Robinson v Kenny [2014] FCA 988 | Case summary

Robinson v Kenny [2014] FCA 988 | Case summary | Zoe

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REASONS FOR JUDGMENT 1 The applicant (Mr Robinson) is the owner of land in Seaview Street, Tweed Heads in northern New South Wales (Property). The first respondent (Mr Kenny) is an architect who practises on the north coast of New South Wales. The second respondent (ABK) was registered on 8 October 2004 and Mr Kenny is the sole director and controller of ABK. Simcorp Developments and Constructions Pty Limited (Simcorp) was a construction company which is now in liquidation. Mr Alex Simpson (Mr Simpson) was Simcorp's sole director. Simcorp and Mr Simpson were the second and third respondents in these proceedings until February 2013 when they were replaced by ABK. 2 Mr Robinson is a chemical engineer who works for the Linde Group, a global gases and engineering company based in Munich. In early 2010 he was employed as the Head of Project Execution, Asia Pacific, and before that he held various international positions over a period of 25 years. From 1995-2000, Mr Robinson, his wife Mrs Sarah Robinson (Mrs Robinson) and their children lived in China. They came to live in Victoria in 2000. Mr Robinson managed operations for Linde Group in Victoria, South Australia and Tasmania. 3 In 2003, it was decided that Mr Robinson should return to his role in North Asia, although he would continue to be based in Australia. The family decided that because Mr Robinson would be travelling for extended periods, it would be better for Mrs Robinson and their children if they lived near Mrs Robinson's family in Tweed Heads. 4 Mr Robinson bought the Property in 2003; it had a house on it which Mr Robinson intended to demolish and build a larger residence as the family home. The Property was near his wife's family and had an ocean view. The Robinsons moved to Tweed Heads and lived in other accommodation while they commenced plans to design and build the home. 5 Mr Kenny was the coach of a rugby team in which Mr Robinson's son played. As Mr Kenny is an architect, Mrs Robinson approached him in early 2004 to see if he would be suitable to design the new home. Mr and Mrs Robinson retained Mr Kenny pursuant to the Design Retainer (as defined at [37] below) in April 2004 (see [36]-[41]). Mr Kenny provided first estimates for the work in August 2004 (see [44]). 6 By late 2004, it appeared increasingly likely that Mr Robinson's employer would ask him to relocate to North Asia. Mr Robinson officially relocated to China in April 2005 for a two year assignment (with an option for a further year) and his family followed in August of that year. The option to extend for one year was exercised in April 2007. The family were still living in China at the time of the trial. 7 In April 2005, the Robinsons obtained development consent to build on the Property. For the next 18 months, Mr Kenny worked on the design of the house. 8 By letters dated 17 November 2006, Mr Kenny wrote to at least five builders seeking quotations for the construction of the house (Tender Invitations). One was Mr Simpson. Another was Mr Mark Spooner (Mr Spooner). 9 On 19 December 2006 by facsimile transmission (fax) to Mr Kenny, Simcorp provided an "estimation and quotation" of the cost to build the house on alternative bases of (1) an "estimate" of $1.3 million on a "cost-plus contract (20%)"; or (2) a "quotation" of $1.4 million on a "fixed time/fixed price contract", in each case stating that "this estimate includes GST" (Simcorp Quote or Quote): see [97] below. Mr Kenny gave the Simcorp Quote to Mr Robinson at a meeting in Mr Kenny's Kingscliff office on that day. 10 Between 19 December 2006 and 5 April 2007, design changes were made and on three occasions revised drawings were provided by Mr Kenny. During this period, there were discussions between Mr Kenny and the Robinsons about Mrs Robinson sourcing materials in China and whether her father should undertake the demolition of the existing house on the Property with a view to reducing construction costs. In late April, Mr Kenny sent draft building contracts to Mr Robinson by email on a "fixed price" (draft OFT Contract) and "cost-plus" basis (draft HIA Contract) (generically "Contract" or "Contracts"). 11 At a meeting at Mr Kenny's office on 10 May 2007, Simcorp and Mr Robinson entered into a contract to build the house on the basis of the designs and specifications provided by Mr Kenny on 5 April 2007 (Building Contract). It was a "cost-plus" contract which contained a "risk-reward" chart prepared by Mr Robinson under which the builder's margin deteriorated from 25% (if the total contract price was $1.1 million) to 12.5% (if the total contract price was $1.35 million) (Reward Chart): see [189] below. It also contained a special condition that "PC's to keep budget @ $1.2m & not affect margin" (Special Condition): see [241]d below. 12 After the Building Contract was signed, the existing house on the Property was demolished. Work commenced in July 2007, but the work ceased in 2009 and the Building Contract was terminated in December 2009 before the house was completed. Simcorp was placed into liquidation in July 2010. 13 Mr Robinson claims that he spent $2,471,821.99 on building the house. The respondents admit that $1,792,770.37 was paid by Mr Kenny to Simcorp on behalf of Mr Robinson. The agreed mid-point of assessments (GST inclusive) made by expert quantity surveyors employed by the parties (Mr Tony Makin and Mr Michael Davies) (Experts) are: Cost plus tender sum in December 2006: $1,745,363 Fixed price tender sum December 2006: $1,584,855 Contract sum on a cost plus basis May 2007: $1,938,211 Contract sum on a fixed price basis May 2007: $1,718,144 Post contract variations: $ 292,065 Cost to complete: $ 299,833

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Mr Robinson's summary of allegations 20 Without derogating from the range of matters pleaded in the 6FASOC, Mr Robinson said that there are broadly two sets of allegations against Mr Kenny and ABK (Architect): a. The Architect misled Mr Robinson as to the likely cost of the works the subject of the building contract signed between Mr Robinson and Simcorp on 10 May 2007, to which the Building Cost Representation (6FASOC [29F]), the Relevant Conduct (6FASOC [29E]) and the Builder Communication Representations (6FASOC [9B] and [9C]) relate; and b. Mr Kenny misled Mr Robinson into a belief that the Simcorp Quote dated 19 December 2006 (see [22] below) was an estimate or quotation that had been prepared by Mr Simpson as an "orthodox response to tender at the conclusion of a properly conducted tender process". The Tender Representations (6FASOC [29J]) relate to this aspect of Mr Robinson's case. 21 In summary, the claims are: a. Relevant Conduct: between December 2006 and 10 May 2007, Mr Kenny or ABK engaged in the following conduct (in any combination): (1) Mr Kenny gave the Simcorp Quote to Mr Robinson on 19 December 2006 without derogation or qualification at that time or subsequently; (2) by email dated 20 December 2006 (see [147(2)]), Mr Kenny stated that on that day Mr Simpson had given him a list of suggestions and changes to get the total price down to $1.1 million and that he was meeting with Mr Spooner, another builder, with a view to receiving his suggestions and changes to get the total price down to $1.1 million; (3) by email dated 29 January 2007 (see [151]), Mr Kenny stated to Mr Robinson that he had had a couple of meetings with Mr Simpson and that (based on those meetings) Mr Kenny's office was making adjustments to the documentation to get the price down; (4) by email dated 4 February 2007 (see [152]), Mr Kenny stated to Mr Robinson that over the past weeks he had been working closely with Mr Simpson to get the price for the Works down through delegation, negotiation, design, construction and material selection changes and that he was only two or three weeks off reissuing the latest "on budget" for construction/contract drawings; (5) by email dated 27 February 2007 (see [155]), Mr Kenny sent Mr Robinson drawings dated 21 February 2007 for the Works; that email stated that the changes in the drawings had been "discussed with Alex [Mr Simpson]"; (6) after Mr Robinson made suggestions (by emails dated 5, 11 and 12 March 2007) in relation to the drawings, by an email dated 13 March 2007 (see [160]), Mr Kenny stated to Mr Robinson that there would be further drawing changes and that, once those were completed and looked over by Mr Robinson, they would be sent to Mr Simpson "to confirm now on budget" and that then Mr Kenny would "do [the] contract and we can start building"; (7) by an email dated 31 March 2007 (see [173]), ABK sent Mr Robinson a new set of drawings for the Works dated 29 March 2007; (8) after Mr Robinson made suggestions (by email dated 4 April 2007) regarding the drawings dated 29 March 2007, by email dated 10 April 2007 (see [175]), ABK sent drawings dated 5 April 2007 to Mr Robinson and communicated that these drawings would be "final for the building contract"; (9) by an email dated 27 April 2007 (see [184]-[185]), Mr Kenny sent to Mr Robinson a draft OFT Contract which he said he had obtained and on which he had written by hand the figure of $1,350,000 including GST in the contract price field (collectively the OFT Markings); (10) by an email dated 24 April 2007 (see [180]-[181]), Mr Kenny sent to Mr Robinson a draft HIA Contract which was partially completed in his own handwriting and contained on page 5 under the heading "Builders Fee" "20 percent of the cost of the building works claimed at the relevant progress claim plus set about [sic] of [blank] if total contract price less than $1.2 million"; and/or (11) by that email of 24 April 2007, Mr Kenny stated that Simcorp and Mr Simpson could handle a construction job of the size and complexity of the Works, he recommended Simcorp and he could work well with Mr Simpson and Simcorp in his role as project manager and designer. The draft HIA contact was a cost-plus contract with no liquidated damages clause for delay and no mechanism for managing cost or timelines; (12) by an email on 7 May 2007 (see [231]), Mr Kenny stated to Mr Robinson that in his view a cost-plus contract would be better than a fixed-price contract if it were well-managed, if there was a good rapport between builder and Architect (which there allegedly was), and as long as there was a transparent costing system and effective incentive scheme in place; he also stated that the Reward Chart was well done and reasonable; (13) in May 2007 and before Mr Robinson decided to enter into the HIA Contract, Mr Kenny wrote by hand onto page 6 of the contract, under the heading "special conditions", "PC's to keep budget at $1.2 million and not affect margin" after which appeared a list of PC items (see [241]d) below; (14) when Mr Robinson explained to Mr Kenny and Mr Simpson his reasoning for the structure and content of the Reward Chart (at a meeting on 10 May 2007 before the execution of the building contract for the Works) Mr Kenny said words to the effect of "that's fine"; and/or (15) Mr Kenny was silent about Mr Simpson saying to him that "it would be difficult to do the Works for a total cost of $1.4 million" and that "the Works could not be completed for $1.4 million without specification and design changes". He was also silent about any belief that he had (if he had such a belief) that it would be difficult to build the Works for a total cost of $1.4 million including GST. He was silent in circumstances where, because of the communications referred to above, Mr Robinson had a reasonable expectation that the Works would not (without variation) cost more than $1,350,000 including GST, if Mr Robinson contracted with Simcorp on a cost-plus basis with a builder's margin in accordance with the Reward Chart. b. Building Cost Representation: by engaging in the Relevant Conduct, ABK and/or Mr Kenny conveyed an implied representation that if Simcorp built the Works on a cost-plus basis with a builder's margin in accordance with the Reward Chart, the Works would (without variation) likely cost Mr Robinson less than $1,350,000 including GST and would not cost more than around the amount of $1,350,000 including GST. This is a representation as to a future matter and Mr Kenny either: (1) had no reasonable basis for that view on 10 May 2007; or (2) had the belief that it would be difficult to build the Works for a total cost of $1.4 million including GST. c. Builder Communication Representations: the Architect represented to Mr Robinson or alternatively created in him the impression that it was the Architect's own belief that: (1) Simcorp (a) represented that it would agree, (b) would agree, (c) would be able to complete the Works under a lump sum contract for a price of $1,350,000 including GST, by sending the draft OFT Contract to Mr Robinson by email on 27 April 2006 with the OFT Markings [see 9B and 9(c2)]; (2) Simcorp or Mr Simpson (a) could and/or would, and further or in the alternative (b) had communicated that Simcorp would, complete the Works for an amount of approximately $1,200,000. The Architect did this by providing the draft HIA Contract (cost-plus) to Mr Robinson (c) partially completed in his own handwriting, and (d) in particular by inserting on page 5 under the heading "builders fee" "20 percent of the cost of the building works claimed at the relevant progress claim plus set about [sic] of [blank] if total contract price less than $1.2 million", and (e) before Mr Robinson decided to enter into the HIA Contract writing on page 6 under the heading "Special Conditions" "PC's to keep budget at $1.2 million and not affect margin" after which appeared a list of PC items. d. Tender Representation: by reason of the Design Retainer; and/or engaging in the conduct of providing Mr and Mrs Robinson the timetable at [69] below; and/or the tender letters at [72] below; and/or the email concerning the closing of the tender at [74] below; and/or the status report at [82] below; and in providing, on 19 December 2006, the Simcorp Quote to Mr Robinson (see [97] below), Mr Kenny impliedly represented to Mr Robinson, on 19 December 2006, that the Simcorp Quote: (1) was an estimate and quotation that had been drafted and prepared by Mr Simpson and/or Simcorp; and/or (2) that it was provided by Mr Simpson/Simcorp as an orthodox response to tender at the conclusion of a properly conducted tender process conducted without Mr Kenny and/or ABK being involved in the actual drafting and preparation of a tender response by a tenderer; and/or (3) the tender process had been fair to all participants in the tender. In fact, the Simcorp Quote was: (4) not an estimate and quotation that had been drafted and prepared by Mr Simpson and/or Simcorp; and/or (5) was provided by Mr Simpson and/or Simcorp as an unorthodox response to tender at the conclusion of a tender process that had not been conducted properly, being a tender conducted with Mr Kenny and/or ABK being involved in the actual drafting and preparation of the Simcorp Quote; and/or (6) by reason of the matters pleaded in (4) and/or (5), the tender process had not been fair to all participants in the tender.

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The Counterfactuals 22 The pleaded counterfactuals in relation to the Builder Communication Representations and the Building Cost Representation are that if the Architect had not made them: A. Mr Robinson would not have entered into a cost-plus contract with Simcorp and would have insisted that Simcorp agree to a fixed price contract of $1.35 million including GST; B. If Simcorp would not have entered into a fixed price contract, Mr Robinson would have sought a contract with another builder on a fixed price basis of about $1.35 million including GST or less; C. If Mr Robinson could not find a builder who would build the Works for a fixed price of about $1.35 million including GST, Mr Robinson would have (1) abandoned the plan to build the Works; (2) continued leasing the existing house on the Property (which had tenants on 10 May 2007); (3) invested the funds he would otherwise have used to pay for the Works; (4) continued to invest the funds until his family's repatriation from China (where he lived in 2007 and still lives because of an extension to his contract which was unforseen in May 2007); and (5) on his family's eventual repatriation from China, reviewed the design for the proposed house and engaged a builder to build a house on the Property for $1.1 million or a sum less than that amount. 23 At the hearing Mr Lee, Senior Counsel for Mr Robinson, indicated that Mr Robinson would not be leading evidence of how Mr Robinson would have invested the money if he had not paid for the construction of the house and so that claim would not be made if Mr Robinson was successful and the Court found that Counterfactual C applied. Mr Lee made this point without prejudice to Mr Robinson's claim to interest under s 51A of the FCA. 24 In relation to the Tender Representations, the pleaded counterfactual is that if Mr Robinson had been aware of the matters pleaded in paragraph 29K ([21]d above), Mr Robinson (1) would not have had any further dealing with the Architect and Simcorp/Mr Simpson at all; (2) would have abandoned the plans for the Works; and (3) would have continued to let the existing house on the Property (which had tenants on 10 May 2007).

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Legal principles 28 The parties agree that the question of whether conduct is relevantly misleading or deceptive is to be determined in accordance with the statement of McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 (Butcher) at 593 which was endorsed in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 (Campbell) at [102] per Gummow, Hayne, Heydon and Kiefel JJ (footnotes deleted and references to paragraphs of Butcher inserted): Using tools of analysis drawn from the common law of deceit (misrepresentation and reliance) within the statutory framework provided by ss 42 and 68 of the Fair Trading Act may sometimes be helpful in identifying contravening conduct and deciding whether loss or damage was suffered by the contravention. But as McHugh J correctly pointed out in Butcher v Lachlan Elder Realty Pty Ltd [at [103]] the "conduct" with which s 52 of the Trade Practices Act 1974 (Cth) deals is not confined to "'representations', whether they be representations as to matters of present or future fact or law". This proposition applies with equal force to s 42 of the Fair Trading Act. References to misrepresentation or reliance must not be permitted to obscure the need to identify contravening conduct (here, misleading or deceptive conduct) and a causal connection (denoted by the word "by") between that conduct and the loss and damage allegedly suffered. As McHugh J also pointed out in Butcher [at [109]], with particular reference to s 52 of the Trade Practices Act, but with equal application to s 42 of the Fair Trading Act: "The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. (Emphasis added.)…" 29 The characterisation of conduct "generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error" and it is "logically anterior to the question whether a person has suffered loss or damage thereby": Campbell at [24]-[25] per French CJ, endorsed in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186 at [49]. In Campbell, French CJ acknowledged that there may be overlaps in resolving the logically distinct questions, and he went on to comment at [26] that the state of knowledge of the person to whom the conduct is directed may be relevant, at least insofar as it relates to the content and circumstances of the conduct. 30 Mr Kenny relies in particular on the difference between estimates and statements of firm opinion. On this question, French CJ commented in Campbell at [32]-[33] (footnotes deleted) that: 32 It is important in considering whether conduct is misleading or deceptive to identify clearly the conduct to be characterised. If the conduct is said to consist of a statement made orally or in writing, the first question to be asked is what kind of statement was made. Was it a statement of historic or present fact made on the basis that its truth was known to its maker? Was it a statement of opinion? That is to say was it a statement of "judgment or belief of something as probable, though not certain or established"? The term "estimate" itself, used as a verb, means the "act of valuing or appraising" or an "approximate judgement of the number, quantity, position, etc, of something". 33 A statement of opinion may be a statement with respect to a future matter. It may take the form of a prediction. A forward estimate relating to the financial results of a business is a class of prediction. In strict logic there may be some category overlap between opinions and statements of fact. Opinions may carry with them one or more implied representations according to the circumstances of the case. There will ordinarily be an implied representation that the person offering the opinion actually holds it. Other implied representations may be that the opinion is based upon reasonable grounds, which may include the representation that it was formed on the basis of reasonable inquiries. In the case of a person professing expertise or particular skill or experience the opinion may carry the implied representation that it is based upon his or her expertise, skill or experience. 31 Where a person claims to be a conduit of a representation, factors which will be relevant to the assessment of the impugned conduct include: a. Whether the person has expressly or impliedly disclaimed belief in the truth or falsity of information conveyed: Yorke v Lucas (1985) 158 CLR 661 at 666; or made it clear that they are not vouching for the accuracy of the information; b. Whether the representation was conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as having adopted it: Gardam v George Wills & Co Ltd (1988) 82 ALR 415 at 427. In Butcher, when the conduct was considered as a whole (including an express disclaimer), a brochure issued by a real estate agent did not communicate adoption of a representation, whereas in John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1995] ATPR 41-249 the conduct of a real estate agent in holding itself out as a consultant to institutional investors was enough to indicate adoption of statements in a brochure relating to commercial property. 32 By way of example, in the most recent decision of the High Court in this area, Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at [3] and [70], French CJ, Crennan and Kiefel JJ held: 3. … [T]he search results which are the subject of these proceedings are "sponsored links" - a form of advertisement created by, or at the direction of, advertisers willing to pay Google for advertising text which directs users to a website of the advertiser's choosing. It is not now in contention that the sponsored links … conveyed misleading and deceptive representations. What the present appeal concerns is whether, in all the circumstances, Google (as distinct from the advertisers to whom the sponsored links belonged) engaged in misleading and deceptive conduct by publishing or displaying the sponsored links. … Google did not contravene s 52 of the Act. Google did not author the sponsored links; it merely published or displayed, without adoption or endorsement, misleading representations made by advertisers. 70. … These findings - that ordinary and reasonable users would have understood the sponsored links to be statements made by advertisers which Google had not endorsed, and was merely passing on for what they were worth - were plainly correct. … On its face, each sponsored link indicates that its source is not Google, but an advertiser. The heading "Sponsored Links" appears above both top left sponsored links and right side sponsored links, and the URL of the advertiser, appearing within each sponsored link, clearly indicates its source. Ordinary and reasonable users of the Google search engine would have understood that the sponsored links were created by advertisers. Such users would also have understood that representations made by the sponsored links were those of the advertisers, and were not adopted or endorsed by Google. 33 Where more than one person is involved in the impugned conduct, the level of involvement of each person must be individually assessed and whether any or all will have been found to have engaged in misleading or deceptive conduct will be a question of fact in the circumstances: Cassidy v Saatchi & Saatchi Australia Pty Ltd (2004) 134 FCR 585. 34 Unless there is a duty to disclose a relevant fact or there are circumstances such that there is a reasonable expectation that a relevant fact will be disclosed if it exists, silence will not constitute misleading or deceptive conduct. The significance of silence always falls to be considered in the context in which it occurs: Warner v Elders Rural Finance Limited (1993) 41 FCR 399 at 402, 404-405. 35 If a respondent's breach of s 52 of the Trade Practices Act or s 42 of the Fair Trading Act "materially contributed" to the loss or damage suffered by the applicant, even in only a minor way, it will be regarded as a cause of the loss or damage, despite other factors having played a role. In setting the amount of the "loss or damage" to be recovered, the Court must select a measure which conforms to the remedial nature of the statute and to the justice and equity of the case: Henville v Walker (2001) 206 CLR 459. The loss or damage must have been caused "by" the conduct: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514.

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Express terms 38 The express terms of the Design Retainer relevantly are: … Please find following summary of how I will approach the design and the documentation process if chosen as your architect. After speaking with you I feel confident that I will be able to receive considerable client input. For this reason I am happy to offer my services for a total of 7% of the estimated construction budget, established at the end of Stage 1 Sketch Design. Timing: I am able to start immediately and would suggest that 9-12 months would be a reasonable and achievable timeframe to design and construct a project of this type. … Below I have listed the process that I would follow, together with my associated fees. … Stage 3 TENDERING AND SUPERVISION Liaison with builder Interim Stage 3 fee due when construction underway (fee based on 1% of estimated construction cost) - Describing and explaining proposed work for builder quotation and selection purposes. - Regular site visits supervising work (looking after the best interest of client) to ensure quality and to take advantage of unforeseen opportunities to improve design Provide detailed drawings Interim Stage 3 fee due when construction underway (fee based on 0.5% of estimated construction cost) - Internal elevations showing tile patterns, materials, colours and finishes. - Cabinetwork and built in furniture. - Miscellaneous details as required Client liaison Final Stage 3 fee due when construction is able to be completed (fee based on 0.5% of estimated construction cost) - Meeting during construction with client and builder. - Assisting client with material, product and colour selections as required.

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Mr Robinson 54 Mr Robinson's experience, as at 2007, was in oversight and management of existing gas-producing assets. From 2010, Mr Robinson had the role of Head of Project Execution, Asia-Pacific based in Shanghai. In that role, he oversaw "all aspects of the commercialisation of gas-producing assets across the Asia-Pacific"; that is, oversight of obtaining government permits and approvals, organising finance (usually in multiple currencies), customer liaison, liaising with the procurement and construction subsidiary of the Linde Group (for which he never worked), recruitment, dealing with customs for imported components and procurement of locally sourced parts for the gas production facility. 55 Mr Robinson presented as a brusque and experienced man of business, accustomed to carrying authority and of some sophistication. He appeared proud of his capacity to make judgements, perhaps overly so. He was clearly impatient and irritated at being required to participate in the process of giving evidence, notwithstanding that he was the applicant. He presented as methodical, if impatient of detail. 56 I do not think Mr Robinson would deliberately lie, however, his evidence of events was curiously lacking in detail. It was more fulsome concerning things he said or thought than of the things said to him. Mr Robinson was guarded and not always responsive in giving his evidence. Both his affidavit and oral evidence was often reconstructed from assumptions about how he would have behaved which detracted from its evidentiary value. To that extent it appeared to be self-serving. 57 Specific to building contracts, Mr Robinson's evidence is that he had never been involved in the construction of a house or in negotiations for a contract to build a house, or a commercial building other than a gas plant. Although he learned about cost-plus and fixed price contracts at university in the mid-1980s, he never let a building contract during his career and none of his professional training, qualifications or role involved analysis of the risk profile of building contracts. Mr Robinson also denies devising incentive schemes for a living. He says that he came into contact with incentive schemes in China as a way of trying to expedite the delivery of goods and services to the timing requirements of a project. I accept this specific evidence. 58 In his email of 25 April 2007 Mr Robinson used the term "risk profile" appropriately in relation to the draft HIA Contract and he demonstrated his understanding that there is no "pricing" in a cost-plus contract, as opposed to the fixed price contract for which he had asked. He demonstrated some sophistication in his understanding of the circumstances in which cost-plus as opposed to fixed price contracts might appropriately be used and in terminology (such as the use of the term "turnkey"). 59 It was Mr Robinson's proposal to use a "risk-reward" incentive scheme. In emails after 25 April 2007 he contemplated such a scheme in association with a cap on the owner's liability, and then without a cap; he plainly understood the difference in consequence. 60 Based on the email correspondence in April/May 2007 and his demeanour in giving evidence, Mr Robinson demonstrated that he had a business-like approach to gathering information he considered relevant. He also demonstrated a commercial understanding of the difference between fixed price and cost-plus contracts and the use of incentive schemes. 61 Mr Robinson is a professional project manager and he demonstrated a tendency to "credential" his assessments by reference to this fact. For instance, under cross-examination Mr Robinson said: "I'm a professional project manager. If you have an estimate on 700 and you go double it's not a good look": T 83.24-26. Accordingly, despite the fact that Mr Robinson says he would never have said, in relation to the Reward Chart, that creating such incentive schemes was "what he does for a living" or "what he does at work", I do think he is likely to have explained the reasons for the Reward Chart in such a way that Messrs Kenny and Simpson could reasonably have understood Mr Robinson to have been saying that he derives his understanding of them through his work.

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Tender Invitations 72 Mr Kenny gave evidence that in November 2006 he approached five builders (Messrs Murfet, Spooner, Jones, Edmed and Simpson) seeking tenders and the Court Book contains unsigned letters which each bear the date "17.11.06" addressed to those named people (the Tender Invitations referred to at [8] above). Mr Kenny gave evidence that he also approached Mr Dale Le Marshall. The Tender Invitations were in the following form: RE: RESIDENCE: [NUMBER] SEAVIEW STREET TWEED HEADS SOUTH SUBJECT: INVITATION TO TENDER Thank you for expressing your interest in tendering on the above project. Please find enclosed for your information the following documents: • plans, from my office, dated 09.10.06. • specification, from my office, dated 09.10.06. • engineering drawings. • survey plan. • soil survey available on request. Please make allowances within the quotation for the installation only of the following items, (n.b. these items are to be selected and supplied by ABK and owner during construction); • Electrical & gas fittings; appliances, Air-conditioning, lights, fans, fireplace etc. • Sanitary ware, hot water system and tanks. • Tiles (see plans & assume floor to ceiling on walls in wet areas) Please make no allowance within the quotation for the installation or the supply of the following items, (to be selected, supplied and installed by ABK, owner and/or nominated subcontractor during construction); • Soft and hard landscaping & fencing • Cabinetwork & built in furniture Please indicate in your quotation; • your preference re, the type of contract. • an estimate of the duration of the construction process. • your earliest starting date. Please send (or deliver) your quotation to me before midday 14.12.06. Please call me to arrange a meeting time to inspect the site, to explain the scope of work or if you have any further questions. I look forward to receiving your quotation and I wish you luck with the tender. 73 Mr Robinson points out that no drawings of 9 October 2006 are in evidence although plans and specifications are. Mr Kenny gave evidence that drawings dated April and September 2006 were included and I accept that evidence.

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20 November 2006 Status Report 74 By an email dated 20 November 2006 (20 November email) to Mrs Robinson's email address, Mr Kenny provided a status report (emphasis added): Dear B&S Status Report I hope you are well. Re. Stone and tiles; Sure, all that sounds fine. I'll get those areas and calculations to you asap. Re. The timing of the closing of tendering. I have been asked by 2 of the builders for an extension of time (pretty standard for this time of year) After consideration (& confirmation from my preferred builder that we on budget, you beauty!) I have given all the builders 2 more weeks. I figured no harm in fishing for a bit longer and we will still be able to sign up the successful builder by 22.12.06 to start mid Jan 2007 for an end of 2007 finish. I'll keep you posted of all the results when at hand. Re. My annual leave is from 22.12.06 to 15.01.07. My offices will remain open over the Xmas period. If you need to contact my office during this time, Jose is your best contact. You can call me if it is an emergency at home [number]. 75 No evidence was given by any of the parties as to what "on budget" meant. 76 Mr Robinson says that the Status Report contained in the 20 November email is the first indication that even in the absence of responses from builders (including Mr Simpson), Mr Kenny was "nevertheless willing to promote Mr Simpson as a 'special case', telling Mr Robinson that he had received "confirmation from my preferred builder that we on [sic] budget, you beauty!"". Mr Robinson suggests that this is curious given Mr Kenny's evidence in cross-examination that he did not have a preferred tenderer until the end of the tender process. 77 Mr Kenny's evidence at T 127.5-35 is: Counsel: So it's correct to say, isn't it, that the tender process was open or being conducted during the period 17 November 2006 through to 19 December 2006; correct? Mr Kenny: Yes. Counsel: Now, during that period you were completely open to the prospect of any of the proposed tenderers being the ultimate person who was successful in the tender, I take it? Mr Kenny: Yes. Counsel: You didn't have a preference one way or the other? Mr Kenny: I would have been happy to have worked with any of those builders. I've worked with all of them in the past and some of them are easier to work with than others. You know, that's just human nature. You get on better with certain people than you do with others, but I would have been happy for any of them to have won the tender. … Counsel: Do you have during that period a preference for any of those proposed tenderers? Mr Kenny: No, I didn't. Counsel: Given that you didn't, it would be quite wrong to describe one of the proposed tenderers as your preferred builder; correct? Mr Kenny: It depends on the timing of it. Counsel: Well, I've oriented you to the timing. It's during this period of a little over a month when the tender process was open. You've agreed to the proposition you didn't have a preferred builder during that process. I'm asking you - the logical extension of that answer is that it wouldn't [sic would] have been quite wrong during that period for you to have referred to one of the tenderers as your preferred builder; correct? Mr Kenny: Correct, although as the process went on I did - I was getting more feedback and more interest from one of the builders. 78 While the language of the 20 November email does indicate some personal preference, Mr Simpson is not named as the "preferred builder" and the 20 November email indicates that two builders had asked for more time. It appears that Mr Spooner was also actively considering the tender at that time, as is evident from the Status Report of 14 December 2006, which says, in relation to both Mr Spooner and Mr Simpson that "he is almost done. He requested until Tues[day], which I granted. He might be worth waiting for" (see [82] below). Mr Robinson appears to ignore this treatment of Mr Spooner in his suggestion of preferential treatment of Mr Simpson. There is, in fact, no evidence of who the "preferred builder" was at this stage. 79 In any event, it would not be unusual or inconsistent with a "proper, transparent and ethical tendering process" for a person conducting a tender to have a personal preference for one person invited to tender (based on their experience of working with that person), but to test the market by seeking tenders from other qualified people with whom they would also in fact be willing to work. That is consistent with Mr Kenny's evidence at [77] above, despite his concession that it would be wrong to have referred to one of the tenderers as "preferred". That Mr Kenny had a preferred tenderer was disclosed to Mr Robinson in the 20 November email, albeit not by name. Whether or not that was "fair" to other tenderers, the fact that Mr Kenny may have had a preferred tenderer was not being withheld from Mr Robinson. 80 The suggestion that Mr Simpson was a "special case" on 20 November 2006 was not put to Mr Kenny. Consistently with Mr Kenny's evidence at [77] above, he conceded that "[b]y the time it got to the end of the tender he was shaping up to be my preferred tender". It is also the case that Mr Spooner was not eliminated from contention even after 19 December 2006: see [147] and [152] below which indicate that Mr Spooner was in contention on 20 December 2006 and remained a "fall back" in February 2007. Mr Kenny was not cross-examined concerning Mr Spooner.

[33]

Submissions and findings in relation to period from 31 July to 18 December 2006 83 Mr Robinson notes that Mr Kenny's evidence was that he approached six builders, not that he transmitted the Tender Invitations. I do not consider that anything turns on the difference and I accept Mr Kenny's submission that he was never asked about the difference or directly challenged on the issue of whether he had, in fact, sent out the Tender Invitations. 84 Paragraphs [23]-[28] of Mr Robinson's closing submissions appear to express scepticism about whether the Tender Invitations were sent out at all. The gravamen of this submission is difficult to understand: it may be to suggest that even before 19 December 2006, Mr Kenny was seeking to establish the appearance of a conventional tender process, but it was not a conventional process because Mr Kenny preferred Mr Simpson. 85 It is true that the Status Report of 14 December 2006 is ambiguous as to whether Mr Kenny is saying that there were nine or six people approached (some names are duplicated but some names are different above and below the second "Status Report" heading: see [82] above). However, the fact that there is no evidence of a response from some of the people to whom Mr Kenny says he sent a Tender Invitation is not determinative of whether or not he did. There is no legal or other obligation to respond to an invitation and there is evidence that some people did respond. There is a handwritten letter from Mr Murfet. There is also a file note by Mr Kenny of a conversation with Mr Spooner on 21 December 2006 (see [148] below). Mr Kenny gave evidence that Mr Le Marshall called him to withdraw from the process, saying that he was "not set up to do this work yet". Mr Simpson says he received the tender request. The 14 December 2006 Status Report is consistent with this evidence and with the 20 November email (at [74] above) which indicates that two builders had asked for more time. All of this evidence was unchallenged by Mr Robinson. 86 I am prepared to accept that at least five (and possibly more) Tender Invitations were despatched by Mr Kenny on or about the date which the letters bear. 87 I do not find it "remarkable" (as contended by Mr Robinson) that, between 1 and 18 December 2006, Mr Kenny's mobile telephone contacted Mr Simpson's mobile telephone 31 times, at least once for up to eight minutes (a call which occurred on 8 December 2006 as disclosed by telephone records annexed to Mr Kenny's 13 August 2012 affidavit). Nor is it plain what Mr Robinson sought to establish by noting that Mr Kenny spoke to Mr Simpson three times on 18 December 2006 (on the basis of Mr Kenny's records, they in fact spoke four times for two to three minutes each time and a total of ten minutes). Mr Kenny was not cross-examined about the content of those conversations. No evidence was provided about the level of Mr Kenny's telephone contact with any of the other people to whom Tender Invitations were issued (and in particular Mr Spooner), so it is difficult to draw any comparison or conclusion about the level of Mr Kenny's contact with Mr Simpson. 88 The contact between Mr Kenny and Mr Simpson was even more extensive than contended for by Mr Robinson. Mr Kenny's telephone records for his landline (annexed to his affidavit sworn on 6 May 2013), when taken with his mobile telephone records, indicate that Mr Kenny contacted Mr Simpson's mobile telephone approximately 50 times between 1 and 18 December 2006. We have no evidence of whether Mr Simpson called Mr Kenny. Mr Kenny's evidence was that although he could not recall exactly the number of conversations during the tender process he thought there may have been "closer to 6" than 12; he clarified that this was in relation to the Robinson project but that he was doing other work with Mr Simpson. I consider that this is likely to be an under estimate, even taking into account that they were working together on other projects. 89 Mr Robinson's written submission at [29] is (underlining in original): The fact is that by 19 December, Mr Kenny had not received a single positive response to the tender he had conducted on Mr Robinson's behalf, including from Mr Simpson. Under cross-examination Mr Kenny said he could not recall being concerned about the fact that by 18 December Mr Simpson had not put in a response to the tender (TP 129.10). However, it is very likely that he was concerned: not only did Mr Kenny know that Mr Robinson was coming to see him on 18 or 19 December 2006 to have "a quick update on the bids" (CB 780a), but in the absence of a bid, Mr Kenny's friend (see above) and "preferred builder" (see also (TP 132.15-20)) might not get the job. 90 As at the second half of 2011, both Mr Simpson and Mr Kenny gave evidence that they had known each other for about six years. The evidence of Mr Kenny was that they were not "close" friends but what might be called professional friends and Mr Kenny accepted that they have what might be described as a "close professional relationship". This issue was not put to Mr Simpson in cross-examination. 91 Notwithstanding that they had a "close professional relationship", Mr Simpson was not one of the builders whom Mr Kenny said he had approached in his email to Mr Robinson of 31 July 2006: see [69] above. Mr Simpson (as developer) and Mr Kenny (as architect) had been engaged in building six units in Pearl Street, Kingscliff in New South Wales before building commenced on the Robinsons' project. In almost exactly the same words, both say that they worked well together on the Kingscliff project. This makes explicable Mr Kenny's view that Mr Simpson might be his "preferred bidder". I do not accept that working well together, or even a "close professional relationship", is a sufficient explanation for any concern on Mr Kenny's part that Mr Simpson might not get the job. 92 It is likely that the imminence of both the end of the tender period and Mr Robinson's visit on 19 December 2006 caused Mr Kenny to contact builders to spur submission of a tender within the 19 December 2006 deadline, whether or not this amounted to a "concern". It would have been odd if Mr Kenny had not been calling at least Mr Simpson and Mr Spooner (the two builders who had asked for time until 19 December 2006) to follow up to see whether they proposed to put in tenders. 93 I find that the Tender Invitations and Mr Kenny's administration of them to 18 December 2006 have the appearance of a conventional tender process. I do not accept that Mr Robinson made out a case that Mr Kenny engaged in a sham by not sending out Tender Invitations, if that is indeed what Mr Robinson was seeking to do. Nor, without more, is the undoubted telephone contact between Mr Kenny and Mr Simpson evidence of a tender process being conducted unfairly or improperly. There is no evidence that, before 19 December 2006, Mr Kenny had any role in formulating the Simcorp Quote.

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19 December 2006 conversation and Qualification 94 In affidavits sworn in October 2011, Mr Kenny and Mr Simpson deposed to a conversation which they had on 19 December 2006 in terms which were almost the same, word for word. Mr Simpson's version was as follows: Mr Kenny: "Can you please provide an estimate and quote because Mr Robinson wants to know the difference in cost between you doing the building work on a cost plus basis and you doing the building work on a fixed price basis?" Me: "Not at the moment because I am driving." Mr Kenny: "You need to submit a written proposal today. Could you complete the work for a total cost of $1.4 million?" Me: "No, not without specification and design change." 95 The point at which their affidavit evidence diverges is that Mr Kenny says that Mr Simpson responded "it would be difficult". Mr Kenny ultimately accepted that Mr Simpson said "no, not without specification and design change". I will refer to Mr Simpson's response as the "Qualification". 96 Mr Kenny's evidence in relation to the Qualification at T 210.15-46 is: Counsel: Now, at the time that you had the meeting with Mr Robinson in the afternoon of 19 December when you handed him the copy of this quote I want to suggest to you that you had two sources of information as to the likely builder's estimate of the contract cost. One was this fax. You would accept that that was one of them, correct? Mr Kenny: Yes. Counsel: And the other one was the conversation you had had with Mr Simpson whereby he had said that he couldn't do it for 1.4 without design and specification changes, correct? Mr Kenny: I think - yes, that would be correct. He said it would be difficult without changes and … and more detail. Counsel: Yes. And so moving forward you just didn't rely on this letter. You relied on both those sources of information in order to from your view, correct? Mr Kenny: Yes, I would have, yes. Counsel: And you don't consider that Mr Simpson misled you in any way, correct? Mr Kenny: No, I don't think he did. I - I think builders often say it's going to be difficult to get a house built for a certain amount of money. Counsel: Yes? Mr Kenny: They - they always try to make sure that they make the point that I am the one that has to make changes and keep it in - within the specification and make sure that the clients don't go crazy with making changes and changing the specification. Counsel: No? Mr Kenny: So builders - builders often hedge - hedge their bets by saying that. You know, they - they say it and I - he said it to me and I accepted it. Counsel: Yes and ? Mr Kenny: I don't know if I necessarily, you know, took it at face value. Counsel: I see. In any event you thought he was telling you the truth in the conversation that you had on 19 December, correct? Mr Kenny: I took it with a grain of salt but yes.

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Provenance of the Simcorp Quote 98 In his affidavit sworn on 16 April 2013, Mr Simpson deposed that it was Simcorp's usual practice to produce a document such as the Simcorp Quote when bidding on a tender and that it would be approved by him before being signed and sent to an architect. Mr Simpson said that he "would never let an architect prepare a document such as the Simcorp Quote". He deposed that he does not recall the Simcorp Quote being produced, but concedes that the signature on the document is that of Mr Smith, Mr Simpson's "foreman" at the time, and that Mr Simpson is familiar with Mr Smith's signature. 99 Mr Kenny accepted that he gave the original fax of the Simcorp Quote to Mr Robinson at the meeting at Mr Kenny's office on 19 December 2006. Mr Robinson subsequently attached a copy of this document to an email which he sent to Mr Kenny on 27 April 2007 at 7.07 pm (see [185]). This is the document that appears at CB 785. It bears what appear to be transmission markings from two fax machines as follows (the final four numbers of the fax numbers have been omitted): 19/12/2006 10:03 075569 XXXX Simcorp 01/01 19/12/2006 09:53 026674 XXXX ABK Aust Brian Kenny 01/01 100 On 19 December 2006, due to daylight saving in New South Wales, New South Wales was one hour ahead of Queensland. Mr Kenny's office was in northern New South Wales and the Simcorp offices were in Queensland. Mr Kenny does not dispute that the fax numbers are numbers which were employed by ABK and Simcorp at their respective offices. 101 When the issue of the transmission markings was first raised with Mr Kenny in cross-examination in March 2013, he accepted that it appeared that the Simcorp Quote had been faxed first from his office at 9.53 am NSW time (8.53 am Queensland time), and then back to ABK from Simcorp at 10.03 am Queensland time (11.03 am NSW time). He also said that he did not know if either or both of ABK and Simcorp's fax machines was correctly set for date and time (having noted previously in relation to Mr Murfet's fax of 4 December 2006 that the area is subject to blackouts). Mr Kenny accepted that it was more probable than not that they were correct. He had no explanation for why the Simcorp Quote appeared to have been faxed from ABK before it was returned from Simcorp. 102 Mr Kenny later categorically denied that he prepared the Simcorp Quote; he said he had no recollection of it being produced in his office. He said it did not look like a document produced in his office which used a different font. He admitted that he assisted by speaking with Mr Smith and Mr Simpson during the day. 103 In support of the proposition that Mr Kenny prepared the Simcorp Quote, Mr Robinson cites the following: a. Mr Kenny accepted that the document at CB 785 (the Simcorp Quote) is a photocopy of the document he handed to Mr Robinson at their meeting on 19 December 2006 and that the document he gave to Mr Robinson was the only copy he had which was signed by Mr Smith. It was only faxed to Mr Kenny once and not emailed; b. Mr Kenny agreed that other communications he received from Simcorp were on Simcorp letterhead while the Simcorp Quote was not; c. On 18 February 2010, in connection with Mr Robinson's litigation against Simcorp and Mr Simpson, Mr Kenny provided the contents of his file to Mr Robinson's lawyer (Ms Melinda Turnbull). Mr Kenny agreed that he provided "all [the] scraps of paper that [he] ever had in respect of [the] project" to Ms Turnbull; d. Ms Turnbull made a file note of her conversation with Mr Kenny on the same day as follows : Telephone attendance on Brian Kenny returning my call. Advised that the quotes should be in there - there is nothing missing from the files - everything he has on the matter is contained within the binders. Recalls that they only rec'd two quotes - one from Simcorp and the other from Mark Spooner. He reviewed his electronic file and located the Simcorp quote which he will fax through to me. The other quote should be within the file - unfortunately he cannot guarantee that the files are in chronological order given the time that has passed. e. Mr Kenny said that "when he was talking about the electronic file [he was] talking about documents on his computer"; f. Appearing at CB 785(d) is an unsigned copy of the Simcorp Quote showing a transmission receipt from ABK at the same fax number as appears on the transmission marking on the Simcorp Quote. The unsigned Simcorp Quote shows a transmission time of 5:20 pm on 18 February 2010 and it is marked "Attn Melinda" in Mr Kenny's handwriting. Mr Kenny accepted that he faxed that document after he printed it out from his computer about an hour after his conversation with Ms Turnbull; g. On 12 March 2013, Mr Kenny was cross-examined about the provenance of the Simcorp Quote and the transmission markings were drawn to his attention. On 13 March 2013 Mr Gavin Beardsell, Mr Kenny's lawyer, swore an affidavit in which he said: (1) on 6 April 2010 he asked Mr Kenny to provide him with his complete file relating to the Property; (2) on 8 April 2010 he received instructions from Mr Kenny that Mr Kenny had six A4 folders which were in the possession of Mr Robinson's solicitors in connection with Mr Robinson's claim against Mr Simpson and Mr Kenny had agreed to collect the papers the next day; (3) Mr Kenny's file was delivered to him on 15 April 2010 and remained in the firm's possession as at the date of the affidavit; (4) on 16 November 2010 Mr Beardsell received a letter from Mr Robinson's lawyers with discovered documents in these proceedings, including the document to be found at CB 785 (the Simcorp Quote), which is referred to in the table of contents of the discovered documents; and (5) during the evening of 12 March 2013 Mr Beardsell reviewed Mr Kenny's original file of papers and the Simcorp Quote was not contained in them (either the original or a copy); and h. Having been taken to Mr Beardsell's affidavit, Mr Kenny accepted that it was more likely than not that he did not keep a copy of the Simcorp Quote signed by Mr Smith on the file which he had provided to Mr Robinson's solicitors and then to Mr Beardsell. 104 In his affidavits sworn on 13 August 2012 and 6 May 2013, Mr Kenny provided detailed telephone records for both the ABK office land line and his mobile telephone. They indicate: a. At 9.53 am, a call of 27 seconds duration was made from the landline at ABK to Mr Simpson's mobile; b. The 9.53 am call was preceded by five calls to Mr Simpson's mobile, the longest being for 9 minutes 11 seconds at 9.37 am and 3 minutes 28 seconds at 9.30 am; c. The ABK landline made calls to Mr Simpson's mobile at 11.02 am for 17 seconds and at 11.55 am for 5 minutes and 58 seconds. These calls were made immediately before and slightly over 50 minutes after the time of the fax transmission marking of the Simcorp Quote from Simcorp at 10.03 am, which would be 11.03 am (NSW Time). 105 The telephone records also indicate that there were no calls from either of the ABK landline or Mr Kenny's mobile to the landline or fax numbers which appear on Simcorp's letterhead at any time in December 2006. 106 Mr Simpson admits that, following the conversation with Mr Kenny on 19 December 2006 in which he made the Qualification, he "would have rung" Mr Smith, but there is no evidence from Mr Kenny, Mr Smith or Mr Simpson as to what transpired in subsequent conversations to give content to the Simcorp Quote. From the ABK landline and mobile telephone records, we know that there were eight calls to Mr Simpson's mobile between 8.52 am and 11.02 am lasting for approximately 17 minutes and a further call of almost six minutes at 11.55 am. Mr Kenny rang Mr Simpson twice between 4.15 and 4.50 pm for a total of approximately two minutes. We do not know how much time Mr Kenny might have spent in calls received from Mr Simpson or Mr Smith; no evidence was given in relation to these records. 107 Mr Simpson was cross-examined as to his knowledge of the workings of his mobile telephone, and whether it included a function which would allow him to receive faxes in his message bank. Mr Simpson agreed that his mobile phone was a Telstra phone and he was generally acquainted with its functions including message bank, but he denied knowledge of this function. Mr Robinson tendered a booklet published by Telstra which indicates that such a function exists and that it has a storage capacity of up to 20 faxes with a total of 50 pages. 108 Under cross-examination, Mr Simpson gave the following evidence at T 245.23-246.10: Counsel: If you go [to] the second page, you will see you talk about the fact you don't recall the SimCorp quote being produced. However, you confirm the signature at the bottom as Mr Smith's. See that? Mr Simpson: Yes. Counsel: You've got no knowledge of the circumstances in which Mr Smith came to sign the document and the signed document be provided to Mr Kenny? Mr Simpson: No. Counsel: You talk about the usual practice of SimCorp to produce documents such as a SimCorp quote when bidding for tender. I just want to ask you one or two questions about this usual practice? Mr Simpson: Yes. Counsel: The usual practice would be that you would go through - either you, yourself, or one of your employees would go through the process of analysing the tender in order to form a view as to what the appropriate response of the tender would be? Mr Simpson: One of my employees, yes. ... Counsel: A document such as a SimCorp quote was always approved by you? Mr Simpson: Yes. Counsel: So in this case presumably because you were out and about, you weren't in a position to sign the document? Mr Simpson: Exactly. Counsel: But no document would leave SimCorp as a response to the tender without at least you understanding the contents and it being signed by someone on behalf of SimCorp? Mr Simpson: Yes, but obviously I didn't because there was a thing missing off the tender, yes. Counsel: And so someone else signed it in this case, although if you were in the office presumably ? Mr Simpson: Normal case would be I would look at every tender before it goes out. Counsel: And you would sign it and send it out if you were there, but in circumstances where you weren't there you would - after having reviewed it, somebody else signed it and then it was sent, correct? Mr Simpson: Yes. 109 The "thing missing off the tender" was the Qualification (see [95] above). Mr Simpson says he would have included something like the Qualification in the Simcorp Quote had he been its author, and he accepted that without the Qualification the Simcorp Quote was incomplete and inadvertently misleading: T 224.12-28.

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Jones v Dunkel 110 Mr Robinson suggested that I should draw Jones v Dunkel inferences from the fact that Mr Kenny did not call Mr Smith as a witness and points out that Mr Kenny gave evidence that he knew of no reason why Mr Smith would not be able to come and give evidence. Mr Robinson submitted that the rule in Jones v Dunkel is a principle founded in common sense, citing Director, Office of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCAFC 8 (OFWBI v CFMEU). 111 In OFWBI v CFMEU at [100] Besanko and Perram JJ (with whom Bromberg J agreed) cited paragraphs (6) and (7) of the detailed consideration given by Glass JA to the rule in Payne v Parker [1976] 1 NSWLR 191 at 201-202 (Payne v Parker) and relied on it. In Payne v Parker, Glass JA at 201-202 said (citations omitted): (6) Whether the principle can or should be applied depends upon whether the conditions for its operation exist. These conditions are three in number: (a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter, (c) his absence is unexplained. (7) The first condition is also described as existing where it would be natural for one party to produce the witness…, or the witness would be expected to be available to one party rather than the other…, or where the circumstances excuse one party from calling the witness, but require the other party to call him…, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him…, or where the witnesses' knowledge may be regarded as the knowledge of one party rather than the other…, or where his absence should be regarded as adverse to the case of one party rather than the other…It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary…If the witness is equally available to both parties, for example, a police officer, the condition, generally speaking, stands unsatisfied. There is, however, some judicial opinion that this is not necessarily so…Evidence capable of satisfying this condition has been held to exist in relation to a party's foreman…; his safety officer…; his accountant…; his treating doctor. (8) According to Wigmore, par. 285, the second condition is fulfilled where the party or his opponent claims that the facts would thereby be elucidated. Under other formulations, the condition is made out when the witness is presumably able to put a true complexion on the facts …, might have proved the contrary …; would have a close knowledge of the facts…, or where it appears that he had knowledge… I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him. (9) The third condition is satisfied if no explanation is offered for the absence of the witness, or the tribunal thinks that the explanation given is unsatisfactory. The explanation tendered may be that the witness is ill, overseas, dead or refuses to waive privilege… 112 In OFWBI v CFMEU at [102], the Full Court went on to say: Where a witness has severed his or her relationship with a party, the degree to which the witness may be said to be in the camp of that party for Jones v Dunkel purposes will fluctuate with the circumstances and generally decline over time. This is because the rule in Jones v Dunkel is a principle founded in common sense: see Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [78]. In some cases, it will be easy to see the witness as equally available to both parties, which view of the world may lead to the conclusion that no inference should be drawn in relation to either. This is probably the best explanation for the result in Claremont Petroleum NL v Cummings (1992) 110 ALR 239 at 259 per Wilcox J; see also Adeels Palace Pty Ltd v Moubarack [2009] NSWCA 29 at [98]-[100] per Giles JA, Beazley and Campbell JJA agreeing. In other cases, an on-going relationship may continue which may lead to a different outcome. 113 Mr Smith would undoubtedly have been a relevant witness. Mr Kenny said that he assisted by speaking with Mr Smith as well as Mr Simpson during the relevant period. Mr Smith was the signatory of the Simcorp Quote and, based on Mr Simpson's evidence, he was Mr Simpson's "foreman" and had been involved with another employee of Simcorp in preparing responses to tenders. He remained involved up to when the Building Contract was signed in May 2007. 114 Mr Smith left employment with Simcorp in 2010 around the time Simcorp went into liquidation. Although Mr Kenny and Mr Simpson have been business associates, there is no reason to conclude that Mr Smith was in either of Mr Kenny's or Mr Robinson's "camp". Mr Kenny said that he did not know if Mr Smith was still engaged in building work in Queensland. Mr Simpson thought that Mr Smith was not. It would have been equally open to Mr Kenny or Mr Robinson to seek out and call Mr Smith as a witness. Mr Kenny was in a better position by far to know the nature and likely content of the evidence that Mr Smith could give. It appears that Mr Kenny did not seek out Mr Smith; certainly he gave no evidence of efforts to find Mr Smith or call him as a witness. 115 I consider that it is open to me to draw the inference that Mr Smith's evidence would not have been helpful to Mr Kenny in relation to the question of how the Simcorp Quote was generated, signed and delivered to Mr Kenny on 19 December 2006.

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Finding on provenance 116 Mr Kenny suggested that "clear, cogent and strict" evidence was required before the Court is in a position to make a finding concerning Mr Kenny's involvement in the preparation of the Simcorp Quote because it is an allegation "akin to fraud". Although Mr Kenny agreed with a suggestion by Mr Lee that it would be a "very wicked thing" for him to have done so in a tender that he was managing, I do not accept that anything other than the normal civil standard, usually applied in cases dealing with allegations of contravention of s 52 of the Trade Practices Act, should be applied in this case. The fact that Mr Kenny might as a result be found to have given less than frank or untrue evidence does not affect this conclusion. 117 I find that the unsigned Simcorp Quote was faxed from Mr Kenny's office to Mr Simpson's mobile at 9.53 am NSW time. At some time after that, the document was signed by Mr Smith and faxed back to ABK from Simcorp's offices at 10.03 am Queensland time (11.03 am NSW time) on 19 December 2006. I therefore find that Mr Kenny was involved in the preparation of the Simcorp Quote in consultation with Mr Simpson and Mr Smith, and it is most likely that Mr Kenny drafted it in cooperation with them. 118 This conclusion takes into account: first, the matters at [99]-[108]; not least of these matters is that Mr Kenny admits that he assisted by speaking with Mr Smith and Mr Simpson during the day: T 211.38-40. There are a large number of telephone calls on the day in circumstances where neither Mr Simpson nor Mr Kenny suggested there were other pressing issues. There is no suggestion that this "assistance" involved only explanation of drawings or the like, as is evident from the conversation referred to at [94]-[95] to which Mr Kenny and Mr Simpson both deposed. 119 Second, Mr Kenny could give no plausible explanation based on his recollection of events for the transmission markings or the presence on his computer of a form of the Simcorp Quote which was not on Simcorp letterhead and not signed. He speculated that the unsigned copy might have been in his in-tray before it was signed by a Simcorp employee and he noted that it is not in the typeface commonly used on ABK documents. Even that explanation suggests involvement by Mr Kenny; why otherwise would he need to see a draft? 120 If a "soft copy" of the Simcorp Quote had been sent to Mr Kenny subsequently, that does not explain the fax markings on the version which Mr Robinson discovered in the proceedings. 121 Neither of Mr Kenny nor Mr Simpson gave any evidence which would support a finding that a draft of the Simcorp Quote or the signed version had been generated within Simcorp and sent to Mr Kenny before 9.53 am NSW time on 19 December 2006. If the Simcorp machine was improperly calibrated and the "10.03 Simcorp" marking is incorrect with the result that Simcorp transmitted the Simcorp Quote before it was faxed back from the ABK machine, no reason was offered as to why Mr Kenny or ABK would fax it back to Simcorp at 9.53 am and it is difficult to think of one. 122 Third, there are no records from the ABK landline which indicate that a fax was sent to Simcorp's fax number at any time in December 2006. While adjustments to fax machines for daylight saving (or the failure to do so) may account for differences of hours, it does not account for the absence of records of any communications in December 2006 between the ABK landline and Simcorp's fax number (or its landline) in a circumstance where there are transmission markings on a document for that timeframe. 123 Fourth, while Mr Simpson did not admit to having had a fax message bank facility on his telephone or to knowing how to use one, there is no other plausible explanation for the transmission markings. The most likely cause of the transmission marking is that the call made from the ABK landline to Mr Simpson's mobile telephone at exactly the time suggested by the transmission marking was the transmission of the draft Simcorp Quote by ABK to Mr Simpson's mobile telephone. It would be a small matter for Mr Simpson to onsend the message to Mr Smith and authorise him to sign and submit the Simcorp Quote to Mr Kenny after Mr Simpson had approved it. It would also be consistent with Mr Simpson's evidence that quotes are always approved by him; it is not his evidence that they were always signed by him: see [108] above. Mr Simpson has never suggested that Mr Smith was not authorised to sign and submit the Simcorp Quote to Mr Kenny. No explanation was offered for why Mr Smith would break with established procedure. 124 It follows that I do not accept Mr Simpson's evidence that he had no knowledge of the production of the Simcorp Quote. I do not accept that Mr Simpson was not involved in the conversations leading up to the delivery of the signed Simcorp Quote to Mr Kenny merely because the Qualification is not included in it. Mr Simpson gave evidence in cross-examination that he "would have rung" Mr Smith following the conversation with Mr Kenny referred to at [94]-[95], the implication being that he would advise Mr Smith of the conversation with Mr Kenny and initiate the process for the issue of the Simcorp Quote. 125 Last, it was in the interests of both Mr Kenny and Mr Simpson that Mr Kenny be in a position to give a document, albeit brief, to Mr Robinson, or to be in a position to confirm that Mr Kenny had received a written response from Mr Simpson/Simcorp when Mr Robinson visited Mr Kenny's office on that day.

[39]

Disposition of Tender Representations Claim 126 Mr Kenny accepted that Mr Robinson believed that the Simcorp Quote had come out of an orthodox tender process, that it "went without saying" and that he intended to convey that impression. There is no evidence to suggest that Mr Robinson thought or had reason to think that the Simcorp Quote had not come out of such a process; he took its accuracy "at face value": T 113.20. 127 I accept that the process initiated by the Tender Invitations and culminating in the Simcorp Quote had the general appearance of an orthodox tender process and that it was not an orthodox process because of Mr Kenny's involvement in production of the Simcorp Quote by one or more of (1) asking if Mr Simpson could build for $1.4 million, thereby suggesting the fixed quote to the builder; (2) by consulting with Mr Simpson and Mr Smith throughout the morning about the production of the Quote; (3) creating the document which became the Quote on his computer based on those consultations; and (4) not including the Qualification in the Quote. 128 Mr Kenny accepted in cross-examination that: "If [information] was relevant or if it was important information and you didn't pass it on, it would be the wrong thing to do by the client": T 141.8-10. Any material way in which the tender was not orthodox (including the fact that it was not wholly the product of Mr Simpson's work and that it was attended by a Qualification not apparent on the face of the Simcorp Quote) was, in my view, important information which Mr Robinson would reasonably expect to receive from a professional architect conducting a tender on his behalf. 129 I am satisfied that the process was unfair to Mr Robinson and Mr Kenny's silence had the potential to lead him into error: a. Had the Simcorp Quote resulted from a process in which Mr Kenny was not involved in the manner discussed, the fixed price quote in the Simcorp Quote would, on Mr Simpson's evidence, have included the Qualification. The other logical alternatives are that the fixed price quote would have been higher or Mr Simpson would not have submitted a quote or estimate at all. Mr Robinson would have been either in a position to consider what course then to adopt in the knowledge that no tender response had been received, or properly informed by a tender response not tainted by Mr Kenny's involvement. b. If Mr Robinson had known that the Simcorp Quote had been the result of an unorthodox process, he would have been in a better position to decide whether to proceed with either or both of Mr Kenny or Mr Simpson and to evaluate or question the processes adopted for specification and design changes, construction cost estimation and the advice given by Mr Kenny after 19 December 2006 about choice of builder, pricing and contract types proposed. c. If Mr Robinson had known of the Qualification, he would have then had the same two pieces of information which Mr Kenny acknowledged in cross-examination that Mr Kenny had and relied on, that is, the Quote and the Qualification: see [96] above. Mr Robinson would have had a better appreciation of the degree of difficulty involved in the task of specification and design change to achieve a construction cost between $1.1 million and $1.35 million and would have had reason to question Mr Kenny's reliance on Mr Simpson for pricing to the exclusion of other builders or to seek a formal estimate from Mr Simpson and/or some other builder. 130 Accordingly, Mr Robinson has established the Tender Representations were made and that Mr Kenny's conduct of engaging in them was misleading or deceptive or likely to mislead or deceive Mr Robinson within s 52 of the Trade Practices Act and s 42 of the Fair Trading Act. 131 Having said that, Mr Robinson's evidence in his affidavit sworn on 13 March 2013 needs to be treated with some caution. He deposed that: If I had been aware of any of the matters pleaded in proposed paragraph 29K [see [21] d above] after 19 December 2006 and before 10 May 2007, I would had [sic] lost all faith in the integrity of the tender process and in Mr Kenny and Mr Simpson. I would not have had any further dealings with them. Further, by this time I was considering (and indeed did decide) to extend my assignment in China. In those circumstances (and especially considering I was going to be in China), I would not have been interested in starting the building project more or less afresh and would have abandoned it up until such time as they returned from China. While considering my future options, I would have continued leasing the existing house on the property. 132 This evidence was given in the full knowledge of the events which occurred during construction under the Building Contract, the breakdown of Mr Robinson's relationship with Mr Kenny, his disillusionment with Mr Simpson and the subsequent legal action taken by Mr Robinson against Mr Kenny and Mr Simpson. 133 I do not accept Mr Robinson's evidence insofar as it relates to how he would have reacted in December 2006 had he been told of the Qualification and that the Simcorp Quote had been elicited with Mr Kenny's participation in an unorthodox tender process. The tone of Mr Robinson's evidence is consistent with his patent anger at finding out that there may have been irregularities in the process of production of the Simcorp Quote at this stage of the litigation. 134 Rather than the hindsight demonstrated by Mr Robinson's evidence, I think his likely attitude if he had been told on 19 December 2006 is better demonstrated by events from 19 December 2006. 135 Mr Robinson's evidence is that he was "a little bit shocked" at the level of the Simcorp Quote ($1.4 million fixed price and $1.3 million cost-plus) and the fact that, in his mind, it was "so vastly in excess of the $700,000 that Kenny had indicated to us in August 2004 would be the build cost". Nonetheless, his approach was to have Mr Kenny (in consultation with Mr Simpson and Mr Spooner) see what steps could be taken to reduce cost by design and specification changes, without telling Mr Kenny what his "walk away" price was. 136 Commencing with an email from Mrs Robinson on 19 December 2006 at 8.14 pm (see 147), following a report from Mr Robinson of his meeting with Mr Kenny, it is clear that Mrs Robinson's efforts to source products in China (which had first been mentioned in November 2006) took on new impetus and Mr and Mrs Robinson arranged for Mrs Robinson's father to undertake demolition of the existing house. As demonstrated by Mr Robinson's proposal of the Reward Chart, Mr Robinson appears to be solution-driven and confident in his capacity to manage problems. This is consistent with Mr Robinson's demeanour as a witness. As at December 2006, no decision had been made about extending Mr Robinson's contract for China and it remained "on the cards" that he would need the house for his family in about April 2008. Mr Robinson therefore had an incentive to consider design/specification changes and the other steps proposed to bring the project within a cost acceptable to him. 137 I find credible and accept Mr Robinson's evidence that if, during 24 April to 10 May 2007, he had learned of the Qualification or that the tender had been unorthodox because of Mr Kenny's involvement, he would have had no further dealings with either Mr Kenny or Mr Simpson. I also accept that it is most likely that he would have let the existing house on the Property and deferred consideration of building a residence until the family returned from China. I reject Mr Kenny's submission that Mr Robinson would simply have sought to redefine the works. While I accept that that was the likely position on 19 December 2006, by April/May 2007 the Robinsons had already been through that exercise. I think it unlikely that the Robinsons would have been willing to do it again with the same team. 138 The emails of 21 and 30 March 2007 (see [166] and 169), in which the Robinsons tell Mr Kenny that they do not wish to demolish the existing house on the Property ahead of signing a building contract, are contemporaneous evidence of their willingness not to proceed with the project. The emails of late April and early May 2007 demonstrate Mr Robinson's concern that the construction costs had not been significantly reduced despite what was, in his view, "tight" specification as a result of the process since December 2006 and his opinion that the alleged savings were only estimates. Further, in cross-examination, Mr Robinson gave evidence as follows at T 83.16-38: Counsel: … $700,000 wasn't a consideration in your decision-making process leading up to the execution of the costs-plus contract, is that right? Mr Robinson: No, it was a consideration for sure. Of course, I never told Kenny what my walk away price would be. Clearly, for reasons of [over] capitalisation, for reasons of sheer cost if I had known that it was going to be more than $1.4 million we wouldn't be here today. I would not have touched the project with a barge pole. Counsel: Right. So what's that got to do with $700,000? Mr Robinson: Because 1.4 is double. I'm a professional project manager. If you have an estimate on 700 and you go double it's not a good look. Counsel: All right. Well, you would want to know the reasons why it had gone double, wouldn't you, if you were concerned about it? Mr Robinson: Have you read the emails? Counsel: Just answer my question please, Mr Robinson? Mr Robinson Yes, I was concerned. Counsel: Did you ask questions as to why it had gone from $700,000 … to $1.4 million? Mr Robinson: Many times. Many times. Counsel: Did you do that after you had got - seen the document with Mr Simpson's name on it? Mr Robinson: I did it consistently from December until the time we signed the contract. 139 I accept Mr Robinson's evidence that his "walk away" price was $1.4 million for reasons of absolute cost and overcapitalisation. In light of the marginal difference between the Simcorp Quote and what Mr Robinson regarded as the pricing in the HIA Contract and the OFT Contract, if he were to learn of the Qualification and the unorthodoxy of the tender process all of these concerns would have taken on more pressing force. As Mr Robinson pointed out, he is a professional project manager and I accept that it would have undermined his confidence in the process. At the least, I would expect that Mr Robinson would have sought independent confirmation of the cost to build the works in accordance with Mr Kenny's April 2007 drawings. The mid-point of the Experts' fixed price tender as at May 2007 was $1,718,144. I accept that it is most likely that Mr Robinson would not have proceeded with the project in April/May 2007, despite the fact that Mr Robinson's evidence in 2013 had the benefit of hindsight of the events which occurred in the construction process and the blow out in costs incurred.

[40]

Building Cost Representations, Building Cost Communications and Relevant Conduct 140 Strangely, neither of Mr Robinson nor Mr Kenny referred to their meeting on 19 December 2006 in their affidavits. Mrs Robinson's emails of 8.14 pm on 19 December 2006 ([147(1)] below) and 28 January 2007 ([150] below), and Mr Robinson's email of 25 April 2007 ([183] below) clearly indicate that a meeting was held and the need to get the price down was discussed. 141 It is now uncontentious that Mr Robinson dropped off samples of materials from China at Mr Kenny's Kingscliff office on 19 December 2006, as foreshadowed in his email of 1 December 2006, and that Mr Kenny gave him the Simcorp Quote without derogation or qualification at that meeting. There is no evidence that Mr Kenny made Mr Robinson aware of the Qualification subsequently. 142 Mr Kenny's evidence is that if he thought that information was important he would always pass it on to the client: T 148.1-8. However, Mr Kenny did not see the need to pass the Qualification on because he took it "with a grain of salt" as the usual builder's gambit: T 210.15-46. I accept this evidence and the consequence that Mr Kenny believed that the works could be constructed for $1.4 million (GST inclusive) within the scope of the Tender Invitations. I also accept that Mr Robinson was shocked by the amounts in the Simcorp Quote having regard to the estimates he received in August 2004. 143 I am satisfied that the target of $1.1 million resulted from Mr Kenny's meeting with Mr Robinson on 19 December 2006. I reject Mr Robinson's submission that it is "startling" that Mr Kenny talked in these terms and that the December 2006 emails contradict the Qualification. There is no evidence that Mr Robinson was surprised by the references to "$1.1 million all up" in the December emails referred to at [147] and they are explicable against Mr Robinson's desire to get the price down and the exercise which was immediately embarked upon for specification and design change.

[41]

Drawings and efforts to reduce costs 144 Mr Simpson confirmed that while he did not have a specific view of the estimated construction cost he thought that it was "significantly north" of $1.4 million. Mr Simpson said that he saw the purpose of the exercise as being to get the price down to $1.4 million: T 220.1-221.7. Mr Simpson gave oral evidence that there were a "whole heap of conversations around that time about getting the price down to where the client thought the price should be". That is consistent with the email traffic from 20 December 2006 to the end of February 2007. Messrs Kenny and Simpson both say that during one of a number of conversations in early 2007 Mr Simpson told Mr Kenny that "significant changes … are required to get the price down" to which Mr Kenny responded "I will prepare revised drawings". Apart from this interchange, neither Mr Simpson nor Mr Kenny gave evidence of any specific conversation between them related to pricing. 145 The email record between Mr Kenny and the Robinsons supports the view that both Mr Robinson and Mr Kenny thought the exercise of specification and design change was to get the price down to around $1.1 million, excluding those things for which the Robinsons would be responsible, such as provision of stone and tiles and demolition of the existing house. It also supports the view that Mr Simpson both knew about and participated in the exercise by making suggestions from as early as 20 December 2006, at least up to the end of February 2007: see [147(2) and (4)], [152] and [155] below. In my assessment, Mr Kenny did not lie to Mr Robinson in these emails and I find that Mr Simpson understood that the activity of specification and design change after 19 December 2006 was aimed at satisfying Mr Robinson's desire to get cost within the builder's scope down to around $1.1 million. 146 Apart from the letter of 13 April 2007 (a simple covering letter to the drawings of 5 April 2007), there is no correspondence in evidence between Mr Simpson and Mr Kenny after 19 December 2006 and prior to the execution of the Building Contract.

[42]

December correspondence 147 In an email chain between 19 and 22 December 2006, Mr Kenny and the Robinsons corresponded as follows: (1) On 19 December 2006 at 8.14 pm Mrs Robinson wrote to Mr Kenny (emphasis added): Bruce hasn't given me the full debrief yet but he did manage to tell me how much the white polished concrete was adding to [sic the] bottom line. … If you have any stone types or finishes for the floor that you would like to propose please put forward a description and I will investigate. (2) On 20 December 2006, Mr Kenny responded to Mrs Robinson (emphasis added): Dear Sarah Re. White concrete v/s stone tiles, you are on the ball or have very good radar. Just so you are up with the latest; I've met with Alex Simpson today. Very encouraging he is keen. His first suggestion was to replace polished white concrete with either tiles or polished grey concrete with white gravel in it. He understood that you are supplying all the stone, tiles and paying for the demolition of the house. He gave me a list of suggestions and changes (not too bad at all) that I will work through with him to get the total price down to $1.1M. I'll expand on this list once it is firmed up a bit more. I'm meeting with Mark Spooner tomorrow with the view of receiving his suggestions and changes to get the total price down to $1.1M. Unfortunately this toing and froing is all fairly normal process, but my gut feeling is that it will all work out well. Please forward this onto Bruce. (3) On 21 December 2006, Mrs Robinson wrote to Mr Kenny: Could you please have a builder say how much budget they had set aside for demolition? Dad needs to know how much money he is saving us. (4) On 22 December 2006, Mr Kenny wrote to the Robinsons (emphasis added): Re. Cost of Demo. Sure I'll find out when the builder (Alex) gets back. Re. Floor Areas/Stone Tiles option, I'll get back to you once I work through the potential saving with Alex, I want to use as bargaining chip for a while and I have not given up on polished conc. just yet. Re. Price, we have a builder Alex Simpson who is very keen, proactive, capable and willing to work closely with us to get the price down to 1.1 m all up and still be finished by Xmas next year if he starts by March!, which is great. Mark Spooner is also hanging in there (so it is not a one horse race) and would like to re tender once amended documents are done. So basically I think it is best to let the silly season come and go and move forward mid Jan. 148 Mr Kenny's file note marked "21.12.06" of his meeting with Mr Spooner records that Mr Spooner "doesn't think it can be done for $1.1 m", "ABK to do changes" "re-engineer" "then Mark to look at it again". No further correspondence with Mr Spooner (such as providing revised drawings to him) was discovered in the proceedings despite the references to him in the emails of 22 December 2006 and 4 February 2007. The correspondence from December 2006 supports Mr Robinson's description of Mr Simpson as Mr Kenny's "chosen builder".

[43]

January/February 2007 correspondence 149 During January/February 2007, the terminology in the email correspondence changes from express references to getting the price down to $1.1 million to the production of "on budget" drawings. 150 On 28 January 2007 Mrs Robinson wrote to Mr Kenny (as written, emphasis added): Welcome back from holidays. Now that you are back at work we are looking forward to a flurry of revised quotations for the Robinson House. I look forward to your next communication following on from Bruce's visit in December. 151 Mr Kenny responded to the Robinsons on 29 January 2007 (emphasis added): I have had a couple of meetings with the preferred builder (at this point, Alex Simpson) to pick his brain and my office (looking at re-engineering too) is now making adjustments to the documentation to get the price down. I will send the latest documentation and the building contract, once I know that we are on budget, should be within 2 - 3 weeks. 152 On 4 February 2007 Mr Kenny wrote to the Robinsons (emphasis added, underlining in the original): Status Report Over the last few weeks my office has been working closely with Alex Simpson (AS) to get the price down through demolition, negotiation, design, construction and material selection changes. We have been working with a new engineer… He is proving to be very helpful/proactive with economic engineering solutions. We have also been working with the building certifier … We are not far from reissuing to you the latest "on budget" for contract/construction drawings, maybe 2-3 weeks. I will send you these drawings, then if you are content, I will finalise the CC and then send you a building contract and then we can start building. (I will also send the "on budget" drawings to Mark Spooner for a price check and as a fall back potentially) AS is busting to start soon. If we start within 2 months we are still fine for a finish date Jan 2008. 153 On 25 February 2007, Mrs Robinson wrote to Mr Kenny (emphasis added): The Robinsons are back from their Chinese New Year holiday and ready to get on with the New Year and their new house. We look forward to receiving the latest from Alex Simpson, Rob Showers & Steve Broger. We would appreciate a detailed progress report including revised design and price implications before the end of the week (ie Fri March 2nd). ….. 154 On 27 February 2007, Mr Kenny responded to the Robinsons (emphasis added): Please find following in the next lot of emails the latest drawings from my office. These now go to; AS, to confirm price and prepare contract with me/you. RS, to update the engineering SB, to get Construction Certificate done. Please contact me if you have any questions or concerns. Basically we are aiming to start building 09.04.07. I noted those dates in my diary, booked in. 155 Two hours later, Mr Kenny forwarded to Mr Robinson (without comment) an email attaching his drawings of 21 February 2006 under cover of an email from Mr Jose Do to Mr Kenny which listed 12 changes, saying (emphasis added): As discussed with Alex [Simpson], I've made the following changes. 156 Mr Simpson's evidence is that the drawings showed a change of polished concrete to tiles, but no changes to windows or the swimming pool, or any other change which would significantly affect pricing.

[44]

March correspondence to final drawings in early April 157 From 27 February 2007, the correspondence makes repeated reference to the process Mr Kenny envisaged in the development of a building contract. Mr Kenny would produce drawings for approval by the Robinsons, he would then pass them to Mr Simpson/builder for pricing and then a building contract would be produced. Mr Kenny envisaged that each of the builder, Mr Kenny and Mr Robinson would be involved in producing the contract. While there is some ambiguity about who Mr Kenny saw as having responsibility for producing documentation as between himself and the builder, it appears that Mr Kenny took that role. 158 From 14 March 2007, Mr Kenny refers to "final contract" type drawings to be submitted to the builder for pricing, without reference to any target amount (as occurred in December 2006/January 2007) or seeking confirmation from the builder that the drawing are "on budget" (as occurred in February 2007 and for the last time on 13 March 2007). It is not clear why this might be so, other than perhaps that the process of contract formulation began to be discussed and it appears to have merged with the pricing process, despite the fact that drawings and specifications were not settled. There is a sense of urgency generated during March 2007. There is no evidence from any of Mr Robinson, Mr Kenny or Mr Simpson of conversations during this time. 159 On 5 March 2007, Mrs Robinson sent an eight page document of comments on the drawings provided by Mr Kenny on 27 February 2007, which includes commentary relevant to the Robinsons' proposal to source stone/marble in China. Having regard to this email correspondence, it appears that drawing changes during March 2007 were primarily focussed on dealing with detailed comments from the Robinsons. 160 On 13 March 2007, Mr Kenny wrote to the Robinsons (as written, emphasis added): Written response done!! now onto the time consuming bit, the drawing changes. Once I get these all these done I'll send to you for a look over & then onto Alex to confirm now on budget & then I'll do contract & we can start building. Yippee. 161 On 14 March 2007, Mr Kenny wrote to the Robinsons (emphasis added): Re Feedback 14.03.07. We will incorporate on the drawings. We will then email to you for last look over, then assuming all is OK, give to Alex & engineer, then do contract & then build. 162 Mr Robinson replied to Mr Kenny's 14 March 2007 email on the same day (emphasis added): We discussed your responses last night in great detail and I shall come back to you today with a much reduced list of open items, none of which should impede progress. … We do need to get cracking!!! 163 On 15 March 2007, Mr Kenny wrote to the Robinsons (emphasis added): Well done, all very clear. All understood. We will continue with amending drawings with great gusto. We will send "final contract" type drawings asap for your final check over before I give them to Alex to review & hopefully set up a contract from. I'm going to email to you a fee proposal from the building certifier, Buildit to print & review & sign (if content) & scan & email back to me along with payment. I'm going to email you a Dept of Fair Trading contract that you will be able to print & review & sign (if content) & scan & email back. Then I'll get Alex to sign (if he is still content) & I'll scan & email back to you. Alex is still hoping to start on site 09.04.07 & we are all working towards that date. Getting exciting now. 164 Mr Kenny's email of 15 March 2007 demonstrates that, in response to Mr Robinson's remark about the need to "get cracking", he was willing to depart from his suggested process of drawings being approved by the Robinsons, pricing by the builder, then contract negotiation. He suggests that he will email the draft contract to Mr Robinson for signature before he gives it to Mr Simpson for pricing, on the basis that Mr Simpson would only sign it if he was "content". The impediment to him adopting that course immediately was the fact that the contract was not available in electronic format from the Office of Fair Trading (see [169(1)]) Mr Kenny gave evidence that he obtained a hard copy from the office at Tweed Heads. 165 Having regard to Mr Robinson's email of 25 April 2007 (see [183]), Mr Kenny's choice of the draft OFT Contract appears to be a result of Mr Robinson's request for a fixed price contract. Mr Kenny says he also prefers this type of contract because it is easier to administer: see [185] below. 166 Mr Robinson wrote to Mr Kenny on 21 March 2007 (copied to Mrs Robinson) (emphasis added): … I am struggling to see how we can make the 09APR07 start date given the current progress. In terms of the builder, he clearly needs to see the full and final drawing package before he can give a firm price. We all then need some time to review the draft contract. Until the contract is signed, we are loath to demolish the existing property as we have proven that there are (amazing though it is) willing tenants out there- please also note we unfortunately asked ours to vacate the property early last month. Although demolition will not take forever, we are still considering undertaking this scope ourselves (as previously advised) to reduce costs. Easter is not far away. Don't you agree that 09APR07 is a little optimistic? It would be good if you could e-mail attach the paperwork you previously mentioned even if only as blank pro formae. At least then we can get familiar with the material. We have asked many times that you copy BOTH of us on your correspondence- it really is very easy to add a second addressee in the "To" box of an e-mail and it makes life so much easier for us given I am often overseas. 167 Mr Robinson's email of 21 March 2007 indicates that he is focussed on receiving the builder's firm pricing after he has seen "full and final" drawings. He requests a pro forma document so he can familiarise himself with its terms. 168 Mr Robinson's email of 21 March 2007 and the email from Mrs Robinson at 9.49 am on 30 March 2007 (see [169(2)]) support Mr Robinson's evidence that the Robinsons contemplated renting the existing house if an acceptable contract could not be negotiated, and so resisted Mr Kenny's suggestion that the existing house on the Property should be demolished before then. 169 On 30 March 2007 there are two chains of emails as follows: (1) In response to a request for an update, Mr Kenny wrote to Mr Robinson on 30 March 2007 at 7.54 am (separately copied to Mrs Robinson) (emphasis added): Dear B&S We are very very close to finalising our drawings ready for signing contracts (thankfully), we should be finished early next week, depending on your feedback. Please keep in mind we are being as thorough as possible to carefully consider all your points (and there have been a few!) Any more minor adjustments I believe should be handled during construction from now on. We have checked with the Dept of Fair Trading and you cannot get or sign contracts over email direct from them. So, I have started manually filling out the contract. Once the builder is signed off I will scan & email to you to print, sign (if content), scan & email back to me. We (& the builder too) are still gearing up towards a building contract start date of 09.04.07. It would be good if the existing house could be demolished & site cleared sooner rather than later. However, we can wait for the contract if you prefer. (2) Mrs Robinson responded to the 7.54 am email at 9.49 am (emphasis added): Can you pls. scan and send the blank document ASAP (or provide a web link to where we can download the form). We would like to read this document carefully and thoughtfully before we sign. Then send the completed document once it is ready. In the mean time we are having power of attorney documents drawn up so my brother will be able to sign on Bruce's behalf. We are reluctant to demolish the existing house until we have at least sighted the finished contract. (should the job NOT proceed we still have rentable premises). (3) At 1.21 pm, Mr Kenny wrote to Mr Robinson in an email chain which appears to be responding to Mr Robinson's 21 March 2007 email (emphasis added): Don't worry the builder won't sign a contract until he is content with everything. Please confirm that there are no more changes and we will very quickly complete the documents and the contract for your assessment. Any more changes we can address during construction. I agree, I wish that this didn't take as long as it has, too. Any way I reckon we (& the builder) are almost there. Yes, I am the eternal optimist. I will try harder to remember to email to both you & Sarah every time, I promise. To be sure and certain, why don't you & Sarah forward on my emails to each other as well just in case. (4) At 4.23 pm, Mr Robinson wrote to Mr Kenny by email (copied to Mrs Robinson) (emphasis added): I am sure that is the case with the builder (as it shall be with us). I think you may be missing the point re the pro forma contract. We would simply like to familiarise ourselves with the blank forms so that when the completed documentation comes through, we at least have the framework understood. If you don't send it, contract signature by our party will take longer! Please keep us advised of developments! With regard to changes, we see no more other than for trim selection which of course can come later. Appreciating there have been some changes, I would like to think we have turned them around expeditiously and as professionally as amateurs possibly could. I'm in Europe again all next week so a progress report next Friday would give me comfort in these cold climes. (5) At 5.22 pm, Mr Kenny responded to Mr Robinson (emphasis added): As I have said in another email to Sarah, I have already started filling out the hard copy of the contract which I now plan to scan and email to you on Monday. I really do believe that a filled out contract will actually answer a lot of questions before having to ask them. Any way I'll keep doing what I think is best and time will tell. 170 Mr Robinson's comments on 21 March 2007 appear to have caused Mr Kenny to propose to revert to the course of getting the builder's "sign off" on the contract before sending it to Mr Robinson. In his 30 March 2007 email of 7.54 am Mr Kenny says: "So, I have started manually filling out the contract. Once the builder is signed off I will scan & email to you to print, sign (if content), scan & email back to me." 171 However, in light of the Robinsons' insistence on receiving a pro forma version of the contract so that they could familiarise themselves with it, and perhaps spurred by the Robinsons' comments about their reluctance to demolish the existing house and the possibility that they would not commit to the project, Mr Kenny says that he will provide a filled out contract on Monday (2 April 2007): see email of 30 March 2007 at 5.22 pm (at [169(5)]). This was before revised drawings were available for pricing by Mr Simpson, although it appears that revised drawings were imminent. 172 The reason Mr Kenny did not send the filled out draft OFT Contract to Mr Robinson is unexplained. 173 On 31 March 2007, Mr Kenny's office sent revised drawings to the Robinsons dated 29 March 2007. Mr Kenny says that the drawings show no significant changes from those dated 21 February 2007. 174 On 4 April 2007, Mrs Robinson sent to Mr Kenny a nine page list of comments on the drawings (but acknowledge that there were few remaining issues to be resolved). 175 On 10 April 2007, Mr Kenny's office sent to the Robinsons drawings dated 5 April 2007. These are the drawings which were used as the basis of the contract entered into on 10 May 2007. 176 On 12 April 2007, Mr Kenny advised Mr Robinson that the drawings had been sent to Simcorp "for his quotation review and for the preparation of the contract". 177 Mr Kenny sent the drawings to Mr Simpson under cover of a letter dated 13 April 2007. Mr Kenny says he gave Mr Simpson a copy of his specifications of 5 April 2007 at about the same time as he gave him the drawings. 178 It is common ground that Mr Simpson did not provide an updated estimate of construction cost based on Mr Kenny's drawings which were provided in February, March and April 2007. Mr Simpson says that the drawing changes did not "significantly reduce" the contract price.

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Email conversation 27 April 2007 at 5:31 pm and 7.07 pm and 30 April 2007 185 Commencing with an email sent by Mr Kenny on 27 April 2007 at 5:31 pm (shown as Kenny) which was addressed to the Robinsons, Mr Kenny and Mr Robinson corresponded about the draft HIA Contract and the draft OFT Contract. Mr Robinson's response at 7.07 pm on 27 April 2007 is marked as ROBINSON and in italics and Mr Kenny's response on 30 April 2007 is marked as KENNY and in bold. The underlining is in the original: Re. The contract Kenny: I do take some of your points re. the first (preferred by the builder, not preferred by me) cost plus contract option. ROBINSON: What is your preferred contract option? KENNY: I prefer to administer this latest fixed price Office of Fair Trading contract, as I am familiar with it & I believe it is more clearcut & easier to manage & to be seen to be managed fairly by all parties, i.e less chance of paranoia or suspicion kicking in. KENNY: However, I don't think that we have wasted months, we have spent an enormous amount of time & effort redocumenting & we have actually been able to get the price down by several hundred thousands of dollars! ROBINSON: Please explain. Alex Simpson's quote dated 19DEC06 (attached) was $1,300,000 on a cost plus contract (20%) and $1,400,000 on a fixed price basis. This was before the significant cost reducing exercise. You believed the changes in concrete alone would save $200,000 yet here we are with an 'estimated' (and it means nothing other than that) $100,000 'saving' on the cost plus version and $50,000 on the fixed price version. Where are the "several hundred thousands of dollars" to which you refer? KENNY: Please check out Simcorp's letter dated 19.12.06 & I draw your attention to the line "Inclusions & exclusions as per your tender letter". Then please also check out the letter sent to Simcorp (& the other builders) from my office dated 17.11.06 which has listed the items which were to be excluded from their tenders; i.e Electrical & gas fittings, appliances. Air con, lights, fans, fireplace etc, Sanitary ware, HWS & tanks, Tiles (which I realise are now part of your scope), soft & hard landscaping & fencing, Cabinetwork & built in furniture. All of these in my estimation could amount to several hundred thousands of dollars. All of these items are now in the latest quotes. ROBINSON: Arguably, we have gone backwards if you consider what is now in our scope. KENNY: I understand tiles, Stone cladding & demolition are now in your scope. Let me know if I have that wrong please. I don't think we have gone backwards if you consider that all these excluded items are now in. However, I am in the process of finding out what PC $ allowances are built into the 2 contract options, so that you can do some meaningful "now & then" cost analysis. I don't mean to be argumentative but I am sensing a bit of "shooting the messenger" derogatory energy directed at me lately. You seem to be often trying to be negative, for example commenting that we have wasted time & then trying to prove your point. Anyway, I'm not into scoring points, we are on the same team & I'll remain positive & keep on trying to do my best to make this happen for you. I might as well give the game away otherwise. KENNY: Also, I don't think that you should automatically discard the option of a cost plus type contract. With the right sort of incentives it can work very well for you, because you get the benefit of a motivated builder (who also has a good working relationship with the designer) trying to keep to the price. We did discuss this. ROBINSON: I know and if you read my e-mail I have said we may consider this as long as there is a cap. KENNY: The Simcorp cost plus option doesn't come with a cap option, I've already checked this out. ROBINSON: I will provide you with an incentive plan over the weekend. KENNY: OK, keep me posted, but it doesn't come with a cap so I thought it would be ruled out by you. KENNY: You know with a fixed price type contract the builder will always cover himself & if nothing goes wrong he gets to keep the "risk" money. ROBINSON: Of course. KENNY: OK. KENNY: Anyway, please find attached another contract option partially filled out for your perusal and comment. ROBINSON: Is this your work or Alex Simpson's? KENNY: What do you mean by this? ROBINSON: Please can you answer our queries re contract paper- I see we are now on Office of Fair Trading paper. KENNY: HIA has cost plus contract, Office of Fair Trading contract was my suggestion. KENNY: Please contact me at your earliest convenience with your suggestions, questions &/or to arrange to meet with your representative here if you want to move forward. 186 It is notable that although Mr Kenny provides the draft OFT Contract under cover of his 27 April 2007 5.31 pm email, the only virtue of a fixed price contract that he draws to Mr Robinson's attention is the fact that he prefers to administer it. The thrust of the exchange is to encourage Mr Robinson to keep an open mind about the cost-plus contract, stressing the benefits of a good relationship between the architect and builder. Mr Kenny says that he has already established with the builder that the builder will not cap the cost-plus contract; there is no statement about Mr Simpson's attitude to a fixed price contract. Mr Kenny draws to Mr Robinson's attention that, under a fixed price contract, the builder keeps the "risk" money, but he does not draw to Mr Robinson's attention the open ended nature of the risk in the draft HIA Contract.

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30 April 2007 email of 7.31 pm 187 The conversation continued with Mr Robinson's response on 30 April 2007 at 7:31 pm saying that the email correspondence was getting a bit messy and so he was starting afresh. This email attached the draft Reward Chart. The email provided as follows (as written): Firstly, please don't feel that we are being negative nor 'shooting the messenger'. We are simply trying to convey our messages from afar-naturally, it would be easier if we were just round the corner and could meet face to face more often. I think we are still keen to see a very successful outcome for all parties. The OFT contract would be fine. We are still interested in your views on what contract basis would be best to proceed (from an owner's perspective, not from an architect's administration perspective). Regarding the latest quotes, please bear in mind we have not seen any detail (the written scope that was attached to the construction drawings) and hence my question regarding scope. It sounds as though Simpson's quote is now effectively turnkey. On this, we just need to check that stonemasonry and tiling labour (including the pool) is included (we of course are free-issuing the material). Also is the pool plant included? I attach a proposed 'cost plus' incentive scheme which incorporates a risk/reward approach. Simpson can do very well if he keeps the total contract price low- he does ok if he exceeds our expectations; we need something like this if there is not to be a cap. I would appreciate your comments before you release it to Simpson. My question regarding the partially filled out contract was simply to establish whether it was partially filled out by you (as a proposal) or Simpson (as a proposal). … Please note that I shall be in Brisbane on Thursday 10th May and would be happy to drive down and sign the contract then if we can reach agreement. If it is not possible to agree terms before that date, we have arranged for my brother-in-law to be my power of attorney so no worries there. Finally, keep smiling … we are nearly there. 188 Mr Robinson's remark that "Simpson can do very well if he keeps the total contract price low- he does ok if he exceeds our expectations; we need something like this if there is not to be a cap" demonstrates two things. The first is that his "expectation" is now $1.2 million, since that is the level at which the builder's fee would be 20% under the Reward Chart. Second, Mr Robinson acknowledges that the Reward Chart does not create a cap. By his remark "we need something like this if there is not to be a cap", Mr Robinson accepts that the Reward Chart does not create a cap and is instead a strategy for minimising risk, designed to incentivise the builder to keep costs low.

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Reward Chart 189 The draft Reward Chart is the same as that attached to the Building Contract save for an asterisk which appears beside the number $1.2 million in the version attached to the Building Contract. The Reward Chart provides as follows: Total Contract Price Builder's Margin Builder's Margin Build Cost $k % $k $k 1100 25.0 220 880 1110 24.5 218 892 1120 24.0 217 903 1130 23.5 215 915 1140 23.0 213 927 1150 22.5 211 939 1160 22.0 209 951 1170 21.5 207 963 1180 21.0 205 975 1190 20.5 202 988 1200 20.0 200 1000 1210 19.5 197 1013 1220 19.0 195 1025 1230 18.5 192 1038 1240 19.0 189 1051 1250 17.5 186 1064 1260 17.0 183 1077 1270 16.5 180 1090 1280 16.0 177 1103 1290 15.5 173 1117 1300 15.0 170 1130 1310 14.5 166 1144 1320 14.0 162 1158 1330 13.5 158 1172 1340 13.0 154 1186 1350 12.5 150 1200

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Mr Robinson's reasons for considering cost-plus option and incentive scheme 191 Mr Robinson explained his reasons for considering the cost-plus option without a cap in his affidavit of 20 July 2011 at [21]: I started to consider a cost plus option when I saw that the draft fixed price contract (OFT) that Kenny had sent to me had a fixed price of $1,350,000, which was $150,000 higher than the cost plus estimate. I was especially aware of this difference because the quote and estimate that Kenny had given me in December 2006 (build cost of $1,300,00 or $1,400,000) were so vastly in excess of the $700,000 that Kenny had indicated to us in August 2004 would be the build cost and with which we had been to that point working. I was therefore very sensitive to the issue of price. (I did not know of any change that was made in the design of the house that would have explained the approximate doubling of the original $700,000 estimate.) Also, in starting to consider the cost-plus option, I began to be persuaded by Kenny's advice in his email of 30 April 2007 … that with a fixed-price type contract the builder will always cover himself and if nothing goes wrong he will keep the "risk" money. … 192 Technically, Mr Robinson first mentioned an incentive scheme in his email of 24 April 2007 in the context of only being willing to consider a cost-plus option with a cap, before he was given the draft OFT Contract, although he did issue the draft Reward Chart after the draft OFT Contract was given to him by Mr Kenny. 193 More importantly, none of the email correspondence from 19 December 2006 onwards reflects the process of reasoning based on $700,000 as a reference point. In my opinion, Mr Robinson's evidence or submissions based on the $700,000 reference point should not be given much weight, if any. That amount was, in fact, Mr Kenny's fee cap and it is lower than the initial estimates given by Mr Kenny in August 2004: see [44] above. There were at least four revisions of the design and specifications between August 2004 and April/May 2007. The first estimate in August 2004 may form part of the deep background, but it occurred at such a preliminary stage that I do not consider that it is part of the "whole conduct" which must be taken into account to determine whether any of the Representations or Relevant Conduct is misleading or deceptive. 194 In my view any causal linkage was broken by the tender process and the provision of the Simcorp Quote, and that is reflected in the fact that Mr Robinson used the Simcorp Quote as the reference point in the emails of 24-30 April 2007 and did not mention $700,000 at all. The email correspondence reflects the fact that Mr Robinson took the Simcorp Quote as the reference point from December 2006 and supports Mr Robinson's evidence in that regard. The price comparisons are on the basis of the "headline" numbers in the Simcorp Quote and the figures of $1.2 million in the draft HIA Contract and $1.35 million in the draft OFT Contract. 195 There are difficulties with this methodology. The figure of $1.2 million in the draft HIA Contract is the pivot of an incentive; it was not presented as an estimate which was directly comparable to the $1.3 million estimate in the Simcorp Quote. The figure in the draft OFT Contract is more directly comparable to the Simcorp Quote. This comparison does not take account of the difference in the scope of the Tender Invitations and the draft Contracts. It is clear from the 27 April 2007 email of 7.07 pm that Mr Robinson understood that the "several hundred thousands" of savings to which Mr Kenny referred were estimates. Mr Kenny was assiduous in pointing out that scope mattered to overall cost of the project in his email of 30 April 2007, and he invited Mr Robinson to do a "now and then" comparison of costs between the Simcorp Quote, based on the Tender Invitations, and the scope of the contracts being considered in April/May 2007. It appears that no request was ever made to quantify the "savings". 196 Having said that, these methodological difficulties primarily relate to assessment of total project cost. It is clear from the 27 April-30 April 2007 emails that Mr Robinson did, indeed, come to consider the incentive scheme seriously after he received the draft OFT Contract and Mr Kenny's advice that Mr Simpson would not accept a cost-plus contract with a cap. Mr Robinson fairly took the point in his 30 April 2007 email that the draft contracts were not accompanied with a detailed scope. The owner's scope was not agreed until the Special Condition was settled at the meeting on 10 May 2007. 197 All Mr Robinson was left with was the headline numbers in the draft Contracts, and it was those numbers which related to the builder's scope under those draft Contracts. Consequently, they are not an unfair comparison with the Simcorp Quote. The Simcorp Quote was not superseded by the re-drawing and re-specification process in Mr Robinson's mind, and he was not unreasonable in using the Quote as a frame of reference, given Mr Simpson's evidence that the process did not significantly reduce costs. 198 Insofar as Mr Robinson talks of being "persuaded" by Mr Kenny's advice concerning the builder keeping "risk money" under a fixed price contract, Mr Robinson gave evidence that he knew about this factor independently and the fact that this might operate to his advantage was a contributing factor in his proposing the Reward Chart and accepting a cost-plus contract without a cap. I accept that he drew comfort from what Mr Kenny. 199 Mr Robinson's evidence at [23] of his affidavit sworn in July 2011 is: One reason I started to consider using a cost plus contract without a cap (despite my initial rejection of the idea) is that I began to be persuaded by what Kenny said [sic in] his email of 27 April 2007 ("G") about the benefits of a cost plus contract in keeping costs down given the relationship between builder and architect. The other reason for starting to consider using a cost plus contract without a cap was that I had considered what Kenny told me in the email of 27 April 2007 that he had "spent an enormous amount of time and effort redocumenting and [had] been able to get the price down by several hundred thousands of dollars." I believed that the project had now been tightly defined, that a lot of research had occurred and the project was thoroughly "mature", and so I thought that the need for a cap had diminished. I thought that the chances of a blow-out were mitigated and the cost-plus price was unlikely to exceed the fixed price quote ($1,350,000). 200 In cross-examination, Mr Robertson explained what he meant by "mature": … it's an expression used in our industry. When we talk about the maturity of a particular business development case it means it's tight, that there's little risk. All the documentation is known. It's not based on assumption. It's based on known fact. 201 In oral evidence, Mr Robinson explained that as a consequence of these beliefs, he regarded the lack of a cap on the proposed cost-plus contract as technical only because $1.35 million was a "robust upper number" in light of the fixed price quote in the Simcorp Quote, all the work that had been done since the provision of that Quote and the provision of the draft OFT Contract with the figure of $1.35 million in it. He also had regard to the fact that one builder had offered two quotations (from which I infer Mr Robinson means both fixed price and cost-plus options), which he regarded as unusual according to industry practice. The fact that the builder had been working on the project for five or six months and was therefore very intimate with the project, and that the builder and architect had a good working relationship, were also persuasive. 202 Mr Robinson relied on his own knowledge, experience and judgement in assessing the effect of these factors on mitigating risk. In formulating the Reward Chart, he was motivated at least in part by the desire to keep the "risk" amount which a builder would incorporate into a fixed price. The mere fact that the builder's margin was calculated by reference to a range of $1.1 million to $1.35 million was not a promise or representation that that range would be achieved. While Mr Robinson might reasonably have regarded $1.35 million as a "robust upper number" it was not a cap, and he understood that he was considering entering into a cost-plus contract for which the builder had refused a cap. He also knew that he had not received a formal update to the Simcorp Quote, and he had expressed the view that the "savings" referred to by Mr Kenny were only estimates. 203 Mr Kenny gave evidence that he believed that the construction could be completed without variation for around $1.35 million (GST inclusive) and he accepted that he conveyed those views to Mr Robinson and he knew that Mr Robinson would rely on them. 204 Nevertheless, I accept Mr Kenny's evidence that he never told Mr Robinson that $1.35 million was a cap as the proposed contract was a cost-plus contract and he had no control over any changes to the design of the building which might be sought by the Robinsons. There is nothing in the email correspondence which indicates that Mr Kenny ever expressly represented to Mr Robinson that the drawings and specifications were "tight" or that there was "little risk". Mr Kenny's statement that "an enormous amount of time and effort re-documenting" had been spent to get the price down is not such a representation: that is Mr Robinson's own assessment. 205 Mr Robinson generally took account of rational factors in formulating the Reward Chart. Absent other factors, Mr Robinson would not be entitled to succeed in an action based on misleading or deceptive conduct by reason that his largely rational calculation did not have the result for which it was designed of sufficiently incentivising the builder to achieve a construction cost of less than around $1.35 million (including GST).

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Pricing: whose work? 209 The phrase "pricing & timing input" is ambiguous about what "pricing" means. The only "contract price" is in the draft OFT Contract. The draft HIA Contract, being a cost-plus contract, does not have "pricing". However, Mr Kenny adopted this language in response to the question about the draft OFT Contract: "[i]s this your work or Alex Simpson's?". In responding about both draft Contracts, he accepted Mr Robinson's usage which compares the estimate and quote in the Simcorp Quote with the figures in the draft HIA Contract ($1.2 million) and the draft OFT Contract ($1.35 million). 210 The phrase "pricing and timing input" is also ambiguous as to what "input" means: does it mean that Mr Simpson specified the figures to be inserted in the contracts (which would be more akin to providing an estimate), or that Mr Kenny formulated the "pricing" based on his understanding of conversations with Mr Simpson about reducing the construction price from the levels specified in the Simcorp Quote to meet Mr Robinson's desire to achieve a construction cost of $1.1 million? For the reasons that follow, I do not accept the first of these possibilities. 211 Neither of Mr Kenny or Mr Simpson gave evidence about the content of their discussions about price after 19 December 2006, other than one conversation relating to the need for specification and design change in early 2007 as a result of which Mr Kenny undertook to do new drawings. The only thing which is clear is that Mr Simpson did not provide an updated estimate from the Simcorp Quote; both of Messrs Simpson and Kenny gave that evidence. 212 Mr Simpson also says that Mr Kenny's drawings did not result in a significant price reduction. Based on the mid-point of the Experts' assessment of the tender sums on a cost-plus and fixed price basis as at December 2006 and May 2007 (see [13] above), I do not accept Mr Kenny's submission that I should treat Mr Simpson's evidence sceptically; it appears to be correct. 213 I regard as self-serving Mr Simpson's evidence that he believed that in April 2007 Mr Kenny understood that Mr Simpson believed that without additional significant design changes Mr Simpson would not be able to do the job for $1.4 million: T 221.27-30. While that understanding would be consistent with the Qualification, and neither Mr Kenny nor Mr Simpson has given evidence of a conversation about a specific price after 19 December 2006, I have found that Mr Simpson understood that the post December 2006 exercise of design and specification change in which he participated was targeted at a construction cost of $1.1 million. In that context, I do not consider that Mr Simpson's belief, if it existed, should be given weight. 214 In cross-examination, Mr Kenny professed to have believed in May 2007 that the works could be built for a construction cost of $1.1 million, subject to design change and the materials selected by Mr Robinson. Such a belief would only be sustainable or relevant if Mr Robinson demonstrated a willingness to go through a further exercise of design change. In an apparent effort to stem changes proposed by the Robinsons, Mr Kenny's 30 March 2007 emails at 169 and (3) say that "[a]ny more changes we can address during construction" and "[a]ny way, I reckon we (& the builder) are almost there". Those comments are not suggestive of the need for a further significant design exercise. There is no evidence that Mr Robinson understood that a significant new effort of design change would be required after 30 April 2007 to exceed "our expectation" of $1.2 million and achieve the 25% incentive builder's fee (as proposed in the Reward Chart), or that it would have been acceptable to him to embark on such an exercise. 215 As indicated at [203], Mr Kenny also gave evidence that he believed that the works could be built for around $1.35 million (GST inclusive) or less and that there were savings as a result of the price reduction exercise in which Mr Simpson participated, for instance, by reason of changing polished concrete to tiles. 216 The force of his evidence is that Mr Kenny's starting point of the cost reduction exercise was around $1.4 million, consistent with his evidence that he took the Qualification with a "grain of salt". Mr Kenny might, without deliberate lie, have said on 1 May 2007 that the "pricing" was Mr Simpson's "input" having regard to the Simcorp Quote and Mr Simpson's involvement in the cost reduction exercise and the savings Mr Kenny thought had been achieved. However, that would not amount to a price stipulation or estimate by Mr Simpson or the "firm price" that Mr Robinson referred to in his email of 21 March 2007 (at [166]).

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Draft HIA Contract - whose work? 217 I accept that Mr Simpson gave Mr Kenny a draft "HIA NSW Residential Building Contract for Works on a Cost Plus Basis" in the form of Exhibit AHS7 (AHS7). There is no evidence of when he did so, but AHS7 appears to be exactly the same document as Mr Kenny provided to Mr Robinson as an attachment to his email of 24 April 2007. 218 In the Defence, Mr Kenny says that the draft HIA Contract was partially filled out and initialled by Mr Simpson, but neither Mr Kenny nor Mr Simpson gave evidence about which parts were filled out by Mr Simpson. AHS7 bears Mr Simpson's initials and handwriting which appears to belong to more than one person. I accept that it was initialled by Mr Simpson, since those initials are on the Building Contract signed by Mr Simpson, but that is all. 219 I accept the evidence of the 1 May 2007 email that it was otherwise filled out by Mr Kenny and his secretary. As disclosed by the March 2007 emails, Mr Kenny took upon himself the role of documenting the building contract. 220 For reasons previously given, I do not accept that Mr Simpson provided Mr Kenny with advice which amounted to an estimate or a stipulation of "pricing" on the basis of which Mr Kenny completed the builder's fee in the draft HIA Contract. I would expect Mr Kenny to have deposed to that fact had it occurred. That Mr Simpson does not mention it in his evidence is explicable: it is inconsistent with his professed belief about construction cost. Except for that factor, the existence of the $1.2 million figure in the builder's fee would not have been a problem for Mr Simpson because the contract is cost-plus and because it was merely the pivot of an incentive payment. 221 By providing the draft HIA Contract with the builder's incentive fee in it and responding as he did in the 1 May 2007 email, Mr Kenny represented that Mr Simpson may be prepared to enter into a cost-plus contract with an incentive payment of the kind set out in it. I do not consider that this represented that a construction cost of about $1.2 million could or would be achieved.

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Draft OFT Contract - whose work? 222 Mr Kenny deposed that he obtained a form of fixed price contract from the Office of Fair Trading in Tweed Heads "for the purposes of providing Mr and Mrs Robinson with an example of a fixed price building contract". He admits that he wrote the figure of $1,350,000 in the "contract price" field. 223 Mr Kenny gave no other evidence in chief about how he came to write $1,350,000 in the contract price field (which is GST inclusive), nor was he cross-examined about it. Mr Kenny's Counsel did attempt to deal with the issue of whose work the $1,350,000 figure was in re-examination, but he did not pursue the issue in the face of objection: T 212.10-214.42. 224 Mr Simpson's evidence does not address the OFT Contract at all; Mr Simpson's affidavit sworn on 21 October 2011 simply confirms that Mr Simpson sent the draft HIA Contract to Mr Kenny; the next item is confirmation that he received the Reward Chart for his consideration. Mr Kenny did not give evidence that he provided the draft OFT Contract to Mr Simpson at any time. 225 The 24 April 2007 email indicates that the draft HIA Contract was preferred by the builder. I infer that this is the reason it was provided to Mr Robinson on 24 April 2007 and not the draft OFT Contract in accordance with Mr Robinson's preference and as contemplated by Mr Kenny in March 2007. 226 Mr Kenny's failure to send the filled out OFT Contract to Mr Robinson as promised in the 30 March 2007 at 5.22 pm email is consistent with waiting for pricing from Mr Simpson. It is also consistent with being told by Mr Simpson when he received the 5 April 2007 final drawings that Mr Simpson would not enter into a fixed price contract. Mr Kenny's 30 April 2007 email to Mr Robinson indicates that he has already checked that a cost-plus option with a cap is not available. Why would Mr Simpson entertain a fixed price option in that circumstance? 227 The fact that Mr Kenny sent Mr Robinson the draft OFT Contract after the draft HIA Contract is explicable in the context of Mr Robinson's 25 April 2007 email; it is consistent with Mr Kenny's desire to please and Mr Kenny's evidence that he gave the contract to the Robinsons "as an example of a fixed price contract". The email of 27 April 2007 under cover of which Mr Kenny sent the draft contract only says "[a]nyway, please find attached another contract option partially filled out for your perusal and comment". Having regard to the contents of Mr Kenny's 27 April 2007 email, and the March 2007 emails in which Mr Kenny refuses to send a pro forma contract, Mr Robinson's question of "[i]s this your work or Alex Simpson's?" is completely understandable. He is in effect asking whether the draft OFT Contract was an example of a fixed price contract filled out by Mr Kenny or if it was something the builder considered as an option. Mr Robinson clarifies the question in his 27 April 2007 response: is it your proposal or Mr Simpson's? 228 It is notable that the bulk of Mr Kenny's 27 April 2007 email is directed to persuading Mr Robinson to keep an open mind about the builder's preferred cost-plus option. I am not persuaded that Mr Simpson considered entering into a fixed price contract in April or May 2007. There is no evidence that he stipulated the figure of $1.35 million as a fixed price estimate or quote, or that he was even aware that Mr Kenny had provided the draft OFT Contract to Mr Robinson with $1.35 million in the "contract price" field. 229 Accordingly, I reject Mr Kenny's submission that the 1 May 2007 email establishes that the pricing in the draft OFT Contract is Mr Simpson's. The 1 May 2007 email is far too slight evidence to conclude that. The dearth of written material passing between Mr Simpson and Mr Kenny may be explained by the fact that they communicated by telephone and at meetings. I would expect Mr Kenny to have provided more fulsome evidence of the substance of conversations with Mr Simpson about pricing than he did if it would have been helpful to him. 230 It was open to Mr Kenny to say in the 1 May 2007 email that the draft OFT Contract was an example of the option prepared by him. By providing the draft OFT Contract and responding as he did, Mr Kenny represented to Mr Robinson that Mr Simpson might be prepared to enter into a fixed price contract and gave credibility to $1.35 million (GST inclusive) as an achievable construction cost within the builder's scope. I will deal with whether that belief was reasonably held later in these reasons.

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7 May 2007 emails 231 On 7 May 2007, Mr Kenny responded to Mr Robinson's email of 30 April 2007 by interspersing commentary. Mr Kenny's response appears in italicised bold. The email is otherwise as written: Dear B&S … The OFT contract would be fine. We are still interested in your views on what contract basis would be best to proceed (from an owner's perspective, not from an architect's administration perspective). I think that a well managed cost plus type contract with an architect who has a good rapore with the builder can be the best for the owner as long as there is a transparent costing system and a true incentive scheme in place. I am just about to build a house & I am going to go cost plus. Regarding the latest quotes, please bear in mind we have not seen any detail (the written scope that was attached to the construction drawings) and hence my question regarding scope. It sounds as though Simpson's quote is now effectively turnkey. Yes, it is understood that you guys are arranging for and paying for the demolition & clearing of the site, capping of services, supplying of all stone and tiles. Otherwise the builder has everything else allowed for in the quotation. On this, we just need to check that stonemasonry and tiling labour (including the pool) is included (we of course are free-issuing the material). Also is the pool plant included? Yes I attach a proposed 'cost plus' incentive scheme which incorporates a risk/reward approach. Simpson can do very well if he keeps the total contract price low- he does ok if he exceeds our expectations; we need something like this if there is not to be a cap. I would appreciate your comments before you release it to Simpson. I think this is well done and reasonable. I will give to Alex on your go ahead. My question regarding the partially filled out contract was simply to establish whether it was partially filled out by you (as a proposal) or Simpson (as a proposal). … Please note that I shall be in Brisbane on Thursday 10th May and would be happy to drive down and sign the contract then if we can reach agreement. If it is not possible to agree terms before that date, we have arranged for my brother-in-law to be my power of attorney so no worries there.] Do you want to meet this Thurs. I think it would be a great way of sorting out a bunch of stuff, you can eyeball Alex & potentially sign up & get started. 232 Mr Robinson responded later in the day of 7 May 2007: Please put the risk/reward cost plus scheme to Alex. I'll be at the Kingscliff office at 13:00 this Thursday. It would be good if we could have all the contract details ready to go for the meeting (ie a cost plus option and fixed price option). I am in a refinery today so cannot have mobile. I will try you again tomorrow!!! 233 Mr Kenny responded the same day: Booked in. me & you @ 1:00 on Thurs @ my office. Then me, you and Alex @ 2:00 @ my office.

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Mr Simpson's reaction to the Reward Chart 234 Mr Simpson and Mr Kenny gave evidence that they discussed the Reward Chart in almost precisely the same terms (the difference being "Fine by me" instead of "It's fine"). In his affidavit sworn on 26 October 2011 at [94], Mr Kenny recounts the conversation as follows: Me: "What's your view of Mr Robinson's incentive scheme?" Mr Simpson: "Fine by me. How did he come up with it?" Me: "It's what he does at work. Do you want any changes?" Mr Simpson: "No." 235 Given Mr Simpson's insistence that it was his view that the works could not be completed for $1.35 million (GST inclusive) and that Mr Kenny understood that Mr Simpson thought the works could not be completed for $1.4 million without significant design changes, Mr Simpson's ready acceptance of the Reward Chart is surprising. 236 By accepting the Reward Chart as the basis of his fee, Mr Simpson was accepting a risk to his fee; he was not accepting a risk that he would have to fund construction costs in excess of $1.35 million (GST inclusive), since the draft HIA Contract is a cost-plus contract. It is the incentive which "fine by me" endorses. Having said this, it would be reasonable for both Mr Kenny and Mr Robinson to take comfort from the fact that Mr Simpson was willing to accept the Reward Chart since it is consistent with Mr Simpson holding the belief that construction of the works could be achieved within the range proposed by the Reward Chart, although his statement of "fine by me" is not a representation to that effect. 237 There is no evidence of how great a value (if any) Mr Simpson put on the incentive. The Simcorp Quote and both draft Contracts pitched the builder's fee at 20%. By accepting the Reward Chart, Mr Simpson was running the risk of a substantially lower fee as costs exceeded $1.2 million, falling to 12.5% at $1.35 million. No evidence was presented about what Mr Simpson's usual fee was, and it was open to him to interpret the Reward Chart as there being a fee of 12.5% for all construction costs exceeding $1.35 million.

[63]

Building Contract 240 Mr Robinson decided that he would proceed with a cost-plus contract with Mr Simpson if terms could be agreed: T 88.35. Mr Robinson saw the purpose of the meeting on 10 May 2007 as being to see if he would proceed with Mr Simpson on a cost-plus basis, not whether he would proceed with the project per se: T 95.46-96.2. The draft OFT Contract was not tabled or considered at the meeting despite the reference to it in Mr Robinson's 7 May 2007 email. 241 The Building Contract was executed at the meeting between Mr Robinson, Mr Kenny and Mr Simpson on 10 May 2007. Relevantly, it contained the following additions: a. The checklist for owners entering building contracts is completed and signed by Mr Robinson; b. The builder's margin on page 1 has been amended to say "see Reward Chart 10.05.07 (attached)"; c. An amendment to the Builder's Fee in Schedule 3. The notation that the fee was "20% … + a set amount of _____ if the total contract price results in less than $1.2 million" was struck out and the words "see Cost Plus Reward Chart dated 10.05.07" were inserted. d. A Reward Chart (labelled "Cost Plus Reward Chart") which is in the same form as that attached to Mr Robinson's email of 30 April 2007 at 7.31 pm, save that there is an asterisk marked next to 1200 and it is dated 10 May 2007, was added. e. The field for "Special Conditions" on page 6 was completed as follows, and I will refer to this item as the Special Condition: PC's TO KEEP BUDGET @ $1.2M & NOT AFFECT MARGIN - WINDOWS & DOORS W1.1,1.5, 1.4 & 1.22 & W2.22 $15K - LIGHT & FAN FIXTURES $15K - POOL BARSTOOL X 4 $ 5K - SANITARY WARE (ONE BATH SUPPLIED BY OWNERS) $20K PROVISIONAL SUM - $40/M2 TILE LABOUR - S/SHELL SCREENS EXCLUDED FROM "REWARD CHART" - OWNERS TO SUPPLY STONE & TILES & DEMOLITION & SITE CLEARANCE; and f. The field for the name of the owner's agent was completed on page 25. 242 In his affidavit sworn on 13 August 2012 at [9], Mr Kenny explained PC items as follows: "PC's" refer to "Prime Costs". A "Prime Costs" item is an item that, at the time of the contract, is not selected but is to be selected by the owner. It is my handwriting that appears throughout the contract. This special condition was a requirement of Mr Simpson, the builder. My recollection is that the special condition was an expression of the desire of the builder to exclude the Prime Costs items from any costs so as to preserve the incentive built into the contract at the suggestion of Mr Robinson.

[64]

Meetings between Mr Robinson, Mr Kenny and Mr Simpson 243 Mr Simpson and Mr Kenny deposed in their October 2011 affidavits to two meetings with Mr Robinson in addition to the meeting on 10 May 2007 at which the Building Contract was signed. Both initially placed them in the time before Mr Simpson gave Mr Kenny the draft HIA Contract. Mr Robinson denied that any meetings occurred with Mr Simpson before 10 May 2007. 244 In August 2012, Mr Kenny and Mr Simpson swore further affidavits. Mr Kenny said that Mr Simpson met with Mr Robinson on at least two occasions in his presence, one on 10 May 2007 and another a few days to either side of that date. Mr Simpson said that there was more than one meeting; he remembers two, one at Mr Kenny's office on 10 May 2007 and another at the Property. He says there may have been a third. In cross-examination, Mr Kenny ultimately accepted that on 10 May 2007 there was a meeting in his office and the visit to the Property may have happened on the same day. It appears that Mr Simpson may also ultimately have accepted that the meetings may all have occurred on 10 May 2007: T 243.35-36. 245 I find that Mr Simpson met with Mr Robinson and Mr Kenny for the first time on 10 May 2007, followed on the same day by a meeting at the Property, as deposed by Mr Robinson. This is because I accept that Mr Robinson was not in Australia in the first half of 2007 before 9 May and he was in northern New South Wales for only a brief period on 10 May 2007. His travel records support this. There would have been no need for Mr Kenny to refresh Mr Robinson's memory about Mr Simpson in his email of 24 April 2007 (see [180]), or to comment on the opportunity for Mr Robinson to "eyeball" Mr Simpson on 10 May 2007, as mentioned in Mr Kenny's email of 7 May 2007 (see [231]), if earlier meetings had taken place. 246 I will therefore consider the evidence given by Mr Simpson and Mr Kenny about what was said at the alleged meetings in the context of the 10 May 2007 meeting.

[70]

Discussion of contract forms and statements about need for specification change 259 There is an equal, and opposite, problem with the evidence given by Mr Robinson and Messrs Kenny and Simpson in relation to what, if anything, was said about the need for further changes to the specifications to achieve a price between $1.2 million and $1.3 million. 260 Messrs Kenny and Simpson's affidavit evidence is in exactly the same terms about what they say Mr Simpson said. Even though their evidence is similar on other issues, it sometimes diverges, at times critically, for instance in relation to the Qualification. On this issue, the evidence of Messrs Simpson and Kenny serves both of their interests: it is an important issue because it goes some way to addressing Mr Kenny's failure to pass on the Qualification to Mr Robinson. 261 Mr Robinson's evidence "I don't think - well, for sure they would not have been said" is not strong on this issue, and his apparent lack of memory of conversation at the meeting is problematic. However, in his 25 April 2007 email Mr Robinson complained of the builder not being prepared to estimate the building cost accurately after "having spent many months working with you [Mr Kenny] to refine the drawings/specifications to such tight definition". His perception that the specification was "tight" was one of Mr Robinson's reasons for proposing the Reward Chart: see [199]-[200] above. 262 In light of this, it might be surprising to Mr Robinson that the builder would speak of the need for further specification change, and it might be expected that Mr Robinson would recall it if it did happen. 263 Having said that, it is not inherently improbable that Mr Simpson would make a remark about the need for further specification change (that is, concerning the selection of materials by the Robinsons) to keep the cost of what he would be responsible for between $1.2 and $1.3 million dollars. 264 The objective of the specification and design change after the 19 December 2006 meeting between Messrs Robinson and Kenny had been to achieve a cost of $1.1 million and Mr Simpson had participated in that effort. Mr Robinson had been told by Mr Kenny, most probably not long before the meeting, that Mr Simpson would not agree to a fixed price contract for $1.35 million. It is improbable that it would not have been the subject of any discussion at the first meeting between Mr Robinson and Mr Simpson, even though Mr Robinson denies that the fixed price contract was mentioned. It is probable, and even likely, that discussion of Mr Simpson's refusal to enter into a fixed price contract would have elicited comments about why Mr Simpson prefers cost-plus over fixed price contracts where an owner wishes to provide some materials, as suggested by Messrs Kenny and Simpson. I accept that the Reward Chart was discussed, notwithstanding that Mr Kenny had done as Mr Robinson asked and referred it to Mr Simpson for comment before the meeting. 265 One of Mr Robinson's rare memories of a conversation appears to fit with this general context. Mr Robinson deposed in his affidavit of 20 July 2011 at [27]-[29] as follows: 27. During the meeting, Kenny put on the table the partially completed draft cost plus contract but did not table the fixed price contract. Nor did he mention it. I said at this point words to the effect "I will only consider a cost plus contract if the risk reward scheme that I sent through is included." 28. At that point Kenny, said words to the effect, "Bruce, just take us through the risk-reward scheme again." In the course of my explanation, I said words to the effect "The upper limit ($1,350,000) is based on the fixed price as Brian sent it through to me. The lower limit ($1,100,000) is based on what Brian has told me is the price you should be able to achieve. The amount of $1,200,000 is the target price based on the draft contract. If you go below the target price you increase the dollar value of your fees. If you go over that, the dollar value of your fees diminishes. In effect, if [you] save me $250,000, you get a bonus of $70,000." 29. Both Kenny and Simpson seemed to accept this explanation and said "That's fine. That can go in the contract." 266 In cross-examination, Mr Robinson retreated from the view that Mr Kenny had kept telling him that $1.1 million was achievable and he said his memory relied on emails. At [149] and [157] I have traced the usage of language and it is plain that Mr Kenny had stopped referring to $1.1 million by January 2007 and began to use the terminology of "on budget". He used the term "on budget" for the last time on 13 March 2007. I consider that all of the parties understood the reference to $1.1 million as being the target in December. The "expectation" was a cost of $1.2 million according to the 30 April 2007 email from Mr Robinson. Although Mr Kenny was extensively cross-examined about his belief about whether $1.1 million was achievable, I consider that Mr Robinson's reconstructed memory over-emphasised this December 2006 target. I also take nothing from the fact that on 18 May 2007 Mr Kenny completed the "contract price" field in the Buildit (building certifier) and insurance paperwork with $1.1 million: there is no "contract price" in a cost-plus contract and I accept that Mr Kenny's motive was to save Mr Robinson money. 267 As to the rest of Mr Robinson's explanation, I accept that Mr Robinson relied on the figures in the draft HIA Contract and the draft OFT Contract in formulating the Reward Chart and that this was obvious to Mr Kenny. While Mr Simpson acknowledged that he knew that Mr Robinson wanted to achieve a build cost of $1.35 million (GST inclusive) or less, it is not clear that he knew of the existence of the draft OFT Contract. 268 Further specification change and the achievement of the incentive in the Reward Chart are complementary issues. Both Mr Simpson and Mr Kenny gave evidence of the "game" played by builders in giving warnings such as that referred to at [263], which are designed to curb an owner's enthusiasm for change during construction. It is not difficult to accept that Mr Simpson might have said something about the need for specification change in response to Mr Robinson's explanation of the Reward Chart. The inclusion of the Special Condition is a related issue because it specifically addresses the impact of the PC items on the builder's margin, and it is likely that the issues would bleed into each other in discussion. 269 There was a significant incentive under the Reward Chart to achieve $1.2 million or less with the builder's fee reaching up to 25% at $1.1 million. It was not in Mr Simpson's interest that the costs he was responsible for should reach $1.35 million because the builder's fee is 12.5% at that point. Any remark made by Mr Simpson about the need for changes to choices of materials and the like might be forgotten because it is consistent with the builder's desire to maximise the incentive payment, which was also Mr Robinson's objective. Mr Robinson seems to have a better memory of the things he said than of things said to him. 270 Although there is reason for concern about the fact that Messrs Simpson and Kenny's evidence on this point is exactly the same, I accept it because it was in Mr Simpson's interest, at his first meeting with Mr Robinson, to encourage Mr Robinson to be modest in his selection of materials (to the extent to which they did not fall within the Special Condition) so that Mr Simpson could maximise his fee.

[71]

Disposition of Builder Communications Representation Claim 271 Mr Robinson must fail in relation to the Builder Communications Representation claims as pleaded. 272 Mr Robinson gave evidence at T 100.22-33 that Mr Kenny told him that Mr Simpson would not enter into a fixed price contract for $1.35 million (GST inclusive) before he signed the Building Contract. Absent other factors, any inference Mr Robinson might have otherwise drawn about Mr Simpson's willingness to enter into or fulfil such a contract arising out of Mr Kenny's email of 27 April 2007 at 5.31 pm with the attached draft OFT Contract was corrected because Mr Simpson refused to do so. 273 I do not accept that the fact that Mr Kenny provided a copy of the draft HIA Contract to Mr Robinson with a builder's fee with an incentive payment at the level of $1.2 million, or the inclusion of the Special Condition, created an actionable representation as pleaded. The Special Condition simply helped to preserve the builder's incentive against Mr Robinson's choices in relation to PC items. The draft HIA Contract with a builder's fee of 20% and an incentive if costs are less than $1.2 million does not represent that the builder will or could achieve that cost, or that the builder had made a communication to that effect. 274 Absent other factors, I do not consider that any impression Mr Robinson had of a belief held by Mr Kenny would have amounted to an actionable representation in the face of Mr Robinson's understanding of the risks associated with cost-plus and fixed price contracts and his knowing assumption of that risk. Mr Robinson's effort to mitigate or manage risk by means of the Reward Chart does not change that opinion. 275 As indicated previously, I accept Mr Kenny's evidence that he never told Mr Robinson that $1.35 million was a cap, as the proposed contract was a cost-plus contract and Mr Kenny had no control over any changes to the design of the building which might be sought by the Robinsons. 276 I do not consider that Mr Kenny's comments that the Reward Chart was "well done and reasonable" or "that's fine, that can go in the contract" give rise to an actionable expectation by Mr Robinson that the risks associated with a cost-plus contract would not be realised and costs within the builder's scope would not exceed either $1.2 million or $1.35 million (GST inclusive). Those remarks are simply an endorsement of the Reward Chart as an incentive designed to keep costs low.

[72]

Disposition of Building Cost Representation Claim 277 Having regard to my findings, I am satisfied that Mr Robinson has established that Mr Kenny, and through him ABK, engaged in the Relevant Conduct pleaded in s 29E of the 6FASOC in all material respects. In particular, Mr Kenny's conduct of (1) having sent the draft OFT Contract to Mr Robinson partially filled out with the contract price of $1.35 million (GST inclusive) and then responding in the way that he did in the 1 May 2007 email to the question "[i]s this your work or Alex Simpson's?"; (2) not conveying the Qualification to Mr Robinson in circumstances in which Mr Robinson could reasonably have expected him to do so; and (3) encouraging Mr Robinson to consider and adopt a cost-plus contract without advising him of the Qualification in circumstances where Mr Simpson had not provided a new estimate; singly and cumulatively led Mr Robinson into error. 278 I am satisfied that this conduct, viewed as a whole, had a tendency to lead Mr Robinson into the erroneous view that if Simcorp built the works on a cost-plus basis with a builder's margin in accordance with the Reward Chart, the likely cost of the works within the builder's scope would (without variation) be less than $1.35 million (inclusive of GST) or marginally more than that amount. This is the essence of the "implied representation" pleaded at [29F] of the 6FASOC. The existence of an "implied representation" is an odd pleading, although Mr Kenny took no issue with its form; he simply denied that paragraph and the pleading in [29H] that there was no reasonable basis for it. It is difficult to see why it was necessary to plead an implied representation at all as s 52 of the Trade Practices Act and its analogue turn on the characterisation of "conduct" and not only representations. Since it was the Relevant Conduct which had the capacity to lead Mr Robinson into error and that was the heart of how the pleaded case was run, I accept that the oddity of the pleading should not prevent Mr Robinson succeeding in this claim. 279 I accept that Mr Kenny genuinely believed that the works could be built without variation for a construction cost within the builder's scope of around $1.35 million (GST inclusive): see [215] above. However, there is no evidence that Mr Kenny had a reasonable basis for this view. There is no evidence that Mr Simpson ever said to Mr Kenny words to that effect or suggested to Mr Kenny that he should complete the draft OFT Contract with the contract price of $1.35 million (GST inclusive). Neither Mr Kenny nor Mr Simpson gave that evidence and I do not accept that the 1 May 2007 email fills that evidentiary gap. 280 While there are issues of credibility concerning Mr Simpson's actual belief about the likely construction cost, the evidence Mr Simpson did give does not support Mr Kenny's belief, nor does the assessment of the Experts of the fixed price tender cost in May 2007. The Experts' findings were that a fixed price tender sum in May 2007 would have been $1,826,619 (Mr Davies) or $1,609,669 (Mr Makin) with a mid-point of $1,718,144. 281 Although both Mr Simpson and Mr Kenny gave evidence that they had conversations about contract price, neither gave evidence which was specific about amounts or the time at which the conversations were held, except for the conversation on 19 December 2006. Even if Mr Kenny held that belief because of inferences drawn from conversations with Mr Simpson during the cost reduction exercise in which Mr Simpson participated, I do not consider that Mr Kenny had a reasonable basis for that belief in the absence of a revised estimate from Mr Simpson or a stipulation of the "pricing" to be included in the draft Contracts. All Mr Kenny had on 10 May 2007 was the Simcorp Quote, the unretracted Qualification, the knowledge of a cost reduction exercise which Mr Simpson says did not significantly reduce cost, and the fact that Mr Simpson had said "it's fine" to the Reward Chart. 282 The course of correspondence from February 2007 through to May 2007 would lead the intended reader, Mr Robinson, to believe that Mr Kenny was relying for pricing on Mr Simpson. In saying this, I recognise that the scope of the Building Contract was not settled until 10 May 2007 at the meeting at which it was signed. However, the elements which were settled at the meeting did not change the headline prices on the basis of which Mr Robinson was, to Mr Kenny's knowledge, making assessments as between the Simcorp Quote and the draft Contracts. 283 Mr Kenny's evidence was that "I didn't provide builder's estimates. I'm not a builder. I'm the messenger": T 146.33-34. I accept that this is Mr Kenny's belief, but I do not accept that it is borne out by the evidence. For reasons given in relation to the email of 1 May 2007, I do not accept that Mr Simpson stipulated the "pricing" in the draft Contracts or that Mr Simpson even knew that Mr Kenny had provided the draft OFT Contract to Mr Robinson. Mr Kenny also derogated from the builder's estimate in the Simcorp Quote by failing to convey the Qualification; he asserted his own judgement in the manner in which he conveyed the estimate and quote. Whatever Mr Kenny's belief about the construction price which could be achieved based on the Simcorp Quote and his assessment of the price reduction exercise which had been undertaken, I consider that his response in the 1 May 2007 email to Mr Robinson's question had the capacity to lead Mr Robinson into error as to the provenance of $1.35 million as a fixed price quote and therefore as to its soundness. 284 Mr Robinson would, on Mr Kenny's evidence, be entitled to believe that Mr Kenny adopted the "pricing". Mr Kenny accepted in cross-examination that he intended to convey the impression to Mr Robinson that he believed that the works could be constructed for a price of around $1.35 million (GST inclusive) and that he knew Mr Robinson would rely on that belief. Even if a "mere conduit" argument were otherwise open to Mr Kenny, Mr Kenny did not take any action to disclaim reliance by Mr Robinson on Mr Kenny's adoption of this "pricing". 285 The only estimate provided by Mr Simpson was the Simcorp Quote. Mr Kenny did not convey the Qualification to Mr Robinson. Consequently, it is not open to him to make the argument that he was a "mere conduit" in relation to that information: a conduit must be faithful in transmitting the message. The fact that Mr Kenny took the Qualification "with a grain of salt" does not matter: the essence of the characterisation of a conduit is that the conduit does not edit the message on the basis of independent assessment as to its validity and without telling the person to whom the message is conveyed that this is what they have done. 286 I accept Mr Robinson's evidence that if Mr Simpson (or anyone else) had informed him that the works could not be built for a fixed price of $1.35 million "or marginally more" he would have abandoned the plan to build the house. I accept that this was for reasons of absolute cost and concerns Mr Robinson had about overcapitalisation in the Tweed Heads area. Mr Robinson gave somewhat flippant evidence in cross-examination that by "or marginally more" he meant 10 cents or so. I take him to mean around $1.4 million as that was his "walk away" price, and he referred in evidence to the $50,000 difference between the fixed price Simcorp Quote and the $1.35 million contract price in the draft OFT Contract as a marginal difference. 287 Having regard to the Relevant Conduct as found, my view is not altered by the fact that Mr Robinson knew, before he signed the Building Contract, that Mr Simpson had not provided a formal re-estimate from the fixed quote of $1.4 million in the Simcorp Quote and that Mr Simpson would not agree in May 2007 to a fixed price contract for $1.35 million (GST inclusive). It is the weight of the Relevant Conduct which makes out the implied representation pleaded; it is immaterial whether the figures in the Contracts are characterised as estimates or not. Nor does the fact that I have accepted that Mr Robinson may have been told on 10 May 2007 that there was a need for specification change (that is, concerning the materials to be selected) to meet a budget of $1.2 million to $1.3 million; that is not a "variation". Without knowledge of the Qualification, Mr Robinson was not in a position to assess his risk about the extent of the need for design change or re-specification. 288 Further, in his July 2011 affidavit Mr Robinson deposed that had Mr Kenny not given him the advice he did in his emails (in particular, his emails dated 27 April, 30 April and 7 May 2007), Mr Robinson would not have entered a cost-plus contract for the project, not even one which incorporated the Reward Chart. Mr Robinson said that he was influenced by the advice that a cost-plus contract incorporating a reward chart "would be effective in keeping costs down" as well as the factors referred to at [191] and [199]. While this overstates Mr Kenny's advice in the 27 April 2007 5.31 pm email, in his 24 April-30 April 2007 emails Mr Kenny states a preference for a fixed price contract while drawing to Mr Robinson's attention the possible benefits of a cost-plus contract structured around an incentive regime. 289 Mr Kenny pleaded at [30] of his Defence that the Robinsons "advised" Mr Kenny "that they required a contract for works on a cost plus basis" on a range of bases, most of which were not seriously prosecuted in the conduct of the case. I accept that Mr Robinson did propose the Reward Chart when he saw the $1.35 million contract price in a fixed price contract and that he wished to retain the "risk" amount built into a fixed price. However, I do not accept that the cost-plus contract was Mr Robinson's initiative based on a desire for flexibility, including the flexibility as to the time at which he started or stopped construction. 290 Against the background of Mr Kenny's encouragement to consider a cost-plus contract in his 27-30 April 2007 emails, Mr Robinson's original request for a fixed price contract, Mr Robinson's question about whose work the draft OFT Contract was and (most importantly) Mr Robinson's specific request for advice from Mr Kenny about the appropriate choice of contract from the owner's perspective, Mr Kenny's advice in his 7 May 2007 email was: "I think that a well managed cost plus type contract with an architect who has a good rapore [sic] with the builder can be the best for the owner as long as there is a transparent costing system and a true incentive scheme in place. I am just about to build a house & I am going to go cost plus." 291 Accepting that Mr Kenny believed what he said, he would only be right if all went well. The response is inadequate against the factors I have listed. Even though Mr Kenny had previously expressed a first preference for a fixed price contract, his advice in support of a fixed price contract was tepid at best. Mr Kenny's statement that he intended to use a cost-plus contract himself has the character of advocacy for that option rather than the provision of disinterested advice. Mr Kenny was an advocate for a cost-plus contract, most probably because Mr Simpson was not willing to contemplate a cap on Mr Robinson's responsibility for cost-blow out, whether as a fixed price contract or as a cap on a cost-plus option. 292 Mr Kenny's advocacy for a cost-plus contract with an incentive scheme and the lack of warning of possible adverse consequences in Mr Kenny's advice in the 7 May 2007 email plainly has the capacity to lead Mr Robinson into error having regard to the fact that Mr Robinson did not know of the Qualification. It is a circumstance in which Mr Robinson had a reasonable expectation that Mr Kenny would have told him of the Qualification and given him balanced advice concerning his choice between contract options. 293 It is not an answer to Mr Robinson's pleaded case that the Simcorp Quote or the figures in the Contracts are merely estimates. The $1.35 million figure in the draft OFT Contract was presented to Mr Robinson by Mr Kenny as a fixed price option; it was not presented as an estimate, albeit that it was part of a pre-contractual negotiation. I am not satisfied that Mr Kenny had a basis for suggesting that amount because of firm advice from Mr Simpson that he would or might be willing to enter into a fixed price contract at that price. Mr Kenny was aware that Mr Robinson was relying on the "contract price" in the draft OFT Contract in constructing the Reward Chart. Mr Kenny knew that Mr Robinson was relying on him for his view about price, and this became more important when Mr Simpson refused to enter into a fixed price contract. Mr Kenny encouraged Mr Robinson to choose a cost-plus contract without a cap with only the Reward Chart as a strategy to incentivise the builder to minimise cost. There is no evidence that Mr Kenny ever advised Mr Robinson that there was or might be a material risk to the achievement of a price of $1.35 million (GST inclusive) or less. 294 It is not an answer that Mr Robinson knows the difference between cost-plus and fixed price contracts. He did not have the same quality of information as Mr Kenny and he would reasonably have expected Mr Kenny not to remain silent about the Qualification and any other relevant factors in responding to Mr Robinson's request for Mr Kenny's advice about contract options from the owner's viewpoint. 295 Mr Robinson thought that the high point of the cost reduction exercise was the $1.4 million fixed price quote in the Simcorp Quote. While Mr Kenny also believed that, he knew that the builder had said that that price could not be achieved without specification and design change. Without being informed of the Qualification, no matter how diligent or careful Mr Robinson was in applying his knowledge and experience to the known information when he was assessing the risk he was undertaking, Mr Robinson was put at heightened risk of error, such as his belief that $1.35 million was a "robust upper figure". He also could not adequately evaluate the degree of difficulty when advised by Mr Simpson on 10 May 2007 that specification changes would be required to meet a target price of $1.2-$1.3 million. 296 It is also not the case, as submitted by Mr Kenny, that the causal link between the Simcorp Quote and the decision to enter into the Building Contract was broken by the specification and design changes undertaken between December 2006 and April 2007 so that the Qualification ceased to be relevant. Mr Robinson was, in fact, making decisions by reference to the Simcorp Quote to the knowledge of Mr Kenny. For the reasons at [194]-[197] above, the estimate and quote in the Simcorp Quote were a relevant comparison to the "pricing" in the draft Contracts and Mr Simpson did not consider that the re-design and re-specification process resulted in significant reduction in the contract price. Mr Simpson's view is supported by the findings of estimated construction costs by the Experts: see [13] above which expresses the midpoint of those findings. 297 For similar reasons to those expressed at [236], I do not consider that Mr Kenny's remark that the Reward Chart is "well done and reasonable" in the 7 May 2007 email or his "[t]hat's fine, that can go in the contract" at the 10 May 2007 meeting do anything more than endorse the Reward Chart as a scheme designed to incentivise the builder to keep costs low in a context where Mr Robinson has indicated that he understands that there will be no cap on the draft HIA Contract. I do not accept that the range in the Reward Chart devised by Mr Robinson operated as a representation that the range would not be exceeded. 298 The Relevant Conduct and the implied Building Cost Representation constitute misleading or deceptive conduct or conduct which is likely to mislead or deceive Mr Robinson within s 52 of the Trade Practices Act and s 42 of the Fair Trading Act.

[73]

Mr Robinson's loss 299 I accept Mr Robinson's submission that neither of Counterfactuals A or B set out at [22] above can apply to the assessment of Mr Robinson's loss as a result of his reliance on the Tender Representations and the Building Cost Representation. Mr Robinson's evidence was that Mr Kenny told him before he signed the Building Contract that Mr Simpson would not enter into a fixed price contract for $1.35 million (GST inclusive), so Counterfactual A has no application. The Experts' findings were that a fixed price tender sum in May 2007 would have been $1,826,619 (Mr Davies) or $1,609,669 (Mr Makin) with a mid-point of $1,718,144, so it is unlikely to have been possible for Mr Robinson to find a builder who would agree a fixed price contract for $1.35 million (GST inclusive); accordingly Counterfactual B has no application. 300 I have accepted that if Mr Robinson became aware of the Qualification or of the unorthodoxy of the tender process in April/May 2007, or if he had been told that the works could not be built for $1.35 million (GST inclusive) or marginally more, or if he could not find a builder who would build the works for a fixed price of about $1.35 million, he would not have proceeded with the project at that time and he would have rented the existing property. Accordingly, Counterfactual C is appropriate in relation to both the Tender Representation and Building Cost Representation Claims. 301 On the basis that Counterfactual C is the appropriate basis for calculating Mr Robinson's loss, I accept Mr Robinson's submission that he is entitled to statutory compensation pursuant to s 68 of the Fair Trading Act and s 82 of the Trade Practices Act calculated as follows: a. The amount of $2,471,821.99, being the sum Mr Robinson paid to Simcorp and others to build the works, as listed in annexure A to the letter dated 23 September 2013 from Mr Kozub of Gilchrist Connell, Mr Kenny's lawyers. Mr Kenny argued that not all of the payments were within the scope of the Building Contract or pleaded in the 6FASOC. As these amounts (including amounts paid in relation to the so called "power lines dispute") would not have been incurred if the Building Contract had not been executed in May 2007, Mr Kenny accepted that they should be included if I found that Counterfactual C was appropriate; plus b. Interest on $2,471,821.99 pursuant to s 51A of the FCA; plus c. The sum of foregone rent for the existing house on the Property from May 2007 to the present, being $280 per week adjusted for inflation. A basis for adjustment for inflation was proposed in Mr Robinson's closing submissions to the end of 2012 and Mr Kenny did not object to that basis of calculation. Unless otherwise ordered, the same methodology should be employed in bringing forward the period to the date of judgment. Mr Kenny suggested that there should be an allowance made for periods of vacancy. However, no evidence has been provided as to what an appropriate period might be in relation to a house of the kind which was on the Property in May 2007. Accordingly, I do not propose to make any such allowance; minus d. A sum equal to any change in the improved value of the Property since May 2007 due to the construction of the works as determined by an expert valuer to be appointed by the Court pursuant to r 23.01 of the Rules. The parties are to confer concerning the identity of the valuer, being a person with knowledge and experience in valuing property in the Tweed Heads area. The parties must also confer and agree draft instructions to be provided to the valuer for approval by the Court and a timeframe in which the work should proceed.

[77]

Consideration of Simpson Cost Representation and Simpson Reward Chart Representation claims 307 Mr Kenny claims that Mr Robinson entered into the Building Contract in reliance on the Simpson Cost Representation and the Simpson Reward Chart Representation. 308 The Simpson Cost Representation as pleaded was made to Mr Kenny/ABK and Mr Kenny's evidence is that Mr Simpson told him of the Qualification. Even if, as conceded by Mr Simpson at T 224.6-28, without the Qualification the Simcorp Quote was a "misleading document" there can be no argument that Mr Kenny was misled. Mr Kenny led no evidence about Mr Simpson's cost management procedures. 309 Accordingly, as pleaded, the Simpson Cost Representation could only relevantly mislead Mr Robinson if Mr Kenny can make out the Simpson Reward Chart Representation, which is essentially a claim that Mr Robinson was misled by Mr Simpson's silence in circumstances where there was a reasonable expectation that Mr Simpson would not remain silent. 310 Mr Kenny argued that it is Mr Simpson's evidence that he knew that the Simcorp Quote had gone out without qualification. Mr Simpson likewise did not believe that the exercise of specification and design change which occurred between December 2006 and April 2007 would change the cost significantly so that the building works could be built for $1.35 million or less: T 242.17. Mr Robinson did not know this. 311 It is a reasonable inference from Mr Simpson's evidence that he knew that the Simcorp Quote had gone to Mr Kenny without the Qualification. However, Mr Simpson also accepted that he was "quite content" not to send a follow-up letter because he had made the position "perfectly clear" to Mr Kenny in the conversation on 19 December 2006 and he was satisfied that Mr Kenny understood Mr Simpson's view: T 224.30-33. There is no reason to doubt this evidence; it is corroborated by Mr Kenny. 312 It is undoubtedly bad practice for Mr Simpson to allow the Simcorp Quote to be incomplete on its face. However, Mr Kenny acted for Mr Robinson in running the tender: he was the person through whom all communications passed and Mr Simpson told him of the Qualification. There is no evidence that Mr Simpson knew whether Mr Kenny would give a copy of the document embodying the Simcorp Quote (which was addressed to Mr Kenny) to Mr Robinson or whether he would make a verbal report; there is no evidence that Mr Simpson ever knew what Mr Kenny did. Mr Lee went to some lengths in cross-examining Mr Kenny to establish that a reasonably competent architect would pass on information of that kind. There is no evidence that Mr Simpson had reason to suspect that Mr Kenny did not or would not pass on the Qualification: that question was never asked of Mr Simpson. There is no basis for finding that Mr Simpson was aware that Mr Robinson did not know of the Qualification. 313 Mr Simpson gave evidence that he knew that Mr Robinson believed that the building works could be completed for $1.35 million, but there is no evidence that Mr Simpson knew that Mr Kenny had provided the draft OFT Contract to Mr Robinson. Mr Robinson knew that Mr Simpson had refused to enter into a fixed price contract for $1.35 million (GST inclusive) and was accordingly not willing to take the risk that the building works could not be completed for that price, nor was he willing to accept a cap on the draft HIA Contract. 314 Further, I have accepted the evidence of Messrs Kenny and Simpson that at the meeting at which the Building Contract was signed, Mr Simpson told Mr Robinson that there would be need for specification changes (i.e. relating to selection of materials by Mr Robinson) if the budget was to be kept between $1.2 million and $1.3 million. 315 In these circumstances and in the absence of Mr Robinson having sought a further estimate of the building works from Mr Simpson, it is difficult to see on what basis Mr Simpson had an obligation to make a disclosure of the kind suggested by Mr Kenny in the Defence. Mr Simpson did not have an advisory relationship with Mr Robinson and he had had no dealings with Mr Robinson before he met him on 10 May 2007 at the meeting at which the Building Contract was signed. 316 I rejected Mr Robinson's argument that the range of cost values by reference to which Mr Simpson's fee was to be calculated under the Reward Chart amounted to a representation that the building cost would fall within that range. I see no reason for a different analysis in relation to this pleading. I accept that Mr Robinson and Mr Kenny may have drawn comfort from Mr Simpson's acceptance of the Reward Chart; if Mr Simpson did not think it feasible to bring in the building works for a cost within the $1.1-$1.35 million range, why would he take the risk of such a low builder's fee? When Mr Simpson said "[f]ine by me", all he was doing was accepting the risk to his fee. That was his risk to take, it was not inappropriate for him to do so, nor did it give rise to a disclosure obligation to Mr Robinson. 317 Mr Kenny's outline of closing submissions pointed out that Mr Lee had been critical of Mr Simpson's credit. While this is true, I do not see how that advances Mr Kenny's argument without suggesting what particular evidence of Mr Simpson's should not be accepted. 318 Accordingly, Mr Kenny has not made out the Simpson Cost Representation or the Simpson Reward Chart Representation.

Robinson v Kenny

At a glance

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Decision date

Before

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Judgment (79 paragraphs)

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Legislation Cited (5)

Cases Cited (16)

Cited By (3)