· A guarantee "to secure to Bellingham the balance of the contract sum and your share of demolition costs."
21 Thus it contemplated three categories of payment - payment for work completed under the Contract, security for the balance of the contract sum of $36,315.40, and security for a share of the costs of the demolition works. There was no alteration in that subject matter, nor in the amounts claimed, up to the time of agreement on 14 July. Having pointed out that Bellingham had incurred additional costs in attempting to expedite the completion, the letter also stated that "BMA is not claiming any additional costs or damages … for the numerous breaches of contract committed by [Roseville]". This is significant in respect of what were later claimed as "variations". The letter attached a reconciliation of the sums claimed, and the sum of $441,424.50 claimed for completed works corresponds with invoice no. 5309. That invoice included provision for variations, albeit minor ones; the total amount claimed includes those variations, and it remained unchanged throughout the ensuing negotiations and was ultimately agreed.
22 An email of 2 July, from Mr Feehely to Mr Rivlin, addressing the valuation of the work completed and yet to be completed, asserted:
BMA has itemised the work to be completed and valued that incomplete work at about $70K. Therefore, the detail of the work completed is simply everything but the work itemised on the spreadsheet attached to me (sic) letter of yesterday.
23 The spreadsheet (reconciliation) also included the "balance of contract to bill" of $36,315, and the costs of the demolition works. This suggests that all work performed in respect of the Marina, including the demolition work, was the subject of negotiation. It would be astounding if Bellingham, intending to claim for the "variations" (other than the demolition work) had omitted them from this document. Their omission is entirely consistent with the statement that Bellingham was not claiming "additional costs".
24 An email of 3 July from Mr Rivlin to Mr Feehely stated that Roseville would pay "the full amount of $441,424.50 on account of invoice no. 5309 prior to the resumption of the works and pay the balance of the contract value on satisfactory completion of the works". In an email of 7 July to Mr Rivlin, Mr Feehely referred to the agreement to pay the $441,424.50 "for work done to date", while security for future work remained in dispute. Mr Feehely's email of 14 July, responding to Mr Rivlin's of 9 July, in the course of arguing that Bellingham would only bear half the costs of the demolition works, pointed out:
BMA is now out of pocket to the extent of $80-$100K [exclusive of margin] in relation to goods and services it has delivered to RBM it was never obliged to deliver in the mistaken belief that would satisfy Mr Tsigolis and put a stop to the contrived disputes he continues to cause. These additional goods and services include the following:
o Telescopic piles, …;
o Sewer pump out.
o Pedestal.
25 These were not connected with the demolition works. This email makes clear that Bellingham performed them in the hope of placating Mr Tsigolis, without obligation, and was "out of pocket" as a result. This is again consistent with and supportive of Bellingham's stated intention not to claim "additional costs". In none of the July correspondence is there a hint of a claim in respect of those goods and services. Had it intended to claim in respect of them, it could not have been said that Bellingham was "out of pocket" in that respect, especially in the context of the statement in the 1 July email that "BMA is not claiming any additional costs …". Yet they were later to be included in the payment claim and the adjudication application, as "variations".
26 Bellingham contends that, there being no provision in the works contract for variations, the additional works were not covered by the contract, and the 14 July agreement was limited to the contract works, so that there was no promise - implied let alone express - to make no claim in respect of them - each "variation" had to be the subject of a separate, self-contained agreement. However, this argument encounters significant obstacles.
27 The first is that variations - albeit of a minor nature - were included in payment claims up to the date of the email agreement, and the agreed sum included such variations up to that date. While the contract did not expressly provide a procedure for variations, progress claim 3 had included a charge for a variation, which was repeated in progress claim 4. The progress payment claim forms used by Bellingham provided for variations claims. Bellingham's case does not satisfactorily explain this away. It is inconsistent with a separate, self-contained contract being required for every additional work.
28 The second is that in the context of setting conditions for a return to work following its exclusion as a result of the stop work notice, Bellingham sought to stipulate for payment of the amount due for work already completed under the contract, for the outstanding balance of the contract price (which related to work yet to be completed), and for the demolition works (which on no view were under the contract) - yet not for the additional (variation) works. If it were contemplated that there would be additional charges for work already completed, but allegedly not under the contract (although they were later described even by Bellingham in its Payment Claim as variations), one would have expected to see reference to that claim in the negotiations. That is all the moreso when reference was made (in the 14 July email) to the telescopic piles, sewer pump out and pedestal, with no hint of a claim for payment for them; to the contrary, the inference was that there was to be no claim in respect of them. No other "variations" are mentioned in any of the correspondence. While Bellingham contends that the silence about variations reflected no more than that the parties were negotiating only in respect of work covered by the contract - and not variations - this is answered by the circumstances that a minor variation was included in the amount claimed for completed works, and that the negotiations addressed the demolition works, which were on any view not covered by the contract. None of Bellingham's communications identified the works later claimed as variations, as works for which payment was or would be due. The absence of any hint of additional claims for variations is to be contrasted with the fact that the negotiations specifically dealt with the separate contract for demolition of the existing marina. The agreement excluded demolition works, but nothing else.
29 The third is the express statement in the 1 July email to the effect that Bellingham was "not claiming any additional costs …".
30 The fourth is that when Bellingham invoiced the agreed amount of $36,315.40 as its "final claim for marina works as per contract", there was no reference to variations, nor any change to the amount that had been agreed.
31 Bellingham also contends that any such agreement would be objectively unreasonable and thus not lightly to be inferred, because while it would give Roseville certainty and finality, it would leave Bellingham open to defects claims (as has, in fact, transpired). But on reflection I do not perceive anything particularly unreasonable about that result. The contract was always a lump sum one, so that each party had some certainty as to the amount of its actual or potential liability or entitlement; yet Bellingham was always exposed to the potential for defects claims, the time for identifying which is upon practical completion, which would not occurred until well after the July agreement. The 14 July agreement did not significantly affect this position: it expedited the return to site and completion of the works; and it facilitated immediate payment of the past due sum. Bellingham obtained - in addition to immediate payment of the past due amount to which it was already entitled - the opportunity which it sought of returning to the site, completing the works and earning the balance of the contract sum, in preference to suing for damages, and the benefit of security for it; Roseville obtained Bellingham's return to site and completion of the works, and a release from any further claim in respect of completed works (save in respect of the demolition works).
32 Bellingham's silence during the negotiations about variations - other than the telescopic piles, sewer pump out and pedestal, with no hint of a claim for payment for them - indicates on an objective view that Bellingham was foregoing any further claim for variations completed to date, in the context of negotiations that encompassed all the works Bellingham had performed and those that remained outstanding. Objectively, the settlement agreement therefore included any claim for "variations" already completed, so as to resolve all Bellingham's claims for payment - other than in respect of the demolition works, which were specifically excluded.
33 The reasonable bystander to the negotiations in July 2008 were such that would have concluded that Bellingham was agreeing to accept immediate payment of the sum of $441,424.50 and a bank guarantee securing the balance contract sum of $36,315.40, and foregoing any claim for damages or additional costs, in respect of works completed, including "variations", and works outstanding under the contract, other than demolition works. (The agreement did not need to cover future "variations", which could be negotiated on a case by case basis if required - but this is irrelevant in practice because there were none, all the "variations" ultimately claimed having been completed prior to the July negotiations).
34 So far as the "final payment" component is concerned, while the 14 July Agreement provided for it to be secured by a bank guarantee, it did not affect Bellingham's entitlement to be paid on practical completion. In respect of the final payment under the contract, there is no reason why the agreement should be construed as excluding any right to make a progress claim under the Act in respect of it at the time when the Act authorised it. (Had it done so, it would have been void by reason of s 34 of the Act, discussed below). Likewise there is no reason why it should be construed (and Roseville does not suggest that it should be) as excluding any right to make a claim in respect of the demolition works; indeed Roseville accepts that Bellingham was entitled to make a claim under the Act in respect of the demolition works.
35 Accordingly, the 14 July email exchange resulted in a binding agreement whereby Bellingham was not entitled to recover payment for additional works - other than the demolition works - completed to date, over and above the agreed sum of $441,424.50. This included what became the "variations" component of its Payment Claim and the Adjudication. Bellingham was therefore not contractually entitled to the amounts allowed by the Adjudicator for variations, other than the demolition works, although it remained contractually entitled to the final payment, and payment for a share of the demolition works.
36 These conclusions render it unnecessary to consider the alternative rectification, estoppel and misrepresentation arguments advanced by Roseville.
Is the 14 July email agreement void insofar as it precludes a payment claim?
37 Section 34 of the Act provides: