Stockland (Constructors) Pty Limited v Darryl I Coombs Pty Limited & Ors - [2004] NSWSC 894 - NSWSC 2004 case summary — Zoe

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Stockland (Constructors) Pty Limited v Darryl I Coombs Pty Limited & Ors

[2004] NSWSC 894

Supreme Court of NSW|2004-09-28|Before: Einstein J, Philip J, Mr P, Lumsdaine AM, Barrett J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2004-09-28

Before

Einstein J, Philip J, Mr P, Lumsdaine AM, Barrett J

Source

Original judgment source is linked above.

Judgment (132 paragraphs)

[1]

CITATION : Stockland (Constructors) Pty Limited v Darryl I Coombs Pty Limited & Ors [2004] NSWSC 894 HEARING DATE(S) : 24/09/04 JUDGMENT DATE : 28 September 2004

[2]

JURISDICTION: Equity Division Technology and Construction List JUDGMENT OF : Einstein J DECISION : Answer given to 5 separate questions. Proceedings to be remitted to Referee for clarification/reconsideration of the ambit of fees properly allowable to the joint venture in light of his findings or varied findings following the remitter.

[3]

CATCHWORDS : Part 72 - Adoption of Referee's report - Motions dealt with by separate question orders under Part 31 Supreme Court Rules LEGISLATION CITED : Supreme Court Rules (NSW) 1970 ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited [2003] NSWSC 665 Abigroup Contractors Pty Limited v Peninsula Balmain Pty Ltd [2001] NSWSC 752 Allied Constructions Pty Ltd v Hyder Consulting (Aust) Pty Ltd [2004] NSWSC 808 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 Australian Broadcasting Commission v Australasian Performing Right Assn (1973) 129 CLR 99 Biscayne Partners Pty Limited v Valance Corporation Pty Limited [2003] NSWSC 874 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 105 Carter v Hyde (1923) 33 CLR 115 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 CASES CITED : Di Biase v Rezek (1971) 1 NSWLR 735 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 International Fina Services AG v Katrina Shipping Ltd ("The Fina Samco") [1995] 2 Lloyds Rep 344 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896; [1998] 1 All ER 98 L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70 Peppers Hotel Management Pty Limited v Hotel Capital Partners Limited [2004] NSWCA 114 Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 76 ALJR 436 Unity Insurance Brokers Pty Limited v Rocco Pezzano Pty Limited (1998) 192 CLR 603 Upper Hunter District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15 Stockland (Constructors) Pty Limited ACN 000 064 835 (Plaintiff) PARTIES : Darryl I Coombs Pty Limited ACN 001 367 317 (First Defendant) Philip J Flook Pty Limited ACN 000 412 564 (Second Defendant) Retail Design Group (International) Pty Limited ACN 002 421 098 (Third Defendant) FILE NUMBER(S) : SC 55046/99 Mr P Dodson (Plaintiff) COUNSEL : Mr I G Roberts (First and Second Defendants) Ms E Ollson SC, Mr R Newell (Third Defendants) Cohen & Krass (Plaintiff) SOLICITORS : Minter Ellison (First and Second Defendants) Cunningham Legal (Third Defendant)

[28]

[73] Finally, it should be noted that no hard and fast rules can be set. The exercise of construction is neither uncompromisingly literal nor unswervingly purposive: The Fina Samco, above, at 350." 12 The written communications which constituted the correspondence became exhibits "H" [letter of 10 June 1992], "I" [letter of 31 August 1992], " J" [letter of 10 November 1992], and "K" [letter of 24 May 1994] on the hearing of the issue before this Court. 13 It was plainly not possible for the Referee to construe these communications in the absence of the relevant background as known to all parties, proven before him and in particular referred to in the Report at [8.7], [8.11], and [8.15]. It was in these paragraphs that the Referee adverted to the following matters: · As to the timing of the 24 May 1994 letter relative to D.A. or thereabouts: · In November 1992 the estimated building cost was $45m, and the estimated total architectural fee was $1.75m. · The D.A. was submitted in January 1993. · In November 1993, following a cost saving review, several design changes were initiated by Stocklands. · In March 1994 the design was substantially changed in a number of areas. · In April 1994, the estimated building cost was reviewed and the fee cap was increased from $1.75m to $2.2m. [8.7] · There were substantial changes to the design and to the JV's scope of works- the initial estimate of construction cost being some $45M and the final construction cost exceeding $60m. [8.11] · It was necessary to consider the timing of the substantial changes to the design and scope of works-The 3-month hiatus and the March 1994 re-design had both occurred before the 24/05/94 letter was written [8.15] 14 Against that environment no error of law has been demonstrated in the approach taken by the Referee to the question of construction. I particularly place special significance the use of the word "future" as used in the final paragraph of the 24 May 1994 letter. Further the approach taken by the Referee to the opening words "In conformity" of the same letter appears to me to be unexceptional. 15 The referee plainly relied upon the distinction which he drew as between, on the one hand future cost variations and on the other hand, changes to the design or scope of the work. No error is disclosed in this approach.

[76]

"Question 4: Whether the referee's report should be adopted or rejected or referred back to be Referee for reconsideration in terms of his conclusion that there was no breach of contract or breach of tortious duty?" 36 The alleged breaches of the architects were pleaded in the alternative in tort and contract (see first amended summons 8 February 2002 paragraphs 18 - 21B) as negligent failures to perform the obligations set out in the consultancy contract, negligent breach of duty and negligent failure to warn of their known non-performance of the contract in relation to the provision of structural steel drawings. The obligations were not put in issue by the first and second defendants but it was alleged that the architects warned the plaintiff(s) in November 1994 that the architectural drawings were not fully "co-ordinated" with the engineering drawings. 37 The referee dealt with this part of the case in part 5 of his report. 38 He dealt with contractual breach and negligence by concluding that on the evidence Mr Coombs and Mr Reilly had warned Stockland employees of their failure to co-ordinate their structural steel drawings with the engineering drawings at a meeting on an unspecified date in November 1994. 39 There is no substance to the challenge by the Stockland parties to the subject findings. As earlier observed, it would substantially defeat the purposes underlying Pt72 if the report of a referee was effectively overtaken by a detailed re-assessment of all matters when the Court came to consider the question of adoption. The counter-productive nature of any such detailed re-assessment is emphasised where a concerted attack is sought to be mounted upon: · statements of fact in the Report said to have been contrary to the evidence; · the manner in which the referee is alleged not to have made findings as to credit. 40 There is no substance in the attempt to impugn the manner in which the defendants put particular matters in issue on the pleadings. 41 That allegation the architects had warned the plaintiffs that the architectural drawings were not fully coordinated was plainly pleaded. Also pleaded was the fact (held to have been made out by the evidence) that the drawings prepared were entirely adequate for their contractual and reasonably expected purposes. 42 The finding of a warning meets and was found to meet the plaintiffs' allegation that there was a misrepresentation as to the status of the drawings. 43 Stocklands contend that the Referee had incorrectly found that in November 1994 the Architect had warned Stockland that the drawings were not co-ordinated. The finding is one of fact which is not shown to have been not open on the evidence. To the contrary the finding was supported by the evidence. The Referee was faced with two competing versions and chose one as being more probable. Further, the Referee found that the deficiencies would have been apparent to Mr Farrant, the Construction Manager employed by Constructors. 44 There is no basis to disturb such a factual finding. The Referee set out the competing versions in paragraphs 5.12 and 5.13 of the report, also making Reference to other matters that tend to make the version that he accepted more probable than not (at[5.14)].

[93]

(c) That this payment was sufficient to cover a part of such liability (in which case, the third defendant must prove the quantum of the partial indemnity)." · there was no evidence adduced that any distinct payment of $7,157,227 was ever paid or received. The defence was based substantially on documents showing that the sum of $82,157,247 was paid by NAT to Constructors over a period ending in early 1997 for developing and constructing the works at Earlville. The settlement of the Queensland litigation did not occur until December 1997. In effect, the defendants contended that this sum of $82,157,247 must have provided a provision referable to Constructors' anticipated outgoings on that litigation; · the first and second defendants tendered on the last day of testimony a bundle of accounting documents which they contended demonstrated such a provision was made; · the defendants did not establish on the balance of probabilities that any such provision for future litigation outgoings was included in the sums paid to Constructors. The referee failed to consider this question. · the referee's reasons [at 6.9 - 6.11] disclose that the referee misconceived (a) the matters to be proved by the plaintiffs (b) the onus of proof in relation to paragraph 17 I of the third defendant's defence. It is also clear that the matters referred to by the referee were not sufficient to establish this defence; · Constructors adduced prima facie proof of its loss, constituted by the settlement payments in relation to the Queensland litigation... There was no serious challenge to the fact that these sums were paid in connection with the Queensland proceedings and their settlement in late December 1997; · Constructors did not seek to prove, and was never obliged to prove "the costs if any by which the $130m figure is exceeded, nor … any overrun … attributable to the Story settlement." These forensic tasks were suggested by the defendants - presumably as suitably unattainable tasks for Constructors to be required undertake in the litigation; · in law, Constructors only had to prove that it had paid the sums alleged, that these payments were a consequence of the negligence of the architects and that the settlement sum was reasonable [Unity Insurance Brokers Pty Limited v Rocco Pezzano Pty Limited (1998) 192 CLR 603]. However, the referee was persuaded that Constructors was obliged to prove something quite different. It was required to prove a negative - that it had not been reimbursed by NAT in early 1997. 52 To my mind the submissions are not of substance. The submissions put forward by the first and second defendants are adopted in what follows.