The Council of the City of Sydney v Woodward [2000] NSWCA 201 | Case summary

The Council of the City of Sydney v Woodward [2000] NSWCA 201 | Case summary | Zoe

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1 PRIESTLEY JA: I agree with Heydon JA. 2 MEAGHER JA: I agree with Heydon JA. 3 HEYDON JA: Background This is an appeal from orders of Einstein J made by way of assessing reasonable remuneration on a quantum meruit, and in particular an order that the defendant pay the plaintiff $773,010. 4 Between May 1995 and September 1996 the plaintiff, an architect specialising in water sculpture, carried out work for the defendant ("the Council"). The work consisted of the partial development of eight different designs for a water sculpture to be constructed in Chifley Square, Sydney. The trial judge found that the work done in relation to design 1 was done pursuant to a contract under which the plaintiff was to be paid $50,000; that the Council breached that contract; and that the plaintiff was entitled, after allowing for payments made by the Council, to $15,454 for damages for breach of contract with interest of $5,597. No appeal is brought in relation to design 1. 5 The trial judge also found that the work done in relation to designs 2-8 was not done pursuant to any contract, but that the Council was liable to pay the plaintiff a reasonable remuneration as on a quantum meruit for that work. He awarded a total of $582,566 together with $169,847 interest calculated from the last day of work on each design. 6 Though the controversies between the parties were much narrower on appeal than they were at the complex and lengthy trial, the Council made three challenges to the trial judge's orders and the reasoning underlying them in relation to the seven quantum meruit claims. 7 First, it submitted that the trial judge should have selected as fair and reasonable remuneration the figures set out in a letter of demand from the plaintiff's solicitors to the Council dated 4 June 1997. The total demanded for all eight designs was $267,926, but leaving aside a claim of $16,071 for the first, the total for the seven quantum meruit claims was $251,855. 8 Secondly, and in the alternative, the Council put a submission in relation to design 4. The trial judge calculated reasonable remuneration on the basis of what the plaintiff "would normally have charged for commissions for a new work, namely based upon 11.1 percent of budgeted cost for schematic design and design development" (Red 2/257E). The figure he selected for "budgeted cost" was $1.5 million. This led to a reasonable remuneration figure of $273,300. In writing the Council submitted that that figure was erroneous because the selection of $1.5 million was "inherently speculative", and the only reliable basis was to select as reasonable remuneration the $82,855 demanded by the plaintiff in the 4 June 1997 letter of demand. This figure was not pressed in oral argument; rather it was submitted that the trial judge should have used $665,767 as a budgeted figure in lieu of $1.5 million, which produced a reasonable remuneration figure of $121,303. 9 Thirdly, the Council submitted that the trial judge ought not to have awarded interest from the date of termination of the work on each design, but rather from the date of the first demand by the plaintiff made on 2 April 1997. On that day he sent a letter demanding sums which were a little lower in total than, but calculated on similar principles to those underlying, the figures in the 4 June 1997 letter. A variant of this contention was that in relation to certain of the design work, interest should run from 4 June 1997 or 29 January 1998 (the date of the plaintiff's first statement, which greatly increased his claims). 10 Hassell Pty Ltd is named as a party to the appeal because it was so named in the Notice of Appeal Without Appointment. It acted as a consultant to the Council in relation to the renovation of Chifley Square. Neither the Notice of Appeal eventually relied on nor the contentions of the Council on the appeal affected its interests and it did not participate in the argument.

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The letter of demand issue: the submissions 15 The starting point of the Council's criticism was that the assessment of reasonable remuneration on a quantum meruit could take into account the value which the parties, or one of them, put on the services rendered. On the other hand, the Council accepted that the value which the plaintiff put on his services in the 4 June 1997 letter did not bind him in the sense that it could not be said that no evidence to the contrary of that value was admissible or in the sense that it could not be said that no evidence to the contrary of that value could outweigh it. Rather, the Council drew attention to the fact that the plaintiff ceased working on the last proposal in September 1996; that he knew best what he had done; that he was of more than sufficient expertise to value what he had done; and that after making a demand on 2 April 1997 for a total of $234,369 which was rejected and met by a counter offer of $37,500 plus the cost of mock-ups on 29 April 1997, he was able to analyse the question of reasonable remuneration for some weeks with the assistance of experienced solicitors. The Council submitted that the plaintiff was in the best position to assess reasonable remuneration; that his view in the 4 June 1997 letter was "strong evidence of fair and reasonable remuneration"; and that there was no satisfactory reason for the trial judge to have departed from that assessment. In view of the trial judge's findings about the plaintiff's high skill and reputation, and the trial judge's total acceptance of the plaintiff's evidence as to how long, hard and skilfully he had worked, these submissions have a certain force. The Council also pointed to an admission by the plaintiff at the end of his cross-examination by the Council that in the 4 June 1997 letter his solicitors "set out what [he] considered to be a fair remuneration for the work [he] had done": Black 1/231H-J. 16 The plaintiff made two responses to this criticism. The first was to contend that no matter how sincerely the plaintiff believed on 4 June 1997 in the fairness of his claim, if it could be seen from the evidence tendered in the proceedings as a whole that the claim was less than fair or reasonable, it was right for the court, while giving due weight to the letter and the plaintiff's admissions about it, to arrive at the conclusion it did in the light of all the evidence. The second was to contend that in re-examination the plaintiff explained away his admission in cross-examination, and that the totality of his evidence revealed that he never thought the 4 June 1997 demand was a demand for fair compensation.

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The letter of demand issue considered 17 In my opinion the first of the plaintiff's responses is sound. At most the letter and the surrounding evidence constituted admissions. An admission can be powerful evidence, but it is only one item of evidence, to be weighed with all other evidence. The methodology underlying the plaintiff's case on reasonable remuneration, namely a time charging basis for designs 2, 3 and 5 and a commission basis for designs 4, 6, 7 and 8, was not as such attacked by the Council. Nor did the Council attack the adoption of the plaintiff's normal hourly rate of $246 or the adoption of the plaintiff's normal commission charging basis, namely 11.1 percent of budgeted cost for schematic design and design development. The reasonableness of these figures was supported by expert evidence, some of it adduced by the Council, which the trial judge accepted and which the Council did not attack on appeal. The extrapolation from the 11.1 percent figure for schematic design and design development to a figure of 37 percent of cost of the work the plaintiff completed was not attacked. The trial judge accepted the plaintiff's evidence of the very high number of hours he worked, and this was not attacked. The only attack which the Council made related to the budgeted cost for design 4. 18 Whether or not the result of the trial judge's reasoning represents a very favourable outcome for the plaintiff, it has to be treated as valid in view of the trial judge's acceptance of the plaintiff and his witnesses and in view of the absence of relevant appellate attack. The result must be regarded as reasonable remuneration objectively arrived at. The trial judge summarised the Council's argument about the primacy of the 4 June 1997 letter as a guide to reasonableness fairly - indeed, forcefully: Red 2/246P-247C. Though this is not precisely the way the trial judge approached the matter, once it is accepted that the arguments propounded to the trial judge on reasonable remuneration by the plaintiff were valid, the conclusion arrived at is not to be upset by an earlier admission by the plaintiff to the contrary. 19 That conclusion makes it unnecessary to deal fully with the second response of the plaintiff to the Council's reliance on the 4 June 1997 letter. However, in view of the time and energy the parties devoted to it, it deserves some analysis. The response was that the admission near the end of the Council's cross-examination of the plaintiff that the 4 June 1997 letter set out what the plaintiff then considered to be fair remuneration was isolated, and was fully explained away by other evidence, and in particular in re-examination. 20 The plaintiff's evidence was as follows. On 19 September 1997 at a meeting with Council representatives the plaintiff agreed to withdraw from the commission provided he was "fully compensated" for the work done to date. This was confirmed in correspondence on 19 and 20 September 1997. On 20 September 1997 he was offered $30,000 by letter. He regarded this as quite unsatisfactory and protested to a Council officer. According to evidence first given in cross-examination, on 1 October 1997 the plaintiff met a member of Council, Mr Jahn, and: "discussed the possibility of getting some project completed in Sydney because I had done years of work with nothing and Councillor Jahn said that could be accommodated by finding a project I could do and would let me have a choice of site and the nature of work I wanted to do. And that was my aim, to get the opportunity of doing a major project in Sydney" (Black 1/229S-V).

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The plaintiff did not expressly refer in his statement to discussions with Mr Jahn. The figures taken from the RAIA Fee Guide for designs 2-8 selected, instead of 11.1 percent of budgeted cost, percentages ranging from 1.455 percent to 4.85 percent. 23 In cross-examination the plaintiff said he did not regard the April 1997 claim as reasonable remuneration. The cross-examination proceeded (Black 1/229D-G): "Q. Why then, Mr Woodward, did you claim that amount if you didn't regard it as a reasonable remuneration? A. Because I believed remuneration for the whole of the project included the opportunity of doing a future design project in Sydney at a site of my choice, design of my choice. And at this stage I didn't want to upset my client, which may jeopardise that situation. So I submitted fees which were such they would find it quite easy to accept, being vastly understated what the fees ought to be." 24 The plaintiff then gave the evidence quoted above about the 1 October 1997 meeting with Mr Jahn. He said he did not mention in the 2 April 1997 letter the fact that he had reduced his fees in the hope of a further commission because of the confidentiality of his dealings with Mr Jahn. He said that when on 29 April 1997 he received a letter refusing to pay his demand of 2 April 1997, he realised he was not going to get the commission discussed with Mr Jahn. He then admitted that when his solicitors sent the 4 June 1997 letter of demand, he had no expectation of receiving a commission from the Council, but regarded the demand as fair remuneration for his work. At the time of that admission, the plaintiff had spent the better part of four days in the witness box. The answer was given just before the morning tea adjournment on Monday 19 October 1998. 25 After some further cross-examination and the interposition of another witness, the re-examination commenced late on 19 October 1998. That part of the re-examination which concerned the admission took place soon after proceedings recommenced on 20 October 1998. After the plaintiff was taken to the 4 June 1997 letter and the admission about it, the re-examination proceeded (Black 2/286W-287R): "Q. And perhaps just look at the very last paragraph, last page of the letter. You see there is a figure there of 267926 dollars? A. Yes. Q. And when you answered the question of my learned friend yesterday did you have in mind that figure? A. No. Q. Can you explain why it is that you answered yes to the question 'In that letter your solicitor set out what you considered to be a fair remuneration for the work you had done on the Chifley Square project didn't you', and you said 'Yes'? A. I said yes. Q. Why did you say yes? A. Well I believe the document had a total figure at the end of the 1.18 million. Q. I don't now have a recollection of how long you spent, but do you recall how long you looked at that letter before you answered the -

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The plaintiff then went on to explain that in the 4 June 1997 letter he had corrected errors of calculation in the 2 April 1997 memoranda. This Court was told that there was no document in evidence answering to the description: "the document had a total figure at the end of the 1.18 million". After some considerable searching, the Court was taken to a formulation of the plaintiff's case in the litigation first offered when the plaintiff's statement was filed on 29 January 1998, in which a total of $1,185,798 was claimed (Blue 1/49N). 26 The trial judge made the following explicit findings. He accepted that when the plaintiff submitted his 2 April 1997 memoranda of fees, the plaintiff still had in mind "the probability of furthering the feasibility of a project along the lines of a water organ which he had discussed with Councillor Jahn" (Red 2/243C). He said: "the Plaintiff's evidence at transcript 287.1 to 287.7 [which appears to refer to the passage in which the plaintiff said he believed that the document had a total figure at the end of $1.18 million] must be read as evidence that the Plaintiff's belief was that a fair remuneration for the work he had carried out was $1.18 million and … I do not accept that evidence" (Red 2/246N-P). The trial judge further said (Red 2/247M-N): "It seems to me that in this very unusual case the Plaintiff's evidence that he did believe, albeit in early June 1997, that he was in some way tied to the approach he had taken in the earlier letter, should be accepted as truthful." Finally, the trial judge said (Red 2/247S-248D): "I have come to the conclusion that the letter of 4 June 1997 was sent in very unusual circumstances by a plaintiff who, having been at issue with the council for some time and having been involved in the frenetic activity during the period of preparation of the designs, could not be said to have sat back and calmly, patiently and quietly reflected on precisely what his true reasonable or fair compensation entitlement in the circumstances was. The letter was sent claiming an amount very similar to that which had been claimed in the letter of April 1997. The letter of April 1997 had been sent at a time when the Plaintiff clearly, on his evidence, sought to understate the fees to which he believed he was entitled, because he still believed that there was this live opportunity for a further commission. Once one finds that the April 1997 letter had been sent with that belief in the Plaintiff's mind and had understated the amount which he believed he was entitled to, the fact that the 4 June 1997 letter claimed generally the same amounts seems to me to be explained." 27 The Council submitted that there was no evidence that the plaintiff lacked any opportunity for calm, patient and quiet reflection on what his true entitlement was in the period between September 1996 and June 1997, or in the period April-June 1997. More fundamentally, the Council argued that the trial judge had failed to relate the findings he did make to the admission that the 4 June 1997 letter was a claim for fair remuneration. The Council argued that but for the re-examination, the admission would have stood without qualification; that the explanation offered in re-examination that the plaintiff thought the document contained the figure of $1.18 million was rejected by the trial judge at Red 2/246P; and that that explanation having been rejected, the admission in cross-examination stood. Though the Council did not so submit, the reasoning of the trial judge in the passage last quoted is compatible with an acceptance of the sincerity and accuracy of the admission: the evidence is consistent with the proposition that on 4 June 1997 the plaintiff did believe the claim to be a claim for fair compensation, but after later calm, patient and quiet reflection, realised that it was not. The Council submitted that if the plaintiff felt "tied" to the April approach in June, it cannot have been because of any tie based on legal obligation and must have been because of a tie based on moral obligation, namely the moral obligation to reveal his true belief that it was a fair claim. There is a further possibility - that he felt a commercial or social obligation in June not to depart from the line taken in the earlier dealing in April. 28 When the trial judge said "I do not accept" the plaintiff's evidence that he believed that a fair remuneration for the work he had carried out was $1.18 million, he made a finding which involves a criticism. The manner in which the evidence relating to the April and June demands came out was not satisfactory, and the answers in cross-examination and re-examination at the very least revealed some unreliability in the plaintiff's evidence on this point. But the evidence which is inherently probable (such as the plaintiff's irritation with the attitude of the Council in September 1996 and March-April 1997 and the inconsistency of the demands with the plaintiff's normal charging practices), the evidence which was accepted by the trial judge (namely that the plaintiff was hoping for a further commission, deliberately undercharged for that reason, and thereafter felt that he could not depart from that position in the June letter) and the inconsistency of the isolated admission that the June letter was a claim for fair compensation with the evidence that the April claim was not a claim for fair compensation point to the conclusion that even though the plaintiff's explanation for making the isolated admission about the June letter was rejected, the trial judge's refusal to infer that the plaintiff thought the June letter to represent a fair claim was not appellably erroneous.

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"Budgeted cost" for design 4: the issue 29 The issue agitated on appeal arises in the following way. The trial judge accepted that reasonable remuneration should be quantified on a "time base approach" for designs 2, 3 and 5. Hence he multiplied the hours which the plaintiff worked by his hourly rate. For designs 4, 6, 7 and 8 he calculated as reasonable remuneration "that which the Plaintiff would normally have charged for commissions for a new work, namely based upon 11.1 percent of budgeted cost for schematic design and design development": Red 2/257B-F. For design 4 he selected $1.5 million as the figure for budgeted cost. His findings were expressed as follows at Red 2/251Q-253L: "(m) The base figure to which the percentage fee is to be applied was a live issue before me. In relation to designs 2, 3 and 4 there was no budget specified in the same way as occurred for designs 5, 6, 7 and 8. However, on my findings there was a figure of 1.45 million notified to Mr Woodward in 1992. Further, I find that the figure of $1.5 million for public art in the square was the operative figure so far as the council was concerned in June 1995. In Mr Williams' report of 8 June 1995 to be found at Exhibit PX Volume 2 Tab 124 at page 494, he said inter alia: 'The total budget allocation for 95/96, 96/97 for $2.8m of which $1.5m is dedicated to public art.' Mr Williams under cross-examination at Transcript pages 351.41 to 351.55 gave the following evidence: 'Q. And if you turn to the second page of that document stamped page 494, there is a heading 'Financial Implications Funding Certificates', see that? A. Yes. Q. And you see the reference to the fact the total budget allocation for 1995/1996 and 1996/1997 was $2.8m of which $1.5m is dedicated to public art, see that? A. Yes. Q. And that was your statement based on your enquiries as the person who was the urban designer consulted on the Chifley Square project? A. Yes.' I find that an overall budget of $2.6 million was notified by Mr Williams to the Plaintiff on 23 November 1994. It will be recalled that in paragraph 10 of Mr Williams' first statement, he gave evidence that he informed Mr Woodward on 23 November 1994 'that there was approximately $2.6 available to do the entire development'. In paragraph 21 of Mr Woodward's second statement, he agreed with Mr Williams' recollection that during their discussions on 23 November 1994, Mr Williams told him 'that the overall budget for the development was approximately $2.6m'. This appears to have comprehended the public art figure. (n) It does not seem to me that the estimates of costs proposed by the quantity surveyor in 1995 are budgets. [This is a reference to estimates of Page Kirkland Partnership, which are important to the Council's argument.] The position throughout 1995 was that there was an overall budget of at least $2.6 million and within that council had considerable flexibility as to how it would apportion those funds depending upon the ultimate design which it adopted. A water feature was regarded as the public art component and an essential feature right up until September 1996. The commemoration of Ben Chifley finally settled on was the statue. (o) The logic of adopting a budget figure, I accept, lies in the uncertainty of knowing the ultimate cost of a proposed work. Mr Nield referred to a 'probable cost of works' clause in an RAIA suggested client and architect agreement and described it as a common basis for charging. At Transcript page 395, Mr Nield under cross-examination, gave the following evidence: 'Q. Is a basis for charging some, or at least architects, a percentage fee based on an estimated cost of works? A. Yes it is. Q. It is quite a common basis? A. Yes it is.' Although a base figure of $1,838,483 was originally used for designs 2, 3 and 4, in the light of the evidence, I accept the Plaintiff's contention that the $1.5 million figure is a reasonable base figure. (p) The alternative base figure is the estimate of cost of works for the respective designs. The logic of this approach is that it is a fee based on the estimated actual cost of works. [Mr Nield cross-examination transcript 395.15 to 395.20.] (q) Mr Woodward and Mr Summers agree on the estimate of cost for designs 2 ($340,000) and 4 ($1.5 million)." 30 The selection of $1.5 million as the budgeted cost led to an award of $273,300 as reasonable remuneration. 31 The period within which design 4 was worked on was 15 August 1995-25 January 1996. On 15 August 1995 the plaintiff attended a meeting at which he "agreed to work on a glass and water wall on the edge of the Hunter Street footpath provided the café was separate alongside the eastern half": Red 2/145C. On 25 January 1996 the plaintiff was instructed to begin work on what became design 5, a glass diamond pattern wall.

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"Budgeted cost" for design 4: the Council's argument 32 The Council argued that the selection of $1.5 million as a figure for the budgeted cost was unreliable, and the figure which should have been selected was $665,767 (being the estimate for the cost of the "café and water element" made by a firm of quantity surveyors, Page Kirkland Partnership, before 15 November 1995). This involved a small degree of generosity by the Council, which could have pressed the figure of $455,441 which that firm estimated for the water element alone on 30 November 1995. 33 The argument of the Council drew attention to the following matters. 34 On 13 January 1992 the Council wrote to the plaintiff inviting him to participate in a limited design competition. The letter said that the design competition was to be for part of the works to be undertaken outside the actual site of Chifley Tower. It also said that the undertaking of those works had been a requirement of the development approval. The letter enclosed a "Brief and Conditions" for the competition. That document contained the following passages (Blue 2/310D-H and 311K): "Generally, the items and works to be included in the design solution for this competition are left to the discretion of the entrant. It should be noted that the Architect of The Chifley Tower project has submitted a design solution in the form of a Pavilion in stone, details of which are included herewith. No other Pavilions will be considered as design solutions. Therefore if work such as sculpture, fountains, landscape etc are to be included as part of the proposed design solution and if specialist sub-contractors are to be employed in the implementation of these designs at a later date, then an appropriate artist/expert in those fields should be nominated. … As a guide to entrants, it is advised that the estimated cost of the project architects proposed solution (a pavilion) is $1.45 million." 35 The plaintiff did not in fact accept the invitation to compete in the competition. 36 On 23 June 1992 the Project Director of the Chifley Tower wrote to the Council noting that the Council had decided not to proceed with the construction of any of the entries in the competition. It said that while previously he had advised a cost of about $1.4 million, because of the requirement to use certain pavers carrying an extra cost: "I believe we should consider the sculpture contribution matter in light of this circumstance. This being the case, I believe it is reasonable for us to offer you an amount of $1,050,000 contribution to the sculpture fund" (Blue 2/316P-R). 37 On 9 July 1992 the Council wrote to the Project Director of the Chifley Tower. The letter said that the Council had resolved to take no further action on the competition entries. It said, in item (d), that the Council had also resolved to request the owner to contribute to the Council a sum equal to the estimated cost of what was described as "the original Rotunda" (an idea preceding the competition), "to be placed in a 'Chifley Square Civic Improvement Fund' on the understanding that Council would be committed to expend the funds held in that area". The letter said that the Council had also resolved that a proportion of that fund would be dedicated for a future study for a design for Chifley Square as a whole. It continued: "With regard to item (d) Council will be pleased to accept your offer of $1,050,000 made in your letter dated 23rd June 1992, to provide Council with funds to expend in Chifley Square, a proportion of which will be spent developing a master plan for the area. Your cheque should be made payable to the following trust fund account: 'SCC, Public Art, Chifley Square' The cheque should be clearly marked as set out above. The tunnel contribution of $2 million must be paid into a separate account: 'SCC, Civic/Pedestrian Improvement, Chifley Square' You will appreciate that the two contributions must be paid into separate accounts to ensure the funds are used only for the specific purpose nominated" (Blue 2/322V-323H). 38 On 19 August 1992 one of the developers of Chifley Square, Baygate Pty Ltd, was given a receipt for the payment of $1,050,000 as a "Contribution to Public Art, Chifley Square": Blue 2/248. As the trial judge recorded, this was part of a total amount of $3,050,000 which the developers contributed to the Council to be used for the development of Chifley Square as a public space: Red 2/89R. The $1,050,000 was kept as a "Public Art Fund" and the $2 million was kept as a "Pedestrian Improvement Fund" (Blue 2/335-R-W). 39 The trial judge found that by late October 1994 the Council had approved a budget for 1994-1995 of $1,150,000 on Chifley Square and an additional budget of approximately $1,200,000 to be spent "on a public art component" (Red 2/91V; Blue 2/366L). 40 On 3 November 1994, according to the trial judge's findings, the plaintiff attended a meeting at the Council, where the Council's Visual Arts Officer, Sally Couacaud, told him that a design concept for Chifley Square had been prepared which included a café cut into the site and that water was to be included as an artwork. She asked the plaintiff if he would be interested in designing the water element (Red 2/95P-T). 41 On 23 November 1994 the plaintiff attended another meeting at the Council. A proposal involving a triangular café with still water on its flat roof and water flowing down its sloped northern glass wall was explained to the plaintiff by Mr Williams, the author of the concept. The plaintiff said he was interested in doing the work provided he had design freedom. A fixed fee of $50,000 was agreed (Red 2/96D-N). The plaintiff was told by Mr Williams that the overall budget for the project (i.e. the works to be funded from the $1.05 million and the $2 million) was $2.6 million. Mr Williams said in cross-examination that it was "regarded as an essential element to the whole project that there be an element of public art in the Square", including a commemoration of the late J B Chifley (Red 2/98C; Black 2/352S-V). 42 On 15 May 1995 Hassell Pty Ltd wrote to the plaintiff to say it had been appointed project manager. The letter said (Blue 3/463M-N): "Consequently we accept your fee proposed of $50,000 for the design and documentation of the 'Waterfall'. Your fee for preparing mock-ups and prototypes is still to be formally accepted by council so we will deal with this separately." 43 In May 1995 Hassell Pty Ltd prepared a document entitled "Chifley Square Redesign Concept Review". That contained various sketch designs (Blue 3/482-485), and recommended (486) option 2 (483). It also contained cost estimates by Page Kirkland Partnership. Those estimates totalled $2,617,157.31. That figure was arrived at as follows. A cost of $1,612,056 was allowed for "paving" and $512,260 was allowed for "café" (which, pursuant to Mr Williams' explanation to the plaintiff on 23 November 1994, included the water feature the plaintiff was to design). That totalled $2,124,316. An allowance of 10 percent for certain contingencies brought the total to $2,336,747.60. A further allowance of 12 percent for Preliminaries and Profit brought a grand total of $2,617,157.31 which corresponds with the figure of approximately $2.6 million given to the plaintiff on 23 November 1994 (Blue 3/503). Page Kirkland Partnership offered a break-up of the $512,260 figure for the café. Among the elements were "Roof" ($250,000) which included $100,000 for "Water curtain" (Blue 3/505Y), and "Hydraulic Services" ($35,000) (Blue 3/507V). 44 It is convenient to interpolate that the Council's submission was that in the period of design 4, the highest figure ever allowed by Page Kirkland Partnership for "café and water element" was $665,767, and that figure, part of Estimate No 3, probably provided on 21 September 1995, was the highest budget figure for the water feature. Another relevant set of figures was given by Page Kirkland Partnership as part of Estimate No 5, namely "Café" $328,048.20, and "Water Element" $455,441. It was part of the Council's argument that a conclusion that the budgeted cost for that part of the artwork in Chifley Square for which the plaintiff was to be responsible, against the background of events before the design 4 period and during the design 4 period, was as much as $1.5 million was wholly unrealistic. As will be seen, the trial judge found that it must have been plain to the Council and to Hassell Pty Ltd that design 4 "was likely to be a far more expensive project than the original concept", i.e. design 1. A question is whether the Council appreciated a fifteenfold increase as distinct from a fourfold or sixfold increase. 45 On some date after 7 June 1995, Mr Maher of Hassell Pty Ltd asked the plaintiff for any cost information about his proposed design option. Mr Maher said the conversation proceeded as follows (Red 2/108G-K): "Plaintiff: 'I cannot give you any cost information. Once I have developed the prototypes I will be able to determine the flow rates and thereafter the size of the pumps and tanks necessary. Then I can give you an estimate of feasibility as well as cost.' Mr Maher: 'Bob, we are concerned that we must have some certainty as to the cost of the fountain element. As you know we currently only have an allowance of around $500,000 for the café and water feature, including at this stage $100,000 allowance for the water feature. If the fountain exceeds this amount then we could only proceed with it if we were able to find savings elsewhere in the project.'"

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The Council submitted that this showed that at that stage the $1.5 million component of the "budget allocation" which was "dedicated to Public Art" was not to be spent solely on either the café with water feature together, or on the water feature alone: the figure included not only the "café fountain" but also the "grid of Palms" and "the commemoration of Ben Chifley". That submission is supported by the fairly close correspondence of the $2.8 million to Page Kirkland Partnership's $2,617,157.31 and of the "$2.3M excluding fees" to Page Kirkland Partnership's $2,124.316 excluding contingencies and preliminaries and profit. Mr Williams must have regarded part of the $1.5 million dedicated to public art as including some of the $1,612,056 to be spent on paving; he gave general evidence to this effect in cross-examination (Black 2/361K-362G). The plaintiff admitted that he had no reason to believe that all the money allocated to art would be applied to the water feature (Black 2/257S-W). 47 On 15 June 1995 the plaintiff submitted a memorandum of fees for $8,000, which the trial judge held was related to design 1. 48 By 25 July 1995 design 1 came to an end and the plaintiff began work on design 2. Under design 2, the water feature was unattached to any café (Red 2/114E-115X). The Council submitted that from that time the plaintiff cannot have had any reasonable belief that, and that it was not the fact that, the budgeted cost of any design he was working on was of the order of $1.5 million. The claims which the plaintiff made in April and June 1997 were based on a project cost of $1,838,483. That figure was arrived at by the plaintiff by taking the $1.45 million referred to in the 13 January 1992 invitation to enter the competition as the estimated cost of the pavilion, indexed over 3.5 years at 7 percent. The pavilion was to be "a design solution", and "fountains" were identified as a possible "part of the proposed design solution". The Council submitted that there was no correlation between the indicated cost of $1.45 million for the design solution, a relatively small part of which the plaintiff was to be responsible for, and a suggestion that the budgeted cost for the plaintiff's design was $1.5 million. 49 Design 3, involving a wedge of water, was only worked on in early August 1995. 50 Design 4 involved a return to a "water-café combination"; in that sense it was similar to design 1, but in other ways it was different from design 1. It arose at a meeting held on 15 August 1995 attended by, among others, the plaintiff, Mr Williams (whose concept underlay design 1) and Mr Maher (a principal of Hassell Pty Ltd). The "Greg Deas" referred to at that meeting was the Council's Assistant General Manager Projects. The plaintiff's evidence was as follows (Blue 1/26H-28C): "At the 15 August 1995 meeting, there was a conversation in words to the following effect: Williams: 'I've spoken to Greg Deas who has directed that the project must proceed according to the original brief and as approved by the Sydney City Council committee. So we have to proceed with the café and water artwork associated with the café.' I said: 'It will be very difficult to work from any of the designs that Hassell's have produced for a water-café combination. I might be able to produce a café water design myself because I would be able to create suitable conditions for the water.' Maher: 'No, you can't do that. Hassell's should still design the café because that's what we were commissioned for and otherwise we wouldn't have anything to do.' I said: 'My café design proposal has already been carried out in my first proposal which was accepted by the design team and even been formally presented to the Council's design review committee.' Maher: 'No, you'll have to design something new.' After further discussion of the design directives from Hassell, I agreed to work on a glass and water wall on the edge of the Hunter Street footpath provided the café was separate alongside the eastern half ('Design 4'). The design directive for Design 4 was completely different from the design brief for Design 1. Rather than the water feature running across the roof and down the northern glass wall of the café as in Design 1, the water feature now constituted a wall made of glass which was completely separate from the café and which ran along the full approximately 40 metre frontage of Hunter Street on the southern side of the café. Though the café was to be situated in the same position as it had been for Design 1, the redesigning of the café by Hassell required creation of a new fountain design concept. The work I had performed on Design 3 was of no practical use for the development of Design 4 due to the change in the design brief. Later in the 15 August 1995 meeting, there was a conversation in words to the following effect: I said: 'There's no guarantee I can succeed with these directives. My design will not be presented until mock-ups or prototypes are completed. What is the budget you have allocated for the water artwork?' McInnes: 'Costs for the paving are already beyond allowances by $75,000 so perhaps the road could not be granite paved, perhaps the granite lines can still cross the road. We have only now discovered below ground concrete at the Chifley Tower frontage which interferes with the new level proposals.' Despite my request, there was nothing said about any budget allowance for the water artwork or Design 4. I was only given a design directive."

[27]

The trial judge accepted that evidence (Red 2/144M-145U). 51 The trial judge also made the following findings (Red 2/149R-150H): "On my findings, what was agreed at this meeting of 15 August 1995 was that the new separate water wall would be freestanding, three metres high and define the southern boundary of the square. The southern boundary was in the order of forty to forty-five metres in length. It must have been plain, it seems to me, to council and to Hassell that this was likely to be a far more expensive project than the original concept. The quantity surveyor was asked to identify a provisional sum for the feature. The 14 September 1995 minutes of meeting include an entry - 'QS - to allow for expensive glass structure'. Any previous estimates were clearly, it seems to me, of no relevance. On my findings, no budget was given to the Plaintiff at the 15 August 1995 meeting. On my finding, there was no discussion of his fee. Council and Hassell, it seems to me, were aware that the Plaintiff could not provide costings yet wanted him to continue working on the plans which were being shown relating to the glass water wall. It is to be noted that throughout this period, there was an overall budget of up to $3m. Of this, $1.5m was dedicated to public art. Mr Woodward and Hassell had been told that it was conceivable that reallocations within the budget could be possible. Also to be noted is the fact that when the cost framework of $1.1m came through on 5 December 1995, the reaction of Mr Williams was not one of immediate rejection. Rather he sought to find out from his superiors whether further funds could be obtained." 52 The Council submitted that the figure which the "quantity surveyor" or "QS", i.e. Page Kirkland Partnership, was asked for was supplied, as will shortly be seen, as part of Estimate No 5 on 29 November 1995 as $455,441 for "Water Element" (other items being "Café" $328,048.20 and "Ben Chifley Statue" $80,000). As will also shortly be seen, though, when as the trial judge said, Mr Williams went to "his superiors", Mr Deas rejected the "cost framework of $1.1m" supplied by the plaintiff on 4 December 1995, which indicates that neither $1.5 million nor $1.1 million was the "budgeted cost". 53 Between 11 October and 14 November 1995 there were dealings between the plaintiff, Hassell Pty Ltd and Council about a draft agreement for design 4. It is convenient to postpone discussion of the details of the Council's discrete submission on these dealings. 54 On 10 November 1995 Mr Deas, describing himself as "AGM City Projects" wrote to the Public Works Department, who were engaged to supervise the works, and said (Blue 4/611R): "The project is funded from a dedicated reserve of $2.8 million. Under no circumstances can this figure be exceeded. The hard works have been costed at $1.6 million, and an allowance has been made for artworks. Fees, contingencies, escalation etc. make up the remainder."

[30]

Within the "Water Element" was a cost of $200,000 for acrylic tubing (Blue 4/639P and 654H); the detailed breakdown of other elements, including $100,000 for hydraulics services, was also set out (Blue 4/652M-654H). These documents were not seen by the plaintiff, but, as will shortly be seen, their effect in relation to the water feature was communicated to the plaintiff on 4 and 6 December 1995. 56 The trial judge found that the plaintiff contacted Concept Aquaria Australian Marine Group, a supplier of acrylic, and obtained a quote for the supply of acrylic for design 4 (including shipping but not including sales tax) of about $1.1 million for the supply only of acrylic. The plaintiff informed Mr McInnes of this on 4 December 1995. Mr McInnes said that the figures were "way beyond what's been allowed and the extra cost just can't be absorbed". Mr McInnes said that $200,000 had been allowed. "It was thought it would be $400,000 plus $100,000 for the hydraulics." He said he would report to Mr Williams. Mr McInnes then reported that conversation to Mr Williams (Red 2/161Q-162A, Blue 4/681W). 57 On 6 December 1995 the plaintiff attended a meeting with various Council representatives including Mr Williams and Ms Couacaud. The trial judge said that Mr Williams gave evidence that Mr McInnes told the plaintiff that the cost estimate for the combined café and water feature was $665,000 and that Mr Williams said the Council would try to get more funding for the water feature but that it would be of the order of $400,000 (Red 2/163N-P). Shortly after the meeting of 6 December, Mr Williams asked Mr Deas whether, in the light of the costings from the plaintiff that were "far more expensive than the budget for the whole café and water feature", it was possible that more money might be obtained to fund the increase in costs. Mr Deas said: "No chance mate" (Red 2/164D-F). The plaintiff continued to work on design 4 with a budget of $950,000 (on the assumption of a reduction in the number of glass cylinders from 36 to 32) (Red 2/164M). However, in early to mid-January, Mr Williams telephoned the plaintiff, said that the cost was far in excess of the budget, said he had spoken to Mr Deas, and said that Mr Deas had said there could be no increase (Red 2/165U). Thereafter the parties moved to design 5. 58 On 2 May 1996 the plaintiff sent an invoice for $17,000 for his work on the "Chifley Square Water Wall", being 50 percent of the $50,000 less the payment of the earlier $8,000. The Council submitted that it was entitled to assume that that was the fee that the plaintiff contemplated for work done to that point in time, and that the invoice contradicted any suggestion that any fee charged on a budgeted sum of $1.5 million was being charged or would be charged. 59 In effect the plaintiff submitted that by the end of the period relevant to design 4 the plaintiff knew that the highest figure the Council had contemplated being spent on the water feature was $665,000 approximately, and then only for the combined café and water feature (Red 2/163N); and that the Council would try to get more funding for the water feature, but that it would only be of the order of $400,000. Those figures correspond with those in Estimates Nos 3 and 5 respectively of Page Kirkland Partnership. Mr Deas thereafter rejected any increase in funding, and the plaintiff was told that (Red 2/164F and 165U). The figure of $1.45 million mentioned in the 13 January 1992 document inviting the plaintiff to enter the competition and the figure of $1.5 million identified as available for art were not referable to the water feature alone. Design 4 was introduced at the 15 August 1995 meeting as being part of a café with separate but adjacent water feature, and nothing that occurred then or later could have caused the plaintiff rationally to conclude that he had a budget of $1.5 million or $1.45 million indexed. 60 In summary, the Council submitted that the Chifley Square redevelopment had to have a public art component because of the $1.05 million donation of the developers. From November 1994 the café with a water feature was identified and spoken of as part of the public art component. While it might be curious in some contexts to consider a café as being part of a public art component, all relevant persons did so regard it in relation to the Chifley Square redevelopment. At the meeting of 15 August 1995 which originated design 4, the plaintiff was told that it was necessary to return to the design 1 approach of water artwork associated with the café. He said he could not work from any of the Hassell Pty Ltd designs and offered to design the café himself, but was told that Hassell Pty Ltd would do that. It was agreed that he would design a new water feature. The plaintiff submitted: "that discussion undoubtedly involved a substantial increase in the cost of the water feature which previously was identified between them as possibly $100,000, was still a water feature in the context that from the budget for public art there had to be provided at the very least a café because that was the constraint imposed at that meeting and other public art features."

[32]

The budgeted figure of design 4: the plaintiff's submissions 61 The plaintiff submitted, first, that a "cost estimate" was not a "budget": Blue 3/519J-P and 2/366-367. The evidence pointed to the existence of a $1.5 million budget for public art work (Blue 2/385Q, Black 2/351P and V). 62 Secondly, the plaintiff submitted that while the café could be described as "public art" while a water feature was part of it pursuant to design 1, once the water feature was separated from it, as in design 4, there was no other ingredient but the water feature which could be public art save for a memorial to the late J B Chifley (Black 2/353P-R). At its highest the budgeted figure for that was $80,000. The plaintiff conceded that that might justify a corresponding reduction in the monetary award for design 4, but submitted that it ought to stand because an alternative to the budgeted cost approach was a reasonable cost estimate approach, and the reasonable cost estimate was $1.5 million. 63 Thirdly, he submitted that the $665,767 figure was a cost estimate, not a budgeted cost, unrelated to a design earlier than design 4. He submitted that the $455,441 was a cost estimate, not part of the Council's budget allocation; in any event, though it was in the design 4 period, it was not, "in any relevant sense, a costing of … design 4". 64 Fourthly, the plaintiff submitted that though costings might change as events unfolded, the budgeted cost never changed. 65 Fifthly, he relied on a statement of Mr McInnes to the plaintiff at a meeting on 14 September 1995 to the effect that when a costing of design 4 was known, "if it exceeds the artwork figure then to find more money adjustments can be made by some of the work being considered in a different category" (Red 2/154P; Blue 1/29D-E; Black 2/358W). Mr Williams said that was "consistent" with what he had told Mr McInnes before the meeting. The plaintiff submitted that that statement was only consistent with a view on the part of Mr McInnes that the whole of the artwork figure of $1.5 million was available for the water feature. 66 Sixthly, the plaintiff submitted that if the budgeted figure of $1.5 million was wrong, the figure of $950,000 ought to be selected, because at the 6 December 1995 meeting a person whose identity he could not recall said (Red 2/162V): "Ask for a price for 32 glass cylinders rather than 36. Can we get the cost of the cylinders down to $950,000?" The budgeted figure for design 4: the draft agreement negotiations in October-November 1995 67 One submission of the Council can be dealt with discretely. It turns on the following events. On 11 October 1995, the plaintiff received a facsimile from Hassell Pty Ltd bearing that date and enclosing a copy of an agreement for the provision of the plaintiff's services to Hassell Pty Ltd for the Council. It was provided in response to a letter from the plaintiff dated 1 August 1995 requesting that the Council confirm that the plaintiff reserved all design rights and copyright in the water sculpture. The plaintiff said he disagreed with almost all the clauses, telephoned Robin McInnes at Hassell Pty Ltd, and notified him of his rejection of the draft agreement. On 12 October 1995 Mr McInnes sent the following facsimile to the plaintiff (Blue 3/582): "As you requested we formally agree to amend your fee (see our letter dated 17th May) to include an allowance of: $14,750 for mock-ups and prototypes. Also, as you appear to not accept the agreement document faxed yesterday I am assuming that you will prepare an agreement for our consideration."

[35]

That reflects design 4, not design 1. Another change was a change to the allowance for the preparation of mock-ups and prototype elements from $12,050 to $14,750, as discussed in the telephone conversation with Mr McInnes. The plaintiff did not change clause 3.1, which said that the lump sum fee for "the above service" is $50,000. This was relied on by the Council as an admission by the plaintiff that there cannot have been a large sum for budgeted cost in mind because if anything like $1.45 million with indexation or $1.5 million had been in mind, it would have produced a figure much greater than $50,000. 69 On 1 November 1995 the changes were mailed to Sally Couacaud, who was the Council Visual Arts Officer, and had been dealing with the plaintiff since 3 November 1994. On a document in the plaintiff's handwriting bearing the date 14 November 1995 appear the words: "Sally had revised contract. I agreed with her clause changes, contract given to Robin [McInnes] to have completed for our signature". No contract was in fact entered. The document dated 14 November 1995 constituted the plaintiff's notes of a meeting on that day between himself, Sally Couacaud and Mr McInnes. 70 The plaintiff's evidence was that the changes he made were preliminary only and did not address several important areas, one of which was the fee payable for design 4 (Blue 1/30H and N). In cross-examination the plaintiff accepted that he did not tell Ms Couacaud in his note on 1 November 1995 or her or anyone else orally before or at the meeting on 14 November 1995 which discussed the changes that the changes were "preliminary only" (Black 1/164J-165D). He said there was no discussion about the fee for design 4 at the meeting. He said that he did not say that the $50,000 figure was not applicable for design 4 before or at the meeting (Black 1/167F-H, 170W-171D and 171Q-R). He said he did not say that he wanted to negotiate some other fee (Black 1/167F-H). He said he was silent because the fee was "so obviously wrong" and he expected those present, without him communicating this thought to them, to work out that the fee was wrong (Black 1/171S-W). Another explanation for not raising the fee question, which was "important" to him, was that "it would be very difficult, subject to discussion, to work out at that stage halfway through a project" (Black 1/173T-W). He explained his failure to say that to the meeting by saying: "I would have imagined they would have known it" because they "were colleagues", though he had not dealt with either Hassell Pty Ltd or Mr Williams before the Chifley Square project (Black 1/174B-G). The following evidence is then recorded (Black 1/174H-R): "HIS HONOUR: Q. Why do you say that you would have imagined that they would have known it? A. Well in the architectural profession quite often people start work, often seeking what direction the project will go. Fees, there may be a fee structure before it begins, quite often the fee structure is worked out afterwards and it is discussed at a time when there is some grounds for working out what the fee might be. Halfway through a project, your Honour, it is a very difficult and lengthy subject. It doesn't come up at a very short meeting. Q. But as I understand Mr Blake's questions and your answers so far, correct me if I am wrong, this is a time where a document is passing between you and the others, which is all about design four and it has a figure sitting there about $50,000. What I don't quite understand is why you wouldn't have expected them, in looking at the document, to think, 'Well, that is what he is going to charge for this design four'. That is what I am trying to understand? A. It is too short a time at a meeting of that nature, and there were several other clauses with which I disagreed completely or partially because they were either incorrect, or incomplete, and so many things to discuss in that contract which would be a lengthy process to discuss a contract, not just with a bunch of people over at one short meeting."

[36]

The plaintiff maintained a similar position in later cross-examination (Black 1/181U-184D). 71 Though the trial judge described some of the evidence just referred to (Red 2/159V-160N) he made only limited findings about the plaintiff's evidence. The reason why this is so appears to flow from the structure of the Council's submissions below. Before the hearing began, the Council submitted that the May 1995 agreement on a fee of $50,000 applied not only to design 1 but, as well, at least to design 4 (Black 3/498K-X). This was apparently maintained in final address (Black 3/544U-X). Pursuant to that approach, it was submitted that the plaintiff's evidence that agreement in relation to the draft agreement was only reached on copyright should not be accepted. It was submitted that the court should not accept the plaintiff's evidence about his contemporaneous note recording agreement. It was submitted that the court should infer that the plaintiff intended designs 1, 2, 3 and 4 to be covered by the May 1995 agreement for $50,000 (Black 3/550Q-W). An alternative quantum meruit argument put before trial was that the Council was not liable to pay anything in relation to design 4 because the estimated cost of design 4 grossly exceeded the Council's budget of $100,000 (Black 3/500P-R). In final address the Council submitted that if the court found that the scope of the plaintiff's May 1995 commission did not encompass design 4, the court should find that he had no entitlement to restitution from either the Council or Hassell Pty Ltd because in the circumstances they behaved reasonably in not realising that the plaintiff expected to be paid for those designs. It was submitted that if the court rejected that submission, the plaintiff should be given restitution by Hassell Pty Ltd (Black 3/549H-K). The Council also said that fair remuneration should be assessed on the basis of the April and June 1997 letters, using as budgeted cost figures those in the Hassell Pty Ltd document of May 1995 entitled "Chifley Square Redesign Concept Review", i.e. $250,000 for roof and $35,000 for hydraulic services (Black 3/553Y-554D, 560 bottom line). 72 The trial judge described the following procedural history in relation to the draft agreement (Red 2/260M-261C): "Insofar as the First Defendant sought to rely, in the evidence, on the circumstances in which the draft agreement to which I have referred passed between the Plaintiff and the Defendant's representatives it is pertinent to note that during the course of the proceedings an application for leave to amend was pursued by the First Defendant to plead an agreement in binding form had been entered into when the Plaintiff, on the pleading, had said that he agreed with the terms of the draft which was being discussed. Ultimately, after an interlocutory hearing and judgment, the First Defendant determined not to pursue that application for leave to amend. In those circumstances, the whole of the material relating to the draft agreement was only able to be relied upon by the Defendants in terms of the document having been passed and discussions having taken place as one of the matrix of circumstance against which a quantum meruit claim should be adjudicated. It did not seem to me that the First Defendant made good, on the facts, its assertion that the Plaintiff had determined to agree to a fee of $50,000 with respect to his relevant work from the design work up until the draft agreement point in time design being considered. I accept the Plaintiff's evidence that the Plaintiff simply did not take into account or give consideration to the $50,000 figure which still remained on the draft agreement and which, on his understanding, all present would understand did not fairly describe what he expected would be his due entitlement for his relevant work." 73 The Council does not appear, from the materials in the Appeal Books, to have submitted that $1.5 million was not an appropriate budgeted cost figure on the ground that the plaintiff was content with $50,000 for design 4, and must have known that such a fee could not have borne any relation to $1.5 million as a budgeted cost. Given that that submission was not made and given that the amendment requested was not pursued, once the trial judge rejected the argument that design 4 fell within the May 1995 contract, he did not have to deal further with the plaintiff's evidence about non-disclosure of subjection to the $50,000 figure. The trial judge's limited findings about the plaintiff's cross-examination do not cast much light on the merits of the Council's argument. It would be difficult for an appellate court to draw any conclusions from the cross-examination, particularly since the plaintiff was not cross-examined specifically to support the submission now made by the Council. Accordingly, the argument is rejected.

[52]

December Mr Deas refused to The plaintiff was told of this 1995 increase the money in January 1996. available for the water feature. 79 In short, if what the Council told the plaintiff is what matters, he was never advised of any figure for the water feature alone greater than $0.5 million. If all that matters is the position of the Council and Hassell Pty Ltd, whether communicated to the plaintiff or not, the position is the same; and the highest figure ever contemplated was $665,000 for the café and water feature combined. 80 In my opinion the Council, despite the lack of any formal budgets in evidence, at all material times from 23 November 1994 on "budgeted" to spend $1.5 million for public art (Blue 2/385Q, Black 2/351P and V). This finding of the trial judge was correct. This contrasts with the $1.45 million contemplated in 1992 and the $1.2 million contemplated in 1994. 81 The question is: how much of the public art component did the water feature make up? The trial judge's crucial finding was that a "water feature was regarded as the public art component … right up until September 1996" (Red 2/252S, emphasis added). In my judgment it was erroneous. At least up to 15 August 1995, the Council contemplated an expenditure, as part of its budgeted costs of $1.5 million, of only $100,000 for the water feature. From 15 August 1995 it appreciated that the costs would rise considerably pursuant to design 4. But it continued to view, not only the Chifley memorial and perhaps other things, but also the café as part of the public art element as it had been in design 1 and as it was in design 4 to the extent that design 4 returned to the central concept of design 1. A suggestion to the Council at any time before December 1995 that the whole $1.5 million could be spent on the water feature and nothing else except for a relatively small amount on a Chifley memorial would have been rejected as totally inconsistent with its idea of what was budgeted. That is confirmed by Mr Deas' reaction when he was informed of the plaintiff's costings in December 1995. 82 There was an artificiality in the plaintiff's case at the trial in relation to its arguments about "budgeted cost" which has an adverse impact on the attractiveness of its argument on appeal. This can be seen by examining the "budgeted cost" figure selected for each of designs 2-8. 83 For designs 2-4, $1.5 million was selected (these being instances where, as the trial judge found, there was "no budget specified in the same way as occurred for designs 5, 6, 7 and 8": Red 2/251R). For designs 5-7, the figure of $555,000 was chosen. For design 8, the figure of $400,000 was chosen. The approach of selecting $1.5 million for designs 2 and 3 as well as design 4 reveals a fallacy in doing so for design 4. Design 4 was "Glass Cylinders 'Poplars' with Air Bubbles"; it was 40-45 metres long and three metres high; it was plainly "likely to be a far more expensive project than the original concept" (design 1 - "Glass Water Wall & Roof of Café"); but the trial judge found also that any "previous estimates were clearly … of no relevance" (Red 2/149R-W). If that is so, the selection by the plaintiff of the same budgeted costs figure for designs 2 ("Stainless Steel & Glass Bowl") and 3 ("Granite Water Wedge") as for design 4 would have generated a wrong result either for design 4, or for designs 2 and 3, or for all three. The particular injustice which would have flowed from the plaintiff's approach to budgeted costs for design 2 and design 3 was overcome by the trial judge preferring a time basis approach for designs 2 and 3. The urging by the plaintiff of a budgeted figure of $1.5 million on the court casts considerable doubt over the rationality of that figure for any of the three designs. It reveals a failure to attend to what costs were budgeted for within the $1.5 million. If the "art" for which the plaintiff was responsible was likely to grow greatly in expense in design 4 compared to designs 1-3, the budgeted figure for design 4 would not have been the same as for designs 2 and 3. 84 In my opinion the budgeted cost for the water feature was not $1.5 million. But what was it? The trial judge rejected the view that the relevant cost could be one of those worked out by Page Kirkland Partnership, because their "estimate of costs" were not budgets (Red 2/252P). It may not be necessary to decide whether that finding is correct. Even if Page Kirkland Partnership's conclusions were not "budgets", the Council never contemplated any greater figure as part of "budgeted cost". The highest figure ever contemplated by a Council officer for a water feature was $0.5 million, as communicated to the plaintiff before 5 December 1995. 85 The $1.5 million budgeted cost figure was the sum of particular expected costs figures. If some rose, others might have to fall. According to the Macquarie Dictionary, a budget is "an estimate, often itemised, of expected income and expenditure … for a given period in the future". The Oxford English Dictionary (2nd ed) states as meaning 4(a) for "budget": "A statement of the probable revenue and expenditure for the ensuing year, with financial proposals founded thereon, annually submitted by the Chancellor of the Exchequer, on behalf of the Ministry for the approval of the House of Commons. Sometimes put for the condition of the national finances as disclosed in the ministerial statement; also for the financial measures proposed. Hence applied to an analogous statement made by the finance minister of any foreign country; also to a prospective estimate of receipts and expenditure, or a financial scheme, of a public body, or to the domestic accounts (of income and its manageable expenditure) of a family or individual ….".

[59]

Interest 90 The Council attacked the following reasoning of the trial judge (Red 2/261L-S): "In relation to the question of interest … the First Defendant submitted that any award of interest to the Plaintiff should only apply from 2 April 1997 as he had made no claim for remuneration prior to that date. The Plaintiff, on the other hand, submitted that on any amount awarded the Plaintiff claimed interest and ought be awarded interest up to judgment from the date of the accrual of each cause of action which date it was submitted was the termination of the work on each design. I accept the Plaintiff's submissions in this regard. Interest will be awarded up to judgment from the date of the accrual of each cause of action, being the date of termination of the work on each design. That was, I accept, the date on which, having had the benefit of the Plaintiff's services, the Defendants became obliged to pay reasonable remuneration. Carter and Mason para 2722." 91 In paragraph 2722 of Carter and Mason's Restitution Law in Australia the following appears: "A claim for reasonable remuneration for work done will generally arise when the work is done and accepted, because it is at that point of time that the defendant has received a benefit in circumstances giving rise to an obligation to make restitution." 92 Section 94(1) of the Supreme Court Act 1970 provides: "In any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect." 93 The written submissions of the Council contending that interest should be charged from 2 April 1997, 4 June 1997 or 29 January 1998 were as follows: "17. Although the award of interest is discretionary, the object of interest under s.94 is to compensate the plaintiff for having been kept out of money due to him: Haines v Bendall (1991) 172 CLR 60 at 66 - 7, 79. Where services are performed over a lengthy period of time payment is usually made only after an invoice or other demand for payment has been made. If the services had been performed pursuant to a contract which did not stipulate a time for payment, then payment would be due a reasonable time after the contract had been performed. A delay in rendering an invoice or demand would be relevant in assessing a reasonable time for payment, particularly if the sum being demanded was not known to the debtor. The notion of being 'kept out of' money, in a section designed to compensate for that fact, was not attracted in the present case until Mr Woodward made his quantified demand for payment. 18. Some support for that approach is provided by the claim for reasonable remuneration under the Law Reform (Frustrated Contracts) Act 1943 (UK) which was made in B.P. Exploration Co. (Libya) Ltd v Hunt (No. 2) [1983] 2 AC 352 at 373 - 4. In that case, the plaintiff's cause of action accrued in December 1971 when the contract between the parties was frustrated, but interest was awarded from June 1974 when the plaintiffs first made it clear that they intended to claim restitution." 94 As the submission said, the trial judge's decision to award interest as he did was a discretionary decision. According to traditional thinking, it can therefore only be attacked if the Council demonstrates an error of law, an error of fact, a failure to consider a relevant matter, a consideration of some irrelevant matter, or a result so unjust as to suggest that one of those vitiating errors must have occurred even though it cannot be specifically identified. The result arrived at by the trial judge is not so unjust as of itself to suggest one of the vitiating errors. Nor does the reasoning reveal any of them. The seven causes of action each arose when work terminated on each particular design, because at that time the Council had received a benefit - progress work on a design - which it accepted in asking the plaintiff to desist and commence a fresh one in all cases except the last, where it asked the plaintiff to desist and accepted that his work would have to be paid for. So far as the Council submitted that where services are performed over a lengthy period, payment is usually made only after a demand, it does not follow that the statutory entitlement to interest should as a matter of discretion not commence until then; in any event it was common ground between the plaintiff and the Council from September 1996 that the Council was obliged to pay the plaintiff something. So far as the Council submitted that where payment is to be made under a contract which did not stipulate a time for payment, it would be done a reasonable time after the contract had been performed, that marks an accrual of a cause of action later than the time at which the plaintiff's causes of action accrued. So far as the Council submitted that a delay in making a demand is relevant in assessing a reasonable time for payment, particularly when the sum demanded was not earlier known to the defendant, the submission is sound, and it is also the case that such a delay is relevant to the s 94 discretion, but the delays here are not so clearly lengthy as to invalidate the trial judge's conclusion. As for BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352, the reason why Robert Goff J selected 14 June 1974 was that "it was on that date that Hunt first became fully aware of BP's intention to bring a claim against him": at 374. The Council should have been aware, and was aware, from September 1996 that the plaintiff required further monies; all it was ignorant about was how much. In oral argument the Council said interest should not run from any time before which the plaintiff's claim was not certain. However, it is commonplace for defendants sued for unliquidated damages, compensation or other money remedy to be ordered to pay interest from a time long before any certain claim was made. 95 I would dismiss the appeal so far as the third issue is concerned.

The Council of the City of Sydney v Woodward

At a glance

Court

Decision date

Before

Source

Judgment (64 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)

Cited By (7)