Yisheng Construction Pty Ltd v City Garden Australia Pty Ltd

Supreme Court of NSW|2022-02-28|Before: Ball J

Introduction

The first defendant, City Garden Australia Pty Ltd (City Garden), is the developer of a residential development consisting of 50 townhouses in North Rocks, Sydney (the Development). City Garden undertook the Development as trustee of the Ming Tian City Garden Unit Trust. The principal shareholders in City Garden and unitholders in the Trust are Jian Wei Liang (also known as Victor Jian Wei) and Meng Dai (also known as Adam Dai). Both were also directors of City Garden, although Meng Dai retired as a director on 27 November 2019. Following the approach adopted by the parties during the course of the hearing, I will refer to the individuals involved in the case by their Anglicised given names.
The principal contractor for the Development was Ming Tian Real Property Pty Limited (the Builder). At the time the building contract was entered into, Adam was the sole director of the Builder and one of its shareholders. Victor had no interest in the Builder. The plaintiffs, Yisheng Construction Pty Ltd (YSC) and Yisheng Air Con. Pty Ltd (YSA), were engaged by the Builder as subcontractors on the Development. YSC is a construction company that provides general building services. YSA provides air-conditioning and ventilation services. Both are controlled by Fei Biao Ji (Billy). Both companies had done substantial work for Victor through another development company he controlled known as Ronghai Property Pty Ltd. They had also done substantial work for the Builder in the past and were working on another project as subcontractor for the Builder at the time they worked on the Development.
The issue in this case is whether City Garden agreed, or is estopped from denying that it agreed, that it would take responsibility for the payment of amounts due to YSC and YSA in relation to the Development and if so, the terms of the agreement or arrangement between City Garden on the one hand and YSC and YSA on the other and the amount payable by City Garden in accordance with that agreement or arrangement.

Background

On or around 23 August 2017, City Garden and the Builder entered into a construction contract in respect of the Development for a lump sum of $17,394,500 (exclusive of GST) (subject to variations in accordance with the contract). The date for practical completion was originally 15 March 2019.
In or around September 2017, Westpac Banking Corporation (Westpac) granted a construction loan facility to City Garden for the Development in the total amount of $24,950,000 of which $17,724,835 related to construction costs (the Facility).
In accordance with the terms of the construction contract, the Builder submitted monthly progress claims. In addition, monthly Progress Drawdown Reports were prepared and certified by Construction Consultants QS Pty Ltd (Construction Consultants), a firm of quantity surveyors appointed by Westpac. They were submitted to Westpac by City Garden to make drawdowns under the Facility. Construction Consultants was also appointed as superintendent under the construction contract. The Builder initially engaged Mr Ghady Georges as the construction manager. On or about 7 March 2019, he was replaced by Mr Mario Juresic (Mario).
Work commenced on the Development in about October 2017. In about April 2018, YSC was engaged to perform work and supply materials for the Development consisting of internal carpentry, painting, internal lining, staircases, carpentry framing and cladding. It provided a fixed price quote for each trade. There are also unsigned contracts in evidence relating to the work other than for internal carpentry and carpentry framing. Dechao Liu (Leon), the assistant general manager of YSC and YSA who was the person primarily responsible for overseeing the provision of services and materials by YSC and YSA, gave evidence that the contracts were signed by YSC and sent to the Builder for signature, but the signed copies were never returned.
Similarly, there is no signed contract between YSA and the Builder. However, there is in evidence an email accepting a quote of $454,000 for mechanical ventilation and air-conditioning and there is also in evidence an unsigned contract relating to those services.
Payments relating to the Development were managed through an account with Westpac known as the "City Garden Business One Account". Advances under the Facility were paid into the account following certification by Construction Consultants of the stage the Development had reached. The signatories on the account were Victor and Adam. Payments out of the account were managed by Adam, who would submit payment requests to Victor online for authorisation by him. At the time, Victor trusted Adam and for the most part he authorised payment requests submitted to him without undertaking any independent investigation of whether the payments were actually due and related to work on the Development. In October 2018, Adam persuaded Victor to deposit $1,000,000 into the account and from that time Victor (or more accurately companies associated with him) would on occasions either pay money into the account or, at Adam's request, pay some subcontractors directly. There is at least some evidence that Adam appropriated payments made by Victor to himself or other projects the Builder was working on.
From about June 2019, YSC and YSA experienced delays in being paid for the work they performed on the Development. By late August 2019, YSC claimed to be owed $517,863.58 and YSA claimed to be owed $134,018.45. On 30 August 2019, YSC and YSA issued to the Builder notices of intention to suspend works on the Development because of non-payment. On 3 September 2019, YSC and YSA reduced the number of employees they had on site.
On 6 September 2019, Billy sent a WeChat message to Victor regarding payment and over the course of the following week Billy and Victor exchanged WeChat messages on the topic. All of the communications between them were in Chinese and have been translated. In response to Billy's initial query, Victor said: North Rocks, no problem, go ahead, the bank is slow.
The subsequent messages are somewhat opaque. The plaintiffs submit that the messages conveyed the impression that City Garden would assume responsibility for paying the plaintiffs' invoices. They rely particularly on a message sent by Victor on 9 September 2019 and a WeChat voice message he left Billy on 6 September 2019.
The agreed translation of the voicemail message is: A: Hi A - Bill, yes, our accountant now has moved it to my side. We have done the figure, our accountant has done the figure. The remaining loan released by Westpac is sufficient for this project. Don't worry. Now we are waiting for the fund to arrive. We have paid out of our own pocket to ensure the operation of this project. The only thing is Westpac is too slow. Don't know why. Don't worry, this project is guaranteed … we have fix assets there. We will do the project properly.
There was initially a disagreement on the correct interpretation of the 9 September 2019 message. However, the interpreters who interpreted for Billy and Victor at the hearing largely agreed on its correct interpretation. Victor's interpreter preferred this interpretation of what Victor said: Hello. How much does the North Rocks project owe you? I asked the accountant to audit it. Billy's interpreter preferred this interpretation: Hello. How much is owed to you on the North Rocks project? I'll ask the accountant to audit it.
YSC and YSA were not the only subcontractors who were having difficulty getting paid and who had reduced their services as a consequence. As a result, progress on the Development had stalled.
Concerned about the delay and no doubt prompted by his exchange of WeChat messages with Billy, Victor, on 11 September 2019, sent an email to Mario asking for an update on the progress of the Development. They subsequently spoke. During that conversation, Mario told Victor that the subcontractors were not being paid. Victor says, and I accept, that that came as a surprise to him because, as far as he was concerned, he had approved payment requests submitted by Adam and had contributed his own money to make sure that any amounts due in respect of the Development were paid promptly. Mario suggested that Victor meet with the subcontractors to find out what was going on. Victor agreed and on 19 September 2019 Mario sent an email to the subcontractors in the following terms: Apologies for the late NOTICE, however I require all subcontractors to attend a site meeting tomorrow Friday the 19th September 2019 at 11am. We require you to bring any outstanding and unpaid invoices with you to the meeting. This is a matter of high importance for all contractors to attend tomorrow, as the meeting will be directed by the developer. (Emphasis in original) The reference to 19th September was plainly an error. It is common ground that the meeting occurred on 20 September 2019.
The meeting was held onsite in one of the (uncompleted) townhouses. Approximately 10 to 15 people attended the meeting. What occurred at it forms an important part of the plaintiffs' case, since it is alleged that it was at that meeting Victor promised to pay the subcontractors directly.
Six witnesses gave evidence of what occurred at the meeting: Victor, Mario, Billy, Leon, Yanze Duan (Kai) and Yan Su (Monica). Kai is the sole director and shareholder of Epic Tiles Pty Ltd, another subcontractor who worked on the Development. He gave evidence for the plaintiffs. He has engaged the same firm of solicitors as the plaintiffs and it appears that he is waiting to see what the outcome of this proceeding is before bringing his own claim against City Garden. Monica is an accountant employed by City Garden.
Each of the witnesses gave somewhat different accounts of the meeting. The evidence given by Billy, Leon and Kai generally supported the case advanced by the plaintiffs. The others generally supported the case advanced by City Garden, although as will become apparent, the differences between them are not as great as they might at first appear.
In seeking to resolve the differences between the witnesses, it is necessary to confront the usual problems that arise in reaching conclusions on the content of conversations that occurred several years ago. In this case, no one took notes of what was said at the meeting. Necessarily, the witnesses' recollections of events fade and are altered by the passage of time and their differing personal interests in the events that are now critical to the resolution of a dispute in which many of them are involved.
In the present case, the resolution of the dispute is complicated by two other factors. First, there were different conversations during the meeting, not everyone was present at the time each conversation occurred and the witnesses now have different recollections of who was present. Second, the conversations that occurred at the meeting were partly in English and partly in Mandarin and different attendees had different knowledge of those languages.
It is largely common ground that Mario opened the meeting in English by introducing Victor, that Victor spoke initially to everyone at the meeting in English and then had separate conversations with a number of subcontractor representatives in Mandarin. Mario cannot speak or understand Mandarin so he could only give evidence of what he said and of what Victor said in English. It is unclear how good Victor's English is. He says, and I accept, that he can speak conversational English and a sufficient level of English to engage in day to day business activities. However, he chose to give evidence through an interpreter. Billy's English is limited and he relied on Leon to interpret what was said in English during the meeting. Leon, on the other hand, plainly had an excellent grasp of English. He also speaks Mandarin fluently. Both Kai and Monica had a good grasp of English and had no difficulty in giving evidence in English, although it was apparent that they were not native speakers.
There is some dispute about what Mario said at the commencement of the meeting. However, nothing turns on that. His principal role was to introduce Victor and that is what he did.
At some stage during the course of the meeting, Victor introduced Monica and told those present that they should give their unpaid invoices to her which is what happened after Victor addressed the meeting. The real dispute is about what Victor said about payment during the course of the meeting.
It is convenient to begin with the evidence of Leon. Of the six, I found him to be the most impressive witness. He was the witness who appeared most willing to make concessions when it was appropriate to do so and who focussed most closely on his recollection of what actually happened. He also appeared to be the witness who had the best recollection of what occurred. That is not altogether surprising. The meeting was an important one from his point of view, and during the course of Victor's presentation to the meeting he translated what Victor was saying for Billy, which would have had a tendency to reinforce in his mind what Victor said. For reasons which I will explain, I have come to the conclusion that I should generally accept Leon's evidence.
Leon agrees with much of Victor's account of the meeting. He was cross-examined by reference to Victor's affidavit evidence and gave the following evidence: Q. Victor said, "I'm the developer on the project."? A. Mm-hmm. Q. Did you say that? A. Yes. Sorry. Q. You just have to say words. He said, "Please let me know your issues and tell me why you are working on the project."? A. No. Q. Don't forget this is not to you, personally, it's to the whole meeting? A. I know, but he didn't say "why you working on the projects." Q. Did he say "what you're doing on the projects"? A. Yeah. Q. He said, "Please let me know your issues and tell me what you're doing on the projects."? A. Yep. Q. He said, "Please let me know if you have any outstanding invoices that have not been paid by Ming Tian."? A. Yep. Q. He said, "Please hand those invoices to my assistant, Monica."? A. Yep. Q. He said, "We will forward those invoices to Ming Tian and chase payments."? A. That's not what he said. Q. Did he say, "We'd forward the invoices to Ming Tian"? A. No. He does not say "we will forward the invoice Ming Tian." Q. He didn't say, "We will chase payments"? A. He didn't say that. Q. He said, "Please keep working on the site, as we do need it to be done on time."? A. Yeah, something like that. Q. Then - this is all in English and you were translating these words? A. Correct. Q. Another slight version. He said something, "I've convened the site meeting so you can raise issues directly with me. If nobody tell me problems, I don't know what the problems are", something like that? A. Yeah. Q. Again, he said, "Please hand your invoices to my accountant, Monica, and we will follow up with the builder."? A. No. Q. He said, "The reasons we're here is because Ming Tian has issues with payment."? A. Yep, yeah. Q. And he, Victor, has become aware of it? A. Yep.
The critical question is what Victor said in relation to the payment of the invoices. On that issue, Leon gave the following evidence: A. We just said, "I'm aware that men has [sic] issue with payment", and City Garden has taken over Ming Tian, and the account document has been transferred to City Garden. I want to assure you City Garden does not have any cash flow issue, and City Garden will take over Ming Tian to fund the job for - fund the rest of the job. He said - he also said this, "If I make payment, you need to come here to the job and get the job completed." And, "Give me all your outstanding invoice. We'll check the figure, and once the figure has been checked, we'll make payment. You will still need to send future progress claim to Ming Tian for assessment. Once the payment has been assessed, City Garden will make payment."
As I have said, following his presentation, Victor spoke to a number of subcontractors in Mandarin. Leon says that he was not present during that conversation. He says that he went into another room to give Monica YSC and YSA's unpaid invoices. He gave the following affidavit evidence of their conversation: She said: I need to check with Ming Tian about all of the invoices. They did not send some of your invoices to me. We need to check the figure. If the figure is genuine then we will make the payment.
Leon gave similar evidence in cross-examination including the following evidence: Q. You understood that she was promising that if the figures were genuine, then Victor to be making payment? A. I wouldn't take it as a promise. It's just - just a conversation. Maybe she's saying, "Okay, if the figure is genuine, we'll make payment", it's just the way she said that. I didn't say that's a promise from the accountant.
The evidence given by Victor is largely consistent with the evidence given by Leon except on the question of what was said about payment. On that issue Victor gave somewhat inconsistent evidence. Initially in his affidavit evidence he said: I then spoke to the subcontractors with words to the following effect: I: "I am the developer of this project. Please let me know your issues and tell me why you are working for the project. Please let me know if you have any outstanding invoices not been paid by Ming Tian. Please hand those invoices to my assistant, Monica. We will forward those invoices to Ming Tian and chase payments. Please keep working on the site as we do need it to be done on time."
However, when addressing evidence given by Kai, Victor said this: I deny the words that were attributed to me in paragraph 24 of Duan's Affidavit, particularly, the following words, "I promise that City Garden will pay everyone". I never made such a promise. What I have promised to the subcontractors is that City Garden would pay them the value of their work approved by MTRP [that is, the Builder] and certified by the QS.
That evidence is consistent with the following evidence given by Victor: I also had conversations with some of the subcontractors in Mandarin, I do not remember if the persons that I was talking to are Mr Yanze Duan, Mr Fei Biao Ji and Mr Dechao Liu. I remember that I said the words in Mandarin to the following effect: I: "Do not worry about the funds. We will make sure that your work done and certified by the builder and QS in this project is paid. The construction loan is sufficient for the project. We will make sure to pay the builder to finish the project. Please keep working on the site. Let's finish it together. "City Garden has been paying the funds requested by Ming Tian and certified by the QS. We do not owe the builder any payments. I do not know why you were not paid. However, City Garden will pay you directly in the future for a quicker payment for the project which is approved by the builder and the QS."
City Garden seeks to explain the apparent inconsistency in Victor's evidence on the basis that Victor is to be understood as denying that he said anything in his presentation in English about City Garden paying subcontractors but he accepts that he said something on that subject when speaking in Mandarin. That submission, however, does not sit easily with the fact that the paragraph of Kai's affidavit to which Victor was responding (para 24) was concerned with what Victor said in English. Indeed, Kai in his affidavit evidence says nothing about a conversation with Victor in Mandarin after Victor's presentation to the meeting in English.
The evidence given by Leon of the meeting is largely supported by evidence given by Billy. However, as I have explained, Billy was unable to give any direct evidence of what occurred at the time that Victor addressed the meeting in English. Billy does say that he subsequently spoke to Victor in Mandarin and that Leon and some others were present during that conversation. In my opinion, that evidence should be accepted. Billy's understanding of English is limited. It would have been natural for him to seek confirmation of what had been translated for him by Leon from Victor directly. As I have said, Victor accepts that he did speak to some subcontractors at the end of the meeting, although he cannot recall whether one of them was Billy. With one qualification, Billy's account of what Victor said corresponds to Victor's evidence. The qualification relates to what Victor said about having the work certified by a "QS". On that subject, Billy gave this evidence: Q. And he said, "You will make sure that your work done and certified by the builder and the QS on this project is paid." INTERPRETER: Sorry, can I get that one? Q. "We will make sure that your work done and certified by the builder and the QS in this project is paid." A. INTERPRETER: He said Ming Tian will certify that. Q. As best you recall, what do you say he said? A. INTERPRETER: He just said, "Keep working, and your work will be confirmed and approved by Ming Tian, and that he will make the payment." Q. What I put to you, sir, is that Victor, in fact, said, "Pay for the work certified by the builder and the QS." A. INTERPRETER: He didn't mention QS. Q. He said, "The construction loan is sufficient for the project." Correct? A. INTERPRETER: He said, "He will be responsible for the payment of this project." Q. I understand you say that. I'm asking you did he say, "The construction loan is sufficient for the project." A. INTERPRETER: I can't remember. Q. He may have said that, but you don't remember; is that right? A. INTERPRETER: I just don't remember. Q. So he may have said it, but you don't remember; is that right? A. INTERPRETER: I don't remember. Q. He said, "We will make sure to pay the builder to finish the project." Correct? A. INTERPRETER: Yes. Q. He said, "Please keep working on the site. Let's finish it together." A. INTERPRETER: Yes. Q. And he said, "City Gardens has been paying the funds requested by Ming Tian and certified by the QS." A. INTERPRETER: QS only has to do with evaluating the cost of the project, construction cost. It has nothing to do with our subcontractors.
It is doubtful that Leon was present during the discussion between Victor and others in Mandarin. He denies that he was and it seems more likely that following Victor's general address to the meeting he waited to give the plaintiffs' invoices to Monica while Victor spoke to Billy and others in Mandarin.
Mario says very little about Victor's address to the meeting in English in his affidavit evidence and he was not cross-examined extensively about the meeting. In his affidavit evidence, he simply says this: 19. Victor addressed the contractors in English and asked them to give all the invoices that they had with them to his accountant, Monica. 20. Victor also thanked them for letting him know the situation and said words to the effect: "Why is the project so slow? I am only the developer for this project, if nobody tells me the problems, I will never know the problems"
In cross-examination, he gave this evidence: Q. Victor said, "Send all future invoices and payment claims to Ming Tian, but also copy in our accountant, Monica."? A. I don't think he said that. He said, "Give - send all future invoices to Monica directly." Q. "And Ming Tian will assess the payment claims for us and if the work is complete, then we will make payment of the invoice."? A. I don't believe Victor would say that - would have said that, no. Q. I'm just suggest you what you remember you heard. A. I know that he didn't say that, because he was whinging, "Are you able to pay?", so, no. Q. I'm not asking you whether you can surmise as to whether it was said, based on what you know. I'm just asking you whether you recall that being said? A. Not while I was there, no. Q. Do you recall Victor saying to the meeting, "I promise that City Garden will pay everyone, but we need to push to get the job done."? A. No. That's not what he said.
Monica denies that she said the words attributed to her by Leon. In cross-examination, she also denied that during the meeting Victor said words to the effect of "I promise that City Garden will pay everyone, but we need to push to get the job done" or "City Garden will take over making payments from now on" (words attributed to Victor by Kai). However, she accepts that during the course of the meeting she was focussed on collecting invoices from subcontractors and was not really listening to what was being said.
Adam joined the meeting towards its conclusion. At the end of it he told Mario not to return to the site and that he was fired.
On 22 September 2019, Victor sent a WeChat message, the translation of which is: Hi, arranged $500,000 from Fashion Company, fund should be cleared by tomorrow. Part of your payment will be made. Try to pay you more next week. Please speed up. Thank you.
The sum of $500,000 was received into the City Garden Business One Account on 23 September 2019. On the same day five separate payments totalling $174,759.87 were made to YSC and YSA. YSC and YSA continued to work on the Project.
On 24 September 2019, Victor sent Billy a further WeChat message, the translation of which is: Will pay another $100,000 today. Ten people is not enough, at least thirty. Thank you. And: [T]rying to press the bank release more fund.
Further WeChat messages passed between Victor and Billy in relation to payment including one on 4 October 2019 in which Victor said: If no GST fund back, I will pay you from my private funds, don't worry.
Work on the Development was completed in April 2020. During the period from September 2019 to February 2020, City Garden and the Builder made substantial payments to YSC and YSA. The Builder made one further payment of $20,000 to YSA on 10 June 2020. No further payments have been made since then.
At some stage, Billy chased Victor for payment of the plaintiffs' outstanding payment claims. On 28 April 2020, Victor sent Billy a WeChat message referring him to Monica. There was then a WeChat exchange between Billy and Monica in which Monica said, among other things "Fellow, can you send me the contract and invoice you signed with Adam? Our team will conduct auditing according to QS". Billy replied "I will have me [sic] people contact you. Thanks." Later the same day, Leon sent Monica copies of the "unpaid invoices from north rocks project" Monica also sought copies of the relevant subcontracts. Leon replied "Most of documents they sent are letters of intent, no contracts".
On 19 May 2020, the plaintiffs' solicitors sent a letter of demand to City Garden claiming $785,683.72 on behalf of YSC and $120,755.06 on behalf of YSA. The plaintiffs commenced these proceedings on 24 June 2020 claiming those amounts. They also made a claim against Victor which has since been resolved. The claim against City Garden was originally supported by affidavit evidence from Leon who identifies particular payment claims made by YSC and YSA which, he said, had not been paid. In the case of YSC, the relevant amounts total $772,704.96 and include an amount of $118,470.99 for 50 percent of the retention that is said to be overdue. In the case of YSA, the relevant payment claims total $100,755.06.
On the last day of the hearing, the plaintiffs sought leave to amend their list statement to claim $667,140 on behalf of YSC and $133,255.22 on behalf of YSA. They also seek to calculate those amounts very differently. Relying on payment schedules issued by the Builder, they seek to prove the total amount owing to them in respect of the various contracts they entered into with the Builder. They seek to prove the total amount they have paid through their own bank statements. The amount they claim is the difference. City Garden objected to the amendments for that reason. It claimed that, put in that way, the plaintiffs were seeking to advance a new case which it could not meet. I reserved the question whether the amendment would be permitted to be dealt with in this judgment. I return to that question below.

The Claim

The plaintiffs seek to put their claim on two bases (a third claim based on what was said to be unjust enrichment was not advanced in submissions and should be taken as having been abandoned).
First, the plaintiffs claim that by the WeChat messages sent by Victor on 6 September 2019 City Garden represented that "it would pay for works undertaken in respect of the Development" (defined as the "WeChat Representation"). Second, they claim that at the 20 September 2019 meeting City Garden represented through Victor that "if work continued on the Development, City Garden would pay the outstanding amounts owed by [the Builder] in respect of the works as well as paying for the works required to complete the Development" (defined as the "Site Meeting Representation"). They contend that those two representations amounted to a contractual offer from City Garden to pay the outstanding invoices and to pay for the ongoing works. The plaintiffs are said to have accepted that offer by continuing to work on the Development and not exercising their right of suspension. The plaintiffs also contend that it was an implied term of that contract that "City Garden would make payment in the amounts and in the time required according to payment schedules issued by [the Builder], or in the absence of payment schedules, according to payment claims issued by [YSC and YSA]".
Second, the plaintiffs claim (in a pleading that follows closely the requirements for a promissory estoppel as explained by Brennan J in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428 - 9) that (1) as a result of the WeChat Representation and the Site Meeting Representation, they assumed that City Garden would pay any monies owing to them in respect of the subcontracts, (2) relying on that assumption they continued to work on the Development, (3) City Garden induced this reliance, (4) City Garden knew they would and intended them to rely upon the assumption, (5) it would be unconscionable for City Garden to take the benefit of the work performed by the plaintiffs and not fulfil the assumption, and (6) therefore City Garden is estopped from denying the assumption and making payment in accordance with it.
It is convenient to address first the question whether the representations on which the plaintiffs rely are made out, then the question whether they gave rise to a contract or promissory estoppel and finally the question whether the plaintiffs have proved that they are entitled to recover the amount they claim.

Were the representations made?

It is difficult to understand how the WeChat Representation could arise from the WeChat messages sent on 6 September 2019. The relationship between the parties was typical of the industry. City Garden was the developer. It had arranged to borrow money from a bank to finance the Development. It engaged the Builder to build the Development, who in turn engaged subcontractors to undertake work in specific trades. The Builder was responsible for paying subcontractors but depended on payment by the developer (City Garden) to be able to do so, which in turn depended on advances from the bank. So much must have been understood by Billy when he approached Victor. In that context, Victor's text message must have been understood as saying that City Garden had sufficient money to pay the Builder so that there would be no problem in the plaintiffs getting paid; and that the delay was caused by the fact that the bank was slow in advancing money.
Victor's voicemail message does not advance the position. It reinforced what was said in the text message - namely, that City Garden would have sufficient money to complete the Development and, in particular, sufficient money to pay the Builder to enable the Builder to pay subcontractors. It could not be read as bringing about a fundamental change in the contractual relationship between the parties.
The plaintiffs submit that the words "our accountant now has moved it to my side" must mean that City Garden had taken over control of the Development from the Builder. Those words cannot reasonably bear that meaning. Rather, all Victor appears to be saying is that City Garden's accountant had completed her analysis and given it to Victor (moved it from her side to his). Much clearer words would be required to justify a conclusion that Victor was to be understood as saying that City Garden had taken over responsibility for paying the subcontractors.
Victor's WeChat message of 9 September 2019 was not pleaded. In any event, there is now substantial agreement on what it says. Plainly, it does not convey the impression that City Garden would take over responsibility for paying the plaintiffs' payment claims.
One difficulty with the Site Meeting Representation is the way in which it is framed. It has two limbs. One is that City Garden would pay the outstanding amounts owed by the Builder. The other is that City Garden would pay for works required to complete the Development. The second limb, in particular, appears to suggest that Victor represented that City Garden would pay whatever was necessary to complete the Development or that it would pay whatever was claimed by the plaintiffs (to adopt a version that seems consistent with the plaintiffs' pleaded implied term). But a representation in those terms is not supported by any evidence and seems inherently improbable. On the plaintiffs' case, amounts were due to them by the Builder under the subcontracts. It was those amounts that they were seeking to have paid. It would make no sense for Victor to promise to pay amounts that were not properly payable by the Builder; and the evidence that was given on the question does not suggest that he did.
The essential question is whether during the meeting Victor said words to the effect that City Garden would pay directly invoices approved by the Builder and, if so, whether he added an additional requirement that the invoices be certified by the "QS". City Garden contends that Victor did not say anything along those lines at the meeting in English, that he did say words to that effect (including the QS qualification) to some but not all subcontractors in Mandarin after the meeting involving everyone, but that the Court cannot be satisfied that Billy was present at that conversation. I do not accept that submission.
By the time the meeting was called, Victor was aware that at least some subcontractors, including the plaintiffs, had not been paid amounts owing to them. It appears to be common ground that by this stage both Victor and Billy had lost confidence in the Builder. The purpose of the meeting was to establish how much was owing to subcontractors and to convince them that they would be paid and that therefore they should resume work. It is plausible that in that context Victor would offer to take steps to ensure that the subcontractors would be paid the amounts they were owed. That is, in fact, what he did following the meeting. It is implausible that the subcontractors would be happy to return to work (which is what they did) simply on the basis that Victor would take up the payment of their invoices with the Builder, when the Builder had not paid their claims for several months. The likelihood is that the Builder had run into financial difficulties and that that was the reason the subcontractors were not being paid. The only way that City Garden would be able to solve that problem was to pay the subcontractors directly. That was the context in which the meeting occurred.
It was Leon's evidence in effect that Victor said at the meeting that City Garden would take over responsibility for paying subcontractors provided they did the work, that it would pay outstanding invoices once the figures had been checked and that future progress claims would need to be sent to the Builder for assessment and that once assessed City Garden would make the payment.
City Garden advances various reasons for why that evidence should not be accepted. First, it submits the evidence is inconsistent with evidence given by Mario, who was the only independent witness. Second, it submits that Leon was not a credible witness. Third, it submits that Leon's account is inherently implausible, since by then Victor had lost confidence in Adam. It is not plausible in those circumstances that Victor would have relied on the Builder to certify the amount payable to the plaintiffs.
I do not accept these submissions. It is true that Mario is more independent than the other witnesses. However, in his affidavit evidence, he said virtually nothing about what Victor said at the meeting, despite the fact that Leon's account of the meeting would have been available to him. He denied specific matters put to him in cross-examination. However, that is as far as his evidence went. City Garden submitted that some weight should be put on the fact that Mario was not cross-examined vigorously on his account of the meeting. But it was not for the plaintiffs through cross-examination to fill in the gaps in Mario's evidence in chief. Mario had limited interest in what Victor said and he was sacked at the end of the meeting. That matter is likely to have weighed more heavily on his mind.
In my opinion, Leon was a credible witness. City Garden submitted that his credibility was undermined by his poor contractual management and the fact that, despite suggesting in the witness box that there were other documents recording the terms of the subcontracts between the plaintiffs and the Builder besides those in evidence, he was only able to produce one. No doubt, the contractual arrangements could have been better managed. The fact that they were not, at least in part, is explained by the fact that the plaintiffs had worked for the Builder (and Victor) on a number of jobs in the past and they trusted one another at the time. In any event, I do not accept that any inadequacies in Leon's contractual management reflect on his credibility as a witness.
City Garden points to the fact that Leon asserts that Monica made statements which she denies and which, given her position, she is unlikely to have made. However, in my opinion, Leon's evidence of his conversation with Monica was credible. He volunteered the view that Monica could not be understood as making some representation on behalf of City Garden herself. The words he attributes to her are "I need to check with Ming Tian about all of the invoices … If the figure is genuine then we will make the payment." In my opinion, it is plausible that she spoke words to that effect. Most of the payments were processed through the City Garden Business One Account. Victor was a signatory to that account. On any view, it seems clear that City Garden was going to take on a greater role in processing payments. In those circumstances, it would have been natural for Monica to have said "we" will make payment without necessarily intending to convey the position that City Garden would become responsible for the payment. The effect of Leon's evidence is that that is how he understood what she said.
As to City Garden's last point, it primarily goes to the question whether Victor also mentioned the role of the quantity surveyors. I return to that question below.
The reference to the quantity surveyors aside, Leon's evidence is plausible in the context in which the meeting occurred and is consistent with evidence given by Victor. City Garden takes issue with this last point on the basis that Leon's evidence concerns Victor's presentation in English whereas Victor's evidence concerns what he said in Mandarin in a conversation to which Leon says he was not a party. There are two difficulties with this submission. First, as I have said, it is not obvious that Victor's evidence is limited to what he said in Mandarin. Second, it does not seem plausible that Victor said different things in English and in Mandarin. It is far more plausible that Victor repeated in Mandarin what he had already said in English particularly for the benefit of those present whose English was poor.
City Garden submits that Billy was not a satisfactory witness. I accept that there are problems with his evidence. One problem is that he did not give evidence of the conversation in Mandarin in chief, although clearly that conversation was important to his case. Another is that he recalls Leon as being present during the conversation, whereas the likelihood is that he was not. A third is that he maintained that Victor had already promised in the WeChat messages of 6 September 2019 that City Garden would pay the plaintiffs, whereas that is not what those messages say. A fourth is that he appeared to have a poor recollection of what was said and ultimately gave evidence that suggests that he could only recall the gist of what was said, which was to the effect that "You can send the past invoices and future invoices to me and keep working". However, these problems are not fatal to the plaintiffs' case. I have explained why I think it is likely that Billy was present when Victor spoke in Mandarin. On any view, Victor made important concessions about what he said at that time. The fact that Billy had a poor recollection of what was said does not undermine the evidence given by Leon, who was primarily responsible for the job on behalf of YSC and YSA.
The question remains whether Victor said words to the effect that any payment claim would need to be certified by the quantity surveyor. I am not satisfied that he did. His evidence on that issue is not corroborated by any other witness, while Leon, Billy and Kai all deny that he said words to that effect. The role of the quantity surveyors was to certify the work completed by the Builder to enable drawdowns to be made under the Facility. There is no evidence that they performed some other function. It seems more plausible that Victor agreed to pay amounts that were owed by the Builder rather than proposing some separate mechanism by which subcontractors were to be paid. Shortly after the meeting, City Garden paid money into the City Garden Business One Account and a number of amounts were then paid from that account to YSC and YSA. There is no suggestion that those payments were certified by the quantity surveyors.
Victor did give evidence in cross-examination that he checked the reports prepared by Construction Consultants before making payment. But just what he did is unclear. The reports prepared by Construction Consultants contained a detailed breakdown of trades, City Garden's budget for each of those trades, the percentage of work completed and therefore the budget allowance that had been used in respect of each trade. However, no explanation was given of how City Garden's classification of trades and budgets for them related to the subcontracts entered into by the Builder, and the fact that Victor checked the reports before making payment does not itself establish that payment to the subcontractors was conditional on certification by the quantity surveyors.
City Garden relies on the WeChat exchange between Monica and Leon in April 2020 in which Monica said "Our team will conduct auditing according to QS" as corroborating Victor's account of the conversation. However, little weight can be placed on Monica's WeChat message. What City Garden was proposing to do in April 2020 says nothing about what Victor said in September 2019. Moreover, Monica does not suggest that payment was conditional on approval by the quantity surveyors. All it suggests was that City Garden was going to check the plaintiffs' claims against the Construction Consultants' reports.
One other point should be made about the representation relied on by the plaintiffs. Although the evidence is that Victor said that he would pay amounts assessed by the Builder that statement must be understood in context. At the time the statement was made the position was that the Builder had entered into certain subcontracts for work necessary to complete the Development in accordance with the terms of the building contract between City Garden and the Builder. The complaint of the subcontractors was that they had not been paid the amounts properly due to them under their subcontracts for the work that they had done. I do not think Victor could reasonably have been understood as saying that City Garden would pay whatever amount was certified by the Builder, making the Builder the sole arbiter of what was due under the subcontracts. Rather, Victor must be understood as saying that City Garden would pay amounts that were properly payable under those contracts, relying on assessments by the Builder of the amount of work that had been done since the last claim. That left open the possibility that City Garden would not pay an amount that it did not believe was properly payable to the relevant subcontractor.

Did the representation give rise to a contract or promissory estoppel?

The plaintiffs' case is that the WeChat Representation and the Site Meeting Representation together constituted an offer that was accepted by conduct - that is, by YSC and YSA in effect returning to work.
The WeChat Representation can be put to one side. On the findings I have made, the Site Meeting Representation was not made in the precise terms in which it is pleaded. Rather, what was represented was that if the subcontractors returned to work City Garden would pay the amounts properly due to them under their respective subcontracts for the work that they had done and would pay for future work in accordance with the relevant subcontract as assessed by the Builder. As I have explained, that representation did not carry with it the implication that the Builder was to be the sole arbiter of what was payable under the subcontract. Rather, assessment by the Builder was part of the process of establishing what was properly owing.
The question is whether that representation can be characterised as a contractual offer capable of acceptance by performance: see Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. In my opinion, it can. The relevant principles were set out by Gaudron, McHugh, Hayne and Callinan JJ in Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [24] - [25] in these terms: [24] "It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty." To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet "[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts". [25] Because the inquiry about this last aspect may take account of the subject-matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances, not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so. Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties. (footnotes omitted)
In the present case, the terms of the arrangement are sufficiently certain to be enforceable, and the circumstances in which the promise was made strongly suggest that the parties intended their arrangement to be legally enforceable. The purpose of the arrangement was to deal with what and how the subcontractors would be paid if they returned to work. City Garden does not seriously contend that the circumstances in which the representation was made could not give rise to a binding contract. Rather, its submissions are directed to the question whether the pleaded representations were made.
On the other hand, I can see no basis for implying into the contract the term pleaded by the plaintiffs. It is unnecessary to discuss the precise requirements for the implication of a term in a unilateral oral contract such as the one in this case and, in particular, whether all of the five conditions identified by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282 - 3 need to be satisfied. The pleaded implied term is inconsistent with the express representation that was made. On the findings I have made, Victor agreed to pay amounts that were assessed by the Builder and were properly payable under the relevant subcontract. He did not agree to pay whatever was claimed by the plaintiffs in their payment claims, which is the effect of the implied term. Moreover, the plaintiffs no longer seek to advance a claim based on the payment claims. Consequently, that aspect of the implied term at least is irrelevant.
On the conclusions I have reached, it is unnecessary to consider whether City Garden is estopped from denying that it is liable to pay the plaintiffs the amounts certified by the Builder as being payable under their subcontracts. However, in my opinion, all the requirements of a promissory estoppel are met in this case. Those requirements were identified by Brennan J in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428 - 9 in these terms: In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
Each of those requirements is satisfied in this case. The plaintiffs assumed that City Garden would pay them if they resumed work. That assumption was induced by what Victor said at the meeting. The plaintiffs resumed work on that basis and City Garden intended that they would do so. The plaintiffs suffered detriment because they forewent the opportunity to suspend work and instead resumed work at the site. On the plaintiffs' case, City Garden has failed to pay them.

The amount claimed

The primary relief sought by the plaintiffs is an order that City Garden pay YSC the sum of $667,140 and pay YSA the sum of $113,255. Those figures are the figures contained in the proposed amened summons and amended list statement that the plaintiffs sought leave to file on the last day of the hearing. The amendments to the summons and list statement principally seek to substitute the new amounts for the original amounts claimed. But those simple amendments do not reveal the true extent of the change in the plaintiffs' case.
The plaintiffs originally sought to prove the amount they then claimed by identifying specific payment claims that had not been paid, tendering a number of payment schedules issued by the Builder stating the amount said to be owing in respect of those payment claims and, where payment schedules were not available, by tendering the relevant payment claims themselves. Put in that way, the claim relied on the term said to be implied in the contract between the parties. That claim was abandoned in final submissions.
As I have explained, instead the plaintiffs now seek to prove different figures by proving the total amount said to have been approved by the Builder in payment schedules and deducting from that amount the total amounts paid by the plaintiffs as disclosed in their bank statements. It is noteworthy that no witness has given evidence about these documents. Rather, the plaintiffs simply rely on them as business records. Put in this way, the claim raises two issues. The first is whether the plaintiffs should be entitled to amend their claim in the way they seek to do. The second is whether, even if they are, they have provided adequate proof of their claims.
In my opinion, the plaintiffs' claim must fail on both bases.
The plaintiffs submit that the case they now seek to put falls squarely within the pleaded case because that case was that it was an implied term of the agreement relevantly that "City Garden would make payment in the amounts and in the time required according to the payment schedules issued by [the Builder]" and all the plaintiffs now seek to do is prove the relevant amounts by tendering the payment schedules. There are, however, two problems with that submission.
First, I have already rejected the case that the relevant term can be implied in the agreement.
Secondly, the way that the plaintiffs seek to make use of the payment schedules is not consistent with the implied term. The case that was originally put was that the relevant payment schedules (in response to a payment claim) showed the amount that the Builder would allow in respect of that payment claim; and that was the amount that the plaintiffs were entitled to recover from City Garden in respect of that claim. However, the plaintiffs now seek to rely on the final payment schedules in respect of each subcontract to prove the total amount paid or payable by the Builder in respect of that subcontract. To take an example, the final payment schedule for framing was dated 26 May 2020. It contained relevantly the following information: Gross Claims by Subcontractor Previous claims to 25/07/19 1,576,496.51 This claim to 04/01/20 (Including Retention) 50,872.31 S/C Claim Reference NRDL07 Total Claimed 1,627,368.82 Payment Calculation Authorised Original Subcontract 1,130,000.00 Variations Approved 481,680.81 Variations Unapproved 0.00 Materials on / off Site 0.00 Rise and Fall 0.00 Gross Payment Authorised 1,611,680.81 Less Retention 90,198.98 Net Payable 1,521,481.83 Less Previous Payment 1,480,100.00 This Payment Authorised 41,381.83 Plus GST 4,138.18 Payment Amount 45,520.01

The plaintiffs seek to rely on that document to prove that the total amount owing to YSC in respect of framing was $1,611,680.81. It seeks to prove the total amounts payable in respect of the other subcontracts in the same way. The total of those amounts is $4,276,299.24. Adding GST, the total is $4,703,929.16. According to YSC, the total amount it has been paid as shown in its bank accounts is $4,036,788.40, leaving a balance of $667,140.76, which is the amount YSC claims. No attempt has even been made to prove how much has been paid in respect of each subcontract. The analysis for YSA is similar, except that there is only one subcontract.
I accept that this is a radically different case. As the claim was originally put, the task for City Garden was to satisfy itself that each payment claim on which it was sued was properly payable and then to consult its records to determine whether it had paid it. City Garden served evidence directed at those matters. As the case is now sought to be put, an essential issue is whether the sum of $4,036,788.40 is the total amount that YSC has received in respect of the Development. Until the case was put in final submissions, City Garden had no reason to investigate that question. Moreover, I accept that had it known that that was the way the case was going to be put, it would have wanted to investigate that question. That is particularly so when the plaintiffs were doing other work for the Builder, raising the question whether past payments had been properly allocated between the jobs on which the plaintiffs were working.
It follows that the amendments should not be permitted and the plaintiffs should not be permitted to advance the case that they now do.
That conclusion is sufficient to dispose of the plaintiffs' amended claim. However, in my opinion, there is another difficulty with it.
The plaintiffs seek to prove the total amount owing to them by tendering the final payment schedules issued by the Builder. There is, however, no evidence concerning how those payment schedules came to be issued. That is significant because two of the schedules (in respect of framing and internal carpentry) are dated 26 May 2020 - after the plaintiffs had sent their letter of demand. Moreover, in order to calculate the amount payable the payment schedules deduct an amount described as "Previous Payment". Yet, the plaintiffs claim that that amount should be ignored in calculating the amounts owing to them, since it represented the amount the subject of previous schedules and not the amount actually paid. In my opinion, the payment schedules themselves are an inadequate basis to justify that conclusion. In order to place any weight on the payment schedules, more information is required about how they were prepared and the circumstances in which they were issued and received. The mere tender of what purport to be payment schedules signed by a representative of the Builder (usually Adam) is not sufficient.
In addition, mere proof that the Builder assessed particular payment claims in the way that it did is not proof that the amounts now claimed are properly payable under the relevant subcontracts. The evidence is that work on the Development is now complete. It might be inferred from that that the plaintiffs are entitled to be paid the balance of the full amount due under each relevant subcontracts. However, tender of the final payment schedule is not proof of that amount. At a minimum, the plaintiffs would need to prove the amount due under each subcontract (including the amount of each variation) and the amount that they have been paid. They have not sought to do the former and the mere tender of the plaintiffs' bank accounts do not prove the latter. These points highlight the fact that the evidence given by the witnesses was directed at proving damages in one way, whereas the plaintiffs now seek to do so in another.
As I have said, the plaintiffs no longer seek to advance the case that they advanced originally - that is, the case that specific invoices which are properly payable under their subcontracts have not been paid. Accordingly, the plaintiffs have failed to prove that any amount is due under the contract on which they sue or that they have suffered any loss arising from their reliance on the representation made by City Garden. It follows that their claim must fail.

Orders

The plaintiffs have been wholly unsuccessful. There is no apparent reason why they should not pay City Garden's costs.
Accordingly, the orders of the Court are: 1. Refuse leave to the plaintiffs to file the amended summons and amended technology and construction list statement; 2. Proceedings dismissed; 3. The plaintiffs pay the first defendant's costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 March 2022

At a glance

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Judgment (9 paragraphs)

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Cases Cited (4)

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