Abigroup Contractors Pty Ltd v ABB Service Pty Ltd
[2004] NSWCA 181
•15 June 2004
NEW SOUTH WALES COURT OF APPEAL
CITATION: Abigroup Contractors Pty Ltd v ABB Service Pty Ltd (formerly ABB Engineering Construction Pty Ltd) [2004] NSWCA 181
FILE NUMBER(S):
CA 40970/03
HEARING DATE(S): 10,11,12,13 May 2004
JUDGMENT DATE: 15/06/2004
PARTIES:
Abigroup Contractors Pty Ltd - Appellant
ABB Service Pty Ltd (formerly ABB Engineering Construction Pty Ltd) - Respondent
JUDGMENT OF: Giles JA Tobias JA Cripps AJA
LOWER COURT JURISDICTION: Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S): ED 55033/98
LOWER COURT JUDICIAL OFFICER: Einstein J
COUNSEL:
R Macfarlan QC & P Durack - Appellant
B Collins QC & M Orlov - Respondent
SOLICITORS:
Clayton Utz - Appellant
Abbott Tout - Respondent
CATCHWORDS:
CONTRACT - tender for construction works - letter of intent issued - formal contract to be entered into - letter of intent envisaged commencement of work prior to formal contract - work commenced and carried on while negotiations continued - whether on construction of letter of intent and with regard to the parties' prior and subsequent conduct a fourth class Masters v Cameron contract had come into existence upon commencement of work - whether party's case in a reference had included that the contract had come into existence - PROCEDURE - contractual claims abandoned in submissions in favour of quantum meruit claim - abandonment conditional on leave to amend - leave opposed - in the event, not necessary to decide question of leave or quantum meruit claim - whether judgment should have been given on contractual claims against abandoning party - COSTS - whether evidence relevant to abandoned claims remained relevant for other purposes - whether error in failing to give other party a costs benefit referable to the abandonment of claims. D.
LEGISLATION CITED:
DECISION:
In the proceedings below, dismiss the cross-claim. In the appeal, appeal dismissed with costs.
JUDGMENT:
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40970/03
ED 55033/98GILES JA
TOBIAS JA
CRIPPS AJATuesday 15 June 2004
ABIGROUP CONTRACTORS PTY LTD v ABB SERVICES PTY LTD
Judgment
GILES JA: Judgment was given for the respondent for $4,773,962.47 on a quantum meruit claim and the appellant was ordered to pay the respondent’s costs. The first issue in the appeal was whether a contract between the appellant and the respondent had come into existence; a sub-issue was whether it was open to the appellant to contend for the particular contract on which it relied. The second issue was whether the appellant was entitled to judgment on other claims which it said the respondent had abandoned. The third issue was whether the order for costs should have been moderated to reflect that abandonment.
Background
The appellant, a substantial construction company, was engaged to design and construct the Multi Use Arena (“the MUA”) within the Sydney Olympic Park precinct at Homebush Bay in Sydney. The MUA was to be the major indoor venue used for the Sydney 2000 Olympic Games, and is now known as the Superdome. It is a bowl shaped concrete structure with tiered seating around a rectangular arena floor, fully enclosed by a steel framed roof providing a completely column-free space beneath. The roof structure includes sound absorption and reflecting elements providing required acoustic qualities.
The respondent, also a substantial construction company, was experienced in the design, fabrication and construction of large steel structures. It gave assistance to the appellant in the preparation of the appellant’s tender for the work of designing and constructing the MUA. When the appellant sought tenders for various sub-contract works, the respondent tendered for the fabrication and construction of the roof works.
Initially the appellant sought tenders for a different roof structure without the acoustic elements. The respondent provided a quotation. The roof works were revised and fresh tenders were sought. The respondent submitted a tender on 9 February 1998. The tender was discussed at a post-tender meeting on 12 February 1998. The appellant asked for and received further information from the respondent by fax and telephone calls on 18 February 1998. Following an intimation that a reduced price would be likely to secure the job, on 19 February 1998 the respondent reduced its tender price to $14,000,000. The tender was further discussed at a meeting on 19 February 1998, and at the end of the discussions the respondent was told that it was the successful tenderer and was given a letter of intent.
The letter of intent will be set out in full later in these reasons. At its commencement it described the appellant’s acceptance of the respondent’s tender as conditional upon entry into a formal subcontract based upon amended SC.JCC-D 1994 conditions and Project Related Conditions of Contract (“the general conditions”). Paragraph 9 authorised commencement of the works in accordance with the letter of intent prior to the execution of the formal subcontract, and included that the roof structure was to be completed by the middle of October 1998. Paragraph 10 included that commencement “is deemed to be full acceptance of the terms of this subcontract agreement and confirms the existence of a subcontract between our two companies”.
On the respondent’s quantum meruit case, it began work on the fabrication and construction of the roof works on 25 February 1998. The appellants submitted on appeal that by virtue of paras 9 and 10 of the letter of intent a contract came into existence upon the respondent commencing the works on 25 February 1998, the terms of which were found in the letter but did not include the general conditions (“a limited conditions contract”).
The respondent proceeded with the works concurrently with ongoing communications and discussions with the appellant upon the terms of a formal subcontract. There were many letters and meetings. Agreement came close, but could not be reached. In mid-June 1998 the respondent asserted that a formal subcontract could not be agreed and that it was carrying out the works on a quantum meruit basis. The appellant asserted in response that there was a contract, although the contract it identified was not a limited terms contract. There were further discussions, but still agreement could not be reached.
On 6 August 1998 the respondent commenced proceedings in which it claimed declarations that there was no contract and that it was entitled to be paid on a quantum meruit basis, alternatively if there was a contract a declaration as to its terms. The appellant filed a defence in which it alleged that a contract had come into existence on 19 February 1998, alternatively that the respondent was estopped from asserting otherwise.
In mid-October 1998 the appellant asserted that the respondent had repudiated the contract in existence between them and gave notice that it terminated the contract. The repudiation was announcing that the works could not be completed until a date in August 1999. The appellant cross-claimed against the respondent in the proceedings, claiming damages for repudiation of the contract and damages under the Trade Practices Act 1974 for misleading and deceptive conduct in misrepresentation of the respondent’s capacity, resources and ability to perform the roof works.
There were then a number of amendments to the claims and cross-claims in the proceedings. The respondent added to its primary case that there was no contract, a claim to a money sum on a quantum meruit basis. It added to its alternative case if there was a contract, claims to money sums for delay and variation costs under any contract which had come into existence, a claim to damages for repudiation by the appellant of that contract, and a claim to an order under s 87 of the Trade Practices Act varying that contract as to the date for completion. The repudiation alleged was the appellant’s termination of the contract. The appellant came to allege eight alternative versions of contracts, coming into existence on 19 February, 5 May and 7 July 1998 and the day the respondent commenced the works, in some cases by estoppel if not directly. It added claims to damages for breaches of the contract independently of repudiation. The respondent’s defence to a 7 July 1998 contract included that the appellant was estopped from alleging it.
On 3 November 1999 the whole of the proceedings was referred to Mr Robert Wensley QC for inquiry and report pursuant to Pt 72 r 2(1) of the Supreme Court Rules.
The hearing before the referee began in March 2000. There were openings and an inspection, various conclaves of experts and a contested amendment application. The first witness was called on 19 May 2000. Evidence was taken over a period extending until 11 September 2001. The reference occupied 151 sitting days. There were numerous witness statements and reports and a large number of exhibits. Something like 200 lever arch folders of documents and a transcript in excess of 10,000 pages weighed upon the referee. The written submissions thereafter exchanged occupied over 20 volumes.
The referee delivered a report of 953 pages dated 9 December 2002. He noted that the respondent “did not pursue” its claims to money sums under and damages for repudiation of a contract, its Trade Practices Act claim, or its estoppel defence. He concluded that no contract had come into existence and the respondent was entitled to $3,215,771.70 plus interest on its quantum meruit claim, and that all the appellant’s cross-claims should be dismissed. He did not report as to costs, expressly leaving that for the Court.
By a notice of motion filed on 13 December 2002 the respondent applied for an order that the report be adopted, and for declarations and orders consequential on its adoption. By a notice of motion filed on 25 March 2003 the appellant applied for an order that the report be rejected so far as the referee had concluded that no contract had come into existence and had upheld and quantified the quantum meruit claim, and for judgment on claims abandoned by the respondent.
The notices of motion were heard by Einstein J over six days in July 2003. The appellant did not contend for the same raft of contracts, but only for a contract coming into existence on the day the respondent commenced the works (“a commencement contract”). It propounded two alternative versions of the contract, one which included the general conditions (“a general conditions contract”) and the other a limited terms contract. In the course of the hearing it confined itself to a limited terms contract. There was dispute over whether the appellant’s case before the referee had included a limited terms contract.
On 30 July 2003 the judge published reasons of 184 pages in which he decided that the report should be adopted. In September 2003 he heard further submissions as to judgment on abandoned claims and as to interest and costs. On 24 September 2003 he published reasons in which he decided that judgment on abandoned claims should not be ordered, how interest should be calculated, and that costs should follow the event. He resolved an outstanding matter in reasons published on 16 October 2003. On that day his Honour made the orders for judgment and costs. Costs from 11 April 2000 were payable on an indemnity basis, and they must have been considerable.
Many more matters were in issue before the referee than before the judge, and more matters were in issue before the judge than on appeal. The referee made comprehensive findings of fact, and so far as relevant to the appeal none of his findings of primary fact was challenged. In written and oral submissions we were taken at length to the findings in and other contents of the referee’s report and the judge’s reasons, and to pleadings, openings, and submissions. There is no need, and it is undesirable, to repeat in these reasons all that was thus exposed. Sufficient reference will be made to explain the decision of the appeal.
The letter of intent
Omitting formal parts, the letter of intent read –
“MULTI USE ARENA PROJECT – OLYMPIC SITE – HOMEBUSH BAY
LETTER OF INTENT FOR THE MAIN ROOF STRUCTURE AND ROOF CLADDINGAbigroup Contractors Pty Limited hereby accept your offer of $14,000,000 (Fourteen million dollars) to supply, deliver and install all roof structure and roof cladding components to complete the main roof at the above mentioned project, all as per the contract drawings, specification and construction schedule as amended from time to time by Abigroup.
Our acceptance is conditional upon the parties entering into a formal subcontract based upon ‘Amended SC JCC-D 1994’ and Project Related Conditions of Contract.
1. Contract Agreement
A copy of the standard subcontract agreement has been forwarded to you. We will now proceed to prepare the subcontract agreement and will forward this document to you for signing.
2. Letter of acceptance
This letter of acceptance dated 19 February 1998 will be included in and form part of the contract agreement.
3. Rise and Fall
Rise and fall is not applicable and the price stated above is firm for the duration of the project and is inclusive of all site and industry allowances.
4. Progress Payments
To be on a 45 day basis related to completed works as at the 20th of each month.
5. Retention
Retention is to be in the form of two (2) Bank Guarantees to the value of $350,000.00 each, the first one to be released at the Head Contract Practical Completion. Balance to be released upon completion of the defects liability period.
6. Defect Liability Period
Fifty two (52) weeks from date of Practical Completion of the Head Contract.
7. Liquidated Damages
Actual costs to a maximum of $1,400,000.00.
8. Insurances
Prior to any works commencing on site, the subcontractor shall provide copies of the actual certificate and the following information.
Current Certificates of Unlimited Workers Compensation, Top Up, Public Liability having minimum cover of $10,000,000.00, contract works Insurance with Public Liability to include the respective interests and rights of Abigroup Contractors Pty Limited and any benefit in terms of premium reduction due to Abigroup head contract insurance shall form a credit variation.
Approved Superannuation and Redundancy schemes along with current evidence of contribution by your company to the funds.
Appropriate PPS taxation requirements.
9. Program of Works
In order to meet program target dates, you are authorised to commence and proceed with the works to [sic] in accordance with this letter of intent prior to the execution of formal copies of the subcontract documents.
The works are to be carried out in accordance with the tendered Programme, which will be with completion of the roof structure by the middle of October 1998.
Drawings and Specification
The trade works relative to this contract are indicated on the following schedule of drawings and specification.Drawings
Architectural drawings by Cox Richardson Architects and Taylor Thomson Whitting.As per Abigroup transmittal No. 164 dated 19/1/98.
Specifications
Taylor Thomson Whitting: SPA – 3K Structural Steel Roof Steelwork No 96319A 24 November 1997 Page 2 to 31 inclusive.
Cox Richardson Architects: SPA-4C Roofing.
No 961033 29 January 1998 Pages 1 to 12 inclusive.
Addendum No 1 – gutter on Main Roof
No 96319A 23 January 1998 Pages 1 to 3 inclusive of Plan Layout.10. General Clauses
Commencement by the subcontractor is deemed to be full acceptance of the terms of this subcontract agreement and confirms the existence of a subcontract between our two companies.
We confirm that the subcontractor has examined the contract drawings and has allowed for everything necessary and incidental to carry out the work as required under this contract. No claims will be recognised as a result of the subcontractor’s failure to allow for everything necessary to complete the works.
Where work commences prior to the execution of the subcontract agreement, no monies will become due and payable until the subcontract agreement has been executed.
You are required to comply with the current law in respect of the Prescribed Progress Payments Act and we further confirm that all progress payment claims are to be accompanied by the appropriate Prescribed Progress Payment Tax Form, or a copy of your deduction certificate.
Debris – the subcontractor shall daily clean up all debris created by his work and, at a time nominated by the builder, the subcontractor shall deposit such debris into the site rubbish chute, where applicable, or in a position pre determined by the builder. The said debris shall then be removed from the site by the subcontractor at no further expense to the builder.
The subcontractor is to provide all necessary storage facilities for his materials and equipment.
Fixing on, near or adjacent to works performed by others is deemed to be acceptance of the suitability of the works performed by others to accept the works contained under this Subcontract Agreement.
The subcontractor is to comply with the “Occupational Health & Safety Act” of the safe working practice of his employees as well as himself as it applies to the work of this subcontract. The subcontractor will supply all materials and equipment necessary to facilitate such safe working practice. Particular attention is drawn to the specific requirements of the Act in relation to electrical equipment and power leads used on site. Failure to comply with this could invoke heavy fines or industrial disruption on site. Compliance is therefore compulsory.
Where the word ’tradesman’ is referred to in this contract this work is deemed to mean the tradesperson (male or female).
We would like to take this opportunity to thank you for your interest in this project and we look forward to mutually rewarding association on this and future projects.”
The appellant submitted that upon the respondent commencing the works on 25 February 1998, a limited terms contract came into existence with the terms -
“(a)a price of $14m with no rise and fall (as specified in the first paragraph and Clause 3);
(b)ABB to supply, deliver and install the roof structure and cladding to complete the main roof in accordance with the drawings and specification referred to in the letter as amended by Abigroup from time to time and to do all necessary work to achieve that end;
(c)completion was to be by the middle of October 1998 in accordance with the tendered program as specified in Clause 9 (the tendered program was a reference to the program described in Abigroup’s letter to ABB of 21 January 1998);
(d)progress payments as described in Clause 4;
(e)terms as to retention, defect liability period, liquidated damages, insurance and other general clauses as described in Clause 5, 6, 7, 8 and 10 of the letter.”
It submitted that the contract was of the kind described in Sinclair Scott & Co v Naughton (1929) 43 CLR 310 at 317 as -
“ … one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.”
`
In Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 and many later cases this has been called a fourth class contract, additional to the three classes described in Masters v Cameron (1954) 91 CLR 355 at 361.The decisions of the referee and the judge
The appellant’s pleading of a commencement contract, in para 5 of its defence and para CIAA of its cross-claim, alleged that the letter of intent was an offer to the respondent to carry out the roof works “on the terms and conditions of [the letter of intent]” and that the respondent accepted the offer by commencing the works. No further particulars were given of commencement of the works or of the terms of the contract.
The referee doubted whether in the end the appellant put a case of a commencement contract. He noted that the appellant’s submissions in chief had included that the letter of intent “constituted an offer to ABB to carry out the roof works on the terms and conditions contained in that letter which ABB accepted by commencing the roof works”, but said that this was not further explained. He said that the submissions then focussed on acceptance, and that the appellant had not “articulated the way in which the letter of intent was capable of constituting an offer which could be accepted by ABB by commencing work” or “articulated what were the terms of the agreement said thus to have been made, other than to point in the pleadings to the terms and conditions of the letter and in the submissions to the terms discussed at the meeting”. Referring to the appellant’s submissions in reply, the referee said that they “intermixed” a contract alleged to have come into existence on 19 February 1998 with a commencement contract, and -
“In fact, Abigroup’s reply to reply submissions seem to abandon the case that the letter of intent was an offer which was accepted by commencement. In paragraphs 73-77 of Abigroup’s reply to reply submissions, the letter of intent is relied upon as something provided to formalise and reflect an agreement reached between the parties set out in the minutes. What seems to have happened is that the clause -
‘Commencement by the subcontractor is deemed to be full acceptance of the terms of this subcontract agreement and confirms the existence of a subcontract between our two companies.’
no longer is relied upon as making commencement the conclusion of an offer and acceptance process, which concludes a contract. Rather, commencement evinces full acceptance of terms of a contract already made, ie evidentiary in effect. This does not seem properly to reflect the use of the word ‘deemed’ but in any event it seems to be Abigroup’s the [sic] final case.”
The referee nonetheless considered a commencement contract over nearly forty pages of the report. In summary, he was of the opinion that -
(a) on the construction of the letter of intent and without regard to the circumstances in which it was handed over at the meeting of 19 February 1998, the letter did not operate as an offer by the appellant to the respondent to perform the works which the respondent could accept by commencing the works;
(b) regard to the circumstances in which the letter was handed over made this “even clearer” and “negate[d] the contention that the letter of intent was such an offer”; but
(c) if the letter did operate as an offer there was no acceptance because –
(i)picking up drawings by the respondent on 20 February 1998 was not commencing the works within the meaning of the letter of intent, the drawings being “useless for [the respondent] in the sense of enabling it to take some positive and productive step, for instance ordering steel or commencement of the shop drawings process”;
(ii)picking up the drawings and other acts of the respondent on 20 February 1998 “could not, in all of the circumstances, be regarded objectively as referrable to the letter of intent”; and
(iii)the respondent had not commenced the works prior to the receipt by the appellant of the respondent’s letter of 20 February 1998, which letter amounted to a rejection of the offer and constituting a counter-offer by the respondent to the appellant.
If the letter of intent did not operate as an offer, what was the effect of its paras 9 and 10? The referee said -
“The arrangements or intention which the earlier parts and, indeed, the whole of, the letter of intent plainly contemplate are a conditional acceptance by Abigroup of an ABB offer to perform roof works, the condition being that a subcontract document will be prepared, forwarded and signed, at which time a contract will be formed. The letter of intent also contemplates and authorises that, in order to maintain programme, the addressee may commence and proceed with the works before the moment of contract. Given these two matters, it seems to me that what the deeming provision is trying to do, despite the obvious drafting and construction difficulties, is to ensure that, when and if the agreement is made (which the letter seems confidently to contemplate will occur), and if work begins earlier than the moment of contract, the terms and conditions of the contract will, by deeming, apply as between the parties from the moment of commencement as opposed to from the moment of contract. Such an arrangement makes sense; in effect, it would give retrospective effect to the agreement, from the time when made back to the time when work commenced, but only when and if the agreement, actually was made. This would mean that, provided the agreement was concluded, matters which had occurred after commencement and before the conclusion of the agreement could be dealt with in accordance with the provisions of the contract – for instance provisions relating to variations, extensions of time and contractual payment entitlements. Such a construction would fit nicely with the provision that no contractual entitlement to payment would arise ‘until the subcontract agreement had been executed’ (referred to above), with such entitlements arising after the time of contract by virtue of the contract created at that time and also being deemed to have arisen after commencement and before that time, in accordance with the retrospective operation of the deeming provision.
The second effect of the deeming clause, with commencement confirming ‘the existence of a subcontract’, on this approach to the meaning of the clause, is of similar effect. The deeming clause read narrowly creates acceptance of the subcontract terms, as and from the time of commencement, when the contract is concluded and the confirming clause, in a complementary way, confirms that the contract terms, agreed at the date of contract (a date later than commencement on this scenario) take effect from the time of commencement, rather than from the time of signing but, importantly, only when and if the agreement is concluded.
Such a construction leaves intact the conditional acceptance structure of the letter and makes an attempt to an obviously sensible and important provision for the contract terms, when and if ultimately agreed, to apply to the work done after commencement and before agreement.
Obviously, the letter - which, with respect to its author, Owen, not a lawyer, is not entirely happily drafted – was drawn with a confident expectation that the conditional acceptance would become unconditional and its words paid little or no attention to the logically available possibility – which is ABB’s case here – that the condition might not be satisfied. However, if I am right about the way in which what I have called the deeming clause is to be construed, the deeming clause has no operation if, for some reason, the condition should not be satisfied because, simply, there would be no agreement or terms of agreement available to relate back to the period after commencement and before agreement.”
When the report came before the judge there was added the dispute over whether the commencement contract litigated before the referee had included a limited terms contract. The dispute involved the two aspects of (a) coming into existence when the respondent commenced the works on 25 February 1998, as distinct from on 20 February 1998 (“a 25 February commencement contract”); and (b) being on the limited terms earlier set out, as distinct from terms which included the general conditions (“a general conditions commencement contract”).
The referee’s reasons for rejecting a commencement contract did not involve whether it was a 25 February commencement contract. There was no offer capable of acceptance by commencement of the works, and if there had been it was sufficient that there had not been commencement of the works prior to rejection of the offer through the letter of 20 February 1998. Nor, save in the respect next mentioned, did the referee’s reasons for rejecting a commencement contract touch upon whether it was on the limited terms earlier set out. His reasons were destructive of a commencement contract, whether a contract on those terms or a general conditions commencement contract.
It is evident, however, that the referee thought that the appellant was propounding a general conditions commencement contract. He saw the appellant as intermixing a commencement contract and a contract coming into existence on 19 February 1998. The latter contract, also said to be a fourth class contract, was pleaded as a contract on terms found in the discussions on 12 February 1998 and various documents including invitations to tender, tenders, a specification, drawings, “General Conditions of Subcontract SC.JCC-D 1994 as Amended”, “Project Related Conditions”, and the letter of intent itself. Notwithstanding the words “one or more of the following documents … “ in the particularisation of the contract, it was on terms going far beyond those of a limited terms contract. One of the referee’s reasons for declining to characterise the letter of intent as an offer was obscurity or incongruity in the terms of the contract to be found in the letter, and in that connection he questioned whether the version of the SC.JCC-D conditions was the December 1997 version known to the respondent or “[t]he revised version which [the appellant] probably was finalising at the very time of the meeting … “. For present purposes it does not matter whether the referee was correct in his reasoning in this respect. He plainly thought that the commencement contract for which the appellant contended included the SC.JCC-D conditions.
If the judge adopted the referee’s report, therefore, or for his own part took up the referee’s reasons, he would also reject a commencement contract without having to decide whether the commencement contract litigated before the referee had included a limited terms contract. This he did. The judge noted the appellant’s submission that in arriving at his conclusions the referee had erred in nine respects and, in extensive discussion, held that the referee had not erred and effectively endorsed the referee’s conclusions and the reasons for them. At an early point, prior to the explanatory discussion, the judge said that he had reached -
“ … the very clear conclusion that neither errors of principle, nor patent misapprehension of the evidence, nor perversity, nor manifest unreasonableness in fact-finding, nor any of the other miscellaneous complaints put forward by Abigroup justify rejection of the findings in the report. Indeed and to the contrary. I have come to the very clear conclusion that the findings in the report were correct.”
The judge also found, however, that the appellant had not litigated a limited terms contract before the referee. He said that the appellant had not submitted to the referee that picking up drawings on 25 February 1998, as distinct from 20 February 1998, was commencement of the works and an acceptance of any offer. He said, with reference in particular to the SC.JCC-D, conditions and the Project Related Conditions, that the appellant had not put submissions to the referee in support of a contract “on some, but not all of the terms of the letter of intent”. He said that in both respects the appellant had not prosecuted a case of a limited terms contract.
The judge did not expressly hold that the appellant was therefore precluded from relying on a limited terms contract for adoption or rejection of the report or the orders to be made in the proceedings. Given his endorsement of the referee’s conclusions, it was not necessary for him to do so. But the judge recorded the respondent’s submission that the appellant “is precluded from endeavouring to pursue such a case for the first time before this Court”, and by brief references to a party being “bound by the manner in which it litigated its case” and to “the elementary principle that parties are bound by the conduct of [their] case” appears to have accepted that submission.
The judge said that the parties should bring in short minutes of orders “providing for the adoption of the Report and ancillary relief”, but no order adopting the report was made. It was undoubtedly intended, but the orders moved directly to the judgment for the quantum meruit amount. Apparently by oversight, no order was made dismissing the appellant’s cross-claim. It was agreed that, if the appeal as to a limited terms contract was dismissed, this Court should so order.
Whether a limited terms contract had come into existence
The judge set out in some detail the principles by which he should be guided in deciding whether to adopt or reject the referee’s report. It was not suggested that he misapprehended or failed to give effect to those principles. He was exercising a discretion, but one under which he should consider and determine afresh any complaint that the referee had erred in law or in the application of legal standards to the facts (see in particular Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 563). The appeal was from the discretionary decision of the judge, not from the conclusions reached by the referee (see Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd, CA, 8 June 1994, unreported). It attracted the appellate restraint described by Dixon, Evatt and McTiernan JJ in House v The King (1936) 55 CLR 499 at 504-5.
The respondent did not submit that the appeal on whether a contract had come into existence was answered by the discretionary nature of the judge’s decision. It was common ground that whether a contract between the appellant and the respondent had come into existence was to be determined objectively, by a consideration of the relevant documents in the light of the surrounding circumstances, and that evidence of the parties’ prior negotiations and their subsequent conduct was admissible as an aid to determining the objective intention of the parties at the time of the alleged contract. The appellant submitted that, so determined on the facts found by the referee, a limited terms contract had come into existence, and that the judge had erred in his application of the established approach. The respondent submitted to the contrary. The error, if made, was taken to vitiate the judge’s exercise of discretion.
The competing submissions did not greatly involve whether the contract was a limited terms contract as distinct from some other commencement contract. The appellant’s submissions included that, even if the letter of 20 February 1998 would otherwise have been a rejection of any offer in the letter of intent, it should be found that the respondent had by commencing the works on 25 February 1998 “elected to accept [the appellant’s] terms”, referring to Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [71]-[81]. The respondent’s submissions included that this submission itself was not open to the appellant and that, whether or not any offer had been rejected through the letter of 20 February 1998 there was no commencement of the works on 25 February 1998, by way of acceptance of the offer.
Behind the pleaded formula of offer and acceptance there must be found in the words and conduct of the parties, understood in the circumstances in which they were acting, an intention to make a concluded and immediately binding contract upon commencement of the works. In my opinion that should not be found, and the referee and the judge were correct in their conclusions. In coming to that opinion I am content to assume that a limited terms contract was open to the appellant.
The appellant accepted that, if the letter of intent had been confined to the conditional acceptance described in its first two paragraphs, a contract would not have come into existence until the parties had entered into a formal subcontract. It submitted that para 9 envisaged a preliminary agreement to govern relations, to be found in the letter itself and not in any formal subcontract, and that para 10 directly provided for a contract to come into existence upon commencement of the works. It submitted that the referee and the judge had erred in disregarding the “clear words” of para 10 and misconstruing the letter’s meaning, in failing to pay sufficient regard to the parties’ commercial situation, and in giving excessive significance to the parties’ prior discussions and insufficient significance to their later conduct.
The words of paras 9 and 10 of the letter of intent must be given effect, but their meaning and operation must be found against the circumstances in which the letter passed between the parties.
The appellant first invited the respondent to tender in November 1997, the works at that stage being the roof steelwork only. Its invitation stated that the subcontract would be on the SC.JCC-D 1994 conditions and the Projected Related Conditions, and a draft subcontract agreement was provided. The draft subcontract made extensive reference to the head contract. Neither the head contract nor the Project Related Conditions was provided. The respondent’s then quotation included that it had “concerns regarding a number of your proposed conditions of Subcontract, therefore, if our offer is of interest to you, we would require to discuss and resolve our concerns before entering into any contract”.
The appellant invited the respondent to tender for the combined roof steelwork and acoustic elements in late January 1998. Its invitation reiterated the general conditions to form part of the subcontract agreement. The respondent’s tender reiterated its concerns as to the proposed conditions and its desire to discuss and resolve the concerns. There were also a number of qualifications in the tender, some technical and some commercial.
At the post-tender meeting of 12 February 1998 the respondent asked to see the head contract and the Project Related Conditions. The appellant said it would provide them. The respondent told the appellant that it was not prepared to contract otherwise than with a limitation of liability and an exclusion of consequential loss, and undertook to provide a suggested wording. It said that it would accept liquidated damages of $40,000 per day for costs actually incurred, capped at ten per cent of the contract sum, which the appellant said would be acceptable. It said it wanted provision for milestone payments, which it was agreed would be later considered. Discussion of the other qualifications in the tender could not take place through lack of time.
The appellant said at the meeting that it wanted to award the subcontract by 20 February 1998. The respondent’s representatives expressed doubt, saying something like “Are you fair dinkum about it” or “Good luck. You’ve got eight days.” A period of 36 weeks for fabrication and erection was discussed, and was recognised as a tight schedule. In the communications of 18 February 1998 the appellant said that it was “committed to placing an order with one of the three tenderers today”. The referee found that this was probably a piece of commercial pressure used to get the tender price down, but there had been earlier references to a tight timetable for completion of the roof works and no doubt there was an atmosphere that the appellant was anxious to have the roof works under way.
At the meeting of 19 February 1998 the respondent insisted on seeing the head contract and the Project Related Conditions, which had not yet been provided. The appellant said that everything material to the head contract was in the Project Related Conditions and that it would provide the Project Related Conditions the next day. The respondent made plain that its tender was conditional upon receiving the Project Related Conditions and either accepting that they were not commercially adverse or working out any concerns by agreement.
The respondent told the appellant that it had concerns about the SC.JCC-D conditions and other contractual matters, and provided a document setting out two clauses limiting liability and excluding consequential loss which it said were non-negotiable and had to be in any subcontract. The non-negotiable clauses were -
‘Notwithstanding anything to the contrary herein contained, the total liability of the Subcontractor shall be limited to the Subcontract Sum.’
‘Notwithstanding anything to the contrary contained in this Subcontract Agreement and the Head Contract, the Subcontractor shall not be liable for any indirect, consequential or economic losses whether in contract or in tort (including negligence) such as, but not limited to, loss of profit, loss of use, cost of replacement production, business interruption and the like.’
Milestone payments were discussed, but without finality and with the appellant to provide its programme to the respondent and the respondent to put forward a specific proposal. Liquidated damages of actual costs to a maximum of $40,000 per day was again stated and agreed.
The appellant told the respondent that the respondent’s reservations could not be discussed at that time, and that the appellant’s representatives at the meeting would have to take the non-negotiable clauses higher because they did not have authority to agree on matters of that kind.
The respondent was then told that it was the successful tenderer. Arrangements were made for it to collect some drawings the next day so that it could start the shop drawings. There were numerous matters remaining for discussion and resolution, notwithstanding that, as the referee said, “the parties confidently hoped, if not expected, that they would be able to attend to and resolve the matters which remained outstanding before a contract could be concluded”. The outstanding matters included that the respondent was still to see the Project Related Conditions, which it had made plain was essential, and that the appellant had to agree to the non-negotiable clauses upon which the respondent insisted.
To this point in the meeting nothing had been said of a letter of intent. One of the appellant’s representatives left the meeting and returned with the letter. It was handed to the respondent’s representatives without comment. They briefly looked at the first page, but none of them read it. The appellant did not draw attention to what the letter said about commencement of the works. Before the meeting ended, it was repeated that there were outstanding contractual issues to be resolved.
In my opinion, these circumstances tell against the parties intending that the letter of intent operate as an offer open to acceptance by commencement of the works. The circumstances were not consistent with commencement of the works binding the parties to an immediate contract.
Notwithstanding that there was a confident hope, perhaps expectation, that agreement could be reached, and a willingness on the respondent’s part to get the works under way, there could not reasonably be attributed to the respondent willingness to contract on terms of general conditions some of which it had concerns about, or to the appellant a belief that the respondent was willing. To repeat, the respondent had made plain that seeing the Project Related Conditions was essential, and its concerns about the SC.JCC-D conditions had been made known but had not been considered. At best the letter of intent was unclear upon whether a commencement contract would include the general conditions, to which the appellant’s reliance before the judge on a general conditions commencement contract is testimony. A contractual bond possibly on terms to which one party objected as unknown or unacceptable was not consistent with the respondent’s position, as made clear to the appellant, even as an interim bond in anticipation of a formal subcontract.
Still less could there reasonably be attributed to the respondent willingness to contract, even on an interim basis, on terms which flew in the face of terms on which it insisted and in part had been agreed, or to the appellant a belief that the respondent was willing. The non-negotiable clauses were not part of the terms in the letter of intent, para 4 of the letter was inconsistent with milestone payments and para 7 of the letter was inconsistent with the accepted $40,000 per day.
Even before the letter of intent it was contemplated that the respondent would commence the works prior to the formal subcontract. Arrangements were made for that to occur. The arrangements were made without any mention of contractual consequences of commencing the works, and the parties to that point must be taken to have accepted that the works could be commenced on a non-contractual understanding. When the letter of intent was handed over, nothing was said about contractual consequences of commencing the works. It must have been apparent to the appellant that the respondent was not then aware of what the letter said. That indicates that the appellant did not treat, or expect the respondent to treat, the letter of intent as carrying with it the making of a contract upon commencement of the works.
Nor was the content of the letter of intent consistent with its terms being the terms of a contract coming into existence upon commencement of the works. On the appellant’s case, the contract thus formed was a contract under which the respondent was not entitled to any payment until the formal subcontract had been executed (see the last subparagraph of para 10 of the letter of intent). If so, there could be no question of progress payments or retention as provided in paras 4 and 5 of the letter: yet these were said to be part of the contract. Under the contract thus formed the liquidated damages in para 7 would apply if a formal subcontract was not entered into, which meant that the respondent would be paid nothing but would be fully liable to the appellant, including for liquidated damages. The terms of the contract did not make sense.
There may be difficulty in a court attributing significance to less obvious aspects of a commercial situation, since the court is not necessarily in a position to appreciate the commercial forces. But the commercial disadvantage to the respondent in an immediately binding commencement contract was plain. Perhaps, as the appellant submitted, the appellant would have wished to avoid the risk of its chosen sub-contractor withdrawing from the project more or less at will, and perhaps also the respondent may have wished to have the contractual certainty of recovering its investment of time and money in assisting the appellant in the tendering. But there had been agreement on starting work without any contract. To the point when the letter of intent was handed over, each party conveyed to the other that it was content for work to start and to take the commercial risk that they would fail to come to a concluded agreement on the formal subcontract. For the appellant, in the absence of a contract that risk would continue. For the respondent, a commencement contract would substitute for its risk a different and far greater risk of being bound in contract to carry out the works, without payment but exposed to liability which it had non-negotiably refused. So viewed, the commercial situation did not favour an intention to make an immediately binding contract. The respondent would be delivering itself into the appellant’s hands.
The appellant sought to counter this by suggesting that it would be obliged to act reasonably in the negotiations towards the formal subcontract. I have difficulty in seeing the legal principle which would so oblige it, and there could be reasonable failure to agree on (for example) the non-negotiable clauses. In my opinion, regard to the parties’ commercial situation tends against an intention of the parties to make an immediately binding contract.
None of this can stand against sufficiently clear words of the letter of intent. The appellant fastened upon the first subparagraph in para 10 of the letter, which it submitted was in words too clear to be ignored. It said that “this subcontract agreement” meant a separate contract coming into existence upon commencement of the works, and that “confirm” referred to the contract so coming into existence.
The word “deemed” may create a fictitious situation, or it may simply state an indisputable conclusion (Hunter Douglas Australia Pty Ltd v Perma Blinds (1968) 122 CLR 49 per Windeyer J at 65-7). In para 10 it seems to have the former usage, since commencement of the works is an act rather than a statement of a conclusion. The word “confirm” would normally suggest that what is confirmed is already in existence, but on any view no subcontract was in existence prior to commencement of the works and the word seems to have been used to emphasise the existence of “this subcontract agreement”, whatever that may have meant.
The words “this subcontract agreement” did not clearly mean a separate contract coming into existence upon commencement of the works. They could readily enough be read as referring to “the subcontract agreement” in para 1 of the letter of intent, the formal subcontract following agreement in further negotiations. If the words had been “the sub-contract agreement” much of the appellants argument would be lost, and “this” had to do a lot of work in the argument. Where in the penultimate paragraph of the letter of intent the words “this contract” were used, they most naturally referred to the foreshadowed formal subcontract, of which the letter of intent and thus the expanded meaning of “tradesman” would form part (see para 2 of the letter). It may be noted that the word “tradesman” was not used in the letter. The same reference of “this subcontract agreement” was well open.
Going beyond these textual considerations, the first subparagraph in para 10 of the letter of intent was one part of what para 10 describes as “General Clauses”. The general clauses were to be provisions of a contract, and the natural understanding of the letter was that they were to be provisions of the formal subcontract via incorporation of the letter in the contract as envisaged in its para 2. On the appellant’s argument, however, the first subparagraph of para 10 was not a provision of a contract, but a potentially contract-creating offer. The structure of the letter of intent was to the contrary.
I do not accept that the first subparagraph in para 10 of the letter of intent has the clear meaning necessary for an intention to make an immediately binding contract. It must be understood as part of the letter of intent as a whole and in the circumstances in which the letter of intent passed between the parties.
The referee correctly referred to the letter’s “obvious drafting and construction difficulties”. In essence, he considered that its function was to ensure that work done prior to the formal subcontract envisaged in the letter would, by incorporation of the letter of intent in the contract, be taken to have been performed under that subcontract although the subcontract was not in existence at the time of performance. On this view, the deemed acceptance was not intended to be acceptance of an offer to be allowed to perform the works, for no payment, under a fourth class contract. It was acceptance in the sense of agreement in the formal subcontract upon its retrospective operation, giving sense to “deemed” as creation of a fictitious situation. The statement that no payment would be made until the formal subcontract had been executed then also made sense. It was not an immediate contractual provision. Rather, when it became a provision of the formal subcontract it prevented claims that money should have been paid at earlier times. In my opinion, the letter of intent is readily open to this construction and operation.
Subject to regard to the parties’ subsequent conduct, in the circumstances in which the letter of intent passed between the parties I consider that an intention to make a concluded and immediately binding contract upon commencement of the works should not be found.
The appellant relied on cases such as Pagnan SpA v Feed Products Ltd (1987) 2 Ll R 601 and Graham Evans Pty Ltd v Stencraft Pty Ltd (2000) 16 BCL 335, particularly for finding an intention to be bound notwithstanding that important matters remained to be agreed and for entry upon performance of the works of itself supporting the existence of a fourth class contract. Each case must be decided on its own facts. The law reports contain many illustrations of work begun in anticipation of a contract, as was to occur in the present case before the letter of intent was produced and passed over. I do not think these cases govern the facts of the present case.
Evidence of subsequent communications between parties is admissible for the light it casts upon their dealings from which a contract is alleged to have arisen: for example, it may show that apparently concluded negotiations were in fact continued, or were not regarded by the parties as contractually binding until entry into a formal contract (B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 97011 at 9149, 9155; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 97023 at 9255; Brambles Holdings Ltd v Bathurst City Council at 163-4). Evidence of the parties’ subsequent conduct is also admissible as an admission by conduct of the existence or non existence of a subsisting contract (Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 668-9, 672; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd at 9255). The probative force of an admission may not be great. If the direct evidence is complete and enables a conclusion, an indirect admission may count for little. Similarly, if an admission is of a matter of law or legal consequences, as to which the admitting party has no expertise or is otherwise to be seen as uninformed or unreliable, the admission will not carry much weight (see for example Lustre Hosiery Ltd v York (1935) 54 CLR 134 at 138-9, 143; R W Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 32 NSWLR 152 at 155-6). And as Gleeson CJ said in Australian Broadcasting Corporation v XIV Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550, “it will often be necessary to identify with some care the fact which is said to have been admitted”.
Of particular importance in the subsequent conduct of the parties, in my view, is the respondent’s letter of 20 February 1998. Even if it was not a rejection of any offer in the letter of intent it was a continuation, after receipt of the letter of intent and before any commencement of the works, of the negotiations left over from the meeting of 19 February 1998.
Again omitting formal parts, the letter read -
“Further to our meeting at your offices on Thursday 19 February 1998 and following further post tender discussions, we were most pleased to receive your letter regarding the Main Roof Structure and Roof Cladding on the above project.
You will recall that there are a couple of outstanding commercial matters to be resolved regarding the subcontract and these are detailed below for your consideration.
1 We have not had sight of the sections of the Head Contract document that may be applicable to the above subcontract works nor have we received a copy of the Project Related Conditions marked ‘D’. Our offer is therefore based on the proviso that there are no adverse commercial considerations within these documents. (We still await such documents from Abigroup.)
2. As an amendment to clause 8 of the Subcontract we would require the following clauses covering exclusion of consequential losses and a cap on total liability.
‘Notwithstanding anything to the contrary contained in this Subcontract Agreement and the Head Contract, the Subcontractor shall not be liable for any indirect, consequential or economic losses whether in contract or in tort (including negligence) such as, but not limited to, loss of profit, loss of use, cost of replacement production, business interruption and the like.’
‘Notwithstanding anything to the contrary herein contained, the total liability of the Subcontractor shall be limited to the Subcontract Sum.’
3. We require clarification of clause 9.03.02 and 10.11 whereby the Builder may, due to any act, default or omission by it, or it’s designers, or any of it’s subcontractors or suppliers etc. cause delay to the works of this Subcontractor and in such a case, the Builder is not entitled to an extension of time under the Head Contract. In such a scenario, how does this subcontractor recover lost time and any associated costs? Will the Builder seek agreement and pay this subcontractor for acceleration measures if necessary and/or any associated reasonable costs for delay? Obviously, we cannot be expected to pay liquidated damages where the delay was caused by Abigroup. The condition precedent in clause 10.2.01 and 10.12.08 should not apply to the above case.
4. Clauses 10.15 and 10.16 refer to liquidated damages ‘or otherwise’. As discussed, we would agree to actual costs incurred by Abigroup, subject always to a maximum daily rate of damages inclusive of both clauses, combined at $40,000 per day and capped to a maximum of 10% of the Subcontract Sum.
5. As soon as we are in receipt of the Project Schedule from Abigroup, we will propose a payment schedule for your consideration, which would include payments linked to milestone achievements and a provision for payment in respect of design and engineering works progressing off site and purchase of raw steel.
6. Programme/Drawings
We acknowledge receipt of tender drawings, but these are not Approved for Construction and therefore we cannot proceed using such drawings. Due to Abigroup’s very tight schedule for this work, Abigroup will need to provide the Approved for Construction drawings (correct, complete and with no ‘holds’) within two weeks of 20 February 1998. Obviously, the sooner this occurs, the better, because our period of 26 weeks cannot commence until we have received such drawings.In addition, we request your clarification of the following matters which we did not have the opportunity to discuss at the meeting:
(a) the provision by Abigroup of a form of surety that ABB will be paid.
(b) administration of the BHP Free Issue Steelwork option.
(c) Clause 10.30 of the Subcontract conditions should be qualified with the words “Subject to clause 3.02” at the beginning.
We trust the above matters are acceptable for inclusion in the subcontract documentation and look forward to your further correspondence.”
The letter did not identify an offer in the letter of intent, or in any other way recognise that commencement of the works would bring a fourth class contract. In para 1 the respondent described its “offer”, that is, its tender, as subject to the proviso that there were no adverse commercial considerations in the head contract or the Project Related Conditions. It still insisted on the non-negotiable clauses (para 2) and liquidated damages at $40,000 per day (para 4), and proposed milestone payments (para 5). The statement that the period of 26 weeks could not commence until it had received drawings (found to be an error for 36 weeks) (para 6) was scarcely consistent with preparedness for time to begin running under a commencement contract upon any commencement of the works, for example, by establishment.
The appellant did not in response draw attention to what the letter of intent said about commencement of the works. It did not point out that the respondent’s “offer” would effectively become unconditional and immediately binding upon commencement of the works. On 24 February 1998 the appellant sent the Project Related Conditions to the respondent. Some drawings were provided on 25 February, purportedly as drawings Approved for Construction but in fact of a roof structure of a different design from that on which the respondent had tendered. A “kick-off” meeting was held on 24 February 1998 and a “site introduction” meeting was held on 26 February 1998. On 12 March 1998 the respondent raised a number of concerns with the Project Related Conditions, and on 18 March 1998 the appellant sent to it a significantly amended version of the SC.JCC-D conditions and a revised set of Project Related Conditions. The respondent raised many matters of concern and asked for a “further post-tender meeting prior to agreement on the terms of the subcontract”. There were then further negotiations.
At a later point counsel for the appellant drew attention to the respondent’s assertion, in a document not in the appeal papers, that “it is entitled to additional time and therefore it did not repudiate”. He asked for confirmation that “no submissions will be made in relation to that contractual entitlement”. The transcript continued -
“MR ORLOV: I will say it one more time: We will not be asking you to determine any extensions of time. I just can’t be any clearer than that.
THE REFEREE: But I think what Mr Corsaro is saying by way of submission there is by delivering a particular program which showed a particular completion date and then by making some statements about completion date, the plaintiff repudiated the contract, and a defensive response to that from the plaintiff is, ‘No. Look at all of this. That conduct wasn’t repudiatory, because, by reference to these circumstances which we contend, we were entitled to an extension of time.’ Therefore, it wasn’t a repudiation of the contract to say, ‘We will finish later than the day on which you say we have to finish’.
MR ORLOV: Sorry, I know what the pleadings say, but we have dealt fully with the repudiation case in our submissions in chief, and I’m saying again: we will not be asking you to determine any extensions of time. I understand that there are references in the pleadings to claims for extensions of time, but I say again: we will not be asking you to determine any extensions of time.”
The appellant thereafter delivered its submissions on, amongst other things, damages for repudiation. The respondent’s submissions in reply took issue with the appellant’s attribution of seventy per cent of the appellant’s delay costs to acts of the respondent, and as to variations said that if the appellant were liable for a variation an allowance should be made in favour of the respondent in the valuation of the damages for repudiation. A detailed schedule of variations and their values was provided. We were not referred to reliance on an entitlement to delay costs as part of the valuation of the appellant’s damages for repudiation, and I infer that there was no such reliance.
In its final submissions the appellant said of the submissions last mentioned that “these matters have all been abandoned by ABB”, without further explanation, but went on to respond to them. In the absence of oral submissions, there it was left.
Nothing said by the respondent on 4 December 2001 went beyond determining extensions of time as part of the defence to the cross-claim. All other matters were preserved. So far as the appellant relied also on the letter of 4 December 2001, its reliance was misplaced, because the letter was limited to issues arising out of the summons.
Consistently with what was said on 4 December 2001, the respondent could rely on an entitlement to the value of variations as part of the valuation of the appellant’s damages for repudiation. It did so. The judge was not in error as to the value of variations.
The judge noted and apparently accepted submissions by the respondent that it made clear that, although the referee was not required to decide its claims for extension of time, that did not “relieve the defendant of the need to prove the matters upon which its cross claim depended”, and that the evidence “going to the issue of delay … remained directly relevant to the cross-claim”. The time consequences of delay remained relevant, at the least to attributing responsibility for delay as between the appellant and the respondent. The cost consequences of delay, meaning the consequences to the respondent, was a different matter. Assuming that abandonment is an accurate description of what occurred, the appellant was on firmer ground in its submission that regard to the costs consequences of delay was abandoned. The cost consequences to the respondent normally could not be found without determining its entitlement to extensions of time. That was fully abandoned, and entitlement to delay costs was not relied on for the valuation of the appellant’s damages for repudiation.
Subject to the assumption, I conclude that the judge was in error in finding that the cost consequences of delay remained relevant to the valuation of the appellant’s cross-claim. It does not follow that the judge’s exercise of discretion is negated and the discretion must be re-exercised. The assumption is not correct, and I have already referred to its potential relevance to the respondent’s claims. That aside, an error as to a fact which, if correctly found, would not have brought a different exercise of discretion does not trigger appellate intervention. The error must be as to a fact important to the decision (State of Queensland v J L Holdings Pty Ltd (1997) 141 ALR 353 at 372 per Kirby J), or a material fact (Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45] per Heydon JA), so that the discretion has thereby miscarried.
The error has come down to the one matter of relevance of the cost consequences of delay to the valuation of the appellant’s cross-claim. The cost consequences of delay independently remained relevant in the proceedings to the respondent’s quantum meruit claim. Any continued relevance was sufficient, since it meant that costs were not wasted through abandonment. Even if the judge had not accepted continuing relevance to the valuation of the appellant’s cross-claim, his decision would have been the same. There is no occasion to intervene.
The result
I propose the following orders -
In the proceedings below, dismiss the cross-claim.
In the appeal, appeal dismissed with costs.TOBIAS JA: I agree with Giles JA.
CRIPPS AJA: I agree with Giles JA.
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LAST UPDATED: 15/06/2004
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