Ace Shopfitters (Nominees) Pty Ltd v Diakos and Associates Pty Ltd - [2011] SADC 105

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ACE SHOPFITTERS (NOMINEES) PTY LTD v DIAKOS AND ASSOCIATES PTY LTD
[2011] SADC 105
Judgment of Her Honour Judge Bampton
15 July 2011
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - ACCEPTANCE
The plaintiff sued the defendant for the balance of money owed for work performed at the Prospect Shopping Centre. The plaintiff alleged it entered into a contract to perform the work when the defendant’s authorised representative Mr Diakos initialled a revised quotation on 18 September 2006.
The defendant asserted that the work was performed pursuant to an oral contract it entered into with the plaintiff in early September 2006, whereby it was agreed that the work would be performed for the fixed price specified in the first quotation provided by the plaintiff in December 2003. Defendant asserted it was not bound by the terms of the revised quotation as Mr Diakos did not read the revised quotation when he initialled it and thought it encompassed the early September 2006 oral contract.
Held: Judgment for the plaintiff. Plaintiff and defendant contracted on terms pursuant to the revised quotation. Defendant bound by the terms of the revised quotation. Post-contractual conduct and documentation demonstrate that Mr Diakos was not acting under a misunderstanding when he initialled the revised quotation and confirm that the work was performed pursuant to the terms of the revised quotations. Plaintiff entitled to amount owing of $71,182.79 plus interest.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd and Others (2004) 219 CLR 165; Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) CLR 337; Abram & Anor v A.V. Jennings Ltd [2002] SASC 417; Jones v Dunkel (1959) 101 CLR 298; Spence v Demasi (1987) 48 SASR 536, considered.

ACE SHOPFITTERS (NOMINEES) PTY LTD v DIAKOS AND ASSOCIATES PTY LTD
[2011] SADC 105
Introduction

The plaintiff Ace Shopfitters (Nominees) Pty Ltd (“Ace”) claims the defendant, Diakos and Associates Pty Ltd, owes it the sum of $71,182.79 together with interest for the supply, fixing and glazing of aluminium windows doors and automatic entrances at the Prospect Shopping Centre.
Diakos and Associates Pty Ltd, an architect’s firm (“the architect’s firm”), was the architect in relation to the development of the Prospect Shopping Centre (“the works”). Mr George Diakos was a director of the architect’s firm at the relevant time and registered proprietor of the land upon which the works were constructed. Mr Diakos was also a director of Coronet Constructions Pty Ltd, the builder of the works.
Ace alleges it gave a quotation in December 2003 (“the first quotation”) to supply, fix and glaze aluminium windows, doors and automatic entrances (“the work”) to the architect’s firm. The quote was for the sum of $68,143.00 and optional additional amounts for various sized modules were also quoted. Ace alleges the quotation was revised in September 2006 and the revised quotation dated 18 September 2006 (“the revised quotation”) was accepted by the architect’s firm. Ace alleges that pursuant to the acceptance and instructions from the architect’s firm, it carried out the work. Ace alleges the total cost of the work is $135,764.27 inclusive of GST.
The architect’s firm has made two payments. The first payment of $40,581.48 was made on 21 December 2006 and the second payment of $25,000.00 was made on 5 April 2007.
The architect’s firm denies liability to Ace asserting in the defence that “at all material times, it acted as disclosed agent for Coronet”. During the trial Mr Scragg, counsel for the architect’s firm, said denial of liability was not pressed and “the main nub of the matter and my client’s concern is the amount that is now being asked is unfair and contrary to the agreement”.
The architect’s firm admits that Mr Diakos sought a quotation from Ace.
The architect’s firm denies the first quotation was revised on or about 18 September 2006 and pleads in paragraph 5 of the defence that Mr Diakos requested from Ace:
…the cost of possible variation in relation to the project should and when those variations became necessary. The purpose of the variations was to anticipate variation requests which may arise from potential tenants. The extent and nature, if any, of those variations was unknown to Mr Diakos at the time the request was made. The quotation in question was to price all possible variations so that Mr Diakos would be aware of the cost of the same in dealing with tenants and in budgeting in relation to the construction of the shopping centre as a whole.
The architect’s firm denies the revised quotation was in substitution of the first quotation. The architect’s firm at paragraph 7 of the defence, admits Ace performed the work but says it was done:
…in performance of a contract made, based upon the first quotation, as modified by what is described by the defendant (sic) as the second quotation, but only to the extent where the work done varied from the specifications set out in the first quotation.
The architect’s firm says the contractual price for the work was $61,940.00 plus extras of $14,983.00, subtotal of $73,077.00 plus GST of $7,307.00, total of $83,034.00. The architect’s firm pleads, taking into account the payments it has made, the amount it owes to the plaintiff is $17, 233.00
Issue for Determination
In order to determine this matter, I need to identify the terms on which Ace and the architect’s firm contracted.
The issue for determination disclosed by the pleadings is whether the work performed by Ace was performed pursuant to a contract based on the first quotation for a fixed price of $68,134.00 modified by the revised quotation, “but only to the extent where the work done varied from the specifications set out in the first quotation” or the revised quotation, under which Ace says it performed the work.
However, the architect’s firm’s witness Mr Daikos gave evidence of an alternative version of the facts that is not pleaded. In particular, there is no pleading in the defence of an oral agreement Mr Diakos asserted he entered into with Mr Casarin in early September 2006 that the work would be carried out for the cost of the first quotation (“the asserted early September 2006 agreement”). Mr Casarin is a former director of Ace who provided the first quotation on behalf of Ace. There is no pleading giving fair notice of Mr Diakos’s assertion that the revised quotation was ‘slipped in’ and that it was Mr Davies’ son, Peter Davies, who attended the works and asked Mr Diakos to sign the revised quotation. Most significantly there is no pleading that Mr Diakos signed the revised quotation without reading it.
Hence, the issue for determination disclosed at trial was whether the architect’s firm is bound by the terms of the revised quotation signed by Mr Diakos in circumstances where Mr Diakos did not read it and asserted that he mistakenly thought it encompassed the asserted early September 2006 agreement he alleged he made with Mr Casarin.
Witnesses
The managing director of Ace, Robert Davies (“Mr Davies”) gave evidence for Ace. Mr Davies told the court he had been with Ace since 1973. I found Mr Davies to be an honest witness. He was confused in cross examination as to dates and particulars of dealings with Mr Diakos in September 2006.
In assessing Mr Davies’ reliability I have taken into account that Ace was not given notice of the case agitated at trial by the architect’s firm and there may have been an element of surprise for Ace. Mr Davies made concessions, for example, in respect of when and how the revised quotation was signed and in respect of recalling his involvement in the early September 2006 meeting. I have carefully considered his evidence having regard to his confusion about his involvement in the meeting and his mistaken evidence that it was he who attended upon Mr Diakos when the revised quotation was signed. Taking into account his confusion, his concessions and having regard to all of the evidence, I found him to be an honest and reliable witness and I accept his evidence on the central issues.
Mr Diakos gave evidence for the architect’s firm. I found Mr Diakos to be evasive in his evidence. On occasions his evidence was inconsistent with the objective facts, which I refer to below. I find he is a commercially astute man of business, who prided himself on ensuring detailed documentation to avoid disputes. He purported to be aware that contractors and builders always argue about progress claims and in 90% of cases contractors put a much higher progress claim than the actual work performed. I find he is a man who would readily understand the importance of reading documents, quotations and contracts before signing them. I find he reconstructed his evidence to justify not paying the amount owed to Ace and his position that the work was to be performed pursuant to the first quotation price of $68,134.00 modified by the revised quotation, “but only to the extent where the work done varied from the specifications set out in the first quotation”. Where his evidence differs from Mr Davies, I prefer the evidence of Mr Davies.
First Quotation
Annexure A to these reasons for judgement is a copy of the first page of the first quotation prepared by Mr Casarin. A complete copy of the first quotation was tendered into evidence and comprises pages 1, 2 and 3 of Exhibit P1. Mr Casarin left Ace in 2008. He did not give evidence. The architect’s firm asks me to infer that his evidence would not have advanced Ace’s case. I deal with this issue later.
Mr Davies gave evidence that he was not involved in the original quotation provided by Mr Casarin.
The following words appear at the beginning of the first quotation:
Scope of Work: We wish to confirm our quotation to supply, fix and glaze of aluminium automatic entrance doors, frames and highlight windows for the sum of $61,940.00 plus GST $6,194.00 totalling $68,134.00.
The first quotation also provides quotations for “optional additional amounts” referred to as modules. One of the conditions listed on the second page of the quotation is “Price is firm for a period of two 2 months, thereafter subject to a review of prices”.
The revised quotation
Annexure B is a copy of first page of the revised quotation, titled “Revised Quotation”. Pages 4 and 5 of Exhibit P1 is a copy of the revised quotation. The following words appear at the beginning of the revised quotation:
Scope of work:
We wish to confirm our revised quotation to supply fix and glaze aluminium windows, doors and automatic entrances as discussed.
Quotation is based on module prices as per architectural drawings #16-2012 and is subject to final evaluation following receipt of submitted final architectural drawings for construction purposes.
UNIT COST AS PER ARCHITECTURAL DRAWING # 16-2012
Under the words “All values exclude GST” individual module costs are itemised.
Mr Davies’ Evidence of Pre-contractual Conduct
Mr Davies said he was involved with the architect’s firm in September 2006, when the revised quotation was provided. When asked why he didn’t quote a fixed price when he gave the revised quotation, Mr Davies said that because the architectural drawings were unfinished drawings and the configuration would change once tenants were arranged, he was not asked to quote for an all-up price.
In cross-examination, Mr Davies said he had a meeting with Mr Diakos in September 2006 and he didn’t believe that Mr Casarin was present. It was put to him that there was a meeting between Mr Casarin and Mr Diakos where Mr Diakos sought assurances that the work would be performed for the price quoted in the first quotation.
Mr Davies conceded that he was in another part of a room, on the phone, whilst a meeting between Mr Casarin and Mr Diakos took place in early September 2006. Mr Davies denied he contributed to the conversation by suggesting that if a cheaper brand of aluminium extrusion was installed, the first quotation could be held. He said his suggestion was to use a more expensive section of aluminium to make the project look better as Mr Diakos wanted to retain the old appearance of the development.[1]
[1] T31.21-24.
Mr Davies denied any reassurance being given to Mr Diakos that the price would remain the same as the price quoted in the first quotation.[2]
[2] T37.14-35.
Mr Davies said that Mr Diakos came to him after the discussion with Mr Casarin and asked him to do what he could with the rates and described how he was having problems with tenants.[3] Mr Davies said the module measurements referred to in the revised quotation were provided by Mr Diakos and when on‑site measurements were made, it was apparent the sizes had been under estimated. It was put to him that Mr Diakos provided a series of modules in anticipation of varying tenant requirements, and, they were the modules that formed the break up in the first and revised quotations. Mr Davies said that Mr Diakos just asked him to carry out the work and to fill up all the holes as required after the structural steel work was up and the site measuring had been performed. He said Mr Diakos did not ask him to do it on the basis of the first quotation.
[3] T43.16-25.
It was put to Mr Davies that the revised quotation was not signed by Mr Diakos in his presence rather it was his son, Peter Davies who attended Mr Diakos at the works when it was signed. Mr Davies said he did not recall and agreed that his son may have taken the revised quote to the works. Mr Davies’ son was not called to give evidence. This may be because it was not until Mr Davies was cross-examined that Ace became aware of the assertion that Peter Davies attended the works and asked Mr Diakos to sign the revised quotation.
The only relevant evidence about Peter Davies’ involvement is that he attended the works on 18 September 2006 and informed Mr Diakos that before he could start measuring Mr Diakos needed to sign the revised quotation. The architect’s firm does not allege Peter Davies coerced or forced Mr Diakos to sign under duress. Mr Diakos admitted he glanced at, but did not read the revised quotation, before signing. Having regard to the evidence, I consider that Peter Davies evidence was not pertinent to the issues requiring determination.
In cross examination, Mr Davies denied being provided with the 8 pages of architectural drawings comprising Exhibit D1. He said all the drawings he had were “fairly rough”,[4] “…very rough and ready drawings. Not to the fine detail these drawings are done at.”[5] He denied that there was very little difference in the dimensions set out in the drawings, for example the drawing labelled N3 in Exhibit D1 and the shopfronts installed at the works. He said:[6]
“A couple of them were correct sizes but that’s all. All the smaller sizes were incorrect. The heights were incorrect on the high level windows. And the materials used in them was different as far the last type.”
[4]    T39.
[5]    T40.3-5.
[6]    T40.13.
Mr Scragg, counsel for the architect’s firm, tendered Exhibit D1 on the basis of Mr Davies’ adoption. Having reviewed the transcript, I am satisfied that Mr Davies did not adopt and accept that Exhibit D1 comprised the drawings that Ace received at the time he became involved.
Having said this, it would appear both quotations were prepared by reference to measurements of 15 modules comprising 10 shopfront modules, 2 door modules and 3 window modules. Both quotations refer to the Schedule of frames being in accordance with drawing #16-2012. Whether or not N8, one of the architectural drawings comprising D1, is drawing #16-2012 or a later version of it, is not clear. In any event, this is not, in my view significant. Ace had measurements provided by Mr Diakos for each quote. It is clear by reference to the first quotation and the revised quotation, that the height of the 15 modules was the same in both quotations. However the width of 10 of 15 modules in the revised quotation was less than the corresponding modules in the first quotation. Further, the cost of the modules in the revised quotation was the same as the cost in the first quotation in respect of 3 modules, less in respect of 2 modules and up to 20% more in respect of 10 modules.
Mr Davies gave evidence that it was his son, Peter Davies, who worked with Mr Diakos regarding the installation of the modules. It was his son who did the site measuring. He said that the layout drawings and cutting lists (which his son brought back to the office with finished sizes for fabrication) were the basis upon which the invoices were prepared. For example, in relation to item “a” on the invoice at page 14 of Exhibit P1 (“shopfronts, fixed glass type 2300 high x 5030 wide”), Mr Davies said that he would have referred back to the revised quotation and identified the module that was closest in measurement to the installed shopfront. In short, where the installed shopfront, window or door varied in measurement from the shopfront window or door closest in size to it in the revised quotation, it was priced according to the price per square metre of the corresponding quoted module, window or door.
Mr Davies said that all items were costed according to the revised quotation signed by Mr Diakos.[7] Mr Davies said that the handwriting on the architectural drawing Exhibit P2 was his handwriting, and the grid numbering, for example grids 9E to grids 12E were numbers provided on the original plans prepared by Mr Diakos. He said that grid references in the tax invoices, were references to the grid references in Exhibit P2.
[7] T15.
Mr Davies said that there was no complaint made to him about the standard of work performed at the Prospect Shopping Centre.
It was put to Mr Davies in cross examination that the original quotation included the whole of what is set out in Exhibit P2, other than items identified as extras. It was put to him that if Exhibit P2 was priced in accordance with the pricing of modules set out in the original quotation, a figure of almost twice $68,134.00 would be arrived at. It was suggested that between the 2003 quotation and the time the work was done, there was no significant difference in the price of modules, doors and windows. Mr Davies said the unknown factors were what doors and materials were required and the final measurements once the structural framework was in place. It was his evidence that his negotiations with Mr Diakos concerned only individual modules, windows and doors and not an “all up” price.
Mr Davies said that he went to the effort of preparing a spread sheet for Mr Diakos which detailed the final measurements of every installed shopfront, window and door as well as all the square metre rates calculated by reference to the revised quotation. The documents also details the width increase in the installed modules compared to the measurements detailed in the revised quotation. A copy of this document dated 20 January 2007 is pages 19-21 of Exhibit P1.
Mr Davies said that there was not a great deal of difference in the module price between the first and the revised quotations, the difference in price came about due to the difference in measurements of the installed product and the calculation of the square metre price.
Mr Diakos’ evidence of pre-contractual conduct
Mr Diakos gave evidence that he was required to obtain the quotation for the purpose of obtaining finance for the works and to provide to his quantity surveyors. He said that on this particular project, his bank had a policy of requiring fixed quotations before work commenced.[8]
[8] T62.24-25.

Mr Diakos gave evidence to the effect that as he was aware the first quotation was only valid for a period of time, he had chosen to deal with Leo Casarin instead of Mr Davies. He made arrangements to go and see him in person at his office. He wanted to discuss retaining the first quotation and to see whether any changes could be made in order to maintain it. He said it was very important to him because there were some escalating costs in other areas and he had to make sure that the cost of fitting windows remained around the quotation received in 2003.[9]
[9] T68.14.
Mr Diakos said that Mr Casarin made him aware that during the period of time of two years or so, there had been 15% to 20% increases in quotations in the windows.[10] He gave evidence that Mr Casarin said that they could look at the quotation to see if some unnecessary costs could be eliminated to maintain the original quotation. He said that one of the areas was to reduce the size and the thickness of the glass and that was by means of reducing the transom to a lower level, whereby the thickness of glass could be reduced. Mr Diakos says that reducing the height had a significant effect.
[10] T68.23-25.
Other areas discussed were the details of the seals, the window sills and the mullions which were attached to the columns. Mr Diakos said that he told Mr Casarin that all those details could be standardised if it meant costs were kept down. He said that at some point during his discussions with Mr Casarin, Mr Davies was sitting about 2 - 3 metres away from him and he realised that Mr Davies was listening to their conversation. Mr Diakos said Mr Davies suggested that they use a less expensive aluminium frame. Mr Diakos said that he agreed to this suggestion and this was the first and last time that he had dealings with Mr Davies.
Mr Diakos said that different suppliers were going to be used in order to reduce the cost. Mr Diakos said that Mr Casarin told him that under those circumstances, they could retain the basic rates discussed and retain the price of the first quotation.[11]
[11] T69.18-38.
Mr Diakos said he passed the information on to his quantity surveyors and to his bank. The architect’s firm did not call any evidence from its quantity surveyors or bankers to support Mr Diakos’ evidence on this issue.
Mr Diakos said that he rang Ace and asked for someone to attend the site so they could start making site measurements for the commencement of construction of the shopfronts. Mr Davies’ son attended and informed Mr Diakos that his father said he (Mr Diakos) had to initial the pages of the revised quotation before work or measurements were made. As noted above, Mr Diakos admitted at trial that he signed the revised quotation without reading it.
Mr Diakos said that he thought the revised quotation confirmed the agreement he had struck with Mr Casarin and that it set out individual module pricing, in the event variations were required by tenants. In my view, if the revised quotation did confirm the work would be performed for the cost of the first quotation, surely at the very least, that cost would be reiterated in the revised quotation, noting that the cost is typed in bold font in the first quotation.
Mr Diakos said in evidence that he thought it was misleading for Ace to submit a quotation for twice the price of the first quotation, two weeks after his agreement with Mr Casarin. As I have noted above, the defence does not plead that Mr Diakos signed the revised quotation without reading it or the circumstances in which it was signed. There is no allegation in the defence of duress or misleading conduct on the part of Ace. Further, Mr Diakos did not allege he was rushed or tricked into signing the revised quotation.
In response to my questions about not reading the revised quotation before initialling it, Mr Diakos said that:
…simply when you are on a job and you are involved with.......of contractors pulling you from every direction, that particular date – or before that date – I met with ….. for Ace Shopfitters to attend the premises or the construction site, so they can start taking measurements, once we establish in early September with Leo that that $68,000 going to remain….two weeks prior to this.[12]
[12] T112.29 – T113.6.
I asked him whether he would have dealt with, and read a number of quotations and contracts. He agreed and said:
Yeah, it was the only contract, the only contract for some reason it had escaped the normal process of doing contract documentation which the quantity surveyors supervise… and for this particular instance – I don’t know, maybe because of my familiarity with Ace Shopfitters … that process did not take place.[13]
Having regard to this evidence I find the architect’s firm did not follow its usual process of preparing contract documentation supervised by quantity surveyors with respect to this work.
[13] T113.13-21.
The contract
As the revised quotation is the only document signed by both parties it would appear to be the contractual basis upon which the parties agreed the work would be performed. The question is whether the architect’s firm, having signed the revised quotation, is bound by its terms in circumstances where its authorised representative, Mr Diakos, did not read its contents. Mr Diakos gave evidence that he thought it encompassed the asserted early September 2006 agreement he had made with Mr Casarin.
In response to my questions about his initialling the revised quotation, Mr Diakos gave the following evidence:[14]
A.Well, I pointed out through the courts that the – that document was presented to me on site on the assumption that you sign this up, assuming it was the quotation that was finalised and agreed upon us between Leo and myself. So I initialled that letter so –
Q.So you didn't read it, you didn't consider it prior to initialling it.
A.No. It was - because it was a document that I believe, after the verbal agreement we had with Leo in early September 2006, which it was based on the original quotation of 2003 it was a formality for me, this document that you are referring to, to initial. And as a brief observation of those figures, they appeared to me, these module quotations that he demonstrate, Mr Davies demonstrated were very much identical to the ones that we had on the first quotation.
Q.But Mr Diakos, the second paragraph is quite an important one. It says 'Quotation is based on module prices as per architectural drawing No.16-2012 and is subject to final evaluation while a receipt is submitted for final architectural drawings for construction purposes.
A.Yep. I have demonstrated through this court this – that he final figure that we agreed on, only weeks ago, was $68,000. The modules were -
[14] T98.38-99.24.
As stated in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd and Others,[15] the rights and liabilities of parties to a contract are to be determined objectively rather than by reference to the subjective beliefs and understandings of the parties.
What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
[15] (2004) 219 CLR 165 at para 40
In Codelfa Constructions Pty Ltd v State Rail Authority of NSW[16] Mason J said:
The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.
[16] (1982) CLR 337 at 352
The revised quotation as initialled by Mr Daikos created legal relations between Ace and the architect’s firm. The Court in Toll said at paragraph 45:
It should not be overlooked that to sign a document known and intended to create legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents…..That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
Mr Diakos is an architect. He is the owner of the architect’s business and a building business. He is an experienced businessman. He is an experienced property developer. He is not a novice when it comes to contractors, contracts and documentation. As he told me, he dealt with a lot of quotes and contracts. He also spoke of the importance of written documentation.
I find that he was well aware that his initialling the revised quotation was the trigger to commence the work. It was he who asked Ace to attend the works to make final measurements. He was asked to sign the revised quotation so that the work could begin. Legal relations were created upon his acceptance of the revised quotation. In my view the wording of the revised quotation as to costing is unambiguous. No all up sum is specified in it. It clearly states quotation is based on specified module prices.
Mr Diakos spoke about the importance of detailed documentation as a means of avoiding disputes when giving evidence about the documentation he gave to Ace.[17]
…From past experiences with quotations, of different trades, you learn through your – through past history that detailed documentations is a means of avoiding any disputes.
Yet he did not document the asserted early September 2006 agreement or ask Ace to put it in writing.
[17] T65.27.
Misrepresentation and duress are not pleaded or asserted. There was a suggestion that the revised quotation was ‘slipped in’. The architect’s firm has not established there are any vitiating factors. There was no attempt to trick Mr Diakos. He is an astute man of business, who for whatever reason did not take the time to read the revised quotation before he signed it. He said that this was a contract that slipped through his usual process and it was the only one to do so. He said at the time he initialled the revised quotation he had a very quick glance at it on site. He said: [18]
…as I was supervising the job – amongst some tens of people moving around the place - and I had a quick look at the amounts. Well, I didn’t have a copy of the other quotation to rely on, but I assume their initial agreement - that the quotation is going to remain the same. So I initialled the pages and he left with them. Now, I’m not too sure whether he left a copy…
The High Court stated in Toll at paragraph 54
There are circumstances in which it is material to ask whether a person who has signed a document was given reasonable notice of what was in it. Cases where misrepresentation is alleged, or where mistake is claimed, provide examples. No one suggests that the fact that a document has been signed is for all purposes inclusive as to its legal effect. At the same time, where a person has signed the document, which is intended to affect legal relations, and there is no question of misrepresentation, duress, mistake, or any other vitiating element, the fact that the person has signed the document without reading it does not put the other party in the position of having to show that due notice was given of its terms.
[18] T71.15-23.
Further at paragraph 57 the Court said:
The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document.
I find the architect’s firm has not established misrepresentation, mistake or any other ground for relief and despite Mr Diakos’ admission that he did not read the revised quotation when he signed it, the architect’s firm is bound by it.
Further there is no suggestion and certainly no evidence of poor workmanship by Ace or that the work performed by Ace is not worth the amount claimed.
Post contractual dealings and documents
The architect’s firm sought to rely on documents prepared after Mr Diakos signed the revised quotation in support of its argument that the asserted early September 2006 agreement was the contract the parties entered into. The extent to which conduct subsequent to a contract can be taken into account is unclear.[19] The only assistance provided by the post contractual documents and conduct of the parties in this matter is in confirming that the revised quotation is the basis upon which the parties contracted.
[19] Per Besanko J, Abram & Anor v A.V. Jennings Ltd [2002] SASC 417 at para 59
For the reasons discussed below, I am satisfied that the post contractual conduct of the parties confirms that the terms on which they contracted were the terms contained in the revised quotation.
Variation Authority
The architect’s firm submitted Exhibit D3 supports the defence. Exhibit D3 is a document titled “Variation Authority” dated 28 September 2006, prepared by Ace and signed by Mr Davies. It is submitted that it clearly demonstrates the work was to be performed in accordance with the asserted early September 2006 agreement. It is not signed by Mr Diakos or any person on behalf of the architect’s firm. Under the heading Description of Variation, the following note appears:
Note: last quotation from Leo Casarin was based on one transom rail approx 1-0 metre above the floor with 6.38 clear laminate below the rail and 6 millimetre clear float above.
In the column titled “Extra cost”, the words: “as last quote” appear.
Items B and C under description of “Variation” provide options for additional horizontal rails at extra cost, as itemised under the heading “Extra Cost”. The wording of Exhibit D3 is ambiguous. The reference to “last quotation from Leo Casarin” is clearly a reference to the first quotation, as that is the only quotation given by Mr Casarin. Reference under “Extra Cost” to “As last quote” could mean the revised quotation as it is the last quote as at the date of Exhibit D3. The architect’s firm submits “as last quote” refers to the confirmation by Mr Casarin in early September 2006 that the first quotation could be maintained. Without further clarification, for example by reference to the author or date of the quotation referred to under the heading “Extra cost” this document does not support either party’s position. Further, the document is not signed by both parties. In my view it does not form part of the contract.
The Payments and Exhibit D2
The first invoice rendered by Ace to the architect’s firm is dated 25 October 2006 and totals $54,693.10 (“the October invoice”). A copy of the October invoice is pages 14-15 of Exhibit P1. This invoice refers in item “a” to the pricing being “based on module 5 pricing 18/0/06”. The reference to 18/0/06 is a typographical error and I infer it should read 18/9/06.
The second invoice is dated 28 November 2006 and totals $47,919.30 (“the November invoice”). A copy of this invoice is pages 16-17 of Exhibit P1. By 21 December 2006, the architect’s firm had been invoiced $102,612.40 for work performed by Ace.
On 21 December 2006 the architect’s firm paid the sum of $40,581.48. The payment was accompanied by a document titled “Progress claim costings” dated 21 December 2006 written by Mr Diakos on the architect’s firm’s letterhead, Exhibit D2. Under the heading “description” Exhibit D2 states “Progress claim 1 from Ace Shopfitters as per quotation dated 18/9/06”. Exhibit D2 does not make specific reference to which invoice it concerns however it is clear the references to items “a” to “f” correspond to items “a” to “f” on the October invoice.
In response to questions about the first payment, Mr Davies said that when he received Exhibit D2, which he described as Mr Diakos’ own reckoning, it appeared to him that Mr Diakos had not checked the sizes of the installed product.
Mr Diakos said that when he received the October and November invoices, his immediate reaction was:
…here we go again. Mr Davies gets involved with his variations and the invoices and I became very concerned and I can’t remember it clearly, but over the phone I think I complained to Leo or to Mr Davies about their claim”.[20]
[20] T72.12-16.
Mr Diakos said that Mr Davies asked him to send him the progress claim payment and he did some homework himself:
…to establish the amount of work that is being carried out because it’s very well known in the industry that contractors, once they commence work, they overcharge with progress claims”.[21]
[21] T72.19-22.
He said that:
So having the opportunity to get the breakdown of the modules in actual costings, I found that a very simple way to deal with the progress claim was to add up those modules to see whether they installed - whether they have balanced the claim they put across.[22]
[22] T72.22-27.
Mr Diakos said he added the modules and immediately noticed the work claimed could not be justified. He said he went to Ace on 21 December 2006, asked for Mr Casarin and confronted Mr Davies. Ace was having a Christmas breakup. He had some drinks with Mr Casarin. He gave Mr Casarin the document titled Progress claim costing dated 21 December 2006, giving him some indication that the claim could not be justified.
When asked about the reference in his “Progress claim costings” to “Per quotation dated 18/9/06”, Mr Diakos was very evasive and said:[23]
[23] T88.13 - 89.30.
Q.You agree with me in your letter of 21 December '06 you made specific reference to the revised quotation, didn't you.
A.That's correct, that's the date that's shown there.
Q.Is it fair for me to assume you had a copy of that quotation in December 2006, given that you're referring to it in your letter.
A.I would have been referring to the agreed quotation for $68,000.
Q.Why do you say that now, given your words are 'Per quotation dated 18/9/08'.
A.Because I'm not too sure about the dates that are inserted here, but the quotation - refer the quotation, it's - I'm referring to the agreed price that Leo and I, we reach upon.
Q.All I'm asking you to confirm to me now is the fact that you would have had a copy, you would have had your own personal copy of the revised quotation in December 2006 because you refer to it in a letter that you wrote.
A.Yeah, I'm referring to because a verbal agreement is just as good as a written one. I haven't got a written quotation apart from the original. If we was – we discuss the second time round with Leo, and we agreed that quotation in 2003 is to remain. Now, my reason of writing this breakdown was because when Mr Davies submitted me with a progress claim, I wanted to prove to Leo that Mr Davies issue of a first progress claim was well above, even with the quantities of those individual modules was counted for. So I demonstrated to Leo that even with the modules that were of the breakdown, it did not come up to that claim of $50,000 or so like he was asking for.
Q.Did you misunderstand my question and what I was driving at with my question.
A.Yeah, I had no written quotation as such and I'm referring to the quotation that with Leo, that I reach upon.
Q.If that's right, if what you're telling me now is true, how is it that in a letter you write on 21 December 2006 you wrote in your own words 'Per quotation dated 18/9/06' if you didn't have the document. How would you know to refer to it if you didn't have it.
A.As I say, the quotation that I'm referring to, it was the 2003 which was later confirmed by Leo, that they're not going to be any changes if we made those modifications on the specifications.
Q.Your evidence is that you were referring to the quotation, the written quotation dated 18 December 2003 but for some reason you happened to write 'quotation dated 18/9/06'.
A.That's correct, and if I had obviously you would have that in front of you because you prepared that. If you had such a written quotation made on that date you have a record made of the original one that was given to me. And I say that it was not such a written quotation given to us on those dates as shown on that D2.

Mr Diakos said that contractors and builders always argue about what a progress claim should be. He said they argue:
Because the contractor which put a claim with – obviously their intention is to claim as much as possible out of their quotation.[24]
He also said in relation to my question about his approach to contractors:
As a rule, 90% of the times according to quantity surveyors, the contractors, they always put a much higher progress claim than what actually the actual amount of work has been put in place.[25]
[24] T91.14-16.
[25] T91.20-23.
Mr Diakos eventually conceded he did not make any reference to the first quotation when he complained about the October invoice being high.[26] He said he could not remember making any specific complaint following the November invoice. He also said he continuously, from day one of every claim, got on the phone and complained to Mr Davies. Mr Diakos said that from the first invoice, he started to object and that as Exhibit D2 demonstrates, he was so frustrated that he had to go through the calculations pointing out the claims could not be accepted.
[26] T94.14-15.
Mr Diakos was also asked why he didn’t make reference to the first quotation price in Exhibit D2. His answer was evasive.
I always believe it was a fixed price. Because in any situation in the building industry, when somebody makes an error and he wants to amend their quotation, they’re always making references about a mistake, about their error for the big change because when one day you agree on a $68,000 and two weeks later you slip in another quotation without making any differences at all. I personally feel that was misleading…”.[27]
[27] T95.29-36.
I find that the architect’s firm had a copy of the revised quotation as at 21 December 2006, being the date Mr Daikos wrote Exhibit D2. It is clear by reference to the first page of the October invoice and Exhibit D2 that Mr Diakos, at the time of the payment of $40,581.00, was providing his own reconciliation of the October invoice by reference to the revised quotation.
Following his own reconciliation, Mr Diakos reduced the total by 10% making the notation “90% of work completed”. He also retained 10% of the payment. I do not agree that he was calculating 90% of the quoted contract price as submitted by Mr Scragg. It is clearly 90% of the amount he calculated as payable on the October invoice. It must be borne in mind that at the date of Exhibit D2, the architect’s firm had received the October and November invoices and had been invoiced over $100,000. It should also be noted that there was no evidence of a retention agreement between the parties.
I find that Mr Diakos’ 21 December 2006 reconciliations are calculated by reference to the revised quotation. By 21 December 2006 Mr Diakos had received the invoice dated 25 October 2006 and the invoice 28 November 2006. If Mr Diakos had it in mind that in December 2006, that the work was to be performed for the price of the first quotation, it is incongruous that he would have prepared the document Exhibit D2 in December 2006 in the way in which he did it. In my view he would have made it very clear at that time that it was his understanding that the price was fixed in the sum of $68,134.00. He did not.
Mr Diakos expressed no dissatisfaction, no displeasure and no complaint in writing in December 2006 in relation to the total of the October and November invoices being over the amount of the first quotation.
The other invoices rendered by Ace are the third invoice dated 31 January 2007 in the sum of $28,718.80, the fourth invoice dated 27 March 2007 in the sum of $3,839.00 and the final invoice dated 11 April 2007 in the sum of $1,594.07.
Summary of Account
Page 19 of Exhibit P1 is a copy of Ace’s summary of account dated 30 January 2007. It provides a breakdown of the amounts charged in each invoice. The summary itemises the items charged, for example, shopfronts, the measurements, the grid reference (by reference to Exhibit P2) and how the item is charged. A number of the items detailed in the summary have increased width and in certain cases height, compared to the module sizes referred to in the revised quotation. It is clear from the evidence of Mr Davies that the revised quotation was prepared by reference to the measurements of the proposed shopfront modules, doors and windows provided by Mr Diakos. However, when the structural framework was in place, and final measurements carried out, the sizes of the windows and doors varied from the sizes in the quotations.
Ace submitted that there was no complaint from Mr Diakos about the total of the account. It was submitted that there is a complete absence of complaint until after the second payment was received on 5 April 2007. That is, some two months after receiving the January 2007 summary of account. It is only after that, when the further payment of $25,000.00 is made, that Mr Diakos prepared his letter dated 5 April 2007 (page 24 and 25 of Exhibit P1).
Architect’s Firm’s Letters 5 April 2007 and 19 October 2007
The architect’s firm sought to rely on letters it had written to Ace dated 5 April and 19 October 2007 in support of its argument that it had entered into the asserted early September 2006 agreement. In the letter dated 5 April 2007 to Ace, Mr Diakos addresses Mr Casarin and refers to an agreement that if a particular manufacturer was used, the price of the first quotation could be retained. There is no evidence that Ace used an alternative manufacturer. When questioned about this, Mr Diakos said he just trusted Mr Casarin.
Mr Diakos said that between January 2007 and April 2007, he made it clear that he would not be making any more payments until the matter was resolved in relation to the fixed quotation. When asked why he paid the $25,000.00 in April 2007 he says it was because Mr Davies:
“…told me, You pay me what you believe and we resolve that quotation afterwards.” So he demonstrated to me that he needed some sort of cash flow...”.[28]
[28] T96.20-22.
When asked whether it was not until the letter 5 April 2007 that he made any reference to the first quotation amount, he disagreed and said that from the second invoice after January 2007, when he became aware the progress claims exceeded $68,000, he started complaining to Mr Davies. It was not until he realised he was not getting very far, that he decided to send letters to keep them on the record.[29] This evidence is inconsistent with the fact that the second invoice had been rendered before Mr Diakos prepared Exhibit D2 on 21 December 2006. As at 21 December 2006, Ace had rendered 2 invoices totalling $102,612.00. I find that Mr Diakos was aware as at 21 December 2006 that the architect’s firm had been charged in excess of $68,000. In fact, Mr Diakos acknowledged he had received both invoices when he prepared his “Progress claim costings” Exhibit D2.[30]
[29] T96.35-37.
[30] T72.
The architect’s firm also sought to rely on a meeting Mr Diakos gave evidence about in July 2007. Exhibit D4 is a copy of a letter dated 19 October 2007 which refers to a meeting on 24 July 2007.
Mr Diakos refers in the 19 October 2007 letter, to a mutual agreement made during a meeting in July 2007 that at a meeting in early September 2006, Mr Casarin agreed that the first quotation 18 December 2003 was to stay in effect and the quotation for individual window modules was to remain unchanged. The letter goes on to say, that “in contradiction of the above agreements, Bob Davies has claimed that the contract in place was the one he personally prepared two weeks after that meeting and dated 18 September 2006”.
Mr Diakos also refers in the 19 October 2007 letter to a letter he sent with a cheque attached for payment of a progress claim and asked it to be noted that in that letter, he notified of the adjustments he had made to the payment as the claim was overpriced. I infer this is the “Progress claim costings” dated 21 December 2006, Exhibit D2. He states in the letter of 19 October 2007 that “the pricing and adjustment of that payment to the claim was based on the costing of the individual window modules with the assumption/belief that the quotation used was the original one agreed upon”.
He also states in the letter “when the payment was made I was neither aware or had my attention brought to the fact that I had been supplied with a revised quotation”. This is patently wrong. Mr Diakos specifically refers to the quotation dated 18 September 2006 in the “Progress claim costings” dated 21 December 2006, Exhibit D2. I have found that Mr Diakos had the revised quotation when he prepared Exhibit D2. In short, when he made the first payment and prepared Exhibit D2 he was well aware of the revised quotation. This is an example of Mr Diakos reconstructing his evidence to support his defence.
Exhibit D5 is a letter from Ace to the architect’s firm dated 10 September 2007, which commences:
NOTE: All prices re-checked and came out slightly clearer. We still confirm the previous summary dated 11 April 2007 is the balance owing.
This letter is inconsistent with Mr Diakos’ assertion that Ace acknowledged at the July 2007 meeting that an agreement was reached in early September 2006 that the first quotation could be kept.
I note Mr Davies said he did not receive the letter 19 October 2007.
I find that the post contractual documentation that the architect’s firm sought to rely on demonstrates Mr Diakos was not acting under a misunderstanding when he signed the revised quotation and it confirms that the work was performed pursuant to the terms of the revised quotation.
Conclusion
Mr Diakos asserted in evidence that the revised quotation for double the original price was ‘slipped’ in and it was ‘misleading’.[31] He said that he did not accept the revised quotation. He said the agreed price was $68,134.00 in accordance with the first quotation and that was confirmed at a meeting in early September 2006 and at a meeting in July 2007.
[31] T95.34-36.
The defence does not plead Mr Casarin’s involvement or that there was an agreement in early September 2006 that the original quotation would be kept. It pleads a contract based on the first quotation and that revised quotation only provides the cost of variations should variation requests arise from potential tenants. Mr Diakos’ evidence was that the early September 2006 meeting was to discuss maintaining the first quotation and that from day one, he complained about the invoices. Contrary to the District Court Rules there is no plea to this effect. There is no pleading setting out the architect’s firm’s alternative version of the facts. There is no plea about Mr Diakos assuming the revised quotation encompassed the asserted early September 2006 agreement and that he signed without reading it.
Whilst I am of the view Mr Casarin’s evidence was not required for reasons set out below, the architect’s firm can not complain about his absence and seek to rely on the rule in Jones v Dunkel,[32] when in my view Ace was not given fair notice of the case the architect’s firm led at trial.
[32] (1959) 101 CLR 298.
The Jones & Dunkel rule provides that an unexplained failure by a party to call witnesses may in appropriate circumstances, where it is natural for the particular party to call such evidence lead to an available inference that the uncalled evidence would not have assisted the party’s case.[33] Having regard to my findings regarding the witnesses and in particular preferring the evidence of Mr Davies to that of Mr Diakos and my finding that the revised quotation is an enforceable contract, I am of the view that it would not have been of assistance to hear evidence from Mr Casarin. Ace is able to prove its case without Mr Casarin. As there is no property in witnesses and given Mr Casarin was no longer associated with Ace, the architect’s firm could have called or subpoenaed him to give evidence. Having said that, I draw no inference adverse to either party’s case regarding the failure to call Mr Casarin.
[33] Spence v Demasi (1987) 48 SASR 536 at 547
Mr Diakos prided himself on ensuring detailed documentation to avoid disputes. Yet there is a dearth of documentation emanating from him until April 2007. Given his evidence, if the asserted early September 2006 agreement to keep the first quotation and the July 2007 acknowledgement of that agreement did occur, surely he would have promptly confirmed the agreement and acknowledgement in writing. He did not.
Mr Diakos admitted that he did not read the revised quotation when he initialled it on 18 September 2006. It is clear that he referred to it at the time he prepared Exhibit D2, which makes reference to the quotation dated 18 September 2006 and the module prices in it are used by him to make his own calculation of the amount payable.
I do not accept his explanation of what he thought the revised quotation was. He is a man of business who, at the time of his dealings with Ace, was developing a “major building project”. Not only that, he is an architect and a principal in the architect’s firm and a building company. As stated earlier in these reasons he is not a novice when it comes to dealing with contractors, contracts and documentation. It is also of note that no evidence was called to support Mr Diakos’ evidence that upon Ace confirming in early September 2006 that the work could be performed for the cost of the first quotation he informed his quantity surveyors and his bank.
The architect’s firm makes no complaint in writing until 5 April 2007, at which time a further $25,000.00 was paid by Mr Diakos. In my view, Mr Diakos has reconstructed his evidence to justify his defence. An example of this is his reference in the 19 October 2007 letter to a belief that costing was based on the first quotation and “being neither aware of or had my attention brought to the fact I had been supplied with a revised quotation” at the time the first payment was made. This is contradicted by his very clear reference in Exhibit D2 to the 18 September 2006 quotation and prices specified in it.
The architect’s firm bears the onus of demonstrating that Mr Diakos was mistaken or was acting under a misunderstanding when he initialled the revised quotation believing it encompassed the asserted early September 2006 agreement. For reasons I have given, I accept Mr Davies’ account of what took place in September 2006.
I am satisfied on the balance of probabilities that the parties entered into a contract to perform the work wholly in writing in terms set out in the revised quotation when Mr Diakos initialled it. I find he was fully aware of its terms as evidenced by his conduct after the entering into the contract and in particular, his reference to the revised quotation, Exhibit D2. As Mr Diakos admitted, the revised quotation was:
…the only contract, the only contract for some reason it had escaped the normal process of doing contract documentation which the quantity surveyors supervise…[34]
[34] T113.13 -26.
I find that the architect’s firm accepted Ace’s offer to perform the work on the terms set out in the revised quotation when Mr Diakos initialled the revised quotation on 18 September 2006. I find there was no mistake or misunderstanding on Mr Diakos’ part when he initialled the revised quotation. Ace is entitled to be paid the amount owing on the invoices rendered to the architect’s firm.
Accordingly, I enter judgment in Ace’s favour in the sum of $71,182.79 being the balance owing of the total amount invoiced of $135,764.27, less total payments made by the architect’s firm of $65,581.48.
Ace is entitled to prejudgement interest from the last invoice dated 11 April 2007. Having regard to the interest rate provided for in Practice Direction 13.3, Ace has conservatively sought interest at a rate of 8%.
Interest in the sum of $24,000.00 calculated at a rate of 8% is added to the judgment sum, making a total judgement sum of $95,182.79.
The plaintiff is to have its costs to be agreed or taxed.
ANNEXURE A
Not attached - available on request
ANNEXURE B
Not attached - available on request