Al-Atabi v Zaidi
[2009] NSWCA 433
•23 December 2009
New South Wales
Court of Appeal
CITATION: Al-Atabi v Zaidi [2009] NSWCA 433 HEARING DATE(S): 13/7/09
JUDGMENT DATE:
23 December 2009JUDGMENT OF: McColl JA at 1; Handley AJA at 68; Sackville AJA at 69 DECISION: Appeal dismissed with costs. CATCHWORDS: CONTRACTS – general contractual principles – construction and interpretation of contracts – lump-sum contract in respect of building work – claim for variations – whether work in variations claim part of work covered by lump-sum contract – whether waiver of contractual variations procedure – whether variations subject of implied or express contract LEGISLATION CITED: Environmental Planning and Assessment Act 1979 (NSW) CATEGORY: Principal judgment CASES CITED: Al-Atabi v Zaidi [2008] NSWDC 128
Concrete Constructions Group v Litevale Pty Ltd & Ors (No 2) [2003] NSWSC 411
Fox v Percy [2003] HCA 22, (2003) 214 CLR 118
GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 50
Liebe v Molloy [1906] HCA 67; (1906) 4 CLR 347
Smith v Leon Dupuy Dozer Hire [2000] VSC 212
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Trimis v Mina [1999] NSWCA 140PARTIES: Muhanad Al-Atabi - Appellant
Attia Zaidi - First Respondent
Mohammad Ali Abbas - Second Respondent
Salma Raza - Third Respondent
Hasan Zaidi - Fourth RespondentFILE NUMBER(S): CA 40305 of 2008 COUNSEL: PT Taylor SC with DS Weinberger for the Appellant
EA White for the RespondentsSOLICITORS: Maccallum Lawyers for the appellant
Dominic Stanfords for the respondentsLOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 1170 of 2007 LOWER COURT JUDICIAL OFFICER: Johnstone DCJ LOWER COURT DATE OF DECISION: 29 May 2008 LOWER COURT MEDIUM NEUTRAL CITATION: [2008] NSWDC 128
McCOLL JACA 40305/08
DC 1170/07
HANDLEY AJA
SACKVILLE AJA
Wednesday 23 December 2009
Muhanad Al-Atabi v Attia Zaidi & Ors
Judgment
1 McCOLL JA: The appellant, Mr Muhanad Al-Atabi, a licensed builder who traded under the business name “Civil Choice”, took proceedings in the District Court seeking payment allegedly due in respect of work he carried out for the first three respondents, Attia Zaidi, Mohammad Ali Abbas and Salma Raza, to construct eight townhouses on property they owned in Mount Druitt. The fourth respondent, Hasan Zaidi, represented the first three respondents in their dealings with the appellant.
2 The central issue at trial was what was the agreed contract price and, in particular, whether the appellant was entitled to amounts he claimed were due in respect of variations. Its resolution turned on which of three documents brought into existence in or around mid 2004 constituted the contract between the parties. The appellant claimed that the contract was a cost plus agreement for $1.1 million. He claimed amounts due for variations to the contract pursuant to two documents, one described as the “Variations Document”, dated 23 January 2006 which enumerated 30 items and claimed $742,092.45, the other entitled “Variation Advice” dated 20 March 2005 in the amount of $98,725.00. He also claimed for provisional sums said to be for work the extent of which was unidentified when the contract was made. The respondents contended the agreement between the parties was to be found in a lump sum contract for $1.1 million entered into on 1 August 2004.
3 Johnstone DCJ found the contract to be the lump sum contract dated 1 August 2004, that it contained no provisional sums, that the requirements for variations under the contract were not satisfied (save as to a minor extent) and that there was no waiver of these requirements: Al-Atabi v Zaidi [2008] NSWDC 128.
4 The appellant appeals only in respect of his failure to recover $98,725 plus interest pursuant to the Variation Advice. He complains that the primary judge erred in finding that the Variation Advice did not either constitute or evidence a variation nor was the subject of an implied or express contract between the parties in accordance with Liebe v Molloy [1906] HCA 67; (1906) 4 CLR 347.
- Statement of the Case
5 As the issues have been narrowly confined on appeal from those presented at trial I shall set out the background facts and findings below only insofar as necessary to resolve the appeal.
6 In early 2004 the first three respondents sought a builder for the construction of eight two-storey residential townhouses on their Mount Druitt property. At some stage the fourth respondent invited the appellant to submit a quotation for the construction work on the basis of plans and other documentation he provided to the appellant.
7 Three contractual documents were created during the course of the negotiations between the fourth respondent and the appellant. The first was described as a “Cost Plus Quotation” for an estimated budget of $1.1 million, GST inclusive, dated 21 June 2004 (the “Quotation”). The Quotation set out various specified allowances included in the budget, as well as Terms and Conditions that provided for a deposit of 5 per cent and for the builder’s fees as “15% of the construction cost + GST”.
8 The second document was described as a Cost Plus Contract. It was dated 25 June 2004 and set out an estimate of $900,000 in respect of the cost of works plus 15 per cent.
9 The primary judge, as I have said, found in the respondents’ favour that the agreement between the appellant and the first three respondents was that contained in the third document, entitled “Home Building Contract”, referred to by primary judge as the “Lump Sum Contract (“LSC”). There were three versions of the LSC in evidence – one as an annexure to the appellant’s affidavit, another as an annexure to the fourth respondent’s affidavit, and another was Exhibit 1 in the respondents’ exhibits. As the primary judge noted (at [22]), there were differences between the three versions. Relevantly, only the version tendered as an annexure to the fourth respondent’s affidavit bore the date 1 August 2004. The other versions were undated. All three versions set out a lump sum price of $1.1 million to be paid by progress payments.
10 The primary judge found (at [16]) that the appellant’s evidence as to the LSC was unreliable and that he had “sought to rationalise the documentation with a view to making it suit his case”. He also found (at [17]) that the appellant had a “full appreciation of the full extent of the building work required prior to 30 June 2004”.
11 The primary judge concluded (at [19]) that the LSC was entered into on 1 August 2004 at a meeting between the appellant and the fourth respondent and that “the Lump Sum Contract, together with all the plans and drawings given to the appellant, constituted the construction contract, under which the price became fixed at $1.1 million inclusive of the builder’s margin”. His Honour further noted (at [20]):
“20. In my view, therefore, the common intention of the parties, viewed objectively, was that their contractual rights and liabilities in respect of the construction project were to be governed by the Lump Sum Contract for a fixed price, without any provisional items. The document was subsequently amended by mutual agreement to include some alterations to which I will refer shortly. Some of the drawings were also later revised, but the price never changed. For these reasons I find that Mr Al-Atabi agreed to carry out the construction work for a fixed price of $1.1m. However, in interpreting the common intention of the parties in respect of that contract, it is appropriate that regard be had to the extrinsic circumstances, including the discussions between Mr Zaidi and Mr Al-Atabi, plans and drawings, the prior contractual documents such as the Quotation and the Costs Plus Contract, and other documents such as the Full Estimate Summary, as well as their subsequent conduct and subsequent documents such as the claims for progress payments.” (emphasis added)
12 The primary judge found (at [23]) that the differences between the three versions of the LSC were likely due to alterations made by the appellant “after discussion with Mr Zaidi, with an eye to the requirements of the [respondents’] financier”. His Honour held that it was the version of the document that incorporated these “agreed alterations” which governed the rights and liabilities of the parties. That version was Exhibit 1.
13 One of the alterations to which his Honour referred (at [22]) was the change made to the “Schedule of Progress Payments” in cl 11 between the version of the LSC attached to the appellant’s affidavit and Exhibit 1. The Schedule, which was completed in handwriting, was amended in Exhibit 1 to increase the number of progress payments. The total contract sum ($1.1m), which appeared in both versions, was not altered. The alterations were initialled by the appellant and dated 30 August 2004. The first progress claim was amended from $350,000 for “up to frame stage” to $220,000 for “Retaining Walls & GF [Ground Floor] Slabs”. The appellant agreed in cross-examination that he inserted the words “Retaining Walls” in the progress payment schedule.
14 Work on the building project was 80 per cent completed by 20 March 2005, the day the Variation Advice was signed. The primary judge found (at [35]) that the appellant carried out no further construction work after 5 May 2005 – although progress payments appear to have continued until at least August 2005.
15 Clause 12 of the LSC prescribed the procedure for variations relevantly as follows:
“ Variations
- The work to be done or materials used under this contract may be varied:
¶ at the request of the owner; or
¶ at the request of the contractor. If the necessity for the variation is due to the fault of the contractor the owner will not be liable for any increase in the contract price; or
¶ due to such other matter that could not reasonably be expected to be necessary for the completion of the work at the date of the contract; or
Procedure for variations¶ due to a requirement of council or other statutory authority relating to the work, if at the date of this contract such requirement could not reasonably have been foreseen by the contractor.
¶ Before commencing work on a variation, the contractor must provide to the owner a notice in writing containing a description of the work and the price (including GST) to the owner. If not specified, the price will be taken to include the contractor’s margin for overheads and profit. The notice must then be signed and dated by both parties to constitute acceptance…
Adjustment of the contract price¶ Variations shall be subject to the overall conditions of this contract.
Any adjustment to the contract price due to an agreed variation will be taken into account at the time of the next progress payment or paid as agreed by the parties.” (emphasis in original)The cost of deletions from the contract will be deducted from the contract price. The price of extra work will be added to the contract price.
16 The primary judge found (at [27]) that the cl 12 procedure was not complied with and that the appellant “never provided any written notices for variations to the [respondents]”. The appellant claimed that despite his lack of compliance with the variations procedure in cl 12, he was entitled to recover amounts due for variations because the respondents had waived the requirements of cl 12: primary judgment (at [28]). He submitted that the fourth respondent had conceded in cross-examination that compliance with cl 12 was waived, relying upon the fourth respondent’s acknowledgment that the appellant had given him invoices for the work the subject of the claims and that he had signed them.
17 The primary judge (at [30]) was not prepared to draw an inference that cl 12 had been waived from the fourth respondent’s cross-examination. He doubted that “Mr Zaidi fully appreciated the significance of the questions” he was asked, and found that his answers were equivocal. His Honour further found (at [31]) that the “onus of proving variations based other than on compliance with the strict requirements of Clause 12 fell upon” the appellant, and that the “material relied upon to discharge that onus [was] unsatisfactory”. He concluded that the fact that the fourth respondent’s signature appeared on invoices and quotes for the work the subject of the claims was an insufficient basis to support the conclusion that the cl 12 procedure had been waived, stating:
32. I am not satisfied, without more, that the mere appearance of Mr Zaidi’s signature on invoices and quotes amounted to anything more than an acknowledgment, or in some instances an approval of the product or supplier. A signature of itself cannot be said to have amounted to a proper and considered action by which the defendants agreed to the further costs over and above the agreed contract price, and therefore an approval. The placing of invoices in front [of] Mr Zaidi and asking him to ‘approve’ them, without some further explanation was in my view insufficient to put the defendants on notice as to the significance of the costs being claimed. Mr Zaidi could not be expected to have had an immediate and constant knowledge of the works or their cost, nor indeed whether the amounts claimed fell within the contemplated scope of the work covered by the agreed lump sum price.” (emphasis added)“31. … Mr Al-Atabi did not satisfy me that Mr Zaidi ever had a full appreciation of the reason for many of the documents discussed with him or signed by him. The word ‘variation’, much used in Mr Al-Atabi’s affidavits and submissions, was conspicuously absent from most of the documentation and from such evidence as there was as to any conversations with Mr Zaidi. In my view, there was a large element of reconstruction in seeking to make the available documentary evidence fit the case sought to be made. Nor do all the documents relied on to support variations claimed contain Mr Zaidi’s signature.
18 The primary judge then addressed the specific claims made by the appellant for additional sums by way of variations. He dealt first with those set out in the Variations Document. The document was created by the appellant before Christmas 2005 in response to a request by the fourth respondent “to justify the variations”, but is dated 23 January 2006: primary judgment (at [36]). The total expenditure claimed was $1,872,210.28, of which the appellant had already received $1,130,117.83, leading to the amount claimed of $742,092.45.
19 One of the appellant’s claims for variations (made both in the Variations Document and the Variation Advice) was based on the proposition that stormwater plans supplied by the fourth respondent on 30 June 2004, purportedly after the provision of the Quotation, required work not previously contemplated because they indicated an onsite detention tank (the “OSD tank”) and a retaining wall. The appellant contended that there was no allowance in the original architectural plans he had received for either an OSD tank or the retaining wall.
20 The plans the appellant said the fourth respondent gave him on 30 June 2004 included a document dated 12 March 2004, entitled “Drainage Plan for Town Houses at 6 Methven Street Mt Druitt”, marked “REV A” (the “Drainage Plan”). This document indicated the location and specifications of the retaining wall and the OSD tank on the Mt Druitt property.
21 The appellant’s evidence was that he had a discussion with the fourth respondent about the “extra work” necessitated by the stormwater plans in August 2004 as follows:
- “I said to him words to the effect,
- ‘The architectural plans and the storm water plans are not the same and there is now an OSD tank on the stormwater plans. There will be extra costs to do this work’
- Zaidi said,
- ‘Please provide an approximate cost for this extra work’”
22 The appellant said he subsequently sent the fourth respondent a facsimile dated 18 August 2004 (“Annexure K”). This, it will be noted, was twelve days before the amendment to the Schedule of Progress payments. The facsimile referred to a “discussion” the previous day and set out the “preliminary cost to construct the retaining wall and the detention tank” as follows:
- “Surveyor = $ 2,400
Excavation = $ 2,150
Supply and fix steel bars and trench mesh = $ 900
Supply and place concrete incl the pump = $ 5,750
Supply and lay block work = $ 8,700
Block infill = $ 5,750
Back fill = $ 1,200
Profit and overheads = $ 3,270
GST = $ 2,507
- Total = $27,577”
23 According to the appellant, a day or two later, he had a telephone conversation with the fourth respondent about the estimate in the facsimile, in which the latter said words to the effect: “If we have to do it we have to do it”. The appellant gave evidence that he understood that comment to mean the fourth respondent would pay for the extra cost associated with the work set out in Annexure K.
24 The primary judge dealt with the significance of Annexure K and the appellant’s assertion that it was written following his receipt of “new plans” as follows:
- “ Excavation as per the new plans and tipping fees
43. Mr Al-Atabi made claims for additional amounts by way of variations for excavation costs ‘as per the new plans’ of $6,598.00 and for tipping fees of $29,530.00. His case was put as follows:
- ‘The new plans provided to me required that the site be excavated because there was a detention tank and the footings for a retaining wall noted in those plans. Excavation was not part of the quotation or the lump sum contract. Mr Zaidi was aware that there would be excavation costs, as these were indicated to him in the fax dated 18 August 2004 (Exhibited at “K”). Excavation was required due to the stormwater engineer’s specifications. The specifications required a detention tank to hold 48 cubic metres of water, therefore the excavation had to be about 65 cubic metres of soil.’
44. The whole thrust of this claim was the assertion by Mr Al-Atabi that he received ‘new plans’, only given to him following provision of the Quotation, that required excavation work not previously contemplated for a detention tank and retaining wall. The excavation required consisted of some 65 cubic metres of soil. Reliance for the variation is placed on the letter at Annexure K, dated 18 August 2004, in which Mr Al-Atabi refers to a conversation the previous day and sets out preliminary costings for the construction of the retaining wall and detention tank.
45. Whatever may have been the motivation for that letter, it cannot have been the ‘new plans’. Even if I were to accept that these plans were not available to Mr Al-Atabi before he prepared the Quotation, which I don’t, it is abundantly clear that he had them at the time he entered into the Lump Sum Contract. It cannot be said, therefore, that it was intended that the cost of the detention tank and the retaining wall was not included in the agreed contract price of $1.1m.
…
48. For these reasons, the claims in respect of excavation as per the new plans and tipping fees fail.” (emphasis added)47. In the result I was left with a factual conflict as between Mr Al-Atabi and Mr Zaidi. Neither witness was particularly impressive and in my view the evidence of each was to be approached with caution and accepted only if corroborated or otherwise verified by extrinsic evidence. In the case of a direct conflict between the two, however, I preferred the evidence of Mr Zaidi. In my view the credibility of Mr Al-Atabi was severely weakened by his false version of events surrounding the contractual documentation. I was not, therefore, satisfied that the work the subject of this claim, even if it did fall outside the agreed contract price, was approved by Mr Zaidi by way of variation to the Lump Sum Contract.
25 As I have said, the appellant sought at trial to claim the amount set out in Annexure K at trial both on the basis of the Variations Document as well as the Variation Advice. Insofar as it formed part of his Variations Document claim, he contended that, in truth, the document set out provisional sums rather than variations. The primary judge rejected that claim (at [162]), on the basis that provisional sums had to be set out in the Provisional Sums Schedule in the LSC, which had not been completed at all, and because “even if it were a claim for a variation it suffers from the same problems as most of the variations alleged in the Variations Document, and could not succeed even as a variation”.
26 At some stage, according to the appellant’s affidavit, he had a conversation with the fourth respondent in which he notified the latter of the need to lodge a s 96 (Environmental Planning and Assessment Act 1979 (NSW)) application to vary the Construction Certificate in order to commence work due to the discrepancy between the architectural and stormwater plans.
27 The appellant said that in order to prepare the s 96 application, he arranged for further plans to be prepared. Those plans included the Revised Drainage Plan (27 August 2004) which revised the reference levels for one of the units, the Retaining Wall Details (24 August 2004) and a document entitled “OSD Tank Structural Details”, dated 1 September 2004.
28 The appellant’s evidence was that at various times, he supplied variation advices to the fourth respondent which the latter approved. One of these was the Variation Advice:
- “VARIATION ADVICE
- To Mr Zaidi Date 20/03/2005
- Project No 6 Methven St, Mt Druitt Job No
Variation # 01
| Particulars | Addition | Deduction |
| Structural design and inspection for R.W & piers | 5,350.00 | |
| Concrete to R.W., 126 piers & strip footings of U 1&2 | 75,200.00 | |
| Block work to R.W. | 9,200.00 | |
| Total of present variation | 89,750.00 | |
| Amounts of variations approved (see previous advice) | - | |
| Total variation to date | - | |
| Less deductions | - | |
| Net addition/omission to contract | - | |
| Original gross contract amount | - | |
| GST | 8,975.00 | |
| Total of varied contract | $98,725.00 | |
Note: if there is no written replay [sic] to the above is received within seven days from the date of this advice we shall assume this figure is accepted.”
29 Both the appellant and the fourth respondent signed the Variation Advice. The fourth respondent was cross-examined as to why he signed the Variation Advice and insisted that he was not approving a variation.
30 The primary judge made the following findings in respect of the appellant’s claim insofar as it was based on the Variation Advice:
“163. The final claim was for $98,725.00 for work relating to the retaining wall and piers, made in reliance on Annexure ‘U’. This document differs from all the others because it is expressed to be a ‘Variation Advice’ dated 23 March 2005 [sic, 20 March 2005]. The problem with Annexure “U” is that it does not indicate which underlying documents it is based upon. It was not made clear whether this claim was in addition to or in substitution for the claims in the Variations Document. The amount of $98,725.00 does not of itself correspond with any item or group of items in the Variations Document. However, the second item in Annexure ‘U’ is for $75,200.00, being the total of the invoices at Tab PP ($41,200.00) and Tab VV ($34,000.00). On the other hand, the claim of $9,200.00 for block work to the retaining wall in Annexure ‘U’ does not appear to correspond with any of the invoices at Tab QQ.
165. Mr Zaidi’s explanation for Annexure ‘U’ was:164. One item of interest in Annexure ‘U’ that is worth noting is that it is described as ‘Variation #1’, and no other ‘variations to date’ were specified.
- ‘I note that annexure U to the plaintiff’s affidavit… is a document headed variation advice dated 20 March 2005 which #6 Meth 09 contract” (sic) as $98,725.00. I believe that this amount explained why the plaintiff had not completed the townhouse project in spite of the fact that most of the contract of $1.1 million had been payed (sic) to the plaintiff at that time. I did not examine the correctness of the plaintiff’s entitlement to $98,725.00. Apart from signing annexure U, I did not approve or agree to variations as asserted in… the plaintiff’s affidavit.’
166. Mr Zaidi was cross-examined as to why he signed Annexure ‘U’, but remained adamant that he was not approving a variation to the agreed price of $1.1m (T 271-3). There was simply no logical reason for Mr Zaidi to agree to the payment of an additional $98,725.00 for work that was clearly included in the agreed price of $1.1m.
168. For these reasons I find that Annexure ‘U’ was not a valid variation under Clause 12 of the Lump Sum Contract and, for the reasons already given, the work claimed for in Annexure ‘U’ did not form part of any variation that arose by reason of a waiver by the defendants of the requirements under Clause 12.” (emphasis added)167. However, I spent some time considering whether Annexure ‘U’ might have evidenced a genuine variation under Clause 12 of the Lump Sum Contract. In the end, however, I was satisfied that Annexure ‘U’ did not sufficiently comply with Clause 12 to constitute a valid variation. Firstly, there was no additional work done, at least not at the request of the owner, nor was the work due to some other matter that could not have been reasonably expected to be necessary at the date of the contract. Second, the notice was provided after the work was done and not before the work on the variation was commenced. Third, the work was in my view insufficiently described. Fourth, the document does not specify the ‘Original gross contract amount’ or the ‘Net addition/omission’ to the contract price. This was information that in my view Mr Zaidi was entitled to have before he could have given an informed approval of a variation for which the defendants should be made liable.
31 The primary judge entered judgment in the appellant for $4920.33 for amounts he had allowed additional to the agreed price in the LSC. He dismissed the claim against the fourth respondent as he was not a party to the LSC.
Issues on Appeal
32 The Notice of Appeal sought to agitate eleven grounds. However ultimately the appellant only pressed the following six grounds, all of which challenged the primary judge’s decision to reject the claim for additional sums in respect of work relating to the retaining wall and OSD tank based on the Variation Advice:
(a) The primary judge erred in finding that the LSC together with all the plans and drawings given to the appellant (whenever they may have been given to the appellant) constituted the construction contract.
(c) The primary judge erred in finding that the work carried out by the appellant “relating to the retaining wall”:(b) The primary judge erred in finding that the respondents did not waive compliance with cl 12 of the LSC.
(i) was not a variation (even though the respondents executed a “variation advice” dated 20 March 2005);
(ii) was not work in respect of which compliance with cl 12 of the LSC was waived;
(iv) was not the subject of a separate contract in respect of which the appellant was entitled to reasonable remuneration.(iii) was not work the respondents directed the appellant to carry out; alternatively
- (d) The primary judge erred in finding that the work carried out by the appellant relating to “piers and ground slab”:
(i) was not a variation (even though the respondents executed “variation advice” dated 20 March 2005);
(ii) was not work in respect of which compliance with cl 12 of the LSC was waived;
(iv) was not the subject of a separate contract in respect of which the appellant as entitled to reasonable remuneration.(iii) was not work the respondents directed the appellants to carry out; alternatively
(f) The primary judge erred in failing to consider and/or provide adequate reasons for rejecting the claim to the extent it relied upon the decision in Liebe v Molloy .(e) The primary judge erred in finding that the claim for misrepresentation (against each of the respondents) and the claim for quantum meruit must fail given “the findings [he has] made”.
33 I did not understand ground (e) to have been pressed. It was not addressed in written or oral submissions.
Submissions on Appeal
34 The appellant’s case on appeal was simple. Mr P T Taylor of Senior Counsel, who appeared for the appellant on appeal but not at trial, with Mr D S Weinberger, argued that, in signing the Variation Advice, the fourth respondent admitted that the appellant was entitled to be paid for the work the subject of the advice. Mr Taylor contended this was supported by the fourth respondent’s affidavit that “Apart from signing annexure U, I did not approve or agree to variations as asserted in… the plaintiff’s affidavit” (emphasis added). He also submitted that the fourth respondent’s assertions at trial that he did not intend to approve a variation by signing the Variation Advice could not counter the effect of his signature next to the words “approved by” on the Variation Advice.
35 Mr Taylor also took issue with the primary judge’s findings (at [163], [167] of the primary judgment) that the Variation Advice did not sufficiently comply with cl 12 of the LSC to constitute a valid variation. He contended that notice of the variation was given to the respondents before the relevant works were commenced by the preliminary estimate provided by facsimile to Mr Zaidi on 18 August 2004, pursuant to cl 12. Referring to the primary judge’s concern that the Variation Advice did not make clear how it related to claims in the Variations Document, he argued that the Variation Advice could neither be in addition to or in substitution for the Variations Document since it preceded it in time of preparation.
36 Mr Taylor then complained that, contrary to the primary judge’s conclusion, the appellant did additional work in making a s 96 application to the Council as a result of the new plans. He also argued that the fact that the work was insufficiently described was not a valid basis in contract to refuse the variation. Lastly, he maintained that the primary judge’s emphasis on the failure of the document to specify the “Original gross contract amount” or the “Net addition/omission” to the contract price elevated technicality to too high a level because, if this was the only signed variation advice, the arithmetic involved in determining the net addition was not difficult.
37 Mr Taylor further argued that the LSC could not have included the work referred to in the Variation Advice. He contended that even on the primary judge’s finding that the final agreement between the parties constituted the LSC “together with all the plans and drawings given to the appellant”, the contract could not have included documents which came into existence after the LSC was executed, being the Drainage Plan dated 27 August 2004 and another plan titled “Retaining Wall Details” dated 24 August 2004. Mr Taylor submitted that as the work the subject of the Variation Advice was based on these plans, the work related to these items was not “clearly included in the agreed [contract] price”.
38 Alternatively, Mr Taylor submitted that even if there was technical non-compliance with the specified variation procedure, there was an implied or express contract between the parties according to the principles in Liebe v Molloy for the respondents to pay for the works the subject of the Variation Advice as items additional to the written contract.
39 Mr E White, who appeared for the respondents at trial and on appeal, submitted that the primary judge’s finding that the Variation Advice did not evidence or constitute a variation ought to be upheld because the works the subject of the Variation Advice were already included in the fixed price of $1.1 million set out in the LSC, and the Variation Advice did not comply with cl 12 of that contract.
40 Mr White submitted that Annexure K (18 August 2004 facsimile) could not be construed as the notice of the work to which the Variation Advice related, as required by cl 12, as the description of the work in Annexure K did not correspond with the items in the Variation Advice.
41 Next, Mr White argued that it was apparent that the appellant had the plans showing the retaining walls and the OSD tank at the time the LSC was executed, 1 August 2004, and also was on notice of the revisions to the reference levels which emerged in August 2004 prior to the amendment to the Schedule of Progress Payments on 30 August 2004. Accordingly he contended it was open to the primary judge to conclude that the first progress payment sum of $240,000 attributed in the Schedule to the retaining walls (of which the OSD tank formed part) and ground floor slabs included all work the objective evidence established had to be carried out in respect of that structure at that date.
42 Finally, Mr White contended that on the basis of the primary judge’s findings that the retaining wall work was included in the LSC, there was no room for the operation of Liebe v Molloy.
43 In reply, Mr Taylor argued that the amendment to the progress payment schedule in the Lump Sum Contract dated 30 August 2004 should not be construed as intending to change the ambit of the fixed price contract, but merely indicated a variation of the dates on which progress payments would be made and the amounts to be paid.
Consideration
44 Consideration of the issues must be influenced by the fact that the primary judge concluded (at [47]) that the appellant’s credibility “was severely weakened by his false version of events surrounding the contractual documentation”. One difficulty with the appellant’s evidence is that it was directed to establishing his primary contention at trial, that the contract was found in all three documents to which I earlier referred and that despite the date it bore, the LSC was executed on 25 June 2004 with, presumably, the consequence that any work agreed to thereafter was a variation. In rejecting the appellant’s case in this respect, the primary judge rejected the appellant’s evidence to the extent that he contended that documents he received after 25 June 2004 evidenced work not covered by the contract, but supported his initial claim for $742,092.45 set out in the Variations Document.
45 The primary judge (at [47]) also entertained some doubts about the fourth respondent’s evidence and concluded that “the evidence of each was to be approached with caution and accepted only if corroborated or otherwise verified by extrinsic evidence”. His Honour’s conclusion about the appellant’s credibility reinforces the obligation of the appellate court to pay due deference to the advantage his Honour derived as a trial judge and only overturn his conclusions in the light of incontrovertible evidence or compelling inference to the contrary: Fox v Percy [2003] HCA 22, (2003) 214 CLR 118.
46 The fourth respondent’s subjective understanding about what he was signing on the first three respondents’ behalf, as adduced in cross-examination was, as Mr Taylor submitted, irrelevant: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165. I did not understand the primary judge to have used that evidence in any impermissible sense. However the primary judge was, in my view, entitled to treat the fourth respondent’s evidence that “[a]part from signing annexure U, I did not approve or agree to variations as asserted in… the plaintiff’s affidavit” as equivocal. It was a statement made in the context where the appellant was claiming almost three-quarters of a million dollars on account of variations where there was a significant dispute as to his entitlement to recover any of that amount on the basis the fourth respondent had not approved any variations. The fourth respondent’s statement did not go beyond stating the obvious: he signed the Variation Advice. Whether it had the force for which the appellant contended was the matter in issue.
47 The primary judge made two critical findings which the appellant had to overcome to succeed on appeal. The first (at [20]) was that while the LSC was amended by mutual agreement after the date it bore (1 August 2004) and “[s]ome of the drawings were also later revised, … the price never changed”. The second (at [166]) was that the work set out in the Variation Advice was “clearly included in the agreed price of $1.1m”. Mr Taylor accepted the appellant had to overcome these findings to succeed.
48 The fact the fourth respondent signed the Variation Advice did not conclusively establish the appellant’s entitlement to be paid the amount set out therein. The Variation Advice was not a document creating a contract in which case the principle concerning the binding effect of a signature generally applies: Toll. The Variation Advice purported to give effect to cl 12 of the LSC. In order to establish the appellant’s entitlement to claim for the sums there set out, the appellant had to establish that the requirements of cl 12 had been satisfied.
49 To establish a cl 12 variation, the appellant had to demonstrate, relevantly, that the work done under the contract had been:
(a) varied at the request of the owner (there was no suggestion the appellant requested any variation), or
(b) that the work had to be varied “due to such other matter that could not reasonably be expected to be necessary for the completion of the work at the date of the contract”, or
(d) that before commencing work on a variation, he had provided to the respondents a notice in writing containing a description of the work and the price (including GST), which notice had been signed and dated by both parties.(c) due to a requirement of council or other statutory authority relating to the work, if at the date of this contract such requirement could not reasonably have been foreseen by the contractor; and
50 As I understand the appellant’s case at trial insofar as the Variation Advice was concerned, it was that the owners had requested the work set out in that document, an assertion the respondents disputed.
51 The critical factual controversy, therefore, was whether the work referred to in the Variation Advice was a variation of the work for which the LSC provided, as the appellant contended, or, as primary judge found, was part of the work covered by the LSC.
Was the work in the Variation Advice covered by the LSC?
52 The work referred to in the Variation Advice was “Structural design and inspection for RW & piers, Concrete to RW, 126 piers & strip footings of U 1&2 and Block work to RW”. The retaining wall (“RW”) is, as the respondent submitted without contradiction, part of the OSD tank system, acting as a barrier around the building envelope to keep excess stormwater on the property in the event the OSD tank overflowed. Although the Variation Advice also referred to “126 piers and strip footings of Units 1 & 2”, the case was presented on the basis that the validity of the Variation Advice revolved around the retaining walls and the OSD tank.
53 The retaining wall (“RW”) and the OSD tank were both depicted on the Drainage Plan and the Revised Drainage Plan to which I have referred, dated respectively 12 March 2004 (which the appellant said he was given on 30 June 2004) and 27 August 2004 – which the appellant said he arranged to be prepared.
54 The Drainage Plan showed two retaining walls, one described as “MAX 800 MM” and the other, “MAX 900 mm MIN 100 mm HIGHER THAN THE PROPOSED FINISHED LEVELS”. It also depicted the OSD tank. Those descriptions did not change on the Revised Drainage Plan, however Mr Taylor emphasised that the reference levels shown on the two Drainage Plans differed by 0.7 of a metre in relation to the retaining walls, while there appeared to be a difference of 0.9 of a metre in relation to the OSD tank. It was on that basis that he contended that the Variation Advice evidenced the parties’ agreement to the revised cost of the work arising from the revision of the reference levels.
55 This submission can be dealt with in two ways.
56 First, there was no evidence which supported the proposition that the change in the reference levels between the two Drainage Plans was of such significance as to warrant a variation of $98,725.00 in the contract price.
57 Secondly, Mr Taylor’s submission is inconsistent with Annexure K. That document, which Mr Taylor also contended constituted the notice cl 12 required be given prior to the commencement of any variation work, did not refer to raised reference levels, but to “preliminary costs to construct the retaining wall and the detention tank.” Further, according to the appellant’s affidavit, he explained what he set out in Annexure K as arising from the fact that, inter alia, “the stormwater plans are not the same and there is now an OSD tank in the stormwater plans”. The latter statement was plainly wrong on the evidence the primary judge accepted that the appellant had received the Drainage Plan by 30 June 2004. The OSD tank appeared on the version of the drainage plan received on or before 30 June 2004.
58 On 30 August 2004 the “Schedule of Progress Payments” in the LSC was amended to include “retaining wall and ground floor slabs” for which $220,000 was allocated. Mr White submitted, without contradiction, that the OSD tank was included in the retaining wall section of the amendments to the Schedule as it formed part of the on-site drainage. He also contended that it was apparent from the amendment to the Schedule that the appellant was acknowledging that the $1.1 million lump sum price included the retaining walls (and OSD tank).
59 It is apparent from this chronology that by the time the amendment to the Progress Payment Schedule was made, the appellant had received and/or had prepared all the documents relating to the retaining wall and OSD, including those relating to the revised reference levels.
60 Clause 11 of the LSC required the owner to pay progress payments at the completion of the stages of work set out in the Schedule of Progress Payments. On 20 September 2004 the appellant made what appears to have been the first progress payment claim. The claim included descriptions of the work: from which it is apparent substantial amounts, if not all, of the retaining wall and OSD tank work had been done. Thus the OSD tank site had been excavated, the OSD tank slab had been concreted and the “SOD tank [sic, should be OSD]” had been backfilled. The retaining wall footings had been excavated and concreted. Claims were also made for retaining wall work in the second progress claim dated 4 November 2004 and the sixth dated 21 March 2005. There is no later reference to the OSD tank in a progress claim. Thus it is apparent that all of the work set out in the Variation Advice had been done prior to the respondent signing the document.
Conclusion: Variation Advice
61 In my view the objective evidence supported the primary judge’s finding that the retaining wall and OSD tank were subject to the price negotiated in the LSC. The substance of the work was set out in the Drainage Plan the appellant received on 30 June 2004, a month before the LSC was executed. To the extent he appears to have received plans indicating a change was required to levels in that plan, and foreshadowed that work in Annexure K, all the documentation necessary to understand the nature of that work had been completed by the preparation of the Revised Drainage Plan dated 27 August 2004, three days before the appellant signed off on the amendment to the Schedule of Progress payments. There was no evidence which demonstrated that the alteration in the reference levels set out in the Revised Drainage Plan substantially, if at all, altered the cost of the retaining wall work. Significantly, when the amendment was made to the Progress Payment Schedule, the contract price of $1.1 million did not alter. That was a cogent indication that nothing in what had happened prior to its amendment on 30 August, including the revision to the Drainage Plan, had altered the LSC. In my view the appellant has not demonstrated that the primary judge erred in concluding that the work described in the Variation Advice was not a variation, but was covered by the LSC.
62 Even if that conclusion were incorrect, I would also agree with the primary judge’s conclusion that no notice was provided as required by cl 12 prior to the work commencing. I cannot accept Mr Taylor’s submission that Annexure K constituted that notice.
63 First, as I have said, the matters to which Annexure K refers do not correspond with the Variation Advice. Secondly, Mr Taylor contended that it appeared to be common ground that the preliminary estimate in Annexure K ultimately escalated to the amount set out in the Variation Advice. I do not understand the respondents to have agreed with that proposition. To the extent the respondents accepted the appellant was contending there was a relationship between Annexure K and the Variation Advice, Mr White submitted the increase in the amount shown on the two documents was never adequately explained – a submission which did not detract from his basic submission that the work set out in the Variations Advice was included in the work set out in the LSC.
64 Mr Taylor sought to avoid the fact that cl 12 required any pre-variation work notice be signed and dated by both parties by suggesting the fourth respondent waived that requirement in the conversation the appellant said took place after Annexure K was sent. It is unnecessary to consider that argument, in my view, having regard to the conclusion that the work contemplated by Annexure K was included in the LSC.
Liebe v Molloy
65 In the light of that conclusion, there is, as Mr White submits, no room for the operation of the principle in Liebe v Molloy. That principle may apply to entitle a contracting party to relief where, notwithstanding failure to comply with a contractual stipulation such as cl 12, the court finds there was an implied or express request that the work which should have been the subject of such a stipulation be done: Liebe v Molloy (at 353); see also Trimis v Mina [1999] NSWCA 140 (at [56]) per Mason P (Priestley and Handley JJA agreeing); GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 50 (at [217]) per Finn J.
66 It is clear from Liebe v Molloy and the subsequent cases that if the work claimed for was work the contract required be done, the builder could not recover a quantum meruit for it: see also Smith v Leon Dupuy Dozer Hire [2000] VSC 212 (at [9]) per Balmford J; Concrete Constructions Group v Litevale Pty Ltd & Ors (No 2) [2003] NSWSC 411 per Mason P. That is the case here. The Liebe v Molloy claim must fail.
Orders
67 I would dismiss the appeal with costs.
68 HANDLEY AJA: I agree with McColl JA.
I agree with McColl JA.
2
10
1