APN DF2 Project 2 v Grocon - [2014] VSC 597

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IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
COMMERCIAL COURT

TECNOLOGY, ENGINEERING AND CONSTRUCTION LIST

S CI 2014 02826

APN DF2 PROJECT 2 PTY LTD	Plaintiff
v
GROCON CONSTRUCTORS (VICTORIA) PTY LTD	First Defendant
And
GROCON (SCOTS CHURCH) PTY LTD	Second Defendant

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JUDGE:	Vickery J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 October 2014
DATE OF JUDGMENT:	27 November 2014
CASE MAY BE CITED AS:	APN DF2 Project 2 v Grocon and Ors
MEDIUM NEUTRAL CITATION:	[2014] VSC 597

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BUILDING CONTRACTS – Whether a term as to verification of progress payments to be inferred in a construction contract – Whether a term as to verification of progress payments is to be implied in a construction contract – Meaning attributed to ‘Actual Trade Cost’- Whether in its context means trade costs actually paid or merely payable - Construction of commercial contracts – Implication of terms in commercial contracts – Term implied as a matter of necessity and commercial efficacy in a construction contract – Observations as to construction contracts being prone to conflicts and disputes.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A J Myers QC with Mr P Zappia of Counsel	Arnold Bloch Leibler
For the First Defendant	Mr J Gleeson QC with Mr R Craig of Counsel	Minter Ellison
For the Second Defendant	Mr D McAndrew of Counsel	Thompson Geer

HIS HONOUR:

Introduction

This proceeding arises out of a complex suite of transaction documents relating to the development, leasing and sale of improvements at 150 Collins Street Melbourne (the ‘Project’). The Project involved the second defendant, Grocon (Scots Church) Pty Ltd (‘Scots Church’), and the plaintiff (‘APN’) (which together with Scots Church are called the ‘Co-Developers’ or the ‘Principal’), being co-developers of land leased to APN under a 99 year lease from Scots Church Property Trust pursuant to a joint venture agreement dated 30 November 2011.

The Project further involved the design and construction of a 12 story office tower (the ‘Works’) by the first defendant, Grocon Constructors (Victoria) Pty Ltd (‘Grocon’ or the ‘Builder’ or the ‘Contractor’).

A dispute has arisen between APN and Grocon as to whether in its capacity as the contractor to APN, it is obliged to provide APN with copies of tax invoices and records for works and services carried out by subcontractors engaged by it which evidence actual payments made to those subcontractors in the course of the construction of the Works.

The Project proceeded under a complex suite of agreements involving the parties to this proceeding and third parties. However the most relevant for the determination of this proceeding are the following transaction documents (the ‘Transaction Documents’):

1. On 30 November 2011 a Joint Venture Agreement was entered into between APN and Scots Church in respect of the development, leasing and sale of the improvements on 150 Collins Street Melbourne (the ‘JV Agreement’);

2. On 15 May 2012, APN and Scots Church, as the Co-Developers and Principal, entered into a contract with Grocon, as the Contractor, for…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading APN DF2 Project 2 v Grocon

Details

AGLC: APN DF2 Project 2 v Grocon [2014] VSC 597
Case: [2014] VSC 597
Decision Date: 27 November 2014

CaseChat Overview and Summary

The matter before the court involved a dispute between APN DF2 Project 2 and Grocon, a construction company. The case centred around the interpretation of a construction contract and the implied terms within it, specifically concerning the verification of progress payments and the meaning of 'Actual Trade Cost'. The dispute was heard in the Supreme Court of Victoria.

The primary legal issues that the court had to determine were whether a term regarding the verification of progress payments could be inferred in the construction contract and what the term 'Actual Trade Cost' encompassed within the contract's context. The court needed to consider whether such a term was necessary for the commercial efficacy of the contract and how it should be interpreted in light of the contract's overall purpose.

In addressing these issues, the court examined the nature of construction contracts and their susceptibility to conflicts and disputes. It found that terms implied as a matter of necessity and commercial efficacy were appropriate in such contracts. The court concluded that a term requiring verification of progress payments was necessary for the proper functioning of the contract. Regarding the term 'Actual Trade Cost', the court determined that it meant the trade costs that were actually paid, not merely those that were payable. This interpretation was consistent with the commercial purpose of the contract and ensured that the paying party was not exposed to unnecessary risks.

The court's final orders provided clarity on the terms of the construction contract, ensuring that both parties understood their obligations and the implications of the contract's terms. The court's decision underscored the importance of clear contractual language and the necessity of implied terms to prevent conflicts and disputes in construction contracts.

Orders