Black Kosloff Knott Pty Ltd v JWLand Development Pty Ltd and MP Development No. 2 Pty Ltd
[2019] VCC 565
•3 May 2019
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-17-04807
| Black Kosloff Knott Pty Ltd | Plaintiff |
| v | |
| JWLand Development Pty Ltd and MP Development No.2 Pty Ltd | Defendant |
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JUDGE: | LEWITAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5, 6, 7, 8, 12, 13, 14 and 19 March 2019 | |
DATE OF JUDGMENT: | 3 May 2019 | |
CASE MAY BE CITED AS: | Black Kosloff Knott Pty Ltd v JWLand Development Pty Ltd and MP Development No. 2 Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 565 | |
REASONS FOR JUDGMENT
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Subject:Contract for payment of architects fees; subject to the execution of contract, implied terms
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C Shaw | Gadens Lawyers |
| For the Defendant | Mr I Percy | Lander and Rogers |
INDEX
| Subject | Paragraphs |
| Introduction | 1- 3 |
| Parties to the agreement | 4 |
| Did the parties reach an agreement? | 5 - 30 |
| Were the fees capped? | 31 - 43 |
| Did the Agreement contain an express term that BKK Architects would advise of any increase in fees for stage 2? | 44 - 47 |
| Was it an implied term of the Agreement that BKK Architects would advise if there was any increase in fees for stage 2? | 48 - 58 |
| The draft consultancy agreement | 59 - 67 |
| The requirement to receive written approval to proceed with stage 2 | 68 - 84 |
| Was BKK Architects entitled to payment prior to receiving written approval to proceed? | 85 - 86 |
| Was BKK Architects in breach of Schedule 3 of the draft May 2017 consultancy agreement? | 87 - 99 |
| The fees for attending the community workshops | 100 - 112 |
| Did BKK Architects fail to perform the work to the required standard? · What percentage of the works had been completed · Could BKK Architects lodge the planning application by 18 August 2017 | 113 114 -117 118 - 131 |
| Total failure of consideration | 132 - 136 |
| Quantum meruit | 137 - 141 |
| Estoppel | 142 – 172 |
| Conclusion | 173 |
HER HONOUR:
1 Black Kosloff Knott Pty Ltd (BKK Architects) claims that it entered into a contract with JWLand Development Pty Ltd (JWLand Development) or alternatively with MP Development No. 2 Pty Ltd (MP Development) to provide services as the architect for a project at 699-702 Park Street Brunswick (the site) in the State of Victoria (the Park Street project). BKK Architects said that it performed work on the Park Street project and sent invoices to MP Development dated 31 May 2017 for $57,667.50 plus GST (the first invoice)[1], 30 June 2017 for $94,968.50 plus GST (the second invoice)[2] and 31 July 2017 for $77,260 plus GST (the third invoice).[3] The first invoice was paid on 6 July 2017 but the second and third invoices remain unpaid. The parties agree that the amount claimed by BKK Architects is $189,154.35 (inclusive of GST). The defendants deny that they are indebted to BKK Architects.
[1] Exhibit 24.
[2] Exhibit 56.
[3] Exhibit 92.
2 BKK Architects is an architecture practice which designs residential, commercial and large scale infrastructure buildings. It has two directors; Simon Timothy Knott (Knott) and Timothy William Black (Black). Debra Adams has been employed by BKK Architects for 3 years and was the project architect for the Park Street project.
3 Nicholas (Nick) Weeks (Weeks) was up until 13 or 19 July 2017[4] the Head of Development (Vic) for the Park Street Project at JWLand Development. Weeks has a Masters Degree in Town and Country Planning which was obtained from Manchester in the United Kingdom about 16 years ago. Since then he has been employed as a senior development manager in the property industry. Knott first met Weeks in 2010 when Weeks was working for another developer, FKP. At that time BKK Architects worked with Weeks for a number of weeks in relation to a public housing renewal project in Carlton.
[4] Exhibits 76 and 80.
The parties to the agreement
4 The defendants contend that BKK Architects entered into an agreement with MP Development on 24 April 2017. By email dated 23 May 2017 Austin Hall of BKK Architects asked which company should be invoiced.[5] Originally Bianca Piva of JWLand Development said that JWLand Development should be invoiced[6] but by email dated 25 May 2017 Weeks corrected that to say that MP Development should be invoiced.[7] On that footing, it was conceded on behalf of BKK Architects that while its original contract was with JWLand Development, it is content to accept that the agreement was novated to MP Development by that email correspondence and that it is MP Development that is liable for BKK Architects’ invoices and for the other claims in this proceeding.[8]
[5] Exhibit 14, Court Book (CB) p 2190.
[6] Email dated 23 May 2017; exhibit 14 CB p 2189.
[7] Exhibit 14, Court Book CB p 2189.
[8] Outline of Closing submissions of the plaintiff, paragraph 4.
Was an agreement reached between BKK Architects and JWLand Development and/or MP Development?
5 The defendants’ in-house architect, Front Architects (Front Architects), had produced general plans over the course of the past year for the site with 400 apartments on a 13 or 14 level building.[9] The proposed plans provided for a building which had an H shape.[10] The Front proposal had been met with enormous community and council opposition.[11]
[9] Transcript p 61.
[10] Transcript p 445.
[11] Transcript p 61; p 446.
6 Dr Xi He is managing director of the defendants, whose base is in Canberra. Xi He travels to Melbourne when required.[12]
[12] Transcript p 460.
7 Vaughan Connor, the town planner engaged by the defendants for the Park Street project, had been working with JWLand Development from the beginning and said that the defendants needed to employ an architect with better design credentials and abilities.
8 Weeks telephoned Knott and told him that JWLand Development owned a large site of 6000 square metres located at the junction of Park Street, Sydney Road and Brunswick Road[13] for which JWLand Development had paid $30 million.[14] It is a well-known site with a motel on it. Weeks told Knott that BKK Architects had been recommended by Vaughan Connor (Connor) as a suitable architect for the Park Street project.
[13] Exhibit 4.
[14] Transcript p 88.
9 Weeks asked Knott whether BKK Architects would be interested in tendering for the project. Knott said that BKK Architects would be very interested.[15]
[15] Transcript pp 60-61.
10 Weeks told Knott that the defendants’ in-house architects, Front Architects, had spent a year or so on the project and that there were enormous holding costs on the site. I accept Knott’s evidence that Weeks told him that the defendants were undecided about how they were going to approach the Park Street project at that stage. The defendants were considering running two parallel schemes. BKK Architects could either introduce another proposal that might run in parallel to the scheme proposed by Front Architects or BKK Architects could amend the existing scheme. The defendants were keen to get the proposal to VCAT as quickly as possible.[16]
[16] Transcript p 63.
11 I accept Knott’s evidence that Weeks told him that the defendants were unsure whether they were going to adopt Front Architects’ initial proposal and try to repackage or redesign it, or completely start again. Knott told Weeks that BKK Architects would not know whether the proposal would require “a complete redesign or whether we are rejigging the existing” until they saw the proposal “in detail” and had an opportunity to go through it and really understand … “There is a lot of moving parts on a project like this and a lot of complexity to the planning approach to it, it’s not certain.”[17]
[17] Transcript pp 63-64.
12 Weeks and Knott had a number of conversations over the course of the next few days. Knott asked Weeks if he might be able to produce the Revit model[18] so that BKK Architects could see the work that Front Architects had done and whether BKK Architects could use that in some way.[19] Weeks forwarded limited access to the Revit model to Knott on 6 April 2017.[20]
[18] Revit is software produced by AutoDesk used to build a three dimensional model of the building.
[19] Transcript p 64; exhibit 1.
[20] Transcript p 67; exhibit 2.
13 By email dated 11 April 2017 Knott forwarded a fee proposal to Weeks (the April fee proposal).[21] Paragraph 5 of that proposal provides:
[21] Exhibit 5, transcript p 72.
Core Services Notes Stage 1- Urban Design and Built Form Study $ 28,000 Stage 2- Concept Design and Town Planning Application $220,000* $380,000 upper limit if we completely started again
*Estimate to be confirmed after Stage 1. Lower amount assumes some work by Front Architects
14 Knott said that in relation to stage 1, the “urban design and built form study” quote for $28,000 (stage 1), it was necessary to look at the City of Moreland and the interface with Princes Park which is part of the City of Melbourne and come up with a strategy about building the form within the site.[22].
[22] Transcript p 73.
15 Knott explained that the concept design and town planning application was the nuts and bolts of the proposal. It was necessary to resolve the design into detailed plans of apartment layouts and to ensure that the apartments complied with the Better Apartment Design Standards (BADS). This involved designing the entire building and coordinating with consultants, structural and services engineers and traffic consultants and then the preparation of a town planning application to submit to council for a planning permit for the site.[23] This stage also included numerous interactions with the planning department of the Moreland City Council.[24]
[23] Transcript pp 73-74.
[24] Transcript p 74.
16 A slightly amended proposal was subsequently forwarded to Weeks on 12 April 2017.[25]
[25] Exhibit 7.
17 Knott then discussed the proposal with Weeks on a number of occasions. Knott spoke to Weeks almost every day or every second day.[26] Weeks said that the proposal by BKK Architects seemed reasonable.[27]
[26] Transcript p 75.
[27] Transcript p 75.
18 Weeks then proposed that it would provide resources in the form of architects to assist BKK Architects.[28] BKK Architects said that it was hard to know what effect that would have without knowing the architects and their ability.[29] On 12 April 2017 Knott met with Weeks as well as George Huon and Ewan Carson from BKK Architects and James Mo (Mo) from Front Architects.[30] Knott told Weeks after that meeting that he thought he could work with James Mo, but he was not really sure.[31]
[28] Exhibit 6.
[29] Exhibit 6.
[30] Transcript p 80.
[31] Transcript p 80.
19 I accept Knott’s evidence that after the meeting on 12 April 2017, he spoke to Weeks and told him that given the uncertain nature of the way the project was going forward, the only way BKK Architects could reasonably put forward a fee would be to perform the services on hourly rates.[32] Knott said that there was uncertainty about how much of the project BKK Architects were reworking and how much they were starting from scratch. He also said that there was uncertainty about how they were going to progress through the planning application process and uncertainty about using Front Architects’ staff, about their abilities and availability (because they were also going to be working on other projects outside of the Park Street project).[33] Knott told Weeks that the only way BKK Architects could reasonably proceed would be on hourly rates until they started to work out what some of those uncertainties were and that once the scope of the project is “sort of established, scope is established, you have established a way forward through the planning application and we’ve got a firm understanding of the resourcing” they could start to fix the fee.[34] Weeks said that that sounded reasonable as an approach and asked what a fee like that would “look like”.[35] Knott’s evidence on those matters was essentially not challenged.[36] Weeks gave clear evidence that he had no recollection at all of his conversations with Knott around the time of the engagement of BKK Architects,[37] had no recollection of discussions he had about fees[38] and was not in a position to contradict Knott’s evidence.[39]
[32] Transcript p 80.
[33] Transcript p 80.
[34] Transcript p 81.
[35] Transcript p 81.
[36] Knott: T208, L29-T209 L7; T 254 L21 – T255 L12.
[37] Transcript p 444.
[38] Transcript p 444.
[39] Transcript pp 445, 455.
20 By email dated 18 April 2017 Weeks wrote to Knott and proposed that two members of their team (James Mo, the equivalent of a senior associate and Nguyen Le, a recently qualified graduate), be seconded into BKK Architects’ office for 3 days a week. Weeks asked Knott to forward an updated fee proposal.[40]
[40] Exhibit 9, CB p 346.
21 On 18 April 2017 Knott forwarded an email to Weeks stating that “we are happy to work on this basis” but “we still need to work through the detail of how this would work”. He said that “We need further discussion on this but the fees could look something like the proposal below.”[41]
[41] Exhibit 9.
| Stage | Days per week | Days | Charge | Projected Hours |
| Concept Town Planning | 50 | |||
| Director – SK ($250/hr) | 2 | 40% | $ 38,080.00 | 160.00 |
| Project Architect – Ewan ($190/hr) | 4 | 80% | $ 60,480.00 | 320.00 |
| Senior Architect – Deb/GH ($190/hr) | 2 | 40% | $ 30.240.00 | 160.00 |
| Registered Architect 1 – Rachel ($110/hr) | 5 | 100% | $ 33,600.00 | 400.00 |
| Graduate Architect 2 – LD ($85/hr) | 5 | 100% | $ 33,600.00 | 400.00 |
| $ 196,000.00 |
22 Knott said that he had reduced the standard hourly rates previously submitted. The fees were stated to be based on projected hours that personnel from BKK Architects would work on the project. It was also said that the estimate and scope would need to be confirmed upon completion of the urban Design/Built Form Study.
23 On 24 April 2017 Weeks as Head of Development (Vic) for JWLand Development forwarded an email to Knott stating:
Based our discussions we are, subject to the execution of Consultancy Agreement, pleased to appoint you as Lead Design Architect for 699 Park St, Brunswick. This commission is for Concept Town Planning and Design Development stage and is based on the hourly rates as per the below email.(emphasis added)[42]
[42] Exhibit 10.
24 The hourly rates set out in the “below email” are contained in the above email dated 18 April 2017 from Knott to Weeks.
25 From that time on, BKK Architects commenced work on the project.[43] Knott and Weeks had no further discussions about fees after that time. [44]
[43] Transcript p 84.
[44] Transcript p 85.
26 The defendants concede that BKK Architects and MP Development intended to be bound immediately by the terms agreed on 24 April 2017 but expected to make a further formal consultancy agreement.
27 Both sides agree that the agreement entered into on 24 April is what may be termed a “fourth category”, being a variation of the first category of Masters v Cameron.[45] The fourth class of case additional to the three mentioned in Masters v Cameron was referred to by McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd[46] as:
…one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
[45] (1954) 91 CLR 353.
[46] (1986) 40 NSWLR 622, 688.
28 As stated by Riordan J in The Edge Development Group Pty Ltd v Jack Road Investments Pty Ltd[47] this fourth category has been accepted in many subsequent cases and was confirmed on appeal. Riordan J held that the decisive issue is whether or not the parties intended to be contractually bound. Riordan J referred to the explanation by McHugh JA (as he then was) on appeal that:
The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.[48]
[47] [2018] VSC 326, [41].
[48]GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd 91986) 40 NSWLR 631, 634-5.
29 In PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd and another[49] the Court of Appeal stated that ultimately the question is whether “viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain.”[50]
[49] (2007) 20 VR 487, 489.
[50]Vroon BV v Foster’s Brewing Group Ltd (1994) 2 VR 32, 82.
30 Having considered the whole of the evidence, and viewed objectively from the point of view of reasonable persons on both sides, I find that the parties intended to be bound immediately on the terms agreed on 24 April 2017 (the Agreement). The Agreement was constituted by the conversation referred to in the above paragraph 19, the 2 emails exchanged on 18 April 2017 and the acceptance on 24 April 2017.[51]
[51] Exhibits 9 and 10.
Were the fees capped?
31 The defendants filed an expert report by Mr Ian Frances Nowak (Nowak) dated 19 October 2018 (Nowak’s report).[52] Nowak was asked to express his opinion about the following matters:
1.5.1In a development of this type, is it usual industry expectation or practice for an architect to be engaged on a fixed fee for the work required by each of stages 1,2 and 3 (assuming the work is set out in the Scope and Program) or is it usual for an architect to provide an estimate for each stage and be entitled to charge on an hourly, and uncapped, rate?
1.5.2Assuming a fixed fee is agreed, if an architect considers that further work is required to be performed outside of the agreed scope of work (either because of circumstances unknown at the time of engagement or because of new instructions from the client) what is the usual industry expectation or requirement for an architect to be entitled to any increase in fees?
[52] Exhibit S.
32 In his report Nowak lists the documents supplied to him for the preparation of his report. The documents listed under Tab A, “Fee Proposals and Consultancy Agreements”, do not include the email from Weeks to Knott dated 24 April 2017.
33 Nowak was asked in cross-examination:
You agree, I take it, that whatever the usual arrangements might be between, for example, a developer and an architect, they can agree as between themselves to do whatever they like, can’t they?...Effectively if you have an agreement, yes.
Whatever might be common or usual or what you say likely, if they agree a certain arrangement between themselves, that’s the arrangement, isn’t it?...Yes.
So if parties agree for services to be provided by an architect on an hourly rate, that’s their agreement, isn’t it?...If that’s what’s agreed, yes.
You accept, don’t you, that sometimes architects do charge by hourly rates, don’t you?...In certain circumstances, yes, that’s been my experience.[53]
[53] Transcript pp 551-552.
34 Nowak attached a document entitled “Client note: Architects fees” as appendix 9 of his report. When cross-examined Nowak agreed that the note states that although time-charge fees is not a common method for charging for architect’s services “Nevertheless, should this method be used, the architect will charge for the work on an agreed hourly (or daily or weekly) rate.”[54] Nowak agreed that an hourly rate was certainly a method of charging that was used by architects.[55]
[54] Exhibit S, CB p 194.
[55] Transcript p 552.
35 Knott’s evidence was that there was no discussion about capping fees.[56]
[56] Transcript p 87.
36 In examination in chief Weeks was asked:
Before I ask you about what happened after 24 April, I asked you about these discussions [with Knott]. Knott says that there was never any discussion about capping fees. What do you say about that?... If you go back to the original fee proposal which is at p 350[57], talking here there’s – BKK say that stage 1 is going to cost $196,000. That figure has been calculated from their point of view by an hourly rate perspective. So to my mind, that would be a fixed component capped on those hourly rates.[58]
What I said to you was that Mr Knott’s evidence is that there was never any discussion with you about capping the fees or fixing fees. What do you say about that?...There may be no specific conversation about that. I thought it was implied within the way that the fee proposal had been set up.[59] (emphasis added)
[57] Exhibit 10.
[58] Transcript p 428.
[59] Transcript p 428.
37 When cross-examined Weeks said:
So the only basis you are suggesting now that the fees are capped is because that’s what you read the e-mail as saying?...Yes because I don’t recall the specifics of the actual discussions themselves.[60]
[60] Transcript p 449.
38 The view which Weeks takes of the effect of the Agreement is inadmissible in the interpretation of the Agreement. As stated by Brooking J in FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd:[61]
The view which a party to a contract takes of its effect has no bearing on its construction, whether that view is made manifest by conduct or by express statement and whether that view is sought to be proved by evidence of conduct (including statements) or by direct evidence of state of mind given in the litigation by the party to the contract.
[61] [1993] 2 VR 343, 351.
39 Weeks was asked the following questions in cross-examination:
As I understand your evidence this morning to Mr Percy, you have no recollection at all of the conversations that you had with Mr Knott around the time of BKK’s engagement; is that right?...That’s right, yes.
So you have no recollection at all of discussions you might have had with him in relation to fees and so forth?...Unfortunately, no.
..if he has come to court and given quite detailed evidence about what was the content of those discussions, you are not in any position to contradict that, are you?...No.[62]
[62] Transcript p 444.
40 The defendants sought to rely on an email dated 24 July 2017 from Anthony Cuzzupi[63] to Simon Knott and Tim Black which states:
I am highly concerned with your fees, both claimed to date and projected. Invoices to date equate to circa $152k, which is 78% of the total $196k for the TP Phase. I understand form [sic] Nick there was to be an acknowledgement in writing once you reached 75% of this fee, was this issued? If so, can you please send to me.
Furthermore, hours spent 1/7-21/7 equate to $84k, which brings the total to $236k, this $40k over the $196k. Nick has confirmed this fee overrun has not been communicated or approved. When I include your projected hours of $106k the total for TP is $343k, close to $150k over the agreed $196k cap.
[63] Exhibit 88.
41 The defendants submit that the contemporaneous email from Cazzupi referring to his understanding of the arrangements as conveyed to him by Weeks on that day (24 July 2017) must be accepted as evidencing the understanding of the arrangements genuinely believed by Weeks to have been made between the parties. The defendants submit that the fact that Weeks now has no recollection of conversations between him and Mr Knott leading to the Agreement, almost 2 years ago, cannot detract from Weeks’ understanding of the arrangements as conveyed to Cuzzupi on 24 July 2017.
42 I do not accept the defendants’ submission. Weeks’ subjective understanding of the terms of the agreement is not relevant.
43 The court has to ascertain objectively what the parties agreed. There was no reference in the emails dated 18 and 24 April 2019 that the fees would be capped.[64] No document refers to the hourly rates being capped and no-one has given any evidence that there was a discussion that the hourly rates would be capped. The background facts known to both parties include that Front Architects had prepared a model but that there was uncertainty as to the extent to which it could be re-worked.[65] Another fact was that the defendants were providing personnel to BKK Architects whom BKK Architects did not know and were not in a position to say what use they would be. On examination of the background facts known to both parties, the relevant conversations and the exchange of emails, it is clear that the parties agreed that BKK Architects would charge an hourly rate and that the fees were not capped.
Did the agreement contain an express term that BKK Architects would advise if there was any increase in fees for stage 2 after it had undertaken the work on stage 1?
[64] Transcript p 349.
[65] Transcript p 446.
44 The defendants contend that it was an express provision of the agreement that BKK Architects would advise if there was any increase in fees for stage 2 after it had undertaken the work on stage 1. The defendants submit that that requirement was expressly provided for in the services and scope section of the 11 April 2017 fee proposal which states “For that reason we have provided an estimate of scope and fees to be confirmed after stage 1.”[66]
[66] Exhibit 5, CB p 317.
45 The defendants submit that BKK Architects never advised that the estimate of $196,000 for fees in relation to stage 2 would change at any time before Cuzzupi received a letter dated 21 July 2017[67] on 24 July 2017.
[67] Exhibit 87.
46 However the 11 April 2017 fee proposal[68] was forwarded to Weeks before the meeting with Weeks and Mo on 12 April 2017. After the 11 April 2017 fee proposal, there was a discussion between Knott and Weeks about hourly rates and then the exchange of emails from Weeks to Knott on 18 April 2017,[69] the email from Knott to Weeks on 24 April 2017[70] and the email from Weeks to Knott on 24 April 2017.[71]
[68] See paragraph 12.
[69] Exhibit 9.
[70] Exhibit 9.
[71] Exhibit 10.
47 Although the 11 Apri 2017 fee proposal forms part of the negotiations between the parties, it forms no part of the agreement. The agreement was constituted by the conversations between Knott and Weeks referred to in the above paragraph 18 and the exchange of emails dated 18 and 24 April 2017.
Was it an implied term of the Agreement that BKK Architects would advise if there was any increase in fees for stage 2?
48 The defendants contend that it was an implied term of the agreement that BKK Architects would give reasonable notice of any proposed increase in fees for the services to be performed on any stage of the project and would not be entitled to fees in excess of those agreed for the Stages without prior agreement with the second defendant (the proposed term).[72]
[72] Amended Defences of each of the First and Second Defendants dated 12 March 2019 (the amended defences), paragraph 8 (xiii).
49 BKK Architects submits that such a term could only sensibly be implied if the agreement was for fixed fees. BKK Architects submits that it is clear that such a term could have no sensible or logical application to an agreement for an architect to charge hourly rates.
50
The defendants submit that the term is to be implied as a matter of standard industry practice for architects practising in the State of Victoria.
The particulars to paragraph 8(xiii) of the second amended defences of each of the first and second defendants dated 12 March 2019 (the amended defences) provide:
The term is to be implied as a matter of standard industry practice for architects practising in the State of Victoria. The defendants rely on clauses 4(2)(i), (j), (k) and (l), 6(a) and (b) and 7(a),(b) and (d) of the Code of Professional Conduct, Schedule 1, to the Architects Regulations 2015 (Vic).
The term is further to be implied as a matter-of-fact having regard to the principles summarised in BP Refinery v Hastings (1977) 52 ALJ 20.
51 Provision 4(1) of the Victorian Architects Code of Professional Conduct[73] relevantly provides that an architect must not provide architectural services for a client unless the architect has entered into a written agreement with the client for the provision of those services. The defendants accept that the email exchange which ended with the acceptance by the defendants on 24 April 2017 is an agreement in writing for the purposes of provision 4.[74]
[73]Architects Regulations 2015 (Vic), schedule 1 – Victorian Architects Code of Professional Conduct.
[74] Transcript p 587.
52 The specific terms of the Victorian Architects Code of Professional Conduct relied upon are:
4(2) An agreement must include the following -
(i) how the client may authorise the architect to proceed with the services, or any part of the services;
(j) a requirement that the architect must inform the client how a change or amendment to the services will affect the professional fees and costs for the services;
(k) how the architect may obtain the client’s authority to change or amend the services;
(l) how variations to the agreement may be made.
6 Professional fees and costs
An architect who has entered into an agreement under clause 4 must –
(a) provide the client with regular statements of account for the services under the agreement unless otherwise expressly agreed with the client; and
(b) ensure that the fees and costs charged do not exceed the fee structure of the agreement.
7 Obligation to inform client
An architect must –
(a) take reasonable steps to ensure that a client is informed of decisions required of the client in respect of the services; and
(b) provide sufficient relevant information with reasonable promptness to enable a client to make an informed decision in relation to the provision of services; and
(d) take reasonable steps to ensure that all information and material provided to a client is accurate and unambiguous.
53 In BP Refinery (Westenport) Pty. Ltd. v Shire of Hastings[75] (BP Refinery) the Privy Council specified five conditions which must be satisfied before a court would imply a term into the Agreement.
[75] (1977) 180 CLR 266, 283.
(1) It must be reasonable and equitable;
(2)It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(3)It must be so obvious that ‘it goes without saying’;
(4)It must be capable of clear expression;
(5)It must not contradict any express term of the contract.
54 In Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (Codelfa) [76] Mason J. stated:
For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made.
[76][1982] CLR 337,346 (emphasis added).
55 Whether a term is implied by custom or usage is a question of fact.[77] There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported the term into the contract.[78] In the circumstances of this case, where BKK Architects have been engaged to perform the services on an hourly basis, the evidence does not allow me to conclude that the proposed term is so well-known and acquiesced in that everyone making the contract can be reasonably presumed to have imported that term in the contract.
[77]Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 16 CLR 226, 236.
[78]Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 16 CLR 226, 236.
56 Nowak’s opinion about “the usual industry expectation or requirement for an architect to be entitled to any increase in fees” is based on the assumption that a fixed fee was agreed. Nowak was also instructed to assume that the parties accepted that the terms of the Consultancy Agreement governed their rights and obligations and that the services provided by BKK Architects were provided pursuant to the terms thereof.
57 I accept the plaintiff’s submission that the proposed term was not necessary to give business efficacy to the agreement. The agreement is effective and workable without that term. It is not sufficient that it is reasonable to imply a term; it must be clearly necessary.[79] Nowak agreed that a contract would work commercially without the proposed term.[80]
[79]Codelfa (1982) 149 CLR 337, 346.
[80] Transcript p 557.
58 In my opinion the proposed term is not so obvious that “it goes without saying.”[81] When cross-examined Nowak agreement that “that arrangement would not be inevitable” and that the proposed term “does not go without saying”.[82] The terms of the Agreement make it clear that the appointment of BKK Architects as Lead Design Architect for the Park Street project was an hourly rate agreement.
Was the work performed by BKK Architects on the basis of the draft Consultancy Agreement forwarded on 25 May 2017[83] and was the contract between BKK Architects and the defendants subject to the terms of that draft Consultancy Agreement?
[81]Codelfa (1982) 149 CLR 337, 355.
[82] Transcript p 557.
[83] Exhibit 15.
59 The defendants contend that the work performed by BKK Architects was performed on the basis of the draft consultancy agreement provided on 25 May 2017 (the draft consultancy agreement), at least from that date.[84] They further contend that the agreement made between BKK Architects and MP Development on 24 April 2017 went forward from 25 May 2017 on the terms of the draft consultancy agreement.
[84] Exhibit 14.
60 In short, the defendants contend that the terms of the draft consultancy agreement superseded, alternatively varied, the Agreement. If agreement was not reached between the parties to adopt the terms of the draft consultancy agreement, such agreement had been reached by 30 June 2017 after receipt of the amendments proposed by BKK Architects[85], or at the latest 17 July 2017, when the parties had reached agreement on those terms.
[85] Exhibit 54.
61 The issue is whether, after May 2017, agreement was reached between the parties that the 24 April agreement was replaced by a new agreement in the terms of the draft consultancy agreement.[86]
[86] Paragraph 36, defendants’ written submissions dated 18 March 2019.
62 The plaintiff submits that the consultancy agreement was never entered into. There was an agreement and there was a negotiation to replace that agreement but it never happened.
63 BKK Architects commenced work shortly after Weeks’ email of 24 April 2017 but the draft Consultancy Agreement was not provided until 25 May 2017, one month later. Accordingly it was not part of the agreement between the parties.
64 On 30 June 2017 Tim Black forwarded an email to Weeks stating “Please find attached our recommended changes to the Consultancy Agreement, as discussed earlier in the week. Could you please confirm availability for yourself and Lander and Rogers on Wednesday in the window previously suggested (12pm – 3pm) – this is the preferred day for discussion of the contract.”[87]
[87] Exhibit 54.
65 The defendants seek to co-opt certain terms of the draft consultancy agreement into the Agreement. The defendants submit that certain terms of the draft consultancy agreement were not disputed and therefore there must have been an agreement to incorporate those terms into the Agreement.
66 The defendants contend that if agreement was not reached between the terms of the 25 May 2017 draft, such agreement had been reached by the time that Black sent the 30 June 2017 email. [88]
[88] Exhibit 54.
67 The contract between BKK Architects and the defendants was not subject to the terms of the draft Consultancy Agreement. As at 30 June 2017 there was no agreement in relation to the terms of the draft Consultancy Agreement. Agreement was not reached when Knott, Black and BKK Architects’ lawyer (Jeremy Smith) met with Weeks and the defendants’ lawyers on 18 July 2017. Although the parties were close to agreement, no further agreement in the terms of the consultancy agreement was reached. BKK Architects were not bound by the consultancy agreement and are not bound by some of its terms when they have not agreed to all of its terms.
Were there terms of the agreement between the parties that BKK Architects was not to proceed to the next stage until it had received MP Development’s written approval to do so?
68 The defendants contend that it was clear from the conditional agreement reached on 24 April 2017 that BKK Architects would not proceed to stage 2 without first obtaining approval for stage 1 and because of BKK Architects’ failure to do that, they are not entitled to be paid. BKK Architects never advised the defendants that stage 1 had been completed.
69 BKK Architects commenced charging for its work on stage 1 on 1 May 2017.[89] This is confirmed by the fee statement provided with its first invoice.[90]
[89] Exhibit 92, CB p 2154.
[90] Exhibit 24, CB p 765.
70 On 1 May 2017 Weeks emailed Knott saying that notwithstanding that the work had commenced he needed to “lock in and confirm” the program, scope of work and deliverables.”[91] He needed this information, amongst other things “for inclusion within the “Consultant Agreement”.
[91] Exhibit 11, CB p 378.
71 Knott responded by email dated 2 May 2017.[92] BKK Architects provided a “scope of works and program as discussed with James [Mo] today.”[93] The email noted that “the first stage is now 4 weeks rather than 3 (as previously advised). This is mostly so I can have some involvement in the last week of the stage. Let us know if you have any questions”.
[92] Exhibit 11, CB p 377.
[93] Exhibit 11, p 377.
72 Knott went overseas to Venice for three weeks between 6 May 2017 and the last week in May 2017.[94] There are no entries for him in BKK Architects’ detailed time report (the detailed time report) after 5 May 2017 until 24 May 2017.[95]
[94] Transcript pp 89 and 234.
[95] Exhibit 92, CB p 2159.
73 The defendants claim that allowing BKK Architects 4 weeks to undertake stage 1 (from 2 May), it was obliged to confirm its fees for stage 2 by, at the latest, 2 June 2017. The detailed time report indicates that BKK Architects completed work on stage 1 by 6 June 2017.[96]
[96] Exhibit 92, CB p 2155.
74 The defendants submitted that Peter Williams (Williams), the expert called by BKK Architects, agreed in cross-examination that as a general principle BKK Architects could not move to stage 2 without finishing stage 1. However Williams also stated:
You understand that there was a design stage 1 which was a design investigation study?...Yes.
Then the stage 2 concept design and planning permit application stage would progress. I think you would accept that you can’t move off stage 2 until you have finished stage 1?...I would accept that as a sort of general principle but often in a situation where timing is tight, there is an overlap between phases. So it may well be that you can start developing something like your structural proposition, for example while you are still looking at the very early stages, simply to respond to the time limits.[97]
[97] Transcript pp 393-394.
75 In this case there was a tight time frame and it was possible to perform stage 2 works whilst still doing stage 1 works.
76 In the amended defence the plaintiff claims that this allegation is based on a term of the draft consultancy agreement. In paragraph 8 of the amended defences the defendants allege:
(g) The May 2017 Agreement superseded the Agreement (as alleged by the Plaintiff in paragraph 8 of the Amended Statement of Claim).
(h) The following were terms of the May 2017 Agreement.
(i) The Plaintiff:
(A)was not to proceed with the next stage forming part of the Services until it had received the Second Defendant’s written approval to proceed with the relevant stage; and
(B)will not be entitled to any payment for Services performed as part of the next stage prior to receiving written approval to proceed. [clause 2.2 of the May 2017 Agreement].
77 Aside from the fact that the amended defences rely on the May 2017 agreement, each of the amended defences do not contain an allegation of breach of the alleged term. Paragraph 10A of the amended defences alleges:
10A.Further and alternatively, the First Defendant says that in breach of the May 2017 Agreement, alternatively the Agreement contended for the plaintiff, the plaintiff failed to perform the Services to the Required Standard.
Particulars
The Plaintiff’s Services were unsatisfactory in that:
E.The plaintiff did not carry out its Services so as to comply with the program and in order to enable a town planning application to have been submitted to Moreland City Council by 18 August, alternatively 28 August 2017.
Particulars
The Defendants rely on the expert report of Ian Nowak dated 19 October 2018 and in particular paragraphs 5.47 to 5.134 dealing with “Extent of Services Provided”
10B.Further and alternatively, in breach of the implied term the Plaintiff failed to give the Second Defendant any notice of a proposed increase in fees for the services to be performed on any Stage of the Project, failed to provide an estimate of proposed further fees and did not obtain the agreement of the Second Defendant to any such increase.
10C.By reason of the said breaches on or about 25 July 2017 the Second Defendant terminated the May Agreement, alternatively the Agreement contended for by the Plaintiff.
Particulars
The termination was oral and was communicated by Anthony Cuzzupi and Xin Ling of the Defendants to Knott on behalf the Plaintiff at a meeting on 25 July 2017.
78 In any event I am not satisfied that BKK Architects breached the agreement because BKK Architects did not receive written approval to proceed with stage 2 (the Concept Town design and planning permit).It was clear from the correspondence between the defendants and BKK Architects that the defendants asked BKK Architects to proceed with stage 2. For example on 24 May 2017 Adams forwarded an email to Weeks attaching a draft of a presentation for the meeting with Moreland City Council.[98] By email dated 25 May 2017 Connor comments:
Regarding the overall massing/height strategy, refer attached. Is the *element on the east wing higher than the west wing. If it is, I think this is problematic in terms of how the DDO provisions work i.e. wanting to graduate height from west to east, and therefore should it be repositioned onto the west wing?[99]
[98] Exhibit 116.
[99] Exhibit 118, CB p 550.
79 By email dated 26 May 2017 Weeks sent an email to Connor, Adams, Black and Mo in the following terms:
Deb, et al,
Can you please modify in line with Vaughan’s comments
Please see my comments attached and below.
Vaughan/Julia
Sydney Road/Park St corner
·Can we remove the setback on Sydney Road and reflect the DDO architecturally (say façade treatment/materiality)?
·Should this corner be higher than the adjacent element on Park St to support stepping up from General Res zone?[100]
[100] Exhibit 120, CB p 658.
80 On 31 May 2017 Weeks forwarded an email to Knott stating “Keep up the good work guys”.[101] I accept Knott’s evidence that Weeks had not said anything about being unhappy with the work BKK Architects was doing. “Quite the opposite”.[102]
[101] Exhibit 22.
[102] Transcript p 122.
81 On 5 July 2017 Austin Hall, studio manager BKK Architects, forwarded an invoice for work completed to the end of June and a schedule of hours. He also included the A1 spot colour prints as a disbursement.[103] The total of the invoice was $104,168.35 (the second invoice). That document was produced from the Harvest system.[104] There was no objection, complaint or discussion about it.[105]
[103] Exhibit 56; the A1 drawings that were produced for the community consultations.
[104] Transcript p 153.
[105] Transcript p 127.
82 On 6 July 2017 Weeks forwarded a remittance advice for the first invoice dated 31 May 2017 for $63,434.25.[106] Neither Weeks nor anyone else from the defendants took issue with that invoice before it was paid.[107]
[106] Exhibit 64.
[107] Transcript p 158.
83 On 6 July 2017 Dr Xi He forwarded an email to Knott:
Thanks a lot for quickly getting back to us. Once the new massing is done, we will show it to Vaughn and be prepared to reduce top floors from the new massing to achieve an outcome council would be comfortable with. Say cut the middle section to 10 levels and cut the West South corner to 8 levels.
If no agreement can be reached between us and council, we will go to VCAT anyway.[108]
[108] Exhibit 65.
84 At least from 26 May 2017 there was a written approval from Weeks for work on the planning issues to be performed.
Were there terms of the agreement between the parties that BKK was not entitled to any payment for services performed as part of the next stage prior to receiving written approval to proceed?
85 The defendants do not contend that this was a term of the agreement reached on 24 April 2017. They nevertheless contend that it was a provision of the draft consultancy agreement of May 2017 and that such term was accepted by BKK Architects. Clause 2.2 of the draft agreement provided that BKK Architects would not be entitled to payment for the next stage without written approval. The defendants submit that BKK Architects never objected to this term.
86 I do not accept the defendants’ submissions for the reasons stated in the above paragraphs 61-66.
Was BKK Architects in breach of Schedule 3 of the draft May 2017 consultancy agreement?
87 The defendants allege that it was a term of the May 2017 Agreement that:
8 (h)(xii) The Plaintiff was to:
(A) be paid on the basis of the agreed rates contained in schedule 3 to the May 2017 Agreement, for undertaking the Services;
(B) provide the Second Defendant with further accurate advice on the likely additional fees, once ¾ of the following fee corresponding to the following indicative budget for each of the corresponding stages had been invoiced.
(1)$196,000 (exclusive of GST) for performing the Stage 1 Services and Stage 2 Services forming part of the Services; and
(2)$255,584 (exclusive of GST) for performing the Stage 3 Services forming part of the Services.[109]
[109] Amended defence 8(h)(xii).
88 This allegation is not pleaded as a breach in the amended defence. The alleged term is not contained in the email by Knott to Weeks dated 18 April 2017 which forms part of the agreement accepted by Weeks on 24 April 2017.[110] The defendants’ allegation would depend on finding that parts of the May 2017 agreement formed part of the agreement between the parties.
[110] Exhibit 10, CB p 350.
89 Schedule 3 of the draft May 2017 consultancy agreement[111] relevantly provides:
[111] Exhibit 15, CB p 604.
Rates
Hourly rates are to be utilised for Stages 1-3 inclusive.
Agreed rates (excluding GST):
Director (Simon Knott or Tim Black)
$250/hour
Project Architect (Ewan)
$190/hour
Senior Architect (Deb/GH)
$190/hour
Registered Architect (Rachel)
$110/hour
Graduate Architect (LD)
$ 85/hour
The following indicative budget figures have been identified for each Stage 1&2 and 3. The Consultant must provide continual updates as to hours undertaken and costs. When ¾ of the fee has been invoiced the Consultant must provide further accurate advice on likely additional fees.
Stage 1-2
$196,000 (plus GST)
Stage 3
$255,584 (plus GST)
90 The defendants submit that BKK Architects never objected to the provisions of Schedule 3 of the draft consultancy agreement. The draft consultancy agreement was received by BKK Architects on 25 May 2017. Mr Percy submitted that there is no evidence that anyone from BKK Architects, on their behalf, took issue with the words in schedule 3 of the draft agreement. Indeed when it put forward its proposed amendments on 30 June 2017, BKK Architects made no change to Schedule 3 and thereby implicitly accepted it.
The meeting on 19 July 2017 at Lander & Rogers
91 On 19 July 2017 a meeting was held at the offices of the solicitors for the defendant to discuss the draft consultancy agreement. As stated above, the meeting was attended by Knott, Black and BKK Architects’ lawyer (Jeremy Smith) and Weeks and the defendants’ lawyers.
92 Weeks gave the following evidence about that meeting:
Do you recall, Mr Weeks, attending a meeting at Lander & Rogers to progress the consultancy agreement?...I do, yes.
Who was at that meeting?...Simon and Tim were there from BKK. I’m not sure whether anybody else attended from JWLand’s perspective.
I’m sorry?...I’m not sure if somebody else attended aside from myself from JWLand.
You were represented by your solicitor, obviously?...Yes, they were there, yes.
Who was there?...That was Lander & Rogers.
Was BKK represented by their legal representatives?...They were, yes.
In substance, what occurred at that meeting? Did you go through the agreement line-by-line?...I don’t recall whether we went through it line-by-line. We just talked at a general high level through the agreement itself.
Where did the meeting reach or where did it end up?...I don’t recall at the end of the meeting what happened. I don’t think it was in an agreed form at that point in time.[112] (emphasis added)
[112] Transcript pp 436 – 437.
93 Knott gave the following evidence about what happened at that meeting:
What happened in that meeting?...Well, as is usually the case with these sorts of meetings, the lawyers led the discussion and they talked through the comments, basically Gadens’ comments on the agreement and some of those points were agreed, some of them conceded, some of them they said they would take away and have a think about. So it was the usual sort of discussion about that.
Can you recall how it was left, as to what was to happen next?...Yes, I do recall because at the end of it – and I think we felt like we had made reasonably progress on it, that we were working towards a resolution of the contract. They were getting down to fairly minor points and at the end of it, Nick Weeks said to me, “I think we are in a position now to fix the fee. The scope has resolved. We have got to a point where we know where the building is going. Can you put together a fixed fee right to the end of planning, to the planning lodgement?” and I said “Yes, sure.”[113]
[113] Transcript pp 170-171.
94 Mr Black’s evidence was to like effect. He attended the meeting with Knott.
…Mr Weeks was the only representative, apart from his lawyer, Mr Loterzo, at that meeting. There was discussion about the agreement and there was no, I suggest to you, further proposed changes to the draft agreement put forward by BKK at that meeting?
I believe at that meeting there was general agreement, Mr Percy, with a view of us, I guess, seeking advice outside of that meeting from Gadens just to clarify our last few points but we were very close, yes.[114]
[114] Transcript pp 293-294.
95 The evidence indicates that while BKK Architects and the defendants were getting close to agreeing on the terms of the draft consultancy agreement, there was no agreement reached. Had the plaintiff and MP Development reached agreement and signed it, they would have then been bound by the consultancy agreement in the manner envisaged by the fourth category of Masters v Cameron. However that did not happen and parts of the draft consultancy agreement do not form part of the agreement between the parties.
96 After the meeting on 19 July 2017 Weeks asked BKK Architects to fix fees. By letter dated 21 July 2017[115] (received by the defendants on 24 July 2017) BKK Architects advised the defendants that for the period between 1 July 2017 and 21 July 2017, it had work in progress of $84,217.50.[116] At that stage BKK Architects advised that the estimated fees until planning lodgement on 18 August were $106,880.[117]
[115] Exhibit 87.
[116] The third invoice dated 31 July 2017 (exhibit 92) was for the lesser sum of $77,260.
[117] Exhibit 87, CB 2093.
97 Within an hour of the email being received, Cuzzupi responded by email dated 24 July 2017.[118] In paragraph 2 he states:
I am highly concerned with your fees, both claimed to date and projected. Invoices to date equate to circa $152k, which is 78% of the total $196k for the TP Phase. I understand form [sic] Nick there was to be an acknowledgement in writing once you reached 75% of this fee, was this issued? If so, can you please send to me.
Furthermore, hours spent 1/7 – 21/7 equate to $84k, which brings the total to $236K, this $40k over the $196k. Nick has confirmed this fee overrun has not been communicated or approved. When I include your projected hours of $106k the total for TP is $343k, close to $150k over the agreed $196k cap.
[118] Exhibit 88.
98 A meeting between Cuzzupi and Knott was held at the offices of BKK Architects on 26 July 2017. On 26 July 2017 Cuzzupi forwarded an email to Knott at 5.30 am advising that the meeting that day “will not only be in regards to fees and program but also my concerns with overall performance to date and quality of concept design.”[119] Later that day Cuzzupi forwarded the following email to Knott and Black at 12.14 pm:[120]
Thank you for your time this morning.
Confirming our conversation that your services on 699 Park St, Brunswick have been terminated, effective immediately.
[119] Exhibit 90, CB p 2112.
[120] Exhibit 91, CB pp 2115 – 2116.
99 At 3.40 pm on 26 July 2017 Knott replied:[121]
Anthony, as expressed today we are very disappointed, especially as we have had no forwarning of that decision. The first time we have had anyone from JWLand express any concerns over the design or any performance related issues whatsoever were at that meeting, and we are therefore regretful that we have had no opportunity to respond.
As discussed we will write to you more formally to clarify the outstanding fees to date and respond directly to some of the issues raised today.
[121] Exhibit 91, CB p 2115.
The fees for attending the community workshops
100 The defendants arranged a meeting with residents in the area as part of a community engagement process designed to engage with the community in a consultative way. Knott said that engagement with the community has generally been proven to be quite successful in a lot of situations.[122] The defendants engaged Capire (community engagement consultants) to set up the consultations with the community.[123]
[122] Transcript p 123.
[123] Transcript p 464.
101 On 6 June 2017 Weeks forwarded an email about proposed community workshops to Ben Neil (from Capire) with copies to Knott, Black and Connor asking Neil, Knott, Black and Connor to confirm their availability on:
·Tuesday 27th June (am, pm and evening) have a 10.30 am (which is our fortnightly Moreland project meeting) and 3.00 pm in the diary already
·Thursday 29th June (am, pm and evening) free up to 3 pm
The sessions will last for at least 2 hours – please allow for 3 hours.[124]
[124] Exhibit 23.
102 On 7 June 2017 Knott replied stating that both Black and Knott can work around both days.[125] Two resident meetings were scheduled at different times to accommodate people who work and people who do not. One meeting was scheduled for the evening and one during the morning.
[125] Exhibit 23.
103 On 14 June 2017 Weeks forwarded an email to Ben Neil, Adams, Knott, Black and Mo in the following terms:[126]
[126] Exhibit 26.
We need to start preparing documents for the Public Consultation Workshops which are to occur on 27th and 29th of June.
A briefing session has been arranged for 2pm on Friday 16th.
For clarity:
The purpose of the Public Consultation/Workshop is:
·To demonstrate quality of Development Team
·Showcase our vision (not the final product)
·Establish credibility of the final product
·Excite residents (this will be a great outcome for them)
·Explain what we could do
·Explain what we are likely to be doing
·Invite residents to comment on the vision, and voice concerns (and support).
104 BKK Architects prepared the documents in accordance with Weeks’ instructions.[127]
[127] Transcript p 131.
105 On 23 June 2017 Ewan Carson forwarded to Weeks the draft version of the Community consultation boards.[128] On 28 June 2017 Knott forwarded to Weeks an invoice for printing the posters and the A1 drawings that were produced for the community consultation. Knott suggested that they could just “add as a disbursement to the next invoice if ok with you.” [129] On 28 June 2017 Weeks responded “just add as a disbursement”.[130] On the same day Austin Hall responded saying “Thanks, Nick. Will do”.[131] There was no suggestion that BKK could not charge for the work Weeks asked BKK Architects to perform because it was outside the scope of the agreement.
[128] Exhibit 38.
[129] Exhibit 49; transcript p150.
[130] Exhibit 50.
[131] Exhibit 50.
106 On 26 June 2017 Weeks forwarded to Knott an agenda and briefing notes in advance of the Public Consultation session on Tuesday 27 June 2017 at Miss Marmalade Café.[132] Four tables were to be setup to deal with different issues. The email stated that Knott would be seated at table 1 to deal with architectural height and Black at table 2 to deal with laneway/urban design.[133]
[132] Exhibit 42.
[133] Transcript p 145; exhibit 42 CB p 1093.
107 On 27 June 2017 at 8.58 am Weeks forwarded an email to Knott attaching the manifesto from the Protect Park St Precinct Residents Action Group Steering Committee “in advance of our meeting this evening”.[134]
[134] Exhibit 43.
108 Black and Knott attended both meetings. Representatives from JWLand including Dr Xi He also attended the meetings.[135] Knott said that because of the antagonism towards the scheme proposed by Front Architects, the residents came to the meeting ready for a fight and held up images of the original scheme.[136]
[135] Transcript p 123.
[136] Transcript p 124.
109 An email dated 28 June 2018 by Knott to Adams states that “last night was lively” but “after a lot of bluster it comes down to few things: height, overshadowing the park, and traffic”.[137]
[137] Exhibit 46.
110 The defendants do not dispute that BKK Architects carried out services under the agreement which are substantially reflected in the detailed time report.[138] However the defendants do not accept that BKK Architects is entitled to charge for all of the work recorded nor do they accept that all of the work fell within the scope of services for stage 2 (including stage 1). The defendants submit that BKK Architects is not entitled to claim that it is entitled to be paid for its work in connection with the community consultations because this work was additional to that described in the scope for stage 2 services.
[138] Exhibit 92, CB pp 2154 – 2184.
111 The defendants submit that an analysis of the detailed time reports show that BKK Architects charged approximately $10,742.50 for this work. The defendants submit that an estimate of those fees should have been provided, and MP Development should have been given an opportunity to agree the cost.
112 I do not accept the defendants’ submission. BKK Architects were carrying out work in response to Weeks request under the Agreement that they were to be paid at hourly rates.
Did BKK Architects fail to perform the work to the required standard?
113 By reason of the abandonment of the allegations of negligence (as particularised in paragraphs A, B, C and D of paragraph 10A) MP Development’s allegation of breach of contract and negligence is now confined to the allegation that BKK Architects did not carry out its services so as to comply with the program in order to enable a town planning application to have been submitted to Moreland City Council by 18 August alternatively 28 August 2017.[139]
At the date of the purported termination, what percentage of the works had been completed by BKK Architects?
[139] Amended Defence, paragraph 10A (particular E).
114 The defendants rely on the expert report of Nowak dated 19 October 2018 and in particular paragraphs 5.47 to 5.134 dealing with “Extent of Services Provided”.[140] The defendants submit that Nowak undertook a detailed assessment of the work undertaken by BKK Architects as revealed in the contemporaneous documents and as recorded in the detailed timesheets. Nowak stated that he compared that work against the milestones recorded in the agreed program. He concluded that BKK Architects were behind in undertaking the required work according to the program. In his opinion BKK Architects had only completed 65% of the work required for stage 2 as at 26 July 2017.
[140] Exhibit S.
115 The plaintiff submits that the percentage of the stage 1 and 2 works completed by BKK Architects is only relevant if the Court accepts, contrary to BKK Architect’s submission, that the fees were fixed and therefore BKK Architects is only entitled to a percentage of the fee commensurate with the proportion of the work that was done.[141] As stated in the above paragraph 43, the agreement was that BKK Architects was entitled to be paid for the services it performed on an hourly rate.
[141] Amended Defence, Paragraph 10E.
116 In Williams opinion BKK Architects had completed 87% of the work required for stage 2 as at 26 July 2017. In paragraph 6(iii) of his report dated 30 January 2019[142] Williams reviewed the Gantt chart included in Scope of Works and program forwarded by Knott to Weeks on 2 May 2017.[143] Williams stated:
[142] Exhibit 164, CB pp 228-229.
[143] Exhibit 11.
·The services under stages 1 & 2 remaining from the date of termination set out under tasks and finishes were:
·25/07/17-1/08/17 Completion of Pre application report 5 days. Note: In my view this task was completed.
·1/08/17 Pre application meeting ½ day
·2/08/17- 23/08/17 Develop the design -15 days
·23/08/17 Consultant Workshop 4 - Pre Planning -½ day
·24/08/17 Design Development Presentation - 1 day
·28/08/17 Town Planning Pre App - 1 day
·15/08/17- 28/08/17 Town Planning Application - 10 days
·28/08/17 Town Planning Submission
·This represents 28 days of “non completed” tasks. Total days completed by BKK up to date of termination is 183 days out of 211 days from the Gantt chart. This includes my allocation of 5 days into the work pre termination as work was done. This represents 87% of the scheduled program.
117 I prefer Williams’ opinion to Nowak’s opinion. Williams is an architectect of 47 years’ experience.[144] Nowak is not an architect.[145] Williams gave a clear explanation as to how he made his calculation. On the other hand it is not clear how Nowak’s figure was produced. Nowak did not have the Revit model when he prepared his report. He had not been provided with it.[146] One of the observations he made in his report was that he thought that the drawings that BKK Architects had prepared were not dimensioned. When Nowak saw the Revit model he realised that the drawings were in fact dimensioned but that did not change his analysis. He agreed that he did not perform a numerical analysis.[147] He said that it could not be done mathematically[148] and agreed that what he had done could not be tested.[149] When cross-examined Nowak agreed that that he could not point to a calculation or analysis to support his calculation of 65%.[150]
Could BKK Architects have completed the remainder of the services so as to enable the planning application to be lodged with the Moreland City Council by 18 August 2017?
[144] Transcript p 386.
[145] Transcript p 549.
[146] Transcript p 557.
[147] Transcript p 559.
[148] Transcript p 559.
[149] Transcript p 560.
[150] Transcript p 560.
118 The defendants submit that when objectively assessed in light of the expert evidence of Nowak, BKK Architects could not have completed the remaining work to the satisfaction of the client and the reasonable expectation of the Moreland City Council by 18 August 2017.
119 Nowak considered that a town planning application could not have been submitted to Moreland City Council by 28 August 2017 or the earlier date of 18 August 2017. In his opinion the town planning submission would have occurred on 12 September 2017.[151]
[151] Exhibit S, CB p 124.
120 Knott stated that had BKK Architects not been terminated, it would have been possible to complete the remainder of the services so as to enable the planning application to be lodged with the Moreland City Council by 18 August 2017.[152] He said that the Revit model was well advanced, BKK Architects had obtained signoff from the client on agreed design layouts and had worked through a number of issues with Council. They had the defendants’ resources and the commitment of the consultant team. [153]
[152] Transcript p 188.
[153] Transcript p 188.
121 Black stated that BKK Architects was thoroughly well placed to complete the submission of the planning application by 18 August 2017.[154] Black said that BKK Architects had committed some very serious resources and had made it clear to the client that there could be no further change in design direction.[155] Black said that the comments of Kate MacLaren (Principal Urban Planner with the Moreland City Council) in an email to Vaughan dated 7 July 2017 were typical of a project in progress as “the nature of design is that it’s not complete until it’s complete.[156] Black said that height is an issue in nearly every residential site. “A complex negotiation has to happen between developers and local governments and that this is just not unusual.”[157] Black said that JWLand Development was dealing with the relocation of the substation.[158]
[154] Transcript pp 271-272.
[155] Transcript p 272.
[156] Transcript p 306.
[157] Transcript p 306.
[158] Transcript p 308.
122 I accept Adams’ evidence that the remaining tasks for BKK Architects were sections, elevations, three dimensional images and a design report.[159] Adams said that had BKK Architects not been terminated, it would have been possible to complete the submission for a planning permit by 18 August 2017.[160] Adams said that completion of the remaining drawings could have been achieved as well as the design reports.[161] In cross-examination Adams said that she did not recall being concerned about the ability of BKK Architects to meet the town planning deadline of 18 August 2017.[162]
[159] Transcript p 351.
[160] Transcript p 352.
[161] Transcript p 353.
[162] Transcript p 377.
123 On 19 July 2017 Cuzzupi forwarded the following email to Knott in response to an email Knott forwarded to him on the same day:[163]
As discussed, the 18th August is the drop dead DA lodgement date and with two Front resources as well as BKK staff this date can definitely be achieved. To further assist you achieving DA lodgement I will allocate both James and Eu Jien full time on Brunswick. (emphasis added)
[163] Exhibit 83.
124 The plaintiff submitted that I should not accept Nowak’s assertion that the work could not have been completed in time. He is not an architect and has never worked as an architect.[164] He has never worked in an architect’s office.[165]
[164] Transcript p 549.
[165] Transcript p 549.
125 In forming his opinion, Nowak has assumed that no additional resources, no late nights and no weekends would be allocated or be spent by BKK Architects to complete the work.[166] When asked whether, with additional effort, the deadline would have been able to be achieved, he said “Well, if you’ve got the right additional effort, yes.”[167] Nowak agreed that BKK Architects had already done a lot of work in a short period of time.[168] Black’s evidence was that BKK Architects would have committed some very serious resources to completing the project in the time available.[169]
[166] Transcript p 565.
[167] Transcript p 566, see also defendant’s concession on p 601.
[168] Transcript p 566.
[169] Transcript p 272.
126 Nowak then suggested that the work by BKK Architects was defective.[170] He referred to the letter by Kate MacLaren to Cuzzupi dated 18 August 2017.[171] That letter suggests that aside from the heritage substation, the only real issues the Council had with the project concerned height, which is not a design fault, but a function of client instructions.
[170] Transcript p 566.
[171] Exhibit R.
127 On 21 June 2017 Kate MacLaren, the planner responsible for the project at Moreland City Council, forwarded an email to Vaughan Connor[172]. In that email she discussed a meeting held during the previous week stating that there “are positive aspects to the proposed site layout as depicted on the ground floor sketch plans we have seen so far.” She also noted that “we are looking for a rationale behind the proposed height of the development.” On 22 June 2017 Weeks forwarded an email to Connor and Knott stating that it is “actually quite a good response.”[173]
[172] Exhibit 30.
[173] Exhibit 31.
128 As stated in the above paragraph 116, Williams stated that BKK Architects had completed 87% of its task. In his opinion,
The time available from the date of termination 25 July to 18 August totals 24 days in lieu of 34 days indicated in the Gantt chart provided by BKK. Delivering the balance of the project by the 18 August would require an intense effort and client cooperation to enable a 30% more efficient process to complete the submission. Extensive documentation and a major REVIT 3D digital model of the project had been completed. Without ongoing changes, the task of and filling in detail completing and labelling schedules and documents and assembling the application would be manageable but demanding. There is evidence over the term of BKK’s engagement of their enthusiasm and willingness combined with skills and professionalism to work to achieve the date.[174]
[174] Exhibit 164; CB p 229.
129 I prefer the evidence of Knott, Black, Adams and Williams, who are all registered architects, to the evidence of Nowak. I accept the evidence of the four practising architects that BKK Architects could have completed the work and lodged the planning application with the Moreland City Council by 18 August 2017.
130 The defendants claim that they have suffered loss and damage by reason of the plaintiff’s failure to carry out its services in order to enable a town planning application to have been submitted to Moreland City Council by 18 August 2017. The defendants terminated BKK Architect’s retainer and did not allow them to proceed. No evidence of loss and damage was led in respect of this claim.[175] As events transpired, the application for a planning permit was submitted in November 2017.[176] It was refused by the Moreland City Council. There was a hearing at VCAT in October 2018 and March 2019 and the outcome of that is pending.[177]
[175] Transcript p 497.
[176] Transcript p 490.
[177] Transcript p 490.
131 The mere fact that the defendants submit that BKK Architects would not have been finished in time does not give rise to a claim for damages and does not excuse MP Development from paying the invoices that had been submitted pursuant to the agreement. As stated by Cuzzupi when cross-examined:
You don’t dispute that BKK did a very large amount of work on this matter, do you?...No.
You accept that they did a huge amount of work with their Revit plan and their plans and their elevations and the like, didn’t they?...They did a lot of work.[178]
[178] Transcript p 507.
Total failure of consideration
132 The defendants claim that as a result of BKK Architects’ alleged breaches of the agreement, there has been a total failure of consideration for the payment of $63,434.25 made to BKK Architects for the first invoice and that it was forced to engage a new architect to re-do the services. As the defendants have withdrawn the allegations contained in paragraphs A-D of the particulars to paragraph 10A, the only alleged breach persisted with by the defendants is that BKK Architects would not have completed the work to have the planning permit application submitted by 18 August 2017.[179]
[179] Transcript pp 358-359.
133 The defendant referred to the following passage in a text book by Julian Bailey on Construction Law.[180]
…where a person is engaged to perform certain work by a critical date, and the person performs the work after that date, it may be of no value to the owner. This was the position in one case where a surveyor was requested to provide plans to the engineer of a railway company by 28 November, where to the surveyor’s knowledge the plans were required for lodging with a government authority by 30 November. The surveyor was not entitled to any remuneration for work performed when he delivered the plans on 1 December.[181] The common element to each of these examples is that the person who agreed to perform certain work has not provided anything of value to the person who requested the work. (emphasis added)
6.322 There will not, however, be a total failure of consideration where the work performed was of some actual or potential benefit to the person who requested and paid for it.[182]
[180] Julian Bailey, Construction Law (Informa Law, 2011) Volume 1, [6-321].
[181]Kewley v Stokes (1846) 2 Car & K 435 [175 DR 180].
[182]Baltic Shipping Co v Dillon (1993) 176 CLR 344, 350 per Mason CJ.
134 In this case I am satisfied on a balance of probabilities that the work performed was of benefit to the person who requested and paid for it. BKK Architects agreed to provide architectural services to the defendants. Those were provided.[183] BKK Architects met regularly with the planning experts Vaughan Connor and Mark Sheppard.[184] BKK Architects spoke and met with Weeks on a regular basis. BKK Architects also met with the defendants’ builders, structural engineers, service consultants, traffic engineers and landscape consultants.[185] The design for the site included 260 apartments, 380 car parks, a childcare centre, commercial retail opportunities and 40 car parks for visitors.[186] BKK Architects prepared plans for all levels of the various buildings on the site and also established two regular fortnightly meetings with council.[187] BKK Architects drew plans, made models and did the Revit modelling.
[183] Cuzzupi transcript p 507; Nowak transcript p566; exhibit 162 CB p 2200; exhibit 108; exhibit 111; exhibit 116; exhibit 119; exhibit 122; exhibit 123; exhibit 125; exhibit 126; exhibit 96; exhibit 139; exhibit 38; exhibit 146; exhibit 149; exhibit 150; exhibit 153; exhibit 154; exhibit 156; exhibit 157; exhibit 158; exhibit 78; exhibit 85; exhibit 161; transcript pp 96 – 97; p185 and pp 347 – 351.
[184] Transcript p 97.
[185] Transcript p 103.
[186] Transcript p 100.
[187] Transcript p 101.
135 Weeks admitted that BKK Architects had carried out significant works. When cross-examined, Weeks stated:
Indeed, you think BKK did a good job, don’t you?...They were working proficiently and doing well, yes.
You thought they were doing a good job, didn’t you?...No objections to what they were doing, yes.
You think they collaborated well with the other consultants?...As far as I am aware, yes, they did.
And that they did a lot of work in a short period, didn’t they?...It was an intensive period of time, yes.[188]
[188] Transcript p 441.
136 I am not satisfied that there has been a total failure of consideration. I also find that MP Development is not entitled to judgment for $63,434.25 for money had and received.
Quantum Meruit
137 BKK Architects claim in the alternative that the plaintiff is entitled to payment in respect of the work it performed on the basis of quantum meruit.
138 The defendants submit that quantum meruit does not arise because at all times there was a contract between BKK Architects and MP Development. The contract was either the original 24 April 2017 agreement, or as contended for by MP Development, the agreement that went forward from early June 2017 was governed by the provisions of the 25 May 2017 draft consultancy agreement (as varied by the BKK Architects June 2017 amendments).
139 BKK Architects claims that in the absence of a contract, BKK Architects would have a claim for reasonable remuneration on the basis of quantum meruit. The only evidence of the value of the work is the timesheets of BKK Architects which is uncontested and the agreed hourly rates. On that basis BKK Architects would be entitled on a quantum meruit to the amounts that have been invoiced because that is the fair value of the work done.
140 In Pavey v Matthews Deane J stated:
[I]f there was a valid and enforceable agreement governing the claimant’s right to compensation, there would be neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration.[189]
[189] (1987) 162 CLR 221, 256.
141 The plaintiff agrees with the Defendants that the claim for remuneration on the basis quantum meruit would only arise if for some reason there is not found to be a contract. As I have found and as both sides agree that the parties entered into a binding agreement in April 2017, it is not necessary to consider whether BKK Architects is entitled to payment on the basis of quantum meruit.
Estoppel
142 The plaintiff submits that in the event that the Court were to find that BKK Architects was not entitled to be paid its invoices pursuant to its contract with the defendants, the defendants would be estopped from denying liability for the invoices by reason of the fact that at no time prior to 25 July 2017 did the defendants raise any dispute with BKK Architects in respect of the agreement, the work or the invoices, two of the three of which had been rendered by that time.
143 The plaintiff alleges that by reason of the payment of the plaintiff’s first invoice,[190] and the absence of any query or objection as to the status of the Agreement and the nature and quality of the work, the plaintiff continued to undertake the work in reliance and on the assumption that the defendants would continue to recognise and abide by the terms of the Agreement and make payment to the plaintiff for the work or such part of the work as was undertaken.[191]
,[190] Exhibit 64.
[191] Amended statement of claim, paragraph 22 (b).
144 The plaintiff alleges that the defendants’ refusal to pay for the work the subject of the outstanding invoices constitutes an unjust departure from the plaintiff’s assumption that the defendants would continue to recognise and abide by the terms of the Agreement and make payment to the plaintiff for the work or such part of the work as was undertaken, on the basis of which assumption the plaintiff undertook the work the subject of the outstanding invoices.[192]
[192] Amended statement of claim, paragraph 22 (c).
145 In closing submissions, the defendants submitted that it would be unconscionable for BKK Architects to be entitled to succeed on its equitable estoppel argument in circumstances where, at some point into its work on stage 2, it must have become apparent that :[193]
[193] Defendant’s written submissions, paras 85(a) – (d).
(a) The work encompassed by stage 2 had expanded by reason of BKK Architects not appreciating the complexities of the site and difficulty of complying with planning requirements, because of its own inefficiency or those of the consultants engaged by the defendants to assist BKK Architects, or because of client led changes to the brief.
(b) its estimate of $196,000 to the completion of stage 2 was insufficient to cover the fees likely to be incurred.
(c) the defendants would have a reasonable expectation to be informed of the likely increase in fees – especially, as things turned out, the expected fee almost doubled ($196,000 compared to $343,463.50 as advised by BKK Architects’ letter dated 21 July 2017.[194]
(d) the $343,463.50 was for work up to the date of lodgment of the planning application. It did not include any work BKK Architects would have been asked to provide in relation to any application to VCAT. The estimate of $196,000 against $343,463 is not comparing “apples with apples”.
[194] Exhibit 87.
Legal principles
146 A general statement of the law of estoppel was provided by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd:[195]
the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations.
[195] (1937) 59 CLR 641.
147 In The Commonwealth v Verwayen (Verwayen), the High Court explained the basis for the remedy of equitable estoppel:[196]
The judgments of a majority of the Court in Waltons Stores v. Maher held that equitable estoppel yields a remedy in order to prevent unconscionable conduct on the part of the party who, having made a promise to another who acts on it to his detriment, seeks to resile from the promise (54). The remedy is to effect what Scarman L.J. called “the minimum equity to do justice” in Crabb v. Arun District Council (55): see Waltons Stores v Maher (56), per Mason C.J. and Wilson J.; (57), per Brennan J. The remedy is not designed to enforce the promise although, in some situations (of which Waltons Stores v. Maher affords an example), the minimum equity will not be satisfied by anything short of enforcing the promise.
[196] (1990) 170 CLR 394 at pp 428-429 (citations omitted).
148 In that same case an alternative formulation was provided by Mason CJ, who stated that estoppel serves the fundamental purpose of “protection against the detriment which would flow from a party’s change of position if the assumption (or expectation) that led to it were deserted.”[197]
[197] Verwayen at p 409 per Mason CJ; see also Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at p 423 per Brennan J.
149 The concept of “minimum equity” as stated by Scarman LJ in Crabb v Arun District Council and affirmed in Verwayen[198] guides the Court in endeavouring to ‘do justice to the plaintiff’. This follows from the fact that equitable estoppel has its basis in unconscionable conduct, rather than the making good of representations.[199] It was acknowledged in Waltons Stores (Interstate) Ltd v Maher (Waltons Stores) that “[h]olding the representor to his representation is merely one way of doing justice between the parties.”[200]
[198]Verwayen at pp 411, 428-429.
[199] Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at p 405 per Mason CJ and Wilson J.
[200]Waltons Stores at p 405.
150 The elements of an equitable estoppel claim were succinctly stated by Brennan J in Waltons Stores.[201]
…it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt the assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption nor expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
[201]Waltons Stores at pp 428-429.
151 It must be noted that it is an essential condition to the existence of an equity created by estoppel that the party who induces the adoption of the assumption or expectation knows or intends that the party who adopts it will act or abstain from acting in reliance on the assumption or expectation.[202]
[202]Waltons Stores at p 423; Crabb v. Arun District Council [1976] Ch., at p 188 per Lord Denning MR.
Application of law to facts
152 Applying BrennanJ’s approach in Waltons Stores:
(1) Did the plaintiff assume that a particular legal relationship existed between the plaintiff and the defendant or expected that one would exist between them and that the defendant would not be free to withdraw from the expected legal relationship?
153 BKK Architects provided architectural services to the defendants on the assumption that the fees were to be calculated on an hourly rate pursuant to the Agreement. It follows that any amendment to this term would necessarily require explicit agreement between the parties.
(2) Did the defendant induce the plaintiff to adopt the assumption?
154 On 18 April 2017 the plaintiff forwarded its proposal to the defendants.[203] On 24 April 2017 the defendants accepted the plaintiff’s offer containing the term that the plaintiff’s fees were to be calculated at hourly rates.[204] The defendants’ acceptance of the offer induced the plaintiff to undertake works and incur expenses on the Park Street project between 1 May and 31 July 2017.[205]
(3) Did the plaintiff act in reliance on the assumption or expectation?
[203] Exhibit 9.
[204] Exhibit 10.
[205] Exhibit 92.
155 The plaintiff continued to work and incur expenses in relation to the Park Street project on the instructions of the defendants.
156 I accept Knott’s evidence that Weeks gave regular directions to BKK Architects regarding the Park Street project. He said that the client was making a lot of changes, exerting pressure and constantly calling BKK Architects “saying, Where are the plans?” So we were trying – working furiously to meet – to respond to them…”[206]
[206] Transcript p 161.
157 In circumstances where the evidence given by the parties suggests that the initial stages of the Park Street project were subject to a number of variables and changes, it is reasonable for the plaintiff to have continued to act in reliance on the assumption that fees were to be billed on an hourly basis. After all, it was the presence of such uncertainty and variables that had justified the hourly basis rather than a fixed fee in the first place.
(4) Did the defendants know or intend for the plaintiff to act in reliance?
158 It is evident that the defendants did not intend for BKK Architects to bill on an hourly basis for the entirety of the Park Street project. Rather, the hourly basis was an expedient to calculate fees on an hourly basis when many variables were unknown.[207] Williams stated that it was not uncommon for architects’ fees to be based on an hourly rate where “it is understood by all parties that problems or complexities will occur…”[208]
[207] Transcript pp 80 – 81.
[208] Exhibit 164, CB p 227; transcript p 388.
159 In any event, the plaintiff and the defendants were in agreement that services would be provided in exchange for fees, such that the plaintiff continued to carry out work and incur expenses until the date of termination.
(5) Will the plaintiff’s actions occasion detriment if the assumption or expectation is not fulfilled?
160 The plaintiff has carried out work under the assumption that its fees were not capped but rather were to be billed at an hourly rate for each member of staff.
161 It was a term of the Agreement that the hourly rates for each member of staff of the plaintiff were reduced.[209] Viewed objectively, this reduction can be taken to reflect the intention of the parties to agree to uncapped fees on an hourly basis. The plaintiff’s standard hourly rates were reduced in recognition that its fees on the project would be subject to a degree of uncertainty, and that this reduction would play some role in mitigating the defendants’ expenses.
[209] Exhibit 9.
162 Should the defendant now refuse to pay the plaintiff’s fees as invoiced on hourly rates, the plaintiff will suffer detriment by being deprived of payment for the work carried out at the defendants’ request and instructions and billed according to the agreed basis under the Agreement.
(6) Did the defendant fail to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise?
163 The defendants did not raise any queries with regard to the nature of the billing until 24 July 2017.[210]
[210] Exhibit 88.
164 On 19 July 2017 the parties met at the offices of Lander & Rogers to negotiate terms of a formal consultancy agreement. During that meeting Weeks requested BKK Architects to fix its fees going forward. Black, who attended the meeting, acknowledged in his evidence that this “seemed like a reasonable proposition.”[211] Importantly, no consultancy agreement was signed by the parties before the defendants terminated BKK Architects’ services on 26 July 2017.
[211] Transcript p 296.
165 The defendants were on notice that the Agreement between the parties was for BKK Architects to bill at an hourly rate. It is inconsistent with the notion of hourly billing to hold the plaintiff to any cap. The defendants had the opportunity to continue negotiations with the plaintiff to lock down terms and fix fees, and it may even have been possible to engage in those negotiations at an earlier stage than 19 July 2017. This did not occur.
166 It was only upon Cuzzupi’s involvement in July 2017 that the defendants expressed concerns about the plaintiff’s fees.[212]
[212] Exhibit 90; transcript p 525.
167 The defendants’ failure to negotiate with the plaintiff to fix fees, and subsequent refusal to pay the plaintiff’s invoices as billed, can be taken as a failure to avoid the detriment to the plaintiff.
168 The defendants’ claim that it would be unconscionable for the plaintiff to succeed on its estoppel claim is untenable. I am satisfied that the plaintiff took sufficient steps to apprise itself of the nature and complexity of the Park Street project as the project progressed, including conducting research into possible construction methods[213] and working closely with the client.[214] As stated in the above paragraph 134 BKK Architects met with the defendants’ builders, structural engineers, service consultants, traffic engineers and landscape consultants.[215] BKK Architects prepared plans for all levels of the various buildings on the site and also established two regular fortnightly meetings with council.[216] BKK Architects drew plans, made models and did the Revit modelling. I am also satisfied that the plaintiff communicated with the defendants to ensure that client-led changes to the brief were addressed in an orderly manner.
[213] Transcript pp 90-93.
[214] Transcript pp 27 and 279.
[215] Transcript p103.
[216] Transcript p 101.
169 While the plaintiff’s invoiced amount of $343,463.50 did not include any work that it would have been asked to provide in the event that the town planning application was the subject of an application to VCAT, the Scope of Works program expressly provides:
For clarification purposes, the following typical services and documents are not included in the Services scope but can be provided for an agreed fee:
…
·Provision of services following submission to Town Planning including amendments to documents, response to RFI’s or VCAT preparation and attendance.[217]
[217] Exhibit 11, CB p383.
Relief
170 As stated by Deane J in Verwayen, “it is only where relief framed on the basis of that assumed state of affairs would be inequitably harsh, that some lesser form of relief should be awarded.”[218]
[218] (1990) 170 CLR 394, 443.
171 I am satisfied that BKK Architects believed that its fees were to be calculated on an hourly basis and that the fees were not capped. In this instance it would be unjust for the plaintiff to be deprived of the fees properly incurred under the agreement simply due to the defendants’ failure to lock down fees at the earliest stage possible.
172 Accordingly even if BKK Architects were not entitled to be paid its invoices pursuant to the Agreement, the defendants should be estopped from failing to pay the invoices rendered by BKK Architects.
Conclusion
173 For the reasons stated in the above paragraphs 5 - 136, I propose to order that there will be judgment for the plaintiff against the second defendant in the sum of $189,154.35. I will hear counsel on the form of the order and the question of costs.
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