Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 2]
[2018] WASC 17
•22 JANUARY 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: BUILT ENVIRONS WA PTY LTD -v- PERTH AIRPORT PTY LTD [No 2] [2018] WASC 17
CORAM: TOTTLE J
HEARD: 27, 28 FEBRUARY & 1 MARCH 2017
DELIVERED : 12 DECEMBER 2017
PUBLISHED : 22 JANUARY 2018
FILE NO/S: CIV 3225 of 2016
BETWEEN: BUILT ENVIRONS WA PTY LTD
Plaintiff
AND
PERTH AIRPORT PTY LTD
Defendant
Catchwords:
Contract - Construction contracts - Whether email constituted binding agreement varying construction contract - Whether intention to create legal relations - Where construction contract required substantial formality for variation or waiver - Where agreement made in context of parties engaging in without prejudice negotiations - Where parties' representatives experienced business-people knowledgeable in construction contracts
Contract - Interpretation - Whether obligations expressed in email limited in time
Contract - Breach - Where performance bonds presented for payment - Whether continuing obligation not to do so
Estoppel - Whether defendant estopped from contending email of no legal effect - Whether defendant estopped from taking steps to recover liquidated damages
Declaration - Whether defendant entitled to present performance bonds for payment
Legislation:
Construction Contracts Act 2004 (WA), s 53
Result:
Plaintiff's action dismissed
Defendant's counterclaim allowed
Declaration made
Category: B
Representation:
Counsel:
Plaintiff: Mr S M Davies SC & Ms K R Lendich
Defendant: Mr J A Thomson SC & Mr V N Ghosh
Solicitors:
Plaintiff: Baker McKenzie - Brisbane
Defendant: King & Wood Mallesons
Case(s) referred to in judgment(s):
Nil
TOTTLE J: The following is a summary of the issues in these proceedings and the disposition of the action and counterclaim. My reasons are included in a judgment published to the parties on 12 December 2017. On that day I made orders prohibiting wider publication of the judgment on the basis that it dealt with matters that are privileged and which might affect other proceedings between the parties that are currently before this court. It is impractical to redact the judgment to remove the sensitive material and accordingly this summary is published pending the determination of the other proceedings.
The plaintiff, Built Environs, is a construction contractor involved in major construction projects. It was the head contractor for the construction of the T1 Domestic Pier and International Departures Expansion Project at Perth Airport. The defendant, Perth Airport Pty Ltd, PAPL (which is the owner of Perth Airport) was the principal.
Built Environs and PAPL entered into a construction contract on 6 February 2013 (the Contract). It incorporated General Conditions that extended over more than 100 pages and 45 appendices. The original contract price was $172,793,479.
This action concerns Built Environ's claim that on 19 December 2016, PAPL wrongly had recourse to unconditional bank undertakings (performance bonds), provided to it pursuant to the Contract, in order to pay itself $14,450,445 in partial satisfaction of liquidated damages that PAPL says were due to it under the Contract. Built Environs alleges that PAPL was not entitled to have recourse to the performance bonds, and that by presenting them for payment it has committed a breach of contract.
An unusual feature of this litigation is that Built Environs does not allege that the presentation of the performance bonds was a breach of the Contract, but that it was a breach of a separate agreement constituted by an email sent on 2 December 2015 by Mr Guy Thompson, PAPL's Executive General Manager Assets and Capital Works. That email was sent to Built Environs' Managing Director, Mr Daryl Young, and copied to Mr Brad Geatches, PAPL's Chief Executive Officer.
The email read as follows:
Subject: Without Prejudice
Daryl
As you are aware we have today communicated to [Built Environs] to identify the assessed position with respect to Liquidated Damages (LD's) and PAPL is advised that it is entitled to recover the sum of circa $17.4 million as per the notice.
In light of current without prejudice discussions PAPL is prepared to release the first bank guarantee only, this week (planned collection by Thursday 3/12/2015) as requested by [Built Environs] and is prepared not to take steps to recover the LD's on the following conditions
•[Built Environs] agree not to advance any further applications under the Construction Contracts Act (WA) between now and the conclusion of without prejudice discussions currently targeted to reach a conclusion by mid Fed 2016. and;
•[Built Environs] continue to participate in the without prejudice discussions in the manner recently agreed when you Brad and I met I am happy to discuss this further if required tomorrow when we meet to continue the variations settlement process
Regards
Guy
The issues raised by Built Environs' claim are as follows:
(1)Did the email of 2 December 2015 constitute a binding agreement, that is, did the parties intend to create legal relations;
(2)If so, what were the terms of the agreement and did PAPL breach those terms by presenting the performance bonds for payment?
(3)If the email of 2 December 2015 did not create a binding agreement, was PAPL estopped from contending that the 2 December 2015 email was of no legal effect; additionally or alternatively, was PAPL estopped from taking any steps to recover any amount for liquidated damages from Built Environs under the Contract by way of set‑off from claims made by Built Environs under the Contract or by resort to the performance bonds?
For the reasons given in the judgment I held that the email of 2 December 2015 did not constitute a binding agreement. I held that even if the email of 2 December 2015 had constituted a binding agreement, PAPL did not breach its terms. I also held that no estoppel of the nature for which Built Environs contended arose. I dismissed Built Environs' action.
As to the counterclaim I held that PAPL was entitled to the declaration sought by it that it was entitled to call upon the performance bonds. I also held that PAPL was entitled to succeed on a claim for monies due to it by Built Environs.
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