C&v Engineering Services Pty Ltd v Metropolitan Demolitions Pty Ltd

[2023] NSWCA 167

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

C&V Engineering Services Pty Ltd v Metropolitan Demolitions Pty Ltd [2023] NSWCA 167

Hearing dates:

21 June 2023

Date of orders:

24 July 2023

Decision date:

24 July 2023

Before:

Kirk JA at [1];
Adamson JA at [2];
Stern JA at [3].

Decision:

(1)   Allow the appeal in part;

(2)   Set aside the orders made on 21 September 2022;

(3)   Declare that on 5 July 2018 the appellant and respondent made a contract for the appellant to procure and fabricate soldiers for Building C and that contract was not conditional upon any further direction to fabricate being made by the respondent;

(4)   Remit the issue of the quantum of damages for breach of contract as regards Building C to the trial judge on the basis that it is a matter for the trial judge whether to refer that issue to a referee;

(5) Note that C&V is entitled to have the judgment sum in respect of Building B increased from $42,438.62 to $50,783.28 together with pre-judgment interest under s 100 of the Civil Procedure Act 2005 (NSW) from 24 July 2018;

(6)   Order the respondent to pay the appellant’s costs of the appeal; and

(7)   Order the respondent to pay the appellant’s costs of the proceedings at first instance.

Catchwords:

CONTRACT – construction – party oral partly written contract – whether contract was formed to procure and fabricate steel soldiers – whether contract in part subject to a condition – whether contract limited to procuring steel in preparation of building works – whether contract subject to condition precedent that there be direction prior to fabricating.

CONTRACT – breach of contract – whether award of damages includes an amount corresponding on GST component for a supply on a tax invoice.

CONTRACT – construction – whether additional sums by way of administration charges payable – no reference to administration charges in standard terms and conditions – no proper basis for establishing claim for additional sums.

Legislation Cited:

District Court Act 1973 (NSW), s 127(1)

Civil Procedure Act 2005 (NSW), s 100

Uniform Civil Procedure Rules 2005 (NSW), rr 20.14, 36.16

Cases Cited:

C&V Engineering v Metropolitan (No 3) [2022] NSWDC 421

Equuscorp v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55

Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150

Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9

Category:

Principal judgment

Parties:

C&V Engineering Services Pty Ltd, ACN 003275134 (Appellant)
Metropolitan Demolitions Pty Ltd, ACN 099769052 (Respondent)

Representation:

Counsel:
D S Weinberger (Appellant)
M Sheldon (Respondent)

Solicitors:
O’Loughlin Westhoff (Appellant)
Vincent CCL Pty Ltd t/as Vincent Young (Respondent)

File Number(s):

2022/302813

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Citation:

C & V Engineering Pty Ltd v Metropolitan Demolitions Pty Ltd [2022] NSWDC 154

Date of Decision:

12 May 2022

Before:

Abadee DCJ

File Number(s):

2021/00108258

HEADNOTE

[This headnote is not to be read as part of the judgment]

In 2018 the appellant, C&V Engineering Services Pty Ltd (“C&V”), was subcontracted to Metropolitan Demolitions Pty Limited (“Metropolitan”) as a steel fabricator for a development in Circular Quay involving work on three buildings, Buildings A, B and C. C&V sued Metropolitan for sums it claimed were owing in respect of contracts for work on each of Buildings B and C. The primary judge found that C&V’s claim for breach of contract for work done in respect of Building B succeeded in part, and awarded damages accordingly, but that its claims for breach of contract failed entirely as regards Building C.

As regards Building B, the primary judge rejected C&V’s separate claim to be paid an item described as “Administration” on an invoice dated 23 July 2018 for work on Building B, and also found that the GST component on a tax invoice for a supply was not recoverable as damages for breach of contract. As regards Building C, the primary judge found that there was a partly oral, partly written contract entered into on 5 July 2018 between C&V and Metropolitan for C&V to procure and fabricate steel soldiers for Building C. However, the primary judge found that that contract was subject to a condition that there be a direction from Metropolitan prior to commencement of fabrication, and no such direction was ever given.

On appeal, C&V contended in respect of Building C that the primary judge erred in finding that the partly oral, partly written contract entered into on 5 July 2018 was subject to a condition that there be a direction from Metropolitan prior to commencement of fabrication. In the alternative, it was contended that even if the contract for Building C was subject to such a condition, the primary judge erred in finding that no such direction was given.

In respect of Building B, C&V contended that the primary judge erred by finding that it had no contractual entitlement to an administration charge. C&V also contended that the primary judge erred in holding that the GST component for a supply on a tax invoice was not recoverable as damages. It was accepted by Metropolitan that the primary judge erred in the latter respect and the parties sent proposed consent orders reflecting this agreement.

The Court (per Stern JA, Kirk and Adamson JJA agreeing), allowing the appeal in part held:

1. The primary judge erred in finding that the partly written, partly oral contract entered into on 5 July 2018 between C&V and Metropolitan for procurement and fabrication of the steel soldiers for Building C by C&V was conditional on a direction from Metropolitan prior to commencement of fabrication: [8]. There was a contract between C&V and Metropolitan for C&V to procure materials and fabricate soldiers for Building C with the price, design details and the number of steel soldiers to be agreed at a later date: [120]. The primary judge erred in his construction of the contract: [89]-[121]. The issue of the quantum of damages for breach of contract to be awarded to C&V in respect of the contract for Building C should be remitted to the Court below: [121].

2. The evidence does not suffice to establish a proper basis for C&V’s claimed administration charges for work on Building B and the contention to the contrary should be rejected: [122]-[124].

3. Given the agreed position of the parties, and the orders proposed jointly, the judgment sum awarded to C&V in respect of work on Building B should be increased to reflect the GST component for the supply: [125].

JUDGMENT

1. KIRK JA: I agree with Stern JA.

2. ADAMSON JA: I agree with Stern JA.

3. STERN JA: The appellant, C&V Engineering Services Pty Ltd (“C&V”) is a steel fabricator. The respondent, Metropolitan Demolitions Pty Limited (“Metropolitan”) is a demolitions contractor. Metropolitan was engaged by Richard Crookes Construction (“RCC”), the head contractor of the development of three buildings (“Building A”, “B” and “C” respectively) in Circular Quay in 2018. C&V was subcontracted to Metropolitan as steel fabricator for the development. These proceedings arise out of a contractual dispute between C&V and Metropolitan relating to these works.

4. C&V sued Metropolitan for sums it said were owing in respect of contracts for procurement and fabrication of steel soldiers for Buildings B and C. A steel soldier is a form of pile that goes into the ground to support an excavation and is sometimes referred to as a PFC or Parallel Flange Channel. In a judgment delivered on 12 May 2022 the primary judge found that C&V’s claims for breach of contract failed entirely as regards Building C but that its claim for breach of contract in respect of Building B succeeded in part, with quantum to be the subject of agreement or a referral: C & V Engineering Services Pty Ltd v Metropolitan Demolitions Pty Ltd [2022] NSWDC 154. The matter was then referred to a referee culminating in orders on 21 September 2022 that there be judgment for C&V in the sum of $42,438.62. The primary judge also made orders for interest and costs: C&V Engineering v Metropolitan (No. 3) [2022] NSWDC 421.

5. C&V appeals as of right under s 127(1) of the District Court Act 1973 (NSW) against the decision of the primary judge in C & V Engineering Services Pty Ltd v Metropolitan Demolitions Pty Ltd [2022] NSWDC 154.

6. By an amended notice of appeal (“NOA”) filed 22 March 2023, C&V raises five grounds of appeal which in essence allege:

1. that the primary judge erred at [140] in finding that the partly oral and partly written contract formed on 5 July 2018 between Metropolitan and C&V for C&V to procure and fabricate steel soldiers for Building C was subject to a condition precedent that there be a direction from Metropolitan prior to commencement of fabrication. C&V contends that the primary judge should have found that the contract of 5 July 2018 was for Metropolitan to procure and fabricate 34 soldiers for Building C at an hourly rate in accordance with design drawings that would be supplied at a later time (grounds 1 and 2);

2. in the alternative, that even if the contract was subject to the condition precedent as found by the primary judge, that the primary judge at [161] erred in finding that no such direction was given. C&V says that the primary judge should have found that such direction was given on each of 5 July 2018, 9 July 2018, 13 July 2018, 20 July 2018 and 1 August 2018 (ground 3). At the hearing, however, counsel for C&V indicated that the allegation that a direction was given on 20 July 2018 was not pressed. Also, C&V was granted leave to amend its NOA to rely upon provision to Mr Pizzolato of drawings for Building C on 26 July 2018 as a further direction satisfying any condition precedent as found by the primary judge;

3. that the primary judge erred at [184] in finding that C&V’s award of damages for breach of either the Building B and/or Building C contract could not include an amount corresponding to the GST component for a supply on a tax invoice (ground 4). Metropolitan accepts that the primary judge erred in this regard and that the appeal should succeed on this ground. The parties sent through proposed orders reflecting the orders that should be made on account of this ground alone. Those orders provide that the judgment sum in respect of the claim for Building B should be increased from $42,438.62 to $50,783.28 on account of ground 4; and

4. that the primary judge erred by finding that C&V had no contractual entitlement to charge for the work referred to as “Administration” in its Standard Terms and Conditions, thereby disallowing the claimed amount of $3,280.00 in respect of such charges (ground 6).

7. By amended notice of contention (“NOC”) filed with leave in Court on 21 June 2023, Metropolitan contends that:

1. at about 1.31pm on 5 July 2018, C&V and Metropolitan entered into a contract for C&V to procure steel for Building C only, but not to fabricate that steel (NOC ground 1); and

2. in addition to the reasons at [183], the primary judge was correct to not allow an amount for “Administration” because C&V did not discharge its onus to prove that the amounts claimed were “outside the scope of works” and the value of the amounts claimed (NOC ground 2).

8. For the reasons set out below, the appeal should be allowed on grounds 1, 2 and 4 but dismissed on ground 6. It is unnecessary to decide ground 3, which was advanced in the alternative to ground 1. The primary judge erred in finding that the contract entered into on 5 July 2018 for procurement and fabrication of the steel soldiers for Building C was in any way conditional. The parties agreed that in those circumstances, the appropriate order is that the matter be remitted to the trial judge for quantum to be determined. The question of whether quantum should be the subject of a referral under Uniform Civil Procedure Rules 2005 (NSW) r 20.14 is a matter for the trial judge, not for this Court.

9. By orders on 21 September 2022 the primary judge made orders as to costs, ordering that C&V pay 40% of Metropolitan’s costs on an ordinary basis as agreed or assessed. In the NOA, C&V seek to set aside this order. Given my conclusions on the appeal, in my judgment it is appropriate that this order be set aside and that Metropolitan pay C&V’s costs of the first instance proceedings and of the appeal.

The primary judge’s findings as to credit

10. The primary judge heard oral evidence from three witnesses. The first, Mario Pizzolato (“Mr Pizzolato”), was the General Manager of C&V. He swore three affidavits which were read in support of C&V’s claims. The second, Erik Van Cooney (“Mr Cooney”), was a project manager employed by Metropolitan at the relevant time and was in charge of Metropolitan’s works for the development. The third, Terrence Faulder (“Mr Faulder”), was a boilermaker who was contracted by Metropolitan to perform some tasks. One affidavit from each of Mr Cooney and Mr Faulder were also before the primary judge.

11. The primary judge considered the credit and reliability of each of these witnesses at [119]-[127]. Ultimately the primary judge had “little confidence in any of the witnesses”. Thus, his Honour concluded at [127] that:

“I repose much more weight in the contemporaneous documentation, including correspondence and the objective probabilities. To the extent that the (affidavit and testimonial) evidence of these witnesses is probative, it is because of its consistency with the contemporaneous documentation and the objective probabilities. Similarly, where there is conflict between competing versions of conversations which are mutual, my preference will be made in accordance with my assessment of the objective probabilities and contemporaneous documents, on a case-by-case basis.”

12. In these circumstances, the key findings of the primary judge were not significantly based upon the primary judge’s assessment of the witnesses. Rather, they were based upon inferences to be drawn from the documents in evidence, in particular, the many emails and attachments sent between either C&V and Metropolitan, or between Metropolitan and RCC, and from evidence that was not disputed.

13. To the limited extent that the primary judge did make findings which depended upon oral evidence, there is no challenge to such findings. The inferences which this Court can draw must, therefore, take those findings into account. As to the question of what terms were agreed on 5 July 2018, this Court should identify the correct inferences to be drawn having regard to those findings and to the undisputed evidence before the Court. In considering what inferences should properly be drawn from such material, whilst this Court must give respect and weight to the conclusion of the primary judge, this Court “is in as good a position as the trial judge to decide on the proper inference to be drawn…”: Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 at 551.

Background

14. The parties agree that a contract was entered into between C&V and Metropolitan in relation to Building C on 5 July 2018 and that that contract was partly in writing and partly oral. To the extent it was oral, it was formed in a conversation which it is agreed took place between Mr Pizzolato and Mr Cooney in the morning of 5 July 2018. To the extent it was written, it was formed by an email or emails passing between C&V and Metropolitan on that day.

15. There is no dispute as to the sending or content of the emails. The dispute relates to the inferences to be drawn from those emails. Further, whilst there is some dispute as to the content of a conversation between Mr Pizzolato and Mr Cooney on 5 April 2018 the resolution of that dispute is to be determined on the basis of inferences to be drawn from later emails. There is also some dispute as to the content of a conversation between Mr Pizzolato and Mr Cooney on 1 August 2018. In my judgment, however, nothing turns on the competing accounts of that conversation.

4 July 2018 offer for Building A

16. On 4 July 2018 at 5.14pm, Mr Pizzolato emailed Mr Faulder (cc’d to Mr Cooney) (emphasis in original):

“Following our conversation yesterday, please see attached lump sum proposal to supply and fabricate soldiers to Shoring Walls SW4 & SW5+SW6.

As mentioned we will get all PFC’s cut to size, notched, weld prepped and holes via external company. This company is available to start early next week. The main benefit of this is while steel is being processed we can work on current soldiers you had in mind to send through.

However the biggest benefit is speed to complete these 25 soldiers compared to your current methods. While we don’t want to give too much away but lets just say soldiers will be waiting for you not the other way around.

All we need to do is meet and confirm that the spreadsheet I sent through the other day is correct, if so put the wheels in motion on this component of works which will allow you to concentrate [of] other projects”.

17. The attached proposal was for Building A and was framed as an “Investment Offer”. Attached to the proposal were C&V’s Standard Terms and Conditions which included the following:

“(3)   Work will not proceed until written confirmation and acceptance of our quotation and terms and conditions is received.

(4)   We will, not undertake to do any work pertaining to additions and/or deletions or other amendments of this project unless the Customer issues prior written instructions. A written order will be required before and variation work is carried out.

(5)   Fabrication work will not commence until hard copy approval all workshop drawings has [sic] been received by C&V.

...”

18. Neither party contended that these terms applied as regards Building C.

5 July 2018 telephone conversation

19. On 5 July 2018, Mr Pizzolato called Mr Cooney. The content of that conversation is disputed: at [49]. In Mr Pizzolato’s first affidavit, affirmed 10 August 2021, he deposed that at around 11.04am, he called Mr Cooney:

“Mario:   Hi Erik, just following up on the quotation I sent to you guys yesterday.

Erik:   Yes, I’ve received it and discussing it with Terry. My preference as previously discussed is doing the works on hourly, that way we avoid any issues.

Mario:      Ok. Totally up to you Erik.

Erik:      Where do I find your rates in your quotation?

Mario:      They are at the bottom of the last page.

Erik:      I see them.

Mario:   As discussed with Terry we intend on using an external company to assist us in processing the materials, these guys will need some time to do their stuff.

Erik:      I thought you would be fabricating these soldiers.

Mario:   We will be. However, we use companies with specialised machinery to process the materials for us. This saves us huge costs and time. Apart from cutting materials to length and drilling holes, the company I want to use can even cut the notch in the 380PFC and bevel the ends to all the PFC’s for welding purposes, all on the same machine

Erik:      I understand.

Mario:   I’m keen to get the order for Building A soldiers Just bear in mind, the quotation I sent for Building A soldiers includes for all materials and is based on using an external company to process the materials. The costs will significantly increase if we need to process the materials with manpower. Something else that you may wish to think about, is since Building C isn’t required for a while you may want to start looking at getting those soldiers underway too, however to do so I need latest drawings.”

20. At trial, Mr Pizzolato was cross-examined on this conversation (Tcpt, 3 May 2022, p 44(9)-(11), (27)-(29)):

MR SHELDON: “…Do you remember Mr Cooney saying to you, “Building C is not required immediately”? Do you remember that?”

MR PIZZOLATO: “Yes.”

…

MR SHELDON: “What I’m asking you is or I’m suggesting is that you said in response, “It’s best to procure materials first.””

MR PIZZOLATO: “Order materials, yes.”

21. In his affidavit, affirmed on 15 December 2021, Mr Cooney gave the following recollection:

“Mario:   I sent over my quotation for the 25 steel soldiers. We are fabricating some steel soldiers for Building B now. Which other steel soldiers are we fabricating?

Erik:      Building C but it is not required at the moment.

Mario:      Will materials be provided or are we supplying materials?

Erik:      You will need to supply materials for this.

Mario:      If that’s the case, it is best to procure the materials first.”

22. Mr Cooney was also cross-examined on this conversation (Tcpt, 3 May 2022, p 75(25)-(41)):

MR WEINBERGER: “Can you recall the specifics of 5 July telephone conversation with Mario?”

MR COONEY: “No, I cannot recall.”

MR WEINBERGER: “When you deny that you told Mario to proceed to fabricate the building C soldiers in accordance with his rates set out in the 4 July quotation, as you sit there now, you truly don’t have a recollection as to whether or not you told them that or not. Would you agree?”

MR COONEY: “I recall – can I explain? Yeah, I – I –”

MR WEINBERGER: “You don’t have a recollection one way or the other as to whether you told him to proceed with the building C soldiers either an hourly rates or the rates set out in the 4 July quotation. Do you agree or do you disagree?”

MR COONEY: “I disagree.”

MR WEINBERGER: “You recall the specifics of the 5 July conversation, do you.”

MR COONEY: “No, I – I don’t recall the specifics, but I don’t recall – I did not give him the go ahead to fabricate building C soldiers, only procure the steel.”

23. As to this conversation, the primary judge did not make findings as to whose account should be accepted save that his Honour at [144] found that:

“Indeed, although Erik’s account of the conversation in his affidavit needs to be treated with reservation, viewed, in retrospect, with the benefit of the other evidence, it had the ring of truth about it when Erik deposed that Mario had asked him what other soldiers were to be fabricated and Erik replied, “Building C”, but that was not required “at the moment”."

5 July 2018 email communications

24. On 5 July 2018 at 11.04am, Mr Pizzolato sent an email to Mr Cooney (cc’d Mr Faulder) (emphasis in original):

“As discussed I understand that Building C is not required at the moment however best to start getting that material processed while we deal with other urgent areas. Therefore please shoot over latest drawings indicating RL’s to building C so we may update our spreadsheet, etc.

In regards to yesterday’s quotation relating to 25 soldiers for Building A... As discussed this proposal included for all materials as we were engaging an external company to supply materials… However, lead time aside best to have this steel processed while we are assisting you with Building B. Please give us the go-ahead on this so we may get materials processed

We also intend to have all materials for Building C processed by external company, hence our request for updated drawings…

…

As for the request to have 16 ready by Tuesday, Erik we won’t beat around the bush and will tell you straight – that is not going to happen! It took your guys 1 week to complete 5 Soldiers. (As I’ve said numerous times there is a lot of work on these soldiers)…”.

25. Mr Pizzolato was cross-examined on the meaning of “processed” and maintained that “processed” included fabrication (Tcpt, 3 May 2022, p 45(28)-(47)):

MR SHELDON: “You recorded precisely what was discussed in this email, that is, “Building C is not required at the moment. Let’s start getting materials ordered and processed.” That’s what was discussed, wasn’t it?”

MR PIZZOLATO: ““Processed” also includes fabrication. Cut, drill, notch, so forth. That was a whole process of – sorry. That was the whole point of that conversation.”

MR SHELDON: “You said nothing about performing fabrication or welding works on building C on the terms and conditions in your 4 July quote, did you?”

MR PIZZOLATO: “No.”

MR SHELDON: “In this e-mail, you said nothing about performing fabrication or welding works on building C on the terms and conditions in the 4 July quote, did you?”

Mr PIZZOLATO: “No.”

MR SHELDON: “You said nothing about welding for building C at all in this email, did you?”

MR PIZZOLATO: “No.”

MR SHELDON: “All you spoke about what processing, which is preparing materials. Isn’t that right?”

MR PIZZOLATO: “No.”

26. Mr Cooney was also asked in cross-examination about the distinction between processing and fabrication and said that he was not a fabricator and did not know the difference between the two (Tcpt, 3 May 2022, p 63(13)-(23)).

27. On 5 July 2018 at 1.31PM, Mr Cooney sent an email to Mr Pizzolato stating:

“Proceed for building C as discussed.

Need this till latest 2.5 weeks.”

28. As recorded by the primary judge:

“57   In his evidence, Mario said that prior to this email, he and Erik had discussed fabrication. He suggested that Erik had indicated that Metropolitan would require C&V to fabricate builders for Building C in due course and explained that the earlier reference to processing included such things as drilling and cutting of the soldiers.

58   In his evidence, Erik accepted that the steel was only urgent if there was a timeline for the installation of the soldiers. He also accepted, at the time of this email, that Metropolitan had not sought a lump sum quote in relation to the Building C soldiers; nor had it sought a quote only in connection with the procurement of steel. He accepted that Metropolitan was instructing C&V to proceed without a lump sum price.”

29. On 5 July 2018 at 5.23pm, Mr Cooney replied to Mr Pizzolato’s 11.04am email (cc’d Mr Faulder) saying:

“Can you order the steel for C of the [drawings] provided or do you need to wait for FCD [full construction drawings] with further info?”

30. There were drawings attached to that email. The affidavit evidence of Mr Pizzolato (which was not challenged in cross-examination) was that these drawings provided for 34 soldiers for Building C.

31. Mr Pizzolato replied at 5.24pm (cc’d Mr Faulder):

“I’ve sent the drawing to our draftsman to see if he can convert the PDF into CAD, waiting to hear back – will chase him up again.”

32. At 5.32pm, Mr Cooney replied to Mr Pizzolato (cc’d Mr Faulder and Sean Ryan (project engineer with Metropolitan) (Mr Ryan)):

“DWG [drawings] attached!

Like I said we need soldiers onside [on-site] 25/7/18! For building C even though we don’t have FCD.”

33. In Mr Pizzolato’s affidavit of 10 August 2021, he deposed that “[f]rom my review of the drawings, I could see that the drawings provided for 34 soldiers for Building C”: at [146].

34. At trial, Mr Cooney was cross-examined on his email (Tcpt, 4 May 2022, p 79(12)-(37)):

MR WEINBERGER: “...And one of the things you directed Mario to do was supply the soldiers on site by 25 July. Correct? Yes?”

MR COONEY: “Correct.”

MR WEINBERGER: “And if all you wanted Mario to do would be to supply steel, there’d be no reason to tell him that you don’t have the FCD, the full construction drawings. Would there?”

MR COONEY: “Okay.”

MR WEINBERGER: “Agree?”

MR COONEY: “Agree.”

MR WEINBERGER: “And if all you wanted Mario to do was to supply steel, and not fabricate it, there’d be no reason to send him the drawings by this email. Agree?”

MR COONEY: “Agree.”

MR WEINBERGER: “So, the reason you sent Mario the drawings is because you wanted him to fabricate the steel and deliver it to site by 25 July. Agree?”

MR COONEY: “Agree. Yep.”

MR WEINBERGER: “Even though you had no quote, let alone any agreement, as to lump sum price. Correct?”

MR COONEY: “Based off this email, correct.”

MR WEINBERGER: “It’s not based of the email, it’s the fact. Isn’t it?”

MR COONEY: “No. I was waiting for his quotation for the fabrication of the steel. So –”

35. On 9 July 2018 at 1.39pm, Mr Ryan sent an email to Mr Faulder and Mr Pizzolato (cc’d Mr Cooney) advising that the set out for Building C had been finalised and attaching drawings. Mr Ryan also advised that elevations would be received soon. These drawings demonstrated where piles for soldiers were to be located in Building C.

36. This is the second direction to fabricate relied upon by C&V in the amended NOA.

37. On 9 July 2018 at 2.03pm, Mr Pizzolato replied by email:

“Thanks for the updated drawings.

We were in the process of updating CAD drawing (see attached) to determine length of soldiers and after reviewing the latest set out for building C, the setout indicates 3 additional to SW13+SW14. Therefore we urgently require updated elevations so we can finalise procurement to this area.”

38. At 2.19pm, Mr Cooney forwarded the above email to Daniel Howe (of RCC) (Mr Howe), Guy Bell (Mr Bell) and Mr Ryan.

39. On 10 July 2018 at 8.07am, Mr Pizzolato sent an email to Mr Ryan and Mr Faulder (cc’d to Mr Cooney):

“Can you please advise how far the revised elevations for Building C are?

This is urgent as we are intending to start on this building on Monday and straight after fabricating the hand full of soldiers we are building for you.”

40. On 10 July 2018 at 12.40pm, Mr Howe sent an email to Mr Cooney and Mr Ryan with the notes from a progress meeting held that morning. On the same day at 3.37pm, Mr Cooney replied “answering the queries below to date”, attaching two documents and stating:

“Come to every meeting with a full status of PFC fabrication and planned delivery dates against the target dates that we agreed on attached plan. Refer to attached steel fab status.”

41. One of the documents attached to that email included markings setting out that for Building C, ten steel soldiers would be delivered by C&V on 20 July 2018, ten would be delivered by C&V on 27 July 2018 and a further ten would be delivered by C&V on 3 August 2018.

42. On 11 July 2018 at 2.35pm, Mr Pizzolato sent an email to Mr Cooney (cc’d Mr Ryan and Mr Faulder) with “high” importance (emphasis in original):

“In relation to the Building C Soldiers

Our spreadsheet has been prepared using information on latest drawings, here is an update;

Section 9 (SW13+SW14)

1.   rock anchor RL’s provided for 7 out of 27 we need the remainder

2.   Latest plan drawing indicated 27 of soldiers, the elevation indicates 24, therefore you need to push the client for an updated elevation.

3.   It also appears that the rock anchors to these soldiers are supported by the 300PFC, what this means is the PFC will need to be strengthened with 2 of 75x10FC per PFC. This will take some time due to additional weld time

Section 10 (SW15+SW16)

4.   we have used the provided CAD file to extract pile depth and capping height, this will enable these soldiers to go into production. However require rock anchor RL’s

Erik, this is your time to put pressure onto your client and make them aware that the lack of information is delaying you.

Feel free to contact me should you wish to discuss”.

43. On 11 July 2018 at 2.49pm, Mr Cooney sent this information to Mr Howe (cc’d Mr Bell and Mr Ryan):

“Our spreadsheet for building C has been prepared using information on latest drawings, here is an update;

Section 9 (SW13+SW14)

1.   We need remainder rock anchor RLs and clarity on toe RLs

2.   Latest Architectural plan drawing indicated 27 of soldiers, ST-PR-21.13_4 the elevation indicates 24, therefore need an updated elevation.

Section 10 (SW15+SW16)

3.    We require Rock Anchor RLs and clarity on Toe RLs”.

44. On 13 July 2018 at 5.01pm, Mr Pizzolato sent an email to Mr Cooney (cc’d to Mr Ryan, Mr Faulder and CV Eng Services Accounts):

“Thanks again for asking us to proceed with Building C.

We’ve placed an order for PFC’s required for SW15, this will arrive on Monday and the workshop can make a start.

We are in the process of finalising an order for SW13, which we intend to place very shortly. However would be great to know if the connection is changing or staying the way it is

I was speaking with Terry earlier this afternoon and he mentioned the engineer may require the 75x10FB to all 300PFC irrespective if there is an anchor at that location or not. Well as you can appreciate, we have 9 of soldiers nearing completion and we need to know ASAP if the ones we are fabricating require the 75X10FB.”

45. This is the third of the directions to fabricate relied upon by C&V in the amended NOA. However, during the hearing before this Court, counsel for C&V accepted that as this was an email emanating from Mr Pizzolato it could not be relied upon as a direction from Metropolitan.

46. On 14 July 2018 at 1.37pm, Mr Cooney sent an email to Mr Howe (cc’d Mr Bell) with a soldier update:

“Update on soldiers are as follows

...

2 – Building B – All 29 have been completed on Building B, Weld tester booked in Monday for last 10, 16 plate HAS NOT been welded onto flange.

3 – building C – Steel has been ordered, will be delivered Wednesday for processing.”

47. On 14 July 2018 at 2.36pm, Mr Pizzolato sent an email to Mr Cooney asking him to “put your client on notice there are significant changes which will constitute a variation both in cost & time! Be sure to also submit your extension for time” (emphasis in original). At 2.59pm, Mr Cooney responded:

“Don’t modify any of your works.

Will discuss this further.”

48. On 17 July 2018 at 1.22pm, Mr Cooney sent an email to Mr Pizzolato which was at the top of an email chain which included Mr Pizzolato’s earlier email of 5 July 2018 at 1.31pm and an earlier email attaching the 4 July 2018 quotation from C&V for Building A. Mr Cooney’s email stated:

“Mario

This is your quotation for building C.

In regards to 10 soldiers on build A, I anticipate it is going to be your rate in regards to the guys over 1.5 weeks?

The rates are in your quotation.”

49. Mr Pizzolato responded by email of 17 July 2018 at 4.45pm:

“The quote you sent through doesn’t relate to building C it related to SW4 & SW5+SW6 on building A. We’ve started updating the cost for building C and will shoot over once we have final information…So far we have managed to do some initial procurement using provided CAD files but haven’t started cutting steel.”

50. At 4.59pm, Mr Cooney replied to Mr Pizzolato:

“Really need a quote from you for building C before I give you the go ahead mate even though I know how much soldiers cost you may blow my budget! Fine to do rates for build B”.

51. The primary judge recorded at [73] that it was “common ground that the request for a quote could only have been in relation to fabrication: by then, the steel had already been ordered and was located within C&V’s workshop” and that in cross-examination Mr Cooney had “maintained that C&V was only engaged to procure the steel and Metropolitan awaited a quote to do any fabrication on the steel for Building C.”

52. During the hearing before this Court counsel for Metropolitan accepted that this email was “self-serving” and submitted that that is why care must be taken when seeking to determine the terms of a partly oral contract by reference to post-contractual correspondence.

53. On 18 July 2018, at 10.20am Mr Pizzolato sent an email to Mr Cooney (cc’d Mr Faulder):

“Not sure why you said what you said below but as you’re aware you gave us the go ahead for building C back on 5 July.

Since then we have been liaising with our draftsman to determine lengths of soldiers.

You were also informed last week that we had placed a steel order for SW15, that steel is in our workshop and the workshop is currently marking and drilling the 300PFCs

We are also in the process of finalising steel requirements for SW13, which was highlighted during our site meeting yesterday when we requested an updated elevation relating to this wall as the plan indicated 27 of soldiers whereas the elevation indicated 24 of.

Therefore the works have progressed based on your instruction.

Yesterday to everyone’s surprise the engineer [being an engineer from RCC] requested the addition of 75x16FB to be welded to the inside face of the 300PFC’s. As you’re aware each PFC will require 4 of, we are required to weld 4 x 1650mm long FB’s to the soldiers we are currently fabricating for building B.

However, the extent of 75x16FB to building C is very different to building B because the rock anchors in building C goes through the 300PFC. The engineer requires the 75x16FB to span 1650mm either side of the rock anchor location, essentially each FB will be a minimum 3300mm long. Therefore as requested in yesterdays meeting we require updated elevations indicating Rock Anchor RL’s, this will determine the extent of the 75x16FB and until we receive this how can we update the cost?

…

Erik, we understand the time constraints you have on this project, the engineer changing details is beyond your control and we will do whatever can to assist. In short we are on your team!

Please push your client for updated elevations to building C.”

54. The primary judge found at [153] that in that email Mr Pizzolato “clearly conveyed his subjective belief that an instruction to fabricate had already been given back on 5 July”, albeit that his Honour found that that genuine subjective belief was “erroneous”. The primary judge also recorded at [75] that Mr Cooney disagreed in cross-examination that, on the basis of this email, he understood that Mr Pizzolato was proceeding on the basis of an instruction to fabricate and that Mr Cooney could not recall whether or not he responded to Mr Pizzolato’s email.

55. Then on 20 July 2018 at 10.43am, Mr Pizzolato sent an email to Mr Cooney (cc’d Mr Howe and Mr Bell) enquiring about Building C RL’s:

“…can you please advise when we can expect updated elevations indicating RL’s for Building C?

Please see attached spreadsheet which was prepared using the CAD file, the items in yellow is what we need to have confirmed.

FYI, materials for SW15 are in the workshop and it would be great to start cutting this over the weekend.”

56. On 20 July 2018 at 3.01pm, Mr Cooney replied to Mr Pizzolato (cc’d Mr Howe, Mr Bell and Arn Roden (Mr Roden)):

“I am still waiting on finalised drawings, we are about 1.5 weeks away to start piling Building C, really we need your soldiers made up in this time which is now looking doubtful for 30 odd soldiers.

RCC are well aware of the situation.”

57. The primary judge recorded at [77] that Mr Cooney agreed in cross-examination that “this was a reference to soldiers being made ready for excavation at the site.” In the amended NOA, C&V relies upon this email as a further direction to fabricate.

58. Then, at 3.29pm on 20 July 2018 Mr Pizzolato replied to Mr Cooney (cc’d Mr Howe, Mr Bell and Mr Roden) with the subject “RE: Building C RLs RFI” stating:

“We have materials for SW15+SW16 – Building C Southern Internal wall in our workshop. To date we have drilled the 300PFC’s, see attached photo

…

Therefore since there are only 8 of soldiers along this wall, it would assist your project to have RCC approve/confirm the RL’s as noted on our spreadsheet.

We have the ability to increase manpower in particular welders and we will look at this next week …”

59. At 3.34pm, Mr Cooney replied to Mr Pizzolato (not including Mr Howe, Mr Bell or Mr Roden in this correspondence):

“Careful what you send to RCC mate, I am pitching for [extension of time], if you say to them you are capable [of] doing the work in the time, it doesn’t help me …”

60. On 26 July 2018, Mr Cooney and Mr Faulder met Mr Pizzolato at C&V’s workshop. In his affidavit, Mr Pizzolato deposed that at this meeting Mr Cooney downloaded and provided Mr Pizzolato with drawings relating to Building C. Mr Cooney in his affidavit also gives evidence that there was a meeting at C&V’s workshop on that day and that he logged onto a platform and provided Mr Pizzolato with drawings with the latest elevations for Building C and asked for an “updated quote for the Building C soldiers.” The provision of these drawings to Mr Pizzolato was relied upon by C&V (by an amendment with leave to the amended NOA) as a further direction to fabricate.

61. On 26 July 2018 at 8.00pm, Mr Pizzolato sent an email to Mr Cooney (cc’d Mr Faulder) with updated costs for Building C, involving 27 soldiers:

“Please see updated costs relating to building C based on latest elevations and engineer requirements to include the 75x16FB...

…

As you saw earlier today, the 8 soldiers relating to SW15+SW16 are well in production. Depending on processing lead times we would like to get the remaining 19 of soldiers for SW13+SW14 ASAP.”

62. The attached “Investment Offer” contained a quote to supply 27 soldiers for a total price of $219,996.00 (19 soldiers for walls SW13+SW14 and 8 soldiers for SW15+SW16). It was in an identical format to the Investment Offer in relation to Building B sent by email of 4 July 2018. As was accepted by counsel for Metropolitan during the hearing, it is apparent that these were standard form documents used by C&V.

63. On 27 July 2018 at 1.19pm, Mr Cooney replied to Mr Pizzolato’s email:

“$8,148 per soldier is crazy expensive, we are doing soldiers for $3,500 each, I thought you had a method of doing things cheap ie mechanically etc you illustrated to me previously?

I don’t know how your price has changed so significantly from 4/7/18 when you quoted the works ie 25 soldiers for $116,500 which is $4,600 per soldier which is a little high but around the correct pricing.

Can you please send over a price for the steel you have in the workshop for the 8 soldiers so I can look at buying it [of] you please?

We pay $1300 a ton for the steel, as per our inspection yesterday I understand you have drilled holes and welded end plates.

Thanks Mario, sorry I [cant] give this work to you mate but these costs are blowing my budget massively!”

64. On 27 July 2018 Mr Pizzolato responded to this email indicating that (emphasis in original):

““Without prejudice”…

In relation to the below email, we will respond to you in due course.

In the meantime, you are referred to your instruction to our company to proceed with building C on 5 July 2017 [sic], which our company complied with and have been working on the project.

You are well aware of what we have done thus far with building C.

The below is a repudiation of the contract which can have severe consequences on Metro because you can’t issue someone with an order, have that company gear up and then terminate – it doesn’t work that way.

Therefore it is strongly recommended you arrange to meet with us on Monday and resolve this matter.”

65. Mr Pizzolato then sent a second email to Mr Cooney on 27 July 2018, again commencing “Without Prejudice” and stating (emphasis in original):

“Just to clarify, as it appears you may have misunderstood, that our updated costs for building C was inclusive of materials …”

66. Mr Cooney responded by email on 27 July 2018 at 3.02pm:

“Flat out at moment.

Let’s meet Monday arvo please DO NOT work on any more soldiers.”

67. Mr Pizzolato gave evidence that there was then a meeting between himself and Mr Cooney at C&V’s workshop on 1 August 2018. As recorded by the primary judge at [89], Mr Pizzolato said that at this meeting Mr Cooney observed that C&V was still working on the Building C soldiers and that Mr Cooney did not give any instruction or direction to stop that work. Mr Cooney also confirmed that a meeting occurred on 1 August 2018 but, as set out by the primary judge at [90], recalled “repeating his instruction to Mario not to do any further works on the Building C soldiers.” Whilst C&V relies upon this meeting as, in effect, Metropolitan allowing C&V to continue the fabrication with a “nudge and a wink”, the primary judge at [160] rejected this characterisation of the meeting and preferred Mr Cooney’s account of the meeting over that of Mr Pizzolato.

68. The 1 August 2018 exchange is relied upon in the amended NOA as a further direction to fabricate.

69. On 1 August 2018 at 5.03pm, Mr Cooney sent an email to Mr Pizzolato (cc’d Mr Faulder, Ms Pizzolato and Nick Giannikouris (Mr Giannikouris)):

“I will not authorise to pay your remaining invoice until we come to a final/reasonable agreement on total amount. The extra 5 soldiers in your workshop I am happy to take and pay for if we can come to a mutual agreement.

…

I didn’t appreciate you threatening to ‘knock me out’ if we don’t pay tonight over something that was unreasonably issued by C&V engineering, ie quoting 100K to do 25 soldiers and then the day before picking up soldiers invoicing 100k for 8 soldiers and expecting metros to pay this amount straight away.

I make the final decision on this matter, whilst I am an extremely reasonable guy that tried to support you with this work yet consequently we are now getting used/abused as a result.

Instead of fighting over this and it turning ugly and not going anywhere, an amicable agreement on costs would be the best outcome for both of us which I await for.”

70. On 4 September 2018 at 6.00pm, Mr Pizzolato emailed Mr Cooney (cc’d Mr Giannikouris and the Metropolitan Accounts Team) attaching an invoice relating to the Building C soldiers, advising that another invoice remained outstanding and stating “the soldiers have been ready for pick up since 13 August 2018. The soldiers need to be picked up as they are taking up valuable space in our workshop.” In this invoice was a charge “Storage Charges relating to 8 of Soldiers…(Period from 13 August to 4 September 2018)”.

71. Finally by way of background, and as to the disputed claim for administrative costs in respect of Building B, on 23 July 2018 C&V submitted an invoice to which it was stated the “Standard C&V Engineering Terms and Conditions Apply”. The invoice covered workshop labour, workshop usage costs, consumables and included administration costs amounting to $3,280.00 set out as follows (emphasis in original):

“Administration (significantly reduced cost)

* Preparation of Soldiers Spreadsheet

* Extensive email communications

* Review of drawing revisions

* Site meeting with Metro and RCC”.

The primary judgment

The Building C claim

72. The primary judge noted the agreed position of the parties that a partly written partly oral contract came into existence on 5 July 2018, but that the “existence of a term” was disputed: at [134]. Having regard to the parties conduct as a whole, including post-contractual conduct, the primary judge found that the agreement on 5 July 2018 was to procure and fabricate steel. However, the primary judge found that the parties agreed that the timing of fabrication would be in the discretion of Metropolitan, such that Metropolitan’s assent to commencement of fabrication “might be regarded as a condition to C&V’s performance” and of Metropolitan’s “corresponding obligation to pay”: at [140].

73. In support of this construction the primary judge relied upon the following matters.

74. First, at [141] the primary judge found that the surrounding circumstances relevant to determining the terms of the contract included:

1. the provision of an instruction as to timing for Building B which created a precedent for what would occur for Building C;

2. uncertainty as to the quantity of soldiers required for Building C and as to when fabrication would occur; and

3. the timing of installation was for Metropolitan to determine which, as a factor, was “more weighted to the detailed involvement and general control exercised by Metropolitan consistent with an agreed discretion in Metropolitan to determine when steel was to be fabricated.”

75. Second, at [142]-[144] the primary judge found that even if Mr Pizzolato’s account in his affidavit at [135] of the conversation with Mr Cooney on 5 July 2018 were accepted, “it was not unambiguously clear from that account of the conversation when C&V should fabricate 34 soldiers for Building C.” The primary judge relied, moreover, upon Mr Pizzolato’s acceptance in cross-examination that he was told that Building C was not required “at the moment” and found that, with the benefit of the other evidence, Mr Cooney’s evidence that he told Mr Pizzolato that the Building C soldiers were not required “at the moment” had the ring of truth albeit that Mr Cooney’s account of this conversation had to be treated with reservation. The primary judge also found, on the basis of Mr Pizzolato’s oral evidence in cross-examination, that he had “agreed with the idea that, even if both parties expected or anticipated that C&V would fabricate the soldiers, it was only agreed that it would procure the materials.”

76. Third, at [145]-[149] the primary judge reviewed the terms of the contemporaneous emails and Mr Pizzolato’s account of his conversation with Mr Cooney on 5 July 2018 and found that they did not “clearly indicate Metropolitan’s agreement to C&V immediately fabricating 34 soldiers for Building C, but [were] consistent with its doing so only after Metropolitan directed it to.” The primary judge at [147] accepted that Mr Pizzolato “may, subjectively, have believed that processing was synonymous with the notion of ‘fabrication’”, but characterised references to “processing” of soldiers in both Mr Pizzolato’s account of the conversation and in his email at 11.04am on 5 July 2018 as references to a “suggestion” rather than to an offer. Thus, the primary judge at [148] found that Mr Cooney’s email at 1.31pm on 5 July 2018 which stated “Proceed for building C as discussed” constituted “acceptance of what had been offered in the earlier conversation that day; not acceptance of the suggestion, about “processing”, that Mario made in his subsequent email of 11:04am”: at [148].

77. Whilst in the email of 1.31pm on 5 July 2018 Mr Cooney also stated “Need this till latest 2.5 weeks”, the primary judge at [149] found that “on its face [it] did not unambiguously convey to C&V that it was entitled to commence fabricating 34 soldiers for Building C there and then”. As to this, at [149] the primary judge found that:

“The statement also had to be viewed not only in the context of the priority that Mario knew Metropolitan accorded to fabricating soldiers for Buildings A and/or B, but also in the light of Erik’s belief, to which he deposed, rightly or wrongly, that there was little difference in the time it would take to fabricate soldiers for Building C then the time taken to fabricate them for Buildings A and B. Of course, Mario disputed that this was so and, given his greater expertise, his view about how long it would actually take to fabricate the soldiers for each of the buildings would naturally be preferred to Erik. But the material point was what Erik believed as to how long fabrication would take and he was not shaken about the genuineness of such belief.”

78. Fourth, the primary judge at [150]-[160] stated that the parties’ post-contractual conduct did not “unambiguously indicate agreement of C&V’s immediate obligation to fabricate 34 soldiers and correlative right to receive payment for such fabrication”: at [150]. Rather, the primary judge characterised the email communications as consistent with a view that the agreed position was for C&V to procure steel, with fabrication to occur at a later point of Metropolitan’s choosing. Whilst the primary judge accepted that in the 18 July 2018 email at 10.20am Mr Pizzolato “clearly conveyed his subjective belief that an instruction to fabricate had already been given back on 5 July”, the primary judge found that this belief was “erroneous”: at [153].

79. Further, the primary judge found that the request for a quotation in relation to Building C “in substance, was an update of estimated costs for the fabrication of soldiers for Building C previously agreed to (subject to Metropolitan’s rights which has been adverted to)”: at [156]. His Honour found that C&V sent the updated costs “because it knew it needed Metropolitan’s approval for the timing of the fabrication” and that the sending of this quotation “proves that C&V understood and accepted that it would not receive Metropolitan’s ‘go ahead’ to fabricate until Metropolitan was able to budget for it and this depended upon C&V providing a costs estimate.” His Honour continued that the email of 27 July 2018 was an explicit direction that C&V not do any further work on the Building C soldiers but that this should not be construed as an admission that Metropolitan had previously given the go ahead for C&V to fabricate those soldiers.

80. The primary judge rejected any suggestion that on 1 August 2018 Mr Cooney acquiesced or implicitly encouraged C&V to continue with fabrication of the soldiers and preferred Mr Cooney’s account of this conversation to that of Mr Pizzolato.

81. Finally, at [161] the primary judge found that Metropolitan never gave a direction to C&V as to when it should fabricate soldiers for Building C. Thus, C&V’s claim for breach of contract, based as it was upon a claimed payment for the fabrication and supply of material, failed.

Building B claim for administration charge

82. At [183] the primary judge rejected the claim for an administration charge for work done by C&V on Building B on the basis that it was not supported by, and indeed was inconsistent with, C&V’s Standard Terms and Conditions. These suggested “that the labour rates encompass such things as “preparation of variations, correspondence and anything else outside the scope of works””: at [183].

Relevant principles

83. As held by the primary judge at [133], consistent with Equuscorp v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55 at [34], the “legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.”

84. As to what evidence is relevant to this task, it was common ground in this Court that post-contractual conduct could not be relevant to construction of the contract but was relevant to the question of identification of the terms of this partly oral and partly written contract. The principle is as set out by Basten JA in Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 at [124]:

“With respect to an alleged agreement not wholly reduced to writing, the post-agreement conduct of one party known to the other, and communications between the parties, which reveal a common assumption as to the existence and terms of an agreement may provide evidence of such an agreement. However, the subjective views or reservations of one party, undisclosed to the other, cannot provide a basis for inferring the terms of a pre-existing agreement.”

85. To the extent that the parties’ post-contractual conduct is consistent with the common assumption as to the terms of the contract revealed by such matters, in my judgment that can also be taken into account in further supporting the conclusion that, objectively construed, the parties shared a common assumption as to the terms of the contract.

Consideration

The Building C contract

86. In broad terms, the dispute between the parties went to the proper inferences to be drawn from the emails and the conversation on 5 July 2018.

87. As to the terms of the contract, C&V in essence submitted that the proper inference to draw from the emails, including the post-contractual emails, was that there was a contract for procurement and fabrication, with matters such as price and the number of soldiers to be determined as drawings were progressively provided. C&V submitted, in particular, that by the point of the 5.32pm email on 5 July 2018 “the parties were ad idem that this was an instruction to supply and manufacture” (Tcpt, 21 June 2023, p 7(3)-(5)).

88. In response, Metropolitan submitted that the agreement was only an agreement to procure, but that if the agreement went beyond that it was subject to a direction from Metropolitan as to price and number. Whether or not to give such direction was entirely at Metropolitan’s discretion. Metropolitan submitted that there was never an agreement as to price and number, and thus there could not have been any agreement that C&V should fabricate soldiers for Building C. In support of this construction, Metropolitan submitted that the terms of the conversation between Mr Pizzolato and Mr Cooney on 5 July 2018 were critical for determining the terms of the agreement. Mr Cooney’s version should be preferred, in particular, that it was a conversation about procurement and did not refer to fabrication. Further, Metropolitan relied upon what in oral submissions was described as a “very, very important” distinction being drawn between processing and fabrication and relied upon the absence of any reference to “fabrication” in Mr Pizzolato’s email at 11.04am on 5 July 2018.

89. For the reasons set out below, on an objective construction of the conduct of the parties having regard to the commercial circumstances and the object and purpose of the agreement, the primary judge erred in his construction of the contract. The parties agreed that C&V should procure and fabricate the soldiers for Building C, albeit that matters such as design details and the final number of soldiers would be worked out in the short period of time within which the soldiers had to be ready on site and price would be also be agreed later. That agreement was not conditional upon any further direction from Metropolitan to fabricate. The appeal should thus be allowed.

The 5 July 2018 conversation

90. For the purpose of determining the terms of the contract for Building C, the first relevant interchange between the parties is the conversation which occurred on 5 July 2018 between Mr Pizzolato and Mr Cooney. There is some common ground between the evidence of Mr Pizzolato and Mr Cooney as to this conversation. First, there is no dispute that the conversation occurred. Second, there is no dispute that there was discussion during the conversation to the effect that C&V would be fabricating soldiers for Building C. Thus, on Mr Cooney’s account in his affidavit above at [26], Mr Pizzolato asked him “Which other soldiers are we fabricating?” to which Mr Cooney replied “Building C”. Mr Pizzolato said that during this discussion he stated that Mr Cooney “may want to start looking at getting [the Building C soldiers] underway too, however to do so I need latest drawings”. Third, Mr Pizzolato agreed in cross-examination that Mr Cooney had said to him that soldiers for Building C were not required immediately. Indeed, in his affidavit account of this conversation Mr Pizzolato recounts saying to Mr Cooney that “since Building C isn’t required for a while …”: at [135]. Fourth, Mr Pizzolato accepted in cross-examination that “in response” to Mr Cooney saying that Building C was not required at the moment, he (Mr Pizzolato) had said it was best to order materials. That was consistent with Mr Cooney’s affidavit evidence that Mr Pizzolato had said that if C&V were to be fabricating soldiers for Building C it was “best to procure the materials first”: at [40].

91. As set out above, the primary judge inferred from this exchange in cross-examination that Mr Pizzolato “agreed with the idea that, even if both parties expected or anticipated that C&V would fabricate the soldiers, it was only agreed that it would procure the materials”: at [143]. In my judgment, his Honour erred in drawing such inference from that evidence. Mr Pizzolato accepted that he had suggested that it was best to order materials but his evidence does not suggest any acceptance that the only agreement related to procurement. Shortly after the passage of evidence in cross-examination set out above, Mr Pizzolato said that performing welding works was discussed in the conversation with Mr Cooney and that:

“‘Processed’ also includes fabrication. Cut, drill, notch so forth. That was a whole process of – sorry. That was the whole point of that conversation.”

92. Mr Pizzolato then rejected the suggestion that his conversation with Mr Cooney had only included “processing, which is preparing materials”. In his affidavit, Mr Pizzolato elaborated that the conversation was in words to the effect that he had suggested that “you may want to start looking at getting those soldiers underway too, however to do so I need latest drawings”: at [135].

93. The dispute between the parties as to the conversation on 5 July 2018 was primarily as to what, if anything, was said as to processing or fabrication. In my judgment, having regard to the common ground between the accounts of Mr Pizzolato and Mr Cooney and to the emails subsequently exchanged, the proper inference to draw is that both procurement and what is, in effect, fabrication of soldiers for Building C were discussed during that conversation and the conversation was not limited to C&V “procuring” the steel for Building C. That is the most likely explanation for the opening words of the email at 11.04am from Mr Pizzolato to Mr Cooney that:

“As discussed I understand that Building C is not required at the moment however best to start getting that material processed while we deal with other urgent areas.”

94. Later in that email Mr Pizzolato wrote (emphasis in original):

“We also intend to have all materials for Building C processed by external company, hence our request for updated drawings including RL’s. Your prompt review and reply will be greatly appreciated!”

95. It is unlikely that an email would have been sent in those terms if nothing more than procurement had been discussed before the email was sent. Further the reference to an earlier request for “updated drawings” suggests that fabrication had been discussed in the earlier conversation, albeit probably not using that word.

96. I also reject Metropolitan’s submission that an important distinction should be drawn between processing and fabrication when considering the significance of the conversation on 5 July 2018 or these emails. Mr Pizzolato said in evidence that he regarded processing as including fabrication. Ultimately, Mr Cooney’s evidence as to what distinction, if any, could be drawn between fabrication and processing was vague and he accepted that this was not something about which he had expertise or that had ever been explained to him. Whilst he initially said that he understood that processing did not involve fabrication, when asked what was involved in the “processing” of steel he said:

“I’m not an expert, like I said, in the area. Generalisation, processing might be ordering and cutting to – pieces of steel…

As a – as a general statement, it’s … maybe a – a process with machinery.”

97. When asked whether his evidence was that processing involved human input he said:

“I’m not sure. I’m not sure. I’m not sure.”

98. Any references to the “processing” of material for the soldiers would, on an objective construction, be understood by both Mr Pizzolato and Mr Cooney as going beyond procurement of steel and involving steps by way of fabrication. It would not be limited to welding. There is no significance, in this regard, in the use of the language of processing rather than that of fabrication such as in the email sent by Mr Pizzolato at 11.04am on 5 July 2018. It is plain from that email that he was proposing steps by way of fabrication of the soldiers for Building C.

99. I thus find that in the conversation on 5 July 2018 between Mr Pizzolato and Mr Cooney both procurement and fabrication of soldiers for Building C by C&V was discussed.

The emails on 5 July 2018

100. In the light of my findings as to the ambit of the conversation on 5 July 2018, I would readily conclude that by virtue of that conversation and the emails on 5 July 2018 at 11.04am, 1.31pm, 5.23pm, 5.24pm and 5.32pm, a contract was concluded between the parties for C&V to procure and fabricate soldiers for Building C and that contract was not conditional upon any direction being given by Metropolitan. However, even if I had accepted Metropolitan’s submission as to the content of the conversation on 5 July 2018, I would have reached the same conclusion based upon the terms of the emails.

101. It is clear from the terms of the 11.04am email that Mr Pizzolato was proposing making a start on the processing of material for the soldiers for Building C. It is also clear that he was requesting drawings for that purpose. The next email that day, at 1.31pm from Mr Cooney to Mr Pizzolato instructed Mr Pizzolato to proceed for Building C as discussed, indicating that “this was needed till latest 2.5 weeks” (emphasis added). That conveyed an instruction to proceed with whatever it was that was required within 2.5 weeks. Given that what was required on site was soldiers (and not merely the raw materials for soldiers), objectively that instruction would be read as an instruction to proceed with the procurement and fabrication of soldiers.

102. The next exchange of emails, at 5.23pm and 5.24pm, went to whether Mr Pizzolato could order steel from the existing drawings or whether he needed “to wait for FCD with further info”. Then, in the email at 5.32pm, Mr Cooney sends drawings to Mr Pizzolato and clearly instructs him that soldiers were needed onsite on 25 July 2018 and that the drawings for Building C were attached even though “we don’t have FCD.” As accepted by Mr Cooney during cross-examination, there would be no reason to send the drawings if Mr Cooney only wanted C&V to supply but not fabricate steel, and that email would be read as a “clear instruction to Mario ... to fabricate the building C soldiers, and to have them delivered on site by 25 July.” This is cogent evidence as to how his email would objectively be read by someone with experience in the construction industry. In any event, in my judgment the email is not sensibly open to any other construction.

103. The email is also cogent evidence as to the way in which the parties were having to operate by reason of the urgency of the job and the state of preparation of the drawings. Thus, whilst in an ideal world a contract to fabricate would not be entered into without finalised drawings indicating the design and number of soldiers and with agreement as to price, that was not the commercial context within which this contract was entered into. That commercial context, namely the urgency and the lack of full construction drawings, was clearly known to both parties.

104. Contrary to the conclusion of the primary judge, the fact that the soldiers for Building C were not required immediately did not suggest that the contract to fabricate the soldiers was conditional upon a later direction being given to fabricate. It was simply part of the commercial context in which the parties were seeking to ensure that the soldiers would be fabricated and ready when needed on site. The emails on 5 July 2018 clearly indicate to C&V the timescale within which the soldiers would be needed.

Post-contractual conduct

105. The post-contractual conduct confirms, but is not essential to, my conclusion as to the terms of the contract that was entered into on 5 July 2018. In particular, the following matters are most consistent with there being a contract for C&V to procure and fabricate the soldiers for Building C without any condition that there first be a direction from Metropolitan.

106. First, over and above the provision of drawings on 5 July 2018 set out above, on a number of occasions drawings were requested and/or provided. On 9 July 2018 drawings are provided by Mr Ryan to Mr Pizzolato, advising that the set out for Building C had been finalised. Mr Pizzolato then emails Mr Ryan thanking him for the drawings and requesting updated elevations “so we can finalise procurement” to the area. On 10 July 2018, C&V again seeks details of the revised elevations, stating that this “is urgent as we are intending to start on this building on Monday and straight after fabricating the hand full of soldiers we are building for you.” Contrary to the submission of Metropolitan, it is plain from these emails that the drawings were being requested to enable C&V to get on with the work of procuring and fabricating the soldiers and not for the purpose of preparing a quotation for that work.

107. Second, there is no real doubt that Mr Pizzolato assumed that C&V had a contract for fabrication. The primary judge accepted that Mr Pizzolato had a subjective belief that an instruction to fabricate had been given on 5 July 2018: at [153]. As C&V submits, this is further supported by the email sent by Mr Pizzolato to Mr Cooney on 11 July 2018 which expressly states that C&V had sufficient information to enable some of the soldiers for Building C to go into production but sought further information which on its face is information needed to fabricate the soldiers. In this email, Mr Pizzolato tells Mr Cooney that he should tell his client that “the lack of information is delaying you”, which strongly suggests that Mr Pizzolato was seeking the information so he could get on and fabricate all the soldiers and that otherwise the supply of the fabricated soldiers for Building C would be delayed. It is difficult to see why such an email would be sent unless Mr Pizzolato considered that he was to get on and fabricate the soldiers. This email is not consistent with the further information being required only for the purpose of C&V providing a quotation as it specifically refers to the available information enabling the SW15 and SW16 soldiers to “go into production”.

108. Third, the conduct of Mr Cooney in the period after 5 July 2018 strongly indicates that he too considered that C&V had agreed to fabricate the soldiers. Thus, the drawings attached to the email sent by Mr Cooney to Mr Howe of RCC on 10 July 2018 at 3.37pm indicates an expectation that the soldiers for Building C would be delivered by C&V on various dates between 27 July 2018 and 3 August 2018. That suggests an assumption by Mr Cooney that, consistent with the emails on 5 July 2018, C&V had agreed to fabricate the soldiers for Building C on the basis that they were needed on site in late July 2018.

109. Further, on 13 July 2018 at 5.01pm Mr Pizzolato sent an email to Mr Cooney (cc’d Mr Ryan, Mr Faulder and CV Eng Services Accounts) in which he clearly stated “Thanks again for asking us to proceed with Building C” and that “we have 9 of soldiers nearing completion and we need to know ASAP if the ones we are fabricating require the 75x10FB”. If Mr Cooney had been proceeding on an assumption that C&V had only been contracted to procure the materials but not to fabricate the soldiers, objectively it would be expected that he would immediately respond to this email telling Mr Pizzolato that he was not yet contracted to commence fabrication, or that he was not contracted to commence fabrication at all. His failure to take that step strongly suggests, on an objective construction, that he shared C&V’s assumption that C&V were contracted to fabricate the soldiers for Building C and to get on with that work. That conclusion is further supported by the email Mr Cooney sent to Mr Howe on 14 July 2018 at 1.37pm stating “building C – Steel has been ordered, will be delivered Wednesday for processing.”

110. Fourth, as is clear from the email correspondence, both parties clearly understood that there was a requirement that the soldiers for Building C would be on site by late July 2018. Further, in the email on 11 July 2018 at 2.35pm from Mr Pizzolato to Mr Cooney, Mr Cooney was told that the drawings indicated that additional strengthening would be required and that this would “take some time due to additional weld time”. That indicated a real need for fabrication work to be progressed without delay. That commercial context makes it objectively unlikely that the parties would have been operating on the basis that there was no contract to fabricate, or that fabrication would only commence after a specific direction was given. Rather, the objective likelihood is that the parties assumed that the contract was for fabrication, and that work over and above procurement of the steel would be undertaken by C&V to the extent that it could as relevant design information was provided on an incremental basis.

111. Fifth, the 17 July 2018 exchange of emails does not weigh against the construction that I have reached. In an email sent by Mr Cooney to Mr Pizzolato on 17 July 2018 at 1.22pm he suggests that the 4 July 2018 quotation for Building A was “the quotation for Building C.” In an email sent at 4.45pm Mr Pizzolato indicates that the earlier quotation was not for Building C and that he will provide costing “once we have final information”. Mr Cooney then sends the email at 4.59pm stating that he needs a quote for Building C “before I give you the go ahead”. This is the first hint in the emails of Mr Cooney considering that C&V were not contracted to fabricate the soldiers for Building C until they were given a direction to do so.

112. In the context set out above, this email is more consistent with Mr Cooney at this stage seeking to protect his position having regard to the fact that neither party had yet sought to agree costs for the Building C soldiers. To that extent, as accepted by counsel for Metropolitan, it was somewhat “self serving”. That inference is supported by the further context, as set out by the primary judge at [31]-[42], that between 14 and 17 July 2018, there had been discussions between Mr Pizzolato and Mr Cooney about additional costs for soldiers for Building B by reason of design changes.

113. In any event, Mr Pizzolato responds on 18 July 2018 at 10.20am clearly telling Mr Cooney that he had given C&V the “go ahead for building C back on 5 July” and that the steel was being marked and drilled. Mr Cooney does not respond to this email. He does not tell Mr Pizzolato to down tools and stop work on soldiers for Building C. In my judgment, on an objective construction, the failure to send any such response is inconsistent with Mr Cooney having an assumption that C&V were not contracted to fabricate the soldiers for Building C or should wait for a direction from Metropolitan before doing so. To the extent that Metropolitan wanted to agree costs, it was plain from Mr Pizzolato’s email on 18 July 2018 at 10.20am that he could not update the costs until updated elevations had been provided. In any event, given the time constraints that are apparent from the emails, it would be unlikely that the parties objectively considered that fabrication should be held off until agreement as to costs had been reached.

114. Sixth, the conduct of the parties following the 17 July 2018 exchange of emails is inconsistent with there being a contract that either did not include fabrication, or in which C&V were not contracted to fabricate soldiers for Building C unless and until Metropolitan gave a direction to do so. In the email of 20 July 2018 (a Friday) at 10.43am Mr Pizzolato clearly states that he had materials and needed drawings as “it would be great to start cutting this over the weekend.” Mr Cooney did not respond telling him not to do so. Rather, by email on the same day at 3.01pm, he tells Mr Pizzolato that “we are about 1.5 weeks away to start piling Building C, really need your soldiers made up in this time which is now looking doubtful for 30 odd soldiers.” Mr Pizzolato then, at 3.29pm tells him that some of the soldiers for Building C have been drilled and that they would look to increase manpower for welding the following week. Mr Cooney again does not suggest C&V should not work on the soldiers, but instead tells Mr Pizzolato, by reply email at 3.34pm, that he (Mr Cooney) is pitching for an extension of time and that it does not help if “you say to them you are capable of doing the work in time”.

115. It is then apparent that further drawings were provided to Mr Pizzolato at a meeting. The primary judge found that at this meeting, progress was discussed and Mr Cooney was “concerned about timing for completion”: at [80]. Mr Cooney gave evidence that he then asked for an updated quote (and given that one was provided shortly thereafter it is likely he did) but there is no suggestion that at this meeting Mr Cooney told Mr Pizzolato not to work on the Building C soldiers. Given that it was clear from the correspondence that Mr Pizzolato was waiting on these drawings for some of the work that he would be doing on the soldiers, it would be expected that Mr Cooney would have made it plain if he considered that there was no agreement to fabricate or that he had not given a direction to fabricate at this time.

116. Seventh, the primary judge at [152] attached significance as to construction to the fact that C&V had not (on the evidence) commenced welding until 23 July 2018. That does not, however, suggest that C&V were waiting for a direction from C&V before it started fabrication. For the reasons set out above there is no reason to regard fabrication as limited to welding. Moreover, of itself, the fact that welding had not commenced does not suggest that C&V was acting on an assumption that the contract to fabricate was conditional. In any event, the email communications from C&V, in particular that on 18 July 2018 at 10.20am, are inconsistent with C&V having such an assumption.

117. Eighth, it was not until after C&V provided the quotation for Building C on 26 July 2018 at 8.00pm that Mr Cooney told Mr Pizzolato that he could not give him the work on Building C, and by later email, told him “please DO NOT work on any more soldiers.” Contrary to the conclusion of the primary judge, the sending of the quotation does not indicate that C&V considered that the contract to fabricate was conditional upon a direction being given to fabricate. It indicates nothing more than that C&V were then in a position to provide a final figure as to costs and, as requested, sent through a quotation.

118. I attach no significance to Mr Pizzolato’s evidence as to what happened at the 1 August 2018 meeting nor to the terms of the 1 August 2018 email from Mr Cooney. The primary judge preferred the evidence of Mr Cooney to that of Mr Pizzolato as to what happened at this meeting. There is no basis to overturn that finding of fact.

Object and purpose of the contract

119. It is clear from the communications between the parties, as set out above, that the commercial object and purpose of the contract was to enable Metropolitan to comply with its own obligations to have soldiers on site for Building C as required by RCC, to enable excavation and construction of Building C to continue without delay and for C&V to undertake tasks, for which it would be paid, to enable that to happen. That commercial object and purpose supports the construction that I have reached on the basis of the communications of 5 July 2018, and which is reinforced by the post-contractual conduct.

Conclusion as to Building C

120. As set out above, in my judgment there was a contract between C&V and Metropolitan for C&V to procure materials and fabricate soldiers for Building C, with price, design details and the number of soldiers to be agreed at a later date, as updated drawings became available. It follows that the appeal should be allowed on grounds 1 and 2 of the NOA. In these circumstances, it is unnecessary to consider ground 3 which was advanced in the alternative to grounds 1 and 2.

121. It is therefore appropriate that the question of the quantum of damages for breach of contract to be awarded to C&V in respect of the contract for Building C should be remitted to the trial judge.

Administration charges for Building B

122. As set out at [71] above, the claim for the administration charges for Building B rests upon one invoice in which those charges are raised, and upon the Standard Terms and Conditions of C&V.

123. That evidence does not suffice to establish a proper basis under the contract for claiming additional sums by way of administration charges. As the primary judge found at [183] there is no reference to administration charges in the Standard Terms and Conditions. Further, the matters for which the charge was said in the invoice to be levied appear to fall within the ambit of the labour rates as set out in the Standard Terms and Conditions in any event.

124. In those circumstances, ground 6 of the NOA should be dismissed.

GST in respect of Building B

125. Given the agreed position of the parties, C&V should succeed on ground 4 of the NOA. Consistent with the proposed orders provided by the parties jointly, the judgment sum awarded to C&V in respect of Building B should be increased from $42,438.62 to $50,783.28.

Notice of contention

126. It necessarily follows from my conclusion as to construction that I would dismiss ground 1 of the NOC.

127. Given my findings at [125] it is unnecessary to consider ground 2 of the NOC.

Conclusion and orders

128. It follows from my conclusions as set out above that the appellant should succeed in substance on the claims it makes as regards Building C.

129. The primary judge held that the appellant was entitled to its costs in relation to the Building B claim, but that Metropolitan should have its costs in relation to the Building C claim: C&V Engineering v Metropolitan (No. 3) [2022] NSWDC 421 at [30]. I see no reason to depart from the primary judge’s conclusion as to costs as regards the Building B claim. In light of my conclusions on the appeal, the appellant is now also entitled to its costs below for the Building C claim. It follows that the appellant is now entitled to the whole of its costs below. This should be limited to the period up to 21 September 2022. Any further costs in the proceedings should be the subject of a further costs order.

128. In my judgment the appellant is also entitled to its costs of the appeal. The written and oral submissions were devoted almost entirely to the issues relating to the Building C claim. The appellant’s failure on its ground relating to the administration charge for Building B does not, in my judgment, warrant any qualification to its entitlement to costs.

129. If any party wishes to be heard in relation to a different order as to costs, taking account of any offers made, they may apply within the 14 day period specified in r 36.16 of the Uniform Civil Procedure Rules.

130. The following orders should be made:

1. Allow the appeal in part;

2. Set aside the orders made on 21 September 2022;

3. Declare that on 5 July 2018 the appellant and respondent made a contract for the appellant to procure and fabricate soldiers for Building C and that contract was not conditional upon any further direction to fabricate being made by the respondent;

4. Remit the issue of the quantum of damages for breach of contract as regards Building C to the trial judge on the basis that it is a matter for the trial judge whether to refer that issue to a referee;

5. Note that C&V is entitled to have the judgment sum in respect of Building B increased from $42,438.62 to $50,783.28 together with pre-judgment interest under s 100 of the Civil Procedure Act 2005 (NSW) from 24 July 2018;

6. Order the respondent to pay the appellant’s costs of the appeal; and

7. Order the respondent to pay the appellant’s costs of the proceedings at first instance.

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Amendments

24 July 2023 - minor bolding fix in headnote.

24 July 2023 - Minor changes at [20], [23] and [82].

Decision last updated: 24 July 2023