Caboolture Park Shopping Centre P/L v White Industries (Qld) P/L
[1989] FCA 232
•18 May 1989
TOT FOR nTSTRTBUTTON
JUDGMENT No. 4.3.31..8%
a THE FEDERAL COURT OF AUSTRALIA)
)
QUEENSLAND DISTRICT REGISTRY ) No. G198 of 1986 1 GENERAL DIVISION )
BETWEEN: CABOOLTURE PARK SHOPPING
CENTRE PTY. LTD.(Applicant) AND : WHITE INDUSTRIES (QLD)
PTY. LIMITED(First Respondent) AND BETWEEN: CRESTLITE GLASS &
ALUMINIUM PTY. LTD.
(Fifth Cross-Claimant)
AND : WHITE INDUSTRIES (QLD.)
PTY. LTD.(Seventh Cross-Res~ondent)
Coram:
Date :
Place:
The fifth cross-claimant, Crestlite Glass & Aluminium Pty. Ltd. ("Crestlite"), was one of some forty sub- contractors engaged by White Industries (Qld.) Pty. Ltd. ("WIQ") in the construction of the Caboolture Park Shopping Centre. It was required, in the words of the schedule to the sub-contract, to supply and instal "all aluminium and glazing
other sub-contractors, Crestlite has been joined as a
including mirrors and glazing to balustrades". With eleven
respondent to these proceedings, which were instituted by the applicant, Caboolture Park Shopping Centre Pty. Ltd.
("Caboolture Park"), against WIQ as head contractor. At the time of the separate hearing in respect of issues pertaining to the sub-contract of, and the performance of work by
Crestlite, Caboolture Park's allegations against WIQ as pleaded in its amended statement of claim were that it had been guilty of misleading and deceptive conduct in contra- vention of 6.52 of the Trade Practices Act 1974, and further or alternatively negligent and fraudulent misstatement in making representations about the ultimate cost of erecting
the shopping centre, and the ability of WIQ to keep that cost within a budget of $13,375,000. Caboolture Park's amended reply and answer, in the form it was when the issues pertaining to Crestlite were litigated, contained the following specific pleas in relation to those issues.
By paragraph 14(c) (ii) of that version of the reply and
answer Caboolture Park alleged that:
"(ii) The Respondent provided to potential Sub- contractors, prior to the execution of Sub- contracts, information (including Bills of Quantities) which was incomplete and incorrect, with the consequence that work which ought to have been comprised within such Subcontracts was not so comprised, the Respondent was required to direct the relevant Subcontractors to undertake additional work to fulfil the Respondent's obligations under the Agreement referred to in paragraph 2 of the Amended Statement of Claim, and such additional work became the subject of variations and increases in provisional sums which form part of the total sum demanded by the Respondent of the Applicant pursuant to that Agreement. The amounts of such variations and increases in provisional sums are as follows:-
Trade Approximate amount claimed
by the Cross-Applicant
because of the above
. . .
(d) Aluminium Framework $427,000.00
. . .
The said conduct on the part of the Cross- Applicant was negligent, in that it is the usual practice within the building trades generally for head contractors to provide to proposed Sub- contractors the plans and specifications under the head contract relevant to the proposed sub- contract works, to allow such proposed Sub- contractors to determine for themselves the scope of the work to be performed; it is not in accordance with the usual practice within the building trades generally for a head contractor to provide to such proposed Subcontractors a Bill of Quantities or other information describing or defining the scope of the subcontract works.
Further, the Cross-Applicant was negligent in preparing a Bill of Quantities and other information for the provision to Subcontractors which was incomplete or incorrect, and which was not consistent with the plans and specifications under the agreement referred to in paragraph 2 of the Amended Statement of Claim."
A further relevant allegation of negligence on the part of WiQ was contained in paragraph 14(c)(v) in these terms:
"(V) The Cross-Applicant failed to ensure that supplies of materials for the performance of work by Subcontractors were available as and when required, by failing to schedule the ordering of such supplies in sufficient time to co-ordinate with the performance of subcontracts works. The said conduct on the part of the Cross- Applicant was negligent, in that it was the usual practice within the building trades generally for a head contractor to order supplies in sufficient time to ensure the delivery thereof to co- ordinate with the performance of subcontract works. As a consequence of the Cross-Applicant's said negligence, the following variation claims by Subcontractors have been incurred which would not otherwise have been incurred:- ...
(e) variation claim No. V14/05
I
. . .
There were also two references to variation orders in respect of work done by Crestlite in paragraph 14(c)(vii)A which read:
"The Cross-Applicant made variation claims or allowed such claims to be made which related to works comprised within the works originally provided for in the Agreement referred to in paragraph 2 of the Amended Statement of Claim.
The said conduct on the part of the Cross- Applicant was negligent, in that it was the responsibility of the Cross-Applicant under the said Agreement (and, in particular, Clause 6.01 thereof), and further or alternatively it was the usual practice within the building trades generally for a head contractor to ensure that variations not be claimed in respect of works which are comprised within the plans and specifications under the head contract.
As a consequence of the Cross-Applicant's said
negligence, the following variations have been incurred which would not otherwise have been incurred:-
. . . ( q ) variation claim No. 14/04
(r) variation claim No. 14/05
Additionally, it was alleged in paragraph 14(c)(xi) that WIQ had claimed or allowed to be claimed variations involving double-counting of the same work, including in respect of work said by W I Q to have been done by Crestlite:
(f) the work claimed in variation claim No. 14/05 is also included in variation Nos. 14/04 and 45/218
(h) the work claimed in variation claim No. 42/09 is also included in variation Nos. 14/04 and 45/218
By its cross-claim filed on 30 March 1988 (as amended by leave granted in the course of these proceedings) Crestlite now claims from WIQ moneys it alleges are out- standing under the original sub-contract and those arising as a result of variations thereto. WIQ, in turn, by its cross- claim (as amended) filed on 10 April 1987, seeks a similar amount from Caboolture Park. Mr Fraser, of Counsel for WIQ, accepted that Crestlite is entitled to recover from WIQ those amounts to which Caboolture Park has conceded Crestlite is entitled as properly included within the sub-contract or arising as a result of authorized variations. However, in respect of any claim as to which Caboolture Park disputes w1Q.s entitlement, wIQ has denied liability to Crestlite on
WIQ also invokes c1.5(b) of the sub-contract which provides the corresponding claim against it by that sub-contractor. that "~rogress payments shall only become due seven ( 7 ) days after the receipt of payment of the amount of the Sub- Contractor's account by the Company [WIQ] from the Principal [Caboolture Park] pursuant to the provisions of the Head Contract". It contends that, by virtue of that clause, it is not obliged to pay Crestlite any outstanding amounts unless and until they are received from Caboolture Park.
Crestlite. by para. 16 of its amended cross-claim, has pleaded, in the alternative, that "if on the true construct- ion of the sub-contract only that amount of Crestlite's
account actually paid by Caboolture Park to White is due and owing to Crestlite by White, Crestlite says that on or about 7 November 1986 Caboolture Park paid the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) to White which White has failad to pay to Crestlite and which amount remains outstanding".
It is common ground, as between the three relevant parties, that the original price under the Crestlite sub- contract was $552,000. Further, it is accepted that WIQ made payments to Crestlite totalling $151,525 on 8 August 1986 ($9,900); 9 September 1986 ($9,450); 10 October 1986 ($124,200) and 19 December 1986 ($7,975). There remains in dispute a number of variations in respect of work done by Crestlite on levels 4 and 5 of the shopping centre.
The first disputed variation concerns the addition of three glazed panels to a lift-well within the shopping
centre. For this variation Crestlite claims $639, the quantum
of which is accepted by both WIQ and Caboolture Park. Crestlite undertook the work as the result of a site instruction dated 22 October 1986 issued by WIQfs project manager, Mr Rickards, to "4. Provide 6 mm Georgian W/C glass to Lift Motor Room view windowsn.
As between Crestlite and WIQ, it is clear that Crestlite is entitled to that amount unless, on the proper construction of the sub-contract, it was obliged to provide the panels in the lift-well as part of what was included in the sub-contract price. Evidence was given by the managing director of Crestlite, Mr Gregory Hannay, that the documents which were supplied to Crestlite for compiling its tender made no reference to these panels in the lift-well. The Crestlite tender was submitted on 9 May 1986. A drawing No. LD 43142 issued by Johns Perry Lifts included the following notation:
"460 X 610 High steel framed vision panels by builder, double glazed with clear 6 mm, Wired Georgian glass. "
However, I find that this plan, approved by Lynch &
Blow Pty. Ltd. ("Lynch & Blow"), Caboolture Park's
architect, which marked it with the date "4/4/86", was not
Crestlite tendered. Accordingly, Crestlite is properly included in the drawings and specifications on which entitled to this amount as a variation. when cross-examined by Mr Perry of Counsel for Caboolture Park, Mr Hannay indicated that, had he been required to price the provision of glazed panels to the lift- well before doing the work, he would have attributed to that work an amount of $420 instead of the $639 actually charged. He explained that difference by saying that the need to lower men, equipment and materials to the bottom of the lift well would not have been apparent to an estimator asked to price the work before it was done. That evidence was relied on by
nr Perry as supporting a conclusion that WIQ had been negligent in not obtaining a price from Crestlite for the lift-well panels shortly after the need for them became apparent or ought to have been apparent to WIQ in or about April 1984. However, I am not prepared, solely from the evidence of nr Hannay as outlined above, in the absence of evidence as to some practice which should have been followed by a reasonably prudent and competent building contractor in the circumstances prevailing on this project between May and October 1986, to infer that WIQ was negligent in commission- ing the provision of the lift-well panels in the way it did. I refer also in this context to Mr Hannay's evidence that "no-one would expect the windows to be called for in the bottom of the lift-well" and that he had not installed any similar panels in the course of 20 years as a glazing contractor.
The second variation, for which Crestlite claims $2555, is referable to the supply and installation of mirrors in bathrooms at the shopping centre. The relevant provision in the specifications was:
"Mirrors ... to extend continuously for full run of handbasin in all toilets. 800 mm high in Women's toilets and 1.000 m high in Men's toilets mounted 1.000 m above finished floor level."
It is apparent that this description does not indicate either (a) the number of mirrors required or (b) their size as the total width of the handbasins was not specified. In effect, only the height was given. M Hannay, after con- sulting the plans in vain for the requisite information, telephoned Mr Barry Norton, the site administrator for WIQ, who was able to provide details from drawings in his possession. Armed with this information, Crestlite, by letter dated 15 May 1986, quoted an amount of $5014 for the supply and installation of 17 mirrors, having a total area of 22.51 square metres. Just before the work commenced, Crestlite received verbal instructions from WIQ1s site supervisors to instal mirrors larger than those previously specified. It complied with this direction and by letter dated 24 November 1986 raised a variation of $2555 for an increase in the area of the mirrors to 33.98 square metres. The additional cost was arrived at simply by applying the original price, per square metre, to the additional area required. This included an amount of $120 for two additional mirrors Crestlite claims were ordered at a later stage. However, during the course of
abandoned the claim for this amount, because he was unable to cross-examination by Mr Perry for Caboolture Park, Mr Hannay indicate where they had been installed. There is nothing to suggest that the details provided by Mr Norton were incorrect. Nor am I able to find, on the evidence, why the dimensions for the mirrors could not be derived from the drawings and other pre-tender information supplied to Crestlite or why the specifications were changed. The facts only permit a finding that Crestlite was provided with specifications which were later altered and it must therefore be allowed the additional cost of those alterations in the whole of the amount claimed of $2435. Even if the failure to provide Crestlite with sufficient information to enable it to price the mirrors above the handbasins as part of its tender was attributable to some negligence on the part of WIQ, the formula used to calculate the initial cost of $5014 and the additional 11.47 square metres does not justify an inference that Caboolture Park has suffered any damage. One can assume that Crestlite would have charged the same amount, per square metre, for those mirrors as installed if it had included them in the tender on which the sub-contract was based.
The next variation in dispute is related to the supply and installation of a "Cowdroy window" - a sashless window in
a machined timber frame with two panels of thick glass which open sideways by sliding on ball-bearings set into the frame. Windows of this type are commonly used as internal office
windows. The quantum of $340 is accepted by all parties. Caboolture Park, however, contends that the sum is properly included within the tender price and should not be allowed as a variation. Mr Hannay claimed that even if he had seen a drawing or a specification indicating that the window was required (which he says he did not), he would have specifically excluded it from his sub-contract on the basis that Crestlite deals only in "the fabrication of aluminium windows and not timber joinery".
I accept that the "Cowdroy" window was not indicated on the plans and specifications on which Crestlite tendered. Accordingly, for that reason, as against W I Q , Crestlite is entitled to the full $340 as a variation.
I am inclined, on the evidence, to conclude that the "Cowdroy" window was not indicated on the design information available to W I Q when it obtained the Crestlite tender. However, even if W I Q had known then of the need for such a window, there is evidence that the cost of the glass alone is $190, leaving the amount in dispute at $150 for the additional components. Mr Hannay, according to his evidence, would have regarded it as outside the scope of a sub-contract to perform "all glazing as shown on the plans" and would have expressly excluded it from his tender, or have otherwise qualified his tender price.
Accordingly, there is no evidence from which I can find
that Caboolture Park has suffered any damage as a result of
W 1 Q r s failure, if any, to require the supply and installation
of the "Cowdroy" window to be included within the scope of
works required by the Crestlite sub-contract.
Two variations are referable to the supply and installation of special pressings and flashing to window sills in the meat preparation and sale areas of the Coles Supermarket and Holly's Deli. These two areas were divided by a 1.1 m high wall upon which sat 6 mm polished plate glass extending up to the ceiling. The lower end of that glass was set into the window sill, a 150 X 45 mm aluminium box section.
It is convenient to deal first with the side on which
the meat was prepared. A drawing, presumably issued by Lynch
c Blow, contained specifications for both the installation of
aluminium cover plates over the sill and for the finish to be applied to the wall itself. The notation on the drawing in respect of the former was clearly directed to Crestlite and provided as follows:-
0
"1.6 mm aluminium cover plates at 45 to sill"
The notation in respect of the wall finish was to
"provide decorative treatment as required. Finish to be flush with window frame of meat sale area siden. It is unclear precisely to whom this instruction was directed, but plainly not to Crestlite. Further, despite the reference to
the "meat sale area side", an examination of the drawing itself shows that the area it referred to was in fact the meat preparation area. Crestlite, in accordance with the first part of the specification, installed the aluminium cover plates. However, either before or after this was done, tiles were affixed to the wall between the floor and the edge of the sill. It appears that, for some reason when the wall was constructed, no allowance was made for the thickness of the tiles. By virtue of the fact that, as originally installed, the flashing extended only to the edge of the sill on the aluminium box section and the "decorative treatment" was not "flush with the window frame", the edge of the tiles was exposed creating a ledge upon which dust or dirt could settle. It was for this reason that the Health Department declined to register the area as one suitable for the preparation of meat.
To meet the requirements of the Health Department, WIQ issued to Crestlite a site instruction dated 7 August 1986 containing a direction to "supply labour and materials to trim around windows and doors to the above arean. This necessitated the removal of the original flashing and its replacement with coverplates which extended over the edge of the tiles so as to eliminate the exposed surface. In addition, it appears from Mr Hannay's evidence that trimming was also required around the doors for similar reasons.
For the additional work Crestlite now claims an amount of $960 calculated as follows:
"Pressings to meat preparation door 73.00
Angles 61 m 1 m @ 3.55 217.00 Instal at $10.00/m
The additional charge was based on the value of new pressing6 and angles and labour at the rate of $10 per lineal metre.
I consider that Crestlite has made out this part of its claim on two bases. In the first place I am led to conclude that the tiling was applied to the wall after Crestlite had fitted the original flashing. This view is supported by Mr Hannayvs uncontradicted assertion that "The necessity for this variation arose because the tiling when applied to the Coles detail provided an area on top of the tiles which was unacceptable to the Health Department". Secondly, I consider that Crestlite acted in accordance with the specifications by making the flashing "flush with the window frame". Had provision been properly made for the application of tiles by decreasing the thickness of the walls or some other appropriate method, the need for this variation could have been avoided.
Although it is not entirely clear whether the original specifications were part of the Coles specification or were prepared by Lynch h Blow, WIQ fulfilled its obligations to Caboolture Park by providing them to Crestlite. After the cover plates had been installed as specified, but failed to
meet the Health Department's regulations, WIQ did what was required of it under cl. 6.05 of the head contract under which WIQ had to ". . . comply with the requirements of the provisions of all Acts of Parliaments, ordinances, regulations or by-laws of all competent Authorities and with the lawful requirements of public, municipal and other authorities which have jurisdiction over the Site or the works and which arise by reason of the execution of the
Works, including all Variations ... . 11 A similar variation for which Crestlite claims $450 is related to flashing installed between the glass and the freezers in the meat sale area itself. Initially, it was installed in the same way as was the flashing in the meat preparation area. However, as installed in the meat sale area, it failed to satisfy the Health Department which required the cover plates to come down from the plate glass and extend over a stainless steel lip affixed to the back of the freezers. As a result, the original flashing had to be removed, and a continuous piece of aluminium was fitted which extended from the plate glass, down and then out so as to accommodate the lip on the freezer. It appears this alteration was first effected before the freezers were in place. As a result, the job had to be repeated when it was discovered that the freezers could not be fitted as close to the wall as originally intended with the result that there was still a gap between the pressing and the rear of the freezer. Further, the problem could not be resolved by merely adding a piece of aluminium sufficiently wide to span the gap; a continuous piece was required by the authorities.
For reasons similar to those outlined in respect of the cover plates in the meat preparation area, Crestlite is entitled to the full amount of $450 which it claims for this item. Similarly, I have been unable to discern any basis in the evidence for the contention that this additional charge would not have occurred but for some negligence, omission or other shortcoming on the part of WIQ.
The final variation to level 4 is related to the deletion of sections of glass in a number of shopfront windows. Mr Gillespie, who was, at the relevant time, in charge of commercial fabrication for Crestlite, gave evidence that the original specifications indicated that all those windows were to be entirely of glass. During negotiations preceding the tender, Crestlite was instructed that the shop fronts were to be similar to those at the Scarborough Fair Shopping Centre on the Gold Coast. Accordingly, Mr Gillespie took photographs of the windows at that Centre as an aid in reproducing its windows at Caboolture Park and to obtain information with which he could complete his tender. Upon noting that in certain sections of the windows, signs or sign boxes displaced the glass, Mr Gillespie asked whether that was to be repeated at Caboolture. In the absence of any response to his enquiry, he ordered material in accordance with the original specifications. This included a number of lengths of aluminium beading, approximately 20 X 15 mm with a radius at one corner so that the glass might be held in place. It was then painted to Caboolture Park's
specification in a colour described as "Red Earth". It was later decided, presumably by tenants who were to
occupy the shops, to incorporate signs and sign boxes in the
shopfront windows. A shop drawing, CP/1852/DI dated 16 July1986 was produced by Crestlite after Lynch & Blow asked for an indication of how this could be achieved. A copy of the drawing was provided to WIQ under cover of a letter of the same date.
By a further shopdrawing (No CP1903-l(B)) dated 25 August 1986, Lynch & Blow approved the deletion of a 600 mm
wide strip of glass from the fronts of shops 17, 18 and 19, so that a light box might be installed in its place. The light box itself is set into a timber frame which is then inserted into a frame in the shopfront. That frame extended for the entire length of the shops at a height of between 6 and 8 feet from the ground. Although Crestlite was responsible for designing these details it was not to undertake the work itself.
As a result of the installation of the light box and the deletion of the glass, the aluminium beading was no longer necessary. However, between the time when Crestlite's
tender was accepted and the decision to instal the light boxes was made, the material had been produced and painted. Some had been used in shopfronts in which light boxes were not installed, but Crestlite now claims that a large amount of beading, to the value of $1236, became redundant and that Crestlite is entitled to payment for that material. On the
other hand, a credit had to be raised by Crestlite for the glass quoted in its tender (including a glazing strip), but not used. This is accepted by all parties as amounting to $3523 ($2899 for the glass and $633 for the glazing strip). It is further accepted that if the beading did become redundant, it could only be disposed of as scrap for an amount equal to 10% of its real value. Accordingly, Crestlite has contended that the total credit which it should allow WIQ is the sum of the amount for the glass not used, plus 10% of the value of the allegedly redundant beading, amounting in all to $3656. On the other hand, if the surplus beading retained its full value, Crestlite should allow the larger credit of $4759.
Although he was strenuously cross-examined by flr Perry about the possibility of using the surplus material in other parts of the project, Mr Gillespie did not resile from his assertion that quantities of similar material for use at other locations had already been delivered to Crestlite. On reviewing the evidence as a whole, I am satisfied that the surplus material was not simply discarded by Crestlite with no regard to the possibility of using it elsewhere. For that reason, and having regard to considerations outlined below in relation to material acquired for shopfronts on level 5 which similarly became unusable, I find that the aluminium sections originally intended for use in the level 4 shopfronts in fact became redundant and thereafter were worth no more than their value as scrap. Crestlite must therefore allow a credit for the relevant variation in the amount only of $3656.
The only variation to level 5 remaining in contention was for the value of material ordered by Crestlite, but alleged to have been made redundant by a design alteration. The amount involved is $9335, with all parties agreed that, if rendered worthless except for scrap, the material should be written down like that discussed above to 10% of the value it would have had had it been usable.
Originally, level 5 was to be a concrete platform, with a 1.5 metre wide walkway completely surrounding it. The shop fronts were to be on the inside of this walkway with floor to ceiling windows and doors permitting access to the shops. To suit the requirements of a prospective tenant of a large area on that level, the walkway was dispensed with and the walls which would have been shopfronts were moved out to the perimeter of the building. A concrete upstand was constructed upon which the windows were placed. In the result, not only were the windows shorter, but it was no longer necessary to make provision for doors. Although the amount of aluminium used was increased because of a reduction in the space between the mullions, or centres, from 2.5 metres to 1 metre, Crestlite contends that the aluminium already ordered could not be utilized, either on Level 5 or elsewhere.
Before it was notified of this change, Crestlite had made an advance order of the material which it originally required for level 5. Two different types of sections were to be used, one a reddish brown colour, the other a dusky
pink. The sections were manufactured and then painted to Caboolture Park's specification. WIQ first received written notice of the proposed
design change by a site instruction No 18 dated 25 June 1986from Lynch & Blow. This was expressed to be "confirmation of verbal advices and instructions given to B. Norton" and
contained the following directions:
"Level 5 - Ensure all involved sub-contractors have been advised by Whites of
intended amendments
- Glass shopfronts to be relocated to
outer edge of walkway (walkway is
deleted)
- Handrails deleted ... "
A further site instruction (No. 28) was issued by Lynch &
Blow on 28 August 1986 to WIQ advising it to "'Holdf all shopfront fabrication around the 'Medical Clinic' area until
further notice - the further notice will be given as soon as
possible." By letter of the same date, WIQ notified
Crestlite as follows:
I Please be advised of Architect's Site
Instruction No. 28 dated 28th ~ugust, 1986. All works connected with the areas detailed therein are to be adjusted as described.
Where 'HOLDSf have been placed on areas of work these will be advised as soon as the revised drawings and/or instructions are to hand."
Crestlite claims that, as a result of these design
changes, much of the material ordered for the original design
became redundant, being unsuitable for use in the
modifications. Evidence was also given by Mr Hannay that material in the colours and section shapes specified has not been used by his company, either before or since the construction of the shopping centre. Nor has he been able to entice any other customer to use it. Even if a use could be found for material extruded in those sections, it seems that it could not satisfactorily be repainted.
On this evidence, I am satisfied that there is no reasonable prospect of Crestlite's using this material, either now or in the foreseeable future. I am supported in this view by the fact that, despite attempts by Mr Hannay to dispose of it, it remains unsold after two years.
I accept the evidence of Mr Gillespie which was substantially unchallenged that:
11 ... In actual fact, the job stopped and started
three times on level 5. We had started from the original contract - naturally you get your shop drawings done and get the materials ordered, because that is your biggest problem, obtaining material in time for the work. The first thing we got then was a hold on level 5, through some negotiations that were going to take place just through the tenant. It then got the go ahead - I am not sure exactly what the change was at that point of time. From my memory as to what happened at this point in time, but as far as I know they were changing it from offices to a single tenant area, which meant the elimination of a walkway completely around level 5 area and moving the shopfronts out then to form a facade arrangement right on the edge of the slab.
... And we made the alteration. We got the
information as to what was going to go on. We modified our drawings accordingly and revised - put a hold on, as soon as we knew the changes were going on, we put a hold on all material that
Alcan, and once it leaves Alcan it goes then to had not been processed at that point in time from the painters, and the painters basically, because it is in such volumes, they are wacking it through as quick as they are getting it. At that point in time we had received some of the material anyhow, and it was a case of weighing up what could be used and what could not be used. The job then proceeded - got the go ahead to go again. We re-ordered the material that could be changed to different quantities and differrent types, and then again we got a second hold. We do not - like, this is to do with White Industries and their clients in that regard, what went on with the tenancy problem.
... Well, because it went from doors to just basically fixed panels, there are certain sections that you just do not use. Like, there is sections you use with doors and sections you do not use with doors. Consequently unfortunately a lot of the material that was turning up was material that Alcan - they choose what they run to suit their own production schedules and, unfortunately it happened to be material we just could not use, like door material. The side jambs that no longer cobld be used, because there was not the quantity of that material needed any more. "
That being the state of the evidence on this issue, I am unable to find that anything more could reasonably have been done by Crestlite or WIQ to reduce further the wastage of materials caused by the design changes to level 5. Accordingly, Crestlite is entitled to the net value of the unusable material, agreed in the sum of $9,335.
In the result, therefore, there is owing to Crestlite an amount of $439,630 made up of:
Original sub-contract price Less paid by WIQ to 19/12/86
Plus net variations
(agreed or allowed in accordance
with these reasons as follows):
AGREED ALLOWED
Level 4 (3,656) 2 2,432
3 1,276
4 639
5 490
6 299
7 10,808
AGREED ALLOWED
8,9,15 and 16 2,538
10 460
11 22,186
12 (3,780)
13 450
14 1,120
17 18 19 20 21 22 23
Level 5
1 (81,315)
2 (20,117)
3 5,283
4 75,861
5
6 8,453
7 802
It remains only to consider the argument advanced by Mr Fraser on behalf of WIQ as to the effect of cl.5(b) of the Crestlite sub-contract. To provide the full context in which that sub-clause should be viewed, I set out the whole of
"5. PAYMENTS
(a)
The Company shall pay the Sub-Contractor the monies stated or referred to in the Fourth Schedule of the Agreement to which these Conditions are annexed (subject to additions and/or deductions made pursuant to this Sub- Contract) by payments made progressively during the execution of the works.
(b)
Progress payments shall only become due seven (7) days after the receipt of payment of the amount of the Sub-Contractor's
account by the Company from the Principal pursuant to the provisions of the Head Contract.
(c) The Company shall deduct from progress payments by way of retention ten (10) percent of the value of each progress payment until such time as the moneys so retained equal ten (10) percent of the Contract Price. The moneys so retained shall, subject to the provisions of this Sub-Contract, be held by the Company until the Company shall have certified that the Works have been fully and satisfactorily completed. (d) Before receiving any progress payment, the Sub-Contractor shall, if required by the Company, deliver to the Company a statement in writing signed by the Sub-Contractor that no wages are due and owing by the Sub- contractor in respect of the Works, and shall immediately after receiving such payment, deliver to the Company a receipt for it. (e)
After satisfactorily completing the Works the Sub-Contractor shall furnish to the Company a statement of its final account and the Company, if satisfied therewith and in exchange for a release in such form and with such provisions contained therein as may be required by the Company of all claims against the Company arising under or by virtue of the Sub-Contract shall issue a statement showing the amount due to the Sub-Contractor and payment of such amount shall subsequently be made by the Company to the Sub-Contractor.
(f)
The Company may from time to time and at any time prior to the completion of the Head Contract Works by a notice in writing make any correction or modification in any previous notice, direction or certificate relating tothe Sub-Contractor's entitlement to progress payments which shall or may have been issued or given by it, and shall have power to withhold any notice, direction, certificate or approval relating to the Sub- contractor's entitlement to a progress payment or any part thereof if the Works are not being carried out to its satisfaction.
(g)
The making of any progress payments to the Sub-Contractor in connection with this Sub- Contract shall not be taken as a proof or admission of any particular work or the Works having been constructed or executed to the satisfaction of the Company or of the value thereof or of any work or the Works having been constructed or executed in accordance with the Sub-Contract, but shall be taken to be payment on account only.
(h)
No claim by the Sub-Contractor by way of interest for or on account of any moneys shall be recognised allowed or certified to under any circumstances whatever."
Mr Fraser pointed also to c1.3A which provides by sub-cl1 (i) and (ii):
"3. PROVISIONS OF HEAD CONTRACT INCORPORATED
HEREINn
A
(i) Except to the extent that they are strictly inconsistent with the express provisions of this Sub-Contract all provisions of the Head Contract as may be applied and/or related to the Works and to the rights and obligations to be observed performed and complied with by the Company and the Principal under the Head Contract in relation to the Head Contract Works and in particular the Works shall be deemed to be included in and to form part of this Sub-Contract
which shall be read as though such provisions of the Head Contract were (mutatis mutandis) expressly set forth herein. And in particular (without limiting the generality of this Clause) the provisions of the Head Contract which govern the rights and obligations of the Principal and of the Company one with the other shall govern (mutatis mutandis) the corresponding rights and obligations of the Company and the Sub- contractor one kith the other in respect of this Sub-Contract. (ii) Where the provisions or any part(s) thereof of this Sub-Contract are silent on any matter(s) or thing(s) which are dealt with in the provisions of the Head Contract then, to the extent of such silence, the provisions of the Head Contract shall likewise apply to and shall be deemed to be incorporated into this Sub-Contract by virtue of
paragraph (i) hereof."
The Fourth Schedule to the sub-contract is not entirely clear but its obscurities have no bearing on the present issue. It is in these terms:
"FOURTH SCHEDULE
Period for progress payments: CALENDAR MONTH (if nothing stated calendar month)
Form of security under Head Contract:
Period of claim for payment (if nothing stated as
per clause): CLAUSE 5(b) Percentage of progress payments to be withheld or form of security in lieu of retention. (If nothing stated 10% of contract sum stated in the
First Schedule): 10% Limit of retention fund or Bond 10% (If nothing stated 10% of contract sum stated in
the First Schedule)
Release of Retention CLAUSE 5 (if nothing stated as per clause 5)
Defects Liability Period 12 MONTHS (if nothing stated 12 months)
add for each separable part Stage 1
Stage 2
Stage 3
Stage 4
(if nothing stated 12 months)"
Clause 5(a) establishes a right in the sub-contractor
to receive progress payments. Sub-clauses (h), (c) and (d) each impose conditions on that right. The condition imposed by c1.5(b) is that a progress payment is not payable until seven days have elapsed after WIQ has received payment from Caboolture Park of the amount of the sub-contractor's
account. That condition is expressly attached only to the right to receive "progress payments" and I can discern no warrant in either the sub-contract or the head contract for extending it to the sub-contractor's right to be paid anything even after presentation of the final account.
It is true that the sub-contract contemplates that Caboolture Park will pay to WIQ, promptly after receipt and approval by Caboolture Park through the Architect of the sub-contractor's account for a progress payment, the amount of the account so approved less a retention sum of 10%. That reflects sub-c1.10.01 of the head contract which envisages that WIQ should submit a monthly claim for a progress payment showing, amongst other things, WIQVs valuation of the work executed to the date of that claim. By sub-c1.10.02, the Architect is required, within ten days of receipt of progress claim, to assess the value of work executed and unfixed
materials delivered, and to issue a Progress Certificate against which payment must be made by Caboolture Park within 14 days of presentation by WIQ of the Certificate (c1.10.07). By contrast with sub-cll.(a), (b), (c) and (d), of clause 5 of the sub-contract, sub-cl.(e) deals not with progress payments, but with the sub-contractor's entitlement to be paid the amount specified in its final account. That entitlement is expressed to be conditional in the first place upon WIQ being satisfied with the final account and obtaining, if it requires one, an acceptable form of release from the sub-contractor. Secondly, the sub-contractor, after presenting its final account, is only entitled to the amount shown on a statement issued by WIQ as due to the sub- contractor. WIQts obligation to issue such a statement by assisting in the identification of a dispute or difference between WIQ and the sub-contractor is in aid of c1.8 which provides for the submission to arbitration of any question, dispute or difference. As I construe sub-cl.5(e), wIQ is bound, within a reasonable time after issuing its statement to the sub-contractor, to make payment without any deduction of the amount shown on the statement other than the 10% to be retained for the defects liability period referable to that sub-contractor. Significantly, the obligation on WIQ to pay the balance of the amount due at the end of that period does not reflect any corresponding right in it under the head contract to receive a further payment from Caboolture Park. Thus, if a sub-contractor had carried out all that was required of it at an early stage of the head contract works,
that sub-contractor could look to WIQ for payment of the 10% retention fund in respect of its work long before the expiration of the defects liability period of fifty-two weeks from the date of practical completion specified by the head contract as the time at which the balance of the moneys due to WIQ becomes payable by Caboolture Park.
nr Fraser also sought to derive support for his construction of c1.5(b) from c1.7 of the sub-contract which is in these terms:
" 7 . NOTICES AND CLAIMS
(a) Without limiting the generality of clause 3 hereof, whenever the Company is required by the terms of the Head Contract to give a return, account or notice to the Engineer or to the Principal the Sub-Contractor shall in relation to the Works give in writing to the Company a similar return, account or notice and such other information as will enable the Company to comply with the terms of the Head Contract and shall do so in sufficient time to enable the Company to comply with the said terms punctually. (b) Subject to the Sub-Contractor complyingwith this clause, the Company shall take all reasonable steps to secure from the Principal such financial benefits, if any, as may be claimable in accordance with the Head Contract on account of any adverse physical or latent conditions or artificial obstructions or any other circumstances that may be encountered during the execution of the Works and the Sub-Contractor shall in sufficient time afford the Company all information and assistance that may be requisite to enable the Company to claim such benefits. On receiving payment of any such financial benefits from the Principal, the company shall in turn pay to the Sub- contractor such proportion thereof as may in all the circumstances be fair and reason- able. Save as aforesaid the Company shall have no liability to the Sub-Contractor in respect of any condition, obstruction or circumstance that may affect the execution
deemed to have satisfied himself as to the of the Works and the Sub-Contractor shall be correctness and sufficiency of the Contract Price to cover the provision and doing by him of all things nece6sary for the performance of his obligations under this Sub-Contract.
(c)
If by reason of any breach the Sub- contractor of the provisions of sub-clause (a) of this Clause the Company is prevented from recovering any sum from the Principal under the Head Contract in respect of the Head Contract Works, then without prejudice to any other remedy of the Company for such breach, the Company may deduct such sum from moneys due to the Sub-Contractor under this Sub-Contract."
However, I regard the presence of that clause as a further indication that the right of the sub-contractor to be paid by WIQ after presentation of a final account is independent of WIQ1s recovery of moneys under the head contract. Clause 7(b) is expressly limited to recovery of financial benefits claimable on account of adverse physical or latent conditions or artificial obstructions or other similar circumstances. It says nothing at all about financial benefits to be derived from execution of the sub-contract works in the ordinary course of things. Moreover, sub-cl.7(c) would be unnecessary if WIQ1s construction of sub-cl.5(b) were correct, since moneys would only become due under the sub-contract after WIQ had recovered under the head contract a sum in respect of the relevant sub-contract works.
Clause 35 of the sub-contract also militates against the construction of cl.S(b) for which WIQ contends. That provides:
"35. STOPPAGE OR SUSPENSION OF WORK
CLAIMS OF SUB-CONTRACTOR
If the Principal with or without cause shall terminate the Head Contract or shall stop or suspend the Head Contract works, or if the Principal shall fail to pay when due any sum payable under the Head Contract, the Company may order the Sub-Contractor to stop or suspend the Works or any portion thereof and the Company shall not be liable to the Sub-Contractor for any such stoppage or suspension and the Sub- contractor shall look exclusively to the Principal for recourse therefore. If and only to the extent that the Principal shall have paid or shall pay the Company for such work as the Sub- contractor shall have completed at the site before the works or any portion thereof was stopped or suspended, the Company will pay the Sub-Contractor for such work.
If the Sub-Contractor shall claim that it is entitled to additional compensation or damages or to an extension of time by reason of any act default or omission of the Company for which the Principal is responsible or by reason of any delay caused by any act default or omission of the Principal, or by reason of any condition beyond the control of either party hereto, the Sub-Contractor shall promptly submit such claim in writing to the Company in accordance with Clause 21 hereof and the Company will on behalf of the Sub-Contractor submit the claim to the Principal. The Sub-Contractor shall co-operate fully with the Company in such submission and in all steps taken in connection with the said claim, shall prepare all supporting data and do all things necessary to present said claim properly, and shall reimburse the Company for all expense incurred by them in connection therewith. If and only to the extent that the Principal shall allow and actually pay additional com- pensation or damages to the Company on account of said claim then the Company will pay the same in full satisfaction of said claim to the Sub- contractor. If any claim of the Sub-contractor is presented to the Principal with claims of the Company or others, the Company's determination as to the amount, if any, allowed and paid by the Principal on the claim of the Sub-Contractor shall be binding and conclusive on the Sub- contractor. The Sub-contractor shall not be entitled to any extension of time for performance of the Works except only to the extent that the Company shall be allowed an extension of time on account thereof by the Principal."
I consider that clause to provide a measure of
protection to WIQ in the event of a failure by Caboolture
That protection would be unnecessary if WIQ1s liability in Park to pay to WIQ an amount due under the head contract. respect of any amount claimable by the sub-contractor were conditional on a payment of a corresponding amount having been made by Caboolture Park to WIQ.
It will be apparent from what I have said so far that I
do not regard sub-cl.S(b) in the context of the whole sub-
contract and the head contract as ambiguous. However, had I
I
been able to detect an ambiguity which rendered available the construction contended for by #IQ, I would have resolved it in favour of Crestlite by applying the principle enunciated by Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129
C.L.R. 99 at 109 and implicitly approved by Stephen J at 114. Unreasonable and inconvenient consequences flow from a construction which defers the liability of a head contractor to pay any part of final sum claimed by a sub-contractor (not being a nominated sub-contractor) until after the head contractor has been paid in full or has received a corresponding amount from the principal.
Accordingly, Crestlite is entitled to recover immediately from #IQ the amount of $439,630 indicated at p.22 above. I shall hear Counsel at 9.30 a.m. on 30 May 1989 on the questions of what orders, including orders as to interest and costs, should be made in the light of these reasons.
I certify that this and the (31) preceding pages are a true copy of the Reasons for Judgment of his Honour Mr Justice Ryan.
IN THE FEDERAL COURT OF AUSTRALIA
) )
NEW SOUTH WALES DISTRICT REGISTRY ) No. N I 7 of 1989
)
INDUSTRIAL DIVISION 1
BETWEEN: THE THEATRE PROPRIETORS' AND
ENTREPRENEURS' ASSOCIATION
First Applicant
CAMERON MACINTOSH PTY
LIMITED
Second Applicant
AND: AUSTRALIAN THEATRICAL AND
AMUSEMENT EMPLOYEES'
ASSOCIATION
Respondent
C O W : WILCOX J PLACE: SYDNEY DATE : 9 NAY 1989
MINUTES OF ORDER
THE COURT DECLARES THAT: 1. Upon the true construction of the Theatrical
Employees (Live Theatre and Concert) Award 1982,
c1.16(e) thereof applies to all casual employees
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