Cabport Pty Ltd v Marinchek

[2013] NSWCA 51

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Cabport Pty Ltd v Marinchek [2013] NSWCA 51

Hearing dates:

25 February 2013

Decision date:

12 March 2013

Before:

Meagher JA at [1];
Barrett JA at [45];
Tobias AJA at [46]

Decision:

(1) Appeal allowed.

(2) Set aside the judgment for the respondent in the sum of $183,331.80.

(3) Judgment for the respondent in the sum of $27,136.44, that judgment to take effect on 19 December 2011.

(4) Set aside the orders for costs made by Olsson DCJ on 19 December 2011.

(5) The respondent pay the appellant's costs of this appeal.

(6) In relation to the costs of the proceedings before Hughes DCJ and Olsson DCJ, if the parties are unable to agree as to the orders to be made and do not file consent orders within 7 days of the date of these orders, the appellant should lodge with the Court and serve within 14 days of the date of those orders written submissions concerning the orders sought. The respondent should then lodge and serve any response within 7 days thereafter. The Court will determine what orders should be made on the basis of those written submissions.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

CONTRACT - building and construction - compromise - whether claims of alleged overcharging by appellant builder had been compromised and released under a settlement agreement between the parties - whether primary judge addressed correct questions given interpretation of settlement agreement adopted by this Court in Marinchek v Cabport Pty Ltd [2010] NSWCA 334 - whether primary judge erred in findings as to respondent's state of knowledge regarding circumstances giving rise to claims of overcharging - claims for recovery of alleged overpayments compromised and released

Cases Cited:

Barclays Bank Ltd v WJ Simms Son & Cook (Southern) Ltd [1980] QB 677
David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353
Marinchek v Cabport Pty Ltd [2010] NSWCA 334

Category:

Principal judgment

Parties:

Cabport Pty Ltd (Appellant)
Scott Marinchek (Respondent)

Representation:

Counsel:
J C Kelly SC, R Zikmann (Appellant)
T Davie (Respondent)
Solicitors:
Norton Rose Australia (Appellant)
Gillis Delaney Lawyers (Respondent)

File Number(s):

2012/84955

 Decision under appeal 

Date of Decision:

2011-12-19 00:00:00

Before:

Olsson DCJ

File Number(s):

2005/296071

Judgment

1. MEAGHER JA: In 2004 and early 2005 the appellant (Cabport) carried out building works on a residential property of the respondent (Mr Marinchek) in Vaucluse, Sydney. There were disputes concerning those works. They included disputes as to the terms of and parties to the contract pursuant to which the works were undertaken, the rectification of defects in the works and Cabport's entitlement to amounts invoiced for the works. Following negotiations, an agreement was made as to the termination of Cabport's engagement as builder and the handover of the building site to a new builder (the Settlement Agreement). That agreement was recorded in email exchanges and, in particular, an email from Mr Marinchek to Cabport sent on 8 March 2005 at 6.05pm and Cabport's response sent at 6.24pm on that day.

1. The principal issue in this appeal is whether claims made by Mr Marinchek against Cabport, by way of cross-claim in District Court proceedings, to recover payments made as a result of alleged overcharging were compromised and released by the Settlement Agreement. That issue arises in an appeal from a judgment of Olsson DCJ. That judgment was given following an earlier appeal to this Court from a decision of Hughes DCJ in the same proceedings.

1. This Court (Macfarlan JA, Handley AJA and Harrison J agreeing) held that on its proper construction, the Settlement Agreement released all claims "in relation to the building agreement that arose out of circumstances then known to the parties": Marinchek v Cabport Pty Ltd [2010] NSWCA 334, esp at [35], [58]; being "claims that arose or might arise out of aspects of the performance or non-performance of the building contract of which [the parties] were aware at the time of the Settlement Agreement": at [46]. Because that question of the parties' knowledge had not been addressed by Hughes DCJ, this Court ordered that there be a new trial of Mr Marinchek's cross-claim insofar as it related to claims in respect of defective work and overpayment.

1. Following that new trial Olsson DCJ held that Mr Marinchek was not precluded from making claims in respect of fourteen specified defects or from recovering moneys paid as a result of overcharging. The latter claim was formulated both before the Court of Appeal (at [59]) and Olsson DCJ (Reasons at [139]) as one for money paid under mistake of fact. Her Honour upheld those claims and gave judgment for Mr Marinchek for $183,331.80. She also ordered that Cabport pay the costs of the proceedings before her, and of so much of the proceedings before Hughes DCJ as related to Mr Marinchek's cross-claim.

1. Cabport appeals from the part of that judgment dealing with the overcharging claims and the costs orders. For the reasons which follow, it is my view that the appeal should be allowed.

1. Before identifying and addressing the specific questions which arise in the appeal, it is necessary to explain the overcharging claims made by Mr Marinchek, to refer briefly to the way in which those claims were dealt with by Hughes DCJ and to consider in more detail how the Settlement Agreement was construed in the earlier judgment of this Court.

Mr Marinchek's claims for recovery of overpayments

1. Mr Marinchek's claim for recovery of overpayments as formulated before Hughes DCJ (Black 2/593, esp at 609) and as upheld by Olsson DCJ (Reasons at [162], [173], [181]), was to recover an amount of $156,195.36, being $75,104.57 for overpayments in respect of subcontractors other than the site foreman, Mr Vaneris; $62,362.57 for overpayments in respect of Mr Vaneris; and $18,728.22 for overpayment of administration and overhead expenses.

1. Each of these claims was made on the basis that the document which constituted the building contract which applied to all of the works undertaken was the Master Builders Association (MBA) Cost Plus Contract and attached special conditions sent by Mr Marinchek to Cabport on about 14 October 2004. That was said to be the result of paragraph 1 of the Settlement Agreement which provided:

"1. We agree that the building works were carried out pursuant to a Cost Plus agreement which was entered into in or about October 2004. The agreement was in the format of an MBA Cost Plus Contract with special conditions endorsed by both parties."

There had previously been an issue between Cabport and Mr Marinchek as to the parties to and terms of the agreement or agreements pursuant to which the building works, which commenced in about February 2004, had been undertaken.

1. In relation to the first two of these claims (to $75,104.57 and $62,362.57), it was said that by invoices rendered over a period from 13 May 2004 to 14 March 2005, Cabport made charges for work undertaken by subcontractors at hourly rates which were only applicable to employees of Cabport. Those subcontractors included Mr Vaneris, in relation to whom the second of these claims was made. It was argued that cl 17 and Schedule 1 Part A(d) and Schedule 2(a) of the MBA Cost Plus Contract provided that the amount payable by the owner in respect of work carried out by subcontractors was to be the amount invoiced or charged by that subcontractor to Cabport but that in its invoices Cabport had charged for that work at specified hourly rates which only applied to its employees. Cabport also added to those charges, as it was entitled to do, a builder's margin of 11 per cent. The amount claimed was calculated as the difference between the amount charged for each subcontractor and the actual cost of that subcontractor plus 11 per cent of that difference. The mistake of fact under which it was said Mr Marinchek laboured was that the persons charged in the invoices were employees or, if not employees, were subcontractors charging Cabport at the hourly rate shown in the invoice.

1. In relation to the third of these claims (to $18,728.22), by invoices issued over the same period, Cabport charged for time spent by Sean O'Sullivan on administration and overhead work. In so doing it was said that Cabport was charging for work for which it was remunerated by the 11 per cent margin and for which it was not entitled to charge separately. The specific provision relied upon as having that effect was paragraph 2(a) of the special conditions (Blue 2/911) forming part of the MBA Cost Plus Contract. That paragraph describes the 11 per cent margin or fee as including administration fees, obtaining quotes from subcontractors, building management and supplying building information and as excluding "all other costs associated with the construction of the dwelling". The amount claimed was calculated as the hourly charges of Sean O'Sullivan, which were described in the invoices as being for "Admin/O-head", plus 11 per cent of those charges.

1. The mistake under which it was said Mr Marinchek laboured in relation to the payment of these amounts was not clearly identified. Mr Marinchek said in his affidavit evidence (Blue 7/2660):

18. While I endeavoured to pay the invoices from Cabport as they were issued I did not realise that [Sean O'Sullivan] was charging separately for administration and overhead work that should have been included in the 11 per cent building margin already contained in the invoices issued by Cabport.

19 I was first able to confirm the duplication of the administration costs and overcharges during the course of the hearing after consultation with my lawyers.

1. It was obvious from invoices issued to Mr Marinchek as early as May 2004 (Blue 7/2702) that Cabport was charging Sean O'Sullivan's time under the item description "Admin/O-head" and also charging the 11 per cent margin under the same description. If Marinchek laboured under any mistake of fact it was not that administration and overhead costs were being charged separately. It was as to an unstated fact, the existence of which would have justified Cabport in making the separate charge. In argument before Hughes DCJ, and by reference to paragraph 2(a) of the special conditions, it was suggested that this fact was that the subject matter of the additional charges made for Sean O'Sullivan was not within the description in that paragraph of the work for which the 11 per cent margin was charged.

The proceedings before Hughes DCJ

1. The Settlement Agreement, among other things, provided (by paragraph 4(vi)) for Cabport to submit a final invoice for unbilled works "for consideration and payment of any monies due". That invoice, No 3138 dated 14 March 2005, was for $23,875.19 and was not paid. Cabport brought the proceedings in the District Court to recover that and other amounts. Mr Marinchek cross-claimed. The respondents to that cross-claim were Cabport, Bernie O'Sullivan (a director of Cabport), his brother Roger, and Sean who was his brother's son. The final form of cross-claim contained claims for breach of contract upon the basis that the building work was defective and that Cabport had delayed in carrying out the works and claims that Cabport had overcharged for the works undertaken. Damages were also claimed for misleading or deceptive conduct and for negligence. The contract claims were made against Cabport and in the alternative against Bernie O'Sullivan and, in the alternative again, against Roger O'Sullivan. The various claims for misleading or deceptive conduct and negligence were made against Cabport and each of the three O'Sullivans. In argument before Hughes DCJ, the only parts of the cross-claim pressed were the claims for damages for defects and for recovery of over-payments. The remaining claims were not pursued: [2010] NSWCA 334 at [53], [54]. The amounts claimed were $58,206.51 for the cost of rectifying defects and $156,195.36 for overcharging.

1. Notwithstanding the way in which Cabport's claim and defence to Mr Marinchek's cross-claim were pleaded, the issues tendered for determination before Hughes DCJ included whether the Settlement Agreement was binding; whether Cabport was entitled to recover the amount of $23,875.19 under that agreement (Reasons at pp 8-9, 13, 15); and whether Mr Marinchek was precluded by the Settlement Agreement from recovering under the claims pressed by way of cross-claim (Reasons at p 9). See also [2010] NSWCA 334 at [49]. Hughes DCJ held that the Settlement Agreement was "intended to be a full and final settlement of the contractual relationship between all the parties" and that the non-payment of the final invoice was a breach of that agreement (Reasons at p 19). He entered judgment for Cabport for $23,875.19 plus interest, dismissed the cross-claim and ordered that Mr Marinchek pay Cabport's costs of the cross-claim.

The earlier decision of this Court as to the construction of the Settlement Agreement

1. This Court allowed the appeal from Hughes DCJ's order dismissing the cross-claim on the basis that his Honour had proceeded on a mistaken view as to the emails which evidenced the Settlement Agreement: esp at [13]. As I have already noted, the Court also held that on the proper construction of that agreement, Mr Marinchek was precluded from making the claims in respect of defects and overpayments if those claims arose or might arise out of circumstances of which the parties were aware at the time of the Settlement Agreement: esp at [35], [46], [58], [59]. In relation to the claim of overcharging, this meant that Mr Marinchek "would have to show that it arose out of a fact discovered by him after the date of the Settlement Agreement and was not therefore the same claim that he made prior to the Settlement Agreement": at [60]. The reference to the claim that Mr Marinchek had "made prior" is to the claim formulated in his letter to Cabport dated 4 March 2005. The terms of that letter and their relevance for the outcome of this appeal are dealt with below.

1. In reaching its conclusion as to the construction of the Settlement Agreement this Court referred in some detail to the written and oral communications which preceded the making of that agreement: [2010] NSWCA 334 at [17]-[45]. Those communications speak as to the context in which that agreement was made and provide an appreciation of its commercial purpose. It was by reference to those matters of context and purpose that the language of the critical emails had to be construed as a reasonable person would have understood it: [2010] NSWCA 334, esp at [36], [37].

1. Disputes had arisen concerning the building works and payment for them. By late February 2005 Mr Marinchek had indicated that he wanted the building works taken over by another builder; that he wanted to agree how any required rectification work should be addressed; and that he wanted to finalise payment of any outstanding invoices. As at 2 March 2005 the issued invoices which remained unpaid were invoices 3086, 3133 and 3134, totalling $228,033.26. The first invoice was a credit note which made debt or credit adjustments to a number of earlier invoices and resulted in an overall credit in favour of Cabport of $4,132.97.

1. Mr Marinchek's letter of 4 March 2005 (Blue 2/778-780) alleged that in the invoices which had been issued over the period of the works, Cabport had charged for work which had not been performed, overcharged for work performed by subcontractors and wrongly charged for rectification works which were due to mistakes or errors on its part. By his email sent at 4.10pm on 7 March 2005 (Blue 2/784), Mr Marinchek proposed a settlement of the three outstanding invoices as well as "all previous invoices and all currently identified rectifications except for the roof, gutters and overflow". The outstanding invoices were to be settled by payment of a sum to Cabport and by Mr Marinchek assuming certain liabilities of Cabport to its subcontractors. The "previous" invoices were to be settled by Cabport foregoing its claim to the balance then remaining due under the three current invoices ($45,232.50). That proposal was said to be subject to "an efficient handover" to the new builder taking place on 10 March 2005.

1. By its response at 5.31pm on 7 March 2005 (Blue 2/783) Cabport indicated it was prepared to allow "a credit of $30,000" from the amount owing under the three invoices and that it would send a "final" invoice for unbilled works to be paid within fourteen days of receipt. As stated in Mr Marinchek's email sent at 5.47pm on 8 March (Blue 2/796-797), there followed further discussions in which that agreed credit of $30,000 was allocated as to $20,000 for "invoice discrepancies" and as to $10,000 for identified "non-roof rectifications". This Court read the reference to "discrepancies" as including "alleged overcharges": [2010] NSWCA 334 at [42]. At the same time a further unallocated credit of $5,166.20 also was allowed by Cabport.

1. By his email sent at 10.24am on 8 March 2005 (Blue 2/781), Mr Marinchek referred to the "speedy resolution of this matter" and noted that "we may never know whether or not there were sufficient grounds for a discrepancy and we will certainly never know whether the contentious tone of our communications was appropriate". Finally, in his email of 8 March 2005 sent at 6.05pm (Blue 2/805-807), which came to record the final agreement of the parties, as this Court noted in its earlier decision (at [40]), Mr Marinchek described the earlier discussions as "concerning the resolution of our differences regarding the building works".

1. The agreement was described as being to "determine" Cabport's contract of engagement subject to the fifteen specific matters enumerated in paragraph 4. They included a payment and assumption of liability by Mr Marinchek in "full satisfaction of invoices 3083, 3133 and 3134" (paragraph 4(iv)) and that Cabport would submit a "final invoice for unbilled works" (paragraph 4(vi)). No mention was made of reopening any of the earlier invoices which had been paid. Those invoices included ones which had been the subject of the adjustments made by invoice 3086. (A number of those earlier invoices, including invoices 3133 and 3134, are sought to be reopened by the claims which Mr Marinchek now makes).

1. These matters of context and the language of their informal agreement confirm that the parties intended to resolve finally their differences in relation to moneys due and to be paid for the work performed and invoiced or to be invoiced. This Court's earlier holding that they released "claims that arose or might arise out of aspects of the performance or non-performance of the building contract" of which they were aware at the time of their agreement ([2010] NSWCA 334 at [35], [46], [58]) although not in those terms, substantially reflects that intention.

1. The references to awareness and knowledge are not to be understood as limited to facts which the parties had direct knowledge of or had the ability to prove in a court of law. Nor do they require knowledge or awareness at the level of detail which would be necessary to justify and establish a claim to a particular amount. This Court's earlier conclusion, consistently with what reasonable persons in the position of these parties would have intended in such circumstances, treats them as having dealt with and resolved claims that had arisen or which "might" arise out of matters of which they were aware.

The decision of Olsson DCJ and the issues in this appeal

1. As I have already noted, Cabport does not challenge Olsson DCJ's conclusion that Mr Marinchek was not precluded by the Settlement Agreement from recovering $27,136.44 by way of damages for the cost of rectifying defects which were not known to him prior to 8 March 2005.

1. Her Honour also upheld the overcharging claims. She held in relation to those concerned with overpayments for subcontractors that whilst Mr Marinchek suspected that those claims may not have been justified, he was not in a position to verify or confirm those suspicions or know what the amounts or likely amounts were (Reasons at [150], [159], [160], [165], [166]). In relation to the claim concerned with administration and overhead expenses, her Honour found that Mr Marinchek did not realise that he had been charged twice for those expenses until well after the Settlement Agreement was made (Reasons at [174], [178]). On the basis of those findings she concluded that none of these claims was precluded; reasoning, it would seem, that they were not precluded unless Mr Marinchek was aware, at the relevant time, of all of the facts which entitled him to formulate and make claims in the amounts sought and had been able to confirm, check or verify to his satisfaction that those facts were correct or could be proved.

1. In the way the grounds of appeal were formulated and argued, the following issues arise in relation to Olsson DCJ's treatment of these claims. The first is whether her Honour addressed the correct factual questions having regard to the construction of the Settlement Agreement adopted by this Court in its earlier decision. The second issue, which is related, is whether Olsson DCJ erred in the findings she made as to Mr Marinchek's knowledge in relation to those claims. The third issue only arises if any of the overcharging claims is not compromised and released by the Settlement Agreement. In relation to each there would then arise a question as to whether Cabport was legally entitled to receive the amounts claimed by the invoices because moneys cannot be recovered as paid under a mistake of fact if the recipient was legally entitled to receive them: Barclays Bank Limited v W J Simms Sons & Cooke (Southern) Ltd [1980] QB 677 at 695; David Securities Pty Limited v Commonwealth Bank of Australia [1992] HCA 48; 175 CLR 353 at 376. In relation to this issue Cabport argued that it had the benefit of an issue estoppel arising from Hughes DCJ's holding that the "initial agreement" between the parties was in different terms from the later MBA Cost Plus Contract and that under the terms of that earlier agreement it was entitled to charge as it had.

1. A number of further or related questions might also arise if it was necessary to consider whether her Honour erred in holding that Mr Marinchek was entitled to recover on the basis of mistake. They include whether any alleged mistake based on a perceived liability under the MBA Cost Plus Contract could have been operative in relation to payments made before October 2004; whether there was any operative mistake established in relation to the overpayment claim for administration and overhead expenses; and whether Mr Marinchek is estopped, by reason of Hughes DCJ's judgment, from maintaining that he was not liable for any of the amounts included within Cabport's last invoice, No 3138 which was the subject of that judgment. Not all of these questions were squarely addressed in argument. Fortunately, as will become apparent, it is not necessary that they be addressed.

Did Olsson DCJ address the correct factual issues having regard to the proper construction of the Settlement Agreement?

Did Olsson DCJ err in her findings as to Mr Marinchek's knowledge?

1. It is convenient to address these issues together.

1. The construction of the Settlement Agreement adopted by this Court precludes claims of overcharging in invoices if those claims arose or might arise out of circumstances of which the parties were aware at the time of that agreement, and irrespective of whether those claims had been made or foreshadowed at that time.

1. That construction required that her Honour address, by reference to the overcharging claims, whether they arose or might arise out of matters of which the parties were aware at the relevant time. In this context, a claim will arise out of factual circumstances or matters if it originates in or results or proceeds from those matters. Her Honour did not address that question in relation to any of these claims and erred in not doing so.

1. When dealing with the claims for subcontractor overcharging, her Honour focussed, as I have already noted, on whether at the relevant time Mr Marinchek was able to "prove" or "conclude" or "verify" that there had been overcharging and the amount overcharged. She concluded that he could not do so. In arriving at that conclusion her Honour also erred in significantly understating the nature and extent of Mr Marinchek's knowledge, as conceded by him in evidence or demonstrated by correspondence of which he was the author. Specifically, in relation to the first claim, her Honour found only that Mr Marinchek harboured "some suspicions about the manner in which the builder calculated its charges", that he had grounds for suspecting that he had been overcharged and that certain comments and circumstances had aroused his suspicion (Reasons at [150], [158]). Likewise, with respect to the claim concerning Mr Vaneris, her Honour found only that Mr Marinchek suspected that Mr Vaneris was being paid significantly less than the amount for which he was being charged (Reasons at [165]).

1. The essential facts on which the subcontractor overcharging claims were based were that a number of workmen had been engaged by Cabport as subcontractors and not as employees and that those contractors had been charged out in invoices at employee rates rather than at the lower rates at which they actually had been engaged. Those facts were known to Mr Marinchek before 8 March 2005 in the sense that he had been told that was the position by various of those tradesmen and believed what he had been told.

1. This was incontrovertibly established by the terms of Mr Marinchek's letter of demand of 4 March 2005 which included the following:

"In relation to your Invoices we note:

1. ...

2. We have ascertained that a number of invoices issued by you in the past, as well as the current invoices issued, claim payments for workmen on sites as if those workmen were employees. We have confirmed with a number of those workmen that they were engaged by you pursuant to a contract of service and were subcontractors not employees. Accordingly, we have been overcharged. We refer you to Schedule 1 Part A of the Agreement. Contractors must be charged pursuant to Schedule 1 Part A. You erroneously charged the contractors at the rate specified in Schedule 2 as if those contractors were employees. This has resulted in a significant overpayment to you. Clearly your current invoices contain items which fall into this category as well. We require an itemisation of all charges rendered for employees and evidence of the employment and payment of wages. Overpayments will be offset against your invoices.

...

You will not doubt understand why we dispute your invoices issued. We are happy to meet with you to discuss issues and the prompt handover to a new builder."

1. The persons with whom Mr Marinchek had "confirmed" that they had been engaged as subcontractors, and not as employees, included Mr Vaneris. In about January 2005 Mr Vaneris had told Mr Marinchek that he was a contractor and not an employee of Cabport and that he was being paid $40 per hour. In the invoices issued by Cabport, including invoices 3133 and 3134, Mr Vaneris had been charged out at a rate of $65 per hour. Mr Marinchek had been sent and received each of those invoices when issued. He had also communicated that as being the position in relation to Mr Vaneris to the principal of the incoming builder, Mr Garden, in the context of discussions as to whether Mr Vaneris would continue to work on the site after Cabport's engagement had been terminated.

1. None of this evidence was controversial. It proved that by March 2005 Mr Marinchek had knowledge of the essential matters on which the subcontractor overcharging claims were made. His state of mind was not merely one of "suspicion". His letter refers to his having "confirmed" the facts relied upon and makes an unqualified assertion that as a result of those facts there had been "significant overpayment".

1. Mr Marinchek argued that he was not in a position to assess the extent of the subcontractor overcharging or able to prove conclusively that it had occurred. That may or may not have been so. It does not, however, address the operation of the Settlement Agreement as construed by this Court in its earlier judgment. It was sufficient that he was aware of matters which although stated broadly nevertheless formed the basis of his claim. Those matters included that a number of workmen had been charged as employees and at rates greater than the rates in fact paid to them as subcontractors. The position in relation to those claims was, as Mr Marinchek conceded in cross-examination (Black 1/330), that by his cross-claim he had "reiterated" earlier claims that he had been overcharged, and that those claims had been discussed "well before entering into the settlement". Adopting the language of this Court in its earlier decision ([2010] NSWCA 334 at [60]), those claims were the same as were made prior to the Settlement Agreement and were precluded by it.

1. In relation to the claim for overcharging of administration and overhead expenses, the position is different. Having referred (Reasons at [174]) to Mr Marinchek's evidence that he had become aware from invoices produced in 2006 that Sean O'Sullivan was charging separately for administration and overhead work that ought have been covered by the 11 per cent builder's margin, her Honour found that until that time, Mr Marinchek did not realise that he had been charged twice for those expenses (Reasons at [178]). However, that finding is not to be understood as being that it was not until 2006 that Mr Marinchek first became aware that separate charges were being invoiced for Sean O'Sullivan's time under the item description "Admin/O-head". Such a finding would have been contrary to uncontradicted evidence. That evidence was that the invoices which were issued and sent to Mr Marinchek from as early as May 2004 contained those charges as well as the 11 per cent margin. In cross-examination (Black 3/773-774) Mr Marinchek said that he received those invoices as they were issued and had a chance to look at them. He agreed that he "usually" looked at them but was not sure that he "put too much thought into it".

1. Her Honour's finding, consistently with the way this subject was dealt with in Mr Marinchek's affidavit evidence (Blue 7/2660-2661), is to be understood as being that notwithstanding that he was aware that he was being separately charged for work done by Sean O'Sullivan which was described as "Admin/O-head", Mr Marinchek did not then realise that he was being charged twice for that work. That may have been because, as was subsequently argued on his behalf, he did not appreciate or understand (whether correctly or otherwise) that the particular work being charged for was work agreed to be covered by the mark-up. Or it may have been because he did not have any understanding as to whether the mark-up was intended to be the only fee charged for particular or any work answering that shorthand description. These possibilities were not the subject of any consideration or findings by the primary judge.

1. However, for the purposes of the operation of the Settlement Agreement, the relevant facts of which Mr Marinchek was aware from May 2004 included that Cabport was charging the 11 per cent mark-up for administration and overhead expenses and charging separately for Sean O'Sullivan's time as incurred in relation to administration and overhead. The claim subsequently made is that the separate charges for Mr O'Sullivan were made in respect of the same subject matter as the mark-up and that Cabport was not entitled to do so under the MBA Cost Plus Contract and special conditions. That claim arises out of the fact that the separate charges were made for Sean O'Sullivan's time with respect to administration and overhead. Mr Marinchek's knowledge of that fact (which also was known to Cabport) was sufficient to attract the operation of the implied release in the Settlement Agreement. Her Honour erred in not addressing that question in this way and in not holding for that reason that the claim was compromised and released.

1. Because each of the overpayment claims pressed before Olsson DCJ was precluded by the Settlement Agreement, each should have been dismissed. This conclusion makes it unnecessary to consider the other questions referred to above.

Costs

1. Olsson DCJ ordered that Cabport pay Mr Marinchek's costs of the trial before her and so much of Mr Marinchek's costs of the first trial before Hughes DCJ as related to his cross-claim. Each of those orders should be set aside.

1. My tentative views are that Cabport should pay Mr Marinchek's costs of the trial before Hughes DCJ insofar as it related to the part of the cross-claim for defects that succeeded before Olsson DCJ; and that Mr Marinchek should pay Cabport's costs of the remaining issues raised by the cross-claim, including those abandoned at the commencement of the hearing and the part of the claim for defects which was rejected. Similarly, in relation to the costs of the trial before Olsson DCJ, Cabport should pay Mr Marinchek's costs insofar as they related to the claim for defects (and notwithstanding that Cabport had success on one defect claim) and Mr Marinchek should pay Cabport's costs of the remaining issues. However, I consider that the parties first should be given an opportunity to agree on the appropriate orders to be made in relation to these costs. If they cannot so agree, they should lodge written submissions which address the orders they seek with respect to these costs.

1. Mr Marinchek has not had success on this appeal and must pay the costs of it.

Proposed orders

1. The orders which I propose are:

(1)   Appeal allowed.

(2)   Set aside the judgment for the respondent in the sum of $183,331.80.

(3)   Judgment for the respondent in the sum of $27,136.44, that judgment to take effect on 19 December 2011.

(4)   Set aside the orders for costs made by Olsson DCJ on 19 December 2011.

(5)   The respondent pay the appellant's costs of this appeal.

(6)   In relation to the costs of the proceedings before Hughes DCJ and Olsson DCJ, if the parties are unable to agree as to the orders to be made and do not file consent orders within 7 days of the date of these orders, the appellant should lodge with the Court and serve within 14 days of the date of those orders written submissions concerning the orders sought. The respondent should then lodge and serve any response within 7 days thereafter. The Court will determine what orders should be made on the basis of those written submissions.

1. BARRETT JA: I agree with Meagher JA and have nothing to add.

1. TOBIAS AJA: I agree with the orders proposed by Meagher JA for the reasons he has expressed.

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Decision last updated: 13 March 2013