Caratti Holding Co Pty Ltd v Austpeak Australia Pty Ltd - [2011] WASCA 34

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: CARATTI HOLDING CO PTY LTD -v- AUSTPEAK AUSTRALIA PTY LTD [2011] WASCA 34

CORAM: NEWNES JA
MURPHY JA

HEARD: 11 OCTOBER 2010

DELIVERED : 18 FEBRUARY 2011

FILE NO/S: CACV 35 of 2010

BETWEEN: CARATTI HOLDING CO PTY LTD
Appellant
AND
AUSTPEAK AUSTRALIA PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :SWEENEY DCJ
Citation  :WILLIAMS & HASSALL PTY LTD -v- AUSTPEAK AUSTRALIA PTY LTD [2010] WADC 41
File No  :CIV 2709 of 2007

Catchwords:

Practice and procedure - Application for leave to appeal against dismissal of summary judgment application under O 16 - Approach to be taken where leave sought to appeal against dismissal of summary judgment application - No error by primary judge

Legislation:

Rules of the Supreme Court 1971(WA), O 16

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: Mr R D Shaw
Respondent: Mr A P Hershowitz

Solicitors:

Appellant: Lavan Legal
Respondent: Robertson Hayles

Case(s) referred to in judgment(s):

Ex parte Bucknell [1936] HCA 67; (1936) 56 CLR 221
Hismelt Corporation v Pratt [2007] WASCA 192
Silbert and Addison as Executors and Trustees of the Estate of Gerte Hoffman v Steinberg as Executor of the Estate of Morris Steinberg [2010] WASCA 113
The State of Western Australia v Bond Corporation Holdings Pty Ltd (1991) 5 WAR 40
Williams & Hassall Pty Ltd v Austpeak Australia Pty Ltd [2010] WADC 41
Wilson v Metaxas [1989] WAR 285

NEWNES JA: This is an appeal against a decision of Sweeney DCJ in the District Court dismissing an appeal from a deputy registrar who in turn had refused the appellant's (defendant's) application for summary judgment under O 16 of the Rules of the Supreme Court 1971(WA). The appellant appeals to this court, contending that her Honour erred in finding that the respondent had an arguable defence to the appellant's claim.
As the decision of the primary judge was an interlocutory decision, the appellant requires leave to appeal. On 7 May 2010, it was ordered that the application for leave be heard with the appeal.

Background

Before turning to the matters in issue, it is necessary to observe that the material in the appeal books is far from complete. Only isolated extracts have been provided from the relevant contract and a number of exhibits to affidavits relied upon below have been omitted. No doubt that pruning was done by the parties' solicitors with the best of intentions in order to avoid inflating the appeal books with unnecessary paper. Alas, it seems to have fallen victim to an excess of enthusiasm and resulted in the omission of documents which appear to be necessary for a complete understanding of the documents in the appeal books, including, for instance, the definition of terms used in the extracts from the contract in the appeal books. The picture that appears from the papers is therefore somewhat short of comprehensive.
It is, however, common ground that, on or about 1 March 2006, the appellant and the respondent entered into a written contract for the construction by the respondent of an office and distribution warehouse (warehouse). Under the contract, the respondent was required to construct the warehouse in accordance with what was described in the appellant's defence as the 'Contract Structural Drawings' (the structural drawings). It was not in issue that the structural drawings were prepared on behalf of the appellant by Saraceni Engineering Group Pty Ltd (Saraceni).
Clause 2.10 of the contract required the respondent to engage Saraceni 'to carry out sufficient inspections during the course of construction in order to certify that the building has been constructed in accordance with the structural design'.
Clause 7.1 provided that the respondent was responsible for the 'supply … delivery and erection of all structural steelwork ... as shown on the Drawings or as herein specified'. Although 'Drawings' appears to be a defined term, the definition is not contained in the documents in the appeal books.
Clause 7.2 dealt with the provision by the respondent of shop drawings. Under that clause, the name of the proposed 'Shop Drawing Company' had to be submitted by the respondent to the superintendent for approval before work commenced. I should say that 'Shop Drawing Company' again seems to be a defined term but the definition does not appear in the appeal books. Clause 7.2 further provided, relevantly, as follows:
The [respondent] shall submit to the Superintendent for examination, comprehensive shop and construction drawings with notes and/or specification, (herein after in the Clause called 'the documents') which are necessary for the proper carrying out of the works.
Before submitting these documents to the Superintendent, the [respondent] shall satisfy himself that the work covered by these documents complies with the requirements of the contract.
The [respondent] shall not manufacture, stockpile, supply or assemble anything affected by these documents until he has received approval back from the Superintendent and Engineer.
The Superintendent and Engineer will examine the documents, and examination of these documents indicates the opinion that the [respondent's] interpretation of the contract requirements is generally satisfactory [sic]. Such examination shall not relieve the [respondent] of his contractual obligations nor of his responsibility of ensuring that the works are complete, accurate and correct.
Where amendments to the drawings are necessary, the amendments shall be promptly made, the three copies shall again by submitted by the [respondent] to the Superintendent.
Carnegie Associates Pty Ltd (Carnegie) was appointed as the 'Shop Drawing Company'.
There is no evidence before us as to what shop drawings were submitted to the superintendent under cl 7.2 or what shop drawings were 'necessary for the proper carrying out' of the works. However, what does emerge from the evidence, limited as it is, is that at some point Carnegie concluded that there was a problem with one of the structural drawings relating to an awning. The problem was that if the awning was constructed in accordance with the structural drawings the ties to the canopy would foul the purlins.
There is a dispute in the affidavit evidence as to what happened once the problem was detected by Carnegie. The appellant says that Carnegie referred the problem to the respondent who told Carnegie to refer it to Saraceni. The respondent, on the other hand, says the issue was not referred to it but that Carnegie simply referred it direct to Saraceni. What is clear, however, is that, on 22 April 2006, Carnegie sent a facsimile to Saraceni raising the problem and attaching a drawing illustrating it. It seems that the drawing was a detail from one of the structural drawings prepared by Saraceni, on which notations had been made by Carnegie to identify the problem. The facsimile from Carnegie had printed in its heading the words 'technical query'.
Carnegie sent a further facsimile to Saraceni on 27 April 2006, also headed 'technical query'. Whether there had been any other communications between them in the meantime does not appear from the evidence. Attached to the facsimile of 27 April 2006 was another copy of the same drawing but on this occasion with a proposed solution endorsed on it. An engineer employed by Saraceni returned the facsimile to Carnegie the same day with the words 'Looks good' endorsed on it.
It does not appear to be in dispute that the awning was subsequently constructed by the respondent in accordance with the modification contained in the facsimile of 27 April 2006. On 19 October 2006, the awning collapsed. I should say that there is no evidence before us as to what caused the awning to collapse.
It is common ground that shortly afterwards, at a site meeting on 23 October 2006, the superintendent instructed the respondent to remove the collapsed awning and construct another awning. There was, however, no admissible evidence as to precisely what occurred at that meeting.
The removal of the collapsed awning and construction of the new awning was carried out by the respondent’s steelwork subcontractor, Williams & Hassall Pty Ltd, which traded as Mills & Hassall. The respondent agreed to pay Mills & Hassall the sum of $48,400 for removing the debris and $88,132 to construct the new awning.
The respondent did not pay Mills & Hassall for the work and Mills & Hassall then commenced proceedings against the respondent in the District Court to recover, amongst others, those amounts. The respondent, in turn, issued third party proceedings against both the appellant and Saraceni claiming a contribution or indemnity in respect of the claim by Mills & Hassall relating to the awning.
The proceedings by Mills & Hassall against the respondent and the respondent's third party claim against Saraceni have been resolved. All that remains is the respondent's third party claim against the appellant. Against the appellant, the respondent claims a right to payment for the removal and replacement of the collapsed awning, on the basis that that work fell outside the terms of the contract and the instruction to carry it out constituted a separate contract between the appellant and the respondent.

The issues between the parties

As it is pleaded, and as amplified by the affidavit evidence, the case turns, in essence, on whether the collapsed awning was constructed in accordance with the contract. The appellant contends that it was not, but that it was constructed in accordance with drawings (being the modified design) which were different to the structural drawings and which had not approved by the appellant, or the superintendent acting on its behalf, under cl 7.2 of the contract (par 7 of the appellant's defence). The appellant says it is not to the point that the modification may have been approved by Saraceni, because at that time Saraceni was acting as a consultant to the respondent; it was no longer engaged by the appellant for any purpose. Accordingly, the appellant says, the superintendant's instruction to the respondent to remove and replace the collapsed awning was properly made under cl 30.3 of the contract, which entitled the superintendent to direct the respondent to remove and replace any work not done in accordance with the contract.
The respondent, on the other hand, contends that the awning was constructed in accordance with the contract, having been constructed in accordance with the modification to the structural drawings approved by Saraceni. The respondent says that in approving the modification, Saraceni was acting as the appellant's agent; that at that time Saraceni was engaged by the respondent solely for certification work under cl 2.10 of the contract. The superintendent's instruction to the respondent to remove and replace the collapsed awning therefore constituted a separate contract for that work.
As I understand it, on the summary judgment application the appellant further contended that there was no flaw in the structural drawings requiring correction but that the problem of the ties fouling the purlins was simply a matter of detail that fell to be resolved in shop drawings which the respondent was required to submit for approval under cl 7.2 of the contract. In dealing with that problem, Saraceni was not acting on behalf of the appellant but as a consultant to the respondent and the respondent was required to submit the proposed modified design for approval by way of a shop drawing (or drawings) under cl 7.2. It failed to do so but went ahead and constructed the awning in accordance with the unauthorised modification.
In July 2008, the appellant applied for summary judgment, contending that the respondent had no arguable claim for the cost of removing and replacing the collapsed awning as the respondent was liable for that cost pursuant to cl 30.3 of the contract. The application for summary judgment was dismissed.
In June 2009, additional material was discovered by the respondent, following a request by the appellant, and a second application for summary judgment was then brought by the appellant. It is that application which is the subject of this appeal. The application was dismissed by a deputy registrar of the District Court. The appellant appealed against that decision to the primary judge. That appeal was dismissed: Williams & Hassall Pty Ltd v Austpeak Australia Pty Ltd [2010] WADC 41.

Decision of the primary judge

The primary judge referred at the outset to the heavy burden that lies on a party seeking summary judgment to show there is no serious question to be tried. Her Honour found that that onus had not been discharged. Her Honour considered that whether, as the appellant contended, the problem identified by the respondent was not an error in the structural drawings but a technical detail to be dealt with under cl 7.2, or whether, as the respondent contended, it was a matter which required an amendment to the structural drawings and had been approved by Saraceni, as agent for the appellant, by way of an amendment to those drawings, was an issue which could not be resolved on the conflicting affidavit evidence but had to be tested at trial [41] ‑ [42].
Her Honour considered that, on the evidence, it was at least arguable that the facsimile of 27 April 2006 was not simply a matter of technical detail which fell to be dealt with under cl 7.2 but a flaw in the original structural drawings which was corrected by Saraceni, acting on behalf of the appellant [44] ‑ [48]. Her Honour therefore concluded, in effect, that it was arguable that the instruction to the respondent to remove and replace the collapsed canopy did not fall within cl 30.3 of the contract but was work which fell outside the contract and the respondent had an arguable claim for the cost of that work [48].
The appellant now appeals against that decision.

The grounds of appeal

It is unnecessary to set out the grounds of appeal. In substance, the appellant contends that the primary judge erred in concluding that the respondent had an arguable claim for the cost of the work and says that her Honour should have found that the collapsed awning was not constructed in accordance with the contract, and therefore the work involved in removing and replacing it was plainly work which the respondent was required to carry out under the terms of the contract.

The disposition of the appeal

As the appeal is against an interlocutory decision, the appellant requires leave to appeal. The principles which apply to an interlocutory appeal are well‑settled. Generally the appellant must show that the original decision was wrong, or at least attended by sufficient doubt to warrant the grant of leave, and that substantial injustice would be done if the decision was not reversed: Wilson v Metaxas [1989] WAR 285. Those principles are not, however, inviolable and leave may be granted whenever the interests of justice require it: The State of Western Australia v Bond Corporation Holdings Pty Ltd (1991) 5 WAR 40, 56 ‑ 57; Hismelt Corporation v Pratt [2007] WASCA 192 [14]. Where an interlocutory decision effectively terminates or finally determines a party's rights, leave to appeal will more readily be given: Ex parte Bucknell [1936] HCA 67; (1936) 56 CLR 221, 225 ‑ 226.
But as Martin CJ pointed out in Silbert and Addison as Executors and Trustees of the Estate of Gerte Hoffman v Steinberg as Executor of the Estate of Morris Steinberg [2010] WASCA 113, the availability of an avenue of appeal from an interlocutory decision, subject to the grant of leave, should not be seen as providing an unrestricted opportunity for the lengthy reventilation of arguments which failed at first instance. The determination of whether the decision was wrong, or attended with sufficient doubt to justify the grant of leave to appeal, should not ordinarily require or involve argument of the complexity and duration of the argument presented at first instance. Ordinarily, an appellant court determining whether or not to grant leave to appeal will take a broad approach to that question. Where it determines that the decision at first instance is not wrong or attended with sufficient doubt to justify the grant of leave, elaborate reasons for that conclusion, of the kind customarily given at first instance, will not ordinarily be necessary or even appropriate [7].
Moreover, as Martin CJ noted in Silbert and Addison, the fact that in a case such as the present an appeal lies at all reflects something of an anomaly in the Rules. The appeal is against the refusal of the application by the appellant, the defendant to the action, for summary judgment pursuant to O 16 of the Rules of the Supreme Court 1971 (WA). Where, however, an application for summary judgment by a plaintiff under O 14 is refused and the defendant given unconditional leave to defend, no avenue of appeal is available to the plaintiff: Supreme Court Act 1935 (WA), s 60(1)(b). In such a case the rights of the parties are left to be determined at trial. It is not self‑evident why a different approach is taken in respect of an application for summary judgment by a defendant. In any event, the fact that an appeal concerns the refusal of an application for summary judgment informs the approach taken by the court to the grant of leave: Silbert and Addison [8].
Turning then to the appeal, the appellant's counsel argued, in substance, that, having found that the respondent did not obtain approval under cl 7.2 for the modified design, the primary judge should have found that it followed that the awning constructed in accordance with that design had not been constructed in accordance with the contract. The fact that the respondent's communications concerning the modification were headed 'technical query' showed that the respondent was simply seeking assistance on a matter of detail from Saraceni as its own consultant. Having obtained that assistance, the respondent had not, as it should have done, then sought and obtained approval of the modified design by way of a shop drawing under cl 7.2. Counsel submitted that once her Honour found that no such approval had been obtained, she erred in failing to conclude that the work was not in accordance with the contract.
I do not accept that submission. In my view, on the evidence the primary judge correctly found that there was a triable issue, in substance, as to whether (as the respondent submitted) Saraceni, as agent of the appellant, had amended the structural drawings following the referral to it of what was said to be a flaw in those structural drawings, or whether (as the appellant submitted) Saraceni was acting for the respondent in varying the design in a manner which had to be (but was not) subsequently approved on behalf of the appellant under cl 7.2 of the contract. If it were the former, construction in accordance with the modified design would have been in accordance with the structural drawings, as so modified.
While it appears that at some stage the respondent did engage Saraceni to provide services beyond certification work under cl 2.10, as her Honour observed, it is not clear when that occurred and, in particular, it is not clear whether it occurred before or some time after the modification of the design. In affidavits filed on behalf of the appellant, a former employee of Saraceni, Mr Thomsett, and a former employee of the respondent, Mr Fitzgerald, each said that in February 2006 the respondent had engaged Saraceni to provide contract administration services, including structural queries, in addition to structural certification work under cl 10.2. On the other side, Mr Tobias, a director of the respondent, said that he had to approve any contract with Saraceni and that at the relevant time Saraceni was engaged by the respondent only for the purposes of certification work under cl 2.10 of the contract. Whilst there were email communications between the parties confirming Saraceni's appointment to provide the respondent with contract administration services, those emails were exchanged some time later, in June 2006, and do not identify precisely when Saraceni was so appointed.

In the circumstances, the capacity in which Saraceni was acting in approving the modification of the design was plainly not a matter which was capable of being resolved on the affidavit evidence.
The fact that each of the documents emanating from the respondent concerning the modification was headed 'technical query' was not, as the primary judge observed, determinative of the true nature of the communication. Indeed, in the absence of evidence as to its significance it seems to me to be of little relevance.
In the course of argument on the appeal, counsel for the appellant also put the appellant's case on a second, somewhat different, footing. He placed some emphasis on the undisputed absence of any approved shop drawings for the construction of the awning. Counsel conceded that because of the problem identified by Carnegie, an amendment to the structural drawing was necessary before a shop drawing was produced (ts 12). But he argued that, having obtained that amendment from Saraceni, by virtue of cl 7.2 the respondent was then required to (but did not) submit and obtain approval of shop drawings containing the modified design before embarking upon construction of the awning (ts 12 ‑ 13). It was submitted that under cl 7.2 the respondent was not entitled to construct the awning until it had submitted shop drawings for the awning and had them approved. As the respondent proceeded without any approved shop drawings for the awning, it had therefore constructed it otherwise than in accordance with the contract.
That contention appeared to be based upon a plea in the defence that under cl 7.2 the respondent was not to carry out any structural steel work

'unless and until it had caused shop drawings to be prepared and approved by both the superintendant and the engineer' (par 4.2).

At least one of the difficulties with the appellant's argument (which, I might mention, does not seem to be relied upon in the defence) is that it is at least arguable that cl 7.2 does not have the effect asserted by the appellant. On its face, cl 7.2 appears only to require the respondent to submit for approval shop drawings 'which are necessary for the proper carrying out of the works'. The evidence did not establish that shop drawings were 'necessary for the proper carrying out' of the construction of the awning.
In my view, no error by the primary judge has been shown. The primary judge correctly decided that there were triable issues and properly dismissed the appeal from the decision of the deputy registrar.

Conclusion

The present appeal is without merit and I would refuse leave to appeal.
MURPHY JA: I agree with Newnes JA.