Concrete Constructions Group v Litevale Pty Ltd - [2002] NSWSC 670

No judgment structure available for this case.

Reported Decision:
(2002) Aust Contract Reports (Digest) 90-152
(2002) ATPR (Digest) 46-224

New South Wales

Supreme Court

CITATION: CONCRETE CONSTRUCTIONS GROUP v LITEVALE PTY LTD & ORS [2002] NSWSC 670

FILE NUMBER(S): SC 055058/97

HEARING DATE(S): 25, 26 and 27 March 2002

JUDGMENT DATE: 1 August 2002

PARTIES :

CONCRETE CONSTRUCTIONS GROUP v LITEVALE PTY LTD & ORS

JUDGMENT OF: Mason P at 1

COUNSEL : Plaintiff: R W Hunt
Defendant: F Corsaro SC

SOLICITORS: Plaintiff: Corrs Chambers Westgarth
Defendant: Deacons

CATCHWORDS: CONTRACT - dispute between builder and developer of shopping centre over status and content of contracts - whether additional work done by the builder was a legitimate 'variation' - ESTOPPEL - parties adhered to unexecuted contract - whether contract governed parties' relationship - AGENCY - parties to contract - TRADE PRACTICES - misleading and deceptive conduct - misrepresentation as to future matter - contractual promises as representations - intention or capacity to perform - conditional promises - complex contractual relations.

LEGISLATION CITED: Corporations Law
Fair Trading Act 1987
Land and Environment Court Act 1979
Trade Practices Act 1974 (Cth)

CASES CITED: Abigroup v Peninsula [2001] NSWSC 752
Accounting Systems 2000 (Developments) Pty Limited v CCH Australia Limited (1993) 42 FCR 470
Australian Tallow & Agri-Commodities Pty Ltd v Malaysia International Shipping Corporation (2001) 50 NSWLR 576
Balkin v Peck (1998) 43 NSWLR 706
Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622
Bill Acceptance Corporation Ltd v GWA Limited (1983) 78 FLR 171
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Brenner & Anor v First Artists' Management Pty Ltd [1993] 2 VR 221
C H Magill v National Australia Bank Ltd [2001] NSWCA 221
City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94
Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326]
McWilliam's Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723
Montgomerie v United Kingdom Mutual Steamship Association Ltd [1891] 1 QB 370
Ridgway & Anor v Consolidated Energy Corporation Pty Limited (1987) ATPR 40-754
Serrata Invest Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419
Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549
Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251
Walter Constructions Group Ltd v Walker Corporation Ltd (2001) 47 ATR 48
Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679
Yorke v Lucas (1985) 158 CLR 661

DECISION: See [194]

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
technology & construction LIST

Mason P

Thursday 1 August 2002

Eq 055058/97 CONCRETE CONSTRUCTIONS GROUP LTD v LITEVALE PTY LTD & 3 ORS

Litevale, the first defendant, was the developer of a large building project at Port Macquarie and a company specially formed for the development. Concrete Constructions Group (CCG) contracted to do the design and construction work for the project, a shopping centre. The second defendant was a company related to Litevale and the third defendant, Mr O’Rorke was a director of both corporate defendants. The work commenced in early 1995 and reached practical completion in November 1995.

The third version of the Design and Construct contract (D+C 3) was never executed, but it provided for allowances to be made for approved variations and variations required by public authorities. CCG undertook numerous variations to the building work but was not reimbursed for the additional expenditure. There ensued disagreement regarding the status of the D+C 3 contract and which of the completed variations entitled CCG to compensation. CCG subsequently sued the defendants in contract, restitution and for misleading and deceptive conduct contrary to the Trade Practices Act 1974 and state equivalent.

In October 1999, the proceedings were referred to a referee for determination under Part 72 of the Supreme Court Rules. The report was delivered in late 2001 and the plaintiff and defendants now seek to have agreed aspects adopted by the Court and other elements are contested.

HELD:

In relation to the plaintiff’s contentions:

• Issues 1-4: The referee determined that the parties had effectively agreed to be bound by D+C 3 and that the plaintiff was estopped from denying that the D+C 3 contract governed the parties’ relationship. The plaintiff contested these findings.

• The referee was entitled to look at the position of the parties as it stood from March 1995 onwards, because that was the period within which the facts giving rise to the present disputes occurred.

Brambles Holdings Ltd v Bathurst City Council

C H Magill v National Australia Bank Ltd

• The parties had relevantly adhered to the D+C 3 contract whether through the principles of contract or estoppel by convention or representation.

• The report is adopted in so far as it concludes that by virtue of the principles of contract and/or estoppel the D+C 3 contract became the primary source of the parties’ contractual relationship at all material times.

• Issues 5, 7, 8 and 10: These contentions no longer became necessary to resolve after the finding in the issues above.

• Issue 6: The referee miscalculated an allowance to the plaintiff for a landscaping variation. The allowance is increased by $22,900 as agreed to by the parties and accepted by the Court.

• Issue 9: The referee rejected a claim by the plaintiff for an allowance of over $39,000 as a variation being the cost of compliance with a court injunction.

• The interlocutory injunction granted by the Land and Environment Court of NSW was not a ‘variation’ for the purposes of the D+C contract as that Court cannot relevantly be described as an ‘authority’ and there was no material indicating the basis upon which that Court had ‘jurisdiction’ or ‘control’ over the works of the site, as defined by the contract.

• Issues 11-13: The plaintiff pleaded that the defendants were guilty of misleading and deceptive conduct in failing to tell the plaintiff that if it carried out the work for which the claim for payment is now due as authorised variations, it would not be paid for that work in circumstances where the corporate defendants became unable to pay due to an unexpected downturn in profits from rental income. The referee agreed with this submission as a breach of s 52 of the Trade Practices Act for the two corporate defendants and s 75B for the third defendant, awarding $580,440.15 in damages.

• The referee determined that liability stemmed from an implied representation, made at the inception of the D+C 3 contract, to the effect that the ‘developer’ had the capacity to pay for variations in accordance with the contract, and the plaintiff entered the contract in reliance upon this representation and suffered loss when it was not paid. Section 51A of the Trade Practices Act was applied.

• The referee’s approach to the agency between the two corporate defendants doubted but not decided.

Montgomerie v United Kingdom Mutual Steamship Association Ltd

Australian Tallow & Agri-Commodities Pty Ltd v Malaysia International Shipping Corporation

• It is not the law that every contractual promise has a superimposed implied representation as to ability to perform, either at the time of contract or some future date. Failure to keep a promise is not itself misleading or deceptive conduct. Whether s 52 has been contravened must be considered as at the time the contract is engaged in, and not by reference to subsequent events.

Bill Aceptance Corporation Ltd v GWA Ltd

Serrata Invest Pty Ltd v Rajane Pty Ltd

• Section 51A does not say in what circumstances a representation as to a future matter shall be implied from a contractual promise. The section is only engaged after answering the prior questions concerning the nature of the implied representation and reliance.

Futuretronics International Pty Ltd v Gadzhin

Wright v TNT Management Pty Ltd

• A distinction is drawn between whether a contracting party is implicitly representing a present intention or capacity to perform, the latter being more difficult to show. There are policy reasons for restraint.

• The very nature of post-contractual variations contemplates later dealings in which liability will stem from mutual assent later achieved. It may not be reasonable to infer from the complex promises alone that there was an immediate representation as to financial capacity to perform such obligations given that assent may be withheld or terms negotiated at the time variation comes into play.

• It was not open to the referee to conclude that the contractual promises were also ‘contractual representations’ or that they had been relied upon as such by the plaintiff at the time of contract. Therefore the claim against the third defendant also falls away.

• Section 51A did not deem the defendants’ conduct unreasonable in the circumstances of this case.

In relation to the defendants’ contentions:

• Issue 14: Remained unresolved at the time of judgment being reserved. The parties to submit brief notes if they wish on this issue.

**********

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
technology & construction LIST

Mason P

Thursday 1 August 2002

Eq 055058/97 CONCRETE CONSTRUCTIONS GROUP LTD v LITEVALE PTY LTD & 3 ORS

JUDGMENT

1 MASON P: This dispute arises out of a building project known as Port Central Shopping Centre at Port Macquarie.

2 The proceedings were commenced by Summons. The pleadings which followed included cross-claims and they were amended repeatedly. In October 1999 the whole of the proceedings were referred to Mr John Tyrril for inquiry and report pursuant to Part 72 of the Supreme Court Rules.

3 The reference was heard over 20 days in 2000. There were 1,273 pages of transcript and about 20 files of exhibits. The Referee received extensive written submissions and oral addresses. His Report dated 10 October 2001 was delivered in early November 2001.

4 A great number of the issues fought before the Referee are no longer in dispute and, to that extent, the parties join in seeking orders that the Report be adopted. However, each party raises sets of issues that involve reconsideration of parts of the Report. An agreed bundle of material that formed a (small) part of the record before the Referee has been placed before me, without objection, in elaboration of the points which the parties seek to raise.

5 The defendants sought leave (if necessary) to adduce a small body of additional evidence (cf Pt 72 r13) which pertains to one of the matters which they wish to agitate. Subsequently the parties agreed to defer the dispute touching that matter in the hope that further discussions may resolve or at least sharpen it.

The project

6 The plaintiff is now known as Walter Construction Group Limited. It is however convenient to refer to it as CCG, an abbreviation of its former name Concrete Constructions Group Ltd. CCG is the acronym used by the Referee.

7 CCG did the design and construction work (the Work) for the project. The Work commenced on 9 January 1995 and practical completion was achieved on 30 November 1995.

8 The Work involved the design and construction of a large shopping centre that included a department store, supermarket, speciality shops and on-site car parking for over 800 cars. The value of the Work, excluding variations, was nearly 25 million dollars and that sum was paid by instalments during 1995-1996. The Centre opened and is trading to this day.

9 At the relevant time the Proprietor was Vynotas Pty Ltd as trustee of the Norwich Real Property Unit Trust (Vynotas).

10 The first defendant Litevale Pty Ltd (Litevale) was a company specially formed for the project.

11 The second defendant ACN 010 753 965 Pty Ltd was formerly known as Consolidated Properties Ltd (CPL). It is a company related to Litevale.

12 The third defendant Mr O’Rorke (O’Rorke) was a director of the defendant companies at the relevant times.

13 In the proceedings, CCG sued the defendants for damages, interest, declarations and costs. The damages claims raised against the corporate defendants were causes of action in contract, restitution and for misleading and deceptive conduct contrary to the Trade Practices Act 1974 (Cth). The contractual and restitutionary claims were in essence brought against the first and second defendants in the alternative because of uncertainty as to the identity of the party with whom CCG entered into relevant contractual relations. The Referee identified that party as Litevale, adding that Litevale contracted as agent for CPL (Referee’s Report p124: hereafter R124). He concluded that the two companies are liable as “the Developer” on the contractual claims and this aspect of his determination is not, I understand it, in dispute except so far as it may bear upon the misleading and deceptive conduct claim discussed later in this judgment.

14 By its contractual and restitutionary causes of action CCG seeks to recover recompense for additional work or expenditure done or incurred in the project. The claims are pressed as contractual “Variations”, alternatively on the basis of quantum meruit. The Referee has determined that the plaintiff CCG is entitled to an award against “the Developer” for $580,440.15 plus interest, on the basis of contractual “Variations”. Numerous alternative and/or additional claims propounded in contract or restitution that were litigated in the Reference are recommended for dismissal. No party seeks to go behind the latter recommendations.

15 The claims under the Trade Practices Act were brought against the three defendants. In the case of Mr O’Rorke they are based upon an allegation of being “knowingly concerned” in the misleading conduct of the corporations of which he was a director (cf s75B(c)). All parties are content to adopt the Report to the extent that the Referee recommends dismissal of those claims. The defendants challenge those portions of the Report which propose upholding certain Trade Practices Act claims against them. The factual genesis of these claims is the inability of the corporate defendants (through lack of funds) to meet the contractual claims found against them. The Referee found that all three defendants participated in misleading or deceptive conduct in their failure to disclose such incapacity to pay at the time when CCG and Litevale were found to have adhered to a detailed Design and Construct (D+C) contract no later than March 1995.

16 The parties agree about the existence of such contract, but they disagree as to certain of its terms. The defendants dispute the findings of breaches of the Trade Practices Act.

17 The parties agree that the approach to be adopted in relation to contested applications concerning the adoption of referee’s reports are to be found in cases such as Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549, Walter Constructions Group Ltd v Walker Corporation Ltd (2001) 47 ATR 48 and Abigroup v Peninsula [2001] NSWSC 752.

The key documents

18 The key documents involved in the project were:

(i) The Design Brief . This was a three page document prepared in October 1994 which set out the basic parameters applicable to the design, construction and services of the Port Macquarie Town Centre.

(ii) The Development Agreement . This was executed on 23 December 1994. Its parties were Vynotas (as “Proprietor” ), Litevale (as “Developer” ), CCG (as “Builder”) and CPL (as “Guarantor” ). The Design Brief is an annexure. The Development Agreement is a lengthy document which records the basic obligations of the key players. A summary appears at par 49 below.

(iii) The Design and Construction Contract (D+C). This document was never executed. Its intended parties were Litevale (as “Developer” ) and CCG (as “Builder” ). The D+C underwent three drafts, which were received by CCG on 12 December 1994, 9 January 1995 and about 12 March 1995 respectively. This was the “Construction Contract” which the Development Agreement contemplated would be entered into between the Developer and the Builder for the construction of the Works. The Referee found that the parties to D+C 3 (ie the third version) conducted themselves on the basis that the said document governed their relationship according to its terms and that they were estopped from contending otherwise. This is one of the key findings challenged by the plaintiff in these proceedings.

(iv) It is common ground that CCG and Litevale entered into a preliminary construction contract in December 1995 being a contract in what is known as the fourth Masters v Cameron category. I shall term this the Interim D+C Contract . Like the jury that were unanimous that they could not agree on a verdict, the parties are ad idem that they had achieved an Interim D+C Contract , but disagree heartily as to its essential terms. The plaintiff challenges the Referee’s findings in this regard.

The Referee’s Report in outline

19 The Report is a model in the clarity of its expression, the logic of its structure and the detail of exposure of essential reasoning processes.

20 It has seven Parts. Part A – BACKGROUND sets out the current pleadings and preliminary information.

21 Part B – EVIDENTIARY ISSUES makes detailed findings as to the credibility of key witnesses, the impact of the plaintiff’s failure to call a key witness (Mr Gomm) and other like issues.

22 Part C – PRELIMINARY ISSUES clarifies the matters pressed at the hearing and disposes of certain untenable points.

23 Part D – THE DESIGN AND CONSTRUCTION CONTRACT records the common ground that there was no executed design and construction contract. The Part proceeds to determine the existence, parties, date and essential terms of what I have described as the Interim D+C Contract. Some of these conclusions are challenged by the plaintiff.

24 Part E - CLAIMS makes findings concerning a number of specific claims, many of them subsidiary to the issues about the Interim D+C Contract or pleaded in the alternative. A number of claims advanced by CCG are dismissed. Since CCG wishes to take these matters no further it is sufficient to note that they included certain of the claims based upon restitutionary principles, variations, estoppels (R 316) and misleading conduct (R 318-336). Many of CCG’s claims relating to variations and misleading conduct were also rejected. Only portions of the Referee’s findings concerning these matters remain the subject of challenge in this Court and I shall deal with them at the appropriate places.

25 The Referee also rejected the claims for declaratory relief based upon a Deed of 9 November 1995 (R 337). This issue has not been reagitated.

26 The Referee upheld the consequential claims for interest on damages.

27 Part F – CROSS CLAIM determined that the various claims made in a cross-claim by the defendants against the plaintiff should be rejected.

28 Part G – COSTS determined that the issue of costs should be left to the Court.

The parties’ objections to the Report

29 I have had the benefit of substantial written submissions which enunciate and develop the issues that still divide the parties. Their length and complexity are (in the main) a reflection on the labyrinthine issues thrown up in this dispute. The submissions of counsel have been appropriately succinct and helpful. In many cases the written submissions were allowed to speak for themselves.

30 I shall be setting out portions of the written submissions and those parts of the Report to which they relate. I do not however intend to set out in this judgment the detail of every submission, although I trust that it will be appropriately addressed.

31 For ease of later reference I record that the following documents are relevant:

- There are two volumes of documents referred to in PS 1 (tabs 1-14) that contain key documents that were before the Referee.

(ii) Plaintiff’s grounds of challenge to findings in Referee’s Report dated 3 December 2001 (PS 2).

- There is an accompanying volume of associated documents (tabs 15-23).

(iv) Plaintiff’s outline of submissions in response to defendants’ submissions (dated 6 March 2002) dated 21 March 2002 (PS 4).

(v) Plaintiff’s further outline of submissions (responding to DS4, below) dated 19 April 2002 (PS 5).

(vi) Defendants’ outline of submissions dated 30 November 2001 (DS 1).
(vii) Defendants’ submissions in reply (in relation to the adoption of the Referee’s Report) dated 5 March 2002 (DS 2).

(viii) Defendants’ submissions (in relation to the quantification of indebtedness as found by the Referee) dated 5 March 2002 (DS 3).

Trade Practices Act

32 CCG raises the following issues touching adoption of the Report. The issues are tabulated in PS 2 and developed at length in PS 1:

Issue number Brief description

Trade Practices Act

33 For their part the defendants raise the following challenges:

Trade Practices Act.

Trade Practices Act

Issues 1-4: Content and date of interim D+C contract; existence and content of later agreement/ estoppel binding parties to adhere to key terms of D+C 3

34 Part 11 of the Report (R58-136) contains the Referee’s findings as to the existence, date, parties and essential terms of what I have called the Interim D+C Contract.

35 The Referee concluded as follows (R135-6):

Determination
For the reasons set out above, I determine:
1. on 23 December 1994, CCG and the Developer reached agreement in the Development Agreement for CCG to carry out the design and construction of the Project in accordance with the Design Brief annexed thereto for the price of $24,910,000. That agreement was of the fourth class referred to above - the parties intended to be immediately bound by essential terms for the design and construction of the Project whilst also expecting to make a further contract containing additional terms, i.e. the terms of the Design and Construction Contract;
2. the Design and Construction Contract was between CCG and Litevale as agent for Consolidated Properties Limited;
3. the terms of the third version of the Design and Construction Contract issued by Litevale have application to govern the parties’ relationship;
4. the Contract Sum was $24,910,000, including an amount of $320,000 for external roadworks;
5. the Design and Construction Contract did not contain any provisional sums, nor provision for the adjustment of provisional sums;
6. the Feasibility Comparisons do not form part of the D+C contract;
7. items of work not expressly included in the Final Cost Plan were not thereby excluded from CCG’s design and construct obligations. Furthermore, the Final Cost Plan did not define nor limit CCG’s obligations. CCG did not otherwise qualify, or exclude, its obligations under the Design And Construction Contract;
8. the Date for Practical Completion under the Design and Construction Contract was 22 January 1996;
9. additionally, the Plaintiff agreed to use its "best endeavours" to achieve Practical Completion by 18 December 1995;
10. the Design and Construction Contract did not entitle the Plaintiff to extensions of time for delays caused by wet weather (beyond the 20 day allowance the Plaintiff had included in its construction program) or by industrial conditions;
11. the Design and Construction Contract included the Design Brief annexed to the Development Agreement, rather than CCG’s earlier “Draft” Design Brief;
12. the Plaintiff assumed the risk and responsibility of obtaining dispensation from the requirement for fire compartmentation of the building within the minor fees agreed for that work pursuant to the 3 November 1993 Agreement and without adjustment to the Contract Sum;
13. in any event, as separately determined, the Plaintiff is estopped by its conduct from denying the third version of the Design and Construction Contract applies and from asserting instead that another form of contract applies.

36 There are alternative findings leading to a similar outcome under the heading 11.16 The Design and Construction Contract – Estoppel (R137-141). The Referee concluded (R141):

Determination

For the reasons set out above, I determine the Plaintiff is estopped by its conduct in using and relying upon its terms from denying that the third version of the Design and Construction Contract (exhibit P1, document 13) applies and from asserting instead that another form of contract applies.

37 Having determined that the terms and conditions of D+C 3 concerning variations were part of the contractual matrix throughout 1995, the Referee (R143) rejected the plaintiff’s invocation of restitution or quantum meruit in its endeavour to escape the toils of the variation clauses and/or the contractual allocation of risk. The Referee cited cases such as Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 and Brenner & Anor v First Artists’ Management Pty Ltd [1993] 2 VR 221. I do not understand the plaintiff to argue that the Referee erred in this approach to the respective roles of contract and restitution.

38 It was common ground between the parties that there was no executed design and construct contract (R58).

39 It was also noted that the parties agreed that some form of Interim D+C contract existed between them and that it was of the nature described by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628 as:

… a fourth class of case additional to the three mentioned in

Masters v Cameron

… namely… one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by agreement, additional terms ….

40 The successive forms of the D+C Contract had been prepared by Litevale’s solicitor and sent to CCG for approval on the dates previously indicated. The differences between the successive drafts were minor (R74-81: see also par > below).

41 The defendants argued that the principles of contract and/or estoppel meant that, with presently irrelevant exceptions, the Interim D+C Contract incorporated by reference the terms of the unexecuted formal D+C Contract as extant from time to time. For present purposes this meant D+C 3, because the dispute between the parties only assumed relevance to events occurring after March 1995, for reasons shortly to be explained.

42 By contrast, the plaintiff submitted both before the Referee and this Court that the binding interim agreement was different from D+C 3 as regards price and scope of works. In its submission, the Interim D+C Contract was comprised of:

(a) certain essential terms, namely:

•

performance of the scope of works allowed in the Final Cost Plan, understood by reference to the architectural drawings and instructions on which it was based;

a price for performing that scope of works of $24.59 million, which amount included a provisional allowance of $200,000 for landscaping, and excluded the cost of compartmentation or obtaining dispensation for it, Q1:100 stormwater and authorities costs;

a[n] additional provisional allowance of $320,000 for certain additional roadworks;

(b) implied terms in respect of:

completion within a reasonable time;

payment of reasonable remuneration for any variations required, including compartmentation or obtaining dispensation for it, Q1:100 stormwater, authorities costs, and landscaping or roadworks in excess of the provisional sums allowed.

43 A variant of the plaintiff’s submission was that a communication from its Mr Coburn on 9 January 1995 had the effect of qualifying adherence to the formal D+C Contract in particular but critical respects, notably touching clauses 2.5(1), 4.5(1) and 13.3 of the D+C Contract.

44 The plaintiff submits that the Referee should have found that the content of the Interim D+C Contract had as its essential terms (PS 1 §34):

(1) express terms that WALTER was to provide the scope of works allowed in the Final Cost Plan (understood by reference to the architectural drawings and instructions on which it was based) for a price of $24.59 million, with a further allowance of $320,000 for certain additional roadworks, which price excluded Q1:100 stormwater and authorities costs;

(2) implied terms in respect of completion within a reasonable time and payment of reasonable remuneration for any variations required.

45 As to (2) the plaintiff adds that it is probably immaterial whether a term for completion with a reasonable time should be implied, rather than for a time expressly agreed, as the parties subsequently agreed on a date for practical completion of 22 January 1996.

46 Specifically as to issues 2, 3 and 4 the plaintiff submits in the alternative that the court should reject the Referee’s findings to the effect that D+C 3 was agreed between the parties; and find instead that what was subsequently agreed, in addition to the Development Agreement, was in terms of D+C 3 with the following exceptions:

“unexpectedly publicly”

“notified”

(ii) There was no agreement that the procedural requirements in cl 2.8 were to be complied with: instead, what was agreed was that unless a variation claim was promptly rejected by Resource Coordination Partnership, the defendant’s contract administrator, then the variation would be paid in an amount to be determined by later agreement;

(iii) There was no agreement in respect of the dates in cl 4.3(1)(a);

“unexpected”

(v) There was no agreement in terms of cl 13.3 (ie the sole agreement clause).

47 The dispute between the parties as to the terms of the Interim D+C Contract is relevant to the issue as to whether clauses 2.5(1) and 2.8 of the D+C Contract were incorporated by reference into the Interim D+C Contract (as the defendants contend). This has adverse consequences to the plaintiff’s case in so far as key claims for extra remuneration were rejected for non-compliance with the procedural regime laid down in cls 2.5(1) and 2.8. In some cases Litevale did not dispute that it requested alternative or accelerated performance, but in these the defendant asserts that it was not put on written notice that the request would lead to extra cost: compliance with the procedural regime to be found in cls 2.5 and 2.8 was an essential requisite (assuming of course that those clauses were part of the contractual matrix). There is also a flow-on effect in so far as the plaintiff’s Trade Practices Act claims become harder to sustain if cl 2.5(1) was part of the contractual matrix from December 1994 onwards.

48 Having stated the issue and its importance the Referee addressed it from R61 onwards. He referred to some heads of agreement made on 3 November 1993, the Design Brief and the feasibility studies culminating in a Final Cost Plan prepared by CCG’s Mr MacGinley.

49 Then followed a detailed analysis of the Development Agreement which it is appropriate to set out in full (R69-73):

11.6 Development Agreement
On 23 December 1994, a "Development Agreement" was executed by Vynotas Pty Ltd (ACN 007 093 601) as trustee of the Norwich Real Property Unit Trust ("Proprietor"); Litevale Pty Ltd ("Developer"); Concrete Constructions Group Pty Limited ("Builder"); and Consolidated Properties Ltd ("Guarantor") (exhibit P1, document 241).

The recitals stated the:
(a) Developer, Litevale had introduced the Proprietor, Vynotas to the site and had offered to develop the site in accordance with the Design Brief to produce a sub-regional shopping centre, with tenants to include Target and Franklins;
(b) Developer, Litevale estimated the net income from the development at approximately $4,105,500 per annum;
(c) Proprietor, Vynotas had purchased the site and wished to engage the Developer, Litevale to develop the shopping centre on the basis that the total cost to the Proprietor, Vynotas would be calculated by capitalising the annual net income at a rate of 10.5%;
(d) Guarantor, Consolidated guaranteed to the Proprietor, Vynotas that the Developer, Litevale would perform its obligations under the Development Agreement.

Amongst other things, this Development Agreement:

1. defined the

as follows (clause 1.1):

"'Builder' means Concrete Constructions (Group Pty Ltd)

or other builder as the Developer may appoint to construct the Works with the consent of the Proprietor in accordance with clause 8.4 that consent not to be unreasonably withheld)."

2. contemplated a

would be entered into between the Developer, Litevale and the Builder, CCG for the Works (clause 1.1):

"'Construction Contract' means the contract to be entered between the Developer and the Builder for the construction of the Works."

3. defined the

as the aggregate of $24,910,000, the valuation of variations and any delay or acceleration costs (clause 1.1);

4. defined

as

(clause 1.1);

5. defined the

as the design brief for the Works

(clause 1.1);

6. defined the

as (clause 1.1):

"... the drawings, specifications and other documents prepared by the Developer (or any other person on its behalf) in accordance with the provisions of this Agreement, for, and necessary to effect, the Works, including, without limitation, the Design Brief."

7. defined the

as 31 October 1995

(clause 1.1);

8. defined the

to include both design and construction (clause 1.1):

"'Works' means the work which the Developer is required to execute and carry out under this Agreement and the materials the Developer is to supply to:

on the Site in accordance with this Agreement.";

9. provided that the Developer, Litevale was to develop the site for the Proprietor, Vynotas, warrant that the design would be

and deliver to Vynotas

on or before the

(clause 2.1);

10. stipulated that the Developer, Litevale's obligations included - applying for and obtaining all approvals, consents, licences and permits for the execution and use of the Works; complying with the requirements of statutes, regulations, codes, by-law or orders of any Government Agency, including without limitation the Development Approval; paying fees (etc) incurred in connection with consents, approvals, licences and permits; endeavouring to obtain leases for the Project; and ensuring that on the Opening Day there were no outstanding requisitions from the Council or Governmental Agencies (clause 4);

11. provided warranties to the Proprietor, Vynotas from the Developer, Litevale and the Builder, CCG regarding the Design Brief and the design and construction of the Works (clause 5.1):

"The Developer and the Builder each warrant to the Proprietor, that:

5.1.1 they have checked and considered the Design Brief and are satisfied that it is adequate and suitable for the purposes of designing and constructing the Works;

5.1.2 they have each made their own review and evaluation of the suitability of the Design Brief for the Project ...;

5.1.3 the Works will be designed with due skill and care, in accordance with the Design Brief and, where necessary, because of a lack of specificity in the Construction Documentation, at least to the Benchmark Standard;

5.1.4 the design for the Works adopted by the Developer ... will be in accordance with the requirements of this Agreement and will be reasonably proper, adequate and fit for the purpose of a sub-regional shopping centre to a standard at least that of the Benchmark Standard; and

5.1.5 construction in accordance with the design for the Works adopted by the Developer will, at the least, accord with the standards specified in this Agreement including the Benchmark Standard.";

12. provided that the Builder's responsibility for both design and construction would be unaffected by certain factors (clause 5.2.2):

"The Builder agrees that its obligations under this Agreement, including the warranties given in sub-clause 5.1 shall remain unaffected and that it shall bear and continue to bear full liability and responsibility for the design and construction of the Works notwithstanding:

13. contained further warranties from the Developer and the Builder with respect to construction (clause 8.2):

"The Developer and the Builder each warrant to the Proprietor that:

14. contained the Proprietor, Vynotas' agreement to the Developer, Litevale engaging the Builder, CCG to effect the Works under the Construction Contract (clause 8.4):

"The Proprietor agrees to the Developer engaging the Builder to effect the Works under the Construction Contract, but the Proprietor's consent given does not relieve the Developer from any of its obligations under this Agreement."

15. provided that the Proprietor, Vynotas was entitled to retain (as part of the Minimum Retained Sum) an amount of $2,500,000.00

(clause 11.13);

16. contained a formula for calculating the amount the Proprietor, Vynotas would be obliged to pay the Developer, Litevale (clause 12);

17. provided that Vynotas entered into the Development Agreement as Trustee of the Norwich Real Property Trust and on the basis it would not be liable to the extent it was not entitled to be indemnified

(clause 15.14);

18. contained covenants from the Builder, CCG to the Proprietor, Vynotas regarding CCG's performance of the Construction Contract Works (clause 16.1):

(d) in accordance with the Construction Contract."

19. contained covenants from the Builder, CCG to the Proprietor, Vynotas that it would not terminate the Construction Contract without giving the Proprietor 21 days prior written notice and that, at the Proprietor's written request, it would novate the Construction Contract to the Proprietor (clause 16.1.2 - 16.1.7);
20. contained an unconditional guarantee from the Guarantor, Consolidated to the Proprietor, Vynotas for the Developer, Litevale's performance of its obligations under the Development Agreement (clause 17). The Guarantor's obligations to the Proprietor included performing any obligation breached by the Developer and indemnifying the Proprietor against any loss, damage, expense or cost incurred by the Proprietor as a consequence of the Developer's default (clause 17.2);
21. annexed the "Design Brief" setting out the "basic parameters" applicable to the design and construction of the Project (Annexure B, Design Brief). This Design Brief included an obligation that standards of finishes and levels of services would be in accordance with a benchmark standard of the Logan Hyperdrome (including improvements since its completion) to "provide a completed and functioning first class sub-regional shopping centre".

I note the definition of "Builder" contemplated the possibility that Litevale might engage some builder other than CCG. However, CCG was a party, as Builder, to the Development Agreement and the Builder's covenants and warranties under the Development Agreement would not have had application to some other builder.

Whilst the terminology "Construction Contract" would seem to indicate the possibility that a construct only contract might be entered into by Litevale, the Developer's and Builder's warranties with respect to both design and construction, the definition of "Works" (including design and construction) and the terms of clause 8.4 regarding the Builder being engaged to "effect the Works under the Construction Contract" seem to me to establish that the "Construction Contract" was to be a D+C contract.

Significantly, the Development Agreement did not contain, incorporate by reference, stipulate, or describe, the terms of the proposed "Construction Contract". However, it seems to me the provisions of the Development Agreement set some of the parameters of the Construction Contract, e.g. regarding the Contract Sum, compliance with the Design Brief and the requirements of Authorities etc.

It is significant for CCG's claims (see below) that there were some differences in the Design Brief set out as Annexure B to the Development Agreement (see exhibit P1, document 241) from the Design Brief marked "Draft" of October 1994 (see exhibit P1, document 5). Those differences and their impact are dealt with below in consideration of CCG's claims.

50 The Referee then made findings relating to the three drafts of the D+C Contract (R74-81). The following matters are of particular relevance:

(i) D+C 2, which was sent to CCG under cover of a letter of 22 December 1994, contained “a minor, but potentially important, amendment to clause 2.8 Variations to the effect that Variations must be ‘within the general scope of the Works’ ” (R75).

(ii) D+C 2 showed the date for practical completion as 30 October 1995.

“outstanding matters”

We will endeavour to complete the project by 18 December 1995 but due to the late possession of site, we cannot guarantee this date and therefore request the completion date of 28 February 1996…

However, as you are aware from our discussions, the success of the project requires trading of the Centre prior to Christmas 1995. And we look to your company to offer all assistance necessary to achieve this target opening.

(v) The changes between D+C 2 and D+C 3 were minor (see R77-8).

51 The Referee summarised the key provisions of D+C 2 and D+C 3 (R78-80). The analysis demonstrates that all matters of substance were agreed in principle. Minutes of site meetings attended by representatives of the parties indicated that they were of a like view (R85). It is also to be remembered that work was by now well under way, CCG having obtained possession of the site on 9 January 1995 (R82).

52 The following comment by the Referee was well justified (R80):

From an examination of their terms, I consider the second and third drafts of the Design and Construction Contract were adequate and competent to govern the parties’ relationship with respect to CCG’s design and construction of the Project.

53 The Referee then examined the minutes of site meetings attended by representatives of the parties. He observed that there was no minute of any discussion, issue, or outstanding problem with respect to the D+C contract. Rather, the PCG minutes record project administration, including administration of the D+C contract (R83-4). The Referee observed the CCG’s own Design Meeting minutes state that the D+C contract was agreed in principle by 28 March 1995 and also showed that the status of the D+C contract disappeared as an item in the minutes from 9 May 1995 onwards (R85).

54 At R88ff the Referee summarised additional evidence that had been taken into account in considering the terms of the D+C contract. In particular he referred to the evidence of Mr Coburn concerning his objections to particular parts of D+C 2 raised in January 1995 (R89-91). The analysis and findings in this and the succeeding pages show that the Referee paid close attention to the credibility of the respective witnesses and the fit of their evidence (in 2000) with the documented events of 1995. The detail will speak for itself. It has not been challenged in its particulars. The findings rest firmly on the evidence and were clearly open to the Referee who saw the witnesses under examination and cross-examination.

55 The Referee referred to leading cases in a manner that has not been the subject of any critical comment. These included the reference to the case law recognising a fourth classification of contracts involving negotiations (especially Baulkham Hills Private Hospital Pty Ltd v CG Securities Pty Ltd (1986) 40 NSWLR 622 (McLelland J), 631 (Court of Appeal)). The Referee also cited case law demonstrating the propriety of examining subsequent conduct as one means of determining whether, and if so when, negotiating parties moved into a contractual relationship (R107-8).

56 At R109 he addressed CCG’s argument based upon the sole agreement clause (13.3) in the draft D+C Contracts. This remains an aspect of CCG’s argument and I shall return to it.

57 At R111-124 the Referee stated why he determined that Litevale was the party to the Interim D+C Contract, albeit as agent for CPL. This matter is not now in dispute (see Tr pp13-14).

58 Having laid the groundwork by this careful review of the factual matrix, the Referee gave his reasons as to the applicable terms of the Interim D+C Contract in the following terms (R125-134):

11.15 The Applicable Terms Of The Design And Construction Contract

Consideration
CCG assumed the obligations in the Agreement of 3 November 1993 of retaining architectural and engineering consultants and of developing a design brief and a guaranteed maximum price for the design and construction of the Project in accordance with the brief. So, CCG had the obligation throughout 1994 of establishing the design and construction requirements for the Project, including those of relevant Authorities, codes, ordinances, regulations and standards. The consequences of CCG's work under the 3 November 1993 Agreement were carried forward into the Development Agreement to which CCG was a party as "Builder" , see below.

I note the nature of a design and construction contract is one where the contractor assumes a single point responsibility for both design and construction to meet the proprietor's stipulated requirements, in compliance with the requirements of relevant Authorities, codes, ordinances, regulations and standards. Usually, D+C contracts include onerous fitness-for-purpose obligations with respect to both design and construction. And, usually, D+C contracts place greater risk and responsibility on the contractor than is the case with construct only contracts with respect to matters such as compliance with the requirements of Authorities etc (re design and construction), responsibility for resolving unforeseen site conditions and for delays (e.g. due to inclement weather).

I note that usual approach of significant imposition of contractual responsibility and risk for design and construction is generally consistent with:
1. the evidence of the Plaintiff's witnesses (King and MacGinley) of Gomm's representations on behalf of CCG of the risks it would assume; and
2. the Defendants' contentions about the contractual risks assumed by the Plaintiff in this instance.

Of course, as in this instance, one must look to the particular terms of the D+C contract to establish the extent of particular risks imposed upon the contractor, any agreed limitations on, or exclusions of, the contractor's risk and responsibility, and regarding the nature and extent of any relief or remedy to which the contractor is entitled in particular circumstances.

In accordance with its obligations under the Agreement of 3 November 1993, CCG prepared a Design Brief and a Final Cost Plan which stated the maximum price payable for the design and construction of the Project.

MacGinley's covering fax of 1 December 1994 to the Final Cost Plan (footer dated 30/11/94) submitted "to be appended to the various contracts" contained no qualification about, nor exclusion from, the price submitted of $24.59m (exhibit D1). Rather, from the words of his fax, I consider MacGinley intended the Final Cost Plan to form part of the contracts, including the D+C contract, consistent with both CCG's obligations under the 3 November 1993 Agreement and Gomm's representations about the risks CCG would assume (evidenced by MacGinley, King and O'Rorke).

Whatever role the Feasibility Comparisons might have had with respect to Project viability, I consider they fell away so far as the D+C contract is concerned, when CCG put forward for inclusion in the Development Agreement and in the D+C contract its unqualified Final Cost Plan price for CCG's work of designing and constructing the Project. If there were certain risks CCG expected the Developer to assume, I consider CCG should have so qualified its price or the work it was to perform, but it failed to do so. Consequently, I consider that any allowances the Feasibility Comparisons might have contained are not relevant or applicable to determine CCG's entitlements.

I do not accept McIntyre’s opinion that, if items were not expressly included in the Final Cost Plan, they were thereby “excluded” from CCG’s obligations. I consider an express qualification, or exclusion, was required to achieve that effect.

Furthermore, there is no evidence that CCG qualified its price in the Final Cost Plan on the basis that it contained provisional sums, which were to be subject to adjustment for actual costs. If it was CCG's intention that amounts in the Final Cost Plan against which the words " allowance " and "provision " were noted were to constitute provisional sums adjustable on the basis of actual costs or otherwise, rather than constituting CCG's own risk assessments or estimates, then CCG failed so to qualify its price. Furthermore, it failed to qualify the benchmarks from which these amounts would be subject to adjustment, the circumstances in which they were to be adjusted and the method of such adjustment.

It is also noteworthy that such adjustable provisional sums would have been contrary to CCG's obligation under the 3 November 1993 Agreement to develop a maximum price Cost Plan (exhibit P1, document 187).

There is no evidence before me of negotiations between the parties for the D+C contract to include provisional sums which would be subject to adjustment, nor evidence the parties ever reached such an agreement. And there is no version of the D+C contract (including the contract of essential terms contended by the Plaintiff), which provided for provisional sums and their adjustment.

Consequently, I consider that any sums included in the Final Cost Plan which included the words "provision" or "allowance" were CCG's estimates for the work required and that it took the risk with respect to those estimates. I consider MacGinley's evidence under cross examination (see above) so confirms.

The absence of any agreement upon adjustable provisional sums is fatal to some of CCG's claims (see below).

Furthermore, I do not consider the Final Cost Plan defines or limits CCG’s obligations to design and construct the Project. There was no qualification to that affect which, if accepted, might have affected CCG’s obligations under the Design Brief, the other terms of the D+C contract (see below), or with respect to the DA conditions. Rather, I consider the lump sum price in the Final Cost Plan simply became the Contract Sum, plus the additional sum of $320,000 for roadworks (see below).

I consider it more probable than not that CCG's Cockburn did raise with Backstrom of Sly & Weigall CCG's risk and responsibility for compartmentation and for delay. It seems to me that position is confirmed by Sly & Weigall's covering letter of 22 December 1994 (to CCG, marked to the attention of Cockburn; exhibit P1, document 244) to the second draft Design and Construction Contract (exhibit P1, document 245). That letter (stated (in part):

"After our meeting last week you were to consider ..Of the issues discussed at our meeting, the following comments are made:

After considering this issue again, we cannot see that there is anything to be gained by a provision of this nature especially when separate contractors are to be working at the same time and because of the more important requirement that the whole of the centre be finished by the date for practical completion.

This is a delivery risk falling within the area of your responsibility. No amendments have been made to deal with this issue.

For the reasons discussed during our meeting, it is not appropriate to include the Development Agreement's definition of 'delay events' into this agreement."

However, on or about 22 December 1994, Litevale and CPL's lawyers rejected Cockburn's proposals.

I consider there is a further fatal flaw to the Plaintiff's contentions about exclusions from its risk and responsibility for design and construction. That fatal flaw is that on 23 December 1994 CCG executed a Development Agreement with Vynotas (as trustee of the Norwich Real Property Unit Trust) as "Proprietor" , Litevale as "Developer" , and Consolidated Properties Ltd as "Guarantor" (exhibit P1, document 241). As stated above, that Development Agreement:
1. contemplated a "Construction Contract" would be entered into between the Developer, Litevale and the Builder, CCG for the Works (clause 1.1);
2. defined the "Construction Cost" as the aggregate of $24,910,000, the valuation of variations and any delay or acceleration costs (clause 1.1);
3. defined the "Design Brief" as the design brief for the Works "prepared by the Developer and accepted by the Proprietor, a copy of which forms Annexure B" (clause 1.1);
4. defined the "Date for Practical Completion" as 31 October 1995 "unless revised under this Agreement" (clause 1.1);
5. provided warranties to the Proprietor, Vynotas from the Developer, Litevale and the Builder, CCG regarding the Design Brief and the design and construction of the Works (clauses 5, 8.2);
6. contained the Proprietor, Vynotas' agreement to the Developer, Litevale engaging the Builder, CCG to effect the Works under the Construction Contract (clause 8.4);
7. contained covenants from the Builder, CCG to the Proprietor, Vynotas regarding CCG's performance of the Construction Contract Works (clause 16);
8. annexed the "Design Brief" setting out the "basic parameters" applicable to the design and construction of the Project.

Theoretically, due to the definition of "Builder" in clause 1.1 of the Development Agreement ( "'Builder' means Concrete Constructions (Group Pty Ltd) (sic) or other builder as the Developer may appoint to construct the Works" ), Litevale might have entered into a D+C contract with a builder other than CCG.

However, since the project feasibility was based, and dependent, upon CCG's work under the 3 November 1993 Agreement, I consider it unlikely that another builder could have been readily procured, without significant delay whilst that other builder reconsidered the design and construction issues dealt with by CCG in assembling the Final Cost Plan. That is, such an alternative builder would have taken weeks, if not months, to price and negotiate its involvement, which would have adversely affected Project timing and feasibility. Simply put, I think the Project was dependent upon CCG's work and involvement.

Due to the inconsistent drafting of clauses 1.1 and 8.4 of the Development Agreement, there is an issue whether Vynotas' approval for another builder was required, or was already given under the terms of clause 8.4. Whilst clause 8.4 contains the Proprietor's agreement to the Builder being engaged to "effect the Works under the Construction Contract" , it seems to me the clause 1.1 definition of "Builder" (CCG "or other builder as the Developer may appoint to construct the Works with the consent of the Proprietor in accordance with clause 8.4 that consent not to be unreasonably withheld" ) necessitated Vynotas' agreement to a builder other than CCG.

It is also conceptually possible that Litevale could have entered into a D+C contract with CCG with a different price or risk allocation from that set out in the Development Agreement. However, the "Construction Contract" to be entered into by Litevale required the approval of the Proprietor under clause 8.4 of the Development Agreement (at least, if another builder was proposed). Furthermore, Litevale was not a builder and was not capable of picking up the obligation for any design and construction work which was not assumed by CCG (nor was CPL).

I do not think it would have been a readily practicable alternative for Litevale to substitute a different builder, or to negotiate with CCG different design and construction obligations to be undertaken from those set out in the Development Agreement. And the facts are that CCG had been developing the Design Brief and the price for over a year and Litevale and CPL had been negotiating with CCG for CCG to assume all of the design and construction obligations for the Project. Those obligations and CCG’s price were agreed in the Development Agreement.

I consider that matrix of facts and circumstances surrounding the Development Agreement should be taken into account.

The Development Agreement contained no qualifications about, nor exclusions from, the Design Brief or the Construction Cost. I consider that, on the date of the Development Agreement, Litevale and CCG had agreed to the Design Brief annexed to the Development Agreement, a price for CCG to carry out the design and construction of the Project of $24,910,000 and a Date for Practical Completion of 31 October 1995.

I note it was Cockburn's evidence that:
1. he had no part to play in the negotiations about the scope of works which fell within the cost plan (T604.38);
2. no-one had told him in the period up to 9 January 1995 the costs of getting dispensation from compartmentalisation were not included in the Final Cost Plan (T608.10);
3. he took it upon himself to protect CCG's position by writing the letter of 9 January 1995 (T608.12 - 21);
4. he left it to others to negotiate the matters he raised (i.e. compartmentalisation, building area, carparking, roadworks, landscaping, headworks) (T604.51);
5. he had unilaterally taken it upon himself that CCG should not enter into a D+C contract which did not allow extensions of time for wet weather or industrial delays, when he knew the Developer had committed, on the basis of discussions to which he was not a party, to deliver a shopping centre to Norwich for a maximum price of $39.1m (T613.21 - T614.26).

I consider that Cockburn's letter of 9 January 1995 (exhibit P1, document 10) regarding "compartmentalisation" , delays and the completion date was too late, because his superior, Gomm, CCG's Queensland Branch Manager, a man authorised by a power of attorney, had already on 23 December 1994 committed CCG to Vynotas, Litevale and CPL in the Development Agreement:
1. that the design and construction of the Project was to be in accordance with the Design Brief annexed to the Development Agreement;
2. to a Construction Cost for the Project of $24,910,000 (plus the valuation of variations and any delay or acceleration costs); and
3. to a Date for Practical Completion of 31 October 1995.

That is, I consider CCG had already agreed with Litevale on 23 December 1994 in the Development Agreement to those key elements of the D+C contract, without qualification or exclusion.

At that date, I consider Litevale and CCG had also agreed they would enter into a design and construction contract (i.e. the "Construction Contract" referred to in the Development Agreement) on terms which were yet to be finalised. I consider Litevale's and CCG's agreement was of the fourth class referred to above - the parties intended to be immediately bound by essential terms for the design and construction of the Project whilst also expecting to make a further contract containing additional terms, i.e. the terms of the Design and Construction Contract.

I consider it was convenient and in CCG's commercial interests in support of its claims for it later to seek to rely upon Cockburn's letter of 9 January 1995. But as stated above, I consider the letter Cockburn took it upon himself to write on 9 January 1995 was after the parties had reached agreement and that it was too late. Furthermore, there is no evidence that the parties reached any agreement to the terms proposed by Cockburn in his letter.

It is common ground between the parties that there is a contract for the design and construction of the Project. For the reasons set out above, I consider that contract was between CCG and Litevale as agent for Consolidated Properties Limited.

Agreement Upon The Design And Construction Contract
I note that in Geeburg Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) BPR [97578] 14,551, Kirby P held (quoting from the headnote):
“(iv) Per Kirby P: In order to determine in what areas the parties were, and were not, in agreement, and what matters they considered necessary in order for an agreement to exist, it is legitimate to examine their subsequent conduct.”

The evidence is that CCG initially administered the contract from commencement on site on 9 January 1995 on the basis of the first draft of the Design and Construction Contract put forward by Litevale and then, subsequently, on the basis of the third version of that contract from the date of its receipt (10 March 1995), because CCG considered there was a contract between the parties.

I consider the parties evinced an intention to be bound by the terms of the third version of the Design and Construction Contract by their conduct in administering the Project on the basis of that document and by relying upon its terms and conditions regarding their respective rights and obligations.

I consider the minutes of the Project Control Group Meetings and the minutes of CCG’s own Design Meetings further confirm that view.

The terms which the Plaintiff contends were not agreed relate to the costs and consequences of compartmentation, the grounds for extensions of time and the Date for Practical Completion. It is appropriate to deal with those issues.

Compartmentation
For the reasons set out below under the heading "Compartmentation" , I consider that:
1. CCG represented it could quickly obtain dispensation from the Building Code of Australia requirement for compartmentation of the building and the Project proceeded on that basis;
2. CCG agreed to carry out the work of obtaining dispensation for the minor fees agreed pursuant to the 3 November 1993 Agreement;
3. CCG subsequently failed to include any provision in its Final Cost Plan price for the work and risk of obtaining dispensation, or to qualify its price on the basis it required payment for that work;
4. it was MacGinley’s evidence that it was fair and reasonable for the Developer to take the view that the price offered included the cost CCG expected would be incurred in gaining dispensation from fire compartmentalisation (T516:40 – 41);
5. CCG subsequently agreed to the Contract Sum of $24,590,000 in the Development Agreement of 23 December 1994;
6. Cockburn's letter of 9 January 1995 was too late and was of no force or effect.

Date for Practical Completion
MacGinley's covering fax of 1 December 1994 to the Final Cost Plan and its enclosed construction program provided for a completion date of 30 November 1994, a construction period of 51 weeks including Christmas shutdown (exhibit D1). Within that construction program, CCG had included an allowance of 20 days for wet weather.

After considering the evidence set out below under the heading "Acceleration" , and for the reasons set out under that heading, I consider:
1. the parties agreed in the Development Agreement on a Date for Practical Completion of 31 October 1995 (exhibit P1, document 241);
2. due to delays in provision of the site and commencement (which occurred on 9 January 1995), in or about January 1995 the parties agreed on a Date for Practical Completion of 22 January 1996 (a construction period of 54 weeks);
3. the parties also orally agreed that CCG was to use its "best endeavours" to complete 5 weeks earlier by 18 December 1995, i.e. a construction period of 49 weeks, due to the importance of the centre opening prior to Christmas 1995;
4. the parties agreed in or about January 1995 that CCG took the risk for delays caused by wet weather in excess of the 20 day allowance CCG had built into the construction program for wet weather, as is evidenced (amongst other things) by CCG's letter of 6 June 1995 (exhibit D3).

There is no evidence of any agreement that CCG would be entitled to extensions of time for industrial conditions; that was not agreed.

Design Brief
As noted below in relation CCG's claims, there are some differences which are relevant to CCG's claims between the Design Brief included in the Development Agreement and CCG's earlier Design Brief which was marked as "Draft".

Due to the time difference between CCG receiving the draft Development Agreement in November 1994 and the date of execution of the Development Agreement on 23 December 1994, I cannot accept as credible Cockburn's evidence that CCG did not have the opportunity of comparing its Design Brief with the Design Brief CCG had prepared. The fact that CCG might not have made the comparison is another thing.

Clause 1.1(17) of the Design and Construction Contract put forward by Litevale defined the Design Brief as "the Design Brief annexed to the Development Agreement".

There is no evidence that CCG raised any issue about the Design Brief included in the Development Agreement prior to its execution or with respect to the Design Brief incorporated by reference in the Design and Construction Contract. The Plaintiff has not pleaded, nor made out an entitlement to, rectification of contract to substitute its own earlier "Draft" Design Brief.

I consider the Design Brief annexed to the Development Agreement forms part of the Design and Construction Contract. (The differences between that Design Brief and CCG's earlier draft Design Brief and the effect of those differences upon CCG's claims are considered below in the determinations of CCG's claims.)

Contract Sum - Roadworks
For the reasons set out below under the heading Roadworks (V26), I consider the D+C contract’s Contract Sum of $24,910,000 included an amount of $320,000 for external roadworks, but this amount was not a provisional sum subject to adjustment on the basis of actual costs or otherwise.

There is no evidence that CCG qualified its roadworks obligations on the basis of TTM’s roadworks report, or otherwise.

Estoppel
The Plaintiff wishes to approbate and reprobate the terms of the Design and Construction Contract put forward by Litevale (exhibit P1, document 13). It used and relied upon those terms throughout the Project. It even relied upon those terms in its final submission to assert that certain meetings between the parties were not privileged, on the basis that the Design and Construction Contract provided for expert determination, rather than litigation (see above). Yet, it denies the applicability of the Design and Construction Contract (exhibit P1, document 13) when it suits its purposes in support of its claims.

Even if it were considered I am wrong in my view the parties evinced an intention by their conduct to be bound by the third version of the Design and Construction Contract put forward by Litevale (exhibit P1, document 13), I have separately determined below that CCG is estopped by its conduct in using and relying upon the terms of that contract to found its rights and entitlements from now denying that contract applies and from asserting instead that another form of contract applies.

59 The Referee addressed estoppel at R137-141. He pointed to several instances where CCG administered the project in reliance on terms of the D+C Contract. These included instances where Variations were claimed by CCG in express reliance upon clause 2.8 of the D+C Contract as well as instances where other clauses of the D+C Contract were invoked in their terms.

60 The Referee explained his estoppel Determination as follows (R139-141):

Consideration
It is apparent from an examination of the Development Agreement (exhibit P1, document 241) and the Design and Construction Contract (e.g. 3rd draft, exhibit P1, document 13) that the clause references in the above CCG contract administration correspondence were to the Design and Construction Contract. The Development Agreement does not contain a clause 2.8, whereas the Design and Construction Contract's clause 2.8 contains provisions dealing with Variations. The Design and Construction Contract's clause 11 contains dispute resolution provisions, whereas clause 11 of the Development Agreement provides for remuneration of the Developer.

I note that, under cross examination, it was Robertson's evidence that he complied with the process set out in the Design and Construction Contract for progress claims because he understood there to be a contract between the parties (T173:8 - 22).

I do not accept CCG's later contention in its letter of 18 October 1995 that it only "used the documents as an administrative guide" (exhibit P1, document 303, set out above under the heading Subsequent Correspondence About The Contract). Rather, I consider CCG relied upon the terms of the third version of the Design And Construction Contract in pursuing its claimed rights and entitlements.

The Developer's Representative administered the Design and Construction Contract in response to CCG's claims based upon the Design and Construction Contract, e.g. RCP's 5 June 1995 determination of a valuation of $49,317 for CCG's claimed Variation No 2b for additional floor space to level 1; RCP's Head Contract Variation Register which listed approved Variations and their value (e.g. exhibit D22, tab 5). RCP made Cheque Requisitions for CCG's Progress Claims, e.g. RCP's letter of 1 June 1995 to Bovis McLachlan (exhibit D23, included in tab 15).

Consolidated Properties Ltd approved Cheque Requisitions for CCG's Progress Claims, e.g. the authorised Cheque Requisition of 1 June 1995 for CCG's Progress Claim No. 6 (exhibit D23, included in tab 15).

…

On the evidence, I consider from 9 January 1995 CCG used the first version and then from 10 March 1995 CCG used the third version of the Design and Construction Contract put forward by Litevale (exhibit P1, document 13) to found its rights and entitlements to claim payment and the Developer's Representative and the Developer acted in reliance upon CCG's conduct in determining CCG's entitlements and in making payments to CCG. Consequently, I consider the Defendants have made out their pleadings that the Plaintiff is estopped from now denying that the third version of the Design and Construction Contract applies to govern the parties' relationship and from asserting instead that another form of contract applies; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

Determination

For the reasons set out above, I determine the Plaintiff is estopped by its conduct in using and relying upon its terms from denying that the third version of the Design and Construction Contract (exhibit P1, document 13) applies and from asserting instead that another form of contract applies.

61 In issues 1-4 the plaintiff challenges these conclusions in relation to the Interim D+C Contract, including the conclusion that the parties were, at the relevant time in 1995, legally adhered to the presently relevant terms of D+C 3 either by application of contractual principles or the principles of estoppel.

62 The four issues are related and it is appropriate to address them together. I have not overlooked the fact that Issue 1 addresses the Interim D+C Contract and that issues 2-4 address the later agreement that effectively incorporated the key terms of D+C 3 from mid March 1995 onwards. As CCG’s Counsel acknowledged in argument (Tr 27/02/02 p142), the matters presently in dispute concern events occurring after March 1995, with the consequence that examination of the detailed contractual regime between December 1994 and March 1995 is largely academic.

63 The plaintiff challenges the findings on the content of the essential terms of the Interim D+C agreement and the content of the subsequent agreement between the parties (PS 1 §42ff).

64 It is contended that the Referee erred in law and in principle in his construction of the Development Agreement; that there was no evidence of agreement between Litevale and CCG in terms of price and scope of works; and that the Referee patently misapprehended the evidence in relation to the Development Agreement.

65 The plaintiff cites the well known passage in the judgment of McHugh JA in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] where he said (with the agreement of Hope and Mahoney JJA) at pp11,117-8.

In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship ….. A bilateral contract of this type exists independently of and indeed precedes what the parties do. Consequently,

it is an error “to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed”

…. Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words. The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract.

66 The plaintiff points out, correctly, that the Development Agreement itself contains no terms for the execution of the Works which the developer Litevale was entitled to enforce against the plaintiff CCG. The plaintiff submits that the fundamental flaw in the Referee’s analysis of the Development Agreement was his failure to distinguish between:

67 In my view the Referee did not commit this fallacy. Nor do the matters now relied upon by the plaintiff displace the force of the other matters taken into account by the Referee, in support of his conclusions and reasons on contract and estoppel, which I adopt.

68 It is true that the Development Agreement does not directly address the bilaterial relationship between Litevale and CCG, and that it expressly contemplated that this would be done in the “Construction Contract” (ie the D+C Contract) that was already in preparation.

69 It is also true that there are some areas of slight misalignment between the obligations assumed by the Builder to the Developer under the Development Agreement and those spelt out in the formal D+C Contract. These include aspects of the provisions relating to practical completion and the precise identification of the work to be done for the main contract price. It is however inherent in the fourth category of Masters v Cameron contract that it represents something less than the perfection of the parties’ contractual relationship. In any event, experience teaches that contractual perfection is never achieved in complex multilateral contractual arrangements such as the one now in contemplation. A fortiori where the relevant obligation (design and construct) contemplates that new issues will constantly present themselves. The defendants also point to plausible reasons, accepted by the Referee, touching the particular matters relied upon by CCG (see DS2 §§48ff).

163 Ormiston J then addressed the impact of s51A and its Victorian counterpart, s10A of the Fair Trading Act 1985 (Vic). He observed (at 239) that s51A does not say in what circumstances a representation as to a future matter shall be implied from a contractual promise. I respectfully agree. Later he said this (at 239, 240-1):

It would seem on the authorities that, at the least, a contractual promise would amount to an implied representation that the promisor then had an intention to carry out that promise. If it can be shown that he had no such intention, he would be guilty of misleading or deceptive conduct. Likewise it would seem that such a representation connotes a present ability to fulfil that promise which, if shown to be untrue at the time of making, would likewise characterise the implied representation as misleading or deceptive.

…

In my opinion, therefore, accepting that s51A and s10A each assumes that a promise may give rise to an implied representation that the promisor will perform an act in the future, namely the promised act, then the promisee is not, in proceedings under s51 or s11, bound to show that the promisor had no intention or no ability to perform the promise at the time of its making. The promisor will be deemed

not

to have reasonable grounds for making the representation or promise, unless he satisfies the court by evidence to the contrary that he had reasonable grounds for making that representation. He may achieve this, in part, by showing that he had a genuine intention to perform his promise and that he had the ability at the time to perform it, but in the end he must show objectively that he had reasonable grounds for making the representation. For present purposes I am not prepared to accept that the plaintiff can make out its case by showing merely promise and breach. In my opinion, that evidence, on its own, is insufficient to show that the promisee was “led into error” unless the plaintiff can rely on s10A or s51A. If there is no element of actual or deemed misrepresentation then the promisee can have been led into no error, nor can it be said to have been misled, by reason of some subsequent breach which causes it harm or loss. If the facts connote no error or misrepresentation, nothing thereby

led

it to take a course which was erroneous.

It follows from what has been said that I am not persuaded that one should treat every contractual promise as giving rise to an implied representation of the kind referred to in s10A (and s51A). However, I am persuaded that if there be an unconditional promise which forms part of the contractual obligations, then it is proper to treat the giving of that promise, at least in the ordinary case, as the making of a representation as to a future matter, being either the doing of an act or the “refusing” (sic) to do an act, being in each case the subject of the promise. Perhaps conditional promises may also be treated as the making of a representation as to future conduct, but in each case the qualified terms of the promise would usually lead to the conclusion that the maker had reasonable grounds therefore, unless it could be shown that under no circumstances would the promisor have fulfilled his promise. It is, however, not necessary to determine this latter point.

Futuretronics

Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd

164 In Serrata Owen J in the Supreme Court of Western Australia considered and adopted Ormiston J’s reasoning. He held (at 434) that a contractual promise does not, of itself, carry with it any representation as to the fact or conduct and that it is necessary to examine the contractual promise in the light of the circumstances surrounding the making of the offer and the circumstances as they have arisen, to see whether the conduct can be categorised as misleading or deceptive.

165 Section 51A provides a method for considering whether a representation with respect to any future matter shall be taken to be misleading. Absence of reasonable grounds for making the representation will deem the representation to be misleading (subsection (1)); and for that purpose, a corporation shall be deemed not to have reasonable grounds for making a representation unless it adduces evidence to the contrary (subsection (2)).

166 But this provision does not say in what circumstances a representation as to a future matter shall be implied for a contractual promise (Futuretronics at 239). A fortiori, it does not import into every contractual promise an implied representation as to intent and capacity to perform; nor does it prove that any such implied representation was relied upon by the other contracting party.

167 I readily accept that it will be comparatively easy to establish that a contracting party is implicitly representing a present intention to perform it according to its tenor. If the other party can establish causation and loss then damages should ensue, although there is usually little point in addressing such a claim because the law of contract will compensate the innocent party for the consequences of non-performance without even having to prove misleading intent from the inception.

168 But when one turns to an alleged implicit representation as to capacity to perform things are not so simple, nor should they be. There are policy reasons for restraint. The law arms the parties to a contract with rights to damages and other forms of relief if breach occurs or is threatened. A complex set of common law, equitable and statutory rights are superimposed on the terms of the bargain chosen by the parties. That bargain may have the simplicity as a contract to sell a loaf of bread or the complexity of a building agreement such as the one in question in this case.

169 Why should the parties be found or presumed to have intended more by what they expressly represented and understood? Of course, s52 goes beyond intentionally misleading or deceptive conduct, but it does not follow that the innocent party understood or relied upon anything more than the express representations and the usually adequate consequences stemming from breach of them stemming from the law touching the mutually chosen regime, ie contract.

170 As Ormiston J put it in Futuretronics (at 239):

… the mere acceptance of the promise by a promisee cannot ordinarily be characterised as being led into error. In the usual case the consequence would be that the promisee had enforceable rights. It is hard to believe that normally any promisee with ordinary contractual rights would then describe himself as having been deceived or misled.

It is only when it became apparent that the promise cannot be enforced, because, for example, it is either unenforceable or the promisee’s rights are valueless or diminished, that one may return to the original promise to inquire whether that promise was of so little substance that it can be concluded that the promisee was indeed misled or deceived in the first place, at the time of his acceptance of the promise. Thus it may then be seen that the promisor originally had no intention to perform his promise or that he originally had no capacity or ability to perform it.

171 It would be erroneous to read the latter two sentences as stating that it will always be possible to return to the original promise after breach has occurred in a search for misleading or deceptive conduct ab initio in representing capacity to perform it. Section 51A does not provide otherwise, because it is only engaged after answering the prior questions concerning the nature of the implied representation and reliance. To apply s51A to an imputed “contractual representation” as to capacity to perform without first determining whether such representation was truly made and acted upon is to miss a vital step. This, in my view, is the essential error in the Referee’s reasons.

172 In McWilliam’s Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723 it was alleged that a transport company, by presenting its tanker to the plaintiff for the loading of wine, had breached s52 by falsely representing that the tanker was free of contaminants. Giles J held that in presenting the tanker for loading, the defendant, at most, represented that the wine would be carried in accordance with the terms of its contract with the plaintiff. The key passage in his reasoning was (at 730):

Whatever the position may have been had Booth presented for loading tankers which it knew contained a contaminant, I do not think that there is to be found in its conduct in presenting the tankers for loading a representation that they were in fact free from an contaminant or, for that matter, fit for the carriage of the wine in other respects of the kinds mentioned earlier in these reasons. Booth presented the tanker to load wine for carriage on the terms of the consignment note. To the contrary of representing that it would take reasonable care of the wine, by those terms it significantly qualified its obligations. Assuming that it represented that it did not know of anything such as inadequate cleaning of the tankers which would cause loss of or damage to the wine, it did not represent that there was not such thing. The possibility of breach of contract on its part was there, and the responsibility for the potential loss or damage was what Booth sought to exclude. By presenting the tankers it did not represent that the drivers would always drive carefully, or that a valve would not spring a leak; it did not represent that there had been no carelessness in the servicing of the tanker or prime movers whereby they were not fully roadworthy; and it did not represent that there had not been carelessness in cleaning the tankers. McWilliams could not have been led to expect any such thing. What it represented was that the carriage of the wine, and the legal rights and obligations of it and McWilliams, would be regulated by the terms of the contract of carriage.

The Law of Misleading and Deceptive Conduct

173 I said earlier that there are policy reasons for restraint in inferring the making of or reliance upon a representation as to capacity to perform express contractual promises. Were it the law that every express contractual promise to pay money carried a present representation as to capacity to perform that thereby engaged s51A, an entire corpus of law relating to insolvency and insolvent corporate trading could be sidestepped by rendering the agents involved in contractual negotiation and performance personally liable through the combined operation of ss52, 51A and 82 of the Trade Practices Act. Corporations (and, more importantly, their officers) would, like the present defendants, be liable unless they proved that adequate provision was set aside at the outset to meet all liabilities capable of arising in the due performance of the contract.

174 As Ormiston J recognised in Futuretronics (at 241), it will be harder to discover implied representation and reliance (from the outset) where there is a conditional contract. The present case offers a good example of this insight. The very nature of post-contractual variations contemplate later dealings in which liability will stem from mutual assent later achieved. Why is it reasonable to infer from the complex promises alone that there was an immediate representation as to (financial) capacity to perform such obligations given that assent may be withheld or terms negotiated at the time the variation comes into play?

175 It is not quite so clear with “variations” that arise under cl 2.8, which depend on the requirements of “Authorities”. Some provision for such contingencies might be prudent from the outset. But it remains true that one is dealing with requirements “unexpectedly publicly notified”.

176 The reliance part of the equation comes into play as one asks: what might the parties reasonably have contemplated the “Developer” would do at the outset to ensure its capacity to pay in relation to these two categories of variations? The answer is by no means obvious, yet that very difficulty suggests further grounds for caution before drawing any inference of reliance upon the implied representation as distinct from rights under the contract. The plaintiff’s difficulties increase when it is recognised that the party with whom it contracted, ie Litevale, was a corporation with limited liability and specifically formed for the purpose of the Project. It is very unlikely that the plaintiff would not have known this. It is certain that the plaintiff knew that it had not arranged guarantees or security for protection of its rights to payment under the contract.

177 In my view it was not open to the Referee to conclude in this case that the contractual promises were also “contractual representations” or that they had been relied upon as such by CCG at the time of contract formation.

178 These are my reasons for rejecting the Referee’s conclusion that there was actionable misleading or deceptive conduct. Analogous reasoning explains why I cannot accept his findings on s51A either.

179 The basal question presented by s51A is proof of absence of reasonable grounds for making a representation. When asking about the existence of reasonable grounds for representing capacity to pay at the inception of an ongoing, developing contractual relationship such as a Design and Construct Contract of immense size and complexity one needs to consider issues such as the likelihood of circumstances giving rise to a need to pay for “variations”, the timing as to when that need is likely to arise, and resources which the party in the plaintiff’s position would reasonably consider to be available. The plaintiff knew it was dealing with a limited liability company and that the parties had endeavoured to work out feasibilities and likely profit margins. In such a context, it would be unreasonable to put the plaintiff automatically into the position of a protected secured creditor. There were elements of risk undertaken on its part also, as evidenced by its participation in the pre-contractual discussions about feasibility and profitability.

180 Although the Referee was entitled to reverse the onus of proof if satisfied that s51A was engaged (which I am not), he still had to grapple with these detailed issues. It was not enough, in my view, to point to the absence of evidence from the defendants as to them having the wherewithal to pay from the outset.

181 In any event, one can see how some of the reasoning adopted for establishing the plaintiff’s s51A case was quite at variance with the approach to the “contractual representation” which was found to have been made at the outset of the D+C 3 contract. I shall endeavour to explain this by reference to the defendants’ submission on this matter.

182 The defendants submit that there was ample evidence before the Referee to prove the reasonableness of the implied representation found to have been made. That evidence was that it was reasonable at the outset to represent that the corporate defendants would have the capacity to pay for variations made and accepted under the terms of the design and construct contract. That evidence, and other bases for challenging the Referee’s determination on this issue, is referred to in §§24-5 of DS1. Some of that material relates to feasibility studies made in 1994, before any contract was entered into. Thus, the defendants point to the evidence (which the Referee apparently accepted) that Mr King and Mr O’Rorke believed on reasonable grounds at the time of contracting that Litevale would make a profit of about $3 million from leasing income (R329, 334). This anticipated profit would provide $500,000 over and above the $2.5 million to be held as the rental guarantee. The defendants next point to evidence (again accepted by the Referee) that this reasonable anticipation of such a profit was only dashed after the opening of the Centre in late 1995 when, due to then prevailing economic conditions, the shops did not lease as quickly as expected (R334-5). The Referee found that it was (R336):

As a consequence of the leasing performance of the Project, [that] the rental guarantee was consumed and, except with respect to the amount of $39,252, the Developer has not paid the Plaintiff for the Variations I have determined above. CCG has thereby suffered loss and damage.

… there is no basis to find:

(a) the Defendants were aware, or should have been aware, prior to Practical Completion that the leasing performance of the Centre would be poor and that, in consequence, the profitability of the Project would be adversely affected by the rental guarantee.

183 In my view these findings on the s51A issue illustrate why this part of the Report contains an essential fallacy or slide of reasoning. It stems from the Referee’s failure to examine both the impact of the representation on the plaintiff as at the time when it was made (ie the entry into D+C 3) and the reasonableness of the defendants’ conduct in having made the disputative representation as at that date.

184 At R329ff in the passage commencing “It is noteworthy”, the Referee indicates that he regarded the Developer’s “profit” as the sole fund from which it could pay for variations, absent additional (semble, outside) funding.

185 Applying the reverse onus imported by s51A, the Referee (at R330) fixed the corporate defendants with breach because no evidence had been addressed that “the Developer” “had the capacity at the time of the Design And Construction Contract to pay for Variations which might arise pursuant to clause 2.5(1) as a consequence of the unexpected requirements of an Authority after the Relevant Date or under clause 2.8 as a consequence of a Variation request”.

186 The “capacity” in question which therefore should have been examined on the reasonableness issue was a financial ability at the time of D+C 3 to pay for variations which might arise late under the Variations clauses.

187 There is in fact discussion about the Developer’s later capacity to pay in the portion of the Report dealing with rejection of the plaintiff’s claim based upon representations by silence (R332-5). It is set out in the extended passage quoted above. Neither side challenges this determination. In that context, the Referee accepted the plaintiff’s submission that the Developer’s impecuniosity was demonstrated by Exhibits P5, P6, P65 and P66 (R335, referring to plaintiff’s submission at 7.9.2). Those Exhibits are or relate to financial statements of Litevale. They reveal that Litevale never earned income or traded in its own right, being the trustee of a Retail Unit Trust whose beneficiaries were Consolidated Management Resources Pty Ltd, Hacknell Pty Ltd and Casper Corporation (the latter two being trustees for family trusts). It is not clear to me why the financial statements reveal impecuniosity as at 30 June 1995 (their latest date) or as at any other relevant time. Be that as it may, the Referee concluded (at R335):

However, on the evidence before me, there is no reason for me not to accept King and O’Rorke’s evidence about the timing of their concerns about leasing the Centre and regarding the profitability of the project. In my opinion, that evidence was not effectively challenged by anything put to them in cross examination or by other evidence. Consequently, there is no basis for me to find that the Defendants engaged in misleading or deceptive conduct by silence by failure to inform CCG that the Developer no longer had the capacity to pay for Variations, due to the leasing performance of the Centre and the resultant profitability of the Project being adversely affected by the rental guarantee to Norwich.

188 This finding, and the evidence to which it refers (summarised at R334-5) establishes in the Developer’s favour that there were reasonable expectations of a profit sufficient to cover Variations until some time after the opening of the Centre. The reasonableness is underpinned by the evidence that the plaintiff represented as much prior to contracting (see the Referee’s findings and the evidence referred to in DS4). Problems only arose (qua profitability) when the level of leasing after practical completion caused a drop in projected rental income.

189 These findings cannot be reconciled with the conclusions of unreasonable conduct at the inception of the contract that were made in the context of the Trade Practices Act claims under present consideration.

190 Accordingly, I would not adopt the s51A conclusions either.

191 One of the defendants’ additional complaints is that the Referee (at R330.2) found a misrepresentation different from that pleaded. The finding concerns a representation made when the design and construct contract was entered into, whereas the pleading averred representations “at the time payment would become due”. I find it unnecessary to deal with this issue as to the outer limits of the case as pleaded or fought before the Referee. That is because the issue before me is whether or not the Referee’s conclusions should be adopted. Those conclusions (addressing the situation as at the time of entry into D+C 3) cannot themselves stand, for the reasons already given.

192 It is unnecessary to consider the separate challenge to the finding of accessorial liability made against Mr O’Rorke. That claim falls away with the rejection of the findings against the corporations themselves.

Issue 14: Application of clause 2.8 to

(a) landscaping requirements of Hastings Council;

(b) charges imposed by North Power;

(c) charges imposed by Telecom.

193 These issues were unresolved when judgment stood reserved. I am unsure whether they remain in dispute, the extent to which they are in dispute and the extent to which the determination of the earlier 13 issues impact on Issue 14.

Disposition

194 If anything of issue 14 remains, the parties should let me have a brief note before the next hearing date stating their respective positions and the portions of submissions and transcript pages referable to this Issue. Subject to this, I direct the parties to bring in Short Minutes of Order to give effect to these reasons.

195 My present view is that the defendants should have the costs of the hearing before me. I am not in a position to know what should be done about the costs of the proceedings referable to the matters fought before the Referee and not agitated before me. I will hear submissions on costs on the day when Short Minutes are brought in.

**********

Last Modified: 08/08/2002

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Citations

Concrete Constructions Group v Litevale Pty Ltd [2002] NSWSC 670

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CITATION:	CONCRETE CONSTRUCTIONS GROUP v LITEVALE PTY LTD & ORS [2002] NSWSC 670
FILE NUMBER(S):	SC 055058/97
HEARING DATE(S):	25, 26 and 27 March 2002
JUDGMENT DATE:	1 August 2002
PARTIES :	CONCRETE CONSTRUCTIONS GROUP v LITEVALE PTY LTD & ORS
JUDGMENT OF:	Mason P at 1

COUNSEL :	Plaintiff: R W Hunt Defendant: F Corsaro SC
SOLICITORS:	Plaintiff: Corrs Chambers Westgarth Defendant: Deacons
CATCHWORDS:	CONTRACT - dispute between builder and developer of shopping centre over status and content of contracts - whether additional work done by the builder was a legitimate 'variation' - ESTOPPEL - parties adhered to unexecuted contract - whether contract governed parties' relationship - AGENCY - parties to contract - TRADE PRACTICES - misleading and deceptive conduct - misrepresentation as to future matter - contractual promises as representations - intention or capacity to perform - conditional promises - complex contractual relations.
LEGISLATION CITED:	Corporations Law Fair Trading Act 1987 Land and Environment Court Act 1979 Trade Practices Act 1974 (Cth)
CASES CITED:	Abigroup v Peninsula [2001] NSWSC 752 Accounting Systems 2000 (Developments) Pty Limited v CCH Australia Limited (1993) 42 FCR 470 Australian Tallow & Agri-Commodities Pty Ltd v Malaysia International Shipping Corporation (2001) 50 NSWLR 576 Balkin v Peck (1998) 43 NSWLR 706 Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 Bill Acceptance Corporation Ltd v GWA Limited (1983) 78 FLR 171 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Brenner & Anor v First Artists' Management Pty Ltd [1993] 2 VR 221 C H Magill v National Australia Bank Ltd [2001] NSWCA 221 City of Botany Bay Council v Jazabas Pty Ltd [2001] NSWCA 94 Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97326] McWilliam's Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723 Montgomerie v United Kingdom Mutual Steamship Association Ltd [1891] 1 QB 370 Ridgway & Anor v Consolidated Energy Corporation Pty Limited (1987) ATPR 40-754 Serrata Invest Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 Walter Constructions Group Ltd v Walker Corporation Ltd (2001) 47 ATR 48 Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679 Yorke v Lucas (1985) 158 CLR 661
DECISION:	See [194]