Concrete Constructions Group v Litevale Pty Ltd & Ors (No 2)

[2003] NSWSC 411

CITATION:	CONCRETE CONSTRUCTIONS GROUP v LITEVALE PTY LTD & ORS (NO 2) [2003] NSWSC 411
HEARING DATE(S):	10 December 2002
JUDGMENT DATE:	21 May 2003
JUDGMENT OF:	Mason P at 1
DECISION:	See [76]
CATCHWORDS:	RESTITUTION - whether Defendant developer was unjustly enriched - "free acceptance" - where Plaintiff's services were neither volunteered nor provided "officiously" - whether Defendants, as reasonable persons, would have realised that the Plaintiff expected to be paid - Referee's conclusion supported by chain of correspondence - CONTRACT - Responsibility for payment to third party power supplier - Plaintiff's obligations under Design and Construction Contract-where Defendant purported to make payment on behalf of Plaintiff - whether Defendant was entitled to deduct that amount from its total payment to Plaintiff - PROCEDURAL FAIRNESS - whether unjust to now allow Defendants to raise claim - where matter already addressed by Plaintiff before Referee and ruled upon in Defendant's favour - mathematical oversight of Referee
PARTIES :	CONCRETE CONSTRUCTIONS GROUP v LITEVALE PTY LTD & ORS
FILE NUMBER(S):	SC 055058/1997
COUNSEL:	Plaintiff: R W Hunt Defendant: F Corsaro SC
SOLICITORS:	Plaintiff: Corrs Chambers Westgarth Defendant: Deacons

OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST

MASON P

Wednesday 21 May 2003

SC 055058/97 CONCRETE CONSTRUCTIONS GROUP v LITEVALE PTY LTD & ORS (No 2)

JUDGMENT

1 MASON P: Most issues in these proceedings were addressed in my earlier reasons for judgment (Concrete Constructions Group v Litevale Pty Ltd & Ors [2002] NSWSC 670 ((2002) 170 FLR 290; (2002) ATPR (Digest) 46-224), the “main judgment”).

2 The parties have filed additional submissions in support of their remaining contentions. These are:

• Plaintiff’s outline of submissions on issues 5 and 14, dated 1 November 2002 (PS 6)

• Defendant’s outline of the existing contentions and submissions in relation to acceleration and Northpower, dated 1 November 2002 (DS 5)

• Plaintiff’s outline of submissions in reply to defendant’s written submissions, dated 15 November 2002 (PS 7)

• Plaintiff’s outline of submissions on general principles in relation to costs, dated 19 November 2002 (PS 8)

• Defendants’ provisional outline of submissions in relation to costs, dated 4 November 2002 (DS 6).

Issue 5

3 In the proceedings before me concerning adoption of the Referee’s Report, the issue of the plaintiff’s challenge to the Referee’s rejection of a particular restitutionary claim was raised (Issue 5).

4 Additional costs were incurred by the plaintiff in accelerating completion of the Works. The Referee held that there was a discussion at a meeting on 26 April 1995 when the defendants’ representative asked the plaintiff’s representative whether the plaintiff could complete to enable the Centre to open prior to December 1995. The plaintiff’s representative said “Yes, we can make it”, but did not state that it would cost more money. Practical completion was achieved by 30 November 1995 and this involved additional expenditure by the plaintiff.

5 The plaintiff sought to recoup this outlay by claiming the cost under a collateral contract (R203-4), as Variations (R204-8), in estoppel (R208-11), under statutory counts based on misleading or deceptive conduct (R211-15) and in restitution (R215-221).

6 Each claim failed, according to the Referee. Nevertheless, the Referee helpfully quantified at $533,448 the monetary value of the additional work done by the plaintiff to achieve accelerated completion (R221-223).

7 The formal claims for Variations were made on 4 August 1995 (Acceleration Claim No 1: V30) and 23 October 1995 (Acceleration Claims No 2: V34 and No 3: V35).

8 This Variations cause of action failed for two reasons. First, it was held that the additional work fell outside cl2.8(1) of the D+C Contract which relevantly stipulated that:

A request to carry out a Variation may require the Builder to do all or any one or more of the following things:
(a) increasing, decreasing or omitting any part of the Works;
(b) changing the character or quality of any material or work;
(c) changing the levels, lines, positions or dimensions of any part of the Works; and
(d) executing any additional work.
The Referee held that acceleration did not fall within either (b) or (d). He said (R205, correcting two obvious errors):

Whilst clause 1.1(28) contemplates that … a variation might involve delay or acceleration, that does [not] mean delay or acceleration constitutes a Variation.

9 Secondly, the Variation claims failed because procedural conditions precedent set out in cl 2.8 had not been satisfied (see R206-8).

10 These findings relating to the Variation claims are not challenged. They form the backdrop to the restitutionary findings that remain in dispute.

11 The Referee rejected the restitutionary claim for the following reasons (R215-221):

Restitution
The Third Further Amended Summons pleads an entitlement to a quantum meruit for acceleration (Claim 3 Restitution) and states (at D1) that a question appropriate for referral is the reasonable remuneration the Plaintiff may be entitled to by way of restitution. Consequently, it remains to be determined whether the Plaintiff is entitled to restitution for the acceleration.

In Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 it was held that a right to recover on a quantum meruit rests not on implied contract but on a claim to restitution or one based on unjust enrichment.

As I have determined that the work of acceleration was not the subject of contract, any right to recovery would be on the basis of a restitutionary quantum meruit, rather than a contractual quantum meruit. In Pavey & Matthews Pty Ltd v Paul Deane J described a restitutionary quantum meruit (at 263) as “an amount which constitutes, in all the circumstances, fair and just compensation for the benefit or ‘enrichment’ actually or constructively accepted.”

In Pavey & Matthews Pty Ltd v Paul , Deane J said (at 256 – 257):
“... unjust enrichment ... constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case ... In a category of case where the law recognizes an obligation to pay a reasonable remuneration or compensation for a benefit actually or constructively accepted, the general concept of restitution or unjust enrichment is ... also relevant ... to the identification of the proper basis upon which the quantum of remuneration or compensation should be ascertained in that particular category of case.”


If, contrary to my determination, it were regarded the acceleration did constitute a “Variation” under the terms of the Design And Construction Contract, then the acceleration would be governed by that contract. It has been held the obligation to make restitution will not arise where there is a subsisting enforceable contract between the parties for the performance of the services in question; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251; Brenner & Anor v First Artists’ Management Pty Ltd & Anor [1993] 2 VR 221. Consequently, if it were considered the acceleration did constitute a Variation, then no right to payment would arise on the basis of restitution. (I have found above such a Variation would fail for CCG’s non-compliance with the clause 2.8 notice requirements.)

Dietrich, Restitution, A New Perspective, Federation Press, 1998, Sydney sets out the necessary “component parts” of unjust enrichment as follows (at 3.1.2, p37):
“... unjust enrichment is usually given content by reference to a number of ‘component parts’ or ‘essential elements’ ... the essential feature ... is:
(1) the existence of an enrichment or benefit in the defendant’s hands;
(2) which benefit is gained at the plaintiff’s expense; and
(3) which is for some reason ‘unjust’, that is, that some ‘unjust’ factor justifies restitution.”

Mason & Carter, Restitution Law In Australia, Butterworths, 1995 sets out a similar formulation (at [203], p38):
“Although the cases do not provide an authoritative statement of the content of unjust enrichment, it is clear that there are three basic elements to the concept, analysis of which is required in any claim to restitution for an unjust enrichment. Because they delimit the concept of enrichment which is unjust, each of those elements is essential: all must be satisfied. The elements are:
(1) ‘benefit’;
(2) ‘at the plaintiff’s expense’; and
(3) ‘injustice’.”


CCG carried out the further acceleration at the request of the Developer to achieve Practical Completion by 30 November 1995. CCG achieved that early completion at its expense. On the evidence, I consider the Developer took the benefit of that early completion (i.e. the benefit of early trading of the Centre, early completion of the sale contract to Norwich and, presumably, consequent savings of interest) and was thereby enriched at the expense of the Plaintiff. Thus, I consider the first two of the three components, or elements, of unjust enrichment are satisfied.

The difficult question arises whether the Developer was unjustly enriched and restitution is appropriate to address that injustice?

Dietrich, Restitution, A New Perspective, states (at 3.1.4, p43):
“... unjust enrichment theorists themselves emphasise that the existence of an enrichment gained by subtraction from another does not of itself justify relief. It must still be ‘unjust’.”

The authors of Mason & Carter, Restitution Law In Australia (supra) comment on the necessary element of injustice as follows (at [226], p59):
“In the unjust enrichment analysis there is a third factor of injustice which must always be found in addition to the requirements implied by ‘enrichment at the plaintiff’s expense’. It goes without saying that not every benefit obtained by a defendant can be described as unjust and worthy of a restitutionary claim. ...
Consideration of the question of ‘injustice’ therefore assumes that a situation has arisen in which the party from whom restitution is sought (the defendant) has been enriched at the expense of the party seeking the order for restitution (the plaintiff). There is an ‘unjust’ enrichment if there was an element of injustice, unfairness or inequity in the circumstances in which the enrichment was conferred. Alternatively, the conduct by which the defendant seeks to retain the enrichment must be capable of being described as unjust, unfair or unconscionable.”


Since the Developer’s acceptance of the benefit of early completion arose on handover of the Centre which CCG was contractually obliged to provide under the D+C contract, I do not consider the Developer’s acceptance of the benefit itself was unconscionable or unjust – rejection of the benefit or handing it back was not an option. The question then is whether retention of the benefit was unjust under the circumstances.

In Davenport & Harris, Unjust Enrichment, Federation Press 1997, the authors comment about the necessary element of unjust retention of the enrichment as follows (at 5.4, p42 – 43):
“This element is the most difficult and elusive aspect of unjust enrichment. The word ‘unjust’ expresses the common quality of those factors which, when present in conjunction with ‘enrichment’, have been held to call for restitution; that is, it is not in every case where a defendant has acquired a benefit at the plaintiff’s expense that restitution will be granted. The defendant’s retention of a benefit is considered to be ‘unjust’ in the situations listed below. It should be noted that these so-called ‘justice factors’ encompass a broad range of conduct, knowledge and events, and therefore cannot be exhaustively defined, partly because they are found in many areas of law, and partly because courts rarely discuss this aspect of a restitution case. Consequently, the situations listed here have been chosen as being those potentially relevant to building ... :
(1) where the transfer of the benefit is involuntary (including the non-officious conduct of the plaintiff);
(2) where the benefit has been freely accepted by the defendant with the knowledge that it was not intended to be provided gratuitously;
(3) where the plaintiff did not confer the benefit while performing an obligation owed to a third party, or did not otherwise act voluntarily in the plaintiff’s own self-interest.”


I note that in Pavey & Matthews Pty Ltd v Paul the injustice arose out of the owner taking the benefit of a builder’s work carried out under an oral building contract rendered unenforceable by legislation.

In Brenner & Anor v First Artists’ Management Pty Ltd & Anor [1993] 2 VR 221, Byrne J said (at 259 – 260):
“It was submitted ... that the test was whether each of the parties thought at the relevant time that the work would be recompensed. I think that the court is not concerned with the actual state of mind of the parties or of either of them: Sabemo’s case at p. 900. Moreover, the enquiry must in my view be principally directed to the position of the party to be charged, for the thread running through this area of law is the injustice of the enrichment of that party. In my opinion the appropriate enquiry is whether the recipient of the services, as a reasonable person, should have realised that a person in the position of the provider of the services would expect to be paid for them and did not take a reasonable opportunity to reject those services: Jones, Restitution in Public and Private Law, (1991), p. 108. Where the services are provided under a contract which turns out to be void or otherwise ineffective or pursuant to a request made in a normal commercial relationship with a person whose business it is to provide those services for reward, this requirement will be satisfied.”
Byrne J also said (at 261):
“... The claim of the plaintiffs is that they provided services and that the defendant accepted the benefit of them in circumstances giving rise to an obligation to make restitution. In a case such as this, the plaintiffs must show that the defendant accepted the benefit of their services in circumstances where he, as a reasonable person, should realise that the plaintiffs would expect to be paid for them. ... Where, upon a proper analysis of the facts ... it was not in the contemplation of the defendant as a reasonable man that the plaintiffs realised that he would be responsible for payment, then the claim against him in respect of those services must fail. ...”


There is nothing before me to suggest Byrne J’s analysis in Brenner & Anor v First Artists’ Management Pty Ltd & Anor is incorrect.

It is a closely balanced matter and one can view it either way.

I have accepted King’s evidence that, when asked at the meeting with Target (which I accept from the minutes occurred on 26 April 1995) whether CCG could complete to enable the Centre to open prior to December 1995 CCG’s representatives said “Yes, we can make it”, but did not state that it would cost more money. There is no evidence CCG stated completion by that date would involve additional work of [sic:?or] acceleration or that CCG expected to be paid for that work. It was King’s evidence that he did not regard CCG working to the 30 November 1995 date as acceleration. It was also King’s evidence that, had he been told completion by 30 November 1995 would cost more money, he would not have made a commitment to Target without discussing it with O’Rorke or others. It was Packer’s evidence he informed King in a telephone discussion in June or July 1995 that costs would be involved, but I have not accepted that evidence for the reasons set out above.

On the evidence before me and on the basis of the above findings, CCG agreed it could reach Practical Completion by 30 November 1995 without any warning that would require additional resources or additional work for which CCG would expect, and claim, additional payment. Furthermore, without such a warning or condition of its agreement, the circumstances of CCG’s “best endeavours” obligation to achieve completion by mid-December 1995 might have resulted in the Developer construing, or misconstruing, that CCG was doing nothing, or little, more than meeting that existing obligation.

I note early completion might also have construed [sic] a benefit on CCG of some reduction in site and (possibly) off site overheads.

If anything, by CCG’s failure clearly and expressly to indicate its intention to claim for acceleration prior to its commencement or within a short period of time thereafter, I consider the Defendants were misled by CCG to the effect that there would be no claim. On the evidence, that position continued from April 1995 to early August 1995. Furthermore, by its failure to inform the Developer of its intention to claim, it seems to me CCG deprived the Developer of the opportunity to reconsider and reverse its acceleration request, or to reach agreement with CCG about the extent of payment to which CCG would be entitled.

In all the circumstances, it does not follow that the Developer should reasonably have realised CCG expected to be paid extra to achieve Practical Completion by 30 November 1995.

From about the date of CCG’s 4 August 1995 claim (since his conditional offer was first made on 3 August 1995), O’Rorke informed CCG the Developer would only make payment for acceleration on the conditions that payment be limited to the extent of interest savings and provided CCG did not pursue further claims. CCG voluntarily continued its work of acceleration (presumably, in the hope of reaching agreement on payment, or on the basis it considered it had some rights) and subsequently rejected those conditions.

I note that Mason & Carter, Restitution Law In Australia (supra) makes the following comments about work done in expectation of concluding negotiations (at [1033], p355):

“... there is an important distinction between cases where a person does work in the belief that there is a contract, and cases where work is done in the knowledge that negotiations may never be completed. ...

... The expectation that the work will be remunerated under the terms of [a] contract yet to be agreed is not a proper basis for a claim to reasonable remuneration if the negotiations come to nothing. ... the principle of unjust enrichment is not a response to reliance per se. In all cases, in order to rely on restitution, the plaintiff must establish both enrichment and injustice. It is not sufficient merely for a plaintiff to assert that a request to do work was relied upon, or that there was a legitimate expectation that a contract would be agreed.”

Mason & Carter, Restitution Law In Australia (supra) also states (at [228], p60):
“Generally, mistake of fact or law has been distinguished from a mere misprediction as to what may subsequently occur. Accordingly, injustice is not generally shown by proof that work was done in anticipation of an agreement to remunerate the work.”


There does not seem to me to arise a right to payment on CCG’s part, which has been unjustly avoided by the Developer.

Whilst the Developer has taken the benefit and has been enriched by CCG’s work in achieving Practical Completion by 30 November 1995, I do not consider under all of the circumstances the Developer has been unjustly enriched so as to require it to make restitution.

12 In the main judgment I said this:

ISSUES 5, 7, 9 and 10
87. As I understand its final position, the plaintiff accepts that these issues fall away if the Referee’s findings as to the content of the contractual agreement between the parties are upheld (PS 1 §§14; Tr 25/03/02 p51; PS 5 §§33-5).
88. In the case of issue 5, the plaintiff does not accept the Referee’s finding (R226) that acceleration to complete before 15 December 1995 was outside the Variation clause. Without considering the issue in detail l record that I find the reasons at R219-220 persuasive. But let it be granted that the plaintiff is correct. The Referee found that, if he were wrong on this issue, the plaintiff would fail for non compliance with the antecedent notice and procedural requirements of cl 2.8. I note that the plaintiff contends otherwise (PS 1 §102(2), (3)), but I find it unnecessary to consider those submissions in light of my conclusions on the main issue.

13 The plaintiff promptly raised the contention that the understanding stated by me in par [87] of the main judgment was wrong.

14 The first matter to be determined is whether it is open to the plaintiff to seek to “re-open” my judgment in respect of issue 5. The defendants accept that the plaintiff did not withdraw its challenge to the finding on the restitutionary claim for acceleration. However, the defendants submit that it is now too late to visit the issue. I disagree. It is unnecessary to address the case law concerning the limited power to open final judgments. No final judgment or order has been pronounced. The understanding stated in [87] was premised on my belief that, in oral submissions, the plaintiff had abandoned the alternative restitutionary claim clearly advanced in its written submissions. I am satisfied that this belief was wrong (see Tr 27/03/02 p150). I am further satisfied that the plaintiff never intended to convey this impression. It would therefore be contrary to the interests of justice for me to refuse to rule upon the restitutionary issue joined in the written submissions.

15 The plaintiff’s primary attack addresses the Referee’s conclusion that the plaintiff failed to show that any enrichment accruing to the defendants was “unjust” in the sense discussed in the authorities referred to by the Referee. The plaintiff points to statements supporting the principle that a defendant who is not contractually bound may nevertheless benefit unjustly from services rendered if the defendant “freely accepts” those services (Goff and Jones, The Law of Restitution 5th ed 1998 pp 18, 43-44. See also Birks, An Introduction to the Law of Restitution, 1985 chapter 8). As Goff and Jones point out, many of the cases susceptible to this analysis are those where the services were rendered in the context of an ineffective contract. The principle of free acceptance is also suggested as an explanation for a line of authority which holds that a quantum meruit claim will lie for the value of services rendered under an entire contract which has not been substantially performed and which the defendant has wrongfully repudiated (ibid, p 20). The validity of the principle is not beyond dispute (see Burrows, The Law of Restitution, 2nd ed 2002 pp20-23, 402-407) but it is unnecessary to resolve that large issue in these proceedings.

16 In support of its restitutionary claim based on the notion of free acceptance, the plaintiff embraces the finding that acceleration was not a “Variation”. Accordingly, the restitutionary claim does not (it is submitted) run foul of any general principle about the subsidiarity of unjust enrichment, especially the idea that restitution cannot be invoked to trump a contractual allocation of risk (see Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251; Grantham and Rickett, “On the Subsidiarity of Unjust Enrichment” (2001) 117 LQR 273).

17 The plaintiff relies on the fact that the services involved in the acceleration claim were neither provided officiously nor volunteered by the plaintiff. Had the services been provided “officiously” or had they been “volunteered” this would almost certainly have precluded any restitutionary claim in the present circumstances. But something more is required to establish the necessary “unjust” factor. The plaintiff does not submit otherwise.

18 In the final analysis the plaintiff contends that it would be unconscionable for the Developer to have the benefit of early completion without paying the plaintiff the reasonable cost of achieving that earlier completion.

19 The matter has been fought on the basis of the evidence before the Referee.

20 The plaintiff places particular reliance upon a letter of 4 October 1995 from the Developer to Target Australia Pty Ltd, the lead tenant. The letter (Ex P56) relevantly states:

“Our understanding of the opening date and rental commencement is:-
- Target’s preference has always been for an earlier (1995) rather than a later (1996) opening.
- In keeping with Target’s preference we brought forward our construction programme from a comfortable March 1996 opening to the current programme.
- If we were able to achieve our programme Target would co-operate by paying full rent and outgoings from opening day.
We have attempted to maintain an “open book” approach to this project by ensuring that Target have had access to all available information throughout the development and construction phases.
In line with our understanding that Target shall pay full rent and outgoings from opening day we ask you to consider:-
- Significant time delays have been incurred at a high cost to ourselves in ensuring that this project proceeds including:-
- Road closures
- Negotiating a Development Approval with a difficult local authority
- Land and Environment Court challenge and subsequent court injunctions stopping work on site (10 days)
- Heritage Council challenge
- Wet weather delays (currently 45 days lost)
- Subsequent to the previously mentioned time delays, the construction programme has been accelerated at considerable cost to ourselves to achieve a pre-Christmas 1995 opening in line with Target’s request.
We believe that we have co-operated wherever possible with Target’s requests and are concerned that further financial cost may result from out attempting to achieve an opening date to help Target trade during the prime Christmas retail period.
We await your comments.

21 The plaintiff submits that the Referee failed to address the critical issue whether the defendants, as recipients of the services, should (as reasonable persons) have realised that the plaintiff would expect to be paid (cf Brenner at 259-61). It further submits that a reasonable person in the position of the Developer would have realised that the plaintiff expected to be paid for the acceleration, more particularly having regard to:

(a) the chain of correspondence referred to at R190-201;

(b) the plaintiff’s claims for payment in respect of acceleration by way of variation; and

(c) the Developer having offered to make limited payment on conditions that were not acceptable to the plaintiff (as noted at R220.8) – the plaintiff submits that a reasonable person would not assume that, because the plaintiff rejected a limited and conditional offer of payment, it no longer expected any payment in respect of acceleration it was continuing to perform.

22 The relative force of these submissions demonstrate the correctness of the Referee’s conclusion that it was “a closely balanced matter and one can view it either way”. Nevertheless, the submissions do not persuade me to the requisite standard that the Referee erred in his closely balanced and necessarily impressionistic ultimate conclusion.

23 The primary materials are adverted to in the Report, as the plaintiff recognises in its submissions summarised above.

24 The “chain of correspondence” reveals the parties negotiating and posturing as well-informed participants. The letter set out above, upon which the plaintiff places most emphasis, shows the Developer asking Target to “consider” the reasonableness of paying extra for the benefits of acceleration at a time when it remained open to the plaintiff to ease back upon working towards early completion if it suited its interests or bargaining position to do so. Instead, work continued apace in circumstances where the Developer was not committing to agree to pay extra and where the extent of the added cost (to the plaintiff) or benefit (to the defendants) was unknown.

25 The plaintiff also points to evidence that the Developer indicated in August/September 1995 that it “proposed to offer some contribution towards the costs CCG are complaining about”, but only “if CCG is prepared to accept that this will bring all of its claims to an end”. No such acceptance was forthcoming.

26 The nub of the Referee’s reasoning (R219-220) is found in the paragraphs following his statement about the matter being closely balanced. It includes a finding that, in all the circumstances, it did not follow that the Developer should reasonably have realised CCG expected to be paid extra to achieve practical completion by 30 November 1995. This, in essence, addresses the legal proposition taken from Brenner that the plaintiff identifies as the key enquiry. See also Liebe v Molloy (1906) 4 CLR 347; Update Constructions; Trimis v Mina [1999] NSWCA 140, 16 BCL 288; ABB Power Generation Ltd v Chapple (2001) 25 WAR 158 at 163-4. The plaintiff accepts that the Referee correctly set out the law (Tr 10/12/02, p179).

27 The primary factual conclusions upon which the ultimate conclusion is based are supported in the evidence and are entirely plausible. I confirm my tentative conclusion that the Referee’s reasons were persuasive (main judgment at [88]).

28 The plaintiff first lodged its claim for Variation No 30 – Acceleration on 4 August 1995. It covered claims for a miscellany of different tasks performed from late April onwards (PS 6, pp42, 51-54). It was accompanied by a statement that “we require your acceptance to these costs in order to continue acceleration to meet your commitments” (R207). This variation claim failed inter alia for want of prior compliance with the Contract’s procedural requirements (R207-8). The delay in making the formal claim, the terms of the accompanying statement, and the chain of unresolved negotiations before and after it show why the Referee’s conclusions in this regard were well based.

29 The second and third Acceleration claims (V34 and V35) were made on 23 October 1995. They also span a miscellany of items (see PS 6, pp42, 55-60). Many relate to invoices for formwork and concern work which the plaintiff asks the court to infer was done after discussion had commenced in earnest in August as to its entitlement to extra payment for acceleration. The Referee did not overlook this, and he was entitled to conclude that the plaintiff “voluntarily continued its work of acceleration (presumably, in the hope of reaching agreement on payment, or on the basis it considered it had some rights) and subsequently rejected [the conditions offered by the Developer]” (R220).

30 There was no error of principle or of law on the Referee’s part. His findings on the restitutionary claim for acceleration should be adopted.

31 Merely because the claim fell outside the Variation clause as well as failing to satisfy its procedural prerequisites did not establish automatically that acceleration fell outside the overall contractual allocation of risk. It is, however, unnecessary to consider that question further, as I have adopted the Referee’s findings on the “unjustness” issue.

Issue 14

32 I adverted to this in pars [193]-[194] of the main judgment. At that stage, it involved the application of cl 2.8 to three payments allegedly made by the Developer on behalf of the plaintiff.

33 The only remaining dispute concerns the plaintiff’s payment of $357,680 to Northpower.

34 Towards the end of his Report, the Referee calculated damages in the plaintiff’s favour in the sum of $580,440.15. He expressed the mathematics as follows (R331):

As there is no evidence before me of any further loss or damage (e.g. such as financing charges), I consider the Plaintiff’s damages are the amounts I have separately determined the Plaintiff is entitled to for Variations, ie:

1. Approved Variations $553,508.00
2. Landscaping $23,245.94
3. Northpower $31,931.55
4. Telecom $11,006.66
$619,692.15

Since the Plaintiff has been paid $24,949,252 (Plaintiff’s Submission In Reply, 1.18), which is $39,252 more than the Contract Sum of $24,910,000, and I do not have evidence that it has been paid in relation to other things, the amount of $39,252 should be deducted from the amounts assessed for Variations . Consequently, I assess the Plaintiff’s damages for the Defendants’ breach of section 52 of the Trade Practices Act as $580,440.15.

35 The portion which I have underlined is repeated in substance at R339, where the Referee addresses interest. There the Referee states:

Consequently, the plaintiff has been paid $39,252 more than the D+C Sum. I understand from the plaintiff’s counsel’s comments at the closing address that this amount needs to be deducted from the amounts to which I have determined the plaintiff is entitled to arrive at the amount owing to the plaintiff.
Since the plaintiff has been paid $24,949,252, which is $39,252 more than the Contract Sum of $24,910,000, and I do not have evidence that additional amount has been paid in relation to other things, $39,252 should be deducted from the amounts assessed for Variations. Consequently, $580,440.15 is the amount due and owing by the developer for Variations under the D+C contract. The plaintiff is entitled to that amount of $580,440.15 as damages for the developer’s breach of its payment obligations under the D+C contract.

36 The defendants submit that the Court should find as a fact that the plaintiff had been paid $25,438,986 and not the amount of $24,949,252 as found by the Referee in these passages. It is submitted that the Referee’s finding was based on a mistaken assumption that only $24,949,252 had been paid to or on the plaintiff’s behalf for the construction of the project.

37 A further sum of $357,680 is claimed by the defendants as effectively having been paid to the plaintiff, with the result that, in light of my findings in the main judgment, the balance of the account lies in the defendants’ favour.

38 It is the defendants who are the moving parties in relation to what remains of Issue 14. In par 3 of their Notice of Motion filed on 30 November 2001 they seek an order that:

Pursuant to Supreme Court Rule Pt 72, r13(1)(a) the determination at pages 331.6 and 339.7 (with respect to the amount paid by the first and second defendants to the plaintiff) of the report by Mr J Tyrril, dated 10 November 2001 (on the issues referred to him on 29 October 1999 for inquiry and report), be rejected by the Court for the reason that the first and second defendants have paid to, or on behalf of, the plaintiff the amount of $25,336,562.80.

39 In light of the more recent concessions that among other things restrict Issue 14 to the Northpower charges (now agreed at $357,680), the defendants contend that this prayer for relief should be read as asserting that the plaintiff has been paid $25,438,986 as distinct from the sum of $24,949,252 stated by the Referee in the two passages set out above.

40 On 8 November 1995 the defendants’ project manager (RCP) wrote to the plaintiff advising that payments made to Northpower totalling $357,680 would be charged to the plaintiff, and that a “deduct variation would be issued”. When the final progress payment was made, the defendants “deducted the sum of $357,680 as they foreshadowed in their letter of 8 November 1995”. (These matters are conceded by the plaintiff: PS 6, par 27.)

41 The main issues in dispute at this stage of the proceedings are whether the Developer’s now admitted payment was “on behalf of” the plaintiff and whether it is open to the defendants to raise this issue in the Court having regard to the manner in which matters were fought before the Referee.

42 The plaintiff submits that the defendants’ failure to raise a claim arising out of the Northpower payments in their pleadings, the absence of evidence or submissions on the topic before the Referee, and the fact that recovery rights are now statute-barred mean that it would be unjust to now allow the defendants to raise the issue of their entitlement to the benefit of these payments.

43 However, as will appear, the matter had been addressed by the plaintiff in various ways upon which the Referee ruled at R275-288.

44 The plaintiff accepts that there was evidence before the Referee that these payments were made by the Developer to Northpower. It is no longer in dispute that the Developer paid a total of $357,680 to Northpower. The Northpower payments were made as follows:

28.4.95 $79,350

21.6.95 $79,350
1.11.95 $198,980
$357,680

These were fees that Northpower required to be paid in advance of power being available to the site in respect of individual tenancies and the Centre Operator.

45 The plaintiff disputes that the defendants were properly entitled to deduct any such moneys from the plaintiff. According to the plaintiff, the evidence at its highest established that (PS 7 pp11-12, omitting footnotes):

(a) there was a course of correspondence between the Plaintiff’s Project Manager (Mr Robertson) and the Defendants’ Project Manager (RCP) between September 1995 and November 1995 (documents 107, 108, 109, 110, and 116 in Ex P1) in relation to payment of the Northpower costs, which are referred to at pages 282 and 284 of the Referee’s Report;
(b) as noted by the Referee at page 283 of the Report, the Plaintiff wrote to RCP on 27 September 1995 (document 107 in Ex P1) stating the previous estimate by Northpower was $358,000, the current estimate was $398,220 and requesting RCP to forward a response to Northpower agreeing to this amount by 4 October 1995;
(c) as noted by the Referee at page 283 of the Report, RCP wrote to the Plaintiff on 3 October 1994 (document 108 in Ex P1) complaining about the late notice and stating:
“You will appreciate that cheques come from a third source and require the Proprietor’s certificate before release.”
(d) the Plaintiff wrote to RCP on 5 October 1995 (document 109 in Ex P1) requesting that either a variation be approved for Northpower costs of $357,680 or “an undertaking that CPL or Norwich would pay it directly”, and stating that Northpower would disconnect power if payment or confirmation of payment was not received by 6 October 1995;
(e) subsequently all Northpower costs “were paid by either CPL or Norwich Union” ;
(f) in a letter to the Plaintiff dated 8 November 1995 …, RCP advised that payments made to Northpower totalling $357,680 would be charged to the Plaintiff, and a “deduct variation would be issued” ;
(g) when the final progress payment was made, the Defendants “deducted the sum of $357,680 as they foreshadowed in their letter of 8 November 1995” .

46 The correspondence referred to in this submission has been placed before me without objection. It was before the Referee in the context of addressing the plaintiff’s contested claim for Northpower variations totalling $408,609. These were Variations 4, 38 and 40. Mr Robertson of the plaintiff gave detailed evidence about the matter in his statement given on 18 August 1998 (§§260-282: PS 7, Tab 2). This evidence was the subject of cross-examination and there was also oral evidence from other sources. The Referee sets it out at R275-286.

47 What is clear - and, I believe, now common ground – is that Northpower constructed a substation and infrastructure for the provision of electricity to the various stores in the development. In late September-early October 1995 it presented its final invoices and it threatened to cut off electricity supply if they were not met.

48 Early on, Target Australia Pty Ltd had refused to pick up Northpower’s tab for this work, claiming that any costs associated with the connection of the power supply was a Developer cost (letter 29 April 1995). I infer that other prospective tenants took the same position. This left the present parties haggling over who should pay Northpower. The matter was discussed from March 1995 onwards, but it remained an unresolved issue (see R275ff). The plaintiff was pressing the Developer to pass on the expense to the tenants. The Developer was hoping that Northpower would adopt a cheaper method of power connection. Nevertheless, it gave instructions to Northpower which effectively authorised Northpower to proceed and/or recognised that Northpower had the whip hand in deciding what electrical work was necessary.

49 The plaintiff’s letter to the Developer of 27 September 1995 (Document 107) reasserted the position that the Northpower fees were a Developer’s expense. The Developer’s response of 3 October 1995 (Document 108) grumbled about the late notice of Northpower’s now pressing demand for payment, but it effectively agreed to make the payment in terms that arguably admitted that the payment was its responsibility (“The best efforts shall be engaged to offset delays, however I would appreciate the necessary advice for further similar matters. You will appreciate that cheques come from a third source and require the Proprietor’s certificate before release.”)

50 This position was confirmed by the plaintiff in its letter of 5 October 1995 (Document 109). The total Northpower costs were as at that date estimated to be $357,660. The plaintiff was obviously concerned that Northpower might carry out its threat to disconnect power. It therefore suggested two alternative solutions:

As originally accepted in writing by RCP on behalf of Consolidated Properties regarding payment of Electricity costs for this project, Concrete Constructions request that RCP either issue a variation to Concrete Constructions for a total of $357,660.00 or continue to pay the applicable fees in relation to the Electrical costs for the project.

51 The first option contemplated the plaintiff paying Northpower, but with the protection of a confirmed variation order from the Developer. The second option contemplated the Developer paying Northpower. On either basis the plaintiff’s message was clear: Northpower fees should be borne by the Developer.

52 In its letter to the plaintiff of 6 October 1995 (Document 110), the Developer expressed its resentment of Northpower holding a gun to its head. However, the letter did not depart from the earlier agreement as to who would pick up the Northpower tab, at least in the first instance. It stated:

Northpower can be assured that the necessary costs will be paid as required.

53 The Developer had paid the two earlier Northpower invoices (in April and June). On 1 November 1995 it paid the third ($198,980) thereby bringing the total Northpower payments up to $357,680.

54 The Developer then took the offensive by issuing a letter to the plaintiff on 8 November 1995 (Document 116) in the following terms:

PORT CENTRAL SHOPPING CENTRE
NORTHPOWER

In line with Consolidated Properties’ withdrawal of the exgratia payment to Concrete Constructions, I advise that the following payments made to Northpower have been charged to your account and that a deduct variation will be issued shortly.
These sums are Payment No 1 $79,350.00
Payment No 2 $79,350.00
Payment No 3 $198,980.00
Total $357,680.00
As Clause 2.1(5) of the Contract and definition (22), these costs are clearly the responsibility of the builder.

55 The “deduct variation” here spoken of was totally different from the “variation” suggested by the plaintiff in its letter of 5 October 1995 (above). The plaintiff’s proposal was a means of resolving the emergency presented by Northpower with its threat to cut off supply. That proposal was not accepted by the Developer.

56 The letter of 8 November foreshadowed that the Developer was seeking to resolve the Northpower dispute in its favour by the simple expedient of withholding $357,680 from its final payment to the plaintiff, subject to the unilateral recording of a “deduct variation”.

57 The letter of 8 November 1995 came too late to represent any basis of agreement between the parties. In light of the earlier correspondence it was either a repudiation of an earlier understanding or agreement, or it was at the least a firmly thrown down gauntlet.

58 The plaintiff took up that gauntlet and challenged the defendant’s action as regards Northpower. As indicated below, the Referee addressed this claim and (with a minor exception) resolved it adversely to the plaintiff for reasons which neither party challenges before me.

59 The “Northpower” issue considered by the Referee at R275-288 addresses the plaintiff’s attempt to have the matter concluded in its favour by issuing its own Variation claims (V4, V38 and V40). The terms of these claims are not in evidence before me, but there is evidence about them in Mr Robertson’s statement. Variation 4 was issued on 8 April 1995 in the sum of $409,411 and was rejected by the Developer on 19 April 1995. Variation 38 was for $40,355 and was rejected on 26 October 1995 (Robertson §§277, 282). Variation 40 was for $75,777 (ibid §282).

60 These three claims totalled $525,543, but the total was later revised to $408,609 (R275).

61 When the hearing of the reference began, the plaintiff’s claims were formulated in a Second Further Amended Summons filed 13 December 1998. Section C26(f) pleaded:

The Defendants were aware that the Northpower Work and the Northpower Fees were not included in the Final Cost Plan and that the Plaintiff expected that it would not be responsible for payment of the Northpower Fees and that it would be paid for any of the Northpower Work which it may undertake for consumer usage and connection; the First Defendant, the Second Defendant and the Third Defendant and Jonathan Warwick King as authorised servant and/or agent of the First Defendant and Second Defendant on 14 August 1995 told the Plaintiff that the Plaintiff would not be responsible for the fees of consumer usage and connection; the Defendants led the plaintiff to believe that the First and/or Second Defendant would pay the Northpower’s Fees and then seek reimbursement of the fees from the tenants of the Project; the Northpower’s Fees were paid in part by the Plaintiff on behalf of the First and/or Second Defendant by two cheques each for $79,350 on or about 5 May 1995 and 5 July 1995 and in part by Norwick Union Life Australia Limited by cheque for $198,980 on or about 1 November 1995 but on or about November 1995 the sum of $357,680 was deducted from the Plaintiff’s Progress Claim in respect of the Northpower’s Fees without any prior notice to the Plaintiff.

62 In the Third Further Amended Summons filed 1 September 2000 the plaintiff pleaded its Northpower claim in various ways set out in Schedule D pars 92-97. So far as presently relevant, the plaintiff alleged that:

WALTER notified the Developer that it expected the North Power costs to be paid by the Developer. This notification was given:
(a) in a feasibility comparison discussed at the meeting on 17 November 1994 between DOR and JK on behalf of the Developer and representatives of WALTER;
(b) orally on 21 March 1995, at PCG meeting no 3 attended by JK and RCP on behalf of the Developer and representatives of WALTER;
(c) by WALTER fax to RCP dated 23 March 1995;
(d) by WALTER letter to RCP dated 8 April 1995, submitting WALTER’s Contract Variation No 4 for a nil amount as being paid direct by the Developer;
(e) orally on 3 August 1995, at a meeting between DOR and representatives of WALTER;
(f) orally on 14 August 1995, at a meeting between DOR and representatives of WALTER;
(g) orally on 12 September 1995, at a meeting between DOR and representatives of WALTER;
(h) by WALTER letter to RCP dated 27 September 1995;
(i) by WALTER letter to RCP dated 5 October 1995.
The North Power charges were paid by the Developer and, prior to 8 November 1995, the Developer and DOR did not inform WALTER that the Developer expected to recover those charges from WALTER, in circumstances where they should reasonably have done so if the Developer was unable or unwilling to pay those additional costs.
The conduct of the Developer and DOR, as aforesaid … represented to WALTER that the Developer would be able to pay, and would in fact pay, the North Power charges and would not seek to recover those charges from WALTER.


The plaintiff alleged that these representations gave rise to liability under the Trade Practices Act 1974 (Cth) or the Fair Trading Act 1987 (NSW) in the sum of $357,680 “being improperly deducted from monies otherwise properly payable to WALTER” (par 97).

63 In essence, the plaintiff asserted that the defendants had acted wrongly in deducting the $357,680. Issue was joined in this way and (as becomes apparent below) the Referee was taken to all of the factual material relevant to the Northpower charges and the circumstances in which the defendants deducted the sum from their final payment to the plaintiff.

64 The Referee stated the issues before him in the following terms (R275):

15.9 Northpower
The Plaintiff has claimed the revised amount of $408,609 in relation to Northpower’s requirements (Plaintiff’s submission in reply, p11).
The Plaintiff submits that regardless of the terms of the D+C contract, it did not require CCG to pay “the various sums in respect of the individual tenancies and the Centre Operator, which Northpower required to be paid in advance of power supply being made available” and that the responsibility for payment of Authorities fees lay with the Developer (Plaintiff’s submission, 6.9.1 – 6.9.2, p84). The Plaintiff also submits those fees were paid by the Developer and then subsequently deducted from the Plaintiff’s final progress payment.

65 He then summarised the evidence of various witnesses as to whether the cost of meeting Northpower’s requirements was a Developer’s cost, as contended by the plaintiff or, as contended by the defendants, a cost of construction, to be borne by the plaintiff unless brought within the Variation regime of the D+C contract. He also referred in detail to the correspondence in September and October 1995 which, according to the plaintiff involved a representation by the defendants that they would bear the Northpower fees as between themselves and the plaintiff.

66 This evidence included that of the defendants’ witness King, who said in effect that he took the position from the outset that Northpower’s fees would be paid by the plaintiff because they were part of the plaintiff’s delivery risk. It appears to have been common ground that King told the plaintiff’s representatives that this was the Developer’s position quite early in the piece (February or March 1995).

67 The Referee summarised the key documents at R282ff. These included early documents relevant to which party assumed the contractual risk as well as the documents from March to 6 October 1995 as the parties assumed various positions when the dispute surfaced in earnest.

68 Apart from a minor claim relating to mains extension charges, the factual and legal issues were resolved adversely to the plaintiff. The reasoning and determination of the Referee was as follows (R284-288):

Consideration
I have found above that the Design and Construction Contract put forward by Litevale (exhibit P1, document 13) has application. Clause 2.5(1) of that contract required CCG to comply with the requirements of Authorities.

The Design Brief applicable under that contract also required CCG to comply with the requirements of Authorities and, with respect to electrical services, its Electrical Services Specification obliged CCG to arrange power supplies with the Supply Authority.

Furthermore, Hastings Council's Development Approval of 30 November 1994 also required CCG to comply with the requirements of the then Oxley Electricity.

I do not consider the Feasibility Comparisons form part of the D+C contract, so the issue of what allowances they might contain for Authorities' fees is not applicable to determine CCG's entitlements.

Neither CCG's Final Cost Plan nor MacGinley's covering fax (exhibit D1) were qualified on the basis that the Final Cost Plan price was based upon particular expectations about Northpower's requirements.

As MacGinley said under cross examination, it was CCG's obligation to provide what was necessary for the installation of electrical services and CCG "ascertained to its own satisfaction what it needed to install power to the centre" (T556:4 - 30).

Clearly, CCG's obligations under the D+C contract included satisfying the requirements of Northpower. Since Northpower's requirements were not specified in detail or otherwise benchmarked in the Design and Construction Contract, I do not consider Northpower's requirements expressed in its letter to CCG of 6 March 1995 can be regarded as constituting a Variation under clause 2.8 of the D+C contract.

One must then consider the provisions of clause 2.5(1) of the Design and Construction Contract, Requirements of Statutes, Authorities etc (exhibit P1, document 13):
"... if any requirement is unexpectedly publicly notified after the Relevant Date (including without limitation any special conditions or levies ...) then compliance by the Builder with any such requirement shall constitute a Variation and the provisions of clause 2.8 shall apply ..."

Whilst Oxley Electricity's correspondence of 28 April 1994 to Hastings Council (exhibit D15) about the electrical services failed to stipulate its requirements, it is apparent on the evidence that Oxley had given oral advice to CCG of its requirements at a meeting on 22 February 1994.

According to MacGinley's evidence (exhibit P25, 264), he knew from a meeting with representatives of Oxley Electricity that connection fees for tenants would amount to at least $100,000, so Northpower's 6 March 1995 requirements with respect to connection charges cannot constitute a requirement "unexpectedly publicly notified after the Relevant Date". Consequently, I do not consider clause 2.5(1) applies to those fees. I agree with and accept McIntyre's opinion in that regard. (Furthermore, I consider any March 1995 issue about inclusion of a clause in leases requiring tenants' reimbursement of connection fees was too late to have any contractual effect with respect to the D+C contract.)

McIntyre formed the opinion CCG is entitled to payment of $65,465 for mains extensions charges and external services pursuant to clause 2.5(1) of the Design and Construction Contract for changes in Northpower's requirements after the Relevant Date.

As noted by McIntyre (exhibit P41, 9.2.1, p129), MacGinley's notes of his 22 February 1994 meeting with Oxley show CCG was advised to allow $30,000 for "mains works" (exhibit P1, document 235). Yet, CCG only allowed $20,000 for this work in the Final Cost Plan. Consequently, I accept McIntyre's opinion that $30,000 should be deducted from the amount of $57,900 for mains extension charges notified by Northpower on 6 March 1995.

Since Northpower's 6 March 1995 notification of its mains extension charges of $57,900 were unexpectedly notified after the Relevant Date to the extent they exceeded the amount of $30,000 Oxley had previously advised, I consider they should be regarded as constituting a requirement "unexpectedly publicly notified after the Relevant Date" for the purposes of clause 2.5(1) of the Design and Construction Contract, so as to entitle CCG to a Variation under that clause .

Whilst the cross reference from clause 2.5(1) to clause 2.8 seems to be a conceptual and drafting anomaly, I do not consider the clause 2.8 notice requirements apply to a Variation under clause 2.5(1). That is because the clause 2.8 notice requirements are all triggered by a "Developer's Representative['s] ... request" to "the Builder to carry out a Variation" , whereas clause 2.5(1) deems an Authority's requirement "unexpectedly publicly notified after the Relevant Date" to constitute a Variation.

McIntyre's valuation of $65,465 somewhat inexplicably includes $29,300 for external services, in relation to which he considers CCG did not incur any additional cost. I do not accept his valuation in that regard.

After deduction of the $30,000 allowance originally advised by Oxley, and after deducting the amount for external services which McIntyre concluded was not justified, CCG's clause 2.5(1) entitlement is as follows:
Mains Extension Charges $27,900.00
External Services 0.00
Plus 9% Overheads $2,511.00
$30,411.00
Plus 5% Profit $1,520.55
Total Variation Cost $31,931.55

Estoppel
After examining the evidence, including the evidence upon which the Plaintiff relies, I am not satisfied the Plaintiff has made out its estoppel contention in relation to Northpower's requirements and fees (Third Further Amended Summons, C25 - C26, Annexure B paragraphs 15(e), 21(e), 22(e), 29(c) (d) (e), 30, 31(d) (e) (f), 32(c), 33(b), 34, 38(d), 39(c), 41(c), 45, 92, 93 and 94). Rather, I generally agree with the Defendants' Submission at 328 - 334.

Trade Practices
The Feasibility Comparison (exhibit P1, document 185) was prepared by CCG. I do not consider it constitutes a representation by CPL or Litevale that the Developer would pay Authority Costs. There is no compelling evidence the Developer represented that it would, or undertook to, pay Authorities’ fees. I accept MacGinley’s evidence in cross examination that it was CCG’s design and construction obligation to provide what was necessary for the installation of the electrical service and that it ascertained those requirements to its own satisfaction. I also accept King’s evidence that he never told CCG it would not be responsible for Northpower’s fees and that he did not commit Litevale to paying the connection fees and passing them on to tenants. Robertson’s evidence in cross examination confirms King’s evidence. No agreement was reached in the “without prejudice” meetings of August and September 1995 for the Developer to pay Northpower’s fees and charges. Furthermore, the evidence is that O’Rorke expressed settlement proposals as being on an ex gratia basis. On the evidence, I am not satisfied that the Plaintiff has made out its contentions that the Defendants engaged in conduct with respect to Northpower’s fees which was misleading or deceptive, or was likely to mislead or deceive, in contravention of the Fair Trading Act 1987 (NSW) and the Trade Practices Act 1974 (Cth) (Third Further Amended Summons, C33, Annexure B, paragraphs 5, 6(c), 8, 9, 10, 11, 15(e), 16, 19(a) & (b), 21(e), 22(e), 29(c) (d) & (e), 30, 31(d) (e) & (f), 32(c), 33(b), 34, 38(d), 39(c), 41(c), 45, 46, 47, 48, 92, 93 and 94). Generally, I accept the Defendants' Submission at 455 - 462.
Determination
For the reasons set out above, I determine:
1. the Plaintiff did not qualify its price or its obligations with respect to Northpower's requirements;
2. there was no detailed specification of Northpower's requirements in the D+C contract;
3. the Plaintiff was bound by clause 2.5(1) of the Design and Construction Contract, the Design Brief and the Development Approval to comply with Northpower's requirements;
4. consequently, the Plaintiff was bound to comply with the requirements set out in Northpower's letter of 6 March 1995;
5. Northpower's requirements did not constitute a Variation under clause 2.8 of the Design and Construction Contract;
6. Northpower's 6 March 1995 requirement with respect to connection fees for tenants was not an unexpected requirement after the Relevant Date and does not attract the Variation relief provided for in clause 2.5(1) of the D+C contract;

7. Northpower's requirement with respect to mains extension charges was unexpectedly notified after the Relevant Date to the extent ($27,900) those charges exceeded the charges it had previously notified, so that the Plaintiff is entitled to a Variation pursuant to clauses 2.5(1) and 2.8 of the Design and Construction Contract to the extent of that increase;
8. taking into account the Plaintiff's entitlement under the Design and Construction Contract to overheads and profit, the Plaintiff is entitled to the amount of $31,931.55 as the valuation of that Variation;
9. the Plaintiff has failed to make out its estoppel contentions with respect to this issue;
10. the Plaintiff has failed to make out its contentions of conduct by the Defendants in relation to this issue which was misleading and deceptive, or was likely to mislead or deceive, in contravention of the Fair Trading Act 1987 (NSW) and the Trade Practices Act 1974.

69 The passage makes it plain that the Referee was fully seized of the issues as propounded by the plaintiff in various guises (Variation, Estoppel and Trade Practices). Factual disputes were resolved inter alia by accepting the evidence of Mr King on critical issues.

70 It is also clear that the Referee understood that the plaintiff was contending that the Northpower fees had been paid by the Developer and then subsequently (wrongly) deducted from the final progress payment to the plaintiff (see R275, 278). The plaintiff lost because the cost was found to be part of the contracted Works, and not a Variation capable of being claimed by the plaintiff. The findings under the heading Trade Practices show that the plaintiff also failed to persuade the Referee that any agreement that the Developer should pay had been reached in late 1995, or that the Developer had represented it would pay Northpower’s costs.

71 In these circumstances the defendants are correct in submitting that at the end of the day the Referee found that their deduction from the final progress payment was appropriate (save only as to the $27,900 properly due to the plaintiff as a Variation for mains extension charges unexpectedly notified after the Relevant Date).

72 What the Referee failed to do, by oversight, was to translate his findings correctly into his final calculations. He erred in overlooking the fact that (in light of his conclusions) the defendants’ payment to Northpower was (save as to $27,900) a payment made on the plaintiff’s behalf and therefore effectively a payment to the plaintiff in that it met an obligation which was the plaintiff’s and not the defendants’. On restitutionary principles, the payment was not officious. On the contrary, it was necessary to prevent Northpower withholding electricity. The payment to Northpower was requested by the plaintiff and since, according to the Referee’s findings, it discharged the plaintiff’s liability to Northpower, the defendants were clearly entitled to be credited with it, according to restitutionary principles (see Mason and Carter, Restitution Law in Australia at [111]).

73 The defendants notified the plaintiff about the Referee’s perceived oversight shortly after the Report was published.

74 The plaintiff submits that the claim by the defendants to set-off any entitlement to recover the moneys paid to Northpower is now statute barred, having regard to ss14 and 63 of the Limitation Act 1969. The plaintiff cites Centurian Constructions Pty Ltd v Beca Developments Pty Ltd (in liq) [1999] NSWCA 457 at [31]-[33], but that case is distinguishable because its facts did not give rise to an equitable defence of set-off. By contrast, the defence is available here because it would be quite inequitable for the plaintiff now to suggest that the issue which it raised and lost should not be brought into account in the final computation of the accounting between the parties.

75 It follows that the defendants must be given credit for this payment in the final adjustment.

Disposition

76 The plaintiff should within 14 days file and serve draft final orders together with any additional submissions as to costs. If the defendants dispute the proposed orders they should file and serve any supplementary submissions. Since extensive costs submissions have already been exchanged, any further submissions as to costs will only have to address the issues arising from these reasons.

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Last Modified: 10/17/2003