Conte Mechanical and Electrical Services v Roach
[2005] VSC 345
•30 August 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 4354 of 2003
| CONTE MECHANICAL AND ELECTRICAL SERVICES | Plaintiff |
| v | |
| ROACH AND ANOTHER | Defendants |
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JUDGE: | OSBORN J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 18-19 and 22 AUGUST 2005 | |
DATE OF JUDGMENT: | 30 AUGUST 2005 | |
CASE MAY BE CITED AS: | CONTE MECHANICAL AND ELECTRICAL SERVICES v ROACH & ANOR | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 345 | 1st Revision 10/11/05 |
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Alleged misleading and deceptive conduct with respect to Terms of Tripartite Deed – Representations not proven – Misleading and deceptive conduct not proved – Plaintiff not misled or deceived – ss.52 and 51AC Trade Practices Act 1974 (Commonwealth) – ss.9 and 8A Fair Trading Act 1999.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P. Cosgrave | Pilley & Associates |
| For the First Defendant | Mr N. Wallace | McCluskys |
| For the Second Defendant | Mr N. Pane | Matthew Shaw & Associates |
HIS HONOUR:
The plaintiff carries on business as an electrical and mechanical services contractor. It is controlled by one Adrian Conte ("Conte") who was the managing director of the plaintiff during the period in issue in this case.
In mid 2000 the plaintiff tendered for the contract to provide electrical and mechanical services as part of the construction of a multi-unit residential development in Port Melbourne known as Atlantis Apartments.
Atlantis Apartments was a project of Courthouse Developments Pty Ltd ("Courthouse") a company controlled through intermediate companies in equal shares by the two defendants ("Roach" and "Payton").
It appears that approval in principle for finance for the project was obtained from Macquarie Bank ("Macquarie") in late 1999/early 2000 and some building work commenced in February 2000.
Atlantis Apartments comprised five levels of apartments intended for resale and a sixth level containing two penthouses which it was intended would be beneficially owned by Roach and Payton respectively.
Neither Roach nor Payton had experience in property development of the scale involved in Atlantis Apartments. Accordingly, Courthouse engaged B.M. Culley & Associates Pty Ltd ("Culleys") as project manager.
Culleys prepared contract documentation and conducted the tender process in order to engage the trade contractors necessary to complete the job.
The plaintiff was awarded the contract for the provision of both electrical and mechanical services in September 2000. A Trade Contract Agreement entitled General Conditions of Contract was executed on 21 September 2000 by Culleys on behalf of Courthouse and by the plaintiff ("the trade contract"). The contract sum for the proposed works was $1,060,000 plus GST. The period of time specified for practical completion of the works was for "rough-in" 19 January 2001 to 25 May 2001, and for "fit-off" 28 March to 6 July 2001.
Provision was made for Courthouse to hold retention moneys by way of "contractors security" in order to secure the plaintiff's performance of the works. That part of the contract enabling provision of "principal's security", that is security for the performance of Courthouse's obligations, was marked "N/A".
Provision was also made for extension of time under the contract and for the payment of liquidated damages for delay in the event of delay caused by Conte.
Payment for stages of the works was subject to certification of the works by the Construction Manager and the project quantity surveyor.
It is unnecessary to further set out the terms of the trade contract save to observe that the copy tendered on behalf of the plaintiff contains a number of handwritten annotations, the origins of which were not explained in evidence. One such annotation, however, points forward to further contractual documentation. Clause 28.5 relating to Extension of Time is crossed with the words "Refer Special Conditions".
Conte's evidence is that in October 2000 he was provided with a set of Special Conditions ("the Special Conditions") and a Tripartite Deed ("the TPD") which he was advised by Culleys must be signed "as a requirement of the project."
Conte's evidence is that at first he did not sign the documentation because he did not like aspects of the Special Conditions. I accept this evidence because:
(a)It appears the plaintiff had already entered into the trade contract which on its face entitled it to participate in the project; and
(b)When the Special Conditions were ultimately executed Conte amended their terms. In particular he added to the proposed definition of "qualifying cause of delay" the words I will italicise:
"Provided that such cause of delay also affects the critical path of the Works as set out in the attached program. It is agreed that Conte Mechanical and Electrical Services P/L and the Construction Manager or Client/Principal agree that Conte M. & E. will have as a minimum the number of working days in the contract program for each task regardless of delays caused by others, either on the critical path or not."
Conte further added to a proposed clarification of cl.28.4 in the trade contract the words italicised:
"Clause 28.4 – by way of clarification, in assessing the Contractors entitlement to an extension of time, the cause of delay must be a qualifying cause of delay and must affect the critical path of the Works as set out in the attached program and subject to clause 1, item 1 of this Special Contract Agreement."
Conte's evidence is that in November 2000 he was told by an employee of Culleys that unless he signed both the Special Conditions and the TPD the plaintiff would not be paid progress payments for initial works done by it. Again I accept that is probable that there were oral communications to this effect. On 22 November 2000 Culleys forwarded a copy of the final version of the Special Conditions and TPD to Conte stating "these should be signed and returned as soon as practicable."
On 12 December 2000 Culleys sent a fax to Conte stating:
"Please ensure that the following is returned to our office so that we can forward same to the Macquarie Bank to ensure payment of our invoices prior to Christmas:-
―Bank Details for Direct Debit …
For everyone OTHER than Building Plastics, the following is also to be returned:-
― Special Conditions
― Tripartite Agreement
We note that the bank cannot make payments until the above is supplied so we request it be returned as soon as possible."
Conte gave evidence that he executed the TPD within one or two days of receiving a further copy of it by fax from Culleys on 15 December 2000. He says that he faxed a copy back to Culleys bearing his copy signature in order to ensure payment was received by the plaintiff before Christmas.
Neither the original TPD signed by Conte nor a copy executed by Macquarie were tendered in evidence.
Conte's account of the execution is at odds with that given in an affidavit sworn by him on 4 June 2003 in proceeding 4751 of 2003 ("Conte's third affidavit"), in which he stated:
"I do not have a signed copy because I handed my signed copy to Court House directors immediately after signing."
Conte's evidence is, however, on one view consistent with the statement made by Macquarie subsequently that it had not received the original agreement.[1]
[1]See letter of 9 November 2001 of Macquarie to Culleys stating: "The following original tripartite agreements remain outstanding:
·Conte Mechanical and Electrical Services P/L …
Could you please forward these documents as soon as possible." (My emphasis)
Furthermore, the communication of execution of the TPD to Culleys is supported by the consequential making of payments which had been promised upon receipt of the executed documents.
Having regard to the evidence as a whole, I am satisfied that Conte did send a facsimile copy of the TPD executed by the plaintiff to Culleys in December 2000. His evidence, however, reflects a reconstruction of events which best fits the documentary evidence, rather than a convincing recall. Indeed, the terms of his third affidavit suggest that his evidence is not reliable as to matters of detail concerning communications between the parties.
I also do not accept that as Conte further deposed in his third affidavit the TPD was produced by Courthouse in response to expressions of concern by Conte at delays in payments. On the whole of the evidence it is clear that the TPD was a requirement of Macquarie and was imposed on the trade contractors including the plaintiff together with the special conditions required by Macquarie as a condition of financing the project.
The Terms of the TPD
Conte accepted in evidence that he had carefully read the terms of the TPD before it was executed by the plaintiff and that such terms were acceptable to him. Moreover, even if he had not so conceded I am satisfied that he did read the TPD and was satisfied with its terms at the time it was executed. The document bore on a $1,000,000 contract and was accompanied by Special Conditions which Conte annotated by hand before executing them. It is inconceivable that he did not consider the terms of the TPD before signing it.
The TPD was made between the plaintiff, Courthouse and Macquarie. A TPD in similar terms was required to be executed by each of the trade contractors participating in the project.
The recitals to the TPD were short and included the statement that:
"In consideration of the mortgagee providing financial accommodation to the Proprietors at the request of the Proprietors and the Trade Contractor, the Proprietors and the Trade Contractor have agreed to enter into this deed."
This recital did not envisage consideration in the nature of an obligation on the part of the mortgagee to provide financial accommodation to the Trade Contractor.
Nevertheless the TPD gave specific power to Macquarie in the event of default by Courthouse to give notice to Conte that Macquarie required completion of the works and undertook as a condition of resumption to comply with the obligations of Courthouse pursuant to the trade contract. [2]
[2]Condition 2 provided: "The Proprietor and trade contractor agree that notwithstanding anything to the contrary contained in the Trade Contract Agreement, they will not (and in addition the Proprietor agrees to procure that the construction manager will not) exercise any right, power or authority under or pursuant to the Trade Contract Agreement (including without limitation, any power of suspension arising pursuant to cl.27 or power to terminate or take out arising pursuant to cl.33 of the Trade Contract Agreement) as a consequence of any default on the part of them or otherwise without first giving notice in writing to the mortgagee of the alleged default and allowing the mortgagee thirty (30) days from the date of the notice … to rectify such default. If the mortgagee rectifies the default within the period, or, in the event the default is not capable of remedy, if the mortgagee, within the period, informs the Proprietor or the trade contractor as appropriate by notice in writing that it will otherwise observe and perform the Trade Contract Agreement, there shall be deemed to have been no default."
Clause 3 of the TPD made it abundantly clear that the deed did not oblige Macquarie to take over the obligations of Courthouse under the trade contract.
"Nothing in this deed shall impose any obligation on the Mortgagee whatsoever in relation to the performance of any term covenant or condition of the Trade Contract Agreement."
Once it is appreciated that the fundamental scheme of the TPD in the event of default by Courthouse was to enable but not oblige Macquarie to take over completion of the project, it can be seen that the TPD offered contractors no guarantee of the performance of Courthouse's obligations to them. On the other hand it did offer some comfort in commercial terms first because by requiring each contractor to enter into such a deed, Macquarie was in a position to compel all contractors to complete the job at Macquarie's cost if it became necessary to do so and thus provide an effective environment for each to obtain the benefit of its trade contract. Secondly if the bank took over the project the contractor would not have to chase Courthouse.
Conte stated in evidence:
"My experience in the building industry in Victoria, where I worked for about 25 years, is that:
·Financiers often lend money to developments against the expected value of the completed project.
·An unfinished project is usually no use for a financier – to recover its principal and interest, the financier needs the project to be finished and sold.
·In order to get a project finished, the financier would normally pay the existing trades on the site to finish the job. Payment would include not just the cost to complete but any arrears.
·Unless the financier or the person to whom the financier offloads the project agrees to pay not just the cost to complete but the arrears, the project is likely to be blacklisted by any union where an employer on the site who has union members as employees is owed money on the project."
It is inherently likely that the potential practical benefit of the TPD was the subject of discussion between contractors on site before Conte executed it.
It is also not unlikely that an employee of Culleys referred to the potential benefits which might accrue from the TPD during the period in which Conte was being urged to execute both the Special Conditions and the TPD.[3] Conte himself, however, conceded in cross-examination that he was not told the TPD amounted to a guarantee or made the plaintiff a secured creditor.
[3]Although it is to be noted that one Wright an employee of Culleys to whom Conte attributes statements of this character was not called as a witness for the plaintiff despite the prior service of a witness statement foreshadowing evidence from him.
Any statements made by Culleys did not mean that at the time Conte executed the TPD Conte understood the TPD to be a guarantee of payment to the plaintiff pursuant to the trade contract with Courthouse. I am satisfied on the balance of probabilities he did not. Conte was an experienced contractor, the terms of the TPD were plain, he did not feel it necessary to consult the plaintiff’s solicitor (then retained by it), and the overwhelming probability is that Conte understood the TPD.
Delay
Following execution of the Special Conditions and the TPD, the job progressed but not in accordance with the original schedule or with revisions of that schedule.
Conte and the witnesses called on behalf of the plaintiff attributed the delay on site principally to mismanagement by Culleys. Roach and Payton attributed the delay in large part to the non-cooperation of individual contractors and union interference.
Whoever individually or collectively was to blame, it is clear that from Conte's point of view the project did not progress satisfactorily. A number of variation payments were sought for individual days lost and generalised notices of delay were given on 7 February 2001 and 5 April 2001. Each notice of delay asserted continuing delay in access to the site and stated:
"The estimated delay will be one day extension for every full day access is not available."
Conte did not, however, prior to the completion of the job in June 2002, formulate a "prolongation claim" for consequential losses suffered as a result of delays.
In September 2001 the situation was thus one where the job was not progressing in accordance with the contract but the plaintiff had made only limited claims for variations as a result.
The services of Culleys as project manager were terminated in November 2001. The plaintiff asserts that this was because of incompetence and resultant delay in the project but it is not entirely clear that this was so.
Non-payment
The plaintiff's statement of claim also alleges that by September 2001 Courthouse was in default with respect to progress payments in the sum of $72,393. This allegation was not proved. To the contrary, the documentation put in evidence supports the view that at this point in time Courthouse had made and was continuing to make progress payments as they were certified in accordance with the contract.
Further, the document which appears to be the basis of the figure asserted incidentally demonstrates that by the end of August 2001 the plaintiff had received $790,128.83 almost 80% of the contract sum.
It also seems clear from the evidence as a whole that there was by September 2001 friction at the site between Courthouse and the trade contractors generally with respect to delays in payment made in accordance with the certification process.
The position was thus one in which Roach and Payton believed and (so far as the evidence enables a conclusion) it appears correctly believed, that payments were being made in accordance with the trade contractors' entitlements but the trade contractors including Conte wished to expedite payments.
As at 6 September 2001 Payton believed the situation was as set out in a detailed report of Culleys bearing that date. This shows that September payments to the plaintiff had been certified in the sum of $85,716. It also shows variations to the credit of Courthouse with respect to the mechanical services which were to be supplied by the plaintiff and variations with respect to electrical works resulting in a net credit to Courthouse with respect to electrical works.
The $85,716 had been claimed on or about 27 August 2001 and was received by the plaintiff on 28 September 2001. Payments continued and by 13 November 2001 the plaintiff had been paid $913,951.
It is in this context that the September conversations forming the first and second bases of the plaintiff's claim fall to be assessed.
The First September Representations
The plaintiff alleges that in or about September, Payton, on behalf of Courthouse, represented to the plaintiff that:
(1)progress payments were slow due to a problem Court House was having with Macquarie;
(2)the plaintiff did not have to worry about receiving progress payments and/or its other entitlements under the contract, because it was fully protected by the tripartite agreement;
(3)that in the event that Court House was unable to pay amounts owed to the plaintiff under the contract, such amounts would be paid by Macquarie pursuant to the tripartite agreement.
Such representations are particularised as follows:
"The representations in sub-paragraphs (1) and (2) above were express and oral. They were made during a conversation on site between the second defendant and Adrian Conte, for and on behalf of the plaintiff, together with the plaintiff's supervisor, Bernie Powell, to the effect as alleged. During the said conversation, the plaintiff indicated its intention to withdraw its labour from site due to Court House's breaches of the contract. Following the representations referred to above, the second defendant requested that the plaintiff not withdraw its labour from site as it was fully protected by the tripartite agreement. The representation set out in sub-paragraph (3) above is implied by reason of the express representations referred to, and the context in which they were made."
The plaintiff seeks to sue on these alleged representations on the basis that they were misleading or deceptive or likely to mislead or deceive in contravention of s.52 of the Trade Practices Act 1974 (Commonwealth) and/or s.9 of the Fair Trading Act 1999. Alternatively it is said the representations constituted unconscionable conduct in contravention of s.51AC of the Trade Practices Act and s.8A of the Fair Trading Act. Further it is said that the defendants are personally liable pursuant to s.75B of the Trade Practices Act and s.158 of the Fair Trading Act by reason of their involvement in contraventions by Courthouse of these provisions. In the further alternative it is said that the representations were made negligently.
Conte's evidence in chief was that in September 2001 he was notified by his on site supervisor Powell that the plumber and some of the other trades had removed their labour from the project because of non-payment. Conte was in the city and went to the site to discuss the situation with Powell. He met with Powell on site and walked through the project to monitor progress and discuss the withdrawal of the plaintiff's labour. During the site inspection they met with Payton on one of the upper levels. Conte says:
"We approached Graham Payton and I expressed my concerns about non-payment and told him I was also removing my labour at the end of the day unless payment is received. Graham Payton told us that the delays with progress payments were because of problems with Macquarie Bank and the quantity surveyor and cost overruns. I told Graham that I was not satisfied with his explanation and would remove labour until payment is resolved. Graham Payton then told me that I had nothing to worry about with receiving payments or entitlements under the contract, as I was fully protected by the Tripartite Agreement. Graham also told us that Macquarie Bank would pay us under the Tripartite if Courthouse could not. Graham asked that I not remove our labour, as it will only compound the problem. Graham then explained that it was a minor problem that was being resolved with the bank and not to worry as Courthouse Developments were financially strong and about to start a second development around the corner, called Aquavita Apartments.
We had already priced this project for Courthouse Developments and I believed him in what he said and concluded there must be some truth to his claims and that the company as Courthouse Developments would not get finance without any substance. I did not remove my labour based on what Graham had told me."
It is to be observed:
(a)This evidence expands the alleged reason given by Payton for delay in progress payments beyond that pleaded. It is not simply a "problem Courthouse was having with Macquarie" but also with the quantity surveyor (who had a critical role in certification of progress payments) and cost overruns.
(b)No claim had been made for "entitlements" other than progress payments at this point in time and it is inherently improbable that Payton would use this term. Further such term was not used in the account given by Conte in an earlier affidavit which I will refer to further below.
(c)The effect ascribed to the TPD could only be understood to be a reference to the existence of a possible back-up rather than a guarantee of performance if Conte understood the nature and terms of the TPD.
This account is at odds in a number of significant respects with the account given by Conte in the affidavit sworn by him in proceeding 4751 of 2003 on 12 September 2003 (Conte's fourth affidavit):
"As the job progressed the first Defendant failed to meet its progress payments to the Plaintiff. I notified the first Defendant that I intended to remove the Plaintiff's workmen from site.
Both Payton and Roach were greatly concerned and two meetings were held between myself and Payton and Roach in late 2001. The first meeting took place at the development with Payton, my supervisor Bernie Powell and myself. The second meeting took place at the directors' new development 'Acquvita Apartments' (sic); both Roach and Payton, my electrical supervisor Steve Pieri and myself. On both occasions I was assured by Payton and Roach that the Plaintiff would be paid. They told me that they had specifically put the Tripartite Deed in place to protect the Plaintiff in case of the insolvency of the first Defendant. They assured me on numerous occasions and with great sincerity that the Plaintiff would not loose out (sic). They asked me to keep my men on site and finish the job.
Due to the assurances of both Payton and Roach I agreed to stay on the job. The Plaintiff extended to the first Defendant credit far beyond what it would normally do because of the Tripartite Deed and the assurances of both Payton and Roach."
Powell says:
"During the course of the job I had many, many discussions with Mr Adrian Conte who informed me that he believed his company's costs were protected under the terms of the Tripartite Agreement which I neither signed nor saw.
I have a recollection of a conversation between Adrian Conte and Graham Payton in or about August 2001 where Adrian was talking about taking men off the job and Payton reassuring him not to do anything rash that he would be alright."
It can be seen this evidence does not materially corroborate Conte.
Payton said in evidence in chief:
"I recall meeting Adrian Conte on site in early September 2001. I had previously met Adrian Conte on one other occasion when I had bumped into him on site and was introduced to him by one of his workers. At the first September meeting, Adrian Conte was with one of his employees who I think may have been known to Bernie Powell. I recall encountering Mr Conte on the fourth floor of the development. I do not have a specific recollection of the exact conversation but I do recall the gist of the conversation. I asked Adrian Conte how the job was going and he responded that it was going okay. Adrian Conte then said that payments were slow and asked how things were going with payments and I said that payment was slow because of the procedures in place involving Culley and the quantity surveyors before Macquarie would pay. I told Adrian Conte that he needed to ensure his claims were in on time to speed up payments. I do not recall any further discussion about payment. I recall the meeting was amicable."
Payton goes on to deny the conversation alleged by Conte. In particular he says there was no reference to the Tripartite Agreement.
In cases such as this the plaintiff must as a first step persuade the Court that the words alleged and sought to be relied on were in fact spoken. As McLelland CJ in Equity observed in Watson v Foxman[4]:
"Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as 'misleading') within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court 'must feel an actual persuasion of its occurrence or existence'. Such satisfaction is 'not … attained or established independently of the nature and consequence of the fact or facts to be proved' including the 'seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding': Helton v Allen (1940) 63 CLR 691 at 712."
[4](1995) 49 NSWLR 315 at 318
In the present case I am not persuaded on the whole of the evidence that Payton made the statements complained of. Nor on the whole of the evidence am I persuaded in any event that statements of the kind alleged would have misled Conte if they were in fact made.
The circumstances which are of greatest significance with respect to the making of the representations are as follows:
(a)Conte's account is directly contradicted by Payton who himself gave entirely plausible evidence.
(b)Conte's account of what was said is not supported by any business documentation such as diary notes or contemporary confirmation.
(c)Conte's evidence differs from that given by him in his third and fourth affidavits and this casts into doubt its accuracy as to matters of detail.
(d)The underlying context of default by Courthouse alleged in the statement of claim has not been made out.
(e)The concern which Conte was agitating during September 2001 was a concern with respect to delay in progress payments only and not other "entitlements" which he now says were referred to in discussions.
(f)It is inherently likely Payton responded to agitation of the issue of delay in payment of progress payments by referring to the need for compliance with the certification process required by the trade contract because this process was both in fact and in his belief the ongoing cause of friction.
(g)It is inherently unlikely Payton made reference to the TPD. In particular it is unlikely Payton would refer to the prospect that Courthouse would fail financially. No basis has been established for concluding that he regarded this prospect as realistic in 2001 and reference to that prospect is hardly likely to have reassured Conte because the collapse of Courthouse would inevitably result in further delay in payment even if Macquarie were to take over the project.
(h)There is no basis for concluding Payton misunderstood the TPD and unless it were understood to constitute a guarantee there would be even less purpose in referring to it.
(i)A statement that Macquarie would pay under the Tripartite Agreement if Courthouse would not, would be a foolhardy statement to make to Conte given the plain and apparent meaning of the TPD which Payton knew Conte had received and executed and it might be presumed understood.
(j)Conte did not at any point obtain a copy of the TPD executed by the other parties as one would expect him to if in fact he believed it constituted some form of guarantee or security.
(k)Aquavita was not a project of Courthouse or one in which Payton had an interest. This make improbable the terms of the conversation relating to that project which Conte asserts.
Even if I am incorrect in the above conclusions concerning the making of the alleged representations then insofar as the representations complained of are said to have misled Conte, I am satisfied that statements of this type would not have misled him as to the true character of the TPD which he had read and which on the balance of probabilities he well understood.
In summary:
(a)I am not persuaded Payton made the representations alleged at the first conversation in September; and
(b)I am not persuaded Conte misunderstood the nature of the TPD at this point in time; and
(c)I am not persuaded Conte would in any event have been misled if representations of the type alleged were in fact made.
The Second September Representations
The plaintiff next alleges that approximately four days after the first representations Roach and Payton on behalf of Courthouse represented to the plaintiff that its rights and entitlements under the trade contract were safe and that it was protected by the TPD. These representations are particularised as follows:
"The second representations were express and oral. They were made during a conversation between the first and second defendant and Adrian Conte together with the plaintiff's site foreman, Steve Perry [sic]. The said conversation took place at the site of the Aquavita Apartments project in Port Melbourne which was then also being conducted by Courthouse and/or the first and second defendants. During the said conversation, the plaintiff raised concerns in relation to problems at the Atlantis Apartments project and Courthouse's breaches of contract on that project. In response the first and second defendants said 'Look you are safe, you have the Tripartite Agreement and you have nothing to worry about. We really have looked after you blokes with this Tripartite Agreement. No one else would do anything like that to protect you fellows'."
It is in turn alleged that these representations were misleading or deceptive, or likely to mislead or deceive, or were unconscionable or negligent, and actionable in the same ways as the first representations.
It is to be observed:
(a)The concern said to be expressed by Conte was premised on assertions of breaches of contract at the Atlantis project. Such breaches have not been established nor has any belief on the part of Roach and Payton that there was any such breach in existence.
(b)To the contrary the evidence supports the view that Roach and Payton were aware of ongoing friction over the certification process. This process is not said to have been referred to at all during the conversation particularised.
In evidence in chief Conte said:
"The following week my electrical supervisor, Steve Pieri and I met Graham Payton and his partner Lance Roach on site at Aquavita Apartments to discuss their new project. We met on site in front of the building and I questioned them both in relation to non-payment and delays we were experiencing on the Atlantis Apartments project.
Graham Payton and Lance Roach both stated that I was protected under the Tripartite Agreement and Lance Roach further explained that I have nothing to worry about as they have really looked after me with the Tripartite Agreement. Lance Roach was very confident that he had protected our rights with the Tripartite and stated 'We really have looked after you blokes with this Tripartite Agreement. No one else would do anything like that to protect you fellows'."
In cross-examination Conte agreed that (as the defendants also stated) the meeting was primarily concerned with a quotation for temporary wiring at the Aquavita site.
In turn Pieri deposed:
"In or about September 2001 I went with Adrian Conte to look at a proposed new job at Aquavita Apartments. We met Graham Payton and Lance Roach there. Adrian told them that he was going to remove all of his labour off the Atlantis job as the talk around the traps was that Courthouse was going broke. Both Payton and Roach asked Adrian not to do anything rash. They told him no matter what might happen Conte was safe because of the protection it had under the Tripartite Agreement on the basis Adrian agreed to keep his labour going at the Atlantis Apartments."
In cross-examination Pieri conceded that prior to going to Aquavita Conte told him of the substance of what Conte said had been discussed a few days earlier. It was submitted on behalf of Roach that this gave rise to the possibility of confusion of what Pieri was told by Conte and what Pieri in fact heard said.
Conversely, Payton gave evidence in chief that:
"Approximately one week later in September 2001, I recall meeting Adrian Conte at a different project known as the Aquavita Apartments which was being undertaken by a company associated with the first defendant. The purpose of the meeting was to ask the plaintiff to submit a quotation for electrical works in relation to the project and to discuss the plaintiff's possible involvement in the new project. I do not recall any discussion at that meeting in relation to payments outstanding to the plaintiff by Courthouse Developments. I recall that Adrian Conte asked whether he would be paid. I took this to mean would he be paid on the Aquavita Apartments project and I replied 'Of course you will get paid you are getting paid on the other project aren't you'."
Roach stated:
"During the period of the building works I met with Mr Conte the plaintiff on two occasions only. The first time is in approximately August 2001 at the development site. I recall attending at the site for a pre-arranged meeting with a representative of Culley. Mr Culley was on site. I was introduced to him. Apart from the introduction I had no other conversation with him.
The second meeting was approximately three weeks later in September 2001. I was about to commence a second residential unit development known as 'Aquavita'. Graham Payton was not involved in this development but was assisting me in negotiating the various contracts and generally in this management. It was proposed that the various trades from Atlantis would be used for the Aquavita development. Payton advised me that he had arranged a meeting with Conte at Aquavita to discuss Conte's retainer in the development and to arrange for temporary power to the site. We arranged that I would also attend the meeting after attending at a prior engagement which I did at approximately 3.00 p.m. By the time I arrived the meeting had concluded. I recall meeting Payton, Conte and his manager in the passageway of the old building at Aquavita just as they were leaving. I walked out with them as they left the building. We exchanged small talk and did not discuss anything at all to do with the Atlantis development including the Tripartite Agreement. I recall walking to Conte's range rover vehicle and commenting to him that he must be doing well. As he left I said to him that I hoped he would come on board at Aquavita."
Each of the witnesses was cross-examined as to the alleged circumstances of the second representations and gave internally consistent accounts but there is no independent corroboration of the accounts given on either side. Ultimately, having regard to the whole of the evidence, I am not persuaded by the plaintiff's case that the second representations were made.
This is in large part for the same reasons that I have set out at paragraph 60 above with respect to the case relating to the first representations.
The most significant of these factors are once again:
(a)the direct contradiction of Conte's evidence by Payton and Roach in entirely plausible terms;
(b)the lack of any contemporaneous business documentation;
(c)lack of consistency with prior affidavits sworn by Conte and the claim as particularised;
(d)the absence of proof of the fundamental context of default by Courthouse which Conte asserts;
(e)the inherent unlikelihood Payton or Roach would refer to the prospect of Courthouse failing financially or the TPD;
(f)the lack of evidence Payton or Roach misunderstood the TPD and regarded it as some sort of guarantee;
(g)the fact Conte did not obtain a copy of the TPD executed by the other parties.
In addition, the following further considerations arise:
(a)Neither Conte or Pieri assert that there was reference to difficulties with the certification process when I am satisfied that it is plain both that there were from the contractors' point of view and that Payton and Roach regarded that process as the principal course of friction concerning delay in payment;
(b)The purpose of the meeting at Aquavita was to resolve the participation of the plaintiff in the initial stage of the Aquavita project. It is difficult to see that references to the TPD could be regarded as useful in this context. What was in issue was a continuing arrangement between the plaintiff and Roach, not the plaintiff's entitlement in the event Courthouse failed;
(c)The evidence of Pieri does not persuade me that Conte's account should be preferred. It differed from that account as to at least one significant matter of detail namely, Pieri says that Conte threatened to remove his labour from the job, Conte does not. Moreover I am not satisfied Pieri is now able to disentangle what Conte may have told him and what the defendants said.
Further, and in any event, if I am wrong and the alleged statements were made to the effect that the plaintiff was protected under the agreement, such statements would necessarily be made and understood on the basis of the true and obvious effect of the TPD which was known to Conte, Payton and Roach. As such a statement about "protection" would not be misleading or deceptive or likely to mislead or deceive.
Insofar as the plaintiff's claim is based on alleged representations in September 2001, it must therefore fail because I am not satisfied of the representations alleged, or that representations of the kind alleged would be misleading or deceptive, or that Conte misunderstood the nature of the TPD at that point in time. In the circumstances it is unnecessary to consider additional arguments concerning, for example, the existence of a duty of care.
The Refinancing of the Atlantis Project
The plaintiff lastly complains that in or around early May 2002 Courthouse refinanced the project with the Australia and New Zealand Banking Group Ltd ("the ANZ"). It is said the failure of Roach and Payton to inform the plaintiff of the refinancing or of the effect of such refinancing upon the TPD, constituted misleading or deceptive conduct or conduct likely to mislead or deceive in breach of s.52 of the Trade Practices Act and/or s.9 of the Fair Trading Act and/or was unconscionable conduct in breach of s.51AC of the Trade Practices Act or s.8A of the Fair Trading Act.
By March 2002 the Atlantis Apartments were substantially constructed. Levels 1 to 5 had reached practical completion and works had commenced on level 6. On 18 April 2002 the plaintiff acknowledged receipt of a suspension notice dated 21 March 2002 stopping all work on level 6 by 23 March 2002. The suspension notice itself was not, however, produced in evidence. By letter of 22 April 2002 the plaintiff sought a certificate of practical completion for all works except level 6 together with the return of 50% of all retention moneys held under the trade contract.
By letter which is annotated as received on the same day, 22 April 2002, Courthouse advised the plaintiff in the following terms:
"We are writing to advise that due to unforseen circumstances there will be a delay in payments on the above project. We have found it necessary to obtain additional funding over and above our prime lender due to overruns on the project.
We request your patience and appreciate your support.
Courthouse Developments P/L have approval for additional funding and expect these funds will be available at approximately four to six weeks.
We thank you again for your support."
In response to this advice and by further letter of 22 April the plaintiff claimed $94,123 from Courthouse by way of progress payments.[5] The plaintiff further sought reconciliation of various figures and requested confirmation, among other things, of:
"• Total amount to be paid when additional funding is available (considering 50% retention release and the supply of a bank guarantee for the other 50%);"
The letter concluded:
"Please also confirm a date this money will be available as I need three working days to arrange a bank guarantee."
[5]Some $56,000 of this comprised retention moneys.
It is apparent that the plaintiff was advised prior to the resumption of works after the suspension in March that additional funding was being obtained and that its response was simply to claim the moneys it believed due at this time and to seek advice as to when works would recommence with the new funding.
The terms of the refinancing by the ANZ are not directly evidenced before me.
Conte's evidence is, however, that the plaintiff did not advise him following the letter of 22 April 2002 that the project had in fact been refinanced by the ANZ. In particular he says that he was not advised that Macquarie was paid out by the ANZ to facilitate the refinancing. Conte's evidence in chief was that:
"In April 2002, based on what the defendants and Adam Wright had earlier told me, I believed that the tripartite agreement protected the plaintiff's position regarding payment in connection with the Atlantis apartment project ('the Project'). The defendants and Wright had said to me that the plaintiff was protected because if there was a problem with payment by Court House, then under the tripartite agreement, Macquarie Bank would step in and pay the plaintiff what it was owed under the trade contract agreement.
If I had been told of the proposed refinance by Court House with the ANZ Bank around late April or early May 2002, I would have tried to protect the plaintiff's position by:
(a)telling the defendants and the ANZ Bank that I wanted another tripartite agreement like the existing one;
(b)telling the defendants and the ANZ Bank that Court House and/or the defendants owed the plaintiff money in relation to the Project due to claims for variations, delay and retention of moneys;
(c)telling officials at the Electrical Trades Union, or the CEPU-Plumbing Division where all of the plaintiff's employees on the building site were members, that Court House owed the plaintiff money in relation to the Project;
(d)not completing the Project until the plaintiff's position was fixed up and it was paid amounts owing to it."
He further stated in cross-examination that if he had been advised of the proposed refinancing he would have expedited the making of a prolongation claim for delay costs in excess of $600,000. This claim was not in fact made until August 2002 after the level 6 works were completed.
There are a series of fundamental problems with the proposition that Conte was misled.
(a)Conte's evidence was given on the basis that he had previously been misled and at the relevant time believed the TPD constituted a guarantee that Macquarie would pay the plaintiff if Courthouse did not. For the reasons I have stated I do not accept that Conte was misled or that he did not understand the true nature of the TPD. Accordingly, the fundamental premise of the claim as to non-disclosure fails. I do not accept that Conte conducted the plaintiff's affairs in and after April 2002 on the basis that the TPD constituted a guarantee by Macquarie of the performance of the obligations of Courthouse under the trade contract.
(b)The TPD never offered Conte practical protection or comfort by its terms with respect to Conte's rights once the project was substantially completed. This situation was achieved when levels 1 to 5 were practically completed and in a readily saleable condition. Even if Courthouse defaulted at this point in time Macquarie had a saleable security without recourse to the TPD in order to effect completion of the works. The TPD at no stage required Macquarie to guarantee ongoing payment to the plaintiff nor did it give rise to an expectation Macquarie would take over the completion of the project unless it was in its financial interests to do so.
(c)There is no evidence Courthouse was in default with respect to moneys due under the trade contract at the time of refinancing. No basis for the giving of notice by the plaintiff under the TPD at that date has been established. No notice could be given with respect to the putative prolongation claim until the processes required under the contract to establish default had been established. These processes were not commenced until August 2002.
(d)No basis has been established for concluding that Roach or Payton knew or believed at the time the refinancing occurred that there was a prolongation claim to come from the plaintiff in respect of the project up to that date. To the contrary the evidence supports the view that they did not expect such a claim when it was ultimately made. Variations had been sought for delay claims prior to the refinancing but they totalled less than $15 000[6].
(e)In the circumstances unless Roach and Payton had previously misled Conte there was nothing unconscionable or misleading in failing to advise Conte of the details of the refinancing. On the contrary, by advising Conte of the fact of the proposed refinancing Courthouse made apparent to him and to the plaintiff that the balance of the works were to be completed with finance from a bank with whom the plaintiff had no agreement equivalent to the TPD. The plaintiff completed the contract works on this basis, presumably after being advised of the proposed recommencement of works in accordance with its request of 22 April 2002.
[6]The exact quantum is unclear.
Accordingly I am not satisfied that the defendants' conduct with respect to the refinancing was misleading or deceptive, or likely to mislead or deceive, and I am not satisfied Conte was misled or deceived as to the plaintiff's rights under the TPD.
It was conceded on behalf of the plaintiff that if the plaintiff's claims based on alleged misleading and deceptive conduct failed then the plaintiff's allegations of unconscionable conduct must also fail. This concession was properly made. There is in my view no evidence of "special disadvantage" on the part of the plaintiff in the sense explained by Gleeson CJ in ACCC v C.G. Berbatis Holdings Pty Ltd[7]:
[7][2003] 214 CLR 51.
Conclusion
In all the circumstances for the above reasons the plaintiff's claim must fail.
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