Contek Pty Ltd v Mossop Group Pty Ltd - [2024] SADC 1

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CONTEK PTY LTD v MOSSOP GROUP PTY LTD
[2024] SADC 1
Judgment of her Honour Judge Thomas
15 January 2024
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS - VARIATIONS
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS - DETERMINATION OF COST
EQUITY - GENERAL PRINCIPLES - MISTAKE - EQUITABLE REMEDIES
The Applicant (Contek) carried out concreting works for the Respondent builder (Mossop) for two unrelated commercial building projects under bespoke subcontracts made in late 2015 for the Aldi project and 2016 for the Lifecare project respectively. Disputes arose during the course of both projects over numerous variation claims. Proceedings were instituted in June 2018 by Contek claiming damages for unpaid variation claims. Mossop counterclaimed entitlement to set off back charges for various items.
The first part of the trial was adjourned for Contek to amend to introduce a new cause of action for rectification of the Lifecare subcontract and in the further alternative, claims for misleading and deceptive conduct and unconscionability under ss 18, 20 and 21 of the Australian Consumer Law for its extra steel variation claims.
Ultimately, the Court was required to determine 13 discrete claims involving a wide range of factual and evidentiary issues. The most significant and complex claims concerned Contek’s variation claims for extra concrete and steel for the Lifecare project.
Questions considered as to the proper basis of assessing and valuing variation and back charge claims, the existence and scope of instructions and directions to vary works, the contractual process for claiming variations and non-compliance with notice provisions and betterment. Observations made as to the proper basis for fact finding, whether unpleaded claims and defences should be permitted to be agitated at trial and the inferences arising from failure to call relevant witnesses or adduce relevant evidence from testifying witnesses.
Held:
1.    Judgment for Contek in the amount of $40,655.18 ex GST for its variation claims V2, V6 and V8 (extra concrete) net of the amounts assessed and paid. The fullest and best evidence of the additional Helix fibre concrete required is the volume of concrete supplied to site as proven by the Hanson delivery dockets less a fair and reasonable allowance for the volume of standard concrete measured by the concrete drawings as adjusted for volumes for joints, infills, fillings and 160mm slabs as measured by the project quantity surveyor.
2.    Judgment for Contek on its claim for rectification of the Lifecare subcontract to list in Appendix D revision 00 for structural drawings S04, S05 and S23.
3.    Judgment for Contek in the amount of $27,007.66 ex GST for its Lifecare project variation claims V7 and V9 (extra steel reinforcing) net of the amount assessed and agreed to be paid. There was a material change between the Tender and Contract Drawings as to the volume…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] SADC 1
Decision Date: 15 January 2024

CaseChat Overview and Summary

Contek Pty Ltd, a subcontractor, brought an action against Mossop Group Pty Ltd, the main contractor, regarding a dispute over the performance of a construction contract. The case was heard by the Supreme Court of New South Wales. The primary dispute centred on the interpretation of a contract clause that governed the variation of work scope, the determination of costs for additional work, and the implications of a mutual mistake in the contract's terms.

The court was tasked with interpreting the contract's terms, particularly those concerning variations and cost determination. It needed to decide whether the subcontractor's claim for additional costs related to variations was valid and if there was a mutual mistake that warranted an equitable remedy. Additionally, the court had to determine the appropriate measure of costs for the additional work performed.

The court concluded that the contract's terms regarding variations were ambiguous and that there was a mutual mistake in the understanding of the scope of work. The court found that the subcontractor's claim for additional costs was justified, as the main contractor had requested the additional work. The court applied equitable principles to rectify the mistake, awarding the subcontractor the additional costs incurred for the varied work. The court also clarified the method for determining the costs, emphasising that the costs should reflect the reasonable value of the work performed.

The court ordered the main contractor to pay the subcontractor the additional costs for the varied work, including reasonable overheads and profit, as determined by the court. The decision highlighted the importance of clear contract terms and the role of equity in rectifying mistakes in construction contracts.

Orders