Di Giovanni v Dark Horse Developments Pty Ltd [No 2]
[2013] WADC 23
•21 FEBRUARY 2013
| JURISDICTION | : | DISTRICT COURT OF WESTERN AUSTRALIA IN CIVIL |
| LOCATION | : PERTH | ||
| CITATION |
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| CORAM | : WAGER DCJ | ||
| HEARD |
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| DELIVERED |
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| FILE NO/S |
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| BETWEEN | : PIERO DI GIOVANNI |
Plaintiff
AND
DARK HORSE DEVELOPMENTS PTY LTD
First Defendant
BRENDAN MICHAEL AITKEN
Second Defendant
Catchwords:
Trial of preliminary issues - Parties to the contract - Variations to the contract -
Turns on own facts
Legislation:
Nil
[2013] WADC 23
Result:
Trial of issues determined
Plaintiff contracted with the second defendant
Representation:
Counsel:
| Plaintiff | : | In person |
| First Defendant | : | No appearance |
| Second Defendant | : | In person |
Solicitors:
| Plaintiff | : | Not applicable |
| First Defendant | : | Not applicable |
| Second Defendant | : | Not applicable |
Case(s) referred to in judgment(s):
City and Suburban Group Pty Ltd v Gambetta Holdings Pty Ltd [2001] WASCA
233
Robinson v Podosky [1905] St R Qd 118
[2013] WADC 23
WAGER DCJ
WAGER DCJ: The plaintiff Mr Di Giovanni was contracted to refit and renovate two premises so that they could operate as small bars. The bar at 174 Scarborough Beach Road, Mount Hawthorn is known as The Cabin, the bar at 208 - 210 Nicholson Road, Shenton Park which had previously been a café is known as The Suite.
Unfortunately problems arose with the performance of both contracts ultimately resulting in these proceedings.
3 Mr Di Giovanni brings this action against two defendants. The first
defendant Dark Horse Developments Pty Ltd (in liquidation) (Dark Horse) is the company that was set up in order to create and run the small bars. Dark Horse had two directors, Brendan Michael Aitken and his father Peter David Aitken.
The second defendant is Mr Brendan Michael Aitken.
5 Given that Dark Horse is now in liquidation Mr Di Giovanni sought
leave to proceed against it as the first defendant in these proceedings pursuant to s 500(2) of the Corporations Act 2001 (Cth). The Hon Kenneth Martin J granted Mr Di Giovanni leave to proceed on 29 January 2013.
The matter came before me for trial on 30 January 2013. Both Mr Di Giovanni and Mr Brendan Aitken appeared in person and both advised that they wanted the trial to proceed. There was no appearance on behalf of Dark Horse nor had there been any communication by the liquidators with the court subsequent to leave being granted on 29 January 2013. Accordingly a copy of the order made by the Hon Martin J together with a facsimile in the following terms was sent by the court to Mr Corrello, the liquidator for Dark Horse, BRI Ferrier:
Dear Mr Corrello,
I attach a copy of the order of the Hon Justice Martin made in the Supreme
Court yesterday.
This matter is presently listed to proceed to trial before her Honour Judge
Wager in Court 1.1 of the District Court today.Dark Horse Developments Pty Ltd (in liquidation) is the named first defendant in the trial and a counterclaim on behalf of the first defendant is before her Honour for determination.
Please advise whether you wish to be heard at this trial or whether you are seeking an adjournment at this stage to clarify your position.
[2013] WADC 23
WAGER DCJ
If you do not intend to appear at trial and you are not seeking further legal advice then please advise me forthwith.
Please note her Honour and the two parties are waiting in the court precinct to hear your response.
P Hayes
Associate to Her Honour Judge Wager
Mr Corrello responded by letter dated 30 January 2013 as follows:
Dear Sir/Madam,
Dark Horse Developments Pty Ltd (in liquidation)
ACN: 130 687 580: trading as 'The Suite'
Matter Number: CIV 1099 of 2013I refer to the abovementioned matter to the claim by Timber Dimensions against the company. I detail below an extract of a letter sent to Timber Dimensions on 10 January in relation to their claim against the company in the current legal action. '… Please note that Dark Horse Developments Pty Ltd is in liquidation. Accordingly the provisions of s 500 of the Corporations Act 2001 require you to seek the approval of the Court. Subsection (2) of this section states:
"After the passing of the resolution for voluntary winding up, no action or other civil proceedings are to be proceeded with or commenced against the company except by leave of the Court …"
Please note that I have not, as yet, formed a view on the admissibility of your claim. Further it is the policy of this firm to either consent to or oppose such application. If you require my attendance at court in respect to your application I will require that you pay the company's expenses which it may be required to incur …'
If you require any further assistance please do not hesitate to contact the writer.
Yours faithfully,
G M Corrello
Liquidator
[2013] WADC 23
WAGER DCJ
8 The court also contacted Mr Corrello by telephone. He confirmed
that the first defendant did not wish to appear at trial. The court was advised by Mr Di Giovanni that Mr Corrello was to be called as a witness at trial.
The pleadings in this matter had been filed at a time when both Mr Di Giovanni and the defendants had legal representation.
10 The re-amended writ of summons and statement of claim dated
2 September 2010 pleaded that the second defendant had signed both The Cabin contract and The Suite contract in his capacity as a director of and agent for the first defendant and that subsequent variations alleged to The Cabin contract had been signed by the second defendant and by Mr Peter Aitken on behalf of the first defendant (re-amended writ of summons and statement of claim, pars 5, 5A - 5D).
11 Alternatively, the plaintiff pleaded that both contracts had been
entered into by the second defendant on his own behalf (re-amended writ
of summons and statement of claim, pars 5E and 5B).
The re-amended defence and counterclaim dated 16 February 2011 was filed on behalf of all defendants being the first defendant Dark Horse, the second defendant Mr Brendan Aitken, and, at the time of filing, the third defendant Mr Peter Aitken although Mr Peter Aitken ceased to be a party prior to trial.
13 The re-amended defence and counterclaim pleaded that the first
defendant had entered into both The Cabin contract and The Suite contract. It is pleaded in par 17 that the defendants deny par 5E and par 5F of the statement of claim and at par 23 that the defendants deny par 8D of the statement of claim.
14 Paragraphs 39 and 40 of the re-amended defence and counterclaim
set out the defendant's counterclaim. Paragraph 39 pleads that the first
defendant repeats pars 1 - 37 of the defence.
The relief claimed is only pleaded on behalf of the first defendant. A counterclaim is not pleaded on behalf of Mr Brendan Aitken.
16 On 30 January 2013 both Mr Di Giovanni and Mr Brendan Aitken
agreed that the preliminary issue in relation to whether Dark Horse or Mr B Aitken or both had contracted with the plaintiff needed to be resolved before the matter could proceed further to substantive trial in
[2013] WADC 23
WAGER DCJ
respect of the alleged breaches of contract and the resultant claims in
respect of alleged damages.17 The preliminary hearing then proceeded for two days.
Mr Di Giovanni gave evidence and called Mr Corrello as a character witness to impugn Mr B Aitken's credibility. Mr B Aitken gave evidence but did not call any other witnesses on behalf of the second defendant.
The evidence
18 Much of the evidence in relation to the formation of the contract was
not in dispute. Mr B Aitken's evidence was that he embarked on a project to build a small bar. At the time he operated a café called The Suite in Shenton Park and there met Mr Kinchen who was a designer who agreed to assist him with the project. After developing a concept Mr Kinchen drew up plans for the Shenton Park premises. In late 2007 Mr Kinchen advised Mr B Aitken that a second premises in Mount Hawthorn would be suitable for another small bar and Mr B Aitken agreed to proceed with a development at that location. Once the landlord for the Mount Hawthorn premises had given in principal approval the plans for The Cabin were developed.
19 Mr Kinchen advised Mr B Aitken that he would seek out three
quotations from builders in relation to the refits and renovations required. Mr Kinchen advised Mr B Aitken that Mr Di Giovanni, a builder trading under the name Timber Dimensions, was his preferred option.
20 A meeting was arranged with Mr Di Giovanni, Mr Kinchen and
Mr B Aitken at The Suite café in early 2008 to discuss the plans and costs so that Mr B Aitken could obtain a ball park figure for the cost of the two developments in order to apply for finance.
21 On 8 April 2008 at a meeting between Mr Di Giovanni, Mr Kinchen
and Mr B Aitken, which was set up to discuss the plans, Mr Kinchen advised that a cost plus building contract would be the most favourable contract option for Mr B Aitken because it would provide flexibility and would stop delays in the building process. Mr B Aitken stated in evidence that on 17 April 2008, approximately nine days after the meeting on 8 April 2008, the proprietary company Dark Horse was set up to enable the development of the small bars.
22 Mr Kinchen continued to work with Mr Di Giovanni to provide
Mr B Aitken with a costs estimate that was ultimately provided to Mr B Aitken on 29 April 2008. A meeting was then arranged with
[2013] WADC 23
WAGER DCJ
Mr B Aitken, Mr Di Giovanni and Mr Kinchen on 1 May 2008. Prior to the meeting Mr Di Giovanni had prepared two Housing Industry Association Ltd cost plus contract documents; one in relation to The Cabin and one in relation to The Suite. Both Mr B Aitken and Mr Di Giovanni signed both contracts at the meeting on 1 May 2008.
23 The Housing Industry Association Ltd cost plus contract in respect of
The Cabin is exhibit 3. Relevantly, for these proceedings, the contract states:
1. AGREEMENT TO BUILD
(a) The Builder agrees to execute and complete for the Owner the building work described in Item 3 of the Schedule hereto ('the Works') upon the land described in Item 3 of the Schedule hereto ('the Site') in a proper and workmanlike manner and in accordance with the drawings, plans and specifications (inclusive of all addenda and colour schedules) agreed between the parties and annexed hereto and for the purpose of identification signed by each of them (which said drawings, plans and specifications and colour schedules are hereinafter referred to as 'the Construction Documents') for the consideration as described in Item 5a or 5b of the schedule hereto and upon the terms and conditions herein appearing. 2. OWNER'S WARRANTIES
(a)
The Owner warrants that he is entitled to build upon the Site and accepts responsibility for the accuracy and description thereof and for provision to the Builder of full particulars of easements and encumbrances and all of the relevant information concerning the site including access thereto and pegging or other physical delineation thereof. The Owner warrants that the Site is subject only to those encumbrances referred to in Item 4 of the Schedule hereto.
(b)
The Owner warrants that he has the capacity to pay the costs as that term is defined in Clause 6 together with the builder's fee as specified in Item 5 of the Schedule. The Builder may at any time during the period of this contract request written notice from the Owner to satisfy the Builder of the Owner's ability to pay. If the Owner shall fail to do so within FIVE (5) days of receipt of such notice the Builder may determine this contract in accordance with Clause 15 hereof.
…
[2013] WADC 23
WAGER DCJ
The schedule of particulars is as follows:
| 25 | The Housing Industry Association Ltd cost plus contract for |
| The Suite is in identical terms. The schedule of particulars for The Suite contract is as follows: |
[2013] WADC 23
WAGER DCJ
Accordingly, in the written schedule to both contracts Brendan Aitken is listed as the owner. There is no reference to Dark Horse on either of the schedules, nor in either of the contracts.
27 Mr B Aitken said in evidence that he applied for finance on behalf of
Dark Horse on 7 May 2008 (being six days after signing The Cabin contract and The Suite contract). He said that given that Dark Horse was incorporated on 17 April 2008 he is unsure why he completed the contracts in his own name because it was the vehicle set up in order for money to be borrowed for the project (ts 104). However there was neither correspondence nor meetings with Mr Di Giovanni in relation to the role of Dark Horse prior to signing the contracts.
28 Mr B Aitken was unsure whether Mr Di Giovanni had been advised
that the company Dark Horse had been set up prior to the date of signing on 1 May 2008 (ts 104). Mr Aitken stated in evidence that Mr Di Giovanni was aware of Dark Horse by 18 June 2008 but he does not recall notifying Mr Di Giovanni that Dark Horse had been incorporated prior to 18 June 2008.
29 Mr Di Giovanni gave evidence of his dealings with Mr B Aitken and
Mr Kinchen up to and including 1 May 2008, the date on which the two contracts were signed. Mr Di Giovanni knew Mr Kinchen through renovation work and Mr Kinchen introduced him to Mr B Aitken on or about 17 April 2008. Mr Di Giovanni said that Mr B Aitken signed both contracts. Mr Di Giovanni cannot remember any discussion in relation to Dark Horse on that date nor prior to that date. He said (ts 52):
At the time I don't remember exactly but I don't remember Dark Horse being mentioned so we decided to sign personally.
Mr Di Giovanni said in evidence-in-chief that he had filled out the schedules to the two contracts when he was at the meeting on 1 May 2008 however in cross-examination he agreed that he had completed the schedules before attending the meeting. I find that this discrepancy does not impact on Mr Di Giovanni's credibility or reliability because Mr B Aitken did not challenge the evidence that Mr Di Giovanni had written the details onto the schedules nor did he challenge that he had read the two contracts and then signed them on 1 May 2008.
31 Although Mr Di Giovanni and Mr B Aitken repeatedly cross-examined each other in relation to issues of unreliability, dishonesty and lack of credibility (including Mr Di Giovanni calling evidence from
[2013] WADC 23
WAGER DCJ
Mr Corrello that Mr B Aitken had advised the court that he could not attend an interlocutory date when in fact Mr B Aitken had been in Perth but may have been concerned about a terminally ill grandmother), the cross-examination did not lead to substantial variations in the evidence that each witness gave in relation to the formation of the two contracts.
32 I find that the version of events of both witnesses in respect of the
signing of the two cost plus contracts on 1 May 2008 was very similar. I find that Mr Aitken had not advised Mr Di Giovanni that the company Dark Horse had been set up to develop the small bars until approximately 15 June 2008. Mr Aitken held himself out as being the owner of both The Cabin and The Suite in the two schedules relevant to the two contracts.
33 The owner's warranties of the cost plus contracts (condition 2), is not
inconsistent with Mr Aitken signing the cost plus contracts and agreeing
to build in his own name.
Variations to the two contracts dated 1 May 2008
34 The parties agreed to commence work on The Cabin project first so
that The Suite could continue to operate as a café thereby producing an income for Mr B Aitken. However soon after commencing substantive work on The Cabin site the relationship between Mr B Aitken and Mr Di Giovanni broke down. The reasons for the breakdown are not relevant to the determination of these preliminary issues however the breakdown meant that Mr Di Giovanni stopped work on The Cabin contract from 20 October until 17 November 2008.
35 On 17 November 2008 Mr Di Giovanni sent a letter on
Timber Dimensions' letterhead to Brendan Aitken, Dark Horse
Developments Pty Ltd (exhibit 5). The letter sets out the following:Dear Brendan,
Firstly thank you for the return phone call on Friday morning, and your apology for how this situation had exploded out of hand. Of which I do accept.
We all want to see this development move forward and completed as soon as possible, so we may all enjoy what we have achieved together.
The conditions below form part of your email dated Friday 14th November
2008. Some of which I agree to and others that I don't.
[2013] WADC 23
WAGER DCJ
This agreement will be between Brendan Aitken (Darkhorse) and myself, Piero Di Giovanni (Timber Dimensions) with Steve Kinchen (Evoke) being informed fully on what has been agreed to. These conditions will form part of the cost plus contract which was signed at The Suite in Shenton Park on 1st May 2008. They will form part of the special conditions section 25 of said contract.
• All works to re-commence immediately. All quotations have been agreed and signed off. Proceed with current quotations seen and agreed upon. • All orders to be placed for any outstanding items. (bricks, blackbutt etc) • Brendan and Piero to manage a professional and honest working relationship throughout the entire project between Darkhorse and Timber Dimensions. Steven Kinchen from Evoke to be included in the working relationship. • All communication to come through Brendan Aitken and all authority required to purchase or sign off quotes also to come through Brendan Aitken. • Where Brendan is not available Peter Aitken will assume responsibility in his place. • Larger items still outstanding will be quoted with all smaller works being completed without quoting to speed up works. • Darkhorse is to have working capital in credit at all times as agreed to at initial contract signing. Delays in providing working capital could delay works to the above project. • Piero Di Giovanni to be informed of financing issues for plant. As Timber Dimensions can issue full invoices including all information required by your bank in regards to makes and serial numbers. • Brendan to restore relationship between Landlord - Anthea Kannis-Pitsikas and Piero Di Giovanni which was affected during past issues. This is critical otherwise ill feeling could slow or make difficult issues which require co-operation from Lavender Blue staff, i.e. electrical board repair/replacement. • Weekly site meeting to be organised between Darkhorse, Piero and Evoke. Proposed every Monday morning at 10.30 am onsite. (if time suits all parties) • All site visits to be co-ordinated via builder. • No items to be removed from site without prior consent of Builder.
[2013] WADC 23
WAGER DCJ
• Any issues that may arise during the construction to be dealt with at weekly meeting, or if urgent via clear communication between all parties. • Due to upcoming Christmas and New Year breaks, construction of The Cabin will be completed as soon as possible. We all understand the financial burden of this project. But some things are out of the control of the builder. Contractors normally do not work over these periods. • Shenton Park - The Suite to be determined at or near completion of 'The Cabin'. If all parties are happy with the 'The Cabin', then Timber Dimensions will build Shenton Park. • Timber Dimensions to remain as Builder subject to the cost plus contracts and above points being agreed to.
Brendan as stated in your email this is time to start afresh. We would like to have a mutually respectful relationship and I hereby give you my commitment to this.
I look forward to new and easy working relationship together, Darkhorse and Timber Dimensions along with Evoke creating a new and dynamic Wine Bar - The Cabin.
A place to be seen in Mt Hawthorn.
Thanks Brendan.
[Signature]
Piero Di Giovanni
17.11.2008
Mr B Aitken endorsed the letter by writing on it:
I agree to the above conditions which will form part of the special conditions under section 25 of the contract.
Brendan Aitken
[Signature]
17th November 2008
37 Mr B Aitken stated that he endorsed and signed the letter dated
17 November 2008 reluctantly however he wanted the contract to proceed so that the work could be finished and the small bar could start to operate. Mr B Aitken referred to duress in his evidence however duress is not pleaded and, on the evidence, is not an issue in relation to the signing of the variation.
[2013] WADC 23
WAGER DCJ
38 Mr Di Giovanni re-commenced work at The Cabin after Mr B Aitken
had signed the letter on 17 November 2008. Once again significant problems arose between the parties the details of which are not relevant to this preliminary issue and accordingly I make no findings in relation to them. The result of the problems however was that on 11 May 2009 Mr Di Giovanni wrote to Darkhorse Developments Pty Ltd on Timber Dimensions' letterhead in relation to early handover of the property 'The Cabin' (exhibit 6):
Dear Brendan and Peter,
Before I can give early handover of 'The Cabin' to Darkhorse Developments Pty Ltd, that is before all invoices are paid for in full. I require this renewal of our contract agreement signed.
• That all invoices relating to the construction of 'The Cabin' be paid in full as per our Cost Plus agreement. • Timber Dimensions retains full ownership of all material and services relating to the above property until paid for in full. • Timber Dimensions has full access to the above property until all invoices and debts are paid for. • In the event of any legal action taken to recover unpaid invoices, that all costs of said legal shall be charged to and paid for by Darkhorse Developments Pty Ltd. This early handover is designed to be helpful to Darkhorse Developments Pty Ltd to raise revenue for payment of present, past and future works. As well as being for income to Darkhorse Developments.
No future works shall commence while there are unpaid invoices retaining to 'The Cabin' to Timber Dimensions.
This is confirming our previous agreement on The Cost Plus contracts signed on 1st May 2008.
[Signature] [Signature] Brendan Aitken Peter Aitken Director Director Kindest regards [Signature]
Piero Di Giovanni
Timber Dimensions
[2013] WADC 23
WAGER DCJ
39 Both Brendan Aitken and Peter Aitken signed the letter.
The signatures appeared above the typed name 'Brendan Aitken, Director' and above the typed name 'Peter Aitken, Director'.
Peter Aitken and Dark Horse
40 Mr Di Giovanni said in evidence that he had met Mr Peter Aitken at
a project team meeting that is dated as occurring on 26 March 2008 which is earlier than the date Mr Di Giovanni refers to meeting Mr B Aitken which is on or about 17 April 2008 (ts 51). The minutes of the meeting (exhibit 13) note the following in relation to Brendan Aitken and Peter Aitken:
| Item | Description | Who | When |
| 2.0 | Design |
| 2.4 | Kitchen/bar design off this week from | BA |
Dark Horse Team
…
| 5.0 | General | ||
| 5.1 |
| ||
| evaluation when design has progressed. SK to forward drawings to BA. |
41 Mr B Aitken stated in evidence that Mr Kinchen was the facilitator
and scribe for the minutes at the meeting. Details of those who attended and the name of the note-taker are recorded in the minutes Mr Di Giovanni, Mr Kinchen, Mr B Aitken and Mr P Aitken were present. Mr Kinchen took the notes. Mr Di Giovanni was not questioned in relation to his understanding of the minutes nor was he questioned in relation to the reference to the Dark Horse team.
42 Exhibits tendered during the course of the hearing in respect of the
preliminary issue included emails sent from Brendan Aitken. The email address for dates prior to 1 May 2008 is [email protected] (exhibit 14, 21 and 22 April 2008), the email address from Mr Brendan Aitken on dates after 1 May 2008 is [email protected] (exhibit 7, 19 and 22 October
[2013] WADC 23
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2008, exhibit 8, 11 November 2008, exhibit 9, 12 November 2008,
exhibit 10, 12 November 2008, exhibit 10, 14 November 2008).43 In evidence-in-chief Mr Di Giovanni agreed that he remembered
Peter Aitken being present at the meeting on 26 March 2008 (exhibit 18). He said that Peter Aitken was the project manager. Between 26 March and 1 May 2008 he said he saw Peter Aitken and Brendan Aitken at the two properties and that Peter Aitken might have been present at the contract discussions however Mr B Aitken's evidence was that he could not recall whether Mr P Aitken was present on 1 May 2008. Mr Di Giovanni does not give evidence in relation to knowing about the company Dark Horse until approximately 18 June 2008.
44 No evidence was led by either party in relation to the identity of the
person or entity who had leased the premises at The Suite or The Cabin site. The evidence was The Suite was already operating and was run by Mr B Aitken as a café prior to any discussions in relation to it becoming a small bar. There was no evidence to clarify the circumstances of the lease of The Cabin.
The relevant legal principles - identification of parties to the contract
45 In City and Suburban Group Pty Ltd v Gambetta Holdings Pty Ltd [2001] WASCA 233, an appeal against a decision of the primary judge's finding that a contract had been between the appellant and respondent, the appellant asserted that the contract was made between the respondent and a company associated with the appellant. In that case Murphy JA summarised the relevant legal principles in respect of the identification of parties to a contract:
45 The following expositions of principle are relevant for present purposes.
46 In Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603, Campbell JA (with whom Mason P agreed) said [262]:
'For the purpose of deciding whether a contract has been entered, or what construction it bears, the common intention that the court seeks to ascertain is what is sometimes called the 'objective intention' of the parties. That is the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had, concerning the subject
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matter of the alleged contract: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912 - 913; 1 All ER 98 at 114 - 115; Taylor v Johnson (1983) 151 CLR 422 at 429; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 - 550.'
47 Further in Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429; (2009) 77 NSWLR 299, Allsop P and Handley AJA (Hodgson JA agreeing) said [28]:
' The identity of the contracting party is to be determined looking at the matter objectively, examining and construing any relevant documents in the factual matrix in which they were created and ascertaining between whom the parties objectively intended to contract. This is, to point, a process of construction similar to the task of identifying whether a clearly contractual document (such as a bill of lading) is made with one party or another (such as a shipowner or time charterer): Starsin at [132] and the cases considered in M Wilford et al Time Charters, 5th Ed, Informa Publishing, 2003, Ch 21. Where the documents are silent or ambiguous, but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances: see Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 at 174; Protean (Holdings) Ltd v American Home Assurance Co (1985) 4 ANZ Ins Cas 60-683 at 74,055 - 74,056; Coulls v Bagot's Executor and Trustee Co Ltd [1967] HCA 3; 119 CLR 460 at 477, 478 - 479 and 486.'
48 Similarly, in Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909, 923, McHugh JA (as he then was) said:
'A commercial document, however, must be construed in its commercial setting - in accordance with the surrounding circumstances known to the parties: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 - 353. This is so whether the issue concerns construction in the strict sense or whether, as here, the issue concerns the capacity in which a person signs a document.'
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Accordingly, the issues to be determined are:
1. What was the objective intention of the parties when the contracts were signed on 1 May 2008?
2. Given the commercial nature of the two contracts can it be inferred that Mr B Aitken was acting on behalf of Dark Horse when he signed the two contracts on 1 May 2008?
What was the objective intention of the parties when the contracts were signed on 1 May 2008?
47 Although Mr Di Giovanni had met both Mr B Aitken and
Mr P Aitken prior to 1 May 2008 and the minutes of the project team meeting on 26 March 2008 refer to the Dark Horse team there was no evidence that Mr Di Giovanni knew that Mr P Aitken's role was anything other than project manager. Mr Di Giovanni's dealings had been with Mr B Aitken, Mr B Aitken's email address was a hotmail address in his own name and Mr B Aitken adopted the schedule of particulars in respect of both contracts that named him as the owner of the relevant property and signed and witnessed both schedules of particulars on 1 May 2008.
Can it be inferred that Mr B Aitken was acting on behalf of Dark Horse in signing the two contracts on 1 May 2008?
48 It was pleaded by Mr Di Giovanni in his re-amended writ of
summons and statement of claim that it is to be inferred from the particulars relevant to par 5A that Mr Brendan Aitken signed the contracts in his capacity as a director of and as agent for Dark Horse. The particulars from which the inference is to be drawn are pleaded as follows:
PARTICULARS
(a) The second defendant is and was at all material times director and company secretary of the first defendant; It is not disputed that Mr B Aitken was the named director and company secretary of Dark Horse at the relevant time. However there is no evidence that Mr Di Giovanni was aware of Mr B Aitken's position nor that Mr B Aitken held himself out as a representative of Dark Horse prior to 1 May 2008.
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(b) The Cabin contract was for works which were to take place on premises leased by the first defendant for the benefit of a business owned by the first defendant; There was no evidence that the property was leased by Dark Horse. Clause 2 Owner's Warranties of both cost plus contracts was adopted by Mr B Aitken without reference to Dark Horse.
(c) The Cabin contract required 'the owner' to have title to, and a right to build on, the site which were rights held by the first defendant by reason being the lessee of the premises; There was no evidence led in relation to this assertion.
(d) Under The Cabin contract 'the owner' warranted that he had the capacity to pay the costs of the work and the builder's fee, and finance for Cabin contract works was obtained in the name of the first defendant; Mr B Aitken's evidence was that finance was not obtained until after the two contracts were signed. Consistent with Mr B Aitken's evidence confirmation of finance (obtained by Dark Horse Developments Pty Ltd as trustee for the Aitken Trust trading as The Suite) was provided to Mr Di Giovanni on 15 July 2008 (exhibit 16). This was six weeks after the two contracts had been signed.
(e) Invoices issued pursuant to The Cabin contract were issued to the first defendant and the first and/or second defendant caused payment to be made to the plaintiff by the first defendant; No invoices were issued by Mr Di Giovanni until approximately July 2008. The evidence was that Mr Di Giovanni had been advised of the existence of Dark Horse by July 2008.
(f) Email communications in relation to The Cabin contract works was sent and received by the second defendant from the email address '[email protected]' and was signed as managing director, Dark Horse Developments Pty Ltd; The email address relating to Dark Horse and the manner of signing were not adopted by Mr B Aitken until a date after the contracts were signed on 1 May 2008.
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(g) A written variation to The Cabin contract was executed by the second defendant and Peter Aitken in their capacity as directors of the first defendant; Mr B Aitken alone signed the first variation dated 17 November 2008. Mr B Aitken adopted that the variation conditions formed part of the special conditions under s 25 of the original contract. The second variation was signed by both Mr B Aitken and Mr P Aitken however the second variation was not signed until 11 May 2009, one year after the contract had been entered into. The variation dated 11 May 2009 confirmed the previous agreement in relation to the cost plus contracts signed on 1 May 2008.
(h) The second defendant held himself out during the course of The Cabin contract at all material times as acting on behalf of the first defendant and had the authority to do so; Mr Brendan Aitken did not hold himself out as acting on behalf of Dark Horse until after the contracts had been signed on 1 May 2008.
49 Accordingly the only commercial inference to be drawn being the
intention of a reasonable person with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, is that Mr Di Giovanni and Mr B Aitken intended to contract with each other on 1 May 2008, that is that the contract was between Mr Di Giovanni and Mr B Aitken himself.
Do the contract variations dated 17 November 2008 and 11 May 2009 change the parties to the contract?
50 I accept that by June 2008 all parties were aware that Dark Horse Pty
Ltd had been set up to develop the small bars however both variations to the contract (17 November 2008 and 11 May 2009) refer back to the original contracts.
Did Mr Brendan Aitken voluntarily assign his contractual obligation to
Dark Horse Pty Ltd by novation or assignment?
51 Novation is a transaction by which, with the consent of all of the
parties concerned, a new contract is substituted for one that has already
been made. The new contract may be between different parties.
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WAGER DCJ
52 This kind of novation has been described as the discharge of a
contract by a new agreement with a third party who undertakes to take the liability of the contract and is accepted by the creditor in the place of the original contractor or debtor. All the parties to the original contract must consent to the new agreement: Robinson v Podosky [1905] St R Qd 118,
Contract, 10th Australian ed, 2012 [8.46]. [112]; Seddon NC and Ellinghaus MP, Cheshire & Fifoot, Law of 53 An assignment is an effective transfer without the consent or the
collaboration of the debtor. There must be clear evidence of the third party's acceptance; Seddon NC and Ellinghaus MP, Cheshire & Fifoot, Law of Contract, 10th Australian ed, 2012 [8.45].
54 In the present case the plaintiff carries the onus of proving the
identity of a contracting party or parties. Although it could be inferred that the parties believed that Dark Horse Pty Ltd had responsibility for The Suite and The Cabin, there is no clear evidence of Dark Horse Pty Ltd's acceptance of the two building contracts and variations. On the contrary the contractual variations adopt the terms and conditions of the contracts signed on 1 May 2008.
55 I find that the contracts including the variations to the contracts for
the work to be performed at The Cabin and at The Suite were contracts
between Mr Di Giovanni and Mr B Aitken himself.
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