Freestyle Building v Calco Timbers
[2014] VMC 3
•21 FEBRUARY 2014
IN THE MAGISTRATES’ COURT OF VICTORIA AT MELBOURNE
CIVIL DIVISION
Case No. C13303510
FREESTYLE BUILDING CO PTY LTD Plaintiff -and- CALCO TIMBERS PTY LTD Defendant ---
MAGISTRATE:
GINNANE
WHERE HELD:
MELBOURNE
DATE OF DECISION:
21 FEBRUARY 2014
CASE MAY BE CITED AS:
FREESTYLE BUILDING v CALCO TIMBERS
REASONS FOR DECISION
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Catchwords: Provision of quotation for supply of timber and timber related product for use by plaintiff in tender process – whether price comprised a representation in trade or commerce under s 18 of Schedule 2 of the Competition and Consumer Act 2010 (the Australian Consumer Law) such that a departure from price and the provision of a subsequent quotation at higher price was misleading or deceptive conduct – claim for damages in the difference in price paid by the plaintiff for timber and timber supplies and price contained in defendant’s principal quotation – Negligence – whether duty of care to take reasonable care in the provision of quotation – whether parties sufficiently proximate – plaintiff’s proceeding dismissed.
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APPEARANCES:
Counsel Solicitors For the Plaintiff Ms Cooper Marshalls & Dent For the Defendant Mr Catlin Harwood Andrews HIS HONOUR:
1.The plaintiff sues the defendant on two bases.
(a) A claim alleging misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law (the ACL); and
(b) A claim in common law negligence alleging a breach of a duty of care owed by the defendant to the plaintiff in the preparation of the quotations it furnished the plaintiff.
2.The plaintiff is engaged in the business of construction and construction management. As events transpired and in the ordinary course of the plaintiff’s business it sought to obtain a quotation from the defendant for the supply of pre-fabricated roof trusses, timber and other materials so that it could submit a tender for the construction of an aged care facility to be constructed for the Seymour Elderly Citizens Hostel Incorporated situate on land in Seymour (the project).
3.The defendant Calco is a company that trades in the supply of timber and timber related products. There are companies of like ilk I heard about such as Bowens Timber and Bunnings.
4.Mr Frank Smith (Smith) is a registered builder and a member of the Master Builders Association of Victoria. He is the director of the plaintiff. He said the plaintiff is a tender builder and that the type of work undertaken is largely commercial construction. He said he is in effective day to day control of the plaintiff.
5.The plaintiff was invited to tender for the project through the De Novo Group (De Novo). Smith said that typically a tender is responded to by costing the scope of the building works including all the jobs associated with the construction of the project. He said that in estimating a price for a tender he will obtain quotations from different trades including contractors and suppliers. He will then build in a margin to represent the plaintiff’s profit on top of the total price of the project and then submit this price as the plaintiff’s tender.
6.The plaintiff had been provided by De Novo with a set of plans for the project. Smith said that he believed he was initially contacted by the defendant who was aware of the tender. Although the defendant had supplied the plaintiff with timber in the past, theirs was not an established or ongoing relationship and the proposed project eclipsed any past dealings.
7.On 9 November 2011 Smith sent Calco the plans for the project in a series of 6 emails and advised it of the closing date for the tender.
The First Quote
8.On 2 December 2012 Calco provided the plaintiff with a quote. It was identified by a number, (Job: Q111778). The First Quote was sent to the plaintiff by email together with a number of documents comprising:
§A covering letter, addressed to, “Dear Valued Client”
§An Abbreviated quote;
§A Full quote;
§A single sheet entitled, The Advantages of Using Calco;
§A single sheet for the provision, if required, of Additional Materials;
§An Authority to Manufacture Sheet;
§A statement of company policy on payment terms;
§Conditions of Sale
9.The First Quote was in the amount of $254,534.41 (exc GST).
10.Because Calco’s Conditions of Sale are an important aspect of the case and are relied on by both the plaintiff and defendant, it is convenient to set out those referred to by the parties.
“2. The customer is responsible for supplying correct plans and measurements. If given measurements are incorrect then any rectification will be to the Customers account. All variations regarding measurements or manufacture instructions must be in writing, as verbal notification will not be accepted. Calco Timbers (Geelong) will not detail or manufacture goods off plans that are not drawn properly and lacking detail or engineering or having incorrect dimensions.
…6. The onus is on the Customer to read and understand the accepted quotation as only those products and services specified in the quotation will be supplied. …. All quoted prices are subject to final designs and plans; some measurements may have been assumed and should be verified at time of order. Quotes are preliminary designs only and may alter at the time of manufacturing. Builders should not construct on the basis of any given detail or layout from the quotation. This quotation should be read together with our "Conditions of Sale". A signed "Authority to Manufacture and Supply" form or "Purchase Order" with a "Plans Correct for Manufacture” stamp will mean that the job will be manufactured as per the quotation and details provided. All site measurements are to be the responsibility of the Customer. (Ie. Match existing, span checks, etc,), and the onus is on the Customer to ensure that Calco Timbers (Geelong) has correct plans and details in writing as requested.
…16 This quotation remains valid for fourteen days from the date hereon and, after this time Calco Timbers (Geelong) reserves the right to revise this price.”
11.The First Quote included the following caveat:
“This quoted price is subject to final designs and plans.
Variations from the original plans will alter the final price for this project”.
12.I take this to mean that a quoted price may be reduced or increased in a given set of circumstances.
13.It was not controversial that the First Quote was predicated on the supply of termite treated pine whereas a subsequent quote incorporated a change to ordinary pine in accordance with architect specifications.
14.The First Quote was not accepted within the period of 14 days (clause 16 Conditions of Sale). Smith said the plaintiff could not accept a quote unless and until it was successful in the tender.
The Re-issued Tender
15.De Novo reissued the tender in respect of the project on 23 January 2012.
The Second Quote
16.On 9 February 2012 Calco supplied the plaintiff with a further quotation (Job: Q111778) in the sum of $235,843.31 (the Second Quote).
17.On 10 February 2012 the plaintiff notified the defendant by email of the reissued tender. The plaintiff’s email attached some drawings with others that followed in a tranche of emails and the plaintiff highlighted the following instruction to the defendant:
“Note this is a Retender, some changes have been made, disregard all previous drawings”
18.The email also made reference to the following matters:
Please review quote and allow for the following
· 90 x 45 studs at 450ctrs – to all walls – refer notes on Drwg So5, S06
· NO TERMITE TREATED TIMBER
19.The defendant supplied the plaintiff with another quotation by email on 17 February 2012 (Job: Q111778B) in the amount of $239,056.38 (the Third Quote).
20.On 17 February 2012 the plaintiff lodged its tender with De Novo. It did so without recourse to the defendant. It utilised the defendant’s price for timber and timber trusses constituted by the Third Quote.
21.On 20 February 2012 De Novo advised the plaintiff by email that:
“We are in receipt of your tender and advise you are one of the two lowest tenderers. Unfortunately the tender received is substantially higher than what client is able to fund.
We propose making changes to the works to reduce costs, those changes are:1. A nett reduction in floor area of 300 msq (Refer to attached plans)
2. A nett reduction in roof terrace area of 26msq (Refer to attached plans)
3. You will note the changes include the deletion of one set of staff change amenities inclusive of services etc
4. Delete the synthetic grass in the dementia courtyard including a sub-base and associated drainage and substitute with turf
5. Delete all internal protective corner guards
6. Delete the dementia rough in from all rooms other than the dementia wing
7. all door grills to be painted not powder coated
8. Incorporate the rainwater tanks in the irrigation PC do not cost as an inclusion
9. Delete the blinding concrete from contract nominated by the consulting engineers
10. Comfort Plus clear glazing is to be used instead of standard 6.38mm glazing
11. Upgrade perimeter walls insulation to be R 2.5 minimum
12. W13 (stack sliding door to garden/BBQ Pavilion) is to be manual delete automation.
We require you give the above changes urgent consideration and provide us by no later than 4.00pm on Wednesday 22 March 2012 an accurate as possible indicative cost saving
On receipt of this information we will see client comment, the cost savings are adequate so as to allow the tender to proceed, we will formalize documents to allow accurate costing….”
22.De Novo asked to meet with the plaintiff on 23 February 2012 to discuss the changes alluded to in its 20 February 2012 email (numbered 1 to 12).
23.Not all of the changes to the project identified by De Novo related to timber and trusses. Smith said that changes numbered 1, 2 and 3 did. The changes were marked up on plans De Novo gave the plaintiff. They showed certain hatched areas representing the reduced footprint of the project.
24.On 21 February 2012 Smith sent Calco an email attaching the altered plans together with the De Novo email dated 20 February 2012 and concluded its message with this request:
“Can you sharpen your pencil – see attached”
25.On 22 February 2012 the defendant emailed the plaintiff and in reference to Quote No: Q111778B said:
“Hi Frank,
We have reviewed pricing for the project given the changes which you have advised…
Cost is reduced by $4500 in total bringing total for Walls and Trusses to $258,462.00 (Originally $262962.00MAJOR costs reduction can be achieved by redesigning ceilings so that COIFFERED ceilings are not featured. This type of ceiling design is quite expensive to manufacture and presents additional installation issues on-site-all adding to cost.
Please advise further”
26.As requested by De Novo, Smith met with them on 23 February 2012. He said they discussed the totality of the reductions in the tender price that the plaintiff had achieved across its various suppliers and not just Calco.
27.On 27 February 2012 De Novo emailed the plaintiff and requested the provision of cost saving breakdowns so as to facilitate proposed discussions with their client later that week.
28.On 2 March 2012 Calco issued another quote (job: Q111778C) (the Fourth Quote) in the amount of $233,150.58 (exc GST).
29.On 16 March 2012 De Novo sent the plaintiff an email saying that the changes would not go ahead and that there would no alteration to building size.
30.The plaintiff contends that as a result of this email from De Novo it was entitled to revert to and rely on the Third Quote because it was the one that costed the scope of works in the original form.
31.On 4 April 2012 De Novo accepted the plaintiff’s tender. The tender of course incorporated not only the cost for trusses and timber but other costs for services that the plaintiff had obtained from various trades and suppliers together with its own margin.
32.It was approximately two weeks later on 17 April 2012 that Smith again met with the Calco at their offices. Smith said that in the course of the meeting he told Calco that the plaintiff accepted its quotation. Smith produced handwritten notes of the meeting. His notes do not corroborate this aspect of his account of the conversation. Rather his notes reflect discussions concerning the likely progress of the project together with entries that suggest that a number of matters were not finalised, in particular, two references to the defendant’s request for Computer Aided Design (CAD) and drawings together with a reference to the absence of dimensions and the deletion of one portico from the plans.
33.It took until 8 May 2012 for Smith to write to the defendant with an acceptance of “your quotation for the supply of trusses and frames as quoted. We acknowledge that there may be minor cost variations due to clarification of measurements”. This was the first occasion in writing that the plaintiff communicated an acceptance to the defendant. Smith’s email went on to identify a progressive program for manufacture on site other than for Wing A of the project.
34.On 11 May 2012 Calco sent the plaintiff another quotation (Job Q111778E) (the Fifth Quote) in the amount of $304,271.68 (exc GST). The quote was sent by email from Paul Colless, General Manager of Calco (Colless) addressed to Smith. It said:
“As discussed please find our revised price for the project as 3 Brettonneux Street, Seymour.
35.The Colless email attached a letter setting out the defendant’s explanation for the increases in the quoted price “since we put in our estimated price last year”. Although the First Quote had been given “last year” namely on 2 December 2012, I think the relevant comparison should be with the Third Quote provided only a couple of months prior.
36.On 15 May 2012 and on a number of occasions thereafter Smith wrote to Calco in terms that demanded it honour the Third Quote. The defendant by answering correspondence said it could not do that and it had never held it out as bound to do so.
37.The plaintiff contends that all of the defendant’s exculpatory explanations and conduct in relation to other quotes occurred too late because it had already submitted its tender to De Novo which De Novo had accepted on 4 April 2012.
38.Smith’s evidence was also that he accepted the defendant’s Third Quote in a series of conversations and, in particular, in the course of his meeting with Messrs Colless and Gavin Thompson (Thompson), an estimator and employee of the defendant, on 17 April 2012. Smith testified that he told them he accepted their quote with the words, “I want you to do the job”.
39.The defendant agrees that it provided the plaintiff with various quotations. In all there were five. It also accepts that it was aware of the plaintiff’s intended use of quotes as part of a tender process for the project.
40.No issue was taken by the defendant that it is a corporation engaged in trade or commerce for the purposes of the ACL or that the conduct alleged by the plaintiff is conduct to which the ACL could apply.
41.The defendant defends the proceeding on a number of grounds. It argues that it had no intention to enter into contractual relations with the plaintiff and that the various quotes were no more than an invitation to treat and that the plaintiff could not bind it to any one quote by a unilateral acceptance and certainly not by the mere use of the prices contained in a quote that was but one component of a much larger tender amount unless the quote process had been completed. I note in passing that each quotation furnished by the defendant was provided free of charge to the plaintiff.
42.The defendant also relies on the express terms common to each quotation it provided to the plaintiff. Smith acknowledged in his evidence he was at all relevant times aware of the Conditions of Sale and accepted that they were expressed in clear and unambiguous language that he understood. I refer to those terms extracted earlier in these reasons including of course clause 16. The defendant says that the plaintiff did not accept any quotation within 14 days including the Third Quote dated17 February 2012.
43.As to the meaning to be afforded the expression, “final designs and plans”, that appeared in the First Quote, there was no consensus between the parties. The defendant placed emphasis on the delay by Smith in supplying it with CAD. CAD is the use of computer technology to aid in the design and particularly the drafting (technical drawings and engineering drawings) of a part or product, including entire buildings. The defendant argued that the supply of CAD is important because it provides assistance in the calculation of final cost. The defendant said that in the majority of cases it is supplied CAD on request and, moreover, at the commencement of the quote process. Smith disagreed. He said that although Colless and Thompson had requested CAD from the beginning the drawings, what he supplied the defendant were construction drawings issued with the tender and they “were the same as CAD”.
44.Colless said he had been involved in the provision to the plaintiff of quotations from the outset. He said that CAD had been requested from before the provision by it to the plaintiff of the First Quote. He said the plans supplied by the plaintiff lacked dimensions. He said many rooms identified on the plans lacked any figures and so it became necessary for Thompson to “scale-off” the drawings. Colless estimated that as many as 50 walls lacked dimensions. Scaling by use of a ruler, he said produces a “fairly rough” estimate of dimensions.
45.Colless accepted that the plans had been provided as a PDF attachment to an en email from the plaintiff. Thompson said that the defendant did not have an A1 printer and so for ease of use the plans were printed in A3 form. He said he enlarged the plans until they were of the requisite size to enable his use of the scale ruler. He used a scale measurement of 1 to 100. He said this would have been unnecessary if CAD had been provided. Thompson said he told Colless that measurements were missing and he needed CAD. Thompson said he was not disadvantaged in the long run because of the missing measurements. However, it did lead to additional time and effort in arriving at correct calculations and this would not have been necessary had he been furnished with CAD. Thompson testified that he will very often be given CAD and at the commencement of the quoting process and if not, for example, because intellectual property concerns exist restricting or delaying their release, he may contact the architect directly. However, he said he refrained from doing so in this case because Smith told him on a number of occasions the CAD was forthcoming.
46.Thompson said it took him more than a “dedicated” week to prepare the First Quote. He said the Second Quote involved a mere adjustment in the price difference between treated blue pine and standard pine and was completed within perhaps “a couple of hours”. The Third Quote was also completed quickly. In regard to the Fourth Quote the plans were shaded and this was the indication of cuts made to the dimensions. There were not Thompson said, measurements supplied of the reduced dimensions indicated on the shaded plans.
47.There is a stark conflict in the respective accounts of the discussion that occurred at Calco’s offices on 17 April 2012. Messrs Colless and Thompson said that in the course of the meeting CAD drawings were requested. Smith agrees with this. Colless says he told Smith not to rely on the quotation until such time as CAD had been supplied. Smith in cross-examination said that he “could not recall a conversation in that form”. Thus whilst he did not deny the conversation he was unable to adopt it in the terms alleged by Colless.
48.The defendant’s reliance on the insufficiency of the printed off drawings was further highlighted by Colless who said he told Smith that, “we need proper plans, we can’t guesstimate” and that he told Smith that Calco would requote after the provision of a disc containing the CAD. Again it was Smith’s recollection that whilst he acknowledged a conversation of this sort, he could not recall if it was in the terms expressed by Colless.
49.I am not satisfied on the balance of probabilities that Smith accepted the defendant’s Third Quote in conversations prior to the meeting held on 17 April 2012 or that he did so in the course of the meeting on 17 April 2012. There was no sufficient evidence of any pertinent conversation before 17 April 2012. In fact Smith said in evidence that one of purposes his meeting was designed to achieve was to “get agreement on their [Calco’s] quote” This is significant in light of Smith already having submitted the tender based on the Third Quote. I am satisfied the meeting concluded without such an agreement. Even if Smith used the language that he claims he did in the course of the meeting on 17 April 2012, in my judgement it is not a sufficient or unequivocal statement of acceptance by the plaintiff and it could not have bound the defendant to the quoted price. I am fortified in my conclusion when I also have regard to Smith’s awareness of the formal steps required by the defendant in order for a quote to be an accepted quote.
50.The plaintiff’s case as I comprehended it was that even in the event the Court concluded that it had failed to give the defendant oral acceptance or written acceptance of the Third Quote prior to 8 May 2012, the absence of any disavowal of the Third Quote by the defendant until, by necessary implication the provision of the Fifth Quote on 11 May 2012, is a sufficient basis upon which to preclude the defendant from departing from the representation constituted by the price contained in the Third Quote.
51.The plaintiff said it was commercially compromised by the defendant’s increase in price and so in order to meet the tender it had secured, it obtained quotations and adopted a quotation it had procured from Bunnings in the sum of $297,406.63 (exc GST). The plaintiff alleges that it suffered loss and damage being the difference in the price for the supply of timber in the Third Quote and the amount it was required to otherwise pay for the timber.
52.The plaintiff however seeks to establish that it was misled by the Third Quote when it received the Fifth Quote. However by time the Fifth Quote was received the plaintiff had elected by a choice of its own making to go ahead and use the Third Quote.
53.Colless in any event testified about the factors that resulted in the increase in cost reflected in the Fifth Quote. It was prepared after the receipt of the CAD. He said that a result of having been supplied the CAD the capacity to identify precise dimensions resulted in an increase in the cost of timber of $18,000. in addition he said that the method or stages that the plaintiff required the timber to be delivered, a process referred to as “batching” that is designed to complement the timing of the construction of each wing of the project such as to maximise units of production, resulted in increased production hours and precluded savings that were otherwise achievable by economies of scale and upon which the original quotes had been predicated upon. This resulted in an increase of $20,000. The recourse to the design of coffered ceilings added $1,500 to the costing as did provision of the increased labour costs under increases built into the defendant’s Enterprise Bargaining Agreement (the EBA) and an increase in the cost of pine.
54.Colless was cross-examined about the increased costs of the EBA and increase in the price of pine and accepted that in the period of time between the Third and Fifth quotes a number of costs referred to had not changed, and therefore, should not have warranted a revised pricing. Colless agreed that no change in the quantity of trusses was evident when comparison is made between the Third and the Fifth Quotes. It was not satisfactorily explained by the defendant how the cost of timber had increased by $18,000 in the short period of time between the provision of the Third and the Fifth Quotes. Ultimately however, I do not regard that lack of explanation as determinative of the matter.
55.In regard to the meeting of 17 April 2012, Colless said he told Smith that he was “sorry” but that the defendant was “unable to accept an order at this stage as we need to finalise a price”. Colless said Smith said that this could be done on the basis of the provision of existing material but Colless replied by saying, “Provide the CAD and we can do that straight away”. Smith said Colless said that he would attend to it to and Colless replied that if this occurred he could then finalise the price. Smith did not tell the defendant that De Novo had already accepted the tender. Asked what he thought finalising the price could mean, Smith said he thought “perhaps a small increase” in the overall price of the Third Quote.
56.There was no cogent reason advanced why it took Smith until 8 May 2012 to tell Colless that the plaintiff would accept the quote and why the acceptance by De Novo of the plaintiff’s tender was not broached before hand. Colless said that in light of their dealings up to and including 17 April 2102, he was taken aback when on 8 May 2012 Smith communicated an acceptance of the defendant’s quote. Colless said that he tried to telephone Smith on three occasions almost straight away after receipt of the 8 May 2012 email but to no avail.
57.Thompson gave evidence of his account of the meeting of 17 April 2012. He said he told Smith that he needed new plans and the CAD in order to redraw the quotation. He said that Smith told him that De Novo was reverting to the original plans and so this wouldn’t be necessary. Nonetheless Thompson said that he pressed Smith for the provision of the CAD. Thompson said that Smith wanted to get started as soon as possible and he said he anticipated the construction would occur in stages. Thompson corroborated Colless’ evidences including telling Smith that "we are not able to accept an order” and that CAD was required “in order to give a final price." Thompson said that Smith said he understood that there “would need to be some changes”. Thompson said he assumed the discussion was in relation to the Fourth Quote.
58.Throughout the defence of the proceeding the defendant relied upon the plaintiff's failure to adopt its procedures governing the acceptance of a quotation which among other matters involved the completion and signing of an authority to manufacture and supply and the provision of the completed and signed forms of the defendant. I am satisfied that the plaintiff’s purported acceptance of the Third Quote by email dated 8 May 2012 was otherwise than in accordance with the mechanism set down by the defendant and was contrary to the terms and conditions common to each of the defendants quotations and that the plaintiff could not bind the defendant to it.
Misleading and Deceptive Conduct Claim
59.In order to overcome the inherent difficulties occasioned by the plaintiff’s claim based on the provision of a quotation, the plaintiff alleges that the defendant’s conduct amounted to misleading and deceptive conduct.
60.Counsel for the defendant in both his written and oral submissions was at pains to emphasise that the plaintiff’s claims were not brought in contract law. So much is readily apparent. Furthermore the defendant characterised the plaintiff’s claim as “highly novel” and its “novelty” being “manifestly evident from what it would mean for all quotes – a flood of misrepresentation claims”. If that is the consequence of an application of the law to the facts, so be it.
61.The defendant’s oral and written submissions addressed reliance which is a necessary element in claims for loss and damage arising from misleading and deceptive conduct. The defendant submitted that the plaintiff could not establish reliance because the provision of a mere quotation or estimate is no more than the expression of an intention to make an offer and not itself an offer capable of acceptance. The defendant also relies on the fact that the state of affairs that regulated the relationship between plaintiff and DeNovo was initially no more was an invitation to tender and it was outside the knowledge of the defendant to anticipate the success or lack of success of the plaintiff’s tender.
62.Section 18 of the ACL is concerned with “conduct” and not contracts, and conduct can of course, take all manner of form and expression including matters contained in contracts or in pre-contractual negotiations. That is not a controversial proposition of law.
63.What any particular and relevant identified conduct conveys is a question of fact informed by having regard to all of the contextual circumstances within which the conduct occurred. In ACCC v Telstra Corp Ltd [2007] 244 ALR 470 the Federal Court said a two step analysis is required by a court when faced with such a controversy as this. The first step is to ask if the facts establish the representation pleaded and the second step involves asking, whether, as a question of fact, the representations are false, misleading or deceptive or likely to mislead or deceive.
64.Applying the above two step process, do the facts pleaded by the plaintiff establish the representations pleaded? The fist problem I have with the plaintiff’s claim under the ACL is that the Statement of Claim fails to plead any facts amounting to representations let alone does it plead facts the existence of which are alleged to be false or misleading. As far as the pleading is concerned the Statement of Claim is of scant assistance to me. However, the defendant took no formal issue with the pleading and it proceeded to defend the matter on the basis of what I might call an “assumed general allegation” that one or more of the quotations provided by it (but certainly the Third Quote) was conduct amounting to a representation that was false or misleading or likely to mislead or deceive.
The applicable test
65.It is settled law that conduct may only amount to misleading or deceptive conduct if it induces or is capable of inducing error see, for example, Parkdale Custom Built Furniture Pty Ltd v Puxu (1982) 149 CLR 191. A court will need to ask itself, what is the likely reaction to the representations relied on by the plaintiff by ordinary or reasonable members of the class to whom the representation is directed?
66.The plaintiff’s formulation of its claim of misleading or deceptive conduct was not well defined as I have already commented. Because of this, and the lack of clarity in the course of the plaintiff’s evidence, it was unclear what facts the plaintiff relied upon as constituting the representations that were misleading or deceptive. It is apparent at least however that the plaintiff claims that the Third Quote amounted to a representation constituted by the price contained in it and that the defendant was bound to it. However, it also appeared to be the plaintiff’s claim that the provision of the quotes, but relevantly the Third Quote, contained a representation that any variation in price would be minimal and could only occur by reason of any design or plan changes. That is not of course the effect of clause 16 of the Conditions of Sale that placed no such inhibition on the right to revise a price previously quoted.
67.The plaintiff says that when the defendant issued the Fifth Quote for a significantly greater amount than the Third Quote it departed from the representation in the Third Quote thus rendering the Third Quote misleading or deceptive.
68.Neither party pleaded or made submissions to the effect that the quotes, if they constituted representations, were representations as to a future matter or, in the event they were as to future matters, that the defendant had reasonable grounds for making the representation at the time. I don’t believe the quotes if they amounted to actionable representations were as to future matters but as no argument was made to me on the point, I take the issue no further other than to say that the provision of a quotation is necessarily a promise by one person that that if accepted by another, the person will have the capacity and willingness to provide the stated services or goods at the given price based on an existing set of disclosed circumstances at some stage in the future.
69.The Third Quote furnished a price and imposed a number of limitations in relation to its use and the reliance that could be placed in it. The plaintiff elected to ignore these limitations and instead proceeded to use the price as part of its total tender. One of those limitations as I have already addressed is the 14 days in which the quote remained open for acceptance. Given that Smith was always aware of this requirement, in my view it would not be reasonable for the court to conclude that the giving of the Third Quote amounted to conduct that in all the circumstances could have led the plaintiff into error in the manner claimed.
70.The defendant says that from the outset it asked for the provision not just of the drawings supplied by the plaintiff from De Novo but of the CAD. Thompson accepted in cross-examination that despite the absence of CAD until after the provision of the Third Quote, the measurements he obtained by scaling off were accurate to 100mm. I don’t think that admission is of much assistance to the plaintiff in action under s 18 of the ACL. Section 18 directs itself to the question whether at the time the Third Quote was provided, the surrounding circumstances were such as to have reasonably led a person in the position of the plaintiff into error, namely that any variation to the price in the third quote would be by definition “minimal” or “marginal” and would exclude a significant variation in price and only arise “subject to final designs and plans”. I can see no reasonable basis to arrive at this conclusion or that it could reasonably be thought to exclude other than minimal or marginal variations in price including at least by reason the absence of any such restriction in clause 16 of the conditions.
71.In any event a requirement given by Smith to the defendant for the batching of timber and trusses gave rise to a significant cost impost of the order of $20,000 according to Colless but not one that the plaintiff would say arose “subject to final designs and plans.” I would not necessarily agree with such a view. It is arguable that the method by which product that is the subject of designs and plans is to be delivered, constitutes a sufficient nexus as to be capable of arising in the relevant sense in relation to final designs and plans. However, I am not required to determine that matter because I am otherwise satisfied that the plaintiff aware of the defendant’s conditions could not have been misled into a belief that a revised price would only be minimal and arise in consequence of a change in final designs and plans if a quote was not accepted within the 14 day period. The plaintiff fixed with such knowledge cannot reasonably be adjudged to have been led into error that the price contained in the Third Quote was set in stone.
72.The plaintiff was not entitled to act on the price of the Third Quote in light of Colless’ evidence that he told Smith that he could not rely on it until the CAD had been supplied and the design was re quoted. It is not to the point for the plaintiff to argue that nothing much changed in light of the CAD. The point is whether at the time when the plaintiff acted unilaterally in using the Third Quote in the tender without giving the defendant notice of its acceptance and refraining from doing so until 8 May 2012, it should be regarded as having been misled by the defendant. For the reasons already expressed, the answer must be no.
73.The defendant pointed to the evidence given by Colless of what I might call an “oral disclaimer” in the meeting on 17 April 2012 with Smith. Counsel for the plaintiff said that it came too late. Such a submission is somewhat hollow when the fact is that it was the plaintiff who precluded any earlier “disclaimer” because of the failure to accept the Third Quote within the specified time and only purporting to do so by email on 8 May 2012.
Damages
74.In light of my findings it is unnecessary for me to determine the plaintiff’s claim for damages under s 236 of the ACL because it is well settled that in order for a person to recover damages a plaintiff must prove that loss or damage suffered was because of conduct in breach of the ACL. The question of causation in actions for damages under the ACL is very considerably a question of fact. However, this is not to say that the law does not call in aid how the question of the determination of fact should be approached in claims for damages. The case law provides very useful guidance particularly in relation to a situation such as this in which the defendant relies in part on the failure of the plaintiff to take reasonable precautions such as, ensuring it accepted a quotation within a period of 14 days, supplying CAD from the outset, communicating an acceptance of the quote to it before relying on it for use in the tender. Had I otherwise determined the matter of misleading and deceptive conduct, I would not necessarily have been persuaded that the defendant’s conduct did not amount to a failure to take reasonable care for its own interests.
75.In Henville v Walker (2001) 206 CLR 459 Glesson CJ said as follows:
It will commonly be the case that a person sho is induced by a misleading or deceptive representation to undertake a course of action will have acted carelessly, or will have been otherwise at fault, in responding to the inducement. The purpose of the legislation is not restricted to the protection of the careful or the astute. Negligence on the part of the victim of a contravention is not a bar to an action…unless the conduct of the victim is such as to destroy the causal connection between the contravention and the loss or damage.
76.Furthermore had I been satisfied that there was conduct by the defendant contrary to s 18 of the ACL, I would have considered that the plaintiff’s own conduct was sufficient to rent the causal connection between the contravention and the loss or damage.
The claim in negligence
77.The plaintiff alleges that the defendant owed it a duty of care to furnish it with a quotation or quotations that were as accurate as it was reasonable to expect from a competent estimator based on the extent of the information supplied to it by the plaintiff for the provision of the quotations. I should add that this was the content of the duty submitted by counsel for the plaintiff in her closing address and not the duty pleaded by the plaintiff in its Statement of Claim.
Was the relationship sufficiently proximate as to give rise to a duty of care?
78.Did the plaintiff owe the defendant a duty of care? A duty of care would usually be thought to arise in circumstances where it can be said that the parties are so proximate that it would be reasonable to treat the defendant as under an on obligation to have the plaintiff in its contemplation in regard to its actions and conduct.
79.The plaintiff claims that its relationship with the defendant was sufficiently proximate as to give rise to the aforementioned duty of care. It says it made the defendant aware that it was seeking a quotation for use by it in a tender. The plaintiff did not explain why such a duty resided in the defendant in regard to the First Quote. The evidence did not disclose that the plaintiff told the defendant that it was it, and it alone, from which it intended to procure a quotation. In fact the evidence was that the plaintiff had obtained other quotes. In addition I see no basis why the defendant should be treated as having a responsibility to quote at any price so as to increase the plaintiff’s prospects of a successful tender. The plaintiff did not point to any statement made by Colless or Thompson upon which it placed reliance and in consequence of which it suffered loss.
80.The plaintiff’s claim in negligence for economic loss has its foundations in the decision of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. The plaintiff relied on the decision in Mutual Life and Citizens’ Assurance Co Ltd v Evatt [1971] AC 793 and argued the quotations amounted to the provision of advice or information that required the application of some special competence or skill on the part of the defendant and that as the defendant held itself out as having the requisite competence or skill for the purpose made known to it by the plaintiff for use in a tender, the failure to do so in a competent manner constituted negligence.
81.The defendant was not as a matter of fact the sole provider of an indicative price for the supply of timber to the plaintiff. The defendant was not in a special position in the provision of quotations for the supply of timber to the plaintiff such that it was forced to place itself in the defendant’s hands because of its particular or peculiar expertise or skill in estimating the amount of and the costs of the supply of timber. As Mr Catlin submitted, and I largely agree with him, the purpose for which the quotes were sought was purely a matter of the lowest price.
82.The plaintiff and defendant’s dealings with each were commercially embryonic. There was a potential for the plaintiff and the defendant to enter a contract for the supply of timber and timber trusses and consequent payment by the plaintiff to the defendant in respect of the same if a quote had been accepted. This never occurred. For the relationship to have progressed it would have required the completion of a number of additional steps before an order for manufacture and supply by the defendant would proceed.
83.The defendant had no actual as opposed to potential financial interest in the provision to the plaintiff of its quotations. The quotations were not provided on what I would regard as a “business occasion” as that term has been applied in law and although the plaintiff was free to use the quotation as an indicative price it was not entitled to rely on it at least in the manner contemplated by decisions such L Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225.
84.I am not persuaded that the facts give rise to a sufficient proximity such as to confer a duty of care on the defendant. There was nothing sufficient in the evidence to persuade me that I should regard their dealings as having given rise to any special relationship such as to confer on the defendant a duty to take care.
85.If I am wrong in my conclusions, I would not be satisfied that the defendant’s quotes were in any event negligent. Certainly there was no evidence that Thompson performed his estimation of the amount of timber and trusses negligently. Indeed it would appear from the evidence that he was remarkably accurate. The fact that the defendant altered the price it felt it was able to supply the timber is a not a particular of negligence. Clause 16 of the conditions gave the defendant scope to do so.
86.Addressing the manner in which the particulars of negligence were developed in the course of submissions by the plaintiff, I am not satisfied that the provision of the quotations by the defendant can be said to have so departed from the standard required of a reasonable timber supplier in the exercise of an estimate of cost as to be characterised as negligent.
87.The basis on which it was claimed the quotations were negligent was that the price changed and also perhaps the failure to print the plans in A1 size. I have already addressed the issue of the change in price and as to the copying of the plans, Thompson’s action in doing so did not lead to any negligent outcome because, as he said, he was able to enlarge the plans sufficiently as to enable him to obtain by use of scale measure the dimensions he required for the making of his estimate.
88.Thus why was the quoted price negligent? The plaintiff contended that the difference between the Third and Fifth Quotes was very significant and not a variation in price predicated on the potential for a price increase of the extent the defendant reserved to itself in the event of changes arising from final plans. I have already dealt with that argument and I have concluded it is not meritorious.
89.For the reasons expressed and after having considered the evidence and submissions the plaintiff’s claims in the proceeding must fail.
THE COURT ORDERS THAT:
1.The plaintiff’s proceeding is dismissed
2.The plaintiff to pay the defendant’s costs of the proceeding
3.Liberty to apply is reserved to the parties on appropriate prior notice to the court and each other.
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