GK Structures Pty Ltd v Bencic - [2012] SADC 157

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
GK STRUCTURES PTY LTD v BENCIC
[2012] SADC 157
Judgment of His Honour Judge Brebner
23 November 2012
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - OFFER AND ACCEPTANCE - CONTRACT IMPLIED FROM CONDUCT OF PARTIES
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
The plaintiff claimed that there was a verbal agreement between the parties - defendant denied the existence of any such agreement - plaintiff further claimed that the agreement had been reduced to writing and forwarded to the defednant and that the defendant had accepted the terms of the agreement by his conduct - plaintiff finally claimed that the terms of the agreement rendered the defendant liable in a liquidated amount - credibility in issue.
Held: Credibility issues determined in favour of the plaintiff - plaintiff's case consistent with the inherent probabilities of the overall situation - defendant accepted terms by conduct - terms of the agreement rendered defendant liable in the amount claimed.
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68; Barrier Wharfs Ltd v W Scott Fell and Co Ltd (1908) 5 CLR 647; Seven Cable Television Pty Ltd v Telstra Corporation Ltd (1995) 171 ALR 89; Bell Group Ltd v Westpac Banking Corporation (No 9) (2008) 225 FLR 1; Profile Events Pty Ltd v West Beach Trust [2011] SASCFC 1; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; Fox v Percy (2003) 214 CLR 118; Hagicostas v Adelaide United Soccer Club [2008] SADC 178; RPS v The Queen (2000) 199 CLR 620; Jones v Dunkel (1959) 101 CLR 298; Federick v The State of South Australia (2006) 94 SASR 545; Toll (FCGT) P/L v Alphapharm P/L (2004) 219 CLR 165; Empirnall Holdings Pty Ltd v Machon Paull Partners Ltd (1988) 14 NSWLR 523, considered.

GK STRUCTURES PTY LTD v BENCIC
[2012] SADC 157

This is a claim in contract and, in the alternative, a claim for payment for work performed and materials supplied.
Introduction
The plaintiff, GK Structures (GK), is a civil engineering company. It undertakes concreting and other construction work. It is duly incorporated. A Mr Christopher Wilkes is the principal of GK. He is its sole director and secretary. He is a licensed builder. For practical purposes he is the plaintiff. Sometimes. The defendant, Mr Walter Bencic, is, amongst other things, a supplier of concrete.
The defendant lives and works at the rural town of Orroroo some 250 kilometres north of Adelaide. In 2008 he successfully tendered to the District Council of Orroroo and Carrieton (the council) for the construction of a number of concrete walls in creek beds adjacent to some of the roads within the council district. The project was referred to in evidence as “the Orroroo job”, or simply “the job” and I will also refer to it as such.
The Orroroo job consisted of a number of separate and distinct construction projects or jobs at different locations within the council district. There is no dispute that the job was eventually completed by a number GK’s workmen using concrete supplied by the defendant. There is also no dispute that GK eventually rendered an invoice in the amount of $94,574.26 to the defendant and that he paid GK an amount of $30,000 by cheque.
It is plaintiff’s case that there was an agreement between GK and the defendant for GK to do the job on the defendant’s behalf as a subcontractor and that the invoice was ultimately rendered in conformity with the terms of the agreement.
In expanded form it is the plaintiff’s case that he and the defendant reached a verbal agreement that GK would undertake the work at an agreed hourly rate. It is also the plaintiff’s case that the terms of the verbal agreement were reduced to writing and forwarded to the defendant by facsimile. It is further the plaintiff’s case that the defendant’s acceptance of the written terms and a subsequent variation can be inferred from his conduct. It is further the plaintiff’s case that the original agreement was ultimately extended to additional work which was undertaken on the same terms.
To the contrary, it is the defendant’s case that there was never any agreement between the plaintiff and himself for GK to undertake the work. It is also the defendant’s case that he entered into a verbal agreement directly with three of GK’s workmen for them to undertake the relevant work on his behalf during a lull in GK’s business and that they eventually instructed him to forward payment of their fees to GK on their behalf. It is also the defendant’s case that he came to a separate agreement with Mr Wilkes for Mr Wilkes to pay the workmen while they were working in the job on the understanding that he would then reimburse Mr Wilkes after he had been paid by the council. Finally, it is the defendant’s case that he forwarded the cheque for $30,000 to GK on behalf of the workmen concerned in accordance with their instructions and that it was in no way part payment of any debt he owed to GK under any agreement whatsoever. It is thus the defendant’s case that he had no contractual obligations to GK and that he discharged his obligations to the workmen by forwarding the cheque to GK. He does not dispute that the relevant work was carried out. Nor does he suggest that the work was not preformed to the required standard.
The issues are thus:
·Was there an agreement between the plaintiff and the defendant and, if so, what were the terms of the agreement?
·Were the terms of the agreement then varied and, if so, on what terms?
·Was the agreement ultimately extended and, if so, on what terms?
·Whether, at the end of the day, the defendant is liable for the entire invoiced amount of $94,574.26?
Whenever I use expressions such as “proved”, “satisfied” or “I find” throughout these reasons I will always be meaning proof, satisfaction or findings on the balance of probabilities.
For the reasons which follow I am satisfied that the plaintiff has established its case. There will be judgment for GK in the amount of $64,574.26 plus interest.
Evidence
The plaintiff was represented by counsel. The defendant represented himself with the assistance of a McKenzie Friend.
The workmen concerned are named Durkin, York and Hutchesson. They are not parties to the proceedings. All three of them were called by the plaintiff. All three of them say that they completed the Orroroo job in the ordinary course of their employment with GK, that they had not been independently retained by the defendant and that they did not instruct the defendant to forward any payments to GK on their behalf.
At all relevant times Mr Durkin, Mr York, Mr Hutchesson and another man named Lane (any combination of which I will sometimes refer to as “the workmen”) were permanent full-time employees of GK. They were responsible to Mr Wilkes. They were employed under the terms of an industry award. They were paid wages based on an hourly rate plus overtime, superannuation and allowances. In particular, when they were working outside the metropolitan area they were paid a living away from home allowance of $80 per day and a travel allowance of $20 per day on days when they were travelling to and from their worksites.
According to Mr Wilkes, GK was financially viable, it always had work for the workmen to do and there were never any lulls in business when the workmen would have been available to perform outside work on their own behalf. Mr Durkin, Mr York and Mr Hutchesson agree that there was always work for them to do.
Mr Wilkes and the defendant became acquainted some five years before the events in question when Mr Wilkes sourced concrete from the defendant while he was working in the mid-north. They resumed their acquaintanceship in early 2008 when Mr Wilkes again sourced concrete from the defendant for work which GK was undertaking for the Department of Transport Energy and Infrastructure (DTEI) in the mid-north.
Mr Wilkes said that while GK was working on the DTEI job he had a number of discussions with the defendant about a number of other construction projects which were out for tender in the area. He said that the defendant eventually asked him if he would be interested in undertaking the work on a contract he might secure from the council. He said that the defendant informed him that he, the defendant, would be paid by the council and that he would be holding the “purse strings” for the job. Over the ensuing months they had a number of further conversations about the matter which eventually culminated in a conversation which occurred when the workmen were working at a location called Yanyarrie. The conversation took place in about August 2008. The plaintiff’s evidence about what was said during this conversation is as follows:
QDid you come to have any further discussions in relation to the Orroroo Council job that Mr Bencic was potentially involved in.
AYes. That was the last time we were going to be in the area and Wally said the council were anxious to get the wall started and could GK Structures guys do the formwork and the concrete placement on the Orroroo Council job.
QWhat did you say, if anything.
AI agreed to it, yes.
QCan you tell his Honour, as best you can recall, who said what in that conversation.
AWally asked me what the guys were up to and I said we didn’t have anything hugely to go on with, yes, he could employ GK Structures guys at that time, and the cost to do the work.
QDid you say anything else in that conversation.
AI told him that the labour costs were $60 an hour, we discussed the cranage and we discussed whether he wanted it at $1,850 a week or $100 an hour. We discussed about the ute being at $100 an hour. We didn’t discuss any sort of plan to materials other than the crane because Wally said he had all the materials and the tools to do the job, but we definitely discussed the labour and we definitely discussed the cranage and the ute costs, and he was happy with that.
HIS HONOUR
QTo the best of your recollection, when did this conversation take place.
AIt was at the start of September, while we were talking about the supply of concrete on the Craddock job.
QAnd where did the conversation take place.
AOver the telephone.
QWhere were you.
AI was at home, yes. There were several conversations about it, though, there wasn’t just the one.
QOver what period of time.
AFrom the start of September up until the subcontract agreement was sent on 12 September. There were several phone calls.
QWho owned the crane.
ARoss Durkin owned the crane.
The defendant secured the contract from the council. Mr Wilkes said that he was told about this in late August 2008 (from here on all dates are in 2008 unless otherwise specified). The contract was for the Orroroo job. Mr Wilkes said that he and the defendant had a number of telephone conversations about the job and that they discussed the costs of GK performing the work on a subcontract basis. He said that he eventually calculated GK’s costs by reference to the costs of the DTEI job on the basis of rates for labour, plant and equipment and not on a lump sum basis. He said that they had several discussions in early September about hourly rates and the supply of materials. He said that they eventually agreed on $60 per hour for each workman, that being GK’s costs of putting them onsite, $100 per hour for the hire of a crane and $100 per day for the hire of a utility. He said that he reduced the agreements which they had come to during the various telephone calls into writing. He said that he did this in his workbook in early September. I should point out that the crane belonged to Mr Durkin and GK would hire it from him on a needs basis. He said that there was no agreement between him and the defendant for them to exchange equipment free of charge.
Mr Wilkes said that he was doing the job at cost because he had a working relationship with the defendant and because he wanted to “network and get work in that area and we saw it as potentially in the future we may … get some more work in the area, having good contacts such as Mr Bencic who knew the local area well.”
Mr Wilkes eventually told the workmen that when they finished at Yanyarrie they would be working on the Orroroo job on behalf of the defendant. He said that there was other work he could have applied the men to after they had finished at Yanyarrie.
Mr Wilkes said that on 9^th September he met Mr Durkin, Mr York, Mr Hutchesson and Mr Lane at GK’s yard in Adelaide. It is necessarily implicit in his evidence that this was after he and the defendant had come to their agreement. He instructed the workmen to travel to Orroroo and inspect the proposed worksites with the defendant and to inspect any tools and materials of the defendant which might be suitable for use on the job. He said that they took some tools and equipment with them when they left.
Mr Wilkes said that Mr Durkin telephoned him on 9^th September and told him that the defendant’s materials were unsuitable and provided him with a list of tools and equipment which would be required. He said that he had not been able to settle the final costing for the job until he knew whether or not he would be using any of the defendant’s materials. He said that he then calculated his final costing.
Mr Wilkes said that he telephoned the defendant on 10^th September and told him that his timber was unsuitable. He said that he informed the defendant that it was up to him to arrange for some of GK’s tools and equipment to be transported to Orroroo. As will be seen, the defendant did in fact meet some of the transport costs. He said that he told the defendant that he “would send up the subcontract agreement … with all the rates so that we are clear and that we both know what the charges are going to be and everything’s ready to go”. He expanded on this by saying that he informed the defendant that he would be sending him a subcontract agreement by facsimile for his signature. He said that he specifically remembered talking about “the labour and the ute”.
The plaintiff’s telephone records confirm that a facsimile was in fact sent to the defendant’s telephone number shortly after noon on 12^th September. The plaintiff said that he telephoned the defendant the following day. He said that the defendant told him that he had received the agreement. He said that he told the defendant to sign the agreement and send it back. He said that the defendant agreed to do so but said that his office was a mess. He said that the defendant did not return a signed copy of the agreement. From here on I will refer to the subcontract agreement prepared by the plaintiff as “the draft agreement”.
Relevantly, the draft agreement provides that the completion date for the work was to be on or before the end of September, that the subcontract price was at hourly rates, that invoices were to be paid fortnightly and that materials, services and facilities (which were) to be “supplied “Free of Charge” by (the) contractor were “to be discussed at end of job”. The agreement contains additional conditions in the form of a summary of GK’s costs. The additional conditions were in Mr Wilkes’ handwriting and they are as follows:
“12. ADDITIONAL CONDITIONS (If any).
Wally a summary of our costs. 12/9/08.
- Labour @ $60 p hr (NB this includes LAFHA @ $80 pday) (Labour cost is $52 p hr – with allowed)
- Crane transport to the job – by Wally.
- Timber, scaffold & sundry to job – by Wally (transport costs)
- Crane hourly hire is $100 p hr (excluding operator)
- GKS Ute cost per day $100 p day (includes fuels)
- Hire of materials & plant to be discussed on usage rates
- % of profit or admin costs to be discussed on final invoice once you know & appraise your tender price.
Thanks Wally. I just want to be up-front on the above. Any queries please do not hesitate to call me.
Ta Chris Wilkes.”
As can be seen, the additional conditions refer to a living away from home allowance.
Work commenced on 14^th September. Mr Wilkes had previously informed the defendant that this was to be the scheduled commencement date. Assuming that Mr Wilkes did in fact forward a copy of the draft agreement to the defendant by facsimile on 12^th September, the defendant would have had plenty of time to read it and to raise any concerns he had about it with Mr Wilkes before the work commenced.
For the purposes of calculating the amount to be invoiced for any given day, it was GK’s standard practice for the workmen to fill out what were described as site daily diary sheets recording precisely what was done each day and how many hours were worked by each man. Mr Wilkes said that he regarded this to be good business practice. The diary sheets were printed pro-forma documents. Compilation of the sheets was the responsibility of the senior man on the particular job. The senior man was also required to record the identity of any visitors to the worksites in the sheets.
The workmen returned to the city on or about 24^th September because a concrete truck belonging to the defendant had broken down. The site daily diary sheets were then given to Mr Wilkes in the usual course of events. Mr Wilkes said that he then prepared what he described as a cost breakdown summary based on the information contained in the sheets. He said that the summary was essentially a breakdown of the costs the defendant had incurred in accordance with the agreement up to that time. He said that he prepared it for the purpose of informing the defendant of his costs to date and that he prepared it rather than invoicing the defendant because the defendant had said that he would pay after he had been paid by the council and that they had agreed that a final invoice would be rendered after the job was completed.
The workmen returned to the mid-north on 2^nd October. Mr Wilkes gave Mr Durkin a copy of the cost breakdown summary and a copy of a covering facsimile header sheet to give to the defendant. He said that he also sent a copy of the summary and the covering facsimile header sheet to the defendant by facsimile the same day. Again his telephone records confirm that a facsimile was sent to the defendant’s number on that day.
The facsimile header sheet is headed “GK Structures Pty Ltd”. It includes a letter to the defendant in these terms:
Hello Wally
Thought I would give you a breakdown of costs so far for Pekina job. It is not an invoice but simply to give you a guide so far.
It is based on the rates I faxed to you on Page 3 of the subcontract agreement 12/9/08. The only change I have made from this agreement is the Saturday and Sunday rate is increased to $70 p.hr to help cover GKs costs.
Anyhow, have a look, review your tender costs and let me know how things look. Wally I have done this so an honest working arrangement can be developed.
Thank you
Chris Wilkes
The header sheet then goes on to itemise some of the costs. It informs the reader that the defendant had incurred costs of $30,070 to that point and that it was estimated that the costs of completing the job would be of the order of about $7,000. It should be mentioned that this estimate was given on the basis of the initial three projects and before there was any discussion about the fourth and fifth projects. Anybody who read the summary in the light of the draft agreement would be in no doubt whatsoever about the fees GK was charging per day.

Mr Durkin confirmed that Mr Wilkes had given him the facsimile header sheet and some attached documents and instructed him to deliver them to the defendant. He said that he read the facsimile header sheet while they were driving back to Orroroo but that he did not read the attachments. He said that he handed the header sheet and the attachments to the defendant the first time he saw him after they arrived. He said that he told the defendant that the document was from Mr Wilkes but he cannot recall if the defendant made any response. He did not record the fact that he had given the header sheet and the summary to the defendant in the site daily diary. He said that this was because he was not on site when he did so and that the diary is only a record of what happens on site. He said that he and the defendant did not discuss wages or subcontracts that day.
The defendant said that he did not receive a copy of the header sheet or the summary either by facsimile or from Mr Durkin.
On 13^th October Mr Wilkes and the defendant met at the defendant’s yard at Booleroo Centre. Work on the first three projects was still continuing at that time. Mr Wilkes said that the defendant told him that “there were two more jobs that the council would like done” and that he would like the jobs done while the workmen were still in the area. He said that he told the defendant that this could be done, but that if it was to be done he required the defendant to sign the agreement and return it. He said that it was assumed by both of them that the two additional jobs would be undertaken on the same terms as the first three. He said that he had not taken a copy of the agreement with him for the defendant to sign that day because he trusted him. He said that he only raised the topic of the agreement after he had agreed to undertake the two additional jobs. He said that the defendant confirmed that he had received the agreement and that he undertook to sign it and return it but that he again said that his office was a mess.
Mr Wilkes does not say that the defendant raised any objections about the terms of the agreement on this occasion.
Mr Wilkes said that he did not present the defendant with an invoice for work already done when they met on 13^th October because they had already agreed that an invoice would be rendered when the job was completed.
Mr Wilkes said that GK incurred a number of costs in relation to the job. In particular, he said that there were costs incurred for the hire of Mr Durkin’s crane, the purchase of a quantity of plywood, the re-calibration of a laser instrument and the purchase of some miscellaneous hardware.
Mr Wilkes said that he prepared schedules of costs for the hire of Mr Durkin’s crane on the basis of the information contained in the daily site diary sheets. He said there was one schedule for crane hire for September and a second for November. He said that Mr Durkin invoiced him for the crane hire and that the invoices relevant to the Orroroo job were paid. The payments were confirmed by payment records which were tendered.
Mr Wilkes said that as the defendant’s materials were unsuitable, GK purchased a quantity of plywood for use on the job. According to Mr Wilkes, a quantity of plywood for both the job and another project were purchased at the same time. The total cost was about $5,800. The plywood was re-usable and so adjustments are made when issuing invoices for each project on which the wood is used. Mr Wilkes said that he invoiced the defendant $1000 for the plywood. It is necessarily implicit in his evidence that he regarded this as generous and that GK absorbed some of the costs of purchasing the plywood which was used on the job itself and the other project where it was used. He also said that a laser device was re-calibrated at a cost of $432.50 for use on the job. He said that this device had to be re-calibrated every three months in any event. He said that some hardware was also purchased for use on the job.
Mr Wilkes said that GK’s employees were paid by electronic transfer of funds. He said that records were maintained of the hours each employee worked and of the amounts to which they were entitled for, amongst other things, hours worked, travel allowance and the living away from home allowance. He said that records were also maintained of the total amount which was ultimately transferred to their respective accounts. He described these records as the weekly time sheets. He said that he prepared the weekly time sheets and calculated the amounts due to each workman from the information in the site daily diary sheets. He said that if the workmen were working outside the metropolitan area the information would be provided to him by telephone or facsimile.
In this regard, Mr Wilkes also said that each employee was provided with a weekly payroll advice itemising the amounts they had been paid for, amongst other things, hours worked, overtime, travel allowance and living away from home allowance. He said that the payroll advices were prepared on the basis of the weekly time sheets and that what he described as payroll activity summaries were generated which itemised the actual amount that each workman was paid.
As set out, the plaintiff called Mr Durkin, Mr Hutchesson and Mr York. It did not call Mr Lane. This is a topic to which I shall return.
Mr Durkin, Mr Hutchesson and Mr York all say that they were employed by GK subject to an award. As set out, they all say that they completed the job in the ordinary course of their employment with GK, that there was no private agreement with the defendant and that they did not instruct the defendant to forward any payments to GK on their behalf.
Mr Durkin worked for GK for about five years ending in early 2011. He said that he first met the defendant while he and some of GK’s other employees were working for GK in the mid-north. He said the defendant supplied the concrete for that particular job.
Mr Durkin said that the defendant eventually told him that “there were some jobs he had gained, was interested in GK looking at”. He said that one of these jobs was at a place called Bennett Creek and that there were two other locations. Part of the Orroroo job was in fact located at Bennett Creek. He said that the defendant eventually said that he had secured the work from the council and that he wanted GK to do the work. Mr Durkin was unable to say whether the defendant actually said “GK” or not, but that he was absolutely certain that the defendant had it in mind that the work would be performed by GK. He said that he told the defendant that he would raise the matter with Mr Wilkes.
Mr Durkin said that GK always had work for him and the other men to do. He said that they eventually worked on another job in the mid-north at a place called Yanyarrie. He said that he, Mr Hutchesson, Mr York and Mr Lance commenced work on the Orroroo job after the work at Yanyarrie was completed. He said Mr Wilkes instructed him to work on the Orroroo job. He used the expression “Wally’s Walls” to describe the job.
Mr Durkin said that the plaintiff instructed him to inspect the site of the first of the projects which went to make up the overall job and to telephone him and tell him what would be required. He said that he did so and that he also inspected some materials at the defendant’s shed. He said that he informed Mr Wilkes about what was required and that he told him that the defendant’s plywood was unsuitable for their purposes. He said that he informed the defendant of this.
Mr Durkin said that they ultimately worked at five separate sites as part of the overall job. He identified them by location. He said that he could not remember who asked him to work at the second, third, fourth and fifth sites.
Mr Durkin said that he maintained the site daily diaries for the duration of the job although Mr York also made some entries. He said that the diary was always written up on the day in question and that this was something that Mr Wilkes was quite strict about. He regarded the diary entries as accurate.
Mr Durkin said that he rarely saw the defendant on site. He said that one of the defendant’s employees, who he thought was named Rick visited the site for an hour or so one day. He said that Rick was there to “lend a hand”, but that he had no experience. The defendant employed a horse strapper named Richard Mahoney. The “Rick” that Mr Durkin described could only have been Mr Mahoney.
Mr Durkin said that work went into abeyance for a time because the defendant was unable to supply any concrete because his truck had broken down. He said that they all returned to Adelaide during this period. He said that this was when Mr Wilkes gave him the facsimile header sheet and attached documents to deliver to the defendant.
Mr Durkin said that during the time he was working on the job he was paid weekly for hours worked and for the living away from home allowance.
Mr York worked for GK for a little over three years commencing in July 2006 and concluding in November 2009. He said that he was paid weekly. Relevantly, he said that he was paid for a minimum of 38 hours a week plus overtime and that he received the living away from home allowance when he was working in the country. He said his pay was credited to his bank account and that he received a payslip.
Mr York said that he first met the defendant when he, Mr Durkin, Mr Hutchesson and Mr Lane were working on the DTEI project. He said the defendant supplied the concrete for the project.
Mr York said that he did not really have any discussions with the defendant about working on any other jobs. He gave a history of where he and his colleagues worked from then on which was broadly consistent with that given by Mr Durkin.
Mr York said that the first he heard about what became the Orroroo job was while they were working at Yanyarrie. He said that the defendant had said that “he had some walls for the council that we could give him a hand with”. He said that while they were at Yanyarrie Mr Wilkes said that “we were going to do work for Wally … he had walls, some concrete to do for the Orrorroo Council.”
Mr York said that the specific arrangements for the Orrorroo job were nothing to do with him and that he did not discuss the terms on which they would be working with either Mr Wilkes or the defendant. However, and while they were working on the job, he said that there was an occasion when the defendant mentioned that “it would have been better employing us rather than going through GK”. He said that he could not remember if anybody responded to this remark, but “that it wasn’t going to happen” because they were working for Mr Wilkes.
Mr York said that he was the site foreman for the job and that he made some entries in the site daily diary. He said that they only used GK’s tools and that they stored them in the defendant’s shed. He said that the defendant would visit the various sites when he was delivering concrete. He said that he thought that the defendant organised an excavator at some stage and that a horse strapper employed by the defendant visited the site one day to learn concreting, but he could not recall his name. The only person this could have been was Mr Mahoney.
Mr York said that he only worked on the job for two weeks before going on holiday.
Mr Hutchesson worked for GK from about 2006 or 2007 until early 2011. He also said that he was paid weekly, that he worked a 38 hour week plus overtime, that he received the living away from home allowance when he was working in the country and that he received a payslip.
Mr Hutchesson said he met the defendant when they were working at Yanyarrie. He said that the defendant was supplying the concrete and that he did not have much to do with him. In particular, he said that he did not have any discussions with the defendant about other jobs. He gave a history of the jobs that he and his colleagues worked on after Yanyarrie which was broadly consistent with that given by Mr Durkin and Mr York.
Mr Hutchesson said that Mr Wilkes eventually told them that they would be going to the Orroroo area to work for the defendant building walls. He said that the defendant did not speak to him about this. Specifically, he said that the matter of him working directly for the defendant was never discussed between them.
Mr Hutchesson said that he thought that the tools which were used on the job were delivered to the defendant’s home. He said that the defendant supplied concrete to the worksites on a daily basis. He said that other members of the defendant’s staff would deliver concrete, but none of them ever went to the work sites in any other capacity.
Mr Hutchesson said that an employee of the defendant’s named Rick visited the sites on a couple of occasions but that he did not do any work while he was onsite. Again, the only person this could have been was Mr Mahoney.
Mr Wilkes, Mr Durkin, Mr Hutchesson and Mr York were all cross-examined with a view to demonstrating that the defendant had provided a significant amount of tools and equipment for the job and that he had borne many of the associated costs. The defendant eventually gave evidence which was broadly consistent with his cross-examination in these regards. It will be more convenient to summarise these aspects of the evidence separately.
Mr Durkin, Mr Hutchesson and Mr York were also all cross-examined so as to suggest that they had said various things at various times which were inconsistent with them having worked on the job in the ordinary course of their employment with GK. The defendant called a number of witnesses to establish that these things had been said. Again, it will be more convenient to summarise this aspect of the evidence separately.
According to Mr Wilkes, the job was completed on 7^th November. He prepared an invoice and another document itemising a breakdown of the costs of each day’s work and he posted them to the defendant on 10^th November. Relevantly, the invoice was in the following terms:
Description  Amount
Plant and Labour
Cc Daywork Daywork Summary Sheet for Wally Benic (sic)
Sept 08:9^th 11^th 12^th 14^th 15^th 16^th 17^th 18^th 19^th 20^th 21^st 22^nd 23^rd
24^th 25^th
Oct 08:2^nd 4^th 6^th 7^th 8^th 9^th 10^th 11^th 12^th 13^th 14^th 15^th 16^th 17^th 21^st
22^nd 23^rd 24^th 25^th 26^th 27^th 28^th 29^th 20^th 31^st
Nov 08: 1^st 2^nd 7^th  $80,110.00
Timber, Scaffold and Sundry   $1,000.00
Percentage of Prelims and Admin Costs at 6%                    $4,866.60
GST in the amount of $8597.66 was added. The total amount invoiced was thus $94,574. Even though the invoice included charges for work which was done in November, it is dated 31^st October.
Mr Wilkes then telephoned the defendant on 18^th November to enquire if he had received the invoice. He said the defendant said he was having heart seizure, presumably over the invoice. He said that he told the defendant that the invoice was costed according to the terms of their agreement. He said that the defendant said that he would settle the invoice at the end of the month after he had received payment from the council. The council had in fact paid the defendant an amount of $110,555.50 on 6^th November.
Mr Wilkes said that he telephoned the defendant again on 10^th December because payment had not been forthcoming. He said that he told the defendant that he was having difficulties, that he needed the money urgently and that he needed it to pay the workmen’s Christmas entitlements. He said he was not in reality experiencing any cashflow problems and that he had simply said all this in order to encourage the defendant to pay. He said that the defendant told him that although he had been paid by the council, he was having money problems of his own and that he was going through a divorce. He said that he became frustrated with the defendant and hung up on him. He said he arranged for his wife to telephone the defendant but that he did not listen in on the conversation. Again his telephone records confirm that a call was placed to the defendant’s number on this day.
Mr Wilkes said that the defendant forwarded a cheque in the amount of $30,000 on 24^th December. He said that he sent an invoice for the balance by facsimile on 17^th February 2009 and again the records confirm that a facsimile was sent on that day.
Mr Wilkes’ wife was employed by GK as a bookkeeper and debt collector. She had met the defendant once shortly before work on the Orroroo job commenced.
Mrs Wilkes said that Mr Wilkes spoke to the defendant by telephone on 10^th December. She said she telephoned the defendant after her husband had spoken to him. She said it was a very short conversation and that she expressed her disappointment in him for not paying the invoice. She went on to say that she telephoned the defendant again on 17^th December. She said that she told him that the invoice was overdue and that she enquired when he was proposing to pay. She said that he said “I have so many problems going on at the moment. My wife is taking me to court, I lost $100,000 in the wheat this year and I’ve reached my limit, my overdraft limit at the National Bank.” She also said that he apologised for not paying and that he said that he had a $70,000 lawyer’s bill and that he had too many problems. She said that he eventually said that he might be able to get an overdraft the following February and settle the invoice then and that he also said that he would speak to his brother and his sister in order to raise sufficient funds to make a part payment.
GK employed a Ms Davila as accounts manager. Mrs Wilkes said that she was present when Ms Davila telephoned the defendant in early February 2009 and that she could hear both ends of the conversation. She said that the defendant told Ms Davila “I have sorted it out with these people, I told them I’d pay them in June” and that in response to a request for part-payment he repeated that he would settle in June.
Mrs Wilkes then went on to say that she spoke to the defendant for a third time on 17^th February. She said that she telephoned him and said that legal action would be taken if he did not settle and that he responded by saying “stand in line”. Finally, Mrs Wilkes said that the defendant never denied that he was in debt to GK.
The defendant put to Mrs Wilkes in cross-examination that he had told her that he was keen to sort the matter out, that he had told her that Mr Wilkes had told him that it was all negotiable and that he was waiting for Mr Wilkes to get back to her with a reasonable figure. She said she could not remember these things being said and she said that when they spoke in February the defendant did not say that he was trying to get in touch with Mr Wilkes with a reasonable figure.
In cross-examination, the defendant also drew Mrs Wilkes attention to the fact that although the invoice is dated 31^st October it itemises work done in November. Mrs Wilkes said that Ms Davila would have raised the invoice. She could not explain the anomaly other than to say that payment might have been due on 31^st October. This was plainly speculation on her part.
The defendant opened his case on the basis that GK’s counsel and solicitors were attempting to overcomplicate what was in reality a simple case of a verbal agreement between him, Mr Durkin, Mr York and Mr Hutchesson for them to provide their labour and for him to provide materials and equipment on an “exchange basis”. He also advanced the proposition that the reality of the situation was that GK “saw me as an easy target and have invented things (which) were never agreed”.
The defendant said in evidence that he was a farmer, a contractor, a horse trainer and a major supplier of concrete in the northern part of the State. He is not a licensed builder. He first met Mr Wilkes when he supplied him with concrete some years earlier.
The defendant said that in July 2008 the Orroroo Council invited him to tender for what ultimately became the Orroroo job. He said that he tendered in about July or August and that he was ultimately successful. He said the tender was for three separate projects or jobs which together went to make up the overall job.

The defendant said that he met Mr Durkin, Mr York, Mr Hutchesson and Mr Lane when he supplied concrete to them while they were working for GK at Yanyarrie. He said that they informed him that they were unsure whether GK had any further work scheduled for them after they had finished at Yanyarrie. He said that he eventually told them that he had contracts from the Orroroo Council of the kind which he would usually undertake himself but “if they were stuck and didn’t have anything to do I was happy to have them on board for a few jobs.”
The defendant said that he eventually reached a verbal agreement with Mr Durkin, Mr Hutchesson and Mr Lane for them to supply their labour. He said that they said that the agreement would have to be approved by Mr Wilkes. He said that he believes that he reached the same agreement with all three of them in the same conversation. He said that he did not enter into any agreement with Mr York on this occasion and he said he could not remember whether he and Mr York ever came to any such agreement. Given that there is no dispute that Mr York worked on the Orroroo job, this is somewhat surprising.
The defendant said that while the work at Yanyarrie was continuing he might have mentioned to Mr Wilkes that he might secure the Orroroo job. He said that he telephoned Mr Wilkes after he had come to the agreement with Mr Durkin, Mr Hutchesson and Mr Lane. He said that this was probably the day after the agreement had been reached. He said that Mr Wilkes told him he could have the men for “labour rates at cost” on the stipulation that they would be required to return to work for GK if GK secured work for them to do. He said that there were no further discussions between them because he had not requested that overtime be worked. He said that he had no beliefs about the circumstances in which workers in the construction industry would be entitled to overtime. He said that they agreed that if he transported a crane to the area then Mr Wilkes would hire it to him at $130 per hour. He later said that the rate they agreed on for the crane was $100. He said that nothing was said about travel costs. He said that he did not need GK to do the job. Given that he was not a licensed builder this is perhaps surprising. He said that mutual referrals would be of common benefit to both GK and himself.
The defendant said that he and Mr Wilkes only discussed the terms of the agreement for the workmen to do the Orroroo job on the one occasion. However, he said that he had a number of other conversations with Mr Wilkes around that time and that MrWilkes was bemoaning the fact that he had failed to secure a number of jobs.
The defendant eventually said that Mr Wilkes had allowed him to use the workmen and some of his backing timber and scaffolding in return for the use of an excavator belonging to the defendant on another job. He said that mutual exchanges of equipment such as this were common practise in the mid-north.
The defendant said that he arranged for the crane to be transported to the site and that he transported a concrete skip and associated equipment to the site himself. He said he inspected the first three sites with the workmen. He said that he showed them the tools and plywood that he had available for the job. He said they told him it was unsuitable and that they would prefer to use the timber they were accustomed to. He said that he contacted Mr Wilkes as a result and he said that Mr Wilkes was prepared to make his own timber and scaffolding available provided that the defendant was prepared to meet the transport costs. He said that he paid for some equipment to be transported to and from Adelaide either for purposes directly connected with the job or as a favour to GK. He said that he either arranged or paid for the transport and hire costs of a 20 tonne excavator and a four tonne excavator for the first of the projects which went to make up the job.
The defendant said that he was surprised when Mr York arrived on site. He said that he was happy to pay him in addition to the others because Mr York was going on holidays in 10 days and he said that he asked Mr York if he wanted him to pay his accommodation direct.
The defendant did not say anything about how the workmen were to be paid when he was giving his account of events in chief. When he was cross-examined on the topic he said that he had probably overlooked it in chief because he was overawed. He then went on to say that he had initially intended to pay the workmen direct either by cheque or by cash. He said that he ordinarily paid by cheque and that he knew that GK paid the workmen by electronic funds transfer. He said that soon after they arrived in the area they spoke to him about the method of payment. Under further cross-examination he said that he believed that the workmen suggested to him that GK could pay them while they were on the job and he could then reimburse GK after the event. He said that they probably suggested this relatively soon after they arrived in the area and that they did so in response to him informing them that he usually paid by cheque. He said that he believed that all four workmen were involved in this conversation. He said that he could not recall precisely what was said but that one of the workmen had said “It might be just as easy that we stay as we are because we don’t know how long we are going to be here for” and that they said “we get paid by EF (meaning electronic funds transfer) and we wouldn’t have access if you give us a cheque. We are not going to be able to do anything with it”.
The defendant said that he discussed the matter with Mr Wilkes. He said that he told Mr Wilkes that because the workmen were currently paid by electronic transfer of funds it would be easier to leave things as they were and for Mr Wilkes to pay them at their “cost labour rate” and for him to reimburse GK after the job was completed. He said that Mr Wilkes said that this would also be easier for him. He said that this conversation occurred either before the men started work or relatively soon after they started.
For at least some of time the workmen were in the Orroroo area they were living in a hall at a township called Pekina. While under cross-examination the defendant said that when the workmen raised the method of payment with him he raised the topic of who would be meeting the costs of their accommodation which, as I understand him, were $5 per man per day. He said that he asked the workmen if they wanted him to pay for their accommodation. Whether he says that he in fact did so is not entirely clear.
The defendant was also cross-examined about the living away from home allowance. When he was asked if he believed that they received such an allowance he said that it was never discussed. When he was asked again he said that he had no idea what their living away from home arrangements in fact were.
The plaintiff’s counsel eventually returned to this topic and asked the defendant who he thought was paying for them to be in the bush. He gave a somewhat discursive answer. He was again asked if he believed that they were entitled to a living away from home allowance and he gave a somewhat unresponsive answer. On being asked yet again he said that he had no beliefs about the matter and that it had “never cropped up”. He went on to say that he does not believe that he made any enquiries about the matter with either the workmen or Mr Wilkes. He said that it was probable that he never discussed the living away from home allowance with Mr Wilkes.
This line of cross-examination led to the defendant being asked if he thought that Mr Wilkes was making contributions to the workmen’s superannuation while they were working on the job. He said that he assumed that this was so and that he assumed that they were Mr Wilkes’ full time employees.
The defendant said that if Mr Wilkes had ever told him that the rate was $60 per man per hour or that if he had ever seen the cost summary, he would have sent the workmen home.
In response to Mr Wilkes’ evidence that he had forwarded a copy of the draft agreement by facsimile, the defendant said that he might have received a facsimile from Mr Wilkes on 12^th September, but that if he did, it was not about the Orroroo job. He also said that when they met at Booleroo Centre Mr Wilkes said nothing to him about any written agreement and nor did he present any written agreement to him for his signature. With regard to the facsimile, he said that the machine was in a side room of his house along with a computer. He said that his two children who were then aged 17 and 11 used the machine and the computer “all the time” and that if either of them took a facsimile off the machine they would “put them to one side” rather than hand them to him and that there was no designated location within the house where facsimiles were to be put. He then went on to say that he would often lose incoming facsimiles. He denied that he discussed the agreement with Mr Wilkes at Booleroo Centre. Similarly, the defendant denied receiving a copy of the facsimile header sheet and the cost breakdown summary by facsimile on 2^nd October and he denied that Mr Durkin had given him a copy of the header sheet and the summary on the same day.
The defendant said that while the work was in progress he allowed the workmen to teach Mr Hutchesson how to drive one of the excavators which he had made available for the job. He also said that he made Ricky Mahoney available to work on the job from time to time and that he did so up to about 20 occasions.
The defendant said that he was the only one who dealt with the council while the job was in progress. For reasons I will come to this is hardly surprising.
The defendant said that the overall job was confined to three jobs and three jobs only and that it was not extended to two extra jobs. However, he eventually said that he hoped to make a profit of about $25,000 from all five jobs.
Turning to the invoice which GK rendered in November, the defendant said that he was not surprised when he received the invoice and that he assumed that “it would be for what he owed GK Structures for the hire of the men”. He said he had heart palpitations when he saw the amount. He said that he regarded it as something for negotiation because the agreement was that he was to reimburse GK for the hourly rates at cost and not all “the add-ons and everything else they put on the invoice”.
With regard to the invoice, the defendant also said that it was for only slightly less than he received by way of payment from the council. He said the council paid him a total of about $138,000 for the entire job and that he had anticipated making a profit of about $25,000 for the completion of all five jobs. If he was paid $138,000 the difference between that amount and the amount invoiced is nonetheless a little over $43,000. He said that his own costs were about $80,000.
The defendant said that he then telephoned Mr Wilkes and said that he was having a seizure. He laughed and said that he thought that this would be his reaction before going on to say that they would work something out. He went on to say that Mr Wilkes said that he, the defendant, would have worked out what the job was worth and that he should pay what he thought was fair. He was then telephoned by Mrs Wilkes. He said that she told him that Mr Wilkes was in difficulties. He said they decided that it would be best if he paid GK “what I thought was a fair amount for the men that they had had there.”
The defendant said that he had previously calculated “that the men and the crane hire should come to about $30,000” so he forwarded a cheque to GK in that amount. He put forward a formula which he regarded as a justification for his calculation and he said that by doing so he had more than satisfied his obligations under his verbal agreement with the workmen. Under cross-examination he expanded on this by saying that he sent the cheque because he “didn’t want to leave the boys out of pocket”, that he did not know if they had been paid their wages for the time they were working on the Orroroo job and that he wanted to send something which “would roughly reflect what was their wages”. He then went on to say that he had calculated that their wages would have totalled about $22,000, that crane hire would have been about $6,000 or $7,000 and that he sent the amount of $30,000 “as a good faith measure”. He said that he believed that GK ordinarily paid the workmen at an hourly rate which he assumed would have been “the industry standard” of about $20 to $25 per hour.
The defendant was cross-examined about his financial position as of the end of 2008 and early 2009. He said he had an overdraft facility at his bank of $170,000 which was constantly drawn down to its limit. He said that he knew what his standing was with his bank. He said that his wheat crop had failed that year. He said that he lost about $40,000 as a result and that the crop would have returned him a profit of about $120,000 had it succeeded.
The defendant’s contributions to the job
The first of the topics which I will deal with separately is the question of the nature and extent of the defendant’s contribution of materials, equipment and labour to the job.
The defendant said that he paid $1,485 to have Mr Durkin’s crane transported from Yanyarrie to the first worksite. As set out, he also transported a concrete skip and some other items of equipment to that worksite. He said that he paid to have some scaffolding and other equipment belonging to GK transported up from Adelaide. He said that he paid to have some of GK’s equipment transported back to Adelaide at the end of the job.
The defendant said that Mr Wilkes wanted to use some of his, the defendant’s, equipment namely his batching plant, his excavator and other associated items. He said that he hired an excavator and paid for it to be transported onsite. He said that he also supplied a smaller excavator which he transported onsite. He said that he paid for the fuel and oil for this second excavator. He said that some of his formwork was used. He said that he supplied a Leyland truck of his own to transport equipment from time to time. He said that he supplied a front end loader. He said that he supplied what are called Z Bars and associated fastenings and also some footings called starter bars. He said that he supplied a front end loader. It is unnecessary to go into the precise details of when and where any of this equipment was said to have been used.
Mr Wilkes agreed that the defendant paid to have some scaffolding and other equipment brought up from Adelaide. He said that he had asked the defendant to bear the costs of this.
Mr Wilkes said that the defendant paid for the crane to be transported from Yanyarrie. He said that this was part of the agreement leading to the hire fee for the crane being fixed at $100 an hour and that it was standard practice for the person hiring the crane to meet the costs of transporting it to the particular worksite. He thought that the defendant transported the concrete skip onsite however; he qualified this by saying that the defendant had the use of the skip for free. He thought that he sent some formwork up from Adelaide, but after looking at his records he said that none was sent up. He said that some scaffolding and some Z Plates, and what he described as “essentials” were sent up. He cannot remember whether the defendant met the costs of transporting any equipment back to Adelaide. He is vague about this aspect of the matter and he cannot explain why half a load of equipment was sent up but a full load was sent back.
According to Mr Durkin, the majority of the tools which were used on the job belonged to GK. He said that a generator and a couple of other things were provided by the defendant. He said that after he had inspected the defendant’s materials and informed him that they were unsuitable, the defendant enquired if it would be possible to have the necessary items sent up. He said that a truckload of equipment was eventually sent up from Adelaide. He was unable to remember whether the defendant has supplied all of the equipment that he said that he had. He denied that the defendant had supplied oil. He said the defendant had supplied two excavators for short periods. He could not remember if the defendant had provided a Leyland truck or a front end loader.
With regard to the equipment which was supplied by the defendant, the evidence of Mr York and Mr Hutchesson was broadly consistent with that given by Mr Durkin, at least in so far as the questioning went. There were however, some discrepancies between the three of them. This was hardly surprising.
Mr York said that some of GK’s tools were stored at the defendant’s shed.
The statements attributed to the workmen
The second topic which I will deal with separately is the question of whether the workmen ever said unequivocally that they were working for the defendant and that they were not working on the job in the ordinary course of their employment with GK.
The defendant said that toward the end of the job Mr Durkin, Mr Hutchesson and Mr Lane attended a barbeque at his home. He said that Mr Mahoney and some acquaintances of his named Stubbs and Nutt also attended.
The defendant called Mr Stubbs and Mr Nutt. He did not call Mr Mahoney.
Mr Stubbs said that he spoke to some construction workers at the barbeque. He said that he had met them previously but he could not remember their names. He said that they said that they had been working for the defendant and that “they had not any work with their current employer”. He was no more specific than this.
Mr Nutt said that Mr Mahoney was at the barbeque. He said that he spoke to some of the men who had been working on the job. He said that they informed him that they were working for the defendant because they did not have any other work to do and that they were quite happy to be there. Much like Mr Stubbs, Mr Nutt could not be any more specific than this.
The defendant called a Mr Brooks with a view to establishing that he also had been told by the workmen that they were working for the defendant direct and also to establish that Ricky Mahoney had in fact worked on the job.
Mr Brooks delivered concrete to the workmen on about six occasions. He was acquainted with them on first name basis. He said that he had spoken to them when they were working at Yanyarrie. He said that they had informed him that after they finished at Yanyarrie “they would no longer have any work with GK Structures for a while (and) because they didn’t have any work they would be staying in (the) Orroroo area and working for Wally doing floodways and flood repairs in the district”. Initially he was no more specific than this.
However, and under cross-examination, it eventually became clear that the men he says that he spoke to were Mr Durkin, Mr Hutchesson and Mr Lane and it also became clear that he spoke predominantly to Mr Durkin and Mr Hutchesson. Also under cross-examination he said that Mr Durkin had said “[We] will be working for Wally because we have no further work with GK, so we will be helping Wally with his work at Bennett Creek and Harris Creek and various other sites.” This was plainly a reference to the Orroroo job. Also under cross-examination he also said that Mr Hutchesson said that “they would have no more work with GK and that they were going to work with Wally and help him out”.
Mr Nutt and Mr Brooks were each shown some photographs of one of the worksites. Both say that Mr Mahoney is depicted in one of the photographs with a piece of formwork. However, precisely what he was doing with it is unclear.
The defendant also called a Mr Smulders. The defendant and Mr Smulders are well acquainted. Mr Smulders operates a road construction business. He was acquainted with Mr Durkin, Mr Hutchesson and Mr Lane. He said that the going rate for workmen on projects such as the Orroroo job was $24 per hour. He said that he and the defendant had a history of exchanging or borrowing each other’s equipment in order to avoid hiring costs. The defendant did not ask Mr Smulders any questions with a view to eliciting from him that the workmen had told him that they were not working on the job in the ordinary course of their employment with GK.

With regard to all of this, the defendant put to Mr Durkin that he told Mr Smulders that it was not a GK job. Mr Durkin denied that he had done so. After some initial uncertainty which did not invite suspicion, he said that he attended the barbeque but that he has no recollection of telling anybody at the barbeque that it was not a GK job.
Mr York was not cross-examined about whether he had told anyone that it was not a GK job. The explanation for this might well be the fact that he was only onsite for a short time before going on holidays and that he would not have attended the barbeque in any event.
It was put to Mr Hutchesson that he too had told Mr Smulders that it was not a GK job. He said that he had no recollection of Mr Smulders visiting the worksites and he said that he had never told Mr Smulders, or anyone else, that it was not a GK job. He said that he attended the barbeque but that he did not say that GK did not have a lot of work on and nor did he say that they had stayed in the area in order to “give [the defendant] a hand.”
The issues and the question trail to their resolution
As is obvious, the cases of Mr Wilkes and the defendant stand in stark contrast and there are some profound conflicts on the evidence.
On Mr Wilkes’s case Mr Wilkes and the defendant entered into a verbal agreement for GK to carry out the work in the ordinary course of its business at agreed rates for labour and equipment hire, that the agreement was reduced to writing and forwarded to the defendant by facsimile, that the hourly rate was varied by the facsimile header sheet and that the original agreement was then extended on the same terms to take in the additional two jobs. On his case the work was performed in the ordinary way and the invoice was prepared on the basis of the information contained in the site daily diaries in accordance with the terms contained in the draft agreement, as varied, and ultimately forwarded to the defendant. Finally, on his case, the defendant made a part payment of a little less then one third of the invoiced amount and remains in default on the balance.
On the defendant’s case, nothing could be further from the truth. On his case he entered into verbal agreements with the workmen for them to undertake the work on his behalf at their ordinary hourly rate even though he did not know what the rate was. On his case he then entered into a verbal agreement for crane hire at $100 an hour. On his case there was then a further and somewhat vague verbal agreement between him and Mr Wilkes for them to exchange equipment which was entered into at some later and imprecise time. Finally, and on his case, and for reasons of mutual convenience for him and the workmen, he entered into yet another verbal agreement with Mr Wilkes for Mr Wilkes to pay the workmen in the ordinary way on the understanding that he would reimburse Mr Wilkes after he had been paid by the council.
The plaintiff’s case thus carries with it, amongst other things, the implication that the defendant has concocted a story about reaching an independent agreement with the workmen because he is either unwilling or unable to pay his legitimate debts, or both.
Similarly, the defendant’s case carries with it, again amongst other things, the implication that Mr Wilkes has concocted a story in order to extort money from him under the pretence that there was an agreement between them for GK to perform the work in the ordinary course of business and that the workmen have become Mr Wilkes’ co-conspirators.
There is simply no room for anyone to be mistaken about whether the workmen completed the job in the ordinary course of their employment with GK or whether they had been independently engaged to do so by the defendant. The following question trail leading to the outcome of the action in contract thus emerges:
1.Has the plaintiff proved that the workmen did not enter into an independent agreement with the defendant to do the work on his behalf?
2.If so, has the plaintiff also proved that he and the defendant came to a verbal agreement for GK to undertake the job?
3.Again, if so, what were the precise terms of the agreement, was the verbal agreement reduced to writing in the draft agreement, was the draft agreement forwarded to the defendant for his signature and, if so did he read it and unequivocally accept the terms which are embodied in it?
4.If the plaintiff has proved that there was such an agreement and the terms of that agreement, has he also proved that it was subsequently varied so as to provide for a higher hourly rate at weekends?
5.Again, if so, was the agreement ultimately extended to the completion of the two additional jobs?
6. Again if so, what were the precise terms on which it was extended?
Obviously enough, the determination of the threshold question of whether the workmen had been engaged by the defendant and the determination of any other questions which might subsequently arise involves a consideration of the credibility and reliability of the witness and of the inherent probabilities of the situation.
The conduct of the parties
Mr Wilkes’s counsel and the defendant each submitted that the conduct of the parties and the workmen gives rise to a number of relevant inferences.
It is well settled that the conduct of the parties before an agreement is said to have come into existence is relevant to their overall credibility and reliability and that it is part of the overall background in which the determination of the terms of any agreement which might have been reached must be considered: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337.
It is equally well settled that the conduct of the parties after a written agreement has come into existence can be taken into account in determining, as a matter of inference, whether the parties have in fact come to an agreement: Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68, Barrier Wharfs Ltd v W. Scott Fell and Co Ltd (1908) 5 CLR 647, Seven Cable Television Pty Ltd v Telstra Corporation Ltd (1995) 171 ALR 89 Bell Group Ltd v Westpac Banking Corporation (No 9) (2008) 225 FLR 1 at [2653]-[2663].
It is equally well settled that post-agreement conduct can be taken into account, also as a matter of inference, in determining what the terms of the agreement actually were: Bell Group at [2653]-[2663].
The same approach is to be taken where there is no written agreement. In such cases the conversations and correspondence between the parties, if any, must be considered in determining whether the parties have in fact come to an agreement and, if so what are the terms of the agreement: Profile Events Pty Ltd v West Beach Trust [2011] SASCFC 1, where Doyle CJ at [18] Sulan and White JJ concurring.
Finally, in this context, it is also well settled that the conduct of the parties cannot be used to assist in construing the terms of any agreement which the parties might have entered into: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, ACN 098 081 004 at [43]-[44].
It thus follows that in determining the critical questions of whether or not there was an agreement between Mr Wilkes and the defendant for GK to do the work and, if so, what were the terms, and whether the agreement was ultimately varied and extended and, if so, in what terms, it is open to me to take into account the conduct which occurred after the agreement is said to have come into existence and any correspondence between the parties which has the capacity, inferentially, to shed light on those issues. It thus also follows that in determining the threshold question of whether the plaintiff has proved that there was no separate agreement between the workmen and the defendant, the conduct which occurred after those agreements are said to have been struck can also be taken into account.
The witnesses
As credibility and reliability are in issue, and amongst other things, demeanour and potential bias must be considered.
I made detailed notes of my impressions of each witness either while the witness was giving evidence or very shortly afterwards. This section of my reasons is based on those notes.
It is now well settled that care and caution must be taken before credibility findings can properly be made based solely on the demeanour of a witness. In Fox v Percy (2003) 214 CLR 118 Gleeson CJ, Gummow and Kirby JJ said at [30]-[31]:
It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Societe d’Advances Commerciales (Societe Anonyme Egyptienne) v Merchants’ Marine Insurance Co (The “Palitana”):
“ … I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.”
Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical. [citations omitted]
I will at all times be mindful of this. Also mindful of this, I will, in some instances, make preliminary findings about the credibility and reliability of some of the witnesses and then re-visit those findings in the light of the conduct of the parties and the inherent probabilities of the overall situation.
In evidence-in-chief Mr Wilkes was laconic and matter of fact. In the main he presented as a careful, methodical, if somewhat trusting, businessman. He did not go beyond what the questions required in order to attempt to corroborate his own account or to argue his case. At times he expressed what appeared to be genuine surprise when his own counsel asked him questions about what counsel plainly anticipated would be aspects of the defendant’s case which would ultimately be put to him in cross-examination.
Under cross-examination he sometimes descended into unnecessary detail over and above that which the particular question required. However, in so doing he did not create the impression that he was attempting to deflect the defendant’s questions or to argue with him and indeed some of his descents into detail were in part prompted by the questions. Obviously this cannot amount to any criticism of the defendant in anyway whatsoever. Also under cross-examination his answers to suggested flaws in his account were generally cogent. However, he did occasionally fail to address the point of simple questions, including questions from me and he appeared to prevaricate to some extent when he was cross-examined about whether he telephoned the council in February 2009 looking for information about the defendant. However, this is qualified by the fact that he was quite forthcoming about the fact that he had in fact telephoned the council to find out if the council had in fact paid the defendant. It is also qualified by the fact that his explanation of wanting to put his point across is not inherently improbable given that this line of questioning occurred towards the end of the cross-examination. Given that I am free to accept and reject different parts of Mr Wilkes’ evidence if it is logically open to me to do so, and given that any prevarication on Mr Wilkes’ part is confined to this discrete area, I do not think that it undermines his overall credibility to the extent that it would not be open to me to be satisfied that he is credible and reliable in the essential aspects of his evidence.
Mr Durkin presented as open and confident. However, he had a disturbing tendency to drop his voice when Mr Wilkes’ counsel put what he anticipated to be aspects of the defence case to him in chief however; he became suitably animated when the defendant was putting his own case in cross-examination. That said, he did not give me the impression that he was actively barracking and he too seemed genuinely surprised by some of the propositions the defendant put to him.
Mr York presented as open, spontaneous and forthright. Like Mr Durkin, he became a little flat when answering questions in chief about anticipated aspects of the defendant’s case however, he too became more animated when the defendant was putting his case to him and he also did not appear to be barracking.
Mr Hutchesson presented as reserved, but nonetheless open. His answers were spontaneous. Although he was vague about some aspects of the matter he did not appear to be attempting to hide anything and his vagueness thus did not invite suspicion.
Mrs Wilkes presented as somewhat diffident and apprehensive, but there was nothing about her or her presentation which invited suspicion. Although she said that she entered the invoice into the system, she said that she did not create it. There is no reason to doubt her evidence in this regard and there is nothing which calls it into question. The possibility that she did not notice the apparent inconsistency between the date and the days when work was said to have been done cannot be overlooked. The possibility that Ms Davilla commenced preparing the invoice before the 31^st October but did not complete it until after she realised that work had been done on additional days cannot be overlooked either. I thus do not think that the invoice has the capacity to call Mrs Wilkes’ credibility into question.
The defendant presented as open when he was giving his own account of the matter. Under cross-examination he became somewhat bombastic at times however, it must be said that on some occasions this could have been the product of the questions and when under close cross-examination he disclosed a tendency to retreat to his basic position that he was trying to help the workmen out by engaging them at day rates. Also under cross-examination the defendant was particularly evasive and unconvincing about whether he received a facsimile from Mr Wilkes on 12^th September and whether it was about the Orroroo job. He was also evasive and unconvincing when under cross-examination about the living away from home allowance. The defendant did not mention the arrangements he had made for the workmen to be paid in chief. As set out, while under cross-examination he said that he had forgotten to do so because he was overawed, indeed he said that he found “court proceedings particularly intimidating”. If this was in fact the truth, then he hid it remarkably well for the entirety of the trial and at all times he seemed to be anything but overawed. His credibility was not enhanced by this statement. For these reasons I have considerable reservations about the defendant’s credibility and reliability.
Mr Stubbs was somewhat hesitant, but not to the extent that on its own it invited suspicion. Mr Nutt was open at all times.
Mr Smulders presented as open and apparently honest in chief. However, the same cannot be said for cross-examination. Under cross-examination Mr Smulders was asked if the defendant had told him that he had engaged GK to do the job. He said that he did not know whether the workmen were working for GK or for the defendant. He then agreed that he had been telephoned about the matter by a Ms Doyle some three days before he gave evidence. Ms Doyle is a solicitor employed by the firm of solicitors who were acting for the plaintiff. Counsel for the plaintiff then put to Mr Smulders that he had told Ms Doyle that “he knew that Wally chose to use Chris on the job.” Mr Smulders said that he could not remember exactly what he said to Ms Doyle in this regard but what was put to him would not have been what he had meant. He was asked again and he said he could not remember telling Ms Doyle that the defendant had told him that he had engaged Mr Wilkes however, he qualified this by saying that he did not dispute that he had said that to her. I asked him if the defendant had ever told him that he had engaged Mr Wilkes to do the job for him and he said “No, probably not” and he went on to say that the defendant had told him that he was employing Mr Wilkes’ workmen as “a separate deal”. Mr Smulder’s evidence that he could not remember what he had said to Miss Doyle about such an important topic a mere three days earlier is inherently implausible. His evidence that he would not have meant to convey to her that the defendant had engaged GK is unconvincing in that it is hard to see how he could have made such a mistake. His demeanour while he was being cross-examined on this topic was unconvincing to the point of shiftiness. For these reasons I am not prepared to rely on his evidence. Ms Doyle was called to prove what Mr Smulders had said to her. However, I have been able to reach my conclusion that Mr Smulders cannot be relied upon without reference to Ms Doyle’s evidence however, there is no reason whatsoever to doubt her. For completeness, I should say that I will not use what Ms Doyle says that Mr Smulders said to her as any evidence of the truth of what he said to her or as some form of admission on the part of the defendant.
Mr Brooks also presented as open in chief. However, he appeared to become decidedly uncomfortable when he was cross-examined about whether he had discussed the matter with the defendant. While under cross-examination he gratuitously said that although he and the defendants were friends, he had not discussed the matter with him. Predictably this led to some probing and then a matter of a few questions later he admitted that they had in fact discussed the proceedings. For obvious reasons this calls his credibility into question and I am thus not prepared to rely on him.
It follows from what I have said that if I were deciding the action on the basis of the impressions that the witnesses created while they were in the witness box I would be satisfied that Mr Wilkes, the workmen and Mrs Wilkes should be accepted over the defendant. For the reasons I have given I am not prepared to accept Mr Smulders or Mr Brooks. There was nothing in the way that Mr Stubbs or Mr Nutt presented which invited suspicion. However, and for reasons which I will come to, their evidence can be reconciled with the plaintiff’s case in any event. I will make my final findings about the credibility and reliability of Mr Wilkes, the workmen, Mrs Wilkes, the defendant, Mr Stubbs and Mr Nutt after I deal with the inherent probabilities of the matter.
Failure to call witnesses
Before proceeding further I should deal with the failure of Mr Wilkes to call Mr Lane and the failure of the defendant to call Mr Mahoney.
The principles engaged were identified and summarised by Nicholson DCJ (as he then was) in Hagicostas v Adelaide United Soccer Club [2008] SADC 178 at [31]-[33] where his Honour relevantly said:
In Blatch v Archer, Lord Mansfield CJ said:
It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced and in the power of the other to have contradicted.
Comprehensive discussions of this principle and illustrations of its application in civil trials are to be found in Jones v Dunkel, O’Donnell v Reichard and Payne v Parker. The leading discussions in South Australia still would appear to be that of Cox J in Spence v Demasi, although a helpful discussion can also be found in Frederick v State of South Australia.
For present purposes, I set out and adopt, with respect, a number of the propositions arrived at, following a review of the then available authorities, by Glass JA in Payne v Parker (citations omitted):
1.     The rule [known in Australia as the rule in Jones v Dunkel] is a principle of the law of evidence whereby a particular form of reasoning is authorised.
2.     The reasoning which is permissible involves the treatment of a failure to adduce evidence as a reason for increasing the weight of the proofs of the opposite party or reducing the weight of the proofs of the party in default. The principle may be invoked for a deficiency in the evidence either of a party bearing the legal onus of proving an issue, or of a party bearing the evidentiary burden only. If the failure is of the latter kind, the direct evidence of the party with the onus of proof can be more readily accepted, and inferences in his favour may be more confidently drawn. If the failure is of the former kind, a consonant formulation would be that the direct evidence of the party carrying the onus may be more readily rejected, and the inferences for which he contends may be treated with greater reserve. The default “brings a great slur on his cause”.
3.     …
4.      …
5.     Whether the principal can be applied is of a question of law, which admits of only one answer. No exercise of discretion is involved. …
6.     Whether the principal can or should be applied depends upon whether the conditions for its operation exist. These conditions are three in number: (a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter, (c) his absence is unexplained.”
(citations omitted)

The defendant said that he would not have made a profit if he had entered into an agreement in terms of the draft and he submitted that it was thus inherently unlikely that he would have subcontracted to GK in those terms. He said that he had hoped to make a profit of about $25,000 after deducting his costs. He said that he was he was ultimately paid a total of about $138,000 by the council. This is significantly more than the amount he was ultimately invoiced by Mr Wilkes. He said he received an initial payment of about $28,000 and he tendered a bank statement confirming that on 6^th November 2008 the council transferred an amount of $110,555.50 to his account. He did not tender any statement confirming the other payment of about $28,000. He did not call any evidence or tender any documents to prove the precise total he was paid by the council. Given that the submission rests, at least in part, on the defendant’s own evidence, given my reservations about his credibility based on the impressions he created while he was in the witness box and given that the possibility that he might simply have miscalculated cannot be ignored, I am not prepared to draw the inference contended for. This submission also fails.
There is no dispute that the workmen received the living away from home allowance while they were on site. As set out, the allowance was $10 per man per hour or $80 per day. The men worked on weekends and so the total allowance could have been up to $560 per man per week. Before Mr York went on leave Mr Wilkes could have been liable for allowances totalling up to $2,240 each week. After Mr York went on leave the total would have been up to $1,680 each week. If the contractual arrangements were as the defendant claims, then Mr Wilkes was willing to make a very significant financial contribution to the job. Doing the work at cost for promotional reasons is one thing. Giving away substantial amounts for the privilege of the defendant paying the workmen their hourly award labour rate is quite another. Even if GK had no other work of its own for the men to undertake, it is inherently unlikely that Mr Wilkes would enter into any such arrangement. Although he might have been prepared to do the job at cost in order to raise his profile in the area, it seems highly unlikely that he would be prepared to spend up to $560 per man per week on an advertising campaign.
Moreover, Mr Wilkes was well aware of the living away from home allowance. It is plain that he was paying the allowance while the men were working at Yanyarrie. It is equally plain that the allowance was a significant proportion of his costs when he undertook work outside the metropolitan area. It is thus inherently unlikely that Mr Wilkes would overlook the allowance when calculating his costs or giving verbal quotes for jobs outside the metropolitan area. If the defendant had reached an independent agreement with the workmen and then telephoned Mr Wilkes and reached an agreement with Mr Wilkes for the use of the men for “labour rates at cost”, it is inherently more probable than not that Mr Wilkes would have mentioned the allowance in the context of that discussion and enquired if the defendant was prepared to met the costs of the allowance. As set out, the defendant was both evasive and unconvincing while under cross-examination about the living away from home allowance. This is consistent with a realisation on his part that the living away from home allowance had the capacity to give rise to strong inferences in the plaintiff’s favour and the unconvincing and evasive nature of his evidence on the topic invites suspicion in any event.
The inherent probabilities thus favour the plaintiff. This is so even when the cumulative effect of the defendant’s submissions on the probabilities is taken into account. The reason for this is that, in my view the probabilities surrounding the payment of the living away from home allowance outweighs the combination of a number of items of evidence which are each, in truth, equivocal.
Credibility and reliability
I will return to consider the issues of credibility and reliability in the light of my findings about the conduct of the parties and the workmen and the inherent probabilities of the overall situation.
As can be seen, the evidence of Mr Wilkes and the other witnesses called during the plaintiff’s case was broadly consistent. As can also be seen, there were however, some discrepancies. Given that the events in question took place some two and half years before trial this is not surprising. On analysis, and when viewed in their totality, the various discrepancies were largely as to matters of detail which would have seemed unimportant to the workmen at the time and they are not of such a nature as to invite suspicion or to create any real doubts about the credibility or reliability of Mr Wilkes or the workmen. Rather, they are no less and no more than one would expect in the circumstances and they thus tend to point away from the existence of the conspiracy which the defendant suggests.
As has been seen, Mr Wilkes and the workmen were well acquainted with each other. Whether the workmen were biased and tailored any of their evidence in Mr Wilkes’ favour is another matter altogether.
The workmen are no longer employed by the plaintiff. Mr Wilkes said that he still regards them as friends. There is nothing other than this which suggests that they might be biased in his favour. In particular, there is nothing other than the broad consistency between their accounts which has any capacity whatsoever to suggest that they are biased. In any event, it would be a strange thing if broad consistency and the mere fact that the witnesses are friends could, without more, call their credibility into question. I reject the possibility that the workmen were biased in favour of Mr Wilkes.
There is no evidence that the workmen were not paid on a weekly basis, as Mr Wilkes and the workmen say, and there is no evidence that they were not paid their living away from home allowance while they were working on the job. There thus cannot be any cogent suggestion that the workmen have any direct or indirect financial interest in the outcome of the action and I reject that possibility.
As set out, the defendant said that he had engaged the workmen because GK had no work for them to go to after they had finished at Yanyarrie and that he was doing them a favour. In reliance on Mr Wilkes’ evidence that GK did not have anything “hugely” to go on with after Yanyarrie, and as I understand him, he submitted that if GK had no work for the men to go to, then his evidence about the agreements which were, or were not, in place becomes inherently more probable than the evidence of Mr Wilkes and the workmen on the topic.
As set out, all of the workmen said that GK always had work for them to do. In relation to the relevant time Mr York said that he was not sure “what work GK had ongoing” and Mr Wilkes said that he had no definite work scheduled for them after they had finished at Yanyarrie and that he had nothing “hugely” for them to go on with. In my view the evidence of Mr York and Mr Wilkes in this regard cannot really take the matter anywhere for the simple reason that there would have had to have been some sort of gap in GK’s diary for Mr Wilkes to have contemplated doing the job at cost for promotional reasons in the first place. The fact that there was a gap in the diary thus cannot and does not mean that GK did not have any work for the men to do later in the year. In these circumstances, the fact that GK might not have had any immediate work to put the men to lacks the capacity to give rise to any inferences which are inconsistent with the plaintiff’s case.
The defendant submits that the statements which Mr Nutt, Mr Stubbs and Mr Brooks attribute to the workmen amount to admissions on their part that they were not working on the job in the ordinary course of their employment by GK and that their credit and that of Mr Wilkes is destroyed accordingly. As set out, Mr Durkin, Mr Hutchesson and Mr York all deny making any statements to that effect. As also set out, it was put to each of them that they said things from time to time which might be construed as being inconsistent with them working on the job in the ordinary course of their employment.
I have already found that I am not prepared to rely on Mr Brooks. This leaves Mr Stubbs and Mr Nutt. As set out, there was nothing in their demeanour which invited suspicion.
As also set out, Mr Stubbs and Mr Nutt both say that at the barbeque one or more of the workmen told them that they were working for the defendant because they did not have any work from their employer and Mr Nutt said that they were happy to be there.
Whether the workmen were working for GK or the defendant would have been of little significance to Mr Stubbs and Mr Nutt and the conversations in question were some two and a half years before they gave evidence. Their evidence appears to be a summary of their understanding of what they say was being said rather than a verbatim account and, as I have mentioned, they were somewhat non-specific. In these circumstances the possibility of mistake or misunderstanding cannot be discounted and their evidence must thus be approached with a degree of caution.
If one construes the statements which Mr Stubbs and Mr Nutt attribute to the workmen literally, then the statements could be taken to mean that the workmen were intending to convey that they were undertaking the job outside of the ordinary course of their employment with GK. However, the possibility that they were speaking somewhat in the vernacular, as they might do at a barbeque, must be taken into account when determining what is to attributed to what they might have said.
The workmen were working on a tender which the defendant had obtained from the council. On the plaintiff’s case the defendant had subcontracted the work to GK. They were thus working for the defendant in a sense, albeit through GK on the plaintiff’s case. They did not have any of GK’s work to do at the time because, as Mr Wilkes said, he didn’t have anything “hugely” on at the time and that was why he was prepared to undertake the job for cost for promotional reasons. In any event, there is no evidence that the workmen knew exactly what, if any, work Mr Wilkes had been able to secure for the period after the work at Yanyarrie was expected to be completed. In these circumstances it is easy to see how the workmen might have expressed themselves loosely when they said that which is attributed to them without in anyway intending to convey that they were in fact working directly for the defendant and outside of the ordinary course of their employment. This submission fails.
Even assuming for the purposes of the submission that Mr Stubbs and Mr Nutt are both truthful and reliable, the statements which they attribute to the workmen are nonetheless equivocal and they thus lack any capacity to demonstrate that the contractual arrangements were other than as Mr Wilkes claims. My findings about the inherent probabilities of the overall situation support this conclusion. Even if I were to accept the evidence of Mr Brooks then the same would nonetheless apply to him. The submission fails.
In any event Mr Durkin and Mr Hutchesson say that they did not tell anyone that they were working directly for the defendant. What Mr Stubbs and Mr Nutt attribute to them was not put to them in the terms in which Mr Stubbs and Mr Nutt ultimately expressed themselves. It follows that conflicts between Mr Durkin and Mr Hutchesson on the one hand and Mr Stubbs and Mr Nutt on the other do not necessarily arise. The inherent probabilities favour the evidence of Mr Durkin and Mr Hutchesson that they did not ever say that they were not working for GK. In any event, and for the reasons I have given, I am satisfied that even if they might have said something along the lines of that attributed to them by Mr Stubbs and Mr Nutt, they did not ever intentionally and unequivocally say that it was not a GK job and that they were working for the defendant direct.
The defendant submitted that while Mr Wilkes and the workmen were under cross-examination they sometimes said that they could not remember certain specified events and he submitted that they were either not denying that these events had taken place or that they were being evasive. There is no doubt that Mr Wilkes and the workmen did from time to time say that they did not remember things. For obvious reasons this is not surprising and it is highly unlikely that any witness will be able to remember absolutely everything. In considering this submission, the possibility that they said that they did not remember things because what was put to them did not in fact take place cannot be overlooked. Indeed at times it was plain from the way that some of them were expressing themselves that by saying that they did not remember they were in fact intending to convey that to the best of their memories the suggested events had not in fact taken place. In short, I do not think that any answers of this kind have any capacity seriously to call their credibility or reliability into question.
The defendant submitted that the draft agreement, which he said he did not receive, stipulates a fee of $60 per man per hour whereas the summary of costs, which he says that he also did not receive, stipulates $70. Mr Wilkes explained this on the basis that it was $10 per hour extra over weekends and that the facsimile header sheet makes this plain. I am satisfied that anybody who read the draft agreement and the facsimile header sheet would realise that this was so. If Mr Wilkes was embarking on an elaborate conspiracy to extort a substantial amount of money out of the defendant, one would not have expected an anomaly like this. In all the circumstances, and particularly bearing the inherent probabilities in mind, this suggested anomaly lacks the capacity to seriously call Mr Wilkes’s credibility into question.
The defendant made a number of other submissions attacking the credibility or reliability of Mr Wilkes and his witnesses. Many of these submissions were predicated on my accepting his evidence and the balance were of no real consequence. In the circumstances, it will not be necessary to consider each of them in detail.
In summary, there is thus nothing which calls the credibility of Mr Wilkes and his witnesses into question to the extent that I could not be satisfied on balance that they were telling the truth and the inherent probabilities of the matter are in their favour also.
If Mr Wilkes and his witnesses are to be accepted as credible, their reliability thus falls for consideration. The essential aspects of their evidence focus on important events which they would be likely to remember and unlikely to become confused about, either to any great extent, or at all. A few simple examples will suffice to illustrate the point. Whether the workmen were working for GK or not is not something they would be likely to be mistaken about. Whether Mr Wilkes entered into an agreement with the defendant for GK to do the job is not something he is likely to be mistaken about. Whether Mr Wilkes forwarded the draft agreement and the facsimile header sheet to the defendant via facsimile would be something Mr Wilkes would be likely to remember and there is the coincidence of the telephone records recording that facsimiles were sent to the defendant’s number on the relevant days. The facsimile header sheet was something a little out of the ordinary and as Mr Durkin says that he read it he is unlikely to be mistaken about whether or not he gave it to the defendant. Whether the agreement was extended during the conversation at Booleroo Centre is something Mr Wilkes would be likely to remember and to not become subsequently confused about. What was said, and perhaps more importantly, what was not said in the various telephone conversations about the invoice are things Mr Wilkes and his wife would be likely to remember and not become confused about either.
I am thus satisfied that Mr Wilkes and his witnesses are also reliable.
For all of the above reasons I am thus satisfied that there was a verbal agreement between Mr Wilkes and the defendant for GK to undertake the job as subcontractors, that there was no agreement between the workmen and the defendant for them to undertake the job on his behalf and that there was no agreement between the defendant and Mr Wilkes for the defendant to reimburse Mr Wilkes in the amount of the labour costs excluding the living away from home allowance. Also for the above reasons, I am satisfied that the agreement was extended during the conversation which took place at Booleroo Centre.
The terms of the agreement
The precise terms of the agreement which was ultimately struck between Mr Wilkes and the defendant must be identified if it is possible to do so.
Mr Wilkes’ evidence about what was said during the conversation when the verbal agreement was struck is set out above. He said that he incorporated the terms which were verbally agreed between him and the defendant into the draft agreement which he forwarded to the defendant on 12^th September. In effect he said that the terms were then varied by increasing the rate to $70 per man per hour over the weekends in the facsimile header sheet which he forwarded to the defendant on 2^nd October along with the summary of costs to date. As set out, Mr Durkin said he gave to the defendant a copy of the header sheet and the summary the same day.
My findings as to credibility and reliability lead me to be satisfied that Mr Wilkes did in fact forward the draft agreement and the facsimile header sheet and the summary of costs to the defendant and that Mr Durkin also served him with a copy of the header sheet and the summary.
The questions are therefore:
1Whether the draft accurately reflects what was verbally agreed between Mr Wilkes and the defendant
2Whether the defendant accepted the terms specified in the draft irrespective of whether they were an accurate reflection of the terms they arrived at verbally and
3Whether he accepted the variation to the weekend rate as set out in the facsimile header sheet?
It is well settled that the rights and liabilities of the parties to an agreement are to be determined objectively. In Toll (FCGT) P/L v Alphapharm P/L (2004) 219 CLR 165 Gleeson CJ, Gummow Hayne, Callinan and Heydon JJ said at [40]:
It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words or conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of a term in a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text but also of the surrounding circumstances known to the parties and the purposes and object of the transaction.
As mentioned in another context, the same approach can be taken to verbal agreements: Profile Events at 18 ibid.
It is also well settled that acceptance can be inferred from conduct. The principle is identified and discussed in Cheshire and Fifoot: Law of Contract (8^th Australian Edition) at [3.23] in the following terms:
It will sometimes be the case that, where there is a clear offer, there is doubt about precisely when or if there was acceptance of that offer. Yet the parties have proceeded. The law has responded by moulding the rules of acceptance to accommodate to imprecise human behaviour or to common practice. Acceptance can be inferred from conduct if that inference is indicated by the objective circumstances. An offeree “promises” to be bound by the terms by simply getting on with it. This is an important aspect of the law because it recognises what commercial people actually do. For example, it is routine contracting practice to respond to an order for goods by starting the process of fulfilling the order: See for example Mooney v Williams.
(citation omitted)

The same approach has been taken where one party undertakes work on behalf of the other. Such a case is Empirnall Holdings Pty Ltd v Machon Paull Partners Ltd (1988) 14 NSWLR 523 where McHugh JA (as the then was), Samuels JA concurring said at
Under the common law theory of contract, the silent acceptance of an offer is generally insufficient to create any contract: Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 at 692 and Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 at 1432; [1966] 3 All ER 128 at 131-132. The objective theory of contract requires an external manifestation of assent to an offer. Convenience, and especially commercial convenience, has given rise to the rule that the acceptance of the offer should be communicated to the offeror. After a reasonable period has elapsed, silence is seen as a rejection and not an acceptance of the offer. Nevertheless, communication of acceptance is not always necessary. The offeror will be bound if he dispenses with the need to communicate the acceptance of the offer: Carlill v Carabolic Smoke Ball Co. However, an offeror cannot erect a contract between himself and the offeree by the device of stating that unless he hears from the offeree he will consider the offeree bound. He cannot assert that he will regard silence as acceptance: Felthouse v Bindley and Fairline Shipping Corporation v Adamson. The common law’s concern with the protection of freedom is opposed to the notion that a person must take action to reject an uninvited offer or be bound by contractual obligations.
Nevertheless, the silence of an offeree in conjunction with the other circumstances of the case may indicate that he has accepted the offer: Rust v Abbey Life Assurance Co Ltd. The offeree may be under a duty to communicate his rejection of an offer. If he fails to do so, his silence will generally be regarded as an acceptance of the offer sufficient to form a contract. Many cases decided in United States jurisdictions have held that the custom of the trade, the course of dealing or the previous relationship between the parties imposed a duty on the offeree to reject the offer or be bound: CMI Clothesmakers Inc v ASK Knits Inc: Brooks Towers Corporations v Hunkin-Conkey Construction Co; Alliance Manufacturing Co Inc v Foti. But more often than not the offeree will be bound because, knowing of the terms of the offer and the offeror’s intention to enter into a contract, he has exercised a choice and taken the benefit of the offer. In Laurel Race Course Inc v Regal Construction Co Inc a contractor proposed that it would do additional work upon the basis that, if the work was the result of its defective workmanship under the original contract, there would be no charge. Otherwise the work would be charged on a “cost-plus” basis. The building owner made no reply to this offer. The contractor commenced work on the job to the knowledge of the building owner who was held bound by the terms of the offer. Speaking for the Court of Appeals for Maryland, Judge Levine said (at 329):
“ … Where the offeree with reasonable opportunity to reject offered services takes the benefit of them under circumstances which would indicate to a reasonable person that they were offered with the expectation of compensation, he assents to the terms proposed and thus accepts the offer.”
This formulation states acceptance in terms of a rule of law. However, the question is one of fact. A more accurate statement is that where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them under circumstances which indicate that they were to be paid for in accordance with the offer, it is open to the tribunal of fact to hold that the offer was accepted according to its terms. A useful analogy is to be found in the “ticket cases” where an offeree, who has or ought to have knowledge of the terms of a contract of carriage or bailment, is generally bound unless he raises objection: cf Thornton v Shoe Lane Parking Ltd and MacRobertson Miller Airline Services v Commissioner of State Taxation (Western Australia).
The ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted.
In separate reasons Kirby P (as he then was) came to the same conclusions. The principles of acceptance by conduct would thus seem to rest on circumstantial evidence and commercial reality.
Counsel for the plaintiff submitted that I should accept that the draft agreement accurately sets out the terms of the verbal agreement. The difficulty with this submission is that notwithstanding my finding that Mr Wilkes was credible and reliable in the essential aspects of his evidence; the possibility nonetheless exists that the draft agreement may contain some of Mr Wilkes’s honestly held but erroneous subjective beliefs about what had been agreed verbally.
For the reasons I have given, I am satisfied that Mr Wilkes forwarded the draft agreement and the facsimile header sheet to the defendant and that Mr Durkin handed him a copy of the header sheet. Determination of the precise terms of the agreement thus involves a consideration of whether the defendant accepted the terms offered to him in the draft agreement and the variation embodied in the header sheet.
The apparent object of the agreement was the construction of the walls by GK on behalf of the defendant in accordance with the council’s specifications. The draft agreement was faxed to the defendant on 12^th September 2008, Mr Wilkes spoke to the defendant about the agreement the following day work commenced the day after that and it is common ground that the defendant supplied the concrete which was used for the job.
If the defendant had in fact read the draft agreement and then supplied concrete and allowed the work to proceed without comment or query then the only inference that can be drawn from an objective consideration of his conduct, when viewed the in the light of their earlier discussions and the apparent objects of the agreement, are that he accepted the terms of the draft agreement. Similarly, if he then read the facsimile header sheet and continued to supply concrete and continued to allow the work to proceed, then the only inference that can be drawn is that he accepted the variation to the weekend rate set out in the header sheet. Despite the fact that it is plain that the defendant adopted a somewhat casual approach to his business dealings, it is nonetheless inherently more probable than not that he would have read the draft agreement, if only to confirm that his own understanding of the agreement that he and Mr Wilkes had come to in the telephone conversation was in fact correct. The facsimile header sheet bears a number of monetary amounts on its face which would have been likely to attract his attention. It is thus also inherently probable that the he would have read the header sheet, if only to find out what it was about. The first line reads “Thought I would give you a breakdown of costs.” This would have been likely to have aroused his interest and it is inherently probable that he would have then read on and read the unequivocal sentences “It is based on the rates I faxed to you on Page 3 of the subcontract agreement 12/9/08. The only change I have made from this agreement is the Saturday + Sunday rate is increased to $70 p.hr to help cover GKs costs.” His evidence about facsimiles and how his children would put them aside and that there was no designated place for incoming facsimiles to be put struck me as unlikely and as evidence of convenience. I am thus satisfied that the defendant did in fact both receive and read both the agreement and the facsimile header sheet and his evasiveness and the unconvincing nature of his evidence about receiving a copy of the agreement by facsimile is consistent with this conclusion. His failure to sign and return the agreement is consistent with his casual attitude. Obviously, it is likely that he would have read the draft agreement and the header sheet relatively soon after he was aware of their existence.
The defendant received the draft agreement two days before work was scheduled to commence. He neither cancelled the work nor queried the terms of the agreement and work commenced as scheduled. Nor did he query the facsimile header sheet or call the work to a halt after he received it. Rather, he accepted the work that GK was undertaking on his behalf; he supplied concrete from the outset and he continued to do so after he received the header sheet.
To adapt the words of McHugh JA in Empirnall at 535-536, in these circumstances the defendant’s acceptance of the work and his supplying of the concrete, when considered objectively, should be taken as an acceptance of the work performed by GK on the terms and conditions offered to him by Mr Wilkes in the draft agreement as varied by the facsimile header sheet. The case is thus one of taking the benefit of an offer with knowledge of its terms and knowledge that the offeror requires payment to be made in return for the work and not a case of acceptance by silence. As the defendant took the benefit of GK’s work in the knowledge of the terms on which it was offered, an objective bystander would conclude that the defendant had accepted the terms of the agreement and the subsequent variation embodied in the header sheet.
This finding that the contractual arrangements were as Mr Wilkes claims is necessarily confirmatory of his credibility and reliability and destructive of that of the defendant, at least in so far as the initial agreement and the variation are concerned. This confirmation of Mr Wilkes’ credibility and further undermining of that of the defendant leads me to be satisfied that the conversation between Mr Wilkes and the defendant at Booleroo Centre and the various conversations which occurred after the invoice was rendered were in fact in the terms which Mr Wilkes says they were.
I am thus satisfied that the agreement was extended to the work on the additional two jobs during the conversation between Mr Wilkes and the defendant at Booleroo Centre. Mr Wilkes said that although there was no discussion about the terms on which the agreement was to be extended, there was a mutual understanding between them that it was to be extended on the same terms. That is to say the original terms as varied by the facsimile header sheet.
In my view, an objective bystander who knew of the terms of the original agreement, as varied, and who knew that the defendant had accepted those terms by his conduct would conclude from what passed between Mr Wilkes and the defendant at Booleroo Centre, particularly in the absence of any words spoken to the contrary, that there was a tacit understanding between them that the work on the additional two jobs was to be undertaken on the same terms as the first three.
I have already said that I am satisfied that the conversations between Mr Wilkes and the defendant after the invoice was rendered were in the terms that Mr Wilkes says they were. There is no reason whatsoever to doubt the evidence of Mrs Wilkes about the conversations she had with the defendant after the invoice was rendered either. I thus reject the defendant’s evidence about what was said in those conversations.
It is plain from what Mr Wilkes and Mrs Wilkes said about their respective conversations with the defendant that he did not at any stage directly, or by necessary implication, deny that he was indebted to GK in the amount invoiced.
If the defendant did not accept that the invoice had been rendered consistently with the terms of the agreement, as varied by the summary, one would have expected him to have said so when Mr Wilkes first telephoned him rather than say, as Mr Wilkes said that he did, that he would settle at the end of the month after the council had paid him. Indeed, if this was the situation, one might have expected him to have telephoned Mr Wilkes and queried the invoice as soon as he received it. His reference to having heart seizure over the invoice could well be consistent with him having realised that he had made a miscalculation somewhere along the way and that his profits were going to be less than he anticipated. Indeed a miscalculation of some kind could have been the reason why he said to Mr York that he would have been better off employing the workmen “rather than going through GK”.
Much the same can said about the further conversations. When Mr Wilkes spoke to the defendant again on 10^th December he said that the defendant told him that he had been paid by the council but that he had money problems of his own. Again he did not query the invoice as one might have expected him to do if he did not accept that he was indebted to GK in the full amount. When he spoke to Mrs Wilkes on the same day he did not query the invoice either. Similarly, he did not query the invoice when Mrs Wilkes telephoned him on 17^th December and merely complained to her about his financial problems, his overdraft, his divorce and the fact that he owed $70,000 to his lawyer. Similarly again, he did not deny his indebtedness when Ms Davila telephoned him on 17^th February 2009.
As set out, the council paid the defendant an amount of about $28,000 at some unknown time and a further amount of $110,555.50 on 6^th November. As also set out, the defendant paid GK the amount of $30,000 on 24^th December. Coincidently, what he said he owed his lawyer and what he ultimately paid to GK add up to all but about $10,000 of what he received from the council on 6^th November.
The only inferences which can be drawn from what the defendant said, and indeed did not say, in the sequence of telephone calls are:
·That he accepted that the invoice had been rendered in accordance with the terms of the agreement as varied by the summary.
·That he accepted that the final two jobs were to be undertaken on the same terms.
·That he accepted that he was indebted to GK in the full amount invoiced.
·That his profit from the job might well have been less than he expected, probably due to some miscalculation on his part.
·That he applied the proceeds of his payment from the council to his lawyer and his other debts and that he then applied the balance in part-payment of his debt to GK.
·That his complicated story about the contractual arrangements and what he claims he owed the workmen is nothing less than a carefully tailored fabrication designed to meet the exigencies of the plaintiff’s case and to explain away what was in reality a part payment of $30,000.
What the defendant said, and did not say, during the various telephone calls after the invoice was rendered is thus confirmatory of my findings that he received, read and accepted the terms of draft agreement and the variation in the facsimile header sheet and that the agreement was extended on the same terms during the conversation at Booleroo Centre.
Conclusions and orders
The claim in contract succeeds. The claim for work done and materials supplied does not fall for determination.
As I have been able to determine the action on this basis there is no need to consider the submissions of counsel for the plaintiff about the use which could be made of the draft agreement, the facsimile header sheet and other documents. Nor is there any need to consider whether any of the evidence or documents which were received de bene esse ought to be admitted.
There will be judgment for the plaiantiff in the amount of $64,574.26 plus interest.