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Grocon Constructors (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd

Grocon Constructors (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd

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Case Copied 23 July 2015 73 min read

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2014 0152

GROCON CONSTRUCTORS (VICTORIA) PTY LTD	Applicant
(ACN 148 006 624)
v
APN DF2 PROJECT 2 PTY LTD (ACN 128 883 581) and GROCON (SCOTS CHURCH) PTY LTD (ACN 143 199 491)	First Respondent Second Respondent

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JUDGES:	SANTAMARIA, KYROU and McLEISH JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 June 2015
DATE OF JUDGMENT:	23 July 2015
MEDIUM NEUTRAL CITATION:	[2015] VSCA 190
JUDGMENT APPEALED FROM:	APN DF2 Project 2 Pty Ltd v Grocon Constructors (Victoria) Pty Ltd [2014] VSC 597 (Vickery J)

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BUILDING CONTRACT – Principles for construction of commercial contracts – Relationship between building contract and side deed – Meaning of phrase ‘actual … cost payable’ – Judge erred in interpreting phrase as meaning ‘costs actually paid’ – Application for leave to appeal granted and appeal allowed.

BUILDING CONTRACT – Principles for implying a term into a commercial contract – Judge erred in implying a term requiring builder to provide to principal documents evidencing payment to subcontractors.

BUILDING CONTRACT – Principles for determining when a term of a contract is to be inferred – Judge correctly held that no term is to be inferred requiring builder to provide to principal documents evidencing payment to subcontractors.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	J J Gleeson QC with	Minter Ellison
R G Craig and A G Rollnik
For the First Respondent	A J Myers QC with P Zappia QC and O Bigos	Arnold Bloch Leibler
For the Second Respondent	D J McAndrew	Thomson Geer

SANTAMARIA JA

KYROU JA
McLEISH JA:

Introduction and summary

This is an application for leave to appeal from a decision of the trial division that the applicant (‘Grocon’), as building contractor, breached its obligations to the respondents (‘APN’ and ‘Scots Church’, collectively ‘principals’), under a contract for the design and construction of a building (‘Project’) at 150 Collins Street, Melbourne (‘Land’).[1] As Scots Church is related to Grocon,[2] it did not take an active part at trial or at the hearing of Grocon’s application in this Court.
[1]APN DF2 Project 2 Pty Ltd v Grocon Constructors (Victoria) Pty Ltd [2014] VSC 597 (‘Reasons’).
[2]The ultimate holding company of both companies is Grocon Group Holdings Pty Ltd.

The trial judge’s finding of a breach of contract related to Grocon’s refusal to provide certain records to APN to enable APN to verify costs actually paid by Grocon in completing the Project (‘payment records’). The judge’s finding was based on the following reasoning:

(a) The obligation of the principals to make progressive payments under the design and construction contract that was entered into on 4 July 2012 (‘D&C Contract’)[3] was amended by a side deed dated 4 July 2012 (‘Side Deed’).[4] Consequently, the phrase ‘Actual Trade Cost’ in cl 2 of the Side Deed — which is defined in cl 1.1 of that deed — applied to that obligation and determined the amounts payable to Grocon.[5]
[3]The obligation to make progressive payments is set out…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2015] VSCA 190
Decision Date: 23 July 2015

CaseChat Overview and Summary

The case of Grocon Constructors (Victoria) Pty Ltd v APN DF2 Project 2 Pty Ltd involved a dispute between the builder and the principal regarding the interpretation and implications of a building contract and a side deed. The primary issues centred on the meaning of the phrase "actual...cost payable" and the potential implication of a term requiring the builder to provide documents evidencing payment to subcontractors.

The legal issues before the court were whether the judge had correctly interpreted the phrase "actual...cost payable" and whether the judge had correctly assessed the implication of a term requiring the builder to provide documents evidencing payment to subcontractors. The court was required to examine the principles of construction of commercial contracts, the relationship between the building contract and the side deed, and the appropriate circumstances under which a term may be implied into a commercial contract.

The court found that the judge had erred in interpreting the phrase "actual...cost payable" to mean "costs actually paid." The court clarified that the phrase should be understood to refer to the costs that were actually payable, not necessarily those that had already been paid. Furthermore, the court held that the judge had also erred in implying a term requiring the builder to provide documents evidencing payment to subcontractors. The court confirmed that no such term should be inferred under the circumstances of this case. The court held that the relationship between the contract and the side deed should not be used to imply additional obligations that were not expressly stated or necessarily implied.

The court granted leave to appeal and allowed the appeal, setting aside the decision of the lower court and substituting its own interpretation of the contract terms. The final orders of the court were that the appeal be allowed, the decision of the lower court be set aside, and the matter be remitted for further proceedings in light of the court's findings.

Orders