J-CORP PTY LTD and LEADBITTER - [2009] WASAT 168

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDERS' REGISTRATION ACT 1939 (WA)

CITATION: J-CORP PTY LTD and LEADBITTER [2009] WASAT 168

MEMBER: MR T CAREY (MEMBER)

HEARD: 16 JUNE 2008

DELIVERED : 1 SEPTEMBER 2009

FILE NO/S: CC 710 of 2008

BETWEEN: J-CORP PTY LTD
Applicant
AND
SEAN LEADBITTER
DAVID GROCHOWSKI
Respondents

Catchwords:

Building disputes - Review of decision of Building Disputes Tribunal - Declarations that price increases the subject of signed variations not payable - Delay in commencement of building works - Responsibility for delay - Consequences of finding of responsibility under statutory scheme - Whether signed variations satisfy 'otherwise agree' exception - Duress claim - Whether duress made out on facts - Effect of 'under duress' notations - Whether economic duress a common law or equitable principle - Whether lack of consideration

Legislation:

Builders' Registration Act 1939 (WA)
Home Building Contracts Act 1991 (WA), s 9, s 9(1), s 9(2), s 13, s 15, s 17, s 21, Pt 2, Sch 1 cl 1, cl 2, cl 3, cl 4

Result:

Application for review refused

Category: B

Representation:

Counsel:

Applicant: Mr A Buchan
Respondents : Self-represented

Solicitors:

Applicant: Hotchkin Hanly
Respondents : Self-represented

Case(s) referred to in decision(s):

Commodore Homes (WA) Pty Ltd v Standley [2001] WADC 89
Crescendo Management Pty Ltd v Westpac Banking Corporation (1998) 19 NSWLR 40
Dimskal Shipping Co SA v International Transport Workers Federation [1992] 2 AC 152
J-Corp Pty Ltd and Leadbitter [2008] WASAT 266
Mason v State of New South Wales (1959) 102 CLR 108
Nixon v Furphy (1925) 25 SR (NSW) 151
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705; [1978] 3 All ER 1170
Pao On v Lau Yiu Long [1979] 3 All ER 65
Pao On v Lau Yiu Long [1980] AC 614
Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1999] FCA 391
Smith v William Charlick Ltd (1924) 34 CLR 38
TA Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1956) SR (NSW) 323
Westpac Banking Corporation v Cockerill [1998] FCA 43

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant builder sought review of declarations made by the Building Disputes Tribunal that amounts claimed by it by way of variations to the contract prices for the construction of three units were not payable.
The respondent owners relied on a number of arguments to support the affirmation of the declarations, including that the imposition of the price increases was not permitted under the contracts, nor under the relevant statute, the Home Building Contracts Act 1991 (WA). The applicant disagreed, and contended that in any event the variations providing for the price increases, to which the respondents agreed, were enforceable. The respondents submitted that the variations were invalid for duress or lack of consideration.
The Tribunal analysed the provisions of the Home Building Contracts Act 1991 (WA) impacting upon the respondent's claims before considering those claims. It found against the…

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.

Keep reading for free

Create a free CaseChat account to read J-CORP PTY LTD and LEADBITTER and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2009] WASAT 168
Decision Date: 1 SEPTEMBER 2009

CaseChat Overview and Summary

J-Corp Pty Ltd (the builder) and Leadbitter (the owners) were involved in a dispute over the construction of a house. The dispute came before the Supreme Court of New South Wales, which was asked to review the decisions of the Building Disputes Tribunal. The primary legal issues were whether the price increases resulting from signed variations were payable, who was responsible for the delay in the commencement of the building works, and whether the signed variations satisfied the 'otherwise agree' exception. Additionally, the owners alleged that they entered into the signed variations under duress, and the court was required to determine whether economic duress was established on the facts.

The court found that the builder's threat to suspend the works if the variations were not signed constituted illegitimate pressure, which induced the owners to enter into the variations agreement. The court held that economic duress is a common law principle and that the lack of consideration is not a necessary element. The court noted that in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd, Mocatta J set out the development of the law of duress, and that unlike earlier cases, Sundell's case concerned a party with pre‑existing contractual rights entering into a fresh contract on terms more favourable to the other party as a result of the threat by the other party not to honour its obligations under the original contract. The court rejected the argument that the original contract was superseded by the new contract, on the basis of a lack of consideration.

In conclusion, the court found that the owners were not required to pay the price increases resulting from the signed variations, and that the builder was responsible for the delay in the commencement of the building works. The court also found that the signed variations did not satisfy the 'otherwise agree' exception. Additionally, the court found that the owners entered into the signed variations under duress, and that the duress claim was made out on the facts. The court made declarations that the price increases were not payable, and that the builder was responsible for the delay in the commencement of the building works.

No orders were made for costs.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Duress has been found to arise in contractual dealing where pressure is applied to induce the 'victim' to enter the contract in circumstances where the pressure went beyond what the law is prepared to countenance as legitimate: Dimskal Shipping Co SA v International Transport Workers Federation [1992] 2 AC 152 (The Evia Luck No 2); Crescendo Management Pty Ltd v Westpac Banking Corporation (1998) 19 NSWLR 40 (Crescendo Management). Although many of the earlier authorities speak in terms of there being a coercion of will (see, for example, Pao On v Lau Yiu Long [1980] AC 614 at 636; and Pao On v Lau Yiu Long [1979] 3 All ER 65 at [79]), the tendency in more recent times has been to emphasise the lack of legitimacy in the pressure or compulsion applied, rather than upon the element of coercion of will. Thus, in Crescendo Management at [45] ‑ [46], McHugh J said:In my opinion the overbearing of the will theory of duress should be rejected. A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure wnt [sic] beyond what the law is prepared to countenance as legitimate? It will still be necessary to establish that the illegitimate pressure was a reason for the person entering the agreement, although it need not be the only reason: Crescendo Management at [46]. Here, the pressure exerted by the builder which the owners contend was illegitimate was its threat to suspend commencement of the works under its contract with the owners if the variations were not signed. In North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705; [1978] 3 All ER 1170 (North Ocean Shipping), a ship owner agreed to an extra payment in order to avoid the ship builder's threat to break a ship building contract between them. It was held that a threat to break an existing contract can constitute 'economic duress', and did so on the facts. In North Ocean Shipping, Mocatta J set out at 716 ‑ 719 a useful history of the development of the law of duress, with particular regard to a number of Australian decisions, including Nixon v Furphy (1925) 25 SR (NSW) 151, Smith v William Charlick Ltd (1924) 34 CLR 38 and TA Sundell & Sons Pty Ltd v Emm Yannoulatos (Overseas) Pty Ltd (1956) SR (NSW) 323 (Sundell's case). Unlike the first two cases, which dealt with the payment of money under compulsion, Sundell's case concerned the position obtaining here of a party with pre‑existing contractual rights entering into a fresh contract on terms more favourable to the other party as a result of the threat by the other party not to honour its obligations under the original contract. As Mocatta J noted, the court in Sundell's case rejected an argument that the original contract was superseded by the new contract, on the basis of a lack of consideration. It also rejected a further argument which sought to limit actionable duress to threats to withhold a proprietary or statutory right as opposed to a contractual right.