Jarvis v Bibbo No. Scgrg-00-1042
[2001] SASC 5
•17 January 2001
JARVIS v BIBBO
[2000] SASC 5
Magistrates Appeal: Civil
1................ WILLIAMS J.... This is an appeal by the defendant Jarvis against a final judgment given in civil proceedings in the Magistrates Court on 4 September 2000. The appellant also complains about the consequential order for costs made on 17 October 2000.
The proceedings arise out of a dispute between the plaintiff builder and defendant owner with respect to the restoration and conservation of an old house at Gover Street North Adelaide for use as a hairdressing salon and residence. The plaintiff brought the action for the balance of his price for work after the defendant had withheld payment. The appellant complains that the Magistrate erred in entering judgment for the plaintiff in the sum of $14,118.00 upon the claim.
The grounds of appeal
I have had some difficulty in identifying upon the face of the Magistrate’s reasons the precise legal basis upon which he reached his decision. As a consequence it is understandable the grounds of appeal do not spell out fully by reference to the judgment, the matters of complaint which were made the subject of argument upon the appeal. However, counsel were able to “lock horns” upon the issues as they appeared during the course of argument. In order to do justice between the parties upon a dispute which does not involve a large amount, I have treated the formal grounds of appeal as sufficiently complying with the rules. However, I have treated as a live issue the question as to how I might fairly construe the Magistrate’s reasons; I note in this respect that each counsel relied upon different passages in His Honour’s reasons to support their opposing arguments.
It is my opinion there are ultimately five points to be considered upon this appeal:
(1)... The effect of an increase of $14700 in the plaintiff’s price for the work which was sought upon a pretext which was not literally accurate. (The defendant by her counterclaim alleged that she had agreed to an increase in price as a result of a misrepresentation upon which the defendant relied so as to cause damage in the sum of $14700).
(2)Whether there was a breach of warranty by the plaintiff with respect to the supply of pavers and the effect of s 37 of the Building Work Contractors Act 1995 (SA).
(3)... The construction of clauses 8.5 and 8.6 of the building contract dealing with extra work.
(4)Whether the Magistrate adopted an appropriate course in the form of his judgment (which did not deal separately with the defendant’s counterclaim).
(5)... The manner in which the Magistrate exercised his discretion with respect to the costs of the action.
2...... The increase of $14700 in the builder’s quotation to make good the salt damp
The plaintiff submitted a quote of $154000 upon the defendant’s plans and specifications and this price was accepted by the defendant. The specification required the builder (inter alia) to undertake certain remedial work which involved making good in respect of salt damp and repointing of the stone walls. However, the specification was far from explicit as to the precise amount of work involved. The specification (at p 91 of Exhibit D1) dealt with the scope of work. The east wall (limestone portion) required work as follows:
“1a... Underset with an approved DPC and with approved masonry and matching face limestone to required height, alignment and thickness. Repoint stone and brickwork to match existing and adjoining works. Stabilise or re-set any loose stone, quoins, sill and coping bricks.
Clean off any hard plaster from general wall areas and brickwork. Any damaged bricks to receive build-up of red-oxide slurry to make good any damaged bricks ready for repointing.”
(Emphasis added).
There was a corresponding requirement in the specification with respect to the western wall.
A stonemason, Daymon (who had previously quoted on the job to the defendant on 13 April 1998) made a copy of his quote available to the plaintiff on 23 July 1998 (Exhibit P15) but on 3 August 1998 made clear to the plaintiff (in the form of a further quote at the same price as before) that his price only covered work to “salt affected masonry to the height of 1.8 metres” (see Exhibit P1). (The date 23 July 1998 is the date shown on a fax but I note that the Magistrate has used a date of 31 July 1998. Nothing appears to turn on that difference). At a site meeting on 7 August 1998 (apparently held a few days after the acceptance by the defendant of the plaintiff’s quote) the extent of the remedial work was identified in conference between the plaintiff and the defendant’s representative. The plaintiff thereafter required that the price be increased by $14700 and the defendant agreed thereto. On 13 August 1998 a written contract was signed between the parties at a price of $168700 - incorporating the requested increase.
Although the Magistrate made no finding on this point, it is my view that the loose way in which the specification was expressed put seriously in doubt whether the plaintiff could have been held to a contract on 7 August 1998 at the price of $154000 - at least in terms of the full amount of remedial work which the defendant required.
The Magistrate accepted the version of the defendant’s representative Mr Mabbitt and the defendant herself as to how the increase in price came about. The defendant contends that these circumstances gave rise to an actionable misrepresentation.
The plaintiff claimed to have asserted that he had made a mistake and justified his price increase on this basis. The Magistrate rejected this. His Honour’s findings (as I read his reasons) was to accept the evidence of Mabbitt: (par 8 of reasons)
“Mr Mabbitt, who also gave evidence, said he understood the site meeting was to make sure Daymon’s quote covered the work required. No additional price was mentioned. Several days later, he received a telephone call from the plaintiff stating Daymon had increased his price by $14,700 for removal of the salt damp on the walls. He referred the matter to the defendant who agreed the extra price and an agreement between the plaintiff and the defendant was signed for the sum of $168,700 on 13 August 1998 representing an additional $14,700 on account of Mr Daymon’s increase in price...”
and (par 14 of reasons)
“...The plaintiff was obviously in an awkward position because he had to persuade the defendant to agree to another $14,700 in the contract price. It would make his task easier if he could blame Mr Daymon. The more correct way of explaining the situation would have been to tell the defendant that Mr Daymon would have to increase his price to carry out the work the defendant expected to be carried out however, I am far from certain the plaintiff was responsible for the mistake which occurred. If Mr Daymon had a copy of the plans and specifications which do not differentiate between the work required to 1.8 metres and not the whole of the walls, it seemed to me that as a layman in the building trade, he should have made it quite clear he was only quoting for the restoration and repair of the walls up to 1.8 metres. He doesn’t say so. (Compare his later quote to the plaintiff)...”
The Magistrate found (inter alia):(par 41 of reasons)
“...At the site meeting, the plaintiff misled the defendant by saying that Mr Daymon had increased his price. The defendant relied on that misleading information in agreeing to increase the contract price by $14,700...”
The Magistrate had previously said: (par 14 of reasons)
“When the defendant was told of the increase in price, she had the right to terminate any contract altogether but instead she chose to accept the $14,700 extra on the basis Mr Daymon had increased his price. Although not asked, I believe it probable the defendant would have agreed the extra price if told the reason was Mr Daymon’s quote did not cover the repair and restoration of the whole of her walls.”
The defendant’s claimed right to rely upon a misrepresentation depended upon a finding that the incorrect statement of the plaintiff was material to the defendant’s decision in agreeing to the price increase. Upon the Magistrate’s findings (as I interpret them) this was not established. It was a matter upon which the defendant bore the onus of proof. This is a case where the incorrect element of the statement was so unimportant that the defendant as representee would have acted in the same way without it. The question as to the burden of proof with regard to materiality and the distinction between inducement and materiality is discussed in Spencer Bower and Turner, The Law of Actionable Misrepresentation 3rd ed Butterworths & Co. (Publishers) Ltd, 1974 pars 131-133.
An actionable misrepresentation must be material, that is to say that it must be of a kind that would affect the judgment of a reasonable person in deciding whether to contract with the representor. In Allen DK, Misrepresentation Sweet & Maxwell, London, (1988) at p 20 is the following useful statement of principle:
“A distinction must be drawn between the requirement of materiality and the need to establish that the representee relied upon the representation. The requirement of materiality imports an essentially objective standard, whereas the question whether or not the representee was induced to rely upon the misrepresentation depends upon its effect on the particular individual. The need to distinguish is emphasised in the judgment of Bowen LJ in Smith v Land and House Property Corporation (1884) 28 Ch.D 7 at 16 where he said:
......... “I cannot quite agree with the remark of the late Master of the Rolls in Redgrave v Hurd, that if a material representation calculated to induce a person to enter into a contract is made to him it is an inference of law that he was induced by the representations to enter into it...”
In other words, the fact that a statement is one that would affect the judgment of a reasonable man does not mean that it necessarily persuaded the particular representee to contract, and conversely the fact that the representee was persuaded to contract does not mean that a reasonable man would have been.”
However, this statement must be regarded as qualified by the remarks of Brennan J in Gould v Vaggelas (1983-85) 157 CLR 215 at 250-1:
“An inference of inducement may be drawn when a party enters into a contract after a material representation has been made to him, but it is no more than an inference of fact and it is settled law that such an inference may be rebutted by the facts of the case: Holmes v Jones; Smith v Chadwick. The tribunal of fact may infer that such a material mis-representation induced the representee to enter into the contract and the fact that there were other inducements to him to do so does not necessarily preclude the drawing of that inference. The relevant question for the tribunal of fact to answer on all the evidence is whether the misrepresentation alone, or with or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss: Nicholas v Thompson, per Cussen ACJ; Edgington v Fitzmaurice, per Bowen LJ; Arnison v Smith, per Lord Halsbury LC Connolly J referred to these principles in the earlier parts of his judgment and there is nothing to suggest that he placed the ultimate onus on the respondents or regarded the inference of inducement to be more than a rebuttable inference of fact.”
Upon this basis a finding of lack of materiality is a separate question from the question of reliance. Moreover, upon the facts of this case I cannot see how the defendant could have suffered damage by the reason given for the plaintiff’s increase in his price.
A finding as to lack of materiality should have been sufficient to enable the Magistrate to resolve this issue in favour of the plaintiff. However, His Honour proceeded to make a series of findings as follows: (par 41 of his reasons):
“The plaintiff or the defendant if she had elected not to pay the extra contract price and engage her own contractor was required to engage another contractor to complete the restoration and repair of the remainder of the walls. The plaintiff did so and paid such contractor, Mr Gaetano. The price paid to Mr Gaetano by the plaintiff for the work performed was fair and reasonable and was in addition to the payments which the plaintiff would have had to pay when arriving at the tender price of $154,000. The defendant did not suffer any loss or damage because if the plaintiff had not engaged a contractor to complete the work, the defendant would have had to engage a contractor to complete the work but would not have had to pay the builder’s 10 per cent for which the plaintiff did not charge the defendant on the value of his subcontractor’s work.”
I note that the Magistrate refers to potential ambiguity in Daymon’s original quote which arguably should have caused the defendant’s architect to recognise the need for “clarification” before the calling of tenders to which the plaintiff successfully responded. There appear to be overtones of mutual mistake in the Magistrate’s reasons. If this be so then his reasoning is understandable and capable of being supported in law. The Magistrate seems to have formed the view that there was a contract in existence on 7 August 1998 but not in respect of salt damp restoration above a height of 1.8 metres.
In my view it is unnecessary for the purposes of this appeal to go beyond the finding as to the lack of materiality in the representation (if that indeed is what the Magistrate found). The Magistrate’s decision is then correct insofar as His Honour rejects a claim based upon a misrepresentation. Upon the Magistrate’s findings a mistake had been made arising from loose specifications and from the way in which Daymon’s quote was first expressed. Enough was explained to the defendant so as to make the precise detail of his excuse or explanation for the plaintiff’s increase in price irrelevant. In my opinion, upon an objective assessment of the facts, the details of the plaintiff’s excuse for his price increase is not to be regarded as material to the defendant’s decision making. If the Magistrate has not made such a finding then I am prepared to do so.
The effect of s 37 of Building Work Contractors Act 1995 (SA)
The defendant seeks relief in reliance upon the Building Work Contractors Act s 37 and in particular subsection 6 which reads as follows:
“(6).. If, on an application under this section, the Magistrates Court is satisfied that there has been any breach of, or failure to perform or fulfil, a contract or warranty to which the proceedings relate, the Court may, subject to this section, make one or more of the following orders:
(a).... to the extent to which it is satisfied that it is practicable for the breach or failure to be remedied by the performance of building work - an order requiring the performance of remedial work;
(b) an order requiring the payment of an amount due under the contract or an order requiring the payment of an amount by way of compensation for the breach.”
The defendant asserts that there was breach of a statutory warranty. In this respect the defendant also points to s 32:
“32(2).. The following warranties on the part of the building work contractor are implied in every domestic building work contract:
(a).... a warranty that the building work will be performed in a proper manner to accepted trade standards and in accordance with the plans and specifications agreed to by the parties;
(b) a warranty that all materials to be supplied by the contractor for use in the building work will be good and proper;
...
(7). In proceedings for breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arose from instructions insisted on by the building owner contrary to the advice in writing of the defendant.”
It was the defendant’s case that driveway pavers (selected by the owner but below the thickness specified in the contract) were installed in breach of the statutory warranty and without any advice in writing being provided in accordance with ss (7) quoted above.
The short answer to this submission is that upon my reading of the evidence there was a variation in the contract arising from the owner’s selection of the undersize pavers. It was not the responsibility of the builder to measure the thickness of the pavers and to compare them with the contract. Subsection (7) is not applicable to this situation. Upon the evidence, it is apparently not the case that the pavers were found to be unsuitable for the purpose but only that they were below the nominal thickness specified.
The Magistrate disallowed the defendant’s claim upon this topic but for reasons different from those which I give. In my opinion, the Magistrate reaches his conclusion upon a basis which is wrong although in the result I agree with his immediate conclusion; I disagree with the Magistrate’s conclusions that the plaintiff has “technically breached the contract in laying pavers not of the thickness specified”. I consider that the contract was varied upon the initiative of the defendant owner when she made her own selection of pavers. I consider that the statutory warranty must then be applied to the specification as varied.
I note the Magistrate’s disposal of this topic:
“Mr Jenner pointed out that the specifications required a minimum thickness of 50 millimetres for the pavers and as the pavers were not of that thickness, there was a breach of contract. This submission overlooks the fact that the defendant selected the pavers although obviously the builder or the supplier of the pavers should have advised the defendant if she informed them of the purpose for which they were being laid, that the pavers selected were unsuitable for the purpose if that was the case.”
And:
“Mr Jenner submitted it was a clear breach of contract for the plaintiff to install pavers of less thickness than was in the specifications and the quantum of damages is the cost of replacing and relaying the pavers. However, this has already been undertaken on one occasion and I do not know the present situation of the pavers since the relaying. If the existing pavers are satisfactory, then it is obvious that to make an order for the plaintiff to perform the work again or to award the defendant damages, is not appropriate unless the relaying has failed or failed within the relevant statutory warranty period. Technically, the plaintiff has breached the contract in laying pavers which were not of the thickness specified but on the other hand the defendant selected the pavers she wanted although the plaintiff would have the duties that I have referred to earlier in these reasons. Furthermore, if there is a further problem with the pavers then it will be necessary to determine whether the problem is because of the pavers themselves or the manner in which they have been laid or whether the base has not been properly repaired.
At the moment, although there is technically a breach of one of the terms of the contract in that the pavers of 50 millimetres in depth were not laid, Mr Jenner argues that the defendant should not have to wait for a further problem with the pavers and rely upon her statutory warranties.
The defendant is in no worse position than any other person who has a similar contract. That person has not a cause of action unless and until it is apparent the work does not come up to the statutory warranty. If the paving is satisfactory for the purpose, namely the in going and out going of vehicles, the quantum of this head of damage is agreed at $3,000 being 60 square metres at $50 per square metre and it may be that is the appropriate remedy if the pavers once again have to be relaid. There is no evidence on this aspect as far as my notes are concerned.”
This is a case where the owner preferred a product which was below the nominal size originally specified but there was nothing in the owner’s selection which brought into play some over-riding responsibility so far as the builder was concerned.
Clauses 8.5 and 8.6 of the building contract
These clauses read as follows:
“8.5.. If possible, the price for the extra work shall be given to the Owner by the Builder before the extra work is started otherwise as soon as possible after it is available to the Builder.
8.6If a price is not agreed before the extra work is started, the Builder may proceed with the extra work requested or required and the price of the extra work shall be the actual cost to the Builder together with a percentage as stated in item D1 of the Schedule.”
(The stated percentage in the schedule is 10 per cent).
Relevantly, the Magistrate decided: (par 83 of his reasons)
“The concrete floor was a variation of the contract works in as much as a timber floor was replaced by concrete floor in certain rooms. Clauses 8.5 and 8.6 apply and on my reading of those clauses, whether the price for the extra work is given to the owner before work is started or is not agreed before the work is started, the builder is entitled to a percentage payment of ten per cent and ten per cent of $4,200 is $420. I allow that claim.”
My reading of the evidence is that the price in question was given before work was started and was agreed in the sum of $4200. The Magistrate made no finding on this topic but the facts appear from the following passage in the cross examination of the plaintiff. [T112-113]
“Q.... One of the items of damage that you seek in this court is what’s called a builder’s margin of ten per cent on one of the claims that you’ve maintained of $420 in respect of the concrete floor. That’s correct, isn’t it.
A.Yes.
Q...... The situation, as I understand your evidence from yesterday, in relation to that variation in the works was that you calculated both the cost of the works and the amount of the credit and received instructions to proceed having nominated a price to Mrs Jarvis after that price had been identified. Is that right.
A.Correct.
Q...... The nominated price was the $4,200 that you gave evidence about.
A.Yes.
...
Q.‘This contract may be varied by changes to the work.’ Clause 8.6: ‘If a price is not agreed before the extra work is started, the builder may proceed with the extra work requested or required and the price of the extra work requested or required and the price of the extra work shall be the actual cost to the builder together with a percentage as stated in item D1 of the Schedule.’ Do you see that clause.
A...... Yes.
...
Q...... What I’m putting to you is that the contract in Clause 8.6 provides for two scenarios. Firstly, you can have a situation where the price is agreed and then in Clause 8.6, if the price isn’t agreed and you proceed with the work, you can charge your actual cost plus a percentage.
A.Yes.
Q...... In this instance, the price was agreed before the work was commenced, wasn’t it.
A.I see, yes.”
I disagree with the Magistrate’s construction of the contract. In my opinion the issue is to be determined upon the basis that the price was agreed before the extra work was started. In my opinion the contract did not authorise any further percentage to be charged. Clause 8.6 requires a price to be established by reference to the “actual cost to the builder” together with an allowance based on the schedule. However, this method of fixing a price is only to be used where the price is not agreed in advance of the work being started.
In the absence of an agreed price the builder will be required to call evidence of the “actual cost to the builder” of the extra work. This exercise is not appropriate where (as in the present case) the amount is agreed in advance. In circumstances (if it be the case) where the builder is doing the work himself with employed workmen using the builder’s equipment there may be considerable room for debate as to the “actual cost the builder” of the extra work. This debate will be avoided if the price is agreed in advance. The two methods of fixing price require different evidence - in one instance, the terms of an agreement and in the other instance, proof of actual cost.
In my view, the appellant should succeed on this issue and $420 should be deducted from the amount awarded by the Magistrate.
The form of the Magistrate’s judgment
The defendant’s counterclaim was compromised in the sum of $8413. I am told by counsel that this amount represents “concessions” made by the plaintiff prior to and during the trial.
Counsel provided me with a useful table which showed the manner in which the judgment sum had been calculated together with the adjustments which would be made if the defendant as appellant were wholly successful upon appeal. The table speaks for itself as follows:
| Judgment | On Appeal | |
| Plaintiff’s Claim | ||
| 1. Balance of contract sum - allowed in judgment - para 84 | $10,000 | $ 0 |
| 2. The Prime Cost items initially claimed by the plaintiff. This sum should be included in full in the calculation if there is to be judgment on the counterclaim of $8,413. | $ 4,724 | $ 4,724 |
| 3. Item 6.1 amended claim 28/3/00-settled and quantum agreed | $ 470 | $ 470 |
| 4. Item 6.2 amended claim 28/3/00-settled and quantum agreed | $ 1,004 | $ 1,004 |
| 5. Item 6.3 allowed in judgment-para 84 | $ 420 | $ 0 |
| Sub-total | $16,618 | $ 6,198 |
| 6. Deduction in accordance with judgment-para 84 | $ 2,500 | $ 0 |
| Balance | $14,118 | $ 6,198 |
| Defendant’s Claim | ||
| 7. Concessions made by the plaintiff in the settlement of issues in the defendant’s counterclaim | $ 8,413 | $ 8,413 |
| 8. Net Contract increase (if $10,000 claim is disallowed) | $ 0 | $ 4,700 |
| 9. Paving | $ 0 | $ 3,000 |
| To plaintiff | To defendant | |
| Net figure | $ 5,705 | $16,113 |
| Interest | $ 950 | $ 3,299 |
| Payable | $ 6,655 | $13,214 |
In my opinion the way in which judgment should be entered depends upon the terms of the compromise. The defendant was entitled to have credit at least by way of set off in respect of the so called concessions but in the absence of formal proof of the counterclaim, the defendant could only secure a judgment upon the counterclaim if the agreement by way of compromise so provided. Moreover, the question of costs upon the counterclaim might depend upon the agreement. In the present case there is no evidence which would justify the entry of judgment upon the counterclaim. The position would be otherwise if the defendant had succeeded upon her counterclaim for $14700 as dealt with in par 2 of my reasons.
In my view the defendant is not now entitled to complain as the form of the judgment. There is a sum of $2500 deducted in accordance with par 84 of the Magistrate’s reasons. The parties are content with that deduction in respect of a contingency sum which was not required. I have not been required to analyse the justification for this adjustment.
The Magistrate’s discretion as to costs
This point should be considered in conjunction with the previous par 5 of my reasons (dealing with the form of the judgment).
The Magistrate gave reasons on 17 October 2000 with respect to his decision as to costs. I note that the Magistrate formally then dealt with the counterclaim in the following terms: (par 5)
“In addition, I do not propose to give the defendant any judgment on the counterclaim because the counterclaim had been settled. I simply dismiss the counterclaim without costs.”
It is apparent from the Magistrate’s reasons that despite the compromise, he treated himself as having some general control over the claim with respect to the concessions. Although the Magistrate records that “the counterclaim had been settled”, I question whether this compromise extended to all matters raised in the counterclaim. The alleged misrepresentation was raised by the counterclaim and that has remained as a live issue. However, as the defendant fails upon the misrepresentation issue, it does not appear that she now has any justifiable complaint as to the way in which the Magistrate dealt with costs as they may have affected the misrepresentation issue.
The Magistrate decided that: (pars 3 & 4)
“I think a fair way of exercising my discretion on cost, is to deduct two per cent from the plaintiff’s four per cent in the item ‘Preparation for the trial.’ There is force in Mr Jenner’s argument that the defendant should be given credit for settling certain matters before the trial and the plaintiff also should be given credit by not having to pay the defendant’s costs of the counterclaim.
I therefore order that the plaintiff, on the item ‘Preparation of trial’, should receive two per cent of the amount allowed instead of four per cent allowed on the scale as there are obviously other matters in issue which had to be prepared for trial beside the matters raised in the counterclaim. The issues debated at the trial in the defence, were decided in favour of the plaintiff.”
Some criticism was made of minor errors in the Magistrate’s recital of facts in assessing costs. The Magistrate assumed that the trial began on 4 April 2000 and that the compromise was made six days before trial. In fact the record shows that the hearing dates were 27 - 31 March, 3 - 4 April and 1 - 2 August 2000. I consider that there is insufficient established to justify me in interfering with the Magistrate’s exercise of his discretion as to costs.
Formal Order
For these reasons the appeal will be allowed for the purpose of giving credit to the appellant as defendant for the sum of $420 mentioned in par 4 of these reasons. In all other respects the appeal should be dismissed.
I will hear the parties as to the consequential formal order which is required to give effect to the proposed allowance of $420 in favour of the appellant. I will hear the parties as to costs of the appeal.
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