Kocakahya v Cutting Edge Fabrication Pty Ltd
[2020] ACTMC 10
•12 May 2020
MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Kocakahya v Cutting Edge Fabrication Pty Ltd |
Citation: | [2020] ACTMC 10 |
Hearing Dates: | 14 – 15 March 2019, 12 August 2019 |
DecisionDate: | 12 May 2020 |
Before: | Magistrate Morrison |
Decision: | See paragraph [196] |
Catchwords: | CIVIL LAW – BUILDING, ENGINEERING AND RELATED CONTRACTS – scope of work to be performed under the contract – whether contract was to provide “operational restaurant fit-out” – whether contract included an agreement to supply and install mechanical exhaust systems CIVIL LAW – CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – offer and acceptance – whether purported acceptance is in fact a counter-offer – test to be applied CIVIL LAW – CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – discharge, breach and defences to action for breach – whether defendant was in breach of the contract – prevention principle – whether delays to building work caused by plaintiff |
Legislation Cited: | Court Procedures Rules 2006 (ACT) rr 6700, 6701 |
Cases Cited: | Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401 Maple Leaf Macro Volatility Master Fund v Rouvroy [2009] 1 Lloyd’s Rep 475 Mooney v Williams [1905] HCA 34; 3 CLR 1 Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No 2) [2012] WASCA 53; 287 ALR 360 |
Texts Cited: | J D Heydon, Heydon on Contract: The General Part (Lawbook, 2019) J W Carter, Contract Law in Australia (LexisNexis Butterworths, 7th ed, 2018) |
Parties: | Mustafa Guner Kocakahya (Plaintiff) Cutting Edge Fabrication Pty Ltd (Defendant) |
Representation: | Counsel W Sharwood (Plaintiff) J E Hartley (Defendant) |
| Solicitors Aulich Civil Law (Plaintiff) Lexicon Lawyers (Defendant) | |
File Number: | CS 84 of 2017 |
MAGISTRATE MORRISON:
Introduction
These proceedings commenced by way of an originating claim filed on 16 May 2017. At its core, the case arises out of a dispute between the plaintiff and the defendant as to the terms of a contract. A contract for the completion of a shop fit-out was entered into by the parties on 20 August 2016. The plaintiff engaged the defendant, a company, to provide the fit-out works.
The plaintiff alleges that it was an essential term of the contract that the work was to be completed by 26 September 2016. In fact, the fit-out works were ultimately completed by a third party on 5 January 2017, and the plaintiff commenced trading shortly thereafter.
The plaintiff claims damages for breach of contract due to the defendant’s failure to complete the works by 26 September 2016 and a separate order for restitution in the sum of $85,000.00. The sum of $85,000.00 reflects an amount paid by the plaintiff to the defendant in August 2016 by way of a deposit on the contract.[1]
Background
Procedural history
[1] Plaintiff’s written submissions filed 9 October 2019, [4].
I start by way of providing a brief outline of certain elements of this matter’s procedural history.
The plaintiff filed an amended originating claim on 27 June 2018. At that stage, proceedings were brought against five defendants: the current sole defendant to these proceedings (originally the third defendant) and four other parties. The first, second, and third defendants, as they then were, filed an amended defence and counterclaim on 4 July 2018, by which they counterclaimed against the fourth and fifth defendants.
On 17 July 2018, a deputy registrar of this Court made consent orders that the parties were to file and serve evidence upon which they intended to rely in advance of the hearing. Those orders were expressed to be pursuant to r 6701(1) of the Court Procedures Rules 2006 (ACT), which relates to the giving of evidence in a proceeding commenced by originating claim by way of affidavit rather than oral testimony.[2] Those orders should not have been made. Be that as it may, the result was that evidence was led at the hearing in part by way of affidavit.
[2] This is contrary to the default position provided for by r 6700 of the Court Procedures Rules 2006 (ACT).
The hearing commenced before me on 14 March 2019. The parties were granted a delayed start in order to engage in negotiations to narrow the scope of the issues in dispute. At the resumption of the hearing in the afternoon of 14 March 2019, the parties handed up the following documents:
(a)an amended originating claim filed on 27 June 2018;
(b)an amended statement of claim filed on 27 June 2018; and
(c)an amended defence and counterclaim filed on 4 July 2018.
Each of those documents were marked up with red pen such that several paragraphs, or parts thereof, were struck through. The documents were marked as annexures “A”, “B”, and “C” in the order that they appear above.
Following receipt of these documents, I made the following consent orders:
1.By reference to Annexures A, B, and C, the parts which are “struck through” are dismissed.
2.The plaintiff’s proceedings against the first, second, fourth, and fifth defendants are dismissed.
3.The first, second, and third defendants’ counterclaim against the fourth and fifth defendants is dismissed.
4. All parties are to bear their own costs.
5.The plaintiff’s claim against the third defendant proceed to hearing on the basis that the documents marked A, B, and C represent the final amended pleadings.[3]
[3] Transcript 14 March 2019, 10.41-46.
The result was that claims against four out five defendants fell away, and the core of the dispute was agreed to be the claims, referred to above, for breach of contract and restitution against Cutting Edge Fabrication Pty Ltd.
Factual background
What is set out below by way of background is largely not in dispute.
In May 2016, the plaintiff, Mr Mustafa Guner Kocakahya, entered negotiations with Worth Street Pty Ltd for the lease of premises at Casey Market Town (“the Premises”). Casey Market Town is a shopping centre in the suburb of Casey in the Australian Capital Territory (ACT). I refer to Casey Market Town in these reasons as “the Centre”. Mr Kocakahya negotiated directly with Ms Brianna Nix, who was at the time the Lessor Manager of the Centre. Mr Kocakahya’s intention was to open a Turkish restaurant at the Premises. The plaintiff signed a letter of offer and paid a deposit on 26 May 2016.
The plaintiff obtained a quote on 11 June 2016 from Mr Erhan Karacate in relation to the cost of the fit-out. It appears that Mr Kocakahya was dissatisfied with the quoted cost of the works and wished to obtain a second quote. To this end, he was referred to Mr Feramuz Arslan. The plaintiff alleges that a first meeting occurred between the plaintiff and Mr Feramuz Arslan in June 2016.
On 5 July 2016, the plaintiff entered into a Deed of Agreement for Lease (the “Deed”) and a Sublease of the Premises. The relevant terms of the Deed are as follows.
1.1 Definitions
In this Deed the following expressions have the following meanings:
…
Handover means handover of the Premises from the Owner to the Tenant to allow the tenant to occupy the Premises under the Lease.
Handover Date means the date that the Owner effects Handover under clause 4.1.
Incentive means the payment of $60,000 plus GST by the Owner to the Tenant in accordance with clause 5.
…
Rent Commencement Date is as defined in clause 2.3.
…
2.2 Commencement Date of Lease
The Commencement Date will be the Handover Date.
2.3 Rent Commencement Date
Notwithstanding any other provision of the Lease to the contrary, the Rent Commencement Date will be the date that is two months and 6 weeks after the Commencement Date.
5. INCENTIVE
5.1 Conditions
For good and valuable consideration and subject to the Tenant complying with this Deed and the Lease in all material respects, including (but not limited to):
(a) …
(b)completing the Fit Out Works to the Owner’s satisfaction (acting reasonably) within 6 weeks from the Handover Date;
(c)…
(d)the satisfactory performance by the Tenant of its obligations under the Lease,
the Owner agrees and covenants to reimburse the tenant’s cost of the Tenant’s Fit Out Works up to a maximum of $60,000 plus GST (‘Incentive’) which will be paid in accordance with clause 5.2 provided the Tenant has:
(i)…
(ii)provided the Owner with a copy of all relevant invoices from the Tenant’s shopfitters made out to the Tenant specifying in a schedule, in such details as may be reasonably required by the Owner, the plant and equipment and related works supplied as a part of the Tenant’s Fit Out Works to the extent of the value of the Incentive, and the Owner is satisfied as to the veracity of the invoices;
(iii)completed the Tenant’s Fit Out Works to the Owner’s reasonable satisfaction including all variations requested by the Owner having been carried out and defects rectified;
(iv)provided to the Owner such evidence as may be reasonably required by the Owner to show that the Tenant has paid the Tenant’s shopfitters, and any other contractors, for all of the Tenant’s Fit Out Works;
(v)opened the Tenant’s business and it is fully operational;
(vi)obtained a certificate of occupancy and all necessary approvals for the lawful use of the Premises for the Permitted Use;
(vii)has paid to the Owner all payment required under this deed; and
(viii)is not in breach of this Deed and where the Lease has commenced, the Lease.
There is some discrepancy between the dates particularised in the Deed and the earlier letter of offer signed by the plaintiff but nothing turns on that for present purposes. The parties accept that the Handover Date was 15 August 2016, such that the end date of the fit-out period was 26 September 2016.
On 16 July 2016, the plaintiff met again with Mr Feramuz Arslan and his son, Mr Ferdi Arslan, who is the director and sole shareholder of the defendant company. Without intending any disrespect, I will refer to Messrs Arslan by their given names so as to distinguish between them. This meeting occurred in Auburn, New South Wales. Ferdi told the plaintiff at this meeting that he was not licenced to build in the ACT, and that a person with such a licence would have to be engaged. Ferdi said he would arrange for another company – BuildCo Projects Pty Ltd (“BuildCo”) – to undertake the relevant building work for these purposes.
The defendant referred the plaintiff to Mr Gunay Izci, an architect, for the purpose of preparing plans for the fit-out works. The plaintiff contracted Mr Izci to draw up the plans. Mr Izci sent those plans by email to the plaintiff and others, including Mr Timothy Hunter who was the architect for the Centre, on 2 August 2016.
On 18 August 2016, BuildCo provided the defendant with a quote for the fit-out works. The amount of that quote was $97,488.00. On 20 August 2016, the defendant provided the plaintiff with a quote for the fit-out works for the sum of $195,900.00, which included the amount quoted to the defendant by BuildCo. The plaintiff accepted this quote by telephone. The defendant says that this was the date on which the contract was formed, although the precise details of what was said during the telephone conversation are in dispute.[4] In particular, the plaintiff alleges that it was an essential term of the contract that the defendant was required to complete the fit-out works by 26 September 2016. The existence of such a term is disputed by the defendant. The exact scope of the works to be completed by the defendant are also in dispute.
[4] Defendant’s written submissions filed 14 November 2019, [14]; Transcript 14 March 2019, 28.43-46.
The plaintiff paid to the defendant a deposit of $85,000.00 on 22 August 2016.
The fit-out was not completed by 26 September 2016. The defendant asserts that around early September 2016, an issue arose regarding the installation of a mechanical exhaust system, which required certain alterations to be made to various aspects of the fit-out works. This issue was not, according to the defendant, resolved until “Christmas, 2016”.[5]
[5] Defendant’s written submissions filed 14 November 2019, [15].
On 27 October 2016, Mr Dusan “Danny” Trifunovic, the director of BuildCo, emailed the ACT Planning and Development Authority to, in effect, withdraw BuildCo from the project.
On 7 November 2016, the plaintiff hired Mr Karacate and his company to complete the fit-out. The fit-out was completed on 5 January 2017 and the plaintiff was able to commence trading by 7 January 2017.[6]
[6] Plaintiff’s written submissions filed 9 October 2019, [19].
The plaintiff alleges the following:[7]
(a)The plaintiff commenced trading over 14 weeks later than he anticipated due to the defendant’s failure to complete the fit-out works before 26 September 2016;
(b)The plaintiff had to pay a number of contractors who had not been paid by the defendant;
(c)The plaintiff was charged rent from 26 November 2016 at the rate of $4,216.67 per month, and outgoings at $843.33 per month;
(d)The plaintiff’s profit and loss statements for his first three months of trading show an average profit of $2,000.00 per week, but the actual amount is in fact more than that.
[7] Plaintiff’s written submissions filed 9 October 2019, [20] – [23].
At my direction, the parties devised an agreed list of issues in dispute prior to filing their written submissions. I set out those issues below.
1.Is there a contract between the Plaintiff and the Defendant relating to work to be done at the premises?
2.If so:
(1)what is the work that was to be done by the Defendant?;
(2)was it a term of the contract that the work would be completed by 26 September 2016?;
(3)was the work the subject of the contract completed by 26 September 2016?;
(4)is the Defendant in breach of the contract?; and
(5)if yes to [2(4)], what are the Plaintiff’s damages?
3.Do the circumstances entitle the Plaintiff to an Order for restitution of the sum of $85,000.00
I note that insofar as issue 1 is concerned, the fact that a contract existed is conceded by the defendant.[8]
The evidence
[8] Defendant’s written submissions filed 14 November 2019, [6].
As I noted earlier, the way the evidence of witnesses was given at the hearing was partly by way of affidavit along with some further oral examination-in-chief and cross-examination. Evidence was received from six witnesses. In the plaintiff’s case, evidence was given by Mr Karacate, the plaintiff, Mr Tayfun Yildirim, and Ms Nix. In the defendant’s case, both Feramuz and Ferdi gave evidence. I limit what is set out in the summary which follows to the evidence which is most material.
Mr Erhan Karacate
Mr Karacate gave evidence on 14 March 2019. He is a qualified shopfitter with approximately 20 years’ experience.[9] Mr Karacate was approached in around May 2016 by the plaintiff and asked to provide a quote for the shop fit-out at the Premises. The plaintiff and Mr Karacate met again in early June 2016, at which point Mr Karacate agreed to provide the plaintiff with a quote. On 11 June, Mr Karacate provided a quote via text message of $198,000.00 excluding GST. That quote was not accepted.[10]
[9] Affidavit of Erhan Karacate affirmed 28 January 2019, [2] – [3].
[10] Affidavit of Erhan Karacate affirmed 28 January 2019, [5] – [8].
After the dispute with the defendant arose, the plaintiff contacted Mr Karacate again and asked him to do what needed to be done to complete the fit-out to enable him to open his restaurant.
Mr Karacate gave evidence about the state of the premises, what work was required of him to complete the fit-out, the cost of the work, and the completion date.
The cross-examination of Mr Karacate included questions about the extent of mechanical ventilation works included in his quote.
Mr Mustafa Kocakahya
The plaintiff was born in Turkey and emigrated to Australia in 2009 at the age of 23. His middle name is Gunes, but it is misspelt as “Guner” on his birth certificate. He is referred to by others as “Gunes”.
In early 2016, the plaintiff entered negotiations with representatives of the Centre to lease premises for the purpose of opening a Turkish restaurant. On 23 May 2016, he signed a letter of offer and paid a deposit for the Premises.[11]
[11] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [2] – [6].
After receiving the quote from Mr Karacate, a friend of the plaintiff recommended that he contact Feramuz with a view to obtaining a second quote. The plaintiff states in his affidavit that he had a conversation by telephone with Feramuz during which they arranged to meet in Auburn, New South Wales to discuss the fit-out. The plaintiff also states that during this conversation, Feramuz recommended that the plaintiff contact the architect, Mr Gunay Izci. The plaintiff states that he contacted Mr Izci during June 2016.[12]
[12] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [11] – [12].
In early June 2016, the plaintiff met with Feramuz in Auburn. He states that during that meeting, the following exchange took place:[13]
At the meeting I said words to the effect:
“I need a fit out for my shop at Casey. I have plans for the premises and I have been given a quote of $198,000 plus GST for the fit out. Can you do the fit out for me and how much would it cost?
In response to this, [Feramuz] said words to me to the effect:
“We can complete the works for you for a cheaper price. Me and my son do shop fit outs.”
[13] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [13].
The plaintiff entered into the Deed on 5 July 2016.
The plaintiff met Feramuz again in Auburn on about 16 July 2016. Ferdi was also present at this meeting. The plaintiff states that at that meeting he said to both father and son words to the following effect:
“I am opening a Turkish restaurant at Casey and I need a fit out for the shop. I have plans for the shop and I need a fit out built for the plans. Can you do the fit out and how much would it cost? I have signed an agreement with the landlord and I have to get the fit out done in six weeks.
I think the handover date will be around the middle of August.”
In response to this [Feramuz] said words to the effect:
“Me and my son can do it. We do these jobs together.”
[Ferdi] then said words to the effect:
“Yes we can do the fit out and I think it will cost around $150,000 plus GST.”
[Ferdi] also said words to the effect:
“We don’t hold a builders licence in the ACT and we will need to get someone else to help. We usually do this kind of work with our builder friend Danny.”
I said words to the effect:
“I need the work done in six weeks, can you do it in six weeks?”
[Feramuz] said words to the effect:
“We can finish it in six weeks.” [14]
[14] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [17].
In early August 2016, the plaintiff said that he spoke with Feramuz and Ferdi by phone a number of times. On these occasions, he said the following conversation was had:
“The handover date is coming up, once I get the shop handed over I will have to finish it in six weeks. Are you sure you can do it in six weeks”
In response to this [Feramuz] said words to the effect:
“Yes, me and my son can do it. We can finish it in six weeks”
[Ferdi] said words to the effect:
“We can finish it in six weeks”. [15]
[15] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [20].
The plaintiff received an email from Ms Nix on 12 August 2016, attaching a handover notice which apparently provided that the fit-out of the shop was to be completed by 26 September 2016. The plaintiff formally entered into the sublease for the Premises on 15 August 2016. That same day, Ferdi and Danny inspected the Premises. The plaintiff states that he said to both men:
“I need the fit out finished in 6 weeks by 26 September 2016 because of the contract I signed with the landlord, can you do that? I need to start trading as soon as the fit out in [sic] finished.”
In response [Danny] said words to the effect:
“I am a professional, I can complete the job on time.” [16]
[16] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [22].
The plaintiff sent an email to Ferdi attaching the handover notice, and, on 18 August 2016, said that he again sought and received assurances from Ferdi that the work could be completed in six weeks.[17]
[17] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [25].
The plaintiff received a quote from the defendant on 20 August 2016. The plaintiff states that he was with his brother-in-law, Mr Tayfun Yildirim, when he called Ferdi by phone that same day and told him that he would accept the quote so long as the work would be completed by 26 September 2016. He says that Ferdi said, “That should be fine but I will check with Danny and call you back.” The plaintiff subsequently received a telephone call from Ferdi, during which Ferdi is alleged to have said, “Danny said that’s fine, no problem. Danny will be sending someone to Canberra in a week or so. Don’t worry, we’ll finish it in six weeks”.[18] The plaintiff paid the $85,000.00 deposit on 22 August 2016.
[18] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [28].
On 9 October 2016, the plaintiff sent a text message to Ferdi noting what he observed to be very little of the works at the Premises having been completed. The plaintiff was made aware by email on 27 October 2016 that BuildCo had withdrawn from the project. On 31 October 2016, the plaintiff engaged Mr Karacate to complete the fit-out works. When he inspected the premises, the plaintiff states that Mr Karacate observed, “There is very little done here. I will need 6 to 8 weeks to do the work because so little has been done”.[19]
[19] Affidavit of Mustafa Guner Kocakahya affirmed on 16 August 2018, [35].
In a subsequent affidavit affirmed 16 January 2019, the plaintiff provided evidence in relation to his understanding of what was required in terms of work on the air conditioning and exhaust systems at the Premises.
The plaintiff says that he understood that he was required to install air conditioning and exhaust systems at the Premises. He says that he asked Ferdi if he could install these systems as part of the fit-out. According to the plaintiff’s evidence, Ferdi said, “Yes we can, but the work will be quoted separately because we have to find a contractor”.[20]
[20] Affidavit of Mustafa Guner Kocakahya affirmed on 16 January 2019, [13].
On 19 August 2016, he says that he forwarded an email to Ferdi which contained several enclosures. One enclosure was the Centre’s fit-out guide, which provided that air conditioning and exhaust systems were to be paid for and installed by the plaintiff.
The plaintiff says that when he received the quote from the defendant on 20 August 2016 he didn’t feel worried at the fact that the quote did not mention the air conditioning and exhaust systems “because I understood, from prior conversations and correspondence … (including my email to [Ferdi] on 19 August 2016), this would be quoted separately”.[21]
[21] Affidavit of Mustafa Guner Kocakahya affirmed on 16 January 2019, [19].
The plaintiff says that on 5 September 2016, he received an email from Danny containing a sketch of where air conditioning and exhaust systems could be installed. He understood the sketch to have been prepared by a third company, Infinity HVAC Services Pty Ltd. These, and other documents, were forwarded to the Centre’s architect, Mr Hunter. On 8 September, Mr Hunter sent the plaintiff an email which raised issues in relation to the installation of the air conditioning and exhaust systems. The plaintiff forwarded this email to Danny.
Around this time, Ms Nix recommended to the plaintiff that he use a company referred to only as “Benmax” to install the air conditioning and exhaust systems. This was discussed with Danny and a quote was obtained on 27 September 2016. The plaintiff considered that the quote was too high, and, on 29 September 2016, contacted Mr Michael King of “King Air” to arrange for the installation of the air conditioning and exhaust systems. An agreement was reached that Mr King would complete the installation work.[22]
[22] Affidavit of Mustafa Guner Kocakahya affirmed on 16 January 2019, [20] – [28] (not including those parts not read).
The cross-examination of the plaintiff commenced on 15 March 2019.
The plaintiff was asked about the meeting with Feramuz and Ferdi in July 2016. He accepted that it was the first time that he had met Ferdi, that Ferdi had told him that he was not licenced to build in Canberra, that he would obtain a quote from a builder who was licenced to do the work, and that the job might cost $150,000.00 or a little bit more.[23]
[23] Transcript of Proceedings, 15 March 2019, 70.13.
It was suggested to the plaintiff that Feramuz did not say at this meeting that they could finish the work in six weeks. The plaintiff rejected this. He accepted that Ferdi had only just seen the bare plans of the shop, but said, “Yes, but this kind of shop takes six weeks”. The plaintiff also accepted that Danny had not yet seen the plans, the fit-out guide, and nor had he inspected the Premises. He accepted that before any contract could be entered into, it would have been necessary for the defendant to contact another builder who could do work in the ACT.
The plaintiff’s attention was drawn to answers that he provided to interrogatories forming part of an affidavit affirmed by him on 13 February 2018. It was put to him that where he was asked to describe the scope of his communication with Feramuz, he did not mention that Feramuz had said the work would take six weeks to complete. The plaintiff accepted that he had not done so but rejected a proposition that the omission was because Feramuz had not said that. He similarly rejected a proposition that he didn’t mention anything about “six weeks” in his answer about the meeting at the coffee shop in July 2016 because he had not been told the work could be completed in that time.[24]
[24] Transcript of Proceedings, 15 March 2019, 75.28.
Cross-examination then moved to the plaintiff’s discussion with Ferdi on 20 August 2016 after receiving the quote. In the interrogatories, the plaintiff said that during that conversation he stressed the completion date of 26 September 2016, and that shortly later Ferdi called him back after speaking with Danny to confirm that was fine. The plaintiff accepted that he referred specifically to the date, 26 September 2016, in the interrogatories, rather than to a period of “six weeks”. However, he said that he could not recall the exact words that he would have used during that conversation. He further conceded that by that point, the period would have been closer to five than six weeks, such that it was unlikely that he would have said “six weeks”.
It was put to the plaintiff that it was equally unlikely that, as at 20 August 2016, Ferdi would have said the job could be done in “six weeks”. The plaintiff conceded this point, but stated, “I don’t remember he says six weeks or 26 September, but he said, ‘I could have done the job for you by that time’”.[25]
[25] Transcript of Proceedings, 15 March 2019, 80.27-29.
Importantly, the plaintiff also accepted that, rather than telling Ferdi that he accepted the quote so long as the work could be done by 26 September 2016 (or within six weeks), it would have been more likely that he said words to Ferdi to the effect, “I accept the quote. Can you do it by 26 September?”.
The plaintiff was then asked about Ferdi’s response. What followed was a somewhat confusing exchange, but the effect of it, as I understood the evidence, was that the plaintiff said it was probably incorrect to say in his affidavit that Ferdi had said words to the effect, “I will check with Danny and call you back”.[26] He said that Ferdi “could have told me this, but exact words, I don’t remember”. The plaintiff said that what he did remember was “calling him, talking about the prices, instalments. They called me back, said, ‘Okay. That’s fine. All right’”.[27]
[26] Transcript of Proceedings, 15 March 2019, 81.45.
[27] Transcript of Proceedings, 15 March 2019, 82.38-40.
Cross-examination moved to the topic of the ventilation system. The plaintiff accepted that the defendant’s quote did not include mechanical exhaust system works. The plaintiff accepted that on 6 September 2016, he received an email from Danny asking him to forward a sketch to Ms Nix for approval. In the same email chain was an email from Infinity HVAC to Danny. The plaintiff accepted that at the time he understood that Infinity HVAC did work relating to mechanical systems.[28]
[28] Transcript of Proceedings, 15 March 2019, 88.18-19.
That email from Danny was forwarded to Mr Hunter, the Centre’s architect, and Mr Hunter replied to the plaintiff with some questions. The plaintiff forwarded that email to Danny and asked him to review those questions. Danny responded that he had “no comments”. What was contained in the email from the Centre included a statement from a Mr Richard Forman, a site manager, providing, “We need to have a mechanical consultant review the current mechanical capability”.
The plaintiff said that he spoke to Ms Nix, who recommended that he use Benmax instead of Infinity HVAC for the installation of mechanical systems. The plaintiff said he accepted that recommendation and conveyed this to Danny who organised a meeting to occur at the Premises on 20 September 2016. On that same day, the plaintiff and Danny received an email from Mr Robert Brozic of Benmax which identified some changes that were required with the mechanical plans.
The plaintiff was referred to an email from Danny to Ferdi which appears to have been sent around the same time, in which Danny states that the walls and the oven would need to be moved, and some tiling work would need to be redone as a result. The plaintiff said that he was aware of that email, and that he was further aware that the work was redone as a result of the changes that were recommended by Benmax.[29] The emails were marked as Exhibit D1.
[29] Transcript of Proceedings, 15 March 2019, 90.12-19.
The plaintiff received a quote from Benmax on 27 September 2016, which he considered to be too high. As a result, he contacted Mr King from King Air to provide a quote. On 5 October 2016, the plaintiff contacted Mr Izci to draw new plans as a result of the alterations that would have to be made to the (distinct) mechanical plans. The plaintiff received those new plans on 10 October 2016.
The plaintiff accepted that he must have provided Mr King with the plans after 10 October 2016.
The plaintiff thought that the King Air work was finished sometime between late November 2016 and Christmas that year. [30]
Mr Tayfun Yildirim
[30] Transcript of Proceedings, 15 March 2019, 41.
Mr Yildirim is the brother-in-law of the plaintiff. He states in his affidavit that he was with the plaintiff on 20 August 2016 when the plaintiff received a quote from the defendant. He states that the plaintiff said words to the following effect: “I am going to call Fred [Ferdi] and make sure they can do it in six weeks”. Mr Yildirim then states that he observed the plaintiff make a phone call. This appears to have happened while the plaintiff and Mr Yildirim were sitting in a car in Casey.[31] He said that during that call, he observed the following to take place:
[31] Transcript of Proceedings, 15 March 2019, 106.26.
[The plaintiff] said words to the effect:
“Hi Ferdi Abi. I got the quote from you, I’m happy with it, I accept it as long as you can do it in six weeks.”
I observed the plaintiff pause. The plaintiff then said words to the effect:
“I can send you guys $85,000.00 now so that you can get started. I will get $60,000.00 incentive from the centre after the shop is finished, so I will give that to you when I get it and then I can pay the remainder off in instalments. But I will send you $85,000.00 now so you guys have enough and can get going.”
I observed the plaintiff pause again and the plaintiff then said words to the effect:
“You guys can have the shop done by 26 September, yeah? Because the Centre has given me until 26 September to finish the fitout and the shop has already been handed to me.”
I then observed the plaintiff pause and say words to the effect:
“Thank you Ferdi Abi.”
Later that same day, Mr Yildirim said that the plaintiff received a phone call. Mr Yildirim states that he saw the plaintiff answer the phone and say, “Hi Ferdi Abi, how did you go?”. After the phone call had ended, Mr Yildirim states that he asked the plaintiff to tell him what had happened. He states that the plaintiff responded by saying, “He said that Danny said that’s fine, no problem. He said Danny will be sending someone to Canberra in a week or so”.[32]
[32] Affidavit of Tayfun Yildirim affirmed 16 August 2019, [10], [12].
The cross-examination of Mr Yildirim took place on 15 August 2019.
Mr Yildirim was asked questions in cross-examination about the reliability of his memory. He said that he only became aware of “the court case” when he was approached and asked to make an affidavit. He accepted that by the time he came to make his affidavit in August 2018, the events he described therein had occurred two years prior in August 2016.[33] When he was asked whether he would agree with a proposition that it would be difficult to remember the exact words used during the course of the conversations which appear in his affidavit, he said, “The exact words, but I was most of it – like I’ve got a pretty good memory”.[34] He further said that he remember the “main points” of the conversation.
[33] Transcript of Proceedings, 15 March 2019, 104.18-19.
[34] Transcript of Proceedings, 15 March 2019, 104.43-45.
For convenience, I record here that I doubt that Mr Yildirim’s memory of precisely what took place in the exchanges about which he gave evidence is as good as he suggests. In addition, he left me with the impression that he saw his role as assisting the plaintiff’s case, as demonstrated by his reluctance to make what were common-sense concessions which ought to have been made. I have not had regard to his evidence.
Feramuz Arslan
Feramuz said that he was contacted by the plaintiff in or around June 2016. He said that they made plans to meet in or around mid-July 2016 in Auburn at a coffee shop. At the meeting, Feramuz told the plaintiff that he did not do fit-outs, but his son did. He further noted that his son did not have a builder’s licence in the ACT. Feramuz said that, following statements by the plaintiff as to the urgency with which he needed a shopfitter, he called Ferdi. It appears from his affidavit that Ferdi joined them at that first meeting. Feramuz said that the plaintiff requested that Ferdi provide him with a quotation for the works. He said that Ferdi told the plaintiff that he would be unable to do the works for the plaintiff, but that he would provide the plans to someone with a view to that person providing a quote.[35] Feramuz said that his son left thereafter, and he and the plaintiff went to his (Feramuz’s) house for coffee.
[35] Affidavit of Feramuz Arslan affirmed 24 January 2019, [7] – [12].
Feramuz said that, contrary to the plaintiff’s evidence, he did not meet with the plaintiff following the meeting in mid-July. He also said that he did not make the representations attributed to him in the plaintiff’s evidence as summarised at paragraph [37] of these reasons. He also denied sending the plaintiff a text message on 9 December 2019.
The cross-examination of Feramuz commenced on 15 March 2019. His evidence was given with the aid of an interpreter in the Turkish language.
In cross-examination, Feramuz appeared to concede that the first meeting with the plaintiff occurred (contrary to what appears in his affidavit) at Ferdi’s workshop without Ferdi in attendance.
Feramuz was asked whether, when he was approached by the plaintiff, he understood that the plaintiff had signed a contract and would soon have possession of the premises. Feramuz said that he did understand that. When asked whether the plaintiff told Feramuz that he had six weeks to complete the fit-out, Feramuz said that the plaintiff did not mention anything about six weeks, rather “[h]e asked when would it finish, would it be finished by”.[36]
[36] Transcript 15 March 2019, 130.22-30.
Feramuz was asked if the plaintiff showed him plans at the first meeting. He said that had occurred. He was also asked if there had ever been a later meeting between Feramuz, the plaintiff and Mr Izci. Feramuz said that no such meeting had occurred. He said that after the initial meeting with the plaintiff he told Ferdi about the job. He says he did not convey to Ferdi that the plaintiff had identified the work as urgent.
Feramuz was asked whether, at the second meeting, he had been told by the plaintiff that the plaintiff would get possession of the Premises in mid-August. Feramuz said that the plaintiff did not mention this to him, and that the plaintiff usually spoke with Ferdi about those matters. He accepted that the conversation at the coffee shop with Ferdi was had in Turkish. However, he rejected suggestions that the plaintiff had emphasised he only had six weeks to complete the job, and that he (Feramuz) had told the plaintiff that they could finish the work in six weeks.
Feramuz was asked whether the plaintiff, when talking to him about the fit-out, was always quite anxious to have the fit-out completed. Feramuz stated that the plaintiff was not that way to him, “maybe to my son, because I’m not the person who gave the quote”.
Ferdi Arslan
Ferdi is the sole director and shareholder of the defendant company.
Early discussions with the plaintiff and with Danny
Ferdi was told in June 2016 that the plaintiff had approached his father in relation to conducting fit-out works. In early July 2016, the plaintiff called Ferdi. Ferdi told the plaintiff that he was not licenced in the ACT, so could not do the fit-out work for him. Nevertheless, they arranged to meet in Sydney so that the plaintiff could show Ferdi the plans and so that they could discuss the work required. Ferdi said that he had in mind to contact builders he knew to see if they were licenced in the ACT.[37]
Ferdi’s practice in relation to giving time estimates
[37] Affidavit of Ferdi Arslan affirmed 3 November 2018, [4] – [6].
Ferdi estimated that the defendant company is involved in approximately five to ten retail fit-outs each year. If a client asks for an estimate of how long the work will take, Ferdi’s practice is to caveat his response by saying “if there are no issues”. He also states in his affidavit that he gives a range of time, rather than, as I understand the evidence, a fixed period.
Ferdi said that issues arise during retail fit-outs relatively often. As such, he does not make promises about when a job will be finished.[38]
The meeting in Auburn
[38] Affidavit of Ferdi Arslan affirmed 3 November 2018, [7] – [13].
At the meeting in mid-July 2016, Ferdi said that he told the plaintiff he could not provide him with a quote because he would not be the builder. Ferdi suggested contacting a particular builder. The plaintiff told him to call the builder and ask him if he wanted the job. Ferdi told the plaintiff that if the builder took the job then “we” (presumably the defendant) can do the metal work. Ferdi said the plaintiff asked him to get back to him as soon as possible as he was late with finding a builder.
Ferdi said that he discussed with the plaintiff whether ventilation works were required. He said that the plaintiff told him the landlords were doing the ventilation.
In response to the plaintiff’s allegations summarised in paragraph [36] of these reasons, Ferdi stated that did not, and could not, have given a quote or estimate on that date because he had not yet discussed the works with Danny. Further, he stated that he would not have said the works would have been completed in six weeks because he had insufficient information at that point on which to base any such estimate. He stated that he did not hear Feramuz provide a timetable for the completion of the works.
Shortly after the meeting with the plaintiff, Ferdi called Danny. He said that Danny was interested in the job, and that he told Danny that the plaintiff would pay a deposit of $85,000.00 and in instalments thereafter.
On 20 July 2016, at the plaintiff’s request, Ferdi emailed Ms Nix and told her that he was the shopfitter. Either on the same day or the next day, Ferdi met with Danny to discuss the works. Ferdi provided Danny with the plans.[39]
Observing the shop
[39] Affidavit of Ferdi Arslan affirmed 3 November 2018, [14] – [21] (not including those paragraphs or parts thereof that were not read).
Ferdi agreed that he had conversations with the plaintiff via telephone from time to time in early August. However, he said that he did not ever say to the plaintiff that the fit-out could be finished in six weeks.
Ferdi said that the defendant had a limited role in the fit-out; that being a role limited to metal work and fabrication. The installation of the work that had been fabricated and all other tasks were to be undertaken by Danny. As such, Ferdi said he was not in a position to give estimates (presumably as to time). Ferdi said that he told the plaintiff about the defendant’s limited role.
Ferdi said that he travelled to the ACT see the Premises in mid-August 2016. He said that he met the plaintiff and some others there. During the course of the day, Ferdi said that he recalled the plaintiff saying that he wanted to have the fit-out completed by 26 September 2016. However, he said that he did not recall Danny responding in the way that the plaintiff alleged (summarised at paragraph [38] of these reasons). Ferdi further said that he did not think that he would have responded to the plaintiff by providing any assurances.[40]
Quotes and payment of deposit
[40] Affidavit of Ferdi Arslan affirmed 3 November 2018, [25] – [30].
On 18 August 2016, Ferdi received a quote from BuildCo for the fit-out works. On 19 August 2016, the plaintiff forwarded Ferdi an email from Ms Nix, which contained the Centre’s fit-out guide and other documents. On 20 August 2016, Ferdi sent the plaintiff an email with the defendant’s quote. The plaintiff telephoned Ferdi that same day and said he accepted the quote. The rest of the conversation went, according to Ferdi, as follows:
Gunes: “How long will it take to do the job?”
Me:“This is not up to me. Danny is going to do the fit out works and I am going to do the stainless steel parts for the shop. I will check with Danny.”
Ferdi said that he then had the following conversation with Danny:
Me: “Gunes wants the work done in six weeks. Can that be done?”
Danny: “I can handle the project. I will have it done.”
Ferdi said he then called the plaintiff back and told him that “Danny seems confident, but you should talk to him yourself. I will get out of the middle”. Ferdi said that the plaintiff did not say that he accepted “the quote as long as you can get the works done in six weeks”.
Ferdi said that, based on his industry experience, the plaintiff had left the process of organising the fit-out very late. In his affidavit, he says “I would not have seen Gunes as being in a position to put conditions on his acceptance of the Quote. As I saw things, Cutting Edge and Danny (or Buildco) were helping Gunes out by taking on a job where payment was a real risk and where he had left things late”. Ferdi said he denied the plaintiff’s assertion that he (Ferdi) had assured the plaintiff the work could be completed in six weeks, as set out at paragraph [40] of these reasons.[41]
Commencement of works
[41] Affidavit of Ferdi Arslan affirmed 3 November 2018, [31] – [40] (not including those parts not read).
Ferdi said that he received a chain of emails from the plaintiff on 23 August 2016, which included an email from Ms Nix which stated that the fit-out completion date should be 26 September 2016. Ferdi also had a conversation with Ms Nix in which he said he was told by Ms Nix that the plaintiff was “already out of time”, which prompted the response from Ferdi, “[w]e will start ASAP”.[42]
Change of plans
[42] Affidavit of Ferdi Arslan affirmed 3 November 2018, [42].
Ferdi said that it was his understanding from the plaintiff that the landlord was organising the ventilation. Ferdi stated that in an email attaching the quote to the plaintiff he said, “All jobs are included except sprinklers and ducting with fan for exhaust system. Aircon is covered by our guys its [sic] included in our quote”. That email forms Exhibit FA 8 of Ferdi’s affidavit.
Ferdi said that he understood from conversations with Danny that Danny was informed by the landlords that ventilation was in fact the plaintiff’s responsibility. Ferdi said that Danny got in touch with “Bems Services” to provide a quote for the ventilation works. The reference to “Bems Services” is, presumably, the same entity referred to as “Benmax” in the plaintiff’s evidence. On 20 September 2016, Mr Brozic of Bems Services sent an email to the plaintiff, Danny and Ms Nix regarding the pizza oven hood size. Danny forwarded this email to Ferdi and told him that “[w]e now have to move the wall to the oven again which means tiling has to be redone in that area”.
Ferdi said that he was told by Danny on 21 September 2016 that he should not bring the hoods to Canberra because the plans did not comply with ACT regulations and the size of the hoods would need to be changed.
Ferdi said that the amendment to the plans meant that:
(a)The defendant had to re-fabricate exhaust hood parts;
(b)BuildCo had to demolish walls, construct new ones in their place, as well as conduct tiling, ceiling, plumbing and electricity work;
(c)Work on the Premises was delayed while a ventilation contractor was found.
Ferdi said that in late September, the plaintiff called him and asked him for some of the deposit back so that he could pay the ventilation contractor.
Ferdi said that there was some correspondence between the plaintiff and Danny and between the plaintiff and Ferdi by text throughout October. Those texts were marked as Exhibits FA 18 and FA 19 of his affidavit.[43]
BuildCo withdraw
[43] Affidavit of Ferdi Arslan affirmed 3 November 2018, [51] – [63] (not including those parts not read).
Around mid-October 2016, Ferdi said that he received an email from the plaintiff informing him that the plaintiff had breached his lease. He said that he thinks it was around this time that BuildCo stopped work at the Premises. Some time later, but still in October, Ferdi said that the plaintiff told him that he was going to engage another contractor to finish the fit-out.
Ferdi said that the plaintiff asked him to invoice him for the deposit that was paid.[44]
The defendant’s role in the works
[44] Affidavit of Ferdi Arslan affirmed 3 November 2018, [65] – [66].
Ferdi said that the defendant’s role in the fit-out job was metal fabrication. He insisted that they produced all the items required and delivered them. It was done with its part of the job before 26 September 2016.
When the mistake in the plans arose, Ferdi insisted that the defendant re-did some of the work for free, even though it was not responsible for the error.[45]
Cross-examination of Ferdi Arslan
[45] Affidavit of Ferdi Arslan affirmed 3 November 2018, [71] – [72].
The cross-examination of Ferdi took place on 12 August 2019.
Ferdi was taken in cross-examination to an affidavit affirmed by him verifying answers given by him to a series of interrogatories.
At paragraph (h) of the interrogatories, Ferdi was asked to state what he said to the plaintiff about a date as to the completion of the works. His answer to that interrogatory was:
I did not undertake a specific date. I said to the plaintiff that I estimated the fitout to take 6-8 weeks.
In cross-examination, it was pointed out to Ferdi that the answer provided there differed from the evidence in his affidavit about what was his usual practice. When asked to explain this discrepancy, Ferdi said he could not recall why he did not also include that information in answer to paragraph (h) of the interrogatories. He said that he was “pretty sure”[46] he would have caveated his answer to take into account issues that could delay the job, but did not know why that was not included in his answer to the interrogatory.
[46] Transcript of Proceedings, 12 August 2019, 156.
At paragraph (l)(b)(i) of the interrogatories, Ferdi was asked whether he understood that the plaintiff was required to complete the fit-out by 23 or 26 September 2016. Ferdi’s answer to this interrogatory was:
Yes, however, I have never undertaken to complete works within a specific dates. The plaintiff asked me if the fitout could be finished before 6 weeks and I replied that I would ask the fourth defendant.
In cross-examination, it was suggested to Ferdi that this evidence was different to what he had previously said about providing the plaintiff with an expected completion time of six to eight weeks. Ferdi responded by saying “[w]ell that’s the kind of talk I give to all my clients … If there’s no issues, they get along, the job will take up to about six to eight weeks”.[47] The following exchange then took place:
[MR SHARWOOD:] So you are saying you don’t remember saying to the plaintiff prior to this time that it would take six to eight weeks? You don’t remember that at all? You are just relying on what you would have said?---Correct.[48]
[47] Transcript of Proceedings, 12 August 2019, 157.
[48] Transcript of Proceedings, 12 August 2019, 158.
Ferdi was asked whether the plaintiff called him from time to time anxious about whether the work could still be done in time. Ferdi’s answer was “Not before I’ve given a quote”.[49] It was put to Ferdi that he met with the plaintiff and others at the premises on 15 August 2016. He agreed. It was further suggested to him that he knew by that date that the work was to be done by 26 September. Ferdi stated that he could not “remember if we had that talk then, but – I can’t remember if we had that before the quotes or after at this stage”.[50]
[49] Transcript of Proceedings, 12 August 2019, 162.
[50] Transcript of Proceedings, 12 August 2019, 162.
On 20 August 2016, Ferdi sent the plaintiff the quote. He was asked whether, when the plaintiff called him that day he again sought reassurance that the work could be done by 26 September 2016. Ferdi responded that he never gave an exact date, and that in this case Danny was handling the project.
Ferdi was referred to the fit-out guide that was sent to him by the plaintiff. He was asked if this would have been important to him in understanding the work that had to be done. He agreed, but said that he would have passed it on to Danny. He stated that he had not read all of it, “because not being the head contractor I wouldn’t think that I would have to – I gave it to Danny for him to do it”.[51] He was referred to specific parts of the guide which provided that ventilation and air conditioning work was the responsibility of the tenant. He agreed, but stated that he did not read that part of the fit-out guide. Later, he was asked about the statement in his affidavit that said the plaintiff had told him that it was the landlord’s obligation to undertake the ventilation and air conditioning work. Ferdi explained this by saying, “[w]ell, we found out about that issue halfway through the project”.[52]
[51] Transcript of Proceedings, 12 August 2019, 166.
[52] Transcript of Proceedings, 12 August 2019, 168.
During the course of cross-examination, it became apparent that there were a number of text messages between Ferdi and Danny in relation to the fit-out works that had not been produced. Counsel for the plaintiff called on the documents, and, after a short adjournment, they were produced. A number of those text messages were received into evidence collectively as Exhibit P5.
In one message to Danny which appears to have been sent on 8 October 2016, Ferdi says, “Danny you really fucked me up. With both jobs”. Ferdi was asked whether one of those jobs was the plaintiff’s. Ferdi confirmed that it was and explained that Danny had also “done the same for a job in Sydney for me, so that’s the other job”.
Ferdi was asked in re-examination whether his memory was better when he swore his affidavit than it was at the time of the hearing. He said that it was.
Observations and findings on witness reliability
I have not had regard to the evidence of Mr Yildirim for the reasons already given.
Insofar as the evidence of Feramuz is concerned, my assessment of it is made more difficult because he is not proficient in use of the English language. I note his evidence that he rang Ferdi at a meeting with the plaintiff following statements by the plaintiff as to the urgency with which he needed a shopfitter, and what (at least according to Feramuz) was the plaintiff’s enquiry about when the work would be completed. Against that background of his own evidence, Feramuz’s testimony that he did not convey to Ferdi that the plaintiff had identified the work as urgent is unlikely and I reject it.
The evidence of the plaintiff and Ferdi is the most important to the outcome of the proceedings.
It was apparent that English was not the plaintiff’s first language, although he did not need an interpreter. As will be apparent from the summary of the cross-examination set out in these reasons, he had not, in his answers to interrogatories, included all of the information which probably ought to have been included about the content of certain exchanges which had taken place. I do not attribute that to any recent invention on his part. In cross-examination he readily conceded what was put to him by defence counsel as to the precise terms of what he had said to Ferdi about acceptance of the quote. I accept that he understood the significance of having the fit-out work completed on time and that he genuinely held the concerns he expressed to have about ensuring that was done.
As is also apparent from the summary of the cross-examination of Ferdi, there was some conflict between what appeared in his affidavit and his answers to interrogatories. In addition, as I understood his evidence, he said that he did not recall (at least at the date of hearing) what he had said to the plaintiff in the conversation on 20 August 2016 but was relying upon what was his usual practice. That testimony was given against the background of the quite precise terms in which the conversation is set out in Ferdi’s affidavit of 3 November 2018. The answer given in re-examination to the effect that his memory was better when he swore the affidavit than at the hearing date is difficult to accept as a complete explanation for the discrepancy in his evidence on such a crucial point.
There is another aspect of Ferdi’s evidence which calls for comment. In the course of cross-examination, Ferdi had been asked if the plaintiff called him from time to time anxious about whether the work could still be done in time. Ferdi said, “Not before I’ve given a quote”. That answer he gave is contrary to what he deposed to in his affidavit, summarised at paragraph [87] of these reasons. When challenged, he retreated somewhat but only to the extent of saying that he could not remember “if we had that talk then, but – I can’t remember if we had that before the quotes or after at this stage”.
In addition, there were several occasions when Ferdi referred to himself as not being the head contractor (or the like). In doing so he gave the impression of attempting to deflect responsibility for what might otherwise have been his obligations.
The evidence of Ferdi to which I have referred cause me to doubt the reliability of his testimony generally. I was left with the impression that he was tailoring his evidence in a way which he believed best suited his case.
On the question of the exchanges which took place before 20 August 2016, I prefer the evidence of the plaintiff where it differs from that of the Ferdi. In particular, I am satisfied:
(a)that the plaintiff understood the date of 26 September 2016 to be very important for the purposes of his lease, his entitlement to benefits from the lessor, and his ability to commence trading;
(b)as a result, he held genuine concerns about having the fit-out completed by that date; and
(c)he conveyed those concerns to the defendant.
I turn to the questions at the heart of the dispute.
Question 1: Was there a contract?
The existence of a contract between the plaintiff and the defendant is not in dispute.
Question 2(1): What was the work to be done by the Defendant under that contract?
Counsel for the defendant has correctly identified that this question is limited to whether the work to be done by the defendant included certain specific work. That work is described in the plaintiff’s principal submissions as “airconditioning and ventilation” and in the defendant’s submissions as “a mechanical exhaust system”. In submissions in reply, the plaintiff uses the term “mechanical exhaust”.
I do not understand the different terminology to indicate that there is any dispute as to the nature or extent of the relevant work (or as to the fact that it was not expressly referred to in the quote). In these reasons, I refer to it as “mechanical exhaust system work”.
The need for resolution of this question is self-evident. The defendant’s case is that, even if the agreement is found to have imposed upon the defendant an obligation to complete work by 26 September 2016 there was no breach of the agreement by the defendant because the plaintiff’s own conduct, around procuring what was necessary for the mechanical exhaust system work, prevented the defendant from meeting the agreed completion date.
As I understand the submissions, the plaintiff says that the contract included an obligation to do the mechanical exhaust system work as a result of the combined effect of the following:
(a)The plaintiff knew at all times that the mechanical exhaust system work was not the lessor’s obligation;
(b)The fit-out guide made clear that the mechanical exhaust system work was the lessee’s obligation;
(c)The fit-out guide was provided to the defendant (via Ferdi);
(d)Before a quote was provided, the plaintiff had given the defendant details of “an air conditioning guy in Canberra … if you don’t already have someone”.
(e)The evidence points to the defendant not having read the fit-out guide.
For its part, the defendant says that the contract was formed by the acceptance of a written quote from the defendant which made no reference to the mechanical exhaust system work. The defendant points to the plaintiff’s acceptance under cross-examination that he agreed that the quote “didn’t include a mechanical exhaust system”.
Further, the defendant says that the fact that the quote did not include the relevant work was expressly brought to the plaintiff’s attention when the quote was submitted by way of the covering email saying, “[a]ll jobs are included except sprinklers and ducting with fan for exhaust system” (emphasis in original).
The email sending the quote did go on to make reference to airconditioning, but there is no reference to that aspect of the email in submissions and, as I understood the evidence, the mechanical exhaust system work goes beyond mere airconditioning.
The defendant says that there is no allegation of any oral agreement outside the quote in relation to the mechanical exhaust system work and that even if there was such an allegation there is no evidence to support it.
In submissions in reply, the plaintiff says that:
(a)The defendant was an experienced fit-out specialist.
(b)The defendant had available all material necessary to understand the scope of the works required for the fit-out.
(c)It is not the plaintiff’s fault that the defendant did not read and understand the scope of the work needed to be done.
(d)The need for the plaintiff to intervene in relation to the mechanical exhaust system work was because the defendant was “delinquent”.
(e)“The quote itself contains no more than a list of works and a price. The plaintiff submits the quote was merely a scope of works and the terms of the contract between the plaintiff and the defendant were agreed orally.”
(f)It was clear to the defendant that he was contracting with the plaintiff for “the installation of an operational restaurant fit out” and as an expert in such installation “it was clear to the defendant or ought to have been clear to the defendant that a mechanical exhaust system was required to achieve an operational restaurant premises”.
(g)The defendant’s submission that acceptance of the quote dated 20 August 2016 comprised the entire agreement between the parties is incorrect. Further, “[t]he defendants quote was merely a formality and did not form the entire agreement between the parties. The terms of the contract between the plaintiff and the defendant were agreed orally.”
The statement in the submission in reply that the defendant knew that he was contracting with the plaintiff for “the installation of an operational restaurant fit out” calls for some careful analysis.
The appropriate starting point is the pleadings.
Paragraph [8] of the Amended Statement of Claim (as received) pleads that the defendant “represented to the plaintiff: that if the plaintiff engaged them to do so, the … defendant would ensure that the premises were fitted out so as to enable the plaintiff to commence trading by 26 September 2016”.
Paragraph [9] of the Amended Statement of Claim pleads that “[o]n 18 August 2016 the … defendant provided a quote to the plaintiff of the costs of preparing the fit out of the premises”.
Under the heading of “Particulars” which then follows there appears:
c. The detail of the work to be undertaken is contained in the quote.
What next follows is a pleading that “[b]y agreement entered into in August 2016, the plaintiff and the … defendant agreed that in consideration of the promise to pay the sum of $195,900 (including GST) the … defendant would carry out the fit out of the premises (“the fit out contract”)”.
The particulars which follow appear as:
The plaintiff accepted the quote and on 22 August 2016 paid the … defendant as a deposit the sum of $85,000.00.
The effect of the Amended Defence is that the defendant admits the existence of an agreement between the plaintiff and the defendant, and:
b. say that there were terms of the agreement that:
i.the … defendant would carry out or procure to be carried out the work specified in the quote; and
ii.the plaintiff would pay the sum referred to; and
c. otherwise do[es] not admit the facts alleged…
As I have already said, the submission in reply on behalf of the plaintiff presses that the defendant was contracting with the plaintiff for the installation of an “operational restaurant fit out”. There is no pleading of an allegation that the agreement with the defendant was for the defendant to provide and install an “operational restaurant fit out”.
The expression “operational restaurant fit out” suggests the existence of an obligation on the part of the builder/supplier to supply and install everything necessary for the intended business operation. There is no pleading of any promise or representation on the part of the defendant to that effect.
The reference in paragraph [8] of the Amended Originating Claim to “[ensuring] that the premises were fitted out so as to enable the plaintiff to commence trading by 26 September 2016” (emphasis added) must be seen in the context of the dispute about the time within which the work was to be done and falls short of an allegation that the defendant had promised or represented that it would supply and install everything necessary for the intended business operation.
I turn next to the terms of the quote itself. It, and the covering email, appear at Exhibit MK13 to the affidavit of the plaintiff sworn 16 August 2018. The quote sets out under the heading “description” a list of things some of which commence with the words “supply and install” and some of which are simply the description of items which I infer were to be supplied or perhaps fabricated and supplied.
As an aside, I mention that one such item which appears on the second page is:
S/S exhaust canopy 6500mm and 1850mm for pizza (ducting + fan not included – supplied by center)
(emphasis added)
That item in the quote was not referred to in the evidence and neither party referred to it in submissions.
For present purposes, it suffices to record that nothing which expressly appears in the quote supports an assertion that the agreement between the parties was for anything more than the supply and installation of the items referred to in it. That is, nothing appearing in the quote supports an assertion that the agreement was one to supply and install all things required for an “operational restaurant fit out”.
The plaintiff’s written submissions go on to press that, while acknowledging the existence of the quote, “the terms of the contract between the plaintiff and the defendant were agreed orally”. While not particularised, I infer the submission is intended to be that there was an oral agreement (beyond the scope of the quote) that what was to be supplied and installed was all things required for an “operational restaurant fit out”.
I have already referred to the defence submission that there is no allegation of any oral agreement outside the quote in relation to the mechanical exhaust system work and that, even if there was such an allegation, there is no evidence to support it.
I accept the defence submission.
I have already referred to what is pleaded by way of the terms of the agreement between the plaintiff and the defendant. They do not plead the existence of an agreement to supply and install all things required for an operational restaurant fit-out. Nor was the case conducted on the basis that the obligations agreed to by the defendant extended to supplying and installing all things required for an operational restaurant fit-out. Even apart from considerations of procedural fairness, the evidence does not support a finding that the agreement between the plaintiff and the defendant included such an obligation on the part of the defendant.
I comment that I do have some sympathy for the plaintiff. I accept that he may have expected that the defendant would consider all of what would ordinarily be required for the operation of a business such as that intended by the plaintiff and that the defendant’s quotation would reflect that consideration.
His claim against the defendant is, however, based upon his agreement with the defendant and the express terms of that agreement did not incorporate any such obligation on the part of the defendant.
I find that the agreement between the plaintiff and the defendant did not extend to an obligation on the part of the defendant to supply and install a mechanical exhaust system.
Question 2(2): Was it a term of the contract that the work would be completed by 26 September 2016?
The plaintiff alleges that he received assurances from Feramuz, Ferdi, and Danny that the work would be completed in either six weeks or by 26 September 2016.
The key to determining this aspect of the contest hinges primarily on what occurred on 20 August 2016, but the exchanges leading up to that day provide important context.
In his affidavit, the plaintiff said that he told Ferdi on 20 August, “I accept the quote as long as you can get the works done in six weeks”. In cross-examination, however, the plaintiff accepted that it would have been more likely that he said words to the effect, “I accept the quote. Can you do it by 26 September?”.
During that exchange, the plaintiff said that he did remember Ferdi “calling him, talking about the prices, instalments. They called me back, said, ‘Okay. That’s fine. All right’”.[53]
[53] Transcript of Proceedings, 15 March 2019, 82.38-40.
Ferdi said that the plaintiff accepted the quote. According to Ferdi, the conversation then went as follows:
Gunes: “How long will it take to do the job?”
Me:“This is not up to me. Danny is going to do the fit out works and I am going to do the stainless steel parts for the shop. I will check with Danny.”
Ferdi said that he then had the following conversation with Danny:
Me: “Gunes wants the work done in six weeks. Can that be done?”
Danny: “I can handle the project. I will have it done.”
Ferdi said he then called the plaintiff back and told him that “Danny seems confident, but you should talk to him yourself. I will get out of the middle”. Ferdi said that the plaintiff did not say that he accepted “the quote as long as you can get the works done in six weeks”.
Whilst the evidence is not completely clear, against the background of the plaintiff’s concessions in cross-examination and what I have concluded was his genuine concern to have the fit-out complete by 26 September, I think it is more likely than not that what was said by the plaintiff was words to the effect of, “I accept the quote. Can you have it done by 26 September?”, and I so find.
As to Ferdi’s response, despite the plaintiff’s uncertainty in cross-examination, it is common ground that he subsequently contacted Danny and asked him about having the work completed within a certain time frame. (He says it was within 6 weeks rather than by 26 September, but nothing turns on that for present purposes.) According to Ferdi, he received an unequivocal response from Danny: “I will have it done”.
Despite that unequivocal response from Danny, and despite Danny being in effect a subcontractor to the defendant, Ferdi says that his response to the plaintiff was couched in the terms set out above, namely, “Danny seems confident, but you should talk to him yourself. I will get out of the middle”.
Ferdi says nothing about any response from the plaintiff to what he says was that communication. There is no evidence that the plaintiff made any attempt to contact Danny about the completion date as Ferdi says he recommended to him.
I have already concluded that I am satisfied:
(a)that the plaintiff understood the date of 26 September 2016 to be very important for the purposes of his lease, his entitlement to benefits from the lessor, and his ability to commence trading;
(b)as a result, the plaintiff held genuine concerns about having the fit-out completed by that date; and
(c)the plaintiff conveyed those concerns to the defendant.
I am satisfied that after being asked by the plaintiff whether the job could be done by 26 September, Ferdi had the conversation with Danny to which he refers in his evidence. Having regard to the evidence, I am persuaded that his subsequent communication with the plaintiff was to the effect that the work could be done by that date. In reaching that conclusion, I take into account the following:
(a)Danny’s unequivocal response to Ferdi’s query would be a rational and reasonable basis for such a response by Ferdi to the plaintiff;
(b)Danny’s evidence that the plaintiff should contact Danny directly is at odds with there being no contractual relationship between him and Danny;
(c)It is incongruous that no attempt at contact would have been made by the plaintiff if Ferdi’s response had been what he said it was; and
(d)My doubts about the reliability of Ferdi’s evidence as set out in paragraph [122] of these reasons.
The finding just made does not dispose of the contest between the parties on this point.
The defendant’s submissions point out that the plaintiff conceded in his oral testimony that it is more likely that he would have said “I accept the quote. Can you do it by 26 September?”. As already stated, I am satisfied that words to that effect were said by the plaintiff. The defendant goes on to make the following submissions:
(a)if the plaintiff’s affidavit evidence is accepted, the plaintiff’s recollection of his statement to Ferdi gives rise to the issue of a collateral contract, which is not the basis on which the plaintiff’s case was run;
(b)if the plaintiff’s oral concession is accepted, the plaintiff’s question to Ferdi as to whether he could complete the job by 26 September 2016 cannot amount to an immediate variation of the contract because: (1) Ferdi’s response was not promissory in nature, and (2) there was no consideration; and
(c)regardless, the evidence is incapable of proving that the contract was not entirely written, such that the parole evidence rule applies.
The defendant’s submissions do not, however, address what is another, more realistic possibility – that is, that what was said by the plaintiff amounted to a counter-offer by him, which was subsequently accepted by the defendant in the later phone conversation referred to in the testimony of the plaintiff.
It is a foundational principle of the law of contract that “[a]ny departure from [an] offer will result in the purported acceptance being ineffective. Such a purported acceptance will normally, even though worded as an acceptance, amount to a new offer (a ‘counter-offer’)”: J W Carter, Contract Law in Australia (LexisNexis Butterworths, 7th ed, 2018) at [3-19]; see also Mooney v Williams [1905] HCA 34; 3 CLR 1 at 7 (Griffiths CJ). Any such counter-offer is capable of acceptance in the normal course, so long as the form of acceptance complies with the necessary requirements.
In the present case, the question is whether what was said by the plaintiff – “I accept the quote. Can you do it by 26 September?” – amounts to a qualified acceptance so as to constitute a counter-offer.
One of the relevant considerations is whether what is suggested by the offeree (in this case the plaintiff) seeks to add a new material term to the bargain.
A question asking if something can be done by a certain date is, even in the abstract, something which could materially alter the terms of an agreement. So much is apparent from the decision of the Court of Appeal of England and Wales in Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401. In that case, the sellers of a “machine tool” made an offer to sell the machine to the buyers on certain terms. The buyers responded by placing an order for the machine some days later. However, that order contained additional terms, including, what is relevant for present purposes, a provision relating to the date of delivery. Their Honours Lord Denning MR, Lawton and Bridge LJJ held that the terms of the order differed from the original offer to such an extent that it was, in effect, a counter-offer which was subsequently accepted by the sellers.
A question of construction arises. The proper approach to construction is referred to in Maple Leaf Macro Volatility Master Fund v Rouvroy [2009] 1 Lloyd’s Rep 475 at [247] (per Smith J):
The question is whether what was introduced … would have been regarded by a reasonable [person in the original offeror’s] position as introducing a new term into the bargain rather than acceptance of the [original] terms.
This approach was cited with approval by J D Heydon in Heydon on Contract: The General Part (Lawbook, 2019) at [2.130].
At first blush, the first words I have found were used by the plaintiff (“I accept the quote”) are unequivocal, and standing alone, no argument about a counter-offer arises.
But that sentence does not stand alone. On the basis of the findings of fact I have made, it was immediately followed by the question “Can you get it done by 26 September?”.
In addition, those two sentences were spoken by the plaintiff in response to the defendant’s offer in the context of two important factors:
(a)The first is that the quote made no reference whatsoever to a time frame for completion of the work. The law would in the circumstances have implied a condition that the work was to be done within a reasonable time, but there is no basis for any assumption that the plaintiff was aware of that legal implication. What was before the plaintiff when he said “I accept the quote” was a document setting out a scope of works and a price with nothing said about a time for completion.
(b)The next is the several background exchanges which had taken place including, as I have found, that the plaintiff had on several occasions conveyed his concerns to the defendant about ensuring that fit-out work was completed by 26 September 2016.
Against the background of those factors, I am persuaded that a reasonable person in the defendant’s position would have regarded the plaintiff’s question as introducing a new term calling for completion of the work by 26 September 2016, rather than as acceptance of the terms of the quote without specification of a completion time. I further find that Ferdi’s subsequent communication with the plaintiff (as I have found it to have taken place above) amounted to an acceptance on behalf of the defendant of that counter-offer by the plaintiff.
For the reasons given, I find that it was a term of the contract between the plaintiff and the defendant that the work to be done by the defendant was to be completed by 26 September 2016.
Question 2(3): Was the work the subject of the contract completed by 26 September 2016?
For the reasons which will become apparent, there is no need to address this question. Having said that, my understanding is that it is not disputed by the defendant that the work was not completed by 26 September 2016.[54]
Question 2(4): Is the defendant in breach of the contract?
[54] Defendant’s written submissions, filed 14 November 2019, [6].
The conclusion to question 2(2) does not dispose of the contest between the parties because the defendant says that, even if it was a term of the agreement that work would be completed by 26 September 2016, it is not in breach of the contract because of the application of the “prevention principle”.
That principle was described by McLure P in Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No 2) [2012] WASCA 53; 287 ALR 360 at [47] in these terms:
The essence of the prevention principle is that a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party's non-performance.
As to the consequences of the application of the principle, her Honour went on to say at [49]:
If as a result of the prevention principle the contractual date for practical completion has ceased to be the proper date for the completion of the works and there is no contractual mechanism for the substitution of a new date in the events which have occurred, then there is no date from which liquidated damages can run and the right to liquidated damages will be lost: Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111; MacMahon Construction Pty Ltd v Crestwood Estates [1971] WAR 162, 167 (Burt J). The nominated time fixed for practical completion is replaced by an obligation to complete within a reasonable time.
The defendant’s submissions are made on the basis that its agreement with the plaintiff did not require it to carry out the mechanical exhaust system works. As already stated above, I have found that to be the case.
The defendant’s submission at paragraph [61] of its written submissions set out what it says is a relevant chronology of delaying events. Those parts of the submission record matters of fact which are largely not in dispute, or, to the extent that they are, not in a material way for present purposes.
The chronology lists various exchanges, commencing on 6 September 2016, between Mr Trifunovic, the plaintiff, the Centre’s architect Mr Hunter, Ms Nix, Mr Robert Brozic of Benmax, the defendant, the designer Mr Izci, and the business “King Air”. The exchanges are about the preparation of drawings for a proposed mechanical exhaust system, the submission of those plans to the plaintiff and to the Centre for approval, the obtaining of a quote from Benmax for the work, the changes required to the defendant’s work, and the plaintiff’s ultimate engagement of King Air to do what was required.
As to the direct impact upon the defendant’s work the submission refers to the evidence of Ferdi that the representative of Benmax (Mr Brozic) prepared a mark-up of a floor plan identifying changes needed to exhaust hoods, and, as a result, sinks, walls, and benches. As a result, it was necessary for the defendant to produce replacement material and for Mr Trifunovic to demolish walls, install new walls, tiling, ceiling, plumbing, and electricity.
The various exchanges referred to, and the consequential delays, are all attributable to the need for mechanical exhaust system work to be carried out and the plaintiff’s attempts to have that work done. They are not attributable to any breach of contract by the defendant.
In the circumstances, I am satisfied that conduct on the part of the plaintiff effectively prevented the defendant from meeting what was otherwise the agreed completion date for the work to be done by the defendant.
There was no agreed extended date for completion and no contract mechanism for determining such a date. In the circumstances, the date for completion was at large.
The plaintiff’s claim for breach is limited to a failure to meet the 26 September 2016 completion date. Having found that the completion date was, by virtue of the application of the prevention principle, at large, the plaintiff’s claim fails. For that reason, it is unnecessary to resolve questions 2(5) and 3.
Orders
In relation to the plaintiff’s claim against the defendant, I give judgment for the defendant.
I did not hear any argument as to costs. In relation to costs, I make the following orders:
(a)the plaintiff is to pay the defendant’s costs; but
(b)order (a) does not take effect if either party contacts my associate within 14 days to re-list the matter to seek some other costs order.
| I certify that the preceding one hundred and ninety-seven [197] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Magistrate Morrison Associate: Angus Brown Date: 12 May 2020 |
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