Makland Constructions Pty Ltd v Page Steel Fabrications Pty Ltd
[2024] VSCA 142
•27 June 2024
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2023 0069 |
| MAKLAND CONSTRUCTIONS PTY LTD (ACN 146 092 533) & ORS (ACCORDING TO THE ATTACHED SCHEDULE) | Applicants |
| v | |
| PAGE STEEL FABRICATIONS PTY LTD (ACN 006 636 004) | Respondent |
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| JUDGES: | BEACH, KENNEDY and LYONS JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 17 June 2024 |
| DATE OF JUDGMENT: | 27 June 2024 |
| MEDIUM NEUTRAL CITATION: | [2024] VSCA 142 |
| JUDGMENT APPEALED FROM: | [2023] VCC 706 (Judge Burchell) |
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CONTRACT – Building and construction – Building contract – Repudiation – Agreement in relation to supply and erection of steel framework for warehouses – Whether judge erred in finding respondent did not require deed of release to be provided before it would perform substantial part of its contractual obligations – Whether judge erred in finding that respondent did not repudiate the agreement – No error – Leave to appeal granted – Appeal dismissed.
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; Alphater Consulting Engineers Pty Ltd v Rozman [2016] VSCA 111, applied.
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| Counsel | |||
| Applicants: | Mr MJ Hoyne | ||
| Respondent: | Mr PS Noonan with Ms P Wakhlu | ||
Solicitors | |||
| Applicants: | Dimos Lawyers | ||
| Respondent: | Hughes Legal Pty Ltd | ||
BEACH JA
KENNEDY JA
LYONS JA:
Makland Constructions Pty Ltd (the first applicant) (‘Makland’) and Page Steel Fabrications Pty Ltd (the respondent) (‘Page Steel’) entered into an agreement for Page Steel to supply and erect steel framework for two warehouses, including offices and canopies, at a site in Derrimut. The second and third applicants own the site.
It is common ground that the project got off to a bad start and that the parties fell into dispute. In the result, the applicants commenced a proceeding in the County Court seeking damages for, amongst other things, the alleged repudiation of the agreement. The repudiation was said to be constituted by Page Steel’s refusal to deliver steel for the canopies until such time as Makland provided a deed of release.
On 5 May 2023, the judge delivered reasons.[1] Although she upheld some of Makland’s claims,[2] she found that Page Steel did not repudiate the agreement.
[1]Makland Constructions Pty Ltd v Page Steel Fabrications Pty Ltd (No 2) [2023] VCC 706 (Judge Burchell) (‘Reasons’).
[2]The judge found that Page Steel breached the consent orders made by Judge Macnamara on 9 December 2019, and gave judgment for Makland in the sum of $73,711.53. She also upheld Page Steel’s counterclaim in relation to a variation (number 4), in an amount of $33,748.10. She ultimately ordered, on 2 June 2023, that the amounts (inclusive of interest) be set off against each other such that Page Steel was to pay Makland an amount of $34,690.61.
The applicant seeks leave to appeal, and alleges that the judge erred in finding that Page Steel had not repudiated the agreement (proposed ground 1).[3]
[3]At the hearing of the appeal, the applicant abandoned proposed grounds 2–4 which related to the counterclaim.
For the following reasons, we consider that the judge was correct to find that there was no repudiation. The result is that, although we will grant leave, the appeal will be dismissed.
Background
On 26 March 2019, Makland and Page Steel entered into an agreement for the supply and erection of steel framework for two warehouses, including offices and canopies, at 10 Fulton Road, Derrimut (‘the site’) (‘March Agreement’).
The terms of the March Agreement included that Makland was to pay a price of $2,184,020.00 + GST pursuant to an ‘Agreed Payment Schedule’ in four payments from 15 April 2019 to 15 July 2019.
As indicated already, the project got off to an inauspicious start and the parties fell into dispute.
On 28 June 2019, Lynette Piacentini of Page Steel (‘Lynne’) and Stefce Kutlesovski (the sole director of the three applicants) (‘Steve’) had a conversation intended to resolve their disputes. Their agreement was set out in an email from Lynne to Steve at 1:15 pm that day (‘June Agreement’). However, the June Agreement only resolved the issues between the parties for a short period.
By September 2019, the parties were again in dispute as to payment.
On 13 September 2019, Lynne and Matthew Francke (Makland’s solicitor, of Pointon Partners) agreed on terms on which payment would be made and work would continue (‘September Agreement’). However, the unchallenged finding of the judge was that the September Agreement did not impose a positive obligation on Page Steel to complete the works by a set time.[4]
[4]Reasons, [49]–[50]. Although Makland had pleaded a series of agreements, it referred to ‘the Contract’ or ‘the Agreement’ in its application for leave to appeal, consistent with the approach of the judge, below.
The delays to the work schedule had consequences for the availability of contractors, particularly the riggers engaged by Page Steel (VicRig Pty Ltd (‘VicRig’)). When entering the September Agreement, the parties also knew that VicRig had agreed to undertake another large job that commenced on or around 23 September 2019.
In September and October 2019, the limited availability of the riggers led to delays in completing the second warehouse.
By early November 2019, the second warehouse was almost complete, but the canopies, pump rooms and office frames for both warehouses remained to be done.
On Thursday 7 November 2019 at 8:10 am, a representative of Makland, Marjan Tasevski (‘Marjan’), sent an email to a representative of Page Steel, Jacintha Anders (‘Jacintha’) which made complaint about VicRig not being on site. Jacintha responded by email on the same day at 10:20 am that Page Steel was ‘reviewing Vic Rig’s progress’, as well as his email, and would respond later that day.
It appears that Marjan and Jacintha then had a discussion. It is unclear precisely what they discussed, save that, consistent with an email of the next day at 12:17 pm (see [19(a)] below) it appears that Makland raised the possibility that it might retain ‘alternative Riggers’.
At 2:55 pm, Marjan emailed Jacintha regarding matters arising from the discussion. At 4:23 pm Jacintha marked up the email from Marjan and responded to his queries as follows:
Marjan:As discussed , you would get back to me on the following items by COB today, please advise urgently.
Jacintha:Per discussion this morning we will endeavour to come back to you today once we have confirmation from Vic Rig.
Marjan:“As discussed over the phone this morning,
Pls advise when warehouse 2 will be fully completed so I can re arrange CPS to erect panels ?
Jacintha:We will respond once finalised with Vic Rig as we are awaiting confirmation. We anticipate that it will be completed over the weekend.
Marjan:As advised CPS were to start erecting panels for WH 2 , this was planned with CPS on the information you gave me that WH2 will be fully completed (Structural Steel) by Wednesday 6th November.
Pls advise when Page Steel can deliver on site all the steel for canopy’s for both warehouse 1 & 2 . ?”
Jacintha:Per our discussion earlier today the canopies for each Warehouse can be delivered once they are ready to be erected which is following the erection of the panels, site welding of the cleats by others and Vic Rig’s availability to install. Also a “Deed of Release” or “Final Contract Sum Agreement” will need to be prepared and signed by both parties.
Later on 7 November 2019, Jacintha sent an email indicating that Page Steel had confirmation that a crane would be on site on Saturday with riggers there to spread the purlins. However, in an email of 4:39 pm Marjan complained that this did not answer his queries, nor allow him to plan site requirements.
On Friday 8 November 2019, there were further emails as follows:
(a)at 12:17 pm, Jacintha wrote to Marjan, setting out a site work schedule, itemising who would be on site and when, for the period from 8 November 2019 through to 13 November 2019. In the same email, she also said:
Please obtain a quote from your alternative Riggers, that you mentioned yesterday, to unload and erect each of the following:
WH1 – Canopy
WH2 – Canopy
WH1 – Pump room
WH2 – Pump room
(b)at 1:30 pm/12:52 pm (the 1:30 pm email amending his 12:52 pm email), Marjan asked (combining the emails as corrected): ‘Please advise when Page Steel can deliver on site all the steel for both warehouse canopy’s 1 & 2 , so I can arrange my own riggers to unload and sort out on site’;
(c)at 2:20 pm, Jacintha replied to Marjan, saying ‘Refer to my correspondence of yesterday and today which I have provided extracts of below’. She quoted Marjan’s request for delivery on site of all steel for both warehouse canopies and in reply quoted the latter part of her own email of 7 November 2019 at 4:23 pm (referring to the delivery of canopies and the deed of release) as well as her request for a quote from the riggers from her email of 12:17 pm;
(d)at 2:40 pm, Marjan emailed Jacintha. At 4:22 pm on 8 November 2019 Jacintha marked up the email from Marjan and responded to his queries as follows:
Marjan:I need the steel for canopy’s on site, please arrange. Regardless if panels are up or not I need that steel on site, I need to make up for days lost. I expect steel to be delivered on site this coming Wednesday as I have arranged a crane and riggers, pls advise schedule of delivery so I can prepare myself.
Jacintha:Refer to my previous emails in relation to a Deed of Release being required first. Further to this, my email of today requesting you obtain a price from the other Riggers (you mentioned yesterday) to erect the canopies and pump house steel to the respective Warehouses. As Vic Rig have limited availability of resources due to the extended delays on this project commencing and drawn out commercial issues we understand that Makland may want to consider the erection occurring via alternate Riggers. We therefore require this pricing so we can address this with Vic Rig and determine how we proceed beneficial to all.
Marjan:I don’t know what this deed of release is, it’s got nothing to do with me.
Jacintha:Others within your company should be familiar with a Deed of Release or Final Contract Sum Agreement Release.
Marjan:Are you saying that u wont be delivering or erecting the canopy’s without this deed of release your talking about ??
Jacintha: Correct
Marjan:Is warehouse portion of warehouse 2 going to be completed by this coming Wednesday ??
Jacintha:This is governed by progress on Saturday and the weather too. By COB Wednesday this is the position that we are aiming for. Vic Rig are still trying to arrange a crane for tomorrow. However , Vic Rig have informed me that the sent a man to site yesterday to work on the bracing and that you asked him to leave site. Can you elaborate on why this occurred? It would have been beneficial for the bracing to be addressed prior to Riggers returning to site tomorrow.
(e)at 4:49 pm, Steve, who was copied into the correspondence, forwarded this correspondence to his solicitor, Mr Francke;
(f)at 5:05 pm, Steve replied to Marjan with a copy to Jacintha:
A deed of release won’t happen Muts,
What it is, is a form of indemnity that we will not pursue our losses caused or suffered by Page steel and there contractors
We have been more than accommodating throughout the process and we will be recovering
(g)at 5:13 pm, Mr Francke emailed Jacintha stating that there was no basis for requiring a deed of release and Makland had not agreed to provide such a release. He stated that ‘the refusal to complete the works unless and until such a release is provided is repudiatory in nature.’ Further, that his client ‘does not intend to provide a release to Page Steel.’ He asked Page Steel to confirm by return email that it would complete the works under the contract forthwith and without further delay;
(h)at 9:47 pm, Marjan also emailed Jacintha saying that two people did come in at 14:00 hours as he was closing up and that he did send them back. He said that he had been advised that if nobody comes in by lunch then to lock up and go to another site.
On Saturday 9 November 2019, no riggers were on site. Between 8:10 am and 8:22 am there was a brief exchange of emails, in which Steve complained that VicRig were not on site and Jacintha forwarded VicRig’s update that it had rescheduled the weekend site attendance to Sunday.
On Monday 11 November 2019:
(a)at 9:22 am, Jacintha sent an updated work schedule for the period 8 November 2019 through to 13 November 2019. This included reference to the fact that VicRig had been on site on Sunday rather than Saturday and that labour was ‘occurring presently’ (on 11 November 2019);
(b)at 10:40 am, Steve emailed his solicitor Mr Francke, copied to Jacintha, asserting that Jacintha had ‘confirmed’ that Page Steel would not deliver steel for the canopies;
(c)at 10:47 am, Jacintha emailed Marjan and Steve with details of the workers attending the site that day (which included a boilermaker on site, and riggers attending in the afternoon), repeated her request for a quote for the alternative riggers Marjan had mentioned on 7 November 2019 and stated that:
The canopies for each Warehouse are ready to be delivered and installed following the erection of the panels and site welding of the cleats by others.
(d)at 11:10 am, Jacintha replied to Steve’s email of 10:40 am, saying that ‘you ended our telecon’ prematurely and said, inter alia:
WH1 canopy requires the panels to be installed and connections to be site welded to CIP prior to the canopy being ready for installation. The canopies should be offloaded from the trucks and spread in location ready to splice and erect. They should not be stored and potentially double handled which is time consuming, costly and can cause potential damage to the galvanised finish.
Our Boilermaker has called to inform me that he has been asked to leave site. Please confirm if this is the case and why? … we have four Riggers attending at approx.. 2.30pm today to spread purlins. … Please confirm that you want works to continue and that he can return to site today.
(e)at 11:25 am, Steve replied:
Jacintha you have been very clear in your communication, to both Marjan and I To Marjan in Writing to me verbally
Site shuts at 15.00 so I don’t know what the riggers will be doing here at 14.30
(f)at 11:29 am, Jacintha again sought confirmation that Page Steel’s boilermaker and riggers would be allowed on site;
(g)at 11:36 am, Steve demanded ‘Are canopies going to be delivered on Wednesday?’;
(h)at 11:41 am, Jacintha replied:
Steve
The canopies are not required on site yet, “The canopies should be offloaded from the trucks and spread in location ready to splice and erect. They should not be stored and potentially double handled which is time consuming, costly and can cause potential damage to the galvanised finish.”
Can our Boilermaker to return to site now, after being told to leave earlier? Also, please confirm that the four Riggers booked in for this afternoon will not be prevented from working on your site until approx.. 5pm today. We have worked on site previously to 5pm with no issue and have not been prevented from working overtime after 3pm.
(i)at 12:01 pm, Mr Francke emailed Jacintha:
I am instructed that the boilermaker is not undertaking any significant work, and was asked to leave the site after you advised [Steve] that steel would not be delivered to site and that you would not be proceeding with the works unless he agreed to sign a release.
As I stated in my email correspondence on Friday, my client does not agree to provide any kind of release to Page Steel. This is not a condition you are entitled to impose on my client.
If it is the case that you are withdrawing that position, and wish to proceed with the contracted works, then yes, the boilermaker is indeed allowed back on site - however the progress made by a single boilermaker undertaking limited work is not acceptable as it will not lead to completion of these works in the near future.
Please confirm in writing what your position in fact is in relation to the steel delivery, the requested “release” and completion of the works under contract.
(j)at 12:05 pm, Jacintha again asked Steve if the boilermaker and riggers would be allowed on site;
(k)at 12:18 pm, Jacintha replied to Mr Francke’s email of 12:01 pm:
Page Steel have continued with contract works today, to WH2, which is one Boilermaker installing bridging to the bay of purlins that were spread yesterday by our Riggers but were not strutted. This work does not require more than one person. We have four Riggers booked this afternoon to continue with the contract works (spreading of purlins) to WH2 per the sequence of works provided by Makland.
We have confirmed the sequence of works required prior to the canopy steel erection being able to occur as the panels are not erected as yet. The site does not require delivery of the canopy steel yet as the canopy cannot be laid out in the position for splicing and erection and will need to be double handled. We have requested that Makland obtain a quote from their alternative Riggers for the erection of each of these canopies and the remaining pump rooms so we prepare ourselves for this component on work in the near future.
We urgently require confirmation that the Riggers can proceed with works to WH2 on site this afternoon. If I have not received this confirmation by 1pm today I will need to cancel them as I will not have time to refuel the booms for them to work. Our Boilermaker can also return to site if you confirm he is no longer denied access.
(l)at 1:21 pm, Jacintha emailed, advising that, in the absence of confirmation of site access, she had had to cancel the riggers.
At 5:02 pm on 11 November 2019, Mr Francke sent a three page letter to Page Steel, raising a number of matters. He included reference to allegations made in an earlier letter of 16 October 2019 that Page Steel had failed to complete works by the dates and times contemplated by the contract which constituted breaches of a serious nature evincing an intention not to be bound by the contract.[5] The letter included the following demand:
Unless by 3:00pm Tuesday 12 November 2019 you:
a)confirm that you will complete the works in accordance with the contract and without requiring any deed of release or other document entered into; and
b)demonstrate your willingness and ability to proceed by completing Warehouse 2 within two days;
we are instructed that our client will accept your repudiation and bring the contract to an end.
[5]The 16 October 2019 letter alleged that Page Steel’s actions in (a) demanding payment where the entitlement has not arisen; (b) suspending works when not entitled to do so; and (c) failing to complete works by the dates and times contemplated by the contract, constituted breaches of a serious nature evincing an intention by Page Steel not be bound by the contract.
On Tuesday 12 November 2019 at 2:16 pm, Lynne sent an email to Mr Francke listing the various alleged instances since 7 November 2019 wherein Page Steel had sent workers to the site, but Makland had ordered Page Steel’s workers off site. The email further stated:
In reference to you correspondence forwarded yesterday to which we will provide a formal response, you advise that we are to demonstrate a willingness and ability to complete Warehouse 2 within 2 days, your client has denied us this opportunity by turning away our and Vicrigs employees from entering the site. They actually said “F…” off.
It's impossible to complete the work if you are not allowed on site
On 12 November 2019, Mr Francke sent a letter to Page Steel, stating that his client accepted Page Steel’s (alleged) repudiation and terminated the contract.
Ultimately, the canopies and the remaining steel were delivered after proceedings were issued, by agreement between the parties.
Proposed ground 1 — Repudiation
Judge’s reasons
The judge considered that Page Steel was prevented from performing the contract, by Makland seeking performance other than in accordance with the contract by seeking to use its own riggers and ordering Page Steel’s employees and contractors off the site.[6]
[6]Reasons, [72].
She found that, on the basis of the contemporaneous correspondence, Page Steel was ‘no longer pressing for a release as a condition of supplying the canopies’, stating:
First, this request was made to Makland in circumstances where Makland was considering deploying its own riggers and not using VicRig. Second, the subject of a release was never communicated by Page Steel directly to Pointon Partners. It was only raised in emails between Jacintha and Marjan. Page Steel responded by email dated 11 November 2019 at 10.47am that the canopies were ready to be delivered following the erection of the panels and site welding of the cleats and was silent in relation to the question of releases.[7]
[7]Ibid [73].
In the light of the actions of Makland in turning workers away from the site, the judge accepted Page Steel’s submission that it was prevented from completing the works in accordance with the contract by Makland.[8]
[8]Ibid [76].
The judge ultimately agreed with Page Steel’s submission that Makland had already determined to end the contract about two weeks prior to termination. She therefore accepted Makland’s submission that ‘its patience had expired by this time’. She considered that Makland, two weeks prior to the alleged termination date, ‘had already embarked on actions motivated by its impatience and not in accordance with its legal entitlement’.[9]
[9]Ibid [83].
The judge ultimately accepted Page Steel’s submissions that the request for the deed of release occurred in the context of:
(a)a request by Marjan for delivery of the canopies before the site was ready to receive them, to be installed by a rigger other than VicRig, an arrangement which would not be in accordance with the contract and would require further discussion with VicRig;
(b)by email dated 8 November 2019, Marjan said that he sought delivery of the canopies on Wednesday, 13 November 2019, not for installation by Page Steel and VicRig in accordance with the contract, but pursuant to an alternative proposal that other riggers be brought in to install the steel;
(c)Page Steel did not refuse to deliver the canopies, it repeatedly said that the canopies could be delivered once they were ready to be erected. It rejected the delivery of the steel canopies as proposed by Marjan, and not in rejection of its contractual obligations. The site was not ready to receive the canopies and delivery would cause double handling and risk damage to the galvanised finish. Given Marjan’s proposal to change the contractual arrangements in respect of the riggers, Page Steel needed to address this with VicRig to determine how to proceed.[10]
[10]Ibid [84].
She stated:
I agree with Page Steel’s submissions that, in seeking delivery of the steel canopies before the site was ready to receive them and thus risking double handling and damage, Makland was not seeking to erect them in accordance with the contract, but rather was aiming ‘to secure the steel that [Makland] had fully paid for’, as stated by Steve. Makland wanted to have it off-loaded and installed by a third party, which was not in accordance with the contract.[11]
[11]Ibid [90].
Finally, the judge cited Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (‘Koompahtoo’)[12] and found that Page Steel did not evince an intention not to be bound by the contract. In her view it was communicating by email its plans to continue to comply with its obligations under the contract.[13]
Proposed ground 1
[12](2007) 233 CLR 115, 135–140 [44]–[56] (Gleeson CJ, Gummow, Heydon and Crennan JJ); [2007] HCA 61.
[13]Reasons, [92]–[93].
Proposed ground 1 reads as follows:
1. The judge erred in finding the respondent:
a.did not require a Deed of Release be provided before it would perform a substantial part of the contractual obligations of the respondent, being the delivery and erection of the canopies, when the evidence demonstrated that such a demand was being made; and
b.did not repudiate the Agreement between the parties when making such a demand.
In particulars, the applicant alleged that the judge erred in finding that:
(a)by 11 November 2019, Page Steel was no longer pressing for a release as a condition of supply of the canopies (at [73] of the Reasons);
(b)Makland had earlier determined to end the contract other than in accordance with its legal entitlement (at [83] of the Reasons); and
(c)Makland would be in breach of the contract if it had another party carry out the obligations of Page Steel to erect the canopies (at [84] and [90] of the Reasons).
Makland’s submissions
Makland highlighted that, by the emails sent on 7 and 8 November 2019, Page Steel clearly demanded entry into a deed of release. Further, despite requests on no fewer than four occasions continuing up until 11 November 2019, at no stage did Page Steel disavow the demand for a deed of release, which could have been done very simply.
Makland criticised the judge’s finding that Page Steel was no longer pressing for a release on the basis that Makland was considering deploying its own riggers and the demand was not communicated to Pointon Partners.
Makland submitted that the fact that Makland was considering deploying its own riggers (owing to delays with VicRig) was plainly not what motivated the demand for the deed of release. First, in the 8 November 2019 email, Page Steel stated that it was only prepared to deliver the canopies once VicRig were available and the deed for release was provided. Second, despite the various requests for clarification, Page Steel never stated that it was only demanding the deed of release if Makland wished to engage its own riggers. Finally, even if the engagement of alternative riggers and the delivery of canopies was linked (which it was not), it did not permit Page Steel to unilaterally impose an obligation on Makland to sign a deed of release before Page Steel complied with its contractual obligations.
Makland submitted that the fact that the demand for the deed of release was not communicated directly to Pointon Partners is also irrelevant, as the demand was expressly and unequivocally made to Makland. Further, the Pointon Partners correspondence referred to those demands and gave Page Steel multiple opportunities to resile from them (which it never did).
Makland noted that the judge placed emphasis on the fact that Page Steel was prepared to continue performing works under the contract. However, Makland submitted that its case is not, and never has been, that Page Steel was not prepared to do any work on site. Rather, its case is that Page Steel was imposing a requirement on Makland (the deed of release) that it had no entitlement to impose, before it would perform a substantial part of the agreement (delivery of the canopies).
Finally, Makland highlighted that the judge appeared to place some reliance on the finding that, if Makland had engaged alternative riggers to unload and erect the canopies, that would have been a breach of the agreement by Makland and further that Makland had determined to replace the riggers in any event. Makland submitted that such a finding is irrelevant and demonstrates error because:
(a)it was not pleaded or raised until closing submissions;
(b)Makland’s suggestion that it was contemplating engaging alternative riggers was not done over the objection of Page Steel, but rather, Page Steel was generally in favour of the concept and requested a quote from the replacement riggers;
(c)it is not a breach of contract to dispense with performance of an act which the other party is obliged to perform;
(d)Makland’s subjective motivations are irrelevant to the question of whether Page Steel repudiated the agreement; and
(e)in any event, it is irrelevant if the proposed engagement of alternative riggers was a breach. That did not give Page Steel the right to demand a deed of release before it would comply with its obligations under the agreement.
In oral submissions counsel submitted that the communications of 7 and 8 November 2019 constituted a clear and unequivocal demand for a deed of release which was not subsequently revoked. More particularly, although the email of 10:47 am on 11 November 2019 (indicating that the canopies were ‘ready to be delivered and installed…’) raised an ‘issue’ as to whether the deed of release was still required, the subsequent responses to the two further requests from the solicitors suggested that the demand had not been revoked.
Counsel submitted that Page Steel had evinced an unwillingness to perform a substantial part of the contract, or to only perform it inconsistently with its obligations.
Page Steel’s submissions
Page Steel submitted that the judge was correct to find that the evidence did not establish Makland’s claim that Page Steel had repudiated the contract.
Page Steel contended that Makland’s interpretation selectively ignored aspects of the context and content of the communications. Specifically, that Jacintha’s requirement for the deed of release only occurred in response to Marjan’s request on 7–8 November 2019 for delivery of the canopies for installation by alternative riggers, which would not have been in accordance with the contract. She otherwise said that the canopies were ready for delivery when the site was ready to receive them (on 11 November 2019). The proper approach to the evidence is to examine it as a whole.
Page Steel submitted that Makland misrepresented the judge’s reasons. It submitted that Makland was incorrect to assert that the judge relied on an allegation of a potential ‘breach of the agreement’ by Makland that was ‘not pleaded’. The judge did not refer to, find, or rely on a ‘breach of agreement’ by Makland. Rather, the judge’s focus was on identifying whether a ‘contractual obligation’ had been repudiated. It submitted that Page Steel’s refusal to accede to a request for delivery and installation by a third party could not be a rejection of its contractual obligations (because there was no such contractual obligation).
Page Steel further submitted that Makland’s reliance on Page Steel’s failure to ‘disavow’ the deed of release requirement does not assist Makland. It submitted that the ‘lack of “disavowal” simply left the position unchanged: a refusal … to do something that was not in accordance with the contract.’ It did not render Page Steel’s conduct repudiatory.
Page Steel contended that Makland’s reliance on Page Steel’s failure to comprehensively refute the allegations set out in Mr Francke’s letter sent at 5:02 pm on 11 November 2019 by the stipulated deadline of 3:00 pm the next day is misplaced. At its highest, the response at 2:18 pm on 12 November 2019 created ‘some ambiguity’. However, Page Steel submitted that this does not assist Makland, given that a repudiation must be clear.
In oral submissions, counsel emphasised that the whole issue of the deed of release only arose in the context where Makland was considering retaining alternative riggers. This raised the question of what was to happen with the extra costs of those riggers, as well as what would happen if the steel was damaged by a third party installer (which did in fact occur). In this sense, the parties had different conceptions as to what they were entitled to demand under the contract. In particular, this was not a situation where Page Steel was refusing the delivery of steel and installation with its riggers under the contract. Rather, Makland was demanding delivery of steel which would be installed with different riggers. The answer to this latter question was not without a deed of release.
Page Steel also highlighted that a deed of release was unequivocally ruled out by Friday 8 November 2019 (at 5:05 pm, and also at 5:13 pm when Pointon Partners stated that their client ‘does not intend to provide a release…’). Despite this, Page Steel kept working and expressly said that the canopies were ready to be delivered and installed on Monday 11 November 2019 at 10:47 am and never mentioned the deed again.
Counsel further submitted that the correspondence from Pointon Partners of 11 November 2019 was broad ranging and ‘messy’ and covered many issues beyond the question of any deed. At best, the exchange between the parties was ambiguous which was insufficient given that a repudiation must be clear.
Consideration
(i) Judicial authority
In Koompahtoo, Gleeson CJ, Gummow, Heydon and Crennan JJ stated:[14]
The term repudiation is used in different senses.[15] First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations.[16] It may be termed renunciation.[17] The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[18] … Secondly, it may refer to any breach of contract which justifies termination by the other party.[19]
[14](2007) 233 CLR 115, 135–6 [44]; [2007] HCA 61 (footnotes in original).
[15]Heyman v Darwins Ltd [1942] AC 356 at 378; Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625–626.
[16]Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 634 per Mason CJ.
[17]Heyman v Darwins Ltd [1942] AC 356 at 397.
[18]Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 659.
[19]See Carter, Breach of Contract, 2nd ed (1991), p 217.
In Alphater Consulting Engineers Pty Ltd v Rozman (‘Alphater’),[20] this Court endorsed the principles enunciated by Ashley JA in R & Cab Co Pty Ltd v Kotzman (‘Kotzman’)[21] as follows:
[20][2016] VSCA 111.
[21][2008] VSCA 68, [45]–[49] (Ashley JA, Kellam JA agreeing at [69], Osborn AJA agreeing at [76]) (citations omitted).
First, in Shevill and Anor v The Builders Licensing Board Wilson J said that —
Repudiation of a contract is a serious matter and is not to be lightly found or inferred: Ross T Smyth & Co Ltd v T D Bailey, Son & Co. In considering it, one must look to all the circumstances of the case to see whether the conduct ‘amounts to a renunciation, to an absolute refusal to perform the contract’: Mersey Steel and Iron Co v Naylor, Benzon & Co.
In the same case, Gibbs CJ observed that a binding contract —
… may be repudiated if one party renounces his liabilities under it — if he evinces an intention no longer to be bound by the contract (Freeth v Burr) or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way.
Second, whether a party’s conduct amounts to repudiation is not ascertained by an inquiry into the subjective state of the mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party’s … intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations, and not in any other way.
Third, it has been stated very often that the whole circumstances of the case must be examined in order to see whether there was repudiation. Lord Keith of Kinkel put it this way in Woodar Investment Development Ltd v Wimpey Construction UK Ltd:
My Lords, in deciding the issue of repudiation which arises in this appeal, the guiding principle is that enunciated by Lord Coleridge CJ in Freeth v Burr.
‘In cases of this sort, where the question is whether the one party is set free by the action of the other, the real matter for consideration is whether the acts or conduct of the one do or do not amount of an intimation of an intention to abandon and altogether to refuse performance of the contract.’
The matter is to be considered objectively — per Bowen LJ in Johnstone v Milling:
‘The claim being for wrongful repudiation of the contract it was necessary that the plaintiff’s language should amount to a declaration of intention not to carry out the contract, or that it should be such that the defendant was justified in inferring from it such intention. We must construe the language used by the light of the contract and the circumstances of the case in order to see whether there was in this case any such renunciation of the contract.’
The importance of looking at the whole circumstances of the case was emphasised by Lord Selborne LC in Mersey Steel & Iron Co Ltd v Naylor, Benzon & Co and by Singleton LJ in James Shaffer Ltd v Findlay Durham & Brodie.
Fourth, qualifying to some extent the principle noted at [47], in some circumstance, ‘a mere honest misapprehension, especially if open to correction, will not justify a charge of repudiation’. The proposition has typically fallen for consideration where the defaulting party has acted in reliance upon an erroneous interpretation of the contract. In that particular context, the bona fides (or otherwise) of the defaulting party is a relevant factor. In Australia, as in England, it has been suggested that an aggrieved party should take steps to persuade the mistaken party of its error if it wishes to rely upon that other party’s conduct as a repudiation of the contract.[22]
(ii) Analysis
[22][2016] VSCA 111, [60] (Santamaria, Beach and McLeish JJA).
There are two criticisms raised by Makland which have merit:
(a)first, the subjective intention and motivations of Makland are irrelevant since whether a party’s conduct amounts to repudiation is not ascertained by an inquiry into the subjective state of mind of a party;[23] and
(b)second, the fact that the deed of release was raised directly with Makland, rather than Pointon Partners, is largely irrelevant save that the requests should be read in the commercial context in which they took place, in circumstances where the communications from Page Steel do not appear to have been written by lawyers.
[23]Ibid; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, 647 (Brennan J); [1989] HCA 23 (‘Laurinda’).
However, Makland’s complaint that the judge somehow made a finding about breach is not valid. The judge did not actually make a finding of breach. Rather, she found that installation by a third party would not be in accordance with the contract. In circumstances where Page Steel had been retained to erect the steel (through its own contractors or otherwise) this was undoubtedly correct.[24] In any event, the judge was correctly focused — not on any breach by Makland — but on whether Page Steel had repudiated the contract. In finding that it did not, she considered that the request for a deed of release was not repudiatory of the contract, inter alia, because it was made in response to a request for performance outside that contract. It remains, then, to consider this finding in the context of all the relevant circumstances.
[24]See also para 17 of Steve’s witness statement dated 28 February 2023, where he stated that he did not specify who Page Steel could, or should, engage as its contractors.
Turning then to the critical exchanges, Page Steel did not proffer an express reason for its request for a deed of release. However, as explained above, Makland appears to have suggested the retention of ‘alternative Riggers’ in a discussion of 7 November 2019. Although Jacintha continued to make reference to VicRig’s availability, she expressly referred to the ‘discussion earlier today’ when ‘[a]lso’ requesting a deed of release (at 4:23 pm on 7 November 2019).
The emails of 8 November 2019 were also exchanged in circumstances where the question of ‘alternative Riggers’ was being raised, as well as the delivery of the canopies even if the site was not ready for them. In the email of 12:17 pm Jacintha requested a quote from these ‘alternative Riggers’. Marjan then suggested that he wanted to ‘arrange [his] own riggers’ to unload and sort out on site (at 1:30 pm/12:52 pm). He later stated that he needed the steel for the canopies on site ‘[r]egardless’ of whether the panels were up or not and stated that he had actually ‘arranged a crane and riggers’ (at 2:40 pm). In each case, Jacintha replied by making reference to a deed of release. She also indicated that she understood Makland might want to consider using alternative riggers, but that she required pricing to address how ‘we proceed beneficial to all.’
It may be accepted that, if by later answering ‘[c]orrect’ (in her email of 4:22 pm on 8 November 2019) Jacintha was saying that Page Steel would not be delivering the canopies in accordance with the contract without such a deed, this could constitute repudiatory conduct. Nevertheless, the emails of 7 and 8 November 2019 occurred in circumstances where the parties were considering the possibility that the steel be off‑loaded and installed by a third party before the site was ready to receive the canopies ie that the contract might be performed in a different way from that which had been contemplated. This may well have raised new issues for negotiation as to the extra costs of those riggers, as well as what would happen if the steel was damaged — as counsel suggested. In any event, a request raised in the course of renegotiating a contract is not repudiatory[25] and it is simply not clear[26] that Page Steel’s statements of 7 and 8 November 2019 should be so classified.
[25]Kotzman [2008] VSCA 68, [55] (Ashley JA, Kellam JA agreeing at [69], Osborn AJA agreeing at [76]).
[26]And see Shevill v Builders Licensing Board (1982) 149 CLR 620, 633 (Wilson J); [1982] HCA 47 cited in Alphater [2008] VSCA 68, [60] (Santamaria, Beach and McLeish JJA), above. See also Laurinda (1989) 166 CLR 623, 633 (Mason CJ), 643 (Brennan J), 657 (Deane and Dawson JJ); [1989] HCA 23; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, 32 (Mason J); [1985] HCA 14, also cited in Alphater [2008] VSCA 68, [62] (Santamaria, Beach and McLeish JJA).
Moreover, even if, on 8 November 2019, Page Steel was saying that it would not undertake works in accordance with the contract absent a release, the pivotal issue is whether it continued to take this stance by the time Makland sought to terminate on 12 November 2019. In considering this issue, it will be recalled that Makland made clear that no deed of release would be provided (in emails of 5:05 pm and 5:13 pm) on Friday 8 November 2019.
Despite this indication, Page Steel then:
(a)did not renew any further request for a release;
(b)continued to provide workers including: VicRig riggers on Sunday 9 November 2019; a boilermaker on Monday 11 November 2019 (though he was asked to leave); the attempted attendance of VicRig also on Monday (who could not attend absent confirmation of site access); and the further attendance of VicRig on Tuesday 12 November 2019 (who were also turned away from the site); and
(c)emailed at 10:47 am on Monday 11 November 2019 that ‘[t]he canopies [were] ready to be delivered and installed following the erection of the panels and site welding of the cleats by others’ — but that the canopies were not required on site yet to avoid damage (according to the later emails of 11:10 am and 11:41 am).
As indicated already, counsel for Makland made the concession that the email of 10:47 am raised an ‘issue’ as to whether Page Steel was continuing to refuse to deliver the canopies absent a release. This was a proper concession to make, particularly in circumstances where the judge accepted that the site was not even ready to receive the canopies. However, counsel submitted that the responses to the subsequent correspondence from the solicitors suggested that Page Steel was renouncing the contract.
It is true that, in its responses to the solicitors’ email and letter (on 11 November 2019), Page Steel did not expressly say that no deed of release was required before it would continue to supply contracted works. However, for the reasons which follow, we do not consider that any such failure was repudiatory.
First, the three page letter from the solicitor canvassed a number of complex issues and sought a response in a relatively short time period in circumstances where the judge’s unchallenged finding was that there was no fixed date for completion. Secondly, in the email of 2:16 pm Page Steel indicated that it still wished to provide a ‘formal response’. This was hardly surprising given the wide range of matters raised by Pointon Partners. Finally, and most significantly, although Makland had already made clear that no deed of release would be given (from Friday 8 November 2019), Page Steel was continuing to supply/attempting to supply works in accordance with the contract without any mention of a deed of release right up until 12 November 2019. As stated in the case of Koompahtoo, in contractual renunciation ‘actions may speak louder than words.’[27] It can hardly be said that Page Steel was evincing a refusal to perform works under the contract in circumstances where it was making every attempt to do exactly that.
[27](2007) 233 CLR 115, 135–6 [44] (Gleeson CJ, Gummow, Heydon and Crennan JJ); [2007] HCA 61.
In all these circumstances, we are not satisfied that Page Steel’s conduct was such as to convey renunciation to a reasonable person. The judge was therefore correct to find that Page Steel had not repudiated the contract.
Conclusion
Leave to appeal will be granted, but the appeal will be dismissed.
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SCHEDULE OF PARTIES
MAKLAND CONSTRUCTIONS PTY LTD (ACN 146 092 533) First Applicant FULTON ROAD PROPERTIES PTY LTD (ACN 163 820 997) Second Applicant FULTON PROPERTIES OVER PTY LTD (ACN 163 820 746) Third Applicant and PAGE STEEL FABRICATIONS PTY LTD (ACN 006 636 004) Respondent