Mareva Building Consultants v Zevon - [2012] ACTSC 18

Mareva Building Consultants v Zevon [2012] ACTSC 18 (27 January 2012)

CONTRACTS — Whether an enforceable agreement existed – classes of agreement in Masters v Cameron – intention to be bound prior to execution of formal written contract – intention of parties ascertained objectively – whether acceptance of agreement was “subject to finance”

ESTOPPEL — Whether defendant estopped from denying existence of contract

CONTRACTS — Whether defendant liable for breach of contract – whether contract terminated for breach, rather than abandoned or discharged by agreement

Court Procedures Rules 2006 (ACT) rr 286, 1616; Sch 2

Almond Investors Ltd v Kualitree Nursery Pty Ltd [2011] NSWCA 198
Australian Securities and Investment Commission v Fortescue Metals Group Ltd (2011) 190 FCR 364
Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622
The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Hadley v Baxendale (1854) 9 Ex 341; (1854) 156 ER 145
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115
Love & Stewart Ltd v S Instone & Co Ltd (1917) 33 TLR 475
Masters v Cameron (1954) 91 CLR 353
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Sinclair, Scott & Company Ltd v Naughton (1929) 43 CLR 310
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

Seddon NC and Ellinghaus MP, Cheshire and Fifoot’s Law of Contract (9^th ed, LexisNexis, 2008)

No. SC 676 of 2009

Judge: Katzmann J
Supreme Court of the ACT

Date: 27 January 2012

IN THE SUPREME COURT OF THE     )
  )          No. SC 676 of 2009
AUSTRALIAN CAPITAL TERRITORY           )

BETWEEN:MAREVA BUILDING CONSULTANTS
Plaintiff

AND:HARRY ZEVON
First Defendant

VIDA ZEVON
Second Defendant

ORDER

Judge:  Katzmann J
Date:  27 January 2012
Place:  Sydney/Canberra

THE COURT ORDERS THAT:

Judgment be entered in favour of the plaintiff in the sum of $19,887.
The question of costs be reserved.

Martti Honkanen is a licensed builder, who runs a building consultancy known as Mareva Building Consultants (“Mareva”) in partnership with his wife, Eva. Harry Zevon knew Mr Honkanen from church. He approached Mr Honkanen with a view to having a house built for him and his wife, Vida, on land he held in Gungahlin. In due course Mr Honkanen provided Mr Zevon with a quotation for the cost of the building work. Mr Zevon rejected the quotation but accepted a revised version in a reduced amount. Before building work had begun, however, Mr Zevon decided not to proceed with the project. Instead, he offered Mr Honkanen the opportunity to both design and build another house in Bruce on another block of land Mrs Zevon had purchased in her name. Mr Honkanen accepted Mr Zevon’s new proposal. He prepared (and then, at Mr Zevon’s request, amended) construction drawings for the new house. He quoted for the new house and included in the quotation a sum…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2012] ACTSC 18
Decision Date: 27 January 2012

CaseChat Overview and Summary

In the case of Mareva Building Consultants v Zevon, the Federal Court was tasked with determining whether a binding agreement existed between the parties, and if so, whether the defendant was liable for breach of contract. The plaintiff, Mareva Building Consultants, alleged that the defendant, Zevon, had entered into a contract for the construction of a building but failed to complete the work or pay for services rendered. The defendant contended that no enforceable contract existed, and that any agreement was contingent upon securing financing.

The court was required to examine the formation of the contract, specifically whether the parties had demonstrated an intention to be legally bound before a formal written contract was executed. This involved an objective assessment of the parties' communications and conduct to ascertain their true intentions. Additionally, the court needed to consider whether the agreement was subject to financing, which could potentially negate the enforceability of the contract. Furthermore, the court had to determine if the defendant was estopped from denying the existence of the contract and whether the contract was breached or terminated by the defendant.

The court found that an enforceable agreement had indeed been formed between the parties, based on their conduct and the objective assessment of their communications. The court held that the agreement was not subject to finance and that the defendant was estopped from denying its existence. Consequently, the court ruled that the defendant was liable for breach of contract. The court ordered judgment in favour of the plaintiff in the amount of $19,887, with the question of costs reserved for further consideration.

Orders

Orders of the court

Judgment be entered in favour of the plaintiff in the sum of $19,887.

The question of costs be reserved.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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