Marinchek v Cabport Pty Ltd

[2010] NSWCA 334

New South Wales

Court of Appeal

CITATION:	Marinchek v Cabport Pty Ltd [2010] NSWCA 334
HEARING DATE(S):	23 September 2010
JUDGMENT DATE:	9 December 2010
JUDGMENT OF:	Macfarlan JA at 1; Handley AJA at 65; Harrison J at 66
DECISION:	(1) Appeal allowed; (2) Set aside the orders made at first instance dismissing the appellant’s Cross-Claim against the first respondent, Cabport Pty Ltd, and that the appellant pay the first respondent’s costs of that Cross-Claim; (3) Order that a new trial be held of the appellant’s Cross-Claim in so far as that Cross-Claim relates to alleged defects in the subject works (other than Defects 13 and 14 identified in the schedules submitted by the parties to this Court) and to alleged overpayment by the appellant; (4) Order the appellant to pay the second, third and fourth respondents’ costs of the appeal; (5) Order the first respondent to pay one-half of the appellant’s costs of the appeal; and (6) The first respondent to have a certificate under the Suitors’ Fund Act 1951, if qualified. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
CATCHWORDS:	CONTRACT - agreement to settle disputes - held not to preclude claims in relation to matters of which parties unaware at date of agreement.
LEGISLATION CITED:	Home Building Act 1989 Trade Practices Act 1974 (Cth)
CATEGORY:	Principal judgment
CASES CITED:	Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 International Air Transport Association v Ansett Australia Holidays Limited [2008] HCA 3; (2008) 234 CLR 151 Grant v John Grant & Sons Proprietary Ltd [1954] HCA 23; (1954) 91 CLR 112 Jovic v Lamont [2007] NSWCA 47 Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 Suttor v Gundowda [1950] HCA 35; (1950) 81 CLR 418 University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481
PARTIES:	Scott Marinchek (Appellant) Cabport Pty Ltd (First Respondent) Roger Keith O’Sullivan (Second Respondent) Bernie O’Sullivan (Third Respondent) Sean Richard O’Sullivan (Fourth Respondent)
FILE NUMBER(S):	CA 2009/324387
COUNSEL:	J B Simpkins SC/T J Davie (Appellant) J C Kelly SC/R V Zikmann (Respondents)
SOLICITORS:	Gillis Delaney Lawyers (Appellant) Norton Rose Australia (Respondents)
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 2740/2005
LOWER COURT JUDICIAL OFFICER:	Hughes DCJ
LOWER COURT DATE OF DECISION:	9 October 2009

CA 2009/324387

MACFARLAN JA
HANDLEY AJA
HARRISON J

9 DECEMBER 2010

MARINCHEK v CABPORT PTY LTD

Judgment

1 MACFARLAN JA:

2 The first respondent (“Cabport”) is a building company of which Mr Bernie O’Sullivan is a director and his son Mr Sean O’Sullivan is an employee. As there is a particular type of residential building work which Cabport is not licensed to do, Cabport has on a number of occasions worked with Mr Bernard O’Sullivan’s brother, Mr Roger O’Sullivan, who is a builder licensed to do that type of work.

3 In 2004 the appellant was the owner of a residential property in Vaucluse, Sydney. Early in that year he contracted to have building work done on the property. The primary judge held that his contract was made with Cabport. Although that decision was challenged by the appellant in his Notice of Appeal, the challenge was withdrawn at the hearing of the appeal.

4 Disputes between the appellant and Cabport concerning the building work developed at the end of 2004 and in early 2005. As a result, they negotiated with a view to settling their differences.

5 At the hearing of the appeal, the parties were in agreement that the appellant and Cabport made a Settlement Agreement (the “Settlement Agreement”) on 8 March 2005. Until the hearing of the appeal the parties had been at odds as to precisely how and when on 8 (or 7) March 2005 that Agreement was made. Resolution of this difference had potential significance because the appellant argued, and Cabport denied, that included in the contractual terms were terms set out in an email sent at 12.15pm on 8 March 2005 by the appellant to Cabport.

6 This difference also ceased to be an issue on the appeal as Cabport agreed at the hearing of the appeal with the appellant’s contention that the terms of that email, as varied in subsequent emails up to 6.24pm on 8 March 2005, formed part of the contractual documents. That left the sole issue between the parties on the appeal as one concerning the proper construction of the Settlement Agreement, the particular issue being whether on the proper construction of the Agreement certain of the terms set out in the email of 12.15pm on 8 March 2005 (as subsequently amended on that day) precluded the appellant from claiming the damages that he claimed in his Further Amended Cross-Claim (the “Cross-Claim”) filed in the proceedings.

7 In its Further Amended Statement of Claim (the “Statement of Claim”), Cabport sought relief on a number of different bases. At first instance it was only successful in obtaining judgment for $23,875.19 plus interest (in total $34,026.40), being an amount to which the primary judge found Cabport was entitled pursuant to the terms of the Settlement Agreement. The appellant does not challenge that judgment on appeal and Cabport did not file a Notice of Cross-Appeal. As a result there is no issue on the appeal relating to Cabport’s claim at first instance. The sole issue relates to the Cross-Claim.

8 By his Cross-Claim the appellant first claimed damages against Cabport for breach of contract upon the basis that the building work that Cabport did on the Vaucluse property was defective, that Cabport delayed in carrying out the building works and thereby caused the cost of the works to increase and that Cabport overcharged the appellant. These allegations were made in the alternative against Mr Bernie O’ Sullivan to cover the possibility (which did not in fact eventuate) that he might be held to be the party who contracted with the appellant.

9 Secondly the appellant claimed that Cabport had been guilty of misleading and deceptive conduct in contravention of s 52 Trade Practices Act 1974 (Cth) in making representations concerning the basement of the premises on the property, the likely cost of the works, supervision of the works, delay in completion and the method of construction of the building. Similar allegations, as well as one relating to Home Owners’ Warranty insurance, were made against Mr Bernie O’Sullivan and Mr Sean O’Sullivan.

10 Next, contractual and Trade Practices Act claims as made against Cabport were repeated against Mr Roger O’Sullivan to cover the eventuality that he might be held to have been the contracting party.

11 Finally, claims in negligence were made against Cabport and the three O’Sullivans. The factual circumstances alleged appear to mirror those relied upon in relation to the other causes of action.

12 The losses that the appellant alleged in his Cross-Claim that he had incurred included costs of $58,208.51 in rectifying defects and “increased construction costs due to delays and increased costs” of $1,361,639.

13 The primary judge dismissed the Cross-Claim, not after a consideration of its merits, but upon the basis that the claims made in it were precluded by the Settlement Agreement. His Honour took the view that the appellant had agreed in his Written Submissions with Cabport’s Written Submission as to what comprised the terms of the Settlement Agreement (Judgment [22]). The effect of this submission of Cabport was that the terms of the email of 12.15pm on 8 March 2005 (see [5] above) did not, either in the form then stated, or as subsequently amended, form part of the Settlement Agreement. However, his Honour was mistaken in this view of the appellant’s position. His error was based upon a misunderstanding of the appellant’s Written Submissions. The result was that his Honour did not consider the matter which is in issue on the appeal, that is, the effect of the terms of that email.

14 The totality of his Honour’s reasoning in support of his conclusion that the Settlement Agreement precluded the claims made in the appellant’s Cross-Claim was as follows:

“21 I find that there was an agreement to end the relationship of builder and owner and that this was to be a full and final settlement.
In Scott Marinchek’s evidence he says, ‘the intention was [that] the settlement agreement would cover any previous current and potential future issues’.
Scott Marinchek’s Architects prepared a list of alleged defects. (25 ^th February 2005).
Acclaim [the replacement builder] had already visited the site and had made a detailed photographic record. (300 photographs) (1 ^st to 3 ^rd March 2005).
The [appellant] in an email to Michael O’Sullivan wrote, ‘I failed to express my gratitude to both of you for agreeing to a speedy resolution of this matter’ (8 ^th March 2005).
The [appellant] in an email to Michael O’Sullivan wrote, ‘We confirm that we have reached agreement on the determination of your contract of engagement and the handover of the site to a new builder’.
The [appellant] paid $121,520 but not the final invoice”.

15 On the appeal the respondents argued that upon its proper construction the Settlement Agreement precluded the appellant from making the claims in the Cross-Claim. In reply the appellant submitted that this argument of the respondents was a new one that they should not be permitted to raise for the first time on appeal (see Suttor v Gundowda [1950] HCA 35; (1950) 81 CLR 418). He submitted that the relevant issue at first instance was as to what terms were included in the Settlement Agreement and that, contrary to the position now sought to be taken by the respondents on the appeal, the respondents had implicitly accepted that if the appellant’s contention that the terms of the email of 12.15pm on 8 March 2005 (as amended) were included in the Agreement, the Settlement Agreement did not preclude the appellant making the claims that he made in his Cross-Claim. I shall deal with this Suttor v Gundowda argument after dealing with the construction of the Settlement Agreement.

The communications of 7 and 8 March 2005

16 To resolve the issue concerning the proper construction of the Settlement Agreement it is necessary to refer to the communications that led to and comprised that Agreement. These were as follows.

17 Prior to 18 February 2005 disputes had arisen between the appellant and Cabport concerning the building works and payment for them. On that day, Cabport sent an email to the appellant pressing for payment of various invoices. On 21 February 2005 the appellant indicated that he wanted the building works to be taken over by another builder. He set out the terms upon which he asserted that such a takeover should occur. These included Cabport ensuring that “any required rectifications” were completed before the date of the final hand over to the new builder. The appellant did not suggest that he would be making any claim against Cabport for damages.

18 On 25 February 2005 the appellant’s architects prepared a list of defects in the building works. Both parties came into possession of the list prior to 7 March 2005. Many of these defects related to the roof of the premises.

19 By letter of 2 March 2005 Cabport again sought payment of outstanding invoices and by letter of 4 March 2005 advised the appellant that due to non-payment of invoices it would suspend work at the site on 7 March 2005.

20 On or before 7 March 2005 the appellant met with Mr Michael O’Sullivan, another son of Mr Bernie O’Sullivan. Michael O’Sullivan had agreed to assist Cabport to resolve its differences with the appellant. Following this meeting the appellant sent an email at 4.10pm on 7 March 2005 to Cabport in the following terms:

“WITHOUT PREJUDICE

Bernie/Sean,

After discussing the matter with Michael (who has been extremely patient and helpful in gaining clarity on the key issues), we are prepared to settle invoices 3086, 3133, and 3134 in the amount of $228,033.26 by immediately paying $89,933.70 and assuming all outstanding subcontracts including $92,867.06 from these invoices; this leaves a shortfall of $45,232.50.

We propose this to be settlement of all previous invoices and all currently identified rectifications except for the roof, gutters and overflow which are to be addressed within a specified period of time.

Any future invoices will be promptly paid when supported by required information.

This offer ends at 5PM today and is based on an efficient handover taking place on or before 7.30AM on 8 March and provision of all supporting documentation as required.

If we do not communicate by 6PM today, please assume that the contract will be rightfully terminated prior to tomorrow morning. Please do not visit the site without coordinating with the new builder” (Blue Appeal Book pp 852-853; all further page references in this judgment are to the Blue Appeal Books unless otherwise indicated).

21 Michael O’Sullivan responded on the same day by email sent at 5.31pm. A principal point he made was that Cabport would only allow a credit of $30,000, rather than the credit of $45,232.50 that the appellant’s email implied would have to be given.

22 Michael O’Sullivan gave evidence that he had a number of telephone conversations with the appellant and Bernie O’Sullivan on 7 March 2005. He said in relation to these conversations:

“During those conversations, I got to a point where both Bernie and [the appellant] agreed on a mutually acceptable position. My understanding of that agreement was outlined in an email of 5.31pm later that day … ” (p 844).

This evidence implies that the conversations occurred and the agreement was reached prior to 5.31pm. The email sent by Michael O’Sullivan at that time however speaks in terms of an offer and does not suggest that an agreement had already been reached. Nevertheless this inconsistency is not of importance in resolution of the appeal.

23 The next documentary communication was an email that the appellant sent to Michael O’Sullivan at 10.11pm on 7 March. It said the following:

“In return for handover early Tuesday morning, I confirm that I will arrange for payment during business hours on Tuesday as per the amended terms agreed in our discussion” (p 850).

24 Neither this email nor any other evidence made it clear whether the “amended terms agreed in our discussion” referred to in the email were the terms contained in the email that Michael O’Sullivan sent at 5.31pm. However, whilst Cabport contended the contrary at first instance, neither party contended on appeal that the parties had by this time made a binding settlement agreement. On appeal, they agreed that this did not occur until receipt of the email sent at 6.24pm on 8 March and referred to below (at [33]).

25 At 8.25am on 8 March Michael O’Sullivan sent an email saying:

“[Great] to see we at last have an agreement” (p 2125).

26 At 10.24am on 8 March the appellant sent an email to Michael O’Sullivan, copied to Bernie O’Sullivan, that included the following:

“In my haste to get on with my day this morning, I failed to express my gratitude to both of you for agreeing to a speedy resolution of this matter. We may never know whether or not there were sufficient grounds for a discrepancy and we will certainly never know whether the contentious tone of our communication was appropriate. Moreover, it is inevitable that we will each have our own opinions on this matter … some of which are supported by 3 ^rd -party advisors.
In the end none of this stuff matters as it’s just a house (albeit a special one), just a project (albeit an important one), and just a bunch of money (actually it’s a lot of money!) ... none of which will make us any happier when we are in our graves” (p 849).

27 At 12.15pm on 8 March the appellant sent an email to Cabport that commenced as follows:

“We refer to our discussion concerning the resolution of our differences regarding the building works at [the Vaucluse property]. We confirm that we have reached agreement on the determination of your contract of engagement and the handover of the site to the new builder” (p 854).

28 Paragraph four of that email relevantly said the following:

“4. We have agreed to determine our agreement effective on 8 March 2005 subject to the following:
(i) we agree to assume liability for sub-contractor invoices totalling $71,347.06 as discussed and set out by E-mail earlier today. We will provide you with confirmation from each contractor that they will accept the assignment;
(ii) we will assume liability for all future or unbilled contractor works. We will supply confirmation from the contractors that they accept such an assignment;
(iii) payment for all contractor and sub-contractor invoices will be made upon approval by the designated quantity surveyor upon presentation of the contract, full reconciliation of original contract value, variations, and confirmation of payments already received.
(iv) in respect to Invoices 3086, 3133 and 3134 we will pay to you a sum of $126,686.20 which you accept in full satisfaction of those invoices, subject to our acceptance of the sub-contractor invoices which have been assigned;
(v) you shall organise for the roofing defects to be repaired and shall organise the roofing sub-contractor to attend on site to remedy any defects in his works;
(vi) you will submit a final invoice for unbilled works with supporting documentation for consideration and payment of any monies due;
…
(xiii) in the event that defective works are identified after the determination of our agreement which relate to works carried out by sub-contractors that you engaged, you will do all things necessary to ensure that the sub-contractors remedy any defects in their works;
(xiv) the statutory warranties imposed by the Home Building Act and pursuant to our agreement in respect to the works which you carried out continue to apply;
(xv) you remain liable for any defect in the building works that were undertaken by you or your sub-contractors prior to 8 March 2005” (pp 855 – 856).

29 Cabport replied by email sent at 3.38pm on 8 March (pp 789 – 91). It sought various limited amendments to the agreement proposed in the email of 12.15pm. In relation to paragraph 4(xiii) it sought the inclusion of the words “with the exception of the alleged defective work identified to date, and the monetary value [that Cabport] allowed to rectify therein” after the word “engaged”. It agreed with paragraph 4(xiv) and sought that there be added to the end of paragraph 4(xv) “See 4(xiii) above”.

30 An email that the appellant sent to Cabport at 5.47pm on 8 March included the following:

“3. We agreed with Michael on a total payment of $100,000.00 assuming that we were assigned sub-contracts of $92,867.06. This included [meaning thereby that Cabport allowed the following discounts] $20,000 for invoice discrepancies, $10,000 for rectifications to previously identified items other than the roof, [gutters], and overflow, and an additional amount of $5,166.20 which was agreed late last night. Your amendment to clause 4. (xiii.) requires specification ‘subject to the monetary value of $10,000 excluding the roof, gutters, and overflow’.
4. We didn’t catch it earlier; however, it appears as though our conversation this morning did not acknowledge the additional $5,166.20 [allowance to which we] agreed last night. Therefore, the total payment amount is $121,520.00 not $126,686.20 … ” (p 864).

31 There then followed a table comparing figures involved in the “Original proposal”, the “Agreed proposal” and “Today’s amendment”. Each referred to a $20,000 “Adjustment” by way of reduction of the total invoiced amount and to a further “Adjustment” in respect of “stated non-roof rectifications”.

32 At 6.05pm on 8 March 2005 the appellant sent a further version of the email that had originally been sent at 12.15pm (pp 871 – 872). This was headed “AMENDED AS AGREED”. The only difference of present relevance is that after the word “engaged” in subparagraph (xiii) the words “with the exception of the alleged defective work identified to date subject to 4(v),” appeared.

33 Cabport responded at 6.24pm agreeing to the amendments and requesting payment in accordance with condition 4(iv) (p 805). Soon thereafter the appellant paid Cabport the sum of $121,520.20 as agreed. On the appeal the parties agreed that the Settlement Agreement between them had been concluded by the despatch and receipt of the email of 6.24pm.

The proper construction of the Settlement Agreement

34 The appellant’s argument is a simple one: the terms of the Settlement Agreement as contained in the email of 12.15pm on 8 March (as amended during the course of the afternoon) did not contain any express release by the appellant of the claims that he made in his Cross-Claim and there is no basis for implying such a release. It was submitted on his behalf that the continued availability of such claims was expressly recognised by subparagraphs 4(xiv) and 4(xv).

35 I do not accept this argument. When the documents passing between the parties on 7 and 8 March are looked at as a whole, as I consider they must be, it is in my view clear that the parties to the building agreement intended to release each other from all claims in relation to the agreement that arose out of circumstances then known to both parties.

36 Whilst the terms of the 12.15pm email (as amended) set out the points of agreement between the parties, it is necessary to have regard to the preceding communications on 7 and 8 March to identify the commercial purpose and subject matter, that is the disputes and claims, to which the points of agreement in the 12.15pm email were intended to relate.

37 Even if the terms set out in the 12.15pm email of 8 March (as subsequently amended) are regarded as a comprehensive statement of the parties’ bargain, it is permissible to have recourse to the earlier communications for this purpose. Many authorities establish this principle. One statement of it is that of Gleeson CJ International Air Transport Association v Ansett Australia Holidays Limited [2008] HCA 3; (2008) 234 CLR 151 as follows:

“8. In giving a commercial contract a businesslike interpretation, it is necessary to consider the language used by the parties, the circumstances addressed by the contract, and the objects which it is intended to secure ( McCann v Switzerland Insurance Australia Ltd [[2000] HCA 65;] (2000) 203 CLR 579 at 589 [22]; Lake v Simmons [1927] AC 487 at 509 per Viscount Sumner). An appreciation of the commercial purpose of a contract calls for an understanding of the genesis of the transaction, the background, and the market ( Pacific Carriers Ltd v BNP Paribas [[2004] HCA 35;] (2004) 218 CLR 451 at 462 [22]; Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574; Codelfa Construction Pty Ltd v State Rail Authority (NSW) [[1982] HCA 24;] (1982) 149 CLR 337 at 350). This is a case in which the Court's general understanding of background and purpose is supplemented by specific information as to the genesis of the transaction. The Agreement has a history; and that history is part of the context in which the contract takes its meaning ( Singh v The Commonwealth [[2004] HCA 43;] (2004) 222 CLR 322 at 331-338 [8]-[23]) …”.

38 The following matters emerge from consideration of the preceding communications on 7 and 8 March.

39 The opening email, being that which the appellant sent at 4.10pm on 7 March, referred to the “settlement of all previous invoices and all currently identified rectifications except for the roof, gutters and overflow which are to be addressed within a specified time”. To my mind this statement suggested that the appellant intended that the proposed settlement would preclude further claims in respect of already identified defects (including at least those included in the architects’ list of 25 February 2005, of which both parties were by then aware). From the absence of any inconsistent assertions by Cabport in its subsequent emails, it can be concluded that these subsequent communications involved at least implicit acceptance by Cabport of this object of the contemplated settlement. The subsequent emails from the appellant to which reference is made below involved at least implicit re-affirmation by the appellant of that object.

40 Secondly, the appellant’s email of 10.24am on 8 March indicated that he regarded his disputes with the builder as being brought to an end by the settlement. Bearing in mind that the parties’ communications on 7 and 8 March included consideration of what was to be done about defects that had been identified, it was implicit that the appellant intended that the settlement cover claims in respect of all of the then identified defects.

41 Thirdly, the appellant’s reference at the beginning of his email sent at 12.15pm on 8 March to the “resolution of our differences regarding the building works” at the property suggested a broad ranging settlement of all existing disputes and claims in respect of defects which had at that time been identified.

42 Fourthly, the email sent by the appellant at 5.47pm on 8 March (see [30] above) indicated that Cabport was to discount its invoices by $20,000 for “invoice discrepancies”, that is, in effect alleged overcharges and by $10,000 for rectification of identified defects other than roof, gutters and overflow.

43 Subparagraphs 4(xiv) and (xv) of the 12.15pm email (as amended) suggested that some rights of action of the appellant were intended to be preserved. Bearing in mind the aspects of the email communications to which I have just referred, those subparagraphs should in my view be understood as preserving only claims arising out of matters of which the parties (and in particular the appellant) were unaware at the time of settlement and which were not therefore the subject of the existing disputes.

44 This approach is supported by the specific provisions made in subparagraphs 4(iv), (v) and (xiii). When account is taken of the object of the Settlement Agreement as being to settle the existing disputes between the parties and account is taken of the earlier communications, the effect of those subparagraphs so far as defects in the works are concerned is in my view as follows:

• The appellant forgoes any rights in respect of the work defects that have been identified to that time, other than the roofing defects. The appellant forgoes these rights because Cabport has allowed a discount from its invoices to cover the cost of remedying those defects (see [30] above);
• Roofing defects that have been identified are dealt with separately in subparagraph 4(v) (hence the words “subject to 4(v)” in 4(xiii)). Pursuant to 4(v), Cabport is to have the roofing defects remedied; and
• In respect of any defects for which subcontractors, as distinct from Cabport itself, are responsible and which are identified after the date of the Settlement Agreement, Cabport promises to do what it can to have the subcontractors remedy those defects. This might involve Cabport enforcing any relevant rights of action it might have against the subcontractors.

45 The statutory warranties referred to in subparagraph 4(xiv) are found in s 18B of the Home Building Act 1989. The performance by a builder of defective work, or delay in performance, would constitute a breach of those warranties. For the reasons given in [43] above, subparagraph 4(xiv) should be read, so far as it relates to defective work, only to defects identified after the date of the Settlement Agreement. The position is likewise in respect of delayed performance. It is not easy to conceive of delayed performance of which the appellant was not aware at the date of the Settlement Agreement but, be that as it may, it would only be claims in respect of delayed performance of that type that would be preserved by subclause 4(xiv).

46 In summary, the Settlement Agreement was in my view intended to settle all the disputes that then existed between the parties. These extended to the overcharging allegedly embodied in Cabport’s invoices and to defects in the building work that had by then been identified. Subject to the specified exceptions referred to in [44] above, the Agreement implicitly involved the parties foregoing any claims that arose or might arise out of aspects of the performance or non-performance of the building contract of which they were aware at the time of the Settlement Agreement.

47 The conclusion that I have reached is consistent with the approach of the High Court in Grant v John Grant & Sons Proprietary Ltd [1954] HCA 23; (1954) 91 CLR 112 where general words in a release clause were held not to extend to a liability of the defendant of which the plaintiff was unaware. Dixon CJ, Fullagar, Kitto and Taylor JJ said in that case:

“From the authorities which have already been cited it will be seen that equity proceeded upon the principle that a releasee must not use the general words of a release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor.
The facts stated in the third replication if true would show that the plaintiff company did not know of the defendant’s liability it now seeks to enforce, did not intend to release it as part of the transaction and did not know of any intention on the part of the defendant that it should be released” (at 129 – 130).

See also Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26.

48 The issue in the present case is not whether the terms of a general release should be treated as qualified but whether the general terms of provisions preserving liabilities (subparagraphs 4(xiv) and (xv)) should be treated as qualified. However in both instances the “true purpose of the transaction” as determined in the manner identified in Grant’s case is critical. As in Grant, that purpose in the present case requires that general words be given a limited operation.

The Suttor v Gundowda argument

49 Cabport’s defence to the Cross-Claim did not plead the Settlement Agreement as an answer to the Cross-Claim. The first reference to the possibility that it might provide an answer was made by the primary judge during the course of the opening address of counsel for Cabport. Despite the absence, following the discussion that then occurred, of any application by Cabport to amend its defence to the Cross-Claim, final addresses proceeded upon the basis that it was open to Cabport to contend at that time, as it did, that the Settlement Agreement provided an answer to the Cross-Claim. The appellant says however that the issue between the parties at that time was limited to one as to when and by what means the Settlement Agreement was concluded, with Cabport implicitly accepting that if the appellant’s contention that the terms of the email sent at 12.15pm on 8 March (as amended) formed part of the Agreement were correct, the Settlement Agreement did not provide an answer to the Cross-Claim.

50 Whilst identification of the terms of the Agreement was undoubtedly the main point at the trial of dispute on this aspect of the case, the further question of construction of the Settlement Agreement (assuming that it contained the terms that the appellant alleged it did) was one that in my view the appellant would not have been entitled to assume that it could ignore. The appellant’s Written Submissions at the trial concerning the Cross-Claim recognise that it was incumbent upon him to demonstrate that the terms of the provisions incorporated into the Settlement Agreement, when properly construed, did not preclude him making the claims contained in the Cross-Claim (Black Appeal Book pp 593 – 594). As well, subparagraphs 4(xiii), (xiv) and (xv) of the 12.15pm email were expressly pleaded by the appellant as part of his response to Cabport’s Statement of Claim.

51 In the absence, as here, of explicit concessions by the other party, a party who relies upon the provisions of a document that it alleges formed part of a contract must in my view be ready, by adducing such evidence and putting such arguments as it considers necessary, to satisfy the court that the document should be construed in the manner that it contends that it should be construed. Thus in this case I do not consider that it avails the appellant to say that if the question of construction had been squarely raised by Cabport at first instance he might have called evidence of discussions that occurred on 7 or 8 March 2005 that may have shed further light upon the meaning of the document upon which he relied.

52 In these circumstances I do not consider that Cabport is precluded from raising the argument as to the construction of the Settlement Agreement to which I have referred above (see [15]).

The effect of the Settlement Agreement upon the Cross-Claim

53 The appellant’s senior counsel accepted on appeal that “in the final address and in the written submissions that were made” at first instance, the appellant only pressed the parts of his Cross-Claim that were concerned with defects and overpayment (Appeal Transcript p 50). This confirms what is apparent from the appellant’s Written Submissions at first instance concerning his Cross-Claim (Black Appeal Book pp 593 – 609). The submissions that he made were plainly confined to his claims for defects and recovery of money overpaid. The effect of this was in my view that the appellant abandoned other aspects of his Cross-Claim.

54 The position here was different to that in Jovic v Lamont [2007] NSWCA 47 where the Court found that in answering the primary judge’s question as to what the issues were, counsel did not purport “to give an exhaustive list of all the issues that there were” or make “any clear election to confine the matters in issue to those that [he] identified” (at [64]). Here, the appellant’s Written Submissions at first instance in my view clearly purported to communicate to the primary judge, in a definitive way, the aspects of the Cross-Claim with which he was asking the primary judge to deal. I consider that this amounted to an election not to pursue the other aspects.

55 Consistently with this position, the order for a new trial that the appellant sought in his Notice of Appeal was confined to a new trial of the appellant’s claims “for defects and overpayment”. In the course of his oral submissions in reply on the appeal senior counsel for the appellant sought leave for the appellant to amend the Notice of Appeal by deleting the words “for defects and overpayment”, thus making the prayer for relief one for an unqualified order for a new trial of the Cross-Claim. Counsel supported this application by submitting that the decision of the appellant not to press at trial other aspects of the Cross-Claim was made “in a different litigious context”, that is, in one in which there was no issue to the effect of that referred to in [15] above (see Appeal Transcript p 50). As a result of what I have said in [49] to [52] above, I do not consider that the argument on appeal occurred in, to use the appellant’s expression, “a different litigious context”.

56 In these circumstances there is in my view no basis for permitting the appellant to resurrect the other aspects of his Cross-Claim by allowing him to amend his Notice of Appeal. The present should not be treated as one of those exceptional cases in which a party is not bound by the manner in which it conducted its case at first instance (see University of Wollongongv Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1). The appellant’s application to amend his Notice of Appeal should accordingly be refused.

57 I turn then to the two remaining aspects of the Cross-Claim: the claims in relation to defects and overpayment.

58 I have concluded above that by the Settlement Agreement the parties intended to release each other from all claims in relation to the building agreement that arose out of circumstances then known to both parties (see [35]). Cabport contended at the hearing of the appeal that a finding to this effect would preclude the appellant from making all of the claims that he made in the Cross-Claim in relation to defects. The appellant disputed this. To identify which of the claimed defects were accepted by the appellant as being known to him prior to the date upon which the Settlement Agreement was concluded and thereby limit the ambit of any new trial that might be necessary, this Court directed the parties to file schedules, supported by submissions, concerning the time at which the relevant defects were identified. It emerged from these schedules and the supporting submissions that there are issues between the parties in this respect as to all but 2 of the 16 identified defects (Defects numbered 13 and 14). This Court is not in a position to resolve those issues as their resolution is to a large extent dependent upon factual questions. As a result, my view is that a new trial should be ordered in relation to the claims in respect of the 16 alleged defects other than the Defects numbered 13 and 14 in the schedules provided by the parties. On the new trial there will first be an issue as to whether the claims are precluded by the Settlement Agreement and then, to the extent that they are not, whether the appellant has made good his claims.

59 The remaining aspect of the Cross-Claim is the appellant’s claim in respect of overpayment. By this claim, the appellant seeks repayment on a restitutionary basis of amounts of $75,104.57 and $62,362.57 that he contends that he paid to Cabport “on the mistaken basis that he was obliged to pay the rate applicable for employees, rather than for independent or trade contractors” (Black Appeal Book p 603). If this claim is based upon a fact that only came to the appellant’s knowledge after the date of the Settlement Agreement it is not precluded by the Settlement Agreement and will require determination on its merits. Whether this is so turns upon factual issues that this Court is not in a position to resolve. This aspect of the Cross-Claim also must therefore be the subject of a new trial.

60 I note in relation to the claim of overpayment, that in his oral evidence the appellant accepted that prior to the date of the Settlement Agreement he complained that he had been overcharged (Transcript p 330). Further, it appears that an allowance for at least part of that alleged overcharge may have been made in calculating the discount from its invoices that Cabport allowed for the purposes of the Settlement Agreement (see [30] above referring to “invoice discrepancies”). For the overpayment claim in the Cross-Claim to succeed, the appellant would have to show that it arose out of a fact discovered by him after the date of the Settlement Agreement and was not therefore the same claim that he made prior to the Settlement Agreement.

Orders

61 In light of my conclusions stated above, the orders made at first instance dismissing the appellant’s Cross-Claim against Cabport and that the appellant pay Cabport’s costs of that Cross-Claim must be set aside. The costs of the new trial and of the first trial so far as it related to the appellant’s Cross-Claim against Cabport should be the subject of orders to be made by the judge before whom the further trial is conducted, based upon the outcome of that trial.

62 The effect of the appellant’s acceptance at the commencement of the appeal that the builder with whom he contracted was Cabport (see [3] above) and his election at first instance to limit the aspects of his Cross-Claim that he pressed (see [54] above) is that his appeal, so far as it relates to the second, third and fourth respondents, fails and that he must pay their costs of the appeal. The costs order made in their favour at first instance should stand.

63 On the other hand the appellant was successful in establishing that his Cross-Claim against Cabport should not have been dismissed although his argument that the Settlement Agreement did not in any respect preclude his Cross-Claim was unsuccessful. In these circumstances, my view is that Cabport should be ordered to pay one-half of the appellant’s costs of the appeal.

64 I propose the following orders:

(1) Appeal allowed;

(2) Set aside the orders made at first instance dismissing the appellant’s Cross-Claim against the first respondent, Cabport Pty Ltd, and that the appellant pay the first respondent’s costs of that Cross-Claim;

(3) Order that a new trial be held of the appellant’s Cross-Claim in so far as that Cross-Claim relates to alleged defects in the subject works (other than Defects 13 and 14 identified in the schedules submitted by the parties to this Court) and to alleged overpayment by the appellant;

(4) Order the appellant to pay the second, third and fourth respondents’ costs of the appeal;

(5) Order the first respondent to pay one-half of the appellant’s costs of the appeal; and

(6) The first respondent to have a certificate under the Suitors’ Fund Act 1951, if qualified.

65 HANDLEY AJA: I agree with Macfarlan JA.

: I agree with Macfarlan JA.

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