MCD Construction (Qld) Pty Ltd v Architectural Windows & Doors Pty Ltd
[2013] QCAT 570
| CITATION: | MCD Construction (QLD) Pty Ltd v Architectural Windows & Doors Pty Ltd [2013] QCAT 570 |
| PARTIES: | MCD Construction (QLD) Pty Ltd (Applicant) |
| v | |
| Architectural Windows & Doors Pty Ltd (Respondent) |
| APPLICATION NUMBER: | BDL310-12 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 3 April 2013; 2 May 2013 and 30 May 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Ann Fitzpatrick |
| DELIVERED ON: | 24 October 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Architectural Windows & Doors Pty Ltd pay to MCD Construction (Qld) Pty Ltd the sum of $28,409.00 within 21 days of the date of this Decision. |
| CATCHWORDS: | Building dispute – terms of contract with supplier of goods – common law estoppel – incorporation of term – sale by description – damages Domestic Building Contracts Act 2000 s 8 Andrews Bros (Bournemouth) Ltd v Singer and Co Ltd [1933] All ER Rep 479 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Cameron McDonald, Director, MCD Construction (QLD) Pty Ltd |
| RESPONDENT: | Mr James Anderson, Manager, Architectural Windows & Doors Pty Ltd |
REASONS FOR DECISION
Background
MCD Construction (QLD) Pty Ltd (MCD) is a building contractor. It was represented at the hearing by its Director, Mr Cameron McDonald, who gave evidence. Architectural Windows & Doors Pty Ltd (AWD) is a supplier, manufacturer and installer of windows and doors. It was represented at the hearing by Mr James Anderson, Manager, who also gave evidence.
I find that the following facts occurred, except where I have noted a conflict in the evidence.
MCD was contracted to construct a home at Carey Street, Bardon. The architect’s plans and specifications called for the inclusion of two types of sashless windows to be sourced from and installed by AWD. The sashless windows were specified to be made by Aneeta.
MCD sought a quotation from AWD for the supply and installation of all windows and doors for the project. AWD was provided with a copy of the structural drawings, specification and building schedule.
Ms Nicole Anderson, marketing and sales manager was responsible for preparing quotations. She gave evidence in relation to preparation of the quotation in this case.
A number of quotations were supplied prior to reaching final agreement. Changes to the quotations arose from a need for fewer windows, the front door no longer being supplied, changed colour of aluminium, changed configuration of windows and a change in the number of insect screens. Fresh architectural drawings issued by the architect to reflect cost savings continued to refer throughout to Aneeta products, including by Series Number.
The various quotations supplied by AWD did not ever refer to “Aneeta” windows, using only the terminology “sashless inserts”. However, quotations were obtained from Aneeta to fulfil the specification and amended drawings.
On 3 November 2011 AWD sent MCD a revised quotation attaching a copy of the then current Aneeta quotation relevant to that part of the works. Despite a request from me and an agreement by the parties to provide a copy of these documents during the hearing, they have not been provided. However both parties agree they were sent and received.
At the end of November Mrs Skepper one of the owners of the Carey Street property attended the AWD’s showroom to look at samples of hardware to match a new window frame colour which had been chosen. After Mrs Skepper’s attendance at the showroom Ms Anderson prepared a final quotation, dated 6 December 2011, whereby she included the cost of sashless inserts and locks manufactured by Jewel Windows, not Aneeta.
It is a matter of dispute between the parties as to whether Mrs Skepper instructed Ms Anderson to substitute sashless inserts and chrome locks manufactured by Jewel Windows for the specified Aneeta products.
On 24 January 2012 Quotation No. 9966 version 3 dated 5 December 2011 together with a document headed “Variation Date: 12 January, 2012” was signed on behalf of MCD by Mr Tom Nicholls. The signed quotation and variation appear as attachment 5.10 to the statement of Mr Albert Goh, Director of AWD. The statement of Ms Anderson records that around this time a payment schedule was forwarded to MCD by Mr Anderson.
The cost of individual items is not disclosed in the quotation or payment schedule. A total quotation value of $89,243.05 is given.
Construction proceeded. AWD manufactured and installed the outer frame or surround for the relevant windows which abuts the exterior of the house. Jewel Windows supplied the window frame, sills and glass as part of a kit put together by AWD and others which was then installed by contractors engaged by Jewel Windows. The Jewel Windows’ products have no identifying mark.
Mr Goh, Director of AWD, gave evidence in relation to his role, which was to detail and site measure the confirmed order and project manage the installation of the products supplied by AWD.
At a site meeting on 24 April, 2012, Mr McDonald of MCD approached the window installers in reaction to what he said in evidence appeared to be inefficient installation. Mr McDonald said he was told that the installers were from Jewel which is a Melbourne company and that they were installing “Jewel style Aneeta’s”. Mr McDonald telephoned Ms Anderson to ask what windows were being installed. His evidence is that she told him words to the effect: “It is exactly as discussed with Jane in the showroom”. Mr McDonald’s evidence is that at that time he thought what was installed was an Aneeta product, re-branded. It is a matter of dispute between the parties as to whether and when Mr McDonald knew Jewel windows were installed.
Installation proceeded. The house was handed over to the owners on 26 June 2012.
Thereafter leaking of all sashless windows was observed during rain.
On 17 August, 2012, the homeowners complained that:
a) the windows as installed are not weather proof, allowing considerable leakage into the house and inaccessible areas of the window assembly, increasing the risk of corrosion;
b) there is daylight visible in a number of locations around some of the windows;
c) the quality of the powder coat on the windows is deficient;
d) the horizontal sliders do not operate smoothly;
e) certain Aneeta features, eg the ability to lock in a partially open position, are not provided;
f) the windows as installed are of poor quality and not fit for purpose;
g) the sashless windows are not manufactured by Aneeta as specified, but rather by Jewel windows. At no time did they agree to substitute Jewel windows for Aneeta windows.
The homeowners required the Jewel Windows to be replaced with the Aneeta units which were specified by the Architect.
Mr McDonald’s evidence is that 17 August 2012 was the first date he knew that Jewel Windows, not Aneeta windows had been installed.
Mr Tom Dawson, licensed builder and employee of MCD provided a written report in relation to his observations of the sashless windows, dated 15 November 2012. He gave evidence consistent with the report that poor installation of the Jewel sashless inserts was causing water to enter the dwelling. Problems identified included no consistency of installation, silicon that had set and silicon that was like a mastic, missing or incomplete silicon, different fixings used, loose screws, sliding windows had dropped and as a result rubbed the powder coating off the window track, scratches in the frames and post installation weep holes drilled into the frames. He observed the window tracks filling up with water because there were no weep holes.
Mr Anderson, gave evidence in relation to communications between the parties and Jewel Windows which resulted from the complaints.
A series of emails between Mr Anderson and Mr McDonald forming part of Mr McDonald’s statement of evidence, set out the positions of the parties.
On 21 August 2012, Mr McDonald agreed with the homeowners to replace the Jewel windows with Aneeta windows.
By email, dated 21 August 2012, Mr Anderson advised that Mr McDonald should not confirm to the homeowners that AWD or MCD will replace the windows. He said the AWD intended to follow the “Defects” and “Warranty” clauses in the AWD Terms of Trade.
Mr McDonald responded by email on 21 August 2012 that the goods supplied were not the goods specified and no notice was given of the substitution. He said that he did not intend to delay the matter waiting on Jewel’s decision as to whether they will repair the windows or to use a defects clause in these circumstances.
Mr Anderson responded that the defect and warranty provisions in the contract to supply products will be followed, that water ingress will have to be rectified urgently and that AWD has not mislead or substituted products because it has supplied what was quoted for, that is the supply of sashless inserts.
On 22 August 2012, the National Sales Manager of Jewel Windows and Mr Anderson carried out a site inspection.
On 30 August 2012, Mr Anderson advised by email that he had met with Rapid Aluminium, the owner of Jewel Windows. He confirmed that faults with the windows related to installation performed by installers arranged by Jewel Windows.
Mr Anderson proposed either allowing rectification work or receipt of a credit from Jewel Windows for the value of an alternative sashless system to be installed such as Aneeta.
MCD agreed to receipt of a credit for the value of Aneeta windows. A quotation from Aneeta dated 21 August 2012 in the sum of $22,000.00 was provided to AWD for the cost of removal and replacement of the windows.
The parties were unable to agree the terms of a deed of settlement.
MCD proceeded to remove the Jewel windows and Aneeta supplied and installed its windows at the end of October 2012.
MCD’s Claims
MCD claims a total cost of $31,330.75, for removal of the Jewel windows and replacement with Aneeta windows. A breakdown of the claim is set out in Exhibit 7 in the proceedings.
MCD also claims:
a) damages for loss of reputation, resulting in reduced offers of work - $50,000.00
b) damages for loss of ability to market its work by using photographs of the Carey Street property - $20,000.00
c) legal costs - $10,000.00.
MCD’s submissions
MCD submits that the windows supplied did not meet the requirements of the specification and any change to the agreed products to be supplied should have been in writing in accordance with Domestic Building Contracts Act 2000. MCD denies that the Jewel windows were selected by the homeowner and submits on the evidence there was no good reason to do so because to the extent AWD submits that Aneeta did not sell a chrome lock which would match the Aneeta product, chrome locks were available from Aneeta at all times. MCD submits that the problem of the leaking windows was not rectified in a reasonable time as 14 weeks passed from the date of the first complaint and 6 weeks passed from the time of the demand to replace the windows, whilst all the while the homeowners suffered leaking windows.
MCD denies that the AWD Terms of Trade or the Jewel Warranty relied upon by AWD apply to the contract between the parties. In any event its argument is that the issue between the parties is not one of defective product to which the Terms of Trade are relevant, but rather, breach of contract for failure to supply the specified product.
AWD’s submissions
AWD submits that the claim should be dismissed because:
a) MCD failed to reject the goods within a reasonable time as prescribed under section 37 Sale of Goods Act 1896 (Qld) and has therefore accepted them.
b) MCD did not provide AWD with a reasonable opportunity to inspect, determine the cause of the issue and if necessary rectify the alleged defects prior to removing the windows, in accordance with clause 10.1 of the AWD Terms of Trade.
c) MCD agreed to AWD’s Terms of Trade. Under clause 11.3 of those Terms, AWD is not responsible for a warranty other than that which is given by the manufacturer of the goods. In this case Jewel Windows’ warranty does not respond, because it excludes all liability other than at its discretion to repair or replace defective goods and/or at the seller’s option discount of purchase price.
AWD denies that the Domestic Building Contracts Act 2000 has application to the contract between the parties.
It says that in any event the quotation was not varied because the quotation provided for supply and installation of sashless inserts and did not name the Aneeta product. AWD says that the Jewel Windows’ product was chosen by Mrs Skepper and this selection was conveyed to MCD whereupon the windows were ordered.
AWD says Mr McDonald’s evidence as to when he says he knew the windows were not the Aneeta product should not be accepted because of conflicts as to when he says he acquired that knowledge. AWD says Mr McDonald’s statement of evidence refers to awareness the windows were not Aneeta brand when the window installers were onsite around 24 April 2012. In cross examination he said he only became aware when he met with the owners on site on 17 August 2012.
Jurisdiction
This Tribunal has jurisdiction to decide building disputes under the Queensland Building Services Authority Act 1991 (QBSA Act).[1] To resolve a building dispute it may award damages or make other specified orders.[2]
[1] QBSA Act s 77(1).
[2] QBSA Act s 77(2).
Schedule 2 of the QBSA Act defines a building dispute to include a domestic building dispute. A domestic building dispute is defined in Schedule 2 to include a claim or dispute arising between a building contractor and a supplier or manufacturer of material used in Tribunal Work, which relates to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work.
Tribunal Work includes the erection or construction of a building.[3] Reviewable domestic work means domestic building work under the Domestic Building Contracts Act 2000 (DBC Act), subject to exceptions which are not relevant in this proceeding. Section 8 of the DBC Act provides that domestic building work includes, among other things, the construction of a detached dwelling.
[3] QBSA Act s 75(1)(a).
This dispute arises between MCD as a building contractor and AWD as a supplier of materials used in the construction of a detached dwelling, and relates to the contract between those parties for the supply and installation of materials used in the construction of detached dwelling. A wide construction has been given to the phrase “relates to” in this context.[4] Accordingly, I find that this dispute relates to a contract for the performance of reviewable domestic work and that the Tribunal has jurisdiction to determine the claim.
[4] Want v Majer Tiles Pty Ltd [2010] QCAT 103; Hill-Douglas v Brkan [2008] QCCTB 148.
It is convenient at this point to note that MCD’s submissions in relation to the necessity for variations to a contract to be in writing, pursuant to the DBC Act are rejected. Those provisions relate only to contracts between a building owner and building contractor.
Issues to be determined
The following issues arise out of this matter:
a) what are the terms of the contract between MCD and AWD?
b) has the contract or any applicable statutory obligation been breached by AWD?
c) what loss or damage can MCD recover?
What are the terms of the contract between MCD and AWD?
The uncontested record of terms and conditions of the agreement between the parties appears in:
a) quotation No 9966 version 3 signed 24 January 2012;
b) the document headed – “Variation. Date: 12 January 2012”; and
c) the payment schedule referred to by Ms Anderson, but not tendered in evidence.
However, it is necessary to decide:
a) whether the Terms of Trade of AWD and Jewel Windows form part of the contract. AWD has placed considerable reliance on this issue and the parties devoted a good deal of time at the hearing to matter, accordingly I have explored the issue in full, however, the Decision ultimately finds that the issue is of no relevance.
b) whether it was a term of the contract that Aneeta windows form part of the contract; and relevant to this point, whether the brand of sashless windows to be installed was altered by Mrs Skepper.
Terms and Conditions of Trade documents
The AWD Terms and Conditions of Trade document relevantly provides:
10. Defects
10.1 The Client shall inspect the Goods on delivery and shall within 3 days (time being of the essence) notify the Supplier of any alleged defect, shortage in quantity, damage or failure to comply with the description or quoted. The Client shall afford the Supplier an opportunity to inspect the Goods within a reasonable time following delivery if the Client believes the Goods are defective in any way. If the Client shall fail to comply with these provisions the Goods shall be presumed to be free from any defect or damage. For defective Goods which the Supplier has agreed in writing that the Client is entitled to reject, the Supplier’s liability is limited to either (at the Supplier’s discretion) replacing the Goods or repairing the Goods except where the Client has acquired Goods as a consumer within the meaning of the Trade Practices Act 1974 (CWth) or the Fair Trading Acts of the relevant state or territories of Australia and is therefore also entitled to, at the consumer’s discretion either a refund of the purchase price of the Goods or repair of the Goods, or replacement of the Goods.
10.2 Goods will not be accepted for return other than in accordance with 10.1 above.
11 Warranty
…
11.3 For Goods not manufactured by the Supplier, the warranty shall be the current warranty provided by the manufacturer of the Goods. The Supplier shall not be bound by nor be responsible for any term, condition, representation or warranty other than that which is given by the manufacturer of the Goods.
18. General
8.3 The Supplier shall be under no liability whatever to the Client for any indirect loss and/or expense (including loss of profit) suffered by the Client arising out of a breach by the Supplier of these terms and conditions.
18.4 In the event of any breach of this contract by the Supplier the remedies of the Client shall be limited to damages which under no circumstances shall exceed the Price of the Goods.
Clause 16(c) of the Jewel Windows Terms and Conditions of Sale provides that:
The Customer agrees to cause its customers and anybody in the chain of manufacturing supply and distribution including the end customer to be bound by limitations of liability substantially equivalent to those contained in these Conditions.
Clause 16(b) of the Jewel Windows Terms and Conditions of Sale provides that:
The Seller’s sole liability and the Customer’s sole remedy is limited to either:
(i)repair or replacement of defective Goods; and/or
(ii)at the Seller’s option, discount of Purchase Price.
Mr McDonald denied in evidence that MCD was ever provided with a copy of the AWD Terms and Conditions document in relation to the Bardon project or the Jewel Windows Terms and Conditions document.
AWD does not assert that it provided those documents to MCD in relation to this transaction, however, the evidence of Mr Anderson was that there had been at least one other transaction between the parties relating to the purchase of goods for another property at Shorncliffe where Mr McDonald had signed a progress payment schedule verifying that he had read and agreed to AWD’s conditions of sale. Mr Anderson put it to Mr McDonald that when an account was set up with AWD a copy of the Terms and Conditions of Sale document was provided to him. Mr McDonald did not deny that had occurred, but said he had no way of knowing if that document was still relevant.
Mr McDonald denied reading any conditions of sale document other than the back of the quotation document which sets out 5 terms relating to the purchase. He said he assumed those terms were the Terms of Trade for the Bardon project.
In the case of the Bardon project, the quotation was signed to signify acceptance by an MCD employee, Mr Nicholls.
The terms on the quotation say that it is provided: ‘in accordance with our terms and conditions of sale as supplied’. The terms on the quotation provide for payment of a deposit, in ‘accordance with the Terms and Conditions of Sale as specified by Architectural Windows & Doors Pty Ltd’.
Other terms are set out declining to accept alterations or cancellations once production has commenced and providing that certain items are not included in the quotation. A term requiring an installer to ensure the opening in the building is square and finally a warranty clause are set out. The warranty clause provides: ‘As per our Terms of Trade document, our Products and hardware are covered from Manufacture and Workmanship defects including powder coating…’.
The Acceptance clause provides: ‘By signing below you will be also verifying that you have read and agree to our Terms of Trade’.
I am not satisfied on the evidence that there is a sufficient prior course of dealing between the parties on agreed terms to justify incorporation of AWD’s Terms and Conditions of Sale document into the contract between the parties on that basis. However, I am satisfied that Mr McDonald was aware of the existence of a separate standard Terms and Conditions of Sale document, even if he had not read it. That fact is relevant to the question of whether AWD’s Terms and Conditions of Sale are incorporated into the contract by reference.
The attempt at incorporation by reference is clumsy. The document refers to the standard terms in different ways, namely: - ‘terms and conditions of sale as supplied’; ‘Terms and Conditions of Sale as specified…’ and a ‘Terms of Trade document’. No document was supplied as suggested in the quotation. The quotation itself set out terms and conditions. Additionally, reference to the Jewell Windows warranty set out in its Terms and Conditions of Trade document, is buried within the AWD Terms and Conditions. A careful reading is required to determine that the Jewel Windows warranty is sought to be incorporated into the terms of the contract.
Despite these problems, I find that MCD was on notice that a Terms and Conditions of Sale document existed. I find that the quotation refers to a separate Terms and Condition of Sale document and that the quotation demonstrates an intention to incorporate the terms of that document into any contract between the parties.[5] The critical fact is that the quotation has been signed on behalf of MCD. The Courts consistently recognize the signature of a party as evidence that the terms of a document have been agreed to, even if a party has not been given and has not read a document such as standard terms and conditions referred to in the main document.[6]
[5] Smith v South Wales Switchgear Co Ltd [1978] 1 WLR 165.
[6]Toll (FGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165. See the discussion in L.Willlmott, S. Christensen, D. Butler and B. Dixon, Contract Law, Oxford University Press, Sydney, 3rd ed., [8.190].
I find that the AWD Terms and Conditions of Sale document and the Jewel Windows warranty appearing in its Terms and Conditions of Trade document form part of the terms and conditions of the contract between the parties and have been incorporated by reference.
Is it a term of the contract that Aneeta windows are to be supplied and installed?
The evidence suggests two bases upon which it can be determined whether it was a term of the contract that Aneeta brand windows be installed. First, upon the ground of a common law estoppel from a representation that the windows will be Aneeta brand. Secondly, in accordance with the law relating to incorporation of terms into contracts.
Common law estoppel based upon a representation
Mrs Anderson was responsible for the quotations given by AWD. Her evidence at the hearing was that:
a) the first quotation was a conforming quotation in that it responded to all items on the specification, including the cost of Aneeta brand sashless windows or inserts;
b) the first quotation did not refer to “Aneeta” brand sashless inserts, because she thought that AWD may mix the Aneeta product with other manufacturers’ items so a generic term, “sashless inserts” was used in the quotation;
c) at the time of obtaining a quotation from Aneeta, Mrs Anderson thought Aneeta was the only provider of this type of sashless insert;
d) a change to Jewel Windows was made after Mrs Jane Skepper attended AWD’s showroom and indicated she did not like the way the Aneeta lock sat in the middle of the window. Mrs Skepper was given a Jewel Windows brochure and was said by Mrs Anderson to have agreed to the installation of Jewel Windows’ sashless inserts so that the locking hardware was consistent in the house;
e) she telephoned Mr McDonald after Mrs Skepper left the showroom and told him that Jewel Windows’ sashless inserts would be supplied;
f) no change was made to the description of the windows in question because they were merely described in the quotation as “sashless inserts” and not by reference to brand;
g) apart from the intention to satisfy Mrs Skepper’s requirements in relation to locking hardware, the other reason for the change in manufacturer of the sashless inserts was because of pressure on price;
h) it was agreed to give MCD a rebate after the job was completed because of the referral of work to AWD by MCD and provided there was prompt payment. Mrs Anderson said that she had to reduce costs somewhere otherwise AWD would make no money on the job. As it transpired no rebate was given; and
i) Mrs Anderson had a poor working relationship with the Queensland State Manager of Aneeta and preferred not to deal with him.
When asked in cross examination why Mrs Anderson had changed the manufacturer of the windows, Mrs Anderson said that she was happy when Mrs Skepper said that she did not like the Aneeta hardware, because she could give Mrs Skepper what she wanted and she did not have to deal with Aneeta. Mrs Anderson said that Mrs Skepper did not have a basic understanding of how the windows worked. When asked whether she discussed the change with Mrs Skepper, Mrs Anderson said that she did not, because it was not necessary to change the wording on the quote.
Mrs Anderson’s evidence in chief set out in her statement, exhibit 8 in the proceedings reveals:
a) that she sent an email enclosing an updated Aneeta quote on 3 November 2011, to MCD, with a note that no discount was available off the Aneeta wholesale price;
b) an assertion that Mrs Skepper was aware of Jewel Windows because their product had been explained in the showroom and Mrs Skepper left with a brochure to show her husband and the architect, and a comment that Mrs Skepper may not have understood what Mrs Anderson was saying;
c) after the meeting with Mrs Skepper in the showroom at the end of November Mrs Anderson contacted Mr McDonald and told him that Mrs Skepper had chosen her hardware and an updated quote would be on the way.
Mrs Skepper was not called by either party to give evidence as to whether she authorised a change from the specified Aneeta brand sashless windows to the Jewel Windows’ product.
I am not prepared on the evidence to find that Mrs Skepper expressly authorised a change of manufacturer of the specified sashless windows.
There is a difference in the evidence given by Mrs Anderson at the hearing and that given in her statement of evidence filed in the proceedings. The statement does not say that Mrs Skepper expressly authorised a change in manufacturer of the sashless windows as stated at the hearing. The statement merely says that Mrs Skepper was aware of Jewel Windows because their product had been explained in the showroom and Mrs Skepper left with a brochure to show her husband and the architect. It was suggested that Mrs Skepper may not have understood what Mrs Anderson was saying to her in the showroom.
Further the evidence reveals a consistent pattern of changes to products or other requirements being documented by the Skeppers and forwarded by MCD to AWD, for example with respect to the change of manufacturer of flyscreens from that originally specified, confirmed in the Variation Document attached to the signed quotation. No written communications appear from Mrs Skepper to reflect a direction to change the manufacturer of the sashless windows.
I am not prepared to find on the evidence that Mrs Anderson informed Mr McDonald that Mrs Skepper had authorised a change of windows from Aneeta brand to Jewel Windows.
I note Mr McDonald’s strong denial of any such conversation and accept his evidence in preference to Mrs Anderson because of the inconsistency between Mrs Anderson’s written statement and her evidence at the hearing. The written statement refers to telephone advice that hardware had been chosen and that an updated quote was on its way. It does not say as AWD now puts its case that Mr McDonald was told Mrs Skepper had chosen to substitute Jewel Windows products for the Aneeta products.
Based on Mrs Anderson’s evidence I find that after 3 November 2011, Mrs Anderson decided to change the manufacturer of the windows in question, so that AWD could provide locking hardware preferred by Mrs Skepper, so that she did not have to deal with the Queensland Manager of Aneeta and so that AWD could extract greater profit from the contract by substituting a cheaper kit form product which was put together by AWD. I have found that Mrs Anderson was not authorised by Mrs Skepper to make that change and that she did not inform MCD of the change. Based on Mrs Anderson’s evidence, I find that she did not consider she had to inform MCD of the change of manufacturer because the quotation used a generic description of the product to be supplied which was not brand specific.
On the basis of Mrs Anderson’s evidence that Aneeta windows were included in the original quotation and that as at 3 November 2011 they formed part of the then current quotation and no notification was given of any change of manufacturer, I find that Mrs Anderson, on behalf of AWD, represented to MCD that the Aneeta brand product formed part of the quotation for supply and installation of the required windows.
What is the effect of the representation?
AWD will be bound to adhere to the representation by Mrs Anderson that AWD will supply and install Aneeta brand windows as specified, if:
a) AWD and Mrs Anderson’s conduct has induced MCD to adopt that assumption;
b) AWD knew MCD had relied upon the assumption;
c) MCD has acted in reliance upon the assumption that Aneeta brand windows will be supplied and installed; and
d) MCD will suffer a detriment if the assumption is not adhered to.[7]
[7] Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428 – 429.
Because of Mrs Anderson’s senior position with AWD I find that the representation made by her binds AWD.
I find that AWD through Mrs Anderson represented to MCD that it would supply and install Aneeta brand windows, because of the evidence that the first quotation given complied with the specification, because as late as 3 November 2011 a copy of the Aneeta quote for its component of the work was supplied and no notice was given that any other manufacturer had been substituted for the Aneeta brand windows.
Finally, in the telephone conversation with Mr McDonald on 24 April 2012, I find that Mrs Anderson did not frankly say that Jewel Windows manufactured sashless inserts were being installed, thereby perpetuating the assumption. I accept the evidence of Mr McDonald that he was told the windows were as selected by Mrs Skepper.
Mr McDonald’s evidence was that at no point either before the final quote was accepted or after did he think that he was being supplied with anything other than Aneeta brand windows. Mr McDonald’s evidence reveals that he was never told by anyone from AWD that Jewel Windows were to be supplied and that all the conduct of AWD was consistent with Aneeta windows being supplied. I accept Mr McDonald’s evidence in this regard.
For these reasons, I find that AWD’s representation induced the assumption by MCD that Aneeta brand windows would be supplied and installed.
Mr McDonald’s evidence is that Aneeta brand windows were required by the architect and owners and that is what he was bound to supply in accordance with MCD’s contract with the owners. I accept Mr McDonald’s evidence and find that MCD acted in reliance upon the assumption that Aneeta brand windows were to be supplied by AWD, by accepting the quotation from AWD and proceeding with construction in accordance with its contract with the owners.
On the basis that Mrs Anderson represented that Aneeta brand windows would be supplied and installed and on the basis that she did not tell Mr McDonald when a change was made to Jewel Windows, I find that Mrs Anderson and AWD knew that MCD assumed Aneeta brand windows would be supplied and installed.
On the basis of MCD’s evidence as to the requirement of the owners that the Jewel windows be removed and replaced with Aneeta brand windows as specified, I find that MCD will suffer a detriment if it cannot recover the loss and damage it has suffered on the basis of a breach of contract by AWD. I accept Mr McDonald’s evidence as to the requirement of the owners and his evidence that not only had AWD been fully paid for its work, but that MCD has borne the cost of removing the Jewel Windows product and installing the specified Aneeta windows.
The findings I have made establish that a common law estoppel arises on the evidence. That is, AWD should be bound by its representation that Aneeta brand windows would be supplied and installed in accordance with the specification. It should not be allowed to hide behind the generality of its description of those windows in the contract, to change the manufacturer at will for its own advantage.
Incorporation of a term
This is a case where the parties have not entered into a formal subcontract document which fully sets out all the terms and conditions agreed between the parties. The terms are to be found in a variety of documents. It is reasonable to conclude that other terms of the agreement are oral. For example, the signed quotation does not deal with time frames for installation of the product. Mr Goh’s evidence refers to fixing details and positions of windows and door frames relevant to the building being discussed.
Deane J in Hawkins v Clayton[8] said that
…in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case.[9]
[8](1988) 164 CLR 539 at 571.
[9]Affirmed by McHugh and Gummow JJ in Byrne v Australian Airlines Ltd (1995) 185 CLR 410.
The accepted quotation refers to the supply of “sashless inserts”. The question is whether a term should be implied that the sashless inserts are to be Aneeta brand and whether that implication is necessary for the reasonable or effective operation of a contract of this nature in the circumstances of the case.
I have found that MCD’s obligation under its contract with the owners of the property was to supply Aneeta windows. Because the specification and amended drawings were provided to AWD I find that they were aware of the owners requirements. I consider on the evidence that it is reasonable to conclude that MCD would not have entered into a contract with AWD for supply and installation of windows if it could not satisfy its contract with the owners of the property.[10] On this basis I find that a term that the windows to be supplied and installed were Aneeta brand, formed part of the contract between the parties and that such implication is necessary for the reasonable and effective operation of the contract between them.
[10]See Aqua-Marine Marketing Pty Ltd v Pacific Reef Fisheries (Aust) Pty Ltd (No 5) (2012) FCA 908 where a party sought the supply of prawns from a prawn farmer, for on-supply to Woolworths. No formal contract was entered into. It was found that Woolworths’ Specifications as to quality were incorporated as terms of the agreement for supply of the relevant prawns. The evidence supported a finding that the purchaser would not have entered the contract for supply if the Woolworths’ Specifications were not met. That is the Specifications were necessary for the reasonable and effective operation of the contract.
Recovery of loss and damage.
The contract between the parties is a contract for the sale of goods by description within the meaning of section 16 of the Sale of Goods Act 1896.[11] That section provides that when there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description.
[11]Andrews Bros (Bournemouth) Ltd v Singer and Co Ltd [1933] All ER Rep 479; Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441.
In this case I have found that AWD was to supply Aneeta brand windows. It did not do so. Accordingly, it is in breach of the statutory implied condition.
Section 14(3) of the Sale of Goods Act 1896 provides that when a contract of sale is not severable and the buyer has accepted the goods or when the contract is for specific goods the property in which has passed to the buyer, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.
In this case, the contract between the parties has been concluded, property in the windows has passed and the contract price has been paid in full.
Section 54 of the Sale of Goods Act 1896 provides that when a buyer is compelled to treat a breach of a condition on the part of the seller as a breach of warranty, the buyer may maintain an action against the seller for damages for the breach of warranty. Section 54(2) provides that the measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.[12]
[12]For completeness I note the reasoning of Einstein J in Tranquility Pools & Spas Pty Ltd v Huntsman Chemical Co Australia Pty Ltd [2011] NSWSC 75, in relation to section 74G of the Trade Practices Act 1974,that the cause of action under that section does not cease to apply if goods supplied become fixtures. His Honour limited the decision of Theo Holdings Pty Ltd v Hockey (2000) 99 FCR 232 on the basis that it related to a recall under the Trade Practices Act 1974 and that a recall would require the severance of the goods from the land to which they were affixed, however s 74G provides a cause of action for monetary compensation which does not require severance of goods which have become fixtures. To the extent that the decision of Romark Design Constructions Pty Ltd v Stephen Larry Hoffmeister [2010] QCAT 586 followed the decision in Theo Holdings Pty Ltd v Hockey to the effect that once doors were incorporated in the building they became fixtures and as such were not “goods” for the purposes of the Trade Practices Act 1974 or Sale of Goods Act 1896, I decline to follow it, because of the reasoning in the Tranquility Pools case.
AWD have not approached the case on this basis. It contends that the claim by MCD should be treated as a claim governed by the Terms of Trade relating to defective product and that its liability should be limited in accordance with the limited remedies provided in the Terms of Trade. Further, it submits that because the goods have been accepted there is no entitlement to reject the goods.
Although MCD has alleged that installation of the windows was defective giving rise to leaking, it does not pursue the case on that basis.
I find that MCD is entitled to claim damages in accordance with the Sale of Goods Act 1896 for breach of the implied condition that the sashless windows would comply with their description and would be Aneeta brand. On that basis the arguments in relation to limitation of liability arising out of defective goods or entitlement to reject the goods are irrelevant. I reject AWD’s submissions in this regard.
In calculating the damages to which MCD is entitled, I find that but for AWD’s breach of contract it would not have been required under its contract with the owners to remove the Jewel Window’s products and replace them with Aneeta products. I find that those costs are the loss directly and naturally resulting, in the ordinary course of events, from the breach by AWD.
MCD has tendered a copy of the statement from Aneeta for the provision of its product in an amount of $22,000.00 inclusive of GST. I accept that was the cost of supply and installation of the windows in question. In addition MCD has claimed costs incurred by it with respect to removal of the Jewel windows and supervision of replacement. Those costs are set out in Exhibit 7. The costs are said to be taken from time-sheets not in evidence. I accept that some costs were incurred and that they are recoverable. However, I am not prepared to allow for GST on items of work performed in house by MCD. Likewise I am not prepared to allow for recovery of the cost of both Mr McDonald and Mr Dawson to supervise window replacement. I allow the cost of Mr Dawson undertaking that work. Given that a payment is made to his Trust, I assume Mr Dawson is a contractor and include GST in his case. Otherwise, I accept the evidence of Mr McDonald that costs were incurred in the sum of $6,409.00 for:
a) EIY Pty Ltd Silicon Sealing – repairing damage - $198.00 incl GST
b) Jason Taylor – Moving of scaffold and protective equipment - $150.00
c) Jason Taylor – Cleaning and removal of windows and scaffold - $825.00
d) Thomas Dawson Trust supervision of window replacement - $4,576.00 incl GST
e) Jodie Carol Willmot – Administration of window replacement - $400.00
f) Thomas Roy Nicholls – Co-ordination of trades - $260.00
I award the sum of $28,409.00 to MCD being damages it is entitled to recover for breach of the statutory implied condition as to compliance with description, in accordance with the Sale of Goods Act 1896.
In relation to the other claims I consider that the losses claimed are too remote from the breach of the statutory implied condition to be recoverable.[13]Additionally, I am not satisfied on the evidence that losses in the amounts claimed have been suffered. Accordingly, I decline to make any order with respect to alleged loss of reputation, loss of ability to market work and legal costs.
[13] Hadley v Baxendale (1854) 156 ER 145.
In relation to legal costs, I assume these costs are not costs in the proceedings but relate to costs associated with the possible settlement of this matter explored by the parties. In any event as the parties are unrepresented in these proceedings no order for costs will be made.
Orders
On the basis of the reasoning set out in this Decision I order that Architectural Windows & Doors Pty Ltd pay to MCD Construction (Qld) Pty Ltd the sum of $28,409.00 within 21 days of the date of this Decision.
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