Nairn Constructions Pty Ltd v Keybrook Pty Ltd
[2012] QCAT 260
•27 June 2012
| CITATION: | Nairn Constructions Pty Ltd v Keybrook Pty Ltd [2012] QCAT 260 |
| PARTIES: | Nairn Constructions Pty Ltd |
| v | |
| Keybrook Pty Ltd t/as Associated Aluminium Services |
| APPLICATION NUMBERS | BDL245-11 / BDL244-11 / BDL292-11 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 5 June 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Peter Walker, Member |
| DELIVERED ON: | 27 June 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the Applications be dismissed. |
| CATCHWORDS: | Interpretation of contract – whether quotations formed part of contract – promissory estoppel – retention monies Building and Construction Industry Payments Act 2004, s 99 Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Brad Nairn, Director |
| RESPONDENT: | Lynnette Bailey, Director |
REASONS FOR DECISION
This is a hearing of 3 separate matters, each arising out of a subcontract arrangement between the Applicant (“Nairn”) and the Respondent (“AAS”) whereby AAS agreed to perform building works for Nairn.
The first contract (“BDL244”) related to works performed at Morree Street, Stafford, whereby AAS agreed to perform certain metal works for the sum of $36,500. The scope of what should be included in the contract works is a matter of dispute between the parties. In short Nairn contends that AAS failed to complete all works that it was contractually bound to perform and claims the cost of completing those works as damages. AAS contends that it has completed all work that it was bound to do and makes a counter-application, which effectively just seeks to have the application dismissed.
The second contract (“BDL245”) related to work performed at 45 Finlayson Street, Acacia Ridge where the contract sum was $34,000. Basically the same types of issues are raised by both the Application and the Counter Application.
The third contract (“BDL292”) was for works performed at Little Cavendish Road, Mount Gravatt. The contract price was $18,500. In this matter Nairn claims for work alleged not to have been performed as well as damages for not complying with training requirements under the written form of the contract.
The Evidence
Each party provided written statements which I have considered[1]. Each party was subjected to cross examination. In general terms the contractual and other documents for my consideration were relevantly attached to statements of evidence.
[1] Exhibits 1, 4, 5, 6, 7, 8, 11, 12 and 13.
Background
There are many aspects to each of the three matters that are common and to that extent I will consider them together.
In each case the business relationship between the parties commenced with a written invitation to tender[2]. This was followed by a written quotation from AAS[3].
[2] See items 1A, 2A and 3A being attachments to exhibit 1.
[3] See items 1B, 2B and 3B as above.
In some cases this quotation process was followed by negotiation and variation before a final price was agreed on, or, as in the case of BDL292, the initial quote appears to have been accepted without question.
The next stage in the process between the parties appears to have been the issuing of “letters of Intent” by Nairn[4].
[4] See items 1C, 2E and 3C as above.
[10] What occurred next is not clear in respect of all contracts, but I accept the evidence of Ms Lynette Bailey, given in answer to cross examination, that in at least the first 2 jobs works were then commenced without any formal written contract having, at that time, been entered into.
[11] The next phase appears to have been the issuing and signing of formal contracts.[5] What constitutes the full extent of these contracts will be considered later.
[5] See items 1E, 2G and 3F as above.
[12] It appears to be common ground that the parties then fell into dispute about the extent of works required. Various steps were taken under the contract, particularly by Nairn in purported compliance with its contractual obligations but in the end the disputes remained unresolved.
[13] In respect of BDL244 the specific issues were a failure to perform Gable Screen works and metal fencing works as Nairn asserted the contract required and a refusal by AAS to accept that those works were within the scope of works for the job.
[14] Nairn claims the cost of performing those works. There does not appear to be any dispute that the works were not in fact performed, nor was any issue taken by AAS as to the cost Nairn incurred in performing those works.
[15] In respect of BDL245 the issue is whether metal screens and fencing to the bin and carport area were required. Again there is no issue that these works were not performed. AAS did, however, take issue with the cost of performance of those works, relying on an email exchange with Beau Lloyd wherein he plainly estimated the cost of works as being very considerably less that it seems it ultimately did cost.[6]
[6] See exhibit 3.
[16] In respect of BDL292 the issue for my consideration is whether the contract between the parties required AAS to supply and install metal fencing, and whether the contract required it to comply with training requirements. If it did the amount claimed for damages in that respect is also in dispute.
[17] Again it seems common ground that metal fencing was not in fact supplied and installed. Further there seems to not have been training provided as required by the pro forma contract. Whether it is required by the final contract signed between the parties is to be determined.
[18] When AAS was not paid the full contract sum (less retentions) they referred each matter to adjudication pursuant to the Building and Construction Industry Payments Act 2004. Each of those adjudication decisions is contained in full in AAS’s statement of evidence.[7]
[7] See Respondent’s Statements immediately following the John Bailey statements.
[19] Each was ultimately determined against Nairn with a finding in each that the works the subject of these matters was NOT included in the contract works.
[20] In short Nairn takes issue with the correctness of those decisions, and upon a calculation of the amounts they incurred in performance of the works that they say should have been included they commenced these proceedings.
AAS’S Defence
[21] While the matter was not pursued before me in submissions the counter application raises an issue that may be best be described as issue estoppel. In effect the point raised is that the issues in these proceedings have already been determined by an adjudicator and should not be reconsidered by me.
[22] In short I do not consider that this submission has merit. The matter is dealt with by section 100 of the BCIP Act which is in the following terms:
100 Effect of pt 3 on civil proceedings
(1) Subject to section 99, nothing in part 3 affects any right that a party to a construction contract--
(a) may have under the contract; or
(b) may have under part 2 in relation to the contract; or
(c) may have apart from this Act in relation to anything done or omitted to be done under the contract.
(2) Nothing done under or for part 3 affects any civil proceedings arising under a construction contract, whether under part 3 or otherwise, except as provided by subsection (3).
(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal--(a) must allow for any amount paid to a party to the contract under or for part 3 in any order or award it makes in those proceedings; and
(b) may make the orders it considers appropriate for the restitution of any amount so paid, and any other orders it considers appropriate, having regard to its decision in the proceedings.
[23] The effect of this provision is, in my view, that I am free to consider the matters afresh and to determine them as I see fit.
[24] In addition the counter application raises other issues based upon the BCIP Act. Again in my view these matters do not impact upon my decision making in any way as Nairn’s claim is essentially one for damages for breach of contract and must be determined on ordinary contractual principles.
The Contracts
[25] The starting point for consideration of these should be the written contracts themselves.[8]
[8] Items 1E 2G and 3F.
[26] In this respect there are a number of issues that should be considered. In the first instance the contract itself states that a number of other documents form part of the contract documents being:
i) Any special conditions;
ii) The General Conditions;
iii) The specification provided to the Subcontractor by Nairn;
iv)The drawings as specified in the drawings register or as otherwise provided to the Subcontractor by Nairn.
[27] The only other provision in the form of contract itself is clause 32 which deals solely with the order of documents for the purposes of interpretation.
[28] Nowhere does the contract state that these documents form the entire agreement between the parties. Further, the documents that I have been provided with do not contain any document headed “Specification” though certainly Nairn proceeded on the basis that this was one and the same as the document described as the “Subcontract Agreement Schedule” in respect of each contract.[9]
[9] See pages 14, 87 and 120 of the Applicant’s statement of evidence.
[29] Whether or not this is strictly so I find that the Schedules do form part of the Contract Documentation in respect of each contract.
[30] The additional comment I would make in respect of the Contract Documents was that the only drawings with which I which I was provided related to BDL245 being drawing 53167/CD/A-01-02, and 02-03.[10] No drawings whatsoever were supplied in respect of the other 2 jobs which makes it impossible for me to apply any real weight to them. For the record only, I note that at least one of the adjudications proceeded in the same way, namely without plans being put into evidence.[11]
[10] See statement of evidence of the Applicant.
[11]See adjudication decision dated 23 December 2010 at paragraph 12 – Respondent’s Statement of Evidence.
[31] I do note, in respect of each Schedule, that the Scope of Works document forms part of each of them. In respect of each I note, as Mr Nairn suggested, that these are in very similar terms to the “Invitations to Tender”.[12]
[12]See items 1A, s2A and 2C, and 3A forming part of the Applicant’s Statement of Evidence.
[32] Each included the following words or words to the same effect:
The Trade Package shall include but will not necessarily be limited to the following:-
Metalwork Package:1.Supply and installation of metalwork including screens, panels, posts, battens, fencing, handrails and ballustrading and all other similar work items
2.Exclude: Steelworks forming structure of the buildings and window hoods and window hood shading battening……
[33] In my view this description is very general and is susceptible to multiple interpretations. By way of example only both Mr Nairn and Ms Bailey gave evidence that the terms “fencing” and “ballustrading” are capable of being used in an interchangeable way. Mr Nairn used this example to indicate that he believed that fencing had been included in AAS’s quotation, and Ms Bailey to indicate that, in her view, it was not clear that fencing was to be included in the contract works.
[34] It may well be that these issues could be clarified to some extent by a detailed examination of the drawings, but this matter was not the subject of evidence or of submissions before me except in a very general way.
[35] Within the context of this lack of clarity the quotations provided by AAS assume some importance.
[36] It is apparent that the quotes in respect of any of the 3 jobs do not strictly comply with the terms required by the Invitations to Tender which provide for a very simple cost breakdown.
[37] In addition Nairn submits it is incumbent on AAS to specifically state the matters that they were NOT quoting on. In this respect they rely upon item 4 of that part of the Invitation to Tender, which states as follows:
Unless nominated NC will presume all trade related works have been included in your Lump Sum for the project.
[38] I do not agree with this submission. It is apparent on the face of the quotes that they do not strictly comply in that they contain far more detail than the Invitation to Tender anticipates and yet they were accepted by Nairn. Therefore in my view to the extent they are silent as to works to be performed the only reasonable conclusion that can be drawn is that any items not mentioned are not included in the quote, nor in the contract works.
[39] That conclusion can clearly be drawn, apart from any other matter, from the fact that the sum expressed in the Letters of Intent, and ultimately in the contracts, was exactly the same figure as the amount of the final quotes. The Letters of Intent did not contain any additional detail about the extent of the works and from this AAS was entitled to assume that the contract being offered was for the works they quoted on at the price they quoted.
[40] I note that Mr Nairn, in evidence, indicated that he believed the quotes included fences as they referred to “ballustrading” – on his evidence an equivalent term. I do not accept that this evidence can be accurate as the quotes refer to Ballustrading by length. A simple mathematical exercise makes it extremely clear that the total length would have differed markedly from the total length of both the veranda ballustrading plus the fencing.
[41] I therefore find, that each letter of intent[13] constituted an acceptance of the quotation provided by AAS.
[13] Items 1C, 2E and 3C of the Claimants Statement of Evidence.
[42] It is also significant, in my view, that the Letters of Intent authorized AAS to commence works, notwithstanding the absence of formal contract documents, in the following terms:
In order to meet program dates, you are authorized to commence and proceed with the works in accordance with this Letter of Intent prior to the execution of formal copies of the Subcontract Documents.[14]
[14] See second last paragraph in each of the above documents.
[43] I therefore find that the mutual intent of the parties was the Scope of Works in fact be in accordance with the quotations submitted and to that extent the quotations formed a part of the matrix of the contract documents. In other words I find that the Scopes of Works are general statements of the work to be done, qualified and particularized by the quotes.
Training Costs
[44] There was one particular issue raised in respect of the third of the contracts only and that related to the issue of training costs. This issue is the subject of clause 12.3 of the Terms and Conditions.[15]
[15] See attachment 3F to the Statement of Evidence of Nairn.
[45] The clause in the actual contract signed has an additional hand-written notation which the parties gave evidence, and I assume, was intended to be a modification of that clause, which is in the following terms: “not a formal trade as such & we don’t employ apprentices”.
[46] Ms Bailey gave evidence that the reason for the insertion of those words was that it was intended that the whole clause should thereby cease to have effect. On the other hand evidence on behalf of Nairn was to the effect that the exemption was intended to relate to apprentices only and that there were other means of complying with the requirement.
[47] In this respect, while either version of events leads something to be desired I am inclined to accept the version of Ms Bailey as to the intention of the parties in making the notation. If it was intended that other alternatives within the section be used as a method of complying with it there would really be reason for the insertion of the notation at all.
[48] On balance then I am of the view that AAS have no obligation to Nairn in respect of the training costs.
Estoppel
[49] If it was found not to be the case that the question of interpretation of the contracts did not favour AAS I would still be inclined to the view that AAS should succeed based on a principle famously expressed in a case known as Central London Property Trust Ltd v High Trees House Ltd[16]. That principle generally is described as promissory estoppel and requires the following elements:
·an unequivocal promise by words or conduct;
·evidence that there is a change in position of the promisee as a result of the promise (reliance but not necessarily to their detriment);
·inequity if the promisor were to go back on the promise.
[16] [1947] KB 130.
[50] In the context of this matter I am of the view that the issue of the Letters of Intent, containing, as they did, figures clearly identical to those contained in the quotes, and without qualification as the works that were included, constituted a promise to accept those quotes, both as to price and scope.
[51] It is clear that AAS acted upon those promises in undertaking the works, and, in at least two of the contracts, starting on those works without a written contract in place. In this respect it not only acted, but acted to its detriment.
[52] To me it is clear that it would now be inequitable to require AAS to perform works beyond the scope of what they quoted for but for the original price.
Decision
[53] I therefore find that the Claimant’s applications should not succeed and that they should be resolved in favour of the Respondent.
[54] I was informed by the Respondent, at the hearing that they were seeking payment of the retention monies associated with each contract.
[55] There was no real issue before me as to the quality of the works performed by the Respondent and indeed the manner in which the Adjudications were resolved makes it plain that they did complete the full extent of the works the subject of their quotations, and accordingly their contractual duties, in a good and workmanlike manner. Accordingly there seems no reason to me why each of the retention sums should not now be paid to them. However an examination of the Cross Applications reveals that they only seek a dismissal of the claims, though they do seek an order that the Applicant pay “all costs associated with the application”. I cannot see, however, that this could be extended to the point where this could be interpreted as referring to retention monies, as these are not costs associated with the application, but rather with the contracts.
[56] While it would ordinarily be convenient to dispose of this matter in this one hearing in view of the fact that there is no formal application as such I can’t see that I should make such an order, particularly as the Claimant would be quite entitled to complain that it had no notice of such an application and did not come prepared to fight it.
[57] Accordingly I do not propose to make any order in that respect.
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