Northbuild Constructions Pty Ltd v Capital Finance Aust Ltd - [2006] QSC 81

SUPREME COURT OF QUEENSLAND

CITATION:

Northbuild Constructions Pty Ltd v Capital Finance Aust Ltd & Anor [2006] QSC 081

PARTIES:

NORTHBUILD CONSTRUCTION PTY LTD
ACN 011 063 764
(plaintiff)
v
CAPITAL FINANCE AUSTRALIA LIMITED
ACN 069 663 136
(first defendant)
DISCOVERY BEACH PROJECT PTY LTD
ACN 100 500 981
(second defendant)

FILE NO/S:

BS11381 of 2004

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

26 April 2006

DELIVERED AT:

Brisbane

HEARING DATE:

28, 29, 30 March and 21 April 2006

JUDGE:

Muir J

ORDER:

Judgment for the defendants with costs

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – OTHER MATTERS – where parties entered into building contract – where contract required builder to provide security to developer – where security provided in the form of bank guarantees – where contract provided for reduction in security upon practical completion of building works – where builder and developer entered into agreement for builder to provide further bank guarantees – where agreement provided that developer entitled to retain security beyond period initially contracted – where plaintiff builder contends that agreement referred only to subsequent bank guarantees – whether plaintiff entitled to release of bank guarantees – whether proper construction of agreement may be ascertained by reference to negotiations

Trade Practices Act 1974 (Cth), s 52, s 87

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, applied
Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715, cited
L/M International Construction Inc (now Bovis International Inc) & Anor v The Circle Ltd Partnership (1995) 49 Con LR 12, cited
Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989, cited
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, cited
The Warehouse Group (Australia) Pty Ltd v Woolworths [2005] NSWCA 269, cited

COUNSEL:

P J Dunning SC with him S A McLean for the plaintiff
J McKenna SC with him J Otto for the first defendant
J C Bell QC with him P Hastie for the second defendant

SOLICITORS:

Ebsworth & Ebsworth for the plaintiff
Hopgood Ganim Lawyers for the first defendant

Minter Ellison for the second defendant

Introduction

The plaintiff, Northbuild Construction Pty Ltd, (“Northbuild”) is a builder which contracted with the second defendant developer, Discovery Beach Project Pty Ltd (“Discovery”), under a building contract entered into on 23 May 2003 (“the Contract”) to build the Surfair Resort at Marcoola. The first defendant, Capital Finance Australia Limited (“Capital”), was Discovery’s financier. Under the Contract, Northbuild was required to provide security to Discovery in an amount equal to five percent of the “Guaranteed Maximum Price” of $27.25 million including GST.[1] Pursuant to clauses 10.10.2 and 10.10.3 of the Contract such security was to be reduced by 1.25 percent on the practical completion of each of Stage 1 and Stage 2. The balance was to be released upon expiration of the defects liability period, which concluded 52…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2006] QSC 81
Decision Date: 26 April 2006

CaseChat Overview and Summary

Northbuild Constructions Pty Ltd, the plaintiff, sued Capital Finance Aust Ltd, the defendant, over the release of bank guarantees. The dispute involved a building contract where the plaintiff was required to provide security in the form of bank guarantees. The contract allowed for a reduction of this security upon the practical completion of the building works. However, after the works were completed, the parties entered into an agreement where the plaintiff agreed to provide additional bank guarantees. This agreement also stipulated that the developer, the defendant, would be entitled to retain the security beyond the period initially contracted. The plaintiff argued that this agreement only referred to the subsequent bank guarantees and that they were entitled to the release of the bank guarantees. The defendant contended that the agreement was broader and that they could retain the security as per the agreement.

The central legal issue before the court was the proper interpretation of the agreement between the parties. Specifically, the court had to determine whether the agreement referred only to the subsequent bank guarantees or if it applied to all bank guarantees provided under the contract. The court also needed to decide whether the negotiations between the parties could be used to ascertain the proper construction of the agreement.

The court held that the agreement between the parties was clear and unambiguous in its terms. It found that the agreement referred to all bank guarantees provided under the contract, not just the subsequent ones. The court reasoned that the negotiations between the parties did not alter the clear terms of the agreement. The court further held that the agreement allowed the developer to retain the security beyond the period initially contracted, and therefore, the plaintiff was not entitled to the release of the bank guarantees. The court's reasoning was based on the principle that the terms of a written contract should be given effect according to their ordinary meaning, unless there is evidence of a contrary intention. In this case, the court found that the agreement clearly provided for the retention of security beyond the contractual period.

Accordingly, the court dismissed the plaintiff's claim and entered judgment in favour of the defendant with costs. The court held that the defendant was entitled to retain the bank guarantees as per the terms of the agreement between the parties.

Orders

Orders of the court

Judgment for the defendants with costs

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Northbuild Constructions Pty Ltd v Capital Finance Aust Ltd & Anor [2006] QSC 081
PARTIES:	NORTHBUILD CONSTRUCTION PTY LTD ACN 011 063 764 (plaintiff) v CAPITAL FINANCE AUSTRALIA LIMITED ACN 069 663 136 (first defendant) DISCOVERY BEACH PROJECT PTY LTD ACN 100 500 981 (second defendant)
FILE NO/S:	BS11381 of 2004
DIVISION:	Trial Division
PROCEEDING:	Trial
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	26 April 2006
DELIVERED AT:	Brisbane
HEARING DATE:	28, 29, 30 March and 21 April 2006
JUDGE:	Muir J
ORDER:	Judgment for the defendants with costs
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – OTHER MATTERS – where parties entered into building contract – where contract required builder to provide security to developer – where security provided in the form of bank guarantees – where contract provided for reduction in security upon practical completion of building works – where builder and developer entered into agreement for builder to provide further bank guarantees – where agreement provided that developer entitled to retain security beyond period initially contracted – where plaintiff builder contends that agreement referred only to subsequent bank guarantees – whether plaintiff entitled to release of bank guarantees – whether proper construction of agreement may be ascertained by reference to negotiations Trade Practices Act 1974 (Cth), s 52, s 87 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, applied Homburg Houtimport BV v Agrosin Private Ltd [2004] 1 AC 715, cited L/M International Construction Inc (now Bovis International Inc) & Anor v The Circle Ltd Partnership (1995) 49 Con LR 12, cited Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989, cited Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, cited The Warehouse Group (Australia) Pty Ltd v Woolworths [2005] NSWCA 269, cited
COUNSEL:	P J Dunning SC with him S A McLean for the plaintiff J McKenna SC with him J Otto for the first defendant J C Bell QC with him P Hastie for the second defendant
SOLICITORS:	Ebsworth & Ebsworth for the plaintiff Hopgood Ganim Lawyers for the first defendant Minter Ellison for the second defendant