Robinson v Kenny - [2014] FCA 988

FEDERAL COURT OF AUSTRALIA
Robinson v Kenny [2014] FCA 988

Citation: Robinson v Kenny [2014] FCA 988

Parties: GRAHAM BRUCE ROBINSON v BRIAN KENNY and ABK AUSTRALIA PTY LIMITED (ACN 111 306 999)

File number: NSD 238 of 2010

Judge: FARRELL J

Date of judgment: 26 September 2014

Catchwords:
TRADE PRACTICES – misleading or deceptive conduct – architect engaged to design house – architect initiated tender process – builder made oral qualification concerning cost of works – whether failure to convey qualification misleading or deceptive conduct – whether representations were estimates – whether architect “innocent conduit” of any representations made – proportionate liability – liability of builder

TRADE PRACTICES – misleading or deceptive conduct – conduct of tender process – whether tender process unorthodox – whether misleading or deceptive representations made concerning conduct of tender process – involvement of architect in preparation of quote – whether tender process fair to all participants

DAMAGES – proportionate liability – whether builder concurrent wrongdoer – whether builder engaged in misleading or deceptive conduct – apportionment of liability

Legislation: Civil Liability Act 2002 (NSW)
Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth)

Cases cited:
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186
Butcher v Lachlan Elder RealtyPty Ltd (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Cassidy v Saatchi & Saatchi Australia Pty Ltd (2004) 134 FCR 585
Director, Office of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCAFC 8
Gardam v George Wills & Co Ltd (1988) 82 ALR 415
Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435
Henville v Walker (2001) 206 CLR 459
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Limited (2013) 247 CLR 656
John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1995] ATPR 41-249
Jones v Dunkel (1959) 101 CLR 298
Payne v Parker [1976] 1 NSWLR 191
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Warner v Elders Rural Finance Limited (1993) 41 FCR 399
Yorke v Lucas (1985) 158 CLR 661

Date of hearing: 11-14 March 2013, 10 May 2013, 20 June 2013

Date of last submissions: 17 September 2014

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 323

Counsel for the Applicant: Mr MBJ Lee SC and Mr A Crossland

Solicitor for the Applicant: Attwood Marshall Lawyers

Counsel for the Respondents: Mr J Sheller

Solicitor for the Respondents: Gilchrist Connell

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 238 of 2010

BETWEEN:
GRAHAM BRUCE ROBINSON
Applicant

AND:
BRIAN KENNY
First Respondent

ABK AUSTRALIA PTY LIMITED (ACN 111 306 999)
Second Respondent

JUDGE:

FARRELL J

DATE OF ORDER:

26 SEPTEMBER 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The parties are to agree final orders which give effect to these reasons, including as to costs, on or before 20 October 2014.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 238 of 2010

BETWEEN:
GRAHAM BRUCE ROBINSON
Applicant

AND:
BRIAN KENNY
First Respondent

ABK AUSTRALIA PTY LIMITED (ACN 111 306 999)
Second Respondent

JUDGE:

FARRELL J

DATE:

26 SEPTEMBER 2014

PLACE:

SYDNEY

REASONS FOR JUDGMENT

The applicant (Mr Robinson) is the owner of land in Seaview Street, Tweed Heads in northern New South Wales (Property). The first respondent (Mr Kenny) is an architect who practises on the north coast of New South Wales. The second respondent (ABK) was registered on 8 October 2004 and Mr Kenny is the sole director and controller of ABK. Simcorp Developments and Constructions Pty Limited (Simcorp) was a construction company which is now in liquidation. Mr Alex Simpson (Mr Simpson) was Simcorp’s sole director. Simcorp and Mr Simpson were the second and third respondents in these proceedings until February 2013 when they were replaced by ABK.
Mr Robinson is a chemical engineer who works for the Linde Group, a global gases and engineering company based in Munich. In early 2010 he was employed as the Head of Project Execution, Asia Pacific, and before that he held various international positions over a period of 25 years. From 1995-2000, Mr Robinson, his wife Mrs Sarah Robinson (Mrs Robinson) and their children lived in China. They came to live in Victoria in 2000. Mr Robinson managed operations for Linde Group in Victoria, South Australia and Tasmania.
In 2003, it was decided that Mr Robinson should return to his role in North Asia, although he would continue to be based in Australia. The family decided that because Mr Robinson would be travelling for extended periods, it would be better for Mrs Robinson and their children if they lived near Mrs Robinson’s family in Tweed Heads.
Mr Robinson bought the Property in 2003; it had a house on it which Mr Robinson intended to demolish and build a larger residence as the family home. The Property was near his wife’s family and had an ocean view. The Robinsons moved to Tweed Heads and lived in other accommodation while they commenced plans to design and build the home.
Mr Kenny was the coach of a rugby team in which Mr Robinson’s son played. As Mr Kenny is an architect, Mrs Robinson approached him in early 2004 to see if he would be suitable to design the new home. Mr and Mrs Robinson retained Mr Kenny pursuant to the Design Retainer (as defined at [37] below) in April 2004 (see [36]-[41]). Mr Kenny provided first estimates for the work in August 2004 (see [44]).
By late 2004, it appeared increasingly likely that Mr Robinson’s employer would ask him to relocate to North Asia. Mr Robinson officially relocated to China in April 2005 for a two year assignment (with an option for a further year) and his family followed in August of that year. The option to extend for one year was exercised in April 2007. The family were still living in China at the time of the trial.
In April 2005, the Robinsons obtained development consent to build on the Property. For the next 18 months, Mr Kenny worked on the design of the house.
By letters dated 17 November 2006, Mr Kenny wrote to at least five builders seeking quotations for the construction of the house (Tender Invitations). One was Mr Simpson. Another was Mr Mark Spooner (Mr Spooner).
On 19 December 2006 by facsimile transmission (fax) to Mr Kenny, Simcorp provided an “estimation and quotation” of the cost to build the house on alternative bases of (1) an “estimate” of $1.3 million on a “cost-plus contract (20%)”; or (2) a “quotation” of $1.4 million on a “fixed time/fixed price contract”, in each case stating that “this estimate includes GST” (Simcorp Quote or Quote): see [97] below. Mr Kenny gave the Simcorp Quote to Mr Robinson at a meeting in Mr Kenny’s Kingscliff office on that day.
Between 19 December 2006 and 5 April 2007, design changes were made and on three occasions revised drawings were provided by Mr Kenny. During this period, there were discussions between Mr Kenny and the Robinsons about Mrs Robinson sourcing materials in China and whether her father should undertake the demolition of the existing house on the Property with a view to reducing construction costs. In late April, Mr Kenny sent draft building contracts to Mr Robinson by email on a “fixed price” (draft OFT Contract) and “cost-plus” basis (draft HIA Contract) (generically “Contract” or “Contracts”).
At a meeting at Mr Kenny’s office on 10 May 2007, Simcorp and Mr Robinson entered into a contract to build the house on the basis of the designs and specifications provided by Mr Kenny on 5 April 2007 (Building Contract). It was a “cost-plus” contract which contained a “risk-reward” chart prepared by Mr Robinson under which the builder’s margin deteriorated from 25% (if the total contract price was $1.1 million) to 12.5% (if the total contract price was $1.35 million) (Reward Chart): see [189] below. It also contained a special condition that “PC’s to keep budget @ $1.2m & not affect margin” (Special Condition): see [241]d below.
After the Building Contract was signed, the existing house on the Property was demolished. Work commenced in July 2007, but the work ceased in 2009 and the Building Contract was terminated in December 2009 before the house was completed. Simcorp was placed into liquidation in July 2010.
Mr Robinson claims that he spent $2,471,821.99 on building the house. The respondents admit that $1,792,770.37 was paid by Mr Kenny to Simcorp on behalf of Mr Robinson. The agreed mid-point of assessments (GST inclusive) made by expert quantity surveyors employed by the parties (Mr Tony Makin and Mr Michael Davies) (Experts) are:
Cost plus tender sum in December 2006:  $1,745,363
Fixed price tender sum December 2006:  $1,584,855
Contract sum on a cost plus basis May 2007:            $1,938,211
Contract sum on a fixed price basis May 2007:  $1,718,144
Post contract variations:  $   292,065
Cost to complete:  $   299,833
BRIEF PROCEDURAL HISTORY
In March 2010, Mr Robinson filed an application and statement of claim to which Mr Kenny was the first respondent and Simcorp and Mr Simpson were the second and third respondents.
In February 2013, leave was granted to Mr Robinson to file an amended application (amended application) and to file and serve a Fourth Further Amended Statement of Claim (4FASOC) which reflected the changes to the application to:
a. remove Simcorp and Mr Simpson as respondents and remove a claim for loss occasioned by delay in the construction of the residence on the Property; and
b. join ABK as the second respondent and insert a new claim for loss occasioned by breach by Mr Kenny and ABK of their duties of care and/or retainer.
At the commencement of the trial, Mr Robinson abandoned the new claim for loss occasioned by breach of duties of care and/or retainer relating to Mr Kenny’s advice to Mr Robinson concerning entry into a cost-plus contract and designing the building works in such a way that construction put it in prospective breach of enforceable standards relating to proximity to power lines, causing delay of approximately 18 weeks. This substantially simplified Mr Robinson’s case, but leaves open the question of costs in relation to the abandoned claims.
On the second day of the trial, Mr Kenny gave evidence under cross-examination concerning the provenance of the Simcorp Quote having regard to fax markings appearing on the copy of the Simcorp Quote included at page 785 of the Court Book (see [97]). Following hearing of an application on the morning of the third day of the trial, Mr Robinson was given leave to file the Sixth Further Amended Statement of Claim (6FASOC) and make the Tender Representation claims (see [21]d below). The trial was adjourned to allow Mr Kenny time to file an amended defence (Defence) and any evidence on which he sought to rely having regard to the amendment.
ISSUES TO BE DETERMINED
In the amended application, Mr Robinson seeks statutory compensation for alleged misleading or deceptive conduct by Mr Kenny under ss 42(1) and 68 of the Fair Trading Act 1987 (NSW) (Fair Trading Act) and by ABK under ss 52(1) and 82 of the Trade Practices Act 1974 (Cth) (Trade Practices Act). In 2006 and 2007, s 42(1) of the Fair Trading Act and s 52(1) of the Trade Practices Act provided:
A [person/corporation] must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 68(1) of the Fair Trading Act provided that:
A person who suffers loss or damage by conduct of another person that is in contravention of a provision of Part 3, 4, 5 (section 43 excepted), 5A, 5B, 5C, 5D or 5E may recover the amount of the loss or damage by action against the other person or against any person involved in the contravention.
Section 82 of the Trade Practices Act is in identical terms, but for references to the relevant provisions within that Act.
If any question arises for determination as to the quantification or valuation of a change in the improved value of the Property since the date of the pleaded contravening conduct, Mr Robinson seeks either (1) an order pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) (FCA) that the question be referred to a referee for inquiry and report according to the Federal Court Rules 2011 (Rules); or in the alternative (2) an order pursuant to r 23.01 of the Rules that the question be the subject of an inquiry and report by a Court appointed expert.
Mr Robinson’s summary of allegations
Without derogating from the range of matters pleaded in the 6FASOC, Mr Robinson said that there are broadly two sets of allegations against Mr Kenny and ABK (Architect):
a. The Architect misled Mr Robinson as to the likely cost of the works the subject of the building contract signed between Mr Robinson and Simcorp on 10 May 2007, to which the Building Cost Representation (6FASOC [29F]), the Relevant Conduct (6FASOC [29E]) and the Builder Communication Representations (6FASOC [9B] and [9C]) relate; and
b. Mr Kenny misled Mr Robinson into a belief that the Simcorp Quote dated 19 December 2006 (see [22] below) was an estimate or quotation that had been prepared by Mr Simpson as an “orthodox response to tender at the conclusion of a properly conducted tender process”. The Tender Representations (6FASOC [29J]) relate to this aspect of Mr Robinson’s case.
In summary, the claims are:
a.   Relevant Conduct: between December 2006 and 10 May 2007, Mr Kenny or ABK engaged in the following conduct (in any combination):
(1)Mr Kenny gave the Simcorp Quote to Mr Robinson on 19 December 2006 without derogation or qualification at that time or subsequently;
(2)by email dated 20 December 2006 (see [147(2)]), Mr Kenny stated that on that day Mr Simpson had given him a list of suggestions and changes to get the total price down to $1.1 million and that he was meeting with Mr Spooner, another builder, with a view to receiving his suggestions and changes to get the total price down to $1.1 million;
(3)by email dated 29 January 2007 (see [151]), Mr Kenny stated to Mr Robinson that he had had a couple of meetings with Mr Simpson and that (based on those meetings) Mr Kenny’s office was making adjustments to the documentation to get the price down;
(4)by email dated 4 February 2007 (see [152]), Mr Kenny stated to Mr Robinson that over the past weeks he had been working closely with Mr Simpson to get the price for the Works down through delegation, negotiation, design, construction and material selection changes and that he was only two or three weeks off reissuing the latest “on budget” for construction/contract drawings;
(5)by email dated 27 February 2007 (see [155]), Mr Kenny sent Mr Robinson drawings dated 21 February 2007 for the Works; that email stated that the changes in the drawings had been “discussed with Alex [Mr Simpson]”;
(6)after Mr Robinson made suggestions (by emails dated 5, 11 and 12 March 2007) in relation to the drawings, by an email dated 13 March 2007 (see [160]), Mr Kenny stated to Mr Robinson that there would be further drawing changes and that, once those were completed and looked over by Mr Robinson, they would be sent to Mr Simpson “to confirm now on budget” and that then Mr Kenny would “do [the] contract and we can start building”;
(7)by an email dated 31 March 2007 (see [173]), ABK sent Mr Robinson a new set of drawings for the Works dated 29 March 2007;
(8)after Mr Robinson made suggestions (by email dated 4 April 2007) regarding the drawings dated 29 March 2007, by email dated 10 April 2007 (see [175]), ABK sent drawings dated 5 April 2007 to Mr Robinson and communicated that these drawings would be “final for the building contract”;
(9)by an email dated 27 April 2007 (see [184]-[185]), Mr Kenny sent to Mr Robinson a draft OFT Contract which he said he had obtained and on which he had written by hand the figure of $1,350,000 including GST in the contract price field (collectively the OFT Markings);
(10)by an email dated 24 April 2007 (see [180]-[181]), Mr Kenny sent to Mr Robinson a draft HIA Contract which was partially completed in his own handwriting and contained on page 5 under the heading “Builders Fee” “20 percent of the cost of the building works claimed at the relevant progress claim plus set about [sic] of [blank] if total contract price less than $1.2 million”; and/or
(11)by that email of 24 April 2007, Mr Kenny stated that Simcorp and Mr Simpson could handle a construction job of the size and complexity of the Works, he recommended Simcorp and he could work well with Mr Simpson and Simcorp in his role as project manager and designer. The draft HIA contact was a cost-plus contract with no liquidated damages clause for delay and no mechanism for managing cost or timelines;
(12)by an email on 7 May 2007 (see [231]), Mr Kenny stated to Mr Robinson that in his view a cost-plus contract would be better than a fixed-price contract if it were well-managed, if there was a good rapport between builder and Architect (which there allegedly was), and as long as there was a transparent costing system and effective incentive scheme in place; he also stated that the Reward Chart was well done and reasonable;
(13)in May 2007 and before Mr Robinson decided to enter into the HIA Contract, Mr Kenny wrote by hand onto page 6 of the contract, under the heading “special conditions”, “PC’s to keep budget at $1.2 million and not affect margin” after which appeared a list of PC items (see [241]d) below;
(14)when Mr Robinson explained to Mr Kenny and Mr Simpson his reasoning for the structure and content of the Reward Chart (at a meeting on 10 May 2007 before the execution of the building contract for the Works) Mr Kenny said words to the effect of “that’s fine”; and/or
(15)Mr Kenny was silent about Mr Simpson saying to him that “it would be difficult to do the Works for a total cost of $1.4 million” and that “the Works could not be completed for $1.4 million without specification and design changes”. He was also silent about any belief that he had (if he had such a belief) that it would be difficult to build the Works for a total cost of $1.4 million including GST. He was silent in circumstances where, because of the communications referred to above, Mr Robinson had a reasonable expectation that the Works would not (without variation) cost more than $1,350,000 including GST, if Mr Robinson contracted with Simcorp on a cost-plus basis with a builder’s margin in accordance with the Reward Chart.
b.   Building Cost Representation: by engaging in the Relevant Conduct, ABK and/or Mr Kenny conveyed an implied representation that if Simcorp built the Works on a cost-plus basis with a builder’s margin in accordance with the Reward Chart, the Works would (without variation) likely cost Mr Robinson less than $1,350,000 including GST and would not cost more than around the amount of $1,350,000 including GST. This is a representation as to a future matter and Mr Kenny either:
(1)      had no reasonable basis for that view on 10 May 2007; or
(2)had the belief that it would be difficult to build the Works for a total cost of $1.4 million including GST.
c.   Builder Communication Representations: the Architect represented to Mr Robinson or alternatively created in him the impression that it was the Architect’s own belief that:
(1)Simcorp (a) represented that it would agree, (b) would agree, (c) would be able to complete the Works under a lump sum contract for a price of $1,350,000 including GST, by sending the draft OFT Contract to Mr Robinson by email on 27 April 2006 with the OFT Markings [see 9B and 9(c2)];
(2)Simcorp or Mr Simpson (a) could and/or would, and further or in the alternative (b) had communicated that Simcorp would, complete the Works for an amount of approximately $1,200,000. The Architect did this by providing the draft HIA Contract (cost-plus) to Mr Robinson (c) partially completed in his own handwriting, and (d) in particular by inserting on page 5 under the heading “builders fee” “20 percent of the cost of the building works claimed at the relevant progress claim plus set about [sic] of [blank] if total contract price less than $1.2 million”, and (e) before Mr Robinson decided to enter into the HIA Contract writing on page 6 under the heading “Special Conditions” “PC’s to keep budget at $1.2 million and not affect margin” after which appeared a list of PC items.
d.   Tender Representation: by reason of the Design Retainer; and/or engaging in the conduct of providing Mr and Mrs Robinson the timetable at [69] below; and/or the tender letters at [72] below; and/or the email concerning the closing of the tender at [74] below; and/or the status report at [82] below; and in providing, on 19 December 2006, the Simcorp Quote to Mr Robinson (see [97] below), Mr Kenny impliedly represented to Mr Robinson, on 19 December 2006, that the Simcorp Quote:
(1)was an estimate and quotation that had been drafted and prepared by Mr Simpson and/or Simcorp; and/or
(2)that it was provided by Mr Simpson/Simcorp as an orthodox response to tender at the conclusion of a properly conducted tender process conducted without Mr Kenny and/or ABK being involved in the actual drafting and preparation of a tender response by a tenderer; and/or
(3)      the tender process had been fair to all participants in the tender.
In fact, the Simcorp Quote was:
(4)not an estimate and quotation that had been drafted and prepared by Mr Simpson and/or Simcorp; and/or
(5)was provided by Mr Simpson and/or Simcorp as an unorthodox response to tender at the conclusion of a tender process that had not been conducted properly, being a tender conducted with Mr Kenny and/or ABK being involved in the actual drafting and preparation of the Simcorp Quote; and/or
(6)by reason of the matters pleaded in (4) and/or (5), the tender process had not been fair to all participants in the tender.
The Counterfactuals

The pleaded counterfactuals in relation to the Builder Communication Representations and the Building Cost Representation are that if the Architect had not made them:
A.Mr Robinson would not have entered into a cost-plus contract with Simcorp and would have insisted that Simcorp agree to a fixed price contract of $1.35 million including GST;
B.If Simcorp would not have entered into a fixed price contract, Mr Robinson would have sought a contract with another builder on a fixed price basis of about $1.35 million including GST or less;
C.If Mr Robinson could not find a builder who would build the Works for a fixed price of about $1.35 million including GST, Mr Robinson would have (1) abandoned the plan to build the Works; (2) continued leasing the existing house on the Property (which had tenants on 10 May 2007); (3) invested the funds he would otherwise have used to pay for the Works; (4) continued to invest the funds until his family’s repatriation from China (where he lived in 2007 and still lives because of an extension to his contract which was unforseen in May 2007); and (5) on his family’s eventual repatriation from China, reviewed the design for the proposed house and engaged a builder to build a house on the Property for $1.1 million or a sum less than that amount.
At the hearing Mr Lee, Senior Counsel for Mr Robinson, indicated that Mr Robinson would not be leading evidence of how Mr Robinson would have invested the money if he had not paid for the construction of the house and so that claim would not be made if Mr Robinson was successful and the Court found that Counterfactual C applied. Mr Lee made this point without prejudice to Mr Robinson’s claim to interest under s 51A of the FCA.
In relation to the Tender Representations, the pleaded counterfactual is that if Mr Robinson had been aware of the matters pleaded in paragraph 29K ([21]d above), Mr Robinson (1) would not have had any further dealing with the Architect and Simcorp/Mr Simpson at all; (2) would have abandoned the plans for the Works; and (3) would have continued to let the existing house on the Property (which had tenants on 10 May 2007).
Mr Robinson’s summary of issues for determination
Mr Robinson says that the issues for determination are:
a.   whether Mr Kenny and ABK made the Builder Communication Representations, the Building Cost Representation and the Tender Representations and engaged in the Relevant Conduct;
b.   if Mr Kenny or ABK made the Builder Communication Representations, the Building Cost Representation and the Tender Representations (each a Representation and together Representations), whether Mr Kenny and ABK contravened s 52 of the Trade Practices Act and s 42 of the Fair Trading Act;
c.   whether any contravening conduct played some part, even if only a small part, in materially contributing to the course of action taken by Mr Robinson in entering into a contract with Simcorp to build a home on the Property and commencing and continuing work under that contract;
d.   what the appropriate counterfactual is if the contravening conduct had not occurred and what losses resulted “by” the contraventions; and
e. whether Mr Simpson/Simcorp are concurrent wrongdoers under Part VIA of the Trade Practices Act and Part 4 of the Civil Liability Act 2002 (NSW) (Civil Liability Act).
Mr Robinson’s summary of the course of conduct
Mr Robinson says that the relevant course of conduct includes:
a.   The nature of Mr Kenny’s retainer (see [36] to [43] below);
b.   The contents of the first estimate letter of 27 August 2004 (see [44] below) in which Mr Kenny said he was “using past experience and after consultation with a quantity surveyor and builder”;
c.   The apparently orthodox nature of the tender process and therefore the apparent soundness of the representations in the Simcorp Quote which Mr Kenny gave to Mr Robinson on 19 December 2006;
d.   The lack of any countervailing representations in regard to the contract price;
e.   The fact (relevant to Mr Kenny’s silence) that it was admitted by Mr Kenny in cross-examination that it was “the wrong thing to do by the client” not to pass on to Mr Robinson that in response to Mr Kenny’s question of whether Mr Simpson could do the work for a “total cost of $1.4 million”, Mr Simpson said “[n]o, not without specification and design change”.
Mr Kenny’s summary of issues
Mr Kenny and ABK say, in summary:
a.   Mr Kenny made no “representations”. Mr Kenny was an “innocent conduit” of the process by which estimates as to the cost of building works were provided by a builder on two occasions, in December 2006 and April/May 2007, and Mr Kenny did not adopt or endorse representations made by Mr Simpson and Simcorp;
b.   “Estimates” do not give rise to representations when they are a necessary function of establishing the work to be done and Mr Robinson knew that he was dealing with estimates until he entered into the Building Contract;
c.   The Simcorp Quote was superseded by the significant work done in the period between 19 December 2006 and April/May 2007 in which three new sets of drawings and specifications were made. The estimate of $1.35 million was contained in a fixed price contract proposed in April 2007; this was Mr Kenny’s preference;
d.   Mr Robinson eschewed a fixed price contract and instead agreed a cost-plus contract, the consequences of which were fully known to Mr Robinson, who sought to mitigate the risk by the creation of the Reward Chart which he negotiated with Simcorp and which was included in the Building Contract;
e.   The Tender Representation case fails at an evidentiary level and no Jones v Dunkel (1959) 101 CLR 298 (Jones v Dunkel) inferences can be drawn from Mr Kenny’s failure to call Mr Daniel Smith (Mr Smith), the employee of Simcorp who signed the Simcorp Quote;
f.    If Mr Kenny is found to have made a representation in April 2007, the Building Cost Representation relates to a future matter in relation to which Mr Kenny had reasonable grounds;
g.   Mr Robinson’s evidence as to what he would have done had he known the truth of various representations has shifted and should be rejected; and
h.   Counterfactual A or B would be the appropriate basis on which to assess damages (if any), not Counterfactual C as contended for by Mr Robinson.
LEGAL PRINCIPLES
The parties agree that the question of whether conduct is relevantly misleading or deceptive is to be determined in accordance with the statement of McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 (Butcher) at 593 which was endorsed in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 (Campbell) at [102] per Gummow, Hayne, Heydon and Kiefel JJ (footnotes deleted and references to paragraphs of Butcher inserted):
Using tools of analysis drawn from the common law of deceit (misrepresentation and reliance) within the statutory framework provided by ss 42 and 68 of the Fair Trading Act may sometimes be helpful in identifying contravening conduct and deciding whether loss or damage was suffered by the contravention. But as McHugh J correctly pointed out in Butcher v Lachlan Elder Realty Pty Ltd [at [103]] the “conduct” with which s 52 of the Trade Practices Act 1974 (Cth) deals is not confined to “‘representations’, whether they be representations as to matters of present or future fact or law”. This proposition applies with equal force to s 42 of the Fair Trading Act. References to misrepresentation or reliance must not be permitted to obscure the need to identify contravening conduct (here, misleading or deceptive conduct) and a causal connection (denoted by the word “by”) between that conduct and the loss and damage allegedly suffered. As McHugh J also pointed out in Butcher [at [109]], with particular reference to s 52 of the Trade Practices Act, but with equal application to s 42 of the Fair Trading Act:
“The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation’s conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. (Emphasis added.)…”
The characterisation of conduct “generally requires consideration of whether the impugned conduct viewed as a whole has a tendency to lead a person into error” and it is “logically anterior to the question whether a person has suffered loss or damage thereby”: Campbell at [24]-[25] per French CJ, endorsed in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186 at [49]. In Campbell, French CJ acknowledged that there may be overlaps in resolving the logically distinct questions, and he went on to comment at [26] that the state of knowledge of the person to whom the conduct is directed may be relevant, at least insofar as it relates to the content and circumstances of the conduct.
Mr Kenny relies in particular on the difference between estimates and statements of firm opinion. On this question, French CJ commented in Campbell at [32]-[33] (footnotes deleted) that:
32It is important in considering whether conduct is misleading or deceptive to identify clearly the conduct to be characterised. If the conduct is said to consist of a statement made orally or in writing, the first question to be asked is what kind of statement was made. Was it a statement of historic or present fact made on the basis that its truth was known to its maker? Was it a statement of opinion? That is to say was it a statement of “judgment or belief of something as probable, though not certain or established”? The term “estimate” itself, used as a verb, means the “act of valuing or appraising” or an “approximate judgement of the number, quantity, position, etc, of something”.
33A statement of opinion may be a statement with respect to a future matter. It may take the form of a prediction. A forward estimate relating to the financial results of a business is a class of prediction. In strict logic there may be some category overlap between opinions and statements of fact. Opinions may carry with them one or more implied representations according to the circumstances of the case. There will ordinarily be an implied representation that the person offering the opinion actually holds it. Other implied representations may be that the opinion is based upon reasonable grounds, which may include the representation that it was formed on the basis of reasonable inquiries. In the case of a person professing expertise or particular skill or experience the opinion may carry the implied representation that it is based upon his or her expertise, skill or experience.
Where a person claims to be a conduit of a representation, factors which will be relevant to the assessment of the impugned conduct include:
a. Whether the person has expressly or impliedly disclaimed belief in the truth or falsity of information conveyed: Yorke v Lucas (1985) 158 CLR 661 at 666; or made it clear that they are not vouching for the accuracy of the information;
b. Whether the representation was conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as having adopted it: Gardam v George Wills & Co Ltd (1988) 82 ALR 415 at 427. In Butcher, when the conduct was considered as a whole (including an express disclaimer), a brochure issued by a real estate agent did not communicate adoption of a representation, whereas in John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1995] ATPR 41-249 the conduct of a real estate agent in holding itself out as a consultant to institutional investors was enough to indicate adoption of statements in a brochure relating to commercial property.
By way of example, in the most recent decision of the High Court in this area, Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at [3] and [70], French CJ, Crennan and Kiefel JJ held:
3. … [T]he search results which are the subject of these proceedings are “sponsored links” — a form of advertisement created by, or at the direction of, advertisers willing to pay Google for advertising text which directs users to a website of the advertiser’s choosing. It is not now in contention that the sponsored links … conveyed misleading and deceptive representations. What the present appeal concerns is whether, in all the circumstances, Google (as distinct from the advertisers to whom the sponsored links belonged) engaged in misleading and deceptive conduct by publishing or displaying the sponsored links. … Google did not contravene s 52 of the Act. Google did not author the sponsored links; it merely published or displayed, without adoption or endorsement, misleading representations made by advertisers.
70. … These findings — that ordinary and reasonable users would have understood the sponsored links to be statements made by advertisers which Google had not endorsed, and was merely passing on for what they were worth — were plainly correct. … On its face, each sponsored link indicates that its source is not Google, but an advertiser. The heading “Sponsored Links” appears above both top left sponsored links and right side sponsored links, and the URL of the advertiser, appearing within each sponsored link, clearly indicates its source. Ordinary and reasonable users of the Google search engine would have understood that the sponsored links were created by advertisers. Such users would also have understood that representations made by the sponsored links were those of the advertisers, and were not adopted or endorsed by Google.
Where more than one person is involved in the impugned conduct, the level of involvement of each person must be individually assessed and whether any or all will have been found to have engaged in misleading or deceptive conduct will be a question of fact in the circumstances: Cassidy v Saatchi & Saatchi Australia Pty Ltd (2004) 134 FCR 585.
Unless there is a duty to disclose a relevant fact or there are circumstances such that there is a reasonable expectation that a relevant fact will be disclosed if it exists, silence will not constitute misleading or deceptive conduct. The significance of silence always falls to be considered in the context in which it occurs: Warner v Elders Rural Finance Limited (1993) 41 FCR 399 at 402, 404-405.
If a respondent’s breach of s 52 of the Trade Practices Act or s 42 of the Fair Trading Act “materially contributed” to the loss or damage suffered by the applicant, even in only a minor way, it will be regarded as a cause of the loss or damage, despite other factors having played a role. In setting the amount of the “loss or damage” to be recovered, the Court must select a measure which conforms to the remedial nature of the statute and to the justice and equity of the case: Henville v Walker (2001) 206 CLR 459. The loss or damage must have been caused “by” the conduct: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514.
PRELIMINARY MATTERS
Design Retainer
At [5] of the 6FASOC, Mr Robinson pleads the retainer of the “Architect” as follows:
In or about May 2004, Robinson requested Kenny and ABK (collectively, ‘the Architect’) and they agreed, to for reward:
(a)design, with instructions from Robinson, a residence to be constructed on the Property including landscaping and construction of a swimming pool (the Works);
(b)in the course of preparing the design of the Works, liaise with the relevant local council and with a surveyor and a town planner regarding requirements relevant to the design;
(c)prepare construction drawings for the Works;
(d)advise on and manage all aspects of the tender and contract formulation for execution of the Works; and
(e)fulfil [sic] the role of project manager for the Works.
(in summary, the Retainer)
Particulars
Letter from the Architect dated 23 April 2004
Common ground
It is common ground that Mr Kenny was retained to perform the work described in [5](a)-(c) of the 6FASOC under Mr Kenny’s letter of 23 April 2004 addressed to Mrs Robinson. This letter was re-sent on 31 May 2004 and this time addressed to Mr and Mrs Robinson, but it was otherwise relevantly in the same form. Mr Robinson refers to this as the “Retainer”, while Mr Kenny refers to it as a “Design Contract”; both agree that it formed the basis of a contract between them. While it is clear that both are seeking to make a point by the terminology used, I have and will refer to it as the “Design Retainer”.
Express terms
The express terms of the Design Retainer relevantly are:
…
Please find following summary of how I will approach the design and the documentation process if chosen as your architect.
After speaking with you I feel confident that I will be able to receive considerable client input. For this reason I am happy to offer my services for a total of 7% of the estimated construction budget, established at the end of Stage 1 Sketch Design.
Timing: I am able to start immediately and would suggest that 9-12 months would be a reasonable and achievable timeframe to design and construct a project of this type.
…
Below I have listed the process that I would follow, together with my associated fees.
…

Stage 3 TENDERING AND SUPERVISION

Liaison with builder

-     Describing and explaining proposed work for builder quotation and selection purposes.

-     Regular site visits supervising work (looking after the best interest of client) to ensure quality and to take advantage of unforeseen opportunities to improve design

Interim Stage 3 fee due when construction underway (fee based on 1% of estimated construction cost)

Provide detailed drawings

-     Internal elevations showing tile patterns, materials, colours and finishes.

-     Cabinetwork and built in furniture.

-     Miscellaneous details as required

Interim Stage 3 fee due when construction underway (fee based on 0.5% of estimated construction cost)

Client liaison

-     Meeting during construction with client and builder.

-     Assisting client with material, product and colour selections as required.

Final Stage 3 fee due when construction is able to be completed (fee based on 0.5% of estimated construction cost)

Ground which is contested

It is not common ground that the Design Retainer extended as far as [5](d) and (e) of the 6FASOC. Mr Kenny says that he relies on the whole Design Retainer. In [5](e) of his Defence, Mr Kenny says that pursuant to the Design Retainer, Mr Kenny agreed to:
(i)design, with instructions from Robinson and Mrs Robinson, a residence to be constructed on the Property, including landscaping and construction of a swimming pool;
(ii)liaise with council, a surveyor, a soil test and a town planner;
(iii)provide an initial sketch design;
(iv)provide documentation for submission to council for planning approval;
(v)provide full working drawings;
(vi)liaise with structural/hydraulic/mechanical engineers and a building certifier;
(vii)provide detailed drawings; and
(viii)liaise with the builder, Robinson and Mrs Robinson during the construction of the residence on the Property.

The words “[d]escribing and explaining proposed work for builder quotation and selection purposes” which are used in the Design Retainer do not support Mr Robinson’s claim that Mr Kenny undertook to “advise on and manage all aspects of the tender and contract formulation for execution of the Works”. This is too expansive an interpretation of the words. Having said that, I consider that the language goes further than an obligation to “provide detailed drawings” as suggested by Mr Kenny. It also envisages a role of explaining drawings for the purpose of facilitating quotations and builder selection.
The express terms of the Design Retainer do not address an advisory and management role in relation to the selection of the builder as is pleaded.
Other related matters
As the breach of duty of care and retainer claims have been abandoned by Mr Robinson, the difference between the matters asserted at 5] of the 6FASOC and [5] of the Defence and the express terms of the Design Retainer have small relevance, if any. The claims in [6] and [7] of the 6FASOC appear to relate to the breach of duty of care and retainer claims and therefore should not have been included in the 6FASOC. None of Mr Robinson’s closing submissions address them nor did his conduct of the trial.
It is unnecessary for me to decide whether or not the supervisory role envisaged in the second hyphenated point under the heading “Liaison with the builder” extends to a project management role (as contended for by Mr Robinson) or a simple liaison role (as contended for by Mr Kenny) because this role appears to apply to the construction phase. The issues in contention only relate to the period from December 2006 to May 2007, which predates construction.
First estimates
By 4 August 2004, following meetings with Mr Robinson, Mr Kenny produced some sketches for the proposed house. In a letter of 27 August 2004, Mr Kenny provided “a range estimate of what the ‘market construction cost’ should be based on the design as of 04.08.04”. The range varied between $726,900 and $849,500 (depending on costs per square metre, with an allowance of $60,000 to $80,000 for landscaping and pool costs). The letter stated that:
N.B I have however capped my fees on an assumed construction cost of $700,000, regardless of what the actual costs turn out to be.
Mr Robinson says that in the absence of any statement as to GST status, it should be read as GST inclusive.
Liability of ABK
At [5] of the 6FASOC, Mr Robinson defines “the Architect” as Mr Kenny and ABK and he uses the term “Architect” in the subsequent claims; all Representations are said to be made by the Architect.
Mr Kenny admits that at all material times he has conducted business as an architect. He also admits that he traded in his own name until October 2004 and then he incorporated his practice in ABK. ABK was registered on 8 October 2004.
The Design Retainer and the first estimate as to construction price, which was given by Mr Kenny to Mr Robinson on 27 August 2004 (see [44] below), are on letterhead which has in its top right hand corner the words “BRIAN KENNY B.Sc. (Arch) B. Architecture”. As ABK did not exist until October 2004, it is not possible that those documents were issued as part of ABK’s business.
Email correspondence sent by Mr Kenny to the Robinsons from at least 31 July 2006 is generally styled “ABK Australia P/L [mailto: kenny@[address]”. Letterhead issued from at least 3 October 2006 has a logo in the top right hand corner with large letters “abk” and under that “CONCEPT TO CONSTRUCTION”; in the bottom right hand corner of the letterhead are the words “Trading as ABK AUSTRALIA P/L” and ABK’s Australian business number.
This would indicate that at least from 31 July 2006 Mr Kenny conducted his architectural practice through ABK, which appears to have been his intention. Whether or not there was a formal novation of the retainer constituted by the Design Retainer, I consider that Mr Kenny’s acts in the conduct of his business as an architect, at least from 31 July 2006, are also acts of ABK. This issue might have had more prominence if Mr Robinson had pursued the breach of duty of care/retainer claims. However, all of the alleged Representations occurred after 31 July 2006.
Affidavit Evidence
The following affidavits were read:
a.   Affidavits of Mr Robinson sworn on 20 July 2011 (but not [34]-[63]), 22 December 2011, 26 March 2012 (excluding [89(ix)] and [88] was admitted as a statement of belief), 4 January 2013 and 13 March 2013;
b.   Affidavits of Ms Kelli Edwards (Mr Robinson’s solicitor) sworn on 2 April 2012 and 28 February 2013;
c.   Affidavits of Mr Kenny sworn on 26 October 2011 (excluding [11], [27], [104]-[106], and [108]-[147] and [167]), 13 August 2012 (but not [5]) and 6 May 2013 (but not [14]);
d.   Affidavits of Mr Simpson sworn on 21 October 2011 (but not [43]-[64]), 15 August 2012 and 16 April 2013; and
e.   An affidavit of Mr Gavin Beardsell sworn on 13 March 2013.
Assessment of witnesses and nature of evidence
Oral evidence was given by three witnesses. The memory of all three witnesses suffered from the effluxion of time between the events which occurred in 2006/07 and the times they gave affidavit and oral evidence in 2011-13.
As Mr Robinson was overseas between December 2006 and May 2007 (except for the periods 17-23 December 2006 and 9-12 May 2007), there is an extensive written record of communications between Mr and Mrs Robinson and Mr Kenny. I have generally preferred this evidence to conflicting oral evidence, because it is contemporaneous and not as open to reconstruction. There is no similar record of emails between Mr Kenny and Mr Simpson, which is unexplained. It appears from Mr Kenny’s telephone records for November-December 2006 that they were in extensive telephone contact and Mr Kenny’s emails to Mr Robinson indicate that they also met on several occasions.
Mr Robinson
Mr Robinson’s experience, as at 2007, was in oversight and management of existing gas-producing assets. From 2010, Mr Robinson had the role of Head of Project Execution, Asia-Pacific based in Shanghai. In that role, he oversaw “all aspects of the commercialisation of gas-producing assets across the Asia-Pacific”; that is, oversight of obtaining government permits and approvals, organising finance (usually in multiple currencies), customer liaison, liaising with the procurement and construction subsidiary of the Linde Group (for which he never worked), recruitment, dealing with customs for imported components and procurement of locally sourced parts for the gas production facility.
Mr Robinson presented as a brusque and experienced man of business, accustomed to carrying authority and of some sophistication. He appeared proud of his capacity to make judgements, perhaps overly so. He was clearly impatient and irritated at being required to participate in the process of giving evidence, notwithstanding that he was the applicant. He presented as methodical, if impatient of detail.
I do not think Mr Robinson would deliberately lie, however, his evidence of events was curiously lacking in detail. It was more fulsome concerning things he said or thought than of the things said to him. Mr Robinson was guarded and not always responsive in giving his evidence. Both his affidavit and oral evidence was often reconstructed from assumptions about how he would have behaved which detracted from its evidentiary value. To that extent it appeared to be self-serving.
Specific to building contracts, Mr Robinson’s evidence is that he had never been involved in the construction of a house or in negotiations for a contract to build a house, or a commercial building other than a gas plant. Although he learned about cost-plus and fixed price contracts at university in the mid-1980s, he never let a building contract during his career and none of his professional training, qualifications or role involved analysis of the risk profile of building contracts. Mr Robinson also denies devising incentive schemes for a living. He says that he came into contact with incentive schemes in China as a way of trying to expedite the delivery of goods and services to the timing requirements of a project. I accept this specific evidence.
In his email of 25 April 2007 Mr Robinson used the term “risk profile” appropriately in relation to the draft HIA Contract and he demonstrated his understanding that there is no “pricing” in a cost-plus contract, as opposed to the fixed price contract for which he had asked. He demonstrated some sophistication in his understanding of the circumstances in which cost-plus as opposed to fixed price contracts might appropriately be used and in terminology (such as the use of the term “turnkey”).
It was Mr Robinson’s proposal to use a “risk-reward” incentive scheme. In emails after 25 April 2007 he contemplated such a scheme in association with a cap on the owner’s liability, and then without a cap; he plainly understood the difference in consequence.
Based on the email correspondence in April/May 2007 and his demeanour in giving evidence, Mr Robinson demonstrated that he had a business-like approach to gathering information he considered relevant. He also demonstrated a commercial understanding of the difference between fixed price and cost-plus contracts and the use of incentive schemes.
Mr Robinson is a professional project manager and he demonstrated a tendency to “credential” his assessments by reference to this fact. For instance, under cross-examination Mr Robinson said: “I’m a professional project manager. If you have an estimate on 700 and you go double it’s not a good look”: T 83.24-26. Accordingly, despite the fact that Mr Robinson says he would never have said, in relation to the Reward Chart, that creating such incentive schemes was “what he does for a living” or “what he does at work”, I do think he is likely to have explained the reasons for the Reward Chart in such a way that Messrs Kenny and Simpson could reasonably have understood Mr Robinson to have been saying that he derives his understanding of them through his work.
Mr Kenny
Mr Kenny has been a professional architect since 1991 and he holds a Bachelor of Science (Architecture) and a Bachelor of Architecture. The email correspondence with Mr Robinson suggests that Mr Kenny is a resilient optimist who seeks to please. This view of him was reinforced by his demeanour under cross-examination. He was a responsive and careful witness. Despite his level of education, Mr Kenny does not present as a sophisticated person.
I found Mr Kenny generally credible, although I do not accept his evidence in some important respects. He was truthful in the face of the opportunity to discredit Mr Robinson’s evidence by supporting Mr Simpson’s evidence that Mr Simpson had told Mr Robinson in Mr Kenny’s presence that his fixed price was $1.85 million plus GST, which would have been helpful to Mr Kenny.
Mr Simpson
Mr Simpson holds an Advanced Diploma of Construction and he has worked in the building industry continuously from 1988.
Mr Lee made a substantial attack on Mr Simpson’s credit: T 235-241. The attack characterised as dishonest and as reflecting adversely on Mr Simpson’s credibility Mr Simpson’s participation in a scheme to assist a sporting club to avoid the salary cap for a player through the provision of building services to the player. Mr Simpson supplied a statutory declaration to a newspaper in relation to the scheme. Mr Lee did not suggest that Mr Simpson had made a false declaration; to the contrary, Mr Lee submitted that Mr Simpson had told the truth but that the dishonesty lay in his participation in a scheme whereby others would engage in misleading conduct or lie. Mr Simpson accepted that the conduct was “shady”; he said that he was a “man who had made some mistakes” but denied that he had no credit. I issued a certificate under s 128 of the Evidence Act 1995 (Cth) to Mr Simpson in relation to his evidence on this matter. I note that Mr Simpson involved Mr Kenny as an architect in relation to the building, but Mr Lee indicated that there is no evidence that Mr Kenny knew or had reason to know of the nature of the scheme.
Mr Lee put to Mr Simpson that he had sworn his affidavits with a view to helping Mr Kenny. Mr Simpson said that he had originally been a party to the proceedings and he had initially sworn the affidavits to help himself; it was now to help Mr Kenny.
In my view Mr Simpson’s evidence should generally be regarded through the prism that it served Mr Simpson’s interests first and last. I accept that Mr Simpson’s evidence should be treated with caution where it is not corroborated by other evidence.
Kenny and Simpson affidavits
There are disturbing similarities between the language used in the October 2011 affidavits sworn by Mr Simpson and Mr Kenny. Although it is to be expected that there will be commonality in the issues addressed, there are many areas of evidence which employ hauntingly similar or the same language about events which occurred more than four years before the affidavits were sworn. I mention a number of them in these reasons. I am not inclined to attribute the similarity to collusion between Mr Kenny and Mr Simpson. Aside from any other reason, this was not put to them directly. The same law firm prepared the affidavits and I am inclined to the view that this is the cause without being in a position to make that finding. This is an issue which lawyers need to be alive to; in a contest of credibility the possible consequences of this are obvious and lawyers should ensure that clients are not put at risk of adverse credibility findings on this basis.
COMMUNICATIONS LEADING UP TO 19 DECEMBER 2006
31 July to 18 December 2006
31 July 2006 email – timeline
On 31 July 2006, Mr Kenny sent an email to Mr Robinson with a proposed timetable for going out to tender (August 2006), signing of contracts (December 2006), starting construction (January 2007) and moving in (January 2008). He notes that five builders (DTBS, Mark Spooner, Statham, Nortara and Chris Edmed) “are interested (yes, and they are all good & I have worked with all”. Mr Simpson does not appear to be one of the builders.
3 October 2006 Status Report
On 3 October 2006, Mr Kenny sent a letter addressed to Mr and Mrs Robinson headed “Status Report”. The letter indicated that Mr Kenny was in negotiation with five builders, this time including Mr Simpson along with John Jones, Chris Edmed and (names inserted in hand writing) Errol Murfet and Mr Spooner. There are three other typed names crossed through.
The letter enclosed a draft tender package (Tender Package). The Specification included in the Tender Package contained a general term which said:
Building contract to be determined by owner and builder and managed by ABK Australia Pty Ltd.
Tender Invitations
Mr Kenny gave evidence that in November 2006 he approached five builders (Messrs Murfet, Spooner, Jones, Edmed and Simpson) seeking tenders and the Court Book contains unsigned letters which each bear the date “17.11.06” addressed to those named people (the Tender Invitations referred to at [8] above). Mr Kenny gave evidence that he also approached Mr Dale Le Marshall. The Tender Invitations were in the following form:
RE: RESIDENCE: [NUMBER] SEAVIEW STREET TWEED HEADS SOUTH
SUBJECT: INVITATION TO TENDER
Thank you for expressing your interest in tendering on the above project.
Please find enclosed for your information the following documents:
·plans, from my office, dated 09.10.06.
·specification, from my office, dated 09.10.06.
·engineering drawings.
·survey plan.
·soil survey available on request.
Please make allowances within the quotation for the installation only of the following items, (n.b. these items are to be selected and supplied by ABK and owner during construction);
·Electrical & gas fittings; appliances, Air-conditioning, lights, fans, fireplace etc.
·Sanitary ware, hot water system and tanks.
·Tiles (see plans & assume floor to ceiling on walls in wet areas)
Please make no allowance within the quotation for the installation or the supply of the following items, (to be selected, supplied and installed by ABK, owner and/or nominated subcontractor during construction);
·Soft and hard landscaping & fencing
·Cabinetwork & built in furniture
Please indicate in your quotation;
·your preference re, the type of contract.
·an estimate of the duration of the construction process.
·your earliest starting date.
Please send (or deliver) your quotation to me before midday 14.12.06.
Please call me to arrange a meeting time to inspect the site, to explain the scope of work or if you have any further questions.
I look forward to receiving your quotation and I wish you luck with the tender.
Mr Robinson points out that no drawings of 9 October 2006 are in evidence although plans and specifications are. Mr Kenny gave evidence that drawings dated April and September 2006 were included and I accept that evidence.
20 November 2006 Status Report
By an email dated 20 November 2006 (20 November email) to Mrs Robinson’s email address, Mr Kenny provided a status report (emphasis added):
Dear B&S
Status Report
I hope you are well.
Re. Stone and tiles; Sure, all that sounds fine. I’ll get those areas and calculations to you asap.
Re. The timing of the closing of tendering. I have been asked by 2 of the builders for an extension of time (pretty standard for this time of year)
After consideration (& confirmation from my preferred builder that we on budget, you beauty!) I have given all the builders 2 more weeks.
I figured no harm in fishing for a bit longer and we will still be able to sign up the successful builder by 22.12.06 to start mid Jan 2007 for an end of 2007 finish. I’ll keep you posted of all the results when at hand.
Re. My annual leave is from 22.12.06 to 15.01.07. My offices will remain open over the Xmas period. If you need to contact my office during this time, Jose is your best contact. You can call me if it is an emergency at home [number].
No evidence was given by any of the parties as to what “on budget” meant.
Mr Robinson says that the Status Report contained in the 20 November email is the first indication that even in the absence of responses from builders (including Mr Simpson), Mr Kenny was “nevertheless willing to promote Mr Simpson as a ‘special case’, telling Mr Robinson that he had received “confirmation from my preferred builder that we on [sic] budget, you beauty!””. Mr Robinson suggests that this is curious given Mr Kenny’s evidence in cross-examination that he did not have a preferred tenderer until the end of the tender process.
Mr Kenny’s evidence at T 127.5-35 is:
Counsel:So it’s correct to say, isn’t it, that the tender process was open or being conducted during the period 17 November 2006 through to 19 December 2006; correct?
Mr Kenny:Yes.
Counsel:Now, during that period you were completely open to the prospect of any of the proposed tenderers being the ultimate person who was successful in the tender, I take it?
Mr Kenny:Yes.
Counsel:You didn’t have a preference one way or the other?
Mr Kenny:I would have been happy to have worked with any of those builders. I’ve worked with all of them in the past and some of them are easier to work with than others. You know, that’s just human nature. You get on better with certain people than you do with others, but I would have been happy for any of them to have won the tender.
…
Counsel:Do you have during that period a preference for any of those proposed tenderers?
Mr Kenny:No, I didn’t.
Counsel:Given that you didn’t, it would be quite wrong to describe one of the proposed tenderers as your preferred builder; correct?
Mr Kenny:It depends on the timing of it.
Counsel:Well, I’ve oriented you to the timing. It’s during this period of a little over a month when the tender process was open. You’ve agreed to the proposition you didn’t have a preferred builder during that process. I’m asking you – the logical extension of that answer is that it wouldn’t [sic would] have been quite wrong during that period for you to have referred to one of the tenderers as your preferred builder; correct?
Mr Kenny:Correct, although as the process went on I did – I was getting more feedback and more interest from one of the builders.

While the language of the 20 November email does indicate some personal preference, Mr Simpson is not named as the “preferred builder” and the 20 November email indicates that two builders had asked for more time. It appears that Mr Spooner was also actively considering the tender at that time, as is evident from the Status Report of 14 December 2006, which says, in relation to both Mr Spooner and Mr Simpson that “he is almost done. He requested until Tues[day], which I granted. He might be worth waiting for” (see [82] below). Mr Robinson appears to ignore this treatment of Mr Spooner in his suggestion of preferential treatment of Mr Simpson. There is, in fact, no evidence of who the “preferred builder” was at this stage.
In any event, it would not be unusual or inconsistent with a “proper, transparent and ethical tendering process” for a person conducting a tender to have a personal preference for one person invited to tender (based on their experience of working with that person), but to test the market by seeking tenders from other qualified people with whom they would also in fact be willing to work. That is consistent with Mr Kenny’s evidence at [77] above, despite his concession that it would be wrong to have referred to one of the tenderers as “preferred”. That Mr Kenny had a preferred tenderer was disclosed to Mr Robinson in the 20 November email, albeit not by name. Whether or not that was “fair” to other tenderers, the fact that Mr Kenny may have had a preferred tenderer was not being withheld from Mr Robinson.
The suggestion that Mr Simpson was a “special case” on 20 November 2006 was not put to Mr Kenny. Consistently with Mr Kenny’s evidence at [77] above, he conceded that “[b]y the time it got to the end of the tender he was shaping up to be my preferred tender”. It is also the case that Mr Spooner was not eliminated from contention even after 19 December 2006: see [147] and [152] below which indicate that Mr Spooner was in contention on 20 December 2006 and remained a “fall back” in February 2007. Mr Kenny was not cross-examined concerning Mr Spooner.
1 December 2006 email
On 1 December 2006, Mr Robinson advised Mr Kenny by email that he would be in Australia in December and he would like to meet with Mr Kenny on 18 or 19 December 2006 to give him samples of materials that Mrs Robinson was able to source in China and for an update on the bids.
14 December 2006 Status Report
On 14 December 2006, Mr Kenny wrote to the Robinsons providing a status report. It provides as follows (deletions in the original, emphasis added):
STATUS REPORT
The builders I’m in negotiation with so far are listed below;
Kelvin Wilson Alex Simpson Keith & Mick Franklin
Steve Vockler John Jones Chris Edmed
STATUS REPORT
Please find following the results from yesterday (& today), a bit disappointing but unfortunately typical.

~~Errol Murfet~~ ~~He has withdrawn. “Sorry, but too busy for next 6-9 months”~~

John Jones I called chasing tender. Awaiting reply.

Chris Edmed I called chasing tender. Awaiting reply.

Alex Simpson He is almost done. He requested until Tues, which I granted. He might be worth waiting for.

Mark Spooner He is almost done. He requested until Tues, which I granted. He might be worth waiting for

~~Dale Le Marshall~~ ~~He has withdrawn. “Sorry, but not set up for a job like this yet~~”
Basically, after speaking with them all I have reset the Tender deadline for 19.12.06.
I will keep you informed of progress with the builders.
Thank you for the opportunity of working for you on this project.
Please call me if you have any questions or suggestions regarding any of the above.

Submissions and findings in relation to period from 31 July to 18 December 2006

Mr Robinson notes that Mr Kenny’s evidence was that he approached six builders, not that he transmitted the Tender Invitations. I do not consider that anything turns on the difference and I accept Mr Kenny’s submission that he was never asked about the difference or directly challenged on the issue of whether he had, in fact, sent out the Tender Invitations.
Paragraphs [23]-[28] of Mr Robinson’s closing submissions appear to express scepticism about whether the Tender Invitations were sent out at all. The gravamen of this submission is difficult to understand: it may be to suggest that even before 19 December 2006, Mr Kenny was seeking to establish the appearance of a conventional tender process, but it was not a conventional process because Mr Kenny preferred Mr Simpson.
It is true that the Status Report of 14 December 2006 is ambiguous as to whether Mr Kenny is saying that there were nine or six people approached (some names are duplicated but some names are different above and below the second “Status Report” heading: see [82] above). However, the fact that there is no evidence of a response from some of the people to whom Mr Kenny says he sent a Tender Invitation is not determinative of whether or not he did. There is no legal or other obligation to respond to an invitation and there is evidence that some people did respond. There is a handwritten letter from Mr Murfet. There is also a file note by Mr Kenny of a conversation with Mr Spooner on 21 December 2006 (see [148] below). Mr Kenny gave evidence that Mr Le Marshall called him to withdraw from the process, saying that he was “not set up to do this work yet”. Mr Simpson says he received the tender request. The 14 December 2006 Status Report is consistent with this evidence and with the 20 November email (at [74] above) which indicates that two builders had asked for more time. All of this evidence was unchallenged by Mr Robinson.
I am prepared to accept that at least five (and possibly more) Tender Invitations were despatched by Mr Kenny on or about the date which the letters bear.
I do not find it “remarkable” (as contended by Mr Robinson) that, between 1 and 18 December 2006, Mr Kenny’s mobile telephone contacted Mr Simpson’s mobile telephone 31 times, at least once for up to eight minutes (a call which occurred on 8 December 2006 as disclosed by telephone records annexed to Mr Kenny’s 13 August 2012 affidavit). Nor is it plain what Mr Robinson sought to establish by noting that Mr Kenny spoke to Mr Simpson three times on 18 December 2006 (on the basis of Mr Kenny’s records, they in fact spoke four times for two to three minutes each time and a total of ten minutes). Mr Kenny was not cross-examined about the content of those conversations. No evidence was provided about the level of Mr Kenny’s telephone contact with any of the other people to whom Tender Invitations were issued (and in particular Mr Spooner), so it is difficult to draw any comparison or conclusion about the level of Mr Kenny’s contact with Mr Simpson.
The contact between Mr Kenny and Mr Simpson was even more extensive than contended for by Mr Robinson. Mr Kenny’s telephone records for his landline (annexed to his affidavit sworn on 6 May 2013), when taken with his mobile telephone records, indicate that Mr Kenny contacted Mr Simpson’s mobile telephone approximately 50 times between 1 and 18 December 2006. We have no evidence of whether Mr Simpson called Mr Kenny. Mr Kenny’s evidence was that although he could not recall exactly the number of conversations during the tender process he thought there may have been “closer to 6” than 12; he clarified that this was in relation to the Robinson project but that he was doing other work with Mr Simpson. I consider that this is likely to be an under estimate, even taking into account that they were working together on other projects.
Mr Robinson’s written submission at [29] is (underlining in original):
The fact is that by 19 December, Mr Kenny had not received a single positive response to the tender he had conducted on Mr Robinson’s behalf, including from Mr Simpson. Under cross-examination Mr Kenny said he could not recall being concerned about the fact that by 18 December Mr Simpson had not put in a response to the tender (TP 129.10). However, it is very likely that he was concerned: not only did Mr Kenny know that Mr Robinson was coming to see him on 18 or 19 December 2006 to have “a quick update on the bids” (CB 780a), but in the absence of a bid, Mr Kenny’s friend (see above) and “preferred builder” (see also (TP 132.15-20)) might not get the job.
As at the second half of 2011, both Mr Simpson and Mr Kenny gave evidence that they had known each other for about six years. The evidence of Mr Kenny was that they were not “close” friends but what might be called professional friends and Mr Kenny accepted that they have what might be described as a “close professional relationship”. This issue was not put to Mr Simpson in cross-examination.
Notwithstanding that they had a “close professional relationship”, Mr Simpson was not one of the builders whom Mr Kenny said he had approached in his email to Mr Robinson of 31 July 2006: see [69] above. Mr Simpson (as developer) and Mr Kenny (as architect) had been engaged in building six units in Pearl Street, Kingscliff in New South Wales before building commenced on the Robinsons’ project. In almost exactly the same words, both say that they worked well together on the Kingscliff project. This makes explicable Mr Kenny’s view that Mr Simpson might be his “preferred bidder”. I do not accept that working well together, or even a “close professional relationship”, is a sufficient explanation for any concern on Mr Kenny’s part that Mr Simpson might not get the job.
It is likely that the imminence of both the end of the tender period and Mr Robinson’s visit on 19 December 2006 caused Mr Kenny to contact builders to spur submission of a tender within the 19 December 2006 deadline, whether or not this amounted to a “concern”. It would have been odd if Mr Kenny had not been calling at least Mr Simpson and Mr Spooner (the two builders who had asked for time until 19 December 2006) to follow up to see whether they proposed to put in tenders.
I find that the Tender Invitations and Mr Kenny’s administration of them to 18 December 2006 have the appearance of a conventional tender process. I do not accept that Mr Robinson made out a case that Mr Kenny engaged in a sham by not sending out Tender Invitations, if that is indeed what Mr Robinson was seeking to do. Nor, without more, is the undoubted telephone contact between Mr Kenny and Mr Simpson evidence of a tender process being conducted unfairly or improperly. There is no evidence that, before 19 December 2006, Mr Kenny had any role in formulating the Simcorp Quote.
19 December 2006 conversation and Qualification
In affidavits sworn in October 2011, Mr Kenny and Mr Simpson deposed to a conversation which they had on 19 December 2006 in terms which were almost the same, word for word. Mr Simpson’s version was as follows:
Mr Kenny:“Can you please provide an estimate and quote because Mr Robinson wants to know the difference in cost between you doing the building work on a cost plus basis and you doing the building work on a fixed price basis?”
Me:“Not at the moment because I am driving.”
Mr Kenny:“You need to submit a written proposal today. Could you complete the work for a total cost of $1.4 million?”
Me: “No, not without specification and design change.”
The point at which their affidavit evidence diverges is that Mr Kenny says that Mr Simpson responded “it would be difficult”. Mr Kenny ultimately accepted that Mr Simpson said “no, not without specification and design change”. I will refer to Mr Simpson’s response as the “Qualification”.
Mr Kenny’s evidence in relation to the Qualification at T 210.15-46 is:
Counsel:Now, at the time that you had the meeting with Mr Robinson in the afternoon of 19 December when you handed him the copy of this quote I want to suggest to you that you had two sources of information as to the likely builder’s estimate of the contract cost. One was this fax. You would accept that that was one of them, correct?
Mr Kenny:      Yes.
Counsel:And the other one was the conversation you had had with Mr Simpson whereby he had said that he couldn’t do it for 1.4 without design and specification changes, correct?
Mr Kenny:I think – yes, that would be correct. He said it would be difficult without changes and … and more detail.
Counsel:Yes. And so moving forward you just didn’t rely on this letter. You relied on both those sources of information in order to from your view, correct?
Mr Kenny:      Yes, I would have, yes.
Counsel:And you don’t consider that Mr Simpson misled you in any way, correct?
Mr Kenny:No, I don’t think he did. I – I think builders often say it’s going to be difficult to get a house built for a certain amount of money.
Counsel:        Yes?
Mr Kenny:They – they always try to make sure that they make the point that I am the one that has to make changes and keep it in – within the specification and make sure that the clients don’t go crazy with making changes and changing the specification.
Counsel:        No?
Mr Kenny:So builders – builders often hedge – hedge their bets by saying that. You know, they – they say it and I – he said it to me and I accepted it.
Counsel:        Yes and ?
Mr Kenny:      I don’t know if I necessarily, you know, took it at face value.
Counsel:I see. In any event you thought he was telling you the truth in the conversation that you had on 19 December, correct?
Mr Kenny:      I took it with a grain of salt but yes.
Simcorp Quote
On 19 December 2006, Mr Kenny received a letter from Simcorp by fax. It is the document referred to as the “Simcorp Quote” or “Quote” in these proceedings. The Simcorp Quote was not on letterhead. It appears in the Court Book at 785 and it is in the following terms (street and mobile phone number deleted):
19/12/06
Re: NEW RESIDENCE – [NUMBER] SEAVIEW STREET, TWEED HEADS SOUTH
Brian Kenny
Following your request to provide a tender, please find following our estimation & quotation. In this estimation & quotation we are using past experience, with assumed high quality selections and the assumption that we are doing all the work until completion.
Estimate Total = $1,300,000:00
This estimate includes GST.
This estimate is based on a cost plus contract (20%)
Quotation Total = $1,400,000:00
This estimate includes GST.
This estimate is based on a fixed time/fixed price contract.
We can start January 2007.
If I can be any further assistance please contact me on [mobile number].
Alex Simpson
[No signature appears]
Simcorp Developments Lic No.181817C
[Signature which reads Daniel Smith]
Provenance of the Simcorp Quote
In his affidavit sworn on 16 April 2013, Mr Simpson deposed that it was Simcorp’s usual practice to produce a document such as the Simcorp Quote when bidding on a tender and that it would be approved by him before being signed and sent to an architect. Mr Simpson said that he “would never let an architect prepare a document such as the Simcorp Quote”. He deposed that he does not recall the Simcorp Quote being produced, but concedes that the signature on the document is that of Mr Smith, Mr Simpson’s “foreman” at the time, and that Mr Simpson is familiar with Mr Smith’s signature.
Mr Kenny accepted that he gave the original fax of the Simcorp Quote to Mr Robinson at the meeting at Mr Kenny’s office on 19 December 2006. Mr Robinson subsequently attached a copy of this document to an email which he sent to Mr Kenny on 27 April 2007 at 7.07 pm (see [185]). This is the document that appears at CB 785. It bears what appear to be transmission markings from two fax machines as follows (the final four numbers of the fax numbers have been omitted):
19/12/2006 10:03 075569 XXXX Simcorp 01/01
19/12/2006 09:53 026674 XXXX ABK Aust Brian Kenny 01/01
On 19 December 2006, due to daylight saving in New South Wales, New South Wales was one hour ahead of Queensland. Mr Kenny’s office was in northern New South Wales and the Simcorp offices were in Queensland. Mr Kenny does not dispute that the fax numbers are numbers which were employed by ABK and Simcorp at their respective offices.
When the issue of the transmission markings was first raised with Mr Kenny in cross-examination in March 2013, he accepted that it appeared that the Simcorp Quote had been faxed first from his office at 9.53 am NSW time (8.53 am Queensland time), and then back to ABK from Simcorp at 10.03 am Queensland time (11.03 am NSW time). He also said that he did not know if either or both of ABK and Simcorp’s fax machines was correctly set for date and time (having noted previously in relation to Mr Murfet’s fax of 4 December 2006 that the area is subject to blackouts). Mr Kenny accepted that it was more probable than not that they were correct. He had no explanation for why the Simcorp Quote appeared to have been faxed from ABK before it was returned from Simcorp.
Mr Kenny later categorically denied that he prepared the Simcorp Quote; he said he had no recollection of it being produced in his office. He said it did not look like a document produced in his office which used a different font. He admitted that he assisted by speaking with Mr Smith and Mr Simpson during the day.
In support of the proposition that Mr Kenny prepared the Simcorp Quote, Mr Robinson cites the following:
a.   Mr Kenny accepted that the document at CB 785 (the Simcorp Quote) is a photocopy of the document he handed to Mr Robinson at their meeting on 19 December 2006 and that the document he gave to Mr Robinson was the only copy he had which was signed by Mr Smith. It was only faxed to Mr Kenny once and not emailed;
b.   Mr Kenny agreed that other communications he received from Simcorp were on Simcorp letterhead while the Simcorp Quote was not;
c.   On 18 February 2010, in connection with Mr Robinson’s litigation against Simcorp and Mr Simpson, Mr Kenny provided the contents of his file to Mr Robinson’s lawyer (Ms Melinda Turnbull). Mr Kenny agreed that he provided “all [the] scraps of paper that [he] ever had in respect of [the] project” to Ms Turnbull;
d.   Ms Turnbull made a file note of her conversation with Mr Kenny on the same day as follows :
Telephone attendance on Brian Kenny returning my call.
Advised that the quotes should be in there – there is nothing missing from the files – everything he has on the matter is contained within the binders. Recalls that they only rec’d two quotes – one from Simcorp and the other from Mark Spooner. He reviewed his electronic file and located the Simcorp quote which he will fax through to me. The other quote should be within the file – unfortunately he cannot guarantee that the files are in chronological order given the time that has passed.
e.   Mr Kenny said that “when he was talking about the electronic file [he was] talking about documents on his computer”;
f.    Appearing at CB 785(d) is an unsigned copy of the Simcorp Quote showing a transmission receipt from ABK at the same fax number as appears on the transmission marking on the Simcorp Quote. The unsigned Simcorp Quote shows a transmission time of 5:20 pm on 18 February 2010 and it is marked “Attn Melinda” in Mr Kenny’s handwriting. Mr Kenny accepted that he faxed that document after he printed it out from his computer about an hour after his conversation with Ms Turnbull;
g.   On 12 March 2013, Mr Kenny was cross-examined about the provenance of the Simcorp Quote and the transmission markings were drawn to his attention. On 13 March 2013 Mr Gavin Beardsell, Mr Kenny’s lawyer, swore an affidavit in which he said:
(1)on 6 April 2010 he asked Mr Kenny to provide him with his complete file relating to the Property;
(2)on 8 April 2010 he received instructions from Mr Kenny that Mr Kenny had six A4 folders which were in the possession of Mr Robinson’s solicitors in connection with Mr Robinson’s claim against Mr Simpson and Mr Kenny had agreed to collect the papers the next day;
(3)Mr Kenny’s file was delivered to him on 15 April 2010 and remained in the firm’s possession as at the date of the affidavit;
(4)on 16 November 2010 Mr Beardsell received a letter from Mr Robinson’s lawyers with discovered documents in these proceedings, including the document to be found at CB 785 (the Simcorp Quote), which is referred to in the table of contents of the discovered documents; and
(5)during the evening of 12 March 2013 Mr Beardsell reviewed Mr Kenny’s original file of papers and the Simcorp Quote was not contained in them (either the original or a copy); and
h.   Having been taken to Mr Beardsell’s affidavit, Mr Kenny accepted that it was more likely than not that he did not keep a copy of the Simcorp Quote signed by Mr Smith on the file which he had provided to Mr Robinson’s solicitors and then to Mr Beardsell.

Mr Kenny pleaded at [30] of his Defence that the Robinsons “advised” Mr Kenny “that they required a contract for works on a cost plus basis” on a range of bases, most of which were not seriously prosecuted in the conduct of the case. I accept that Mr Robinson did propose the Reward Chart when he saw the $1.35 million contract price in a fixed price contract and that he wished to retain the “risk” amount built into a fixed price. However, I do not accept that the cost-plus contract was Mr Robinson’s initiative based on a desire for flexibility, including the flexibility as to the time at which he started or stopped construction.
Against the background of Mr Kenny’s encouragement to consider a cost-plus contract in his 27-30 April 2007 emails, Mr Robinson’s original request for a fixed price contract, Mr Robinson’s question about whose work the draft OFT Contract was and (most importantly) Mr Robinson’s specific request for advice from Mr Kenny about the appropriate choice of contract from the owner’s perspective, Mr Kenny’s advice in his 7 May 2007 email was: “I think that a well managed cost plus type contract with an architect who has a good rapore [sic] with the builder can be the best for the owner as long as there is a transparent costing system and a true incentive scheme in place. I am just about to build a house & I am going to go cost plus.”
Accepting that Mr Kenny believed what he said, he would only be right if all went well. The response is inadequate against the factors I have listed. Even though Mr Kenny had previously expressed a first preference for a fixed price contract, his advice in support of a fixed price contract was tepid at best. Mr Kenny’s statement that he intended to use a cost-plus contract himself has the character of advocacy for that option rather than the provision of disinterested advice. Mr Kenny was an advocate for a cost-plus contract, most probably because Mr Simpson was not willing to contemplate a cap on Mr Robinson’s responsibility for cost-blow out, whether as a fixed price contract or as a cap on a cost-plus option.
Mr Kenny’s advocacy for a cost-plus contract with an incentive scheme and the lack of warning of possible adverse consequences in Mr Kenny’s advice in the 7 May 2007 email plainly has the capacity to lead Mr Robinson into error having regard to the fact that Mr Robinson did not know of the Qualification. It is a circumstance in which Mr Robinson had a reasonable expectation that Mr Kenny would have told him of the Qualification and given him balanced advice concerning his choice between contract options.
It is not an answer to Mr Robinson’s pleaded case that the Simcorp Quote or the figures in the Contracts are merely estimates. The $1.35 million figure in the draft OFT Contract was presented to Mr Robinson by Mr Kenny as a fixed price option; it was not presented as an estimate, albeit that it was part of a pre-contractual negotiation. I am not satisfied that Mr Kenny had a basis for suggesting that amount because of firm advice from Mr Simpson that he would or might be willing to enter into a fixed price contract at that price. Mr Kenny was aware that Mr Robinson was relying on the “contract price” in the draft OFT Contract in constructing the Reward Chart. Mr Kenny knew that Mr Robinson was relying on him for his view about price, and this became more important when Mr Simpson refused to enter into a fixed price contract. Mr Kenny encouraged Mr Robinson to choose a cost-plus contract without a cap with only the Reward Chart as a strategy to incentivise the builder to minimise cost. There is no evidence that Mr Kenny ever advised Mr Robinson that there was or might be a material risk to the achievement of a price of $1.35 million (GST inclusive) or less.
It is not an answer that Mr Robinson knows the difference between cost-plus and fixed price contracts. He did not have the same quality of information as Mr Kenny and he would reasonably have expected Mr Kenny not to remain silent about the Qualification and any other relevant factors in responding to Mr Robinson’s request for Mr Kenny’s advice about contract options from the owner’s viewpoint.
Mr Robinson thought that the high point of the cost reduction exercise was the $1.4 million fixed price quote in the Simcorp Quote. While Mr Kenny also believed that, he knew that the builder had said that that price could not be achieved without specification and design change. Without being informed of the Qualification, no matter how diligent or careful Mr Robinson was in applying his knowledge and experience to the known information when he was assessing the risk he was undertaking, Mr Robinson was put at heightened risk of error, such as his belief that $1.35 million was a “robust upper figure”. He also could not adequately evaluate the degree of difficulty when advised by Mr Simpson on 10 May 2007 that specification changes would be required to meet a target price of $1.2-$1.3 million.
It is also not the case, as submitted by Mr Kenny, that the causal link between the Simcorp Quote and the decision to enter into the Building Contract was broken by the specification and design changes undertaken between December 2006 and April 2007 so that the Qualification ceased to be relevant. Mr Robinson was, in fact, making decisions by reference to the Simcorp Quote to the knowledge of Mr Kenny. For the reasons at [194]-[197] above, the estimate and quote in the Simcorp Quote were a relevant comparison to the “pricing” in the draft Contracts and Mr Simpson did not consider that the re-design and re-specification process resulted in significant reduction in the contract price. Mr Simpson’s view is supported by the findings of estimated construction costs by the Experts: see [13] above which expresses the midpoint of those findings.
For similar reasons to those expressed at [236], I do not consider that Mr Kenny’s remark that the Reward Chart is “well done and reasonable” in the 7 May 2007 email or his “[t]hat’s fine, that can go in the contract” at the 10 May 2007 meeting do anything more than endorse the Reward Chart as a scheme designed to incentivise the builder to keep costs low in a context where Mr Robinson has indicated that he understands that there will be no cap on the draft HIA Contract. I do not accept that the range in the Reward Chart devised by Mr Robinson operated as a representation that the range would not be exceeded.
The Relevant Conduct and the implied Building Cost Representation constitute misleading or deceptive conduct or conduct which is likely to mislead or deceive Mr Robinson within s 52 of the Trade Practices Act and s 42 of the Fair Trading Act.
MR ROBINSON’S LOSS
I accept Mr Robinson’s submission that neither of Counterfactuals A or B set out at [22] above can apply to the assessment of Mr Robinson’s loss as a result of his reliance on the Tender Representations and the Building Cost Representation. Mr Robinson’s evidence was that Mr Kenny told him before he signed the Building Contract that Mr Simpson would not enter into a fixed price contract for $1.35 million (GST inclusive), so Counterfactual A has no application. The Experts’ findings were that a fixed price tender sum in May 2007 would have been $1,826,619 (Mr Davies) or $1,609,669 (Mr Makin) with a mid-point of $1,718,144, so it is unlikely to have been possible for Mr Robinson to find a builder who would agree a fixed price contract for $1.35 million (GST inclusive); accordingly Counterfactual B has no application.
I have accepted that if Mr Robinson became aware of the Qualification or of the unorthodoxy of the tender process in April/May 2007, or if he had been told that the works could not be built for $1.35 million (GST inclusive) or marginally more, or if he could not find a builder who would build the works for a fixed price of about $1.35 million, he would not have proceeded with the project at that time and he would have rented the existing property. Accordingly, Counterfactual C is appropriate in relation to both the Tender Representation and Building Cost Representation Claims.
On the basis that Counterfactual C is the appropriate basis for calculating Mr Robinson’s loss, I accept Mr Robinson’s submission that he is entitled to statutory compensation pursuant to s 68 of the Fair Trading Act and s 82 of the Trade Practices Act calculated as follows:
a.   The amount of $2,471,821.99, being the sum Mr Robinson paid to Simcorp and others to build the works, as listed in annexure A to the letter dated 23 September 2013 from Mr Kozub of Gilchrist Connell, Mr Kenny’s lawyers. Mr Kenny argued that not all of the payments were within the scope of the Building Contract or pleaded in the 6FASOC. As these amounts (including amounts paid in relation to the so called “power lines dispute”) would not have been incurred if the Building Contract had not been executed in May 2007, Mr Kenny accepted that they should be included if I found that Counterfactual C was appropriate; plus
b. Interest on $2,471,821.99 pursuant to s 51A of the FCA; plus
c.   The sum of foregone rent for the existing house on the Property from May 2007 to the present, being $280 per week adjusted for inflation. A basis for adjustment for inflation was proposed in Mr Robinson’s closing submissions to the end of 2012 and Mr Kenny did not object to that basis of calculation. Unless otherwise ordered, the same methodology should be employed in bringing forward the period to the date of judgment. Mr Kenny suggested that there should be an allowance made for periods of vacancy. However, no evidence has been provided as to what an appropriate period might be in relation to a house of the kind which was on the Property in May 2007. Accordingly, I do not propose to make any such allowance; minus
d.   A sum equal to any change in the improved value of the Property since May 2007 due to the construction of the works as determined by an expert valuer to be appointed by the Court pursuant to r 23.01 of the Rules. The parties are to confer concerning the identity of the valuer, being a person with knowledge and experience in valuing property in the Tweed Heads area. The parties must also confer and agree draft instructions to be provided to the valuer for approval by the Court and a timeframe in which the work should proceed.
PROPORTIONATE LIABILITY
Mr Kenny claimed that if he were found to be liable for any loss or damage of Mr Robinson, Mr Simpson and Simcorp are “concurrent wrongdoers” for the purposes of Part VIA of the Trade Practices Act (ss 87CB and 87CD) and Part 4 of the Civil Liability Act (ss 34 and 35). Mr Kenny’s proportionate liability claims are pleaded at [35]-[47] of the Defence.
Mr Robinson did not dispute the legislative basis for such a claim or the application of principles enunciated by the High Court in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Limited (2013) 247 CLR 656.
As submitted by Mr Robinson, concurrent wrongdoing must be proved on claims as pleaded. It should not be found on the basis of “palm tree” justice as to who might have moral blame for loss or damage.
Simpson Cost Representation
Mr Kenny’s first claim is (in effect) that having inspected the Property and the drawings and specifications provided with the Tender Invitations, Mr Simpson gave the Simcorp Quote to Mr Kenny/ABK, thereby representing that if Simcorp built the works on a cost-plus basis, the total contract price would be approximately $1.3 million including GST. This was a representation as to a future matter and Mr Simpson/Simcorp had no reasonable grounds for making the representation. Further, and in the alternative, Mr Simpson/Simcorp had no intention of ensuring that the Works would be built for $1.3 million or less, or Mr Simpson/Simcorp did not intend to construct the Works on a cost-plus basis for this amount. The particulars to this claim relate to the failure of Mr Simpson to have or implement effective cost management procedures: [39]-[40] of the Defence.
Simpson Reward Chart Representation
Mr Kenny’s second claim is that Mr Simpson/Simcorp engaged in misleading or deceptive conduct by failing to make “any representation to [Mr] Robinson or [Mr Kenny] prior to 10 May 2007 to the effect that the Reward Chart was not appropriate”: [41] of the Defence. The particulars to this claim are that having regard to the Simpson Cost Representation and the nature of the Reward Chart there was a reasonable expectation that if the Reward Chart was inappropriate because of what Simcorp/Mr Simpson estimated to be the total cost of the Works, Mr Simpson/Simcorp would disclose that to Mr Robinson before Mr Robinson entered into the Building Contract.
Consideration of Simpson Cost Representation and Simpson Reward Chart Representation claims
Mr Kenny claims that Mr Robinson entered into the Building Contract in reliance on the Simpson Cost Representation and the Simpson Reward Chart Representation.
The Simpson Cost Representation as pleaded was made to Mr Kenny/ABK and Mr Kenny’s evidence is that Mr Simpson told him of the Qualification. Even if, as conceded by Mr Simpson at T 224.6-28, without the Qualification the Simcorp Quote was a “misleading document” there can be no argument that Mr Kenny was misled. Mr Kenny led no evidence about Mr Simpson’s cost management procedures.
Accordingly, as pleaded, the Simpson Cost Representation could only relevantly mislead Mr Robinson if Mr Kenny can make out the Simpson Reward Chart Representation, which is essentially a claim that Mr Robinson was misled by Mr Simpson’s silence in circumstances where there was a reasonable expectation that Mr Simpson would not remain silent.
Mr Kenny argued that it is Mr Simpson’s evidence that he knew that the Simcorp Quote had gone out without qualification. Mr Simpson likewise did not believe that the exercise of specification and design change which occurred between December 2006 and April 2007 would change the cost significantly so that the building works could be built for $1.35 million or less: T 242.17. Mr Robinson did not know this.
It is a reasonable inference from Mr Simpson’s evidence that he knew that the Simcorp Quote had gone to Mr Kenny without the Qualification. However, Mr Simpson also accepted that he was “quite content” not to send a follow-up letter because he had made the position “perfectly clear” to Mr Kenny in the conversation on 19 December 2006 and he was satisfied that Mr Kenny understood Mr Simpson’s view: T 224.30-33. There is no reason to doubt this evidence; it is corroborated by Mr Kenny.
It is undoubtedly bad practice for Mr Simpson to allow the Simcorp Quote to be incomplete on its face. However, Mr Kenny acted for Mr Robinson in running the tender: he was the person through whom all communications passed and Mr Simpson told him of the Qualification. There is no evidence that Mr Simpson knew whether Mr Kenny would give a copy of the document embodying the Simcorp Quote (which was addressed to Mr Kenny) to Mr Robinson or whether he would make a verbal report; there is no evidence that Mr Simpson ever knew what Mr Kenny did. Mr Lee went to some lengths in cross-examining Mr Kenny to establish that a reasonably competent architect would pass on information of that kind. There is no evidence that Mr Simpson had reason to suspect that Mr Kenny did not or would not pass on the Qualification: that question was never asked of Mr Simpson. There is no basis for finding that Mr Simpson was aware that Mr Robinson did not know of the Qualification.
Mr Simpson gave evidence that he knew that Mr Robinson believed that the building works could be completed for $1.35 million, but there is no evidence that Mr Simpson knew that Mr Kenny had provided the draft OFT Contract to Mr Robinson. Mr Robinson knew that Mr Simpson had refused to enter into a fixed price contract for $1.35 million (GST inclusive) and was accordingly not willing to take the risk that the building works could not be completed for that price, nor was he willing to accept a cap on the draft HIA Contract.
Further, I have accepted the evidence of Messrs Kenny and Simpson that at the meeting at which the Building Contract was signed, Mr Simpson told Mr Robinson that there would be need for specification changes (i.e. relating to selection of materials by Mr Robinson) if the budget was to be kept between $1.2 million and $1.3 million.
In these circumstances and in the absence of Mr Robinson having sought a further estimate of the building works from Mr Simpson, it is difficult to see on what basis Mr Simpson had an obligation to make a disclosure of the kind suggested by Mr Kenny in the Defence. Mr Simpson did not have an advisory relationship with Mr Robinson and he had had no dealings with Mr Robinson before he met him on 10 May 2007 at the meeting at which the Building Contract was signed.
I rejected Mr Robinson’s argument that the range of cost values by reference to which Mr Simpson’s fee was to be calculated under the Reward Chart amounted to a representation that the building cost would fall within that range. I see no reason for a different analysis in relation to this pleading. I accept that Mr Robinson and Mr Kenny may have drawn comfort from Mr Simpson’s acceptance of the Reward Chart; if Mr Simpson did not think it feasible to bring in the building works for a cost within the $1.1-$1.35 million range, why would he take the risk of such a low builder’s fee? When Mr Simpson said “[f]ine by me”, all he was doing was accepting the risk to his fee. That was his risk to take, it was not inappropriate for him to do so, nor did it give rise to a disclosure obligation to Mr Robinson.
Mr Kenny’s outline of closing submissions pointed out that Mr Lee had been critical of Mr Simpson’s credit. While this is true, I do not see how that advances Mr Kenny’s argument without suggesting what particular evidence of Mr Simpson’s should not be accepted.
Accordingly, Mr Kenny has not made out the Simpson Cost Representation or the Simpson Reward Chart Representation.
Simpson Tender Representation
Mr Kenny’s third claim is that by providing the Simcorp Quote, Mr Simpson or Simcorp made an implied representation to Mr Robinson that it was provided as an orthodox response to a tender at the conclusion of a properly conducted tender process and that this implied representation was misleading or deceptive because it was an unorthodox response.
Mr Kenny suggests that Mr Robinson’s Tender Representations claim is effectively that Mr Kenny and Mr Simpson colluded in the preparation of the Quote.
This claim should be rejected. As Mr Robinson submitted, the Simcorp Quote was a response to Mr Kenny, it was not a representation to Mr Robinson. There is no evidence that Mr Simpson knew or had reason to know that Mr Kenny would not tell Mr Robinson how the Simcorp Quote had been generated or of the Qualification. That was a circumstance entirely within Mr Kenny’s responsibility and control, and Mr Simpson was entitled to assume that Mr Kenny would do his job in a professional manner and consistent with professional standards. Cooperation between Mr Kenny and Mr Simpson to ensure that the Quote was generated on 19 December 2006 does not imply or necessitate a finding that they colluded to mislead Mr Robinson about how the Quote was generated.
CONCLUSION
Mr Kenny has failed to establish a basis on which Mr Simpson or Simcorp is a concurrent wrongdoer. Accordingly, I find that Mr Kenny and ABK are liable for Mr Robinson’s loss calculated as set out at [301].
I will direct the parties to agree final orders which give effect to these reasons on or before a date to be determined following delivery of these reasons. As currently informed, I consider that costs should follow the usual course, including that the respondent is entitled to costs thrown away in relation to the claims abandoned by the applicant. The parties will have the opportunity to address this issue in accordance with the direction.

I certify that the preceding three hundred and twenty-three (323) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.
Associate:
Dated: 26 September 2014

Citation:	Robinson v Kenny [2014] FCA 988
Parties:	GRAHAM BRUCE ROBINSON v BRIAN KENNY and ABK AUSTRALIA PTY LIMITED (ACN 111 306 999)
File number:	NSD 238 of 2010
Judge:	FARRELL J
Date of judgment:	26 September 2014
Catchwords:	TRADE PRACTICES – misleading or deceptive conduct – architect engaged to design house – architect initiated tender process – builder made oral qualification concerning cost of works – whether failure to convey qualification misleading or deceptive conduct – whether representations were estimates – whether architect “innocent conduit” of any representations made – proportionate liability – liability of builder TRADE PRACTICES – misleading or deceptive conduct – conduct of tender process – whether tender process unorthodox – whether misleading or deceptive representations made concerning conduct of tender process – involvement of architect in preparation of quote – whether tender process fair to all participants DAMAGES – proportionate liability – whether builder concurrent wrongdoer – whether builder engaged in misleading or deceptive conduct – apportionment of liability
Legislation:	Civil Liability Act 2002 (NSW) Fair Trading Act 1987 (NSW) Trade Practices Act 1974 (Cth)
Cases cited:	Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 304 ALR 186 Butcher v Lachlan Elder RealtyPty Ltd (2004) 218 CLR 592 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 Cassidy v Saatchi & Saatchi Australia Pty Ltd (2004) 134 FCR 585 Director, Office of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCAFC 8 Gardam v George Wills & Co Ltd (1988) 82 ALR 415 Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 Henville v Walker (2001) 206 CLR 459 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Limited (2013) 247 CLR 656 John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1995] ATPR 41-249 Jones v Dunkel (1959) 101 CLR 298 Payne v Parker [1976] 1 NSWLR 191 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Warner v Elders Rural Finance Limited (1993) 41 FCR 399 Yorke v Lucas (1985) 158 CLR 661
Date of hearing:	11-14 March 2013, 10 May 2013, 20 June 2013
Date of last submissions:	17 September 2014
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	323
Counsel for the Applicant:	Mr MBJ Lee SC and Mr A Crossland
Solicitor for the Applicant:	Attwood Marshall Lawyers
Counsel for the Respondents:	Mr J Sheller
Solicitor for the Respondents:	Gilchrist Connell

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 238 of 2010

JUDGE:	FARRELL J
DATE OF ORDER:	26 SEPTEMBER 2014
WHERE MADE:	SYDNEY

JUDGE:	FARRELL J
DATE:	26 SEPTEMBER 2014
PLACE:	SYDNEY

Stage 3 TENDERING AND SUPERVISION
Liaison with builder - Describing and explaining proposed work for builder quotation and selection purposes. - Regular site visits supervising work (looking after the best interest of client) to ensure quality and to take advantage of unforeseen opportunities to improve design	Interim Stage 3 fee due when construction underway (fee based on 1% of estimated construction cost)
Provide detailed drawings - Internal elevations showing tile patterns, materials, colours and finishes. - Cabinetwork and built in furniture. - Miscellaneous details as required	Interim Stage 3 fee due when construction underway (fee based on 0.5% of estimated construction cost)
Client liaison - Meeting during construction with client and builder. - Assisting client with material, product and colour selections as required.	Final Stage 3 fee due when construction is able to be completed (fee based on 0.5% of estimated construction cost)

~~Errol Murfet~~	~~He has withdrawn. “Sorry, but too busy for next 6-9 months”~~
John Jones	I called chasing tender. Awaiting reply.
Chris Edmed	I called chasing tender. Awaiting reply.
Alex Simpson	He is almost done. He requested until Tues, which I granted. He might be worth waiting for.
Mark Spooner	He is almost done. He requested until Tues, which I granted. He might be worth waiting for
~~Dale Le Marshall~~	~~He has withdrawn. “Sorry, but not set up for a job like this yet~~”