Rokeby Constructions Pty Ltd v Universal Waldeck Ltd

[1988] FCA 370

LIMITED DISTRIBUTION

NOT FOR PUBLICATION

C A T C H W O R D S

CONTRACT - formation - intention to enter legally binding relations - construction project - application of standard form construction management contract unresolved - no concluded agreement.

Trade Practices Act 1974 s.52

Stack v Coast Securities (No.9) Pty Ltd (1983) 154 CLR 261

FRENCH J.
PERTH
14 JULY 1988 I

ROKEBY CONSTRUCTIONS PTY LTD V UNIVERSAL WALDECK LIMITED and
MOTIVE GROUP LIMITED
WAG 161 of 1987

IN THE FEDERAL COURT	)
OF AUSTRALIA	)

WESTERN	AUSTRALIA	)
DISTRICT	REGISTRY	)

GENERAL	DIVISION	)	NO. WAG 161 Of 1987
B E T W E E N :	ROKEBY	C NSTRUCTIONS	PTY LTD

Applicant

and

UNIVERSAL WALDECK LIMITED

First Respondent

and

MOTIVE GROUP LIMITED

Second Respondent

MINUTE OF ORDER

JUDGE MAKING ORDEER: FRENCH	J.
DATE OF ORDER:	14 JULY 1988
WHERE MADE:	PERTH
THE COURT ORDERS	THAT:

1. The application is dismissed.

2 .	The applicant is	to	pay	the	respondents'	costs of the
application.

Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT	)
OF AUSTRALIA	)
WESTERN AUSTRALIA	1
DISTRICT REGISTRY	1
GENERAL DIVISION	) NO. WAG 161 of 1987
B E T W E E N :	ROKEBY CONSTRUCTIONS PTY LTD

Applicant

and

UNIVERSAL WALDECK LIMITED

First Respondent

and

MOTIVE GROUP LIMITED

Second Respondent

CORAM: FRENCH J .

14 JULY 1988

REASONS FOR JUDGMENT

Introduction

This case concerns the allegedly wrongful termination of

a contract under which the respondents are said to have engaged

the applicant to oversee substantial works connected wlth the

construction of a caravan park and tourist resort at Broome.

Although a claim under s . 5 2 of the Trade Practlces Act

was also pleaded, it does not appear that rt ever had much

substance. That 1s not to say that it was pleaded merely to attract the jurlsdiction of the Court. No attack was made on the plea OK choice of forum prior to or at trial and, accepting, as I

do, that the contract claim falls within the court's accrued

jurisdiction, that jurisdiction 1s n o t lost by reason of the failure of the primary federal cause of action. The jurisdiction is, of course, discretionary - Stack v Coast Securities (No. 9) Pty Ltd (1983) 154 CLR 261 - but in the circumstances that the parties were before the court ready to proceed to trial, I have no doubt that a proper exercise of that discretion requires that I hear and determine the application.

Factual Background

Kenneth John Turner is the managing director of Rokeby

Constructions Pty Ltd whlch carrles on business as a builder. His wife is the only other director. The company, which was incorporated in 1978, has been concerned largely with industrial

and commercial bulldlngs. Mr Turner has had substantial

experience In the industry. For 8 years before setting up Rokeby Constructions he was the senior quantity surveyor and commercial manager for Watts Construction.

In the early 1980's he became interested in Broome and its posslbilities for development and associated bullding work. In June 1983 the Department of Lands and Surveys invited applicatlons for the purchase of Broome Lot 1783 on the basis that

the purchaser would erect a "caravan park and tourist

accommodation" of not l e s s than 100 bays thereon wlthin a 2 year

period. Turner organrsed a syndicate with a vlew to making a submission for such a development but the syndicate was unable to settle upon a suitable scheme and that exercise dld not proceed.

It appears that no acceptable appllcation was received by the Department at that time.

On 27 June 1986 the Department of Lands and Surveys again invited applications under s.45A of the Land Act 1933 for the purchase of Broome Lots 1783 and 2065 "for the purpose of "caravan park" and "holiday and tourist accommodation"" on specified terms and conditions. There was evidently considerable interest in the proposed release and Turner realised that a

substantial submission would be required from the successful

appllcant. He discussed the matter with Mr Wally Edwards, then managing director of Universal Electronics Limited, now known as Universal Waldeck Limited. Edwards was interested in expanding his company's activities into construction work and agreed to a submission going in on the basis that Universal would be the developer, Rokeby Constructions would be the builder and Mr

Jeffrey Freeman, an architect known to Turner, the project

architect. The project was to be financed by Universal. Freeman

and Turner were to prepare the submission. They went ahead and produced a document entitled "Proposed Tourist Village & Caravan Park, Broome for Universal Electronics Limited". In the course of its preparation Turner went to Broome at his own expense, consulted with relevant authoritles and took photographs of the

site. The submisslon and accompanying drawings were lodged on 12

August 1986. The drawings were prepared by Freeman, with the

assistance of BOnSer Bradshaw, Consulting Engineers, who provlded a computerized drafting facility. Turner, however, was not satisfied with the submission as filed and thought that it needed more input. He knew a Mr Paul Cook, one of the principals of the Motive Group Limited, a tour operator with an involvement in tourism in the Broome area. He approached Cook with a view to involving his company in the development. He subsequently told Edwards that the Motive Group was interested and Edwards said that he would have discussions with the principals of that company. Turner and Freeman were later invited to a meeting held at the Motive Group offices on 16 September 1986. Edwards was present, representing Universal, along with Clive Nelthorpe and Paul Cook, representing Motive Group. It was agreed to withdraw the proposal submitted by Turner on 12 August and to lodge a more elaborate and comprehensive submlssion. If it were accepted, then Universal and

Motive Group would participate in the development as joint

venturers, Rokeby Construction would be the builder and Turner the

project manager. The second more elaborate and polished

submission was commenced and submitted within 10 days of the

meeting. It was entitled "Tourist Resort	Village and Caravan
Park Broome	A ~oint proposal by Universal Electronlcs Limlted

and Motive Group Limlted".

The introductlon to the submission explained that It was proposed to develop the "Hollday and Tourist Accommodation" site in the style of a fully inclusive resort village based on the "Club Medlterranee" concept. The caravan park was to be planned

as "an all en-suite first class development".	The Project Team
was set out ln the submission as including Mr Turner as Project	Manager, MC Freeman as Architect, and Rokeby Construction Pty Ltd
as Builder.
Submisslons were considered by a body described as a Land Board which heard applications from prospective purchasers of the land including the respondents on 26 September. Turner attended along with Edwards, cook, Freeman and a landscaping consultant. The Board took evidence on oath, principally from Cook but also from Turner and Edwards. Subsequently Edwards was advised that the Universal/Motive Group application was successful and he 60 informed Turner. They arranged to meet to discuss getting the project under way. According to Turner they met on 6
October. Edwards had no recollection of the date but thought it
was the 20th as his records showed an appointment with Turner on
that day. In the end not a great deal turns on the difference.

It IS clear that the ~ o i n t venturers had a meeting on 10

October at which Edwards and Mr R. Lewls were present representing Universal, and Messrs. Nelthorpe and Cook on behalf of Motive Group. A note of that meeting records that:-

"It was agreed to proceed with the project In two parts.

firstly the Carapark, and then the resort. Each	to be
held by separate Pty Ltd companies." (sic)

The note goes on to record that Universal and Motive

Group were to have equal lnterests in the companies to be formed

for the two stages of the development. However, item 5 of the

note recorded:-

"Carapark to be 50/50 costs shared from day one, and

50/50 participation in the venture. Resorts to be 50/50 during the reasessment period, with final decislons as to equlty to be taken later." (sic)

Item 8.0 provlded that Universal was to "handle

construction" and Motive Group to "handle operation and

promotion". Under the heading "MATTERS FOR FURTHER CONSIDERATION" reference was made to revaluing the assets associated with the caravan park and expanding the company "to provide sufficient tangibility (sic) to be subject of a soundly based float". Item

11.2 noted that the tourist development, together with development

at Araluen, Port Kennedy and Margaret River, "could be considered
for inclusion in the proposed float". According to Edwards, it

was decided at this time that the joint venturers would commit

themselves to the development	of the caravan park but that there
would be no commitment made to the resort.	This is at odds with
the terms of the submission to the Land	Board on the strength of
which the land was released.	Nor is it supported by the minutes

of the meeting of 10 October. While it is clear from that mlnute that the caravan park was to be constructed first, the uncertainty regarding the tourist resort seems to have related to the preclse

mode, timing and corporate vehicle for its construction.

When Edwards and Turner met in October no one else was

present. They discussed a number of topics including the

appointment of consultants and Rokeby's role in the project.

According to Turner, it was agreed that the caravan park was to be

constructed Immediately, to be opened for the start of the tourist

season in May-June 1987. The ob~ect was to generate cash flow as

the construction of the tourist resort would be the more expenslve

exercise. It was agreed that Freeman, the architect, and Bonser

Bradshaw, the engineers, should be appolnted on account of the work they had already done. Edwards nominated plumbers and electrical consultants he wanted. He asked Turner what he

: *

expected out of the project. Turner said he wanted a

"construction management agreement with a 6.5 per cent f e e " . The "construction management agreement" was explained by Turner in evidence as a reference to the standard form of construction management contract published by the Master Builders' Association. That form of contract sets out terms and conditions of the appointment of a construction manager to provide management services and to exercise the functions there set out. Clause 6 provides that the construction manager is to "organise commencement of the Works, and in consultatlon with the Principal, co-ordinate construction of the Works by the Trade Contractors so as to achieve Final Completion in accordance with the terms of the Contract". The contract contemplates that the principal shall pay trade contractors direct upon the recommendation of the construction manager (c1.9(a)). The construction manager is to be paid fees for pre-construction management services and management services during the construction stage (cls.13 and 14(a)). For management services during the construction stage the fee can be calculated as "a percentage of the Cost of the Works as set out in Schedule 5 " (cl.l4(b)). The "Cost of the Works" means costs and expenses incurred by the construction manager and by the principal

in the construction stage of the works, whether paid for or not

(~1.1). By c1.17, termination of the agreement could be effected
by elther side upon 10 days' written notice to the other.	Clause
17 provided:-

"Either party shall have the right and power to determine this Contract at any tlme by giving to the other party ten ( 1 0 ) days notice in writing of his intention to so determine, The notice of determination shall be sent by certified mail."

According to Turner's evidence-in-chief, Edwards accepted the proposal and agreed that claims would be submitted on

a monthly basis.	The claims were to include invoices rendered by
contractors which had been paid for by	Rokeby and were to be

reimbursed, invoices made out to the ~oint venturers direct by

trade contractors and a claim for the manager's fee. Turner did

not intend to raise any charge for pre-construction management services although it does not appear from the evidence that he sald so to Edwards.

It was Edwards' evldence that he had never previously heard of the construction management contract and that he

responded to Turner's proposal by saying "well you know, I	do not
know that contract, please get it ready f o r me and get it to	me".

This was put to Turner in cross-examlnation, but he sald he dld

not recall such a reaction. He agreed that it was probably true to say that there was no discusslon of what was comprised ln the 6.5% fee. In re-examlnatlon however the followlng exchange took place (Tr.137-1381:-

MR DAVIS - It was put to you by my learned friend that

M K Edwards said to you that he had no experience of the

construction management contract; do	you recall him
saying that?

MR TURNER - he might have sald it. I do not recall, no. MR DAVIS - Okay. Do you recall him asking you any

questions about the construction management form	of
project management?
MR TURNER - Not at that meeting, no.

MR DAVIS - Right. Do you recall whether Mr Edwards was aware that he MBA contract was a standard form contract?

MR TURNER - I am not aware that he did not know it, no.

MR DAVIS - No, but was he - did you put it to him at that meeting that the terms you expected were according to a standard form?

MR TURNER - Y e s , standard MBA.

MR DAVIS - Did Mr Edwards say anything to indicate whether he accepted or rejected your terms?

MR TURNER - At that meeting?
MR DAVIS - Yes?
MR TURNER - NO.

MR DAVIS - He did not say anything. Did he indlcate when he would tell you?

MR TURNER - No, there was no conversation on that, no.

MR DAVIS - Did he indicate that you should commence work on the project?

MR TURNER - Yes.

MR DAVIS - When?

MR TURNER - Immediately.

FRENCH J. - Well, did he ever say to you whether he

accepted or rejected those terms in so many words?

MR TURNER - N O .

MR DAVIS - Did Mr Edwards at any time durlng that conversation suggest any particular terms of your engagement himself?

MR TURNER - NO.

MR DAVIS - So when you suggested the MBA standard form

construction management contract, you are saying he dld

not suggest any devlation from that at all?

MR TURNER - No, that is correct.

FRENCH J. - Sorry; he never suggested any devlation from

that?

MR TURNER - NO.

FRENCH J. - Did he indicate whether he accepted that as

a basis for YOUK agreement?

MR TURNER - Yes, I just - he said what do you want and I

said that is what I was after.

FRENCH J. - Did he ask - I thought you said earlier in
cross-examination that he asked you f o r a copy of that, to have a look at it or something; is that right or have

I got that wrong?

MR TURNER - I do not belleve so at that meeting."

And further at p.138:-

"MR DAVIS - Did he make any comment at all?
MR TURNER - On the contract?
MR DAVIS - On the proposition that you put to him?
MR TURNER - NO. "

Edwards on hls own evidence told the Court that he accepted that Turner would be lnvolved in the construction but did not come to any concluded view about the precise nature and terms

of his involvement.

It was common ground that Turner was to get the project under way immediately and he proceeded to do so by appointing a firm of surveyors to do physical feature surveys. He also appointed consultants and had Freeman prepare conceptual drawings with detailed plans being prepared by Bonser Bradshaw using their

computer facility. Final documentatlon however, was not completed

untll 13 March 1987. In the meantime, a foreman, one Roland

Parthezius, was appointed on slte on 1 December by Rokeby and work commenced on that date. About 3 weeks prior to that time, on 6 November, Turner visited the site with Edwards and Waldeck, who was also a dlrector of Universal.

A construction schedule was prepared. It is common

ground that Rokeby worked on the site although the pleaded detail of the work done was not admitted. However, it is apparent that the company was engaged in the construction of the caravan park from 1 December 1986 until 16 March 1987. The signlficance of the latter date will appear below.

The company through which the ~ o i n t venturers were to

carry out the project was incorporated on 14 November 1986 as Eden Caravan Park Pty Ltd, although, according to Turner, he did not become aware of Its existence until early February 1987. In the event, work proceeded in connection with the project through

December to march. Planning approval was obtalned and slte

clearing carried out by the Broome Shire by mid-December. Design plans for various aspects of the work were commenced, an "environment study" was prepared and an electrical sub-station built. By the end of January tenders had been called for earthworks, siteworks, plumbing and electrical works. These comprised the major elements of the constructlon of the caravan park. A tender was let for the provlslon of pre-fabricated buildings, being chalets and ablution block unlts assoclated wlth each caravan bay.

On 2 February 1987 Universal appointed an In-house

building expert or project manager to its staff. H1s name was

Peter Cue and it was his function to oversee new developments and maintain existing ones for the Universal Group. He effectlvely became Universal's project managel: in relation to the caravan park

'.

12.

development. Indeed, it was he who processed the first claim for payment by Rokeby. This claim was not made in written form until 13 February 1987 when Turner sent to Eden Caravan park Pty Ltd, in answer to a written request from Mr Cue, a copy of outstanding

invoices for payment on the project. Turner had previously

requested payment of the invoices as he was being pressed by contractors. However, there had been some difficulties as between Universal and Motive, the latter having experienced financial difficulties following its involvement in activites associated with the America's Cup race.

On 24 February, Turner and Cue met and went through a handwritten list of invoices to 31 January 1987 prepared by

Turner. These totalled $66,221.41, of which Rokeby had paid

$13,872.69 itself. In addition, Turner included a claim for Rokeby's fee, being $4,364.71, representing 6.5% of total invoices, less consultant's fees. He went through the list with Cue and pointed out the fee component. Cue paid all invoices on that day. In particular he reimbursed Rokeby for the invoices it

had met and paid the 6.5% fee claimed. These last two figures

totalled $18,223.45. The cheque for that amount given to Turner

was drawn on the account of Eden Caravan Park Pty Ltd and the R. &

I. Bank at Perth and was made out to Rokeby Constructions Pty Ltd.

From mid-February, according to Edwards, the developers

-

were expressing doubts about the progress of the project. Contractual arrangements with Rokeby had not been concluded and there was concern about the accuracy of the initial estimates for the cost of the work. Edwards asked Cue to push Turner and

Freeman to get the detailed documentation finished and cost

estimates prepared. On 23 February, Turner completed the MBA standard form of construction management contract, as a contract between Eden Caravan Park Pty Ltd and Rokeby Construction Pty Ltd. It was delivered to Edwards who referred it to Cue along with

various trade contracts. Cue came back to Edwards and asked

whether he realised what form the contract took. Edwards read it

briefly and said he would have to talk to Turner about it.

By 2 March the final documentation was nearly
complete and Turner proposed detailed estimates with help from

Parthezius in Broome. There were set out in an 18 page

handwritten document and came to a total cost of $3,165,265,

which, with Rokeby's fee of 6 . 5 % , amounted to $4,010,000. This

contrasted with the estimated cost of $2.36 million set out in the

original submlsslon to the Land Board. Turner explained that the

dlfference reflected increases in site coverage leading to a 1 4 5

bay plan whereas the orlginal submission envisaged only 100 bays.

About this tlme Unlversal had engaged a valuer from L.J. Hooker to assess the value of the project for the purpose of

ralsing loan flnance. The valuer's flgure was only $ 3 . 2 million,

substantially less than the pro~ected

this discrepancy, Edwards rang Turner and asked hlm to come round costs. On becoming aware of

to Ills house to talk about the estlmates and areas in which costs

mlght be reduced. They had a long dlscussion about the project.

Edwards said that he was not confident that some of the sub-estimates making up the total estimated cost of the work could be maintained. Turner told him that they had a very good quality park. The real problem he said was not with the cost estimate but rather the valuation and that they needed to get the valuation up.

Edwards did not accept this.	The meeting concluded on the basis
that both Turner	and Edwards should do what they could to bring

the costs down. Edwards expected Turner to propose changes to

designs and materials which might have that effect. Edwards

directed Cue to arrange with Turner to get their consultants together to work on the problem generally. On 9 March a meeting of consultants was held at which Edwards was brlefly present to state the cost cutting objective. Cue presided and Turner was also present. Possible areas of cost savings totalling $557,000

were identified and the minutes of the meeting concluded with	the
note:-

"Meeting finlshed at 1.00 with all parties now waitlng for the Executive Director to decide on the cuts

required. "

It would appear that the reference to the Executive Director was a reference to Edwards.

I n the meantime, according to Edwards, the directors of

Eden Caravan Park Pty Ltd, of which he was one, concluded that they could not accept the proposed construction management contract with Rokeby. At about that time Edwards had made some

handwritten notes of his own setting out various options to achieve'cost reduction. There were three prlncipal headings "Valuation", "Costs" and "Options to Delete". Under the heading

"Costs" the following appeared:-

"Current 3,765,000

Plus

Rokeby	244,725	( + on site 50,000)
Consultants (6 1/2) 2%	130,000

Auster 244,725
$4,384,450

Say $4.4 million (Stage 1)"

The reference to "Auster" appears to have been a

reference to Auster Plumbing and Construction, a business carried on by Universal as one of its divisional activities. When asked in cross-examination why he had noted the same figure against Auster as that against Rokeby, Edwards said he had no idea.

Under the heading "Options to delete" the following

appeared:-

. Earthworks/Siteworks $ 70,000

- cut thlckness

- organise BC and kerbs ourselves

- width outside kerb.

. Tiling to Ensuites only	24,000
. Remove Chalet C,	51,000
. Remove covered rec area	8,000
. Remove sltes 1-10 (camping)	90,000
. Reduce concrete strength	6,000

. delete more en-suites (20)	$190,000 $439,000
. convert Rokeby to a consultant	$150,000 $589,000

The figure of $150,000 appears to refer to the saving

that could be achieved by the proposed conversion. Edwards' evidence suggests that that was the fee he contemplated should be paid to Rokeby. I am inclined to think however, that the fee he was contemplating to Rokeby was in the order of $95,000. Nothing

much turns on the discrepancy which may result from the fact that counsel for Rokeby put it to him in cross-examination that he was contemplating a $150,000 fee for the company.

On or about 18 March Edwards telephoned Turner at home

and told him that the developers could not accept the proposed

contract wlth a 6.5% fee. They had, he said, to take cost cutting measures and while they wanted hlm to remaln involved In the project, ~t could not be on the basis of a constructlon management contract. He suggested a consulting arrangement. He acknowledged to Turner that he had put a lot of work into the project and said that the developers wanted to see him wlth a fair return out of it. Turner expressed hls dlsappolntment and said he would think

about it. Turner's recollectlon of the conversation is recorded

in a note which he made on the night of the conversation and later
transcribed on to a separate piece of paper that was admltted as

Exhibit 25. That record read as follows:-

"W. Edwards 8.15 pm Wed 19 march '87	Advised KJT cannot afford to pay his pro~ect manager's	fees - was alright when contract was small as original
submission
Advised they wlll be building it anyhow & I would only be duplicating them & they have to make a profit
Could retaln me as a consultant to help them on this &
other projects.
Pay for work done to date. Pay for introducing the
project to them etc. Thanks for everything - think about it and let them
know. "

The substance of the conversation so recorded was not disputed by

the respondents. Though it is evident that Edwards and Turner

recall different elements of it, their recollections do not
conflict in any material way.

Edwards rang Turner again the following Monday, 23 March and they arranged to meet on Thursday, 26 March at 9 a.m. At that meeting Edwards retraced in conversation the ground covered in the telephone discussion of 18 March and suggested that a consultancy

with a fee at 1 1/2 to 2% would provide a satisfactory	return for
Turner's effort.	He also said the company had other projects and

that there was good ongoing business to be had.

Turner replied that he was unhappy and that i f that was the way Edwards thought, then he could "stick it".

They had no further contact i n relatlon to the Broome project although curiously Turner did continue to do other unrelated work for Edwards.

The Pleadings

. The statement of claim alleges uncontroversial background facts in paras. 1 to 7 and at para.8 contends that prior to the second submission to the Land Board, Rokeby,

Universal and Motive had agreed that if the subrnlsslon were

accepted Motive would participate in the development as joint developer with Universal, Rokeby would participate in it as builder and Turner would participate in it as project manager. This much is admitted by the respondents. More importantly

however, and central to Rokeby's case, is the assertion in para.10

that following the acceptance of the proposal by the Land Board, it was agreed between Turner for Rokeby and Edwards for the developers that:-

Rokeby would participate in the development as
construction manager.

Rokeby would be paid a fee f o r its services as

construction manager equivalent to 6.5% of the total

project costs.
Rokeby would submit monthly Invoices of expendlture
incurred for and on behalf of the developers as progress
claims, such invoices to include the agreed 6.5 per cent

fee for Rokeby.

Paragraph 11 of the statement of claim pleads that as at

October 1986 by reason of these matters a "contract arose between the developers on the one part and Rokeby on the other for the

vlllage project by Rokeby". It is then said that Rokeby, in construction management of the caravan park and tourist resort	reliance upon the agreement, was fully engaged as constructron
manager-.for the first stage of the project namely, the construction of the caravan park (para.12). Submission and payment of the first progress claim is pleaded (paras. 13 and 14) and it is contended that by reason of the submission of the second proposal, the work done by Rokeby in reliance upon the agreement
pleaded, the submission of its progress claim and the payment of its progress claim "the developers are estopped and should not now
be heard to deny the existence of the contract pleaded in
paragraph 11 herein" (para.15). Paragraph 17 alleges with reference to the telephone conversation of 18 March 1987 that:-

"On or about 19 March, 1987 Edwards orally advised Turner
that the developers could not afford to pay Rokeby's
construction management fee and terminated the
engagement of Rokeby as Constructlon manager for the
project."

It is admitted that immediately after that date Rokeby ceased work, left the project site and handed over all drawings and documents relating to the project to the developers.

Rokeby says that the purported terminatlon was a

repudiation of the contract that it had with the developers, was a breach o € that contract and that by that breach it has suffered loss and damage (paras. 19 and 21). Its claim for damages is calculated as a loss of proflt by taking 6.5% of the final project cost for the caravan park, sald to be $4,507,423, and 6.5% of the

estimated pro~ect cost for the tourlst resort village, said to be

$6.5055 rnlllion. On this basls the total fee entitlement is

$606,557.49. Credit i s given for fees pald of $4,364.71 and

expenses saved, leavlng total net profits foregone of $565,797.79.

In an amended ~ o i n t defence filed on behalf of both

respondents at the commencement of the trial, the developers
deny any agreement as to the fee to be paid, saying that Turner
and Edwards, while agreeing a percentage fee, did not agree what
project costs were to be the basis of its calculation. In the
alternative they say that if there were an enforceable agreement
between the parties it was a condition that the parties would
execute a standard form MBA construction management contract and
it was a term of that contract that either party might determine

it at any time whereupon the principal would pay to the

construction manager the balance of his fee based on the cost of

the work executed to the date of termination.

They admit that the applicant performed certain work in

respect of the project but deny it was performed pursuant to any

contract. In the event that there was a binding agreement It 1 s

further pleaded in the defence that such agreement provlded that

the developers were to incorporate a company for the caravan park and the tourist resort village stages of the development respectively and that it was the company so Incorporated that was

to engage Rokeby in each case. While denying that Edwards

terminated Rokeby's employment as constructlon manager, the

developers contend that, if he did so, he was entltled to do so pursuant to the terms of the agreement by reason of the provlsions

of c1.17 of the standard form contract.

In its reply Rokeby says that, if ~t were to be engaged

by Eden Caravan Park Pty Ltd and a company called Broome Resorts Pty Ltd; that was a term of its agreement wlth the developers and that the failure of those companles to so engage it was a breach by the developers of the agreement. Further, Rokeby denies that

either party might determine the agreement at any time under the

MBA construction management contract and says the termination

power in c1.17 thereof can only be invoked by either party for good and sufficient reason and not unreasonably or vexatiously. Further, it is pleaded that neither of the developers at any time acted or purported to act pursuant to c1.17.

Formation of the Agreement

It is critical to Rokeby's case that it establish the

formation of a legally enforceable agreement under which it was
engaged by the respondent as a construction manager for the
development on a fee calculated at 6.5% of total project costs.
Rokeby's case was conducted on the basis that the agreement was
concluded in the course of Turner's meeting with Edwards in
October 1986. What was said on that occasion no doubt had to be
understood in the light of the history of the development and
earlier understandings of what Rokeby's role would be. It is in
this context important to note that the respondents admit that it
was previously agreed that if the proposal to the Land Board were

accepted, Rokeby would participate in the development as a builder

and Turner as project manager. But that agreement, absent further terms, was at best an agreement in principle, not intended to have

legal force and effect. Nor, so far as it goes, does it reflect

the terms of the agreement relied upon by Rokeby. Under the

latter as pleaded, Rokeby was not to act as builder but to provide the services of a construction manager. As such it was to act as

agent for the	developers OK their chosen corporate vehicle. It
would not have involved Rokeby in engaging sub-contractors on	its
own account.

Some of the evidence given by Edwards tended to suggest that as at 18 March he was of the view that there was a concluded arrangement of some kind. He referred in his handwritten list of "Options to delete", to converting Rokeby to a consultant, the implication being open that there was some previously understood arrangement between them. On 18 March, in speaking to Turner of the developers' inability to afford project manager's fees, Edwards said, accordlng to Turner's note, that it was "alright when contract was small as original submission" (sic). Again,

this might be taken as a reference to some pre-existing

arrangement which could not be contlnued. And the offer on that occasion to provide consultancy work on other Universal projects might also be seen as reflecting a consciousness of some pre-existing commitment being withdrawn. In the end, however, in my opinion, these matters are inconclusive. So, too, is Cue's payment of the 6.5% fee clalmed by Rokeby on 2 4 February. Cue was not involved and indeed, appears not even to have been employed by Universal in October when the pleaded agreement was said to have been concluded.

The issue is, I n my oplnion, determined by Turner's

evidence in re-examination, which makes It clear that while it was

agreed that he and his company would have a significant	involvement in the supervision of the contract, the terms of that
involvement were not then decided. Turner proposed to Edwards
that he be paid a 6.5% fee under the terms of the standard
construction management contract. His evidence in re-examination and that of Edwards supports the inference that Edwards did not

I

23.

? .

accept he proposal at hat ime. I also accept Edwards'

evidence that he wanted to see the	proposed standard form contract
before agreeing it. Edwards'	indication to Turner that he should

begin work immediately does not, In my opinion, constitute an acceptance of his proposal in the circumstances of this case. In

some circumstances such a directive might amount to acceptance,

but given Edwards' stated ignorance of the terms of the standard

form and his desire to see it, no acceptance could be implied from his conduct. On this basis I conclude that as at October 1986 no

legally enforceable agreement as pleaded was arrived at	in
relation to Rokeby's role in the project.

Estoppel

Rokeby relies in the alternative upon the propositlon,

pleaded in para.15 of the statement of claim, that, by reason of

the matters set out in paras.8, 12, 13 and 14, the developers	are
estopped and should not now be heard to deny the existence of	the

contract alleged in para.11. As pleaded, it was sought to base a

cause of action on the alleged estoppel.	The elements of the
estoppel relied upon were as follows:-

1. The commlssioning and submission to the Land Board of

the second proposal whlch	showed Rokeby as builder and
Turner as pro~ect	manager (para.8).

2 . -	That Rokeby in rellance upon the agreement pleaded in para.11 was fully engaged as construction manager for the first stage of the pro~ect, namely, construction of
the caravan park, and did various things pursuant to that engagement (para.12).
3 .	That Rokeby submitted and received payment for its first
progress claim which included a claim for its fee of
6.5% of the costs.

The plea cannot succeed. To the extent that it relies upon the

alleged formation of the agreement of October 1986, it cannot
stand unless that agreement was formed and I have already found
adversely to Rokeby in that respect. Otherwise no relevant
representation or promise is identified to support the estoppel.
The statement in the submission to the Land Board that Rokeby
would be builder and Turner the project manager is not in accord
with the contract that Rokeby now seeks to set up and under which
it claims to have been appointed not as builder but a s

construction manager.

In the event, the reality is that Rokeby proceeded to

carry out work without the benefit of a concluded agreement or clear promise as to the terms of its remuneration. It was paid a fee and, no doubt, would have been entitled on some basis to a reasonable remuneration for such of the work as it did wlth the acqulescence of the respondents. In my opinion, however, no case for either representational or promlssory estoppel is made out.

CONCLUSION

No case having been put for contravention of s.52 and

there being no evidence on the face of it to support such a case, the applicant's claim must fail for want of a concluded agreement

as alleged.

There were other issues addressed during the trial

relating to the proper parties to the alleged agreement, whether the applicant should have sued specifically in its capacity as trustee, whether there was a right to terminate under the agreement, if agreement there was, and what effect the termination clause in the standard form of contract would have on the recovery of damages. There was the question whether what Edwards said in the telephone conversation on 18 March would have amounted to a termination of the alleged agreement, if agreement there had been. There was also the questlon of damages. None of these matters need be addressed for it seems to me that the application fails at the threshold. The applicatlon will be dismissed.

I certify that the preceding

twenty five (25) pages ace a true copy of the Reasons for Judgment of his Honour

Justice French.

Counsel for the Applicant: Mr R. Davis

Solicitors for the Appllcant: Messrs. Keall Brinsden

Counsel for the Respondent: Mr P. Kyle

Solicitors for the Respondent: Messrs. Dwyer & Thomas

Dates of Hearing: 4, 5 , 6 and l July 1988

Date of Judgment: 14 July 1988