| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : SEA CORPORATION PTY LTD & ANOR -v- ALVARO [2003] WADC 277 CORAM : JENKINS DCJ HEARD : 15-18 JULY 2003, 1-2 OCTOBER 2003 DELIVERED : 12 DECEMBER 2003 FILE NO/S : CIV 3293 of 2001 BETWEEN : SEA CORPORATION PTY LTD First Plaintiff
CRAIG THOMPSON AND ROSEMARY THOMPSON
Second Plaintiffs
AND
ROCCO DOMINIC ALVARO
Defendant
Catchwords: Contract - Termination - Damages
Legislation: Nil
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Result:
The defendant is entitled to judgment against the second plaintiffs in the sum of $6,878.76 plus interest
The defendant is entitled to judgment against the first plaintiff in the sum of $21,465.57 plus interest
The plaintiffs' claims fail Representation:
Counsel:
First Plaintiff : Mr R D Shaw
Second Plaintiffs : Mr R D Shaw
Defendant : Mr R W Richardson
Solicitors:
First Plaintiff : Phillips Fox
Second Plaintiffs : Phillips Fox
Defendant : Lawton Gillon
Case(s) referred to in judgment(s):
Amann Aviation Pty Ltd v Commonwealth of Australia (1991) 174 CLR 64
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 346
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Elliott v Reading & Anor [1999] WASCA 11
Fitzgerald v Masters (1956) 95 CLR 420
Foran v Wight (1989) 168 CLR 385
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
Case(s) also cited:
Creamoata Ltd v Rice Equalization Association Ltd (1953) 89 CLR 286
Federal Commerce & Navigation Co Ltd v Molena Alpha Incorporated (The 'Nanfri') [1979] AC 757
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Heyman v Darwins [1942] AC 356
Hoffman v Cali [1985] 1 Qd R 253
Johnson v Perez (1988) 166 CLR 351
Photo Production v Securicor Transport Ltd [1980] AC 827
Psaltis v Schultz (1948) 76 CLR 547
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 All ER 571
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1 JENKINS DCJ: The first plaintiff, Sea Corporation Pty Ltd ("Sea Corporation"), claims that it has been assigned a debt allegedly owed by the defendant, Rocco Dominic Alvaro, to the second plaintiffs, Craig Geoffrey Thompson and his wife, Rosemary Thompson. The assigned debt is claimed to be the sum Mr Alvaro has agreed to repay Mr and Mrs Thompson being the moneys they advanced to Mr Alvaro under a building contract less Mr Alvaro's costs. After setting off a debt which Sea Corporation acknowledges it owes Mr Alvaro under a contract to fit out its offices, Sea Corporation claims the sum of $12,872.93, plus interest. Alternatively, Mr and Mrs Thompson claim the sum of $24,999.99 plus interest being the alleged debt owed to them by Mr Alvaro.
2 In his defence, Mr Alvaro alleges that Mr and Mrs Thompson purported to terminate the building contract in breach of it and he counterclaims for damages for breach of contract. However, in oral submissions the defendant's counsel abandoned that claim and said that Mr Alvaro relied upon the alternative pleading that Mr and Mrs Thompson repudiated the building contract and this was accepted by Mr Alvaro. The defendant counterclaims for damages of $123,302.15 for loss of the benefit of the building contract. Mr Alvaro also claims $6,561.17 for work done up until the date of repudiation of the building contract. 3 With respect to the contract to fit out Sea Corporation's offices Mr Alvaro claims that Sea Corporation owes him $44,446.17 for work done under the fit out contract. The defendant further claims $3,722.87 under a contract he claims he entered into with Sea Corporation for the design, draft and documentation work in respect to the fit out contract. He denies that Sea Corporation are entitled to set-off these amounts as first he denies that he owes Mr and Mrs Thompson any money under the building contract and secondly, he denies the efficacy of the assignment of debt. 4 In their reply Mr and Mrs Thompson deny that they breached or repudiated the building contract or that the defendant has suffered any loss at all. 5 With respect to the fit out contract, Sea Corporation pleads that it was an implied term of the building contract that the cost for the work performed and material supplied would be reasonable. The parties have prepared a Scott Schedule in respect to the fit out contract. Of the $44,466.17 claimed for work done and not paid for under the contract. Sea Corporation accepts that the sum of $16,544.55 is due and owing to Mr Alvaro. The difference between the two figures is in issue between the parties.
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6 With respect to the alleged contract for the design, draft and documentation work the first plaintiff denies that there was a contract to perform the work, that Mr Alvaro completed the work or rendered to it an invoice for such work for $3,722.87.
7 Before separately considering each of the claims I will deal with the credibility of the crucial witnesses.
Findings as to the credibility of Mr Thompson and Mr Alvaro 8 Both counsel submitted that the case turned upon issues of credibility. The plaintiffs' counsel presented cogent and valid reasons why the evidence of Mr Alvaro ought not be relied upon. The defendant's counsel presented similarly persuasive reasons why the evidence of Mr Thompson ought not to be relied upon. 9 It was submitted that Mr Alvaro lacked credibility because of the lack of documentation to support the claims made in the Scott Schedule, the irrelevancy of some claims to the work that was done with respect to the fit out and inconsistencies between his claims and previous correspondence between the parties relating to them. 10 I agree with much of what was put to me by the plaintiffs' counsel in this regard. I will mention just a few examples. The defendant acknowledged that he relied upon the wrong invoice for cabling work. The invoice he relied upon in the Scott Schedule was clearly titled as relating to SGS and not Sea Corporation. He relied upon the invoice relating to Sea Corporation cabling to prove another part of his claim when it was obviously not relevant to that particular claim. 11 Further, some invoices presented by Mr Alvaro were not consistent with work actually performed. An example of this was the tiling invoice for granite tiles supposedly laid in the reception area. Photos of the reception area tendered by the plaintiff did not show any granite tiles. Given the large amount of tiles claimed for, the absence of the tiles from the photos was only consistent with them not having been laid at all. 12 Then there were unexplained inconsistencies between the defendant’s preliminary costs and expenditure document prepared in August 2000 as opposed to his current claims. There were also a number of claims that were originally included in the Scott Schedule but were abandoned during the trial when it became patently obvious that they could not be substantiated. An example of this was the initial claim for over $9,000 for
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a proportional cost of the carpet when Mr Alvaro must have been aware that he was out of pocket for, at most, $4,000 for this item because he had received a carpet rebate of $17,000 from the managing agent. At the commencement of the trial the defendant's claims in the Scott Schedule came to just under $60,000. By the end of the trial this figure had been reduced by one third principally as a result of the deletion of clearly hopeless claims. 13 The most telling matter relating to the defendant's credibility is the evidence concerning the supposed pre purchase of bricks under the building contract. Mr Alvaro represented to Mr Thompson that he had prepaid for the bricks and the supplier was claiming additional fees because the building contract was not proceeding. I am satisfied that the evidence proves that Mr Alvaro did not pre pay for the bricks and the supplier did not charge any additional fees. Further there was evidence which indicated that Mr Alvaro had attempted to create a false documentary trail to support his claim to Mr Thompson. 14 Consequently I find that Mr Alvaro lacks credibility on many crucial issues. 15 Regrettably the position does not improve when I consider the credibility of the plaintiff's main witness, Mr Thompson. The defendant submitted that Mr Thompson lacked credibility because he lied to him in order to advance his personal interests. I accept that this is the case. Not only was he prepared to lie but he was also prepared to be dishonestly manipulative in order to get his own way. The prime example of this is in relation to the building contract. It is clear that Mr Thompson decided not to proceed with the building contract and he then set out to persuade Mr Alvaro to repay him the money he had advanced under that contract. His means of persuasion included lying to Mr Alvaro about his intentions to consider Mr Alvaro in respect to a further building contract when, as he said in evidence, he had no intention of ever allowing Mr Alvaro to design or build for him. He committed this lie to paper and signed it. Audaciously, he submits that this lie is consideration for a later alleged contract between the parties. He also arranged a meeting at the brick suppliers at which he planned there would be witnesses who would hear him assert that the he and Mr Alvaro had agreed to cancel the building contract and that Mr Alvaro had agreed to refund him money. He then insisted that this had occurred at the meeting, despite no other witness who was present at the meeting corroborating his evidence in this respect.
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16 My conclusion, as I explain in more detail later in this judgment, is that Mr Thompson decided not to proceed with the building contract and he then set about to persuade, by fair means or foul, Mr Alvaro to refund him money he had paid under the contract. As far as Mr Thompson was concerned the ends justified the means. I am not satisfied that his evidence is not tainted with the same approach.
17 The result of my findings with respect to the credibility of the key witnesses is that I have sought wherever possible to base my findings on facts which are supported by evidence other than the testimony of Mr Thompson or Mr Alvaro. Where it has been necessary to rely upon their evidence I have tested it, using common sense, before relying upon it.
Facts relating to the building contract 18 The following facts are either agreed between the parties or have been found by me. 19 Mr and Mrs Thompson were the owners of 52 Ogilvie Road, Mt Pleasant ("the property"). On 28 October 1999 Mr and Mrs Thompson agreed to a schedule of fees with Mr Alvaro, trading as Alvaro Design Consultants, for his professional services relating to architectural, structural and survey drawings and standard specifications for a proposed new residence on the property. The total fees agreed to were $12,000. Other than to rectify errors, omissions and discrepancies in the design drawings, the schedule of fees did not include site or construction supervision or inspection fees, council's fees and charges, water fees and charges, landscape fees and owner's revisions and amendments after Council approval. 20 Mr Alvaro prepared the architectural drawings. He did not engage an engineer to do the structural drawings because as a consequence of his later dispute with Mr Thompson he thought there was no point in continuing to complete the drawings. Mr Alvaro submitted the architectural drawings for approval to the Melville City Council. The Council did not formally approve the plans. Mr and Mrs Thompson paid Mr Alvaro the $12,000 under the agreed schedule of fees. 21 After the plans were completed they were subject to alteration at the request of Mr and Mrs Thompson. Mr Alvaro completed amended drawings in compliance with the requests of Mr and Mrs Thompson.
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22 On 15 January 2000 Mr and Mrs Thompson and Mr Alvaro, trading as RDA Constructions, entered into a lump sum building contract in the general form provided by the Housing Industry Association Ltd ("the building contract"). The building contract provided for the building of a new residence on the property. The building contract included allowances for some extra items (Annexure A to the contract), a progress payment schedule (Annexure B), standard specifications in the general form provided by the Housing Industry Association and addenda to the specifications. In the schedule to the building contract the contract price is said to be $333,545.66 plus "extras + variations".
23 The costings document which formed part of the building contract stated: "The owners agree to pay a deposit of 10% of the lump sum contract price plus $20,000 to assist the builder in pre-purchase and/or pre-payment, building materials and services, building costs fees and charges as available and these to be ordered or secured prior to 28 Jan 2000." 24 Mr Alvaro quoted the sum of $6,000 to demolish the existing house on the property, remove trees and grass and to leave the site clean. Mr and Mrs Thompson agreed to this quotation and paid the sum of $6,000 on 5 February 2000. 25 It is agreed between the parties that Mr and Mrs Thompson paid $84,254.50 under these three agreements. 26 Mr Thompson testified that he believed he had paid approximately $20,000 to Mr Alvaro for pre-payment of building materials, whereas Mr Alvaro said that, he thought he had agreed with Mr Thompson to buy $30,000 worth of bricks prior to the introduction of the Goods and Services Tax ("the GST"). Mr Alvaro also gave evidence that he paid T and G Earthworks to do site works prior to commencement of building. These works included scraping the site, placing approximately 300 millimetres of clean sand fill across the block and compacting it. He said that he paid $3,600 for this work. This work was required by cl 6 of the specifications forming part of the building contract. Mr Alvaro did not produce any documentation to support his evidence in this regard. 27 Mr Alvaro gave evidence that he paid other fees to the local Council in respect to lodgement of plans, advertising and building approval and was reimbursed for these fees by Mr Thompson. Mr Alvaro was unable to
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particularise the amount of these fees and he produced no documentary evidence in support of his claim. 28 Mr Alvaro gave evidence that he paid $150 for the closing of gas and water to the site. Again he did not produce any documentary evidence to support his claim. However, the demolition quotation states that there would be an extra $150 to cut and seal the sewer. It is not clear whether this sum was paid in addition to the $6,000. 29 Mr Alvaro also claims that he paid $3,610 for insurances related to the proposed building. In support of this claim he produced a one page certificate of insurance from Savill Hicks Corp. Pty Ltd, insurance brokers, which appears to relate to contract, public liability and workers' compensation insurance for the building commencing 3 February 2000 until practical completion, not exceeding 12 months. He also produced two facsimile documents one being a copy of the certificate of insurance. On it there is reference to a cheque number and the date 3 February 2000 and the amount of $3,610.17. There is a further reference in Mr Alvaro's handwriting to the word "paid" and the sum of $3,000 and date 5 February 2000. The second facsimile document has been completed and signed by Mr Alvaro and is an application by him for home indemnity insurance. There is no evidence that this application was submitted or that Mr Alvaro paid any money pursuant to such an application. 30 In the light of this evidence it is difficult to determine the breakdown of the $84,254.60 that it is agreed that Mr and Mrs Thompson paid Mr Alvaro. I find that Mr and Mrs Thompson paid $12,000 pursuant to the schedule of fees for the architectural, structural and survey drawings and $6,000 pursuant to the quotation for the demolition and clearing of the site. I further find that Mr and Mrs Thompson paid a deposit of 10 per cent of the lump sum contract price plus $20,000 to assist Mr Alvaro in pre-purchase and/or pre-payment of building materials and other matters. That leaves a balance of $12,900 which I find is represented by further payments or advances to Mr Alvaro for various items and services. There is insufficient reliable evidence to enable me to conclude that the plaintiffs have failed to pay Mr Alvaro for any work he performed under or relating to the building contract. 31 By 12 July 2000 Mr and Mrs Thompson had decided not to proceed with the construction of a new home pursuant to the building contract. The reason why Mr and Mrs Thompson came to this position is irrelevant as they do not allege that it was as a consequence of any breach of the building contract by Mr Alvaro. Mr and Mrs Thompson do not allege that
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any of the events referred to in cl 15 of the lump sum building contract occurred giving them the right to early termination of the building contract. However, I accept that by 12 July 2000 Mr and Mrs Thompson had lost their faith and trust in Mr Alvaro and had decided that they were not going to proceed with the building of the house on the property. Mr Thompson acknowledged in evidence, that on more than one occasion prior to 12 July he had told Mr Alvaro that he was definitely not going to build on the property. 32 By facsimile dated 12 July 2000, Mr Thompson wrote to Mr Alvaro on the basis that there would be a settlement between them of the moneys paid by Mr and Mrs Thompson with respect to the building contract. In that facsimile Mr Thompson advised that he was looking to purchase another block. The letter refers to Mr Thompson's hope that they can come to a mutually acceptable settlement to enable them "to keep our excellent relationship for the future". 33 It is in this context that he then refers to the prospect of a further building project. In cross-examination Mr Thompson acknowledged that, at this time, he and Mr Alvaro did not have an excellent relationship and that there was no intention on his behalf to permit Mr Alvaro to build him a house on any block. He said that by using those words he was attempting to ensure that he could get the money he had paid Mr Alvaro back from him. 34 On 24 August 2000 Mr and Mrs Thompson entered into a contract to purchase another property in Mt Pleasant and on 16 November 2000 they became the registered proprietors of that other property. Subsequently, they have built a new home on that site which was due for completion in July 2003. Mr Alvaro has not been involved in the construction of that home. 35 After the letter of 12 July, Mr Thompson and Mr Alvaro met on Saturday 29 July 2000. There is a dispute between Mr Thompson and Mr Alvaro as to where this meeting took place. Mr Thompson says that it took place in the offices of Sea Corporation whereas Mr Alvaro says that it took place at the home of Mr and Mrs Thompson. Mr Alvaro has a diary note to the effect that he had an appointment at Mr and Mrs Thompson's home on 29 July. However this diary was only discovered and produced for inspection on the morning that Mr Alvaro gave his evidence and thus I am unwilling to rely upon it as proof of the location of the meeting. In his evidence Mr Alvaro said that he could not say for certain where the meeting took place.
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36 The only significance of the location of the meeting is that the plaintiff called evidence from Mr Thompson and Mr John Kelly, an employee of Sea Corporation, to the effect that at the conclusion of the meeting Mr Alvaro and Mr Thompson shook hands and Mr Alvaro signified his agreement to cancel the building contract. Mr Thompson gave further evidence that that agreement was on terms that Mr Alvaro would pay Mr and Mrs Thompson $57,554.50 and that he would pay $37,500 forthwith and the balance of $20,000 would be paid within a maximum of 90 days. Mr Alvaro disputes this agreement. If the meeting occurred in Mr and Mrs Thompson's home Mr Kelly would not have been a witness to any part of the agreement.
37 For the reasons that I will give later in this judgment, even accepting the evidence of Mr Kelly, I reject the proposition that Mr Thompson and Mr Alvaro agreed to cancel the building contract on 29 July 2000. Rather I find that Mr and Mrs Thompson repudiated the contract on or before 12 July 2000. Thus it is unnecessary for me to decide where the meeting of 29 July 2000 took place. 38 At the meeting of 29 July 2000 Mr Thompson was keen to negotiate a final figure that was owed by Mr Alvaro. Mr Thompson said that in order to obtain Mr Alvaro's agreement it was necessary for him to promise that if Mr Alvaro paid the moneys as detailed that he, Mr Thompson, had a "strong moral obligation to discuss all future home buildings". The inference from this undertaking being that he had the obligation to discuss such buildings with Mr Alvaro so as to give him the opportunity to design or build them. This alleged agreement was written by Mr Thompson on notes that he made at the meeting and was signed by him. Mr Thompson said that he never had any intention to discuss his future building plans with Mr Alvaro as he was not prepared to permit him to design or build a home for him. He signed the supposed agreement in order to obtain Mr Alvaro's agreement to repay him $57,554.50. 39 At the meeting on 29 July Mr Alvaro brought with him a statement summary which particularised all the expenses he said he had incurred under the building contract and related agreements. His alleged total costs were $57,277.45. Mr Alvaro's figures were discussed and not agreed. 40 Both parties left the meeting and agreed to meet further. 41 On 2 August 2000 Mr Thompson sent Mr Alvaro a facsimile referring to a discussion of the previous day wherein he requested Mr Alvaro to send him some paperwork to substantiate his claims. Mr Alvaro acknowledges
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that he did not send Mr Thompson such paperwork. The facsimile also refers to a meeting at R.B. Transport in Yangebup later that day. However, the meeting took place on 3 August. 42 On 3 August Mr Thompson and Mr Leslie Mulligan, an employee of Sea Corporation, went to the home of Alan Robinson the proprietor of R.B. Transport in Yangebup. After some discussion between the three of them they were joined by Mr Alvaro. The purpose of the meeting, on Mr Thompson's part, was to ascertain from Mr Robinson whether Mr Alvaro had purchased bricks from R.B. Transport and whether in light of the termination of the building contract, whether Mr Robinson was charging a "re-stocking fee" and "rebate service fee" of 15 per cent of $28,975.45 and 12.5 per cent of $28,957.45 respectively as claimed by Mr Alvaro in his statement summary. The second reason Mr Thompson sought the meeting was in order to have a witness to the purported agreement between he and Mr Alvaro to cancel the building contract. In relation to the first purpose, Mr Robinson advised Mr Thompson that he had not charged such fees and he had not purchased or ordered any bricks for the proposed building. However, he said that Mr Alvaro had previously visited him and asked him to prepare an invoice for the purported supply of bricks under the building contract. Mr Robinson testified that he told Mr Alvaro that he could not do that but instead he offered to provide a quote. He completed a quote in the sum of $40,463.85 plus cartage. Consequently, the quote was for the supply of bricks only. Mr Alvaro asked Mr Robinson whether he needed a deposit and Mr Robinson said "no", as he had never been given a deposit for a job. However, at Mr Alvaro's request in the left hand margin of the invoice he wrote "paid deposit on 3.3.00 $20,232". Mr Alvaro produced a cheque book for a Challenge Bank Account in the name of Mr R D Alvaro containing a cheque butt dated 3 March 2000. On the cheque butt is written the words "R & B Transport Ogilvies & Brookwood $20,232.00". Mr Alvaro says that this is the butt of a cheque which he gave to Mr Robinson as a deposit for the bricks. He says that Mr Robinson subsequently returned the cheque to him. In evidence Mr Alvaro said he did not know where the cheque was. 43 The reason why Mr Alvaro gave Mr Robinson the cheque is unclear. I note that the cheque book upon which it was allegedly written was not regularly used for the payment of goods and services related to Mr Alvaro's building and design businesses and that the cheque immediately before it was purportedly written in August 1999. Consequently I doubt that Mr Alvaro gave Mr Robinson the cheque. Mr Robinson is an apparently reliable and truthful witness. What is clear is that whilst Mr Robinson
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quoted for the supply of bricks, he did not order them, he did not charge any fees related to his quote and if he did receive a cheque by way of deposit he did not bank it and he subsequently returned it to Mr Alvaro. 44 As to the second purpose for the meeting, only Mr Thompson gave evidence that there was any reference during the meeting to the cancellation of the building contract. Mr Thompson's contention is that, by his silence, Mr Alvaro acceded to the proposition that the building contract had been cancelled. I do not accept that Mr Thompson said enough in the meeting, in Mr Alvaro's presence and in circumstances in which Mr Alvaro's silence could be accepted as being an agreement to what Mr Thompson was saying to draw that conclusion. 45 After the meeting in Yangebup Mr Thompson and Mr Alvaro travelled, in separate vehicles, to Mr Alvaro's office and there Mr Thompson demanded payment of $30,000 being part of the money he said Mr Alvaro owed him under the building contract. Mr Alvaro wrote one cheque for $15,000 and wrote another cheque for $15,000 which was post-dated by a week. The first cheque was honoured and the second cheque was dishonoured. Mr Alvaro subsequently provided Mr Thompson with a bank cheque to cover the dishonoured cheque. 46 It is at the meeting at Mr Alvaro's offices on 3 August that Mr and Mrs Thompson allege that it was agreed to cancel the building contract and agreed that it was not in dispute that Mr Alvaro owed Mr and Mrs Thompson a total of $45,944.68 being the balance of the $84,254.60 they had paid less $38,309.82 in costs incurred by Mr Alvaro. Mr and Mrs Thompson further allege that there were still two items in dispute. These were insurance of $3,610 and the cost of cut and fill works of $3,600. Mr Alvaro disputes that there was any such agreement or acknowledgment of debt as of 3 August 2000. For the reasons I give later in this judgment I find that there was no agreement to cancel the building contract on this date as it had already been repudiated by Mr and Mrs Thompson by 12 July 2000 and that the repudiation had been accepted by Mr Alvaro. 47 On 24 August 2000 Mr Thompson wrote to Mr Alvaro by facsimile outlining his view of the agreement between he and Mr Alvaro. 48 Mr Thompson requested written proof that Mr Alvaro had paid $3,610 for the insurance and he disputed the cost of the cut and fill works because he believed that this was already included in the cost of earthworks and demolition costs that he had paid. Further, in relation to
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the insurance he suggested that if it had been paid there should be a substantial proportional rebate from the insurer because the building work had not commenced. 49 Mr Alvaro responded by letter on the same date. In it Mr Alvaro said that a separate agreement in relation to the fit out contract must be settled in full before he would discuss termination of the building contract. He stated that he had not agreed to terminate the building contract and he had not received any written notice from Mr and Mrs Thompson to do so. He agreed that he would refund the moneys paid in advance for the purchase of goods prior to the introduction of the GST. In his opinion this was covered by the refund of $30,000. 50 Mr Thompson responded by a facsimile dated 25 August. There is no need for me to go into the details of that facsimile as it and some of the material in the preceding correspondence is merely self-serving. 51 As indicated, Mr and Mrs Thompson later sold the property without building on it. 52 On 22 December 2000 Mr and Mrs Thompson purported to assign the debt in the sum of $28,882.37 they allege is due to them under the agreement of 3 August 2000 to Sea Corporation. The assignment took place by way of deed dated 22 December 2000.
The law relevant to the building contract 53 Mr and Mrs Thompson concede that no provision of the building contract gave them a right to terminate it. However their case is that the building contract was terminated by a later contract between the parties on, or about 3 August 2000. They allege that the terms were to terminate the contract and for Mr Alvaro to pay them $45,000, approximately, on certain terms and by Mr Thompson agreeing to give Mr Alvaro consideration in respect to any future building plans he had. Mr Alvaro says that he did not enter into a later contract. Rather Mr and Mrs Thompson repudiated the building contract and he accepted the repudiation giving him a right to claim damages for breach of contract. 54 A contract may be terminated by a further contract between the parties. Such a contract may be express or can be inferred. With respect to an inferred contract, where an inordinate length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them, it may be
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inferred that the contract has been abandoned or, in other words, discharged by agreement: Fitzgerald v Masters (1956) 95 CLR 420 at 431. 55 Any later contract terminating an earlier contract requires offer, acceptance and consideration. With respect to consideration, where the original contract has not been performed by either party, consideration exists if each party gives up the right to enforce the original contract. 56 On the other hand if a party manifests an unwillingness to perform a contract without justification the courts regard this as a repudiation of the contract which confers on the innocent party a right to terminate the contract and to sue for damages: Foran v Wight (1989) 168 CLR 385 at 441: Amann Aviation Pty Ltd v Commonwealth of Australia (1991) 174 CLR 64 at 74; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423. 57 If termination of a contract was justified in law as a consequence of repudiation of the contract by the other party the terminating party may claim damages for loss of the defendant's performance. Such damages are commonly known as loss of bargain damages. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 31. Loss of bargain damages equate to damages for loss of profit or net expectation interest: Elliott v Reading& Anor [1999] WASCA 11.
Specific Findings with respect to the Building Contract
Did Mr and Mrs Thompson repudiate the building contract? 58 The unequivocal evidence is that by 12 July 2000 Mr Thompson had decided not to proceed with the building contract. By this date he had communicated this to the defendant on more than one occasion. This was weeks prior to any negotiations between the parties concerning repayment of monies advanced by Mr and Mrs Thompson. That decision and the communication of it to Mr Alvaro constituted clear repudiation of the building contract.
Did Mr Alvaro accept the repudiation? 59 The tenor of Mr Alvaro's evidence was that even after Mr Thompson repudiated the building contract, he, Mr Alvaro, believed the building contract was still in existence. However, after Mr Thompson communicated to him his intention not to proceed, Mr Alvaro took no further steps to perform his obligations under the building contract.
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60 Due to the findings made and reasons given previously, the second plaintiffs have failed to prove that the building contract was terminated by a later agreement between the parties. 61 The second plaintiffs' counsel submitted that Mr Alvaro's payment to Mr Thompson of $30,000 was only consistent with a mutual agreement to terminate the building contract. I do not agree. It is equally consistent with Mr Alvaro repaying some of the money advanced to him under the building contract at the insistence of Mr Thompson, after he had accepted Mr Thompson's repudiation of the contract. I find that Mr Thompson was very determined to obtain repayment of the money he had advanced and he was insistent in his demands for repayment. I do not find it surprising, in the light of the pressure he was under, that Mr Alvaro gave Mr Thompson the cheques. 62 The evidence of John Kelly, an employee of Sea Corporation, does not persuade me that the parties came to a later agreement to cancel the building contract. Mr Kelly's evidence was that he was in Sea Corporation's office on 29 July 2000 when he overheard part of a meeting between Mr Thompson and Mr Alvaro. He said that Mr Thompson was obviously angry and he heard him say that he was cancelling the contract. He later saw Mr Alvaro leaving. Mr Alvaro and Mr Thompson shook hands and he saw Mr Alvaro nod his head, as if in agreement. He could not recall if Mr Alvaro said anything. His view was that Mr Alvaro was agreeing to cancel the contract. However, that is but one view of what he saw and heard. The other view, which in my opinion is more likely, is that Mr Alvaro was accepting Mr Thompson's repudiation or, in layman's terms, cancellation of the building contract. 63 The second plaintiff's counsel also tendered an affidavit sworn by the defendant on 13 July 2001 in which he states that he has refunded a total of $30,000 to the second plaintiffs and that that is an over-refund of $3,022,95. The second plaintiffs submit that this is an acknowledgement by the defendant that the refund was properly made as a condition of a subsequent agreement to terminate the building contract. However that paragraph must be read in the light of the whole of the affidavit which was sworn by the defendant in support of his application for summary
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judgment. In the affidavit he asserts that the second plaintiffs advised him that they did not wish to continue with the building contract. Nowhere in the affidavit is it said, either expressly or by implication, that the refund was pursuant to any later contract. I acknowledge that the statement in the affidavit of what he is owed is not consistent with his present claim. However what he is due, if anything, is a mixed question of fact and law. I am loathe to hold a party to an assertion of such a nature when it is probably based, in part, on legal advice, the substance of which is not before me. 64 I accept the defendant's counsel’s submission that even if the payment of the $30,000 constituted part of an unpleaded later agreement between the parties there was no term of such an agreement that the defendant forego any right he had to damages for repudiation of the building contract. The evidence indicates that, other than sustained pressure from Mr Thompson, the other reason for the repayment of the money was because Mr Thompson agreed to consider Mr Alvaro for a subsequent building project. There was a total failure of consideration in this regard as Mr Thompson acknowledged that he never intended to consider Mr Alvaro.
65 As a consequence of these findings the second plaintiffs' claim against the defendant fails. The defendant is entitled to judgment against the second plaintiffs in respect to his counterclaim in so far as it relates to the building contract. 66 The defendant is entitled to loss of bargain damages. He is entitled to the profit he would have made had the contract been performed. Mr Alvaro's evidence was to the effect that this would have been 33.3 per cent of the value of the contract. However, when he was cross-examined he conceded that the contract documentation indicated that his profit and overhead margin was $30,223.32. 67 Mr Alvaro was also shown a note on one of his design drawings which referred to his profit being 10 per cent of the contract price. With respect to that note he said that it was made on an ad hoc basis assuming that it would be a cost plus contract. Whereas if, as it turned out to be, it was a lump sum contract his margin would be higher because he was taking more risk.
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68 As to the amount stated on the actual building contract he said that it did not include the margin he would make on other items which are left off the contract such as earthworks and variations.
69 I was not impressed by Mr Alvaro's evidence in this regard. The written documentation prepared by Mr Alvaro does not support his evidence. I found his explanation for the difference between his evidence and the documents to be unconvincing. I accept the contract documentation rather than his evidence. His reference to further profit he expected to make either refers to matters outside the building contract or is speculative. Consequently, it is not appropriate that I include it in the assessment of damages.
70 Loss of bargain damages amount to $30,223.32 being the defendant's profit under the building contract. 71 It is agreed between the parties that Mr Alvaro was paid $84,254.60. Of that amount, $33,354.56 amounted to a 10 per cent deposit. A further $20,000 was paid towards the cost of bricks which were never purchased. These two amounts total $53,354.56. I find that the balance of the money is comprised of architectural, structural and survey drawing fees, costs for demolition and clearing of the site and costs of other various items and services. The second plaintiffs received value for these items and thus they can be excluded for the purposes of assessing damages under the building contract. I am not satisfied that there are any outstanding claims that Mr Alvaro has for goods and services he provided to the second plaintiffs. In particular he has not satisfied me that he is owed $3,610 in insurance or that $3,600 is still owed for cut and fill works. 72 Of the $53,354.56 Mr Alvaro repaid $30,000, leaving $23,354.56 that he has received and not accounted for to the second plaintiffs. If this amount is subtracted from $30,233.31 it leaves a debit balance of $6,878.76 that is payable by the second plaintiffs to the defendant as damages for breach of the building contract.
73 As the second plaintiffs’ claim fails, the purported assignment of debt is of no legal effect.
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Facts relating to the fit out contract
74 The following facts are agreed between the parties or have been found by me. 75 Mr and Mrs Thompson are the directors of Sea Corporation. Mr Thompson is the Managing Director of Sea Corporation. He formed the company in 1998. Primarily, it is a shipping agent for the export of dry bulk cargo. In the first half of 2000 it leased premises at 173 Davy Street, Booragoon. It was agreed between Sea Corporation and another unrelated company, SGS Australasia ("SGS") that both companies would lease areas in this building for offices. The leased areas share a common wall, reception area, toilets, lunch room and small kitchen. Other than the common areas both companies have separate offices. Both companies' offices required fitting out and SGS contracted with Mr Alvaro to do the fit out for it. It told Mr Alvaro that it needed to be in its offices by 1 July 2000. 76 Mr Alvaro and Mr Thompson on behalf of Sea Corporation agreed that Mr Alvaro would fit out the Sea Corporation part of the office and that Mr Alvaro would charge Sea Corporation his costs plus 12.5 per cent. Further, with respect to work done in relation to common areas Sea Corporation agreed to pay 41 per cent of those costs plus 12.5 per cent. This is because SGS had the larger lettable area. Mr Alvaro disputes this and says that the agreement was that Sea Corporation would pay 41 per cent of all the work done for both SGS and Sea Corporation. The corollary of this is that SGS would pay 59 per cent of the work done for both companies including the work in Sea Corporation's offices. 77 Mr Thompson's evidence was to the effect that the Sea Corporation part of the work was "extremely basic" and that Mr Alvaro was to give him three written quotes for each component of the work, then he, Mr Thompson, would choose a quote. Mr Alvaro would then charge Sea Corporation on provision of the paid invoice. He said that with respect to common walls the costs were to be split on a 59-41 per cent basis. 78 The defendant submitted that if I accepted Mr Thompson's evidence it would mean that Sea Corporation would only pay 41 per cent of common walls which were shared 50:50 with SGS. Logically Sea Corporation should pay 50 per cent of the cost of such work. On the other hand, it was submitted by Sea Corporation that if Mr Alvaro's evidence was accepted it would mean that Sea Corporation was overall paying a significantly greater percentage of the cost of the fit out than it ought. This would be because the cost of SGS's fit out was substantially greater than that of Sea
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Corporation as SGS had a greater area and was installing more work stations, partitions and offices. 79 There is evidence in the form of invoices and contemporaneous correspondence which is capable of proving either version. However in my view the decisive evidence is that in July 2000 Mr Alvaro invoiced SGS for 100 per cent of the work done in its office area and 59 per cent of the work done in the reception area and the lunchroom. He did not render an invoice for any work done in the first plaintiff's offices. Even accepting that the invoice was for work done on a lump sum basis, the only inference available is that Mr Alvaro did not expect SGS or, therefore, Sea Corporation to pay for work done in each other's office areas. Further, the negotiations between the parties in 2000 were on the basis that for work related solely to Sea Corporation's offices, Sea Corporation would be charged 100 per cent of the cost plus 12.5 per cent. I also note that the Scott Schedule has been prepared on the same basis. Mr Alvaro's claim is inconsistent with the agreement he alleges was made. Consequently, I accept Mr Thompson's evidence as to this term of the contract. 80 However, I do not accept Mr Thompson's evidence that it was agreed between he and Mr Alvaro that in respect to all work Mr Alvaro would present three quotations prior to the work commencing. The evidence is that this did not occur in all cases and yet Mr Thompson permitted the fit out to continue. His behaviour in this respect is not consistent with him believing that Mr Alvaro was required to present three quotations for every part of the work before it could commence. 81 The agreement between the parties was entered into on or about 18 May 2000. On that date Sea Corporation facsimiled Mr Alvaro a message stating its requirements as follows: · "An office for Craig (which you have already discussed with him.
· A storage/communication room.
· An office (the exact dimensions of the office already established).
· Six work stations.
· A work area for the centre of the room.
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Please ensure that the partitions separating both parties is double thickness to provide some noise protection (and confidentiality). The total leased area is 537 sqm of which 237 sqm is account Sea Corp and 300 sqm account SGS. Rocco we have not decided on an actual design (with the exception of Craig's area) but will have a better idea by the end of the week." 82 On 23 May 2000 Mr Alvaro wrote to Sea Corporation confirming and thanking it for its commission to carry out the "interior design, layout and fit out" of its offices. It requested "a deposit prior to the commencement of any design or drafting work." 83 Mr Alvaro acknowledges that the actual schedule of fees attached to this letter, although referring to professional services for the design, draft and documentation of the internal layout and finishes, did not state a fee for such work. The defendant tendered a copy of the schedule of fees which included a total fee for the design, draft and documentation of the internal layout and finishes. That fee was $9,078.26 of which 41 per cent is $3,722.87. Mr Alvaro said that he sent Mr Thompson the schedule without costings and that he thought he had also sent Mr Thompson the schedule including costings. Mr Thompson acknowledged that he had seen the schedule with the costings and had refused to pay it as he denied that the agreement with Mr Alvaro included any design documents. It was not put to him and he did not say when he had seen it. I am unable to find the date upon which Sea Corporation received the schedule of fees, although I find that it did receive it at some time. 84 Mr Alvaro prepared basic design documents for the fit out at Sea Corporation's offices. Sea Corporation's submission is that it was unnecessary for any design documents to be prepared as its fit out was so simple. I do not accept this. It was necessary for Mr Alvaro to prepare some documentation so he could obtain quotes for work such as supplying and installing partitions. However, I acknowledge that the design work was not significant and the design documents tendered by the defendant prove that it was not. 85 Mr Alvaro went ahead and arranged for the fit out to take place and by 1 July 2000 the fit out was complete. The date of 1 July was of the essence as far as SGS were concerned because the lease on its previous premises was expiring. It was not as important to Sea Corporation,
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however, Mr Thompson did tell Mr Alvaro that he would like Sea Corporation to move in as soon as possible. 86 No money has ever been paid to Mr Alvaro for the fit out of the offices. Sea Corporation acknowledges that it owes Mr Alvaro the reasonable costs of the fit out, plus 12.5 per cent. 87 The first plaintiff pleads that the fit out contract included certain implied terms. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 346-347 sets out the requirements that must be satisfied in order for a term to be implied within a contract: "(1) It must be reasonable and equitable; (2) It must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it; (3) It must be so obvious that 'it goes without saying'; (4) It must be capable of clear expression; and (5) It must not contradict any express term of the contract." 88 The consideration of whether to imply a term is to be done at the time the parties concluded the agreement. 89 Applying those requirements to this case, I find that there was an implied term in the fit out contract that the defendant would carry out the work with reasonable competence and economy. One only has to consider the consequences if this was not so. That is, that the defendant could carry out the work in an incompetent manner and not be in breach of the contract. I am satisfied that would be contrary to the expectations of both parties. Similarly, that he could carry out the work in an uneconomic manner and not be in beach of the contract. In order to give business efficacy to the contract I believe it is appropriate to imply this term. This is particularly as I have found that the defendant was not obliged to produce three quotes for each part of the job. Consequently, the defendant had the latitude to sub-contract the work as he saw fit. It is obvious that the parties intended that such work would be carried out reasonably competently and economically. 90 For the same reason I am inclined to find that the there was a further implied term, as alleged by the first plaintiff, that the defendant was only entitled to be paid for costs that were reasonably incurred. However, in my
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analysis of the items in the Scott Schedule my determinations do not depend upon these implied terms. 91 Having regard to the terms of the contract I now turn to the Scott Schedule. The schedule was amended on a number of occasions during the course of the trial, principally for the purpose of deleting claims that the defendant decided that he could not prove. I will deal with each remaining item of the schedule seriatim using the numbering of the schedule. I will not deal with items relating to claims that the defendant has deleted. As the first plaintiff does not dispute that invoices presented by the defendant have been paid, I will not refer to this issue when dealing with each item. 1.1 The defendant claims a total of $14,399.40 for the cost of partitioning and glass. Item 1.1, being a claim for $891, is supported by an invoice from a partitioning firm for $792 stating "Extra costs incurred Craig's office Upgrade legal size of glass because of no plasterboard breaking up total wall length." Mr Alvaro testified that initially the relevant wall was to be in gyproc. After the stud work had been done, he said that he and Mr Thompson decided to substitute the gyproc with glass. He said that this necessitated an increase in the thickness of the glass to meet Australian standards. This invoice represented the cost of that increase plus his agreed margin of 12.5 per cent. I accept Mr Alvaro's evidence in this regard and allow the claim in the sum of $792. 1.2 The defendant claims $168.13, being 41 per cent plus 12.5 per cent of an invoice he has paid which states "Pull down existing new walls and relocated in Reception put up column and pull down". Mr Alvaro testified that a column was put up for the reception desk which Mr Thompson did not like. Consequently one of the columns was pulled down. He said that the work was agreed to by Mr Thompson. I accept Mr Alvaro’s evidence in this regard and allow the claim for $168.13. 1.3 The defendant claims $10,833.38, being 41 per cent plus 12.5 per cent of an invoice for all partitioning work, both in the first plaintiff's side of the office and SGS' side. He supports this claim by an invoice from a partitioning firm for $23,487. The amount claimed is on the basis that the first plaintiff is liable to pay 41 per cent of all work. For
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reasons given earlier I do not accept that claim. Sea Corporation is liable for 41 per cent of the cost of partitioning in the common areas and 100 per cent of the cost of partitioning in its office area. In August 2000 Mr Alvaro provided Sea Corporation with a preliminary summary of his costs and expenditure. At that time he claimed $12,659.36 for the cost of glass, partitioning, skirting and painting of the same. The figures indicate that the cost was determined on the basis of 100 per cent of the cost of partitioning within the Sea Corporation office area and 41 per cent of the dividing walls. Under cross-examination he was not able to explain to my satisfaction why he has now claimed for some of the work done in SGS' office. I note that the amount that he has now claimed is less than he advised in August 2000 despite his present claim being for a lot more partitioning. If his original August 2000 costings were correct the present claim, as it is for an increased amount of partitioning, should be more. The variations in prices and the failure of Mr Alvaro to substantiate his claim mean that I am not prepared to accept it. I am not satisfied that it represents the costs of these items at the agreed percentages plus 12.5 per cent. The first plaintiff tendered a quote that it obtained at the time from another partitioning firm for the supply of the relevant amount of partitioning, glass, skirting and painting. Using the meterage supplied by the defendant in the August 2000 document, the costs contained in the quote obtained by the first plaintiff and an added 12.5 per cent margin the cost comes to approximately $6,900.00. The first plaintiff also called a Scott Francis Parrott, quantity surveyor, who prepared an estimate of the costs of the fit out. His estimate of the cost of partitioning based on the meterage as measured by him and assuming that Sea Corporation would pay 100 per cent of the cost of partitioning in its offices and 41 per cent of shared partitioning was $5,997.12. However he did not estimate the cost of insulated partitioning and the evidence is that at least some of it was insulated. I accept Mr Alvaro's
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evidence as to why it was necessary to insulate some of the partition. On the other hand he estimated for 13 millimetre partitioning whereas some of that actually installed was 10 millimetre. Consequently, there are some variations between what Mr Parrott estimated and what was installed. The defendant attacked Mr Parrott's evidence on the basis that the computer software he used to prepare his report did some calculations that were unexplained. I do not accept this. I accept that Mr Parrott prepared his own report and that he inserted the variables into it. I acknowledge that the computer may have done some of the calculations but they appear to me to be simple multiplication calculations. I found Mr Parrott to be a reliable and credible expert witness. The defendant also submitted that Mr Parrott's costings did not contain any allowance for overtime work to ensure that the fit out was completed expeditiously. Whilst a certain amount of expedition was required. There is no evidence that the supplier charged any extra sum because of that factor. Taking into account all these matters I allow $6,000 for this item. 1.4 The defendant claims $2506.89, being 41 per cent plus 12.5 per cent of an invoice he has paid for a workstation that Mr Alvaro alleges was installed and then removed at the request of Mr Thompson. He supports this claim by an invoice from a partitioning firm for $5,435.00. The first plaintiff's case is that these workstations were not supplied and installed as alleged. In support of this position it says that the invoice relied upon by the defendant refers back to a quote dated 30 May 2000 provided to the defendant for the supply and installation of three workstations. The first plaintiff says that as of 30 May the design of its offices had not been finished, three workstations were not installed in its office area, although some partitioning was, SGS had a number of workstations installed in its office area and that the
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2. The defendant claims $6,107.11 for the cost of information technology, wiring and cabling. He supports his claim by reference to an invoice from a telephone and computer cabling contractor in the sum of $5,428.54 to which he has added his margin of 12.5 per cent. However, in cross-examination, he acknowledged that that invoice did not relate to Sea Corporation but rather to cabling done for SGS. He said that the invoice relevant to Sea Corporation was another invoice in evidence for $6,546.18. That particular invoice was used to support his claim for the cost of supposedly additional electrical work (item 3.18). Obviously it cannot be used to support both claims. I accept the evidence given during Mr Alvaro's cross examination that the invoice for $6,546.18 is the invoice relevant to this claim. That is because there was evidence of three invoices from the contractor. Each one of them mentioned the same quote but referred to different parts of the work. In the case of the invoice for $5,428.54 it says "reference: SGS". In the case of the invoice for $6,546.18 it says "reference: Seacorp Pty Ltd" and in the case of the third invoice it says "reference: Common room and reception". Thus, the invoices support the defendant's ultimate evidence that it is the invoice for $6,546.18 that is relevant to this part of the claim. However I note that the defendant's initial claim for this work in the preliminary summary of costs and expenditure that he prepared was for $6290. Attached to that summary of costings was a facsimile from the contractor dated 4 August 2000 which, in part, says "below are the prices for those areas that we did the work … as per quote and plus extra work requested on site". Below that are the
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words "Seacorp Pty Ltd" against the figure "$6290" and the words "Common Room and Reception Area" against the figure "$3,835". The first plaintiff accepts $5182 of this claim. In support of this the first plaintiff tendered a facsimile from Mr Thompson to Mr Alvaro of 14 June 2000 which refers to a recent telephone conversation and confirms an all in price of $5,430.00 to provide "electrical and data cabling etc" for Sea Corporation's office. It also tendered a letter from the defendant to Sea Corporation dated 27 June 2000 wherein Mr Alvaro states that the sum of $247.87 would be credited to its wiring and cabling account. Mr Thompson gave oral evidence consistent with the first plaintiff's case in this regard. Mr Alvaro testified that the credit of $247.87 was in relation to the first plaintiff arranging for the connection and switching over of the telephone system. He said he had provided this credit. However he did not show where he had allowed for it. The first plaintiff's defence to this claim, no matter which invoice it is based on, is that it was agreed that it would only be charged $5,430.00 less $247.87 for this work. As I have already stated neither Mr Alvaro nor Mr Thompson can be relied upon as an accurate and reliable witness in respect to these claims. The first plaintiff's position is bolstered by the facsimile of 14 June. Although it is self-serving, it is contemporaneous, and thus is not the product of any later concoction. Remembering that the onus is on him, Mr Alvaro did not produce any other contemporaneous document refuting the alleged agreed all in price. The agreement to reduce the price further by $247.87 is also supported by a contemporaneous document. Thus, on balance, I accept the first plaintiff's case in respect to this claim and allow the claim at $5,182. 3.1 The defendant claims $371.00, being 41 per cent plus 12.5 per cent of a cash sale docket dated 24 June 2000 for the purchase of 35 square metres of ceramic tiles, grout and
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glue which Mr Alvaro testified was used in the offices of SGS and Sea Corporation. In cross-examination he said that the only areas tiled were the reception area and kitchen area. These areas were just under 35 square metres each. Mr Alvaro was shown a quotation letter he sent to the first plaintiff on 8 June 2000 in which he quoted $660.00 plus 12.5 per cent for "the supply, preparation, laying and finishing" of tiles to the lunch room area, which is the same as the kitchen. Mr Alvaro said he received consent to go ahead with that work. He acknowledged that the cash sale docket referred to the same area as the quote. However, he said that the cash sale docket was for materials and the quote was for labour. However this explanation is contrary to the express words of the quote which says that it includes "supply" of the tiles. Mr Alvaro submitted that as the agreement for the fit out was for costs plus 12.5 per cent Mr Alvaro was entitled to the higher amount if that represented his actual costs. I agree that in a situation where there has been no specific agreement for a fixed price Mr Alvaro is entitled to costs plus his margin. However the situation is different where, as in the case of this item, the defendant has quoted and had accepted a specific price. In my opinion he is then bound by the quoted price, unless there is further evidence of an agreement to vary it. Consequently this claim is allowed at $304.43, being 41 per cent plus 12.5 per cent of the quoted $660. 3.2 The defendant claims $194.30, being 41 per cent plus 12.5 per cent of an order dated 30 June 2000 for the purchase of 6.75 square metres of porcelain tiles and glue. Mr Alvaro testified that these items were used in the reception area. There was no real challenge to this claim and Mr Alvaro's evidence in relation to it. I allow the claim at $194.30. 3.3 The defendant claims $4,227.74, being 41 per cent plus 12.5 per cent of an invoice dated 12 June 2000 for the supply and fixing of tiles. Mr Alvaro testified that these tiles were used in the reception area. There is great deal of
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confusion over this invoice. It itemizes a number of separate items and states that the total of them is $15,367.00. This is the amount upon which the defendant based his original claim. However when the separate items are tallied they total only $10,867.00. To further complicate matters Mr Alvaro has written on the invoice that he paid $9,165.83. He said that he had not been asked to pay more. Consequently he amended his claim to the amount stated above. However, in cross-examination he was referred to another invoice apparently from the same contractor being identical to the first mentioned invoice only with a different total again. The defendant has stamped paid and written $6,201.17 on that invoice. The two amounts that it is indicated he has paid total $15,367.00. As I said during evidence this may indicate that Mr Alvaro is not careful about reading invoices before he pays them. However it cannot change the fact that the invoices duplicate one another and the total amount on one of them is $10,867.00. Thus the total amount Mr Alvaro is entitled to claim under this item is $5,569.37 being 41 per cent plus 12.5 per cent of this amount. The invoice includes 32 square metres of granite tiles which Mr Alvaro said were for the border of the floor and the fountain or waterfall. This latter item was going to be installed in the reception area but instead it was turned into a planter box. However Mr Alvaro said that the tiles were used in the premises. There were also 36 square metres of tiles which he said were "possibly" for the lining of the waterfall feature. No claim was made by the defendant for this work in his preliminary summary of costs and expenditure. In relation to the floors in the reception and lunchroom he claimed $1500.54 only. He said that he could not explain the omission of this invoice except that it was oversight. The other unusual matter is that the invoice is dated 12 June 2000. On Mr Alvaro's own evidence the tiling of the reception area was one of the last things completed. Consequently it would not have been completed until the end of June 2000. I do not understand why the defendant would have been invoiced for the supply and fixing of the
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tiles in mid June. It could not have been because he had to prepay for the purchase of the tiles as he did not pay the invoice until July. It seems to me to be contrary to usual business practice to send an invoice weeks prior to completion of the work. In cross-examination Mr Alvaro was shown photos of the reception area. Mr Alvaro acknowledged that there was no granite shown in these photos. That is, that the tiling shown on the floor and the planter box is all ceramic tiling. The planter box appears to be of modest size. Mr Parrott gave an estimate of $1,297.65 for the cost of tiling this area. He costed the tiling of the floor, the planter and the block work for the planter. He included costs of adhesive and tools. He allowed a prime cost of $30 per square metre for the tiles. He acknowledged that he did not cost the actual tiles used. Mr Parrott measured the area as requiring 49 square metres of tile. This included 13 square metres extra over for banding in different colours. He also allowed 12 metres of tile capping and skirting. Other than with respect to the issue of cost of the tiles I am satisfied that Mr Parrott has estimated the reasonable cost of the work that was done in the reception area. With respect to the cost of the tiles I note that the invoice relied upon be Mr Alvaro states that the cost of the tiles was $22 per square metre. Therefore the prime cost sum estimated by Mr Parrott falls well within this figure. As to the cost of laying them, Mr Parrott allowed $40.00 per square metre, including labour adhesive etc. The invoice relied upon by Mr Alvaro charged $14.55 per square metre for all work and goods other than the tiles. Thus, the claimed cost per square metre is less than what Mr Parrott estimated. What takes the claim well over Mr Parrott’s estimate is the price of and the fixing of the granite tiles. Taking into account all of the evidence I am not satisfied that there were granite tiles used in the reception area. I find that Mr Alvaro's evidence regarding this item to be unreliable. Consequently I allow the claim in the sum allowed by Mr Parrott. I note that this is slightly higher
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than I would have allowed if I had allowed the claim as per the invoice but deleted the cost of the granite tiles, their fixing and screed for them. I allow this item in the sum of $1297.00. 3.4 The defendant claims $13.84, being 41 per cent plus 12.5 per cent of a receipt dated 28 June 2000 for the purchase of three lengths of black plastic trim for the waterfall edging. There was no real challenge to this claim and Mr Alvaro's evidence in relation to it. I allow the claim at $13.84. 3.5 The defendant claims $960, being 41 per cent plus 12.5 per cent of an order dated 26 June 2000 for the purchase of porcelain tiles, glue and grout which Mr Alvaro said was for the reception area. Given my analysis of the requirements of the reception area and the evidence relating to it I decline to allow this sum. I am simply not satisfied that these materials were used in the fit out of the offices. 3.6 The defendant claims $49.11, being 41 per cent plus 12.5 per cent of a account dated 31 July 2000 for the purchase of general hardware used in the common areas. There was no real challenge to this claim and Mr Alvaro's evidence in relation to it. I allow the claim at $49.11. 3.7 The defendant claims $1882.15 for carpet. He testified that he removed the old carpet and supplied and laid new carpet in the premises. For this work he quoted $21,080.56 to the managing agents of the premises. They paid a rebate of $17,000 to the defendant. The balance between the quote and the rebate is $4,080.56. Mr Alvaro's claim is based on 41 per cent plus 12.5 per cent of this amount. Mr Alvaro testified that as Sea Corporation agreed to pay 41 per cent of costs plus 12.5 per cent of all invoices for the common areas this claim ought to be allowed. Mr Thompson testified that Mr Alvaro had been at a meeting between he, a representative of SGS and a representative of the managing agents when the terms of the lease were being discussed. Part of the terms were that
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the lessor was to replace the carpet. Mr Alvaro offered to do this work. He then provided the quote referred to above which was tendered in evidence. Mr Thompson's evidence was that under the oral agreement between the defendant and the managing agent some of the common areas, including the lunchroom and reception had been carpeted and were to be re-carpeted but they were not. Mr Thompson said he agreed with Mr Alvaro that Sea Corporation would pay the 41 per cent plus 12.5 per cent of the cost of tiling these areas less $20 per square metre. This latter figure was supposedly to take into account that the defendant had already been paid by the managing agent to carpet these areas. Mr Thompson was not cross examined on this version of events. Mr Alvaro testified that he spoke to Mr Thompson and told him that he wanted $21,000 to carpet the areas. Mr Alvaro said that Mr Thompson later told him that he organized a rebate of $17,000 and to go ahead and do the work. The cross-examination of him on this point was related to the carpet claim not being part of his preliminary costs and expenditure at all and his alleged dishonesty in maintaining a claim for the full $21,000 up to the second day of trial. He did, however, acknowledge that his agreement to supply the carpet was with the managing agent, not Sea Corporation and that he received the $17,000.00 direct from them. I am left with considerable doubt as to the nature of any agreement between the parties with respect the carpet. Clearly, despite Mr Alvaro's evidence, it could not have been part of the general fit out agreement to pay 41 per cent of costs plus 12.5 per cent. This is because the agreement, whatever it was, was with the managing agent. Further the quotation on which the claim is based is not a costs only invoice. It is Mr Alvaro's all inclusive quotation to the managing agent, which presumably includes his profit margin as between them. Also it no doubt includes a considerable amount of carpet for SGS only offices. Once the cost of this carpet and its laying, Mr Alvaro's profit margin and the $17,000 rebate is taken into account I am not satisfied that the defendant is
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out-of-pocket in the sum of $1,882.15 or at all. Consequently, this claim is denied. There remains the issue of the whether the defendant agreed to reduce his price of the tiling of the kitchen and reception by $20 per square metre to take into account that he had been paid to carpet these areas but had not done so. The defendant denies this. There is no independent evidence to substantiate the first plaintiff's claim. I am not persuaded that there was such an agreement. Consequently, I decline to reduce the amounts claimed by the defendant in respect to these areas. 3.8 The defendant claims $161.90, being 41 per cent plus 12.5 per cent of an invoice dated 5 August 2000 for material for the pond portion of the waterfall or fountain that was to be installed. The claim is admitted. I allow the claim at $161.90. 3.9 The defendant claims $1,286.89, being 41 per cent plus 12.5 per cent of an invoice dated 5 August 2000 for tiling labour for the reception and kitchen. The claim is admitted by the plaintiff. I allow the claim at $1,286.89. 3.10 The defendant claims $783.20, being 41 per cent plus 12.5 per cent of an invoice dated 5 August 2000 for the purchase of furniture for the for the reception area. The claim is supported by an invoice from a supplier in the sum of $1,698.
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of this furniture was part of the agreement between the parties. I decline to allow this claim. 3.11 The defendant claims $795.07, being 41 per cent plus 12.5 per cent of a statement dated 25 August 2000 for the rental of furniture for the Sea Corporation office area. Mr Alvaro testified that he hired office furniture for SGS and that Mr Thompson asked whether Sea Corporation could use some of it. However, he said that most of it went to SGS. In cross-examination it was put to him that Mr Thompson had not asked for it and his reply was that he did not say no to it. He repeated an answer of this type and then said that Mr Thompson had asked for it. The only particular items he said that Sea Corporation used in its office area were some grey desks. He said other furniture was put in the reception and kitchen areas. Mr Thompson denied having an agreement with Mr Alvaro about rental furniture and denied that Sea Corporation had been supplied with such furniture. Again, there is no independent evidence as to whether the furniture was rented for Sea Corporation pursuant to an agreement to do so. I am not persuaded to the requisite standard that it was. Further the claim is based on an assumption that all the furniture was used in the common areas such that Sea Corporation had an obligation to pay for 41 per cent of its total cost. Yet the evidence of Mr Alvaro is that most of it was used by SGS, a portion was in the common areas and then a small proportion of it was used exclusively by Sea Corporation. There is no evidence as to what length of time it is alleged that Sea Corporation had exclusive use of some part of the furniture. Thus even if I accepted Mr Alvaro's evidence I still would not allow the claim because it is based on incorrect assumptions and is too vague to enable me to verify it. I decline to allow this claim. 3.14 The defendant claims $103.78, being 41 per cent plus 12.5 per cent of an invoice dated 18 July 2000, for the relocation of existing screens allegedly for the Sea Corporation office area. Mr Alvaro testified that this "may be" a reference to low level screens that were erected in Mr Thompson’s office and then removed, at his request,
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3.16 The defendant claims $161.44, being 41 per cent plus 12.5 per cent of an invoice dated 30 June 2000, for painting. The invoice states "Extra painting for new layout". Mr Alvaro testified that this related to the variation to the layout which apparently resulted in new partitioning having to be repainted. He said that this was done at Mr Thompson’s and SGS' request. In cross-examination he said there was a request to make such an alteration. Mr Thompson acknowledged that Mr Alvaro had arranged for the partitions to be painted. He understood that to be included in items 1.1-1.3 of the schedule. He said he did not ask Mr Alvaro to do any painting. There is no independent evidence regarding this item apart from the invoice itself. Common sense dictates that in the course of a fit out of this nature there will be some variations in items such as painting. It is not the sort of thing that Mr Thompson would necessarily recall. On this basis I am prepared to allow the claim in the sum of $161.44. 3.17 The defendant claims $1,840.85, being 41 per cent plus 12.5 per cent of an invoice dated 26 June 2000, for "Extra Over IT service wiring and cabling". The invoice states "Reference Common Room and Reception supply and install communications cabling and electrical cabling as per" a quotation number. Mr Alvaro testified that this related to cabling in the common areas as opposed to the amount claimed at item 2 which related to the Sea Corporation office area only. In his preliminary costs and expenditure he referred to the cost of this item as $3,835. As I have already stated there is a facsimile from the
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contractor attached to that document which states that $3,835 was the cost of the work in the common room and reception area. That facsimile is dated 4 August 2000. I am inclined to accept that document as it is of a later date and it is possible that there was a minor adjustment in the invoice price after 26 June. Mr Thompson testified that the only agreement for cabling was that referred to at item 2. I note that the facsimile from the first plaintiff referred to earlier in this judgment of 14 June 2000 specifically states that the $5,430.00 is for cabling for "Sea Corp's office". I accept that cabling was required for the common area, particularly the reception area. Further, I accept that Mr Thompson must have appreciated that the $5,430 was for Sea Corporation's office area only, not the common areas. This is not only because of the wording of the facsimile of 14 June but also because Sea Corporation was quoted an all in price, that is, 100 per cent of the cost as opposed to 41 per cent which would have been the case had the quote been for common areas. Consequently, I allow $1,768.89, being 41 per cent plus 12.5 per cent of $3,835. 3.18 The defendant claims $7,364.45 being 100 per cent plus 12.5 per cent of an invoice dated 26 June 2000, for "Additional electrical work requested on site". I have already found that the invoice allegedly related to this item is the relevant invoice for item 2. Consequently, I am not satisfied that it provides a basis for this claim in addition the amount claimed at item 2. This is despite Mr Alvaro's evidence in chief that this invoice relates to this claim. He subsequently acknowledged in that it did not. This contradiction did not reflect well on his reliability and truthfulness as a witness. I am satisfied that the invoice initially relied upon by the defendant to support the claim at item 2 relates to work done for SGS. Thus it cannot support this claim either. There being no other document capable of supporting this claim, I disallow it.
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3.19 The defendant claims $426.00 being 41 per cent plus 12.5 per cent of an invoice for dated 19 July 2000, for "Extra Over to existing partitioning to reception area – LHS to re-cover all of existing partition because existing opening required covering". This item is accepted by the first plaintiff. I allow it at $426.19. |