Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd

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SUPREME COURT OF QUEENSLAND

CITATION:

Surfstone Pty Ltd & Anor v Morgan Consulting Engineers Pty Ltd [2015] QSC 290

PARTIES:

SURFSTONE PTY LTD AS TRUSTEE OF THE IERNA PROPERTY TRUST ACN 097 808 225

(first plaintiff)

CORKDON PTY TLD AS TRUSTEE OF THE HICKS PROPERTY TRUST ACN 097 808 190
(second plaintiff)

v

MORGAN CONSULTING ENGINEERS PTY LTD ACN 009 859 081

(defendant)

FILE NO/S:

No 11423 of 2014

DIVISION:

Trial

PROCEEDING:

Trial

DELIVERED ON:

19 October 2015

DELIVERED AT:

Brisbane

HEARING DATE:

12 May 2015

JUDGE:

Peter Lyons J

ORDER:

Each of the following questions is answered in the affirmative:

1.   Were the ACEA Guideline Terms of Agreement incorporated, in full, into the contract between the plaintiffs and the defendant?

2.   If so, does clause 4.3 of the ACEA Guideline Terms of Agreement, on its proper construction, operate as a bar to the plaintiffs bringing this proceeding against the defendant?

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – OFFER – GENERALLY – INCORPORATION – where the defendant engineers submitted a Fee Proposal on 27 August 2003 – where the Fee Proposal stated that the ‘commission would be generally in accordance with the ACEA Guideline Terms of Agreement’ – where the defendant submitted the first of a series of invoices relating to the commission on 17 December 2003 – where the defendant did not provide the plaintiffs with a copy of the Guideline Terms and no one associated with the plaintiffs sought to obtain one – where clause 4.3 of the Guideline Terms limited the duration of the defendant’s liability for the commission to one year from completion – where the plaintiffs filed a Claim in negligence more than nine years after the defendant submitted the final invoice – where the plaintiff alleges that clause 4.3 of the Guideline Terms was not incorporated into the contract – whether a reasonable person in the plaintiffs’ position would have concluded that, at the time that the Fee Proposal was accepted, the defendant intended to enter into a contract to provide the relevant engineering services on the terms identified in the Fee Proposal, including the Guideline Terms – whether, for an exemption clause to be incorporated into an unsigned contract, a party must do all that is reasonably necessary to bring the  clause to the other party’s attention – whether a party must be given notice of, or have their attention drawn to, terms which alter their common law rights –– whether clause 4.3 was a term which no one would anticipate in a contract of the type in question

Balmain New Ferry Co Ltd v Robertson (1906) 4 CLR 379; [1906] HCA 83, cited.
Baltic Shipping Co v Dillon (1991) 22 NSWLR 1; [1991] NSWCA 19, cited.
Circle Freight International Ltd v Medeast Gulf Exports Ltd [1988] 2 Lloyd’s Rep 427, cited.
Cockerton v Naviera Aznar SA [1960] 2 Lloyd’s Rep 450, cited.
D F McCloy Pty Ltd v Taylor Thomsom Whitting Pty Ltd

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Details
Case
[2015] QSC 290
Decision Date

CaseChat Overview and Summary

In the case of Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd, the parties were engaged in a dispute regarding the terms of a contract for civil and structural engineering services related to a construction project for a retail clothing and accessory business. The defendant, Morgan Consulting Engineers, submitted a Fee Proposal on 27 August 2003, stating that the commission would be generally in accordance with the ACEA Guideline Terms of Agreement. The plaintiffs, Surfstone Pty Ltd, alleged that the Guideline Terms were not incorporated into the contract, and specifically that clause 4.3, which limited the duration of the defendant's liability for the commission to one year from completion, did not apply.

The legal issues before the court were whether the ACEA Guideline Terms of Agreement were incorporated, in full, into the contract between the plaintiffs and the defendant, and if so, whether clause 4.3 of the Guideline Terms operated as a bar to the plaintiffs bringing the proceeding against the defendant. The court considered the arguments presented by both parties, including the plaintiffs' contention that the language used in the Fee Proposal was insufficiently clear to incorporate the Guideline Terms into the contract. The court also examined the principle that where a term is more than ordinarily onerous, special notice of it might be required.

In its reasoning, the court found that the Fee Proposal did not specify a date and that the submissions for the plaintiffs pointed out that no one signed the Guideline Terms on their behalf, nor were they provided with a copy. The court rejected the plaintiffs' argument that the language used in the Fee Proposal was insufficiently clear to incorporate the Guideline Terms into the contract. The court found that the Guideline Terms were incorporated into the contract, and as a result, clause 4.3 operated as a bar to the plaintiffs bringing this proceeding against the defendant.

The court answered both questions for determination in the affirmative, stating that the ACEA Guideline Terms of Agreement were incorporated, in full, into the contract between the plaintiffs and the defendant, and that clause 4.3 of the Guideline Terms, on its proper construction, operated as a bar to the plaintiffs bringing this proceeding against the defendant. The court concluded that the defendant had met its burden of proving that the Guideline Terms were incorporated into the contract, and that clause 4.3 was a valid limitation of liability clause that barred the plaintiffs' claim.

Orders

Orders of the court

Each of the following questions is answered in the affirmative:

1. Were the ACEA Guideline Terms of Agreement incorporated, in full, into the contract between the plaintiffs and the defendant?

2. If so, does clause 4.3 of the ACEA Guideline Terms of Agreement, on its proper construction, operate as a bar to the plaintiffs bringing this proceeding against the defendant?

Background

Background to the litigation

These are the reasons for judgment for my determination of the questions set out below, pursuant to an order of Martin J of 13 March 2015:-“(a) Were the ACEA Guideline Terms of Agreement incorporated, in full, into the contract between the plaintiffs and the defendant?(b) If so, does clause 4.3 of the ACEA Guideline Terms of Agreement, on its proper construction, operate as a bar to the plaintiffs bringing this proceeding against the defendant?”Background In about 2003, the plaintiffs arranged to have carried out construction work for a distribution centre for a retail clothing and accessory business known as “City Beach”. They engaged Mr Robert Meredith as the architect for the project[1]. In August 2003, Mr Meredith invited Mr James Thomas of the defendant to submit a fee proposal for the provision of civil and structural engineering services for the project[2]. Mr Thomas did so on 27 August 2003, by a document bearing that date (Fee Proposal)[3].[1] Defendant’s Outline of Submissions, Hearing on 12 and 13 May 2015, dated 5 May 2015 (Defendant submissions), at [11][2] Defendant submissions at [12].[3] Defendant submissions at [13]. The Fee Proposal was a relatively brief document[4]. It commenced with a statement that it was a proposal for “…services to be provided and fees to be charged on this project.” It then made representations about the defendant’s quality assurance system and its insurance cover. It nominated a total fee of $49,000 plus GST. There then appeared the following:-“These fees will remain valid for a period of six months from the date of this letter. The commission would be generally in accordance with the ACEA Guideline Terms of Agreement, with terms of payment being 30 days from the date of invoice.Invoices will be submitted at the end of each month during the project, with the invoiced amount being proportional to the amount of work completed at that time.”[4] Affidavit of James Mitchell Thomas, sworn 28 April 2015, Court Document 18, at Exhibit 2. The Fee proposal concluded with the following:-“If you require any further information, or wish to discuss the fee structure or any aspect of this proposal, please do not hesitate to contact the undersigned.” The evidence does not identify any specific acceptance of the Fee Proposal. However, the defendant submitted an invoice dated 17 December 2003, claiming 25 per cent of the agreed fee. Subsequent invoices were submitted, the final invoice (for $3,000) being dated 5 July 2005[5].[5] Affidavit of James Mitchell Thomas, sworn 28 April 2015, Court Document 18, at Exhibit 4. No one associated with the plaintiffs sought to obtain a copy of the terms of agreement referred to in the first of the quoted paragraphs (Guideline Terms). The plaintiffs commenced the present proceedings by Claim and Statement of Claim filed on 27 November 2014. The Claim is framed in negligence. It alleges that the internal concrete floors of the centre have been subject to rotation and deflection, caused by settlement of compressible soft-firm clay beneath the floors. Signs of these difficulties became apparent in about April 2009, and the rotation and deflection accelerated by about 2010.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

There is authority for what might be regarded as a qualification or proviso to the proposition that clear words of reference suffice to incorporate terms so referred to. It is that where a term is more than ordinarily onerous, special notice of it might be required[120].[120] Maxitherm per Buchanan JA at p 569, by reference to Thornton Shoe Lane Parking Ltd [1971] 2 QB 163 and Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433.Conclusion The first of the questions for determination is expressed more broadly than the question which I have considered. Beyond submissions about the ineffectiveness of the language used in the Fee Proposal to incorporate the Guideline Terms (which I have rejected), no submission was made that the balance of the Guideline Terms were not incorporated. I have already referred to the concession made on behalf of the plaintiffs in relation to the second question. Accordingly, I would answer each of the questions for determination in the affirmative.

Ratio Decidendi

Legal Principle Established

Item 10 of the Schedule did not specify a date.Submissions on incorporation of Guideline Terms The submissions for the plaintiffs pointed out that no one signed the Guideline Terms on their behalf, nor were they provided with a copy[13]. They submitted that whether the Guideline Terms were incorporated into the contract was a matter of construction. The reference to them in the Fee Proposal was “vague and imprecise”[14]. The language used in the Fee Proposal was insufficiently clear to incorporate the Guideline Terms into the contract between the parties. [13] Plaintiff’s submissions, dated 5 May 2015 (Plaintiff’s submissions) at [19].[14] Plaintiff’s submissions at [20]. The submissions referred to Maxitherm Boilers Pty Ltd v Pacific Dunlop Ltd[15] for tests to be applied when determining these questions. One is whether a term is so onerous or is otherwise of a kind such as to suggest that it might not reasonably be expected to be part of the terms of the contract; in which case, the issue is whether the accepting party can reasonably be taken to have assented to the particular term. Another is whether terms “are appropriate to a contract of the type in question”; or whether the terms include provisions “which no one would anticipate in a contract of the type in question”. Another is whether the term is an unusual term “because it is more than ordinarily onerous”.[15] [1998] 4 VR 559, at 561, 568-569. The plaintiffs’ oral submissions emphasised that the word “generally” in the Fee Proposal was not sufficiently certain to incorporate clause 4.3; and in the context in which that document referred to the Guideline Terms, it incorporated no more than provisions relating to the payment of fees. Specific attention would have had to be drawn to a limitation clause, such as clause 4.3[16]. A term would be unusual in this context, if it was more than ordinarily onerous[17]; or if it altered common law rights[18]. Reliance was also placed on the decision in D F McCloy Pty Ltd v Taylor Thomsom Whitting Pty Ltd[19] (McCloy). The evidence advanced on behalf of the defendant was not sufficient to show that the incorporation of the Guideline Terms was common industry practice. However it was accepted that, if the Guideline Terms were incorporated, the plaintiffs’ claim would be barred.[20][16] Reliance was placed on a statement by Brennan J in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 (Oceanic), at pp228-229; and on Cheshire & Fifoot’s Law of Contract (10th Aust Ed) LexisNexis Butterworth’s 2012 at [10.70]. [17] Relying on Maxitherm at p 569.[18] Transcript from hearing of 12 May 2015 (T) 1-101.[19] [2000] NSWSC 1142.[20] T 1-93. The plaintiffs made written submissions, intended to be in relation to both questions, but dealing specifically with the question whether clause 4.3 was incorporated into the contract between the parties. By reference to a passage from Cheshire & Fifoot[21], they submitted that the party relying on a limiting term must show that reasonable notice was given of its existence; or that the party which relied on the clause, “did all that was reasonably necessary to bring (it) to the other party’s attention”[22]. They submitted that, in order to rely on clause 4.3 of the Guideline Terms, the defendant “must prove it drew that term to the plaintiff’s attention (or to the attention of their agent)”. There being no evidence to show this, the clause was not incorporated into the contract.[21] Cheshire & Fifoot’s Law of Contract (10th Aust Ed) LexisNexis Butterworth’s 2012 at [10.70].[22] Citing eBay International AG v Creative Festival Entertainment Pty Ltd [2006] FCA 1768 at [19].