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 [2016] QCA 213

PARTIES:

SURFSTONE PTY LTD AS TRUSTEE OF THE IERNA PROPERTY TRUST
ACN 097 808 225
(first appellant)
CORKDON PTY LTD AS TRUSTEE OF THE HICKS PROPERTY TRUST
ACN 097 808 190
(second appellant)
v
MORGAN CONSULTING ENGINEERS PTY LTD
ACN 009 859 081
(respondent)

FILE NO/S:

Appeal No 11570 of 2015
SC No 11423 of 2014

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:


Supreme Court at Brisbane – [2015] QSC 290

DELIVERED ON:

26 August 2016

DELIVERED AT:

Brisbane

HEARING DATE:

16 May 2016

JUDGES:

Margaret McMurdo P and Morrison JA and Atkinson J
Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDERS:

1.   The appeal is dismissed.

2.   The appellants are to pay the respondent’s costs, to be assessed.
CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – EXTRINSIC MATERIALS INCLUDED IN CONTRACT – where the appellants are owners of land on which a distribution warehouse was intended to be built – where the appellants commissioned an architect to design the warehouse – where the architect retained the respondent to perform civil and structural engineering services – where the respondent submitted a fee proposal which stated that the commission of the works “would be generally in accordance with the ACEA Guideline Terms of Agreement” – where the Guideline Terms included a clause limiting the liability of any consulting engineer at the expiration of one year from the completion of the work – where signs of problems became apparent and the appellants commenced proceedings against the respondent five years later for negligence – where the primary judge found that this clause operated as a bar to the appellants bringing the proceeding – where, on appeal, the appellants contended that the Guideline Terms were not incorporated in full into the contract, and that because of the unusual and onerous nature of the term the respondent should have brought it to the attention of the architect – whether the Guideline Terms are taken to be incorporated in full into the contract – whether the respondent should have brought the limitation of liability term to the attention of the architect working for the appellants

EVIDENCE – ADMISSIBILITY – OPINION EVIDENCE – EXPERT OPINION – BASIS OF OPINION – where the appellants objected, at trial, to the admission of three reports from expert witnesses on the basis that they were not truly expert opinion – where the respondent conceded that the report contained factual evidence based on the experience of the authors – where objection to the reports was then pressed on the basis that the evidence was irrelevant – where the learned primary judge relied on Maxitherm Boilers Pty Ltd v Pacific Dunlop Pty Ltd [1998] 4 VR 559 to overrule the objection and admit the evidence as relevant – whether the primary judge erred in admitting the…

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Details
Case
[2016] QCA 213
Decision Date

CaseChat Overview and Summary

In the case of Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd, the appellants, who own land on which a distribution warehouse was intended to be built, commissioned an architect to design the warehouse. The architect, in turn, retained the respondent, Morgan Consulting Engineers, to perform civil and structural engineering services. The respondent submitted a fee proposal which referenced the ACEA Guideline Terms of Agreement, which include a clause limiting the liability of any consulting engineer at the expiration of one year from the completion of the work. When signs of problems became apparent, the appellants commenced proceedings against the respondent for negligence five years later. The primary judge found that the limitation of liability clause operated as a bar to the appellants' proceeding, and the appellants appealed on the grounds that the Guideline Terms were not fully incorporated into the contract, and that the respondent should have brought the limitation of liability term to the attention of the architect.

The court was required to decide whether the Guideline Terms were incorporated in full into the contract, and whether the respondent should have brought the limitation of liability term to the attention of the architect. The court also had to consider the admissibility of evidence from expert witnesses, who provided reports that the appellants objected to on the basis that they were not truly expert opinion and irrelevant. The primary judge admitted the evidence, finding it relevant to the question of whether clause 4.3 of the ACEA Guideline Terms was incorporated by the reference in a fee proposal to those Guidelines.

The court found that the evidence from the expert witnesses was relevant to the question of whether clause 4.3 was incorporated in the retainer, as it was part of a set of terms that was commonly used in retainers of engineers in the years leading to when this retainer was made. The court also found that the appellants' challenge to the admissibility of the evidence was without merit, as the evidence could not be considered inadmissible simply because it was based on the experience of the authors. The court concluded that the primary judge did not err in admitting the evidence.

The court dismissed the appeal and ordered that the appellants pay the respondent's costs, to be assessed. The court agreed with the orders proposed by Morrison JA and with the reasons given by his Honour.

Orders

Orders of the court

1. The appeal is dismissed.

2. The appellants are to pay the respondent’s costs, to be assessed.

Background

Background to the litigation

It will be apparent in the reasons which follow, that several issues overlap.Relevant facts As at 2003 Mr Meredith was an experienced architect, having provided architectural services to a business named City Beach since at least 1995. The warehouse distribution building was constructed by the owners for City Beach, and Mr Meredith was the architect retained to design the building. Mr Meredith sought the assistance of Morgan to identify a suitable geotechnical engineer for the building project. In time that led to a request from Mr Meredith to Morgan, to submit a fee proposal for the civil and structural engineering services on the project. The fee proposal referred to the ACEA Guideline Terms. Mr Meredith did not have a copy of those terms, had never read them, and did not seek a copy. Morgan did not provide a copy to Mr Meredith or the owners. The fee proposal[4] was sent on 27 August 2003, attached to a facsimile sheet which said: “Attached is the fee proposal for the above project as requested”. It commenced with the statement that it was a proposal for “… services to be provided and fees to be charged on this project.” It then set out the “Scope of Works” for the design, documentation and inspections of the project.[4]AB 160. It then made representations about Morgan’s quality assurance system and insurance cover. It nominated a total fee of $49,000 (plus GST), split into three areas. 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.”[5][5]Emphasis added. 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.” There was no evidence as to any formal acceptance, oral or otherwise, but it was not in dispute that Morgan was retained and did carry out the services. A total of five invoices were rendered,[6] and paid. The first was for “25% of agreed fee”,[7] and the second noted it was for “80% Completion of design and documentation of structural and civil works for the above project”.[8][6]Commencing on 17 December 2003 and ending on 5 July 2005.[7]AB 166.[8]AB 167.The evidence of Cox, Motto and Quigley The evidence of Mr Cox and Mr Quigley was drawn in the form of expert reports. Objection was taken to the admission of those reports, on the basis that it was not truly expert opinion. The admission of them was initially pressed as expert reports, but ultimately Senior Counsel for Morgan conceded that they really contained factual evidence based on the experience of the authors.[9][9]AB 28 line 39.

Evidence

Evidence Before The Court

There was no evidence as to any formal acceptance, oral or otherwise, but it was not in dispute that Morgan was retained and did carry out the services. A total of five invoices were rendered,[6] and paid. The first was for “25% of agreed fee”,[7] and the second noted it was for “80% Completion of design and documentation of structural and civil works for the above project”.[8][6]Commencing on 17 December 2003 and ending on 5 July 2005.[7]AB 166.[8]AB 167.The evidence of Cox, Motto and Quigley The evidence of Mr Cox and Mr Quigley was drawn in the form of expert reports. Objection was taken to the admission of those reports, on the basis that it was not truly expert opinion. The admission of them was initially pressed as expert reports, but ultimately Senior Counsel for Morgan conceded that they really contained factual evidence based on the experience of the authors.[9][9]AB 28 line 39. The objection to their receipt was then pressed on the basis that the evidence was irrelevant. Relying on Maxitherm Boilers Pty Ltd v Pacific Dunlop Pty Ltd[10] the learned primary judge overruled the objection and admitted the evidence as being relevant to the question whether clause 4.3 of the ACEA Guideline Terms was incorporated by the reference in a fee proposal to those Guidelines; that is, whether, for the period leading to the retainer in question, other engagements of consultant, civil or structural, engineers usually or commonly were on the terms of the ACEA Guidelines.[11][10][1998] 4 VR 559, per Calloway JA at p. 562; per Buchanan JA at pp. 569-570. (Maxitherm)[11]AB 40. As for Ms Motto’s affidavit, objection was taken on the basis that the whole of it was irrelevant, and paragraph 12 was impermissible hearsay and lacked detail. The objection to paragraph 12 was overruled on the basis that what it contained was based on a mixture of first-hand knowledge and hearsay, which (in the latter case) affected its weight but did not make it inadmissible. The learned primary judge held that the balance of the affidavit went to: (i) the use of the particular version of the Guideline Terms;[12] and (ii) whether clause 4.3 should be regarded as an unusual clause in the sense described in the preceding paragraph above.[13][12]A matter put in issue in the Reply.[13]AB 49. Before this Court, the challenge to the admission of the evidence of Ms Motto, Mr Cox and Mr Quigley (relevant parts of which are set out below) was pressed, on the basis that the evidence was irrelevant. For several reasons I do not accept that contention. First, one of the central issues to be decided, as part of the consideration as to whether clause 4.3 was incorporated in the retainer, was whether the clause was unusual or onerous. The fact that it was part of a set of terms that was commonly used in retainers of engineers in the years leading to when this retainer was made, was plainly relevant to that assessment. The fact that the witnesses could not speak beyond their own practices may have affected the weight of the evidence, but did not make it inadmissible.

Decision

Reasons for decision

The conclusion reached above means that it is not necessary to consider Morgan’s notice of contention. In any event the distinguishable factual circumstances in Hyder mean that it is of no assistance in resolving the issue raised in that notice.Conclusion and orders For the reasons above the appeal must be dismissed. There is no reason why costs should not follow the event. I would propose the following orders:-1.The appeal is dismissed.2.The appellants are to pay the respondent’s costs, to be assessed. ATKINSON J: I agree with the orders proposed by Morrison JA and with the reasons given by his Honour.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.