SWF Hoists & Industrl Equipmt v Woolcock Engrng No. Scgrg-99-735 Judgment No. S353

[1999] SASC 353

SWF HOISTS & INDUSTRIAL EQUIPMENT PTY LTD

v
WOOLCOCK ENGINEERING PTY LTD
[1999] SASC 353

Magistrates Appeal

1 PRIOR J         The appellant instituted proceedings in the Magistrates Court against the respondent to recover money due under a contract between the parties whereby the appellant agreed to design, manufacture, deliver, install, commission and test three overhead travelling cranes on land tenanted by a company intending to transfer its business operations to that site.  By the contract, delivery of the cranes was to occur within eight to 10 weeks "from receipt of approved for assembly drawings".  Detailed drawings were supplied on 10 August 1995.  They were approved the following day. 
2 The respondent complained of a failure to deliver within the time provided for by the contract.  The appellant, whilst admitting that the cranes were not delivered until well after 10 weeks from the contract, insisted that the non-delivery within the time prescribed by the contract was due to the respondent’s failure to have runway beams aligned to within acceptable tolerances rendering it impossible to install the crane rails and cranes on the beams.  It was a term of the contract that the appellant would "erect the cranes in runway rails supplied, installed and straightened" by the appellant’s personnel.  End stops were to be attended to by others, but more significantly, the runway rails were to be fixed onto runway beams that the respondent had to construct and locate in accordance with the approved drawings.  The crane span nominated in the drawings was 24.552 metres.
3 An engineer employed by the appellant deposed to visiting the site in August, September and early October, to find the beams were not aligned to within acceptable tolerances.  Later in October, the engineer discovered that the beams were then sufficiently aligned to accept a crane constructed to a span of 24.562 metres.  An agreement to vary the original approved span of 24.552 metres was reached on that day between the engineer and the respondent’s supervisor, James Woolcock. 
4 The magistrate held that the appellant was in breach of its obligation to deliver the first two cranes within the time prescribed by the original contract.  He found that there was no impediment to the appellant complying with the contract with respect to these  two cranes. The appellant was found to be aware of the tenant’s plans.  The magistrate held that the respondent was entitled to set off against the appellant’s claim the tenant’s claim for additional rent and running expenses incurred because it could not occupy the premises on time.
5 The magistrate also found in favour of a counter-claim by the respondent that the appellant was in breach of contract by not supplying all new parts on one of the cranes.  The appellant has not pursued a ground of appeal with respect to this issue.
6 In his reasons, the magistrate made a number of particular findings.  They included that the contract provided for delivery of the cranes "no later than the end of October 1995".  One of the grounds of appeal is that this finding is erroneous.  It is said that the magistrate should have found that the contract called for the delivery and installation of the cranes between 6 and 20 October 1995 and that at no time in that period were the runway beams properly aligned to allow the crane beams to be cut to size such that they would have fitted.  Another particular finding was that the cranes could have been delivered at any time in October 1995 and the beams adjusted to accept the actual span.  The magistrate’s view was that the appellant’s decision not to deliver the cranes pursuant to the contract was a unilateral one and that this constituted a breach of the appellant’s contract resulting in the respondent incurring damages to its tenant in the same sum as the appellant sought in its claim against the respondent.  Those damages being reasonably foreseeable in all the circumstances of the formation of the contract, the magistrate ordered the respondent’s damages be set off against the appellant’s claim.
7 The appellant’s submission was that the contract was not just for delivery of cranes but for the installation, commissioning and testing of them.  The performance of the appellant’s contractual obligations was dependent upon the provision by the respondent of beams properly aligned and fitted to act as bearers for the installation of the rails and the cranes.  The respondent had to do all that it could reasonably do to assist in the performance of the contract, attending to its obligations within a reasonable time.
8 It was said that the effect of the evidence was that the respondent was in breach of the obligation to provide beams upon which the rail and crane of the dimensions ordered could be installed.  I think it is correct that it was implicit in the magistrate’s findings that he accepted that the beams were not aligned and within dimensions which would carry the rail and cranes before 18 October 1995.  I agree with the submission that the agreement reached on 18 October 1995 to alter the crane span confirmed that the respondent had not earlier complied with its obligation to provide beams on which the rails and cranes could be installed.
9 The magistrate’s reasons suggest that he accepted evidence called for the respondent as establishing that had the cranes been built in accordance with the original specifications the runway beams could have been adjusted to accommodate the cranes.  His Honour referred to the admissions made by Mr Anderson, an employee of the appellant, that had the crane been made to the original specification, having regard to tolerance allowed on the pillar stalls, it would have fitted the runway beams, provided the beams were aligned so that the distance between them was constant along their entire length. The appellant says that the magistrate was not entitled to take that view of Anderson’s evidence.  He was incorrect in concluding that the appellant could have, and should have provided the cranes by the time it had undertaken to deliver them.   I think the appellant is correct.  Mr Anderson made plain, in his evidence, that the centre line of the runways did not permit of installation within time against the original crane span specification.  The evidence called by the respondent, in particular that of the witnesses Woolcock and Vissher, did not support the findings the magistrate made either. 
10 The magistrate said that the appellant’s responsibility under the contract was to supply the crane to specifications within time and that if, through no fault on the appellant’s part, the cranes did not fit, that would have been the respondent’s concern.  The approach overlooks the totality of the contract.  The magistrate could not properly consider the case on the basis that the appellant’s obligation was limited to the delivery of cranes to the site.  The contract extended to an obligation to install, commission and test the cranes.  The appellant’s contractual obligations were subject to the respondent meeting its obligations.  Where each party’s obligation "is conditional on performance by the other, neither can complain of non-performance by the other when the condition governing the other’s obligation goes unfulfilled."
11 The evidence clearly established that the appellant’s obligation to install was incapable of being discharged within the time specified for delivery. Thus the respondent was not entitled to complain of the failure to deliver within 10 weeks because it had failed to provide runway beams in a position to take the cranes as initially specified with a span of 24.552 metres. 
12 An item of evidence of particular significance is that when the appellant was about to commence assembly of the first crane, it sought confirmation of the crane span "in light of the problems with the crane runway beam alignment".  There was no response to that request.  The appellant was discharged from any obligation then fairly dependent upon the respondent discharging its obligation to locate runway beams complying with the drawings.  The time for delivery was no longer eight to 10 weeks from 11 August given the respondent’s continuing failure to discharge it obligation.   The respondent had not performed its concurrent obligation.  Therefore the appellant was not in breach of the obligation to deliver in eight to 10 weeks .  By its own conduct the respondent had lost the right to rely on the essentiality of the time set for completion of the contract which, though speaking of delivery within eight to 10 weeks had to be understood as a reference to time within which the vendor’s entire obligations under the contract would be discharged.  This was a case of mutual or concurrent obligations.  Performance by the appellant of its obligations was conditioned upon the performance by the respondent of its obligation with respect to the beams .  Time was plainly an essential aspect to the obligations on each of the parties .  The respondent could not sue for an alleged breach of the time clause because of its failure to carry out its part of the bargain .    The evidence clearly established that the appellant was "not presently incapacitated from future performance and (was) not indisposed to do, when the time (came), what the contract (required)" .  A variation of the contract occurred on 18 October.  Before then there was not a substantial incapacity on the appellant’s part or a definitive resolve or decision against the performance of its obligations .   Thus the counter-claim, based upon the failure to deliver, failed.  The magistrate was in error in finding the appellant in breach of its obligations given the respondent’s omission.
13 I therefore allow the appeal and enter judgment for the appellant on the claim and that part of the counter-claim relating to the losses said to have been incurred by the tenant from the appellant’s failure to comply with the time clause in the contract between the parties.