Tilley Air Conditioning Pty Limited v Traminer Pty Limited

[2010] NSWDC 331

CITATION:	Tilley Air Conditioning Pty Limited v Traminer Pty Limited [2010] NSWDC 331
JUDGMENT DATE:	9 December 2010
JURISDICTION:	District Court of New South Wales
JUDGMENT OF:	Cogswell SC DCJ
DECISION:	Judgment for the defendant for $97,483.23
CATCHWORDS:	CIVIL LAW - contract - fundamental components of contract agreed upon - contract for defendant to undertake certain work for plaintiff for an agreed lump sum - 6 aspects of contract in dispute - what are the contract documents? - what are the terms of the contract? - under the terms of the contract is the plaintiff entitled to recover monies from the defendant with respect to reduction in the scope of its works? - was the executed contract a complete contract, or was the demolition a separate and divisible contract? - whether the AHW specifications formed part of the contract? - the date the contract was formed? - other issues in dispute - methodology of valuing claims - whether the defendant undertook temporary works - value of the temporary works - whether contract documents provided for ductwork - whether the ductwork was modified at the instruction of the plaintiff and by the defendant - the value of the ductwork not undertake n by the defendant - whether the experts allowed for the ductwork in their reports - if there was a divisible contract what were the terms? - who is contractually liable for the demolition? - whether there was a term that the defendant would perform demolition work up to a value of $65000 - whether the defendant breached or repudiated the contract by failing or refusing to undertake the entire demolition - quantum of damages suffered by each party relating to the demolition work - whether the defendant could succeed under a claim under the Trade Practices Act based on alleged representations - the applicable rate for the ductwork - the amount of ductwork deleted from the scope of the work - whether the defendant was unjustly enriched by receipt of payment for works omitted from the contract - whether the defendant is liable to pay additional labour costs - whether the plaintiff committed misleading and deceptive conduct - whether the defendant is entitled to damages claimed in the amended first cross claim - whether the plaintiff engaged in unconsionable conduct - credibility and the weight to be placed on the evidence of the parties and the expert reports
LEGISLATION CITED:	Trade Practices Act 1997 (Cth) s 51A, s 52
CASES CITED:	Akron Securities a Illiffe (1997) 41 NSWLR 353 AMP Services Limited v Manning [2006] FCA 256 Brandi v Mingott (1976) 12 ALR 551 BB Constructions (Aust) Pty Limited v Brian A Cheeseman Pty Limited (1994) 35 NSWLR Codelfa Construction Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337 Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 Erle v Castlemaine District Coummunity Hospital [1074] VR 722 Franklins Pty Limited v Metcash Trading Limited [2009] NSWCA 407 Global Sportsman Pty Limited v The Mirror Newspapers Pty Limited (1984) 2 FCR 82 Jones v Dunkel (1959) 101 CLR 298 Kitzbeau Pty Limited v WG and B Pty Limited (1995) 184 CLR 281 Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 Manly Council v Byrne [2004] NSWCA 123 Mister Figgins Pty Limited v Centrepoint Freehold Pty Limited (1981) 36 ALR 23 Reg Russell Sons Pty Limited v Buxton Meats Pty Limited (1994) ATPR(digest) 46-127 re Creative Landscape Design Centre Pty Limited and Ors [1989] FCA 370 re Gilda Johnstone and Murray Robert Johnstone v Delata Pty Limited and Ors [1993] CRA 79 Webb Distributors (Aust) Pty Limited v The State of Victoria and Anor (1993) 179 CLR 15
TEXTS CITED:	"Building and Construction Contracts in Australia" Dorter and Sharkey, 2nd ed "Hudsons Building and Engineering Contracts", Duncan Wallace, 11th ed
PARTIES:	Tilley Air Conditioning Pty Limited Traminer Pty Limited
FILE NUMBER(S):	2006/292554
COUNSEL:	Mr T Bland for the plaintiff Mr DM Loewenstein for the defendant

JUDGMENT

INTRODUCTION
1. Bill Tilley and Darren Beecroft had a successful working relationship for some ten years. Each had his own company. Mr Tilley ran a company called Tilley Air Conditioning Pty Ltd which supplied and installed mechanical services such as air conditioning in industrial and commercial buildings. Mr Beecroft ran a company called Traminer Industries Pty Ltd which supplied and installed metal ductwork for air conditioning systems. Mr Beecroft had been in his business for some twenty-two years and Mr Tilley had been in his business for some fifty-five years. When it secured a major job Tilley would often retain Traminer as a contractor to do the metal ductwork.

2. One such major project was a refurbishment of the TAB building in Ultimo. Tilley was awarded the contract by the builder, Prime Constructions. Tilley asked Mr Beecroft to quote on the job but he was too busy. Some months went by and Tilley was still looking for a contractor to undertake the ductwork and entered into discussions with Mr Beecroft on behalf of Traminer. Traminer was awarded the contract and started work. Some months into the contract issues began to arise between Tilley and Traminer. There were discussions between the parties but the problems were not resolved. The good working relationship, which had lasted over the years, fractured. Tilley commenced a case in this Court suing Traminer and Traminer has cross-claimed against Tilley.

3. Tilley’s statement of claim pleads a contract between itself and Traminer for Traminer to supply and install air conditioning ductwork, insulations and to undertake demolition work. Tilley said Traminer breached that contract by refusing to undertake the demolition work which Traminer had agreed to do, and then by refusing to make adjustments for the costs incurred by Tilley when it retained another contractor to do the demolition work. Tilley also said Traminer refused to make allowance for variations in the contract work, which had the effect of reducing the amount of work Traminer had to do and therefore the price. Tilley claims that Traminer owes it over $400,000: some $60,000 for demolition work undertaken by the other contractor and some $370,000 for variations to and reductions in the scope of works as well as some temporary works.

4. Traminer also pleaded a contract between itself and Tilley for the supply and installation of air conditioning ductwork, insulations and certain demolition work. Traminer said, though, that its obligation under the contract was to do demolition work only up to a value of $65,000 and that it would be compensated for demolition work over that amount. Traminer said that Tilley had requested a lot of variations in the work which Traminer undertook. Traminer denied that it breached or repudiated the contract. Traminer also said that it entered into the contract relying on certain statements made by one of Tilley’s employees and these statements were misleading and deceptive. In its cross-claim Traminer said that the lump sum contract was $946,000 and despite performing all the work Tilley had underpaid it by some $95,000. Traminer had also performed the variation work which Tilley had requested and it was still owed some $220,000. Overall Traminer said that it was owed nearly $320,000 by Tilley.

5. The case was conducted before me in stages and altogether occupied nearly four weeks of court time. Early in the proceedings counsel for each of the parties, Mr Timothy Bland for the plaintiff and Mr D M Loewenstein for the defendant, reduced into writing the issues which they regarded as needing to be determined by me in the litigation. The various written submissions and the oral submissions were directed to those issues. The list is comprehensive and I propose to deliver my judgment by making determinations in respect of the issues. That process I believe will resolve the litigation.

PERSONS INVOLVED
6. It is convenient to list some of the people and corporations that will be referred to in the course of the judgment. They are as follows:
1 Tilley Air Conditioning Pty Ltd is the plaintiff and cross-defendant
2 Traminer Industries Pty Ltd is the defendant and cross-claimant
3 William Tilley is a director of the plaintiff
4 Darren Beecroft is a director of the defendant
5 Brad Aitken was the plaintiff’s initial project manager on the site
6 John Hopkins was the plaintiff’s project manager for two weeks when Brad Aitken was away
7 Cameron Howes was the plaintiff’s project manager from mid-December 2001 on the site
8 Remy Logel was a design engineer employed by the plaintiff
9 Michael Auld was a principal of SydFab Pty Ltd, manufacturer and supplier of ductwork
10 Ian Summers was the Traminer’s foreman onsite from September 2001 to May 2002
11 Glen Willmott was Traminer’s foreman onsite from May 200212 Michael Sturgess was a quantity surveyor called to give opinion evidence on behalf of Tilley
13 Joseph Maric is the commercial manager of Equilibrium Air Conditioning and was called to give opinion evidence for Traminer
14 TAB Ltd was the client for the project
15 APP Projects Pty Ltd was the project manager
16 AHW Engineering Planning & Management was the mechanical consultant to the project
17 Prime Constructions was the project builder

GENERAL CONTRACT ISSUES
Introduction
7. Both parties assert that they were in a contractual relationship with each other. The fundamental components of that contract are common ground. It was a contract for Traminer to undertake certain work for Tilley at a site in Harris Street, Ultimo. Tilley would pay Traminer an agreed lump sum for that work. The work comprised the supply and installation of air conditioning ductwork and of insulations and the undertaking of demolition work by Traminer. It was also common ground that the terms of the contract were partly written and partly verbal. Beyond those fundamental components many other aspects of the contract are in dispute. There has been disagreement over -
· some of the documents comprising the written part of the contract
· the date the contract was made
· whether there was more than one contract
· certain important terms of the contract.
·
8. The areas of dispute, so far as general contractual issues are concerned, was put in writing by counsel in the list of issues. There were six areas concerning the contact and they are these -
Issue 1. What are the contract documents?
Issue 2. What are the terms of the contact?
Issue 3. Under the terms of the contract is the plaintiff entitled to recover monies from the defendant with respect to reduction in the scope of its works?
Issue 4. Was the executed contract a complete contract, or was the demolition a separate and divisible contract?
Issue 5. Whether the AHW specifications formed part of the contract?
Issue 6. The date the contract was formed?

9. Some of those areas of dispute effectively resolved themselves during the course of this case, but there remain in issue some fundamental aspects of the contract which need to be resolved by me. Essentially I have to determine whether certain documents were part of the contract and what certain important terms of the contract were.

ISSUE 1: WHAT ARE THE CONTRACT DOCUMENTS?
10. The documents over which the parties differ as being part of the contract comprise:
. Which set of plans?
. Tilley’s purchase order 15 October 2010
. The specifications.

11. As Mr Bland said at [11] of his written submissions of 13 November 2008, the:

“ question that arises between the parties is which set of plans constituted the tender plans ”

Mr Bill Tilley from Tilley’s said the tender plans were a set annexed to his affidavit of 22 December 2006 as BT8. He said that Cameron Howes told him that Darren Beecroft “had requested drawings and documents from him regarding the TAB project.” Mr Tilley went on to say that Mr Howes “produced the documents - as I say on a request. He produced the documents and gave them to me. I then put the documents at the reception desk - our reception desk - and the receptionist rang Mr Beecroft to tell him that.“ I then asked Mr Tilley whether he was there when the receptionist phoned. Mr Tilley answered as follows-

“Yes. Rang Mr Beecroft to tell him that the drawings and documents were available, and later in the day that drawings and documents were gone. I didn’t see Mr Beecroft come in but they were gone.”

12. Darren Beecroft said in his affidavit, which became exhibit 7, at clause 19 that “somebody from Tilley’s office (I do not recall who) telephoned me to say that the copies of the plans were ready for collection. I then attended Tilley’s office, which at that time was located at Brookvale, to collect the plans.”

Mr Beecroft said that tab 1 of his affidavit, which was part of DJB “is a copy of the plans that Remy gave me during the meeting referred to in the preceding paragraph.” In the preceding paragraph, which was clause 19, Mr Beecroft had said that at Tilley’s office he “bumped into Remy Logel...who worked for Tilly, and we had a conversation in words to the effect:

REMY: ‘Here are the plans. Have you priced this job?’

ME: ‘Thanks for the plans. No, I have not priced it.’

REMY: ‘Tilley is in the final stage of winning the job. Would you like to give us a price?’

ME: ‘Yes, no problem. I will get back to you.’ ”

13. Confronted in cross-examination by the fact that the plans annexed to his affidavit could not have been in existence when he was asked to quote for the project, Darren Beecroft agreed that the plans at tab 1 of DJB 1 were not the plans given to him by Remy Legal at the meeting. Dealing with which drawings he had quoted on Mr Beecroft said in evidence at T 543-

“I quoted off the drawings that were given to me and I think I’ve actually stated there that we agree with Mr Tilley’s plans and that’s what the take-offs were done on, and we agreed on that. I agreed, and that’s what we would have used .”

14. Traminer did not attempt to suggest that the concession was wrong. The conclusion is irresistible and I find, as invited by Mr Bland, that-

“ The plaintiff’s version of the tender plans located at BT8...should be preferred and accepted as the tender plans .”

15. Mr Bland argues that the confusion of Mr Beecroft over the plans, and the many assertions in his affidavit about the version of the plans given to him by Remy Logel, must damage his credibility. Mr Loewenstein argues that Mr Beecroft’s credibility is not so affected. The question of Mr Beecroft’s credibility I will deal with later in this judgment.

ISSUE 2: WHAT ARE THE TERMS OF THE CONTRACT?

16 As Mr Bland pointed out, at clause 25 of his submissions dated 30 November 2008, there are “two issues that arise between the parties in respect to the terms of the contract. They are firstly, the terms of the contract relating to demolition...and the terms of the contract relating to positive and negative variations.”

17. For reasons I will come to, I find that the contract included the two terms pleaded by Tilley in clauses 7 and 8 of its amended statement of claim. Also, for reasons I will come to, I find that the contract included the terms pleaded by Traminer in clauses 5(b) and 6 of its cross claim.

ISSUE 3: UNDER THE TERMS OF THE CONTRACT IS THE PLAINTIFF ENTITLED TO RECOVER MONEYS FROM THE DEFENDANT WITH RESPECT TO REDUCTION IN THE SCOPE OF ITS WORKS?

18. Tilley’s position is that this issue is resolved on the pleadings. It points to clauses 7 and 8 of its amended statement of claim filed on 8 May 2006 which are in the following terms-

“ 7. Further or alternatively, it was an express and/or implied term of the Contract that if any works were omitted and/or varied from the Contract, then the amount due to the Defendant would be adjusted by the value of the works omitted or varied.

8. Further or alternatively, it was an express and/or implied term of the Contract that the contract work could be varied, in which case the Contract price would be adjusted between the Plaintiff and the Defendant in accordance with an amount agreed between them, or default of agreement, a reasonable sum.”

Tilley then points to clause 5 of Traminer’s defence which reads as follows-

“ 5. Traminer admits paras 7 and 8 of the amended statement of claim.”

Mr Bland argues in his written submissions of 13 November 2008 as follows-

“31. Therefore, the plaintiff submits that it was a term of the contract that the contract price was subject to rise and fall for both additional work completed by the defendant, which was not included in the original scope of works, as well as work taken away from the defendant or work not completed by the defendant that originally formed part of the original scope of works. An adjustment was thereafter to be made to the contract price in the terms as pleaded in paras 7 and 8 of the amended statement of claim.”

19. Tilley claims that some of the work that Traminer originally agreed to do in exchange for the lump sum was not required, so that the scope of the work was reduced and Traminer should accordingly, in effect, reduce its price by the value of the reduction.

20. Traminer’s position is that whilst it was entitled to claim for an increase in the scope of works, there was no evidence - documentary, verbal or course of conduct - to support any entitlement of the plaintiff to obtain from the defendant the value of any reduction in the scope of work.

21. Traminer went to some effort to avoid what would appear to be the fairly obvious consequence of admitting clauses 7 and 8 of the amended statement of claim. The consequence was that those pleaded terms did not require proof by evidence.

22. First, Mr Loewenstein argued that his client’s admissions of clauses 7 and 8, when read in context, are admissions with respect to removal of old ductwork or demolition only. He points to the references in clauses 5 and 6 of the amended statement of claim to demolition and removal of old ductwork.

23. I do not accept that argument. Clauses 4 to 8 inclusive of the amended statement of claim plead terms of the contract. Each pleads a distinct term, sometimes in the alternative. The references in clauses 5 to 6 to demolition and removal of old ductwork do not influence, in my opinion, the meaning of the terms pleaded in clauses 7 and 8 of the amended statement of claim. Even if the context argument had some force, the context must include clause 4, which relates to the works generally, and is not limited to demolition or removal.

24. Mr Loewenstein next argues that clause 12 of the amended statement of claim, which is denied by his client, is of relevance in the limiting of clauses 7 and 8 to demolition. Clause 12 of the amended statement of claim reads as follows-

“ 12. Further, or alternatively, the contract sum is to be adjusted in favour of the plaintiff in respect to variations in the scope of works which resulted in some works not being carried out by the defendant and/or a reduction in the scope of works and/or temporary works having to be undertaken. ”

I have not included reference to the particulars given to that paragraph. Mr Loewenstein argued, in clause 14 of his written submissions of 24 November 2008, that if paras 7 and 8 “were intended to refer to all the works and not just demolition works, then that would render para 12 ... of no utility.”

25. I do not accept that argument. Clauses 7 and 8 plead terms of the contract. Clause 12 pleads facts: variations, reductions in scope of works and a legal consequence - the contract sum is to be adjusted. The legal consequence follows from the operation of cl 7. All clauses have their utility.

26. Mr Loewenstein refers to what was said by him regarding an amendment to the defence. The amendment was foreshadowed but not pressed after Mr Bland foreshadowed an adjournment application if the application was allowed. The consequence of the amendment was made abundantly clear by Mr Loewenstein at T 71 where he said as follows-

“Your Honour, I should just add that the broad propositions of law that were stated in relation to lump sum contracts are not resiled from as a matter of principle, but insofar as there have been admissions made, and with the spectre of a possible application from adjournments, we are not proceeding to press the issue about lack of entitlement to deduct moneys back.”

27. I accept Mr Bland’s submission that the defendant is bound by that conduct.

28. Mr Loewenstein further argues that his client’s admission of clauses 7 and 8 is inconsistent with its denial of clause 12 of the amended statement of claim but in my opinion this argument is convincingly met by Mr Bland at clause 6 of his written submissions dated 26 November 2008 where he said as follows-

“ Para 12 of the statement of claim is pleaded as a consequence of the terms pleaded, that is, the contract price is varied. Para 12 is denied by the defendant as it did not intend to deny the terms, but rather the amounts said to be adjustable...Any event it was made clear on the transcript and the defendant did not amend their pleadings, they are now bound by their conduct .”

As I said, I accept that submission. There is, in my opinion, no inconsistency between the admission of clauses 7 and 8 and the denial of clause 12.

29. I am not assisted by general submissions about the nature of “rise and fall” clauses. It is the pleadings in this case that I am interpreting. The intention of this pleading is made manifest at T 71. I am not suggesting that Mr Loewenstein was, himself, the pleader of the defence.

30. Mr Loewenstein goes on to argue that clauses 7 and 8 plead terms which do not impose an obligation on his client. That may arguably be true of clause 7 but clause 8 pleads a term that in the event of a variation “the contract price would be adjusted between the plaintiff and the defendant”.

31. Mr Loewenstein goes on to argue that the breach of contract referred to in clause 11 of the amended statement of claim is not a breach of the terms pleaded in clauses 7 and 8. That is true. It seems to me that it is clause 12 which pleads the relief related to the contractual obligations pleaded in clauses 7 and 8.

32. Mr Loewenstein’s fallback position was to acknowledge that clauses 7 and 8 had been admitted but to argue that they pleaded terms of the contract that provided for omissions or variations by mutual agreement between the parties. Mr Loewenstein said in his submissions dated 21 December 2009 that to suggest that Tilley after commencement of the works or at any stage of the works being undertaken by Traminer “could remove a large portion of the works without agreement is a proposition not only unsupported by any evidence in the interests of the plaintiff but also unsupportable on the premise of any sound commercial efficacy in dealings between two commercial entities. No admissions have been made by Traminer as to any such allegation in any event.”

33. Mr Loewenstein developed the argument about mutual agreement in oral submissions on 18 January 2010. He said at T 14 of the transcript of that day that it would be an “unreasonable interpretation” of the pleaded clauses to construe them as meaning that “two commercial entities reaching an agreement and admitting that an agreement has been reached to the effect there could be a unilateral withdrawal of works without agreement by one party to the contract at any point of time including the conclusion of the works and such withdrawal ...that if I could call it unreasonable interpretation could include provision of contract works to another subcontractor and that a party would agree to that contractual arrangement.”

34. The essential question is what clause 7 “really means” as was said by counsel in the oral submissions but Mr Loewenstein’s stated position at T 71 at the commencement of the proceedings must be seen in the context of his proffered interpretation of clause 7. I do not accept his argument. It confuses variations to the contract with a provision in the contract allowing for variation of works.

35. In Building and Construction Contracts in Australia, Dorter and Sharkey, 2nd ed, the authors at [8.10] say that the word “variation” is “generally employed in the context of building and construction contracts to denote one of two types of change”. The first they describe as signifying “a change in the contractual terms upon which the relevant work is to be carried out.” The authors continue -

“ Secondly, and more commonly, the word is used to signify an alteration, whether by addition or omission, to the work which the contractor is required by the contract documents to perform .”

A similar distinction is made by Duncan Wallace QC, the author of the 11th ed of Hudsons Building and Engineering Contracts at p 877 [7.0001]. Hudson’s makes the distinction even sharper at p 46 at [1.091] where, after discussing variations in the terms of a contract between parties, the author relevantly says-

“ None of the forgoing discussion, which relates to changes or variations made to the contractual provisions of a contract (including, if necessary, the description of work undertaken) is, however, applicable to variations of the work ordered under the express power conferred on the owner...’variations’...which is found in nearly all standard forms of construction contract .”

The emphasis is in the original.

36. It seems to me to be clear from clauses 7 and 8 that what is being pleaded by Tilley and admitted by Traminer are terms which provide, not for variation of the contract but for variation of the contract works. I accept Mr Bland’s submission at T 28 of the transcript of 18 January 2010 where he said that the terms pleaded mean that “there is a unilateral power within the contract to vary the works, the contract works.”

37. Mr Loewenstein argued that even if the plaintiff had a power to reduce the scope of works it was not entitled to recover monies for any such reduction. This was because Tilley purported to exercise such power after the event or at the conclusion of the contract. Mr Loewenstein argued over T 38-39 in his oral submissions on 18 January 2010 that “the normal way is for there to be a claim or notification during the process of the works” and not an adjustment at the end of the project. Mr Loewenstein referred to a letter dated 19 June 2003 from Tilleys to Traminer which appears at tab 35 of exhibit 7, Mr Beecroft’s affidavit at p 6. Mr Loewenstein said that this was an “attempt at reconciliation between the variations claimed by Traminer and the amount that it asserts Traminer owes them back because of the reduction in the scope of works” (T40, 18 January 2010).

38. In his written submission in response which became MFI 26, Mr Bland pointed to the evidence led on behalf of Traminer which acknowledged that the terms of the contract permitted a reconciliation at the end of the project. It referred to evidence in the affidavit of Mr Willmot, exhibit 9, where Mr Willmot said as follows:

“ 11. When I first became the foreman I would ask for written site instructions as in my previous employment as foreman. I would be given written instructions (these are written notes confirming the work required to be done in addition to any work shown on construction drawings) but was told by Cameron words to the effect:-

‘They get fixed at the end of the job’.

12. I then spoke to Darren about the fact that my instructions were not in writing and had a conversation in late May or early June 2002 in words to the following effect:

Me: ‘Darren I am not being given anything in writing, they said that it gets fixed at the end.’
Darren: ‘Just do the work, we have a good relationship with Tilley’s. ’

39. In Mr Beecroft’s affidavit of 27 July 2007, which became exhibit 7, over clauses 204-207 he outlines a discussion he had on 18 January with Cameron Howes about “non payment” for work performed by Traminer. It is clear from at least one of the items (number 16 over pp 41-42) that Traminer was prepared to acknowledge deductions from the works in a reconciliation process. There was also a reference to an affidavit produced on behalf of Tilley. It was Cameron Howes’ affidavit of 16 January 2007, which became exhibit B1. At clause 18 of that affidavit Mr Howes said as follows:

“ 18. It was a common occurrence during the works that I would give oral instructions to Mr Beecroft of Traminer to change the scope of works. Sometimes these changes would result in increased work for Traminer and sometimes it would result in less work for Traminer .”

Mr Bland points out that this assertion was not challenged by Mr Beecroft in his affidavit dated 24 July 207 where at clause 282 he responded to Cameron Howes’ affidavit.

40. Mr Loewenstein quite properly directed my attention to the Court of Appeal decision in BB Constructions (Aust) Pty Limited v Brian A Cheeseman Pty Limited (1994) 35 NSWLR 227 which is some authority for the proposition that the expression “variations” can include a reference to back charges.

41. I am satisfied on the balance of probabilities from this evidence that Traminer has acknowledged that there was a common understanding between the parties that variations to the works made during the course of the performance of the contract would be the subject of a process of reconciliation at the end of the project. This common understanding amounts to at least an implied if not an express term of the contract.

42. Accordingly I find that under the terms of the contract, Tilley was entitled to recover money from Traminer with respect to the reduction in the scope of works.

ISSUE 4: WAS THE EXECUTED CONTRACT A COMPLETE CONTRACT OR WAS THE DEMOLITION A SEPARATE AND DIVISIBLE CONTRACT?

43. Both Traminer and Tilley assert that the contractual arrangements for demolition work were part of the main contract. I agree with them for the reasons put forward by Mr Bland at clause 70 of his written submissions dated 13 November 2008-

“ The dispute between the parties relates to not the fact the demolition work was included in the contract, but rather, the extent to which demolition was required and to some extent, as raised by the defendant, whether there were representations by the plaintiff that would have the effect of limiting the amount of demolition required ”.

ISSUE 5: WHETHER THE AHW SPECIFICATIONS FORMED PART OF THE CONTRACT

44. I turn now to the question whether the contract included specifications. The specifications for the project appear in exhibit A2 at tab BT10. They were prepared by AHW Pty Limited Consulting Engineers and received by the builder Prime Constructions on 24 August 2001.

45. As Mr Loewenstein said in written submissions of 13 November 2008-

“A material difference between what is asserted by the plaintiff as having been provided to Mr Beecroft and what Mr Beecroft says to the best of his ability he received, are the AHW specifications.”

Mr Tilley acknowledged in evidence at T 188 that the specifications was ”one of the documents…left at…reception for collection by Mr Beecroft”.

46. Mr Beecroft says that he “never got the specifications” and it “wasn’t given to me”. The significance of his client not having the specifications is explained by Mr Loewenstein at clause 1.11 of his written submissions of 13 November 2008 in terms of what it included. He said as follows-

“ The failure to provide the specifications to Mr Beecroft is material insofar as, amongst other matters, the specifications provide a note of the completed drawings…the requirement for ‘demolition and removal of existing central plant systems and risers which become redundant under the refurbishment works’; the demolition and removal of existing systems and installations generally…the demolition and removal of existing systems and installations generally as set out in 1.624 on page 14 of the same exhibit to Mr Tilley’s affidavit. Also within the specifications was provision for the nature of insulation to be provided (at S.6).”

47. Mr Bland argues that the specifications are incorporated by reference into the documents forming part of the contract between his client and Traminer. He relies on the document “GENERAL NOTES” in exhibit A2 at tab BT9 which is drawing number 20125MO1E.

48. I accept that note was likely to be with plans that Mr Beecroft collected. But although Tilley asserts that the plans “are to be read in conjunction with the contractual docs” including specifications, the terms of the contract between Tilley and Traminer must be determined by reference to all the evidence. If I accept the account given by Mr Beecroft of his conversations with Remy Logel then clearly Remy Logel was selective in what documents he had provided to Darren Beecroft. He was not prepared to provide “demolition drawings” or the quotation from the other tenderer for the job.

49. What documents the parties choose to make part of the contract must be a matter for them, particularly if there are discussions about documentation. In this case there was a discussion. I do not accept the submission that the reference in the general notes has the effect of determining the documents which partly comprise the contractual relationship in this case between Tilley and Traminer.

50. I accept Mr Loewenstein’s submission in his written submission of 24 November 2008 at clause 38 that the reference in the general notes “does not of itself incorporate by reference the specifications into the terms of the contract between Tilley and Traminer in circumstances where the specifications were not provided to Mr Beecroft and therefore not part of the contract documentation.”

51. Mr Beecroft did not ask for the specification because of the history and nature of the relationship between his company and Tilley. Mr Bland rhetorically asks at clause 88 of his submissions of 13 November 2008-

“ How could have the works being costed by the defendant and its subcontractors...if there were no specifications available.”

52. The quotation included internal insulation, but once again Mr Bland asks rhetorically-

“If the defendant did not have any specifications when pricing the works...why then did it include in its quote a reference to internal insulation included?”

53. Mr Bland argues that Traminer priced the work to include insulation because it was in possession of the specifications. Mr Loewenstein argues that it is important to distinguish between internal and external insulation. External insulation was not quoted for by his client. Internal insulation was included in SydFab’s quotation to his client - which appears at tab 1 of exhibit 10 - so his client was able to include it in its quotation to Tilley. SydFab had been in direct contact with Remy Logel about the topic of insulation. See the fax which appears at tab 3 of exhibit 10 from SydFab to Remy Logel dated 4 September 2001 regarding insulation. That is support for the assertion made by Mr Beecroft at clause 26 of his affidavit which was exhibit 7 where he attributed to Mr Auld an assertion to him (Mr Beecroft) that-

“ Remy has given me details of insulation required. I have prepared my quote on that basis.”

54. Mr Auld himself said that he would ask questions and do insulation as required. This appears at the transcript at T 946, 984 and 985. It seems not to be clear whether or not Mr Auld allowed for only three metres of internal insulation. What is clear, and I find, is that Mr Beecroft was able to quote for insulation despite not having specifications. The specifications were in my opinion not needed for the insulation quotation.

55. Mr Bland argues that Traminer would have noted “three metres for insulation on his quotation.” But the insulation quotation really came from SydFab. That is, in my opinion, no answer.

56. Also it is the case that Darren Beecroft trusted his relationship with Tilley.

57. Mr Bland argues that there were no variation claims for insulation, but there were such claims as appears in Mr Loewenstein’s submissions at clause 39.

58. Although Mr Tilley can say that the specifications were included in the documents left at reception for Mr Beecroft, he cannot assert that Mr Beecroft himself collected from reception what had been left there. This is clear from the cross-examination of Mr Tilley at T 233. Mr Tilley could not say how long it was between him leaving the documents at reception and noticing they were gone, except that it was the same day.

59. The person who would be able to throw relevant light on what documents Darren Beecroft was provided by Tilley is Remy Logel. He has not been called by either party as a witness.

60. It seems to me that I should approach this issue of the absence of Remy Logel’s evidence on this issue as follows. Mr Bland argues that Traminer has had contact with Remy Logel since the commencement of proceedings and that Remy Logel is no longer working with his client. Mr Bland also points out that Traminer has the onus to prove what it asserts Mr Logel said. Mr Loewenstein argues that Remy Logel is a former senior employee of Tilley’s. At T 157 Mr Tilley described Mr Logel as a design engineer.

61. I should also add here that at least one of the conversations which Mr Beecroft asserted occurred between him and Mr Logel was in the presence of the then project manager for Tilley’s Brad Aitken.

62. In this case it is Traminer as defendant which asserts the terms of a contract based upon oral representations by a person I regard as a senior employee of Tilley. I regard him as a senior employee because he is a design engineer and because he was obviously involved in the discussions with Mr Beecroft regarding the contract. The same representations are said by Traminer not only to amount to terms of the contract, but also to be misleading and deceptive. Essentially in its defence to the cross claim, Tilley denied that the representations were made.

63. Mr Beecroft gave his evidence about the representations made by Mr Logel in very clear terms. Part of that evidence was supported by Mr Auld, who said that he was present on one occasion when a relevant representation was made by Mr Logel. There is some support also from Mr Summers, who recounts a conversation with Cameron Howes which is consistent with what Mr Beecroft says Mr Logel was asserting.

64. Both Mr Bland and Mr Loewenstein assert that I should draw against their respective opponent the unfavourable inferences which are referred to and known to lawyers as the inferences in Jones v Dunkel (1959) 101 CLR 298.

65. In Brandi v Mingott (1976) 12 ALR 551, in a joint judgment, Gibbs ACJ and Stephen, Mason and Aickin JJ said at 560 the following-

“When both sides fail to call available evidence competing inferences arise and it will then be for the tribunal of fact to consider the evidence which is before it, in the present case coming exclusively from the appellant and his witnesses, in the light of such inferences.”

66. In AMP Services Limited v Manning [2006] FCA 256, Finkelstein J, in delivering his judgment in the Federal Court, referred to a decision of the Full Court of the Supreme Court of Victoria in Erle v Castlemaine District Community Hospital [1974] VR 722 and then said at [49] by reference to the judgment of Little J the following-

“ The judge went on to say that it would be erroneous to lay down any single ‘general rule’ that if a witness was available to both parties no inference could be drawn against either and that it must depend on the facts and circumstances of a particular case. This, I think, is the correct view.”

67. In Manly Council v Byrne [2004] NSWCA 123, Beazley JA in the New South Wales Court of Appeal said the following at [71]-

“ But the fact that a witness who was not called is equally available to plaintiff and defendant is not always sufficient to avoid a Jones v Dunkel inference against either, or both, of those parties.”

Her Honour went on to say in the following paragraph that in certain circumstances it would be “more natural” for the plaintiff in that case to call certain witnesses which she did not call “because the plaintiff had the onus of proof, the proof she had presented was thin”. Beazley JA was hypothesising the circumstance that the proof was thin. Her Honour also pointed out in the same paragraph that, having the onus of proof “is not essential to whether it is ‘more natural’ for one party to call a witness - sometimes it is enough if an onus of adducing evidence is on that party.” Her Honour went on to conclude, however, that in that case the evidence presented on behalf of the plaintiff was not thin, but was “ample” to determine the issue which was the subject of the competing inferences.

68. In this case, Traminer had the onus of proof concerning the proving the assertions that it said were made by Mr Logel, but there is ample evidence for me to conclude that those representations were made. That evidence is primarily from Mr Beecroft, but also from Mr Auld and supported indirectly by Mr Summers. This means, in my opinion, that there is an evidentiary onus on Tilley. In my view, I would have expected Tilley to call both Remy Logel and Brad Aitken. I more readily accept Mr Beecroft’s account and I infer that the failure of Tilley to call Remy Logel and Brad Aitken was a fear that those persons would expose facts unfavourable to its case, to refer to both of the inferences described by respectively Menzies J at 312 and Windeyer J over 320 - 321 of Jones v Dunkel.

69. I prefer to base my decision on the Jones v Dunkel authority rather than the principle described by Wilcox J in Repatriation Commission v Reid (1984) 54 ALR 157 at 162 by reference to the decision of the full court of the Supreme Court of New South Wales in Holman v Holman (1964) 81 WN (NSW) 374 which was indirectly referred to by Mr Loewenstein in his submissions.

70. Mr Bland refers to the cross-examination of Mr Willmott at T 789 to support the proposition that Mr Darren Beecroft had the specifications. Mr Willmott cannot recall having the specifications. The terms of the proposition to which he replied “Sometimes, yes”, does not really lend that support in light of the question which was put to him.

71. Tilley asserts in its case that the contractual documents included the specifications. For the reasons which I have just set out, I am not satisfied on the balance of probabilities that it has proven that assertion.

ISSUE 6 - THE DATE THE CONTRACT WAS FORMED

72. Whilst initially arguing that the contract documents must have included the plaintiff’s purchase order of 15 October 2001, Mr Bland later acknowledged at clause 104 of his written submissions of 13 November 2008, that whilst “it is arguable that the plaintiff’s purchase order dated 15 October 2001 constituted a formal acceptance of the offer by the defendant dated 27 August 2001, it is more reasonable to conclude that, in the absence of evidence to the contrary, the contract between the parties was formed prior to the commencement of the works in mid-September 2001 when the plaintiff informed the defendant it would start works on site.”

73. In light of that position appropriately taken by Mr Bland I accept the submission of Mr Loewenstein in his written submissions of 13 November 2008 at clause 6.7 that the “weight of evidence...tends towards the fact that the contract was entered into prior to 17 September 2001 and following upon an acceptance of Traminer’s tender during the asserted telephone conversation with Mr Logel on 8 September 2001.”

HIS HONOUR: I am going to take the morning tea adjournment and take some papers with me.

MCCROSTIE: Your Honour with your leave might I be excused to be replaced at the bar table by Mr Ratnam from my staff?

HIS HONOUR: Yes and how do we spell his name?

MCCROSTIE: The initial is D and it’s R-A-T-N-A-M.

HIS HONOUR: Thank you for attending Mr McCrostie and for your assistance on that issue, I appreciated it.

SHORT ADJOURNMENT

HIS HONOUR: Now Mr Ratnam I note your appearance now for the plaintiff, thank you.

METHODOLOGY OF VALUING CLAIMS
ISSUE 7:

WHAT IS THE APPROPRIATE METHOD OF VALUING TRAMINER’S RATE FOR DUCTWORK

74. Under this heading there was only one issue and it became issue 7. This issue involved evidence from two experts, a quantity surveyor named Michael Sturgess called for Tilley and a commercial manager from the air conditioning industry named Joseph Maric called for Traminer.

75. Each of them was asked amongst other things for an assessment of a fair and reasonable rate for the installation of ductwork. Mr Maric came in with sixty-nine dollars per square metre and Mr Sturgess with $103.56 per square metre.

76. Sensibly both experts were asked to confer and comment on each other’s assessments. They produced a joint report dated 29 April 2008 called but not treated as a draft and also wrongly dated on the cover as 29 April 2007. That became exhibit D. Under item 4 over pp 7 and 8 of the report both experts say the following -

“ Sturgess and Maric agree that there is a fundamental difference in the basis of their rates in that the Maric rate of $69 per square metre is for plain ductwork only while the Sturgess rate of $103.56 per square metre is for plain ductwork plus or insulation, spigots, flexible connections, drip trays, plinth surrounds, over-flashings, access panels, subcontract overheads and profit, et cetera and includes for the site constraints identified under the Maric affidavit (point 12).”

77. Mr Maric was cross-examined about his notes. At annexure E of his affidavit sworn 25 October 2007 he had estimated a range for plain uninsulated straight ductwork as $75-$97 per square metre. He agreed at T 116 that “the cost of straight ductwork is in a range between $75-$97 per metre” and added that “$110 a square metre could be a reasonable rate as well”.

78. It follows, it seems to me, that the rate of $103.56 “for plain ductwork plus all insulation” et cetera - Mr Sturgess’ estimate of item 4 of exhibit D - must be reasonable and I so find. I am bolstered in this finding by item 18 in Traminer’s schedule to its cross-claim where it asserts that Traminer when invoicing Tilley throughout the job “applied a square metre rate of $110 per square metre”.

79. Traminer argues that for any reduction in the amount of ductwork actually completed by Traminer on the job, Tilley would be entitled to recover only at the contractual rate charged by Traminer to Tilley and not at Mr Sturgess’s rate which Mr Loewenstein described as “artificial”. Mr Bland effectively meets this argument by pointing out that the documents relied upon by Traminer as providing the basis for the contractual rate are not in fact part of the contract. Essentially I accept as correct, including the conclusion, what is argued by Mr Bland over clauses 5 to 9 of his written submissions dated November 2009. The conclusion at clause 9 which I do accept is that “Mr Beecroft’s tender calculations were never sent to Tilley and hence never formed part of the contract.” Hence Mr Bland goes on to argue that whilst Traminer’s tender calculations are “relevant” they are “not the only consideration the court ought to consider in assessing the value and applicable rate with the variations” (at clause 26).

80. In light of Traminer’s admissions of clauses 7 and 8 of the amended statement of claim the contractual process for assessment must be, in my opinion, the “value of the work submitted or varied” (clause 7) or “an amount agreed” or “a reasonable sum” (clause 8). There is no agreement. The “value” based upon the evidence I would regard as $110 per square metre. I concluded the appropriate assessment is $103.56 per square metre as estimated by Mr Sturgess because I would regard that as a “reasonable sum” in the circumstances.

81. I do not accept Mr Bland’s submission and any suggestion that Mr Maric’s evidence should be rejected for bias. I regarded both Mr Maric and Mr Sturgess as acceptable experts to provide opinions in this area. Their strengths came from different sources: Mr Maric’s from his industry experience and Mr Sturgess’s from his qualification and experience as a quantity surveyor and his use of independent scales. Both experts were prepared to make reasonable concessions and revise their figures under cross-examination.

TEMPORARY SCOPE OF WORKS

82. Traminer says it did not receive the specifications and I have so found. So that to the extent that temporary works are provided for in the specifications, it was not made known to Traminer. The quotation makes no reference to temporary works as part of the tender. Mr Tilley said that a letter from AHW dated 16 July 2001 contained a reference to and was a basis for the temporary works valued at $73,493. There is no evidence that that letter, which was at tab 4 to Mr Tilley’s affidavit, was provided to Mr Beecroft. Mr Beecroft denies awareness of the amendments referred to in that letter and says he was never asked to quote for temporary works.

83. Mr Bland argues that the AHW letter dated 16 July 2001 relates to temporary works required of Traminer at the contract formulation stage. Whether or not the letter was provided to Mr Beecroft before the tender, Mr Bland “adopts the same reasoning as explained in issue 1 and 5 above” regarding what documents were given to Mr Beecroft. However, he fairly went on to acknowledge that it is “unclear at what stage, if at all, the defendant has priced the cost of this temporary work” and says the most likely explanation is it was included because of adjustment in costings. He says it does not matter if Mr Beecroft received the letter of 16 July 2001. Mr Bland goes on to argue from analysis of Mr Beecroft’s costings that the adjusted amount took account of the letter referring to temporary works. Mr Loewenstein argues that there was no basis for Mr Bland’s theory regarding Mr Beecroft’s costings and that it is speculation. There is, he says, no reference to temporary works in the costings, nor was the theory ever put to Mr Beecroft.

84. I conclude that I am not satisfied by Tilley, on the balance of probabilities, that the contract provided for the pleaded temporary works and therefore their cost should not be accounted for against Traminer.

ISSUE 9: PLAINTIFF’S STATEMENT OF ISSUE: WHETHER THOSE TEMPORARY WORKS (THE TEMPORARY WORKS ATTACHED AS ANNEXURE TO THE AMENDED STATEMENT OF CLAIM, AS REFERRED TO IN ISSUE 8) WERE NOT UNDERTAKEN BY TRAMINER INDUSTRIES. DEFENDANT’S STATEMENT OF ISSUE: WHETHER THE DEFENDANT DID UNDERTAKE TEMPORARY WORKS IN THE LEVEL 4 PLANT ROOM (THE DEFENDANT CONCEDES THAT IT DID NOT PERFORM TEMPORARY WORKS IN OTHER PARTS OF THE SITE, ON THE BASIS THAT SUCH WORKS WERE NOT INCLUDED IN THE CONTRACT DOCUMENTS PROVIDED TO IT).

85. As the title of this issue indicates, Traminer concedes that it did not perform temporary works, apart from the level 4 plant room. The only temporary works required was the level 4 plant room, which Traminer claims for in item 18 of the schedule to the cross-claim.

ISSUE 10: THE VALUE OF THOSE TEMPORARY WORKS

86. Mr Loewenstein argues that the temporary works can only be valued on the basis of rates agreed between the parties to the contract. Mr Loewenstein argues that Traminer made no provision for temporary works or their price, so it is an irrelevant exercise. I have found that they were not part of the contract. If I had to value them, I would accept Mr Sturgess’s evidence of a value of $80,843, excluding GST, but I note that Traminer claims no more than $73,493, excluding GST, which if it was necessary, I would so find.

DUCTWORK DELETED FROM STAGE 10
ISSUE 11: WHETHER THE CONTRACT DOCUMENTS PROVIDED FOR DUCTWORK AT STAGE 10

87. Mr Loewenstein argues at clause 11.1 of his written submissions dated 13 November 2008 that it is “common ground that the drawings provided to Traminer, and forming part of the contract documents binding the parties, included AHW drawing number 20125MO5”. Whilst not agreeing in terms, Mr Bland says at clause 120 of his submissions of 13 November 2008 that the “dispute as to which plans constituted the tender plans, has a minimal effect on the overall costings” and he does not contest Mr Loewenstein’s assertion in his reply to Mr Loewenstein’s submissions. It seems to me, and I conclude, that the contract documents provided for ductwork at stage 10.

88. I will deal with issues 12 through to 14 together.

ISSUE 12: PLAINTIFF’S STATEMENT OF ISSUES: WHETHER THE DUCTWORK AT STAGE 10 WAS NOT UNDERTAKEN BY TRAMINER INDUSTRIES.
DEFENDANT’S STATEMENT OF ISSUE: WHETHER THE DUCTWORK AT STAGE 10 WAS MODIFIED BY INSTRUCTION OF TILLEY AND WHETHER TRAMINER PERFORMED THAT WORK.
ISSUE 13: PLAINTIFF’S STATEMENT OF ISSUES
THE LIABILITY, QUANTUM AND VALUE OF THE DUCTWORK DELETED OR NOT UNDERTAKEN BY TRAMINER.
ISSUE 14: PLAINTIFF’S STATEMENT OF ISSUES
WHETHER THE EXPERTS HAVE APPROPRIATELY ALLOWED FOR THIS DUCTWORK IN THEIR RESPECTIVE REPORTS.

89. Mr Bland argues that Traminer has not discharged its burden of proof regarding its variation claims. He argues that the joint conclusion of the experts is that the as built plans show less ductwork at an agreed amount than in the tender plans. The majority of the variation claims, he argues, are accounted for. This is supported, he argues, by SydFab’s variation registration. These should, he said, be the only variations accepted.

90. Mr Loewenstein concedes, because of the joint experts’ report, that 1153 square metres of ductwork was deleted. He says that there was no contractual basis for Tilley to recover for the deleted ductwork. Mr Loewenstein says that Tilley has not calculated on the basis of Traminer’s rate in the contract, and that rate has to be the actual loss incurred by Tilley. I have already rejected this argument because the documents relied upon by Traminer as providing the basis for the contractual rate are not part of the contract.

91. The amount claimed by Traminer in its cross-claim for variation work is $221,927.68, which are the total variations in the schedule, less adjustments and payments. This amount includes, as item 14, demolition of $65,000. I have found that a reasonable rate for ductwork is $103.56 per square metre. I have also found that Traminer has admitted clauses 7 and 8 of the amended statement of claim. These findings, along with Traminer’s concession regarding the deleted ductwork, essentially determine these issues.

DEMOLITION
ISSUE 15 : IF THE ANSWER TO ISSUE 4 ABOVE IS YES THEN WHAT WERE THE TERMS OF THE DIVISIBLE CONTRACT?

92. Mr Loewenstein argues that this issue does not arise in light of the submissions he made with respect issue 4. This is right, because both parties agree that the demolition work was part of the main contract. There was no divisible contract.

93. Mr Bland does not address the first question in issue 15, but it must follow from his submission regarding issue 4 that the question does not arise. Mr Bland asserts that the second question in issue 15 “is irrelevant”.

94. Mr Loewenstein argues that the second question in issue 15, the valuation of the demolition in question, will not be the subject of a submission under this issue.

ISSUE 16: PLAINTIFF’S STATEMENT OF ISSUE: WHO IS CONTRACTUALLY LIABLE FOR DEMOLITION? DEFENDANT’S STATEMENT OF ISSUE. THE DEFENDANT DOES NOT AGREE THAT THIS IS AN ARISING ISSUE.

95. Mr Loewenstein relies on his submissions in relation to issues 2 and 4. He says that its “contractual responsibility was to undertake demolition work up to a cost of $65,000 after which any additional work undertaken would be the subject of adjustment or compensation.” That appears in his written submissions at clause 16.1.

96. Mr Bland says that “question of contractual liability for demolition is dealt within issue 17”. He argues that Traminer is liable for the entire demolition work to a cost of $69,118.11 which appears as item 3 in schedule A of the amended statement of claim.

97. Mr Loewenstein responds that Mr Bland’s reference to quantum “is not presently understood to be the subject of submissions required at this time”. Demolition generally is the subject of other submissions.

ISSUE 17: WHETHER THERE WAS A TERM OF THE CONTRACT THAT TRAMINER WOULD PERFORM DEMOLITION WORK UP TO A VALUE OF $65,000

98. This issue raises Traminer’s assertion contained in clause 5(b) of the amended first cross-claim. That assertion is in the following terms-

“ 5. It was an express, or alternatively an implied, term of the Contract that: ...
(b) the Contract work to be performed by Traminer consisting of demolition work (the Demolition Work) was to be as directed by Tilley (or its agents) up to a value of $65,000 plus GST .”

99. Tilley’s defence says that the “lump sum contract value included all demolition works”. That appears in clause 6 of the defence to the amended cross-claim.

100. Both parties agreed that a quotation from Traminer to Tilley’s dated 27 August 2001, but sent by fax on 2 September 2001, was one of the contract documents. That document which made its appearance amongst the exhibits in a number of places, one of which was exhibit A3 at tab 12, contains the following entry which had been made by Mr Beecroft on behalf of Traminer before sending the quotation: “Note: $65,000 has been allowed for demo”.

101. In addition Traminer asserts that there were various conversations between Mr Beecroft and Mr Remy Logel which supported its asserted terms of the contract.

102. The contractual significance of Mr Beecroft’s note in the agreed contract document and the significance of the conversations between Mr Beecroft and Mr Logel were both controversial and the subject of submissions. I need to make findings in both of those areas.

103. Mr Loewenstein had submitted in relation to issue 2 at clause 2.12 of his written submissions of 13 November 2008 that it is apparent from the “context” in which Mr Beecroft’s note appears that “although there has been an ‘allowance’ of $65,000 for demolition, the carrying out of demolition beyond that cost chargeable to Tilley by Traminer is not Traminer’s obligation.” In his submission regarding issue 17 at clause 17.1 Mr Loewenstein refers to his earlier submission, which he says “answers the question by submitting that Traminer had no obligation to carry out demolition work under the terms of the Contract for a fee that it would be entitled to charge amounting to more than $65,000.”

104. Mr Bland responds with a series of arguments to the effect that Traminer cannot rely on Mr Beecroft’s note in the way that it does. First he argues that there is no ambiguity about the terms of the note so that resort cannot be taken to any “context” in which the expression appears. Secondly, the terms of the note should be taken to mean what they say. They were not drafted by Mr Beecroft to constitute a contractual term but a statement of fact. Thirdly, in any event Mr Beecroft’s intention is not relevant-

“Identification of terms of the contract and their meaning involves a process of objective analysis and construction. It is not what the parties intended by the words, but rather what the terms or words mean on their face objectively.”

That appears in his written submissions at clause 137. Fourthly, he argues it should not be regarded as an isolated item which affects the lump sum contract price. Just because a sub-contractor, he argues, might provide a break up of the work at stages does not affect the overall lump sum price. Finally, he argues that Mr Beecroft’s evidence of his conversation with Mr Logel about being compensated for any demolition work over $65,000 is inconsistent with his position that $65,000 was an overall limit.

105. Mr Loewenstein responds by arguing that Mr Beecroft’s note “in the context in which it appears is capable of more than one meaning.” He says that Mr Bland is relying on the parole evidence rule which, Mr Loewenstein says, is no longer as narrow as was formulated by the High Court in Codelfa Construction Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337.

106 I note in this regard from a recent decision of the Court of Appeal, to which both parties referred me - Franklins Pty Limited v Metcash Trading Limited [2009] NSWCA 407 - that it is clear that it is no longer necessary to find an ambiguity in the words of a written contract before the surrounding circumstances can be examined as an aid to construction.

107. Mr Loewenstein acknowledges that the note could mean that the $65,000 is “an allowance within the lump sum contract”, but he also points to the fact that the note appears separately in the document from items listed as included in the price and from items listed not included in the price. It, therefore, does not readily lend itself to meaning an inclusion or allowance within in the lump sum price and is, indeed, somewhat ambiguous.

108. Mr Loewenstein argues at clause 73 of his submissions in reply that the meaning of the note “is unclear and entitles it to clarification by reference to the context in which that expression was used.” As I have said, in my opinion I do not need an ambiguity before resorting to the context. However it does appear to me, if it were necessary so to find, that there is an ambiguity about the note in the document. One would expect to find it, if it was meant to be an inclusion in the lump sum price, under the listed items of inclusions, perhaps as part of item 7. Standing as it does by itself suggests that it might have formed some other meaning. I do not think that it could reasonably mean that the total price is to be increased by the $65,000 allowance of a demolition, but an objective reading of the document throws up a question at that point. It clearly does not intend to increase the lump sum price but nor does it appear under the inclusions so the objective reader in my opinion is left wondering what it means.

109. I do not accept Mr Bland’s argument that the note “is not drafted in the form of the term”. The note was not “drafted” by a lawyer but written by a contractor who, I accept, does not normally do demolition work. It would not surprise me, although I do not rely on this, if the quotation was sent off - as the fax form suggests - just before midnight. But this is a document prepared by a contractor not by a lawyer who is used to employing niceties of language and grammar. It is true that, as Mr Bland argues, the inclusion in a lump sum contract of an itemised break-up would not entitle the contractor to argue that there is no lump sum contract price. But in my opinion the lump sum contract price is not compromised as at the date of the document.

110. I accept Mr Loewenstein’s submission that when his evidence is considered in its entirety Mr Beecroft did not suggest that he was taking responsibility for the entire demolition. I also accept that there was good reason for Mr Beecroft to request the demolition plans for the reasons set out in Mr Loewenstein’s submissions in reply over clauses 78 – 79.

111. As Mr Loewenstein makes it clear the contract is only partly in writing. Part of the contract is oral and Traminer relies upon the conversations between Mr Beecroft and Mr Logel. It also argues that those conversations may be used to assist in the interpretation of the written component of the contract, including Mr Beecroft’s note. The authorities regarding the interpretation of written contracts need to be read in light of the fact that in this case the contract is partly written and partly oral. Mr Bland reasonably points out “the representations allegedly made by Mr Logel and their timing required to be generally accepted by the court”, before weight can be placed on Mr Loewenstein’s submissions on that topic. But having considered and accepted that the representations were made by Remy Logel, which Mr Beecroft says were made, I conclude from those representations and the note on the quotation that the answer to this issue is, yes there was a term of the contract that Traminer would perform demolition work up to a value of $65,000.

LUNCHEON ADJOURNMENT

ISSUE 18:THE PLAINTIFF’S STATEMENT OF ISSUE: WHETHER TRAMINER REPUDIATED AND/OR BREACHED THE CONTRACT BY FAILING OR REFUSING TO UNDERTAKE THE ENTIRE DEMOLITION. THE DEFENDANT’S STATEMENT OF ISSUE: THE EXTENT OF DEMOLITION WORK PERFORMED BY TRAMINER AND THE VALUE OF THAT WORK.

112. As Mr Bland argued this “question necessarily involves determination of the phrase ‘note: $65,000 has been allowed for demo’, as expressed in the defendant’s quotation”. Tilley’s position is that Traminer knew that it was undertaking the refurbishment of existing occupied premises and gave its quotation which included allowance for the demolition in full knowledge of the risks associated with committing itself to such a task. Mr Beecroft, argues Mr Bland, was given a price to beat and made a commercial decision to better that price. Mr Auld recalled “Mr Beecroft was given a figure to meet.” On the other hand, Mr Bland argues, “Mr Beecroft is adamant that nobody at Tilley’s told them that the best price they had to meet was $860,000”. Mr Bland argues that Traminer repudiated its contract with Tilley’s “by indicating it was not prepared to any more demolition work”. That appears at Mr Bland’s written submissions at clause 18.6. He said this occurred “about September/October 2002”, but had also been expressed by Traminer “in writing in its letter to the plaintiff dated 2 January 2002”. That letter appears behind tab 37 to Mr Beecroft’s affidavit which is exhibit 7. Indeed Mr Beecroft said on behalf of Traminer to Tilley in that letter that “Traminer Industries is not going to keep on paying out for demolition works as we did not ‘this work’.” Traminer in its submissions argues that quite clearly that letter “supports the contention always maintained by him that the defendant did not contract to carry out demolition works in excess of the amount of $65,000”. That appears at clause 59 of Mr Loewenstein’s submissions in reply. Mr Beecroft does not accept the terms of the conversation which allegedly occurred in September October 2002 wherein he is said to have repudiated the contract.

113. Of course if the contract was, as Mr Beecroft alleges, that he would be paid for demolition work in excess of $65,000 and this term of the agreement was not being met by Tilley’s then it would be Tilley’s who was in breach of the agreement and perhaps repudiating it. The real issue here, as Mr Bland says, is not so much which party repudiated the agreement but what the terms of the agreement were.

114. Mr Bland argues that in Traminer’s letter of 2 January 2002 “Traminer does not take this opportunity during the works to state a central plank of its claim, ie ‘that duct workers do not do demolition’.” In my opinion that assertion is not correct. In that letter Mr Beecroft said about his company that “we are installers not demolishers.” Mr Bland also says that there is “no mention of deals done earlier with Remy Logel yet this is the basis upon which Traminer’s claim rests”. But in his letter of 2 January 2002 Mr Beecroft said that at “ the time of quoting I was advised by Remy that an amount of $64,000 was more than enough to cover this work. At this time I advised Remy that I did not want to do the demolition as we are installers not demolishers.”

115. Mr Bland argues at clause 18.12 that there is a “serious lack of direct evidence and very little anecdotal evidence of the extent of demolition works performed by Traminer, at least to the extent that the value exceeded $65,000”. Mr Bland examined clauses 258 – 278 of Mr Beecroft’s affidavit which is exhibit 7. Mr Bland argues that in clause 258 Mr Beecroft “admits that he does not have written records to the demolition work carried out by Traminer”. In my opinion that is not an accurate description of what Mr Beecroft said. What he said in that paragraph was that he did not have “detailed written records for some of the demolition work carried out by Traminer”. Mr Bland also asserts that there are “no contemporaneous invoices, claims or demands for demolition works being undertaken by Traminer”. Neither is that an accurate assertion. Behind tab 41 to Mr Beecroft’s affidavit there is a copy of a letter dated 19 September 2002 which Traminer sent to Tilley’s complaining about the amount of demolition work in excess of $65,000 and providing an estimate for total demolition work of $162,734 and a claim for that work.

116. Mr Bland argues that “Mr Beecroft’s analysis of diary entries between para 259 and 278 offers some assistance to the Court, however there is insufficient evidence to make out the claim for $162,734.00 the demolition works.” The assertions made by Mr Beecroft over clauses 258 – 273 of his affidavit about demolition work carried out in excess of $65,000 are supported by documents exhibited to his affidavit and contained in exhibit 7. It is true that the documents do not constitute invoices containing all the details which would be desirable in making out such a claim, but nor do I accept all of Tilley’s criticisms of the documents. It is apparent to me that most of the documents contain a reference to the relevant project - TAB site - and to a relevant work -demolition. Mr Bland makes some points about cross-examination of Mr Summers, but I do not think that any of those points impact on the general reliability of the documents relied upon by Mr Beecroft to support his claim for demolition work.

117. I accept Mr Loewenstein’s submissions at clause 24 that Mr Beecroft’s affidavit sets out the demolition work carried out to the value of $65,000 and the demolition work carried out in excess of $65,000 and is “supported by the log books to which reference is made in the paragraphs and appearing behind tabs 38, 39 and 40” of Mr Beecroft’s affidavit.

118. I accept on the balance of probabilities that Remy Logel, an authorised representative of Tilley’s, said to Mr Beecroft that $65,000 would be allowed for demolition and in effect that Tilley’s would compensate Traminer for any demolition work which exceeded that amount. I accept that for the following reasons.

119. First, and perhaps most importantly, Mr Beecroft has always maintained that position. As early as his letter dated 2 January, 2002 he asserted his position that $65,000 was allowed for demolition and had been reached and he therefore expected to be able to invoice for work in excess of that.

120. Secondly, the claimed assertion by Remy Logel is supported by Mr Auld. Not only that, but Mr Summers gives an account of hearing Cameron Howes say words which were consistent with the same position.

121. Thirdly, Tilley’s did not call Remy Logel to deny that claimed assertion. Indeed, Tilley’s was not in a position to challenge Mr Beecroft’s evidence of what Mr Logel said, which therefore stood unchallenged and supported by Mr Auld and indirectly by Mr Summers.

122. Therefore in my opinion, Traminer is right in asserting that “once an allowance of $65,000 is made, there remains due and owing $97,934.00 plus GST totalling $107,507.40”: see Mr Loewenstein’s written submissions at clause 30.

123. As for Mr Bland’s criticisms of Mr Beecroft’s assessments for demolition work in excess of $65,000 I accept Mr Loewenstein’s submissions that “the overwhelming evidence is that the work was carried out as asserted and as detailed in the extensive documentation provided.” That appears at clause 62 of Mr Loewenstein’s submissions in reply.

124. Over clauses 33 – 34 of his written submissions Mr Loewenstein challenges a claim made by Tilley’s in respect of the demolition work which Tilley’s said it had to arrange to be done by another contractor named Moylan because Traminer did not complete its agreement to do all the demolition work. Mr Loewenstein examines each of the Moylan invoices and descends into the same “minutiae” which he criticised Mr Bland for descending into with respect to Traminer’s estimate of demolition work. Mr Loewenstein makes some valid points about some of the invoices which contain no description of work at all and, if I was wrong in my primary finding, I would be disinclined to allow those invoices.

125. In the event that I was wrong about my primary liability for the demolition work, the findings that I would make regarding the Moylan invoices briefly are these and they are based upon Mr Loewenstein’s submissions about whether or not there was reference to any demolition work.

126. In respect of docket 410, I would allow nothing, so I would deduct sixteen by forty-one dollars fifty, $664.00. In respect of docket 430, I would allow half, so I would deduct seventy-two by forty-one dollars fifty and nine by fifty dollars fifty. I would divide that by two and deduct a total of $1,721.00. In respect of docket 434, I would allow nil and deduct thirty-four by forty-one dollars fifty, that is $1,411.00. In respect of docket 437, I would allow nil and so I would deduct thirty-six by forty-one dollars fifty, an amount of $1,494.00. In respect of docket 445, I would now allow nil and would deduct thirty-two by forty-one dollars fifty, namely $1,328.00. In respect of docket 450, I would allow half, so I would deduct forty-eight by forty-one dollars fifty. Four by fifty dollars fifty and ten by fifty-nine dollars fifty. I would divide that by two and deduct $1,395.00. In respect of docket 460, I would allow half and deduct half of thirty-two by forty-one dollars, namely $664.00. In respect of docket 486, I would allow half and so I would deduct half of thirty-two by forty-one dollars fifty, namely $664.00. In respect of docket 487, I would allow nil, so I would deduct forty-eight by forty-one dollars fifty. Four by fifty dollars fifty and twelve by fifty-nine dollars fifty: respectively amounts of $1,992.00, $202.00 and $714.00. In respect of docket 494, I would allow half and therefore deduct half of twenty-four by forty-one dollars fifty, namely $498.00. In respect of docket 495, I would allow half and so I would deduct half of sixty-four by forty-one dollars fifty. Four by fifty dollars fifty. Twelve by fifty-nine dollars fifty, namely $1,786.00. In respect of docket 496, I would allow half and therefore deduct half of thirty-five by forty-one dollars fifty, $726.00. In respect of docket 498, I would allow nil and therefore deduct sixteen by forty-one dollars fifty, namely $664.00. I would, if need be, deduct a total of $15,923.00.

ISSUE 19 : PLAINTIFF’S STATEMENT OF ISSUE: THE QUANTUM OF DAMAGES SUFFERED BY TILLEY OR TRAMINER BY REASON OF HAVING TO COMPLETE OR CONTINUE THE DEMOLITION. DEFENDANT’S STATEMENT OF ISSUE: DEFENDANT MAINTAINS THAT THIS IS ENCOMPASSED IN ITEM 13 ABOVE.

127. Mr Bland refers to his submissions on other issues (see clause 19.1) and Mr Loewenstein addresses this issue in his submissions over clauses 22 - 62.

ISSUE 20:

WHETHER TRAMINER INDUSTRIES ARE ABLE TO SUCCEED ON A CLAIM UNDER THE TRADE PRACTICES ACT BASED ON ALLEGED REPRESENTATIONS AS TO THE AMOUNT OF DEMOLITION WORK, INCLUDING:

A. WHETHER THERE WERE REPRESENTATIONS

B. WERE THE REPRESENTATIONS DELIBERATE OR RECKLESS, (INSERTED AT PLAINTIFF’S REQUEST; THE DEFENDANT DISAGREES THAT THIS IS PROPERLY AN ISSUE)

C. WAS TRAMINER ABLE TO SEEK CLARIFICATION OR FURTHER INFORMATION? (INSERTED AT PLAINTIFFS REQUEST; THE DEFENDANT DISAGREES THAT THIS IS PROPERLY AN ISSUE)

D. WHETHER THERE WAS RELIANCE UPON THOSE REPRESENTATIONS.

E. IF D IS FOUND IN THE AFFIRMATIVE WAS THE RELIANCE REASONABLE IN THE CIRCUMSTANCES?

F. WHETHER REMY LOGEL HAD ACTUAL OR OSTENSIBLE AUTHORITY TO MAKE THE REPRESENTATIONS ALLEGED BY TRAMINER

G. WHETHER TILLEY KNEW OR OUGHT TO HAVE KNOWN THE REPRESENTATIONS WERE FALSE

H. WHETHER THE REPRESENTATIONS WERE NEGLIGENT.

I. DOES THE DOCTRINE ERRONEOUS ASSUMPTION APPLY?

J. DOES S 52 APPLY TO PRIVATE NEGOTIATIONS?

DEFENDANT’S STATEMENT OF ISSUE: WHETHER TRAMINER INDUSTRIES ARE ENTITLED TO SUCCEED ON THE CLAIM UNDER THE TRADE PRACTICES ACT AS PLEADED IN ITS CROSS-CLAIM.

128 In its cross-claim Traminer claims that certain representations were made by Tilley’s to Traminer before the commencement of the contract work, as well as after entry into the contract. Traminer alleged that the representations were made by Tilley’s, a corporation, in trade or commerce and were misleading and deceptive or likely to mislead and deceive. If these allegations are made out then it would follow that Tilley’s had breached s 52 of the Trade Practices Act and thus be exposed to the relief provisions of that Act. Traminer claims that some of the representations were made with respect to a future matter and without reasonable grounds would therefore be “taken to be misleading” by s 51A of the Trade Practices Act.

129 Traminer set out in clause 15 of its cross-claim representations it claims Tilley made before the contract work commenced. They are as follows -

“(a) Tilley wished to enter into a contract with Traminer whereby Traminer would agree to perform the contract work;
(b) Tilley would submit to Traminer a tender for the contract work and allow in that tender an amount of $65,000 plus GST for the demolition work;
(c) The demolition work was capable of being completed by Traminer at a cost of no more than $65,000 plus GST in time and materials;
(d) The demolition work would cost Traminer no more than $65,000 plus GST in time and materials to complete;
(e) Traminer did not require demolition drawings in order to accurately assess the scope and cost of, or accurately tender for, the contract work or to perform the demolition work; and
(f) Traminer would receive instructions from Tilley or its agents in relation to the demolition work required to be performed by Traminer at the TAB site .”

It is the representation in (d) which Traminer says was with respect to a future matter.

130. Traminer sets out in para 18 of its cross-claim the representations in the claims Tilley made after entry into the contract. They are as follows -

“(a) During the period September 2001 to December 2001, that;

(1) the Demolition Work was capable of being completed by Traminer at a cost of not more than $65,000 plus GST in time and materials;
(2) the Demolition Work would cost Traminer no more than $65,000 plus GST in time and materials to complete;

(b) During the period January 2002 to May 2002 that
(1) in the event the value of the demolition work performed by Traminer did exceed $65,000 (plus GST) Tilley:
(A) would pay Traminer for the full value of the work performed; and/or
(B) would otherwise ensure that Traminer was fully compensated for the Demolition Work by:
(1) reducing the scope of the Contract Work comprising the Installation Work; and
(2) if, after the offset in (B)(1) above the value of the Demolition Work still exceeded $65,000 (plus GST), Tilley would pay to Traminer such amount as was necessary to compensate Traminer for the full value of the work.”

It is representation cl (a)(2) which Traminer says was with respect to a future matter.

131. Traminer claims that Tilley intended Traminer to rely on the representations in entering into and performing the contract. Traminer says it did rely on Tilley’s representations when it entered the contract, performed and continued to perform the contract.

132. Traminer sets out in clause 21 of its cross claim how it claims that all of the representations were misleading or deceptive, or likely to mislead and deceive. It says that -

“(a) the Demolition Work that Tilley and/or its agents directed Traminer to perform was not capable of being completed by Traminer at a cost of less than $65,000 plus GST in time and materials;

(b) the cost to Traminer in time and materials of performing the Demolition Work greatly exceeded $65,000 plus GST; and

(c) without the demolition drawings Traminer could not accurately assess the scope, or cost, of the Demolition Work, or accurately tender for the Contract Work.”

I have not included particulars.

133. In clause 22 Traminer sets out how the representations made after entry into the contact were misleading or deceptive or likely to mislead and deceive. It says that Tilley did not -

“(a) pay Traminer for the full value of the work performed; or

(b) otherwise ensure that Traminer was fully compensated for the Demolition Work by:

(1) reducing the scope of the Installation Work; and/or
(2) otherwise paying to Traminer such amount as was necessary to compensate Traminer for the full value of the Demolition Work .”

134. The question for me must be whether I am satisfied on the balance of probabilities that Traminer has made out these various allegations.

135. The conduct Traminer relies on comprises assertions which it says were made by Remy Logel on behalf of Tilley’s. Those assertions are contained in Mr Beecroft’s affidavit, exhibit 7, at clauses 23, 25, 27, 29, 32 and 256. I do not propose to set those out in the judgment. Traminer also relies on an account given by Mr Auld of one of those assertions by Remy Logel. It is contained at clause 9 of Mr Auld’s affidavit which is exhibit 10.

Item 12

174. Clauses 92 - 95 of Mr Beecroft’s affidavit provide a clear document trail. The work was done. Invoice 283 is said to be “not paid”. In exhibit B1 there is no reference to invoice 283 or description of its content. There is no denial of Mr Beecroft’s assertion regarding the work done and unpaid. I accept Mr Loewenstein’s submission.

Item 13

175. There is a clear document trail. In clauses 97 –102 of Mr Beecroft’s affidavit the work was done. He asserts that invoices 293 and 320 were “not paid”. Exhibit B1 shows two payments each of $40,000 each regarding invoice 293 but each pre-dates the order and the invoices of 6 June 2002 and 28 June 2002. But it also shows $16,445 unpaid regarding order number 3502. There is no denial that the work was done. The record of payment pre-dates the order and is also inconsistent. I accept Mr Loewenstein’s submission regarding this.

Item 14

176. This concerns the demolition work above $65,000 and I have dealt with that.

Items 15 and 16

177. I will deal with these together. They are dealt with over clauses 105 – 140 of Mr Beecroft’s affidavit. It relates to extra labour “required to install ductwork in riser shaft due to limited access not shown on drawings. Ductwork had to be lowered down the riser shaft from the top floor plant room (on L4) through a small hole. The ductwork was connected to a rope and lowered down. Lack of access in riser shaft was not shown on tender drawings. Access is normally available from each level.” Item 16 refers to supply of extra ductwork in the riser shaft.

178. In exhibits A5 and B2 Mr Tilley and Mr Howes refer to the conditions at the time the contract was entered. The claim turns on a conversation Mr Beecroft asserts he had with Mr Logel. That appears at clause 116 of Mr Beecroft’s affidavit. It not denied by either Mr Tilley or Mr Howes. In addition Mr Howes sent a fax to Prime on 30 August 2002 which became exhibit 2 in “regard to the riser from the level 4 plant room”-

“ at tender time a site visit was conducted, as per the contract documents. During this visit it was impossible to accurately ascertain the amount of other services or to determine the clear path for the duct runs and other works in the riser area. It was also impossible to ascertain the amount, if any, of conflicts with the building structure in the riser ”.

Mr Howes on behalf of Tilley made a claim on Prime. I accept, in light of that, Mr Beecroft’s evidence regarding the access difficulties to the site. I accept the conversations that he had with Mr Remy Logel and that that resulted in a variation which was referred to in tab 18 of DJB1 because the fax of 11 October 2002 is consistent with the expectation that it was to be a variation as well as a fax dated 5 May 2003 which appears at tab 19. Mr Howes said he responded to the latter fax by a letter of 6 May 2003 referring to the claim being more than was first thought. I do not accept that as affecting the claim. First, Tilley made a claim on Prime. The fact that Prime rejected the claim was not relevant to the contractual relations between Tilley and the Traminer. Secondly, the assertion in the letter is inconsistent with the conversation with Remy Logel and thirdly the fact that a claim was made on Prime reflects the legitimacy of the claim.

I find for Traminer so far as items 15 and 16 are concerned.

Item 17

179. This is dealt with by Mr Beecroft over clauses 141 –154 of his affidavit. The item concerns what Mr Beecroft describes at item 143 as “a problem attempting to install ductwork in certain areas of level 3 in stage 13. Cable trays and structural beams not shown on the original tender drawings, or the Stage 13 Construction Drawings, meant that the ductwork had to be modified on site to fit around them.” After a meeting with Mr Howes which Mr Howes does not deny in exhibit B2, Traminer proceeded with work to fix the problem that is referred to in clause 146 of Mr Beecroft’s affidavit. Traminer sent a fax to Tilley dated 11 October 2002 which appears at tab 18 regarding extras including an amount of $6,418 for that work. It was also itemised in a fax from Traminer to Tilley dated 5 May 2003 which appears at tab 19. In a meeting with Mr Howes on 18 June 2003, Mr Beecroft made notes on a copy of that fax and there is a note “Okay” next to this item. The day after the meeting Mr Beecroft sent another fax to Traminer dated 19 June 2003, noting an agreement that this item of $6,418 was amongst those left to pay (tab 35 p 1). Tilley’s response was a fax of 19 June 2003 (tab 35 p 2) but then some weeks later, according to Mr Beecroft, Mr Howes handed Mr Beecroft a letter dated 19 June 2003 (tab 35 pp 3 to 6). That letter appeared to acknowledge that this item was unpaid and should be counted as a credit to Traminer although denying that, after an overall reckoning, Tilley owed anything to Traminer. It seems to me that Tilley has acknowledged its indebtedness to Traminer for this item and I find in favour of Traminer.

Item 18

180. This is dealt with by Mr Beecroft over clauses 155 to 173 of his affidavit. The problem is described at clause 157 where he said that when, after commencing work in the plant room, stage 13, he “discovered that the penetrations in the concrete slab made by the builder (the hole through which the ductwork was to pass), were different to those shown in the Stage 13 Construction Drawings. They were different both in the size of the penetrations and their location. This meant that the previously manufactured ductwork did not align with the penetrations, or fit through the penetrations. This meant that the previously ordered ductwork could not be used at all, because it had been made to measure specifically in accordance with Stage 13 Construction Drawings.” Mr Beecroft related a conversation at clause 158 with Mr Howes which is not denied by Mr Howes. Additional ductwork was ordered from SydFab, supplied and paid for by Traminer. Mr Beecroft says at clause 162 that Mr Howes asked him for “a square metre calculation showing the cost of the extra ductwork you had to supply and install for the stage 13 plant room” which Mr Beecroft supplied by fax. That appears at tab 20 on p 13. Mr Beecroft was asked to invoice at a reduced rate which produced an amount of $7,733 or $8,506 including GST. The item was referred to in a fax of 5 May 2003 but at another rate. That appears in tab 19 p 1. It then seems to have disappeared from the correspondence. I am not satisfied on the balance of probabilities that this is made out and I find for Tilley regarding item 18.

Items 19 and 20

181. I will deal with these two together and they are dealt with by Mr Beecroft over clauses 175 - 213 of his affidavit. Certain work was done on the project which Traminer claimed as extras. They were contained in faxes sent by Traminer to Tilley dated 19 October 2002 (tab 22 p 1) and 28 November 2002 (tab 23 pp 1 to 2). The relevant items in the 29 October 2002 fax are numbers 3 to 8 and 12.

182. The work done is well documented. Mr Beecroft and Mr Howes discussed these faxes at a meeting on 8 January 2003. Mr Beecroft sets out the conversation over clauses 204 – 209. Mr Howes does not deny any except that he qualifies the assertion made in Mr Beecroft’s clause 207. That concerns the fax of 28 November 2002. The next day Traminer sent two faxes, tab 28 p 1 and p 2. It asked for the faxes to be signed and faxed back but that did not occur. Then Traminer sent its fax of 5 May 2003 which included a relevant reference at D to these two items.

183. There was a meeting on 18 June 2003. Mr Beecroft annotated both faxes, 8 January 03 and 5 May 03 (see clause 234(b)) regarding item 19.

184. Regarding item 20, Mr Beecroft also annotated both faxes, 8 January 2003 and 5 May 2003 (see clause 234(b)). Mr Howes does not deny the substance. He said that he did not agree with the claims. Mr Beecroft’s annotations and the correspondence as well as the lack of specific denials from Mr Howes are telling. I am satisfied that these are legitimate variations and acknowledged as such by Tilley. I find for Traminer so far as these variations are concerned.

Item 21

185. This is dealt with by Mr Beecroft at clause 214 – 224. There was a fax dated 10 February 2003 from Traminer to Tilley regarding variations in the sum of $9,468.60 for the period October 2002 to February 2003 (see tab 29 pp 1 to 2). That is well documented by Mr Beecroft over clauses 215 – 216. The work was done as he said in clause 220.

186. In the fax dated 5 May 2003 the claim is for “extras stage 17/$9,648.50”. There was the meeting between Mr Beecroft and Mr Howes on 18 June 2003. Mr Howes agreed to $7,790.60. At some stage, Mr Beecroft made a note on the fax of 5 May 2003. Mr Howes’ recollection is over clauses 52 – 53 in exhibit B1. There is a reference in the fax of 19 June 2003 which appears at tab 35 on p 1. This claim is well documented and there is no specific denial. I find for Traminer in respect of this claim.

Item 22

187. This is the final variation, which is referred to by Mr Beecroft in exhibit 7 over clauses 225 – 230. There is a fax dated 6 June 2003 from Traminer to Tilley regarding variations regarding the final stages (see clause 225 at tab 32 pp 1 to 2). The claim is for $12,538. It is well documented as clause 228 shows. The work was done. It does not appear in the fax of 5 may 2003. There was the meeting between Mr Beecroft and Mr Howes on 18 June 2003 at which Mr Howes agreed to pay $5,491.00. Mr Beecroft noted it in the fax on p 2. This work was all documented and there is no specific denial. I find in favour of Traminer so far as that claim is concerned.

PLAINTIFF’S MISLEADING AND DECEPTIVE CONDUCT
ISSUE 29:WHETHER TILLEY COMMITTED MISLEADING AND DECEPTIVE CONDUCT AS ALLEGED IN PARA 15 TO 18 OF THE AMENDED FIRST CROSS-CLAIM.

188. Both parties developed no submissions in relation to this issue but refer to their submissions regarding issue 20.

TRAMINER’S ENTITLEMENT TO RELIEF
ISSUE 30:WHETHER TRAMINER IS ENTITLED TO DAMAGES AS CLAIMED IN PARA 23 OF THE AMENDED FIRST CROSS-CLAIM IN THE AMOUNT OF $317,187.68.

189. Both parties refer to other submissions.

ISSUE 31:WHETHER TILLEY ENGAGED IN UNCONSCIONABLE CONDUCT AS PLEADED IN PARA 24 OF THE AMENDED FIRST CROSS-CLAIM.

190. Mr Bland address this pleading at clause 31.1 but Mr Loewenstein conceded at clause 168 that there is “no room for consideration of the principles of unconscionable conduct” so this issue no longer needs to be determined.

ISSUE 32: WHETHER TILLEY WAS UNJUSTLY ENRICHED AS ASSERTED IN PARA 26 OF THE AMENDED FIRST CROSS-CLAIM.

191. Mr Bland says this issue was dealt with in his submissions in relation to issue 28. Mr Loewenstein concedes at clause 169 of his written submissions that “there remains no scope for a claim based upon unjust enrichment given the existence of a contract between the parties defining the parties’ obligations”. I agree with that submission and it means that this issue no longer needs to be determined.

ISSUE 33:THE DAMAGES AND RELIEF WHICH TRAMINER IS ENTITLED AS CLAIMED AT PARAS (A)-(H) OF THE AMENDED FIRST CROSS-CLAIM.

192. Mr Loewenstein says that the claims in clauses (a)-(c) have been addressed elsewhere and that claims (e)-(h) should await the outcome of the proceedings.

193. Mr Loewenstein addresses his client’s claim for relief under s 87 of the Trade Practices Act in claim (d) of the cross-claim. In the event that such relief is required, Mr Loewenstein submits that the powers provided to a Court under s 87 of the Trade Practices Act are wide. Mr Loewenstein points to authority and argues that in the event that I find that the contract limited payment for demolition work to $65,000 then “the misleading and deceptive conduct constituted by the representations made by Mr Logel which induced Traminer to enter into the contract and to continue with demolition work during its performance of the contract, should lead to invocation of the relief claimed in subs (d).” In other words, Mr Loewenstein relies on his argument that Mr Logel engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act. That question I have already dealt with under issue 20.

194. Mr Bland replies by referring to authorities which he says support the proposition that “in exercising its discretion under s 87 it was well established that in the absence of fraud, the Court will be reluctant to find the contract rescinded and it should only be granted on the very strictest evidence”.

195. In Akron Securities v Iliffe (1997) 41 NSWLR 353, the President of the Court of Appeal, Mason J, with whom Priestley JA agreed, said at 364 as follows -

“ Early case law took a narrow approach to s 87 of the Trade Practices Act 1974 (Cth), with courts fearing to move far from the familiar coastline of traditional common law and equitable approaches. But it is now clearly established that s 87 is to be given no restrictive interpretation ”.

196. His Honour went on to say that a “court should not restrict the exercise of its discretion ‘by imposing upon itself technicalities which might defeat the policy of the section’.” His Honour had been quoting from a decision of Northrop J in Mister Figgins Pty Limited v Centrepoint Freehold Pty Limited (1981) 36 ALR 23 at 56. Mason P said that the Full Federal Court had held in Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 that-

“ The loss or damage for the purposes of both s 87(1) and s 87(1A) would include the detriment suffered by being bound to a contract induced by misleading and deceptive conduct in contravention of s 52”.

197. At 365, Mason P referred to the High Court’s judgment in Kitzbeau Pty Limited v WG and B Pty Limited (1995) 184 CLR 281 as illustrating “how, in a proper case, an award of damages may be married to an order pursuant to s 87 re-writing a contract so as to put the innocent party ‘in the same position that it would have been if there had been no misrepresentation’.” At 366 Mason P said-

“ In short, the power conferred by s 87 is (in subs (1)’s own words) to make ‘such order or orders as the Court thinks appropriate’. Proven contravention of s 52 is the ‘passport to…extensive relief’.”

198. Mason P also quoted from the judgment of Ipp J (then in the Supreme Court of Western Australia) in Reg Russell Sons Pty Limited v Buxton Meats Pty Limited (1994) ATPR(digest) 46 -127 where Ipp J had said-

“The court has a very wide discretion under s 87(1)…In exercising its discretion the court will take into account whether there is a causal link between the loss or damage suffered or likely to be suffered by the plaintiff, whether and to what extent the plaintiff is the author of his or her own misfortune, and whether another remedy is or was at hand to recover the loss or damage in question”.

199. Kitzbeau was a judgment of the Full Court of the High Court and their Honours said at 298 the following -

“Section 87 of the Act confers a wide discretionary power on Courts to make remedial orders in appropriate cases to ensure a fair result. Section 87(2) sets out the orders a Court can make including an order varying any contract or arrangement in such a manner and from such a date as the Court thinks fit: s 87(2)(b)”.

It is even so wide that the High Court said at 299 -

“ No doubt in some cases, it may be appropriate for a Court, when making an order under s 87, to re-write a contractual term that was not brought about by the misleading conduct of a defendant. Thus, in a case where a Court would wish to, but cannot for practical reasons, grant recision, it might be proper to re-write an unfair provision in an agreement even though it was not induced by the defendant’s conduct” .

200. The remark of Einfeld J about fraud referred to by Mr Bland is in the context of the relief of declaring a contract void ab initio (see re Gilda Johnstone and Murray Robert Johnstone v Delata Pty Limited and Ors [1993] FCA 79 at [44]).

201. Much of the case law concerns the exercise by a Court of the power conferred by s 87(2)(a) (see Webb Distributors (Aust) Pty Limited v The State of Victoria and Anor (1993) 179 CLR 15 and re Creative Landscape Design Centre Pty Limited and Ors [1989] FCA 370).

202. I will approach the exercise of a power to vary under section 87(2)(b) as discussed Mason P in Akron at 366.

CREDIBILITY AND WEIGHT
ISSUE 34: (A) CREDIBILITY ISSUES GENERALLY (B) THE WEIGHT TO BE PLACED ON THE EVIDENCE OF THE PARTIES AND THE EXPERTS’ REPORTS

203. Mr Bland points to various passages extracted from Mr Beecroft’s evidence to support the proposition that I should not rely upon him as a credible witness.

204. I accept that there are inconsistencies at times but Mr Beecroft was cross-examined extensively over a number of days. Mr Loewenstein submits that he gave his evidence in a credible fashion. My own impression was that he was doing his best to give accurate answers to questions, even on occasions when they were against his interests. An example is at T 554. There were occasions when he and the cross-examiner were at cross-purposes. His idea was that the plans exhibited at tab 1 of his affidavit were “the same” plans as those given to him by Remy Logel was, I accept, based on his understanding that they (the plans he had re-constituted) amounted to the same thing or there had not been any relevant changes (see T 544). I expect that is why he resisted agreeing at T 670 that his affidavit was “wrong”. There is also the impact of a lapse of time. As Mr Beecroft said at T 554, “it was four and a half years ago that it was done, when I compiled all this”. I do not regard his assertion about hearing of a floor demolition conversation for the first time in Court as an attempt to mislead me in light of the material obviously in Mr Howes’ affidavit. The cross-examination about Lucent Technologies was a mixture of poor recollection about an unrelated project and cross purposes.

205. I do not accept Mr Bland’s criticisms of Mr Auld’s evidence. I expect he was carefully and properly advised about not speaking to Mr Beecroft about his evidence and providing his own best recollection.

206. I found both men impressed me in the witness box as well. I accept Mr Loewenstein’s submission that that Mr Beecroft presented as an honest witness. Perhaps most importantly Mr Beecroft’s evidence is well supported in many relevant respects by contemporaneous correspondence and documents. Mr Beecroft was supported in relevant aspects on a conversation with Remy Logel by Mr Auld. Tilley did not call its employee who is said to be present at the August 2001 Remy Logel conversation, namely Mr Brad Aitken. I infer that was because his evidence would be of no assistance.

207. Mr Loewenstein makes submissions about Mr Maric and Mr Sturgess but as I have said, each had his strengths.

PAYMENTS AND CLAIM RECONCILIATION
ISSUE 35:THE AMOUNT PAID BY TILLEY AIR CONDITIONING TO TRAMINER INDUSTRIES IN RESPECT TO THE WORKS UNDERTAKEN BY TRAMINER INDUSTRIES, CLAIM RECONCILIATION SUMMARY.

208. I will determine this issue next when I come to enter verdicts and judgment.

CONCLUSIONS AND VERDICTS

209. Traminer was not in breach of the contract because it was not prepared to do more demolition work. Traminer should not be liable for any demolition work undertaken by another contractor. Traminer went into the contract on the basis that it would be compensated for any demolition work it undertook which exceeded $65,000. The extent of the demolition work was always far from clear. Traminer was asking to be paid for demolition work it had undertaken which exceeded $65,000 and payment was not forthcoming. It should not be liable to pay for demolition work which Tilley sent to another contractor.

210. A good amount of ductwork was deleted from the contract. That amount is agreed at 1,153 square metres. I have found that an appropriate rate is $103.56. I accept that the deleted ductwork amounted to a variation of the contract works and that Traminer should not be paid for that work not undertaken.

211. Traminer has conceded that it is liable for certain adjusted labour costs at an agreed figure.

212. The quantum of Tilley’s claims were set out in a schedule to the statement of claim. The schedule went through various amendments and the latest is dated 25 January 2010 and entitled “Further Amended Schedule A to Amended Statement of Claim”. As a result of the findings I have made, and by reference to that schedule, I would not allow item 1 for temporary ductwork. Nor would I allow item 3 for the cost to complete demolition works by another contractor. I would allow item 4 for deleted ductwork in full in the sum of $131,345.15. I would also allow item 7 for adjusted labour costs in the full amount of $37,393.

213. Accordingly on the statement of claim I would enter a verdict of for the plaintiff in the sum of $168,738.15.

214. In its cross-claim, Traminer claims $317,187.68 damages for breach of contract. There are two components to the claim.

215. The first is an amount of $95,260 which Traminer says it is owed by Tilley for unpaid invoices. There are four invoices which Traminer says remain unpaid and they are referred to in clause 8 of the cross-claim and by Mr Beecroft in clause 280 of his affidavit, exhibit 7. Tilley denies its liability for those alleged unpaid invoices and requires strict proof. In respect of one invoice Tilley says it has paid it in full. I have examined the evidence supporting Traminer’s claim regarding the unpaid invoices. Mr Beecroft asserts that invoices 318 and 292 remain unpaid and that assertion is supported by his accounting records behind tab 42 of DJB1. I would regard those two invoices as unpaid on that invoice. Invoice 312 is asserted by Mr Beecroft to be unpaid but I cannot find a reference to it in his accounting records. I would not find that invoice unpaid. Invoice 268 is the one which Tilley says it has paid in full. Mr Beecroft says that it is outstanding to the extent of some $20,260, however, the accounting records show that only $8,000 is outstanding and there is also a reference to another invoice 268 which is paid in full. I am not satisfied that that invoice is unpaid. Of the $95,260.00 Traminer says is outstanding for unpaid invoices, I am satisfied that the amount of $52,800 is outstanding.

216. The second component of Traminer’s claim for damages for breach of contract is an amount of $221,927.68 which it says it has not been paid for variation work. I have found that with one exception, all of the variation work was undertaken by Traminer and should be paid for by Tilley. The one exception is item 18 on Traminer’s schedule to the cross-claim in the sum of $8,506.30. Of the $221,927.68 Traminer says is outstanding for unpaid variation work I am therefore satisfied that the amount of $213,421.38 is outstanding. In addition, I would award Traminer damages of the same amount under s 87 of the Trade Practices Act for the breach of s 52 of that Act.

217. Accordingly, when that amount of damages for breach of contract and damages under the Trade Practices Act is added to the outstanding amount for unpaid invoices, I would award damages in the sum of $266,221.38 and on the cross-claim I would enter a verdict for the defendant in that amount.

218. I would set off the amount owed to the defendant by the plaintiff against the plaintiff’s claim and enter judgment for the defendant in the proceedings in the sum of $97,483.23.

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