Trinvass Pty Ltd v Connect Infrastructure Design Pty Ltd

[2022] NSWDC 394

District Court

New South Wales

Medium Neutral Citation:

Trinvass Pty Ltd and Anor v Connect Infrastructure Design Pty Ltd [2022] NSWDC 394

Hearing dates:

11, 12, 13, 14 and 28 July 2022; 2 September 2022

Date of orders:

2 September 2022

Decision date:

02 September 2022

Jurisdiction:

Civil

Before:

Weber SC DCJ

Decision:

(1) That there be judgment and verdict for the defendant.

(2) That the plaintiffs pay the defendant’s costs.

Catchwords:

BUILDING AND CONSTRUCTION — Contract — Implied terms — Australian Consumer Law

CONSUMER LAW — False or misleading representations — Representations about goods or services

Legislation Cited:

Australian Consumer Law, ss 18 and 60

Civil Procedure Act 2005 (NSW), s 56

Cases Cited:

Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520

Demagogue Pty Limited v Ramensky (1993) 39 FCR 31

General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164

McWilliam’s Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723

Category:

Principal judgment

Parties:

First Plaintiff: Trinvass Pty Ltd (ACN 074 094 063)
Second Plaintiff: Kelaron Pty Ltd (ACN 073 975 416)
Defendant: Connect Infrastructure Design Pty Ltd (ACN 102 482 271)

Representation:

Counsel:
Plaintiffs: Mr A E Hopkins
Defendant: Mr S E Gray

Solicitors:
Plaintiffs: Reuben George Lawyers
Defendant: Clyde & Co

File Number(s):

2020/266796

Publication restriction:

None

Judgment

Introduction

1. These proceedings concern the development of the property known as 216 to 228A Elizabeth Street in Surry Hills. The site, prior to its development into residential apartments, contained a golf shop known as “Sharpie’s Golf House”. The building was well known to rail commuters for its ornate neon sign depicting a golfer chipping a golf ball onto a green, which was clearly visible on the north side of Central Station. 

2. Not relevant to the proceedings, though hopefully of some interest, is the fact that prior to the demolition of the pre-existing structure, the neon sign was removed and donated to the Powerhouse Museum. It was added to the New South Wales State Heritage Register in 2002. 

3. The plaintiffs were the developers of the Golf House site. It was to be redeveloped to a residential development. The plaintiffs engaged Aspen Constructions Pty Ltd (“Aspen”) to undertake construction of the Golf House residential development, and engaged Project Tourism International Architecture Pty Ltd (“PTI”) as architect. The plaintiffs also engaged Mr Daniel Prentice as the project manager of the development. 

4. In order for the project to be completed it was necessary for an expert to be engaged to design a connection between the development and the Ausgrid electrical infrastructure. The design was referred to in the proceedings as a Level 3 ASP Design. Such a design ultimately required certification by Ausgrid. The defendant (“Connect”) was engaged to undertake the design work and obtain this certification. 

The 2015 Design Offer by Connect

5. On or about 11 November 2015 Connect provided a document entitled Offer of Services in respect of its proposed involvement in the Golf House redevelopment (“the Offer Document”). To the extent to which the Offer Document was specific to the Golf House project, it was in the following terms:

“Our Offer of Services

Connect is pleased to provide Project Tourism International with an offer to prepare a detailed level 3 design in order to make a connection of electrical power available to the above mentioned address by way of a standard indoor chamber substation. Connect has provided design solutions to the NSW electrical transmission and distribution market for 17 years. We can provide power solutions from single dwellings to large multi-million dollar projects.

…

This submission

This submission is complete. The offer is based on the documentation provided to Connect and our standard contract conditions. The submission includes a Scope of Works including all necessary inclusions and options.” (CB, pp. 132 – 133).

6. Other than these paragraphs which was specific to the Golf House, the balance of the Offer Document then descended into what can be described as statements by Connect attesting to its own ability to deliver projects in general in a satisfactory manner.

7. The Offer concluded in the following manner:

“In order for the works to commence please complete, sign and return 2 copies of the signature pages of the agreement. Connect will countersign both and return one copy to you.”

The 2015 Agreement 

8. The agreement referred to in the preceding paragraphs was provided at the same time as the Offer Document, and made provision for execution on behalf of the prospective client, in this case the plaintiffs. 

9. The 2015 Agreement contained inter alia the following:

“THE PARTIES AGREE

That Connect shall do work (hereafter termed “the Works”) in accordance with this contract.

The Customer shall pay Connect for the doing the Works the Lump Sum Price and any additional amounts that may become payable under this contract, at the time and in the manner specified in the contract.

…

1. THE WORKS

In response to the information provided by Glen Fernandes on 11 November 2015, Connect’s offer and the scope of the Works is defined below and in clause 5:

Consultancy works to determine the supply arrangements and preparation of a detailed design to the local electrical utility’s standards (level 3 ASP design works) in order to make a single connection of permanent electrical power to a development at the above address by way of a new single transformer standard (mini) chamber substation. This does not include any subdivision, asset relocation, multi transformer chamber substations or street lighting works. Our offer assumes and is based on the HV connection point being the existing high voltage cables in Blackburn Street. Additional fees may apply if Ausgrid determines another connection point.” (CB, pp. 139 – 140).

10. The 2015 Agreement contained a list of matters which were either included or excluded from the scope of works. The 2015 Agreement expressly included the following: “Production of a level 3 ASP design certified by the electrical utility”.

11. Importantly for present purposes, the 2015 Agreement expressly excluded “Survey work” (see clause 5.8).

12. The plaintiffs executed the 2015 Agreement through its agent Peter Israel of PTI. This occurred on 14 December 2015. 

The Warnings in the 2015 Agreement Design Plans

13. In furtherance of the 2015 Agreement, Connect prepared Level 3 ASP design plans for submission to Ausgrid. These design plans were provided by Connect to PTI prior to them being submitted to Ausgrid for certification. Each page of the design plan carried the following in bold red letters: “CHECK FOR OTHER SERVICES BEFORE BORING OR EXCAVATING.”

14. On the first of fifteen pages of the design plans, the following warning can be found: 

“WARNING

The design cannot be used for construction purposes until the location of all existing services are verified.

The information provided in this design must be checked on site and the most current information on the configuration of all services, including Ausgrid’s network, must be verified immediately before construction commences by contacting Dial-Before-You-Dig by telephone on 1100 or at information must not be older than 20 business days at the time of construction.”

15. This warning was repeated on other pages of the plan.

16. On sheet 1 of the design plans under the heading “Notes” is the following:

NOTES:

…

4. All trenching, pits cables & cables & conduits are to be surveyed marked, & photographed (inspected by compliance officer prior to backfilling).

…

7. The preparation of this design, has been undertaken giving due consideration to the existing services. The project constructor is, however, wholly responsible for verifying the exact location of existing services and permanent survey marks before construction commences, and no responsibility nor liability will be accepted by the designer of this project for damage to existing services as a result of this design.

…

15. Customer to prepare a registered survey of the substation area for easement establishment purposes. In addition customer is to provide a survey of the ductlines as they are laid and before trench is backfilled for easement creation and compliance officer inspection.”

17. On sheet 2 (which contained the drawings showing the location of the conduits to be installed), the following note appears:

“Note:

Depth of existing UG HV cables, ducts and other utilities are unknown ASP1 must verify depth & location before excavation.”

18. I shall refer to these statements collectively as ‘The Warnings’.

19. At present it is important to note that the plaintiffs never raised issue with ‘The Warnings’. They never said, for example, that The Warnings were inconsistent with Connect’s obligations under the 2015 Agreement, which involved them in being required to undertake survey work.

20. When The Warnings were replicated in the 2017 Design Plan, a topic to which I shall return, there was similarly no demur by the plaintiffs.

The 2015 Design Plans Are Finalised

21. The plans prepared pursuant to the 2015 Agreement the subject of the Level 3 ASP design envisaged that the substation required for the certification would be located at the ground floor level of the development. This was then the plan of the plaintiffs.

22. The Level 3 ASP design involving this configuration of the substation was approved by the plaintiff’s, and ultimately certified by Ausgrid.

The plaintiffs Have a Change of Plan

23. In September 2017 the plaintiffs had a change of plan. They wished to now locate the substation in the basement of the development. This change involved the preparation of the new Level 3 ASP design for submission to Ausgrid. On 15 September 2017 the plaintiff, through PTI, advised Connect of the proposal to relocate the substation, and requested that Connect review the proposed relocation of the substation, and discuss it with Ausgrid (CB 1254). 

24. Thereafter, Connect set about preparing drawings for the amended plans involving a relocation of the substation, and doing what was necessary to obtain Ausgrid’s certification. A draft amended design was provided to Mr Israel in July 2018 (CB 1283 – 1307). The amended design as certified by Ausgrid was provided to Mr Israel on 10 August 2018. 

The Attempted Implementation of the Connect Amended Design Plan

25. It was common ground between the parties that Connect did not undertake any form of physical survey work on the Golf House site, such as potholing or trenching. It was also common ground that Connect did not conduct any construction work associated with its design plan. Indeed on 9 August 2018 the plaintiffs entered into a contract to implement Connect’s Level 3 ASP Amended Design Plan. This contract was with Connect Infrastructure Constructions Pty Ltd (“CIC”). CIC was a related company to Connect. 

26. In late May 2019, CIC had arranged with Ausgrid for commissioning of the electrical equipment. This was to occur on 9-10 July 2019. It was planned that the Golf House would achieve a permanent electrical connection on 11 July 2019 (Saleh Affidavit at [73] [CB 1094]; JS-1 at 218 [CB 1315]).

27. Shortly after access to the site was granted to CIC, on 25 May 2019, CIC identified an issue in relation to the implementation of the Amended Design. It provided Aspen with a Project Advice Notice of Possible Variation which stated “[CIC] dug trial holes to find a suitable route for the Ausgrid conduits in Elizabeth Street Surry Hills but due to other services [CIC] could not find a window to install conduits” (CB 286, see also Saleh Affidavit at [74] [CB 1094]; JS-1 at 219 [CB 1316]).

28. CIC then returned to Ausgrid to work with them to find a new route for the Ausgrid conduits, whilst maintaining the original installation dates. A month later Ausgrid identified that one of the pits was damaged and could not be used (CB 288, see also Saleh Affidavit at [75] [CB 1094]; JS-1 at 220-222 [CB 1317-1319]).

29. These two issues, combined, resulted in the need to submit a redesign to Ausgrid.

30. As a result of the need for a redesign of the Amended Design Plan, the date for achieving a permanent connection was re-scheduled to 21 August 2019 (RS-1 at 253 [CB 306]).

31. The Golf House achieved a permanent connection on 18 September 2019 (Saleh Affidavit at [84]-[85] [CB 1096]).

32. The plaintiffs say that the period of delay between the projected establishment of power to the Golf House redevelopment, being 11 July 2019, and its actual establishment on 18 September 2019 was attributable to the acts and omissions of Connect. They allege that they have suffered loss as a consequence of that delay, for which they say Connect is liable.

An Overview of the Plaintiff’s Case.

33. Given that the services provided by Connect to the plaintiffs were services provided pursuant to a written contract, with a written scope of works and exclusions, one might have expected that the plaintiffs’ primary cause of action would be based on the terms of that written contract, and the scope of works. This is not the case. Rather the plaintiff’s case is founded on a relatively complex web of interlocking allegations of misrepresentations under the Australian Consumer Law (“ACL”). These representations were said to be both express and implied. The plaintiffs also relied upon the existence of implied terms and statutory warranties under the ACL.

34. In my opinion, the reason why the plaintiff’s case is structured in this manner is readily obvious; namely that the express terms of the written contractual arrangements between the parties seem to make clear that Connect was not responsible for physical Survey Work of the subterranean areas through which it had designed the Level 3 ASP Design. This was a task for either the contractor who was giving effect to the Connect design, or a specialist contractor engaged for that purpose.

35. Rather Connect’s investigatory work was to be undertaken by desktop investigations with the task of implementation of Connect’s design work, including physical survey of the site to ascertain the actual position of services below ground, being a task for the company undertaking the construction of Connect’s Level 3 ASP design. As I have indicated, this contractor was not Connect.

36. I shall deal now with the plaintiff’s case in more detail.

The November 2015 Representations

37. The plaintiffs allege that:

“The Representations

9 As part of the November 2015 offer included the following statements, made in trade or commerce, and for the purposes of inducing the plaintiffs to engage the Defendant to prepare the detailed level 3 design and route, and upon which the Plaintiffs specifically relied:

a. Connect’s experience ensures the financial and technical capacity to deliver this project.

b. Selecting Connect provides Project Tourism International certainty this project will be delivered on time and provide a clear way forward.

c. Connect Infrastructure is a market leader in design and construction in the NSW power transmission and distribution sector. Our designs are underpinned by our construction expertise. No matter the design, Connect will be able build it for you.

d. By selecting Connect, Project Tourism International is assured that the project’s power solution will be designed in accordance with all project requirements whilst meeting the electricity distributor’s guidelines.

e. Critically, Connect’s designers understand the importance of tailoring our designs to your needs.

f. This system [the Defendant’s integrated management system] has proven to achieve excellence in all aspects of project planning and delivery, safety, quality, environment and risk management.

g. The breadth and depth of our resource base allows us to take our client’s projects from concept to construction, providing a collaborative approach to the design process, with the client input a critical focus of our team ensuring that the project can deliver on requirements.

(the November 2015 Statements)”

38. The plaintiff then goes on to allege that:

“9A By the November 2015 Statements the Defendant made the following implied representations to the Plaintiffs in trade or commerce, and for the purposes of inducing the plaintiffs to engage the Defendant as the Level 3 Design contractor for the permanent connection of electricity to Golf House:

a) That the Defendant’s Level 3 Design would be to the highest standard and meet the Plaintiffs’ requirements by its implementation in the field; and

b) That the Defendant’s Level 3 Design would be fit for purpose as a design for the connection of permanent electrical power from an Ausgrid connection point available to the Golf House.

(the Implied Representations)

10 The Defendant knew or ought to have known that Project Tourism and/or Trinvass and Kelaron (as owners of The Golf House) would act on the faith of the November 2015 Statements and the Implied Representations and in reliance thereon.

11 By reason of the November 2015 Statements and the Implied Representations the Defendant expressly, or in the alternative by implication, warranted that if it was selected by the Plaintiffs as the Level 3 Design contractor for the permanent connection of electricity to the Golf House:

a. the project of designing a route would be delivered with due care and skill; and

b. would meet the highest and best standards of design so as to provide an electrical connection fit for purpose for its implementation in the field.

12 In the alternative the Defendant warranted that the services would be rendered with due care and skill pursuant to s 60 of the ACL.”

39. The plaintiffs then allege that in reliance on these matters they entered into the 2015 Agreement.

40. Next the plaintiffs plead:

“13A1 In the circumstances the December 2015 contract also included the following implied contractual warranties:

a) That the defendant’s Level 3 Design would be to the highest standard and meet the Plaintiffs’ requirements for its implementation in the field; and

b) That the Defendant’s Level 3 Design would be fit for purpose as a design for the connection of permanent electrical power from an Ausgrid connection point available to the Golf House.

(the 2015 Implied Contractual Warranties)

13A2 Further the December 2015 Contract also included an implied term that the Defendant in carrying out the services agreed to provide the services with reasonable care.”

41. The breaches alleged were pleaded in the following terms:

“28 The Defendant breached the 2017 Implied Term (or in the alternative the 2015 Implied Term) and the November 2015 Statements and the Implied Representations (or in the alternative the December 2015 Contract), and acted in a manner that made the November 2015 Statements and the Implied Representations misleading and/or deceptive, by:

a. Not conducting potholing of the site prior to making the Design Plan.

b. Failing to make a correct assessment of the site conditions, including the possibility, given the location of The Golf House, that the Design Plan may be unworkable.

c. Failing to inspect the site ahead of 28 May 2019, being only several weeks before the proposed Commission Dates.

d. Failing to warn that the nature of The Golf House’s location was such that it may be desirable for potholing and/or inspections to be conducted in advance of preparing the Design Plan.”

42. The plaintiffs did not plead any express obligations on the part of Connect to undertake the tasks referred to in the previous paragraph, said to give rise to those breaches.

43. It can be seen therefore that with the exception of the breach occasioned by a failure to warn of the desirability of potholing or other forms of inspection, the plaintiffs’ case is that Connect should have itself undertaken physical survey work on site, including potholing.

44. Each of the representations said to make up the November 2015 Representations are to be found in the Offer Document. The question therefore is not whether those representations were made, but rather whether they were actionable misrepresentations pursuant to s 18 of the ACL.

42. It is trite to say that in order to determine whether a representation is misleading and deceptive for the purposes of the ACL, it is necessary to consider the representations against the background of all the relevant circumstances (Demagogue Pty Limited v Ramensky (1993) 39 FCR 31; General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164).

43. In this case the November 2015 Representations, deriving as they do from the Offer Document, do not exist in a vacuum. Rather they were contained in the Offer Document which was in respect of specific services, and specific works. More particularly they were made in the context of a proposed contract which include the following express terms:

THE PARTIES AGREE

That Connect shall do work (hereafter termed “the Works”) in accordance with this contract.

The Customer shall pay Connect for the doing the Works the Lump Sum Price and any additional amounts that may become payable under this contract, at the time and in the manner specified in the contract.

…

1. THE WORKS

In response to the information provided by Glen Fernandes on 11 November 2015, Connect’s offer and the scope of the Works is defined below and in clause 5:

Consultancy works to determine the supply arrangements and preparation of a detailed design to the local electrical utility’s standards (level 3 ASP design works) in order to make a single connection of permanent electrical power to a development at the above address by way of a new single transformer standard (mini) chamber substation. This does not include any subdivision, asset relocation, multi transformer chamber substations or street lighting works. Our offer assumes and is based on the HV connection point being the existing high voltage cables in Blackburn Street. Additional fees may apply if Ausgrid determines another connection point.

…

5. LIST OF INCLUSIONS AND EXCLUSIONS

The following list of inclusions and exclusions is provided to further define the scope of Works being undertaken.

Tasks included or excluded in lump sum price	Inc	Excl
Design
1. Production of a level 3 ASP design certified by the electrical utility	√
…
8. Survey work	√
9. New feeders out of Zone substations or modifications to the network remote from the nominated site	√
10. Consultants to design/specify grouting/backfill material and trafficable cable pits	√

(CB 139 – 142)

47. To my mind the draft agreement, which was later executed on behalf of the plaintiffs, provides an essential aspect of background against which the representations contained in the Offer Document, must be considered. In my opinion that process denies the possibility that the November 2015 Representations could carry with them a representation or an obligation of Connect to conduct physical surveys of the site, including potholing.

48. In my view, the November Representations were made in respect of a contract which did not require Connect to undertake physical survey work such as potholing.

49. Thus in my view the existence of the express terms of the 2015 Agreement, to which I referred, deny the 2015 Representations of their pleaded force.

50. As to the Implied Representations (ASOC paragraph 9A), and the Warranties (ASOC paragraph 11), these alleged matters relied upon for their force on the existence of the 2015 Representations. Accordingly in my view as the 2015 Representations are not made out, the plaintiff’s case in respect of these matters must also fail, for the same reasons.

51. Similarly the allegations of warranty to render services with due skill and care pursuant to s 60 of the ACL must also be understood as applying to the provision of the services contemplated by the contract. As I have indicated, in my view, those services did not involve physical survey work, or any physical inspection of the site.

52. I should also add that the evidence discloses that no one on behalf of the plaintiffs ever read the Offer Document and said to give rise to the various representations.

53. Indeed, there was no evidence that the contents of the Offer Document was ever conveyed to Mr Spanos, the sole director of the plaintiffs. Mr Spanos gave no evidence that he read the Offer Document or that a copy was ever provided him. His evidence as to what was conveyed to him when he made the decision to engage Connect, was a discussion he had with Mr Israel in “early November 2015” (that is to say before 16 November 2015). That discussion was based on Mr Israel’s prior experience with Connect, and Mr Israel’s conclusion having read unidentified information on “their website” and a discussion with unknown persons.

The November 2017 Contract

54. The plaintiffs plead that an exchange of emails between 30 October 2017 and November 2017 constituted offer and acceptance leading to the November 2017 Contract.  This was the contract necessary to deal with redesign to allow for the relocation of the substation.

55. The plaintiffs plead that the November 2017 Contract was a stand-alone contract, that is to say that it did not constitute a variation of the 2015 Contract. Connect asserts that the November 2017 redesign were undertaken pursuant to a variation of the 2015 Contract. 

56. The reason why this issue may be of importance is that if, as Connect alleges, the 2017 works were carried out pursuant to a variation to the 2015 Contract, the exclusion of “survey work” in the 2015 Contract would extend to 2017 Contract. 

57. I shall return to this issue shortly. 

58. Notwithstanding that the plaintiffs’ plead that the 2017 Contract was a stand-alone contract, and thus unrelated to the 2015 Contract, they also allege that the 2015 Representations, and the 2015 Implied Representations were continuing representations as at 2017. 

59. The plaintiffs allege that they relied upon those representations, and in so doing entered into the 2017 Contract. They say that, in all the circumstances, of their reliance on 2015 Representations and Implied Representations the 2017 Contract included the Implied Contractual Warranties (see ASOC paragraph 13J). They also plead that alternatively there is to be implied into the 2017 Contract contractual warranties to exercise due skill and care (ASOC paragraph 14). 

60. I have already concluded that in the circumstances of the case, the plaintiffs have not established misleading and deceptive representations in the nature of the 2015 Representations, either express or implied. I thus find even if such representations were continuing, as the plaintiffs allege, they were not actionable, for the reasons which I have endeavoured to earlier explain. 

The Design Representations

61. The plaintiffs allege that in providing them with a draft of the design plan for submission to Ausgrid to deal with the change of substation location to the basement of the Golf House, Connect impliedly represented to the plaintiffs as follows:

“14B By providing the Design Plans, by implication the Defendant represented to the Plaintiffs that:

a. The Design Plans provided a design that was feasible and if implemented would achieve a permanent electricity connection to The Golf House;

b. The route designated in the Design Plans was a suitable route for the Ausgrid conduits;

c. The Design Plans were a true and accurate reflection of locations through which Ausgrid conduits could be channelled;

d. In preparing the Design Plans the Defendant had made a suitable assessment of the site conditions, including as to the location of The Golf House and the risks associated with such a location (due to its age and density of services in the area);

e. The Defendant in preparing the Design Plans had exercised due care and skill in selecting a suitable route for the Ausgrid conduits;

f. The Defendant in preparing the Design Plans had satisfied itself that pit 54985 was useable for the purposes of the Design Plans;

g. The Defendant in preparing the Design Plans had exercised due care and skill and provided a design that was feasible, and if implemented would achieve a permanent electricity connection to The Golf House;

h. The Defendant in preparing the Design Plans had done so in accordance with the Express Representations;

i. The electricity cables and conduits for The Golf House could be installed as specified in the Design Plans; and

j. A permanent electricity connection to The Golf House could be obtained by implementing the Design Plans.

(the Design Representations)”

62. I do not consider that, in all of the circumstances of the case, the Design Representations were made by Connect. Rather in my view the correct analysis is as submitted by the defendant namely; that if Connect represented anything by providing the Amended Design, it was no more than its opinion that the design complied with the terms of the contract under which it was provided: McWilliam’s Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723 at 729.

63. It should also be noted that first the 2017 Design Plans also contained the Warnings, and secondly that the plaintiffs had been aware of the Warnings and the 2015 Design Plans were provided to them. The Warnings in my view are inconsistent with the Design Representations, and produce an important background fact which in the circumstances would deny the 2017 Design Representations of their pleaded force.

Was There a Variation to the 2015 Contract? 

64. The plaintiffs submitted that the 2015 Agreement had been discharged by performance, and as such as at September 2017 there was no contract on foot between the parties capable of being varied.

65. I do not accept that this is the case. I will shortly outline the exchange by email that occurred in relation to the 2017 Agreement. These exchanges in my view demonstrate clearly the continued involvement of Connect in the Golf House project after its fees were paid in respect of the first Design Plan. That involvement must have been undertaken pursuant to the 2015 Agreement, as there was no evidence of any other agreement pursuant to which Connect continued to provide services to the plaintiffs, after that date.

66. I turn then to the issue of contractual variation. As the plaintiffs correctly contended, even if a contract varies an earlier contract there are in existence not one, but two contracts. 

67. In Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520 High Court (per Gleeson CJ, Gaudron, McHugh and Hayne JJ) stated:

“When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists.”

68. I took it to be common ground between the parties that the determination of the issue as to whether a second contract varied the first was to be determined by well-known principles of the objective theory of contract. 

69. Applying such principles, it seems to me that an objective businessman bystander, considering the interactions between the parties in relation to the 2017 redesign would have little difficulty in concluding that the 2017 Level 3 ASP redesign was undertaken pursuant to variation of the 2015 Agreement. 

70. The proposal to relocate the substation to the basement car park entry was first communicated to Connect on 15 September 2017. The emails between Connect and PTI at that time make clear that Connect remained actively involved in the project following the certification of the initial design by Ausgrid.

71. An email of 15 September 2017 from Glen Fernandes of PTI to Kiran Tiwari of Connect is in the following terms. 

“Hi Kiran,

As discussed with Peter on the phone earlier, we are proposing to locate the substation below the carpark entry / exit off Blackburn Lane.

This allows us to provide the 4m clearance above the Transformer Hatch, and adequate headroom in the substation.

We have a fire stair adjacent to the proposed Substation location, could this be used as access? If not, we would need to consider locating the access stair off the G.02 Plant Room to below.

If you could please review and discuss with Ausgrid if this location is acceptable.

Kind Regards,

Glen Fernandes: Architect”

72. On 18 September 2017 Connect raised the issue with Ausgrid (CB 580). Emails then passed between Connect and Ausgrid in late September 2017 (see CB 579 and following). The results of these communications were passed on by Connect to PTI. Ausgrid ultimately requested alterations to the plans which had been provided. On 17 October 2017 PTI provided to Connect CAD files reflecting Ausgrid’s requested changes (CB 572).

73. Crucially on 30 October 2017 Steve Hodgson of Connect emailed Peter Israel of PTI in the following terms:

“Peter,

Good afternoon – The redesign (variation) for this project is $22,800. This is a discounted price due existing site information but will require a complete redesign. I will formalise if you require but at present an email of acceptance will be sufficient.

Many thanks and please reply only to me

Steve Hodgson” (CB 582)

74. Mr Israel responded in the following terms:

“Hi Steve

We are seeing our Client in the morning so will get the OK

Can we now then tell Council that we can put the substation in the basement

As this is important for us to be able to tell them

Thanks and kind regards

Peter” (CB 583)

75. Mr Hodgson replied as follows:

“Peter,

Have you received an OK to proceed – I have Ziad chasing me for Network standards (which is fine) but we need to be engaged

Many thanks

Steve Hodgson” (CB 585)

76. On 2 November 2017, Mr Israel emailed Connect in the following terms:

“Hi yes we want to proceed

Is there something u need to have signed

Kind regards

P”

77. No new contract was entered into.

78. The exchange of emails reveal that as at October 2017 Connect remained involved in the project. They also reveal that the plaintiffs have never demurred from Connect’s characterisation of the 2017 works, as being a “redesign” or “variation” of the 2015 works. Also relevant is the fact the plaintiffs were offered a discount on Connect’s fees on account of Connect’s familiarity with the site. There was no fresh contract prepared, the parties being obviously content for Connect to proceed with the redesign of the plans consequent on the change of plans as to the relocation of the substation, on the basis of a simple exchange of emails. 

79. These facts to my mind, would inevitably lead the objective reasonable businessman to conclude that the 2017 dealings were being undertaken pursuant to the 2015 Agreement, varied to account with the plaintiffs’ change of plan for the location of the substation. 

80. As a consequence, I am of the view that the exclusion of survey works contained in the 2015 Agreements remained part of the contract between the parties pursuant to which the 2017 redesign was undertaken. I should also add that, in any event, the draft Level 3 ASP Design Plans prepared by Connect in respect of the 2017 redesign contain the same warnings as the 2015 design plans. These warnings, to my mind, make it abundantly clear that Connect was not contracting to undertake any form of physical survey work in respect of the 2017 redesign, a fact that was known to the plaintiffs at least from the fact of the Warnings given in 2015 being repeated in 2017.

81. Thus, the same reasons which led me to conclude that the clear limitation of Connect’s role agreed by the parties preclude the possibility of representations effectively obliging Connect to undertake physical survey work lead to the same conclusion in respect of the 2017 redesign. 

Was there a Duty to Warn?

82. As I have earlier indicated, the plaintiffs allege as a breach the following term:

“28 The Defendant breached the 2017 Implied Term (or in the alternative the 2015 Implied Term) and the November 2015 Statements and the Implied Representations (or in the alternative the December 2015 Contract), and acted in a manner that made the November 2015 Statements and the Implied Representations misleading and/or deceptive, by:

…

d. Failing to warn that the nature of The Golf House’s location was such that it may be desirable for potholing and/or inspections to be conducted in advance of preparing the Design Plan.”

83. As I have earlier noted there is no express pleading of such a duty to warn on the part of Connect. 

84. Be that as it may, before the 2017 Amended Design was provided to the plaintiffs in 2017 they had already received such warnings. In addition, the plaintiffs, from their own knowledge, were aware of the risks of the construction contractor finding subterranean obstacles, and were aware that it was desirable to carry out inspections of the area of the cable route.

85. As to the first matter, as I have earlier discussed, the warnings about the need to undertake physical survey work were littered throughout the Initial Design, and the draft Amended Design. There were relevantly identical warnings in both sets of Design that is to say in both the 2015 and 2017 design plans.

86. The plaintiffs understandably sought to downplay the Warnings. They criticised them as being of a general nature; of being not properly communicated; or being self-evident. They contended that they could not be read as conveying that Connect had not undertaken physical survey.

87. I do not accept these submissions. The Warnings, to my mind, more than adequately conveyed to the reader the fact that Connect were not undertaking physical survey tasks which the plaintiffs now allege was its obligation.

88. As to the second matter, namely the plaintiff’s knowledge of the desirability for someone to undertake inspections of the cable route, Mr Spanos in cross‑examination stated (T 93 lines 15-25):

“Q. You didn't know he dug a whole or not a dug a hole, did you?

A. I knew he hadn't.

Q. So, you knew he hadn't, and you knew because of your experience in this area and the age of things happening in the area that there could be problems?

A. Yes, I knew that there could be problems, absolutely. Common sense.”

89. The reference to “he” being a reference to Mr Saleh the then CEO of the group of which Connect was a part.

90. Mr Prentice gave similar evidence, namely that he knew about such risks, and knew that Connect had not carried out intrusive physical survey work. Further, the evidence discloses that Mr Israel not only knew that intrusive works had not been carried out by Connect, in fact he sent an email to Mr Spanos and Mr Prentice about the topic, in which he stated: “because coming along Eliz[abeth] Street presents so many issues and problems for us being the location of the hoarding as well as other underground services that are along Elizabeth St, plus issues of the disruption to Elizabeth St and closing off major roads.”

Conclusion

91. For these reasons, I am of the view that the contractual arrangement between the parties make clear that Connect was not contracting to undertake physical survey work in the nature of potholing or trenching.

92. This was the obligation of others. 

93. This inconvenient fact to my mind cannot be overcome by an elaborate recourse to representations and warranties which could only apply to Connect’s contractual obligations in fact. Put simply the plaintiffs have attempted to expand Connect’s obligations beyond those for which the parties had contracted.

94. In that attempt in my view the plaintiffs have failed.

95. The manner in which I have decided these proceedings make it unnecessary for me to consider certain issues which were raised by the parties. I have thus not decided those issues.

96. I should mention however one matter. The plaintiffs in their final submissions submitted that certain representation were representations as to future matters. This had not been pleaded by the plaintiffs, who later correctly withdrew the submission accepting that pleadings were necessary. (See Lawfund Australia Pty Limited v Lawfund Leasing Pty Limited (2008) 66ACSR 1 at [59] per Brereton J).

Loss

97. Finally, I should also add that even if the plaintiff had made good their case in liability against Connect, I would not have concluded that the plaintiffs had demonstrated that they have suffered any loss, as a result of any act or omission of Connect. 

98. As the issue of loss does not arise on my reasoning, it would not be consistent with s 56 of the Civil Procedure Act 2005 (NSW) to engage in a detailed analysis of the issues going to loss, other than to say that, for reasons articulated by Connect by way of closing submissions, I do not believe the plaintiffs have suffered any loss caused by Connect’s acts or omissions.

Conclusion 

99. There should be judgment and verdict for the defendant with costs.

Orders

1. That there be judgment and verdict for the defendant.

2. That the plaintiffs pay the defendant’s costs.

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Decision last updated: 02 September 2022