Wauters Nominees Pty Ltd v SUNOCO Oil Australia Pty Ltd
[2001] WADC 115
•18 MAY 2001
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: ALBANY
CITATION: WAUTERS NOMINEES PTY LTD -v- SUNOCO OIL AUSTRALIA PTY LTD [2001] WADC 115
CORAM: BLAXELL DCJ
HEARD: 16, 17 OCTOBER 2000, 4, 5 JANUARY 2001
DELIVERED : 18 MAY 2001
FILE NO/S: CIV 511 of 1999
BETWEEN: WAUTERS NOMINEES PTY LTD
Plaintiff
AND
SUNOCO OIL AUSTRALIA PTY LTD
Defendant
Catchwords:
Contracts - General contractual principles - Whether negotiations between parties concerning proposed construction by plaintiff of warehouse for defendant gave rise to a binding contract between the parties - Whether a repudiation of that contract when defendant entered into agreement with alternative builder - Acceptance of alleged repudiation and claim for damages including loss of profit - Turns on own facts
Legislation:
Nil
Result:
Plaintiff entitled to damages of $42,160 plus interest
Representation:
Counsel:
Plaintiff: Ms P E Cahill
Defendant: Mr I A Morison
Solicitors:
Plaintiff: Jackson McDonald
Defendant: Haynes Robinson
Case(s) referred to in judgment(s):
Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310
Tern Minerals NL v Kalbara Mining NL (1990) 3 WAR 486
Case(s) also cited:
Masters v Cameron (1954) 91 CLR 353
Timmerman v Nervina Industries (International) Pty Ltd (1983) QR 1
BLAXELL DCJ: The parties to this action each conduct business in Albany, the plaintiff as a building contractor, and the defendant as a distributor of batteries. During 1998 the parties entered into negotiations with a view to the plaintiff constructing a new office and warehouse building for the defendant. The plaintiff claims that these negotiations resulted in a binding contract between the parties.
It is common ground that the defendant subsequently arranged for another builder to construct a smaller version of the office and warehouse building. The plaintiff contends that the defendant thereby repudiated the alleged contract, and now claims damages including loss of profit.
The negotiations which allegedly gave rise to a contract took place between the plaintiff's managing director, Mr Jan (also known as "John") Wauters and the defendant's director, Mr Darryl Bennett. At times, the plaintiff's quantity surveyor, Mr John Wildman, became involved in the negotiations, and on one occasion, another director of the defendant (Mrs Helen Bennett) was present.
As can be expected, the plaintiff's witnesses and the defendant's witnesses have substantially different versions as to what occurred. However, somewhat unusually there are also significant discrepancies between the witnesses for each of the parties with regard to certain key events. Unfortunately there is little in the way of contemporaneous documents or other objective materials to assist in unravelling the conflicts in the evidence, and my factual findings must depend in large measure upon my impressions of the credibility of each of the witnesses.
The principal determination that I am required to make is whether a contract was made between the parties on 20 May 1998 (as alleged in par 3 of the re‑amended statement of claim), or alternatively on or about 17 July 1998 (as alleged in par 4). Before coming to this determination I intend to outline the evidence of all witnesses by reference to particular chronological events, and at the same time make certain preliminary observations relevant to credibility.
The background to the dispute
The defendant is an importer and distributor of oils, batteries, and related products, and operates a family business which was commenced by Mr and Mrs Bennett after they ceased farming in 1989. For a number of years the business was conducted from leased premises at 157 Chester Pass Road, Albany. However, in 1993 Mr and Mrs Bennett purchased the nearby property at 146 Chester Pass Road, with the intention of eventually relocating the business there.
Before the business could be relocated to 146 Chester Pass Road it was necessary to construct a new office and warehouse building. . As the lease on 157 Chester Pass Road was due to expire in August 1998, Mr and Mrs Bennett commenced steps towards construction of the new building in about 1996.
The first step taken was to obtain what Mr Bennett described as "pre‑approval" from the Shire of Albany. This involved attending at the Shire to ascertain relevant guidelines, deciding on the type of construction, and then submitting preliminary plans to the Shire. The Shire's minimum requirement was a "steel type, ironclad building with a brick front", but the Bennetts chose:
"… a new way to go which was concrete tilt-wall. We chose to go this way for security and better growth of value on our investment." (T 179)
During late 1997 the Bennetts consulted a Perth architect, Mr Brian Adcroft, with a view to progressing the project. On 13 January 1998 they signed a short form of written agreement with Mr Adcroft (Exhibit 20) which set out the extent of the services he was to provide. These services included design development for planning approval, documentation for the building licence, and administration of the construction contract.
The Bennetts preferred that a local builder in Albany should carry out the construction work. However, there were only two builders in Albany with experience in concrete tilt‑wall construction, and one of these was the plaintiff. In this regard the plaintiff company operated a well‑established family business involved in a wide variety of projects, and it had a reputation for high quality work. Furthermore the plaintiff had recently completed, or was about to complete, its own new business premises which were of the concrete tilt‑wall type. Mr Bennett was reasonably well‑acquainted with Mr Wauters, and it is his evidence that the plaintiff was his "preferred builder" (T 276 - 7).
According to Mr Bennett, he first visited the plaintiff in connection with the proposed building in February 1998, and a secretary showed him around the then nearly completed new business premises. In late March or April 1998 he called back once again and enquired of Mr Wauters whether "he would be interested in giving some price on this type of building when we got our plans done". Mr Wauters was eager to do the work and Mr Bennett arranged to drop in the plans once they were drafted (T 181). Although Mr Wauters was not cross‑examined as to these earlier conversations, little turns on them, and there is no reason why I should not accept Mr Bennett's evidence of the same.
The general tenor of the evidence is that during early 1998 Mr Bennett was doing all that he could to expedite the defendant's new building. In this regard the lease on the existing premises was due to expire in August 1998, and it was also likely that winter rains would hinder construction (T 252 - 3). However, because the building industry was "flat out", Mr Bennett was experiencing a delay in obtaining the necessary architectural and structural engineering plans (T 181 - 2, 185).
The first meeting on 20 May 1998
It is common ground that by 20 May 1998 Mr Bennett had received an incomplete set of plans, and that he had made an appointment to see Mr Wauters on that date. The appointment was kept, and there are two sharply differing versions as to what took place.
According to Mr Wauters the appointment was made so that Mr Bennett could bring in some plans and "come and have a look at our new premises that had only just been built" (T 20). Mr Wauters had arranged for the quantity surveyor, Mr Wildman, to be present, and when Mr Bennett arrived, the three men went out the back of the office to have a look at the new construction. It is Mr Wauters' evidence that Mr Bennett appeared to be most impressed by the new building and said "John if you can guarantee to give me a job similar to this, then I would like you to build my building". Mr Wauters responded that that would be no problem and the three men then returned to the office (T 21).
Once inside the plans were examined and it was agreed that Mr Wildman would "work out the quote". Mr Bennett also asked when construction could start and Mr Wauters said "within a fortnight". At Mr Bennett's request, Mr Wauters and/or Mr Wildman provided him with the plaintiff's builder's registration number so that he could apply to the Shire for a building licence (T 21). Mr Wauters agreed to provide the builder's registration number because he believed that the parties had reached a binding agreement for the plaintiff to carry out the construction (T 48).
It is Mr Wauters' evidence that at some stage during the first meeting Mr Bennett told him that "he was getting two other quotes or that he had two other prices". However, Mr Bennett at the same time said that "he wasn't considering the other two prices … because of the quality of their work" (T 38 - 9, 40, 47).
Mr Wildman's evidence as to the first meeting (T 66 - 7) is broadly consistent with that of Mr Wauters, but he does not corroborate all of the conversations that Mr Wauters refers to. He also identifies one of his business cards with the plaintiff's builder's registration number written on the back (Exhibit 17) as being the one provided to Mr Bennett during the first meeting.
According to Mr Bennett all that happened on 20 May 1998 was that he dropped in a set of incomplete plans and told Mr Wauters that he would bring the remainder as soon as they were available. He did not in any way indicate that he wished the plaintiff to build the building nor did he obtain the plaintiff's builder's registration number at that time (T 231 - 2). Although he was obtaining quotes from two other builders he did not inform Mr Wauters of that fact. However, he may have told Mr Wauters that he had "had a look at a couple of other builders around" and was not overly impressed with their work (T 231).
During cross‑examination Mr Bennett admitted that although at that time he was seeking quotations from the two other builders, he had no serious intention of contracting with either of them. In his view Mr Wauters was "the only man in town" capable of the work and he was obtaining the two other quotes simply to "ensure that Mr Wauters' price was reasonable" (T 276 - 8). As long as Mr Wauters' price was reasonable, Mr Bennett was going to give him the job (T 286 - 7).
Although Mr Bennett initially testified that Mr Wildman was not present at the meeting on 20 May 1998 (T 188, 229) he did later concede that the latter "could have been" there (T 230). The evidence overall satisfies me that Mr Wildman was in fact present at that first meeting on 20 May 1998.
Subsequent events up until the plaintiff's quotation
Mr Bennett received a complete set of plans from his architect in about mid‑June 1998 and immediately provided copies to the three builders (including the plaintiff) from whom he was obtaining quotations. According to Mr Bennett, he had by then informed Mr Wauters of the fact that he was obtaining three quotations, and had also told him of the "closing date" for the same (T 188 - 189, 200 - 201). (Mr Wauters of course contends that he was first told of the involvement of the other two builders on 20 May 1998.)
On 26 June 1998 Mr Bennett lodged an application for a building licence (Exhibit 1) with the Shire of Albany. The building licence application form had been partially completed by the plaintiff's architect, and forwarded to Mr Bennett along with the set of complete plans. It is Mr Bennett's evidence that when he attended at the Shire to lodge the form, the counter clerk said:
"Well, we're going to need a builder's number to put on the form, a builder's name. It doesn't matter if it’s the one that doesn't get the job. It can be changed at a later date but when the application goes in it needs a builder's name and a number on it." (T 194)
It is also Mr Bennett's evidence that when he was told this he decided to obtain the plaintiff's builder's registration number in order to insert it into the form. He thought that this "… will be enough, seeing as how we didn't have to worry whether it was the person who was going to get the job or not" (T 194). Mr Bennett then attended at the plaintiff's business premises and saw Mr Wildman who provided him with a business card endorsed with the required number (Exhibit 17). This of course contradicts the evidence of the plaintiff's witnesses that the card was provided to Mr Bennett at the first meeting on 20 May 1998. In this regard, Mr Wildman cannot recall any other meeting with Mr Bennett prior to the plaintiff providing its quotation to the defendant on 7 July 1998 (T 119).
The delivery of the plaintiff's quotation
Once Mr Bennett had delivered the complete set of plans, Mr Wildman set to work to prepare the plaintiff's quotation. It is common ground that this quotation was delivered by Mr Wauters to Mr Bennett at the defendant's business premises on 7 July 1998. However, there are differing versions as to what occurred at this time.
According to Mr Wauters, he made a prior arrangement with Mr Bennett to meet the latter at his office at 7.00 am on 7 July. When Mr Wauters arrived Mr Bennett was occupied in doing business with some customers. For this reason Mr Wauters simply handed Mr Bennett the quotation (Exhibit 3) in a sealed envelope and then departed without any significant discussion taking place (T 26 - 7). Mr Wildman did not accompany Mr Wauters to the defendant's premises on that date (T 53).
Mr Wildman has testified that after he prepared the quotation, he handed it to Mr Wauters who had an appointment to deliver it to Mr Bennett. Mr Wildman was at the plaintiff's office when Mr Wauters returned from seeing Mr Bennett, and according to him Mr Wauters said that:
"… He had met Mr Bennett. Mr Bennett had said words to the effect that the quotation was very competitive and that Mr Wauters then shook hands. They shook hands and that they had a deal on this new building." (T 75)
Quite obviously if this statement was made to Mr Wildman it would be inconsistent with Mr Wauters' evidence that there was not any discussion with Mr Bennett at the time of delivering the quote.
Mr Bennett's version is that on 7 July 1998 Mr Wauters and Mr Wildman both arrived at his office to deliver the quote. At that time Mr Bennett was busy on the phone or discussing business with a customer, but when he had finished, he welcomed them both and was handed an envelope with a price in it. Mr Bennett then opened the envelope, looked at the contents, and said "It’s a bit more than I thought it was going to be". Mr Bennett also said:
"I'll have to look at it. We can't make a decision, naturally enough, straight away. We've got to wait for the other quotes to come in." (T 197 - 8)
It is also Mr Bennett's evidence that at some stage on 7 July 1998 Mr Wauters:
"… expressed interest in the fact that we could sit down, toss these plans … around, and come up with savings or ways savings could be made, because there seemed to be an extreme way that the building was designed in some aspects of the building." (T 203)
Mrs Bennett was present at the defendant's premises when the plaintiff's quotation was delivered, and she has yet another version of what occurred. She confirms her husband's evidence that Mr Wauters and Mr Wildman were both there, and that after opening the envelope Mr Bennett said "Well actually its more than I thought it would be". However, according to her, the conversation then proceeded as follows:
"… after Darryl had looked at the quote John Wauters said to Darryl, 'Have you asked anyone else to give a quote?' and Darryl said, 'Well, I haven't asked anyone myself, but other people have asked me can they give a quote.' He said, 'I've had a couple of phone calls from Perth builders and a couple from builders that are now based in Albany. I've told the Perth builders I'm not interested, but the two that are based in Albany are going to give me quotes.'
Did Mr Wauters say anything in response to that?---He seemed a bit upset, the fact that these other builders had tendered for or had quoted for the job, and he said, 'I think I know how that's happened. My glass supplier' - or one of his other suppliers - obviously he left the quotations, the plans and the specifications on his desk and the other builders had come in and seen them and he said - you know, he didn't say he was cross, it was just his manner, that it sounded like he was cross that his supplier would do this, and that's how they had found out about the job. Obviously since we hadn't asked them, they obviously had to find out about it somehow and Mr Wauters seemed to be under the impression that that's how they found out about it.
Then after that discussion about the other tenderers was anything else said by anyone?---Darryl just said to Mr Wauters, 'Well, these other tenders that are coming in, quotes coming in, are going to be in by the end of the week, and so over the weekend we will look at them all and we'll get back to everyone next week." (T 328 - 9)
This version of the conversation totally contradicts the evidence that Mr Bennett had previously told Mr Wauters that he was obtaining quotes from two other builders. The effect of Mrs Bennett's evidence is that on 7 July her husband told Mr Wauters for the first time that he had been approached by other builders (not that he had approached them), and that the latter seemed to be upset by this news and speculated that the other builders might have come to know of the project through the carelessness of his glass supplier.
It should be noted that Mr Wauters and Mr Wildman were not cross‑examined as to Mrs Bennett's version of events, and accordingly I do not have the benefit of their comments on this evidence. Furthermore it was not put to Mr Wildman that he was present at the defendant's premises on 7 July 1998.
The meeting on 17 July 1998
According to Mr Bennett the closing date for tenders was extended by a few days to accommodate the other two builders. The three quotations that were then received were for the following amounts:
Plaintiff $392,889
Mackaway Constructions $397,977
Tectonics $424,233
These figures should be compared to the estimated value of construction set out in the application for the building licence lodged on 26 June 1998 which was $380,000.
It is Mr Bennett's evidence that after receiving the three quotations he and his wife went through them for the purposes of comparison. Although the plaintiff had come up with the cheapest price, after allowing for items not included it was in fact marginally higher than the second lowest one. According to Mr Bennett, he and his wife decided not to accept any of the tendered prices because they were all too dear and letters were sent to the other two builders to that effect. However, Mr Bennett decided to visit Mr Wauters personally because the latter had previously expressed an interest in "tossing ideas around" in order to make savings (T 203, 207 - 9). (It should be noted that the letters to the other two builders were not discovered by the defendant, and were not produced despite time being given to do so during the trial.)
It is common ground that Mr Bennett made an appointment to meet with Mr Wauters on 17 July 1998. It is Mr Wauters' evidence that prior to that meeting he had had no previous response to the plaintiff's quotation, and that when Mr Bennett arrived, the following discussion took place:
"Mr Bennett said, 'John, I'm (pleasantly) surprised with your quote. It's okay. We'll carry on.'
Did he say anything else?---I'm sure lots of things were said. We were all in a good mood and very pleasant at the time.
What did you say?---I said, 'Darryl, are you quite sure about this? Are you happy with everything?' He says, 'Yes. All I've got to do is organise my finance' and we shook hands on it. That's what I believed happened, yes." (T 27)
It is also Mr Wauters' evidence that he understood Mr Bennett's reference to finances to mean not that the contract was subject to finance but that it was simply a matter of the latter going to "see the bank and fix it up - that he had reviewed matters, arrangements previously" (T 43).
Mr Wildman did not give any evidence concerning the meeting of 17 July 1998 and was not asked any question in relation to the same. However, his evidence as to what Mr Wauters allegedly said after delivering the quote on 7 July bears a marked similarity to the latter's testimony as to what occurred on 17 July.
Mr Bennett has a totally different version of the meeting on 17 July. It is his evidence that after arriving he told Mr Wauters that the defendant was not accepting any of the tendered prices. He also explained that there had been "a 20 per cent crash in the Australian currency against the US currency and as an importer it was causing huge problems to our cash flow". The two men discussed the situation generally, and Mr Wauters then called in Mr Wildman (who had not been present until then) to review the costings in the quote (T 207 - 8). It is Mr Bennett's evidence that what then happened was that:
"… we went through the costings of it all and Mr Wildman looked at them all and he said, 'Yes,. See that there, I can do this. See that there' - and he justified the costings. He couldn't see where there was some way that savings could be made. So Mr Wauters was happy with the fact that his costings were right, how it was all done, that there was no way that they had made a mistake on their costings, and then I said, 'Well, the only thing out of this is, I'd like to be able to sit down with you at a later date and we can toss these plans around,' because there were indications of the fact that savings could be made in different areas, like changing the floor type structure, a 6‑inch concrete suspended floor to say, a timber and steel type floor, the stairs being changed, of some other ways of different changes, and we both agreed that once we got - because it was basically too late in that year to start doing anything anyway, because it was the middle of July and it was pouring with rain, to start a building site - - -." (T 208)
According to Mr Bennett, he and Mr Wauters then agreed that it would be best to have another look at the project at a later date, most probably in January or February 1999 (T 209).
Mr Wauters agrees that there was a discussion between him and Mr Bennett about the drop in the Australian dollar, but asserts (at T 28) that this took place "probably three or four weeks, may be a bit longer" after the meeting on 17 July 1998. (In my view Mr Wauters' statement (at T 27) that the discussion occurred "before then" clearly refers to a time prior to Mr Wildman informing him that Mr Bennett had been in). At the time of this later meeting Mr Wauters was already aware of the drop in the dollar, and according to him, the discussion between the two of them was as follows:
"He said, 'John, because all my business is imported, mainly from the United States, I've got to revise what I'm doing . Perhaps we may have to reduce the size of the building, but I would like time to have a good look and see what this dollar does.' I agreed to that. I said, 'Darryl, I know where you're coming from. I've been in the import export business myself. I used to have a company as such and I know exactly what your problem is. That's fine. Come back to me when you're ready.' " (T 28)
The grant of the building licence
It is common ground that the defendant lodged the application for the building licence on 26 June 1998 and that the building licence was issued by the Shire of Albany on 6 August 1998 (see Exhibit 5). It was a requirement of the Shire that the licence be issued to and collected by a registered builder. In the present instance the licence was issued in the name of the plaintiff and it was collected personally by Mr Wauters.
When collecting the licence the plaintiff had to pay building fees and levies to the Shire totalling $1,520. The plaintiff subsequently forwarded an invoice to the defendant for this sum (Exhibit 6 dated 12 October 1998) and was duly reimbursed by Mr Bennett.
Before the building licence issued the plaintiff had been obliged to deal with a number of requisitions from the Shire of Albany concerning matters such as storm water disposal, the location of a fire hydrant, dangerous goods storage, and a structural engineer's certificate.
Mr Wildman was the person who handled these queries, and it is his evidence that he did so after being instructed by Mr Wauters to "expedite the building licence" on 7 July 1998 (Mr Wauters having informed him of the contract on that date with the defendant). In order to resolve the Shire's requisitions Mr Wildman had to liaise with other authorities and with Mr Bennett. According to Mr Wildman:
"I had to provide certain information and to provide that I had to talk to Mr Bennett and he was providing certain information, so we were basically working together to obtain that licence." (T 122)
It was put to Mr Wildman during cross‑examination that Mr Bennett was never aware of the work being done at that time to expedite the building licence, but Mr Wildman emphatically denied this (T 122 - 127).
Mr Bennett's evidence on this issue is less than clear. His evidence‑in‑chief is to the effect that after deciding to defer the project on 17 July he "didn't want to press the issue" of the building licence. As far as he was concerned "if the plans didn't get passed or got passed to me it was irrelevant at that stage" (T 210). When he later received the plaintiff's invoice (Exhibit 6) he "wasn't happy" about reimbursing the building licence fees because Mr Wauters had gone ahead and obtained the licence without contacting him again (T 211, 272).
At times during cross‑examination Mr Bennett maintained that he did not become aware of Mr Wildman's discussions with the Shire until after the building licence issued (T 260, 263, 267 & 291). However, elsewhere during cross‑examination he also admitted to having telephone conversations with Mr Wildman concerning the matters the subject of the requisitions from the Shire (T 260, 262, 267 - 8). It is impossible to reconcile Mr Bennett's varying assertions on this issue.
According to Mr Wildman his work in expediting the building licence occurred on various dates through to and including the last week of July 1998 (T 83), and this is corroborated by the contents of Exhibit 16.
The negotiations to vary the project
Following the grant of the building licence, nothing of significance occurred between the parties until early in 1999. According to Mr Wauters, he did not feel any need to contact the defendant "because I believed that when Mr Bennett would be ready he would come and talk to me. I trusted Mr Bennett" (T 56).
It is Mr Bennett's evidence that in early January 1999 he telephoned Mr Wauters who then called at the defendant's office. The defendant had decided that it wished to reduce the scale of the project and Mr Bennett gave to Mr Wauters a list of suggested variations (Exhibit 14A). He told Mr Wauters "this is sort of ideas I'm sort of thinking. Can you come up with any or can you sort of think of anything … regarding these cost savings" (T 212). Mr Wauters took the list away but Mr Bennett did not hear anything further.
According to Mr Bennett, he telephoned the plaintiff once again in February 1999 and as a result Mr Wildman visited him. Mr Wildman brought with him the list that Mr Bennett had previously provided to Mr Wauters, and the two of them discussed the suggested variations in some detail. Mr Wildman then prepared a revised quotation in the sum of $325,226 (Exhibit 9) which was presented to Mr Bennett on 12 February 1999.
The plaintiff's witnesses have a different version of events in January and February 1999. According to Mr Wildman, he was handed the list of variations (Exhibit 14A) when Mr Bennett called at the plaintiff's office and asked him to prepare a varied quotation based upon that list (T 77, 130). This is consistent with Mr Wauters' evidence that he did not meet with Mr Bennett but that he heard that the latter had "come out to see Mr Wildman" to discuss variations (T 30). Mr Wauters was also aware of the "adjusted" quotation that was sent to the defendant (T 57).
The defendant did not accept the plaintiff's second quotation, and according to Mr Bennett, he considered the new price to be "off". He met with Mr Wildman to discuss the matter further and the latter indicated that the plaintiff would be unwilling to build a steel mezzanine floor which Mr Bennett considered to be the cheapest option (T 215). Consequently Mr Bennett decided to have some new plans drawn up by a draftsman specialising in steel constructions, Mr Voss (T 216).
In order to have the new plans prepared, Mr Bennett needed to retrieve some of the old ones from the plaintiff. When he called to collect these from Mr Wildman, he told the latter that he was getting revised plans done and also explained some of the changes (including a gable roof and box gutter) which he wished to see incorporated in the new plans. According to Mr Bennett, Mr Wildman expressed some reservations about some of the proposed changes, and the following conversation then took place:
"… he said, 'Listen when you get these plans all done are we going to get a chance to put a price on it?' I said, 'You have just explained to me that John wouldn't like the changes, wouldn't want to change the style of roof and wouldn't build the box gutter. So why would I bother, why should I bother in running in another set of plans to you?' and left it at that." (T 217)
This alleged conversation has been put to Mr Wildman in cross‑examination, but he denies that it occurred (T 137 - 8). He also does not recall any subsequent discussion at all with Mr Bennett after the second quotation had been delivered (T 141).
It is common ground that no further communication occurred between the parties. Mr Bennett proceeded to have the new plans prepared and then obtained a quotation from a firm known as A to Z Commercial Steel who were specialists in steel fabrication. The quoted price was $259,000 and this was accepted by the defendant.
According to Mr Bennett the revised plans were lodged with the Shire of Albany in April, and construction commenced on 2 June 1999. However, there is evidence that prior to then Mr Wauters became aware that workers from A to Z Commercial Steel were on site, and that he made an objection to the Shire that another builder was using the plaintiff's builder's licence. The Shire responded to this complaint by facsimile dated 28 May 1999 (Exhibit 7).
It is unnecessary to go into the aftermath of this complaint. Essentially, Mr Bennett asserts that he believed at the time that the existing building licence could be transferred. In fact the true position was that a new building licence had to be applied for and issued to A to Z Commercial Steel before construction could continue.
The credibility of each of the witnesses
I have already observed that Mr Bennett has made inconsistent assertions as to his knowledge of the work being done by Mr Wildman towards expediting the building licence in July 1998. This area of the evidence is significant given that Mr Wildman continued to expedite the building licence after 17 July when on Mr Bennett's version the plaintiff had been told that its quote would not be accepted.
In my view it is also significant that Mr Bennett has been reluctant to concede fairly obvious facts which might be inconsistent with his case. Examples of this include the following:
- that the figure of $380,000 was inserted as the estimated value of construction on the application submitted by Mr Bennett to the Shire (T 242 - 5).
- that as pleaded in par 12(b) of the defence, the plaintiff's quotation was the lowest of the tendered prices (T 269 - 272).
- that the plaintiff's quotation of $392,000 when compared to the estimated value on the building licence application and to the other two builders' quotes can be fairly regarded as reasonable (T 245 - 8, 269, 275, 279 - 280).
- that as pleaded in par 13(b) of the defence, Mr Bennett had "discussed the cost of presenting the plans to Council" (T 249 - 50).
- that Mr Bennett never informed the plaintiff that it "didn't have the job" (T 251, 262).
- that the defendant did not intend to enter into a contract with either of the other two builders who were submitting quotes (T 276 - 8).
- that Mr Bennett did not want Mr Wauters to find out that A to Z Commercial Steel were commencing construction (T 316 - 7).
With regard to the last of these matters, Mr Bennett's reasons given during cross‑examination as to why he did not inform Mr Wauters of the contract with A to Z Commercial Steel, are simply not credible. The initial reason given by Mr Bennett was that he had already told the plaintiff in February "that they didn't have that job from then" (T 292). However, when pressed, Mr Bennett asserted that he had forgotten to inform Mr Wauters (T 293).
Overall, Mr Bennett impresses me as having been less than forthright on matters which might impinge upon his case, and I consider that I need to be very cautious before accepting his evidence on contentious issues.
Mrs Bennett presented very well in the witness box, and if I had based my assessment upon her demeanour alone, I would have considered her to be a very credible witness. However, the fact remains that her version of the conversation which allegedly occurred on 7 July 1998 totally contradicts the evidence of all other witnesses including that of her husband.
Mr Wauters impressed me as an honest but not entirely reliable witness. It was obvious that he has a poor memory on matters of detail, and particularly the dates of relevant events when he is not assisted by entries in his diary. I nevertheless consider that on fundamental issues such as whether or not Mr Bennett accepted his quote, he is not only a credible but also a reliable witness.
In coming to this conclusion I have taken full account of the fact that there were significant amendments to the statement of claim during the course of the trial. Ordinarily one would expect such amendments to impact upon the credibility of the plaintiff's primary witness, but in my view the need for them was consistent with Mr Wauters' genuine confusion as to relevant dates.
Mr Wildman was a careful and precise witness who in my view was patently honest. There is nevertheless room for him to be mistaken in some of his recollections, including the date when he was told by Mr Wauters that there had been a shaking of hands and an agreement between the parties.
Findings
The evidence of Messrs Wauters and Wildman as to the meeting on 20 May 1998 is broadly consistent, and I prefer their version of what occurred to that of Mr Bennett. Accordingly I find that Mr Bennett did state that although he was obtaining prices from two other builders, he was dissatisfied with the quality of their work and that he wanted the plaintiff to build the defendant's warehouse.
I am also satisfied that on 20 May Mr Wauters genuinely believed that there was a contract between the parties subject to the price to be quoted by the plaintiff being reasonable. That was also Mr Bennett's understanding as effectively conceded by him during cross‑examination (T 286 - 7).
However, in my view, the discussions that took place on 20 May 1998 did not constitute a binding agreement between the parties. Those discussions really constituted an agreement to agree, which was subject to Mr Bennett accepting the price that was still to be quoted. During cross‑examination, Mr Wauters essentially conceded this to be the situation, when he was asked how the price under the purported contract was to be determined. Mr Wauters' answer was as follows:
"I would give him a quotation which, when I did, he could look at and if there was any arguments over it, that was the time to do it, and no contract would have been formed and I would have asked him to recompense me for any expenditure I'd had." (T 48)
I also prefer the evidence of Messrs Wauters and Wildman to that of Mr Bennett as to the date when the latter was provided with the plaintiff's builder's registration number. I prefer their version because it was unusual for the plaintiff to hand over the number in this way, and I accept that Mr Wauters was involved in the decision to do so. If I was to accept Mr Bennett's version, it would mean that he obtained the number from Mr Wildman without any reference to Mr Wauters.
The fact that the builder's registration number was provided on 20 May 1998 is consistent with Mr Bennett anticipating the arrival of the building licence application form from his architects and wishing to lodge it quickly. It is also consistent with the plaintiff undertaking to be in a position to commence construction "within a fortnight" (T 21).
I am satisfied that on 20 May and during the following weeks the defendant was most anxious to progress the building project, but was being frustrated by delays from it's architect. The complete set of plans did not become available until shortly before 26 June when Mr Bennett lodged the building licence application with the Shire. Those plans also enabled the preparation of a quotation by the plaintiff.
That quotation was delivered by Mr Wauters at the defendant's premises on 7 July 1998 and I am satisfied that Mr Wildman was not there at the time. In this regard although Mr Wildman was not asked if he was there, his evidence is totally inconsistent with him having been present at the time of delivery of the quotation . If he had been present, I would expect that he would remember that event and that he would give evidence of the same.
I am unable to accept Mrs Bennett's account of the discussions at the defendant's premises on 7 July 1998 because it is inconsistent with the evidence of all other witnesses that the plaintiff was previously aware that prices were being obtained from two other builders. Given the detail in Mrs Bennett's account it is difficult to understand how she could be mistaken about these matters, but I nevertheless find that I am unable to accept her evidence.
I also make the finding that Mr Bennett responded to the plaintiff's quotation by accepting it on behalf of the defendant. This is not an event which Mr Wauters could be mistaken about, and I consider that his credibility on crucial issues is greater than that of Mr Bennett.
Furthermore, I accept Mr Wildman's evidence that he was told by Mr Wauters that the latter had shaken hands with Mr Bennett, and that "they had a deal on this new building" (T 75). This was a significant event for the plaintiff and it is not a matter that Mr Wildman would be mistaken about. Furthermore, I consider that Mr Wildman would particularly remember if (on the defendant's version) the quotation he had prepared had been rejected as being "too dear".
I consider it more probable than not that Mr Bennett's acceptance of the plaintiff's quote occurred on 17 July rather than on 7 July as Mr Wildman's evidence would imply. Acceptance on 17 July is consistent with Mr Bennett having had the opportunity to compare the plaintiff's price with the quotations received from the other two builders (which comparison would have been favourable given that the defendant preferred that the plaintiff be the builder, and that the latter's price was either the lowest or second lowest of the three).
Having regard to the totality of the evidence I consider it likely that Mr Wildman has confused the date when he was told of the defendant's acceptance of the quotation. In this regard the evidence is unclear as to whether Mr Wildman was present throughout the meeting on 17 July, but in my view it is more likely that he was absent at the time of acceptance but was told about it by Mr Wauters afterwards. I am certainly satisfied that if Mr Wildman had been present he would have remembered this particular event.
By 17 July Mr Wildman had already commenced work towards expediting the building licence, and this is consistent with the expectation (arising from the meeting on 20 May) that the plaintiff's quote would be accepted. I accept Mr Wildman's evidence that his work in responding to the Shire's requisitions was done in conjunction with, and with the full knowledge of, Mr Bennett. I am satisfied that throughout this period and up until the end of July Mr Bennett continued to desire that quick progress be made with the building project.
However, at some stage around the end of July the defendant had a sudden change of attitude towards the project. This may well have come about as a result of the drop in value of the Australian dollar. Combined with this, it may also be that the defendant had come to realise that it had probably over‑committed itself to too expensive a type of building (as conceded by Mr Bennett in cross‑examination at T 317). Whatever the reason, I am satisfied that the conversation between Mr Wauters and Mr Bennett about the drop in the Australian dollar did not take place until some weeks after 17 July.
I find that as a result of the defendant accepting the plaintiff's quotation on 17 July 1998 there was a binding agreement between the parties. The essential terms were that the plaintiff would as soon as possible construct for the defendant a warehouse/office building in accordance with the plans and specifications that had been provided, and for the price as set out in the quotation. I also find that it was at all times contemplated that the detailed terms of that contract would be the subject of a written agreement to be executed at a later date. In this regard I consider the contract to be:
"… one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing by consent additional terms." (Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310, 317; Tern Minerals NL v Kalbara Mining NL (1990) 3 WAR 486, 494 - 5)
The agreement between the parties was later varied when Mr Wauters and Mr Bennett discussed the state of the Australian dollar. It was then agreed that commencement of construction would be deferred until the defendant was ready to proceed.
At a later time again, Mr Bennett provided Mr Wildman with a list of proposed variations (Exhibit 14A). Thereafter, it was within the contemplation of the parties that there would be negotiations to further vary their agreement so that a smaller building would be constructed.
I prefer Mr Wildman's version of the negotiations that did subsequently take place, and do not accept that these came to an end with Mr Bennett stating that the plaintiff would not have a further chance to quote. I also find that Mr Bennett deliberately withheld from informing the plaintiff of the new contract with A to Z Commercial Steel, and that he did not simply forget to do so. As Mr Bennett well knew, the plaintiff was at that time awaiting his further instructions in order to proceed with the project.
By engaging A to Z Commercial Steel to build the warehouse, the defendant clearly repudiated it's contract with the plaintiff. The plaintiff accepted this repudiation, and is thereby entitled to damages.
The quantum of damages
The evidence of Messrs Wauters (T 24) and Wildman (T 73 - 4) and the contents of Exhibit 2 establish that the plaintiff's original quotation of $392,889 contained a profit margin of $40,000. Mr Wauters' evidence that this was a reasonable margin in all of the circumstances was not challenged. (It is also relevant to note that the plaintiff's margin in the second quotation for $325,226 was increased to $45,000.)
Mr Wauters has also testified to the effect that in 30 years of performing building contracts he has never achieved a profit less than his margin (T 25, 36). Mr Wauters (T 59 - 60) and Mr Wildman (T 141 - 8) were extensively cross‑examined as to this assertion, but in my view their evidence as to the likely profit was not seriously shaken and should be accepted.
I also accept Mr Wauters' unchallenged evidence that the plaintiff had the capacity to perform the contract and that there was "always room for more work" (T 34). Accordingly I find that as a result of the defendant's repudiation of the contract between the parties the plaintiff has lost a profit of not less than $40,000.
The plaintiff also claims damages in respect of a total of $2,880 paid to Mr Wildman for his work in preparing the two quotations and in expediting the building licence. I accept the evidence of Mr Wildman (T 81 - 3) as to the manner in which this sum has been calculated, and find that the quantum of the amounts paid to him are reasonable.
However, I do not consider that the costs of the second quotation can be properly claimed given that these costs were not included in the contract price of $392,889. The second quotation did not result in any variation to the contract and the defendant did not at any time agree to pay these additional costs. Nor in my view is it possible to imply a contractual term that such costs would be met.
The evidence of Mr Wildman (at T 81 - 3) establishes that the costs of preparing the second quotation were $720. I find that the plaintiff is entitled to damages equivalent to the balance claimed of $2,160.
Accordingly, the plaintiff is entitled to damages in the total sum of $42,160. Pursuant to s 32 of the Supreme Court Act 1935 I also award interest on this sum at the rate of 6 per cent per annum from the date of issue of the writ until the date of judgment (which I calculate to be $4,670).
It follows that there will be judgment to the plaintiff in the total sum of $46,830.
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