Westwing Concrete Pty Ltd v Skender
[2013] WASC 181
•13/05/2013
WESTWING CONCRETE PTY LTD -v- SKENDER [2013] WASC 181
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 181 | |
| 13/05/2013 | |||
| Case No: | CIV:1911/2010 | 20-24 & 30 AUGUST 2012 | |
| Coram: | EM HEENAN J | 13/05/13 | |
| 39 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for plaintiff for $530,871 against first defendant Claim against second defendant dismissed Counterclaim of second defendant dismissed | ||
| B | |||
| PDF Version |
| Parties: | WESTWING CONCRETE PTY LTD IGOR SKENDER BIOKOVO CONSTRUCTION PTY LTD |
Catchwords: | Contract Identification of contracting parties Repudiation Alleged repudiatory breach Damages Moneys due under contract before breach Interest |
Legislation: | Supreme Court Act 1935 (WA), s 32 |
Case References: | Aitken Transport Pty Ltd v Voysey [1990] 1 Qd R 510 Bridges & Salmon Ltd v 'The Swan' (Owner); Marine Diesel Service (Grimbsby) Ltd v The Swan (Owner) (The Swan) [1968] 1 Lloyd's Rep 5 Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124 Grincelis v House (2000) 201 CLR 321 H J Lyons & Sando Limited v Houlson [1963] SASR 29 Haines v Bendall (1991) 172 CLR 60 Holland v Wiltshire (1954) 90 CLR 408 Hungerfords v Walker (1989) 171 CLR 125 Ingram v Little [1961] 1 QB 31 Lewis v Averay [1972] 1 QB 198 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154 Pilmer v Duke Group Ltd (in liq) (2001) 180 ALR 249 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Victoria Economic Development Corporation v Cloverdale Pty Ltd [1992] 1 VR 596 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
IGOR SKENDER
First Defendant
BIOKOVO CONSTRUCTION PTY LTD
Second Defendant
Catchwords:
Contract - Identification of contracting parties - Repudiation - Alleged repudiatory breach - Damages - Moneys due under contract before breach - Interest
Legislation:
Supreme Court Act 1935 (WA), s 32
(Page 2)
Result:
Judgment for plaintiff for $530,871 against first defendant
Claim against second defendant dismissed
Counterclaim of second defendant dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr H Sklarz
First Defendant : Mr M J Lindsey-Temple
Second Defendant : Mr M J Lindsey-Temple
Solicitors:
Plaintiff : Henry Sklarz
First Defendant : Contract Intelligence Pty Ltd
Second Defendant : Contract Intelligence Pty Ltd
Case(s) referred to in judgment(s):
Aitken Transport Pty Ltd v Voysey [1990] 1 Qd R 510
Bridges & Salmon Ltd v 'The Swan' (Owner); Marine Diesel Service (Grimbsby) Ltd v The Swan (Owner) (The Swan) [1968] 1 Lloyd's Rep 5
Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124
Grincelis v House (2000) 201 CLR 321
H J Lyons & Sando Limited v Houlson [1963] SASR 29
Haines v Bendall (1991) 172 CLR 60
Holland v Wiltshire (1954) 90 CLR 408
Hungerfords v Walker (1989) 171 CLR 125
Ingram v Little [1961] 1 QB 31
Lewis v Averay [1972] 1 QB 198
(Page 3)
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154
Pilmer v Duke Group Ltd (in liq) (2001) 180 ALR 249
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Victoria Economic Development Corporation v Cloverdale Pty Ltd [1992] 1 VR 596
(Page 4)
1 EM HEENAN J: In order to provide suitable accommodation for the large and growing workforces in and around the Port Hedland area, the decision was taken to construct the Port Haven accommodation complex which, when completed, would provide housing, facilities, kitchens, recreation areas and other amenities for a large number of transient workers. The project was undertaken for BHP Billiton Iron Ore Pty Ltd (BHPB) and, as a consequence, was subject to BHPB site standards and regulations and was under the overall supervision of BHPB management. The principal contractor for the construction of the Port Haven project was Decmil Australia Pty Ltd (Decmil) which, subject to BHPB supervision, had the possession and control of the site and the responsibility for undertaking the project.
2 Work on the project commenced, as far as is relevant in this case, in 2009. This litigation concerns an early stage in the project involving the laying of concrete foundations, footings and slabs comprising stage 1 of the project. The building site was a fairly large area located adjacent to the Great Northern Highway, close to, but north of Port Hedland airport.
3 By a subcontract agreement dated 1 July 2009, Decmil contracted with Biokovo Paving Pty Ltd to perform specified concrete works associated with the Port Haven central facilities buildings - stage 1. That contract resulted from an undated quotation from Biokovo Paving Pty Ltd submitted to Decmil for the concrete works comprising stage 1 of the project for a lump sum price of $895,000 excluding GST. It was accepted by a letter to Biokovo Paving Pty Ltd from Decmil Australia dated 1 July 2009 for the quoted price. However, the formal subcontract agreement, already mentioned, although bearing the same date, was for a larger lump sum of $1,305,000 plus GST and specified that the scope of the work included:
• labour and Plant for detailed excavations and slab preparation (bobcat and mini excavator)
• supply and installation of Polythene Membrane
• placing casting in position and Holding Down Bolts
• labour to install Reinforcing Steel
• labour to pour and surface finish concrete slabs on ground
• labour to pour pad and strip footings
(Page 5)
- • supply, erect and dismantle all formwork
• concrete curing specified
• Attend BHP induction as required
4 The contract also specified that the scope of work would exclude:
• airfares
• accommodation
• concrete supply
• reinforcing steel supply
• supply holding down bolts
• concrete pump hire
• footpaths
5 Biokovo Paving Pty Ltd was a duly proprietary company which had been incorporated in or about June of 2000. Later, after entering into the Decmil contract and commencing the contract works, it changed its name to Biokovo Construction Pty Ltd on 30 July 2009. This is the second defendant in this action. Biokovo Paving Pty Ltd and, under its new name, Biokovo Construction Pty Ltd at the material time had only one issued share. That was held by Mr Igor Skender, who was the sole director and secretary of the company. He is the first defendant in this action.
6 Before June of 2009 Biokovo Paving Pty Ltd had not been engaged in any major construction projects and, so far as the evidence establishes, undertook only comparatively small paving contracts, including brick paving, mainly in and around the Perth metropolitan area, although it had undertaken at least one other paving contract in the Pilbara area some years before. All the indications are, and I find, that the Port Haven project was a big step up in the size, value and complexity of concrete laying operations for Biokovo Paving Pty Ltd and its owner/manager Mr Skender.
7 It was in or about May of 2009 that Mr Skender learned that he may have an opportunity to obtain a subcontract with Decmil for the Port Haven concrete works. He learned of this through a friend and associate,
(Page 6)
- Mr Denis Vlahov, who was employed as an officer of Decmil and who later became its construction manager for the Port Haven site. Realising that his experience, knowledge and workforce had not fully equipped Biokovo Paving Pty Ltd for a job of the size and complexity of the Port Haven complex, Mr Skender decided that he should obtain the service or assistance of more experienced, trained and better equipped concrete contractors. Knowing of Westwing Concrete Pty Ltd (Westwing) by previous experience and reputation, he decided to approach its director and manager, Mr Ivan Vidovic, for assistance in the proposed project.
8 Westwing is, of course, the plaintiff. Mr Vidovic had previous experience in conducting his own business named I & S Grano-Workers from 1994 onwards and in or about 2003 incorporated Westwing Concrete Pty Ltd, which specialised in undertaking and performing concrete laying works.
9 In 2009 Westwing had an annual turnover of $2.2 million or thereabouts and had a staff of 12 full-time employees and contractors. During May 2009 Mr Skender outlined to Mr Vidovic in a very general way that he expected to obtain the contract to do the concrete works at Port Haven and he invited Mr Vidovic to go into partnership with him for the purposes of that venture. Mr Vidovic was not interested in any form of partnership with Mr Skender but indicated that Westwing would be prepared to enter into a subcontract to do specified parts of the concrete work at Port Haven.
10 All this was very indefinite and unspecific. For example, the idea of a proposed partnership, rejected it seems very quickly, did not go as far as identifying who the partners were to be, whether Mr Vidovic and Mr Skender personally or Skender and Westwing Pty Ltd, or any other combination. Indeed, at this point, Mr Skender did not disclose that he was proposing a business enterprise, not on his own behalf, but on behalf of his company, Biokovo Paving Pty Ltd. The existence and name of that company were never mentioned by Mr Skender, either then or later, and Mr Vidovic knew of Mr Skender's business only by the name 'Biokovo Paving' which was the name that Mr Skender used.
11 In any event, on 24 June 2009 an agreement was reached between the two men that Westwing would enter into a subcontract with Skender (nothing more precise than this was mentioned) to undertake the contract work on stage 1. Mr Skender maintains that the contract was entirely oral. However, Mr Vidovic claims that he recorded the terms of the contract in a quotation document number 1301 dated 24 June 2009 under the
(Page 7)
- letterhead Westwing Concrete Pty Ltd specifying the essential terms - although he concedes that a number of other terms were orally agreed at the time, and that there were further oral terms adding to or varying the contract on subsequent occasions. It will be necessary to attend to the details of these in due course.
The plaintiff's claim
12 In the statement of claim, by paragraph 33, the plaintiff originally claimed, first against Mr Skender, and alternatively against Biokovo Constructions Pty Ltd, a total sum of $814,845 alleged to be loss and damage due to the defendant's breaches of the contract. Those two total sums were each comprised of the following components:
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13 However, as the case progressed and as explained by counsel for the plaintiff in the course of his final address, various components in this
(Page 8)
- claim were abandoned, not pursued or reduced. The items abandoned were (using the above references):
(b) $14,500
(d) $35,000
(f) $ 8,340
(g) $20,000
(h) $23,800
15 Accordingly, so reduced, the plaintiff's claim became:
(a) $348,895
(c) $ 17,500
(e) $ 85,700
$452,095
16 In addition, the plaintiff seeks interest on so much of any amount found to be due at the rate of 6% per annum simple interest as from 16 June 2010 (the date of the writ) until judgment pursuant to s 32 of the Supreme Court Act 1935.
17 Other than maintaining that there was nothing due by either defendant to the plaintiff (with one exception soon to be mentioned) neither defendant advanced any submissions to contest the claim for interest under s 32, nor the rate of interest claimed, nor the period claimed for the commencement of its accrual.
18 The principles underlying the availability of statutory interest whether for debt or damages are well established. They are discussed in Hungerfords v Walker (1989) 171 CLR 125; Grincelis v House (2000) 201 CLR 321, 329; Pilmer v Duke Group Ltd (in liq) (2001) 180 ALR 249; and Haines v Bendall (1991) 172 CLR 60 [66] (Mason CJ, Dawson, Toohey & Gaudron J). (See generally Edelman & Cassidy, Interest Awards In Australia (2003, Butterworths).
(Page 9)
19 Accordingly, I consider that an award of interest under s 32 on any amount found due to the plaintiff is justified and that 6% per annum is the appropriate rate in the absence of an agreed rate or evidence led to establish the return which the plaintiff would have obtained on money received on time.
20 The date for the commencement of the calculation of the interest is, however, another matter. In the statement of claim the interest is sought 'from the date the damages were incurred to date of payment or judgment', a claim made on the mistaken assumption that the whole of the plaintiff's claim was for damages rather than for money due under the contract.
21 The explanation given by counsel for claiming interest only from the date of the writ was that was the first occasion when either defendant was given full notice of the total amount being claimed and demanded. Insofar as the claim then being advanced included components for damages in the proper sense that may be some reason. However, the damages claims have since been abandoned, leaving the residue of the claim entirely as an aggregation of moneys due under the contract which are claimed to be due and payable by 19 September 2009 at the latest (that being the date on which the plaintiff's equipment from the Port Haven site was returned to Perth). As it is, the claim for interest is only pursued as from 17 June 2010 and neither defendant has been required to address or to defend a claim for interest from any earlier date. That being the case, I consider that interest on any amount awarded in favour of the plaintiff should be calculated at 6% per annum from 17 June 2010 to today, that is, 13 May 2013 - a period of two years and 330 days.
22 In referring to one possible exception to the defendants' positions that no amount was due by either defendant to the plaintiff, it is necessary to have regard to the sheet of computations produced by Biokovo (the term 'Biokovo' is here used to refer to whichever of the defendants actually contracted with Westwing without, at these stages, determining those issues) and its bookkeeper, Ms Cherry McKay, at a conference between representatives of Westwing and Biokovo held at Westwing's offices on 28 October 2009 in an attempt to resolve the then outstanding dispute about moneys payable to Westwing. At that meeting the representatives of Biokovo produced a schedule (copied at exhibit 2, folio 25) by which they calculated that the most owing to Westwing was $16,497.92. Mr Dyson, who conducted that meeting, for Biokovo indicated that the most which would be paid was $16,500. It is to be noted that that schedule includes the letters 'TBA' (presumably 'to be agreed') for the claim made by Westwing for materials under the invoice
(Page 10)
- of 9 September 2009. That was the amount of $93,214, the subject of a second invoice of that date. The plaintiff's bookkeeper, Ms Lee-Anne Flindell, describes (exhibit 9, par 55) how on 9 December 2009 she was advised by Biokovo's bookkeeper, Ms Cherry McKay, that Mr Skender was refusing to pay any more than $16,500.
23 However, there was no concession or admission at this trial that $16,500 or any other sum was due by either defendant to the plaintiff. I consider that the position of either defendant at trial was a denial of any indebtedness or liability to the plaintiff.
The agreement reached between Mr Vidovic and Mr Skender
24 The circumstances of the meeting between Mr Vidovic and Mr Skender on 24 June 2009 have already been outlined. Mr Vidovic gave evidence, which I accept, that Mr Skender explained to him that Westwing was to supply equipment and labour and provide its expertise in relation to the project which was needed by Mr Skender to identify the equipment and materials which would be needed for different stages of the project. In the course of this discussion Mr Skender and Mr Vidovic agreed that Mr Skender would meet all the costs and expenses incurred by Westwing in supplying the necessary equipment and labour. There had been discussions to this effect which preceded the meeting on 24 June 2009 but it was on that occasion that a concluded oral agreement was reached and recorded by Westwing in its quotation form (exhibit 2 folio 2 and 2A).
25 This discussion included an agreement that instead of the excavator originally agreed to be provided by Westwing a ride-on concrete machine would be required so the bobcat previously discussed was replaced by this other apparatus. The estimates of man hours of labour to prepare the slabs, footings and pour was simply an estimate to be revised by a meeting to be conducted at the site soon after arrival on the proposed commencing date, 20 July. This was to be subject to variation or confirmation following the site inspection. At this meeting it was also agreed that Westwing was to supply hand tools for the concrete works and its equipment including the ride-on machine, five cement trowel machines, a sea container and formwork for a fixed price of $35,000 for a period of not longer than three months. It was also agreed that Westwing would invoice Biokovo fortnightly and the invoices were to be paid within 14 days. The formwork was to remain the property of Westwing and was to be returned in the same condition as supplied or, failing that, compensation would be paid for its replacement.
(Page 11)
26 The first variation of the contract was reached orally between Mr Vidvoic and Mr Skender in mid-July. Because the project involved more work than had been anticipated and was likely to take longer, Mr Vidovic agreed to Mr Skender's request that the labour hourly rate would be reduced to $120 but, in compensation and because of the continued use of Westwing's equipment and tools, Biokovo was to pay for the cost of these materials and equipment at commercial rates. On this occasion, Mr Skender agreed with Mr Vidovic specifically that Biokovo Paving would also pay for protective equipment for personnel as required by Decmil but to a maximum cost of $35,000 and would also pay for induction, training, medical examination and transport of personnel to the site and the hiring of buses for transport and for accommodation costs together with the cost of supplying a concrete cutter for use on site.
27 A further variation to the contract was agreed between Mr Vidovic and Mr Skender on or about 27 July 2009, just before the container load of Westwing's equipment was to be despatched by truck to Port Hedland. On Mr Vidovic pointing out that there were no formwork pickets or timber included for profiling on the job site he discussed this matter with Mr Skender, resulting in an agreement that Westwing would immediately obtain six bundles of timber for profiling and 500 steel star pickets at a cost of $14,500 because these were essential for the work. Mr Skender agreed that these were an extra cost and would be added to the remuneration payable to Westwing. It was at this meeting at Mr Skender's home on 27 July 2009 that Mr Skender requested Mr Vidovic to make out Westwing's invoices to Biokovo Paving. Mr Vidovic recognised this as a business name under which Mr Skender operated. It was also at this meeting that Mr Mark Dyson, Mr Skender's accountant, wrote out a cheque for $38,500 and gave it to Mr Vidovic, being for the $35,000 worth of equipment listed in the quotation of 24 June 2009 plus GST. As a result, invoice number 1 was later prepared and submitted (exhibit 2 folio 4 and 4A).
28 The various cheques by which, presumably, Biokovo paid Westwing for the first four invoices are not in evidence. There is no direct evidence of the name or identity of the account upon which any of those cheques was drawn. When asked in cross-examination about this, Mr Skender, whose knowledge and skills in English are obviously limited, said that he never had a personal cheque account and that all the cheques were drawn by Biokovo Paving. However, efforts to distinguish between Biokovo Paving and Mr Skender personally on the one hand or Biokovo Paving Pty Ltd or Biokovo Constructions Pty Ltd on the other proved fruitless and I am, therefore, not able to make any finding about the identity of the
(Page 12)
- entity who drew and paid the funds to Westwing under the contract. Accordingly, one potential fact which might have assisted in identifying the party with whom Westwing had contracted remains unknown.
Background and subsequent course of contract
29 The first major controversy in this trial can now be introduced. Was this subcontract an agreement between Westwing and Mr Ivan Skender personally, as the plaintiff maintains it was, or was the contract between Westwing and Biokovo Paving Pty Ltd, even though the latter name was not mentioned or disclosed by Mr Skender at the time of the agreement on 24 June 2009 or later? Mr Skender maintained that the contract was with Biokovo Paving Pty Ltd and that only the second defendant, now Biokovo Construction Pty Ltd, had any obligations or potential liability to Westwing.
30 Despite the importance of this issue in this trial, the evidence upon it was quite sparse and its consideration is best deferred until later, after all matters bearing on the identification of the actual parties to the contract have been reviewed. Against the contingency that the party contracting with it may turn out to have been Biokovo Paving Pty Ltd, Westwing has sued the second defendant in the alternative but, except for this modification, for the same relief and on the same grounds as advanced against Mr Skender.
31 It will be necessary to return to the details of the agreement between Mr Vidovic and Mr Skender on 24 June 2009 and some subsequent developments later, but, to put this case in perspective, I proceed at this point to give an overview of what led to the differences between the parties and how the plaintiff now puts its claim against the defendants in the alternative.
32 Pursuant to the agreement between Mr Vidovic and Mr Skender, Westwing was to commence concrete work on the project at Port Haven on 20 July 2009. That imposed a tight schedule because Westwing had to assemble the workforce required and, significantly, arrange to gather all the necessary formwork, hand equipment, machines, small machines, excavator or bobcat and other materials needed for the job, load them into a large container at its depot in Wattleup in Perth, and then have the container transported by truck to the worksite at Port Haven.
33 As matters turned out, it was not possible for the concrete subcontract work to commence on 20 July 2009 because civil engineering work at the Port Haven site had not been completed and the necessary
(Page 13)
- ground levels had not then been established. For this reason, the Westwing workforce did not arrive at the Port Haven site until 30 July 2009 and the truck with the container-load of equipment, tools, machinery and supplies arrived the next day. No fault or consequence is attributed to Westwing or to any other party for this delayed start. It was accepted as inevitable. As it was, however, once work in digging excavations for the concrete footings for the establishment of steel reinforcing and the corresponding slabs was commenced, it was discovered that ground levels, resulting from the civil engineering work, were 80 mm (8 cm) higher than they should have been and this resulted in some delays in setting the excavations and steel reinforcing for the concrete works at the proper levels.
34 This first delay had another important consequence because it meant that there was no opportunity for a site meeting at Port Haven between Mr Vidovic and Mr Skender to go over the details and plans for the works and to revise, more accurately, the extent of the contract work which was to be undertaken and which had only been the subject of a general estimate at the time of the agreement between Mr Vidovic and Mr Skender on 24 June 2009. It had then been expressly agreed that, at the intended site meeting there would be available detailed construction drawings and plans, none of which was available at the meeting on 24 June 2009. As to the intended site meeting, a detailed estimate of the magnitude of the work and the man hours required to perform it would be undertaken.
35 Mr Skender maintains that plans and drawings for the project were available and discussed at the 24 June 2009 meeting, but I do not accept his evidence in this regard. Instead, Mr Vidovic, who, in contrast to Mr Skender, I accept as being an honest witness, was emphatic that there were no plans or drawings available at the 24 June meeting and that Westwing's quotation was given based on an estimate of man hours for the job which came entirely from Mr Skender without any verification or support. Not only do I prefer the veracity of Mr Vidovic to the evidence of Mr Skender who, as I shall proceed to describe, was quite unconvincing and, at times, untruthful in other respects, but the tentative nature of the quotation of 24 June given by Westwing would be quite unnecessary and incongruous if there had been information for Mr Vidovic at the time which allowed him to quote a specific price.
36 Despite the delayed start, work got underway at the Port Haven site quickly and the Westwing staff kept a daily diary of work activities and
(Page 14)
- progress, showing virtually continuous activity during daylight hours for each day from 30 July to 16 September 2009 (exhibit 3).
37 There were, however, some occasional interruptions. The evidence of some of Westwing's concrete crew, including that of a supervisor and of a leading hand, are, I am satisfied, reliable accounts of the general pattern of behaviour during these working days. The Westwing crew were all experienced concretors and were working under the supervision and direction of their leading hand, Mr Gary Skipsey, who, in giving evidence, impressed me as a very experienced and competent tradesman who was careful with his work and moderate in his conduct and responses. He was a straightforward and reliable senior tradesman and he was entrusted with, at the first phase of the operation, keeping the Westwing timesheets and records and corresponding with Westwing's Perth office to arrange for the payment and wages to the Westwing workers. There was no suggestion that he was in any way incompetent, or that his record-keeping was ever shown to be erroneous. Despite some allegations made by Mr Skender that the Westwing work was substandard, there was no evidence of any occasion when it was rejected or found to be inadequate and no claims have been made for deductions or compensation for poor workmanship, replacement or need for rectification.
38 The evidence of Mr Skipsey, and of other workmen, Mr Eastman, and Mr Justin Rea, was all to the effect that at the worksite Mr Skender behaved in a very overbearing manner, yelled and abused the Westwing crew and attempted to give directions countermanding the instructions under which they were working and demanding that the work be done in a different manner. Mr Skipsey at first attempted to placate Mr Skender, pointing out that there was good reason for the work to be done in the manner in which it was being done and that, in any event, Mr Skender had no power or authority to give directions to Westwing crew members who were answerable to him or to Mr Vidovic. On at least one occasion, when the matter of dispute between Mr Skender and Mr Skipsey or another senior Westwing crew member had to be settled by reference to the arbitration of a Decmil engineer, the Westwing methods and proposals were confirmed.
39 As time wore on, the relationship between Mr Skender and Mr Skipsey deteriorated and Mr Skender became more aggressive and abusive to Mr Skipsey, to the point where Mr Skipsey would barely speak to him. Nevertheless, the work continued, but there were notable tensions. At one point Mr Skender attempted to persuade Skipsey to leave
(Page 15)
- Westwing and to work for him. He made similar proposals to other Westwing crew allegedly in return for a higher rate of pay. One of Westwing's crew did change employers for that reason, but this had no effect on the progress or performance of the work. Things got to the point where Mr Skender attempted to sack Mr Skipsey, but of course he had no power to do so. When Mr Skipsey attempted to return after a short period of leave in Perth, he discovered that no arrangements had been made for a return air booking for him to Port Hedland, which had been the responsiblity of Skender. However, Mr Vidovic stepped in and made the arrangements, and on Mr Skipsey's appearance at the worksite next morning, Skender told Skipsey that he was not welcome and not wanted on the site. However, that had no effect. Mr Skipsey continued to perform his duties.
40 The payment of moneys due to Westwing under this contract was haphazard and a point was reached on 11 September 2009 when Mr Skender refused to pay to Westwing moneys that it claimed were due, and then refused to discuss the matter with Mr Vidovic. The latter became so concerned at the amount then outstanding, in Westwing's view $353,031, that he sought the intervention of Decmil through its senior personnel at Port Haven. This resulted in a temporary pragmatic solution in which Decmil made a special progress payment to Biokovo of $220,000 which Mr Skender then used as a part-payment of the money due to Westwing. However, by then Mr Vidovic was very concerned and apprehensive about Westwing's financial exposure on this project and sought written confirmation that Mr Skender would arrange for the payment of the balance of $226,249 in the immediate future. Despite having said to Mr Vidovic that he would agree to make that payment, Mr Skender refused to sign a letter giving written confirmation of his promise in that regard and refused to discuss the position further with Mr Vidovic.
41 At this point, Mr Vidovic decided to take legal advice and consulted Mr Simon Lee, since deceased, a solicitor at Mallesons in Perth, about his predicament. He and his chief bookkeeper, Ms Lee-Anne Flindell, met with Mr Lee at Mallesons' office on the morning of 16 September 2009 at a conference which took place between about 9.30 and 11 am that day. The result was that Mr Lee settled a letter to be sent by Westwing to Mr Skender demanding payment of the moneys outstanding and insisting that an acceptable future regime be established for reliable payments of moneys due to Westwing to occur at fortnightly intervals.
(Page 16)
42 In preparing that letter, Mr Lee had his legal staff at Mallesons made a search of the business names at ASIC for Biokovo Paving and this revealed the company Biokovo Construction Pty Ltd (see exhibit 8) - previously Biokovo Paving Pty Ltd. Consequently, the letter settled by Mr Lee for Mr Vidovic to be sent under the letterhead of Westwing Concrete Pty Ltd was addressed:
'Biokovo Construction Pty Ltd trading as 'Biokovo Paving'
Attention: Igor Skender'
43 A second letter also drafted by Mr Lee to be sent by Westwing on 16 September 2009 to deal with the crisis which had, by then, developed, was also addressed to Biokovo Construction Pty Ltd trading as Biokovo Paving.
44 According to Mr Vidovic, this was the first time that he became aware of the existence of a limited liability company, whether Biokovo Paving Pty Ltd or Biokovo Construction Pty Ltd. He claims that at all times he believed that he was contracting with Mr Ivor Skender personally and, indeed, his various invoices had all been addressed simply to 'Biokovo Paving' which he took to be Mr Skender's trading name. There was no suggestion that Mr Vidovic or anybody at Westwing had ever searched for particulars of the registered business name of 'Biokovo Paving' or had any actual notice of the existence of any similar company. He was aware of a business operating under the name Biokovo Paving, but nothing more.
Events at Port Haven on 16 September 2009
45 There is considerable controversy about what happened at the Port Haven site when Westwing's letter of 16 September 2009 arrived at Decmil's office. Mr Skender claims that he was not on-site at the time and that he never received this letter. He also maintains that he was not personally present or involved in any of the arguments or face-offs which then followed. He is supported to some extent in this regard by the evidence of Mr Denis Vlahov, the then Decmil construction manager, and by another Decmil employee, Mr Steven Kastelan, who was site manager at the Port Haven construction site at the time. However, for reasons that follow, I do not accept that evidence. In the case of Mr Skender, I consider that it is quite false. In the case of Mr Vlahov, his evidence in part is contradicted by Westwing employees who were present at the time and who I regard as truthful witness, namely Messrs Skipsey and Eastman. Mr Vlahov claims that he was not present at the material time,
(Page 17)
- although Mr Eastman says that he was, and in relation to other aspects of the event his evidence is inconsistent with the Westwing witnesses whose evidence I do accept.
46 I conclude that at about 11.50 am on the morning of 16 September 2009, the letter from Westwing, drafted by Mr Lee at Mallesons and despatched from Westwing to Decmil's office at Port Haven, was received on site. On the instructions of Mr Vidovic conveyed from him by telephone from Perth, Mr Skipsey collected the letter, having been directed to deliver it personally to Mr Skender who was on site and near the Decmil office at the time. Mr Skipsey collected the letter, but, because of the very poor relationship between him and Mr Skender which existed at that time, and thinking that if he delivered the letter to Mr Skender in person that would simply cause trouble, Mr Skipsey gave the letter to Mr Peter Spence, a senior Decmil officer, and requested that he give it to Mr Skender. Mr Skipsey did not see Mr Spence deliver the letter to Mr Skender, but Mr Eastman did. Mr Skender read the letter and flew into a rage, swearing at Eastman and Skipsey and acting in such a threatening manner that he had to be restrained by Decmil personnel. In the course of this performance, Mr Skender told Mr Skipsey that he and all the Westwing crew were to go, in no uncertain terms. He was angry and swearing and ordered Skipsey to take his men off the site, give up their accommodation and leave. His language was not in those terms. It was far more colloquial and coarse and it can be found in the transcript, but there was no mistaking its meaning.
47 According to Mr Skipsey and Mr Eastman, whose evidence I accept, this occurred about 12 noon just as the men were preparing to start a concrete pour at the freshly laid formwork at the construction site. Mr Skipsey contacted Mr Vidovic by phone to explain what had happened, and Mr Vidovic attempted to contact Mr Skender, but the latter would not speak to him. In view of what had happened, Mr Vidovic, from Perth, instructed Mr Skipsey to collect the Westwing crew and to make arrangements to collect all the Westwing belongings, pack them up and to return to Perth, and for the men to fly back that night. As already mentioned, Westwing had a considerable quantity of hand tools, supplies, stakes, formwork and other machinery which it has brought to the site and which, when not in use, was kept in a Westwing container under lock and key. Westwing's property included much of the formwork which had been erected at the site awaiting the imminent concrete pour. Believing that they were entitled to collect Westwing's formwork, some of the Westwing crew began to dismantle the formwork which had been erected for the pour which had been due to commence. As they were doing so
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- that came to the attention of Mr Kastelan and others at Decmil. Decmil regarded that as a serious breach of site rules and an interference with the works and there was talk of calling the police. Decmil personnel ordered the Westwing workers to stop dismantling the formwork, resulting in a face-off between the two sides. Decmil personnel reported that one of the Westwing workers had threatened a Decmil officer with a sledgehammer when the latter attempted to interfere and prevent the dismantling of the formwork. However, the Westwing personnel deny that any threat was made, although there was a big man in their crew holding a sledgehammer. According to Mr Skipsey and Mr Eastman, Mr Skender came out from the Decmil office and stood on the formwork, screaming at the Westwing personnel, shouting obscenities at them and telling them again, in obscene terms, that they were finished and had to leave the site.
48 In view of the attitude adopted by Decmil that there could be no interference with the formwork, the Westwing crew withdrew. They then went about collecting their other tools, machines and utensils and packed them up into the Westwing container, locked it and left the site. They retrieved their belongings from the various points of accommodation which had mostly been arranged by BHPB by arrangement with Decmil and reported to the airport to fly back to Perth that evening. They had left the site at about 12.30 pm.
49 However, there were only about two seats arranged for the Westwing crew to fly back to Perth that evening. The others had to be found alternative accommodation for that night and flew back the next day. One remained behind to meet Mr Vidovic, who flew up on 17 September, to liaise with Decmil officers and to make arrangements to retrieve the container and his belongings, load it onto a truck and have it sent to Perth.
50 Westwing had no alternative but to accept, as a fait accompli, their dismissal from the site by Mr Skender. His peremptory dismissal of them from the site was reinforced by orders from Mr Vlahov on behalf of Decmil that the Westwing crew be prohibited from coming onto the site in the future, and that the accommodation provided for them under joint arrangements between BHPB and Decmil was withdrawn. Westwing treats this episode as a repudiation of its contract of engagement by Mr Skender, whether by him alone or by Biokovo Paving Pty Ltd, entitling them to treat the contract as at an end. On this basis, the plaintiff claims moneys already accrued due for services and supplies provided and, in addition, damages for relocation expenses, the costs of accommodating the Westwing crew overnight in Port Hedland on the evening of 16 September after they had been ordered out of the
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- Decmil/BHPB accommodation and other claims for loss of profits. As will be seen, however, as the case progressed, all Westwing's claims in the nature of damages were progressively withdrawn or abandoned and the remaining claims amount to a claims for the balance of moneys due for labour supplied, hire of equipment and incidental services forming part of the original agreement as varied.
Damages or moneys due
51 This posture of the plaintiff in seeking enforcement of obligations arising under the contract with Biokovo, even after the termination of the contract, is well supported in principle. It is established that rights which have accrued to a party before termination may be enforced even after the termination of the contract even when that is done on the grounds of the claimant's default - which is not the case here: see Ettridge v Vermin Board of the District of Murat Bay [1928] SASR 124. However, once the contract has been terminated, either because of the breach or because of the election by the plaintiff to accept the defendants' repudiation, it is determined for all purposes and is discharged: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; Holland v Wiltshire (1954) 90 CLR 408, 416 (Dixon CJ); and Victoria Economic Development Corporation v Cloverdale Pty Ltd [1992] 1 VR 596, 602 - 603. The classical explanation of the position is that of Dixon J in McDonald v Dennys Lascelles Ltd (476 - 477) where his Honour said:
When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected.
52 There was a second letter sent by Mr Vidovic on behalf of Westwing to Biokovo at Decmil's office at Port Haven on 16 September. This has already been briefly mentioned because it too was settled by the solicitor for Mr Vidovic, Mr Simon Lee. Mallesons' records show that this letter was probably despatched from Westwing in Perth to Biokovo at Port Haven shortly after 3 pm on 16 September. Mallesons' records show that Mr Vidovic attempted to contact Mr Simon Lee by telephone at about 1.45 pm that day and that was a result of them eventually making contact that the second letter was drafted and sent. By then the events at the Decmil office at Port Haven with Mr Skender and the episode at the site
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- with the formwork shortly afterwards had obviously occurred, and Westwing had accepted the orders to leave. This fits with the timetable described by Mr Vidovic, Mr Skipsey and Mr Eastman, and corresponds with the timings of the events recorded in the Mallesons' file. This is inconsistent with the timings stated or implied by Mr Skender and also by Mr Vlahov.
53 The second letter from Westwing to Biokovo read:
Further to our letter earlier today, we confirm your direction to cease work under the sub-subcontract and to leave the Site. We will now do so immediately.
As for the formwork and other equipment supplied under the sub-subcontract and which is currently at the Site, we are removing the equipment. We reject your assertion that you own the formwork. We refer you to section 20 in Schedule S1 Division 7 of the Construction Contracts Act 2004 (WA), which provide relevantly that, in the circumstances of the sub-subcontract, ownership of the formwork does not pass from us to you until we are paid for the formwork.
We have not received any payment for the formwork. All we have received is a part payment only in respect of our tax invoices 3 and 4. There was no allocation by you of any component of the part payment against any of the items of tax invoices 3 and 4, including but not limited to the formwork. Unless and until such time as we are paid the balance owing on tax invoices 3 and 4 of $226,245 including GST, you have no entitlement to ownership of the formwork. We reserve all of our rights against you to assert and enforce ownership of the formwork.
Notwithstanding the above, for the time being we shall not take any steps to remove the formwork from the Site. We will notify you should our position on the formwork change.
Yours faithfully
Ivan Vidovic
54 There was no reply to that letter from Mr Skender or Biokovo or, for that matter, from Decmil. In the manner in which this case has been conducted it is unnecessary to determine who had the ownership of the formwork at the time that it remained erected on the site at Port Haven on 16 September 2009 or whether, regardless of ownership, Westwing were not entitled to retake possession of it in the circumstances which then prevailed. Decmil's insistence that it was unlawful and/or in breach of the site regulations to interfere with the formwork while it was in situ was not explained or investigated. Presumably, that approach was based on one or
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- more provisions of the subcontract between Biokovo and Decmil (exhibit 15, document 45, cl 1.3 and 37.1) and, possibly, similar provisions in the head contract between BHPB and Decmil. Nevertheless, despite provision being made in the subcontract between Decmil and the second defendant for the second defendant to ensure that its subcontractors, if any, complied with the terms of the subcontract and the head contract, this was never actually done in this case. There was no contractual relationship of any kind between Westwing and Decmil or, for that matter, between Westwing and BHPB.
55 The letter from Westwing to Biokovo of 16 September 2009 which was sent by email to the Decmil office at about 11.50 am on 16 September and was later delivered by Mr Spence to Mr Skender at site, resulting in Mr Skender's subsequent rage and dismissal of Westwing, was in the following terms:
We refer to the sub-subcontract between Biokovo Paving and Westwing Concrete for the provision by Westwing Concrete to Biokovo Paving of labour and materials to carry out the concreting works of the above Project.
It is a term of the sub-subcontract that we are to be paid 'COD' on receipt by you of our tax invoices.
You received our tax invoices 3 and 4, both dated 9 September 2009, on that day. The total amount of these invoices is $446,245.00 including GST. On Friday, 11 September 2009 we received $220,000 including GST in part payment only of tax invoices 3 and 4.
Unless agreement is reached between us and arrangements are put in place by 5 pm today to pay:
(a) the balance owing on tax invoices 3 and 4 of $226,245.00 including GST by no later than 12 pm this Friday, 18 September 2009; and
(b) all further tax invoices issued by us under the sub-subcontract within two days of receipt by you;
we will withdraw, from tomorrow morning, Thursday, 17 September 2009, our labour and equipment under the sub-subcontract and will leave the Site. We will also take steps to recover from Biokovo Paving the balance owing on tax invoices 3 and 4 and further amounts owing in respect of the work carried out by us up until and including today.
Please treat this with the utmost urgency and contact Ivan Vidovic immediately on 0438 079 740.
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- Yours faithfully
Ivan Vidovic
56 By this time the subject of the payment of the balance of the outstanding Westwing invoices had already been discussed between Mr Vidovic and Mr Skender. According to Mr Vidovic, an agreement had been reached on 10 September that the $446,245 then outstanding would be paid in two instalments, the first on 11 September 2009 and then the balance of $226,245 in the immediate future, but in a manner and at a time to be agreed. Mr Vidovic submitted a letter to Mr Skender dated 11 September proposing that the balance of $226,245 would be payable within 14 days and future invoices should be paid fortnightly (exhibit 2, document 14) but Mr Skender refused to sign that. That was followed by a further letter from Mr Vidovic on behalf of Westwing to Mr Skender dated 11 September advising that if agreement cannot be made between Biokovo and Westwing for Igor to sign the documentation provided and agree on the partial payment of those invoices Westwing would have no alternative but to remove all staff and equipment and start legal action. By this letter Westwing advised that it was willing to continue the project if Decmil would instruct Biokovo to make regular payments of invoices fortnightly and witness the signing and receive copies of daily time sheets.
57 These initiatives resulted in the $220,000 payment being made by Decmil to Biokovo and then by Biokovo to Westwing on 11 September but nothing more. The situation remained unresolved on 16 September at a time when Westwing's crew had been working continuously on the job since the payment dispute has arisen.
58 I do not consider this correspondence from Westwing to Biokovo to constitute any anticipatory breach or repudiation by Westwing of its obligations under the contract. It is clear that Westwing was ready and willing to proceed so long as payments to it under the contract which had accrued due were made and in accordance with an agreed schedule for future payments. In particular, Westwing were not refusing to carry out the work which was due for performance on 16 September, namely the concrete pour scheduled for that day. Westwing did threaten to withdraw on the morning of the following day, 17 September, but it left open the rest of 16 September to agree upon arrangements for payment of the outstanding balance of the invoices by 18 September and for further invoices within two days of receipt. There was no attempt by Mr Skender or Biokovo to discuss these demands or to dispute the amounts outstanding nor any offer to tender any other sum acknowledged to be due.
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59 In all the circumstances, the refusal by Mr Skender/Biokovo to comply with the demands for payment by Westwing, alternatively to tender amounts acknowledged to be due or to enter discussions in an effort to establish an acceptable schedule for repayment of the amount claimed and of future payments can only connote a refusal by Mr Skender/Biokovo to make any payment to Westwing at all. All this was occurring in the context of Westwing supporting and maintaining its crew of men at this distant location, providing its machinery, tools and equipment for use on the site, and itself incurring heavy expenditure for the advantage of Mr Skender/Biokovo. If Mr Skender/Biokovo was not willing to make any payments for the labour and services being received, Westwing could not be expected to continue because payment of the agreed value for the services was a fundamental obligation under the agreement between them.
Counterclaim
60 Consistently with its plea that Westwing had repudiated its obligations under the contract and/or committed an anticipatory breach which Biokovo had accepted, the second defendant advanced a counterclaim for damages. This alleged that, as a consequence of Westwing abandoning the work, damaging the formwork which was in situ, and leaving the site, the concrete pour which had been arranged for that day had to be abandoned. According to the second defendant, this meant that the cost of the concrete ready to be poured, the contractors and workers assembled by Decmil for the pour; the disposal in an acceptable and environmental manner of the waste product which could not be utilised; rehabilitating the site; and paying for the cost of the accommodation and travel of the Westwing workers on their return to Perth meant that Decmil had suffered losses and expenses which it was entitled to charge to the second defendant. These charges were put at $57,959.23. Further items in the counterclaim were as follows:
|
|
|
$ 3,617.00 $ 340.00 $10,000.00 $10,000.00 $82,055.39 |
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61 The particulars of $57,959.23 are included in an annexure to the statement of evidence of Mr Dennis Vlahov (exhibit 17) but none of the items in the counterclaim was developed. At the end of the case for the defendants the second defendant formally withdrew its counterclaim. I thereupon dismissed the counterclaim and ordered that the costs associated with the current claim would be reserved.
62 By contrast, the second defendant, Biokovo Construction Pty Ltd, claims that the conduct of Westwing by sending the letter to Mr Skender of 16 September 2009 threatening to cease work unless outstanding moneys were paid, amounted to an anticipatory breach of the contract by Westwing and/or a repudiation of the contract by threatening major consequences if Biokovo did not perform its part of the contract (that is, make payments of money claims) in a manner and within times not required by the terms of the subcontract itself.
The components of the plaintiff's claim
63 The remaining claim for $17,500 under subpar (c) of [12] above is for the supply to site of timber brackets and tubing resulting from a variation agreement made between Mr Vidovic and Mr Skender that with effect from 19 August 2009 the plaintiff would reduce its hourly labour rate from $140 to $120 per hour (which is agreed) but in return for the plaintiff to continue to supply its equipment to the site at a weekly rental rate calculated pursuant to industry rates and also to supply to site timber brackets and tubing. Mr Skender maintains that the only agreement reached in this regard was that the hourly rate for labour would be reduced from $140 to $120 per hour but says that this was a rate to be inclusive of all expenses, including the supply of equipment, materials, tools and necessary incidentals. As to this, there is a direct conflict of evidence between Mr Vidovic and Mr Skender.
64 The claim for the hire of materials was submitted under cover of the second invoice of 9 September 2009 but no reason was then given by Mr Skender to refuse payment on the grounds that this was not agreed. The details are supported by the invoice and schedule at exhibit 2, folios 10 and 11.
65 According to Mr Vidovic, at the original meeting on 24 June 2009 the amounts and rates discussed proceeded on the basis that Westwing would supply the concrete labour force, together with their hand tools, specified equipment and machinery (for which additional payment was
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- then specified) but that all other expenses of every kind would be met by Mr Skender. I accept his evidence in that regard as it is entirely consistent with the limited knowledge of the situation which existed at that time - namely, uncertainty about the duration and extent of the project in the absence of any contract drawings or specifications. It is most unlikely that anyone in Mr Vidovic's position would have agreed to absorb as part of its overhead any amounts then being quoted for the cost of timber brackets, tubing or other supplies for a project of unknown dimension and design. Nor would that be consistent with the approach adopted by Mr Vidovic that his company would supply labour only with limited tools and equipment and that all else was to be at its cost.
66 There is no dispute but that timber brackets and tubing were supplied to site by Westwing after the variation agreed at the end of August. Nor was there any evidence to dispute the value of the timber and associated materials claimed by the plaintiff of $17,500 and, accordingly, I consider this to be a justifiable component of the plaintiff's claim.
67 Similar observations apply in relation to the $85,700 claimed by the plaintiff for the hire of equipment from 19 August to 19 September (item (e) in the foregoing classification). The details of the equipment supplied by Westwing to the Port Haven site are set out in exhibit 2 folio 28 which itemises the equipment and materials supplied, specifies the quantities and then lists an individual weekly hire rate per unit, calculating the total weekly hire rate in the final column. It was the evidence of Mr Vidovic, and not challenged, that these hire rates were based on the standard retail hiring rates for equipment suppliers in the industry which he had obtained from Coates Hire Services and reduced by a factor of 10% to eliminate the hirer's profit. The total is calculated as follows:
First Delivery
Period of hire 19 August 2009 to 16 September 2009
Total weekly hire charge of $16,210 for that four-week
period $64,840
Second Delivery
Period hire 31 August 2009 to 16 September 2009
Total weekly hire charge of $10,430 for that two-week
period $20,860
$85,700
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68 Apart from asserting there had never been an agreement to pay such hire charges for this equipment, neither defendant attempted to establish that the cost was excessive or that the equipment had not been supplied, though there was a suggestion that the ride-on trowel machine was not requested or necessary. I reject that contention in view of Mr Vidovic's evidence that shortly after the initial quotation of 24 June 2009 it was agreed that the ride-on machine could be supplied in lieu of a bobcat/excavator. Illustrations of some of the equipment supplied to site by Westwing can be found in exhibit 2 folio 3, although these are restricted to the equipment which was sent up to site in the container which arrived on 30 July 2009. I am satisfied that the materials listed were supplied and that Mr Vidovic's evidence about the individual component weekly hire charges being at the standard industry rates should be accepted. Consequently, this component of the plaintiff's claim should also be allowed.
Claim for the balance of moneys due under the invoices
69 This is item (a) in the foregoing classification of the plaintiff's claims and is the sum of $348,895.
70 This figure is calculated by deducting from the aggregate of the amounts billed by Westwing to Biokovo Paving the aggregate of the payments actually received. This is set out in tabular form below showing the six invoices involved, the total amounts involved for each (including GST) and the four payments made by Biokovo Paving. Also shown are the exhibit numbers and individual invoices:
| Exhibit No | Claim/Invoices | Payments |
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
| |
5 |
|
| |
| |||
6 |
|
|
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$747,395 | $398,500 |
-$398,500 | |
$348,895 |
72 The second and third payments made by Biokovo Paving of $100,000 and $40,000 respectively were simply lump sums apparently chosen arbitrarily by Mr Skender and paid on account. Invoices were drawn up after the payments had been received to apportion the amounts received as between labour costs and 10% for GST to equal the total received.
73 The controversial claims are invoices 4, 5 and 6. Invoice 4 for $353,031 which, as the invoice shows, is for labour from 9 September at the reduced rate of $120 per hour less the two previous charges for labour by invoices 2 and 3, plus other outgoings for travel, induction, driver training, machine training and medicals. Despite assertions in the defendants' documents (exhibit 15) to the effect that those outgoings were not chargeable to Biokovo, I am satisfied that they are covered by the
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- agreement reached between Mr Vidovic and Mr Skender on 24 June 2009 that all other outgoings and expenses associated with Westwing's performance of the work would be at the cost of Biokovo Paving.
74 The real issue concerning invoices 4 and 6 is the accuracy of the total hours claimed for labour.
75 Invoice number 5, totalling $93,214 inclusive of GST, is for the supply of timber, nails, star pickets and other equipment and supplies, including cost of accommodation for Westwing crew up to 9 September 2009. Again, I am satisfied that these outgoings are for the cost of Biokovo Paving under the terms agreed between Mr Skender and Mr Vidovic on 24 June.
76 In the correspondence between the parties after the termination of 16 September 2009 Biokovo was asserting that petrol was not used in any machinery on site; that the costs for timber, nails and star pickets were the responsibility of Westwing, as was PPE (personal protective equipment) and that a concrete cutter was not needed. However, the plaintiff's evidence was that it was specifically required, and I accept this.
77 As for the accommodation component claimed, the position of Biokovo was that accommodation for the Westwing crew was supplied by arrangement with BHPB and Decmil at BHPB accredited facilities at Decmil's cost. However, because there were two members of Westwing's crew who were refused admittance to BHPB facilities and had to be found accommodation elsewhere - not financed by Decmil - Biokovo was not responsible. I do not accept this. The clear agreement between Westwing and Biokovo Paving reached with Mr Skender on 24 June 2009 was that the cost of accommodation for the Westwing crew would be met. It was not specified by whom it would be met but it was certainly not to be met by Westwing. Perhaps at that time Mr Skender believed and expected that the accommodation for all the Westwing crew would be provided by BHPB at the expense of Decmil, but that was not a stipulation or condition of the agreement. As it turned out, the men had to be accommodated elsewhere and the cost of that accommodation therefore falls on Biokovo.
78 It was also contended in the correspondence from Biokovo that there was no occasion for Westwing to hire a bus but again the Westwing position was that this was necessary for transport was agreed, was supplied and used, and that its cost falls within the category of outgoings payable by Biokovo. I accept that that is the case.
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79 The final invoice of 28 September, number 6, for $122,650, is for labour only for hours worked from 10 September to 16 September inclusive at the reduced rate of $120 per hour plus GST. This depends upon the accuracy of the claim for the total hours worked.
Plaintiff's claims for hours worked
80 By far the major areas of the controversy between the parties has been disputes raised by Biokovo about the accuracy of the various claims for hours worked by the Westwing concrete crew at Port Haven. These disputes can be addressed compendiously.
81 The breakdown of the hours worked by the plaintiff and the subject of the various invoices is apparent from the fourth and sixth of those invoices (exhibit 2 folio 7 and exhibit 2 folio 20) which, excluding travelling, induction and training time, claim 3,559.5 hours to 9 September 2009 and a further 762.6 hours from 10 September to 16 September inclusive - an all up total of 4,322 hours. This figure alone shows how much greater, more complicated and extensive was the work needed for the project than the 3,000 hours originally estimated by Mr Skender and inserted into the quotation from the plaintiff dated 24 June 2009 (exhibit 2.2).
82 Although it did not emerge expressly from the evidence, it is a fair inference that part of the reluctance of Mr Skender to pay the plaintiff's claims submitted on 9 September 2009 was his realisation of the consequences of this gross under-estimation of the magnitude of the job. Some of the reasons for this have already been mentioned, namely, the absence of any plans or drawings at the time when Mr Skender and Mr Vidovic met and agreed on the terms of engagement on 24 June 2009; the delay in commencement which meant that no initial site meeting at Port Haven was ever held to examine the drawings, assess the requirements of the job and provide a revised estimation of the amount of labour required for the concreting. Some loss of time due to initial problems associated with the incorrect ground levels at Port Haven may also have contributed but the inferences which I draw from the evidence is that, at the most, this was only of minor effect. So far as the plaintiff was concerned, the engagement which it had with Biokovo Paving was on an hourly rate basis with no upper limit or fixed lump sum.
83 Another factor of considerable importance is that the subcontract between Decmil and Biokovo Paving Pty Ltd was extended to include the manufacture of precast panels at a separate construction yard and to transport the manufactured panels to site for erection during a later stage
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of the project. In order to carry out this work Mr Skender established a separate depot or working area at Wedgefield, eight kilometres or so to the west of the Port Haven site. It was at Wedgefield that the concrete work was done in preparing and casting these panels and from there they were transported to the Port Haven site. This was not originally part of stage 1 of the Port Haven project but, nevertheless, it was taken on by Biokovo Paving and conducted, at least for part of the time, simultaneously with the operations at Port Haven. At the request and direction of Mr Skender some of Westwing's concreting crew were required to work at the Wedgefield site on the concrete work for the construction of these panels. They did this as part of their services for the provision of labour for concrete work and otherwise on the same terms and conditions as the engagement of Westwing for the Port Haven site. However, the administrative arrangements in relation to the Wedgefield site were different. It was not a Decmil site and there was no supervision, timing or recording of when men entered or left the Wedgefield site as there was, at least to some extent, at Port Haven.
84 As already mentioned, Westwing staff at Port Haven kept daily records, time sheets, of the hours worked by all Westwing employees on the concrete work. These were originally kept by Mr Skipsey and later by Mr Eastman. I have already recorded that I consider those two men to be reliable and truthful witnesses and to be competent and efficient in the records which they kept and in relation to all other aspects of their duties. It was these Westwing time sheets that were forwarded to Westwing's office in Perth and which were used as the basis for the payment of wages to individual Westwing employees. There is no suggestion of problems experienced in calculating or paying wages by Westwing to its employees or any other difficulties with the accuracy of the time sheets.
85 At various points during the currency of the contract Westwing's staff approached Mr Skender and requested him to inspect and approve or otherwise the Westwing time sheets. The reason, while not stated, was obvious, to give Mr Skender/Biokovo the opportunity to scrutinise the time sheets, raise and resolve any controversies about their accuracy, and to provide an agreed record of hours worked for subsequent calculation of Westwing's remuneration. However, Mr Skender repeatedly refused to examine, endorse or approve these time sheets. On one occasion, when offered the documents, he threw them in Mr Skipsey's face. I am satisfied that Mr Skender and Biokovo Paving had the opportunity to scrutinise the Westwing time sheets progressively throughout the course of the contract had they wished to do so. The fact that they were not inspected, endorsed
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- or otherwise examined was due entirely to the refusal of Mr Skender to do so.
86 By contrast, neither Mr Skender nor Biokovo Paving kept any records at all of the times worked by Westwing employees on the Port Haven site or, for that matter, at Wedgefield. Hence the only records of the hours worked are those prepared by Westwing, which were processed in the manner which I have already described and from which the calculations for the hours worked were made and the invoices later submitted by Westwing to Biokovo Paving. In that regard, the time sheets were scrutinised by Westwing staff in Perth and, for various reasons, not due to the accuracy of the time sheets, the total hours charged by Westwing was slightly less than the aggregate of hours recorded in the time sheets.
87 After the dismissal of Westwing's employees from the site on 16 September 2009 and in the negotiations which followed, by correspondence and at meetings between representatives of Westwing and Biokovo, Biokovo refused to accept as accurate the Westwing time sheets. Mr Dyson at the meeting which he attended with the Biokovo bookkeeper, Ms Cherry McKay, refused to accept any of the Westwing time sheets or invoices unless they were 'commercially supported'. The Biokovo representatives contended that the Westwing time sheets did not reconcile with the Decmil time records for men clocking in and clocking off at the Port Haven site and at times claimed for hours in excess of the 10-hour limit per day said to have been permitted by Decmil for any workers on the Port Haven site. '
88 The evidence established that all men working on the Port Haven site were required to undergo and pass a breathalyser test administered by Decmil personnel when they arrived at the gate at the beginning of the morning shift. On passing the test they had to proceed to another stage of sign-in or clock-in or have their entry on to the site recorded. When the men left the site, whether Decmil employees or others, they were required to sign out with a Decmil officer and accordingly there were Decmil records which, so the defendants contended, provided an accurate account of all entries and exits from the site. The Biokovo representatives pointed to several apparent discrepancies between the Decmil records and the Westwing time sheets which suggested that Westwing were claiming for longer hours for men on the site than recorded in the Decmil records or, in other instances, for hours worked in a particular day more than the maximum allowed by Decmil.
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89 There are several problems with the Biokovo reliance on the Decmil time records. First of all, there was no evidence from any Decmil officer or former employee or, for that matter, from any other witness to establish that the Decmil records were comprehensive or accurate or, indeed, recorded all entries and exits of workmen at the Port Haven site. Second, the Westwing workmen pointed out that there were frequently times when they did have to work longer than 10 hours a day and the necessity for them to do so was accepted and permitted. This occurred especially on the days when a concrete pour had been arranged for footings or slabs at Port Haven because, on those occasions, once the pour had begun, the work could not be stopped and the men had to continue with the task until it was finished, sometimes working up to 13 or 14-hour shifts. A further explanation given by the Westwing personnel was that the signing off procedure at the end of day was not strictly followed or observed. To visit the office to sign off meant that the men had to walk some considerable distance out of their way and a practice developed in which often one man would sign off for himself and three or four others and the implications were, and I draw the inference from them, that the Decmil sign-off records could not be regarded as completely accurate.
90 Another point of significance is that there were no Decmil sign-on or sign-off records or other recording of hours for time worked at the Wedgefield site. The only records of the Westwing employees' times worked when they were there, rather than at Port Haven, were the daily Westwing time sheets which did not distinguish between work done at Port Haven and work done at Wedgefield.
91 In her evidence the bookkeeper for Biokovo Paving, Ms McKay, said that she had checked the Westwing time sheets against Biokovo's records in order to attempt to reconcile the claims for hours worked but found that they did not match. On closer investigation, it became apparent that Ms McKay was not referring to any records kept by Biokovo but was treating the Decmil sign-on and sign-off records already described as Biokovo records. Neither she nor any other witness was able to verify or confirm the accuracy or reliability of those Decmil records.
92 The consequence of this is that the court is left with the fact that the only contemporary records of times worked by the Westwing personnel at Port Haven and Wedgefield were those kept by Westwing itself. There are, in fact, no others. The personnel who prepared and kept the Westwing records have each given evidence and their confirmations of the accuracy of the time sheets has not been shaken. Those records were the basis for the calculation of the weekly wages for the Westwing
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- personnel and there is no evidence of any complaints or problems arising in that regard. Mr Skender had been offered the opportunity to check the time sheets progressively as they were prepared but refused. For reasons just described, I am not satisfied that the Decmil records provide an accurate or reliable record of the times worked on the project by the Westwing staff and they certainly do not record time spent working at Wedgefield.
93 In these circumstances, I am satisfied that all the probabilities are that the Westwing time sheets constitute an accurate record of the time spent by their employees on the project and should be accepted as a basis for calculating the agreed remuneration of Westwing by Biokovo Paving. Consequently, I am satisfied that the hours claimed by Westwing in the several invoices have been proved to have been worked by the Westwing employees and that Westwing is entitled to be remunerated accordingly. This leads to the conclusion that the balance of the claim for the unpaid invoices of $398,500 including GST should be allowed.
Credibility issues
94 At various points in these reasons I have referred to my preference to the credibility of the evidence of the plaintiff's witnesses to the credibility of some of the witnesses for the defendants. Without, I hope, unnecessary disparagement, I should record that I have extreme reservation in accepting as credible uncorroborated or unconfirmed evidence of Mr Skender. There are several reasons for this, including the results of my impressions and observations in watching him give evidence. In observations which I recorded during the course of his examination and cross-examination I noted that his written statement (exhibit 12) includes allegations contrary to the contemporary written documents and correspondence and matters which were not put to Mr Vidovic in the course of the latter's cross-examination. In the course of his evidence I consider that he was evasive and discursive in the answers which he gave and had a tendency to descend into irrelevant elaboration to avoid the point of a question. He was distinctly evasive over the question of the value of the entire project for which his company had contracted but eventually conceded that the total remuneration was $4.8 million. I am satisfied that he told at least two deliberate falsehoods. One related to the circumstances of the payment of $220,000 made by Biokovo Paving to Westwing on 11 September 2009. Against all the evidence, Mr Skender maintained that this payment had nothing to do with the payment of the same amount made to him by Decmil as a result of Mr Vidovic's pleas on or about 9 September. I reject his evidence in this regard entirely. He
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- also persisted in claiming that he had never previously engaged Westwing until he was forced to acknowledge documents showing that he had done so. Furthermore, when he was due to give evidence on the morning of 23 August 2012, Mr Skender's counsel, on clear and specific instructions I have no doubt, made an explanation to the court that Mr Skender was not available to give evidence because of significant medical problems which had arisen as an emergency. The details of the explanation can be found in the transcript. When Mr Skender eventually did give evidence, he was cross-examined about this by counsel for the plaintiff and it became apparent that the information which he had provided to the court by instructions to his counsel was exaggerated, wrong and materially misleading. Further, he maintained that he was not on site at Port Haven on the morning of 16 September 2009 when Westwing were dismissed and that he played no part in its dismissal. This is directly contrary to the evidence of Messrs Skipsey and Eastman, who were there at the time and saw Mr Skender fly into a temper on receiving Mr Vidovic's letter by the hand of Mr Spence. I completely reject the denial by Mr Skender that he was not at the site or played no part in the dismissal. I am satisfied that he was there and it was his outbursts which expressly constituted the dismissal of Westwing. It has suited him since to assert that Westwing was dismissed from the site not by Biokovo Paving, but by Decmil because of threatening behaviour and unlawful attempts to sabotage or damage the formwork. I reject that contention entirely.
95 The second defendant's abandonment of its counterclaim for damages against Westwing without any sufficient explanation also has a tendency to tell against the credit of Mr Skender. There is no doubt that, because of the dismissal, time was lost and the concrete pour then about to commence had to be abandoned with inevitable significant cost. There was evidence from Mr Vlahov that a backcharge or debit of $57,959.23 was raised by Decmil against Biokovo Constructions Pty Ltd for this reason. As previously described, the counterclaim included additional components as well. There may be reasons associated with difficulties of proof or absence of records to support the counterclaim which might provide an explanation for its abandonment which do not reflect upon the credit of Mr Skender but nothing in that regard was advanced.
96 There is some support for Mr Skender's description of the events around midday on 16 September 2009 coming from Mr Vlahov. However, I am not prepared to accept as reliable the evidence of Mr Vlahov on these points. Despite his denial of being at the Decmil offices at the time when Mr Skender is alleged to have dismissed Westwing, Mr Vlahov was seen there by Mr Skipsey at the time the letter
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- was delivered to Mr Spence. It is apparent that shortly after the receipt of the letter Mr Skender and Mr Vlahov spoke to each other and a little later Mr Vlahov attended at the formwork site and ordered the Westwing staff off the site. The evidence establishes that Mr Vlahov and Mr Skender were close friends and that it was, indeed, Mr Vlahov who procured the Decmil subcontract for Biokovo Paving Pty Ltd. Soon after the dismissal of Westwing Mr Vlahov, on behalf of Decmil, granted a variation in the subcontract of Biokovo Paving Ltd, increasing the contract price by a total of $991,000 plus GST. This was done by an order dated 22 September 2009 (exhibit 18). On 20 October 2009 Mr Vlahov left the employment of Decmil. He says he resigned because the work involved too much travel and he no longer wanted to work there. Subsequently, Mr Vlahov joined with Mr Skender as a co-director of another Biokovo company and continued with him in that role for some years.
97 Mr Vlahov's evidence in cross-examination that he was not on the Port Haven site when Westwing was dismissed, that he heard about the dismissal only from others and that he acted to order Westwing staff off the site some time between 3 pm and 5 pm that day cannot be accepted. I am satisfied that Mr Skender dismissed Westwing shortly after 12 noon and that by 12.30 pm the Westwing crews were leaving the site, packing up their tools and making preparations to go to the airport. The timing of the correspondence that day from Mallesons establishes that Mr Vidovic was seeking legal advice in relation to the events which happened by about 1.45 pm and that the letter from Mallesons to Biokovo Paving confirming acceptance of the dismissal and addressing allegations made about damaging the formwork was despatched at or before 3 pm. Accordingly, I am not prepared to accept the evidence of Mr Vlahov where it conflicts with the evidence of the plaintiff's witnesses.
98 None of the other witnesses for the defendants had any direct knowledge of working arrangements on the site, the accuracy of the claims for hours worked or of the events on 16 September except for Mr Kastelan. However, he was not at the Decmil office at Port Haven that day but was rather arrived later at the site where the concrete pour was about to commence having been told that Westwing were now already dismantling formwork. His evidence was to the effect that he saw Westwing staff pulling down formwork and told them to leave the site. He had no recollection of seeing Mr Skender at the formwork area at that time. However, the principal events had occurred before any of Westwing's staff attempted to dismantle the formwork and they happened at or in the vicinity of Decmil's site office. Mr Kastelan's statement was prepared only shortly before the trial and about three years after the events
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- in question. I accept that he did see Westwing staff making attempts to dismantle some of the formwork but by then the dismissal had occurred. I do not regard as reliable his lack of recollection of Skender at the concrete formwork site at that time.
Was Westwing's contract with first or second defendant?
99 All the evidence bearing on the question of the identity of the party with whom Westwing contracted in June 2009 has now been mentioned. The only written component of the contract which has been suggested is the quotation of Westwing on 24 June 2009 which is in the name of Westwing Concrete Pty Ltd and addressed to 'IGOR & IVAN - In The Yard' written in the Croatian language for which an accepted English translation has been provided. According to Mr Skender the contract was entirely oral but Mr Vidovic claims that the quotation was part of a contract and I accept his evidence in that regard.
100 All subsequent discussions and variations with the contract were oral and reached between Mr Vidovic and Mr Skender at face to face meetings. At none of these meetings did Mr Skender ever expressly state that the contract would be in the name of his company, then Biokovo Paving Pty Ltd, nor did he produce any invoice or document, business card, memorandum or anything else showing the name of Biokovo Paving Pty Ltd or mentioning that he was a director or agent for an incorporated body nor was there any reference to, or disclosure of, an ACN number.
101 It was not suggested, let alone established, that because Mr Vidovic knew that Mr Skender had previously conducted business in the name Biokovo Paving that this meant that he was aware, or on notice, that the proprietor of Biokovo Paving was a corporation. Nor was it suggested that in June 2009 Mr Vidovic had searched or obtained information from any business names register or ASIC records. The only evidence in that regard is the evidence that on the morning of 16 September 2009 Mallesons, before advising Mr Vidovic at the conference about the problems he was experiencing with unpaid accounts, had caused a search to be made at ASIC which revealed the existence of a company Biokovo Paving Pty Ltd to which the two letters drafted and settled by Mr Lee for Mr Vidovic were then addressed. I will return to any potential significance of this evidence later because it raises the question of what significance, if any, may be given to post contractual conduct when seeking to identify specifically the contracting parties.
102 This common problem of identifying whether a particular contract is made with a company or with the man who stands behind the company
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and the many related authorities were examined comprehensively by the NSW Court of Appeal in Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154, in a judgment of Campbell JA, with whom Beazley and Basten JJA agreed. Campbell JA examined the authorities dealing with the issue and the significance, if any, of information contained on a business name register or similar public register. That was a case, rather the like the present, where very little evidence or cross-examination was directed to this particular issue. In the course of his review of the authorities Campbell JA referred to Aitken Transport Pty Ltd v Voysey [1990] 1 Qd R 510 which in turn referred with approval to The Swan: Bridges & Salmon Ltd v 'The Swan' (Owner); Marine Diesel Service (Grimbsby) Ltd v The Swan (Owner) (The Swan) [1968] 1 Lloyd's Rep 5 where it was observed that the question to be determined by the court when seeking the identity of contracting parties must be to establish an objective intention of both parties based on what two reasonable businessmen making a contract of that nature, in those terms and in those surrounding circumstances, must be taken to have intended. This is very much in accord with the obligation to apply the objective theory of contract which was described in Toll (FGCT) Pty Ltd v AlphapharmPty Ltd (2004) 219 CLR 165.
103 Furthermore in Aitken there is reference to a passage of the judgment in Chamberlain J in H J Lyons & Sando Limited v Houlson [1963] SASR 29 which contains the passage:
The prima facie position is that when a man orders work to be done he impliedly undertakes to pay for it, and if he desires to avoid the liability so undertaken by setting up that he was acting purely as agent for another person, he must have made that position clear to the other contracting party.
104 Again, in Aitken Campbell CJ said:
The presumption is one of fact and so may be displaced by evidence of a contrary intention. Such an intention must be ascertained by an objective assessment of the words and deeds of the parties in the light of all the evidence, as well as the actual knowledge of the party seeking to enforce the promise against the individual. He cannot of course insist upon a contract with the individual if he in fact knows that that individual was acting as the representative of another, whether or not that other is a corporate entity or natural person or firm. But it lies with the person seeking to avoid that liability to show that there are circumstances, including such knowledge, sufficient to displace the prima facie inference that he is the one liable on the contract.
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105 Also in Pethybridge Campbell JA approved observations to the effect that in these circumstances the judicial task is not to discover the actual intentions of each party but 'to decide what each was reasonably entitled to conclude from the attitude of the other' [43]. At [52] - [53] Campbell JA refers to two English decisions Ingram v Little [1961] 1 QB
31; Lewis v Averay[1972] 1 QB 198 where it was stated that there was a presumption that a person is intending to contract with a person to whom he is addressing the words of the contract and that in both these cases the dealings were face-to-face.
106 In the present situation all the dealings between Mr Vidovic and Mr Skender were conducted face-to-face. In the absence of disclosure by Mr Skender that he was acting on behalf of a corporation or some other entity the starting presumption is that he was contracting personally with Mr Vidovic who plainly disclosed that he was contracting on behalf of Westwing. There is nothing to refute that presumption. It is certainly the evidence of Mr Vidovic that he believed he was contracting personally with Mr Skender, but Mr Vidovic's personal belief is not determinative. As already mentioned, the search must be for an objective intention between the parties, but in the absence of any indication that Mr Skender was acting on behalf of some other person, even an unidentified principal, the objective circumstances favour the conclusion that he was contracting personally.
107 This returns me to the significance of the evidence that on 16 September 2009, after obtaining legal advice, Mr Vidovic wrote the two critical letters of that date to Biokovo Paving Pty Ltd. As to the significance of subsequent communications for the purpose of deciding with whom a contract was entered. This topic was also examined by Campbell JA in Pethybridge, his Honour said:
The present state of the law throughout Australia on whether and if so when it is possible to use post-contractual conduct as an aid to construction of the contract is not yet settled: see the authorities cited in Cheshire and Fifoot’s Law of Contract, 8th Australian edition, p 392–393; Cross on Evidence, 7th Australian edition, para [39290]; Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 at 318 [109], per Kirby J. The more restrictive view, favoured in this Court, is that subsequent communications cannot be looked to as an aid to construction of a contract, but can be looked to as an aid to deciding whether a contract has been entered into at all: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 163–164 ; [2001] NSWCA 61 at [25]–[26]; Magill v National Australia Bank Ltd [2001] NSWCA ...(further authorities omitted) ...
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108 In the present case there is no doubt that a contract did exist between Westwing and either Mr Skender or the second defendant, so here the application of the so-called restrictive view does not lead to any pertinent conclusion. However, even if I were to take into account the evidence of the two letters written on behalf of Westwing on 16 September 2009, I would not conclude that they amount to any acceptance that the contract was with the second defendant. Mr Vidovic knew nothing of the results of any search at ASIC or elsewhere until that day. At that point the question of critical importance for him was to secure arrangements for the continuity of payments due under the contract and there was no issue which he or his solicitor needed to address about the identity of the contracting parties. Both letters were written under circumstances of urgency and it is most improbable that any attention would have been given by Mr Vidovic to the question of whether or not either letter constituted an acknowledgement by Westwing that it was contracting with the second defendant rather than the first. The modes of address used in those two letters are entirely inconclusive on the question of with whom Westwing had previously contracted.
109 Accordingly, in these circumstances, I conclude that the contract by Westwing to provide labour and equipment for use at the Port Haven project was with Mr Skender personally and not with Biokovo Paving Pty Ltd, later to become Biokovo Construction Pty Ltd. It follows that I consider that Mr Skender is personally liable in this action to Westwing in the sum of $452,095 plus interest at 6%, totalling $78,776, making an aggregate of interest and damages to date of $530,871.
110 I should add that if, for any reason, I may be wrong in determining that this contract by Westwing was with Mr Skender rather than with the second defendant, then the only other possible result is that the contract was with the second defendant. In that case it would be Biokovo Construction Pty Ltd which would be liable in this action to the plaintiff.
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