Colless Nominees Pty Ltd v Davidson (t/as Barton Houseshift)
[2006] NTSC 20

PARTIES: COLLESS NOMINEES PTY LTD
(ACN 009 630 335)

v

DAVIDSON, ALLISON GAYE (t/as BARTON HOUSESHIFT)

TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING APPELLATE JURISDICTION

FILE NO: No. LA 22/05 (20326458)

DELIVERED: 16 MARCH 2006

HEARING DATES: 14, 15, 16 MARCH 2006

EX TEMPORE
JUDGMENT OF: ANGEL J

CATCHWORDS:

CIVIL – CONTRACT

Appeal – Local Court Appeal – Questions of Law only – Contract – Repudiation – Right to Rescind – Unjustified Demand – Whether Contract Repudiated – Damages – Contract – Breach

REPRESENTATION:

Counsel:
Appellant: B O’Loughlin
Respondent: W Piper

Solicitors:
Appellant: Clayton Utz
Respondent: Pipers

Judgment category classification: B
Judgment ID Number: Ang200605
Number of pages: 14


IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Colless Nominees Pty Ltd v Davidson (t/as Barton Houseshift)
[2006] NTSC 20
No. LA 22/05 (20326458)

BETWEEN:

COLLESS NOMINEES PTY LTD
(ACN 009 630 335)
Appellant

AND:

ALLISON GAYE DAVIDSON
(t/as BARTON HOUSESHIFT)
Respondent

CORAM: ANGEL J

EX TEMPORE REASONS FOR JUDGMENT

(Delivered 16 March 2006)

[1] This is a plaintiff’s appeal and a defendant’s cross–appeal against a judgment of the Local Court at Darwin for the plaintiff to pay the defendant $3477.10 and costs. Appeals from the Local Court to the Supreme Court are confined to questions of law: s 19 Local Court Act (NT).

[2] In mid–2002 the defendant, trading as Barton Houseshift, agreed to sell an elevated tropical house to the plaintiff, to remove it from its location at Strangman Court Larrakeyah, to transport it to Mandorah on Cox Peninsula and to install or “restump” it on land of the plaintiff at 10 Cox Drive, Mandorah, all for the sum of $77,000. In order to comply with certain legal requirements an eave had to be removed from the house to make it sufficiently narrow to transport by road. The plaintiff’s Local Court claim against the defendant included the alleged cost of re–instating the eave on the house once at Mandorah together with alleged consequential losses by way of lost rent. The plaintiff also claimed damages for the defendant’s alleged failure or refusal to complete a series of other works additional to the delivery and re–stumping of the house which the defendant agreed to do


[3] On 5 July 2002 the defendant sent a facsimile to the plaintiff in the following terms:

“Colless Nominees
5 Edwards Street
Parap, NT
3 July 2002
RE: Purchase of House, No 2 Strangman Circuit, Larrakeyah NT

Dear Brian
We are pleased to offer you the 3 bedroom house inspected by yourself at 2 Strangman Circuit, Larrakeyah. Please find following the terms and conditions of the sale of the house.
Purchase price of the house delivered and restumped, is $77,000.00, including GST. The house will be available for us to commence work by the end of this month, and a Permit to relocate will be obtained for the following available weekend.

The price includes the following:

(a) Transportation of the house from the current location & delivery to you property at Number 10 Cox Drive, Mandorah NT.
(b) Restumping of the house at 2.85m.
(c) Footing holes, concrete & 100 ml box section piers.
Barton Houseshift gives no guarantees to the quality and/or structure of the house. You must rely upon your own inspections of the building to determine the condition of the house for its intended purpose.

Barton Houseshift will not be responsible for any of the following and the price does not include any of the following:

1. Access into the proposed site at No 10 Cox Drive, Mandorah.
2. Connection of services such as power, water and septics.
3. House plans, certificates or inspections.
4. Any verandah’s and stairways attached to the building.
5. Any further excavation costs, should we encounter soil irregularities such as rock etc in footing holes.
6. Transit Insurance for the building.

The payment details are $55,000.00 (including GST) on acceptance of this offer, and the balance of $22,000.00 (including GST) on the completion of the restumping at No 10 Cox Drive, Mandorah.

** Please Note: If further costs are incurred (such as clause No 5 above, or upgrading quotes), a separate invoice will be issued.
It is to the discretion of the Motor Vehicle Registry if any verandahs/landings etc may remain attached during the transportation. Therefore, we can not give any guarantee to the condition of such if they are required to be removed from the building.
If there is anything further that you wish to discuss, please do not hesitate to contact either myself or Kym.

Yours sincerely
(signed)
Allison Barton
Barton Houseshift”.

[4] On 9 July 2002 the plaintiff paid the defendant a deposit of $7,700. On 30 July 2002 the plaintiff paid the defendant a further sum of $20,000. In August the plaintiff arranged for a structural engineer to inspect and report on the house at Larrakeyah. The engineer produced a report. The report prompted a meeting between Mr Colless of the plaintiff and the defendant at the Cool Spot, a coffee shop at Fannie Bay. There, each party agreed to undertake work on the house once it had been transported to the Mandorah site. The defendant sent an email to the plaintiff, Exhibit 4, setting out what she understood to be the works she had agreed to undertake. The learned Magistrate found that the scope of the undertaking was uncertain, and this was so to the knowledge of Mr Colless (para 85 reasons).

[5] On 28 August 2002 the plaintiff paid a further $27,300.00 to the defendant towards the purchase price. On 8 September 2002 the defendant transported the house to Mandorah. A further $11,000 was paid by the plaintiff to the defendant on 13 September 2002 and stumping of the house commenced at the Mandorah site on about 3 October 2002.

[6] On 11 October 2002 the defendant having been paid the final payment of $11,000 by the plaintiff, Kim Barton, the defendant’s husband, left the plaintiff’s Mandorah site. He did so, the learned Magistrate found, with the acquiescence of the plaintiff.

[7] The plaintiff as I have said claimed damages on the basis that the defendant failed to re–instate the removed eave and failed to complete the works agreed to be done at the Cool Spot meeting. For her part the defendant counter–claimed for monies allegedly owing for work done by Barton on behalf of the defendant at the plaintiff’s request on footings for a verandah on the house at Mandorah and certain other items.

[8] The learned Magistrate held that a binding contract of sale and re–installation of the house at Mandorah was struck between the plaintiff and the defendant prior to the Cool Spot meeting, and that the defendant’s agreement to do further work at that meeting was unenforceable, inter alia, on the ground that no consideration passed from the plaintiff to the defendant therefor. The learned Magistrate, in reaching that conclusion, held that the decision of Santow J in Musumeci & Another v Winadell Pty Ltd (1994) 34 NSWLR 723 did not represent the law in the Northern Territory. The learned Magistrate also held that any agreement in relation to additional works was void for uncertainty. The learned Magistrate further held that in any event the plaintiff had failed to establish that the defendant was in breach of her promise at the Cool Spot meeting to do the extra work.

[9] The learned Magistrate held the defendant liable to the plaintiff in the sum of $1,320.00 being the cost of re–instating the eave and entered judgment on the plaintiff’s claim accordingly. He upheld the defendant’s counter–claim for work done, assessed it in the sum of $4,797.10, and entered judgment on the counter–claim in that sum. Setting off the plaintiff’s claim against the defendant’s counter–claim, the learned Magistrate ordered the plaintiff to pay the defendant the difference, namely $3,477.10. Following a further hearing the learned Magistrate ordered the plaintiff to pay the defendant’s costs.

[10] The plaintiff’s grounds of appeal are as follows:

“1. The Magistrate erred in declining to apply Musumeci v Winadell Pty Ltd and holding that, in the circumstances, consideration was provided by the plaintiff to the defendant for the additional items agreed to be performed by the defendant at the Coolspot meeting (“the Coolspot items”).

2. The Magistrate erred on a question of law in finding that there was no consideration provided by the plaintiff to the defendant for the Coolspot items.

3. The Magistrate erred on a question of law in finding that the original contract was not rescinded by the new contract struck at the Coolspot.

4. The Magistrate erred on a question of law in failing to find that the defendant was estopped from denying that she was obliged to perform the Coolspot items.

5. The Magistrate erred on a question of law in determining liability in relation to the Coolspot items on a lack of consideration where:
(a) lack of consideration had not been pleaded by the defendant;
(b) lack of consideration was not raised by the defendant until closing submissions; and
(c) the defendant pleaded that it was under an obligation to perform the works.

6. The Magistrate erred on a question of law in finding that there was no breach in the promise to perform the Coolspot items in finding that the departure of the defendant from the site terminated the defendant’s obligation to perform the Coolspot items.

7. The Magistrate erred in law in finding that part of the agreement in relation to the additional works on the house was void for uncertainty.

8. The Magistrate erred in law in awarding costs to the defendant.”

[11] It is convenient to deal with ground 6 of the appeal first.

[12] The learned Magistrate upheld the defendant’s pleaded defence that the defendant did not fail, refuse, or neglect to perform the works promised by the defendant at the Cool Spot meeting as alleged by the plaintiff. He so held notwithstanding that the defendant never commenced the works she agreed to undertake at the Cool Spot. How did the learned Magistrate reach this conclusion? I quote from his reasons for judgment
“56. As will be seen below, my conclusion on all the evidence is that, whatever Mr Barton promised to do exactly, it was understood at the time he made the promise that the work was to be done at the time the house was delivered to and restumped at Mandorah, a time when Mr Barton would be on site, with various tools and machinery and a labourer at his disposal, when he might conveniently and efficiently attend to the work. As things turned out, the promised works were not then done, with at least a degree of acquiescence by Mr Colless. According to Mr Barton he did not definitively refuse to do the works until much later, in May 2003, and that his reasons for doing so then relate to the receipt of a letter from Mr Colless’s solicitors, (dated 24 April 2003 but not received till early May). The letter became Ex10 and included the following:

“The agreement between you and our client was largely informal and would appear not to have any specific default clauses. We are therefore instructed to give you notice to make time of the essence for the completion of your obligations under the Contract. While the house cannot be used our client is losing potential rental income.

Our client has sent you a copy of the Engineer’s Report setting out what works must be carried out both to complete the removal works and to bring the house up to Code. In that regard we refer you to Peter Russell’s inspection report dated the 20 August 2002 and in particular to the 15 points listed on that report under the heading “Findings”.

If those works are not completed by you to the satisfaction of our client’s building certifier (Shane Cooper of Building Surveyors Australia Pty Ltd) within 3 weeks of the date of this letter, our client will terminate the agreement for the sale and transportation of the house and will engage private contractors to complete the outstanding work, and will expect you to reimburse it for the cost incurred.”

57. As can be seen, that is a demand that Mr Barton perform all the works on Mr Russell’s report, not the much smaller number promised at the Cool Spot meeting. Mr Barton’s evidence was that he was repulsed by this unjustified demand and, after desultory further communications (which gave rise to another letter from Clayton Utz effectively repeating that demand - Ex11), he washed his hands of the matter.
58. Mr Colless gave evidence that on numerous occasions late in 2002 and early 2003 he spoke on the telephone to either Ms Davidson or Mr Barton, urging the completion of the work. It was only when such means failed that he went to his lawyers. His evidence in relation to those telephone calls – their number and their content – is disputed. No evidence (by way of telephone bills etc) was led to confirm their occurrence. I am not persuaded on the balance of probabilities that Mr Colless made enough calls requesting the completion of the works for it be inferred from the works’ non-completion that Mr Barton or Ms Davidson had refused to complete. If any obligation, by way of promissory estoppel obliged Mr Barton to do the works in the first place, (which, I doubt) and if that obligation survived his departure from the site (which I very much doubt) then I am not persuaded that he finally sought to abandon that obligation until he received an unjustified demand – what he may understandably have believed to be a deliberately inflated demand. His refusal after that cannot in my view be categorised as unconscionable.
…..
97. It seems to me on all the evidence that it was the essence of Mr Barton’s agreeing at the Cool Spot meeting to do the works that they would be done in connection with the relocation of the house. Of course, if Mr Barton then chose to postpone the works – to chase other lucrative work – his obligation would remain. But if Mr Colless chose, for example, to postpone the works, or was not in a position to furnish the materials necessary for the works, and Mr Barton took himself, his equipment and his labourer off site in these circumstances, then it is my opinion that an essential underpinning of the obligation would have been taken away, and Mr Barton would be no longer obliged to put himself to the trouble and expense of returning at Mr Colless’s convenience. In my opinion the parties to the Cool Spot agreement would have included a termination clause in their agreement to that effect, if they had turned their minds to such events. It is only reasonable to imply such a term, given the reasons why the works were asked for, and agreed to.
98. That being so, on the question whether the agreement was breached, the burden of proof being on the plaintiff, there is simply insufficient evidence for me to decide whether Mr Barton’s departure from the site was a default on his part, or whether it was occasioned by some failure on Mr Colless’s part, such as the examples above. Nor is there evidence which could persuade me that Mr Barton’s departure was negotiated on condition that he would return later to complete the works. It may have been Mr Colless’s hope and understanding that Mr Barton would, and Mr Barton may have felt that, if called upon, he should, but there is not evidence of a revised agreement to that effect. In my opinion, his departure from the site terminated any obligation, arising from the Cool Spot meeting. There is not sufficient evidence of a breach of that agreement.”

[13] Counsel for the appellant particularly complains that the learned Magistrate implied a term of the contract (paragraph 97) without reference, indeed contrary, to the leading decisions on implications of terms into contracts. He further criticized the learned Magistrate’s conclusion that Barton’s departure from the Mandorah site terminated any obligation of the defendant to do the extra works arising from the Cool Spot meeting. I think there is much substance in these criticisms. I also think the learned Magistrate’s language in paragraph 58 of his reasons quoted above is open to criticism, particularly in his emphasis on whether the defendant “refused” to do the work and whether it could be categorised as “unconscionable”. With respect, unconscionability has nothing to do with it. The issue was whether the plaintiff had established the defendant was in breach of a promise to do works, that is, failed to do that which the defendant was obliged to do. “Refusal” connotes a conscious repudiation of an obligation, that is, a repudiatory breach. The plaintiff could succeed without proving as much. The learned Magistrate found as a fact that Barton left the Mandorah site with the acquiescence of Mr Colless. He found as a fact that Barton did not refuse to do the works until after the defendant had received the plaintiff’s unjustified demands contained in the plaintiff’s solicitor’s letter Exhibit 10 (quoted above). Those findings of fact conclude the matter.

[14] Putting it into the language of common law contract, and ignoring irrelevant equitable concepts such as unconscionability, any contractual obligation of the defendant to do extra works arising from the Cool Spot meeting was discharged by the defendant’s acceptance of the plaintiff’s repudiation of contract constituted by the unjustifiable demands contained in the letter Exhibit 10, effectively repeated in Exhibit 11. Those unjustifiable demands amply demonstrated an intention on the part of the plaintiff no longer to be bound by any agreement reached at the Cool Spot entitling the defendant to treat the agreement as discharged from that time onwards: see generally, Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277; Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625, per Gibbs CJ; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623. On the facts as found there was here repudiation by the plaintiff accepted by the defendant. The learned Magistrate’s finding of fact in paragraph 85 of his reasons that on the evidence it was not established there was a “meeting of minds as to the subject of whatever Mr Barton gave” is additionally fatal to the appellant’s case.
[15] The conclusion of no breach of any agreement to do the extra works renders consideration of the remaining grounds of appeal unnecessary, save that as to costs.

[16] I turn to the defendant’s cross–appeal.

[17] The ground of the cross–appeal is that the learned Magistrate erred on a question of law in determining that there should be judgment in favour of the plaintiff in respect of the costs of replacement of the plaintiff’s eave as neither the evidence nor the learned Magistrate’s line of reasoning disclosed any or any sufficient legal basis for such liability.

[18] I quote from the learned Magistrate’s reasons at paragraph 70, 73 and 74.

“70. On all of the evidence, I conclude on the balance of probabilities that:

(a) Something, eave or verandah, had to come off the house so that it could be legally shifted.

(b) Both parties preferred, for different reasons that it be the eave if there was a choice. Mr Barton and Ms Davidson were aware that Mr Colless had a reason to prefer it to be the eave. (I don’t accept Mr Colless’s evidence to the contrary on p232.) Namely, that this would dovetail with his plan to add a new full length balcony to the relocated house. I don’t know if Mr Colless was aware that Mr Barton had a reason to prefer it to be the eave, indeed, I don’t know myself what that reason was, but Mr Barton’s evidence suggested there was one.

(c) There was no discussion as to who would bear the cost of repairing or replacing the eave, nor of who would do that job, nor of what the job would entail, before the eave was removed and the house shifted.

(d) Once the house had been shifted, Mr Barton offered to do that job, but to do it in a manner that would not be up to code. For that reason Mr Colless refused that offer.

(e) Mr Barton was probably offering to do that job free of charge, and probably because that was the sort of job he was accustomed to do free of charge.

(f) Mr Barton was not prepared to do a job up to code and therefore satisfactory to Mr Colless at that time. Probably there was not on site either a plan, or materials to do the satisfactory job.
…..

73. In my judgment the exclusion clauses in the terms quoted from the offer to purchase are ambiguous so far as eaves are concerned. It appears to me to be a case where there is no better and fairer means of deciding the issue than to interpret the document contra proferentem, that is, to conclude that the exclusions do not extend to eaves. Therefore the house as delivered to the Mandorah site was deficient in a way not covered by the exclusion clause and the plaintiff was entitled to have the deficiency put right. The claim therefore succeeds so far as the cost of those repairs is concerned.
74. In relation to any claim for damage consequential upon the defendant’s failure to provide a house with an eave, it is my opinion that Mr Barton’s offer to botch the job is sufficient to defeat that claim. Had Mr Colless accepted that offer, his relocated house would have been waterproof, if not up to code, and Mr Colless could later have had the work satisfactorily done at his leisure in an appropriate season. I have no reason to believe that the doing of Mr Barton’s proposed mode of repair would have compromised anything in the structure or rendered more expensive the later bringing of the eave up to code. By rejecting Mr Barton’s offer Mr Colless has, for understandable reasons, failed to mitigate his losses and must be left to bear them.”

[19] The respondent on appeal did not submit that the deficiency as regards the eave was covered by the exclusion clause.

[20] I agree with the learned Magistrate that the plaintiff was entitled to have the deficiency put right, that is, to have the eave that had been removed for transport purposes reinstated. Although there was no obligation on the defendant, contractual or otherwise, to re–instate the eave to Code Standard he was obliged to “put the eave back as it was”, to employ the words of Mr Colless at page 67 of the transcript. Barton offered a patch or botch job, which offer Colless for his own reasons declined. There was therefore a legal basis for the defendant being liable for not putting the eave back as it was and thus for costs of rebuilding the eave albeit not for consequential loss that might have been avoided if Barton’s offer had been accepted. It follows that the cross–appeal should be dismissed and the judgment on the plaintiff’s claim against the defendant in the sum of $1,320.00 affirmed.

[21] The net result therefore is as follows: the plaintiff’s judgment against the defendant in the sum of $1,320.00 is affirmed; from the judgment sum of $4,797.10 on the defendant’s counter–claim there will be deducted $200.00 to take account of the learned Magistrate’s conceded error in allowing that sum for welding. Setting one off against the other the plaintiff/appellant will be ordered to pay the defendant $3,277.10.

[22] I will hear the parties’ deferred submissions on the plaintiff’s appeal against the learned Magistrate’s costs order and as to the costs of the appeal.