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Press Metal Aluminium (Australia) Pty Ltd v Total Concept Group Pty Ltd (Externally Administered)[2014] QDC 280

Press Metal Aluminium (Australia) Pty Ltd v Total Concept Group Pty Ltd (Externally Administered)[2014] QDC 280

DISTRICT COURT OF QUEENSLAND

CITATION:

Press Metal Aluminium (Australia) P/L v Total Concept Group P/L (Externally Administered) & Anor [2014] QDC 280

PARTIES:

PRESS METAL ALUMINIUM (AUSTRALIA) PTY LTD

(plaintiff)

and

TOTAL CONCEPT GROUP PTY LTD (EXTERNALLY ADMINISTERED)

(first defendant)

and

DANIEL MCGEE

(second defendant)

FILE NO:

186/2013

DIVISION:

Civil

PROCEEDING:

Claim and Counterclaim

ORIGINATING COURT:

District Court of Queensland

DELIVERED ON:

12 December 2014

DELIVERED AT:

Brisbane

HEARING DATES:

20, 21, 22, 23, 24 and 28 October 2014

JUDGE:

Dorney QC, DCJ

ORDER:

  1. That each of the plaintiff and second defendant have leave to make submissions on all matters raised in paragraph [184] of these Reasons, to be filed and served by 4pm on 19 December 2014.

CATCHWORDS:

Guarantee – whether limitation on amount of liability

Contract – whether implied term – whether breaches – whether assignment of rights valid and effective – whether compromise – extent of damages on recovery

LEGISLATION CITED:

Corporations Act 2001 (Cth), s 444A(4)(i), s 444A(5), s 444D, s 444E(1)

Property Law Act 1974, s 56, s 56(1), s 199

TEXTS AND CASES CITED:

RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (2002, 4th ed)

Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99

Bellgrove v Eldridge (1954) 90 CLR 613

Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36

Browne v Dunn (1893) 6 R 67

Brownton Ltd v Edward Moore Inbucon Ltd [1985] 3 All ER 499

Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185

Cross v Moreton Bay Regional Council [2013] QSC 215

Derwinto Pty Ltd (in liq) v Lewis [2002] NSWSC 731

DH MB Pty Ltd v Manning Motel Pty Ltd [2014] NSWCA 396

Dymocks v Capral [2013] NSWSC 343

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471

Hazard Systems Pty Ltd v Car-Tech Services Pty Ltd (in liq) [2013] NSWCA 314

Hitchings & Coulthurst Co v Northern Leather Co of America and Doushkess [1914] 3 KB 907

International Air Transport Association v Ansett Australia Holdings Limited (subject to a Deed of Company Arrangement) (2008) 234 CLR 151.

Knott Investments Pty Ltd v Fulcher [2014] 1 Qd R 21

Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184

McKay & Anor v Hudson & Ors [2001] WASCA 387

Poulton v The Commonwealth (1953) 89 CLR 540

Suosaari v Steinhardt [1989] 2 Qd R 477

Tooth v Brisbane City Council (1928) 41 CLR 212

Trendtex Trading Corporation v Credit Suisse [1982] AC 679

UI International Pty Ltd v Interworks Architects Pty Ltd [2008] 2 Qd R 158

WorkCover Queensland v Amaca Pty Ltd [2013] 2 Qd R 276

COUNSEL:

Mr N Cooke for the plaintiff

Mr M Bland for the second defendant

SOLICITORS:

Tucker & Cowen Solicitors for the plaintiff

QBM Lawyers for the second defendant

Introduction

  1. [1]
    The plaintiff, Press Metal Aluminium (Australia) Pty Ltd (“PMAA”), sues the second defendant under an Indemnity and Guarantee dated 8 March 2010.  The second defendant, Daniel McGee (“McGee”), counterclaims against the plaintiff pursuant to assigned rights arising from an agreement, or agreements, between PMAA and the first defendant, Total Concept Group Pty Ltd (Externally Administered) (“TCG”), concerning aluminium products, intellectual property and a manufacturing tool supplied by PMAA to TCG [and, thereafter, to be combined for manufacture by TCG into, relevantly, door suites for the supply by TCG to Philip Usher Constructions Pty Ltd (“Philip Usher”), a registered builder, for the purposes of a project in Southport in the State of Queensland known as H20 Broadwater (“H20”)].
  1. [2]
    At the beginning of the trial hearing on 20 October 2014 I placed a ruling on the record that I had indicated to all parties that I intended to make then. It dealt with the order of calling evidence, which meant that PMAA was, in its case, only obliged to call evidence in respect of the issues on which it had the burden of proof. This had the consequence, adhered to by the parties, that McGee, with respect to the claimed assigned rights, led evidence with respect to the counterclaim before PMAA was required to respond.
  1. [3]
    Since the issues concerning the guarantee were, therefore, discrete from the issues concerning alleged breaches of the agreements underpinning the counterclaim, it is appropriate to deal with them separately, in turn.

Guarantee

  1. [4]
    It was not in dispute between the parties that the Indemnity and Guarantee dated as made 8 March 2010 (Exhibit 1, Tab 18) was the relevant document.
  1. [5]
    As pleaded, McGee admitted that he signed that document but otherwise denied that he personally guaranteed to pay PMAA relevant moneys. This denial was based upon an alleged oral agreement that any sum owing be limited to the amount found to be in excess of an “insured credit limit” of $100,000.00 for the relevant credit trading account agreement.
  1. [6]
    A significant evidentiary problem was that the oral agreement was alleged to have preceded the admittedly signed agreement on 8 March 2010 (being an agreement alleged to have been entered into on or about 22 October 2009).
  1. [7]
    The defence pleaded further, in the alternative, that any term concerning the “moneys payable” was void for uncertainty.
  1. [8]
    McGee’s pleading also admitted that he had not paid the sum claimed.
  1. [9]
    In the written submissions of McGee made at the end of the trial, the only issue agitated was that the guarantee was limited in the manner pleaded (namely, only to amounts in excess of $100,000.00).
  1. [10]
    While a determination of whether there was any meeting at which such words of limitation were “agreed” involves a consideration of the evidence of both McGee and the authorised representative of PMAA, John Henley-Smith (“Henley-Smith”), I find it is particularly significant that as at the time that he signed the Indemnity and Guarantee on 8 March 2010 McGee raised no contest that the actual terms of that agreement were otherwise than those then contained in writing (i.e. that there was no assertion of any kind that they did not truly reflect the effect of the alleged earlier oral agreement).
  1. [11]
    The actual circumstances of execution were explored in McGee’s cross-examination. He first admitted that he read the document before he signed it. Then, when asked whether he understood the terms of the document before he signed it, his answer was that “quite possibly”, adding that there “should have been an addition to it but, yeah, it would be apparent that I’ve signed it”. He further admitted that he signed it quite some time after the alleged meeting in October of the year before. In addition, he admitted that he had read another identified document before he signed that document and that he knew what an indemnity and guarantee was throughout 2009 and 2010.
  1. [12]
    There was no re-examination of McGee.
  1. [13]
    Turning back, then, to the meeting between McGee and Henley-Smith, McGee asserted that Mark Eckford (“Eckford”) was also present. It needs to be immediately noted that Eckford had no specific recollection of any such meeting, though he had a general recollection of “meetings”. Additionally, Eckford was clear in his evidence that he could not “divide what was discussed into particular meetings”. Furthermore, McGee made no notes of the meeting and sent no correspondence which detailed, at least for present purposes, this “agreement” as to limitation. McGee’s evidence in examination-in-chief was in the form of very general information, simply saying that Henley-Smith “basically said to me that if I was willing to sign a personal guarantee for over and above, he would give us $200,000.00”. The reference to “over and above” is the reference to only being able to get $100,000.00 as the insured credit limit concerning TCG.
  1. [14]
    While McGee’s assertion of the date of this discussion (that led to the relevant limitation agreement) had been pleaded to be on or after 22 October 2009, his evidence was, particularly in cross-examination, although initially conceding that it was about 22 or 23 October 2009, that he could not recollect when it was then or whether the meeting occurred at a time related to some event or incident and, in particular, during the annual Gold Coast car racing event (variously described as the Super GP or the Moto GP), which he sometimes attended at that time of year.
  1. [15]
    But the date is not particularly important, especially since Henley-Smith’s evidence-in-chief was to the effect that he had no recollection of such a meeting. In particular, Henley-Smith conceded that what McGee “wanted” – whenever the conversation was had – was that he (McGee) was prepared to provide a personal guarantee for any amount over and above $100,000.00; but Henley-Smith was adamant that he (Henley-Smith) “wouldn’t allow it”. Henley-Smith was also adamant that that was “what (McGee) requested” and that he, Henley-Smith, did not make an offer to McGee to extend TCG’s credit if that personal guarantee was given.
  1. [16]
    While Henley-Smith’s recollection was patchy as to detail, I found, equally, that McGee’s recollection, though initially confidently expressed, was neither in the words that he stated that he had used nor with the certainty with which it was so originally expressed.
  1. [17]
    For reasons that I will further develop later, I accept that the meetings between McGee and Henley-Smith – about which there is little contemporary documentation (which I was also discuss later) – were ones where McGee for his part stated matters that he wished to be the subject of agreement (although, as I have indicated, I have much doubt about the actual words used, or the effect of such words). In contrast, Henley-Smith, a more experienced and older businessman, took the position of constant deflection of those demands without indicating positive agreement.
  1. [18]
    In my understanding of all of the material which is relevant to a determination of this question, I do not accept that McGee obtained an agreement from Henley-Smith about any limitation on the amount to be paid under the Indemnity and Guarantee. I am fortified in this conclusion particularly by the way in which that document was read and executed by McGee and by the contents of an emailed letter dated 2 March 2010 - to which no objection was taken - from Andrew Morrison “for and on behalf of” TCG wherein he referred to conversations with McGee and McGee’s willingness to execute, by an “assurance”, a “replacement” Director’s Guarantee, in circumstances where no limitation was expressed in that letter and where the former Director’s Guarantee contained no such limitation.
  1. [19]
    Accordingly, since there is no dispute about the amount that would be owing in such circumstances, I find that the written document containing the guarantee obliges McGee to pay that for which the first defendant had judgment given against it on 29 August 2014 (namely, the amount of $116,712.60).  I will deal with ongoing interest later. 
  1. [20]
    If, despite what I have found, Henley-Smith did agree with McGee that there would be such a limitation, a considerable legal impediment remains. Although not mentioned in either set of submissions, s 56 of the Property Law Act 1974 deals with the need for guarantees to be in writing.  Section 56(1) states that no action may be brought upon any promise to guarantee any liability of another unless the promise upon which such action is bought is, relevantly, in writing and signed by the party to be charged.  While that does not concern PMAA’s own case as pleaded, of particular interest here is that any variation needs also to be evidenced in writing: see Hitchings & Coulthurst Co v Northern Leather Co of America and Doushkess.[1]  Moreover, it is difficult to conceive of a variation prior to an actual agreement in writing.
  1. [21]
    But even apart from that, it is clear that, estoppel aside (which has not been pressed), a contract which is partly oral and partly written has the effect that any oral term contradicting the written part is not effective.
  1. [22]
    In Equuscorp Pty Ltd v Glengallan Investments Pty Ltd[2] it was held that, since in the nature of things oral agreements will sometimes be disputable and resolving such disputation is commonly difficult, time consuming, expensive and problematic, where the parties enter into a written agreement, the courts will generally hold them to the obligations which they have assumed by that agreement (at least in circumstances apart from where relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case): at 483-484 [35].  The judgment then proceeded to refer to the possibility of a collateral agreement: at 484 [36].  Such an agreement can exist where it is held that the “earlier consensus reached by the parties” was made “in consideration of the parties later executing the written agreement”: also at 484 [36].  But, as the judgment went on to note, if there was simply an earlier, oral, consensus, it is discharged by the parties’ agreement recorded in the writing that they executed, because it is the written agreement which governs the relationship: also at 484 [36]. 
  1. [23]
    No such consideration can be established in this case. Taken at its highest, an acceptance of McGee’s evidence means simply that there was an earlier, oral, consensus.
  1. [24]
    Accordingly, by either path, I find that there was no agreement other than that which is contained in the written terms of the Indemnity and Guarantee.

Terms of the supply of intellectual property

  1. [25]
    It is undisputed that the execution by the authorised representative of TCG (namely, McGee) on 15 March 2010 of a standard form agreement entitled “Commercial Suite – Punching Tool Loan Agreement” was binding on both it and PMAA. It dealt with the machine which was to be used by TCG to convert the aluminium product supplied by PMAA into, relevantly, the door suites. It is also not in dispute that the parties are bound by an agreement contained in a pro-forma document of PMAA entitled “Credit Application Form” which was signed by TCG’s authorised representative, McGee, on 15 May 2009. It dealt with the supply obligations of PMAA for the aluminium product once ordered by TCG.
  1. [26]
    What is in contest is the allegation by TCG that there was a later oral agreement made 6 August 2009. PMAA’s response to that allegation is that there was no further or collateral agreement entered into and, even if there was, Clause 14 of the accompanying Terms and Conditions of Sale (incorporated by reference into the agreement of 15 May 2009) had the effect that the terms of any May 2009 agreement were not “varied” because PMAA had not agreed “in writing”.
  1. [27]
    The basis of TCG’s claim of an oral agreement – conceding in oral submissions that nothing other than an “agreement” was being alleged (i.e. forsaking any reliance upon the matters raised on 6 August 2009 being representations that had statutory or common law or equitable effect, apart from agreement) - was that the consideration for the “new” agreement was that TCG would order materials which would then become the subject of obligations under the agreement of 15 May 2009.
  1. [28]
    Given the fact that the agreement dated 15 May 2009 was in the form of a credit application and that the written terms and conditions of sale (incorporated by reference) could not apply until an order was received by PMAA from TCG, I do find that, even if the “offer” to make orders to deliver “goods” did not provide the necessary consideration, the further agreement (even if only demonstratable by conduct alone) to provide the intellectual property to manufacture the suites from the supplied product would give a proper basis for terms which could relate to nothing other than such property. In which case, because of that further collateral agreement, if it was agreed between PMAA and TCG on 6 August 2009 that the contract for the ordering and delivery would contain additional terms, then I would hold that there was sufficient consideration for the existence of those terms to be incorporated, subject to an examination of that Clause 14 (concerning variation).
  1. [29]
    The central term that is relied upon by TCG which it contended arises from the events on 6 August 2009 concerns an alleged term that PMAA “would ensure that its systems were fit for the purpose of installation in the H20 building project”: see paragraph 12(j) of the TCG’s third amended defence and counterclaim, adopted by McGee in paragraph 8(a) of his third amended defence and counterclaim (filed at the beginning of the trial on 20 October 2014). The actual pleading uses the term “fit for the purpose of installation and use at the project”.
  1. [30]
    As can be seen from close examination of the agreement of 15 May 2009, it simply deals with the delivery of ordered goods. It does not deal with the way in which those goods would then be the subject of the manufacturing processes used by TCG in constructing window and door suites. As Clause 7.0 of the agreement made 15 March 2010 attested, the equipment then supplied was “to be used exclusively for processing of aluminium/systems supplied by PMAA”. Absent an intellectual property agreement such as that alleged to have been made on 6 August 2009, none of the written documentation deals with the terms of the “systems supplied” by PMAA. At that level, Clause 14 would have no traction.
  1. [31]
    But, assuming for the moment that such an agreement concerning such systems made on 6 August 2009 is that alleged in paragraph 11 (particular 4) which itself refers to paragraph 1 of the particulars in paragraph 12(a) of TCG’s third amended defence and counterclaim, then it is from that combination of documents and statements that a discernment must be made as to relevant “fitness for purpose”, since the second defendant has placed that at the centre of his allegations of breach of the assigned rights.
  1. [32]
    Because the conversations that were had on 6 August 2009 are recollected so differently by McGee and Henley-Smith, it is necessary to form some conclusion both as to the credibility of such witnesses and, more importantly for this case, their reliability. Although the evidence of what occurred on 6 August 2009 covered a variety of issues the important one for present purposes is this question of fitness for purpose. As I have already observed, such meetings as were held between McGee and Henley-Smith were meetings in which each had a significantly different agenda and attitude. From McGee’s viewpoint he wished to present “a list of demands” that he was then “giving to any potential suppliers at the time”. As earlier noted, he made no notes and he put nothing in writing setting out what those demands were or the fact of acceptance of them. Thus, any term so found would simply be based on recollection and, as to that, although he was encouraged to give his evidence “as best as you can remember (as to) what the effect of the words that were used”, he still responded in a very general way to the questions asked.
  1. [33]
    Focusing, in particular, on requirements as to standards with respect to the manufacture of the finished product which would become the “full suite” of the sliding doors, McGee stated that he informed Henley-Smith that he required “something to be of an equivalent nature to ALSPEC” and that he was “put to rest on that”, being told that “it was equally comparable”. Before being asked about the effect of the words used, he had given evidence that “we required the product to be fit for purpose, come with test certificates to ensure that it had actually been tested and was going to perform to certain criteria”. It can be noted that the matter of fitness for purpose was not asserted other than in that very general framework. McGee had stated that Eckford was at this meeting also – though, again, Eckford himself had no such distinct recollection.
  1. [34]
    But, in cross-examination, McGee asserted that Eckford had looked at PMAA’s window and door designs and had said that it was a comparable system “suitable” for the project. He further conceded that such information was given prior to the meeting of 6 August 2009.
  1. [35]
    Before turning to documents and subsequent events, Henley-Smith in his evidence in-chief acknowledged that a meeting had occurred on 6 August 2009. It was clear in his recollection that Eckford was not present during the meeting. In cross-examination, Henley-Smith stated that McGee wanted to know how long PMAA had been in business, what products it manufactured, what it supplied, what were the lead times and “that kind of thing”. When moving to what McGee had told him about the “quality” that he wanted for the product, Henley-Smith responded by stating that he was asked “what quality my product was” and that he replied that it was “commercial quality standard to what is required. We had quality standards”. When specifically taken to a competitor called ALSPEC, while conceding that McGee had mentioned that competitor’s name, Henley-Smith stated that he could not comment on that “because I don’t know how my product compares with ALSPEC”. Although the questioning returned a number of times to that issue, Henley-Smith reiterated that, “as I’d never used or handled ALSPEC product, I had no idea. I couldn’t comment on it”. When it was yet again put to him that he gave “an assurance that the two products were equally comparable”, Henley-Smith explicitly answered “No”.
  1. [36]
    As to the general import of meeting, Henley-Smith, while stating that they both generally talked about requirements, added that “there was no formality about saying you must do this or you must do that. It was put out there that this is what I want. As far agreeing to what he wanted, that was not done”.
  1. [37]
    Immediately after the meeting of 6 August 2009, Henley-Smith sent an email to McGee. Both McGee and Henley-Smith had different interpretations of what was conveyed by the words used. McGee, for his part, believed that the first paragraph, at least in his subjective view, was an admission by Henley-Smith that the things that McGee had raised “were addressed” and that Henley-Smith had only “one issue” in order to go forward and that he was addressing that soon. In response to a question about not responding to the email by, for example, confirming matters that he had raised at the meeting, he stated that “emails were quite new to me” and that he had “quite a bad habit, I guess, of not replying to emails and setting things up. I was quite naive in business at the time”. That last comment resonates with my understanding of the context of those meetings between these two.
  1. [38]
    For his part, Henley-Smith, in examination-in-chief, sought to provide a context for, in particular, his statement in the email that “it is truly encouraging to have a customer that knows what he wants, sets the ground rules and allows us the chance to work within that framework with a full understanding of what is required”. He stated that McGee was “fairly new in business” so “McGee wanted to make sure that he got across what his company was all about” and “wanted to find out what my company was all about”, so “we were setting some ground rules between each other”. Further, Henley-Smith stated that they talked about their backgrounds and “the vision” that McGee had and McGee’s need “to be able to work with people that could help him get there”. With respect to the statement about assuring “you of our fullest support”, Henley-Smith said the context was that PMAA “can support you in things that we can”.
  1. [39]
    Although this email of 6 August 2009 (sent at 6.54 pm) is not a contractual document, an objective reading of it gives an equivocal answer, particularly on undertaking the analysis that I have of what I accept happened at that meeting. To my mind, it is merely a continuation of the attitude that I originally discerned that Henley-Smith brought to the meeting itself (namely, one of encouragement to McGee but of no expressed consent to any particular aspect raised). As to whether such a generalised summation of the meeting should have called for a response from McGee, given the subjective interpretation that McGee had about the meeting itself, it is understandable that he may have believed that the things that he had asserted were the subject of an expressed agreement, even though they were not.
  1. [40]
    Accordingly, while I do not accept that the email of 6 August 2009 from Henley-Smith to McGee expressed PMAA’s agreement with the issues raised by McGee at the meeting (except the matter of “Credit Insurance”), neither do I accept that it required an express response from McGee detailing what he believed had, in fact, been so agreed. 
  1. [41]
    The next document is one of PMAA under the hand of Henley-Smith, dated 16 April 2010.
  1. [42]
    In the cross-examination of McGee this document was brought to his attention. While seeking to deflect his own knowledge of the relevant letter – it being addressed to Andrew Morrison (“Morrison”) of TCG – he did concede that [since Morrison (a person having, implicitly, authority to do so) never responded to the assertion that PMAA’s contract with TCG was “to supply aluminium extrusions” for the H20 project and that those were supplied “according to PMAA’s Terms and Conditions of Sale” such that there “can be no linking of the terms of your contract with the builder of H20 to the contract” between PMAA and TCG] there was a “drop of the ball there, obviously” by Morrison (in never responding that Henley-Smith had misunderstood the terms of the agreement between the parties). See, also, the concession by McGee that the effect of what was being stated by Henley-Smith was that the agreement was that PMAA’s terms and conditions were what applied to the (whole) relationship. Finally, McGee conceded that the letter indicated that at least Henley-Smith “was labouring under a misapprehension that his terms and conditions applied” by answering “it appears so, yes”; yet, furthermore, McGee answered that he “had made no attempt to address that (misunderstanding)”.
  1. [43]
    Focusing, for the moment, on the question of what terms applied, since the onus is on TCG to establish, on the balance of probabilities, the relevant term, through canvassing the matters that I just have, I am not satisfied that there was any express “agreed” term concerning the standard, or standards, of the provision of the supply of intellectual property.
  1. [44]
    In particular, I do not accept the contention that the statements that Henley-Smith made about having “quality standards” and about the “quality” of the product being of a “commercial quality standard” reveals anything about an agreed term, particularly where no evidence was led about what a “commercial quality standard” was, in fact, as an acceptable and well understood term in that particular trade.
  1. [45]
    Nevertheless, I do accept that there was a collateral agreement concerning the supply of the intellectual property which could not be categorised as simply being part of a supply of aluminium extrusions which was the subject of the original Terms and Conditions. Thus, the question of whether there was any term implied by law needs to be considered. Paraphrasing the findings in DH MB Pty Ltd v Manning Motel Pty Ltd,[3] the parties objectively intended that the statement that TCG would place orders for the aluminium product of PMAA was a promise offered by it in consideration for PMAA supplying its intellectual property to TCG which was necessary to manufacture such product into, relevantly, door suites for the H20 project: at [14] and [17].
  1. [46]
    I do not accept that the appropriate principles are those which relate to obligations cast on manufacturers. TCG sought to rely upon Suosaari v Steinhardt[4] where it was stated that there was a duty “to take reasonable care to avoid a reasonably foreseeable and real risk of injury”: at 487.  Although cases which followed Suosaari were also brought to my attention - after I raised the reliance in it on the principle of “proximity” - including Cross v Moreton Bay Regional Council[5] (at [61]), the relationship discussed in such cases was the relationship between a manufacturer and a consumer, or user of the product.  Suosaari itself involved an injury to a farm labourer when using the machine in question. 
  1. [47]
    The collateral contract for the supply of intellectual property which formed the basis of the manufacturing process and was to utilise the aluminium extrusions supplied by PMAA to TCG for the H20 project involves the concept of the utility of the design.
  1. [48]
    When considering, in Dymocks v Capral,[6] what duty of care might be imposed by law on a defendant who conducted an architectural practice that designed the particular residence and associated works and prepared the specifications, where, in connection with the preparation of the roofing specifications, the roof sheetings and fixings were affected by corrosion, McDougall J (in the Equity Division – Technology and Construction List) was content to hold that the contract for such services “contained an implied promise to exercise reasonable care and skill in the provision of those services”, with such a liability being concurrent in contract and tort: at [211]–[214]. 
  1. [49]
    In dealing with that aspect of the interplay between contract and tort, it is of interest that the High Court, recently, in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288,[7] per Crennan, Bell and Keane JJ, noted that the common law has not developed with a view to altering the allocation of economic risks between parties to a contract by supplementing or supplanting the terms of a contract by duties imposed by the law of tort: at [132].  But, where, as here, there is nothing in the contractual arrangement underpinning this collateral contract which is contrary to that, I do hold that this particular contract of the services (which were associated with the intellectual property) also contained an implied promise “to exercise reasonable care and skill in the provision of those services”. 
  1. [50]
    I do not accept that such a duty is not applicable in this case because of matters raised by PMAA. Those matters include:
  • that TCG made its own enquiries as to the design;
  • that TCG had made a mock-up of the door and was satisfied as to the suitability of the design;
  • that TCG was an experienced manufacturer of doors such as the one used; and
  • that TCG made its own enquiries and used its own screws and gaskets and, therefore, did not rely upon PMAA’s design when constructing the doors.

This is because the conduct of both parties showed a clear acceptance of a reliance by TCG on the documents, and advice, provided by PMAA to TCG for these services.

  1. [51]
    To the extent to which PMAA has asserted that the Terms and Conditions incorporated into the signed document of 15 May 2009 applied to the design, not only have I decided that there is a separate, collateral contract but also that those written terms and conditions are, contextually, inconsistent with design: see the discussion on context by the New South Wales Court of Appeal in Mainteck Services Pty Ltd v Stein Heurtey SA.[8]  This is hardly surprising given that the terms and conditions are referrable merely to the supply of the aluminium extrusions.  In particular, paragraph 17(f) of PMAA’s third further amended reply and answer to the third amended defence and counterclaim of TCG raises such terms and conditions.  That particular paragraph is adopted in paragraph 8 of the amended reply and answer to the third amended defence and counterclaim of the second defendant. 
  1. [52]
    While Clause 10(a) purports to exclude all implied conditions and warranties, the context, which refers specifically to “purchasing the goods” (and is illustrated by Clauses 1, 2 and 3), does not trigger the application of this provision. This is despite the further statement within it that there are “no collateral contracts in connection herewith (except such as may be provided herein and are signed by a duly authorised representative of the Company)”. Quite obviously, such collateral contracts do not exist in this case (in the sense of such being claimed to then exist - since “future” collateral contracts cannot be the purpose of this provision, if even allowable in contractual theory). And, further, the conduct of the parties is consistent only with the provision of the services of relevant intellectual property, understanding that Clause 10(a) expressly provides that the only collateral contracts are those that are “provided” by such Terms and Conditions, and are “signed”.
  1. [53]
    As to Clause 10(b)(i), it only has application where TCG “alleges” and PMAA “agrees” that any of the “goods” do not correspond with the description of them on their face or are defective. It is obviously inapplicable.
  1. [54]
    Clauses 10(b)(ii) and 10(b)(iii), which are identical in all respects, apply only to claims made by TCG under the Trade Practices Act 1974.  Again, they are inapplicable.
  1. [55]
    Clause 12 only applies where the goods in question have a relationship with the design or specification “of” TCG. None of the extruded aluminium products supplied fell within such design or specification.
  1. [56]
    Clause 14 provides that the conditions will not be varied unless PMAA “agrees in writing”. Because I have concluded that the relevant terms and conditions do not apply at all to this collateral contract, there is no reason to consider any variation of them.
  1. [57]
    For the sake of completeness, I will mention Clause 11. It refers to “Tooling”. To the extent that it refers to the equipment provided through the effect of the agreement of the “Commercial Suite – Punching Tool Loan Agreement”, it adds nothing to that agreement. To the extent that it attempts to go further, it does not impinge at all in any way on the exclusion of any implied term for the supply of intellectual property.

TCG’s remaining claims

  1. [58]
    In the more limited “claim” that was eventually contested at the trial hearing, the claims which were maintained were all claims that were relevant to alleged breaches of a duty to design with reasonable care and skill. There was no remaining claim that dealt with such aspects as late delivery, a failure to keep sufficient product in PMAA’s warehouse or a failure to provide a V6 computer system.
  1. [59]
    Accordingly, it is necessary to examine, in turn, each of those aspects which the third amended defence and counterclaim of the second defendant has identified in paragraph 8C as being defects in such design. There were no Australian Standards applicable to any alleged defect.

Mohair seals

  1. [60]
    It is in this area that the clash of the opinions expressed by the respective engineering experts is most realised.
  1. [61]
    It is necessary to resolve the dispute between those engineers before moving on to the consequences of the resolution of such a dispute.
  1. [62]
    For TCG, David Donnan (“Donnan”) of Arup Pty Ltd gave the relevant opinions. For PMAA, John Van De Hoef (“Van De Hoef”) of NJA Consulting Pty Ltd advanced his. Donnan’s written report was dated 1 May 2014. Van De Hoef’s written report was dated 28 April 2014. They also produced a joint report dated 9 May 2014. All became exhibits.
  1. [63]
    In the joint report the discussion of this aspect is under a section entitled “Pile Seals”. As is stated there, the function of a pile seal includes assisting the prevention of air infiltration and stopping the dust and insect infiltration. The pile seal product specified was Item PM026. The pile seals installed were different, being a Schegal Mohair product - but nothing turns on that difference.
  1. [64]
    Both experts agreed that the sliding door operation had caused, and was causing, damage to the external pile seals to a significant number of the doors and to the inner pile seals to a much lesser extent. The experts agreed the damage was primarily related to the wearing of the pile seals.
  1. [65]
    Both experts agreed that the cause of the pile seal wear was the cutting of the pile seal by a notched burr that was present on the stile cut outs at the head and sill locations of the sliding doors. The joint report also noted that the notching of the stiles was undertaken using a notch machine supplied by PMAA and that, for the subject sliding doors, burrs were present on notch cuts in a significant number of locations. They were not able to identify why the variability in the stile notches had occurred but raised two possibilities. The first was that the machine was not punching correctly; and the second was that the machine was not being operated correctly. Both experts agreed that successful use of the punching machine would be somewhat dependant on the operator having sufficient experience to recognise burrs that could lead to problems with pile seals.
  1. [66]
    The difference between the experts was that Donnan stated that a contributing factor was the rotation of the head and sill rails against the stile, resulting in the edge of the rail protruding towards the pile seal. Van De Hoef’s response was the damage to the pile seals was generalised and not localised and was primarily external, which indicated to him that the problem was generally related to the issues with the stile notch itself. According to Van De Hoef, as rotation can occur in both directions, the significantly greater incidence in external pile seal damage demonstrated that a primary problem was related to the stile notch itself. Both experts had agreed: that the damage to the external pile seals was more severe than the damage to the internal pile seals; and that the main difference between the external and the internal pile seals was that the external pile seal coincided with the stile notch.
  1. [67]
    It was not in contest that: Donnan observed during the door investigation process that there was deformation in the web of the stile where the screw was fixed through to the screw flute in the rail; this connection was loose in 28 of the 52 stiles inspected; and it did require some tightening to regain a sound connection.
  1. [68]
    Although both experts agreed that the burring contributed to the damage to the mohair seals, Donnan maintained the view that damage to the mohair would still had occurred even if no burring was present. The difference sprung from the observation during operation of the sliding doors that the stile which was handled to operate the door had some rotation in it which would, when the door was opening, cause the burred edge of the notch to be forced closer (or further away depending on whether the person opened the doors inside or outside) to the pile seal. Donnan advanced the opinion (set out at page 17 of his own report) that the “modest” load applied to the stile by grasping the “outstand” portion of the stile to open or close the door was sufficient to deform an associated internal wall of 1.6 mm thickness. According to him, the magnification of that force, as applied to the screw and the wall of the stile, was a magnification of nine times due to “the lever arm affect”. A diagram was presented on that particular page, designated as “Image 1”. It ought to be noted, at this time, that the left hand top end of the PM425, designated as a “male stile”, showed a green arrow (pointing to the “male” part of the stile) which was said to be “Force Here 8 Times Applied Force” in circumstances where the applied force was said to be “x = 0.11 KJ”. Van De Hoef’s opinion was that the initial force was really 120 Newtons - but nothing of importance turns on the difference.  
  1. [69]
    The response by Van De Hoef was that the number of loose stile to rail connections – what he called “loose stiles” – for the “male/female interlocking section” (where he stated was where the force was applied) was 2% of the doors. It was contended in written submissions (in particular) that Van De Hoef had misunderstood the 2% factor which was stated in the Arup Report. The particular observation from the Arup Report (which was Donnan’s report) was at page 14. The statement made there was that it “was recorded by Denis Dunn” that of the 104 stiles inspected, 26% of the “interlock” stiles were loose and 2% of the “male/female” stiles were loose. The submission made by TCG was that the diagram on page 17 of Donnan’s report was not a male/female stile but an interlock stile. It was contended to be distinguishable because the male/female stiles “don’t have that large projection” and that, therefore, when they are handled, the lever arm affect which Donnan gave evidence about would not be experienced.
  1. [70]
    Counsel for TCG readily conceded, in submissions, that he had not taken Van De Hoef specifically to this alleged misunderstanding in the cross-examination of him.
  1. [71]
    For my own part, I am unable to discern at all that Van De Hoef misunderstood anything. The reference at page 14 of Donnan’s report is to 2% of the “male/female stiles”. The diagram on page 17 clearly refers to the PM425 stile as a “male stile”. The projection at the left top of the diagram confirms that description. To the extent that he used the word “interlock” or “interlocking”, Van De Hoef was not only using the common sense understanding of what male/female stiles do but also using a designation sometimes attached to male and female stiles alike as “interlocking”. Though in a document entitled “The Aluminium Book”, a document that TCG acknowledged having received, at page 312 the four stiles shown include the PM425 and the PM426 (designated as the “Female Stile”), with the other stiles each being designated as an “Interlock Door Stile” - but bearing the identifiers PM424 and PM427 - and though the direct association between the PM425 (at page 17 of the Arup report) and the “male/female” stiles referred to at page 14 are to be distinguished from the “interlock” stiles, the interpretation of how Van De Hoef used the additional term “interlock” concerning the male/female stiles was consistent with an appropriate, though perhaps loose, usage, which was a usage continued by Philip Usher’s architect, BDA Architecture, in Drawing No 4033A (Revision A) dated 4 April 2009, concerning PM425 and PM426. It is also a usage consistent with the NJA Drawing 14104-004-1, appearing in Exhibit 1, Tab [47]. But in the end there is no doubt at all that Van De Hoef was correctly referring to the male/female stiles when he was referring both to the 2% and to the effect of handling them for opening/closing.
  1. [72]
    Although I have found that both engineering experts were qualified in the relevant sense to give expert evidence concerning such forces, my conclusion is that the comprehension of the aspects of physics involved was better explained, and implicitly better understood, by Van De Hoef. His explanations, for the transmission of the human forces applied as they actually affected the internal mechanism of the sliding doors at the initial and ongoing stages, and his understanding, of rotation occurring in both directions and its effect on producing the observed damage, persuade me that his analysis is to be preferred. This has the consequence that I accept that the much more significant contributing factor to pile seal wear is the notched burrs, particularly given the relatively small percentage of observed male/female stiles being loose. TCG has not satisfied me at all what any remaining small contributing factor to any specific pile seal damage is attributable to any design defect.
  1. [73]
    TCG, particularly in its oral submissions, further contended that Van De Hoef did not address the issue of anti-twist devices. These devices, or blocks, were suggested rectifications of the door system proposed by Donnan. It was submitted that, since Donnan’s identification of such means was “wholly unchallenged”, then his evidence of the necessity for such should be accepted. There was no doubt that the anti-twist blocks were, according to Donnan, to be inserted to the bottom part of the male/female stiles.
  1. [74]
    But it is not strange at all that Van De Hoef did not concern himself with anti-twist blocks, or devices. His opinion (expressed essentially at page 24 of his report) was that it should be noted that the summary table of various different sliding door construction methodologies covering a number of manufacturers which was provided by Donnan had 5 of the 7 selected examples showing that they were “not being constructed with anti rotation blocks” at all. When one takes his consequential arguments – which he adhered to in his evidence in court – involving as they did a rejection of Donnan’s proposition that it was a combination of the lack of anti-rotation blocks and the force concentration, with a relatively low ridge height to the stile section, which allowed for the rotation of the stile to occur, there is little wonder why he would not need to say more about anti-twist devices, or blocks.
  1. [75]
    The cogent evidence that burring (which caused the damage to mohair seals) occurred because of TCG’s acts and omissions can be directly established, or inferred, from the following facts:
  • it was not in dispute that PMAA gave both physical and documentary instructions to TCG, and also gave advice to staff from TCG, concerning the manufacturing process (which included the use of the punch tools provided);
  • Donnan accepted that burring was an issue in relation to aluminium processing and that such occurred either at the manufacturer’s site or in the manufacturing process;
  • it was a simple process to deburr, either immediately after manufacture or on installation;
  • Donnan conceded, after being shown certain photographs taken by Van De Hoef (of damage stated to be caused by the burring) that he personally did not undertake the “site investigation phase” and the “deconstruction of the doors”;
  • Michael Jones (“Jones”), who gave evidence in TCG’s case, accepted that TCG’s manner of manufacture and lack of quality assurance may have caused the burring; and
  • both Donnan and Van De Hoef agreed that the burring occurred because notching existed in the aluminium as processed.
  1. [76]
    Evidence about whether the screws became loose or were over-tightened is as follows:
  • Richard Fairhead, at the relevant time an employee of TCG, conceded that it was possible that the bulge observed in the aluminium frames was caused by the particular screw being screwed too tightly and Dennis Dunn (“Dunn”) thought it was more likely that the deformation of the location was caused by the screw being over-tightened;
  • Donnan, to the contrary, stated that even if the wall of the extrusion was pulled towards the rail during fabrication so as to form a slight cone in the aluminium, this still would have resulted in a secure and firm connection between the stile and the rail;
  • while Dunn asserted that a lot more rails had rotated than there were deformations in the stiles, Donnan, in his report, notes that, of 208 stile to rail connections observed, there were 48 deformations and only 17 rotated rails (although there were twice as many connections as there were rails);
  • Tracey Gramlick (“Gramlick”), called on behalf of PMAA, stated that, if one of the door stiles was quite loose and needed to be tightened, that was something that should have been done during fabrication (noting that, since she had no idea what condition that any door was in when it left the factory, she could not comment on whether the cause was at manufacture or after installation);
  • Donnan agreed that if a screw was not done up properly it was possible that the rail could rotate, noting in re-examination that the terminology of the screw being “loose” was the wrong term because the screw itself does not actually “rotate”; and
  • Mark Witchard (“Witchard”), who stated that he had knowledge about the manufacturing done by TCG, gave evidence that screws inserted into the doors were done so to achieve a sufficient tightness to hold the stile tight to the rail and were not over-tightened and not loose (though there was no cogent evidence that this, in reality, universally occurred).
  1. [77]
    My conclusion is that there were screws which were either under-tightened or over-tightened, with the deformations being evidence of the latter.
  1. [78]
    Finally, it was the clear view of Van De Hoef that any rotation was not a significant factor in the damage to the mohair and that the identification of the cause was that it was “directly related to the presence of a rough and sharp section at the location where the end of the stile had been punched out to allow the stile to fit into the track”: at page 24. Donnan accepted, in the joint report, the significance of the notched burring on the stile cut outs both at the head and the sill locations. Since it has been established to my relevant satisfaction by the evidence that burring of that type should have been observed during the manufacturing process, if not also during the installation process, and since it has not been proved to my satisfaction, again to the relevant standard, that the punching tool was defective in a way that could not have been fixed by calling upon PMAA to rectify any such problem (as it was obliged to do), I find that the burring itself is at least a major cause, if not the only significant identified cause, of what occurred. The additional problem of the screws either being tightened more than they were required to be or not being tightened enough to achieve a sound connection was again a matter that was strictly within the field of manufacture and installation - meaning that any deficiency in the screwing during the latter stages of manufacture or installation by TCG either was not a design fault to be brought into account or (if I were to be wrong about that) had little identifiable effect on this particular damage.
  1. [79]
    Hence, I find that there has been no causative link established because I have found no failure on PMAA’s part concerning its duty to provide a design exhibiting reasonable care and skill, insofar as it deals with any proved damage to the mohair seals.

Doorstops (and any consequential or associated damage)

  1. [80]
    There are two particular aspects of the alleged design breaches relevant to doorstops. The first is the alleged damage to the plastic part of the doorstops itself. The second is the alleged inability of the doorstops to dissipate the force that the sliding doors applied, with the alleged consequential damage to such things as the track cover component of the door stops, the vertical infill covers and the door jambs.
  1. [81]
    Because the resolution depends to a reasonably large extent on the proof or otherwise about the nature of the intellectual property supplied by PMAA to TCG concerning the manufacture of the track cover components of the door stop, it is prudent to examine that question first.
  1. [82]
    Central to the resolution of this question is when TCG was given Drawing SD-6 (“SD-6”) by PMAA. That particular drawing’s importance concerns the horizontal aspect of the sliding door involving PMAA Item PM405 (“PM405”). The diagram is entitled “Sliding Door (Punch Module 6) SD-6”. The illustration shows the PM405 in a horizontal aspect and being attached to the PM402 sill. A diagram at the left top of that drawing shows a notch in the aluminium section used. The note beneath that refers to “Notching might be require(d) at one end only as according to application”. It is clear that the notching identified and its attached note applied to, among other items, the PM405. It is also important that there was a reference to Punch Module 6. Finally, it is not in dispute that the date of the drawing is 24 March 2009.
  1. [83]
    For PMAA’s part, James Brown (“Brown”) said that the drawings, including the SD-6, were contained in a product catalogue folder similar to Exhibit 20 and that two such manuals were handed to Reece Miers (“Miers”) and Witchard (for TCG) in April 2010. While that was his “very confident” memory, he conceded, in cross-examination, that his basis for asserting that that folder included all nine pages of the tool set drawings (of which SD-6 was the last) was that they were all included in a single PDF file. Barton, PMAA’s national product development manager, “believe(d)”, as a standard document (which he made up) and the “whole” of which was “give(n)” out, that the SD-6 was in the folder that he gave when he met the TCG “people” in early 2010.
  1. [84]
    For TCG, Morrison and Witchard stated in evidence that they did not see the SD-6 until November 2011 when Henley-Smith handed a copy of it to Morrison. Miers’ evidence was that he had never seen it until he was in court; while Witchard said he would have received the tool set drawings in mid to late April 2010, though he substantially qualified that, in re-examination, by then stating that the first time that he saw the SD-6 was at the end of the project and, therefore, at a different time for the rest of the tool set drawings. Morrison’s evidence was that he located the tool set drawings “minus the last page” in a binder in TCG’s factory manager’s office after the November 2011 Meeting. It is important to know that Witchard also conceded that a two page tooling machine centres document contained a reference, in diagram 12, to both SD-6 and a “notching” of 16 mm and that that may “possibly” have caused him to ask for that particular drawing - though that does not sit well with only seeing it first at the project’s end [which is a reference to “seeing”, rather than “receiving”, all the pages as a single document, about which he was “(n)ot 100 per cent” certain]. That two page document “arrived” at the same time as the machine itself (according to Witchard).
  1. [85]
    Despite the statement by Morrison that it was only at the end of November 2011 that he located the relevant binder in the factory manager’s office (accepting that some documents had been hand delivered for fabrication purposes) and that, shortly thereafter, he and others went looking to see what other documents TCG had and that he then located other documents including The Aluminium Book (which he acknowledged had been received on 18 August 2010 by Eckford, and by him in late August 2010), no document of any kind other than that Book, whether it be a binder containing documents, or the SD-6 in its own right, or a copy of the tool set drawings, was the subject of disclosure to the plaintiff.
  1. [86]
    The claim in this proceeding was filed on 16 December 2011. As can be seen, that was soon after Morrison indicated that he had located those various documents. It is strange indeed to think that the only part of this relevant documentary evidence concerning the content of the intellectual property that was available for disclosure at the time when TCG was considering that claim just made against it was the (neutral) Aluminium Book. While in no way considering that there is any deliberate non-disclosure, given the centrality of the documentary evidence in this case, particularly of the SD-6, it becomes of significance in determining what did occur about the provision of relevant documentation by PMAA to TCG, where it is only PMAA which has any of the directly relevant documentation. While the contrary is possible, I do accept that, on balance, all nine pages of the tool set drawings were supplied together, it not being in dispute that the other eight pages were. The analysis in the second defendant’s written submissions about how the SD-6 “does not provide sufficient information to enable a complete doorstop to be fabricated, either alone or in conjunction with the rest of the materials supplied by” PMAA, appears to me, from the totality of the evidence led, to lead to the conclusion that the significance of SD-6 was not appreciated by those at the factory level who worked for TCG, even though it was provided. As Van De Hoef commented, it was relatively clear that the SD-6 applied to PM405 “which forms part of the end stop”. For my own part, I find it is sufficient compliance for a proper performance of PMAA’s obligations when supplying documentation, as I do find (on balance), that a combination of the tool set drawings (which included the SD-6) and the two page tooling machine centres document (which referred to it and its “notching”) were supplied in a timely way.
  1. [87]
    Turning, then, to the contention about the inadequacy of the SD-6. Miers stated that this drawing was general in nature rather than referring specifically to doorstops. But, given that the PM405 was used in conjunction with the plastic end cap which was admitted to be identified by PMAA, and given what even a cursory visual observation would show of where that fitted into the vertical infill covers, I decline to accept that evidence. This is despite Graham Barton (“Barton”), for PMAA, accepting that a fabricator might read the SD-6 as indicating that a notch should be put in the extrusion when it was being used as a jamb cover, rather than a door stop - but, if so, then why not for both? As for Witchard’s evidence that the drawing did not show the doorstop being notched into the jamb, I accept that that was the true import of his evidence rather than his later statement that it “could” refer to a vertical infill, particularly where it was not in evidence that the SD-6 type notching was used for a vertical infill, especially where such were clearly “square cut”.
  1. [88]
    I also reject the contention that, because the plastic parts set drawing was supplied separately, it would create confusion of a kind which could not be alleviated by seeking advice. That is because any visual observation made during the construction of the full doorstop would have shown that the vertical infill itself contained a space for such notching to be inserted, as Exhibit 10 shows.
  1. [89]
    While Barton, for PMAA, gave evidence that, in the course of demonstrating the punching machine to Witchard, he explained that diagram 12 was the one that PMAA used for notching the door stop, in the absence of that allegation being put to Witchard, I decline to accept it on the basis of Browne v Dunn.[9]  Nevertheless, Jones, TCG’s factory supervisor, knew that the tool machine had a part for notching - but states that he was not given instructions for his team to notch the PM405.
  1. [90]
    What, then, flows from my acceptance that relevant documentation was provided by PMAA to TCG identifying the fact that the notched PM405 (together with the particular plastic part) was to be used as the relevant door stop?
  1. [91]
    Although Miers gave evidence that he was told by Brown (of PMAA) to “cut it” at 100 mm long, there was no evidence that there was any instruction or advice from PMAA to cut it “square”. Brown himself denied that he gave specific information to Miers, explaining that he was not the person who gave technical information. The mere fact that there was evidence that Brown sent emails attaching technical drawings to TCG does not gainsay that assertion by Brown. Moreover, as I have earlier observed, the PM405, if it was “cut” straight, would not have acknowledged the slot in the vertical infill cover where a notched section would fit. It was expressly conceded by McGee’s counsel in oral submissions that “an un-notched doorstop would have been readily apparent ... (i)n the sense that you would have a gap that was obvious there to the installers”.
  1. [92]
    Before I turn to the combination of the material used in the plastic section of the doorstop and the absence of the notching in the PM405, it is necessary to consider the plastic part itself. It was accepted by Van De Hoef that, regardless of the presence of the notching at the end of the PM405 constructed part, damage to the plastic cap could still occur. But Van De Hoef’s point was that, if the sliding doors were installed such that the doorstops at both the top and the bottom were in alignment such that the door engaged both stops at the same time, the damage would have been “reduced”. The use of reduction rather than alleviation was because Van De Hoef was of the opinion that the plastic doorstops did not have “significant shock absorbing capabilities” and therefore had a “high probability of being damaged to some extent by any operation of the sliding doors irrespective of the configuration of the end of the PM405”. As he stated in cross-examination, the plastic and cap had an “extremely limited capacity to shock absorb”.
  1. [93]
    As to the actual evidence of installation, Jones, for TCG, gave evidence that, as part of an installation crew, “he” adjusted the rollers so that there was no impact on a single door stop, expressing it as going “to straighten the door panel up, (s)o the doorstops were being used properly”. There was no evidence of how many other persons did as “he” did; or even whether there was a direction by TCG to do so every time. Importantly for this determination, when shown photographs of a very large gap between a particular doorstop and the edge of the door, he admitted that “some” doors might have been “missed”. It is noted that there were two photographs only - but the point to be made is about how generalised assertions of proper installation have inherent limitations. Where Doonan’s expert evidence is in conflict with Van De Hoef’s evidence about the impact on the top and bottom stops at the same time, for reasons earlier advanced, and for the explanations given by each on this question, I accept the conclusions reached by Van De Hoef. This is because he readily conceded that there were problems with the plastic ends to the doorstops but opined that reduction of damage would occur if correct installation had been effected. Since the evidence that I have accepted is to the effect that defective installation was a cause, at least to some extent, of the damage to the plastic end, the fact that the plastic caps might deteriorate in this way becomes an issue which is confined to replacement of those items alone, as they occurred. On such a conclusion, where Van De Hoef’s expert evidence is to the effect that the issue of the plastic doorstops may be rectified by “whacking them in”, with no need for any disassembly of the doors, I conclude that that should have taken, if rectified on occurrence, a relatively short amount of time to do.
  1. [94]
    There, therefore, remains the issue of the transmission of the force of the load from the moving door into the door jamb, which was claimed by TCG to have resulted in: damage to a number of door stop cover strips; limited prying apart of the sill to jamb junctions; damage to the jamb cover strip; damage to the interface (between the two); and damage to the perimeter frame of the door system. And there is, also, a consequential question to be considered (concerning the doorstops) of whether such damage as has been observed, after manufacture, is causally related to any breach of duty.
  1. [95]
    The proposition advanced by Donnan, for TCG, was that damage was caused to the vertical jamb infill track covers as a direct result of being pushed in, and to the track covers and jamb extrusions, as a result of the force that the moving door imposed on impact (being transmitted directly through the doorstop to those elements), in circumstances where there was no energy absorption by the doorstop.
  1. [96]
    There were in evidence several photographs showing that, in some locations, there was an opening of joint faces between the jamb extrusion and the sill, and the head extrusion of the perimeter of the door frame.
  1. [97]
    Donnan’s opinion was that these observed matters were a consequence of the doorstop not providing a resilient buffer to absorb energy from the sliding door panel when it reached its end of travel, which meant that the kinetic energy from the sliding door was transferred directly to the door jamb and put the joints under load.
  1. [98]
    The responsive approach of Van De Hoef, for PMAA - which I accept - involved a number of different aspects.
  1. [99]
    The first conclusion expressed by Van De Hoef was that the Arup Report indicated that only 6 of 104 doorstops investigated had caused an opening of the joint faces between the jamb extrusion and the sill (i.e. 5.7%). He therefore considered it logical to conclude that, while a problem appeared to be present, not all doorstops were damaged in the manner described. This was consistent with the full doorstops being manufactured to the incorrect length for the installed doors, thereby creating gaps.
  1. [100]
    Secondly, as canvassed earlier, the correct installation of both bottom and top complementary doorstops would have formed a resistance to the force on stopping.
  1. [101]
    Thirdly, if the notching provided by the SD-6 had been carried out, then damage to the vertical jamb cover strip for the vertical jamb (exposed section) would not be expected to occur during the normal operation of the sliding door. His explanation of the forces which underpinned that conclusion were, to my mind, convincing and are to be preferred to those expressed by Donnan on the same point, noting that Donnan accepted that, if the notched door strip (PM405) had been used and that the installer slid “it in underneath the cover strip”, he “believe(d)” that it “probably would have” reduced the damage to the vertical cover strip. This is because, then, the “door stop bears against the frame”. Donnan refused to go further, asserting that “how it performs is hypothetical” where a plastic cap is used.
  1. [102]
    Fourthly, if the doorstop construction had been in accordance with the SD-6, then even if there was, which was likely in some instances, damage, it would be occasioned to the plastic end caps only, with damage to the exposed sections of the jamb not being expected to occur. It can be seen that the opinion of Van De Hoef was that the only damage that would have occurred, if manufacture and installation had gone according to the intellectual property supplied, was the damage to the plastic end caps; and that would have been the limit of such damage (which I accept).

Track covers

  1. [103]
    The contention here by TCG is that the infill track cover (PM405) did not fit tightly into the head, or sill or jamb sections of the sliding door, with a consequence that it became loose, rattled in the wind and often fell out. The joint report noted that, as cover strips, they performed no structural function.
  1. [104]
    In TCG’s case, Morrison gave evidence that at times during his inspection from 1 April 2014 to 8 April 2014, he heard a rattling noise from the vertical infill track covers of the sliding doors, in circumstances where he stated that the wind was “quite gusty”.
  1. [105]
    TCG has contended that Morrison’s evidence is corroborated by entries in the warranty and maintenance lists prepared by Neil Bladen (“Bladen”) of Phillip Usher. Item 18 of that list stated that “all” tenants had complained about whistling and rattling to balcony windows and had found snap-in strips not secure.
  1. [106]
    Van De Hoef’s opinion was that it was quite possible that during high winds some tenants could be concerned by the rattling of infill track covers. Nevertheless, as he pointed out, it was difficult to quantify exactly how severe the problem was because there was no independent evidence to support the same complaint by “all” tenants and it was “cosmetic” (i.e. decorative) only.
  1. [107]
    In terms of installation techniques, TCG’s evidence was primarily, on this point, given by Miers. He stated that he recalled that looseness of the track covers was brought up during a meeting in which Barton and Brown, from PMAA, went to TCG’s factory to inspect the prototype doors that Witchard had fabricated. This was before any full scale manufacturing had begun. In answer to questioning about whether it had been suggested, at that meeting, that a bit of silicone be used or that crimping the legs be done when the covers were being installed, Miers stated that he recalled something about crimping, but added that a logical solution would be to use some siliastic to stop the looseness.
  1. [108]
    Although that “logical solution” cannot be understood as a concession that anything was actually said, it is difficult to escape the conclusion that such a “logical solution” should have been adopted by TCG when installation was being effected, absence a discerned reason for not crimping.
  1. [109]
    Brown’s recollection was that Barton had advised at that meeting that all that would be needed to be done was to “crimp the leg” and then use silicone “if required”. Barton, for his part, while he could not remember the exact details of what was said about jamb covers during that meeting, acknowledged that there would have been something spoken about how you fit them, noting that “(s)ometimes they’re tight. Sometimes they could be a bit loose”. He further stated that it was explained that what you do is you “make sure it’s a good fit”.
  1. [110]
    I reject TCG’s contention that a verbal, or manual based, direction was necessary requiring the use of sealant when installing the track covers. There is no doubt that both Donnan and Van De Hoef gave evidence that the use of sealant was the appropriate way to deal with such looseness. It cannot be that fitters such as TCG had at the material times a need to be expressly told that they should use a sealant, when necessary, when installing the track covers, particularly given my acceptance of conversations had by those in charge during the inspection of the prototype doors.
  1. [111]
    To the extent that Van De Hoef gave evidence that a number of installers had indicated that they would not carry out a practice of using silicone sealant, it was an opinion expressed in circumstances where he gave evidence that experienced installers, in circumstances where a cover strip is “loose in a track”, would take that action.
  1. [112]
    Important to a determination of this question is Gramlick’s report which stated that standard industry practice was to add a daub of sealant when capping “if there is a concern”. During cross-examination, she stated that an individual installer would need to assess how much that installer needed to use. But that would be within their competence, as tradespersons of that kind.
  1. [113]
    The conclusion I therefore reach is that it was not the duty, within the confines of the duty that I have accepted applied to PMAA, to advise that crimping and sealant should be used when there was concern about the tightness of the fitting of track covers during installation.

Other matters concerning the sliding doors

  1. [114]
    Donnan, besides being of the opinion that there was a necessity to use anti-rotation blocks, also opined that comparison of the design of PMAA’s sliding door panels with several other manufacturers showed other differences. They were:
  • the incorporation of a ridge in the stile to hold the rail in position;
  • the height of that ridge;
  • the thickness of the internal wall of the stile which the screw did bear against; and
  • the number of screws between the stile and the rail.
  1. [115]
    Donnan’s analysis of these matters was that:
  • the PMAA system had the smallest ridge projection on the stile which made it more susceptible to disengagement between the rail and the ridge on the stile when the stile had a load applied to it;
  • PMAA’s stile had the thinnest wall thickness used to screw the stile to the rail, making it more susceptible to deformation and loosening the stile to rail joint connection; and
  • the only other system that had the same wall thickness incorporated a roller carriage which prevented the prising action associated with applying a load to the outer part of the door stile and provided resistance to the rail rotating, through the engagement of the roller carriage from the rail into the stile.
  1. [116]
    Before considering the approach of Van De Hoef to those opinions of Donnan, consideration needs to be taken of evidence that was given by Kevin McDonald (“McDonald”). Such evidence was about what occurred some three weeks before he appeared in Court. It is to be remarked that this evidence is the only occurrence of this particular event. McDonald stated that, before he went to bed, he pushed the balcony door closed but that, when he woke up the next morning, he found the whole side of the door had fallen off and was lying on the balcony. Since he was asleep, he could only say that to his knowledge – which must have been extremely limited due to his being asleep – no unusual force had been applied. He also stated the door had not received any unusual impact that he knew about before it broke. Morrison gave evidence that he examined the door afterwards and saw that holes inside the stile (where normally the screw holds it and attaches it to the top and bottom rail) had been torn, with the screw having torn through to the internal webbing of that metal. It is difficult to conclude that that particular door is representative of all, or even many, of the doors manufactured and installed by TCG. Neither expert was asked to comment on it. And it would have been very difficult for any expert to consider the matter without a thorough examination of the door in question (which may have simply been one of a kind).
  1. [117]
    Moving, then, to Van De Hoef’s opinions. I have already dealt with his opinion that it was not necessary to even consider incorporating anti-rotation blocks. As for the use of multiple screws, a thicker internal stile wall or high ridges on the stile - or a combination of such features - his opinion (which, again, I accept) was that a fairly similar connection was provided between the stile and the rail at both the top and the bottom of the door and that, given the relative strength of the stile section, the applied load to the stile/rail interface would generally be shared between the two connections.
  1. [118]
    Donnan accepted that the force used to operate such a door would be distributed to the top and bottom rails. I conclude that this is similar to the approach taken by Van De Hoef. But, particularly where I have accepted Van De Hoef’s rejection of the proposition that the lever affect identified by Donnan significantly magnified the force applied such that it achieved a destructive level, Van De Hoef’s acceptance that the reactions on the individual components were a lot higher than the actual force applied does not contradict the general conclusions he reached – and which I have accepted.

Proved damage

  1. [119]
    The only damage that I have accepted as flowing from a breach of duty (concerning the provision of proper design) is to the plastic end caps of the door stops. The failure that I have identified is that, because it did not have significant shock absorbing capabilities, it had a higher probability of being damaged (at least to some extent). But it is difficult to see how that particular rectification could not have been carried out when other such work was done during the particular years of 2012 and 2013, when other rectification was being effected.
  1. [120]
    The answer that TCG might well make is that the provision of end caps that had better shock absorbing capability was not a significant part of what TCG believed was the cause of the damage to, and by, the PM405 cover strip sections.
  1. [121]
    But where, as here, I have found that that is not an issue, there does seem to be substance in the argument that proper replacement doorstops should have been the subject of rectification work undertaken in 2012/2013.
  1. [122]
    Although PMAA cast this aspect as a “duty to mitigate”, it is, in the end, a decision concerning conduct which needs to be characterised as acting “reasonably in all the circumstances”: see Knott Investments Pty Ltd v Fulcher[10] at 41 [43]-[45].  As that case pointed out, such a plaintiff is not under any obligation to do anything and, in particular, is not required to sacrifice or risk any property or rights and, hence, so long as the party not in breach can be seen to have acted reasonably and justifiably in the circumstances, such a party should not be barred from recovering the actual loss flowing to it simply because it is asserted that, by taking some other course, the loss may well have been lower: at 41 [45].
  1. [123]
    Applying the relevant principles, I accept that, since the inadequacy of the plastic ends was identified earlier, and since such ends are easily attached - and, earlier, removed - that particular aspect of rectification could have been easily and effectively undertaken by TCG earlier. The effect that has on the damages to be awarded is that the damages should be limited to the proper cost of replacement caps, the labour involved in undertaking that task and the cost of disruptions necessary to permit that to be done – but excluding the use of the additional activities by such persons as building managers and, or alternatively, security guards to accompany such rectifiers, in circumstances where such additional persons would not have been necessary during 2012 and 2013.

“Reasonable” damages

  1. [124]
    PMAA has also argued that, bearing in mind that the principles enunciated by the High Court in Bellgrove v Eldridge,[11] certain costs should not be allowed.  In particular, PMAA identified, as falling within the principle, that: a security guard was not required (particularly where the building management had never charged for such previously); the charge out rate should not be an amount notionally payable to TCG’s employees (in circumstances where it is in liquidation and relevant employees are employed by another company that has no such obligation); and that, combined with the last point, the open market rate, on the Gold Coast, should be that which is adopted for a glazier. 
  1. [125]
    As well demonstrated by Keane JA, with whom Holmes JA expressly agreed, and with whom Williams JA generally agreed, in UI International Pty Ltd v Interworks Architects Pty Ltd,[12] what Bellgrove v Eldridge determined often overlooks the fact that the primary issue there was the issue of damages recoverable “by an owner of land” for defective work in constructing a building on that owner’s land: at 178 [56].  Nevertheless, as he goes on to analyse in considerable detail, the fundamental principle in this field of discourse is that the plaintiff is entitled to be put in the same position, so far as an award of money can do it, that it would have been in had the contract been performed; and that it is this principle which controls the measure of damages applicable to any particular case: at 190 [87].  Keane JA later considered the effect of supervening events.  In particular, he made the following observations:
  • that the right that ought to be recognised is that a claimant can recover damages for repair work which has not been done - but that recognition says nothing about a case where the asset has been sold by a claimant for “full value” and “work is neither required nor permitted by the purchaser” (at 195 [102]);
  • that, citing a learned English text, it is generally no concern of the courts what the claimant intends to do with the damages (while noting that the rationale of this rule does not “necessarily” apply in a three-party case) (at 196 [105]);
  • that where by reason of the ownership of a property by the third party the repairs cannot be carried out by the claimant, the claimant cannot claim the cost of repairs, noting that this arises simply from the fact that damage to the claimant’s interest in the performance of the claimant’s contract with the builder cannot reasonably be measured by the costs of repair which cannot occur (at 196 [106]); and
  • that, quoting New South Wales authority, if supervening events mean that the rectification work cannot be carried out, it can hardly be found that the rectification work is reasonable in order to achieve the contractual objective, since achievement of the contractual objective is then no longer relevant (at 196 [107]).
  1. [126]
    Nevertheless, it ought to be remembered that the last referred to statements depend upon findings by the court in question that there is an insuperable barrier to the claimant’s rectification plan, rather than simply one of the many options that are open.
  1. [127]
    It may well be asserted that, in this case, since what McGee sues upon is an assignment of rights and since TCG is in liquidation, the only recourse that Philip Usher, as the builder, had was to lodge a proof of debt (as it has done, on 1 September 2014 – see Exhibit 21), meaning that rectification cannot be carried out.
  1. [128]
    But such an argument mistakes the right that a “claimant” has in these circumstances. The assignable right of action that TCG had – subject to a further determination to be made later about the validity of the assignment – was based on a defective product supplied to a legal entity, Philip Usher, which had the right to oblige TCG to carry out that rectification that was so required or, alternatively, pay damages for any defective work proved to have been the legal responsibility of TCG. Consequently, the assigned right of TCG to McGee was the right to sue PMAA for the actual cost of rectifying such defective work as was proved necessary to remedy such defects as were legally compensable, noting that, in terms of the liability to pay damages, that had accrued on the establishment of breach.
  1. [129]
    The determination at the end of that consideration is that the very general statement that can be extracted from Bellgrove v Eldridge (that not only must the work undertaken be necessary to produce conformity but also it must be a reasonable course to adopt) is a statement of general principle that is applicable here - but only in that sense.  Applying that resolution of principle to this case, the only real consideration is the extent to which the supervening event has affected the extent of recovery – and I have held that it does not at all – with the actual recovery of damages by the costing of such rectification being a reasonable course to adopt in terms of general principle.
  1. [130]
    Thus, concerning the specific issues raised here by PMAA, they are to be determined simply on whether they are damages which fall within the general principle that, for a contract being performed, the innocent party should be put in the position of the beneficiary of a properly performed contract, at least insofar as an award of money can do it.
  1. [131]
    It needs to be remarked that any reliance upon McKay & Anor v Hudson & Ors[13] (to the extent that the cost of rehabilitation should be based upon the cost applicable at the time of breach) should be read in the context that the decision there was made in special circumstances of not only the court holding that there was an “intransigent attitude” on behalf of the original contractors – who were doing work for the owners of the land in question – but also that there were “delays and forensic activity resulting from it” which gave rise to a very significant delay.  In addition, it was actually proved at that trial that the cost of rehabilitation had then “escalated by some $50,000”: at [95].  This was also where there was no explanation why the contractors did not cause the work to be undertaken then, particularly where it was not suggested that, financially, they were not in a position to commission such rectification. 

Remoteness of damages

  1. [132]
    As articulated by PMAA, remoteness, here, appears to have three aspects. The first deals with the original agreement entered into between TCG and Phillip Usher under which, by Clause 8, TCG became contractually obliged to remedy defects. The second deals with the assignment of the “litigation rights” of TCG to McGee, under a Deed of Assignment dated 1 August 2014 (“Assignment”), and, in particular, where the Assignment stated, by Clause 2.1, that, subject to the terms of the Deed, TCG unconditionally, irrevocably and absolutely “assigns to (McGee) all of (TCG’s) rights, title, interest and benefits in and to the Cause of Action with effect from the Assignment Date”. The third aspect is the entering into a Deed of Company Arrangement (“DOCA”) on 25 September 2014. This was subsequent to Phillip Usher lodging, on 9 September 2014, a formal Proof of Debt for $1,123,374.27 (which, incidentally, was the same amount as TCG’s original counterclaim against PMAA). It is not in dispute that Phillip Usher had no greater claim than as an unsecured creditor of TCG.
  1. [133]
    Relying upon s 444E(1) of the Corporations Act 2001, PMAA contends that, since the DOCA is binding on all creditors of the company so far as concerns a claim arising on or before the date specified in the deed [being 25 September 2014 in accordance with s 444A(4)(i)], Phillip Usher is a relevant creditor so as to be bound by the DOCA, in reliance upon International Air Transport Association v Ansett Australia Holdings Limited (subject to a Deed of Company Arrangement).[14]
  1. [134]
    Relying then, upon Clause 7.3 of the DOCA, PMAA asserts that Phillip Usher is barred from instituting proceedings to enforce the contractual obligation to rectify defects until the DOCA is terminated. That conclusion relies upon Derwinto Pty Ltd (in liq) v Lewis.[15]  There, it was held that s 444D, read in context with the other sections of the Corporations Act, had the effect that the court ought not to adopt a construction that would permit a right of appeal to be restricted, unless the relevant provisions are clearly “intended” to have that effect, noting that such a restriction was possible having to regard to s 444A(5) of the Act: at [44].
  1. [135]
    Building upon that argument, PMAA contends that it was “intended” that Clause 7.1 of the DOCA, which provides that upon termination of the DOCA each claim that may have accrued before the day the administration commenced would be extinguished, should have the meaning that, where no “Cause of Action” existed between TCG and Philip Usher (such that there could be no assignment of any contractual right “owed” by TCG to Phillip Usher), no “claim” for rectification damages could ever be maintained against TCG by Philip Usher, particularly where Phillip Usher was not listed as a subordinate creditor to whom Clauses 7.1 and 7.3 referred.
  1. [136]
    Furthermore, PMAA asserts that Clause 3.5 of the DOCA, providing that defect liability and rectification work be undertaken by Total Lifestyle Windows Pty Ltd (another company of which McGee is also a director), limits such work to projects listed in Clause 3.4, in circumstances where the H2O project of Phillip Usher was not so listed.
  1. [137]
    The response by TCG is manifold.
  1. [138]
    First, TCG submits that, because TCG entered into the DOCA after the assignment was perfected by the giving of notice on 5 August 2014 – which is not in dispute – for the DOCA to have any such effect as PMAA contended for, PMAA would have to establish not only that the unenforceability of Phillip Usher’s claim against TCG is an equity which PMAA might have raised against TCG’s counterclaim but also that such equity is one “flowing out of and in separately connected with” the obligation (the benefit of which is assigned), relying upon RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies,[16] at paragraph [6-500].
  1. [139]
    TCG argues that, as to the first requirement, since “a chose in action is, after all, the benefit of an obligation” and “equity means in this context a defence, set-off or counter-claim which the person subject to the obligation is entitled to oppose to the claim of the person entitled to the benefit” (quoting the text), the unenforceability of Phillip Usher’s claim against TCG would not have amounted to a defence by which PMAA could have successfully opposed the counterclaim of TCG. That this is so is contended to result from the measure of TCG’s damages in both contract and tort being the amount necessary to put it in the position that it would have occupied if PMAA had not breached the contract or committed the tort, relying, amongst other cases, on Butler v Egg & Egg Pulp Marketing Board[17] at (191).
  1. [140]
    The second leg of the first requirement in TCG’s response is that, in the case in hand, the amount of such damages is the cost of putting the door suites in the state they would have been if PMAA had not breached its contractual and common law duty obligations concerning design. That would mean that TCG’s entitlement to damages against PMAA was not contingent upon proof of “present liability” to rectify the door suites, relying upon statements made in Bellgrove v Eldridge (at 620).  Given my earlier analysis of what Bellgrove v Eldridge stands for as analysed by Keane JA in UI International, I am not sure the passage identified, of itself, establishes that argument, although that Court of Appeal case, in the existing circumstances, does.  The last aspect of this first requirement is the contended conclusion by TCG that any unenforceability of Phillip Usher’s claim against TCG would have not have constituted a defence that PMAA might have raised against TCG’s counterclaim. 
  1. [141]
    The second requirement concerns the identified equity’s connection with the obligation correlative to the benefit so assigned. In Tooth v Brisbane City Council[18] Isaacs J, in dissent, held that, since the debt there arose entirely after a resumption by the Brisbane City Council and almost wholly after notice of the assignment was given, it was under a “new contract” made with the Council and therefore was not “flowing out of and inseperably connected with” any dealings or transactions previously existing between then Council and the assignor: at 223.  It should be noted that the majority held that the relevant clause in question did not operate as an equitable assignment.  Nevertheless, Higgins J, in the majority, also referred to the relevant principle: at 227.  And the text of RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies[19] states that it is authority for the proposition that “the equity must be one that impeaches the right which is assigned”: at paragraph [6–500]. 
  1. [142]
    The consequence that TCG urges is that neither any unenforceability of Phillip Usher’s claim against TCG can be said to flow out of PMAA’s obligation to pay damages in respect of defective design nor that such unenforceability can be described as “inseparably connected” with PMAA’s obligation to pay damages. Furthermore, it urges that there is no impeachment of TCG’s right to damages by way of rendering that right inequitable for TCG to maintain against PMAA.
  1. [143]
    PMAA’s argument about the unenforceability of Phillip Usher’s right to have TCG make a payment in any court action resonates with the decision made earlier about the inability of Phillip Usher to force TCG to undertake physical rectification, by itself, its contractors or its agents. But, as considered there - which is also the consideration here - that does not necessarily mean that TCG’s cause of action against PMAA itself ceases, by extinguishment or otherwise.
  1. [144]
    This is because the unenforceability - which TCG implicitly recognises - that flows from the provisions of the DOCA is not one which triggers a similar unenforceability in McGee’s assigned rights. The analysis of TCG (contesting such unenforceability being a claimable “equity” and being one which is correctly characterised as flowing out of and inseparably connected with the obligation which was the subject of the assigned benefit) is correct. Since I have found that neither of those requirements exist here, I conclude that the DOCA does not preclude McGee from litigating TCG’s assigned causes of action concerning defects of design.

Assignability of causes of action in negligence

  1. [145]
    PMAA has contended that TCG could not assign any action in negligence, particularly where no negligence had been pleaded by TCG in its counterclaim, before assignment, against PMAA. PMAA contends that, as a result, McGee has “created an entirely new action in negligence”.
  1. [146]
    An additional argument is that Poulton v The Commonwealth[20] holds that an action in tort is not assignable. 
  1. [147]
    In response, TCG raises, particularly as to the second part, the Queensland Court of Appeal decision of WorkCover Queensland v Amaca Pty Ltd[21] and the New South Wales Court of Appeal decision of Hazard Systems Pty Ltd v Car-Tech Services Pty Ltd (in liq).[22]  It is unnecessary to consider  the latter because the former is binding on this Court. 
  1. [148]
    Although I have not found that the elements of any tort have been established - other than arising from a concurrent duty, and therefore enforceable in contract, anyway - were I to be wrong in doing so, it would then have been necessary to proceed to address the arguments, anyway. And so I do. Turning then, first, to an analysis of Amaca.  The major decision was given by Gotterson JA, with whom McMurdo P and Martin J concurred.  Dealing, specifically with the judgment of the High Court in Poulton, after analysing recent observations by French CJ, Crennan and Kiefel JJ in Equuscorp and the House of Lords decision in Trendtex Trading Corporation v Credit Suisse,[23] as well as observations of other members of the court in Equuscorp, it was held that, drawing upon such authorities, the law “now” is “that a right to claim damages in negligence may be validly assigned where the assignee has a genuine commercial interest in the assignment”: at [64].  It, therefore, remains to be considered whether McGee had a general commercial interest in the enforcement of TCG’s claims against PMAA.  McGee’s argument was that, the assignment having been effected by the giving of proper notice under s 199 of the Property Law Act 1974 – which is not in dispute – McGee does have a genuine commercial interest.  No particular basis was relied upon.  Even so, it is clear that McGee, as a director (and, from the evidence, apparently a sole director) of TCG, was a person who would have been concerned to maintain a commercial relationship with Phillip Usher and, consequently is able to show, apart from any other consideration, a sufficient interest of a genuine commercial kind.  As Amaca held, the pre-existing commercial interest need not be an interest which, of itself, is enforceable at law or in equity: at [66].  When one takes the statements from Lloyd LJ in Brownton Ltd v Edward Moore Inbucon Ltd[24] (referred to in Amaca at [63]) to the effect that in judging whether the assignee has a genuine commercial interest you must look at the transaction as a whole (at 509), the particular circumstances in this case, including the legal entities with which McGee had an association and their commercial concerns, can be found to be well free of the restriction of the right assigned as “a bare right to litigate”. 
  1. [149]
    Accordingly, even if there was, simply, a sustainable, independent cause of action in tort held by TCG, it would not be non‑assignable.  Here, since I have found that the action that exists is based upon contract, there is no restriction applicable at all and there is no necessity to decide if the assigned rights included those, though not pleaded, which are based on negligence.  On the fact of Clauses 2.1 and 1.1, it is likely that they were. 

Compromise?

  1. [150]
    PMAA has raised the argument of a precluding compromise. It is based upon a letter from TCG to PMAA dated 29 April 2011 and a document, termed a “settlement letter”, dated 10 August 2011. The existence and execution of both is not disputed.
  1. [151]
    In the letter in April 2011 TCG raised the question of alleged “damages and costs incurred” by TCG and “attributable to” PMAA as a result of “incorrect and/or defective supply of materials”. The letter then referred in detail, under separate headings, to different aspects of such damages and costs. It then generally referred, additionally, to a “significant amount of management time (being) required to manage all aspects of these rectifications”, identifying particulars of such. On the third page of the letter there was, in tabular form, a description of each of the identified matters, including management and administration costs, and a costing which, in total, excluding GST, amounted to $46,359.51.
  1. [152]
    The “settlement letter” is simply a one-page document referring to that earlier letter of 29 April 2011. In it, it was stated that TCG agreed to withdraw its claim in the amount of $46,359.51 “for back charges and costs” against PMAA and agreed “not to make any future claim” against PMAA “for labour or costs that may result” from the TCG “Contract Agreement” on the H20 “Building Project”. It then stated that, in “full settlement”, PMAA agreed to issue a credit of $10,000.00 to TCG on Monday 15 August 2011.
  1. [153]
    Finally, the document stated that, in consideration therefor, PMAA agreed to continue, without delay, supply of the “ordered goods” for the H20 project as agreed to between the parties. It is not in dispute that the “letter” was duly executed by authorised representatives of both TCG and PMAA.
  1. [154]
    Although McGee alleged in his defence that TCG signed the letter of August 2011 “under duress”, that was not an argument that was persisted with at trial.
  1. [155]
    PMAA has argued that the settlement letter binds TCG and, therefore, acts as a bar to any further litigation of any defect, including any purported assigned right connected with it. The argument then deals with defences of an equitable kind. Those have not been raised; and, therefore, I do not move to consider them.
  1. [156]
    For McGee’s part, it is argued that, when read in context, the reference to “any future claim” relates to further future aspects of the identified claim of $46,359.51 only.
  1. [157]
    McGee does not raise any issue with any purported failure of PMAA to issue a credit of $10,000.00. Therefore, the argument simply is about what the words mean, in context.
  1. [158]
    It is not in dispute that as at 29 April 2011 the work had not been completed. This is graphically illustrated by the reference in the “settlement letter” to the consideration in PMAA’s agreement to continue to supply.
  1. [159]
    Reliance is placed by McGee on Australian Broadcasting Commission v Australasian Performing Rights Association Ltd.[25]  There, Gibbs J (as he then was) held that, if the language of a written contract is open to two constructions, that which will be preferred will be that that avoids consequences which appear to be “capricious, unreasonable, inconvenient or unjust, ‘even though the construction adopted is not the most obvious, or the most grammatically accurate’”: at 109. 
  1. [160]
    The words which refer to “any future claim” do need to be contrasted with the specific amount of $46,359.51 “for back charges and costs”. That, of course, is not the end of the matter.
  1. [161]
    Since it has been, again, recently stated by the High Court that the matter of context is to be considered at the outset in any interpretation (see Electricity Generation Corporation v Woodside Energy Ltd[26] at 656-657 [35], referring, among other aspects, to a commercial contract being construed so as to avoid it “making commercial nonsense or working commercial inconvenience”), I do hold, in this context, that the reference to “any future claim” is to be limited to further claims concerning the sources of the various “damages and costs incurred” as identified in the letter of 29 April 2011.
  1. [162]
    Since there has been no identified “future” damage or cost incurred with respect to the then existing sources of the items set out on the third page of the letter of 29 April 2011, there is no bar to TCG assigning the relevant causes of action to McGee and to McGee suing on those assigned rights. This is especially so in circumstances where, at least between the parties, matters which were agitated at this trial are matters which, at least for its part, TCG claims, primarily, to have first identified in any significant way after April 2011.

Calculation of damages

  1. [163]
    Because of the analyses that I have done with respect to whether actual rectification will occur, and because of my determination, on that score, that, given the circumstances of the DOCA, the validity of the assignment of at least the contractual rights that TCG had assigned to McGee and that TCG was in the position of an innocent party entitled to receive damages by way of an award of money to put it in the position of contractual performance, I conclude that damages, properly calculated, which are referable to the replacement of the plastic end door stops by suitable rubber door stops should be allowed – but that no amounts should be allowed for items that would be directly concerned with expenses that will now not be additionally incurred by TCG, because it should have effected such repairs during 2012/2013, if not for the additional reason that a court should not overcompensate a party such as TCG for additional, special expenses where it will not inevitably be carrying out the rectification that the damages otherwise reflect.
  1. [164]
    Before turning to the calculation of the relevant amounts, it is necessary to determine what relevant rate should apply for that part of the claim relating to “Site Labour” [as it is set out in the Supplementary Report of the quantity surveyor, Michael Gilligan (“Gilligan”) in a report prepared for McGee by RLB/Rider Levett Bucknall dated 16 October 2014 (Exhibit 17)].
  1. [165]
    Gilligan relied upon a labour rate of $93.00 per hour. This was stated by him to be based upon the rate charged by TCG as at 1 January 2014. He stated that that rate was justified as being based on a relevant text applicable in the field, Rawlinsons, as well as the going rates within the market, asserted to be based upon his experience as a quantity surveyor.  When cross-examined about the rates indicated in another text, Cordells, he stated that they were based upon “award” rates which were not necessarily reflective of some of the wages paid in the market under the terms of enterprise bargaining agreements or what were otherwise negotiated between tradepersons and their employers. 
  1. [166]
    The quantity surveyor called to give evidence by PMAA was Gary Thompson (“Thompson”). For his part he prepared a Reply to Supplementary Report dated 22 October 2014. His labour rates were based upon the rates indicated in Cordells.  Unsurprisingly, he disagreed with the approach of Gilligan.  Nevertheless, in cross-examination, he agreed that the enterprise bargaining agreement rate could be applicable to a major project such as the H20 complex. 
  1. [167]
    If Gilligan’s estimate of cost had simply been based upon the rate charged by TCG, given the fact that TCG cannot undertake any such rectification work now, I would have rejected that rate. But Gilligan also indicated that the rate selected by him was consistent with other bases (which are identified above). Given that enterprise bargaining agreement rates were conceded by Thompson as potentially applicable to a major project such as the one in question, I accept that the rate chosen by Gilligan should be the one adopted.
  1. [168]
    Since the only breach that I have found goes to the matter of the plastic ends of the doorstops, it is important to identify the difference between the reports prepared by Gilligan and Thompson. Gilligan selected a requirement of two stops per door. Thompson, for his part, selected one stop per door. Thompson’s approach was based upon a paragraph in the joint report of Donnan and Van De Hoef. But, as the written submissions by McGee point out, the particular paragraph merely stated that if it was not intended that two doorstops were to be effective, then only one doorstop would be required. PMAA did intend that two doorstops were necessary because it included both stops in its design. Additionally, any reliance by PMAA on that joint report stating that it is “relatively normal practice” for sliding doors to be provided with one doorstop only does not, as McGee’s submissions have asserted, alter the conclusion that PMAA’s design was for two doorstops.
  1. [169]
    There is nothing in the evidence which gainsays that, if all plastic doorstop ends included in the PMAA design should be replaced, the consequence is that two new rubber stops are necessary for each door.
  1. [170]
    While the opinions expressed by Van De Hoef do suggest that the damage to the plastic end caps might not include all doorstops, because he was still of the opinion that the plastic doorstops provided in the design did not have “significant shock absorbing capabilities” and therefore had a “high probability” of being damaged to some extent irrespective of the configuration of the end of the PM405, I conclude that it is necessary to allow damages for the removal and installation of new doorstops on all 1,254 panels.
  1. [171]
    In Gilligan’s report, these costs are dealt with as Item 18.a.i. Thompson agrees that the cost of the doorstops will be $1.50. Hence, on accepting that there are two stops necessary for each sliding panel, the cost is $3,762.00. As for site labour, preferring the rate identified by Gilligan as $93.00 and noting again the necessity for two stops, I accept that the appropriate figure for site labour is $19,437.00. The total of those two figures is $23,199.00.
  1. [172]
    It is also necessary to look at Item 18.i. This deals with further rectification costs. Necessarily, many of the particulars of this Item are either inapplicable or are not within the ambit of what I have decided are relevant costs; but some are.
  1. [173]
    Turning to particular A, which deals with “material transport” to the site, and movement between units, I accept the rate of $93.00 per hour. Given that only one man then would have been necessary (consistently with Item 18.a.i.) for the 358 apartments, it is unlikely that there would be, given every unit is involved (even if an adjoining unit were to be inaccessible immediately), a longer “movement” than five minutes. Allowing, also, a small amount for “materials to site”, which is an allowance per month, I conclude that the overall cost for the material transport to the site and movement to any units is $3,000.00.
  1. [174]
    For particular B, dealing with project insurance, on accepting an allowance of 1% of $27,199.00 for future works, then the apportionment should yield approximately $271.99.
  1. [175]
    I do not intend to allow anything for particulars C and D, which deal with site induction, training of site staff and crews, and matters of first aid plans and safe work method plans. This is in circumstances where I accept Van De Hoef’s opinion that it was simply a matter of “whacking” such doorstops in.
  1. [176]
    As to particular E, I have determined that no safety equipment and gear was necessary.
  1. [177]
    As to particular F, referable to materials for protection of units and preparation of work space, again I do not see on the evidence led that there would have been any need for an allowance for such materials and preparation.
  1. [178]
    Moving to particular G, which deals with the cleaning of units on completion, on the evidence led I see no need for any cleanup involving such limited work would have existed.
  1. [179]
    Turning to particular H, dealing with security for the units, given the conclusions I have reached about when this work should have been done and the conclusions I have reached about actual rectification not now being able to be completed by TCG, I allow nothing for such additional security.
  1. [180]
    As to particular I, which deals with project preliminaries, on the evidence led there is nothing which would suggest that the relevant materials for the doorstops would have needed to be placed in some compound on-site and, similarly, for such matters as a site office, a lunchroom, a storage container, other temporary facilities and a site supervisor or manager, or temporary site office equipment, or rubbish removal and disposal or sundry expenses.
  1. [181]
    For particular J, being with respect to head office overheads on non-labour costs, I allow the amount of $1,000.00.
  1. [182]
    Finally, as to particular K, dealing with non-productive hours, since no evidence has been led as to this factor, I decline it, also.
  1. [183]
    Adding all those matters together, the total sum calculated is $27,470.99.

Summary

  1. [184]
    In accordance with my findings and determinations, there will, eventually, be: judgment on the claim for $116,712.60, plus ongoing interest; and judgment on the counterclaim for $27,470.99, plus interest. Since no precise submissions have been made on interest, I will give leave for the filing and serving of submissions on how the interest should be calculated and then how the resulting amounts should be dealt with vis-a-vis each other. Further, there will need to be submissions on costs. I will not give any judgment or make any orders until such submissions have been received, particularly where the Court vacation period is imminent.

Footnotes

[1] [1914] 3 KB 907.

[2] (2004) 218 CLR 471.

[3] [2014] NSWCA 396.

[4] [1989] 2 Qd R 477.

[5] [2013] QSC 215.

[6] [2013] NSWSC 343.

[7] [2014] HCA 36.

[8] [2014] NSWCA 184.

[9] (1893) 6 R 67.

[10] [2014] 1 Qd R 21.

[11] (1954) 90 CLR 613.

[12] [2008] 2 Qd R 158.

[13] [2001] WASCA 387.

[14] (2008) 234 CLR 151.

[15] [2002] NSWSC 731.

[16] (2002, 4th ed).

[17] (1966) 114 CLR 185.

[18] (1928) 41 CLR 212.

[19] (2002, 4th ed).

[20] (1953) 89 CLR 540.

[21] [2013] 2 Qd R 276.

[22] [2013] NSWCA 314.

[23] [1982] AC 679.

[24] [1985] 3 All ER 499.

[25] (1973) 129 CLR 99.

[26] (2014) 251 CLR 640.

Close

Editorial Notes

  • Published Case Name:

    Press Metal Aluminium (Australia) P/L v Total Concept Group P/L (Externally Administered) & Anor

  • Shortened Case Name:

    Press Metal Aluminium (Australia) Pty Ltd v Total Concept Group Pty Ltd (Externally Administered)

  • MNC:

    [2014] QDC 280

  • Court:

    QDC

  • Judge(s):

    Dorney DCJ

  • Date:

    12 Dec 2014

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2014] QDC 18605 Sep 2014Application for security for costs granted: Dorney QC DCJ.
Primary Judgment[2014] QDC 28012 Dec 2014Judgment for the plaintiff on its claim against the second defendant pursuant to an indemnity and guarantee; judgment for the second defendant on its counterclaim for breach of contract: Dorney QC DCJ.
Primary Judgment[2015] QDC 403 Feb 2015Form of order and costs of [2014] QDC 280: Dorney QC DCJ.
Notice of Appeal FiledFile Number: Appeal 1743/1519 Feb 2015-
Notice of Appeal FiledFile Number: Appeal 2205/1503 Mar 2015-
Appeal Discontinued (QCA)File Number: Appeals 1743/15 and 2205/1522 Jul 2015Appeals dismissed by consent.

Appeal Status

Appeal Discontinued (QCA)

Cases Cited

Case NameFull CitationFrequency
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
2 citations
Jump To
Cite 1 - (1973) 129 CLR 99
Cite 2 - (1973) 129 CLR 99
Bellgrove v Eldridge (1954) 90 CLR 613
2 citations
Jump To
Cite 1 - (1954) 90 CLR 613
Cite 2 - (1954) 90 CLR 613
Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36
2 citations
Jump To
Cite 1 - [2014] HCA 36
Cite 2 - [2014] HCA 36
Browne v Dunn (1893) 6 R 67
2 citations
Jump To
Cite 1 - (1893) 6 R 67
Cite 2 - (1893) 6 R 67
Brownton Ltd v Edward Moore Inbucon Ltd [1985] 3 All ER 499
2 citations
Jump To
Cite 1 - [1985] 3 All ER 499
Cite 2 - [1985] 3 All ER 499
Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185
2 citations
Jump To
Cite 1 - (1966) 114 CLR 185
Cite 2 - (1966) 114 CLR 185
Cross v Moreton Bay Regional Council [2013] QSC 215
2 citations
Jump To
Cite 1 - [2013] QSC 215
Cite 2 - [2013] QSC 215
Derwinto v Lewis [2002] NSWSC 731
2 citations
Jump To
Cite 1 - [2002] NSWSC 731
Cite 2 - [2002] NSWSC 731
DH MB Pty Ltd v Manning Motel Pty Ltd [2014] NSWCA 396
2 citations
Jump To
Cite 1 - [2014] NSWCA 396
Cite 2 - [2014] NSWCA 396
Dymocks v Capral [2013] NSWSC 343
2 citations
Jump To
Cite 1 - [2013] NSWSC 343
Cite 2 - [2013] NSWSC 343
Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd and Ors (2014) 251 CLR 640
2 citations
Jump To
Cite 1 - (2014) 251 CLR 640
Cite 2 - (2014) 251 CLR 640
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471
3 citations
Jump To
Cite 1 - (2004) 218 CLR 471
Cite 2 - (2004) 218 CLR 471
Cite 3 - (2004) 218 CLR 471
Hazard Systems Pty Ltd v Car-Tech Services Pty Ltd (in liq) [2013] NSWCA 314
2 citations
Jump To
Cite 1 - [2013] NSWCA 314
Cite 2 - [2013] NSWCA 314
Hitchings & Coulthurst Co v Northern Leather Co of America and Doushkess [1914] 3 KB 907
2 citations
Jump To
Cite 1 - [1914] 3 KB 907
Cite 2 - [1914] 3 KB 907
International Air Transport Association v Ansett Australia Holdings Limited & Ors (2008) 234 CLR 151
2 citations
Jump To
Cite 1 - (2008) 234 CLR 151
Cite 2 - (2008) 234 CLR 151
Knott Investments Pty Ltd v Fulcher[2014] 1 Qd R 21; [2013] QCA 67
2 citations
Jump To
Cite 1 - [2014] 1 Qd R 21
Cite 2 - [2014] 1 Qd R 21
Mainteck Services Pty Ltd v Stein Heurtey SA & Anor [2014] NSWCA 184
2 citations
Jump To
Cite 1 - [2014] NSWCA 184
Cite 2 - [2014] NSWCA 184
McKay & Anor v Hudson & Ors [2001] WASCA 387
2 citations
Jump To
Cite 1 - [2001] WASCA 387
Cite 2 - [2001] WASCA 387
Poulton v Commonwealth (1953) 89 CLR 540
2 citations
Jump To
Cite 1 - (1953) 89 CLR 540
Cite 2 - (1953) 89 CLR 540
Suosaari v Steinhardt [1989] 2 Qd R 477
2 citations
Jump To
Cite 1 - [1989] 2 Qd R 477
Cite 2 - [1989] 2 Qd R 477
Tooth v Brisbane City Council (1928) 41 CLR 212
2 citations
Jump To
Cite 1 - (1928) 41 CLR 212
Cite 2 - (1928) 41 CLR 212
Trendtex Trading Corporation v Credit Suisse (1982) AC 679
2 citations
Jump To
Cite 1 - (1982) AC 679
Cite 2 - (1982) AC 679
UI International Pty Ltd v Interworks Architects Pty Ltd[2008] 2 Qd R 158; [2007] QCA 402
3 citations
Jump To
Cite 1 - [2008] 2 Qd R 158
Cite 2 - [2008] 2 Qd R 158
Cite 3 - [2008] 2 Qd R 158
WorkCover Queensland v AMACA Pty Limited[2013] 2 Qd R 276; [2012] QCA 240
2 citations
Jump To
Cite 1 - [2013] 2 Qd R 276
Cite 2 - [2013] 2 Qd R 276

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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