New South Wales Supreme Court CITATION : Ultra Modern Developments Pty Ltd v Cowan and Anor [2004] NSWSC 746 HEARING DATE(S) : 16 August 2004 JUDGMENT DATE : 30 August 2004 JURISDICTION: Common Law Administrative Law List JUDGMENT OF : Master Malpass at 1 DECISION : The summons is dismissed; the plaintiff is to pay the costs of the summons; the exhibits may be returned. CATCHWORDS : Appeal - construction of building contract - costs. Ultra Modern Developments Pty Limited (Plaintiff) PARTIES : Arthur Henry Cowan (First Defendant) P O'Shane LCM (Second Defendant) FILE NUMBER(S) : SC 30004/04 COUNSEL : Mr M Lawson (Plaintiff) Mr S Balafoutis (First Defendant) SOLICITORS : Hunter Lawyers (Plaintiff) Wight & Strickland (Defendant) LOWER COURT Local Court JURISDICTION : LOWER COURT 4754/01 FILE NUMBER(S) : LOWER COURT P O'Shane LCM JUDICIAL OFFICER : - 6 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST Master Malpass Monday 30 August 2004 30004 of 2004 Ultra Modern Developments Pty Limited v Arthur Henry Cowan & Anor JUDGMENT 1 Master: The plaintiff is a builder. The defendant is the owner of the property known as 78 Sarsfield Street, Blacktown. The parties entered into a contract for the erection of an Eagle Home on the property. 2 Following performance of the building work, dispute arose between the parties concerning claims for variations made in a final invoice. The defendant retained the sum of $5,000 and paid the balance claimed. Of the disputed items, two were later conceded (water tempering valve and identification survey). 3 The disputed claims concerned a sum of $5,900 in respect of what it said was a basic price increase and a sum of $3,323.69 in respect of what was said to be additional scaffolding costs. In addition, there was dispute as to the sum retained. 4 The contract had provided for the installation of what has been described as whitegoods. These had not been installed. Because of a credit later allowed to the defendant, the amount claimed by the plaintiff in respect of the sum retained came to be $3,540.90. 5 The dispute saw the commencement of the proceedings in the Local Court on 24 April 2001. The plaintiff sought the recovery of each of the three sums. The defendant brought a cross-claim for the cost of the installation of the whitegoods (these having been installed by another party). The proceedings were heard before O'Shane LCM. On 3 December 2003, she delivered judgment. 6 She refused the claims for price increase and scaffolding. In respect of the sum retained, she ordered that the defendant pay the sum of $2,560.56. This sum was comprised by a sum of $1,122 (for the water tempering valve and identification survey) and an amount of $1,438.56, (being part of the sum retained). 7 At this stage, I should digress to observe that such an order for payment was made in circumstances where the defendant had been the successful party on the questions argued during the hearing. 8 The defendant was also successful on the cross-claim. He recovered an amount in the sum of $3,561.44. 9 The plaintiff was also ordered to pay the costs of both the original proceedings and the cross-claim. The learned magistrate ordered that the plaintiff pay the costs on an indemnity basis. In reaching that result, she took into account an offer of compromise. 10 The plaintiff has brought proceedings in this court by way of an appeal from the Local Court decision. The appeal encompasses both the plaintiff's claim in the lower court, the defendant's cross-claim and the costs orders. 11 A copy of some of the exhibits before the lower court were tendered in this court (it seems that the exhibits themselves may still be with the Local Court). One of the documents was a quotation dated 29 October 1999 (Exhibit 1). It also seems to be referred to as a "tender". It expressed a basic price of $113,600 and had an expiry date (27 February 2000). The date was later extended. Another of the documents was the building contract (Exhibit 2). It was dated 17 December 1999. It was in standard form (BC4 Contract) with special conditions. A further document was a Sydney Price List (Exhibit 3). It gave a current price (updated 3 September 1999) for the home ($113,600). It gave another current price (Effective: 18th December 1999) for it ($119,500). The price list in effect provided inter alia for a price increase of $5,900 which was to be effective on 18 December 1999. 12 In finding for the defendant on the claims for $5,900 and $3,323.69, the learned magistrate appears to have relied on various matters (including condition 14 of the contract). The condition related to variations (in the works). 13 It appears that the claim for these moneys had initially been advanced as being payable pursuant to that condition (see Exhibit 5). This may have also been the case presented by the pleadings. In my view, it had no application to either of the two claims. Such a position seemed to be common ground between the parties. 14 The argument presented on behalf of the plaintiff both here and in the Local Court was that the sum of $5,900 was payable under special condition 1. It provides that the contract and price were subject to what appears in (a) to (f) thereof. It is the plaintiffs case that the basic price increase was an applicable price increase within the meaning of (e) thereof. There was evidence of lack of notice of what was mentioned in (a) to (e) prior to the expiration date noted on the tender. 15 The contract expresses a contract price ($133,180). A "warning" appearing on the front page of the contract advises inter alia that the price is based upon the work to be done under the contract as at the date thereof. 16 It was said that a purpose of special condition 1 was to pick up any price increase that took effect between the date of the quotation and the contract. The court was told that there was evidence of communication concerning the possibility of an increase. 17 Save for the special conditions, the contract (which was dated 17 December 1999) was not amended in any way so as to include the alleged price increase in the moneys payable thereunder. 18 Special condition 1 was one of a number of provisions in the contract which purport to enable an increase in the moneys payable thereunder. What is relied on by the plaintiff is clumsily drafted. What it means is far from clear. It embraces a requirement that the designated "points" ((a) to (e)) must be obtained prior to the specified date ("the expiration date"). If and when it operates, the effect is to be that "applicable price increases" will "apply". "Applicable price increases" are not defined. It might be thought that they would be price rises contemplated elsewhere in the contract. Whatever they are, they are to apply should the designated "points" not be received prior to the specified date. The term "receive" seems to be inapt. What has to be received and by whom is unclear. 19 In my view, in the circumstances of this case, I am not satisfied that special condition 1 assists the plaintiff in respect of the claim for price increase. Accordingly, the plaintiff has failed to satisfy the court that the decision of the learned magistrate on this question should be disturbed. 20 The claim for additional scaffolding costs relies on special conditions 19 and 26. 21 The case founded on special condition 19 was but faintly pressed. In my view, it was devoid of any substance whatsoever. 22 Special condition 26 is in the following terms:- It is agreed that Eagle Homes has made an allowance for the safety guard rail to the right hand side of the garage roof, any additional requirements by Workcover Authority will incur a further expense to the owner. 23 It is common ground that an allowance had been made for a safety guard rail. It might be thought that what was contemplated was to provide for additional requirements pertaining to related matters (such as the rail or the works). I am far from satisfied that special condition 26 was intended to extend to "additional requirements" of any kind. However, in the particular circumstances of this case, it is unnecessary to pursue that consideration. 24 The special condition only has application where the Workcover Authority has made an additional requirement post contract. In this case, there was no such additional requirement. The evidence discloses that there had been pre-contractual requirements in force which required the use of scaffolding as a safety issue on construction sites. At the time of the building work, the enforcement of these requirements had become more rigorous. In an endeavour to meet increased scrutiny from the Authority, the plaintiff hired the scaffolding and then sought to pass the costs on to the defendant. 25 In my view, the special condition has no application to what was claimed by the plaintiff. In these circumstances, no basis has been shown for disturbing what was done by the learned magistrate. 26 It was said that the defendant was not entitled to withhold retention moneys. It is not said that the contract contained any provision that enabled him to do so. It appears that an impasse arose between the parties. The plaintiff did not install the whitegoods because the defendant did not pay the amount of the plaintiff's final invoice. The sum of $5,000 was retained because the defendant did not accept that he was liable for the basic price increase and additional scaffolding costs.. There was evidence that the defendant incurred costs in the sum of $3,561.44 in respect of the acquiring of the whitegoods. His case was conducted on the basis that he accepted that he owed the sum of $1,438.56. He had also accepted liability for the water tempering valve and the identification survey. Save for an order that the defendant pay the sum of $1,438.56 (the balance of the sum of $5,000 after these two other amounts were taken into account) the defendant was given judgment on the plaintiff's claim. 27 I am not satisfied that there is any basis for disturbing what was done by the learned magistrate in relation to these matters. 28 During the course of argument, the failure of the learned magistrate to deal with questions of interest was raised. As I understand what was put, no independent claim for relief is made in respect of these questions. It appears that it was raised in connection with the question of costs. 29 The Local Court has a discretionary power in relation to costs. It is exercisable having regard to the relevant statute and rules. The primary consideration is that costs follow the event. In this case, the defendant was the successful party. He made an offer of compromise. The decision of the learned magistrate produced a more favourable result than what had been offered. 30 In my view, in the circumstances of this case, the learned magistrate reached a result that was reasonably open. As I understand the position, the plaintiff accepts that if it fails on all other matters, it does not expect to be successful in its challenge to the costs orders. 31 The plaintiff has failed to demonstrate any entitlement to relief. Accordingly, the appeal fails. 32 The summons is dismissed. The plaintiff is to pay the costs of the summons. The exhibits may be returned. Last Modified: 08/30/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.