New South Wales Supreme Court CITATION : Flora trading as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 888 HEARING DATE(S) : 26/11/07, 27/11/07, 28/11/07, 29/11/07, 30/11/07 JUDGMENT DATE : 29 August 2008 JURISDICTION : Equity Division JUDGMENT OF : Barrett J DECISION : Short minutes to be brought in CATCHWORDS : CONTRACT - breach of contract - assessment of damages - no question of principle LEGISLATION CITED : Associations Incorporation Act 1984 CATEGORY : Principal judgment CASES CITED : Singh v Singh; Flora trading as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 386 Singh v Singh (No 2) [2008] NSWSC 787 Davinder Singh Flora trading as Flora Constructions - Plaintiff/Cross-Claimant Budget Demolition & Excavation Pty Ltd - Defendant S Charan Singh - First Cross-Defendant S Harmit Pal Singh - Second Cross-Defendant PARTIES : S Sarwan Singh - Third Cross-Defendant S Jaspal Singh - Fourth Cross-Defendant S Pardeep Singh Gill - Fifth Cross-Defendant Prabhjeet Singh Anand - Sixth Cross-Defendant The North Shore Sikh Association of Sydney Inc - Seventh Cross-Defendant FILE NUMBER(S) : SC 6458/05 COUNSEL : Mr M K Rollinson - Plaintiff/Cross-Claimant Mr D A Smallbone/Mr A K Singh - Cross-Defendants SOLICITORS : Newman & Associates - Plaintiff/Cross-Claimant Harish Prasad & Associates - Cross-Defendants IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J FRIDAY, 29 AUGUST 2008 6458/05 DAVINDER SINGH FLORA trading as FLORA CONSTRUCTIONS v BUDGET DEMOLITION & EXCAVATION PTY LTD JUDGMENT 1 These proceedings 6458/05 were consolidated with and heard together with proceedings 5651/05 in which final orders (except as to costs) have been made consequent upon the delivery of judgments on 1 May 2008 and 1 August 2008 (see [2008] NSWSC 386 and [2008] NSWSC 787). 2 In the present proceedings 6458/05, a subcontractor ("Budget") sues a builder ("D S Flora") and the builder maintains a cross-claim against the persons who were the defendants in proceedings 5651/05. Those persons are North Shore Sikh Association of Sydney Incorporated, an association incorporated under the Associations Incorporation Act 1984 (which I shall call "the Association"), and six natural persons who purported to act so as to bind the Association to a building contract with D S Flora. 3 D S Flora maintains that he entered into a building contract with the Association in April 2005, performed works thereunder and submitted invoices which remain unpaid. S D Flora claims, as against the Association, the amount of those invoices (some $197,000 plus interest). 4 It is also pleaded in D S Flora's cross-claim that D S Flora has been sued by Budget for $50,000, and is unable to pay Budget because payment has not been forthcoming from the Association. 5 D S Flora's claim against the Association is for moneys unpaid under the building contract. There is an alternative claim against the six individual cross-defendants who signed the contract, being a claim for breach of warranty of authority. The alternative claim was advanced against the possibility that it might be found that there was no building contract between the Association and D S Flora. That possibility has been rejected. At paragraphs [188] to [195] of the judgment of 1 May 2008 (under the heading "Was there a contract between the Association and D S Flora?"), I concluded that there subsisted, from 8 August 2005, a written building contract between the Association and D S Flora. 6 It was also determined in the judgment of 1 May 2008 (at paragraphs [200] and [201]) that D S Flora was entitled to cease work under the contract (as he did on 2 July 2005) because he had not been paid. 7 As a result of these earlier findings, it has become common ground between the parties other than Budget that D S Flora's cross-claim should be dismissed as against the cross-defendants other than the Association and that there should be judgment in favour of D S Flora and against the Association on the cross-claim. The matter in contention between the Association and D S Flora is accordingly confined to quantum (also costs which will be dealt with separately and at a later time). 8 One preliminary question concerns the nature of D S Flora's recovery right. D S Flora has seen fit to read expert evidence about the value of the work done. The Association submits that the matter of value is irrelevant. The claim can only be a claim based on the contract. The Association contends that because there is a contract and it makes comprehensive provision for financial matters, there is no room for a quantum meruit approach that pays attention to value. The entitlement is, rather, a contractual entitlement to be quantified and calculated in accordance with the contract. I accept the Association's submissions on that aspect. 9 D S Flora's damages calculation based on the contract is set out as follows in submissions: " Flora's invoices for progress payments, inclusive of GST, under contract were: No. 1091 19 April 2005 $166.573.00 1092-A 24 May 2005 58,998.50 $225,571.50 Invoices for variations (cl. 11 of contract) were: V-001 28 April 2005 3,350.00 V-002 28 April 2005 1,485.00 $ 4,835.00 Total $230,406.50 The Association partly paid first invoice 75,500.00 Balance due $154,906.50 Flora is entitled to this balance plus interest thereon at 10% pa under cl. 6(c). As more than half of the balance has been due since 19 April 2005, interest is calculated on the whole sum since 30 April 2005. $154,906.50 x 3 years to 1 May 2008 x 10% $46,471.95 Continuing at $42.22 per day. Flora incurred additional expenses after 2 July 2005 when work stopped, which are due as damages. Invoice No. Amount (excluding from invoice 'interest' 1093 4 July 2005 10,810.75 1096 31 July 2005 11,933.45 1097 2 September 2005 10,641.95 2003 2 November 2005 7,314.45 $40,700.60 Plus 3 bank fees for dishonoured Association cheques 30.00 Total $40,730.60 Interest at Court rate since the mid-point, say 1 September 2005, is $40,730.60 x 90%to 31 December 2006, 1 year 122 days x $10.04 per day 4,887.93 $40,730.60 x 10% from 1 January 2006 to 1 May 2008, 2 years 122 days at $11.15 per day 9,500.42 $14,388.35 Continuing at $11.15 per day Total judgment for Flora to 1 May 2008 Debt and damages $195,637.10 Interest to judgment $ 60,860.30 " 10 The Association takes issue with some elements of this. It says that the amount due under the contract for work performed is $222,113, compared with $225,571.50 (or $230,406.50 including variations) in D S Flora's calculation. The slightly smaller figure comes from a report by Mr Fransen, an expert witness. The Association says that the amount of progress payments made is $75,000, not $75,500. 11 In final submissions, both the Association and D S Flora accepted a figure of $222,113 less $75,000 already paid (that is, net $147,113) as the appropriate basis on which to calculate the sum unpaid under the contract. 12 As to the remaining element, I accept the submissions made on behalf of D S Flora that his invoiced amounts for expenses after cessation of work should be taken into account in the assessment of damages, those amounts not having been challenged as to their accuracy. The aggregate of those amounts is $40,700.60 to which should be added $30.00 for cheque dishonour fees, making $46,730.60. 13 The damages sum is accordingly $187,843.60, disregarding interest. 14 In relation to interest, allowance should be made for interest on $147,113.00 at the clause 6(c) rate since 30 April 2005; and there should be interest on the $40,700.60 component at court rates from the mid-point mentioned in D S Flora's submissions (1 September 2005). 15 It will be necessary for precise calculations to be made and embodied in short minutes. 16 It remains to deal Budget's claim against D S Flora. There is no dispute in relation to that. D S Flora accepts liability quantified as follows in submissions: " $48,123.00 invoiced to Flora on 2 May 2005 $48,123.00 Plus interest at Court rates (or other agreed rate) to judgment At 9% to 31 December 2006, 1 year 243 days x $11.87 per day 7,215.48 At 10% from 1 January 2007, 1 year 122 days to 1 May x $13.18 per day 6,420.26 $13.635.74 And continuing at $13.18 per day " 17 Again, it will be necessary for precise calculations to be embodied in short minutes. 18 I direct that there be delivered to my Associate immediately after my return from leave on 22 September 2008 short minutes of orders giving effect to these findings on liability and quantum, with the interest calculations having first been agreed by the parties. 19 As I have said, the question of costs will need to be separately addressed. This will be in conjunction with submissions on costs matters relevant to the matters determined by the earlier judgments. ********** 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.