FEDERAL COURT OF AUSTRALIA

Auguste v Nikolyn Pty Ltd [2016] FCA 1579

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the costs of the respondents, to be assessed if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

TABLE OF CONTENTS

MCKERRACHER J:

1    Mr Auguste brought a building dispute (in the form of a misleading and deceptive conduct claim) in the Federal Circuit Court of Australia against a builder, Nikolyn Pty Ltd (ACN 078 833 977), and its director Mr Donato Colasante.

2    The claim was dismissed in the Federal Circuit Court and a significant portion of the counterclaim was allowed. The judgment, Auguste v Nikolyn Pty Ltd & Anor [2016] FCCA 1045, took a long time to deliver (almost 23 months). The claim was intricate. The presentation at trial required navigation through a labyrinth of somewhat disconnected pieces of evidence, all of which undoubtedly contributed to the delay. As it happens, credit findings, which might well be in doubt by reason of the delay, were not the sole basis of determination of the case.

3    While I hasten to add that there is no reason that a building dispute should not technically be brought within federal jurisdiction, in smaller disputes such as this, the practical benefit in doing so is questionable, given there are skilled arbitrators and other experts able to resolve such disputes, usually within state jurisdiction. Be that as it may, the questions raised were ultimately answered, and answered adversely to Mr Auguste. The conclusions reached were open on contemporaneous objective evidence, which evidence is still capable of review. The findings reached, putting aside credit findings on which I express no view, were not only open, but in my view, correct.

BACKGROUND

4    The claim by Mr Auguste was in essence for damages caused by delay in construction of compliant plumbing works by Nikolyn. The claim was advanced in numerous ways.

5    In 2006, Mr Auguste owned a parcel of Land at 20 Hardey East Road, Wattle Grove (Lot 123). The Land was 1.6 hectares in area and described in one Certificate of Title. Mr Auguste sought to develop the Land by subdivision.

6    By application to the Western Australian Planning Commission (WAPC) in March 2006, the Land was approved for subdivision, subject to conditions, into five single dwelling lots and a balance landholding of 1.38 hectares. By another subdivision application, also approved in March 2006, the balance landholding of 1.38 hectares was also approved for subdivision, again subject to conditions, into five single house lots, a grouped housing lot, and public open space.

7    The first and second applications were, however, superseded by subdivision application WAPC 131308, which received conditional approval from the WAPC on 25 August 2006. That subdivision application sought to create four freehold lots, described as the Green Title Lots and a public open space. The approval was valid until August 2009. Relevantly, the conditions included:

(a)    suitable arrangements being made with the Water Corporation for water, sewerage and drainage;

(b)    satisfactory arrangements being made with the Shire of Kalamunda for the making of a contribution towards infrastructure; and

(c)    development, including landscaping and reticulation, of the public open space.

8    When the subdivision was ultimately completed in April 2011 (after the events of significance in this appeal and pursuant to another subdivision application (WAPC 140805)), the four Green Title Lots came to be Lot 1231 (Existing House), Lot 1232 (Northern Lots), Lot 1233 (Existing House), and Lot 1234 (Southern Lots).

9    Mr Auguste intended to further develop the Northern Lots and the Southern Lots by obtaining additional survey strata approvals from the WAPC in respect of each of those lots. He initially obtained the survey strata approvals in 2006. Each of those approvals, however, was subject to the creation of a new lot created pursuant to WAPC 131308, which was to be the subject of each survey strata approval. Each survey strata approval, in turn, depended upon, amongst other things, the issue of a new Certificate of Title creating each respective lot upon which it was based. WAPC 131308 expired in August 2009. The two survey strata approvals lapsed in August and October 2010, respectively.

10    Mr Auguste then made another subdivision application (WAPC 140805), which was approved on 3 February, 2010. By that application, the whole of the Land would be subdivided into four green title lots and public open space. That approval was valid for three years from the date of approval. It was to lapse in February, 2013. The approval WAPC 140805 was conditional upon Mr Auguste complying with a number of terms set out in the approval. Mr Auguste did not achieve compliance with WAPC 140805 until March 2011 and Green Titles were therefore not issued until April 2011.

11    The development required extensive plumbing arrangements. Mr Auguste contacted Mr Colasante, a director and shareholder of Nikolyn, to commence negotiations in relation to plumbing to be carried out at the development. The negotiations started in October 2009.

PRIMARY JUDGMENT

12    The primary judge found (at [22]-[23]) that Mr Auguste provided information about the required work to Mr Colasante by way of emails and attachments to those emails. There were two emails sent on 14 October 2009. There were another two emails sent on 30 October 2009. Attached to the first of the emails of 14 October 2009 was a site plan, clearly marked ‘PRELIMINARY ISSUE – NOT FOR CONSTRUCTION’. On it there was noted a drainage junction where a storm water drain from the proposed subdivision joined into a larger drain or creek noted on the plan as ‘Woodlupine Brook’. Where the smaller drain met the larger, the plan had noted on it, ‘PRECAST RC HEADWALL TO SUIT 450 DIA PIPE’. Then, underneath those words, the following appears, ‘HOLD TYPE PF CONNECTION TO EXISTING DRAIN PENDING CONFIRMATION FROM WATER CORP OF ACCEPTANCE’.

13    His Honour noted (at [24]) that it was clear from a plain reading of the plan that:

(a)    it was not a ‘for construction’ drawing. It was a preliminary drawing only; and

(b)    the connection type at Woodlupine Brook was yet to be determined and approved by the Water Corporation;

14    Attached to the second of the emails of 30 October 2009 were some drawings of the proposed connection at Woodlupine Brook drawn by Baker Drafting Services Pty Ltd. The connection was described a type ‘B’ connection. It was approved by the Water Corporation. In fact, in 2006 the Water Corporation had previously specified and approved a type ‘B’ connection for the Woodlupine Brook connection.

15    His Honour recorded (at [26]) that Mr Colasante’s evidence was that he had not seen the subsequent drawings from Baker Drafting Services. Nonetheless, he did not deny that he had received them. His Honour found that, following the last email from Mr Auguste (with its enclosures), there could be no doubt that the connection that was required at Woodlupine Brook was a connection that had Water Corporation approval. It was also beyond doubt that the relevant connection was that which was drawn by Baker Drafting Services. Mr Colasante had been provided with the emails from the Water Corporation signifying their approval to the connection detail drawn by Baker Drafting Services.

16    The difficulties between the parties emerged from the contested assertion by Mr Auguste that he had provided additional plans and constructions to Mr Colasante in a meeting in October or November of that year at Mr Auguste’s office in South Perth, on which he should quote. The primary judge noted (at [27]) that in cross-examination Mr Auguste agreed that no such meeting had occurred. The primary judge rejected the assertion of any meeting in October 2009 as alleged by Mr Auguste in his evidence in chief. His Honour concluded that Mr Auguste’s evidence on this point was most unsatisfactory. His Honour noted that Mr Colasante accepted that there had been a meeting between him and Mr Auguste in February 2010, but on another project.

17    In any event, the primary judge observed (at [31]) that in November 2009 Mr Colasante told Mr Auguste that he was not interested in quoting on the work. He thought the plans were confused and the scope of works unclear. Contact was not re-established until March 2010. On a number of occasions the primary judge rejected accounts of conversations from both parties.

18    The key area of dispute relates to an alleged a telephone conversation at some date between 5 March and 11 March 2010 when Mr Auguste says that Mr Colasante said that the relevant work at Woodlupine Waters ‘should only take a couple of months to do the work …’ (the representation). Mr Colasante denied that the conversation ever took place and certainly denied that it did so in the terms asserted by Mr Auguste. These terms included an alleged statement by Mr Auguste to Mr Colasante ‘I have a quote from another plumber to do the work for $61,810 plus GST’ and Mr Colasante’s alleged reply ‘I will match it’. The primary judge rejected Mr Auguste’s account on this topic and accepted the statement of Mr Colasante (also as a matter of logic) that he would not match the price of another plumber without first understanding the bases for the quote that he was asked to match. It was common ground that he had not seen the quote at that stage. The primary judge (at [38]) accepted Mr Colasante’s denial that he had ever said that the work would take two months, noting that he was not cross-examined about this matter. The primary judge also concluded (at [39]) that Mr Auguste’s recollection of the conversation was very poor.

19    The primary judge relied not only upon his impression of the witnesses and the fact that Mr Colasante had not been cross-examined, but also on surrounding correspondence. His Honour said (at [41]):

In that respect, I have taken into account, amongst other matters, that not once in the extensive correspondence that passed between the parties and those that represented them after the parties fell into dispute, did Mr Auguste suggest that there had been such a representation. These proceedings are the first time such an allegation was ever raised by Mr Auguste. In fact, the course of correspondence following the development of the dispute demonstrates that Mr Auguste contended that the work was to be carried out in a reasonable time and at one point contended that a reasonable time was three months rather than two. That is entirely inconsistent with such a representation having been made. Mr Auguste’s explanation for not raising the oral representation allegedly made by Mr Colasante earlier than these proceedings was utterly unconvincing.

(emphasis added)

20    Arrangements seem to have been rather loose. The primary judge accepted that Mr Colasante raised with Mr Auguste the state of the plains for the work. They were incomplete and insufficient for construction, and some aspects of the work lacked full design. His Honour also accepted that Mr Auguste said to Mr Colasante in the course of that telephone conversation that he would get completed plans showing full design of the works prior to Nikolyn commencing work.

21    Mr Colasante did not take steps to carry the work out himself. He appointed an employee of Nikolyn, Mr Steve Sialtsis, as supervising tradesman for the project which was due to start on 12 March 2010. Mr Sialtsis gave evidence. He confirmed his appointment as supervisor for Nikolyn at the Lot 123 project, but the primary judge found (at [47]) that Mr Colasante did not give Mr Sialtsis any documents or the plans that he had so as to assist him. Mr Sialtsis was asked to speak with Mr Auguste and other employees of Nikolyn on site to see what was needed. The other employees had some plans in their possession, but they were not called to give evidence and it was impossible for the primary judge to determine what plans they had. Mr Sialtsis’ diary, in which he recorded the work done at the site on a daily basis, was adduced in evidence and was not challenged as a contemporaneous record.

22    The problems continued, however, because, despite daily contact from Mr Sialtsis to Mr Auguste to obtain plans and instructions, there was great difficulty in obtaining reliable plans and instructions. Mr Sialtsis was not cross-examined on much of this material. The primary judge found no reason not to accept it in its entirety.

23    Work commenced on site on time on about 12 March 2010. By that stage, Nikolyn’s price had been fixed, but even the price was not documented until an exchange of emails on 17, 18 and 19 March 2010 between Mr Auguste and Mr Colasante. The price of $61,810 was fixed to cover work (as noted at [51] of the primary judge’s reasons). The work to be performed was set out in an email from Mr Auguste to Mr Colasante on 17 March 2010 (17 March 2010 email), saying (transcribed without amendment):

I confirm that you will be completing work in accordance with the plans and specifications as supplied and noted below:

1.    Contract sum $59,500, terms 90 days. I will advise the entity to Invoice (it maybe that we pay the builder and he pays you)

2.    Storm water property pits and grated lids to 3 existing sumps

3.     Replace GPT lid with correct flush mounted

4.    Install headwall to existing out pipe in Woodlupine Brook, in ‘Soils aint Soils’

5.    Install internal sewer

6.    Install 50mm water service to suit Water Corp Multi metering to individual meters supplied by CPL, (to be read by Water Corp) and gas service by others; in coordination with Triventi Electrical

7.    At additional cost to supply 50mm water run from bore to POS, using existing prelay and to dig a trench for future retic

8.    At additional cost to locate and remove septic tanks from rear 20 A Hardey Rd, the large house next to the 150mm sewer

9.    additional cost to locate, drain and remove septic tanks from rear 121 Sheffield Rd Wattle Grove

Please note that, to assist your subcontractors I have engaged the services of Civil Engineers Shawmac, Tony Shaw, or Ryan 9355 1300. They are providing set out details fo (sic) the property pits and sewer advice. please note that we wish to avoid the building envelopes as set out on the plans; that North Lot 10 is the mirror plan, with the alfresco on the Fennel Crs side

The surveyors are Survey 21, pls deal through me. They have visited site and provided a datum near the West Pwr box in Fennell Crescent.

24    It was common ground that the price did not include the price of the last three items of work on the list, which was additional to the work disclosed in the emails of 14 and 30 October 2009 and their attachments.

25    The work was completed by 23 October 2010. Disputes then arose and carried through to the issues at trial as to whether the work was within the original scope of works. The primary judge made the following findings (at [54(a)-(d)]) in respect of the work described in the 17 March 2010 email:

a)    Item 2 (including storm water pipe mains to interconnect the pits to the storm water outlet):

a.    Pits:

i.    Northern lots: commenced 8 April 2010 and completed 28 April 2010.

ii.    Southern Lots: commenced 8 April 2010 and completed 28 April 2010.

b.    Storm water main:

i.    Northern Lots: commenced 15 April 2010 completed 20 April 2010.

b)    Item 3

The GPT lid was a prefabricated pit and had been installed at the wrong height. The Applicant later attended to this after we [sic] had measured it on numerous occasions.

c)    Item 5

a.    Northern Lots: commenced 12 March 2010 and completed 25 March 2010.

b.    Southern Lots commenced 26 March 2010 and completed 7 April 2010.

d)    Item 6

a.    Northern Lots: commence 24 May 2010 completed 28 May 2010.

b.    Southern Lots: commence 24 May 2010 completed 27 May 2010.

26    Various invoices were rendered, including invoices for work said to be additional to the contract.

Reasoning of the primary judge

27    As indicated, the nature of the claim advanced by Mr Auguste was the representation that the works would be carried out within a period of two months. The primary judge rejected the contention that this representation was ever made (at [60]).

28    Significantly, however, the primary judge went on to say (at [61]) that even if he was wrong about that, he was not satisfied that either:

(a)    Mr Colasante did not have reasonable grounds for making the representation (that is, he did have reasonable grounds); or

(b)    Mr Auguste was induced by those words to make the contract with Nikolyn or in any other way relied upon those words.

29    Broadly speaking, his Honour’s reasoning was that Nikolyn was able to complete items 2-6 of the 17 March 2010 email, save for the Woodlupine Brook connection and headwall, within about 10 weeks of commencement of the work. It followed, therefore, that even if Mr Colasante had made the representation about how long it would take to complete the work the subject of those items in the 17 March 2010 email, the actual course of the work demonstrates that it was a reasonable time estimate. His Honour’s view was that the development of events as he found them to have taken place necessarily proved that, even if the representation had been made, there were reasonable grounds to make it.

30    Additionally, his Honour concluded (at [63]) that there was no reliance (equally causation), even if the representation were made. The process of reasoning by his Honour in this regard was that the context of the conversation set out by Mr Auguste in his affidavit of evidence in chief demonstrates that the statement about ‘a couple of months’ to do the work was not in response to a request for an estimate of the time for the work to be completed. Rather, it was about payment - it was offered by Mr Colasante in the context of a discussion about when Nikolyn might be paid for its work. His Honour’s view was that even if the reference to two months was made, it was neither offered nor received as a genuine and reliable estimate of the time it would take to do the work then under consideration. Moreover, as his Honour observed (at [64]), Mr Auguste gave evidence that he never discussed his own timeframes with Mr Colasante. He never told Mr Colasante that he needed Nikolyn to complete its work within a particular timeframe because any of the relevant approvals were about to lapse.

31    His Honour also reached the following important (objective) finding in relation to causation, on the assumption the representation were made (at [65]):

65.    Finally, any representation that Mr Colasante may have made in the relevant telephone discussion about the time it would take to complete the work was rendered unreliable by the inclusion of additional work in the contract by the 17 March, 2010 email. As to that matter, Mr Auguste said in cross-examination (T41 – 42):

All right. So while we’re looking at that page 48, items 7, 8 and 9, that’s work to be done by the first respondent at additional cost, isn’t it? Yes.

That’s not work that he knew he was doing when he was talking about – when he gave you the quote of 61-odd thousand dollars, is it? Correct.

That’s why it’s summary form, isn’t it, because you didn’t have the details at that point, did you? When you say “summary form”

Well, that’s why it was to be done at additional cost. Once you provided the necessary information, that work could be worked out and the price of it worked out, couldn’t it? It was intended to clarify that it was an additional cost and not included in the agreed sum.

Yes, I understand that. And it wasn’t something – you just said a moment ago, you’ve agreed – it wasn’t something Mr Colasante knew about when he provided you the quote? Correct.

So you could not possibly have thought at that time that any comment as to how long it would take could include work he didn’t even know about, would you? Correct.

So any comment he made about, “It should only take a couple of months,” couldn’t possibly have included the additional work, could it? Correct.

Or the variation work that followed? Correct.

(emphasis added)

32    In short, as his Honour noted (at [66]), even if Mr Colasante had said that it would take a couple of months to do the work, as alleged by Mr Auguste, the requirement to undertake additional work must necessarily have meant that the time estimate claimed to have been given by Mr Colasante was no longer reliable. This was a point which Mr Auguste conceded in cross-examination. I pause to note that, even if he had not, it had to be correct.

33    There was another aspect of the misleading and deceptive claim advanced. Mr Auguste alleged that to complete the works within two months, a reasonably competent and diligent plumbing contractor would require one tradesman and one apprentice on the site for the duration of the works. The contention was that Nikolyn or Mr Colasante failed to inform Mr Auguste that they would not have those resources available on site for the duration of the works or that the workmen on site would be asked to go to other sites whilst the work was being carried out for Mr Auguste. Mr Auguste contends that had he known those things he would not have engaged Nikolyn to carry out the work. His Honour found (at [68]), however, that there was no evidence of weight in support of that contention. The only evidence led about what a reasonably competent and diligent plumbing contractor would require by way of labour resources to complete the work was adduced from one witness alone, Mr Anthony Shaw, who was not available for cross-examination. Mr Shaw was described as a civil engineer, but his Honour gave no weight to Mr Shaw’s evidence in circumstances where he was not produced by Mr Auguste for cross-examination. Further, his Honour noted that there was no pleading about any duty to convey such information to Mr Auguste.

34    All permutations of the statutory cause of action failed, not only because no representation was made, but for other reasons outlined above, including the existence of reasonable grounds for making the representation, and absence of reliance and thus causation.

35    Additionally, the primary judge was not satisfied that Mr Auguste had suffered any loss in consequence of breach of any representation. Mr Auguste’s damages claim had been formulated on the basis that loss had been suffered due to the conditions for the survey strata approvals not being met in a timely way before they lapsed. The consequence of that was said to be additional financing cost, as well as the costs of subsequent planning approvals. It was common ground that two survey strata approvals lapsed in August and October 2010. Mr Auguste contended that if Nikolyn had completed its work in a timely way, those approvals would not have lapsed and the sales of the relevant properties would have settled by 1 July 2010. Mr Auguste also claimed ‘interest charges’ on the settlement funds that Mr Auguste says he would have received by 1 July 2010. Additionally, he claimed the costs of completing a noise assessment, which was required by the subsequent approval.

36    Importantly, his Honour said (at [74]):

There was no attempt to identify any particular work done by the first respondent with any particular approval. For this purpose, the first relevant approval is that which would create the green title lots. The second group of approvals were the survey strata approvals for the northern and southern lots. The headwall works were relevant to the first approval. Until that was done, the green titles could not be issued. There were other conditions that needed to be met, such as the payment of infrastructure costs to the local shire council.

37    His Honour concluded (at [77]) that on the evidence, even if Nikolyn had completed its work before the lapse of the survey strata approvals for the Northern and Southern Lots, the subdivisions could not have been completed before they lapsed. The survey strata approvals for the Northern and Southern Lots were each subject to a condition, amongst others, that the electricity reticulation throughout the subdivision be approved by the electricity authority, Western Power. There was no challenge to the evidence that the electrical work commenced on site on 27 May 2010 and was not completed until February 2011. It was not until 17 March 2011 that Mr Auguste obtained the necessary approvals from Western Power in relation to the electricity reticulation for the subdivision of the Northern and Southern Lots.

38    The primary judge held (at [79]) that even if Nikolyn had completed its works under the contract before the survey strata approvals for the Lots had lapsed, the conditions of those approvals would not have been met before they expired. It followed that any delay on the part of Nikolyn, for which it might be seen as responsible, had no impact upon the ability of Mr Auguste to complete the subdivision according to the original or refreshed approvals. The original approvals were always going to lapse because the electricity reticulation was not approved by Western Power until March 2011. Indeed, his Honour concluded (at [80]) that none of the conditions which needed to be satisfied in order to get the four Green Title Lots the subject of the application approved (and the respective certificate of titles issued), which, in turn, would enable sales, had anything to do with the work being done by Nikolyn. Those conditions were entirely independent.

39    The case was also framed in the alternative on the basis of an implied term in the contract that the work would be carried out by Nikolyn within a reasonable time. The case as put at trial was that a reasonable time to complete the work was two months from commencement. The respondents accepted that the contract was subject to an implied term that the work would be carried out within a reasonable period of time. His Honour concluded (at [84]) that a reasonable time for the completion of the works was about three months excluding any variations.

40    There was an independent basis for that finding which did not depend upon any credit determination because the finding was consistent with Mr Auguste’s case. As at 27 May 2011, when his solicitor wrote to Nikolyn about the dispute that had developed between the parties, he said that ‘[a] reasonable time for the works was no more than 3 months excluding variations’. In relation to the variations, in that correspondence, the solicitor said that ‘[a] reasonable time for the variations was no more than an additional 2 months.’

41    The primary judge accepted the entirety of the evidence of Mr Sialtsis, whose evidence, his Honour said, was not the subject of challenge. His Honour said ‘I accept his evidence unreservedly.’ Apart from the oral evidence of Mr Sialtsis, his Honour relied on documents annexed to his affidavit, being copies of the plans he was given by Mr Auguste from time to time for the work. He noted that many of the plans were different in material respects and Mr Sialtsis explained the difficulty and delays that the inconsistencies caused when programming and carrying out the work, including that incorrect levels were depicted on various plans. His Honour noted (at [89]) that Mr Sialtsis was not effectively challenged on any of this evidence.

42    The primary judge observed (at [90]) that, consistently with the evidence, the work required by items 2-9 in the 17 March 2010 email (aside from item 4 which was also complete but not in accordance with the contract and separately, the GPT lid) was complete by 31 May 2010. The GPT lid was completed on 16 June 2010. Accordingly, his Honour concluded that all that work was completed within the time he found to be a reasonable time for the completion of the contract work and the additional work, being a total of five months.

43    The primary judge found that it was part of the original scope of works that Nikolyn would install a type ‘B’ connection and headwall in accordance with the Baker Drafting Services drawings. For the purpose of the trial, it was the delay in reworking of the headwall that was important. His Honour recorded (at [92]) that the evidence of Mr Sialtsis, as well as the evidence of Mr Wray, an inspector for the Water Corporation, was that the rebuilt type ‘B’ connection was in place and completed by 25 August 2010. (This is not accepted by Mr Auguste and is agitated on appeal). His Honour found that it was Mr Wray’s task, on behalf of the Water Corporation, to inspect and accept drainage infrastructure such as the Woodlupine connection. Without that acceptance, the necessary conditions for the subdivisional approval could not be met.

44    The primary judge concluded (at [93]) that Nikolyn had completed all the matters required of it by the contract reflected in the 17 March 2010 email by ‘a week or so’ outside of the five month period.

45    It was only because Mr Wray would not accept the completed type ‘B’ connection because the banks surrounding the connection had been compromised by construction works and was unsafe, that it was necessary for further works to be carried out to stabilise the bank. The primary judge found (at [94]) that the requisite remedial works were carried out and accepted by Mr Wray by 22 September 2010. None of this had been provided for in earlier plans, including by Baker Drafting Services, as pointed out by Mr Wray. The need to carry out the work was only because of requirements imposed by Mr Wray after the date of completion. On that basis, his Honour concluded (at [95]) that the work was not within the original scope of works.

46    In addition to the work as originally defined in the 17 March 2010 email, four areas of additional work were undertaken after 25 August 2010, according to his Honour:

(a)    the remedial works discussed above concerning the restoration of the creek bank at the headwall at Woodlupine Brook;

(b)    the construction of a revised stormwater layout;

(c)    the repair of some pipework damage by others; and

(d)    the cleaning out of manholes and some footpath work.

47    It was only the first of the matters that was the subject of the dispute. Mr Auguste accepted that the other matters were additional work that went beyond the original agreement.

48    Mr Auguste’s claim was dismissed.

49    In significant measure, the cross-claim was accepted. That is to say, the cross-claim by Nikolyn for payment for additional works. Again, the primary judge drew on the evidence of Mr Sialtsis and his contemporaneous records, on which he was not challenged, in relation to the work which was carried out. At [109] the additional works the subject of the cross-claim were summarised as follows:

In its cross-claim filed on 10 January, 2010, the first respondent alleges that Mr Auguste directed the first respondent to carry out work additional to that provided for in the email of 17 March, 2010 as follows:

a)    on or about 30 March 2010: provide pipe manufacture information and dates, pressure test, pressure gauge calibration, disinfection plan and headwall;

b)    on or about 6 April 2010: rectify the broken Stormwater main;

c)    on or about 29 April 2010: locate and test previously installed water mains;

d)    on or about 30 May 2010: to hand-dig a section of storm water line;

e)    on or about 13 May 2010: to lower the GPT and to disinfect the water main installed by a previous contractor;

f)    on or about 31 May 2010: to dig test holes on the adjoining property;

g)    on or about 31 May 2010: to make changes to the gas supply, fire hydrant and sluice valves;

h)    on or about 16 June 2010: to carry out additional works due to changed levels on site;

i)    on or about 17 June 2010: to apply protective coating to fittings installed by previous contractor;

j)    on or about 24 June 2010: to change flush points;

k)    on or about 28 June 2010: to carry out works to Stormwater tanks and bollards;

l)    on or about 9 July 2010: to carry out rectification of the sluice valve box installed by previous contractor;

m)    on or about 14 July 2010: to carry out paint markings for water main fittings;

n)    on or about 15 July 2010: to carry out further testing of previously installed water main;

o)    on or about 27 July 2010: to carry out modifications to the entry to access ways;

p)    on or about 18 August 2010: to carry out works for the revised stormwater layout;

q)    on or about 1 September 2010: to carry out the repair of pipework damaged by road works contractor;

r)    on or about 2 September 2010: to carry out additional works to meet Water Corporation requirements;

s)    on or about 12 October 2010: to carry out the removal of base and bitumen from manholes; and

t)    on or about 5 February 2011: to carry out the patching of manholes.

The primary judge noted that these claims were varied in some respects by the evidence given by Mr Sialtsis, but was satisfied that the work alleged by Nikolyn to have been requested by Mr Auguste (as varied by Mr Sialtsis) was requested. His Honour concluded (at [111]) that Nikolyn was therefore entitled to a reasonable sum for the work it has performed.

50    His Honour rejected the assertion by Mr Auguste that the work had not been independently itemised in accordance with the Construction Contracts Act 2004 (WA). He noted that while this was initially so, the subsequently requested further itemisation was more than sufficient to satisfy the legislative requirements. The primary judge rejected a contention that the claim by Nikolyn was a total costs claim as described in various cases such as D & Z Constructions Pty Ltd v IHI Corporation [2013] WASC 265 and DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170. His Honour described the claim (at [112]) as being a claim for the cost of work and labour done, the price of which was not agreed between the parties. It was not a claim for loss suffered by a contractor by reason of multiple interacting events for which the principal was responsible and which could not be separately identified.

51    The court was satisfied that there was evidence as to a reasonable basis for the work undertaken and the price claimed, relying on the evidence given by Mr Barry Tonkin, a civil engineer who was called to give evidence for Nikolyn. There were some minor exceptions.

52    A subsequent judgment was given in relation to interest and costs: Auguste v Nikolyn Pty Ltd & Anor [2016] FCCA 1558. An interest claim was allowed, as were costs on an indemnity basis.

53    The interest claimed and awarded amounted to approximately $30,000.

54    Indemnity costs were awarded on the basis of Mr Auguste’s persistent pursuit of an effectively hopeless claim in circumstances where it could only be concluded that the purpose of pursuing it was to discourage Nikolyn pressing its cross-claim or otherwise to delay payment of Nikolyn’s variation claims.

55    Indemnity costs were also allowed in relation to the cross-claim (from a particular date) pursuant to provisions of the Federal Circuit Court Rules 2001 (Cth) under which an offer was made to settle the matter at a figure which when costs were taken into account (at a solicitor/client, rather than indemnity level), was an offer that was more favourable than the terms of the judgment in favour of the respondents.

GROUNDS OF APPEAL AND NOTICE OF CONTENTION

56    The amended grounds of appeal can be reduced to the following:

(1)    Was the delay in judgment delivery of nearly 23 months from June 2014 to May 2016 without any indication in the judgment that the consideration and conclusion was made at a time reasonably proximate to the hearing, such that the conclusion of the trial judge should be seen as flawed? (ground 1)

(2)    Was the conduct of the respondents misleading or deceptive where, viewed as a whole, it would have a tendency to lead a person into error determined objectively in light of all of the surrounding facts and circumstances? (grounds 2, 3 and 4)

(3)    Was the work completed within a reasonable time? (ground 5)

(4)    Did failing to complete the work to Water Corporation satisfaction until 22 September 2010 cause Mr Auguste to suffer any loss or damage? (ground 6)

(5)    Was the evidence of Mr Tonkin (which was accepted by the primary judge) expert evidence within a field of expertise held by Mr Tonkin? (ground 7)

(6)    Was Nikolyn’s claim for payment for additional works the subject of the cross-claim sufficient to comply with the requirements of the Construction Contracts Act? (ground 8)

(7)    Did the trial judge fail to properly exercise his discretion in ordering Mr Auguste to pay the costs of the proceedings, including the costs of the cross-claim from a particular point in time, on an indemnity basis? (ground 9 and ground 10)

(8)    Did the trial judge fail to exercise his discretion properly in fixing the amount of interest payable? (ground 11)

57    There is also a notice of contention to the effect that there was no evidence or no sufficient evidence on which the applicant could prove any loss or damage. In light of my conclusion on the appeal, it is unnecessary to consider that contention.

APPEAL ARGUMENTS

Ground 1 – delay

58    The trial of the action took place over about two and a half days from Monday, 9 June 2014 to almost midday on Wednesday, 11 June 2014. The respondents’ solicitors wrote to the Associate to the primary judge after the decision had been reserved for eight months and again after it had been reserved for 13 months. The President of the Western Australian Bar Association wrote to the Federal Circuit Court after the decision had been reserved for 17 months and 22 months.

59    As a result, the Federal Circuit Court initially advised the decision would be delivered on 18 December 2015, and subsequently advised that the decision would be delivered on 11 March 2016. It was in fact delivered on 3 May 2016, almost 23 months after the trial and five months after the first date on which judgment was ‘anticipated to be delivered’.

60    Mr Auguste submits that numerous matters were not addressed in the reasons of the primary judge, such that the decision is unsafe and should be set aside on the principles discussed in various cases, including Tattsbet Ltd v Morrow (2015) 233 FCR 46 per Allsop CJ, Jessup and White JJ; Mount Lawley Pty Ltd v Planning Commission (WA) (2004) 29 WAR 273 per Steytler, Templeman and Simmonds JJ; Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17 per Carr, Emmett and Gyles JJ (at [66]-[83]); Monie v Commonwealth (2005) 63 NSWLR 729; and Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462. The topics to which Mr Auguste points and which he complains were inadequately dealt with by the primary judge are these:

(1)    The primary judge accepted the evidence of Mr Tonkin about the nature and extent of the work, the reasonableness of the work undertaken, and the price claimed, without referring to Mr Tonkin’s evidence that:

(a)    his engineering expertise was in railways, rather than plumbing;

(b)    he did not attend the site to look at the works;

(c)    the original scope of works could have been done in 30 working days or six weeks, including the unpriced work in the scope;

(d)    he did not work out what reasonable hours would be for the work to be done, rather he accepted what had been given to him;

(e)    he did not do an independent assessment;

(f)    he accepted the rate the respondents provided;

(g)    the rates he was given by the respondents were inconsistent;

(h)    he did not identify the actual cost of labour, machinery or materials; and

(i)    he did not look at delay, extension of time, productivity or the program of works.

(2)    The primary judge found (at [95]) that:

… none of the plans of the Woodlupine drainage connection (including the drawings by Baker Drafting Services) provided for any stabilisation works for the bank surrounding the drainage connection. That work only became necessary after the Water Corporation required it to be carried out following the inspection on 25 August, 2010. In my view, it was not work that was within the original scope of works. …

But the primary judge’s reasons did not refer to:

(a)    the evidence of the Water Corporation inspector, Mr Wray, that:

(i)    when he attended the site on 16 July 2010, the work was not complete;

(ii)    when he attend the site on 25 August 2010, the work was not satisfactory and the bank abutting the connection had been compromised; and

(iii)    because of the unsafe environment and the amount of the bank that had been cut away, the potential for erosion of that bridge was unsatisfactory, putting others at risk.

(b)    the evidence of Mr Tonkin that:

(i)    the contract required a headwall compliant with Water Corporation requirements;

(ii)    he did not read the report of Mr Wray of the Water Corporation; and

(iii)    in the original scope of work, the Water Corporation were required to approve the headwall.

(3)    In finding (at [35]) that Mr Colasante ‘gave evidence, again which I accept, that he would not match the price of another plumber without first understanding the basis for the quote that he was asked to match’, Mr Auguste complains that the primary judge rejected the evidence of Mr Auguste that Mr Colasante had agreed to match a quote from another plumber for $61,810 plus goods and services tax (GST). Mr Auguste refers to [34] of the primary reasons and says that his Honour’s approach to reconciling this contest on the evidence was not ‘to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events’: Fox v Percy (2003) 214 CLR 118 (at [31]). Mr Auguste argues that the contemporary materials only supported his account.

(4)    The fact that, although the majority of the work to be done by the respondents was at an agreed price of $61,810 plus GST, the charges for the small amount of unpriced work was at an additional amount of $155,788 plus GST. The amount, he says, was constituted by invoices which did not comply with the requirements of the Construction Contracts Act. Mr Auguste also points to the fact that an invoice was after the work was completed in November 2010 for $68,410 plus GST for ‘work done til the month of November 2010’. Mr Auguste says the work done after November 2010 was to patch manholes, yet the respondents issued invoices on 4 March 2011 for $66,840 plus GST for ‘labour and materials’ and on 30 May 2011 for $20,538 plus GST for ‘an extra over amount.’ I pause to note that the 4 March 2011 invoice also expressly included sums payable for plumbing work done where not all invoices had come through in time for the initial invoice. The 30 May 2011 invoice was also expressly ‘as per reconciliation invoice sent’.

61    The purpose of Mr Auguste identifying these matters is to show that the primary judge did not deal with material evidence that is directly inconsistent with his findings and relates to issues which go to the very heart of the claim.

Ground 1 – delay – consideration

62    In Tattsbet, the Full Court dealt with a similar complaint about delay in delivery of reasons for judgment. Jessup J, in considering the submission, said the following (Allsop CJ and White J agreeing) (at [131]-[134]):

131.    The principles which inform the decision of an appellate court to hold that excessive delay in the delivery of judgment at first instance in the case concerned has rendered that judgment unsafe were discussed at length by the Full Court in Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189; (2004) 140 FCR 17, 32-35 [66]-[83]. I would accept that, particularly where a transcript of the evidence at trial exists, mere delay need not justify a conclusion that the fact-finding process has miscarried. There are, however, additional circumstances which give rise to concern in the present case.

132.    In Expectation, the Full Court said (at [74]):

The problem is not restricted to fading memory. A judge who comes to make an inordinately delayed decision will inevitably be subjected to great pressure to complete and publish the judgment. A conscientious judge could not but feel that pressure. It is almost inevitable that there will also be some form of external pressure - whether from the parties, the management of the Court, the press or parliamentarians. That pressure could well unconsciously affect the process of decision-making and the process of giving reasons for decision. The decision that is easiest to make and express will have great psychological attraction.

In the present case, I can see no sign that the primary Judge sought to take the easiest path to the resolution of the disputes that were before him. To the contrary: his Honour gave careful attention to the appellant’s reasons for having taken adverse action against the respondent, notwithstanding that, on his findings, her case failed at an anterior stage. Nonetheless, the pressures to which the Full Court referred in Expectation appear to have been present here. The circumstances which surrounded the delivery of judgment bespeak an environment in which his Honour felt under considerable pressure to complete his reasons at the last minute.

133.    Additionally, the omissions to which I have referred above, taken cumulatively, suggest that his Honour may not have given some issues in the case the attention which they deserved, notwithstanding the very long period during which he was reserved. Those arising under s 357 of the FW Act are an instance. His Honour’s failure to make the findings of fact that would be necessary for a proper determination of so much of the respondent’s case as relied on s 340(1)(a)(iii) and (b) of the FW Act are another. On the cross-appeal, our attention was also drawn to a number of minor errors – typographical and proofing errors, for example – in his Honour’s reasons. While nothing would normally turn on such matters, in the circumstances of the present case it must be accepted that they provide some support for the respondent’s second ground.

134.    The critical finding with respect to the appellant’s reason or reasons for taking adverse action turned substantially upon the credit which the primary Judge assigned to the evidence of Mr Fletton. Notwithstanding the existence of transcript, that finding was inevitably based upon his Honour’s observation of Mr Fletton as a witness, and upon the advantage which a trial Judge conventionally has in such a setting. In my view, there is a real risk that his Honour compromised his ability to use that advantage in the determination of Mr Fletton’s reasons for acting when he allowed such an inordinate period to elapse between the giving of the evidence and the making of the determination. When considered together with the matters referred to in paras 106-109 above, the result is that his Honour’s disposition of the respondent’s case under s 340(1)(a)(iii) and (b), linked to s 341(1)(b) and (c)(i), of the FW Act cannot stand.

(emphasis added)

63    Allsop CJ agreed with Jessup J, also observing (at [2]):

2.    I wish only to add the following additional comments. First, the delay in the production of the decision was, with respect to the judge, unfortunate: over 20 months from final submissions. The practical realities of life as a judge may mean, sometimes, a degree of delay in decision-making. Pressure and volume of other judicial work, complexity and size of the particular decision-making task at hand, a lack, sometimes, of useful assistance from litigants or the profession, and illness or incapacity are but examples of reasons for delay. Some of the reasons may rest in point of fault; some in point of technique. The burdens on judges in a busy trial court can be enormous. Some reasons may be the responsibility of the Court itself, if too much work is given to a judicial officer without any, or adequate, time or facility to undertake reserved judgments. But systems must be made to cope. Whatever the cause of any particular delay (and there was no explanation available here), its consequences must be examined with an eye to the fair administration of justice. I agree with Jessup J that it has been demonstrated here that the delay affected, or can be seen as apparently affecting, the decision-making in question. Generally, some apparent operative effect of the delay is required for appellable error to be shown: Monie v Commonwealth (2005) 63 NSWLR 729 as discussed in MM Constructions (Aust) Pty Ltd v Port Stephens Council (2012) 191 LGERA 292 at [11]. The conclusion as to the true reason for Ms Morrow’s termination was sparsely put. After such a long period, without any evidence in the judgment that the consideration and conclusion were made at a time reasonably proximate to the hearing, and without expressed careful consideration of all the evidence, the conclusion should be seen as flawed. It also had the effect of being, on its face in terms of expression, a contingent finding with the problems involved with such: Wade v Burns (1966) 115 CLR 537 at 555; and see Tarabay v Leite [2008] NSWCA 259 at [34]-[35].

(emphasis added)

White J agreed.

64    It is true to say, as the respondents do, that in this case the trial was not overly long, nor was the oral evidence particularly extensive or the issues particularly complex. Although, the transcript reveals there was a degree of disorder and confusion in the presentation of some of the evidence and factual submissions. The transcript was available to his Honour, as were the exhibits, including affidavits of each of the witnesses’ evidence in chief and the expert report of Mr Tonkin, on which the primary judge relied.

65    But, a delay of over 22 months is extensive. Nonetheless, my assessment of the reasons is that they are carefully, systematically and logically recorded, notwithstanding that Mr Auguste points to some of his contentions that he says the primary judge did not specifically address. It is true, as the authorities point out, that the problem with the delay does not rest merely with memories fading, that is to say, in particular, the judicial memory. It is also the case, as the authorities emphasise, that delay in production of a judgment produces pressure to complete the judgment, especially in circumstances where there are inquiries made and estimates given as to likely dates of publication. But in the end, the critical question in taking into account all those factors, as discussed amply in the authorities referred to above, is whether there is operative delay. That is, whether the delay can be seen as being problematic in the sense of confidence being placed in the judgment. Examples of operative delay include dealing with issues on only a cursory basis or overlooking clearly critical evidence.

66    Mr Auguste says that there are clear indicators of these factors in the reasoning of the primary judge in the specific areas to which he points. In my view, one aspect must be recognised at the outset: unless there is some clear evidence that (as is very often the case) that a record was taken at the time of the trial or hearing as to the impression formed of a witness, having regard to the very busy schedule of most judges, bare credit findings based upon the impression formed of a witness would be the findings most vulnerable to attack on the basis of excessive delay. In Tattsbet, for example, the credit finding was critical to the result.

67    On proper analysis, in my view, none of the findings in this case fall into that category. But, if there is a finding that is close to a bare credit conclusion, it is the finding that the representation was not made. The primary judge gives a sound explanation as to why that conclusion was reached, not least of which was that the improbable account by Mr Auguste was not put to Mr Colasante in cross-examination. However, I would think that this particular finding, which goes close to a finding simply as to who was to be believed on that point, would be sufficiently vulnerable for the judgment to be unreliable when given almost 23 months later. Unlike Tattsbet, the judgment does not turn only on that finding. But that is not an end to the enquiry. The credit finding can be discarded in the analysis. If the reasoning does in truth reveal other difficulties of the nature discussed above, the judgment may also be vulnerable.

68    It is for that reason that the argument for Mr Auguste focusses on other suggested omissions. These must be examined.

69    While Mr Auguste has been critical of the acceptance of Mr Tonkin’s evidence and the failure of the primary judge to advert to the points made in his cross-examination and listed above, it must also be noted that the acceptance of Mr Tonkin as a suitable expert occurred in circumstances where Mr Tonkin was the only available independent expert before the court. He had produced a written report with annexures, which was supplemented by oral evidence. He was, of course, produced for cross-examination and cross-examined. None of that cross-examination went to his credit, but did go to his expertise and his qualification to express the views he expressed. The suggestion that the evidence of Mr Anthony Shaw, who was not available for cross-examination other than by telephone (for which leave was not granted), should somehow be preferred to Mr Tonkin’s independent expert evidence is entirely unsustainable.

70    Additionally, while Mr Auguste did not admit to having directed further works, he simply put Nikolyn to proof on that point. In respect of the latter point, his Honour wholly accepted the relevantly unchallenged evidence given by Mr Sialtsis. No submission was made on the appeal that Mr Sialtsis was relevantly challenged. That acceptance extended to the hours claimed for the work carried out. This was also unchallenged in cross-examination, notwithstanding that the respondents were put to proof. Further, as I have observed above, it is not necessarily the case that the primary judge took an uncritical view to the evidence of Mr Tonkin. In certain respects, in his Honour’s analysis, he disagreed with some aspects of the evidence given by Mr Tonkin (see the primary reasons at [114]-[117]).

71    In relation to the stabilising work, Mr Auguste’s argument was that the respondents were responsible for that work as it formed part of the installation of the type ‘B’ connection. There was no documentary support for that assertion and no independent expert evidence called to support the assertion by Mr Auguste. The only evidence was to the contrary. In particular, the evidence from Mr Wray confirmed that there was no detail on the Water Corporation drawing (DG16-3-11) or on the sketch by Baker Drafting Services that showed any work required to retain or stabilise the bank. In any event, as at 25 August 2010, without variations, a concrete headwall had been installed that conformed to the sketch by Baker Drafting Services. But as a result of erosion or damage, Mr Wray, without attributing blame to anyone, formed the view that ‘retention works were required to stabilise the bank.’ On the basis of this primarily documentary evidence, it was certainly open on objective analysis to conclude that the work then required was outside the scope of the contract.

72    As to the acceptance of Mr Colasante’s evidence in relation to the matching quotes, the alleged statement was contained within the conversation (found not to have taken place) in which the representation (found not to have been made) was supposedly made. While Mr Auguste’s evidence on this point was rejected and Mr Colasante’s accepted, there was solid logical foundation for this conclusion. Specifically, the quote that Mr Colasante supposedly agreed to match was Mr Ballantynes’ quote, which Mr Colasante had never seen or discussed. Moreover, as far as the evidence indicated, the quotes appeared to be for materially different works. In particular, the quote was for the installation of a ‘precast headwall’, not a type ‘B’ connection. Mr Colasante was aware that a modified type ‘B’ connection was required. Mr Ballantynes’ quote excluded the digging of hard rock, whereas the Nikolyn contract did not exclude the digging of hard rock. The quote included works not included in the 17 March 2010 email and omitted other works set out in the 17 March 2010 email.

73    Mr Auguste has not asserted, nor in those circumstances could he assert, that the scope of work carried out by Nikolyn under the contract was that defined in Mr Ballantynes’ quote. All of these matters make it implausible and totally illogical that Mr Colasante would have blindly agreed to match some other different quote which he had not seen or discussed.

74    In relation to the contended deficiency as to the timing of the invoices and quantum of the variations, such a complaint, like a number of others advanced by Mr Auguste, can only be advanced if other aspects of Mr Auguste’s case, which failed, are now to be accepted. Mr Auguste had asserted that the claims made were for a total claim, whereas his Honour expressly found this not to be so (at [112]). Rather, his Honour accepted the evidence of Mr Sialtsis, which was ‘largely unchallenged’ as to the work done and the hours claimed, specifically because there were detailed records supporting those items (on which Mr Sialtsis was not challenged in cross-examination). The finding made by his Honour, which was entirely open, was that, although the initial description on the invoices had not been fulsome, on request of further information, detailed and sufficient particulars were supplied to Mr Auguste.

75    Turning, importantly, to the alleged representation, which was the primary basis of the claim. The process of his Honour’s reasoning has been described above. Transparently, it is not reasoning based solely on the impression of the witnesses. It is to be noted:

(a)    not once in extensive correspondence passing between the parties after they fell into dispute did Mr Auguste ever refer to or rely upon such a representation (see the primary reasons (at [41]); and

(b)    Mr Auguste, himself, contended prior to proceedings that the reasonable time for the contract work to be completed was three months, with two further months for the variations. This is clearly inconsistent, not only with the implied term argument advanced for Mr Auguste, but also any assertion as to a representation in the conversation that was expressly denied and on which Mr Colasante was not cross-examined.

76    In any event, assuming the finding as to the representation is unsafe, the primary judge’s reasoning I have discussed above concerning causation and reliance is entirely plausible. It will remain even if the representation finding is vulnerable. Moreover, manifestly unchallengeable is the primary judge’s conclusion that there must have been a reasonable basis for making the representation because the work was actually carried out within a reasonable time (the reasonable time being the subject of a separate finding by his Honour).

77    All of this (incidentally), reveals the complexity of arguing a relatively modest building case in this manner. An arbitrator or adjudicator of building and construction disputes could have decided fairly quickly whether the additional work was within or without the scope and should have been charged. Nonetheless, his Honour did assess every aspect of the elaborate claims advanced, and, unsurprisingly, it took a long time to do so.

78    There can be no denying that there was delay in delivery of the judgment. But I am inclined to agree with the respondents’ submission that there is no basis on which Mr Auguste can contend from the reasons that his Honour’s conclusions were not based upon ‘contemporary materials, objectively established facts and the apparent logic of events.’ Indeed, that is exactly the approach his Honour took. Notwithstanding the delay, the reasons demonstrate that his Honour considered all of the evidence, such that it is clear that no delay had an operative effect on the conclusion reached to dismiss Mr Auguste’s claim and allow the cross-claim.

Grounds 2, 3 and 4 – misleading and deceptive conduct

79    Ground 2 of the amended grounds of appeal is that his Honour erred in finding that Mr Colasante did not make the representation relied upon by Mr Auguste. Ground 3 complains about an error of law in finding that Mr Colasante’s intention was relevant to determining whether the conduct was misleading or deceptive or likely to mislead or deceive. Ground 4 complains of an error of law or fact in finding that Nikolyn completed the work in a reasonable time.

80    The authorities dealing with the law in this area are too numerous to cite, but Mr Auguste relies in particular on the decision Caffey v Leatt-Hayter (No 3) [2013] WASC 348 per Beech J (at [228]-[240]) where his Honour said (endnotes omitted):

228    A claim of contravention of s 52 of the Trade Practices Act 1974 (Cth) need not be pleaded or argued by reference to the making of a representation. In this case, however, the plaintiffs pleaded their case based on representations.

229    Conduct is misleading or deceptive if, viewed as a whole, it has a tendency to lead a person into error.

230    Whether conduct is misleading or deceptive is a question of fact, to be determined objectively in light of all the surrounding facts and circumstances.

231    Often, as here, that will involve two steps: first, making findings of fact about what was said and whether any pleaded representation is established; secondly, determining whether the proven representations (or other conduct) are misleading or deceptive.

232    As French CJ has explained, the question whether conduct is misleading or deceptive is logically separate from, and anterior to, the question of whether a person has suffered loss or damage as a result. The conceptual distinction between characterisation of the conduct, and determination of the issue of causation, must be maintained. Nevertheless, in practical terms, there may be an overlap between the resolution of these logically distinct questions. The characterisation of conduct may involve assessment of its notional effects, judged by reference to its context. The same contextual factors may play a role in determining causation.

233    Where the relevant conduct is directed to an individual, in determining the character of conduct, in particular whether it is misleading or deceptive, account should be taken of the matters of fact each party knew about the other as a result of their dealings and the conversations between them.

234    Whether conduct is misleading or deceptive is determined objectively. A corporation may contravene s 52 even though it acts honestly and reasonably.

235    Conduct is likely to mislead or deceive if there is a real and not remote possibility that it will do so. It is not necessary that the degree of likelihood exceeds 50%.

236    A statement that is literally true may nevertheless be misleading and deceptive.

237    In the context of statements made to members of the public, it has been held that statements that are capable of more than one meaning may be misleading or deceptive if the meaning for which the applicant contends is one that would be reasonably open, and might be drawn by a significant number of those to whom the representation is made. Similarly, in my view, a statement made to a particular individual that is capable of more than one meaning will be likely to mislead or deceive if a meaning that is reasonably open is misleading or deceptive. If that is so, there will be a real and not remote possibility that the representation is misleading or deceptive. The meaning actually attributed to the statement by the recipient is relevant to reliance, but not to the objective characterisation task.

238    An expression of opinion that is identifiable as such conveys no more than that the opinion expressed is held and, perhaps, that there is a basis for the opinion. At least so long as those conditions are met, an expression of opinion is not misleading merely because it turns out to be incorrect.

239    Whether a particular formulation of words is taken to express merely an opinion or a statement of fact depends upon all the facts and circumstances of the case. That is to be assessed objectively, not by reference to the subjective purpose or motivation of the maker of the statement. The relative knowledge of the speaker and the audience may also be relevant to the question of characterisation of a statement as one of fact or opinion.

240    It may not be necessary or useful to attempt to classify a statement within a dichotomy of opinion and fact. Rather, the focus is on what the statement objectively conveyed to its intended audience.

81    On these grounds of appeal Mr Auguste says that the relevant surrounding facts and circumstances are that Mr Auguste had approval to subdivide the Land. It expired on 25 August 2010. As noted above, that approval was conditional upon suitable arrangements being made with the Water Corporation for water, sewerage and drainage. Without that acceptance, the necessary conditions for the subdivisional approval could not be met, as the primary judge noted in his reasons (at [92]). Mr Auguste complains that the respondents agreed to do the water, sewerage and drainage work, but did not inspect the site where the drainage headwall was to be constructed, despite the fact that it was adjacent to a roadway. He says that the respondents believed that working on this project work might help secure work at another of Mr Auguste’s developments and therefore agreed to do the work at $61,810 plus GST, being the same price Mr Auguste was quoted by Mr Ballantyne, although they had not seen the quote. Mr Auguste contends that a reasonable time to complete all the work listed in the 17 March 2010 email was six weeks. The works commenced on 12 March 2010, but did not finish until 22 September 2010, six and a half months (or 28 weeks) later. Therefore, Mr Auguste contends on appeal, the representation was false. This, like many of the submissions for Mr Auguste, relies upon other areas in his case being accepted for the proposition to be tenable, such as his asserted scope of the works.

82    Mr Auguste once again submits that his case was consistent with the ‘contemporary materials, objectively established facts and the apparent logic of events.’ In addition, the respondents’ case that the exact price was reached without mention of the time it would take to complete the works is an incredulous proposition, Mr Auguste says. Mr Auguste also contends that it is significant that the primary judge found that the evidence of Mr Colasante disingenuous on a critical part of the claim, the headwall.

83    Mr Auguste says that the respondents did not adduce evidence sufficient to avoid the deeming effect of s 51A(2) of the Trade Practices Act 1974 (Cth) by reference to the following:

(1)    the respondents never inspected the site where the drainage headwall was to be constructed;

(2)    the respondents installed the ‘wrong’ headwall, which had to be removed;

(3)    Mr Colasante gave evidence that the headwall drawings were ‘too confusing’ or ‘confused’; and

(4)    Mr Sialtsis gave evidence that he had not worked from the drawings, which were provided to the respondents on 30 October 2009

Accordingly, Mr Auguste says that the respondents engaged in conduct which was in contravention of s 52 of that Act. Mr Auguste also refers to authority that the references in the Trade Practices Act to “loss or damage” should be given no narrow meaning (see for example Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388) and also authority as to the breadth of the remedial provisions under the Act (see for example Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 (at [137])).

Grounds 2, 3 and 4 – misleading and deceptive conduct – consideration

84    There are real difficulties with these arguments when attentive consideration is given to the facts and evidence. The broad brush depiction by the appellant does not withstand scrutiny.

85    Insofar as the alleged representation was concerned, accepting the difficulty that the delay in the judgment presents and putting that to one side, there were very strong grounds for concluding that the representation was not made. These include the fact that it was not put to Mr Colasante in cross-examination in the face of his firm denial of the representation. While the matching figures in the quotes support Mr Auguste’s argument, there are numerous other aspects about Mr Ballantynes’ quote referred to above (at [72]-[73]) that make it entirely implausible. The representation feature of the case was in some ways a fairly small consideration given that there was no documentation supporting its existence. The real forensic enquiry was to examine the work the subject of the contract, the time in which the work was to be completed pursuant to the contract, and whether the work that was contracted was completed within time. The conclusion that the work that was actually contracted was finished by the August date was based on the content of the 17 March 2010 email and the contemporaneous site records. The case for the respondents was not only that there was no representation, but that the works could not have been completed any sooner for reasons outside of their control. His Honour accepted that the requisite work was completed within a reasonable time on the basis of evidence including contemporaneous materials still available for scrutiny, such as Mr Sialtsis’ work diaries and plans and drawings, as well as the evidence of an independent witness, Mr Wray.

86    It is incorrect for Mr Auguste to suggest that the primary judge found that the whole of Mr Colasante’s evidence about the headwall was ‘disingenuous’. That remark was limited to his evidence that the detail about the headwall and the connection was confusing: see his Honour’s reasons (at [30]).

87    As noted above (see for example [40]), Mr Auguste has expressed substantially different estimates of a reasonable time for the contracted works over the course of the dispute. Not only were there no written materials upon which the pleaded representation could be supported, but the material as they were, were to the contrary.

88    Ground 2 cannot succeed.

89    Ground 3 complains that the primary judge erred in relying upon Mr Colasante’s intention in order to determine whether the conduct was misleading or deceptive or likely to mislead or deceive. It is certainly true, as Mr Auguste submits, that intention will not be determinative in relation to an assertion of misleading and deceptive conduct, and that the appropriate test requires the conduct to be viewed objectively.

90    I do not consider that the primary judge erred in this regard. In my view, Mr Auguste’s broad contention under this ground is not a fair characterisation of the primary judge’s approach. The substance of his Honour’s finding was that it would not be possible, objectively viewed, for a statement that ‘it should only take a couple of months’ in the express context in which it was made, that is, at a preliminary stage when relevant information and materials were not known to be misleading and deceptive or, indeed, to cause loss or damage. His Honour’s conclusion was that if such a statement was made (contrary to his finding), it was not in the context of specifically providing a timeframe for completion of the works in the 17 March 2010 email.

91    Moreover, given that the pleaded representation relied on s 51A of the Trade Practices Act (Sch 2, s 4 of the Competition and Consumer Act 2010 (Cth) and s 9 of the Fair Trading Act 1997 (WA)), there is the unchallenged finding by his Honour that the works about which Mr Colasante could have known in October 2009 were actually completed within two months, demonstrating that there were reasonable grounds for making the representation, if, contrary to the finding, it was made.

92    There are further complications, in any event, on the reasonable grounds point because, when looking at s 51A of the Trade Practices Act, as distinct from s 52, the subjective knowledge is not as readily excluded. Section 51A, in dealing with reasonable grounds, is directed to reasonable grounds relevant to the circumstances at hand when the representation as to a future matter is made. Of course the representations of Nikolyn are made by Mr Colasante. The representation is to be viewed objectively. State of mind is largely irrelevant (although in certain cases, intent to deceive has been considered relevant to reaching a conclusion as to the existence of misleading and deceptive conduct).

93    But in considering whether there were reasonable grounds for making the statement as to future conduct, Mr Colasante (and Nikolyn) are entitled to point to the objective information they had to hand. In Australian Competition and Consumer Commission v Dateline Imports Pty Ltd [2015] FCAFC 114 per Gilmour, McKerracher and Gleeson JJ (at [98]-[102]) said:

98    Dateline submits that its success on the truth of the underlying representation is enough to defeat these grounds. In other words, so long as the represented fact is right, Dateline submits that the ACCC has not shown that it was misleading or deceptive for Dateline to have made the representation on incomplete or wrong reasons that it believed were correct and complete, and did not include the reasons showing it to be correct.

99    We do not accept this submission. It is not a question as to Dateline’s subjective belief. Rather, the representation that Dateline had reasonable grounds for making the several representations of fact is to be considered in light of the grounds which Dateline actually then knew and whether those grounds, objectively, were reasonable.

100    There will not be reasonable grounds for making a representation if, at the time of making, it, the representor did not have facts sufficient to induce, in the mind of a reasonable person, a basis for making the representation: Australian Competition and Consumer Commission v Jones (No 5) [2011] FCA 49 at [32]-[33]; George v Rockett (1990) 170 CLR 104 at 112.

101    It matters not that it transpires, in due course, that the fact represented is true. That may simply be serendipitous. The representation, “I have reasonable grounds” for making the representation of fact is a discrete representation, indeed one which is likely to reinforce in the representee the reliability of the representation of fact.”

102    Moreover the reasonable grounds representation is also one of fact. It is not directed to grounds which may become known but are not then known. Consumers should be protected against such conduct where, in fact, objectively assessed, there were no reasonable grounds known to the representor.

(emphasis added)

94    In any event, I am not satisfied that his Honour erred by concluding that if the representation were made (contrary to his finding), in the context, it could not be misleading or deceptive. That finding was not made on the basis of Mr Colasante’s state of mind because Mr Colasante denied saying those words at all. The finding was that, in the context, those words could not be misleading or deceptive for reasons set out above.

95    Ground 3 cannot succeed.

96    Ground 4 is the complaint about his Honour’s finding that Mr Auguste did not rely upon the alleged representation. This overlaps to some extent with ground 3, but the conclusion reached by the primary judge was supported by other evidence, including the accepted facts that:

(a)    Mr Auguste did not seek an estimate of the time for the work to be completed (primary reasons at [63]);

(b)    Mr Auguste did not discuss his own timeframes or the expiry date of his approvals with Mr Colasante (primary reasons at [64]), which goes to the reasonableness of the reliance; and

(c)    the requirement to undertake additional work included in the 17 March 2010 email and the subsequent variations were not included in the time estimate (as conceded by Mr Auguste in cross-examination), such that any representation was rendered unreliable (primary reasons at [65]-[66]).

97    All of these reasons of the primary judge are entirely supportable by the objectively ascertainable contemporaneous evidence. The reasons summarised in (a) and (b) do not depend upon the subjective assessment of credibility of witnesses. They were based on Mr Auguste’s own evidence (and, in relation to (a) it was evidence in chief). But, in any event, the factors at (c), and the entirely clear and frank concession in cross-examination, renders this ground quite unarguable, in my respectful view.

98    Moreover, there was no mention of any timeframe or date for practical completion in the 17 March 2010 email or any other contemporaneous records.

99    Ground 4 cannot succeed.

Ground 5 – a reasonable time

100    Mr Auguste points to the evidence of Mr Tonkin, for the respondents, that a reasonable time for completion of all of the work in the 17 March 2010 email, whether priced or not, was six weeks. The works commenced on or about 12 March 2010 and did not ‘finish’ until 22 September 2010, being the date on which the Water Corporation signified acceptance to the connection and associated works (following the remediation works). According to Mr Auguste, the works were conducted over six and a half months or 28 weeks, exceeding even the primary judge’s finding of three months or five months.

101    At the hearing, in relation to this issue of reasonable time, counsel for Mr Auguste also sought to rely upon the evidence of Mr Anthony Shaw, a civil engineer engaged by the respondents. Mr Shaw deposed:

From my experience in dealing with civil works in residential subdivisions, it is my opinion that the reasonable time for a competent plumbing contractor to complete the work CPL Plumbing was engaged to do is two months.

Mr Shaw was not available for cross-examination (other than by telephone, for which leave was not granted), such that the primary judge admitted the affidavit but did not intend to give the evidence any weight (see primary reasons at [68]).

Ground 5 – a reasonable time – consideration

102    Much of this material has been covered above. The express finding, entirely consistent with assertions made for Mr Auguste when the dispute initially arose, was that ‘a reasonable time for completion of the works was about three months excluding any variations.’ As to the variations, it was also said for Mr Auguste that a reasonable time was ‘no more than an additional 2 months.’ A reasonable time for completion of the contract work and the additional work was a total of five months (see primary reasons at [84]).

103    Mr Shaw’s assessment of a reasonable time was, perhaps understandably, not expressed in his honour’s reasons as the evidence was afforded no weight.

104    In my view, Mr Auguste has mischaracterised the evidence of Mr Tonkin on this issue on appeal. Mr Tonkin’s estimate of 15 weeks was expressly qualified as being on the basis of the work commencing on site with approvals in hand, the design drawings being correct and all of the scope that was requested during the works being provided at the outset. Mr Tonkin found that the headwall was initially installed within 10 weeks. He opined that the respondents’ work was not in accordance with the sketching plans at the time of the relevant Water Corporation inspection. However, critically, the design solutions provided by the Water Corporation and the consequent rectification works expanded the scope of the initially requested work. Accordingly, it is not necessary to attribute significant weight to Mr Tonkin’s time estimate because it was rendered inaccurate by the drawings provided by Mr Auguste, the issue of approval by the Water Corporation, and the rectification works being outside the scope of the original agreement.

105    Ground 5 cannot succeed.

Ground 6 – failure to complete the headwall until September 2010

106    As noted above, the primary judge found (at [95]) that the remediation works on the headwall were not within the original scope of works, and, therefore, was not work required to be undertaken within the reasonable time period.

107    Mr Auguste says that, as the primary judge found (at [92]) that ‘without [Water Corporation] acceptance, the necessary conditions for the subdivisional approval could not be met’, the failure to have the work acceptable to the Water Corporation before the subdivision approval lapsed (within a reasonable time) was a cause of Mr Auguste’s loss.

Ground 6 – failure to complete the headwall until September 2010 – consideration

108    Nikolyn was required to supply and install a type ‘B’ connection, the design of which had been approved by the Water Corporation by 25 August 2010. It did so. It is true that the conditions imposed upon Mr Auguste’s subdivision approval could not be met until the Water Corporation had approved the Woodlupine drainage connection.

109    Properly understood, there is no ground in the amended grounds of appeal expressly challenging the primary judge’s finding that there was no breach of contract. On any view of the matter, having regard to the contemporaneous documentation and putting aside the question of any oral evidence, the primary judge was entitled to find, as his Honour did, that the stabilisation of the bank surrounding the head wall was not work within the original scope of work. Again, that finding has not been expressly challenged. Having regard to the evidence of Mr Wray that the work was not included in the contemporaneous plans, it would be difficult to see that such a challenge could be open. In the absence of any evidence or assertion that the stabilisation work was foreshadowed or ought reasonably to have been anticipated as part of the construction of the type ‘B’ headwall, his Honour’s finding is not surprising.

110    Ground 6 fails.

111    As an additional general observation, and in connection with all of grounds 1-6, there are further difficulties, namely, that:

(a)    even if Nikolyn had completed its work before the lapse of the survey strata approvals for the Northern and Southern Lots, the subdivisions could not have been completed before the relevant approvals lapsed (see primary reasons at [77]-[80]). Therefore, even if Mr Auguste could make out his misleading and deceptive conduct case, any relevant conduct by Nikolyn was not the cause of any of the loss claimed by Mr Auguste (see primary reasons at [81]); and

(b)    even if there had been a breach of the implied term, Mr Auguste did not prove he had suffered any loss or damage if there was a breach (see primary reasons at [100]).

Ground 7 – acceptance of Mr Tonkin as an expert witness

112    Mr Auguste relies upon the same matters set out in the delay ground concerning the evidence of Mr Tonkin (at [60(1)]) in support of a bare assertion that the primary judge was not entitled to rely on his evidence in the manner it did.

Ground 7 – acceptance of Mr Tonkin as an expert witness– consideration

113    Mr Auguste relies upon this ground independently of the delay ground illustrating a failure to consider certain features of Mr Tonkin’s evidence. I have already addressed a number of matters concerning Mr Tonkin, but there are several further considerations in relation to this standalone ground of appeal.

114    The first is that there was no objection raised to Mr Tonkin’s expertise. The extent of his cross-examination was to confirm that Mr Tonkin had engineering expertise in a number of areas. The ground of appeal in the amended notice of appeal asserts that it was not open to the primary judge to accept Mr Tonkin as an independent expert. But this is raised in circumstances in which no objection to his expertise was advanced at the trial. It was therefore a question of weight for the primary judge. As the respondents note, Mr Tonkin’s qualifications and experience are summarised in detail in his written report, as is expected of independent expert witnesses. Without going into great detail, that experience includes experience as a civil engineer, an arbitrator, an accredited mediator, a registered adjudicator, a registered building practitioner and a consultant contract specialist. In several instances, Mr Tonkin indicates in his expert report that he has assessed man hours, such as those claimed by Mr Colasante, in terms of their reasonableness. He gave evidence that the man-hours claimed were reasonable in a competitive market and applied hourly rates for man-hours that he had ascertained from identified publications. No substantive challenge was advanced as to the process of analysis adopted by Mr Tonkin in this regard.

115    With an objective report available for scrutiny and analysis, the evidence of Mr Tonkin stood in clear contrast to the evidence that Mr Auguste sought to adduce by affidavit from Mr Shaw who was not available in person to be cross-examined. It is not surprising that his Honour preferred the evidence of an actual independent expert in circumstances where that evidence was capable of being properly tested in cross-examination.

116    Additionally, and as noted above, it is not as though the primary judge accepted every aspect of Mr Tonkin’s evidence without question. It is clear that he adopted and accepted some of the calculations by Mr Tonkin, but rejected others. This supports an impression that the process of reasoning was not mere blind acceptance of the respondents’ perspective on every aspect of the case.

117    Ground 7 cannot succeed.

Ground 8 – non-compliance with the Construction Contracts Act

118    By ground 8, Mr Auguste complains that the primary judge erred in concluding that the respondents’ cross-claim complied with the Construction Contracts Act.

119    Mr Auguste relies upon the evidence of Mr Tonkin, a registered adjudicator under the Construction Contracts Act. Mr Auguste asserts that in cross-examination Mr Tonkin expressed the view that the respondents’ invoices did not comply with the requirements of that Act.

Ground 8 – non-compliance with the Construction Contracts Act – consideration

120    His Honour accepted that the original invoices lacked detail and presumably that they would not satisfy the requirements of the Construction Contracts Act. However, his Honour noted that the respondents provided ‘significant’ further detail at Mr Auguste’s requests, and went on to specifically find (at [104]) that Mr Auguste had sufficient information by 29 April 2011 to be informed of the nature and extent of the work being claimed and to assess the Nikolyn’s claims. His Honour rejected Mr Auguste’s argument that he was not ever given sufficient detail to properly assess the claims. All that material was produced in written form. There was extensive particularisation when the issue of the inadequacy of explanation was raised.

121    Unsurprisingly, Mr Tonkin confirmed in re-examination that the detail subsequently provided by Nikolyn was sufficient in order to assess its claim. His Honour reached the same conclusion. There can be no plausible suggestion that the subsequent provision of the information could fail to satisfy the requirements under the Construction Contracts Act. Even if that were so, the point as to subsequent information was not run in the Federal Circuit Court, nor on appeal, and in the circumstances of this case it would have been quite unrealistic to do so.

122    Ground 8 cannot succeed.

Ground 9 and ground 10 – award of indemnity costs

123    Mr Auguste complains about the award of indemnity costs in circumstances where:

(a)    Mr Auguste pleaded each of the planning approvals in the amended statement of claim dated 7 December 2011 and annexed them to his affidavit, sworn 11 July 2013;

(b)    his Honour found that the respondents’ work was not approved by the Water Corporation until 22 September 2010, four weeks after the relevant planning approval had lapsed, where such approval was a condition of the planning approvals; and

(c)    on the basis of the matters set out in grounds 1-6.

124    Ground 10 of the amended appeal grounds also complains about the award of costs of the cross-claim on an indemnity basis. Ground 10 is in these terms:

10.    His Honour erred in law or in fact and failed to exercise his discretion properly or at all, in finding [Mr Auguste] ought pay the cost of the cross-claim to be taxed on under the Federal Court Rules 2011, including on an indemnity basis from 8 July 2013, on the grounds set out below:

10.1    His Honour failed to take into account a mandatory relevant consideration, being that [Nikolyn] claimed $171,366.80 ($155,788 plus GST) in its cross-claim dated 23 December 2011, [Mr Auguste] succeeded in reducing the amount to $99,523.67;

10.2    His Honour erred in finding that [Mr Auguste] brought his claim only in an effort to delay payment of [Nikolyn’s] variation claim, in circumstances set out in 10.1 above;

10.3    The finding that [Nikolyn] did better at trial than its offer of $137,500, cannot be sustained in circumstances where any interest at 8 July 2013, was significantly less than at 24 June 2016, in large part due to the time the decision was reserved;

10.4    There was no evidence, or submission, before His Honour as to the costs according to the scale in schedule 1 to the Federal Circuit Court Rules 2001;

10.5    His Honour failed to take into account mandatory relevant considerations, being:

10.5.1    The by [sic] orders of Judge Lucev dated 11 October 2013, dismissing the Respondent’s [sic-Respondents’] application to adjourn the trial;

10.5.2    The reasons for decision of Judge Lucev in Auguste v Nikolyn Pty Ltd [2013] FCCA 1630; and

10.5.3    The orders of Judge Lucev made 24 October 2013, requiring the Respondent’s [sic – Respondents] to pay the costs thrown away by adjournment of the trial; and

10.6    On the basis of the matters set out in grounds 7 and 8 above.

125    Mr Auguste, of course, argues that there should be some special or unusual feature in the case to justify departing from the ordinary practice of awarding costs on a party and party basis. He says that there was ‘no point’ in Mr Auguste completing the other conditions unless the Water Corporation approved the respondents’ work.

126    The respondents claimed $155,788 plus GST, totalling $171,366.80. The primary judge found that they were entitled to $99,523.67 (including GST), so the respondents therefore, Mr Auguste stresses, failed on $71,843.13 or 42% of their claims. In relation to the cross-claim, the primary judge found that an offer of $137,500 by the respondents was unreasonably refused. Mr Auguste argues that the primary judge’s sole basis for finding that the refusal was unreasonable was because the offered settlement sum would have been less than the judgment, taking into account costs and interest. Mr Auguste contends that this approach did not meet the requirement ‘to consider all the circumstances in determining whether it was unreasonable’: Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2007] FCAFC 15 (at [4]).

Ground 9 and ground 10 – award of indemnity costs – consideration

127    The respondents once again rely on the submission that Mr Auguste did not challenge the submissions of the respondents on indemnity costs during the costs hearing in any meaningful way. Mr Auguste now argues that there was no point in completing the other conditions unless the Water Corporation approved the respondents’ work. This was not the subject of evidence or submission before the primary judge and cannot be relied upon now. I accept this submission.

128    His Honour found (at [20] of [2016] FCCA 1558]) that Mr Auguste conducted the proceedings in disregard of the known facts, and, accordingly, it was difficult to resist the conclusion that Mr Auguste brought his claim only in an effort to delay payment of Nikolyn’s variation claims.

129    It was open to the primary judge to award indemnity costs having regard to all the materials and as a matter of principle: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 per Woodward J (at 401); Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J (at 233-234).

130    Relevantly to the present case, as noted in Colgate-Palmolive (at 233) and numerous cases thereafter, circumstances which may justify the Court departing from the ordinary rule as to costs include (references omitted):

… the fact that the proceedings were commenced or continued for some ulterior motive … or in wilful disregard of known facts or clearly established law … the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.

(emphasis added)

131    I accept the submission for the respondents that Mr Auguste’s loss and damage claim was doomed to failure when the true status of development approvals made it clear that there no basis for any allegation by him that the respondents caused the lapse in the development approvals. His persistence in pursuing a poorly conceived misleading and deceptive claim and implied term claim affected the ability of the parties to properly negotiate any settlement on the cross-claim. This, it may be said, is an instance of the pursuit of allegations which ought never to have been made sufficient to justify an award of indemnity costs.

132    I agree with the primary judge that it was unreasonable for Mr Auguste to pursue the claim in an attempt to ‘stymie’ or thwart Nikolyn’s entitlement to be paid for the work which it had performed. This presumed pursuit of an ulterior motive would alone justify an award of indemnity costs.

133    In relation to the cross-claim, the offer was made entirely in accordance with the regime under r 25 of the Federal Circuit Court Rules. As such, the offer gives rise to a presumptive entitlement to indemnity costs as demonstrated in a variety of decisions, including the recent decision of Huntley v Department of Police and Justice (NSW) (No 2) [2016] FCCA 146 (at [113]).

134    The reasoning of the primary judge in relation to costs (in [2016] FCCA 1558) was as follows (at [23]-[28]):

23. The first respondent’s cross-claim was the subject of an offer to settle made by the first respondent. As the first respondent points out r.25.14(3) of the Federal Court Rules 2011 applies to these proceedings by reason of FCCR 1.05(3) read with Part 2, sch. 3, Item 16 of those Rules.

24. On 4 July, 2013 the respondents made an offer to settle the proceedings. First, the offer dealt with the applicant’s claims against the first and second respondents. The offer required the applicant to have those claims dismissed. Secondly, the offer dealt with the cross-claim and in that respect, the first respondent offered to accept the sum of $125,000 (plus GST) and inclusive of costs in full and final satisfaction of the first respondent’s cross-claim against the applicant. The offer was not accepted.

25. The effect of the offer was that the applicant would pay to the first respondent $137,500 (inclusive of GST). The order obtained in these proceedings by the first respondent against the applicant was for the sum of $99,523.67 plus interest. For reasons that will become apparent, up to judgment I am satisfied that interest ought to be calculated at the sum of $32,063.95. That amount when added to the judgment sum is less than the offer that was made by the first respondent to the applicant, save for the question of costs.

26. The issue to be determined for the purposes of FCR 25.14 is whether the judgment obtained by the first respondent was more favourable than the terms of the offer. The amount recovered under the judgment, including interest as I have set out below, is $131,587.62 without costs. The amount of the offer was $125,000 (plus GST of I assume 12,500) all inclusive. Leaving aside the arguments about indemnity costs, there is nothing to suggest that costs would not abide the event in the proceedings and so if the first defendant succeeded on its cross-claim it would most likely receive an order for costs. Even if the costs were assessed according to schedule 1 of the Federal Circuit Court Rules, the amount recovered under the judgment including costs would exceed the amount of the offer made by the first respondent. There is no evidence of any offers from the applicant that might have impacted upon how the costs of the cross-claim might be dealt with.

27. I am satisfied that the judgment obtained by the first respondent was more favourable than the terms of the offer. It was not suggested that the first respondents offer did not meet the formal requirements for an offer for the purposes of FCR 25.14(3).

28. In my view, there was nothing put in argument for the applicant which would suggest that it is appropriate to deprive the first respondent of the benefit of FCR 25.14. It is appropriate to make an order for costs in accordance with FCR 25.14 in respect of the first respondent’s cross-claim.

(emphasis added)

135    Over and above the finding as to the purpose of the pursuit of the proceedings, it has not been demonstrated that the primary judge erred in this reasoning.  His Honour in effect made only a very modest provision for costs which would follow the event in comparing the terms of the judgment and the offer made.  The total of judgment, interest and such costs would well have exceeded the offer.  Moreover, any provision for reduction of the interest by reason of delay, not that such an argument was apparently put and not that it was quantified in any way on appeal, could not be shown to change that outcome.  Further, once the principles from the authorities (which are not in dispute) are taken into account, there will be cases where there remain evaluative, discretionary determinations to be made in the balancing exercise as to whether or not to make such an award.  No error in the process has been demonstrated.

136    As it has not been demonstrated that his Honour erred, grounds 9 and 10 fail.

Ground 11 – interest

137    The primary judge held that the respondents were entitled to interest on the damages from 22 March 2011 to 3 May 2016.

138    Ground 11 complains that the primary judge erred in exercising his discretion to fix interest up to judgment in the amount of $32,902.40 for the following reasons:

(a)    his Honour failed to take into account a ‘mandatory relevant consideration’, being that the the calculation included interest from the date the decision was reserved on 11 June 2014 to the date the orders were made on 24 June 2016, being more than two years;

(b)    his Honour failed to take into account ‘mandatory relevant considerations’, being orders made by Judge Lucev of 11 October 2013 dismissing the respondents’ application to adjourn the trial, the reasons for decision of Judge Lucev in Auguste v Nikolyn Pty Ltd [2013] FCCA 1630, and the orders of Judge Lucev made on 24 October 2013 requiring the respondents to pay the costs thrown away by adjournment of the trial; and

(c)    by virtue of the matters argued for in ground 7 and ground 8.

139    In support of these amended grounds of appeal, Mr Auguste says that the Court (per Judge Lucev) allowed interest from 28 October 2013 until 9 June 2014 in the amount of $3,664, being the time the trial was delayed after the respondents had failed to file any affidavits despite having known that they were required for over 15 months. The interest also included an amount of $11,321.12 for the period 11 June 2014 (when the decision was reserved) until 3 May 2016 (when judgment was delivered). Additionally, the amount included interest on the original quoted work from January 2011, contrary to the 90 day terms agreed by the respondents, being $381.31. Accordingly, it is argued that the primary judge erred in fixing the interest from 22 March 2011 when the final invoice did not issue until 30 May 2011 and was not due until 90 days later under the agreed terms, or 50 days under the Construction Contracts Act.

Ground 11 – interest – consideration

140    These grounds are misconceived.

141    Interest was not calculated on each invoice, but on the judgment sum, sufficient information for which was provided by 22 March 2011. Although the respondents did apply to adjourn the trial, and such application was opposed, ultimately the adjournment was by consent.

142    More importantly, the very short point in relation to all of this is that Mr Auguste has had the use of the money throughout the period over which the payment of interest was ordered. On this topic, it matters not that there was delay in delivery of judgment or a delay by reason of an adjournment. The simple fact is that, throughout that period of time, Mr Auguste had the benefit of the money that the respondents should have had. The respondents were and are entitled to have interest on that money.

143    The matters argued for in ground 7 and ground 8 fall away because those grounds failed.

144    Ground 11 also fails.

CONCLUSION

145    As none of the grounds have succeeded, the appeal is dismissed with costs.

Associate:

Dated:    23 December 2016