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Trestrail & Trestrail v Briggs

TRESTRAIL & TRESTRAIL V BRIGGS [1999] SASC 413

Supreme Court of South Australia – 24 September 1999

FACTS

Briggs owned a block of land in the Adelaide Hills and retained Trestrail to construct a driveway to run from the northeastern corner of the land. Trestrail quoted a piece of $4000 to $4500 for the work.

Trestrail started the work but constructed the driveway to run from the northwestern corner of the land. When the works were well under way Briggs inspected the works and found out that the driveway was running from the wrong corner. After some discussions Briggs reluctantly accepted that the driveway would run from the wrong corner on one condition that a motor vehicle would be able to use the driveway. The corners on the driveway were too tight.

Trestrail sued for unpaid work and Briggs sued for breach of contract.

ISSUES

Did Briggs agree to a variation of the original contract?

Was Briggs estopped from claiming breach of contract against Trestrail?

FINDING

Briggs did not agree to a variation of the original contract. She simply accepted the substantial performance by Trestrail after a breach of contract had already occurred.

The conduct of Briggs in allowing Trestrail to complete the driveway did not mean that she was estopped from suing for breach of contract. She allowed Trestrail an opportunity to prepare an acceptable driveway and he still failed to construct such a driveway.

QUOTE

Doyle CJ said:

“Plainly enough, the judge did not find that Dr Briggs agreed to vary the contract. What she did was to accept what must have seemed to be the inevitable. When she came to the site the work was well advanced. It was hardly practicable to go back, undo what had been done, and start again. I do not agree that, by allowing Mr. Trestrail to proceed as she did, Dr Briggs is taken to have agreed to a variation of the contract. There may have been an element of uncertainty about the state of affairs on that day. But, on the Judge’s findings, Dr Briggs made it plain that what Mr. Trestrail had done was not acceptable to her. She could have instructed Mr. Trestrail to cease work, but did not.

But her failure to do so does not mean, in my opinion, that she was agreeing to a variation of the contract. She was simply accepting the substitute performance, in breach of the contract, for what it’s worth. That left it open to her to make such claim as might be available to her, arising from the breach of contract.”

“The Judge found that Dr Briggs permitted Mr. Trestrail to proceed specifically on the basis of an assurance that the driveway as proposed by him would be usable. The Judge made a strong finding that the driveway was not usable.

This finding was supported by an inspection that the Judge made of the site, and observations made by the Judge of Dr Briggs’ manoeuvring her car on the driveway. The substitute performance by Mr. Trestrail was defective.

If there was an estoppel, or some other basis for refusing to allow Dr Briggs to assert her rights under the contract, justice would surely require that she be at liberty to do so if the basis of any acceptance of the substituted performance was found to be an unfulfilled assurance that the substituted performance would provide a usable driveway.”

IMPACT

If a breach of contract has occurred the innocent party will have to decide whether to stop the work or allow the guilty party to correct the work and/or provide a substitute for the work. Allowing the guilty party to complete or substitute the work may not bar the innocent party from later claiming for a breach of contract provided there is no agreement to vary or amend the works.

SWF Hoists & Industrial v Woolcock Engineering

SWF HOISTS & INDUSTRIAL PTY LTD V WOOLCOCK ENGINEERING PTY LTD [1999] SASC 353

Supreme Court of South Australia – 31 August 1999

FACTS

SWF agreed to design, manufacture, deliver, install and commission three travelling cranes for Woolcock. The relevant contract said that delivery was to occur within eight to ten weeks.

The cranes were not delivered within the ten weeks. SWF claimed that the late delivery was due to Woolcocks failure to have runaway beams aligned to within acceptable tolerances and therefore it was impossible to install the cranes. The contract provided that Woolcock was responsible for the runaway beams. SWF issued proceedings to recover payment for the work on the cranes. Woolcock claimed that the late delivery of the cranes was a breach of contract and SWF was not entitled to be paid for its work.

ISSUE

Was the term of the contract that provided that SWF would deliver the cranes within the ten weeks conditional on Woolcock discharging its contractual responsibilities with the runaway beams?

FINDING

The obligation of SWF was to design, manufacture, deliver, install and commission the cranes.

It was not simply an obligation to deliver the cranes. SWF could only install the crane when Woolcock had properly installed the beams.

QUOTE

Prior J said:

“The magistrate could not properly consider the case on the basis that the appellant’s obligation was limited to the delivery of cranes to the site. The contract extended to an obligation to install, commission and test the cranes. The appellant’s contractual obligations were subject to the respondent meeting its obligations.

Where each party’s obligation “is confidential on performance by other, neither can complain of non-performance by the other when the condition governing the other’s obligation goes unfulfilled.” – paragraph 10 of [1999] SASC 353

“The evidence clearly established that the appellant’s obligation to install was incapable of being discharged within the time specified for delivery.

Thus the respondent was not entitled to complain of the failure to deliver within 10 weeks because it had failed to provide runway beams in a position to take the cranes as initially specified with a span of 24.550 metres.” – paragraph 11 of [1999] SASC 353

IMPACT

When each party to a contract has obligations conditional on the other party performing neither party can complain of non- performance if the time limits are not fulfilled.

If a particular time limit is important the parties should ensure that the contract specifies that the time limit is not dependant on external events.

Stokolosa v Weeks Peacock Quality Homes

STOKOLOSA V WEEKS PEACOCK QUALITY HOMES PTY LTD [2000] SASC 266

Supreme Court of SA – 11 August 2000

FACTS

Stokolosas’ reached an agreement with Pinnington (an employee of Weeks Peacock) to build a house on the Stokolosas’ land to designs prepared by Pinnington.

Pinnington told Stokolosa that he had obtained the approval of Weeks Peacock to build the house for the agreed price of $115,000. Stokolosas’ therefore signed a building contract for the house and made two advance payments. Pinnington kept one advance payment for himself.

Rowland from Weeks Peacock later told the Stokolosas that there had been no contract as Pinnington was acting without authority to enter into a contract and that the house could only be built for a price of $125,000.

Stokolosas accepted the repudiation of the contract made by Weeks Peacock and had another builder build a similar house.

ISSUES

  1. Was the act of Pinnington within the scope of an agent acting with apparent or ostensible authority?
  2. Would the contract entered by Pinnington be binding on Weeks Peacock notwithstanding the allegation of fraud?
  3. Should the court award damages for loss of expectation despite the Stokolosas having mitigated the damage?

FINDINGS

Pinnington acting as sales consultant for Weeks Peacock was given authority to obtain approval of the management where necessary and enter into contracts with its customers. Since Pinnington’s actions were within the scope of the role of a sales consultant he had apparent or ostensible authority to enter into contract with the Stokolosas to build their house.

There was a conditional contract formed between the parties. The fact that Stokolosa had made certain changes to the plan to build their house that was based on a display house did not constitute a counter offer.

Since the Stokolosas had a binding contract to build the house for $115 000 but they were later told that the house could only be built for $125,000 they were awarded $10,000 for loss of bargain.

QUOTE

Gray J said:

“An act of an agent within the scope of his actual or apparent authority does not cease to bind his principal merely because the agent was acting fraudulently and in furtherance of his own interests.”

IMPACT

A contracts entered by an agent which is within the scope of his actual or apparent authority notwithstanding fraud or acts made in furtherance of his own benefit shall be binding on the principal.

The principal will therefore be liable for damages for loss of expectation and/or bargain if the terms of the contract are later changed to the detriment of the other party.

NP Generations v Feneley

NP GENERATIONS P/L V FENELEY [2000] SASC 240

Supreme Court of South Australia – 19 July 2000

FACTS

NP was a real estate agent and a rental property manager. Feneley was employed by NP as the manager of its rental property business. Feneley kept a diary and an address book that contained details of NP’s clients. Feneley decided to resign from her position when her relationship with her employers was deteriorating but before she could do so, her employment was terminated.

After the termination Feneley called NP’s clients to inform them that she was no longer employed with NP and that she would no longer be handling their properties. Eight of the owners whom she had contacted terminated their arrangement with NP and established arrangements with Feneley when she joined her partner who operated a real estate business.

ISSUES

Was Feneley acting in breach of her employment duties given that there were no written employment contract between the parties?

Could the court grant an injunction against Feneley to stop her using NP’s confidential information?

FINDING

A contract of employment existed between the parties even though it was not expressed in writing. It was implied to the contract that during the continuance of the employment, Feneley would act in NP’s interests and not use the time for which Feneley was paid by NP in furthering her own interest. Information about the clients was an asset of NP therefore the nature of the business was sufficient to confer confidential status upon the information in the diary and address book.

The fact that the information was accessible by other staff was irrelevant as the same obligation of confidence applied to all of them. Employees of NP including Feneley were therefore obliged to keep that information in confidence from competitors like property owners.

However Feneley compiled the information for the sole purpose of discharging her duties as a rental property manager. She was not deliberately memorizing the information to act inconsistently with her obligation to NP. She was not using the information to compete with NP because she had not decided to join another real estate business when her employment was terminated.

QUOTE

Mullighan J said:

“If the information in question can be regarded as separate part of the employee’s stock of knowledge which can be recognised to be the property of his old employer and not his own to do as he likes, then if the court finds that there is a danger of the information being used or disclosed by the ex-employee to the detriment of the old employer, the courts will prevent the result by granting an injunction.”

IMPACT

The duty of good faith and fidelity is an implied term imposed on an employee during the course of his/her employment.

The duty will be broken if an employee deliberately copies or memorizes information of customers of the employer and solicits the customers for future time when the employment has ceased and the employee has established his/her own business.

Cufone & ORS v Cruse & ORS

CUFONE & ORS V CRUSE &ORS NO SCGRG-99-269 [269] SASC 304 (8 SEPTEMBER 2000)

Supreme Court of South Australia

FACTS

Cufone and Cruse owned equal numbers of units in a unit trust that operated a tavern for which Fun Trading was the trustee. Cufone and Cruse had equal shareholding in Fun Trading but the Cufone representatives held majority interest on the Board of Directors of Fun Trading.

Cruse sought equality in the representation of each group as directors of Fun Trading and as signatories to the Company’s bank account. The parties referred the dispute to an arbitrator subsequent to clause 9 of an agreement between the parties.

The Arbitrator consented to Cufone submitting any question of law arising from the ruling to the Supreme Court pursuant to s39 (1)(a) of the Commercial Arbitration Act (“the Act”) and did not make an award. Cufone therefore applied to the court contending that the Arbitrator had no jurisdiction under s42 of the Act and sought declaratory relief.

ISSUE

  1. Does the arbitrator have power to grant declaratory relief?
  2. Is rectification of the agreement is within the ambit of the arbitration clause?

FINDING

Section 42 of the Act is inapplicable in the absence of misconduct on the part of the arbitrator or where an award has not been improperly procured.

The arbitrator had implied powers to grant declaratory relief where dispute was one that could have been submitted to the Supreme Court and where the court could have given such relief. However a court of law can only grant declaratory relief on disputes that involve contractual rights or other legal rights and not disputes based on principles of equity or fairness. Since the arbitrator had not identified and determined the nature of the dispute whether it was contractual or based on some other legal principles the arbitrator had erred in holding that he could grant declaratory relief. Given that the arbitrator has power to grant declaratory relief it should be reserved for further consideration the extent of the arbitrator’s powers to consider claim for rectification.

QUOTE

Bleby J said:

“An Arbitrator has an implied power to grant declaratory relief where the dispute is one which could have been submitted to the Court and where the Court could have given such relief. However an Arbitrator does not have power to grant relief in respect of disputes that are based on principles of equity and fairness because a court of law could not grant declaratory relief in respect thereof. Indeed a court could not grant any relief unless the dispute were based on alleged contractual right or some other legal right.”

IMPACT

An arbitrator has the authority to give relief as would be available in a court of law having jurisdiction with respect to the subject matter. A power to award a declaration may be implied into the arbitration agreement and that power will be co- extensive with the power of the Supreme Court. The power to consider a claim for rectification is not isolated from the claims made to consider the arbitrator’s power to give relief.