Misrepresentation by Programme – A Second String To The Paradigm Case Bow

Misrepresentation has always been one of the more important ways in which contractors and subcontractors have been able to obtain extra-contractual recoveries in the construction industry. Whether the misrepresentation is relied upon pursuant to one of the statutory bases based on the UK legislation[1], or by way of negligent misstatement, or by way of misleading conduct pursuant to the Australian Consumer Law, the paradigm case has typically been to do with latent ground conditions. The owner induces the contractor to enter into a construction contract by misrepresenting the state of her[2] knowledge about what is underground.

Typically, she will require the contractor to sign a contract acknowledging that he is entering into the contract without reliance upon anything that she has said, but instead upon reliance on his own inspection. Equally typically, those contractual provisions are ineffective to avoid liability.

In Australia, perhaps the most notable of these cases is Abigroup v Sydney Catchment Authority[3], where it was held that the employer was liable for her statement that she had no plans showing underground conditions. In fact, and entirely innocently, there was an old plan undiscovered in her archive.

But this is not the only type of case in which an owner who contracts with the head contractor, or head contractor who contracts with the subcontractor, might be liable for misrepresentation. There is another category of case, which sees the light of day less often, which also potentially sees a representor liable for misrepresentation. It is a case particularly common in the context of subcontracting, and so will be described in those terms. The head contractor knows that the project is already in trouble; it is already the subject of delay and disruption with dark clouds already overhead. That delay and disruption is going to affect most, if not all, of the subcontractors yet to start work. Anxious not to inflate subcontract tender prices, the head contractor conceals what it knows about that delay and disruption. Instead, it puts forward to the subcontractor a programme which represents that the subcontractor will get prompt and uninterrupted access to the work. Sometimes, that programme may well have been achievable at the time it was originally put forward, but by the time the subcontract is entered into, the head contractor knows, or ought to have know, that the programme is no longer achievable.

The scenario gives rise to some questions Continue reading

Manning up

6 LangtreeThe submissions are now in before the High Court in the appeal in Mann v Paterson Constructions. It is all about the right of a contractor to elect for a quantum meruit in the event of a repudiation of a building contract by the owner.

The established law is well known. If an owner commits a repudiatory breach of a building contract, the contractor has two elections. The first election is as to whether or not to accept that repudiation. If the contractor does so elect, the contract is at an end. The contractor then has a second election. He can either recover the portion of the contract price that he has earned, together with damages for loss of profit on the balance of the work. Or, if he prefers, he can recover a quantum meruit for the whole of the work.

The facts in the case are depressingly familiar. The owners purported to terminate the contract, on the ground, into alia, of the contractor’s delay in completing the contract, and refused to allow the contractor back onto site. It was found that the owners were not entitled to do this, and that their conduct was repudiatory. The contractor accepted that repudiation, and elected to recover on a quantum meruit basis.

The contractor succeeded in VCAT Proceedings, and on appeal before a single judge, and in the Court of Appeal of the Supreme Court of Victoria. The owners have obtained special leave to take the matter to the High Court.

Leaving aside some matters peculiar to Victoria, there are essentially two issues Continue reading

Contract and the Australian Consumer Law

cACLIt is suggested on the back cover of Contract and the Australian Consumer Law that it is intended to be read from cover to cover, and since I was sitting on an aeroplane for three hours on Saturday, I did just that.

It is a refreshing read by Emeritus Professor John Carter and Laina Chan about a very dull topic. The Australian Consumer Law reads as though it had been written by some demonic anarchist dreamt up by Evelyn Waugh. It is very long, and full of words that do not bear their ordinary meaning. Statutory liabilities are referred to as “guarantees” although they are nothing of the sort. “Consumers” include companies which are not consumers. A contract with a “consumer” is not necessarily a “consumer contract”. Things are defined as “warranties” when they are not even contractual terms, let alone warranties. Quite how the authors of this book managed to maintain their sanity whilst surveying this awful scene is a mystery.

But we should be grateful to them. Their gentle mockery of the legislation turns out to be rather helpful in getting to grips with it.

At 162 pages, it is a short book, and all the more useful for that. Thoroughly Continue reading

Making a Pig’s Ear Out Of a Silk Gown

wigEach jurisdiction has its own system as to how it recognises the most eminent of its barristers. Some  jurisdictions, such as England and Wales, Victoria, and Queensland appoint Queen’s Counsel or, when there is a king on the throne, King’s Counsel. The distinction is well recognised by the public by the post-nominal QC (or KC). Traditionally, QCs wear court gowns made out of silk, and hence they are colloquially known as silks.

There are those who think the system is elitist, and think it should be abolished. One difficulty with that proposal is that, unless existing QCs are stripped of their title, younger up-and-coming barristers will have no opportunity to compete on a level playing field with those existing QCs.

There are others with more Republican sympathies who dislike the nominal link with the monarchy. Thus, the South Australian Labor government in 2008 ended the practice of appointing QCs, instead allowing the Supreme Court to award the title of SC, or “Senior Counsel”. It gave the option to QCs at the time to change their post-nominal from QC to SC, but none did so except just one, Chris Kourakis, who is now the Chief Justice of South Australia.

Other States tried the same experiment, but reversed it. Those reversals have been widely welcomed. Thus, when in 2013 at Queensland reinstated the title of Queen’s Counsel, 70 of the 73 barristers who had there Continue reading