Munns Sly and Associates Pty Limited v John Poulos [1986] ACTSC 8 (25 February 1986)

SUPREME COURT OF THE ACT

MUNNS SLY and ASSOCIATES PTY. LIMITED v. JOHN POULOS
S.C. No. 1927 of 1982
Contract

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Jenkinson J.(1)

CATCHWORDS

Contract - proposed construction of motel - engagement of architect - preparation of design to enable application to be made for loan funds - obtaining approval in principle from planning authority - extent of work agreed to be done.

Australian Capital Territory Supreme Court Act 1933 - s.53A

HEARING

CANBERRA
25:2:1986

DECISION

Trial of action for damages for breach of contract.

2. The defendant John Poulos was at material times a director of a company which held a Crown lease of land in the Australian Capital Territory on which Mr. Poulos had it in mind that the company might build a motel. A firm of solicitors had been retained to seek loan funds for the proposed development of the land. The solicitor dealing with Mr. Poulos, Rodney John Skeen, took him to the office of the plaintiff, the directors of which at that time were Messieurs Munns and Sly. At a meeting in that office on 23 January 1981 between those four men an oral agreement for the provision of architectural work by the plaintiff was made between the parties to this action. The work was agreed to be done for a fixed price of $1,500. At the meeting Messieurs Sly and Munns also told Mr. Poulos how fees for further architectural work would be calculated if the plaintiff were requested to do further work. A few days after the meeting Mr. Sly sent to Mr. Skeen a letter, addressed to Mr. Poulos, which was in these terms:

"Re: Proposed Motel Section 87 - Griffith

We confirm Friday's meeting where we advised
of our fee arrangements for the above project.

Our fee and services for the various stages
would be:-

1. Feasibility Study -

Fee $1,500

Services In conjunction with client
prepare concept study. In
conjunction with N.C.D.C.
develop concept study. Produce
concept study drawing or
drawings. Produce cost
estimates.

2. Final Design & Working Drawings.

2.01 Fee 3.5% of Architects estimate for
cost of project.

2.02 Services a. Develop concept study
to final design with
client.

b. Gain final design
approval from
N.C.D.C.

c. Produce Working
Drawings
Plan, Elevation &
Section 1:100
Site Plan 1:200
Details of room,
toilets, kitchen etc.
Specifications
Gain building
approval from D.C.T.

2.03 Services not included

- Structural Engineering

- Mechanical or Electrical
Engineering

- Hydraulics

- Site Supervision.

However should these services be
required we would be pleased to
make recommendations for their
selection.

These professional services would
be provided as detailed in the
R.A.I.A. conditions of engagement.

We trust this information meets with your
approval."

In performance of the agreement it had made the plaintiff carried out architectural work in connection with the design of the proposed motel. The work done was submitted to the defendant, who guided and approved each stage of the work. What is in issue is whether the work done is all within the description of work agreed to be done for $1,500 or whether some of the work done is work for which further remuneration is payable.

3. Of the four persons at the meeting on 23 January 1981 three gave evidence. Mr. Munns was sworn to be in ill health: his failure to give evidence was not the subject of any critical observation by counsel for the defendant. The evidence of Mr. Poulos was not helpful. His command of English was imperfect and his recollection of the conversation at the meeting differed in important respects from the recollections of Messieurs Skeen and Sly, between whom most of the conversation took place. The defendant's version of what happened at the meeting was neither clear nor probable. Mr. Skeen at that time bore the responsibility of preparing an application for a loan by means of which the lessee might fund the development of the motel. He told Mr. Sly, according to his evidence, that what Mr. Poulos sought to have done by the plaintiff for a fixed price was the preparation of plans which embodied a design which the National Capital Development Commission had approved and the estimation of the cost of erecting a motel in accordance with those plans. That was what Mr. Skeen needed for the loan application he was preparing, he swore. He agreed in evidence that the letter sent to him by Mr. Sly accurately summarised the discussion at the meeting. Mr. Sly's evidence was that, although the design to be prepared and costed for the fee of $1,500 was to be submitted to officers of the National Capital Development Commission for an informal intimation by them that the design met with their approval, no formal expression of the Commission's approval was to be - or was at the meeting agreed to be - obtained in the course of carrying out the work for which the agreed fee was $1,500.

4. Mr. Sly and Mr. Skeen were both aware that the Commission's practice was to signify formally its approval of the design and siting of a building by a stamped "approved in principle" on the plans. Mr. Skeen's evidence was that he had made it clear at the meeting that it was to that stage that the plaintiff had to carry the development of the design for the fee of $1,500. Mr. Sly, on the other hand, swore that the stamping of that after the completion of the work agreed to be done much further work would be required to gain the approval which the stamping signified. The stamping signified, according to Mr. Sly's evidence, what in the letter is described thus: "Gain final design approval from N.C.D.C.". Mr. Sly swore that what was offered at the meeting to be done for $1,500 was to develop and embody in drawings a concept of the proposed motel to which informal approval had been given by officers of the Commission and for which an estimate of cost had been produced.

5. I am persuaded to find that the agreement made at the meeting was that to which Mr. Sly testified. I think Mr. Sly's recollection is better than the recollection of Mr. Skeen.

6. The work agreed at the meeting to be done was done. And the defendant authorised the plaintiff to carry out further work which resulted in the stamping of plans as approved in principle by the Commission. But the defendant did not authorise the plaintiff to go further than that. Either the agreement concerning work beyond that for which the fee of $1,500 had been fixed was an agreement that the whole of the work described in paragraph 2 of the letter should be done, in which case the defendant breached the agreement by refusing to accept performance of that whole, or more plausibly the agreement was for a further stage of the work (namely that described in paragraphs 2.02 a and 2.02 b of the letter) to be done, in which case a term for payment of a proportionate fee must be implied. Either way the evidence of Mr. Sly showed that the amount claimed for the work which was done and which is described in paragraphs 2.02 a and 2.02 b - three quarters of one per centum of the plaintiff's estimate of the cost of the motel development - bears to the fee payable for the whole of the work described in paragraph 2 of the letter the proportion which the work done (beyond that for which the fee was fixed at $1,500) bore to the whole of the work described in paragraph 2, and is accordingly an appropriate measure of the damage caused by the breach or an appropriate measure of the fee payable under the implied term. That claim, for $6,902.63, is allowed, as well as the claim for $1,500.

7. I think a reasonable allowance for interest is at the rate of fourteen per centum per annum on $8,402.63 for three years : $3,529.10.

8. There will be judgment for the plaintiff against the defendant for $11,931.73 including the sum of $3,529.10 in respect of interest pursuant to s.53A of the Australian Capital Territory Supreme Court Act 1933.