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Construction Law News June 2010

Timms Contracting Pty Ltd v Pipes International (Qld) Pty Ltd [2010] QSC 88 (23 March 2010)

This case considered a claim for damages brought under a contract for the construction of a ‘hardstand’ at an industrial site in Brisbane.  Perhaps the most important issue considered by the judge Philippides J was whether or not the contract is question could be considered to be a ‘design and construct’ contract.

Timms Contracting Pty Ltd [“Timms”] was an earthmoving and demolition contractor. The defendant, Pipes International (Qld) Pty Ltd [“Pipes”], was a merchant of pipes and fittings.

Timms claimed the balance of monies owing under a contract for the construction of a hardstand, plus interest.  At the time of the Timm’s claim, 2 progress payments had been paid by Pipes, totaling around half of the total invoiced price of $501,384.40. Pipes counterclaimed for damages for breach of contract, negligence and misleading and deceptive conduct. 

In terms of the scope of works, Timms argued that, under the contract with Pipes, it had undertaken only to build a hardstand at the site. The contract between the parties comprised a written quotation. 

Pipes claimed that the parties had agreed orally that Timms would be responsible for designing the hardstand, deciding on the landfill to be used, and ensuring that the hardstand was fit for use as a storage site for heavy loadings and as a thoroughfare for heavy vehicles.

Pipes also claimed that, in entering into the contract, it had relied on misleading and deceptive representations made by Timm’s director to the effect that Timms  “was a contractor skilled in earthworks, excavation and design construction of the works”. 

Finally, Pipes argued that it was an implied term of the contract that Timms would carry out the works in a good and workmanlike manner, and that it owed Pipes a duty of care to this effect.  Pipes claimed the hardstand was poorly constructed from unsuitable materials and was unfit for its purpose and they claimed damages for rectification costs. 

Timms denied that it was engaged to design the works and that its director had made any representation that Timms was a contractor skilled in design construction. Timms admitted that it told Pipes that it would be able to undertake the works so that the works would be suitable for the relevant purpose, but stated that Timms told Pipe’s general manager on various occasions that the hardstand would require ongoing maintenance in that:

1. due to the nature of the ground at the site, the hardstand was subject to subsidence;
2. unless the hardstand was built using concrete or bitumen, it would be subject to sinkage and slippage;
3. the site would need to be maintained by the laying of road base on any holes or sinkage applied using a bobcat.

Timms maintained that any deficiency in the hardstand resulted from a failure by Pipes to maintain it. 

Shortly after completion of the hardstand, a ‘soft-spot’ had developed.  On Timm’s evidence, they attended the site and dug out the soft-spot before re-filling it.  Timms then provided a quote to seal the hardstand surface with concrete or bitumen. 

Pipes ultimately admitted that the compaction of the hardstand complied with the relevant main roads standard as well as the scope of works, and based its complaint as to workmanship solely on the quality of the materials used.

HELD: the scope of works did not specify that Timms undertook to design the hardstand.  A firm of Consulting Engineers was shown to have been responsible for the design of the hardstand.  This was a contract for specified works.  Pipes had provided the finish levels, details as to the falls, the survey and directions as to how contamination was to be dealt with.Timms had not represented that it was skilled in design and construction. 

It was held that Timms had not represented that the material to be used for the surface of the hardstand would be ‘blue metal’ of a Main Roads specification quality, as the defendant argued.

However, it was submitted by Pipes  that “if a contractor himself designs or selects materials for the work, either because he provides the whole design himself or because a part of the design is left to his judgment and choice, there will be an implied term that the work or materials will be suitable for their purpose”.It was argued that this proposition applied to Timm’s selection of the materials for the top layer of the hardstand. 

However, his Honour found that Pipes had been advised of the limitations associated with a non-sealed surface and was offered other surface options, such as concrete and bitumen, which Pipes chose not to pursue.Pipes had sought to construct a hardstand in the cheapest form possible, and had ignored Timm’s advice that the surface of the hardstand would require ongoing maintenance.

Judgment was entered in favour of Timms.

This decision demonstrates the importance of ensuring that your agreements are as detailed and comprehensive as possible before works are commenced.  It is critical that the scope of works is clearly and explicitly stated.  To avoid potentially costly and damaging disputes of the kind outlined above, contact Forum Law for advice on the preparation and review of agreements.  We can provide you with cost-efficient, professional advice on your existing and future agreements.  We can even provide you with template agreements customized for your business covering a wide variety of works to suit your particular requirements.