Construction company Built has found itself in an unwanted legal and contractual predicament, after a computer glitch led to it making what it says was an accidental $565,000 overpayment to sub-contractor C&L Ceilings.
Construction company Built Holdings has found itself in an unwanted legal and contractual predicament, after a computer glitch led to it making what it says was an accidental $565,000 overpayment to sub-contractor C&L Ceilings.
The dispute stemmed from Built’s appointment as the main contractor on the Heirloom Apartments project in Fremantle.
It hired Maddington-based C&L Ceilings as a sub-contractor on what was meant to be a fixed lump sum price of $10.1 million (exclusive of GST).
Variations throughout the sub-contract resulted in C&L being paid a total of $12.2 million (inclusive of GST).
Built subsequently issued a statement of demand to recover an overpayment of $565,064.
The legal dispute followed a series of meetings between representatives of the two companies, including Built’s head of finance, Jason Mortimer.
“Essentially he says an error was made by the defendant (Built) as the result of a computer glitch,” this week’s Supreme Court judgement stated.
“The defendant now says it has overpaid the plaintiff (C&L) by the amount stated in the statutory demand.”
In the course of the trial, Master Craig Sanderson evaluated a ‘subcontractor release’ signed by the two companies in November after negotiations to determine the final amount owing.
Master Sanderson said there was conflicting evidence between the parties as to what took place in the negotiations, which also included C&L director Gary Leach.
There was also, in the words of Master Sanderson, one obvious error of fact in the subcontractor release.
He said a retention sum was not properly accounted for, leading to a mistake in calculating the amount owing.
C&L, which was represented by HopgoodGanim Lawyers, argued before the court that the agreement between the two companies should stand.
“Effectively it says there is a contract between the parties and no warrant for going behind that contract,” Master Sanderson wrote in his judgement.
“It says at the very least it is arguable the contract is enforceable and the defendant has no right to recover any funds allegedly overpaid.”
Master Sanderson said the relevant terms of the contract were clear.
“On the fact of it there is no reason to go behind the contract and look at the negotiations that took place and the position of the respective parties,” he said.
“There is one clear mistake but that is obvious and would not in and of itself allow the whole bargain to be reconsidered.
“What the defendant (Built) appears to be arguing is that it was operating under a unilateral mistake – for one reason or another the amount of previous payments was overstated.
“But there is no suggestion that this mistake was induced by the plaintiff, nor is there any suggestion that the plaintiff was aware that the defendant had the incorrect figure.
“In fact there is no evidence on that point.”
In conclusion, Master Sanderson said it was difficult to see why the subcontractor release would be void.
“It was a bargain entered into after negotiation between the parties,” he said.
“In any event, that is not an issue which I have to determine.
“All I have to conclude is that the plaintiff has an arguable case such as there is a genuine dispute as to the debt.
“In my view the position is clear and the plaintiff has made good on its application.”
Master Sanderson accepted C&L’s application to have Built’s statement of demand set aside.
Options for Built are to appeal the ruling or proceed to trial.