Alliance Building and Construction Pty Ltd v Veesaunt Property Syndicate 1 Pty Ltd [2024] QCA 75

SUPREME COURT OF QUEENSLAND

CITATION: Alliance Building and Construction Pty Ltd v Veesaunt Property Syndicate 1 Pty Ltd [2024] QCA 75

PARTIES: ALLIANCE BUILDING AND CONSTRUCTION PTY LTD / ABN 88 645 500 938 / (appellant) / v / VEESAUNT PROPERTY SYNDICATE 1 PTY LTD / ABN 22 639 391 665 / (respondent)

FILE NO/S: Appeal No 8622 of 2023 SC No 14468 of 2022

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane – [2023] QSC 129 (Brown J)

DELIVERED ON: 7 May 2024

DELIVERED AT: Brisbane

HEARING DATE: 8 November 2023

JUDGES: Mullins P and Bond and Dalton JJA

ORDER: The appeal is dismissed with costs.

CATCHWORDS: CONTRACT – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where parties entered into a contract for the construction of residential townhouses – where the rights and obligations of the parties under the contract were subject to the satisfaction or waiver of certain specified conditions by a nominated date – where, if the conditions were not satisfied by a nominated date, the contract became voidable, not automatically terminated – where the Superintendent had issued a Notice to Proceed despite the unfulfillment of conditions precedent – where the primary judge declared the contract remained on foot and was binding on the parties – whether the primary judge erred in rejecting the contention that the Notice to Proceed issued by the Superintendent constituted a waiver by the Principal of the need to satisfy the conditions / Gange v Sullivan (1966) 116 CLR 418; [1966] HCA 55, followed / Hume Computers Pty Ltd v Exact International BV [2007] FCA 478, cited / JPA Finance Pty Ltd v Gordon Nominees Pty Ltd (2019) 58 VR 393; [2019] VSCA 159, cited / Mackay v Dick (1881) 6 App. Cas. 251; [1881] UKLawRpAC 14, cited / Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749; [1997] UKHL 19, applied / Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211, cited / V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2021] VSC 849, cited

COUNSEL: R A Perry KC, with S B Whitten, for the appellant / J D McKenna KC, with J P Hastie, for the respondent

SOLICITORS: CDI Lawyers for the appellant / Shand Taylor Lawyers for the respondent

1. MULLINS P: I agree with Bond JA.

2. BOND JA: On 31 March 2022 the respondent (the Principal) and the appellant (the Contractor) entered into a contract pursuant to which the Principal engaged the Contractor to carry out and complete the design and construction of certain residential townhouses on the Gold Coast.

3. By originating application filed on 21 November 2022, the Principal sought a declaration that certain contractual “conditions precedent” had been satisfied or waived and a declaration that the contract remained on foot and was binding. The Contractor opposed the application on the basis that, in the events which had happened, the contract had been terminated.

4. In a judgment published on 14 June 2023, the primary judge declared that the contract remained on foot and was binding on the parties.

5. By this appeal the Contractor seeks to reverse that outcome. For reasons which follow, I would uphold the Principal’s contention that the order made by the primary judge should be affirmed, albeit on grounds other than those expressed by the primary judge. The appeal should be dismissed with costs.

The contract

6. The contract between the Principal and the Contractor was entirely in writing and was comprised of –a formal instrument of agreement;general conditions of contract AS4902-2000 (as amended); andannexures part A to part O.

The formal instrument of agreement

7. The formal instrument of agreement was a 3-page document dated 31 March 2022 and executed by the Contractor on 23 March 2022 and by the Principal on 31 March 2022. It defined the Principal and the Contractor by reference to their names and street addresses and recited their intention that the Contractor carry out and complete the design and construction of the Works for the Principal on the terms of the contract and then set out six operative terms.

8. Clause 1 obliged the Contractor to carry and complete the design and construction of the Works in accordance with the contract and, correspondingly, obliged the Principal to pay the Contractor the contract sum as set out in the contract.

9. Clause 2 listed the documents comprising the contract in the order referred to at [6] above and provided that “any ambiguity, inconsistency or discrepancy” would be resolved by considering the documents in the order of precedence so set out.

10. Clause 3 was an entire agreement clause. Clause 4 was an express Mackay v Dick¹ term whereby the parties agreed “that they shall do everything reasonably necessary to give effect to the contract.” Clause 5 contained an express statement applying the term of the contract to “all of the WUC and the Works” even if they were performed prior to the date of the execution of the contract.

11. The proper construction of the next clause is critical to the disposition of this appeal. Clause 6 provided:

“6. Conditions precedent

6.1 General

The rights and obligations of the parties under the Contract, other than the Day 1 Clauses which commence on and from the Contract Date, are subject to the satisfaction or waiver of the conditions precedent in clause 6.2.

The satisfaction of each of the conditions precedent identified in clause 6.2 can only be waived by written notice from the Principal (on such conditions (if any) as the Principal may stipulate).

Unless each of the conditions precedent identified in clause 6.2 have been satisfied, or waived under clause 6.1(b), within 3 months of the date of the Contract Date (or such later date as the Principal and the Contractor may agree in writing):

the parties will no longer be bound by the terms of the Contract or other obligations connected with the WUC or the Works other than the Day 1 Clauses;

the Contract will be taken to have been terminated on that date (or such later date as the parties may agree) and the Contract will be of no further force or effect; and

the Contractor will have no entitlement under or in respect of the Contract or in respect of or otherwise in connection with the WUC, other than any claim in relation to a breach of any Day 1 Clause.

The Contractor must not commence carrying out work on the Site unless and until each of the conditions precedent identified in clause 6.2 have been satisfied or waived under clause 6.1(b).

6.2 Specific conditions precedent

The following conditions precedent are required to be satisfied before the Contract will commence:

finance being approved by the financier (at the Principal's discretion);

receipt by the Principal of evidence of all insurance required to be effected by the Contractor under the Contract;

a single director of the Contractor executing a deed of guarantee and indemnity, set out in Annexure Part O, in accordance with clause 5.6A.

the Contractor providing security in the amount stated in Item 14 in accordance with clause 5 of the General Conditions of Contract; and

the Contractor executing any financiers' deed in accordance with clause 47 (if required to do so by the Principal).”

12. Before this Court the parties united in referring to the clause 6.1(c) date as the Nominated Date. It is convenient to adopt that terminology.

13. The phrase “Day 1 Clauses” expressed in clause 6 of the formal instrument of agreement represented the only operative usage of that phrase in the contract. The phrase itself was defined in clause 1 of the general conditions of contract, as were many other relevant terms. I turn now to that document.

The general conditions of contract

14. The form of general conditions of contract was a 68-page modified form of the Australian Standard general conditions of contract for design and construct contracts.

15. Clause 1 set out contractual definitions which were to apply “except where the context otherwise requires”. Of the many definitions set out in clause 1 the following definitions should be noted:

“Business Day means a day that is not:

(a)a Saturday or Sunday; or

(b)a public holiday, special holiday or bank holiday in the place in which any relevant act is to be or may be done; or

(c)a day in the period from 22 December in a particular year to 10 January in the following year, both days inclusive.

…

Contract has the meaning in clause 6;

Contract Documents means:

(a)Formal Instrument of Agreement executed by the parties;

(b)this AS4902-2000 Amended Conditions of Contract and all attachments including the Annexure;

(c)all documents referred to in the Contract; and

(d)any other document expressed in this Contract to be a Contract Document

contract sum means:

(a)where the Principal accepted a lump sum, the lump sum set out in Item 6A;

(b)where the Principal accepted rates, the sum of the products ascertained by multiplying the rates by the corresponding quantities in the schedule of rates; or

(c)where the Principal accepted a lump sum and rates, the aggregate of the sums referred to in paragraphs (a) and (b),

including provisional sums but excluding any additions or deductions which may be required to be made under the Contract;

Contractor means the person bound to carry out and complete WUC;

…

Contract Date means the date on which both the Principal and Contractor executed this Contract;

…

Day 1 Clause means the provisions contained in:

(a)clauses 1 to 2;

(b)clause 5.6A;

(c)clause 6;

(d)clauses 8.2, 8.5 and 8.7;

(e)clauses 11.1;

(f)clauses 15 to 18;

(g)clause 42;

(h)clause 44;

…

direction includes agreement, approval, assessment, authorisation, certificate, decision, demand, determination, explanation, instruction, notice, order, permission, rejection, request or requirement;

…

Financier means any person providing finance to the Principal for the purpose of developing the Site;

…

Item means an Item in Annexure Part A;

…

Principal means the Principal stated in Item 1;

…

Superintendent means the person stated in Item 5 as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent and notified as such in writing to the Contractor by the Principal and, so far as concerns the functions exercisable by a Superintendent’s Representative, including a Superintendent’s Representative;

…

WUC (from ‘work

under the Contract’) means the work which the Contractor is or may be required to carry out and complete under the Contract and includes variations, remedial work, construction plant and temporary works,”

16. The possibility that, apart from the Day 1 Clauses, the contract might terminate three months after its execution and its terms no longer be binding has already been noted. It is appropriate briefly to outline the nature of the Day 1 Clauses:Clause 1 was the definitions clause.Clause 2 was an extensive clause covering various obligations concerning performance and payment. Amongst other things, it provided – (i)(by clause 2.1) that the Contractor must carry out execute and complete the whole of the WUC, in accordance with the contract and any directions authorised by it.(ii)(by clause 2.2) the agreement that the Principal would be liable to pay the contract sum to the Contractor for the performance of the WUC.(iii)(by clause 2.3) various warranties by the Contractor addressing how the WUC would be carried out and what standards would be reached, and other relevant statements concerning the obligations. Clause 5.6A required a director of the Contractor to execute a deed of guarantee and indemnity as set out in Annexure Part O. Clause 6 specified what would amount to evidence of the contract until the formal instrument of agreement was executed. Clauses 8.2, 8.5 and 8.7 set out obligations on both parties concerning the provision of certain documents and the need to maintain confidentiality in them. Clause 11.1 obliged the Contractor to comply with legislative requirements. Clause 15 to 18 obliged the Contractor to indemnify the Principal in relation to certain liability and set out various obligations requiring the Contractor to effect certain insurance by a particular time but also to maintain the insurance. Clause 42 was the dispute resolution clause. Cause 44 set out various obligations on the Contractor in relation to keeping and maintaining records and providing access to those records.

17. Clause 7 of the general conditions contained provisions concerning giving and receiving notices in these terms:

“7. Service of notices

A notice (and other documents) shall be deemed to have been given and received:

if addressed or delivered to the relevant address in the Contract or last communicated in writing to the person giving the notice; and

on the earliest date of:

actual receipt;

confirmation of correct transmission of fax; or

3 days after posting.”

18. Clause 19 of the general conditions contained the familiar provisions concerning the role of a “Superintendent”:

“19. Superintendent

19.1 Appointment of Superintendent

The Principal shall ensure that at all times there is a Superintendent, and that the Superintendent fulfils all aspects of the role and functions reasonably and in good faith.

Except where the Contract otherwise provides, the Superintendent may give a direction orally but shall as soon as practicable confirm it in writing. If the Contractor in writing requests the Superintendent to confirm an oral direction, the Contractor shall not be bound to comply with the direction until the Superintendent does so.

19.2 Directions given by Superintendent

The Contractor must comply with all directions given by the Superintendent.

If the Contractor does not comply with a direction given by the Superintendent under or in connection with this Contract then:

the Superintendent may issue a notice to the Contractor requiring compliance within a reasonable time to be stated in the notice;

if the Contractor does not comply with that notice then the Principal may employ and pay others to execute any work whatsoever which may be necessary to give effect to such Directions from the Superintendent;

all costs and expenses and any loss or damage properly incurred or to be incurred by the Principal in so doing may be recovered by the Principal as a debt due to the Principal by the Contractor or may be deducted by the Principal from any monies which may then be or thereafter become payable to the Contractor by the Principal or from any Security.

19.3 Directions

Notwithstanding any other provision in this Contract, if a Direction is given by the Principal or the Superintendent other than in writing, the Contractor:

may ask for the Direction to be given in writing; and

is not required to comply with the Direction until it is given in writing.

If a Direction is given other than in writing, the Principal or the Superintendent must give the Direction in writing to the Contractor within 3 Business Days after the Direction was given other than in writing.”

19. Clause 37 set out the mechanism by which the Contractor could claim payment for the work which it did and pursuant to which the Superintendent would certify the Superintendent’s opinion of the monies due from the Principal to the Contractor, thereby obliging the Principal to pay the amount so certified. The clause obliged –the Contractor to claim payment progressively by lodging progress claims;the Superintendent to issue payment schedules evidencing the Superintendent’s opinion of the monies due from time to time; andthe Principal to pay the Contractor the amount determined as due by the Superintendent.

20. Clause 39 set out a default clause which permitted the Principal to give a show cause notice to the Contractor for substantial breaches of contract, requiring the Contractor to show cause in writing why the Principal should not either take works out of the Contractor’s hands or terminate the Contract. The clause empowered the Principal to terminate the Contract in the event that the Contractor failed to show reasonable cause as required.

21. Clause 46 provided:

“46. Security of payment

The parties agree that the Superintendent is the agent of the Principal for the purposes of:

accepting service of payment Claims served by the Contractor under the Security of Payment Act;

assessing payment Claims served by the Contractor under the Security of Payment Act; and

providing the Contractor with payment schedules under the Security of Payment Act.”

22. Clause 47 provided:

“47. Financiers' Deed

The Contractor shall, within 14 days of being requested by the Principal to do so, enter into any deed with the Principal and any financier in a form acceptable to the Principal and the financier. The Contractor shall not be entitled to submit any claim for a progress payment until it has entered into the deed in accordance with this clause.

The Contractor shall co-operate with the financier and supply the financier with information which the financier may, from time to time, request.”

The annexures

23. There were 15 annexures:Annexure Part A;Annexure Part B - Approved form of conditional undertaking;Annexure Part C - Deed of novation for subcontractors;Annexure Part D - Deed of novation for consultants;Annexure Part E - Principal's project requirements;Annexure Part F - Tender Submission and Tender Clarification;Annexure Part G - Deletions, amendments and additions;Annexure Part H - Development Approval;Annexure Part I - Development Approval Matrix;Annexure Part J - Outline of Construction Program;Annexure Part K - Deed of Release - Practical Completion;Annexure Part L - Deed of Release - Final Completion;Annexure Part M - Provisional Sums;Annexure Part N - Example Sales Contract;Annexure Part O - Deed of Guarantee and Indemnity.

24. Annexure Part A listed various items to which cross-reference had been made in the formal instrument of agreement (see clause 6.2(a)(iv)) or the general conditions of contract (see various references to items in the definitions in general condition clause 1). Mr Weintrop was identified as the Superintendent. Notably street addresses were specified for each of the Principal, the Contractor and the Superintendent and an email address was also specified for the Principal.

Some preliminary observations as to the construction of the contract

25. The contractual intention revealed by clause 6 of the formal instrument of agreement was that –the parties to the contract were bound by all its terms on and from the Contract Date;if the clause 6.2(a) conditions precedent² were satisfied or waived within the specified time, that position would continue; andif the clause 6.2(a) conditions precedent were not satisfied or waived by the Nominated Date, the contract would automatically terminate and the parties would cease to be bound by the terms of the Contract apart from the Day 1 Clauses.

26. Nevertheless, the contract should not be construed as providing for true automatic termination in the event of the conditions not being satisfied or waived by the Nominated Date. In Gange v Sullivan,³ Taylor, Menzies and Owen JJ stated the general principle:

"Whilst the effect of a condition must in every case depend upon the language in which it is expressed and a decision upon the meaning of one condition cannot determine the meaning of a different condition, the authorities cited do show a disposition on the part of courts to treat non-fulfilment of a condition such as that here under consideration as rendering a contract voidable rather than void in order to forestall a party to a contract from gaining some advantage from his own conduct in securing, or contributing to, the non-fulfilment of a condition bringing the contract to an end."

27. Accordingly, the better view is that if the conditions precedent were not satisfied or waived by the Nominated Date, the contract became voidable, not automatically terminated.

28. Clause 6.2(a)(i) to (iv) specified four conditions precedent. Clause 6.2(a)(v) permitted the Principal to elect to impose a fifth condition precedent by requiring the Contractor to execute a financier’s deed “in accordance with clause 47”. No specific mechanism was specified in the formal instrument of agreement as to what steps the Principal had to take in order to bring about that result. But given that the purpose of the clause was to require something to be done “in accordance with clause 47”, and given that clause 47 gave the Contractor 14 days within which to execute the financier’s deed to which it referred, if the Principal wished to make execution of such a deed a condition precedent the Principal would have to make the request before the Nominated Date; the request would have to require that the Contractor execute the financier’s deed before the Nominated Date; and the request would likely have to be made more than 14 days before the Nominated Date.

29. Some observations concerning the position of the Superintendent under the contract should also be made. Under this form of contract the Superintendent had two roles. The first role was that of agent of the Principal. The principal example of that role was the role authorised by clause 19, namely that of giving “directions” (as defined) to the Contractor on behalf of the Principal which the Contractor was obliged to follow, and which could result in increased pecuniary liability of the Principal to the Contractor. Second, the role of independent certifier. The performance of that role involved the Superintendent making objective assessments which could affect the rights and liabilities of both parties under the contract. The principal example of that role was the role of certifier of progress claims under clause 37. This dual role is not uncommon in building and construction contracts.⁴

The facts

30. The Contract Date was 31 March 2022. That meant that the 3-month period referred to in clause 6.1(c) of the formal instrument of agreement would expire at the end of June 2022. That was the original Nominated Date.

31. Although clause 6.1(d) of the formal instrument of agreement prohibited the Contractor from carrying out work on the site until the clause 6.2 conditions precedent were satisfied or waived, it is evident that it was contemplated that some matters might still be carried out by the Contractor in that period. Work could be done off site and if it was it would be governed by the general conditions which fell within the ambit of the definition of Day 1 Clauses.

32. It appears that works were in fact carried out in the period before the clause 6.2 conditions precedent were satisfied or waived. I observe:On 18 May 2022 the Superintendent issued payment certificate 1 recommending payment of $63,820.17 for preliminaries and design and consultancy work completed to 30 April 2022;On 3 June 2022 the Superintendent, writing in his capacity as such –(i)gave a notice to the Contractor to proceed with an “early works package” the scope of which encompassed preliminaries of $48,125 plus GST (for work concerning preparation of plans and specifications for an approval process, co-ordination, reviewing construction methodology) and design and consultancy work for $138,903 plus GST (for design consultancy costs to complete the design of a set of documents for building approval purposes) and statutory fees of $120,532.(ii)advised the Contractor:

“Please note the closing approval to proceed with the works under the contract⁵ has not been given. The parties further agree to extend the conditions precedent required satisfaction date outline in clause 6.1(c) of the Contract from 3 months to 4 months.”

On 15 July 2022, the Superintendent issued payment certificate 2 recommending payment of $44,169.48 for preliminaries and design and consultancy work completed to 30 June 2022.

33. The notice of 3 June 2022 was sent by the Superintendent both to the Contractor and to the Principal under a cover of an email which requested each of them to respond with acceptance of the notice. The appeal record contained the Contractor’s email confirming acceptance but did not contain the Principal’s email confirming acceptance. That did not matter because the Principal and the Contractor entered into a further deed, dated 28 June 2022, which –defined “Effective Date” as the date of the deed;by clause 2 provided that from the Effective Date clause 6.1(c) of the formal instrument of agreement was amended by deleting the words "3 months" and replacing them with the words "4 months" and that the contract and the deed were to be read as a single integrated document;by clause 4 provided that if the deed was inconsistent with any other part of the contract the deed would prevail to the extent of any inconsistency;by clause 7 provided:

“7. Notices

7.1 Notices

Any notice, demand, consent, approval, request or other communication to be given under this deed (Notice) must be in writing and, unless this deed provides otherwise, in English.

Email is considered to be in writing for the purposes of this clause 7.

7.2 Address for Service

The Address for Service of each party is as set out in the Building Contract Side Deed:

Principal

Name: Veesaunt Property Syndicate 1 Pty Ltd

Address: Unit 8, 16/18 Em Harley Drive, Burleigh Heads QLD 4220

Email: [email protected]

Contractor

Name: Alliance Building and Construction Pty Ltd

Address: 50 Water Street Toowoomba OLD 4350

Email: [email protected]

The parties must notify all other parties in writing of a change of Address for Service.

7.3 Service of Notices

A Notice must be given at the recipient's Address for Service by being:

personally served on a party, or being left at a party's last notified Address for Service at the time of being served; or

sent to the email address of a party listed in subclause 7.2.

A Notice is given if:

personally served, at the time of being served; or

sent by email:

(A)if addressed to the email address of a party listed in subclause 7.2; and

(B)on the date of confirmation of transmission of the email.

By clause 8.6 provided:

“8.6 Time for doing acts

If:

the time for doing any act or thing required to be done; or

a notice period specified in this deed,

expires on a day other than a Business Day, the time for doing that act or thing or the expiration of that notice period is extended until the following Business Day.

If any act or thing required to be done is done after 5 pm on the specified day, it is taken to have been done on the following Business Day.”

34. The result of that deed was that the new Nominated Date was the date which was four months after 31 March 2022, namely Sunday 31 July 2022. Because Sunday 31 July 2022 was not a Business Day, notice could have been given on 1 August 2022. As will appear, the extra time did not matter.

35. On Friday 29 July 2022 at 1.00 pm the Financier emailed to the Superintendent copied to Mr Hough, the sole director the Principal, in these terms:

“Subject: RE: Notice to Proceed - Lakehouse

Hi Deano

Can you please send a notice as Superintendent in relation to the attached to Alliance, noting the following:

Formal finance approval from ANZ has been received and therefore we are satisfying the preconditions per clause 6.2

We are submitting the attached to be signed within 14 days in accordance with clause 47.

Wes - I assume you have no issues with this mate?”

36. “Deano” was a reference to the Superintendent as identified in item 5 of Annexure Part A and “Wes” was a reference to the Principal’s Mr Hough.

37. On Friday 29 July 2022 at 2.00 pm the Superintendent responded by email copied to the sole director of the Principal in these terms:

“Subject: Notice to Proceed - Lakehouse

Hi Guys

Have a quick look at the attached notice and let me know any changes before I issue.”⁶

38. On Friday 29 July 2022 at 2.06 pm the Principal responded by email addressed to the Superintendent and to the Financier stating:

“Looks good to me guys”.

39. On Friday 29 July 2022 at 4.20 pm the Superintendent emailed the Contractor and the Principal in these terms:

“Please see attached the Lakeside Robina Notice to proceed with contract works under the contract.”

40. I observe:The subject matter of that email was “Lakeside Robina notice to proceed with contract works”.The email was sent to the email addresses referred to in clause 7.2 of the deed dated 28 June 2022.There were four attachments.The first of the attachments was the document referred to in the body of the email, namely the signed notice to proceed itself. It is convenient to refer to that document as the Notice to Proceed. It was in these terms:

“RE: Lakeside Robina – Notice to proceed with contract works

I write in my capacity as Superintendent in relation to the Lakeside Robina (34-38 Glenferrie Drive, Robina, QLD) AS4902-2000 contract between Veesaunt Property Syndicate 1 Pty Ltd and Alliance Building and Construction Pty Ltd dated 31 March 2022 ("the Contract"). This is a notice to proceed with contract works as clause 6.2 under the contract has been satisfied as per the below:

• Formal finance approval from ANZ has been received and therefore preconditions per clause 6.2 have been satisfied.

• The building contract tie-in deed will be submitting within 14 days in accordance with clause 47.”

Second, a document described as “Building contract tie-in deed – V2.pdf”. As to this document:(i)That deed may be regarded as a deed which would satisfy the requirements of clause 47 of the general conditions of contract.(ii)It was a deed between, on the one hand, two financiers namely the Australian and New Zealand Banking Group Limited and Boulder Capital Investments Pty Ltd and, on the other hand, the Principal and the Contractor.(iii)The recitals to the deed recorded that ANZ and Boulder had made or intended to make financial facilities available at the request of the Principal in connection of the contract; that the Contractor had entered into the contract with the Principal; that the Principal had charged or intended to charge its interest in the contract to ANZ and Boulder and that the parties had agreed to enter the document to regulate the rights as between themselves.(iv)Amongst other things the operative provisions included a warranty by the Principal and the Contractor that the contract was “in full force and effect and has not been varied, rescinded or terminated as at the date of this document.”

The third and fourth attachments apparently were the construction contract itself and a side deed. The copies so attached do not appear in the appeal record.

41. On Friday 29 July 2022 at 4.32 pm the Contractor responded by email to the Superintendent and to the Principal by an email using the same subject heading and which stated:

“Thanks mate ... I reckon you just made Wes's year with that news.

I have been off isolating this week with Covid ... however planned to catch up with the guys next week for an update on the frames and trusses package which still poses our greatest risk at present.”

42. Again, “Wes” was a reference to the Principal’s Mr Hough.

43. On Friday 29 July 2022 at 4:42pm the Principal’s Mr Hough responded in an email to the Contractor and to the Superintendent using the same subject heading and which stated:

“You would be right mate!

Rest up and have a good weekend.”

44. It may be observed that as at that time, The Principal had not yet received evidence of all insurances required to be effected by the Contractor under the contract, as required by cl. 6.2(a)(ii).The Contractor had not yet provided security, as required by cl. 6.2(a)(iv).Although the Superintendent’s Notice to Proceed may be regarded as a request that a clause 47 deed be executed, the request did not require the deed to be executed by the Nominated Date and the request itself had not been made more than 14 days before the Nominated Date.

45. The parties subsequently fell into dispute on the question whether the Contract had been terminated by operation of 6.1(c).

The issues on appeal

46. Before the primary judge the Principal advanced two arguments in support of its contention that the contract remained on foot. First, the Notice to Proceed constituted a waiver of any of the clause 6.2(a) conditions precedent which had not in fact been satisfied at that date either for the purposes of clause 6.1(b) or, alternatively, at general law. Second, in any event, the only conditions which were yet to be satisfied related to the provision, by the Contractor, of evidence of insurances and security. As the Contractor had failed to provide those things, it was prevented from relying upon its failures to assert that the contract was at an end.

47. The learned primary judge rejected the first of the Principal’s arguments. By its notice of contention in this Court, the Principal contested the correctness of that rejection. All the bases of error there specified rested on the same propositions, namely that the primary judge erred by failing to conclude that, in the circumstances in which it was given, the Notice to Proceed was effective to waive any unsatisfied clause 6.2(a) conditions precedent whether pursuant to clause 6.1(b) or at general law.

48. The learned primary judge accepted the second of the Principal’s argument, reasoning that:the contract, properly construed, contained words sufficient to exclude a party from taking advantage of its own default;the Contractor failed to bring about the satisfaction of the unsatisfied clause 6.2(a) conditions precedent, which was its responsibility to satisfy; andthe Contractor was, therefore, prevented from relying on its failure to satisfy the unsatisfied clause 6.2(a) conditions precedent to say that the contract was at an end because of the nonsatisfaction, or waiver, of the Conditions by the Nominated Date.

49. In this Court, the Contractor did not challenge those parts of the primary judge’s reasoning, which conclude that the Contractor could not rely on –the fact that the Principal had not yet received evidence of all insurances required to be effected by the Contractor under the contract, as required by clause 6.2(a)(ii); andthe fact that the Contractor had not yet provided security, as required by clause 6.2(a)(iv).

50. The Contractor’s challenge to the primary judge’s reasoning focussed on its applicability to what the Contractor contended was the condition precedent in clause 6.2(a)(v) namely, that the Contractor execute a financier’s deed in accordance with clause 47 by the Nominated Date. The Principal correctly submitted that all four of the grounds of appeal which the Contractor pressed turned on that same narrow contention, namely:the condition in clause 6.2(a)(v) had neither been satisfied, nor effectively waived, by the Nominated Date;it had not been provided with a copy of the financier’s deed, with a request that it be executed, before the Nominated Date; andin those circumstances, the non-satisfaction of the Conditions did not occur solely because its own default and, accordingly, her Honour erred in concluding to the contrary.

Consideration

51. For the following reasons, the arguments advanced by the Principal in its notice of contention should be accepted.

52. Pursuant to clause 6.1(b) the need to satisfy the clause 6.2(a) conditions precedent could only be waived by written notice “from the Principal”. The Principal submitted and I would accept that on the proper construction of the clause the Principal could give written notice itself or by an agent purporting to act on the Principal’s behalf, so long as the contract did not preclude the giving of notice by an agent.⁷ In the present case, the Contractor did not submit that the contract should be so construed.

53. Before sending the Notice to Proceed, the Superintendent had sought the Principal’s approval to do so and been advised by the Principal that the notice looked good to the Principal: see [37] and [38] above. That advice must be regarded as the Principal actually authorising the Superintendent to send the Notice to Proceed on its behalf.

54. One issue of construction is that the Notice to Proceed did not explicitly purport to be a notice sent on the Principal’s behalf. As has been noted at [40](d) above, the Superintendent wrote in his “capacity as Superintendent”. Should the notice nevertheless be regarded as notice “from the Principal” and, if so, should it be construed as a notice under clause 6.1(b) waiving further compliance with the clause 6.2(a) conditions precedent?

55. The remarks of Lord Steyn in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 are often cited with approval⁸ and are applicable here:At 768:

“First, in respect of contracts and contractual notices the contextual scene is always relevant. … Thirdly, the inquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases. Given that the reasonable recipient must be credited with knowledge of the critical date and the terms of clause 7(13) the question is simply how the reasonable recipient would have understood such a notice.”

At 771:

“In determining the meaning of the language of … unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.”

56. What would a reasonable businessperson standing in the shoes of the Contractor and knowing what the Contractor must have known have made of the Notice to Proceed?

57. First, and for reasons already mentioned, the fact that the Superintendent wrote in his capacity as such would not communicate to the reasonable businessperson that the notice was not provided as agent for the Principal. One of the two roles of the Superintendent was to give directions as agent for the Principal. The reasonable businessperson must be taken to have appreciated that and would have concluded that the notice was intended to be regarded as a notice given on behalf of the Principal.⁹

58. Second, as at 29 July 2022 the reasonable businessperson would have been acutely aware of the following contextual matters:The original Nominated Date had come and gone.Some works had been done under the contract (see [32] above), but the parties had been explicit that the performance of those works had not altered the existing conditionality of the contract. On 3 June 2022, when ordering the early works package, the Superintendent had been clear that “closing approval to proceed” had not been given, but rather a one-month extension for that to happen had been agreed on.A little over three weeks later, both the Principal and the Contractor had entered into a deed the effect of which was to extend the Nominated Date to 31 July 2022, consistently with the Superintendent’s earlier communication.As previously observed, insofar as the Notice to Proceed did require a clause 47 deed to be executed, it did not require the deed to be executed by the Nominated Date and the request itself had not been made more than 14 days before the Nominated Date.The Contactor had not yet complied with all the clause 6.2(a) conditions precedent, in that –(i)it had not yet received evidence of all insurances required to be effected by the Contractor under the contract, as required by cl. 6.2(a)(ii).(ii)it had not yet provided security, as required by cl. 6.2(a)(iv).29 July 2022 was the last Business Day before the Nominated Date.Accordingly expiry of the time limit for compliance with cl 6.2 was imminent.

59. Third, the terms of the Notice to Proceed were antithetical to the idea that the Principal wished to terminate under clause 6. Although they did not explicitly mention waiver, they did purport to be a direction from the Superintendent that the Contractor should proceed with the contract works. They were a direction from the Superintendent that the Contractor should so proceed “as clause 6.2 under the contract has been satisfied”. The notice was obviously the “closing approval to proceed” which had been referred to in the Superintendent’s email of 3 June 2022.

60. Fourth, having regard to the context in which it was sent, the reasonable businessperson would have regarded the Notice to Proceed as written notice for the purposes of clause 6.1(b). Such a person would have construed the notice as a document which the Superintendent had sent on behalf of the Principal which had the effect of notifying the Contractor that the contract was no longer subject to the otherwise imminent automatic termination provided for by clause 6.1. The effect of the notice was to direct the Contractor to regard the clause 6.2(a) conditions precedent as satisfied. In effect, the Notice to Proceed was a notice that the contract had become unconditional and the Contractor was authorised to proceed with the contract works.

Conclusion

65. The appeal should be dismissed with costs.

66. DALTON JA: I agree with the order proposed by Bond JA and with his reasons.

Footnotes

1. Mackay v Dick (1881) 6 App. Cas. 251. ↩

2. The conditions are better regarded as conditions subsequent rather than conditions precedent, but it is convenient to continue to use the contractual taxonomy. ↩

3. Gange v Sullivan (1966) 116 CLR 418 at 441; See also Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 440 - 442; Havenbar Pty Ltd v Butterfield (1974) 133 CLR 449 at 455 - 456 and Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 544 - 545 and 567. ↩

4. Cf Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 at [50] (Hodgson JA, Mason P and Stein JA agreeing), and V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2021] VSC 849 at [239] to [240] per Digby J. ↩

5. The “closing approval” was obviously a reference to notification from the Principal that the clause 6.2 conditions precedent had been satisfied or waived. ↩

6. The draft notice was in the same form as that which was subsequently sent. ↩

7. Hume Computers Pty Ltd v Exact International BV [2007] FCA 478. ↩

8. See, for example, JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159; 58 VR 393 at [67]. ↩

9. The Contractor seemed to accept that the Notice to Proceed could be so regarded insofar as it operated as a request for the contractor to execute the clause 47 deed, but argued for the contrary view but insofar as the notice might be regarded as a notice from the Principal for the purposes of clause 6.1(b). There is no warrant for that distinction to be drawn. If, as I would conclude, the Superintendent’s email can be regarded as a notice from the Principal, it would have to be regarded as such for both purposes.