CPB Contractors Pty Limited v Transport for NSW

Jurisdiction: Equity - Technology and Construction List

Before: Hammerschlag CJ in Eq

Decision: Paragraphs of the Second Further Amended Technology and Construction List Statement are struck out

Catchwords: PRACTICE AND PROCEDURE – Practice Note SC Eq 3 – CONTRACTS – Construction – Application to strike out paragraphs of a Technology and Construction List Statement pleading a claim in contract on the basis that no reasonable cause of action is disclosed – Whether such an application should be entertained – Where plaintiff claims an entitlement to delay costs for delay or disruption to it carrying out work on a substantial contract to the upgrade of a highway – Where the Contract, on its proper construction, makes no provision for the Claim – HELD – Claim struck out

Legislation Cited: Civil Procedure Act 2005 (NSW) s 15
Practice Note SC Eq 3

Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36
Baffico v YMCA of Great Lakes Inc [2014] NSWCA 61
David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Limited; Martin John Fletcher v Lendlease Corporation Limited [2019] NSWSC 1631
Electricity Generation Corporation Ltd v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69
Harrington v Browne (1917) 23 CLR 297; [1917] HCA 36
HNOE Limited v Angus & Julia Stone Pty Ltd [2024] NSWCA 271
Lepcanfin Pty Ltd v Lepfin Pty Ltd (2020) 102 NSWLR 627; [2020] NSWCA 155
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] HCA 55
Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17
Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56

Category: Procedural rulings

Parties: CPB Contractors Pty Limited (Plaintiff/Respondent)
Transport for NSW (Defendant/Applicant)

Representation: Counsel:
R Dick SC / E Ball (Plaintiff/Respondent)
N Kidd SC / M Lyons (Defendant/Applicant)
Solicitors:
HWL Ebsworth (Plaintiff/Respondent)
Ashurst (Defendant/Applicant)

File Number(s): 2022/00221645

Publication restriction: Nil

JUDGMENT

Introduction

1. The plaintiff is a construction company. The defendant is Transport for New South Wales, a New South Wales government agency. They are embroiled in a substantial building dispute about an upgrade to the Pacific Highway between Woolgoolga and Ballina on the NSW North Coast.

2. By written instrument styled Deed of Contract Agreement made on 25 October 2017 (the Contract), the defendant as Principal retained the plaintiff as Contractor to do the upgrade. The Contract incorporates General Conditions and a schedule entitled Contract Information.

3. References below to clauses are references to clauses in the General Conditions and references to Items are references to Items in the Contract Information.

4. The principal proceedings were initiated on 28 July 2022 by the plaintiff filing a Summons and Technology and Construction List Statement (the List Statement). The List Statement runs to over 200 pages. The List Statement spawned a List Response and Cross-Claim Statement, running with annexures to some 1000 pages. There is also a List Reply running to some 70 pages and a brief Cross-Claim List Response.

5. The plaintiff’s claims total $188 million.

6. One of its claims is for further allowances for delay costs from wet weather or its consequential effects, which are said to have delayed the Contractual Completion Date. There is no dispute that if the facts support it, such a claim can be brought under the Contract.

7. Another claim (the Claim) – the subject of the immediate controversy –introduced by an amendment to the List Statement on 29 November 2024, is for “delay costs for disruption” amounting to $63.4 million (of the total).

8. For its part, the defendant cross-claims for liquidated damages for delay. The defendant’s claim is of the order of $36 million.

9. By Notice of Motion filed 8 July 2025, the defendant moves for the Claim to be struck out because the Contract, on its proper construction, cannot support it.

Practice Note SC Eq 3

10. The question first to arise was whether the Court should entertain the application.

11. Practice Note [1] SC Eq 3 (the Practice Note) applies to proceedings in the Commercial List and Technology and Construction List (the Lists) of the Equity Division. It contains the following paragraph 65:

Summary judgment

As a general rule applications to strike out or for summary judgment will not be entertained. Sometimes applications are appropriate, but Practitioners should expect strictness in declining to entertain such applications.

12. This provision is one of a number in the Practice Note calculated towards ensuring speedy resolution of the real issues in commercial causes [2] by avoiding time consuming and possibly fruitless applications and the corresponding waste of judicial resources.

13. Commonly, the assessment of whether an application should be entertained or not can (and should) be made summarily (in particular where the Court has received written submissions in advance which is usually the position). This is the same approach to be taken with respect to forum non conveniens applications Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 565; [1990] HCA 55 and class action carriage applications David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Limited; Martin John Fletcher v Lendlease Corporation Limited [2019] NSWSC 1631 at [37].

14. The object of the provision will be defeated if a significant amount of time, that is more than a few minutes, is taken up in oral argument on whether the application should be entertained (especially when the Court then decides not to entertain it).

15. In this case written submissions had been received from both sides. On reading them, my initial impression was that the application had some force, whereas the plaintiff’s position was correspondingly lacking in force, although not necessarily hopeless. However, the ostensible complexity of the argument made it inappropriate, without more, to make an abbreviated upfront determination that the application should or should not be entertained. Rather, I took the course of hearing substantive argument on the footing that a determination that the application should not be entertained remained an option.

16. In a well-known and oft-cited passage in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130; [1964] HCA 69 Barwick CJ said of the jurisdiction to terminate an application summarily for want of a cause of action in the plaintiff is to be sparingly employed and ought not to be used save where the lack of the cause of action is clearly demonstrated. Yet the jurisdiction should not be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, even of an extensive kind, may be necessary to demonstrate that the plaintiff’s case is so clearly untenable that it cannot possibly succeed.

17. In the context of an application like the present one, founded on the proper construction of a contract, the Court of Appeal in Lepcanfin Pty Ltd v Lepfin Pty Ltd (2020) 102 NSWLR 627; [2020] NSWCA 155 at [97] observed that the issue was essentially a question of construction and referred to the statement of Isaacs J in Harrington v Browne (1917) 23 CLR 297 at 307; [1917] HCA 36 that “there can only be one construction given to a contract”.

18. Although the Practice Note adds an additional barrier to applications for summary judgment and striking out, there are cases where they are warranted: see HNOE Limited v Angus & Julia Stone Pty Ltd [2024] NSWCA 271 at [58]-[59].

19. As it turned out, this is such a case.

20. Because of the apparent complexity of the application, I took the course of hearing substantive argument without initially deciding separately whether the application should not be entertained.

21. When close attention is paid to the words of cl 51 of the Contract – around which the immediate controversy is centred – the futility of the Claim is evoked. It is demonstrated to be so clearly untenable that it cannot possibly succeed.

The Contract

22. The Contract defines Contractual Completion Date to mean, relevantly, the last date by which the Contractor must achieve Completion of the Works. [3] It defines Completion, relevantly, to mean the state of the Works being complete (cl 79).

23. Clause 50, headed Changes to Contractual Completion Dates, provides, relevantly, that the Contractor is entitled to an extension of time to any Contractual Completion Date for the number of days assessed by the Principal if the Contractor satisfies the Principal that the Contractor is or will be delayed in achieving Completion by a cause beyond the control of the Contractor which occurs on or before the Contractual Completion Date.

24. It is appropriate to set out the whole of cl 51 even though doing so contributes to the prolixity of this judgment:

51 Delay costs and liquidated damages

Delay costs

.1 The Contractor is entitled to delay costs only for delay or disruption caused by:

.1 a Variation (other than a Variation for the Contractor’s convenience);

.2 failure to give the Contractor access to the Site within the time stated in Contract Information item 13;

.3 subject to clause 8.9, an instruction under clause 8.8;

.4 adverse Site Conditions that differ materially from those the Contractor should reasonably have expected at the close of tenders (subject to clause 37.8 and Contract Information item 37);

.5 resolution of a Fault notified in accordance with clause 38.1;

.6 changes in Statutory Requirements that the Contractor should not reasonably have expected at the close of tenders and that require changes to work in connection with the Contract (subject to clause 49.5);

.7 a suspension instruction under clause 53 if the need for the suspension arises from the Principal’s act or omission; or

.8 a breach of the Contract by the Principal.

.2 Delay costs are calculated at the applicable rate in Contract Information item 49A for the number of working days by which the Contractual Completion Date for the whole of the Works is extended because of a cause (or combination of causes) listed in clause 51.1, subject to the limitations in clause 37.8, 38.4 and 49.6. A working day means a working day as described in Contract Information item 18.

.3 Notwithstanding clause 51.2, the Contractor is not entitled to delay costs for any period when the Contractor:

.1 is delayed by multiple causes, where at least one of those causes is not listed in clause 51.1; or

.2 would have been delayed anyway by another delay (or cause of delay) for which the Contractor has no entitlement to delay costs (regardless of which delay commenced first, or the time of commencement of the respective delays).

.4 The applicable rate of delay costs will be reduced where any part of the Works is being used or occupied prior to Completion under clause 64. The reduced rate of delay costs will be in the same proportion to the original rate as the value of the remaining work is to the Contract Price (as adjusted to the time of occupation). The value of the remaining work will be assessed by the Principal, acting reasonably.

.5 The Contractor has no remedy or entitlement connected with delay or disruption other than:

.1 the amounts to be paid under clause 51;

.2 an extension of time to any Contractual Completion Date to which it is entitled under clauses 48 or 50; or

.3 any remedy it may have under clause 74 or 75.

Liquidated damages

.6 If Contract Information item 49B states that liquidated damages do not apply, the Principal may claim general damages if the Contractor fails to achieve Completion of the Works or any Milestone by its Contractual Completion Date.

.7 If Contract Information item 49B states that liquidated damages apply and the Contractor fails to achieve Completion of the Works or any Milestone by a Contractual Completion Date to which liquidated damages apply, the Contractor will be liable to pay the Principal liquidated damages at the rate stated in Contract Information item 49B for every day after the Contractual Completion Date up to and including the Actual Completion Date.

.8 If, however, the Contract is terminated before the Contractor achieves Completion, any liquidated damages will apply only up to the date of termination of the Contract.

.9 A failure by the Principal at any time to demand payment or to deduct, withhold or set-off the liquidated damages does not amount to a waiver of, or otherwise affect, the Principal’s rights and entitlements.

.10 If any Contractual Completion Date is extended after the Contractor has paid or the Principal has deducted liquidated damages, the Principal must re-pay any excess liquidated damages to the Contractor, subject to any right of set-off.

.11 The applicable rate of liquidated damages will be reduced where any part of the Works is being used or occupied prior to Completion under clause 64. The reduced rate of liquidated damages will be in the same proportion to the original rate as the value of the remaining work is to the Contract Price (as adjusted to the time of occupation). The value of the remaining work will be assessed by the Principal, acting reasonably.

.12 The Contractor acknowledges that the rates for liquidated damages in Contract Information item 49B are a genuine pre-estimate of the Principal’s loss and agrees that it will not challenge any rate for liquidated damages as being in the nature of a penalty.

(Of cl 51.1 only sub-clauses .1 and .3 are relevant. Clauses 37.8, 38.4 and 49.6 have no role to play in the current controversy.)

25. Clause 8.8 makes provision for the Principal to instruct the Contractor to use a particular work method or change a specified work method and that if the Principal does so without the Contractor first agreeing in writing the effects of the instruction, the Contractor may claim an extension of time in accordance with cl 50 and consequent delay costs under cl 51. Clause 48 entitles the Principal to instruct a Variation before Completion of the whole of the Works.

26. The Contract includes as Item 49A Table 2 which sets out the monetary rates which apply for delay costs per working day for any “delay to Completion of the whole of the Works”. A working day is defined in Item 18 as Monday to Friday and Saturdays but excluding proclaimed public holidays and the Contractor’s rostered days off.

The Pleading of the Claim

27. Paragraph 7 of the List Statement pleads express terms of the Contract. Paragraph 7(wA)(i) and (ii) plead:

(wA) CPB is entitled to delay costs for delay or disruption caused by:

(i) a Variation;

(ii) subject to clause 8.9, an instruction under clause 8.8;

…

Particulars

General Conditions, clause 51.1

28. Paragraph 7(wB) pleads:

(wB) delay costs under clause 51 are calculated at the applicable rate in Contract Information item 49A for:

(i) the number of working days by which the Contractual Completion Date for the whole of the Works is extended because of a cause (or combination of causes) listed in clause 51.1; and

(ii) the number of working days of disruption which occurred on the Project during the period of the delay to Completion because of a cause (or combination of causes) listed in clause 51.1,

subject to the limitations in clauses 37.8, 38.4 and 49.6

Particulars

(A) General Conditions, clause 51.2.

(B) Contract Information, items 18 and 49A.

(C) A working day means between 7am to 6pm Monday to Friday inclusive, and Saturdays 8am to 5pm but excluding proclaimed public holidays and CPB’s rostered days off.

(D) The applicable rates for delay costs are set out in Table 2 of item 49A of the Contract Information.

(emphasis added – the emphasised words articulate the Claim)

29. Paragraph 329 (read with paras 324 to 328) pleads that the plaintiff was delayed in achieving Completion because of instructions amounting to Variations given by the defendant. In the particulars to the paragraph, it is said that achieving Completion was delayed by 159 working days. Paragraphs 331 and 332 plead that the plaintiff is entitled to an extension of time to the Contractual Completion Date of at least 159 working days. Paragraph 334 pleads that by reason of these matters the plaintiff is entitled to delay costs for delay or disruption calculated in accordance with the Contract Information for at least 159 working days which yields a figure of $11.9 million. This number of working days is particularised as comprising four different periods of working days, each said to be due to a particular instruction. The periods in working days are 17, 62, 32 and 48, respectively.

30. It will be readily appreciated that this claim squares with the uncontroversial elements of cll 50 and 51 namely:

31. a Variation and/or instructions (cll 51.1.1 and 51.1.3);

32. entitlement to an extension of time in a specified number of working days to the Contractual Completion Date for the whole of the Works;

33. application of the delay costs rate to that number of working days;

34. But then, the plaintiff goes on to plead (para 334(b)) that, because of the defendant’s instructions, it is also entitled to delay costs for delay or disruption calculated at the applicable rate in the Contract for “the number of working days of disruption within the meaning of cl 51.1 of the Contract that occurred during the period of the delays to Completion” referred to. In the particulars it says that the instructions caused 839 days of disruption valued at $63.4 million.

35. The plaintiff identifies that during each period of working days forming part of the delay claim a significantly greater number of working days of disruption “occurred across the Project” for which it is entitled to delay costs for disruption. In relation to the 17 working days component of the delay claim it says that 109 working days of disruption occurred during that period.

36. The underlying thesis of the Claim is that cl 51 permits two kinds of claims for delay costs for delay or disruption. The first (and uncontroversial for present purposes) is for those working days by which the Contractual Completion Date has blown out for a cause specified in cl 51.1. The second (and highly controversial) is for working days of disruption which played no part in the blowout of the Contractual Completion Date but which were lost due to disruption during the period of working days by which the Contractual Completion Date must be extended (and claimed for in the first claim).

37. Paragraphs 381(b) and 383(b) refer to paras 7(wA), 7(wB), 335-6 and 376-9. They plead the Claim slightly differently, based on a failure by the defendant to be satisfied of the plaintiff’s entitlement to delay costs for “the number of working days of disruption that occurred during the period of the delays to Completion specified in paragraph 334(a) above because of the instructions”. The difference in pleading is immaterial for present purposes. It was not suggested that the outcome of the application is affected by the difference.

The Arguments

35. The defendant argues that:

36. the plaintiff pleads an express term of the Contract as the basis for the Claim;

37. an examination of the Contract reveals that it contains no such term;

38. clauses 50 and 8.8 work clearly and congruently with cl 51.1. The first two contain a structure for the granting of extensions of time and the third provides an entitlement to delay costs calculated by multiplying the number of working days by which the Contractual Completion Date is extended by the specified monetary rate;

39. the plain meaning of cl 51.2 is that delay costs are calculated at the applicable rate for – meaning in respect of – the number of working days by which the Contractual Completion Date for the whole of the Works is extended leaving no room for a separate claim for delay costs for disruption which has no effect on the Contractual Completion Date.

40. The plaintiff argues that:

41. clause 51 distinguishes between, and permits separate claims for, delay costs respectively, for delay and disruption;

42. the terms delay and disruption have the following different and specialised meanings which are well-known in the construction industry: delay means an event that gives rise to an extension of the time required to complete a project – sometimes called “critical path delay”; disruption is “non-critical delay”; being an event which causes delay to work activities off the critical path, that is, not causing completion of the Project to be delayed. The plaintiff intends to call expert evidence to support this;

43. clause 51 should thus be construed as recognising claims for disruption which have not caused any delay in Completion of the whole of the Works;

44. where used in cl 51.2, the word for in the phrase “for the number of working days” means during;

45. accordingly, provided the disruption occurs during the working days which are lost and which cause an extension of the Contractual Completion Date, it is compensable at the specified rate (even though it does not itself cause any delay in the Completion of the Works);

46. limiting claims for disruption in that way is a brake on claims for disruption.

Consideration

37. The Contract is a commercial contract which is to be given a business-like interpretation. Interpreting it requires attention to the language used by the parties, the commercial circumstances which it addresses, and the objects which it is intended to secure. The meaning of the words chosen is determined objectively by reference to its text, context, and purpose, the question being what a reasonable businessperson would have understood them to mean. Preference is given to a construction supplying a congruent operation to the various components of the whole, so as to avoid commercial inconvenience. Where language is open to more than one construction, the Court will prefer a construction which avoids consequences which are capricious, unreasonable, inconvenient or unjust (see Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22]; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [22]; Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at [82]; Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [15]; Electricity Generation Corporation Ltd v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [47]-[51]). See too Lepcanfin (supra).

38. The plaintiff’s construction cannot be right because:

39. contrary to the settled canon that the words of a contract can only have one construction, the plaintiff’s construction requires the word for (where it first appears in cl 51.2) to be given ambulatory construction and therefore operation, when applied to a claim for delay which caused an extension of the Contractual Completion Date as opposed to a claim for disruption which did not cause such an extension. In the first case, for bears its ordinary English meaning of “in respect of”, but in the second case, ie. the Claim, it has to mean “during”;

40. when the phrase “for the number of working days by which the Contractual Completion Date for the whole of the Works is extended” is applied in the first case, what is required is simply to multiply the applicable rate in Item 49A Table 2 by the number of working days of the extension. However, with the Claim the plaintiff would have it that one takes a number of working days calculated by periods of disruption during the period when there were events which caused an extension of the Contractual Completion Date and multiplies that by the applicable rates in Item 49A Table 2. This gives no work to the words “by which the Contractual Completion Date for the whole of the Works is extended”. It entails an operation for which cl 51.2 does not provide;

41. the only provision for calculation of delay costs is cl 51.2 and the only method of calculation is the application of the specified rate to the number of working days by which the Contractual Completion Date for the whole of the Works is extended. It is not necessary to determine whether the terms delay and disruption are terms of art having some meaning different from their ordinary English one. Even if they do, all the rates specified in Item 49A Table 2 are expressly “For any delay to Completion of the whole of the Works…”. There is no provision in the Contract for any other calculation such as that required by the plaintiff’s construction. There is no machinery for any claim to be made or assessed whether for delay or disruption which does not cause an extension to the Contractual Completion Date for the whole of the Works;

42. there is no discernible commercially rational reason why the plaintiff should be compensated where there is an extension to the Contractual Completion Date for the whole of the Works as well as for disruption during the period which gives rise to the extension of the Contractual Completion Date but which itself plays no part in bringing about that extension. Its construction and operation leads to the commercially irrational possibility that the plaintiff is entitled to two heads of compensation referable to a single period, the second head of which does not entail any extension to the Contractual Completion Date of the whole of the Works and which (as it does in the case of the Claim) can exceed the compensation referable to the period of the extension by multiples. The claim in the first category is for $11.9 million, the claim in the second is for $63.4 million, a commercially absurd result;

43. there is no commercially rational reason for the brake for claims for disruption which the plaintiff suggests;

44. the plaintiff’s construction requires an examination of periods of disruption and conversion of those periods into working days without any reference to the number of working days by which the Contractual Completion Date is extended, an exercise for which the Contract makes no provision.

Conclusion

39. Paragraphs 7(wB)(ii), 334(b), 337(b), 381(b) and 383(b) of the Second Further Amended Technology and Construction List Statement are struck out.

40. I provisionally order that the plaintiff is to pay the defendant’s costs of the motion. This order will solidify seven days after delivery of this judgment unless any party notifies the other party and my Associate, in writing, that some other order is sought, specifies the order and provides brief grounds. If notice is given, the order will not take effect and I will determine any costs issues.

41. The proceedings are stood over into the Technology and Construction List on 19 September 2025 with liberty to apply on three days’ notice.

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Endnotes

Section 15(1) of the Civil Procedure Act 2005 (NSW) provides that subject to rules of court, the senior judicial officer of the court may issue practice notes for that court in relation to civil proceedings to which the Act applies. Practice Notes govern or guide the way in which proceedings are to be expected but they operate and are to be read in conjunction with the Rules: Baffico v YMCA of Great Lakes Inc [2014] NSWCA 61 at [31].

An area in which the efficient circulation of money is critical to society’s prosperity: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [137].

Specified to be 120 weeks from Date of Contract.