Eddy Lau Constructions Pty Limited v Transdevelopment Enterprise Pty Limited & Anor

Supreme Court of NSW|2001-12-13|Before: Einstein J

CITATION : Eddy Lau Constructions Pty Limited v Transdevelopment Enterprise Pty Limited & Anor [2001] NSWSC 1136 FILE NUMBER(S) : SC 55035/01 HEARING DATE(S) : 13/12/01 JUDGMENT DATE : 13 December 2001

Eddy Lau Constructions Pty Ltd (Plaintiff) PARTIES : Transdevelopment Enterprise Pty Ltd (First Defendant) John Beresford Dorter and the 76 Partners of Allen Allen & Hemsley (Second Defendant) JUDGMENT OF : Einstein J

COUNSEL : Mr G McVay (Plaintiff) Dr G Flick (Defendants) SOLICITORS : James A. Moustacas & Co. (Plaintiff) Henry Davis York (Defendants) CATCHWORDS : Contract - breach of contract - claim for monies said to be outstanding under contract and damages for breach and repudiation of contract - whether section 92 and 94 of the Home Building Act 1989 (NSW) preclude the plaintiff from relief - construction of statutory definitions - whether contract was "to do residential building work" - whether contingency was required to be satisfied before contract became a contract "to do" building work - whether builder's obligation was conditional upon site being made available to it - conditions precedent - conditions subsequent - whether plaintiff obtained a contract of insurance Commercial Arbitration Act 1985 (NT) LEGISLATION CITED : Home Building Act 1989 (NSW) Home Building Amendment Act 1999 Local Government Act 1993 Casa Maria Pty Ltd v Trend Properties Pty Ltd [New South Wales Court of Appeal unreported 18 December 1998] FAI General Insurance v Gallagher [2000] NSWSC 453 CASES CITED : HIH v Jones [2000] NSWSC 359 PMT Partners Pty Ltd (in liquidation) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 DECISION : "Question 1(a) Sections 92 and 94 of the Home Building Act 1989 (NSW) in force at the relevant time precludes the plaintiff from recovering as against the first defendant any damages or other remedy in respect of a breach of contract or the recovery of money in respect of work done under the contract;; Question 1(b) The execution on 4 August 1998 by the plaintiff and the first defendant of the document entitled "Building Works Contract 8-12 Hornsey Road Homebush" was a contract "to do any residential building work" within the meaning of and for the purposes of section 92(1) of the Home Building Act 1989(NSW);; Question 1(c) Assuming such matters as are factually asserted by the plaintiff in paragraphs 6 and 6A to U of the Third Further Amended Statement of Claim, sections 92 and 94 preclude the plaintiff from recovering as against the first defendant damages or other relief in respect of a breach of contract or the recovery of money in respect of work done under the contract."; The Court orders that the plaintiff pay the first defendant's cost of and occasioned in relation to the hearing of the questions of law separately and in advance of all other issues in the proceedings.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION - COMMERCIAL LIST Einstein J Thursday 13 December 2001 ex tempore Revised 31 January 2002 55035/01 EDDY LAU CONSTRUCTIONS PTY LIMITED V TRANSDEVELOPMENT ENTERPRISE PTY LIMITED & ANOR JUDGMENT 1 The plaintiff builder in these proceedings, Eddy Lau Constructions Pty Limited, claims relief under a number of heads in relation to a contract pleaded by the plaintiff as having been entered into with the defendant on or about 4 August 1998 in the form of a document entitled "Building Works Contract 8-12 Hornsey Road, Homebush". [See paragraph 5, Third Further Amended Statement of Claim] 2 The following questions of law are before the Court for final hearing to be determined separately and in advance of all other issues in the proceedings: '(a) Whether or not sections 92 and 94 of the Home Building Act 1989 (NSW) which were in force at the relevant time ("the Act") preclude the plaintiff from recovering as against the first defendant any damages or other remedy in respect of a breach of contract or the recovery of money in respect of work done under the contract.

(b) Whether or not, the execution on 4 August 1998 by the plaintiff and the first defendant of the document entitled "Building Works Contract 8-12 Hornsey Road Homebush" was a contract "to do any residential building work" within the meaning of and for the purposes of section 92(1) of the said Act.

(c) Whether or not, assuming such matters as are factually asserted by the plaintiff in paragraphs 6 and 6A to U of the Third Further Amended Statement of Claim, sections 92 and 94 preclude the plaintiff from recovering as against the first defendant damages or other relief in respect of a breach of contract or the recovery of money in respect of work done under the contract.' 3 The Third Further Amended Statement of Claim inter alia pleads: s that the "works" referred to in the contract were residential building works within the meaning of the Act [paragraph 6A]; and s that on 21 August 1998 the plaintiff obtained a contract of Insurance in relation to the works which complied with Part 6 of the Act [paragraph 6L]. 4 The plaintiff as against Transdevelopment Enterprises Pty Limited, as first defendant, relevantly claims entitlement to relief solely by reason of alleged breaches of the contract. The claims are underpinned by the circumstance that the first defendant by Notice of 25 March 1999 stated its intention to determine the employment of the plaintiff under the contract for the asserted reason that the plaintiff had failed to comply with clause 6.05 of the contract in that the plaintiff was said not to have obtained a policy of insurance as required by section 92 of the Act. The first defendant by undated notice then purported to determine the employment of the plaintiff under the contract for the reasons set out in the 25 March 1999 notice. The plaintiff shortly pleads that: "The said determination...was wrongful and in breach of the said contract..." [statement of claim paragraph 15]; and

"As a result of the said breach of contract and the repudiation thereof the plaintiff has suffered loss and damages..." [statement of claim paragraph 17] 5 The claims for relief seek moneys said to be outstanding pursuant to the contract and damages for breach and repudiation of contract. 6 The central issue [thrown up by paragraph 13(1) of the first defendant's defence] which falls for determination, concerns the operation of sections 92 and 94 of the Act which at the date 4 August 1998 were inter alia in the following terms: "92 Contract work must be insured (1) A person must not contract to do any residential building work unless a contract of insurance that complies with this Act is in force in relation to the proposed work...

(2) A person must not contract to do any residential building work unless a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, is attached to the contract..."

"94 Effects on contract of contravention (1) A person who enters into a contract in contravention of section 92(1)... (a) is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract or to recover money in respect of work done under the contract under any other right of action (including a quantum meruit action), but

(b) is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person. (2) This section does not affect the liability of any such person for an offence against a provision made by or under this or any other Act". 7 In short the first defendant contends that the plaintiff contravened section 92(1) of the Act in that it contracted to do work by way of the contract executed on or about 4 August 1998 and did not obtain any insurance, if at all, until 21 August 1998. Hence the first defendant contends that by reason of the provisions of section 94, the facts as pleaded, do not entitle the plaintiff to contractual relief. 8 The plaintiff on the other hand contends that there has been no contravention of section 92(1), the submission being that section 92 did not apply to the contract for the reason that the contract was not a contract "to do" residential building work, there having been a contingency which required to be satisfied before it would become a contract to do building work. The claim in respect of the suggested contingency relies upon a number of the clauses in the contract generally related to the builders obligation to commence the execution of the works upon the site being made available by the proprietor [clause 1.03.01] and the builders obligation to bring the works to Practical Completion by the date for Practical Completion [clause 1.03.03]. The submission is that the first defendant's obligation to commence the execution of the works and to bring them to practical completion was conditional upon the site being made available to it. The precise allegations in the statement of claim putting the matter in a number of alternatives are set out below. It will be noted that the words "conditional" or "condition" are to be found in paragraphs 6G and 6S and the words "condition precedent" are to be found in paragraph 6H. The clauses of the contract relied upon by the plaintiff are as follows: "The definitional clause 1.02.06: The Site The lands and other places to be made available by the Proprietor to the Builder for the purposes of this Agreement and as more specifically defined in item B.6 of the Appendix. The definitional clause 1.02.08 The Date for Possession The date on or before which the Proprietor is to make the Site available to the Builder, namely the date stated in item B.8 of the Appendix [that date was 19 August 1998]. Clause 1.03:

The Builder shall: 1.03.01 Upon the Site being made available by the Proprietor commence the execution of the Works; 1.03.02 thereafter regularly and diligently proceed to execute and complete the Works in accordance with this Agreement; and 1.03.03 in doing so bring the Works to Practical Completion by the Date for Practical Completion. Clause 1.04: Proprietor's Obligations The Proprietor shall, subject to the provisions of this Agreement, make the Site available to the Builder on or before the Date for Possession and shall in consideration of the Builder carrying out his obligations under this Agreement, pay to the Builder the Contract Sum. Clause 1.06: Applicable Law: The laws which shall govern this Agreement and any dispute resolution under section 13 shall be those of the State or Territory stated in item C of the Appendix. [NSW was the State identified]" 9 Paragraphs 6A to 6U of the Third Further Amended Statement of Claim are in the following terms: "6A. The works referred to in the said contract were residential building works within the meaning of the Home Building Act 1989.

6B. The works could not be carried out without the prior approval of the Strathfield Municipal Council. PARTICULARS The plaintiff refers to the provisions of section 68(1) of the Local Government Act 1993 and the definition therein of "manufactured home" and the provisions of subsection 3(1) of the said Home Building Act 1989 and the definition of "residential building work" contained therein.

6C. Approval to carry out the works from the said Strathfield Municipal Council came into effect on 25 August 1998.

PARTICULARS (i) On 25 August 1998 the Strathfield Municipal Council delivered to the first defendant a copy of the plans and specifications for the said works with the said Council's endorsement thereon that it was satisfied that the plaintiff had complied with the applicable requirements of Part 6 of the Home Building Act 1989; and

(ii) The plaintiff refers to s.102(3) of the Local Government Act 1993.

6D. By cl.1.03 of the said contract the plaintiff was to commence the execution of the works upon the site being made available to the plaintiff by the first defendant.

6E. The plaintiff says by operation of ss.68 and 102(1)-(3) of the Local Government Act 1993 the first defendant could not make the site available to the plaintiff to commence the execution of the said works until the Strathfield Municipal Council forwarded or delivered to the first defendant plans and specifications for the said works with the said Council's endorsements thereon that it was satisfied that the plaintiff had complied with the applicable requirements of Part 6 of the Home Building Act 1989.

6F. The said Strathfield Municipal Council forwarded or delivered to the first defendant the said plans and specifications with the said endorsement thereon on 25 August 1998.

6G. The plaintiff says that on a proper construction of the said cl.1.03 the obligation of the plaintiff to commence the execution of the said works was conditional upon the first defendant making the site available to the plaintiff.

6H. Alternatively to paragraph 6G cl.1.03 contained a condition precedent to the plaintiff having any obligation to commence execution of the works which was that the first defendant would make the site available to the plaintiff.

6J. By reason of the matters in paragraph 6A-6F thereof the first defendant did not make the site available to the plaintiff to commence the execution of the works until 25 August 1998.

6K. In the premises the condition referred to in paragraph 6G hereof and the condition precedent referred to in paragraph 6H thereof were satisfied on 25 August 1998 when the first defendant was able to make the site available to the plaintiff to commence the execution of the works.

6L. On 21 August 1998 the plaintiff obtained a contact of insurance in relation to the works which complied with Part 6 of the Home Building Act 1989.

6M. Alternatively to the matters in paragraph 6A-6l hereof the plaintiff says and the fact is that as at 4 August 1998 the actual intention of the plaintiff and the first defendant was that the first defendant would make the site available to the plaintiff to commence the execution of the work when the said Council forwarded or delivered plans and specifications in relation to the works to the first defendant.

PARTICULARS (i) The plaintiff through Eddy Lau understood that the said Council would not forward or deliver the said plans and specifications to the first defendant until the Council was satisfied that the plaintiff had obtained a contract of insurance that complied with the Home Building Act 1989; (ii) the first defendant through Chris Tran or its agent Bernard Chiu understood that the said Council would not forward or deliver the said plans and specifications to it until the Council was satisfied that the plaintiff had obtained a contract of insurance with the Home Building Act 1989; (iii) the said Eddy Lau, the said Chris Tran and the said Bernard Chiu understood that the works could not be carried out without approval from the said Council; (iv) the said Bernard Chiu advised Eddy Lau prior to signing the contract that he should organise home warrant insurance before starting work.

6N. In accordance with the said actual intention the said Chris Tran on 24 August 1998 produced a certificate of insurance obtained by the plaintiff to the Council in order to obtain delivery of the said plans and specifications from the Council to enable the plaintiff to commence execution of the works.

6O. In further accordance with the said actual intention on 25 August 1998 the said Chris Tran produced a further certificate of insurance to the Council and obtained delivery of the said plans and specifications from the Council and handed a set of the said plans and specifications to the plaintiff to enable it to commence execution of the said works

6P. In order to give effect to the said actual intention of paragraph 6M hereof a term is to be implied into the said contract that the first defendant would make the site available to the plaintiff to commence the execution of the works when the said Council forwarded or delivered to the first defendant approved plans and specifications in relation to the works.

6Q. Alternatively to the matters in paragraph 6M hereof the plaintiff says that it was the presumed intention of the plaintiff and the first defendant that the first defendant would make the site available to the plaintiff to commence the execution of the works when the Council forwarded or delivered approved plans and specifications in relation to the works to the first defendant.

The plaintiff repeats the particulars to paragraph 6M hereof.

6R. In order to give effect to the said presumed intention a term is to be implied into the said contract that the first defendant would make the site available to the plaintiff to commence the execution of the works when the said Council forwarded or delivered approved plans and specifications in relation to the works to the first defendant.

6S. In the premises the said implied terms contained a condition that the plaintiff was not obliged to commence execution of the works until the first defendant made the site available to the plaintiff.

6T. The plaintiff repeats paragraphs 6A, 6B, 6C, 6E, 6F and 6L hereof.

6U. Further in the premises the said condition in paragraph 6S was satisfied on 25 August 1998 and on that date the plaintiff became obliged to commence the execution of the said works."

The plaintiff's Contentions 10 The plaintiff's written contentions were in the following terms: "3. The obligations on the part of the Respondent under the contract were, as at 4 August 1998 the date of the contract, executory. cl.1.03 and cls.1.02.06 and 1.02.08.

The Respondent's obligation to commence the execution of the works and to bring them to practical completion was contingent upon the site being made available to it. cl.1.03.

Conversely, the obligation in cl.1.04 on the part of the Applicant is promissory.

Cl.1.06 provides for the laws of New South Wales to be applicable laws to the contract. Those laws would include the Home Building Act 1989 and the Local Government Act 1993.

The site could not be made available by the Applicant for the respondent to commence the execution of the works and to bring them to practical completion until what was provided for in ss.68(1) and 102(1)-(3) of the Local Government Act had occurred.

The site could be made available by the Applicant to the Respondent on 25 August 1998 because what was provided for by s.102(3) of the Local Government Act had occurred.

As at 25 August 1998 there was in force an insurance contract that complied with the Act in relation to the proposed work.

Prior to 25 August 1998 the Respondent was obliged by the contract to do nothing.

Until 25 August 1998 the Respondent was not in breach of the contract if it failed to do any building work.

Prior to 25 August 1998 there was no contract to do building work.

The Act contains a prohibition in s.92. The prohibition is on "contract(ing) to do" any residential building work.

The word "contract" is used as a verb and the phrase "contract to do" is a phrase used as a verb. There is no prohibition against entering into a contract but rather a contract for an action - a "contract to do".

By reason of the contingency, being that the site had to be made available, having not been fulfilled as at 4 August 1998 there was no obligation on the Respondent to do any building work at that date. Further, the Applicant could not enforce the contract and require the Respondent to do any residential building work on that date. This is because the contingency had not been satisfied. The Applicant had not carried out its promise to make the site available and the site could not be made available until the provisions of the Local Government Act had been complied with.

The contract became a contract to do building work on 25 August 1998. That was when the Council, pursuant to s.102(3) forwarded a copy of plans to the Applicant endorsed as provided for in s.102(2). At that time there was in force a contract of insurance in relation to the work that complied with the Act.

On the basis of the above analysis it is submitted that as at 4 August 1992, on the approach of the Respondent to the correct interpretation of s.92, the building contract was not a contract to which the provisions of s.92 applied because it was not a "contract to do" residential building work. There was a contingency to be satisfied before it became a contract to do building work.

The legal concepts of conditions precedent and conditional contracts were well known in 1989 when the Home Building Act was enacted. There is nothing in the Act which, on any reasonable interpretation, could be said to take away a well settled legal right which parties who enter into a contract have to defer obligations to perform the contract until a certain contingency is satisfied. To interpret the Home Building Act in the way the Applicant suggests and not to analyse the particular contract to ascertain its nature would be to take away form builders and proprietors alike the flexibility to enter into contracts the performance of which were conditional upon obtaining contracts of insurance. Such a drastic consequence to everyday well-known commercial contracts could not have been envisaged.

This interpretation is reinforced by the provisions of s.94 of the Home Building Act. S94 envisages a builder having expended money and carried out building works seeking to recover those moneys either as damages or some other enforcement remedy including quantum meruit. It also envisages the builder being liable for damages if it has breached a contract in any way. That could include poor workmanship or failing to complete residential building work.

On the analysis contended for by the Respondent the builder would not have expended any moneys on residential building work which he could seek to recover or could not be liable for damages for poor workmanship or not carrying out building works because there was no obligation on the builder to do so if the contingency referred to was not satisfied. In other words, the provisions of s.94 would never have any work to do because the builder would never have an obligation to expend moneys or carry out building works under a contract such as the one signed by the Applicant and the Respondent on 4 August 1998. This is the type of analysis of the contract carried out by the Court of Appeal in the Casa Maria Pty Ltd case." Casa Maria Pty Ltd v Trend Properties Pty Ltd 11 The decision in Casa Maria Pty Ltd v Trend Properties Pty Ltd [New South Wales Court of Appeal unreported 18 December 1998] dealt with sections 92 and 94 of the Act prior to the 1999 amendments. Mason said at pages 1-2: "By reading together subsections (1) and (2) of section 92, one ascertains that the contract of insurance required to be in force by section 92(1) must be in force at the time a person contracts "to do any residential building work". Entry into a contract in contravention of section 92(1) entails the sweeping and dire consequences spelled out in section 94, regardless of whether the common law would have been so harsh and unyielding... Being both penal and confiscatory of legal rights, section 92(1) should be construed strictly." 12 Meagher JA at page 6 of his Honour's judgment said: "This case really resolves itself into one question: bearing in mind that section 92 of the Act forbids an uninsured person from contracting to do any residential building work, is the contract between Casa Maria and Trend Properties to be described as a 'contract to do any residential building work?'" 13 As the first defendant's counsel pointed out, the prohibition against entering into a contract without insurance, as opposed to having insurance at the time when work was performed, had also been recognised in HIH v Jones [2000] NSWSC 359 at paragraph 52 and FAI General Insurance v Gallagher [2000] NSWSC 453 at paragraph 14.

The Home Building Amendment Act 1999 14 As a matter of convenience it is appropriate to note that the Home Building Amendment Act 1999 amended section 92 which relevantly in its amended form then provided in subsections (1) and (2) as follows: "(1) A person must not do residential building work under a contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work, and

(b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract.

Maximum penalty: 100 penalty units. 15 The amended section 94 was in the following terms: "(1) If a contract of insurance required by section 92 is not in relation to any residential building work done under a contract (the uninsured work), the contractor who did the work: (a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and

(b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit). (2) However, the contractor remains liable for damages and subject to any other remedy in respect of any breach of the contract committed by the contractor. (3) Residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of the section if the required contract of insurance for the work is subsequently obtained. Note. If a contract of insurance is in force in relation to part of the residential building work, this section applies only in relation to the part of the work that is not insured."

Dealing with the issue 16 The question is a pure question of statutory construction. 17 In my view there is no substance in the plaintiff's fulcrum contention that the contract was not a contract to which the provisions of section 92 applied. More particularly and contrary to the plaintiff's submissions and pleading, the subject contract was a "contract to do...residential building work" within the meaning of section 92(1) of the Act. 18 The fundamental importance that statutory definitions be construed according to their natural and ordinary meaning unless some other course is clearly required was emphasised in PMT Partners Pty Ltd (in liquidation) v Australian National Parks and Wildlife Service (1995) 184 CLR 301: per Brennan CJ and Gaudron and McHugh JJ at 310. 19 In my view the words "contract to do any residential building work" are in their natural and ordinary meaning, clearly wide enough to encompass an agreement by the parties to do such work in the event of some condition being satisfied, as for example, the contingency that the site be made available by the proprietor. 20 It is instructive to examine PMT which involved the proper construction of section 48 (1) of the Commercial Arbitration Act 1985 (NT) which provided that the Supreme Court "shall have power, on the application of a party to an arbitration agreement...to extend the time...fixed by the agreement...for doing an act...in or in relation to an arbitration". Section 4 defined arbitration agreement to mean (unless the contrary intention appeared) "an agreement in writing to refer present or future disputes to arbitration". 21 A contract for the construction of works in the Northern Territory provided that all disputes should be decided by the contractor submitting a notice in writing to the superintendent not later than fourteen days after the dispute arose. The superintendent was required as soon as possible to give his decision to the contractor. If the contractor was dissatisfied with that decision he was entitled to submit the matter at issue to the principal, the government contracting party, for decision. The principal was required to give its decision to the contractor. If the contractor was dissatisfied with that decision he was entitled to serve notice within twenty-eight days of receiving the decision on the principal, requiring the matter to be referred to arbitration and specifying with detailed particulars the matter at issue. The matter at issue was then to be "determined by arbitration". The contract further provided that if a notice was given requiring the matter at issue to be referred to arbitration, no proceedings should be instituted by either the principal or the contractor in any court unless and until the arbitrator had made his award. The contract did not prescribe a procedure for the principal to refer disputes to arbitration but it provided that a reference to arbitration should be deemed to be a reference to arbitration within the meaning of the laws relating to arbitration in force in the Northern Territory. The contractor did not give notice in writing within fourteen days after a particular dispute arose. It applied for an order under section 48(1) of the Commercial Arbitration Act 1985 to extend the time for the giving of the notice. 22 The judgment of Brennan CJ, Gaudron and McHugh JJ carefully examined previous authorities dealing with the question of whether or not in order for there to be an arbitration agreement, the parties must have agreed that their disputes were to be referred to arbitration, not merely that they may be so referred. Certain previous authorities had reached the conclusion that where there was a clause which conferred a right of election, no arbitration agreement fame into existence until a election was made to have the matter arbitrated. Brennan CJ, Gaudron and McHugh JJ put the matter as follows: "The words 'agreement... to refer present or future disputes to arbitration' in section 4 of the Act are, in their natural and ordinary meaning, quite wide enough to encompass agreements by which the parties are bound to have their disputes arbitrated if an election is made or some event occurs or some condition is satisfied, even if only one party has the right to elect or is in a position to control the event or satisfy the condition." 23 Likewise Toohey and Gummow JJ expressed the view that: "The terms of the definition of 'arbitration agreement' in section 4 of the Act extend to an agreement whereby the parties are obliged if an election is made, particular event occurs, step is taken or condition is satisfied (whether by either or both parties) to have their dispute referred to arbitration. This result is within the ordinary and natural meaning of the terms of the definition and there is no sufficient reason to cut down that meaning." [at 323]. 24 Notwithstanding the different context dealt with in PMT the similarity in reasoning process is clear and supports the holding earlier expressed in these reasons. 25 The plaintiff relied upon the following sentence which appears in the judgment of Mason P in Casa Maria: "As the appellants point out, section 92(1) prohibits the entry into a legally binding commitment which entails a promise 'to do any residential building work'." 26 The plaintiff's submission is that this sentence should effectively be read as if the words "non-conditional" appeared before the words "legally binding commitment". To my mind that submission is not one of substance for the reason that plainly Casa Maria was a case which did not involve, and for that reason cannot be read as having determined, the issue the subject of the above reasons.

Contractual Construction 27 The above reasons approach the matter purely as a matter of statutory construction. Whilst not of particular necessary relevance it may for completeness be convenient very briefly to refer to the appropriate analysis where questions only of contract construction are concerned. 28 Conditions precedent or subsequent in relation to the proper construction of a contract generally treat with a contingency upon which: (a) some or all of the promissory terms depend; and/or

(b) the contract itself depends. 29 From time to time confusion arises as to which of these situations are appropriately described as "conditions precedent" or as "conditions subsequent". Clearly it is necessary for the words to be connected with a definite point of reference in relation to time if this terminology is to make sense: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 541. Precision would assist if for example the situation in (a) was referred to as a "condition subsequent to formation" and the situation in (b) was referred to as a "condition precedent to formation". 30 Whilst as I have said the issue presently before the court is appropriately dealt with simply as a question of statutory construction there is generally a presumption in favour of construing a contract as containing conditions subsequent to formation. Mason J in Perri (supra at 552) put the matter as follows: "Generally speaking the court will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of a contract. In most cases it is artificial to say, in the face of the details settled upon by the parties, that there is no binding contract unless the event in question happens. Instead, it is appropriate in conformity with the mutual intentions of the parties to say that there is a binding contract which makes the stipulated event a condition precedent to the duty of one party, or perhaps of both parties, to perform. Furthermore, it gives the courts greater scope in determining and adjusting the rights of the parties. For these reasons the condition will not be construed as a condition precedent to the formation of a contract unless the contract read as a whole plainly compels this conclusion." 31 Were the matter appropriate to be treated as one of contractual construction only, my view would be that the conditions relied upon by the plaintiff are clearly conditions subsequent to formation.

Contract of Insurance 32 The first defendant seeks to raise a further issue for determination being an alternative submission to the effect that the "contract of insurance" as identified by the plaintiff in its written submissions, is in fact not such a contract within the meaning of the Act. 33 This is not a matter which falls for determination if, as appears form the reasons given above, the court rejects the primary submission of the first defendant that the contract was not one to which the provisions of section 92 applied. Nor as it seems to me, is it a matter which falls for consideration in any event in terms of the separate questions now being heard.

Conclusion 34 In my view the questions of law raised for determination and earlier referred to should be answered as follows: "Question 1(a) Sections 92 and 94 of the Home Building Act 1989(NSW) in force at the relevant time precludes the plaintiff from recovering as against the first defendant any damages or other remedy in respect of a breach of contract or the recovery of money in respect of work done under the contract;

Question 1(b) The execution on 4 August 1998 by the plaintiff and the first defendant of the document entitled "Building Works Contract 8-12 Hornsey Road Homebush" was a contract "to do any residential building work" within the meaning of and for the purposes of section 92(1) of the Home Building Act 1989(NSW);

Question 1(c) Assuming such matters as are factually asserted by the plaintiff in paragraphs 6 and 6A to U of the Third Further Amended Statement of Claim, sections 92 and 94 preclude the plaintiff from recovering as against the first defendant damages or other relief in respect of a breach of contract or the recovery of money in respect of work done under the contract."

Orders 35 The Court orders that the plaintiff pay the first defendant's costs of and occasioned in relation to the hearing of the questions of law separately and in advance of all other issues in the proceedings. It is appropriate to simply stand the proceedings over for further directions and for such motions as Dr Flick may wish to put forward. The proceedings are stood over for further directions to Friday 1 February 2002 and both parties have leave to make returnable on that day any motion seeking any orders which the parties consider should be made ancillary to the answering of the preliminary questions by the judgment just delivered.

I certify that paragraphs 1 - 35 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 13 December 2001 ex tempore revised 31 January 2002

      Susan Piggott
      Associate

31 January 2002

Last Modified: 02/04/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Commercial Arbitration Act 1985(NT)

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