23 The referee held (para 201) that the requirements in cl 6 for written notification were not met in respect of claim 5 saying "there was no evidence of a written notice". It is not clear whether the referee was rejecting a submission for the builder or deciding the matter independently. It is well established that in some circumstances a new point of law can be raised for the first time on appeal. The point will be entertained when it arises on the construction of a document, or upon facts admitted or proved beyond controversy. It will not be entertained where evidence could have been given below which by any possibility could have prevented the point from succeeding. See Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, 438; Green v Sommerville (1979) 141 CLR 594, 608; O'Brien v Komesaroff (1982) 150 CLR 310, 319.
24 An appeal from the decision of a Judge to adopt the report of a referee in whole or in part has special features. By adopting the report the Judge does not, without more, adopt any errors in it so as to expose his or her decision to attack on that basis in this Court: Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd (NSWCA, unreported, 8 June 1994) at pp 4, 10-11 per Gleeson CJ. The primary Judge exercises a discretion when deciding whether to adopt a report (DCR Pt 28A r 12(1)) and an appellant must establish an error in its exercise: Super Pty Ltd v S J P Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549. An appellant cannot attack the exercise of the Judge's discretion on the basis of an error in the report where the point was not taken before the Judge.
25 The proprietors have established appellable error in the Judge's findings of waiver and estoppel and the question is whether the respondent can raise a point of law that was not raised before the Judge.
26 The appeal is governed by s 75A of the Supreme Court Act which provides in sub-s (5) that it be a rehearing and in sub-s (10) that the Court may give any judgment or make any order which ought to have been given or made or which the nature of the case requires. These provisions allow the Court to entertain new questions of law in other appeals, and in my judgment they do so in this type of appeal once appellable error has been established. There is nothing in Super Pty Ltd v S J P Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 and Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd, properly understood, which prevents a respondent in cases such as this raising a new question of law once the exercise of the Court's powers under sub-s (10) becomes a live issue. These conclusions are reinforced by the duty imposed on the Court by s 63 of the Supreme Court Act to finally determine, as far as possible, all matters in controversy between the parties so as to avoid a multiplicity of legal proceedings. See also SCR Pt 1 r 3.
27 In para 14 of Mr Bailey's submissions in reply of 14 February, after the Court had reserved its decision, he withdrew paras 3-6 of the Notice of Contention "in relation to the waiver for the Telstra delay". Read literally this left in issue the contention under grounds 4-6 that the builder had given a written notification which complied with cl 6 of the contract, but Mr Bailey may have intended to withdraw grounds 3-6 completely.
28 In my opinion the Court should not act on the withdrawal of grounds 4-6 of the Notice of Contention, if this was intended, where the result, in disregard of this Court's duty under s 63, would be further proceedings in the District Court, further costs, and further delays leading to an inevitable result. Under SCR Pt 51 r 22(1)(c) this Court can exercise its powers notwithstanding the withdrawal of these grounds of contention. The questions were fully argued and in my judgment this is a proper case for the Court to invoke this rule.
29 Under cl 6 the contractor, in the circumstances identified, was entitled to a fair and reasonable extension of time "PROVIDED that the owner is notified in writing … within ten working (10) days of the event". The event refers to one or more of the matters in sub-paras (a) to (l) but the information to be included in the written notification is left to implication. It could simply be "the event", it could be that "the building work" is or will or may be "delayed by reason of" "the event", it could be that a claim will be made for delay "by reason of" "the event", or it could be the claim itself.
30 The last construction should be rejected because it would require the contractor to formulate his claim within 10 days of the event when this might be impossible or impracticable. I would reject the third construction for similar reasons. The contractor may not know within 10 days whether a claim will be made because it may be possible to avoid delay by reorganising or varying the work and other causes of delay may be operating.
31 I would also reject the first construction that the contractor need only notify the owner of "the event". Some of the "events" will be initiated by the owner such as (f) "any instruction of the owner …", (j) "a variation of the Building Work", and (k) "a suspension of the Building Work by" the owner. A construction which would require the contractor to notify the owner that he has given the contractor an instruction would be absurd.
32 This leaves the second construction which I would adopt. There is no absurdity for example in requiring the contractor to notify the owner within 10 days of receiving an instruction that compliance will cause delay because the owner may not be aware of this.
33 In the present case it is necessary to identify the relevant event and determine whether any letter sent to the proprietors was a notification in writing that the building work would be delayed by that event. The referee found that the builder was entitled to an extension of time under cl 6(a) (any alteration to the plans and specifications), 6(f) (any instruction of the owner or failure to give an instruction) and 6(j) (variation of the building work). However there was no alteration to the plans and specifications, no instruction from the proprietors, and no variation of the building work, until the proprietors' instruction of 24 November (blue 1/162). Those events could not cause delay before they occurred and could not support an extension from 14 October.
34 The events which reflect the realities of the situation following discovery of the cable were either the second limb of para (f) "the failure of the Owner to give [an] instruction" or (l) "any other reason over which the Contractor has no control". The only letters from the builder to the proprietors before 14 October which could possibly constitute a notification in writing that satisfied cl 6 in respect of these events are those of 4 and 16 September. The letter of 4 September (blue 3/542) relevantly stated "we are pleased to submit the following quote for your consideration: Extra cost associated with Telstra cable, including labour and equipment $27,450". That of 16 September (1/159) relevantly stated:
"3) We also note that due to the Telstra cable the sewer has to be hand excavated, due to this work a lump sum price would not be fair for you or myself, I feel the best alternative is cost plus builder's margin … Could you please confirm if you would like to proceed with the variations?"
35 The variations included those caused by the cable. The proprietors did not give an instruction to proceed until 24 November. The letter of 16 September implied that the work would be delayed until instructions were received. It was a notification that the cable created a problem and complied with the requirement that the proprietors be notified of any reason over which the builder had no control that would cause delay.
36 The statement "due to the Telstra cable the sewer has to be hand excavated" implies that the builder had intended to use a machine but cannot do so. The letter did not state in terms that the work would be delayed but the proprietors already knew that hand excavation would cause delay.
37 The oral evidence referred to in paras 8-10 of these reasons fully supports the referee's findings referred to in para 13. The knowledge that the parties had of the need for hand excavation, and the delay that this would cause did not dispense with the need for the builder to give an appropriate notification in writing to the proprietors.
38 Where to the knowledge of both parties the proprietors already have the information that cl 6 requires the builder to communicate the notification need not set this out at length. In those circumstances the primary purpose of any written notification will be to provide objective evidence to facilitate contract administration and avoid disputes.
39 The relevant question is whether the letter of 16 September would convey to a reasonable recipient, with this background knowledge, that the building work would be delayed because of the cable. There is no difficulty in so construing this letter. A non-technical approach to its construction is supported by Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, 774 where Lord Hoffmann said that the clause in issue "does not require the tenant to use any particular form of words". This can be said of cl 6. At 767-8 Lord Steyn said:
"The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood [them] … the notices must be construed taking into account the relevant objective contextual scene … The real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation. That depends on what meanings the language read against the objective contextual scene will let in."
40 In its Notice of Contention the builder only relied on its letter of 4 September as a compliance with cl 6 but Mr Bailey relied in oral argument on the letter of 16 September (T 57(16), 58(25, 45), 59(21) and 60(40)). No objection was taken that this was outside the Notice of Contention and if it had been the Court would either have allowed an amendment or brushed aside the objection. The Court is entitled to hold that the letter of 16 September was a sufficient compliance with cl 6.
41 The question of whether the letter of 4 September was also a sufficient compliance is not so clear. The words which could notify a recipient that the cable would cause delay are "Extra costs" and "labour". Both parties knew that the extra costs were for doing the work by hand over a longer period. In my opinion this letter construed in the light of the known background information also satisfied cl 6. The letters of 3 and 4 September also evidenced a waiver of any further compliance with cl 6. The proprietor's request for a quote was a step in contract administration that would normally follow notification of a variation under cl 6. The request dispensed with the notification step and the builder's reliance on the request was evident. I would therefore reject these grounds of appeal and uphold extension of time claim 5 as allowed by the referee and the Judge.
One or two projects
42 The referee held on the true construction of the contract there was only one project although there were different dates for the practical completion of 14 and 14A. Accordingly any extension of time for 14 would automatically extend the time for 14A whether or not the delay was on the critical path (para 40). The Judge upheld this construction. The proprietors claimed in grounds 6 and 7 that the contract provided for two projects so that a delay to 14 did not automatically extend the time for 14A. The referee found that all the successful delay claims lay on the builder's critical path (paras 40, 88, 125, 159).
43 However it is not clear that the referee found that all delays to 14 caused the same or any delays to 14A, and her finding on the Telstra cable delay (para 125) was that:
"Mr Smith agreed that the delay in proceeding with this work affected the critical path of the project on 14A … Mr Finnane also agreed that the delay was on the critical path of the project."
44 Thus there was no finding that the work was also on the critical path for 14. Her findings as to the stair set out for 14 (para 88), and for the retaining wall and underpinning (para 159) were that these caused delays to "the project".
45 It is arguable in relation to these two claims that the referee found that the delays affected both 14 and 14A but there is either a finding to the opposite effect with respect to the Telstra cable delay or at best for the builder the finding is ambiguous.
46 In these circumstances the Court must decide the question of construction. Schedule 4 to the contract specified 25 weeks from 8 August 1997 for completion, but schedule 8 provided a time of 13 weeks for completion of 14 Campbell Avenue.
47 Clause 6 relevantly provided:
"If the Building Work is delayed by reason of: