JJ Armstrong v Hope St Judgment [2017] VCC 1247

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Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613

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Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424

CJD Equipment Pty Limited v A&C Constructions Pty Limited & Ors [2011] NSWCA 188

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County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193

Craig Williamson Pty Ltd v Barrowcliff [1915] VicLawRp 66; [1915] VLR 450

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640

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Home Site Pty Ltd v ACN 124 452 786 Pty Ltd (fka Nahas Construction (NSW) Pty Ltd) [2017] NSWSC 698

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Metier3 Pty Ltd v Enwerd Pty Ltd & Anor [2014] VSC 80

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Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 26 ALR 567

SGIC v Sharpe (1996) 126 FLR 341

Silent Vector Pty Ltd t/as Sizer Builders v Squarcini [2008] WASC 246

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Summary of issues: other matters and the net result5

How should the term 'building permit' be construed12

Can Hope St claim general damages or equitable compensation for delay?20

Was there an intention to create legal relations?43

What impact does any denial of access have on Hope St's defects damages claim?72

What damage has Hope St suffered from defects and incomplete work?84

Part 12A of the Building Act94

1 According to Wikipedia "Brunswick is known for its local bohemian culture, strong arts community and large student population, owing to its proximity to the University of Melbourne and RMIT University". The defendant ("Hope St") is a family company that provides student accommodation in inner Melbourne. By a standard form building contract signed on 10 May 2012 ("Contract"), Hope St engaged the plaintiff ("JJ Armstrong") as contractor to construct student accommodation at 6 Hope St in Brunswick. The accommodation comprised five floors, 22 units of various sizes, a common room and other common areas, an office and a ground floor shop.

2 Michael Dikeakos was the sole director of Hope St until 20 October 2014, when he was replaced as director by his father George Dikeakos. However, he remained involved in the business of Hope St as Operations Manager, and continued to have the day to day management of the building project. The directors of JJ Armstrong are John Newbold and his son Ben Newbold. JJ Armstrong's contract manager for most of the period of the project was James Lenhart. Mr Lenhart left the employ of JJ Armstrong in April 2014, about half-way through the defects liability period under the Contract.

3 The Contract at the heart of this proceeding is the Australian Building Industry Contract, Major Works known as the ABIC MW-2008. This form of contract was selected by the project architect, Peter Brown Architects Pty Ltd ("PBA"), which also acted as the administrator under the Contract. Peter Brown, the principal of PBA, has been in continuous practice as an architect for just short of 50 years. The Contract is his preferred contract form and his firm has been appointed as architect under this contract at least six times since the early 2000s. He was assisted in administering the Contract by PBA's employee David Ta.

4 PBA purported to issue a Final Claim Certificate under the Contract on 26 November 2014 ("first FCC") and then a revised Final Claim Certificate on 24 April 2015 ("revised FCC"). The validity of the revised FCC is in dispute in the proceeding. It certified that, after allowing $11,417 for the value of defects work to be carried out and $15,000 being a "previously agreed delay loss contribution by Builder", there was $71,116.35 due by Hope St to JJ Armstrong. JJ Armstrong sues on the revised FCC for payment of this sum. However, Hope St asserts that the amount owing to it for delay is $125,952 and the cost to it of rectifying the defects is $222,173. After allowing for the balance payable to JJ Armstrong under the contract, Hope St's counterclaim against JJ Armstrong is for $343,670.05, including interest on the delay damages and the cost of building reports.

5 The central question in this proceeding is who owes what to whom. Resolution of that question of course requires consideration of a number of subsidiary questions. The formulation of those subsidiary questions in the form of a document entitled "Summary of Issues" was something of a moving feast both before and during the trial. Having considered the written submissions of both parties, including their discussion of the most recent iteration of the Summary of Issues document, I consider that the questions that ultimately fall for determination in the proceeding are best summarised as set out below. I have also set out following each question a brief statement of my answer.

(a) The LD agreement: Was an agreement made between the parties on 8 November 2013 fixing the amount of liquidated damages that Hope St could claim under the contract ("LD Agreement")? More particularly:

• Was there an intention at the lunch meeting on 8 November to create legal relations? Answer: Yes, although the question is finely balanced.

• If so, is it possible to distil from what occurred at the meeting an objectively ascertainable common intention as to the key elements of an agreement? Answer: No. The key elements are, first, the amount that the parties agreed to fix as Hope St's liquidated damages and, second, what (if anything) JJ Armstrong was contributing to the resolution of Hope St's liquidated damages claim. There was no objectively ascertainable common intention in relation to either of these matters.

• If so, was JJ Armstrong's contribution sufficient consideration for Hope St's agreement to fix the amount of its liquidated damages claim? Answer: No need to answer. But even if I accepted JJ Armstrong's characterisation of what it contributed to the resolution of Hope St's liquidated damages claim, that was not sufficient consideration.

(b) Amount of delay damages: If there was no LD agreement, is Hope St entitled to damages or compensation for delay and, if so, in what amount? This issue requires consideration of the legal basis for Hope St's claim, the ascertainment of the period of delay (which in turn requires consideration of the date for practical completion and the date of practical completion) and how damages or compensation for that period are to be assessed. Answer: Hope St is entitled to damages or equitable compensation for delay in the amount of $86,062.

(c) Access to site: Did Hope St limit or deny JJ Armstrong access to the site in a way that impeded or prevented JJ Armstrong from rectifying defects and completing incomplete works and, if so, did that conduct amount to a breach of express and implied terms of the Contract to co-operate and not to prevent performance or was it a failure by Hope St to mitigate its loss (or both)? Answer: Hope St did limit and deny access to an extent that gave rise to a failure to mitigate its loss.

(d) Defects: What items of defective or incomplete work is JJ Armstrong obliged by the Contract to rectify and what amount should be allowed in favour of Hope St in respect of those items (including by having regard to the access to site issue and the fact that certain of those items may give rise to remedies under Part 12A of the Building Act 1993 (Vic))? Answer: By reason of its failure to mitigate its loss, Hope St is entitled only to an amount in respect of defects and incomplete work by reference to the "builder's cost", being the cost to JJ Armstrong of rectifying and completing those works. But that cost is not reduced because certain items may give rise to remedies under Part 12A of the Building Act 1993 (Vic). The total payable by JJ Armstrong to Hope St in respect of defects and incomplete works is $58,549.

Summary of issues: other matters and the net result

(e) The Final Claim Certificate: Is the FCC valid and, if so, what part does it play in the determination of the other issues in the proceeding? Answer: The FCC is invalid. Even if it were otherwise, it is merely evidence of the matters it certifies and a factor to be weighed into the balance of the evidence (if any) on each of those matters.

(f) Site ownership: Is any claim by Hope St in respect of delay or defects precluded in any event by a failure to obtain written permission from the property owner for the works to be carried out, or by the fact that Hope St is not the owner of the property? Answer: No.

(g) The net result: Having regard to the answers to the questions above and after allowing for the retention amount (including GST) of $91,579.35 payable by Hope St to JJ Armstrong, what is the amount owing and to whom? Answer: After allowing for the retention amount (including GST) of $91,579.35, there is $53,031.65 payable by JJ Armstrong to Hope St.

6 At the commencement of the trial, counsel for JJ Armstrong submitted that the usual course of the openings, evidence and closing addresses ought to be reversed. The basis for the submission was in substance that the overwhelming weight of the issues in the proceeding arose from Hope St's counterclaim. This would mean that the bulk of the evidence from JJ Armstrong's witnesses, after seeking to prove the formalities of the revised FCC, would be taken up with evidence in anticipation of the case to be put on behalf of Hope St.

7 I indicated to counsel for Hope St that I had some sympathy for JJ Armstrong's suggested approach, primarily because it was likely to avoid the possibility of JJ Armstrong's witnesses giving evidence on topics that later turned out to be uncontroversial. Hope St's counsel submitted that it was not unusual for a plaintiff's witnesses to be required to give evidence in anticipation of issues that may be raised for the defendant, but indicated that he had no substantive objection to reversing the order of addresses and witnesses.

8 While agreeing with Hope St's counsel that the circumstances of this case were not particularly unusual, I saw some potential for time saving in JJ Armstrong's suggestion, and in view of the lack of objection, acceded to it. I directed that the trial commence with an opening on behalf of Hope St, followed by an opening on behalf JJ Armstrong and that Hope St's two lay witnesses be called next. This would be followed by the lay evidence on behalf of JJ Armstrong and then concurrent evidence from experts.

9 A number of other procedural issues arose during the trial, namely:

• the implications of JJ Armstrong's late filing and service of the expert report of Dr Eilenberg;

• the debate over the iterations of the Summary of Issues document;

• Hope St's successful application for leave to rely on their further amended reply to amended defence to counterclaim dated 26 May 2017;

• Hope St's notice on 31 May 2017 that it did not press its liquidated damages claim calculated at $671,000, and instead claimed common law damages or equitable compensation totalling $125,952;

• JJ Armstrong's successful application for leave to file and serve a rejoinder dated 2 June 2017 (including debate over various iterations of that document); and

• JJ Armstrong's unsuccessful application to adduce expert evidence from Mr Brown.

10 It is necessary for me to say a little more about the last of these issues. I had anticipated also needing to say something about the second last issue, but given my findings below essentially rejecting the matters raised in the rejoinder, it is no longer necessary for me to do so.

11 I describe the Contract as being at the heart of the proceeding because the parties are both experienced participants in commercial property development who made an informed choice (guided by Mr Brown) about the terms that would govern all aspects of their commercial dealings. And those terms are both extensive and comprehensive. Thus they play a central role in the consideration of every issue in this proceeding and will be the first and, in some cases, the only point of reference for determining those issues.

12 Moreover, any unilateral decision by a party or PBA as contract administrator to depart from or disregard those terms, whether as a consequence of leaving the contract "in the bottom drawer" or otherwise, carried a significant risk. Namely, that the decision would in due course come to be measured against what the Contract required, and fall short. That is, to a significant extent, what has occurred in this proceeding.

13 The circumstances of the completion and execution of the Contract are largely uncontroversial. Mr Brown's evidence was that he provided a blank form of the Contract for both parties to familiarise themselves with. He asked JJ Armstrong to provide the detail to be inserted into the schedules to the Contract and submit this to Mr Brown to consider and revise on behalf of Hope St. Mr Brown wrote up the Contract accordingly and then met with Michael Dikeakos and John Newbold on 10 May 2012 to go through the completed Contract, deal with any queries and then execute the Contract.

14 There was some controversy concerning how the rate for liquidated damages at item 30 of Schedule 1 to the Contract was arrived at. There is no dispute that the words "$250 per day per unit" were written in by Mr Brown and agreed to by the parties. Michael Dikeakos gave evidence that the figure of $250 per day per unit was proposed by Mr Brown at the meeting to finalise the Contract, with Mr Brown describing it as being "a standard industry figure". According to Mr Dikeakos, Mr Newbold agreed saying, "that's fine, not a problem".

15 The substance of Mr Brown's evidence was that JJ Armstrong had inserted that figure in the process of completing a draft of the Contract prior to revision and completion by Mr Brown. Mr Brown said that he queried Mr Newbold on the figure, probably over the phone when he was in the process of revising and preparing the execution copy of the Contract. According to Mr Brown, he recommended to JJ Armstrong that the amount was excessive, but Mr Newbold was prepared to proceed with the figure.

16 Mr Brown later gave evidence that he believed that the true damage measurement would have been $250 per week per unit (rather than $250 per day per unit), because that reflected the market rate that those units would be let out at. He went on to say that he knew at the time the Contract was signed what the market rental rates generally would be, and he mentioned to Mr Newbold that $250 per week per unit was more in line with those rates. Mr Brown did not recall expressing the same concerns to the Hope St representatives at this time. The evidence is that he first suggested to Hope St some 18 months later (in correspondence and discussions shortly before the lunch meeting on 8 November 2013) that the liquidated damages rate set by the Contract may not be enforceable.

17 When Mr Brown's evidence about how the liquidated damages rate was selected was put to Mr Newbold during cross-examination (he was not asked about it during his evidence in chief), Mr Newbold said: "Mr Brown is incorrect". He said he was not the one who originated the liquidated damages rate: "we've never done that...we have no access to that information to be able to do that, and it did not happen".

18 I have annexed to these reasons the relevant provisions of the Contract. Key among them are:

• clause A1 - setting out the obligation of both parties to act reasonably and cooperative;

• clause A6 - concerning the role of the Architect in administering the Contract;

• clause A8 - dealing with the process for disputing a certificate or decision issued by the architect, or the architect's failure to issue a certificate or decision;

• clause A10 - which provides that compensation is the sole remedy under the Contract;

• clause G4 - providing that the contractor is liable for the work done by sub-contractors and must take responsibility for any acts or omissions of suppliers or subcontractors;

• clause H1 - which sets time limits for making claims to adjust the Contract;

• clause M - dealing with practical completion, liquidated damages and defects; and

• clause N - dealing with payment obligations and the final certificate.

19 Although an examination of the period of delay pre-supposes that there was no agreement to fix the amount of delay damages, it is convenient to begin with that issue, as it falls for consideration first in the order of events.

20 Mr Brown wrote the words in the Contract "date of building permit issue" (as the date in Schedule 1, item 18 by which the owner must give possession of the site) and "twelve months after issue of building permit" (as the date in Schedule 1, item 27 for practical completion). Mr Brown's evidence was that, both at the time he inserted those words and by the time the parties executed the Contract, the expectation among Mr Dikeakos, Mr Newbold and Mr Brown was that there was going to be only a single building permit issued.

21 The choice of a date for practical completion, being 12 months after the anticipated issue of the building permit was important to Mr Dikeakos because this would coincide with the university semester break and provide Hope St with the ideal opportunity to market the accommodation to students due to commence university at the beginning of the second semester. Mr Brown agreed that he was present at conversations leading up to the start of the Contract where it was clear to all parties that the twelve month contract period was important to Hope St because they would capture the midyear semester break for university students.

22 Mr Dikeakos's recollection was that the decision to split the building permit into two stages was the result of a round table discussion he attended with Peter Brown, PLP (the building surveyors) and John Newbold. Mr Dikeakos made it clear that Hope St wanted the construction completed by the semester break. He was pretty sure that it was suggested by Mr Newbold and also PLP that the building permit could be split, so there was a permit to get the construction "out of the ground", while all the documentation was finalised to enable the issue of the second stage permit.

23 Similarly, Mr Brown's evidence was that the reason for the two permits was "to commence work as quickly as possible". He said that staged permits are a common technique, so that outstanding issues that may involve finishes and other non-structural matters do not delay the project. Both Mr Dikeakos and Mr Brown thought that the outstanding issue delaying the permit (and thus leading to the splitting of the permits into two stages) concerned the fire engineering report.

24 The first permit is titled "Building Permit Stage 1 - (Structural and Civil Works Only)" and is dated 12 June 2012 ("Stage 1 permit"). The cost of stage 1 is stated in the Stage 1 permit to be $1,140,810, being about one third of the total cost of $3,400,000. The second permit is titled "Building Permit Stage 2 - (Completion of Works)" and is dated 20 September 2012 ("Stage 2 permit").

25 Mr Dikeakos's evidence was that the work commenced within a week or so of the Stage 1 permit being issued. Minutes of "Site Meeting Number 1" dated 3 July 2012 confirm under item 4.0, a contract start date of 12 June 2012, a contract period of 12 months and a completion date of 12 June 2013. Mr Dikeakos was present at that meeting and gave evidence that there was no concern or complaint raised during the meeting by Mr Newbold or anyone else about the 12 month contract period needing to start from a later date.

26 Similarly, Mr Brown's position as at the date of the receipt of the Stage 1 permit, was that the contract period of 12 months ran from that date. Mr Brown's recollection was that JJ Armstrong provided a building program, probably after the issue of the Stage 1 permit, and that it did not provide for stages of works to be split between Stage 1 and Stage 2, but was a continuous program. Mr Brown did not recall Mr Newbold saying anything to him to the effect that the building program might have to be changed because JJ Armstrong only had a Stage 1 permit. Mr Brown confirmed that by the time of the first site meeting on 3 July 2012, JJ Armstrong had commenced work and had started issuing progress claims.

27 It is not in dispute that JJ Armstrong never made any claim for an extension of time in relation to the splitting of the building permits or otherwise in connection with the issue of the Stage 2 permit on 20 September 2012. Further, there is no evidence that JJ Armstrong was in fact delayed by the splitting of the building permits or the issuing of the Stage 2 permit some four months later than the Stage 1 permit.

How should the term 'building permit' be construed?

28 I agree with JJ Armstrong's submission that whether JJ Armstrong did or did not subsequently claim extensions of time based on the Stage 2 permit is not relevant to this issue. The question is purely one of the proper construction of Schedule 1, item 27 of the Contract. In my view, on its proper construction, the expression 'building permit' as it appears in Schedule 1 item 27, is a reference to the permit pursuant to which construction commenced on the site, being the Stage 1 permit.

29 The term "building permit" appears twice in Schedule 1 of the Contract: in item 18, "date by which the owner must give possession of the site", being "date of building permit issue" and item 27, "date for practical completion", being "12 months after issue of building permit". It is a fundamental rule of construction that any document should be construed as far as possible so as to give the same meaning to the same words wherever those words occur in that document.[1] Although this principle is better known as a principle of statutory construction, it applies equally to the construction of contracts.[2]

30 In my view, the reference to "building permit" in Schedule 1 item 18 can only mean the building permit that entitles the contractor to enter into possession of the site and commence construction. The words "building permit" in Schedule 1 item 27 should be given the same meaning. Such a construction is also consistent with the relevant surrounding circumstances and the commercial purpose of the Contract. I agree, in this regard, with Hope St's submissions.[3]

31 The evidence establishes that at the time the Contract was executed, the intention of the parties was that there would be a single permit. That intention is objectively apparent both from the form of words selected for Schedule 1 items 18 and 27 and from the fact that the idea of splitting the permits first arose after the Contract was executed. Thus at the time of execution of the Contract, the expectation was that construction on the site would commence on a particular date and proceed continuously until completion. The later splitting of the permits did no more than facilitate an earlier start date than would have been possible if the parties had been forced to await finalisation of the prerequisites to the Stage 2 permit.

32 I agree with JJ Armstrong's submission that the change in circumstances after the Contract was executed resulting in a single permit becoming two permits, has given rise to a "latent ambiguity" in the Contract. However, in my view, a commercial result is achieved by resolving that ambiguity in favour of a construction that "building permit" in Schedule 1 item 27 means the permit that facilitated commencement of construction (being the Stage 1 permit). As Hope St submitted, the alternative view that the Stage 2 permit marks the commencement of the Contract period disregards the preceding three months of work which was in fact carried out on the project, claimed for and paid. To me, that is a result that gives rise to the kind of commercial nonsense eschewed by the authorities on which JJ Armstrong's submissions rely.

33 JJ Armstrong has submitted that clause R14.1 of the Contract supports the preferred interpretation of "building permit" as plural. In my view, converting the term into the plural form "building permits" does not advance the argument. It remains productive of ambiguity when looked at in the context of the Contract as a whole, particularly in light of Schedule 1, item 18. Thus the same construction analysis is engaged, with the same result.

What was the date for practical completion?

34 Although the documentation concerning the progress of the building project did not identify precisely when and why this occurred, there was no dispute between the parties that the original date for practical completion of 12 June 2013 was at some point extended to 1 July 2013. Mr Brown gave evidence that there were claims for delays that would have been certified to that extent. There is, however, a dispute about whether the date was further extended to the end of July 2013.

35 In anticipation of completion in June 2013, Hope St commenced advertising for tenants in about mid-April 2013. The advertising coincided with open days for the various nearby universities. Hope St was able to secure 5 tenants at rentals ranging from $1,304 per month to $1,704 per month. In cross-examination, Mr Dikeakos explained that the documents giving details of those tenants were not leases, but were "disclosure statements" provided to prospective tenants. He said that the statements set out a snapshot of what the student was going to be leasing and, when the premises became available, the student would come in and sign a lease and be given the keys. Each of the disclosure statements included a provision that the tenant would be notified by no later than 2 June 2013 in relation to the building being available on 2 July 2013.

36 Mr Dikeakos gave evidence that at the time the prospective tenants were secured by provision of the disclosure statements, he already had a little bit of concern about the project not being completed by the due date, given that the works were not up to the stage expected by that time. Mr Dikeakos referred to a meeting on-site with PBA and John Newbold during which Mr Newbold stated that the building would be complete by 31 July 2013. It seems likely that the meeting Mr Dikeakos was referring to was the last site meeting, being site meeting number nine held on 9 July 2013.

37 Minutes of site meeting number 8 held on 4 June 2013, at item 4 still show the "revised completion date of 1 July 2013". The handwriting appearing on that page of the minutes in the court book is Mr Dikeakos's. Mr Dikeakos's evidence was that the notes were made by him during a later conversation with Mr Brown when it was evident that the building would not be completed by 1 July 2013. This conversation is likely to have been at or about the time of the final site meeting on 9 July 2013. The minutes of that meeting showed that the revised completion date remained at 1 July 2013 but included a note that:

JJA informed practical completion is scheduled for 30 July 2013, 30 calendar days after adjusted completion date. JJA to provide work progress in a week's time.

38 The effect of Mr Brown's evidence in relation to this note was that he was aware there were delay claims that JJ Armstrong could have made, but didn't. This was not something that JJ Armstrong had said to Mr Brown or emailed him about, it was just his observations about the works. There was a subsequent extension of time ("EOT") claim that was not processed, part of which related to a delay in the delivery of vanities. While Mr Brown agreed that this extension claim was never certified by PBA, he gave evidence that: "We agreed that practical completion would extend to that likely time" (referring to 30 July 2013).

39 However, shortly after the final site meeting on 9 July 2013, Mr Brown sent an email to JJ Armstrong confirming that Hope St wanted the building completed by the end of July 2013. The email sent by Mr Brown is dated 11 July 2013 and states as follows:

"John

I have to draw your attention to an issue raised as a result of your advice on Tuesday (9th) that you anticipate completion by the end of this month (July).

It is noted that your advice at our June 2 meeting was that you anticipated completion in the first week of July. And further, that the Contract completion date had been adjusted to July 1st. Both of those times have now passed.

Michael and George have pointed out that they have lost 5 tenants scheduled to move in on the 13th July, and have also incurred another month of financing costs-and are desperate for completion.

They are aware that under Clause M12 they may have entitlements to liquidated damages, subject to any time claims that you [may] not have yet lodged.

At the same time they are appreciative of your work and the manner in which you have carried out of the contract on a very difficult site and don't want to compromise the current excellent working relationship.

Accordingly, on their behalf, I pass on the proposal that if JJ Armstrong undertakes to achieve Practical Completion by July 31, and in the process agrees to install the previously deleted shelving, as well as the level 5 balcony boxing to the downpipes, then they will happily forgo their entitlement to liquidated damages.

Otherwise they reserve their entitlement.

If you have any queries please call, otherwise I look forward to your acceptance of the proposal."

40 It is notable that Hope St's offer in the letter from Mr Brown is to forgo an asserted entitlement to liquidated damages despite an anticipated delay of one month, so long as JJ Armstrong agreed both to meet the new deadline and to do some minor additional works. This theme repeats in the evidence of Michael and George Dikeakos about what occurred at the 8 November 2013 lunch meeting discussed below.

41 Importantly for present purposes, the email is not consistent with the existence of any notification (formal or otherwise) of an extension of the date for practical completion to 31 July 2013. On the contrary, the effect of the email is that Hope Street was reserving its entitlement to claim liquidated damages for delay if JJ Armstrong failed to achieve practical completion by 31 July 2013. If the date for practical completion had already been extended to 31 July at the time this email was sent (as Mr Brown suggested), Hope St would have had no "entitlement" that it could "reserve".

42 Similarly, JJ Armstrong's extension of time claim 14 dated 22 July 2013 ("EOT claim 14"), claims eight working days as an adjustment to the date for practical completion and puts the "Revised Practical Completion Date" as 17 July 2013. It is not clear to me how the eight additional working days leading to an adjusted date of 17 July 2013 is calculated, but it is certainly not based on a date that had already been adjusted to 31 July 2013. PBA failed to assess that claim within the time required by clause H4, or at all. And JJ Armstrong failed to dispute PBA's failure to assess the claim pursuant to and within the time provided by clause A8.1 of the Contract.

43 JJ Armstrong relies on two items of later correspondence. First, an email from Mr Dikeakos to Mr Brown dated 24 October 2013, which states that at the site meeting held on 9 July 2013: "it was agreed that practical completion would be given on 30 July 2013 as the main delay was in relation to the power being connected to the property". Secondly, Schedule 1 to the letter dated 4 May 2015 from Hope St to Mr Brown disputing the revised FCC, in which Hope St refers to: "Extension of time approved for completion date: 31st of July 2013". These may show that Mr Dikeakos believed at the time that the date for practical completion had been adjusted. However, in the absence of grounds for estoppel, Mr Dikeakos's subjective belief about that matter cannot operate to effect that adjustment. No estoppel is pleaded in reliance on those communications, nor could it be. Among other things, there is no evidence of reliance by JJ Armstrong or acting to its detriment in respect of either communication.

44 In those circumstances, I do not accept JJ Armstrong's submission that, while no formal notice was issued by the architect of the extension to 31 July 2013, the evidence clearly indicates that the parties were notified at site meeting number 9 that the date was so extended. In my view, the evidence as a whole points the other way. In any event, PBA's certification of 1 July 2013 as the date for practical completion (and PBA's failure to certify any later date) is decisive on this issue. JJ Armstrong failed to dispute pursuant to clause A8 of the Contract either PBA's certification of the adjusted date for practical completion of 1 July 2013 or its failure to certify a later date.

45 By its rejoinder, JJ Armstrong has pleaded that Hope St is also disentitled to general damages for delay on the basis claimed, because it contributed to that delay in a manner that amounted to a breach of its express and implied duty to co-operate and act reasonably. In its particulars to this pleading, JJ Armstrong relies on its (uncertified) EOT claim 14. I had understood this claim to amount, in effect, to an alternative basis for a finding that the start date of Hope St's delay loss should be later than 1 July 2013, regardless of the stipulation of the date for practical completion under the terms of the Contract.

46 However, JJ Armstrong's submissions on this issue appear to address a different matter, namely, the allegation that Hope St denied access to JJ Armstrong for the purposes of completing defects.[4] That allegation has no bearing on any entitlement to damages for delay. It is therefore not clear to me whether JJ Armstrong presses this claim and, if so, on what basis. In any event, I am persuaded that it should be rejected for the reasons advanced by Hope St.[5] Accordingly, I consider that any delay loss claimable by Hope St should be calculated from the adjusted date of practical completion certified under the Contract of 1 July 2013.

47 According to Mr Dikeakos, Hope St received the occupancy permit "pretty much the next day" after the date it bears (12 September 2013). His evidence was that he was expecting to receive the keys at the same time, but did not in fact receive them until around 25 September 2013. They were given to Mr Dikeakos by Mr Lenhart on site. Mr Lenhart's evidence was that he did not recall the specific date on which he delivered the keys to Mr Dikeakos, but did recall that it was "quite soon after, meaning a number of days" after the receipt of the occupancy permit. He added that "it was certainly not as late as 25 September 2013 which was almost two weeks after the certificate issued".

48 In fact, the date the occupancy permit bears was a Thursday. If the permit did not reach the parties until late the next day (or the following Monday), and the reference to a "day" is taken to be a reference to a business day, it is possible that the "number of days" that Mr Lenhart refers to could therefore have taken the period of delay to the Thursday or Friday of the following week (20 or 21 September). 25 September 2013 (a Wednesday) is only 3 to 4 business days beyond that. Further, as at 25 September 2013, Mr Dikeakos had not received all of the manuals and other documents listed at Schedule 2a, item 9 of the Contract. His evidence was that he had not received any folders at this time. Rather they came in from the architect in "dribs and drabs", somewhere between the end of September and the end of October 2013.

49 PBA issued the formal Notice of Practical Completion dated 31 October 2013. The notice is directed "To Contractor" and states:

"Pursuant to clause M4 and item 9 of Schedule 2a -Special conditions, you are advised that, in our opinion as Superintendent, the Works have reached Practical Completion (Noting occupancy commenced on 13 September 2013). The defects Liability Period of 52 weeks commences on 31 October 2013. Further, we hereby release 50% of the retention funds pursuant to clause C7".

50 In evidence-in-chief, Mr Dikeakos said that on receiving the Notice, Hope St began the process of advertising the apartments. He said that it took about eight weeks to secure leases for all of the 22 units in the building, "and we had to start advertising at a discount rate to try to get the apartments filled". However, in cross-examination, Mr Dikeakos said that the first tenant moved in in late September or early October 2013, and "gradually we started filling them up", over the course of the next days and weeks.

Can Hope St claim general damages or equitable compensation for delay?

51 I have concluded that it is not necessary for me to determine whether the date of practical completion under the terms of the Contract falls on the date of the occupancy permit (12 September 2013), the date certified by the architect (31 October 2013) or some date in-between. But before giving my reasons for that conclusion, I will consider the question of whether (as JJ Armstrong has alleged), the only compensation available to Hope St under the contract for delay is liquidated damages calculated in accordance with clause M12. The relevant provisions are clauses A10 and M12 of the Contract. For the reasons that follow, on a proper construction of those provisions, Hope St is not precluded from recovering general damages for delay.

52 Clause M12 is headed "Liquidated damages may be payable". Accepting that headings in the Contract are a guide only and do not form part of it (clause R11), I consider that the heading does accurately state the effect of the clause. Clause M12.2 unequivocally confers on the owner a discretion as to whether to claim liquidated damages. It relevantly provides: "Up to 20 working days after the date of the issue of the notice of practical completion, the owner may notify the architect in writing whether it will enforce its entitlement to liquidated damages against the contractor" [emphasis added]. However, if an owner chooses not to enforce its entitlement to liquidated damages under clause M12, or is unable to do so (for example, because the agreed rate amounts to a penalty), is the owner's right to recover compensation for delay lost altogether?

53 There is some tension between the Australian authorities and academic writings about how that question should be answered. And the authorities themselves are not entirely consistent. The current state of the law, at least in Australia, is conveniently analysed and summarised in a recent decision of Burns J in the ACT Supreme Court in Adapt Constructions Pty Ltd v Whittaker and Luff[6] ("Adapt"). That analysis (as it relates to the position in Australia), begins with a discussion of the decision of Giles J of the NSW Supreme Court in Baese Pty Ltd v Bracken Building Pty Ltd[7] ("Baese") and, in particular, His Honour's distinguishing of the English Court of Appeal in Temloc Ltd v Errill Properties Ltd (1987) 39 BLR 30, and his finding that:

"It is, I think, fairly well recognised that a liquidated damages clause providing for liquidated damages in the event of failure of a builder to complete on time is normally inserted for the protection of the proprietor, in order that the proprietor may be relieved from the difficulty and expense of proving actual damage occasioned by delay, and I refer in this regard to what was said by Salmon LJ and Phillimore LJ in Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 114 at 121 and 127. It seems to me that the function of cl 10.14 was to enable the proprietor, if he so desired, to cause the architect as his agent to invoke the machinery whereby liquidated damages could be assessed, or enable the architect to do so, in order to obviate the task which would otherwise arise of establishing an actual loss due to delay, but that if the proprietor or the architect did not do so, then the proprietor was entitled to rely upon his common law right to damages for breach of cl. 1.02.03.

One matter in particular can be seen as supporting this view of the contract. As Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd shows, a proprietor may lose his right to rely upon a liquidated damages clause providing for liquidated damages in the event of delay in completion if the proprietor caused or contributed to the delay. In that situation it would require clear words, in my view, before it was held that a liquidated damages clause was the entirety of the proprietor's rights, because the proprietor would be exposed to being left with no entitlement at all to damages for delay if by reason of his own contribution thereto he was unable to rely upon the liquidated damages clause. Clause 10.14, read in the context of the contract as a whole, does not to my mind so provide, and certainly does not so provide in clear words."

54 I would say the same about the function of clause M12 particularly (as in this case) where the proprietor has lost his right to rely on the liquidated damages clause because it has been conceded (correctly, in my view) that it is a penalty.[8]

55 I note that Burns J in Adapt does not include in his analysis the decision of Turner Corporation Limited (Receiver and Manager Appointed) v Austotel Pty Ltd (1997) 13 BCL 378 (although it was cited to him), in which Cole J (also of the NSW Supreme Court) distinguished Baese, essentially on the basis that he (Cole J) was not addressing liquidated damages. There is a clear sense that Cole J was troubled by the result in Baese and concluded that he was unpersuaded that the word 'may' in the clauses he was tasked to construe, was intended to preserve common law rights. Referring to the concept articulated in Baese that if a party's common law right to sue for damages for breach of contract is to be contractually removed, it must be done by clear words, Cole J held (at p395):

"I do not doubt that concept; however, it does not mean that express words are required. If on the proper construction of the contract as a whole, it can be said that a party has surrendered its common law right to damages, that construction must be given effect to, notwithstanding absence of express words surrendering the common law right to damages."

56 However, Burns J in Adapt does cite extensively from the still more recent decision of the WA Court of Appeal in J-Corp Pty Ltd v Mladenis[9] ("J-Corp") (which cites Baese with approval) and distils from the authorities as a whole the following principles:

(a) the requirement in each case is to ascertain the intention of the parties to the agreement concerning damages for delay;

(b) in ascertaining that intention, consideration may be given not only to the language of the agreement, but also to the surrounding circumstances known to the parties and the apparent purpose and object of the transaction;

(c) the vesting of a discretion in the proprietor to exercise a contractual right to claim liquidated damages may indicate that the parties did not intend the contractual right to liquidated damages to be the exclusive remedy for delay; conversely, a mandatory clause, in the sense of compelling the builder to pay regardless of any demand for payment by the principal, may indicate that the clause is intended to provide an exclusive remedy; and

(d) in construing a contract which, on its face, provides for no liquidated damages for breach, an intention to exclude a right to common law damages must be expressed in clear and unambiguous terms.

57 The principle in (d) above derives from a statement by Newnes JA in J-Corp where His Honour drew a distinction between contracts which provided for the liability of the builder in a positive amount, and those which provided for nil damages. His Honour said (at [51]):

I do not consider there is any inconsistency between the terms of cl 11.9 and a right in the respondents to claim unliquidated damages for delay. The position may well be different where a contract provides for the liability of the builder for liquidated damages in a positive amount, it being unlikely that the parties would have intended that the proprietor should have the benefit of both liquidated and unliquidated damages for the same delay.

58 I have some reservations about the second sentence of this passage, given that none of the authorities appear to countenance a suggestion that an owner could claim both liquidated and unliquidated damages for the same delay. At most, decisions like Baese can be said to preserve to the owner a choice where (as in the present case) the liquidated damages clause is expressed in permissive terms.[10] In any event, two matters that all the authorities are clear and consistent about are, first, that the question is ultimately one of construction of the particular contract under consideration. And, secondly, that if a party's common law right to sue for damages for breach of contract is to be contractually removed, it must be done by clear words.

59 In this case, in my view, clause M12 fits comfortably into the category of a clause that evinces an intention of the parties to confer on Hope St a discretion not to take the liquidated damages route, and instead opt for common law damages. In particular, I do not read the clause as providing that a decision (or an inability) on the part of Hope St to take the liquidated damages route, robs it entirely of any right to seek compensation for breach of the Contract. Put another way, there are no clear words in clause M12 suggesting that the parties intended to remove Hope St's right to claim common law damages (I deal with clause A12 below).

60 To the extent that it is necessary to seek guidance from surrounding circumstances (and acknowledging the ongoing uncertainty about when it is permissible to do so[11]), these point in the same direction. The evidence referred to above concerning how the rate of liquidated damages was arrived at, shows a distinct lack of discipline in the process. There was no real attempt by any of those involved to engage in a robust pre-estimate of what Hope St's actual loss from delay might be. Indeed, on one view of the evidence, Mr Brown (in this capacity, acting for Hope St) alerted JJ Armstrong through John Newbold, to the fact that the rate was excessive and Mr Newbold was content to proceed with it.

61 Thus the parties either knowingly adopted a liquidated damages rate that was not a genuine pre-estimate of actual loss or, at best, treated the rate as an afterthought. In my view, this conduct is not consistent with an intention that liquidated damages stand as the only source of Hope St's entitlement to damages. It is not mandatory in its express terms and it carried with it the risk that it was invalid in it operation. It therefore falls entirely outside the description offered by Jenkins J in Silent Vector Pty Ltd t/as Sizer Builders v Squarcini as follows[12] (citations omitted):

"The authorities are at one that a valid and mandatory liquidated damages clause in a building contract which stipulates a positive amount of liquidated damages for failure to reach practical completion by the due date is evidence of an intention by the parties to exclude liability for unliquidated damages. In other words the parties to a contract will be bound by the liquidated damages clause if it is not a penalty."

62 In my view, clause A10 of the Contract does not detract from the analysis above, for two reasons. First, clause A10 provides: "Where the contractor or the owner is entitled to compensation as determined under this contract". The use of the generic term "compensation" and not "damages" or "liquidated damages", suggests to me that the clause intends to exclude non-monetary remedies (such as specific performance, where the Contract allows for compensation in lieu of performance), and is not seeking to distinguish between types of monetary damages. Secondly, and in any event, the clause goes on to provide that such compensation is a sole and complete remedy under the Contract only "when paid in full". Here, no compensation whether liquidated or otherwise, in full or in part, has been paid by JJ Armstrong for its delay. Accordingly, clause A10 does not operate at all.

63 Although my findings above mean it is unnecessary for me to decide the point, my tentative view for the reasons advanced in the Hope St's submissions, is that Hope St has an alternative remedy in equity, based on the remarks in Andrews v ANZ Banking Group Ltd,[13] and the later authorities referred to by Hope St. I also note that, despite being the putative beneficiary of the admittedly exorbitant rate of liquidated damages provided for in the Contract, Hope St appears to have had little or no involvement in arriving at that rate. This may be a further factor in favour of equity intervening to ensure Hope St is not deprived entirely of a remedy for delay.

64 JJ Armstrong's failure to bring the works to practical completion by the adjusted date for practical completion (1 July 2013) was a breach of the Contract entitling Hope St to damages for such breach, calculated in accordance with the usual measure of damages for breach of contract. Hope St claims in effect that its loss and damage manifested in its loss of opportunity to lease the apartments on and from that date and to derive rent from those leases. There can be no suggestion that loss of the type claimed was not foreseeable. Likewise, it is clear that the loss was caused by JJ Armstrong's failure to have the apartments ready for occupation by the date for practical completion of 1 July 2013.

65 I accept that Hope St was able to arrange five likely tenants during May 2013 when it seemed possible that the project would be completed in July 2013, at the rents set out in the disclosure statements referred to above. I am also satisfied on the evidence that, had the project been nearing completion in the period leading up to that date, Hope St would have derived some advantage from the likelihood of greater demand for student accommodation around the time of the university semester break in late June and July, than would be expected mid-semester. Thus, it is likely that the apartments would have filled up somewhat more quickly commencing on 2 July 2013 than commencing on a date in September or October.

66 Turning to the point in time when loss from the delay ceased, the pre-eminence of the terms of the Contract and the implications of the certification (or lack of it) by PBA as 'architect', are decisive considerations in determining many of the issues in this case. However, they are of diminished importance in relation to fixing an end date of the period for which Hope St can claim damages. This is because, in my view, Hope St's decision on day three of the trial to abandon its claim for liquidated damages, necessarily takes it out of the strict terms of the Contract. Instead, the exercise becomes one of determining assessable actual loss flowing from the breach in respect of both any "rate" of damages, as well as the period in respect of which those damages are to be assessed. Put simply, by abandoning liquidated damages, Hope St can no longer rely on the formula imposed by the Contract either in respect of rate or period.

67 While the date for practical completion does set the start date (because it is the failure of JJ Armstrong to deliver a completed building by that date that constitutes the relevant breach of the Contract), the end date will be determined by ascertaining when in fact Hope St was able to begin the process of leasing apartments, not by reference to the artificially imposed date of practical completion. On the evidence, this was a date after 12 September, but before 31 October 2013, by which time the process of leasing the apartments was well underway (if not close to complete).

68 The evidence on this discussed above is sketchy, as is the evidence of rental rates. But in my view, and notwithstanding JJ Armstrong's submissions to the contrary, this is a case of difficulty of assessment, not one where Hope St has produced no admissible evidence of loss. The authorities are clear that where damages are difficult to assess because the plaintiff has produced evidence which, while establishing loss or damage, does not permit the court to make as reliable an assessment as should have been possible, the court must do the best it can.[14]

69 Doing the best I can, and after allowing for the uncertainty about the date of the provision of keys and the fact that there would likely have been greater difficulty in finding tenants in the middle of the university semester compared with a 1 July date of practical completion (but accepting that there would have been some time delay in filling apartments in either case), in my view Hope St's delay loss had ceased by no later than 30 September 2013. Thus the total period of compensable delay was three months, not four as submitted by Hope St.

70 As with the evidence going to the period of delay, the evidence of actual rental rates potentially achievable during that period is also considerably less than ideal. Hope St relies on the rent referred to in the five disclosure statements Hope St was able to secure in May 2013 and the evidence of Michael Dikeakos as to the numbers of apartments that attracted the various monthly rents (13 at $1,304, 4 at $1,504 and 5 at $1,704). The only other evidence was Mr Brown's scantily supported assertion that $250 per week (being $1,083 per month) per unit, reflected the market rate that the units would be let out at. However, as JJ Armstrong submitted, the rates provided by Mr Dikeakos do not appear to take account of, for example, which apartments were rented furnished and which were not (given the rates in the disclosure statements were for furnished apartments and Mr Dikeakos gave evidence in cross examination that not all apartments were rented furnished). JJ Armstrong went on to submit that:

"In light of the evidence that tenants were in fact occupying apartments in September and October and the fact that Hope St must be in possession of documentary evidence in respect of its claim for general damages, it must be assumed that any such evidence held by Hope St does not support the claim as particularised. In the absence of such proof the claim for general damages must fail."

71 Although (as discussed above) I do not agree that the evidence is so deficient that the claim for general damages must fail altogether, I do consider that the uncertainty in the evidence requires that I take a cautious approach to the evidence of rental rates (such as it is). While accepting that Mr Dikeakos has given evidence of a range of rents from $1,304 up to $1,704 per month, I need to weigh that against the lack of detail in that evidence as to what factors justified those higher rates and the evidence from Mr Brown suggesting that market rates may have been even lower. Once again, doing the best I can, I propose to take the figure of $1,304 per month, representing the lower and more conservative end of the possible range or rents, and apply it to all 22 of the apartments.

72 On that basis, I assess Hope St's loss from the delay as 22 multiplied by $1,304 per month for three months, or $86,062 in total. I accept the submission by Hope St that it is entitled to interest on that sum under the Contract at the rate of 10% per annum (clause N16, item 34). However, in the ordinary course, the sum owing by JJ Armstrong for delay damages would have been netted-off against the retention sum, and this amount would not have begun to accrue interest until a final accounting was achieved as part of a valid Final Claim Certificate process. The parties were denied that process in the circumstances discussed below, and I therefore propose to allow interest on the net amount owing to Hope St on and from 13 February 2015, for the reasons there set out.

73 Mr Dikeakos wrote to Mr Brown by email dated 24 October 2013 seeking his thoughts on a number of matters relating to delays, defects and deficiencies in the manuals received. On the subject of liquidated damages, the email states: "My understanding is we have rights to claim the full $228,000 under item 30 M12 clause", and then sets out how that sum has been calculated. Among other things, Mr Dikeakos asserts in the email that the "delay to complete as per our contract was 38 days".

74 On the topic of defects, Mr Dikeakos states in the email:

"Furthermore in relation to the defect period the list was provided to JJ more than 10 days ago from the date of this email and yet they have not been rectified. I don't want these defects to carry on for over 6 months and given you're the super of this contract can you pls advise what the best course of action is. We are continually getting water through the downpipes and into our bin/bike area. [emphasis added]

...

We want these rectified asap given students are starting to occupy the rooms. Seems as JJ are dragging their feet given the constant harassing of getting these defects completed".

75 Mr Brown responded to that email by email dated 6 November 2013. In this email, Mr Brown makes a number of observations concerning a potential claim for liquidated damages. After noting that Hope St is considering whether or not to make a claim, he observes that Hope St had also acknowledged the merits of the construction performance by JJ Armstrong. He states:

"These 2 things seem contradictory to each other and perhaps they can be better resolved at lunch on Friday". He continues: "I suspect that whilst it is articulated in the contract at $250/day per unit, that liquidated damages rate would not be accepted by a Courts [sic] on the grounds that... The purpose of liquidated damages is to compensate for losses (damages) only-it is not meant to be a profit opportunity. Any damages could only reasonably be assessed at $250/week" [emphasis in original].

76 At point 9 in his email, Mr Brown states: "Against these points must be weighed the builder's overall performance and fairness in his variation and time claims. The (pedantic if you like) fact is that his Stage Two permit is dated September 30, 2012".

77 Mr Dikeakos responded to this email by an email dated 6 November 2013, copied to John Newbold. In it, Mr Dikeakos asserts that seeking liquidated damages is not a profit driven exercise. The email goes on to identify concerns in workmanship in the project and other matters, including a major outstanding issue regarding the hot water service. The email concludes by expressing hope that issues can be resolved over Friday's lunch.

78 John Newbold of JJ Armstrong also replied to the 24 October email from Mr Dikeakos shortly before the lunch meeting. His email is dated 7 November 2013. Mr Newbold begins: "Just a couple of notes (I feel obliged to respond) in regard to your email to Peter Brown onto which I was copied". He then goes on to respond at some length to a number of Mr Dikeakos's complaints and strongly defends the quality of the workmanship and materials used in the project. His email does not engage with Mr Dikeakos's asserted claim for liquidated damages, apart from stating: "38 days: I am unsure what this is about and where these nominated 38 days have come from. It was in our best financial interests to be off site sooner rather than later". Mr Newbold makes no references in his email to the Stage 2 permit or to the time to complete of defects.

79 The meeting foreshadowed in Mr Brown's and Mr Dikeakos's emails took place at 1.00pm on Friday 8 November 2013 at "Mesa", a Greek restaurant in Abbotsford. The meeting was attended by Michael Dikeakos, his father George, John Newbold, Ben Newbold and Mr Lenhart from JJ Armstrong and Mr Brown. Having regard both to the differing priorities and expectations of those attending the meeting and the informality of the setting, it is perhaps unsurprising that there are significant differences in the various accounts of what was discussed and agreed at the meeting.

80 On the Hope St side, Michael Dikeakos's evidence was that he remarked at the meeting that, as the building wasn't yet fully occupied, it was a great opportunity after Mr Brown had done his list of defects and Mr Dikeakos had compiled his list, for the builder to get into the building in the period leading up to Christmas and complete the majority of the defects. Mr Dikeakos continued: "He could move around freely in the building, given the fact it wasn't fully occupied, and we were stressing to him that we wanted them completed as soon as possible". According to Mr Dikeakos, the response on behalf of JJ Armstrong was "we will do our best efforts to complete them".

81 George Dikeakos understood the purpose of the meeting was to discuss the outstanding work and rectification of the defects. His evidence was, that while he was not directly involved in the negotiations, he heard John Newbold, Mr Brown and Michael Dikaekos discussing the outstanding work and defects. He understood that Mr Newbold and Mr Brown had agreed to complete the outstanding work and rectify the defects by 30 June 2014 in exchange for a sum of money. George Dikeakos said he had heard the amount of $30,000 mentioned, but didn't pay any attention to it.

82 On the subject of liquidated damages, according to Michael Dikeakos, he stated at the meeting that Hope St had a rate of $250 per unit per day and Mr Brown responded by asking what Hope St's actual losses were. Mr Dikeakos estimated without having details in front of him that actual losses would have been $30,000 or thereabouts. Mr Brown then made the suggestion that if "Michael and George would limit the LD charge to half of the actual losses if defects were completed by 30 June 2014". Mr Dikeakos said he was happy to agree with that and it seemed to him that everyone agreed. According to Mr Dikeakos, Mr Newbold did not say anything to give him the impression that getting all the defects done by 30 June 2014 was not going to be possible.

83 According to Michael Dikeakos, there was no discussion at the lunch meeting about the issue of the dates of building permits. He added that, during his entire dealings with the architect or the builder on the project, neither of them ever raised the issue with him about the contract period and that it should start from the Stage 2 permit. George Dikeakos's evidence was that he did not hear John Newbold mention that JJ Armstrong would forego any claims for an extension of time or rights in relation to the permit issue.

84 Mr Dikeakos gave evidence that he made a brief hand written note of the discussions at the meeting at about 6.30 to 7.00pm that evening. The note relevantly states:

meeting held 8/11/13

discussion between me, George, Ben, Peter, James, John

talked about LD, loss to Hope St, loss of leases, defects

agreement defects will be completed by the end of June/July limit the LD payable under contract

85 In cross-examination, Mr Dikeakos said that the note was made on a page of a notepad that he was using, and he rejected the suggestion by counsel for JJ Armstrong that the note was not in fact made by him on the day of the meeting. He also disagreed with counsel for JJ Armstrong when she put to him that there was no discussion about there being any condition applied to the agreement for liquidated damages. Neither Michael nor George Dikeakos were tackled in cross-examination about evidence that was later given on behalf of JJ Armstrong to the effect John Newbold said at the meeting words to the effect that the two stage building permit "blurred the lines" on the date for practical completion and that JJ Armstrong would "put that matter to bed" in agreeing to pay half of Hope St's delay cost.

86 Turning to the JJ Armstrong witnesses, John Newbold recalled that Mr Brown attempted to identify the actual loss incurred by Hope St and figures such as $30,000, $20,000 and $15,000 were "thrown around". His evidence was that no specific figure for liquidated damages had been agreed upon. Rather, JJ Armstrong would pay half of the amount Mr Brown deemed appropriate. When it was put to him that this evidence was inconsistent with his letter of 8 December 2014, he conceded that his recollection was that the payment would be less than half of $30,000, but reiterated that his agreement was to pay half of whatever Mr Brown determined was appropriate.

87 Mr Newbold agreed that Hope St was looking for reassurance that JJ Armstrong would return to complete the outstanding defects, but denied there ever being a condition to the agreement on liquidated damages. He agreed in evidence that he expressed his commitment to attending to the urgent defects, but attending to other defects would be deferred to the end of the defects liability period. Mr Newbold noted that at the time of the meeting, they were still in the defects liability period and for this reason, he would have rejected a condition on completing defects early forming part of any agreement. He said, no builder attends to defects before the defects period is over.

88 In evidence-in-chief, Mr Newbold stated that he felt the agreement on liquidated damages was a concession to settle the potential issue of a second building permit. He stated that there was "a bit of query about that and we felt that we will concede that, to put the whole matter to bed and get on and finish the job". In cross-examination, Mr Newbold's evidence was that the two building permits "blurred the lines" of the practical completion dates. He asserted that he said at the meeting that there was a blurred line with the Stage 2 permit and that if Mr Dikeakos accepted half of whatever sum Mr Brown determined, JJ Armstrong would "take the building permit off the table" and "put that one to bed". Mr Newbold maintained that this exchange occurred during the meeting.

89 Ben Newbold was not closely involved in the project at Hope St in the period leading up to the meeting. However, he saw some of the correspondence and overheard his father John and James Lenhart in their open plan office both on the phone to PBA and speaking to each other about aspects of the project. He believed that up until the point of the 8 November 2013 meeting, the relationship between JJ Armstrong and Hope St was cordial.

90 Mr Newbold was unaware there had been two stage permits on the project until about the time he first learned that Hope St had raised the issue of liquidated damages. He said this was definitely before the meeting, but he was unsure how long before. Mr Newbold maintained that he was unaware before the meeting that Hope St considered it was entitled to liquidated damages in the order of approximately $228,000. He knew about the $250 per unit per day, but had not calculated the quantum of the actual exposure. His evidence was that he was "looking at it from a stage 2 building permit where...there is no delay".

91 Ben Newbold saw Mr Brown as the chair of the meeting, who guided the discussion to a resolution of the liquidated damages issue. Mr Newbold gave evidence that, at the conclusion of the meeting, Hope St had accepted John Newbold's offer that JJ Armstrong would pay half of Hope St's losses:

"The conclusion to that lunch was that in the interests of putting this to bed, and avoiding an argument regarding LDs regarding permit dates, was, 'we'll pay you half. Let's go halves. We put the contract away and we get on with finishing the defects and finishing this building. In the interests of maintaining a relationship, let's just put it to bed".

92 When pressed on the amount of liquidated damages that was agreed at the meeting, Mr Newbold confirmed his earlier evidence that "$15,000 was the number that I recalled". He went on to say: "I'm not exactly sure whether they had originally said it was $30,000 and 50% was $15,000 or whether the number they had said was $15,000 and the number became 50% of $15,000". In the end, Mr Newbold agreed that he left the meeting thinking that the amount to be paid was $7,500.

93 Mr Newbold agreed that he did remember his father saying something to the effect that the Stage 2 building permit "blurred" the issue about completion dates. His evidence was that: "after liquidated damages had been flagged and issues regarding defects had been spoken about and raised, John then had the opportunity to respond and said that, from our side, we still believe that under the second building permit we are not late...so the lines of when that completion date should be is blurred". He later asserted that his father said: "From where we are sitting with the date of the second building permit, the completion date is blurred. So in the interests of putting it to bed, we will pay 50/50". During the meeting, claims for extension of time were also raised. However, details were not mentioned.

94 On the issue of defects, Ben Newbold's evidence was that Hope St were looking for reassurance and a commitment that JJ Armstrong would in fact return to make the defects right and to see them through. However, there was no discussion at the meeting as to when the rectification of the defects were to be completed and there was no condition attached to the agreement on liquidated damages.

95 In his witness statement, Mr Lenhart stated that in the lead up to the lunch meeting, he had been involved in discussions in the office about a possible claim being made by Hope St for liquidated damages:

"Prior to the lunch we had discussed the pros and cons of such a claim and what JJA would say in response. The fact that the project was not late as it had been delivered within 12 months of the date of the second building permit was discussed. We also discussed EOT claims particularly the claim for the late delivery of the vanities and the effect that had on the completion of flow on work and the date for practical completion under the contract."

96 Mr Lenhart's witness statement also confirmed that the issue of liquidated damages and losses that Michael Dikeakos claimed he had suffered due to what he claimed was late delivery of the project, was a subject of discussion at the lunch. According to Mr Lenhart, Michael Dikeakos said that he had lost a number of tenants and also talked about the cost of extra interest on his financing. John Newbold mentioned the fact that there were two permits and that the work was completed within the date of the second permit. He also discussed the outstanding EOT claims. After some discussion: "it was agreed that JJA would pay half of the amount Michael Dikeakos set out as his loss at the lunch".

97 Mr Lenhart confirmed that rectification of defects was also discussed at the lunch. Mr Lenhart stated: "Peter Brown emphasised the two different categories of defects and the need for work to be undertaken on the operational matters as soon as possible. All agreed that was a focus and would be attended to". In his evidence, Mr Lenhart added that Mr Dikeakos was not satisfied with the state of the defects and the progress that was being made to rectify them. In his statement, Mr Lenhart asserted that the condition to the agreement on liquidated damages set out in Hope St's pleading was not discussed and was not agreed at the lunch.

98 In cross-examination, Mr Lenhart referred again to having spoken to John and Ben Newbold in advance of the meeting with Hope St, to discuss the issue of liquidated damages. According to Mr Lenhart, they were of the view that the claim was not valid and therefore, took the position that they would make an offer which was half of what the actual loss was. They had come to this position in light of the outstanding EOT claims, power issues and because the issue of the building permits and date of practical completion was "blurry". This was the first time Mr Lenhart had turned his mind to the issue of liquidated damages. Mr Lenhart recalled doing a calculation of the liquidated damages at $250 per calendar day and stated that he thought the amount was "overinflated".

99 Mr Lenhart gave evidence that John Newbold acknowledged that Mr Dikeakos had incurred a loss as a result of leases falling through and alternative arrangements having to be made. This led to Mr Newbold offering to pay half of whatever the loss amounted to, "and you know, put it to bed". On the issue of the amount to be paid, Mr Lenhart could not recall at the time of giving evidence what the amount was, but he accepted that his email of 28 January 2014 (discussed further below) accurately reflected what he remembered at the time he wrote that email.

100 No-one on the JJ Armstrong side could recall making a note of what occurred at the meeting and there was nothing in the evidence to suggest that any of them had.

101 The architect Mr Brown brought to the meeting his own views on the state of the "ledger" in the dealings between JJ Armstrong and Hope St as at 8 November 2013 and how he felt a resolution could and should be achieved. It is clear that Mr Brown considered the ledger favoured JJ Armstrong. Mr Brown referred on more than one occasion in his evidence to JJ Armstrong being "fair" in their dealings during the building phase and not making nit-picking claims for variations and time delays that it might have made. And he was encouraging Hope St (for example, in his email of 6 November 2013, referred to above) to reciprocate that approach by compromising their claim for liquidated damages. Notably, when asked why the dispute over Hope St's liquidated damages claim mattered to him, Mr Brown responded: "I just didn't think it was fair". In that sense, he was not a wholly disinterested observer of how the negotiation at the meeting unfolded. However, of all the people present, he was the closest to what might be described as an objective bystander.

102 Mr Brown's evidence was that by the time of the meeting, the relationship between JJ Armstrong and Hope St had been good, but was deteriorating. He was eager to see them reach an agreement that was equitable for them both and put the dispute behind them. According to Mr Brown, the discussion at the meeting proceeded along the lines that there was information from Hope St that there had been some actual losses incurred and that the precise figure something like $31,800, comprising loss of rental income and extra interest on borrowings.

103 This was a general discussion around the table and everyone at the table was involved. Mr Dikeakos was saying that this was a real cost. Mr Brown described Mr Newbold's response as follows:

"To, I think, his credit it was he who volunteered to meet half those costs and offered to settle the matter for $15,000. We rounded off the 31-whatever, to around 30 and Mr Newbold offered to meet half those costs."

104 As to what was said about defects at the lunch, Mr Brown's evidence-in-chief was: "Only that they needed to be attended to with some urgency". In cross-examination, Mr Brown agreed that he understood Mr Dikeakos came to the meeting concerned about the outstanding works and defects and the rate in which they would be rectified. According to Mr Brown, once the issue of liquidated damages had been discussed, Mr Dikeakos raised his concerns about the outstanding defects issue. Mr Brown could recall very little about the discussion of defects, save for his direction that the defects that affected occupancy of the building were to be addressed as a matter of urgency and that the builder had committed to addressing them.

105 Mr Brown did not recall that JJ Armstrong's commitment to attend urgently to defects affecting occupancy was made on the back of Hope St's acceptance of the $15,000. He described the issues as: "Related but yes, not chained together". Mr Brown conceded that there was logic to the suggestion that Hope St only agreed to accept the $15,000 on condition that all defects were completed earlier than the end of the defects liability period, but he had no recollection of it being discussed at the meeting.

106 Mr Brown's evidence was that JJ Armstrong had not given up any rights as part of the offer to pay the $15,000. In this context, Mr Brown was not asked during his evidence-in-chief whether there was any discussion at the meeting about the effect of the Stage 2 building permit on practical completion. However, in cross-examination, Mr Brown agreed that at no stage during the meeting did JJ Armstrong say it would agree to give up any claim to extend the date for practical completion by reason of the Stage 2 building permit being issued.

107 It was clear from Mr Brown's evidence and his precise and methodical diary-keeping and note-taking practices, that Mr Brown understood the importance of taking and maintaining accurate and contemporaneous records. Further, Mr Brown accepted that it was part of his responsibility as Contract administrator to assess claims and certify entitlements in a timely way. And finally, Mr Brown accepted that Hope St had a "definable but possibly arguable claim" for liquidated damages and that he had taken it upon himself, before any certification of what the liquidated damages might be, to encourage the parties to negotiate away from dispute. He accepted that the meeting on 8 November 2013 effectively amounted to the parties amending the Contract by later agreement.

108 Against that background, it is more than a little surprising that Mr Brown's only record of the outcome of the meeting was to write "$15K" near his diary entry for the lunch meeting. Mr Brown's evidence was that this entry represented what was offered and accepted at the meeting and that his purpose in making the entry was: "Only to record it, I guess, in my after work musings".

109 When asked in cross-examination why this was his only written record of the variation to the Contract, Mr Brown's response was telling. He said: "It would be only because I think with the relationships, to have done so would have just precipitated more angst". When it was then put to him: "You wanted to try to resolve it, you believed you had a resolution at the meeting, why didn't you document it straight away and get both sides to sign it?", He responded: "I don't know". When asked to explain what he meant by "more angst", Mr Brown responded: "I just thought that it would make formal that which they had informally agreed to and amicably, and that to formalise it, more things on paper, would generate more discomfort, shall I say".

110 There is no further reference in the materials to what transpired at the lunch meeting until 28 January 2014, when Mr Brown emailed Mr Lenhart of JJ Armstrong (with a copy to Ben Newbold, John Newbold and Michael Dikeakos) about a number of issues brought to Mr Brown's attention "that require to be addressed". After setting out a number of matters concerning the current status of defects work, including a list of six items of uncompleted "urgent works", Mr Brown states at paragraph numbered 5:

"Finally we want to register, without prejudice, the lunch time agreement made last year between John and Michael where John offered to compensate 50% of Michael's $30,000 actual loss for the delayed handover. The final certificate will be so adjusted."

111 Mr Brown said in evidence-in-chief that this statement recorded the outcome of the meeting agreement at the lunch on 8 November 2013. However, when asked in cross-examination what he meant specifically by the words "wanting to register, without prejudice, the lunch time agreement", Mr Brown's evidence was: "I was not aware of anything but it was meant to allow for some further adjustment, I think is what I had in mind". Mr Brown went on to explain that he wanted to allow for the possibility for some further adjustment to the $30,000 actual loss, but rejected the suggestion that the lunchtime agreement was really a proposal put on a without prejudice basis, and not an agreement. He ultimately accepted that his evidence was that if JJ Armstrong did not attend to the urgent defects in a timely manner, that might have a bearing on PBA's certification of the liquidated damages agreement.

112 Mr Lenhart replied to the email from Mr Brown later the same day (28 January 2014). In responding to Mr Brown's paragraph 5, Mr Lenhart stated:

"We recall, with clarity, that the figure nominated by Michael at last year's lunch was "$15,000-20,000" NOT $30,000. This generous agreement/offer to pay half of these costs was in the an endeavour to put the issue to bed, and not have ongoing arguments about EOT's and the building permit issue date (20/9/12). The Clients only penalty is for a loss of rental income and NOT interest on money is borrowed, which is a constant." [Emphasis in original]

113 John Newbold said he thought the figure was $15,000 to $20,000 (consistently with Mr Lenhart's email), but that he knew $30,000 was mentioned. He said he thought the figure was going to be less than half of $30,000 but he was happy to be bound by whatever Mr Brown thought was appropriate. As indicated above, Ben Newbold ultimately accepted he left the meeting thinking JJ Armstrong would be paying $7,500. Mr Lenhart agreed that he wrote the figures in his email because that was what he remembered. He agreed that at the time he wrote the email he obviously thought the figure of $30,000 had not been mentioned at any stage during the meeting.

114 Mr Dikeakos responded to Mr Lenhart's email on 29 January 2014. He agreed during cross-examination that there was nothing in his email about the agreement reached at the lunch meeting being subject to defects being completed at the end of June 2014. He said: "There was no need to mention it there because I thought everyone understood what the agreement was". He later added: "If you can see the email, it's all about defects so one would assume that they understand the need to finish by 30 June, which was the agreement at lunch".

115 Contrary to the submission of JJ Armstrong,[15] the next item of relevant correspondence is an email from Mr Dikeakos to Mr Brown dated 27 November 2014, responding to Mr Brown's first FCC dated 26 November 2014. The email states: "JJ have had over 12 month [sic] to complete the defects and we initially agreed that all these works will be completed by June/July 2014 and it's the end of November and we are still discussing them". Mr Brown's evidence was that when he read that he thought, "what's he talking about", but agreed he did not write to Mr Dikeakos about it, "Because at that stage he was trying to make a point that he knew we didn't agree with and I just ignored it, as indeed much of what he said". John Newbold likewise said that when he read those words he did not know what Mr Dikeakos was referring to but he did not contact him.

116 On 8 December 2014, John Newbold went into print in an email to Mr Brown on the question of what he then recalled had transpired at the lunch meeting. This was in response to Mr Brown's email earlier that day in which Mr Brown indicated his intention to issue a revised FCC that would include (among other things) an allowance for the $15,000 that JJ Armstrong agreed to contribute to Hope St's delay losses of $30,000. Mr Newbold's email states:

"James Lenhart's email confirms my recollection of events at the luncheon 'peace talk'... We offered to pay 50% of $15-$20K, certainly not $30K...

...

The deduction offered should be between $7500-$10,000 as per the meeting (say $8750-mid point) and corrected by James in his email to you of 28/1/14. Not the 15 K. The offer was made to avoid conflict over [sic] and this has not been avoided.... Does this negate the offer-another one for Rigby Cooke."

117 Finally, in its letter to Mr Brown of 4 May 2015 responding formally to the revised FCC dated 24 April 2015, Hope St states:

"We've had numerous meetings with JJ Armstrong Pty Ltd in relation to rectifying the defects in particular an agreement was reached where JJ Armstrong Pty Ltd would complete all defects by July 2014 and we would seek $15,000 of liquidated damages. JJ Armstrong Pty Ltd failed to comply with this and therefore the agreed liquidated damages is not valid."

118 Further comments are made about the agreement in an email exchange between Mr Dikeakos and Mr Brown in late May 2015, but these do not add materially to the positions that each party and Mr Brown had taken about the meeting up to that point.

Was there an intention to create legal relations?

119 In commercial dealings, there is a presumption that there is an intention to create legal relations and the onus is on the party asserting rights to displace the presumption. In Ermogenous v Greek Orthodox Community of SA Inc[16], (cited with approval in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [17] ("Toll")), the plurality held:

"Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties."

120 Here, the correspondence leading up to the lunch meeting provides the most reliable guide as to the circumstances in which the statements at the lunch meeting were made. Mr Dikeakos's email of 24 October 2013 identifies both liquidated damages and outstanding defects as issues that need to be resolved. In relation to the latter, Mr Dikeakos states: "I don't want these defects to carry on for over six months... We want these rectified asap given students are starting to occupy the rooms".

121 Mr Brown's response refers to Hope Street's potential claim for liquidated damages and also its acknowledgement of JJ Armstrong's construction performance and states: "these two things seem contradictory to each other and perhaps they can be better resolved at lunch on Friday". Mr Dikeakos's response to this email on 6 November 2013 repeats concerns about liquidated damages and workmanship, and concludes: "We are hoping this can be resolved over Friday's lunch". Thus the lunch is expressly identified as the forum for resolving the emerging disputes over both liquidated damages and defects.

122 Against this, Mr Newbold's email of 7 November 2013 sets out the JJ Armstrong position on the issues raised by Mr Dikeakos in his email on 24 October 2013, but does not talk in terms of achieving a "resolution" of any issues or otherwise references the lunch. And the absence of consideration moving from JJ Armstrong as discussed below might indicate a lack of intention, at least on its part, to assume a legally enforceable duty. Further, an informal lunch meeting at a local restaurant seems an incongruous setting for the purpose of agreeing what would in effect amount to material variations to a detailed and prescriptive written agreement. Meetings at restaurants and similar informal venues are notoriously fertile occasions for generating disputes.

123 Nevertheless, on balance, it seems to me that the parties did approach the meeting with an intention to create legal relations or, more accurately, vary legal relations. That intention is evidenced predominantly by the contemporaneous written communications, confirming that the parties were seeking at the meeting to resolve matters of dispute that had begun to emerge. In my view, they can be taken to have been aware that any such resolution was likely to entail some variation or modification of their rights under the Contract.

124 The issues of intention to create legal relations and common intention often merge, with the result that a finding about the former often leads naturally and inevitably to a consistent finding about the latter. This is perhaps best exemplified in the following passage from the decision of the Full Court of the Federal Court (Allsop J (as he then was), with whom Drummond and Mansfield JJ both agreed) in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd[18]:

"[Contracts] can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting i's and crossing t's or where they think they have done so ... Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances,...if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances have been intended to be binding, the court will recognise the existence of a contract**.** Sometimes this is said to be a process of inference or implication. For my part, I would see it as inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound/ in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties', reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract." [emphasis added]

125 Here, however, a tentative intention to reach a compromise over emerging disputes in my view did not manifest in a concluded agreement on 8 November 2013. Paraphrasing Allsop J, there was no mutual assent to a 'sufficiently clear regime'. Having regard to the disparate commercial aims and expectations of each of the parties leading up to and at the 8 November meeting, I am unable to discern a manifestation of mutual assent that bespeaks an intention to be bound to a set of clear and consistent elements of a concluded agreement.

126 I refer above to the theme of a concession on liquidated damages being offered by Hope St in exchange for a commitment from JJ Armstrong to achieve a deadline, as first emerging in the email from Mr Brown on behalf of Hope St to JJ Armstrong dated 11 July 2013. And in his email of 24 October 2013 shortly before the lunch meeting Mr Dikeakos refered expressly to his not wanting defects to drag on for over six months. I consider that these items of correspondence both provide strong support for a finding that the Hope St representatives (in particular Michael Dikeakos) came to the lunch meeting with, first and foremost, an intention to achieve some certainty on the timely completion of defects. They also point to Hope St's preparedness, in return, to compromise its claim for liquidated damages.

127 Turning to the meeting itself, the evidence of both Michael and George Dikeakos as summarised above was to the effect that they agreed to accept $15,000 as liquidated damages (being half of Hope St's actual losses of around $30,000) in return for a commitment from JJ Armstrong to complete defects by the end of June 2014. Their respective accounts stood up well to cross-examination and were reinforced by Michael Dikeakos's note of what was agreed at the meeting. I accept Mr Dikeakos's evidence that the note was made soon after the lunch meeting and most probably that evening.

128 I do not accept JJ Armstrong's suggestion that the note was a fabrication, essentially for two reasons. First, I consider that Michael Dikeakos was generally a truthful witness, although I have reservations about the accuracy of his recollections on the issues of access, as discussed below. Secondly, if Mr Dikeakos had set about fabricating a note that purported to reflect Hope St's version of the LD agreement, one would have expected to see something more considered and that more closely accorded with the agreement as pleaded by Hope St. For example, by referring to an agreement that defects will be completed by '30 June 2014' instead of 'end of June/July'.

129 For their part, both John and Ben Newbold agreed in evidence that the issue of defects was a significant topic of discussion at the meeting and that Hope St was looking for reassurance and a commitment that JJ Armstrong would in fact return "to make the defects right and to see them through". Mr Brown's evidence was that the only thing said about defects at the meeting was that they "needed to be attended to with some urgency". He also agreed that in the course of the discussions the issues of defects and liquidated damages were "related but yes, not chained together".

130 On the other hand, there is scant evidence to suggest that JJ Armstrong attended the meeting in the expectation that Hope St would be seeking to extract a binding commitment that defects would be completed before the end of the defects liability period on 1 October 2014. John Newbold had seen Mr Dikeakos's 24 October email to Mr Brown, but did not make any reference in his reply to Mr Dikeakos's wish not to have defects "carry on for over 6 months". The evidence of all three of John and Ben Newbold and Mr Lenhart was to the effect that they attended the meeting focussed on the fact that Hope St had asserted an entitlement to liquidated damages for delay and the need to put that issue to bed. And consistently with that focus, their evidence was that this issue alone was the subject of agreement at the meeting.

131 As with the Dikeakos's, while in respect of some matters of detail I considered parts of the evidence of the JJ Armstrong parties to be more in the nature of reconstruction than genuine recollection, they too presented to me generally as truthful. In particular, I accept their evidence that, in their minds, JJ Armstrong did not agree during the meeting that Hope St's acceptance of a discount on its claim for liquidated damages was subject to a condition that all defective works were completed by 30 June 2014 (or, indeed, 'end of June/July' 2014).

132 While I feel less confident about this finding, I am also prepared to accept that each genuinely recalls the issue of the Stage 2 building permit being a topic of conversation at the meeting. However, I cannot exclude the possibility that this was because it was something they discussed in the lead up to the meeting, and it was not in fact aired during the meeting itself, or not in a way that was heard and understood by Michael or George Dikeakos or Mr Brown. This possibility is reinforced by the fact that it appears the Newbold and Lenhart evidence about this issue was not part of JJ Armstrong's original instructions to its counsel. It was not canvassed by JJ Armstrong's counsel with any of Michael or George Dikeakos or Mr Brown, nor particularised in JJ Armstrong's rejoinder of 2 June 2017.

133 I do not disregard, in this context, the reference in Mr Brown's email dated 6 November 2013 to "The (pedantic if you like) fact is that his Stage Two permit is dated September 30, 2012". However, I am not prepared to find that all of Michael and George Dikeakos and Mr Brown were giving false evidence when they each said in response to questions from Hope St's counsel words to the effect that that the issues of dates of building permits and giving up EOT claims were not discussed at the meeting.

134 I also accept the evidence of Ben Newbold and Mr Lenhart that they recalled (and, in the case of Mr Lenhart, "recalled with clarity") the figure nominated by Michael Dikeakos at the meeting as Hope St's actual loss, was $15,000 to $20,000 and that the sum JJ Armstrong agreed to pay was therefore $7,500 (or $7,500-$10,000). John Newbold's evidence on this was more equivocal, suggesting that he was content to pay half of whatever Mr Brown considered reasonable. But on this issue I prefer the version in his email of 8 December 2014, that his recollection accords with Mr Lenhart's. Mr Brown was clear that the agreement was for JJ Armstrong to pay $15,000.

135 Concerning the evidence of correspondence post-dating the lunch meeting, I accept the JJ Armstrong's submission that such correspondence and associated conduct can properly be taken into account:

"It is also well established that, where no formal written contract exists, such evidence is admissible for the purpose of determining whether a contract was formed, who the parties to the contract are and whether a particular term should be inferred. Similarly, in the case of an oral contract, when the issue is not interpreting words but determining the subject matter of the contract as a fact, the court may have regard to post-contractual conduct."[19]

Accordingly, Michael Dikeakos's failure to assert in correspondence or otherwise, his recollection of what was agreed at the lunch meeting at any time before his email of 27 November 2014, is relevant to the question whether agreement was reached.

136 However, I do not accept JJ Armstrong's submission that it "points tellingly against a term of the oral collateral agreement that required JJA to rectify all defects by 30 June 2014 as a condition of the agreement to cap all delay damages to $15,000". Mr Dikeakos's explanation that he saw no need to mention it because he believed everyone understood what the agreement was, is entirely plausible. Further, when he did first mention it in late November 2014, the battle lines between the parties were yet to be drawn. There is nothing in the email of 27 November 2014 or what preceded it, to suggest that Mr Dikeakos was then alive to the possibility that his recollection of what was agreed would later be hotly disputed. Thus I do not regard this somewhat belated reference to his recollection of the agreement, as contrived or self-serving.

137 I am therefore not persuaded that any of the post-meeting conduct is sufficiently compelling to displace the view that I have formed concerning the veracity of the evidence of Michael and George Dikeakos of their intention going into the meeting and of the meeting itself.

138 The test as to whether there was a common intention is outlined in Toll:[20]

"It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. Reference to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement."

139 There is an additional layer of complexity where a court is called upon to determine questions as to the formation and terms of an oral agreement:

"The subject matter and the concomitant terms of the [oral contract] must be inferred from a combination of surrounding circumstances including conversations, documents and conduct none of which provide a definitive form of words. The issue is not one of interpretation, because there are no words to interpret. The issue is one of fact: what did the parties agree?"[21]

140 This test in Toll was recently applied in a case with facts similar to the present, but with a different result: Home Site Pty Ltd v ACN 124 452 786 Pty Ltd (fka Nahas Construction (NSW) Pty Ltd) ("Home Site")[22]. Here, unlike in Home Site, the objective facts that can be ascertained from the surrounding circumstances including conversations, documents and conduct, on the whole, point away from a common intention and a concluded agreement.

141 In particular, a reasonable person having read Michael Dikeakos's email of 24 October 2013 would understand that Hope St was concerned to see defects completed in a timely manner, and ideally within six months. The discussion at the meeting would have given that reasonable person no basis for concluding that this concern had evaporated by the time of, or during, the meeting. On the contrary. In contrast, a reasonable person observing the conduct of the JJ Armstrong representatives both before and at the meeting would likely have understood that a potential claim for liquidated damages was front of mind for each of them, and that defects were merely something to be addressed in due course in accordance with the Contract.

142 Further, both parties were pulling in different directions on how much in liquidated damages JJ Armstrong should pay and therefore interpreted the various amounts that were canvassed at the meeting in a way that produced the best result for them. For Hope St, the figure was $15,000. For JJ Armstrong it was $7,500 to $10,000.

143 In those circumstances, in my view, a reasonable person in the position of either party is likely to have failed to understand sufficiently clearly what the other party was proposing, both as to what (if anything) was being offered in return for Hope St's agreement to cap its claim for liquidated damages, or the amount of that cap. Accordingly, I am satisfied that there was no objectively ascertainable common intention and no concluded LD Agreement. The position here is probably best described in one of the earlier cased articulating the so-called objective theory of contract. In Smith v Hughes[23], Blackburn J held:

"I apprehend that if one of the parties intends to make a contract on one set of terms, and the other intends to make a contract on another set of terms, or, as it is sometimes expressed, if the parties are not ad idem, there is no contract, unless the circumstances are such as to preclude one of the parties from denying that he agreed to the terms of the other... If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms."

144 Referencing the passage above, the conclusion I have reached is that neither party has conducted itself in a manner that would leave a reasonable person believing that either has assented to the terms proposed by the other. The evidence of Mr Brown, the most objective observer involved, is particularly instructive in this regard. His unvarnished admission that, to have created a written record of the outcome of the meeting "would just have precipitated more angst", is to my mind only explicable by the fact that he harboured real doubts about whether both parties fully understood what they each agreed to. If the position were otherwise, I consider that he would have had no hesitation in ensuring, consistently with his usual practice, that the terms of the LD agreement were carefully and accurately recorded.

145 A similar point can be made about the statement in his email of 28 January 2014 that PBA wanted to "register, without prejudice, the lunchtime agreement". The use of these words in reference to the LD agreement, and his evidence that the words were "meant to allow for some further adjustment", is not consistent with a genuinely held belief that the parties had reached an immutable concluded agreement.

146 Counsel for JJ Armstrong in final oral submissions contended that the parties should be held to their pleadings on the issue of the LD Agreement, with the result that the only matter for me to decide is whether the agreement came with or without a condition concerning the early completion of defects. I disagree. This is not a situation where a party is materially prejudiced by the late introduction of an issue or contention because, for example, they were denied the opportunity to adduce relevant evidence. As the factual narrative above demonstrates, the evidence from both parties about circumstances of the LD agreement was exhaustive. Further, the issue was squarely raised before JJ Armstrong called its first witness, when I was discussing with counsel the latest iteration of the Summary of Issues document and my inclusion in that document of the question: "Was any agreement reached?" I observed at the time that: "Even though it's not strictly pleaded in express terms, it clearly is something that may fall from the evidence".

147 In Banque Commerciale SA (in liq) v Akhil Holdings Ltd,[24] Dawson J said:

"But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties ... cases are determined on the evidence, not the pleadings".

148 The position here is neatly encapsulated by in the following passage from the judgment of Millhouse J (SASC(FC)) in SGIC v Sharpe:[25]

Pleadings in an action are to define the issues between the parties. Sometimes ... the pleadings may not do so at all or only imperfectly. As a rule, though, depending on the course of the hearing, that may not matter because the issues become quite plain as the hearing proceeds and no party is put at a disadvantage ... The day has well passed when decisions are based on the state of the pleadings, irrespective of the facts or justice

149 I am satisfied that the issue of whether any agreement was reached on liquidated damages became quite plain as the hearing proceeded, and no party is put at a disadvantage by the fact that the issue has fallen for determination on the evidence as adduced.

150 Before leaving this issue, I note that both parties sought to support their respective positions on the LD Agreement by reference to arguments based on avoiding a commercial nonsense or commercial inconvenience.[26] JJ Armstrong submitted in effect that it makes no commercial sense to have the outstanding works and defects rectified prior to 30 June 2014 as it was still within the defects liability period. Counsel for Hope St submitted that the only way the LD Agreement makes sense, is if there was the condition that the outstanding works and defects be rectified by 30 June 2014. In my view, neither position could fairly be described as a 'commercial nonsense'.

151 Having said that, I incline more towards the position on this issue advanced by Hope St. It is difficult to understand from a commercial perspective why Hope St would agree, first, that it was not entitled to the generous rate of liquidated damages provided for in the Contract and, secondly, that it should accept a 50% discount on its actual delay losses, without being offered something material in return beyond a commitment to comply with the Contract. This brings me, briefly, to the question of consideration.

152 Although in light of my finding that there was no binding LD agreement it is unnecessary for me to finally decide this issue, I will say something briefly on the topic of consideration. Assuming for present purposes, and contrary to what I have determined, that the plaintiff's version of the LD agreement were accepted, in my view there was no consideration for that agreement essentially for the reasons set out in detail in the written submissions by Hope St.[27]

153 This is not a case like Home Site where there was a claim to give up.[28] In my view, it does not even reach the level of a "doubtful claim" of the kind discussed in the authorities referred to by JJ Armstrong.[29] The relevant principle is best articulated in Wigan v Edwards,[30] a decision referred to and relied on in Home Site [37]:

"The general rule is that a promise to perform an existing duty is no consideration, at least when the promise is made by a party to a pre-existing contract, when it is made to the promise under that contract, and it is to do no more than the promisor is bound to do under that contract. The rule expresses the concept that the new promise, indistinguishable from the old, is an illusory consideration. And it gives no comfort to a party who by merely threatening a breach of contract seeks to secure an additional contractual benefit from the other party on the footing that the first party's new promise of performance will provide sufficient consideration for that benefit.

An important qualification to the general principle is that a promise to do precisely what the promisor is already bound to do is a sufficient consideration, when it is given by way of a bona fide compromise of a disputed claim, the promisor having asserted that he is not bound to perform the obligation under the pre-existing contract or that he has a cause of action under the contract. The qualification recognizes that for the Court itself to examine and determine the correctness of the promisor's claim would be a pointless exercise when the new bargain indicates that the promisee regarded the fresh promise as a benefit presumably viewing the promise of performance as more advantageous than the remedies available to him for breach of a contract. But the law, by insisting that the claim in dispute is one which was honestly or bona fide made, prevents the qualification from assisting the party who would seek to gain an unfair advantage by threatening unscrupulously to withhold performance under a contract." [emphasis added]

154 Here, there is real doubt about whether a claim based on the Stage 2 permit was in fact raised during the lunch meeting. But even if it was, it seems that at best JJ Armstrong was asserting that it "blurred the lines" about the date for practical completion. There was no suggestion that they were asserting that JJ Armstrong was contemplating in fact making a claim for an extension based on the Stage 2 permit date. Mr Newbold agreed in evidence that JJ Armstrong mentioned the Stage 2 permit in passing, "but never agitated a claim in relation to that". Further any such assertion, if it had been made, would have been an empty threat: the time for making any such claim had long passed, as discussed below. In that sense, in my view, any reference to the Stage 2 permit at the lunch meeting was a straw man.

155 Counsel for JJ Armstrong made oral closing submissions to the effect that, on its proper construction, clause P2 of the Contract entitled a party to initiate at any time a dispute in accordance with the procedure set out in clause P. In particular, she submitted that there was "no close connection and reliance of clause P of the Contract on clause A8". She submitted that clause P2 is not subject to any time limitation; all that is required under the clause is a dispute or difference between the parties. Counsel argued that JJ Armstrong was entitled to raise a dispute either pursuant to clause A8 within 20 days or under clause P2 within an unspecified period.

156 I reject that submission. It is at odds with the clear words of clause A8 of the contract and, indeed, the entire scheme of the Contract. The Contract appoints the architect to act as the independent assessor, valuer and certifier. In a practical sense, this means that the architect is routinely the first port of call in relation to matters requiring determination under the Contract. This scheme applies to disputes as much as it applies to any other issue requiring determination under the Contract.

157 Consistently with this, clause A8 provides a clear regime for giving written notice of a dispute to the architect within 20 working days, and for the architect to assess that notice and give a written decision within 10 working days. In my view, on a proper construction of clause A8 (and A8.4 in particular), a party's entitlement to invoke the procedure under clause P crystallises only after the architect gives his or her written decision or has failed to do so.

158 It is not disputed that JJ Armstrong did not give written notice about any dispute under clause A8.1 in respect of the certified date of practical completion (whether based on the Stage 2 permit, the architect's failure to determine JJ Armstrong's EOT claim 14 or any other EOT claims) within 20 days of a relevant date, or at all. In this regard, the last possible relevant date is 31 October 2013, when the architect finally certified practical completion. Accordingly, in my view, JJ Armstrong was and is precluded by clause A8.2 from disputing the matter at all - either at the lunch meeting or now.

159 Thus, even if contrary to my decision above the parties did enter into an LD agreement as alleged by JJ Armstrong, there was no valuable consideration moving from JJ Armstrong to Hope St in return for the latter's agreement to cap its claim for liquidated damages. In those circumstances, any LD agreement that did exist is unenforceable.

160 For completeness, I note that it might be said that the reasoning denying JJ Armstrong's entitlement to dispute the issue of the Stage 2 permit once the 20 day period under clause A8 had expired, should also apply to Hope St's entitlement to pursue its claim for damages. However, I have concluded that, on its proper construction, the Contract preserves to the owner an entitlement to elect either to pursue liquidated damages under (and in accordance with) the Contract or, instead, to fall back on a claim for general damages. Hope St has elected the latter and therefore has removed itself from the liquidated damages regime provided for in the Contract. Subject to otherwise validly engaging the dispute resolution process under clause P (which Hope St has done), its claim for general damages is not constrained by the regime (including time limitations) for a claim for liquidated damages under clauses M12 and (if applicable) A8.

161 On 11 September 2013 David Ta of PBA sent to JJ Armstrong (with a copy to Mr Dikeakos) the first of a series of defects lists. The list itself is dated 5 September 2013 and was prepared by Mr Ta with the assistance of a colleague, Joel. For the purposes of preparing the defects list, Mr Ta and Joel did a room by room inspection, occasionally separating and heading to different floors. Mr Ta gave evidence that they would have had the construction drawings with them at the time of the inspection. He could not recall precisely how long the inspection took but he believed it was probably about a day.

162 The defects list runs to a total of 6 pages. It begins with a list of 22 items under the heading 'Typical Defects'. These were described by Mr Brown as "a common defect, not just restricted to one position where it could be identified" such as a particular apartment. The list also identifies defects in the stairs at all levels, defects in the corridor and lift lobby at each level, defects in common areas and 'back of house' and anything from 5 to 21 individual defects in each of the 22 apartments.

163 The nature and extent of the defects in the building is referred to extensively throughout the correspondence. It is common ground that there was an extensive list of defects well after the date on which the architect issued the certificate of practical completion on 31 October 2013 and after the lunchtime meeting on 8 November 2013. These are referred to in (among other places) Mr Brown's email to the parties of 28 January 2014 referred to above, which identified the two categories of defects: "urgent", being those that affected the proper operation of the building or the safety of residents, and "less urgent", involving "cleaning, touch up paint work and crack repairing etc."

164 There were email exchanges (primarily between Michael Dikeakos and Mr Lenhart) in response to Mr Brown's updated list of defects. There was some conflict in the evidence over whether Mr Brown's "urgent" defects were in fact attended to urgently, but nothing turns on this. It seems not to be in dispute that little work was done to finalise the so called "less urgent" defects before September 2014. The defects work from September 2014 is discussed below in the context of the access issue.

165 While there was some evidence of difficulties with access in the period up to September 2014, there is no suggestion that any such difficulties impeded JJ Armstrong in undertaking defects work at any time before September 2014. Indeed, the evidence was that work on defects by JJ Armstrong in the period up to September 2014 was intermittent (for example, from Michael Dikeakos). This is probably at least in part explained by the direction from Mr Brown in his email of 28 January 2014 to defer the "less urgent" defects.

166 It is common ground that access at least to the tenanted parts of building was arranged by the relevant representative of JJ Armstrong contacting Michael Dikeakos by phone or text message. Mr Dikeakos gave evidence that he needed advance notice for access to tenanted areas, in order to make arrangements with the affected students. From September until at least late October 2014, this contact was primarily made by Darryl Meyers, who was brought onto the project in that period by JJ Armstrong to finalise the defects work.

167 The position in relation to access to the common areas is less clear. The effect of the evidence as a whole was that representatives of JJ Armstrong could access common areas in the initial stages of the defects work without needing to give advance notice to Mr Dikeakos, but it appears that this changed from about late October 2014, as the conflict over the defects work began to escalate. Certainly the incident on 8 December 2014 referred to below would suggest that Michael Dikeakos by then expected to be given advance notice of any attendance on site by a JJ Armstrong representative.

168 Mr Meyers' evidence was that his practice during September was to give Mr Dikeakos 48 hours' prior notice that he needed access to a tenanted area or the office. He arranged access at his own discretion (that is, without consulting others at JJ Armstrong) and worked on the assumption that when he requested access to the site, he was requesting access for the whole day. Mr Dikeakos would generally stay with Mr Meyers when he undertook work in tenanted areas or in the office. According to Mr Meyers, progress on the rectification of the defects was dictated by Mr Dikeakos's availability.

169 Mr Meyers gave evidence that there were a number of occasions during September 2014 where Mr Dikeakos would request that Mr Meyers cease work after a couple of hours, as he (Mr Dikeakos) had to leave the site. He said there were also four occasions in this period when Mr Meyers arranged in advance with Mr Dikeakos to attend on site. He was at the site at 8am to commence work and when there was no sign of Mr Dikeakos by about 8.30am he contacted Mr Dikeakos asking "how far off are you", only to receive a response saying that he would be unable to make it. Mr Meyers would then follow up Mr Dikeakos to arrange another suitable time to carry out the works, however, this "got harder and harder". Once the difficulties in gaining access were reported back to the Newbolds, they arranged for a meeting at the Lux café to sort out the access issues.

170 Both John and Ben Newbold recalled being aware of access issues during September 2014, in the lead up to the meeting at the Lux café. Mr Brown also recalled his colleague David Ta being contacted by Mr Meyers from site about access issues.

171 Mr Dikeakos denied that there were any difficulties with access during September 2014. Indeed, his evidence was that he did not recall receiving requests for access before late September. He also denied that the meeting at the Lux café was called for the purpose of resolving access issues. He denied that any of the incidents of the kind described by Mr Meyers occurred at any time. He conceded that there may have been an occasion or two when he was asked if access could be arranged for a particular day and he would respond that he couldn't do it until a day or two later, "but it doesn't say that George wasn't available or anyone else wasn't available".

172 The meeting at the Lux café took place on 1 October 2014, immediately following a walk-through at the site involving Mr Brown, Mr Ta and Michael and George Dikeakos. There was no representative of JJ Armstrong present at the walk-through. The later meeting at the Lux café was attended by Michael and George Dikeakos, Mr Ta and Mr Brown from PBA, John and Ben Newbold, Mr Meyers, Keith the electrician and Angelo the plumber. Not unlike the lunch meeting on 8 November of the previous year, recollections differed as to the focus of discussions at the meeting.

173 Michael Dikeakos gave evidence that the subject of the meeting was the rectification of the defects that needed to be completed between 1 and 31 October 2014. The JJ Armstrong representatives said that the primary purpose of the meeting was to resolve access issues. Mr Brown had a bet each way: his evidence was to the effect that the purpose of the meeting was to ensure the defects were addressed (the defects liability period was due to expire shortly), the contract was adhered to and the access issues were resolved.

174 At least one outcome of the meeting was that access would be arranged by Mr Meyers or Ben Newbold contacting Michael Dikeakos on an "as required" basis to request access to the site. In other words, it appears that the existing arrangement was largely reconfirmed. John Newbold thought the agreed notice period was 24 hours, but both Darryl Meyers and Ben Newbold recalled that 48 hours was the notice they agreed to give. Ben Newbold thought there may have been discussion of which days of the week were more suitable to Michael Dikeakos. Ben Newbold also gave evidence that his level of attention to the Hope St project stepped up at and after the Lux café meeting.

175 What is clear is that, with the exception of the note at the foot of the "addenda defects list" referred to below, none of the arrangements for access discussed at the meeting were committed to writing at or shortly after the meeting, in the form of a remedial works program or otherwise. Mr Brown gave evidence that PBA had asked for a remedial works program on a number of occasions and, "we probably reiterated the request at the Lux café".

176 On the day after the meeting at the Lux café, Mr Brown sent to John and Ben Newbold, with a copy to Michael Dikeakos, an email attaching "addenda defects for your action". The email noted that the defects list attached was an addenda to the one sent on 28 January 2014. The list begins with tasks to be undertaken by Keith the electrician and Angelo the plumber. It is likely that these were identified and agreed to at the Lux café meeting. It then lists a total of 17 further matters requiring attention, presumably identified in the course of the walk-through that immediately preceded the Lux café meeting. The defects list concludes with: "Building is occupied, organise with owner for access".

177 The evidence from John and Ben Newbold and Mr Meyers was that access problems similar to those described by Mr Meyers as having occurred during September, continued in the period after the meeting at the Lux café. Mr Meyers said there were four occasions between the Lux meeting on 1 October and 23 October and where arrangements were made for him to access the site, but they weren't kept by Mr Dikeakos:

"That's when I was left either sitting in the car reading the paper waiting for Mr Dikeakos to turn up and the excuse came back that, 'I won't be in today', and that was via text because I tried a couple of times to ring then there would be no answer but Michael would text me and say that, 'something's come up', but it was just, 'can't make it today'".

178 Mr Brown and Mr Ta of PBA both gave evidence of receiving phone calls from JJ Armstrong about encountering difficulties in getting access to the site, but neither was clear on the dates or frequency of those calls. Mr Ta said he recalled four or five phone calls from Mr Lenhart and John Newbold informing him they could not gain access or were told to leave. He later gave evidence that these calls were probably beyond the end of the defects liability period at the end of October 2014. This recollection must be at least partly faulty, given that Mr Lenhart left the employ of JJ Armstrong in April 2014.

179 Mr Brown identified two entries in his diary after 1 October 2014 where he made a record of being contacted by someone on behalf of JJ Armstrong complaining that they had been denied access. Mr Brown agreed that if he received a complaint of this kind, he would have documented it in some way. The two entries are for 16 and 30 October.

180 It appears that sometime in the week ending on Friday, 17 October 2014, Ben Newbold sent to Mr Brown a letter proposing that JJ Armstrong have access to the site on 21, 22, 28, and 29 October. It is not clear whether the letter was sent to Mr Brown by email or some other means. The letter also outlined the way in which Mr Newbold proposed that he and Mr Meyers would move through the building on particular dates and discussed issues of access by subcontractors. Curiously, it appears that the first part of the letter, presumably comprising at least the addressee details, was not included in the materials before the Court. Mr Newbold gave evidence that he could not recall whether he received a request from Mr Brown for the work program set out in his letter. He said: "Continual denial of access is what would have triggered me to do that"; that is, to send the letter.

181 Even more curiously, for reasons that were never adequately explained, the incomplete letter from Ben Newbold appears in the materials only as an attachment to an email sent by Mr Brown to John and Ben Newbold and Michael Dikeakos on Thursday, 23 October 2014. The attachment had the document identifier "Hope St23102014.pdf", which might suggest it had only been created (or re-created) on that date. In any case, there is no dispute that the detailed written request for access was not sent by Mr Brown to Michael Dikeakos until a day after the first two days on which access was proposed. Mr Brown's covering email states:

"In response to my request for a remedial works program, JJ Armstrong have provided the attached.

Both parties (builder & proprietor) are obliged to cooperate in discharging it

If there are any difficulties please advise."

182 Regardless, the walk-through proposed by Mr Newbold as part of his program did occur, albeit a day later than proposed. And access was also arranged for Mr Meyers on the following day (23 October 2014). Ben Newbold's letter included the sentence: "Any subbies I need to organise (which I'm led to believe is none) I will do so at this time" (referring to the time of the proposed walk-through). Mr Newbold's evidence was that he could not recall whether or not he determined following his walk-through on 22 October 2014, that any sub-contractors were required to attend in October.

183 Asked whether Hope St had refused access to any sub-contractors at that time, he responded: "At that particular time Hope St hadn't refused access to any sub-contractors". Mr Meyers gave evidence that he saw the plumber on site, that he knew the plumber was attending site and he was not aware of any occasion when the plumber was refused access. More generally, there is no evidence of the plumbing or electrical sub-contractors encountering any difficulties in getting access to the site. Neither was called to give evidence.

184 Mr Meyers was on site on 23 October 2014 to carry out minor works to approximately three apartments. Michael Dikeakos was unavailable to supervise Mr Meyers work for the whole day and so, arranged for George Dikeakos to be present. There is some divergence in the evidence as to what precipitated the altercations that occurred that day, first between Mr Meyers and George Dikeakos and then between Mr Meyers and Michael Dikeakos.

185 Mr Meyers' evidence was to the effect that while he was carrying out works, George Dikeakos was hovering around Mr Meyers asking about attending to items that were not on the list of defects. Mr Meyers stated to Mr Dikeakos that if it was not on the list, it would not be addressed. Mr Meyers downplayed in his evidence the level of irritation he felt at the close supervision by Mr Dikeakos, but it is clear from what he later reported to Ben Newbold that he was experiencing some level of annoyance and frustration. He said that once he completed the works in the apartment and was removing his equipment, Mr Dikeakos approached him and accused him of taking screws out of a toilet roll holder in the cleaner's cupboard. Mr Meyers said he had "had enough", and went out to his car and phoned Ben Newbold reporting his conversation with George Dikeakos.

186 George Dikeakos gave evidence that the source of his concern was the fact that Mr Meyers was scraping plaster from the wall without a drop sheet and allowing dust and debris to fall onto the carpet. He said that when he raised this, Mr Meyers used a dust pan and brush belonging to the tenant to sweep it up and then disposed of it in the kitchen sink. When Mr Dikeakos told him the rubbish should go into the bin, Mr Meyers stormed off, threatening to "punch the walls and him". In cross examination, Mr Meyers accepted that George Dikeakos had raised a concern with him about causing a mess with falling plaster in apartment 405 and not using a drop sheet. However, he said the dust pan and brush that he used to clean it up was his own, that he did not put any rubbish in the kitchen sink and the suggestion that he stormed off threatening to punch the walls and to punch George Dikeakos was "a total lie".

187 George Dikeakos called his son to report what had occurred. It appears that Michael Dikeakos then returned to site and had a look around the building before calling Mr Meyers, thinking he had left. Mr Meyers, however, was still outside the building in his car. According to Mr Meyers, the first thing Mr Dikeakos said when he phoned Mr Meyers was to the effect of, "remember there are cameras through the building". Based on this, the earlier comment by George Dikeakos concerning the toilet roll holder and his later discussion on site with Michael Dikeakos, Mr Meyers felt (with some justification) that he was being accused of taking the screws from the toilet roll holder.

188 Michael Dikeakos's evidence was that when he returned to site and had a look around, he noticed that someone had unscrewed the toilet roll in the caretaker's toilet and left the toilet roll holder on the floor and taken the screws. He also saw silicon and rubbish in the sink in one of the apartments. He said he was very upset at the state of the works, the mess that was left and about the toilet roll holder. He then phoned Mr Meyers and asked what was going on with the mess and the screws. The two then met on site and an argument ensued:

"We had an altercation in terms of coming chest to chest where, he said, 'I didn't take no screws and your dad doesn't let me work' and I said, 'Mate, he was just there opening the doors. We had two screws missing, we have got rubbish in the sinks, what's going on' and he goes, 'Fuck you' and just said, 'I'm going'".

189 According to Mr Meyers, the discussion that he and Mr Dikeakos had on site was considerably more civilised. His evidence was to the effect that Mr Dikeakos repeated the statement he had made on the phone about the cameras in the building, Mr Meyers offered to join Mr Dikeakos in reviewing the footage of the day to confirm he was not responsible for removing the toilet roll and Mr Dikeakos declined, saying it was not necessary. He said that his conversation with Mr Dikeakos was in a "normal tone" and denied there was an altercation.

190 In any case, Mr Meyers was clear that being accused of stealing the screws from the toilet roll holder was "the straw that broke the camel's back". He phoned Ben Newbold to say he was not going back to site and Mr Newbold agreed. For his part, Michael Dikeakos gave evidence to the effect that the incident left him with no confidence in JJ Armstrong's willingness to or ability to complete the defects, and the threats made him feel uncomfortable about having Mr Meyers on site.

191 Between 23 October and end of October, Ben Newbold's evidence was that he could not send Mr Meyers back to the site:

"I had countless notifications of the architect that I was being frustrated and I couldn't get into the building and, you know, the question was always asked of the architect, 'what am I meant to do, like honestly, what am I meant to do?' So I don't recall doing anything between that, you know, that incident beyond... I don't recall what I did with regard to defects at that stage, I'd probably just about had enough."

192 By an email dated 26 November 2014 to Michael Dikeakos and copied to John and Ben Newbold, Mr Brown purported to terminate all further work on defects and incomplete work, ascribe a value to that work and issue to Hope St a final claim certificate in the amount of $90,824.51 and a notice requiring Hope St to release the final cash retention. The email relevantly stated as follows:

"Michael

We have now been advised by JJ Armstrong for possibly the fifth time, that you have not been able to adhere to the access program that was discussed on 20/10/22104 [sic] and followed up with an email 23/10/2014, and to which you agreed.

Accordingly we are bound to agree with the Contractor's view that the expenses he has been incurring as a result of his been repeatedly denied access to complete the defects work is now unacceptable.

The only means to resolve the issue is for us to instruct the builder to cease his efforts as of this date, to value those defects list items which he has been unable to attend to, and to credit that value against the remaining retention amount (together with other items for which you have paid directly-but which we still don't have a copy of the invoices you previously promised), and to issue the final certificate."

193 This was a surprising and precipitous decision for Mr Brown to make at this time, particularly given that he must have known that he had only supplied the so-called access program referred to in his email to Hope St three days after it was to commence. It appears that Mr Brown's email was putting into effect a suggestion made by John Newbold to Mr Brown during a brief telephone conversation on 30 October 2014, a note of which appears in Mr Brown's diary for that day. Mr Brown gave evidence that the note records Mr Newbold informing Mr Brown that JJ Armstrong had been refused access to the site and Mr Newbold's suggestion, "that maybe we would be better just to resolve the matter by putting a monetary value on outstanding defects and bringing the job to a close".

194 What in fact appears to have occurred on 30 October 2014 was later explained by Mr Dikeakos in his email of 27 November 2014, responding to Mr Brown's email the day before, in which Mr Dikeakos states:

"Hi Peter

Thank you for your email and I am completely shocked about us not adhering to the program. We also dispute the final certificate based on the below.

The last communication we had with JJ was on 30 October when there [sic] employee Daryl sent me a messaging [sic] asking for access to Hope St which I advised him that would not occur and that I would be speaking to John re the current situation. Although we have been under the pump our intention was to contact John this week and sort out the outstanding items.

Just to give some background info we had an incident on 23 October with JJ's employee Daryl (the dispute was conveyed to David Ta). There was a dispute in relation to the way the defects where [sic] being undertaken i.e. leaving mess on the apartments [sic] floor and in the kitchen sink ect [sic]. As such JJ's employee stormed out of the building threatening to smash walls ect [sic]. Furthermore we noticed items missing from the site such as screws for a toilet roll holder from the cleaners [sic] toilet with the holder thrown onto the ground (not accusing Daryl but it's a coincidence).

Also works conducted prior to the dispute appear to be substandard as you can see by the photos attached."

195 The effect of Mr Brown's evidence in relation to his decision to send the email of 26 November 2014 and attachments, and Mr Dikeakos's response, was that:

(a) despite the reference in his email to being advised "for possibly the fifth time" about refusal of access, he had only made notes of two occasions when he was so advised and could not recall the dates of any others, except that it would have been October;

(b) he took at face value the assertions on behalf of JJ Armstrong about refusal of access and did not enquire as to any circumstances of the refusal - he was unable to assess whether the owner had been unreasonable or the builder had been unreasonable, for example, by not giving reasonable notice;

(c) he did not ask Mr Dikeakos about the circumstances of the refusal of access or otherwise consult him about his intention to call a halt to the defects work and issue a final certificate;

(d) the account in the letter of what occurred with Darryl on 23 October 2014 was consistent with what Mr Brown understood had been reported by Michael Dikeakos to David Ta;

(e) he did not accept Mr Dikeakos's account of the state of the defects at the time of the letter; and

(f) issuing the final certificate was "the last avenue".

196 Ben Newbold gave evidence that payment of the final retention amount became due seven days after the date of the purported final certificate and so he called Mr Dikeakos on the due date (presumably around 3 December 2014) to follow-up payment. He said that Mr Dikeakos asserted that JJ Armstrong had not finished the works, there were still outstanding defects and how could they possibly be expected to be paid. Mr Newbold accused Mr Dikeakos of cheating him and heated words were exchanged. Mr Newbold later called Mr Dikeakos back and apologised for the way the conversation had unfolded.

197 On 4 December 2014, Mr Brown sent an email to both parties stating that: "in the light of recent information that has come to hand after the issue of the Final Certificate, that it is our intention to review the matter and issue a draft REVISED Final Certificate in the next day or two for your comment/feedback" [emphasis in original]. Mr Brown agreed that the information included some of the issues that had been raised in the email from Mr Dikeakos of 26 November 2014. Mr Brown said nothing in this email about recalling his decision that defect works should cease. Mr Newbold responded later that day by email stating that he was:

"Disappointed with your intention to issue a 'revised' final certificate based upon Michael's petulant carry on over the last few days (I am unsure if a 'revised' final certificate is a recognised document-particularly in light of the circumstances under which it is to be issued... one for the lawyers me thinks)."

198 On 8 December 2014, for reasons which are unclear having regard to the poor state of the relationship at this time and Mr Brown's decision to call a halt to defects work, John Newbold arranged for his son Ben and Mr Meyers to attend the site to inspect the front canopy, to see if they could ascertain the cause of the ongoing leaks and undertake necessary repairs. It is common ground that no one at JJ Armstrong gave any notice to Hope St of this visit. Shortly after they arrived and had climbed onto the top of the canopy, Michael and George Dikeakos also arrived on site and asked Mr Newbold and Mr Meyers to get off the canopy and to leave. Once again, tense words were exchanged between Mr Dikeakos and Mr Newbold, and George Dikeakos intervened and told Mr Newbold and Mr Meyers that they were no longer welcome on site.

199 Mr Newbold wrote to Mr Brown about the incident by email that day, concluding his email with the words: "we cannot and will not be returning". Mr Dikeakos also wrote to Mr Brown about what had occurred that afternoon noting that he had advised Mr Newbold and Mr Meyers that: "we're working with you to have this resolved by different means given the defect period expired and the recent conversation with Ben Newbolt [sic] where he has already briefed a solicitors [sic] being Rigby Cooke Lawyers to commence legal proceedings". Mr Brown emailed both parties later in the afternoon, not referencing either of their communications earlier in the day, but instead setting out the changes he was proposing to make to the final certificate, including making allowance for $15,000 as the "agreed delay cost contribution by JJ Armstrong". John Newbold responded to that letter that evening, disputing Mr Brown's version of the agreed delay cost contribution, as discussed above.

200 On 19 December 2014, Mr Brown emailed the parties asking them to nominate a day early in the new year for a site walk-through "to assess defects, remedies and costing". There was no evidence about what occurred between 8 and 19 December 2014 that might explain how the parties had reached a point where a joint walk-through had become a feasible option, despite the deterioration in the relationship to that point. I can only assume that it was Mr Brown's initiative, which is hard to fathom given his email of 26 November 2014 purporting to bring an end to further defects work and issue an FCC.

201 The walk-through did occur on Friday, 13 February 2015, but shortly after the parties had left the building and were making their way to the nearby car park, Michael Dikeakos and John Newbold had a heated exchange about defects and the quality of the workmanship. Mr Dikeakos at least thought this latest altercation brought to an end any hope of JJ Armstrong returning to site to complete the defects and uncompleted work.

202 On 17 February 2015 Mr Brown emailed the parties attaching a "revised current defects that came out of our Friday inspection". The letter continued:

"Michael please be advised that JJ Armstrong have formally reiterated its willingness and commitment to rectifying the defects (refer attached).

In order for them to complete the process it will require your co-operation in advising your residents as to their likely inconvenience once you have been given the programme(s) by Wes.

The work will be subject to our inspection/approval."

203 The document attached to the email was a letter from JJ Armstrong to Mr Brown dated 16 February 2015 stating:

"Following our meeting on Friday, February 13, 2015, I again confirmed JJ Armstrong PL's willingness to complete identified defects at the above site to your satisfaction.

It was a difficult meeting but it is always our intention to deliver a first-class building to our clients and architects.

I await your direction as to the acceptance of our commitment to meet our contractual obligations and hope that site access will be more easily achieved in this attempt at completion."

"As discussed JJ have had 12 months to complete the defects which they have failed to do so [sic] and therefore have breached their contractual obligations.

Given the events that occurred in the month of October/early November and the meeting held on Friday, it's best to find and alternative solution."

205 On 31 March 2015, Mr Brown emailed Mr Dikeakos with a copy to Mr Newbold discussing arrangements for inspection of a drainage pit and indicating that PBA was about to issue the revised FCC. Mr Dikeakos responded the following day by email stating (among other things): "Also prior to reissuing your final certificate can you pls relook at your defects remedial works valuation items which need we believe need to be relook [sic] in terms of cost are as follows". The email then sets out a list of remaining defects.

206 There was a further exchange of brief emails between Mr Dikeakos and PBA later in April 2015 arranging the pit inspection, which included statements from Mr Dikeakos that: "We don't want John on site anymore after our last meeting, so David Jones and yourself can report back on your findings to him", and "Just to be clear after being threatened personally we do not want anyone from JJ Armstrong (Armstrong Road) there [sic] associates or any of their contractors on site at any time".

207 Mr Brown issued the revised FCC and supporting documents as attachments to an email dated 24 April 2015. Hope St wrote to JJ Armstrong on 30 April 2015 advising that the revised FCC "is being disputed as previously advised under section A8 .1 of the Major Works Contract". By letter dated 4 May 2015, Hope St set out the basis for the dispute and attached supporting documentation. It is common ground that the parties then engaged in the necessary preliminary steps provided for in the Contract before proceedings could be issued, and that this proceeding was later commenced and came to trial in compliance with the dispute resolution process under section P of the Contract.

What impact does any denial of access have on Hope St's defects damages claim?

208 JJ Armstrong has submitted that the evidence on access shows a pattern of denial of access to JJ Armstrong to effect completion of the defect works in September and October 2014, at the end of the contractual defects liability period. Hope St refused such access even when an open offer to complete was put by JJ Armstrong in February 2015 and an instruction to further cooperate was given by PBA. JJ Armstrong submitted that by taking these steps, Hope St itself breached its obligations under the Contract (notably the obligation to co-operate under clause A1) and is now not in a position to claim damages for JJ Armstrong's failure to complete the defects works.

209 JJ Armstrong submitted in the alternative that if Hope St is found to be entitled to claim for the cost of defect rectification works, any such entitlement must be reduced by the value of Hope St's failure to mitigate its loss. Hope St failed to mitigate its loss by failing to provide access or adequate access to JJ Armstrong to complete defect rectification works in September and October 2014 as required by the Contract. Further, Hope St's failure to mitigate extends to its failure to have JJ Armstrong require the plumber and electrician to attend site with the result that any claim by Hope St for defect rectification costs should take into consideration the fact that the works of the plumber and the electrician are covered by enforceable industry warranties and guarantees. Thus if any amounts in the expert reports are to be accepted then the lesser amounts applicable to the cost to the builder are the amounts to which the Court should have reference.

210 In response, Hope St has drawn attention to the requirement under the Contract in relation to defects rectification, that JJ Armstrong was required to promptly return to site and correct any defect or finalise any incomplete work during the defects liability period; an obligation that continued until the defect or incomplete work is completed (clauses M16 and 17.1). Hope St submitted that although that obligation did not come to an end when the defects liability period was over, this did not impose a corresponding obligation on Hope St to grant access to JJ Armstrong as and whenever it required, and especially not after the defects liability period had expired.

211 In relation to the obligations on both parties imposed by clause A1.1 to act reasonably, co-operate in all matters and avoid obstructing the other, Hope St:

• noted that under clause A1.2, those obligations do not affect either party's rights or responsibilities under the Contract;

• relied on authorities supporting propositions to similar effect: "There cannot be a duty to co-operate in bringing about something which the contract does not require to happen",[31] and "A duty to afford the other party the benefit of what he has contracted for; not a duty to act generally in the other party's best interests";[32] and

• accepted that capricious and arbitrary refusal to do everything necessary to permit performance will be a breach of the duty to cooperate, but argued that a reasonable refusal does not offend the implied obligation to cooperate;[33] and

• submitted on that basis that the co-operative contracting obligations are to be assessed by reference to the reasonableness of the parties' conduct throughout the relevant period.

212 I am satisfied on the evidence as a whole and, in particular, the evidence of Mr Meyers, that JJ Armstrong experienced real difficulties in gaining access to the site, particularly during late September and October 2014. I am less confident in forming a concluded view about the frequency and extent of those difficulties. At one end of the scale, Michael Dikeakos would have it that there may have been one or two occasions when a time proposed by JJ Armstrong didn't suit him, but his father George would have been available. Whereas Mr Meyers said he could recall four occasions in September and another four in October when appointments were made with Michael Dikeakos and he failed to keep them. Ben Newbold would probably put the number of occasions of thwarted access even higher. I consider that the true position probably falls somewhere in between these two extremes.

213 Hope St conceded (correctly, in my view) that Mr Meyers gave forthright evidence. Based on that evidence, I am satisfied that there were at least two or three occasions in late September and October 2014, where Michael Dikeakos failed to keep appointments and had not arranged for his father George to be there in his place. I accept that there were also at least one or two occasions when Michael Dikeakos asked Mr Meyers to leave early because he needed to be elsewhere.

214 In my view, Michael Dikeakos downplayed in his evidence both the nature and frequency of these incidents. His responses in cross-examination about access issues were pre-emptory and sometimes unresponsive. My impression was that he had a generally poor recollection of these events, and proceeded on the assumption that if he could not clearly recall the circumstances of the incidents put to him, they did not happen. His lack of clear recollection compared with that of Mr Meyers, is probably explained by the fact that, at the time, the incidents did not impact him in the way they must have inconvenienced and frustrated Mr Meyers (and, through him, Ben Newbold).

215 I am also doubtful about both Michael and George Dikeakos's assertions that Mr Meyers behaved in a threatening manner during the incident on 23 October 2014. However, it is both likely and understandable that Mr Meyers was displaying frustration at the close scrutiny of his work by George Dikeakos and incredulity at the frankly bizarre suggestion that he had stolen screws from the toilet roll holder.

216 On the other hand, it is also likely that the inconvenience and frustration experienced by Mr Meyers and Mr Newbold, had an equal but inverse effect, amplifying in their recollection the frequency and circumstances of the incidents. I therefore consider that the likelihood is low that there were as many as four similar incidents in late September and another four in October 2014. I am reinforced in reaching this conclusion by the fact that Mr Brown had recorded in his diary notes only two occasions after 1 October 2014 when JJ Armstrong called to complain about being denied access, and his evidence that if he received a complaint of this kind he would have documented it in some way. Mr Ta said he could recall four or five calls, but that these calls were after the end of October. This evidence is at odds with Ben Newbold's assertion that he had "countless notifications of the architect that I was being frustrated" in the period up to the end of October when, he decided he could not send Mr Meyers back to site.

217 I have focussed in my analysis above on the period up to the end of October 2014, because I consider that by 26 November 2014, no further performance was required by either party in relation to completing defects and incomplete work, or granting access for that to occur, as explained below . And it appears that by 30 October 2014 at the latest, the parties had reached a stalemate on defects and access, with the result that there is no evidence of access being sought or denied between that date and 26 November 2014.

218 The 26 November 2014 date is significant not just for being the date when Mr Brown issued the first FCC under cover of his email that day. A number of other relevant events occurred in the lead up to that email:

• Mr Meyers had told Ben Newbold following the 23 October incident that he was not going back to site and Ben Newbold formed the view that he was not prepared to send Mr Meyers back;

• Michael and George Dikeakos were no longer comfortable having Mr Meyers back on site and communicated this to John Newbold;

• John Newbold telephoned Mr Brown on 30 October 2014 confirming that JJ Armstrong had again been refused access to site and suggesting that "we would be better just to resolve the matter by putting a monetary value on outstanding defects and bringing the job to a close";

• Hope St had lost confidence in JJ Armstrong's willingness and ability to complete the defects and unfinished works but Mr Brown was not accepting Mr Dikeakos's account of the state of the defects;

• more generally, the relationship between the parties had deteriorated significantly; and

• the defects liability period had expired (on 31 October 2014).

219 In my view, by writing to Hope St in the terms of his email of 26 November 2014 and purporting to issue the first FCC, against the background of the events listed above and without consulting Hope St, Mr Brown effectively absolved the parties from further performance under the Contract (except, of course, in respect of outstanding money claims). He did this not only by the terms of the email itself, but also by overtly aligning himself with JJ Armstrong in the ongoing dispute between the parties. He thus compromised both his independence and his authority to give directions in the future about defects work and access that were inconsistent with his unequivocal directive. Further, the evidence establishes that Mr Brown's actions were taken with the express encouragement of John Newbold.

220 In these circumstances, I am satisfied that Hope St's obligation to cooperate imposed under clause A1 of the Contract, in so far as it encompassed an obligation to give access to JJ Armstrong to complete defects and uncompleted work, ceased on 26 November 2014. Putting it another way, on and from that date, it could no longer be sustainably argued that Hope St was acting unreasonably in refusing further access to JJ Armstrong and its subcontractors. I note that, despite this, some attempts were made after 26 November 2014 (including by Hope St) to facilitate further defects work by JJ Armstrong, but I do not regard this as relevant to my analysis below of the effect of Hope St's alleged breach of the duty to cooperate. It is clear, in any event, that the conflict between the parties continued to escalate following the incidents in December 2014 and the walk-through in February 2015, resulting in the positions of the parties becoming even more entrenched.

221 Similarly, I give no weight to the attempt by JJ Armstrong to attend to defects on 8 December 2014, nor to the offer in its letter to Mr Brown dated 16 February 2015 to commit to "meeting our contractual obligations" and expressing the hope that site access will be more easily achieved. When viewed in the light of the very poor state of the relationship between the parties at this time (and notably the statement by John Newbold in his email of 8 December 2014 that "we cannot and will not be returning"), the letter reads more as an attempt to shore up JJ Armstrong's position for the purposes of future litigation, than a sincere gesture towards a reconciliation. I note that Mr Newbold's email of 8 December 2014 to Mr Brown also shows that JJ Armstrong had commenced consulting solicitors by 8 December 2014 at the latest.

222 Mr Brown's attempt to deploy JJ Armstrong's offer in his email to the parties on 17 February 2015, including by insisting on Hope St's co-operation, was equally disingenuous. As discussed above, Mr Brown had nailed his colours to the mast in his email of 26 November 2014 and the first FCC, and it was too late for him to purport to take them down in a way that somehow resurrected Hope St's obligation to give access to JJ Armstrong for the completion of defects work as late as February 2015.

223 For the reasons above, I have concluded that the period where the relevant access difficulties occurred was limited to September (and probably the second half of September) and October 2014. It is also clear that access was in fact arranged on a number of occasions in that period, including for the plumber or electrician. Indeed, as mentioned above, there is no evidence of the plumber or electrician having difficulties getting access at any relevant time.

224 The question then is whether denial of access on the scale referred to, over the period from mid-September to 30 October 2014, amounted to a breach of the Contract by Hope St sufficient to deny entirely its claim for damages for the defects. More particularly, in the terms of the parties' submissions,[34] did Hope St's conduct in this period engage what is commonly known as the "prevention principle"? Or, if not, does it constitute a failure by Hope St to mitigate its loss?

225 As noted in JJ Armstrong's submissions, the prevention principle was recently summarised by Riordan J of the Victorian Supreme Court in Hera Project Pty Ltd v Bisognin [No 3] (omitting citations):[35]

"The principle, which is of long standing, is that a person cannot take advantage of the existence of a state of things that he has produced himself. Accordingly, a party to a contract who, by his own act, brings about an event to terminate a contract, 'cannot be permitted ... to insist upon the stipulation ... because to permit the blameable party to do [so] ... would be to permit him to take advantage of his own wrong'."

226 JJ Armstrong had a contractually stipulated 12 months to complete any defects and incomplete work notified to it by PBA. Once the defects liability period was over on 31 October 2014, PBA was effectively precluded from giving a first instruction to correct a defect or to finalise any incomplete work (clause M17.2). The first instructions were given in September 2013 and were the subject of regular revision and discussion in the months that followed. JJ Armstrong could have taken steps to complete the remaining defects and incomplete work earlier in the defects liability period, but chose not to. I accept that its decision to put-off the non-urgent work until at least June or July 2014 was taken with the imprimatur of PBA. However, the consequences of that decision should not be visited on Hope St.

227 One of those consequences was that, by September and October 2014, there was a heightened degree of urgency to complete the works, with the result that the difficulties of access became more acute. But viewed in the context of the performance under the Contract as a whole, including the fact that the period concerned represented six to eight weeks in a total defects liability period of 52 weeks, I am not persuaded that Hope St's conduct brought about JJ Armstrong's failure to complete the work. At most it hindered JJ Armstrong's ability to complete the work in the time that it had given itself. What ultimately precipitated the failure to complete the defects work was Mr Brown's decision (with JJ Armstrong's encouragement) to bring it to an end on 26 November 2014, in the circumstances discussed above.

228 On the question of mitigation, I adopt Hope St's analysis of the relevant principles as follows:

"Where rectification is required, it is generally accepted that the Builder must be given a reasonable opportunity of carrying out that work. That is not only a requirement of the duty to mitigate but has the practical consequence that the cost to the Builder in carrying out the repairs is likely to be less than another Builder would charge. Where a principal refuses to allow the Builder an opportunity to rectify defects, that may amount to a failure to mitigate the losses: Woodlands Oak Ltd v Conwell [2011] EWCA Civ 254...In that circumstance, the principal will be limited to recovering an amount equivalent to what it would have cost the Builder to complete had it been permitted access: Hudsons at 4-145; Brooking on Building Contracts, 5th edition, 11.1.

The onus of proof of any failure by Hope St to mitigate its loss in relation to outstanding defects is on the Builder: CJD Equipment Pty Limited v A&C Constructions Pty Limited & Ors [2011] NSWCA 188 at [87]. Hope St is also only required to take such steps in mitigation as are reasonable: United Petroleum Pty Ltd v Bonnie View Petroleum Pty Ltd (In Liquidation) & Ors [2017] VSC 185 at [347]."

229 Applying those principles, I accept JJ Armstrong's submission[36] to the effect that Hope St's conduct in hindering JJ Armstrong's access to the site in September and October 2014, was sufficiently material to amount to a failure to mitigate it loss.

230 It is impossible for me on the evidence to attempt anything approaching a robust analysis of the precise cost associated with Hope St's failure to mitigate its loss. Such an analysis would involve, for example, identifying the particular items of work that JJ Armstrong was proposing to undertake on the days it was unable to go on site, despite giving requisite notice to Michael Dikeakos. As discussed above, the evidence relating to these instances was so uncertain that I was unable to reach a concluded view about how often it occurred, let alone on what days and what work was proposed.

231 Once again, doing the best I can, I propose to take the course endorsed by the authorities and account for the failure to mitigate by limiting Hope St's damages to an amount equivalent to the "cost to builder" value of Hope St's loss, that is, what it would have cost JJ Armstrong to complete the work had it been permitted access.

232 There are two aspects of the expert evidence that I need to address before turning to the detail of that evidence and the amount of damages that Hope St can claim for defects and incomplete work. First, JJ Armstrong's submissions to the effect that Mr Johnson's evidence should not be admitted or given no weight. And, secondly, my decision not to allow Mr Brown to give evidence about matters covered in the expert reports.

233 In relation to the admissibility of Mr Johnson's evidence, JJ Armstrong has submitted that there is no evidence that Hope St provided Mr Johnson with the Expert Witness Code of Conduct ("Code") before giving his report. I reject that submission. First, there is in fact evidence (and I accept) that he was provided with the report by Hope St's solicitors.[37] Further, the veracity of Mr Johnson's written acknowledgment that he read the Code before completing his report and agreed to be bound by it, is not challenged. In my view, the mere failure by a party to "give" the Code to an expert, where the evidence shows the expert had the Code and read it before completing their report, could never be a basis for excluding the expert's evidence.

234 Next JJ Armstrong has sought to attack Mr Johnson's independence on the basis that the content of discussions with Mr Dikeakos during Mr Johnson's inspections were not recorded in his report. This too is a trifling criticism. It is clear from Mr Johnson's report that his findings were based on his own expert observations made during the inspections and fully recorded in his findings and photographs. I saw nothing in his reports or in his evidence to suggest that he was guided or influenced by anything Mr Dikeakos may have said. I would say the same about Dr Eilenberg, who clearly also had discussions with the principal of the party that engaged him, John Newbold. Indeed, I adopt the submission of Hope St that:

"The Court ought be more than satisfied that Mr Johnson's reports, his evidence during trial and the substantial agreement with Dr Eilenberg only served to properly assist the Court and equip with the information and assessments required to determine the defects aspect of the case, and that both gentlemen did so professionally, co-operatively, and in accordance with their obligations to the Court."

235 There is, however, some substance to JJ Armstrong's submissions concerning the reliance by Mr Johnson and, to a lesser extent, Dr Eilenberg on the engineering reports of G. J. Hay & Associates Pty Ltd ("Hay Reports") and Pipe & Cable Investigation Services Pty Ltd ("Pipe & Cable Report"), in respect of the stormwater drainage system. The authors of these reports were not called to give evidence and Mr Johnson conceded that he obtained the Hay Reports because he believed he did not have the expertise himself. JJ Armstrong has also criticised the lack of evidence of the instructions given by Mr Johnson in relation to the preparation of the Hay Reports and the Pipe & Cable Report.

236 On balance, I prefer Hope St's submissions on this issue,[38] but because of my findings below on the stormwater drainage issue, nothing of substance turns on either the Hay Reports or the Pipe & Cable Report. In relation to the former, the Hay Reports confirm that the differences between the drainage layout and the design, do not affect the overall operation of the system. To that extent, they assist JJ Armstrong. Importantly, they say nothing about differences between layout and design contributing to the low grade (or "fall") to street level in the system. Mr Johnson agreed in evidence that was the root cause of the problem with the system, leading to the need for regular flushing and maintenance.

237 In relation to the latter (the Pipe & Cable Report), the report is in substance no more than a summary of what can be observed from CCTV footage from a camera inserted into the stormwater pipework. Mr Johnson and Dr Eilenberg each gave evidence that they had viewed a DVD of that footage and were able independently to confirm what was apparent from that footage. I am satisfied that each had the necessary expertise to make those observations.

238 Turning to my decision not to allow examination of Mr Brown in relation to matters covered in the expert reports, at the conclusion of his evidence in chief, this arose when counsel for JJ Armstrong asked Mr Brown if he had been provided with copies of the expert reports that had been served in the proceeding. That question prompted an objection from counsel for Hope St, apprehending that Mr Brown was going to be asked for opinion evidence in his role as an architect, in respect of the expert reports. In the discussion that ensued, counsel for JJ Armstrong submitted that she sought to adduce the evidence as lay opinion under s78 of the Evidence Act 2008 (Vic), accepting that it would not be possible for Mr Brown to give "purely expert opinion". I ruled against Mr Brown giving any evidence touching on the expert reports.

239 I have real doubts about whether evidence of the kind sought to be adduced by counsel for JJ Armstrong from Mr Brown falls within the category of a lay opinion of the kind contemplated by the exception in s78 of the Evidence Act 2008 (Vic). Given his qualifications and experience, it is difficult to see how any commentary by Mr Brown on the expert reports could be other than "purely expert opinion", traversing the very same issues that are covered in the reports of Mr Johnson and Dr Eilenberg.

240 In any event, I was satisfied that Mr Brown's views about the state and value of defects and incomplete work was adequately covered by both his evidence up to that point and by the contemporaneous documents prepared by him (notably the first FCC and revised FCC, and schedules attached). I was and remain of the view that I would not have been assisted by his hindsight reflections on those matters, or anything else covered in the expert reports. His intimate involvement with the relevant events, and his actions and statements since at least November 2014, preclude him from bringing an independent mind to these issues. Not only does the evidence suggest that had he aligned himself with JJ Armstrong's since that time, any evidence he might have given would also have been influenced by an understandable tendency to rationalise and justify the decisions he made at the time.

What damage has Hope St suffered from defects and incomplete work?

241 On this issue, I have been greatly assisted by the level of cooperation and agreement between the experts for each of the parties. Mr Johnson and Dr Eilenberg were able to meet on very short notice and agree on a significant number of the items of alleged loss. They did so by reference to a spreadsheet entitled "comparative summary of expert reports", which listed a total of 24 items (numbered 1 to 23 and 25), matching the items listed in Appendix E to Mr Johnson's report. There was also a high degree of consensus in their oral evidence. Unless otherwise stated, the amounts mentioned below are inclusive of GST.

242 Putting aside for the moment the possibility of claims under Part 12A of the Building Act 1993 (Vic), Mr Johnson and Dr Eilenberg were substantially in agreement on the substance and cost to builder value of each of items 1 to 10 (inclusive), 12, 13, 17, 18 and 20. In the case of item 6, where there was a variation in the cost to builder value between the experts on these matters, I have taken the mid-point. In relation to items 2 and 7, the evidence of both experts was to the effect that these were essentially design defects and, while JJ Armstrong may be been obliged to draw them to the attention of Hope St, the likelihood was that any rectification would have manifested as a variation and therefore been undertaken at the cost of Hope St. I have therefore attributed nil value to these items. Subject to these matters, I assess the total cost to builder of these 16 items as $6,323, and I need say no more about them.

243 The doubt about the assessment of item 15 arose from the fact that, while the plans showed a fire-rated wall in the pump room, they did not specify a fire door. Thus it was not clear why penetrations through the wall should include fire protection. Mr Johnson gave evidence that, being a pump room, he would normally expect to see fire isolation of that space. In my view, the penetrations should conform to the plans regardless of the specification for the door. If fire regulations in fact require a fire door as well, this is not specified in the plans, so would be at Hope St's cost. I assess item 15 at $352.00.

244 In relation to item 16, it was common ground that the access panel had been cut at the time of a flood event and it had not be adequately repaired. Mr Johnson gave evidence that he had been told the panel was cut by JJ Armstrong, but that evidence was hearsay and I am not prepared to rely on it. Further, there was no requirement for an access panel in the plans. I therefore asses item 16 as nil.

245 Moving to item 19, there was some dispute about whether seals to the fire doors had been specified and whether they had been fitted and later become dislodged. I am satisfied on the evidence as a whole that seals are a necessary inclusion for fire doors, the plans showed the doors concerned were specified as fire doors and no seals had been fitted at the time of installation of these doors. Again I propose to assess item 17 at the mid-point between the two amounts estimated by Mr Johnson ($6,600) and Dr Eilenberg ($5,000), namely $5,800.

246 In relation to item 21, the issue was the total number of non-conforming light fittings. The information relied on by both experts was essentially hearsay (neither did an actual count). Mr Johnson counted the total number of fittings showing on the plans and deducted the number that Mr Dikeakos told him had been replaced. Dr Eilenberg relied on the number of non-conforming fittings stated in Mr Brown's schedule to the revised FCC.

247 I have been unable to locate in any of the defects schedules any earlier reference to 30 non-conforming light fittings, so there is no basis for inferring that this figure was based on an actual count. It certainly could not have been based on the work that Mr Ta and his colleague Joel did in compiling the original defects schedule in September 2013, because the evidence was that the problem with the light fittings did not emerge until much later. I also note that Dr Eilenberg seemed ultimately to agree with Mr Johnson's approach to the calculation. However, on balance and doing the best I can, I will again take the mid-point and assess item 21 as $7,571.

248 It appears that item 23 (numbered item 24 in the body of Mr Johnson's report) was overlooked by all concerned in the course of the oral expert evidence. I am nevertheless prepared to find, based on Mr Johnson's first report, that there was excess tile adhesive and screed material in the shower drains. Further, I am not satisfied that this is something that should be corrected as part of routine maintenance of shower drains, as suggested in Dr Eilenberg's report. I therefore assess item 22 at the builder's cost figure ascribed by Mr Johnson, namely $704.

249 In relation to item 25, Dr Eilenberg noted that epoxy flooring paint in some areas had been specified in the finishes schedule, but it had not been applied. He therefore questioned whether there had been a variation deleting the requirement for epoxy floor paint. However, there was no evidence of any such variation being sought or approved. Dr Eilenberg accepted that the only fact he had relied on in raising the question of a variation was the absence of the paint on the floor. He gave evidence that including an allowance for epoxy floor paint in his calculations of item 25 would bring his total cost for that item to around $4,000. On that basis, I assess item 25 at the more considered estimate provided by Mr Johnson, being $4,106.

250 Items 11 and 14 concern the alleged non-conforming balcony construction and other defects and incomplete work affecting the balconies. In addition to difficult questions of the fall to wastes and general waterproofing of the balconies, these items also encompassed scratches to the balcony balustrading, missing and sagging rubber gaskets securing the glass panels and the problem of water leaking down the outside of the down pipes that penetrate each of the balconies.

251 Both experts agreed that if the balustrade scratches were determined to have occurred pre-occupation, they would amount to a defect. However, Dr Eilenberg considered that it was not possible to ascertain whether they were pre or post-occupation. I disagree. It appears from his report that Dr Eilenberg was supplied only with the revised FCC and annexures (including schedule 1: "defects/remedial works valuation"), and not any of the earlier defects schedules. These show that "scratches to aluminium balustrading" was item 17 in the "Typical Defects" section of the first defects schedule prepared by PBA, well before occupation on 5 September 2013 and in later iterations. The iteration dated October 2014 had the item struck-out (presumably by someone at JJ Armstrong or PBA). However, there is no evidence that the striking-out occurred as a result of the defect being rectified. In fact, the evidence (including based on the inspections by the experts) is to the contrary. Accordingly, in my view, the cost of rectifying those scratches should be included in the damages recoverable by Hope St.

252 As to what manner of rectification is appropriate, the experts agreed that replacement was the best long term solution. Touch up paint is available and is now better quality than it once was, but it tends to fade unevenly over time, with the result that the scratches begin to show as different colouring on the balustrades. Mr Johnson also noted that some of the scratches are reasonably deep. Dr Eilenberg's view was that touch-up could reasonably be expected to last 10 years before significant fading and noted that the original coating would also fade over that time.

253 There is no evidence from the experts or elsewhere in the material as to the discrete cost of patching scratched balustrading. However Mr Johnson has included in his costing breakdown an allowance of $10,120 (excluding GST) for a labourer to remove and dispose of floor tiles and screed and remove and dispose of balustrade frames, and $23,000 (excluding GST) to supply and install 115 metres of balustrade frames and posts, suitable for re-use of original glass for all balconies. It is not clear if the 115 meters covers all balconies or just those where scratching is evident.

254 As Hope St has submitted, what remedial work is both "necessary" and "reasonable" in any particular case is a question of fact. Further, the test of unreasonableness is only to be satisfied by fairly exceptional circumstances.[39] In my view, Hope St is entitled to balustrades that conform to the contract and it is reasonable to expect that scratched balustrades (particularly ones with deep scratches) be replaced. The evidence of the extent of the scratching in Mr Johnson's report is that 16 of the 19 balconies had scratching to balustrade frames. Doing the best I can and making allowances for the fact that Mr Johnson's costing includes matters unrelated to scratches on the balustrade frames, I assess the total cost of replacing scratched balustrade frames as 25% of his assessment of labour cost for removal (being $2,350 - most of the removal cost allowed by Mr Johnson is likely to have related to tile and screed removal) and 75% of his assessment of the cost replacement balustrade frames (being $17,250 - a small proportion of the balustrade cost is likely to have related to posts), giving a total of $19,600 (plus GST).

255 The rubber gaskets are strips of rubber that are "push-fit" on both sides of the top and bottom edges of the glass panels to hold the panels in place where they fit into the aluminium tubing of the balustrades. Both experts gave evidence of missing gaskets and also gaskets which were sagging or falling out of their housing. Mr Johnson considered from his inspection that in a number of cases a gasket may not have been fitted to one side of the panel, allowing the opposite gasket to sag or fall out. Dr Eilenberg had also observed this but explained that expansion and contraction of the aluminium in changing weather conditions can also allow the gaskets to come loose. He also noted that during his inspection some balconies contained single gaskets as described by Mr Johnson.

256 Again, missing gaskets are recorded in some early iterations of the defects lists and I am therefore satisfied that these comprise part of the defects and incomplete work. This is consistent with the schedule 1 to the revised FCC that includes an allowance for the gaskets. As with the scratches, the experts have not given a discrete costing for the gaskets. However, schedule 1 to the revised FCC assesses the cost of installation (but not supply) of the gaskets as $1,080 (excluding GST). I am not prepared to speculate about the cost of the gasket material, and so will assess the loss in respect of the gaskets as $1,080 (plus GST)

257 There was relatively lengthy evidence from the experts on the location of the wastes on the balconies and the lack of fall in the tiling to those wastes. In the end, the experts agreed that the wastes were located consistently with the plans. On the other hand, it is tolerably clear that in many instances there was no fall in the tiling to those wastes, and the fall instead tended to shed the water off the edges of the balconies.

258 However, both experts agreed that the type of wastes specified in the plans (a shower-style waste) were generally ineffectual in managing heavier rainfall, which would tend to run off the edges of the balconies in any event. And although the inclusion of a waste would normally suggest that the tiling should fall towards that waste, Mr Johnson could not recall anything in the plans about a fall. Dr Eilenberg was also concerned that any fall would make the floor surface uneven and unsuitable for chairs or other furniture.

259 Having regard to all the evidence on this issue, I am not satisfied that any departure from the plans or usual practice in relation to the location of wastes and the fall to those wastes, is sufficiently material to amount to a defect or other breach of the Contract. I therefore do not propose to make any allowance for this aspect of the balcony construction.

260 Moving finally to the question of waterproofing, the experts agreed that the architectural specifications called for a "typical waterproof liquid membrane tanking to all balconies on top and underside of slab. Continue waterproofing of slab 450mm min pass external wall above". They also concurred that this was to be a paint-on membrane and not a fabric or plastic membrane. Neither expert was able to explain why the waterproofing included the underside of the balconies or what was meant by the reference to "450mm pass external wall above".

261 Dr Eilenberg considered that "whatever" had been done in the way of waterproofing was stopping water penetrating the concrete slab of the balcony. He stated that the balconies he inspected did not appear to have major problems and pointed to the lack of the usual penetration sign, which appears as a central horizontal line of efflorescence along the balcony. Further, the currently visible efflorescence appeared to be a result of water penetrating the grout between the tiles and leeching through the screed, resulting in characteristic vertical white efflorescence appearing over the edge of the balconies. Mr Johnson considered that the metal strip on the edges of the balconies may actually be covering the horizontal efflorescence, therefore not giving an accurate representation of water penetration, but there was no investigation of this.

262 Both experts agreed that "turn ups" of waterproofing paint required by the plans could not be achieved through impregnated mortar but required paint-on waterproofing (or a fabric/plastic barrier not contemplated in this case). They both expressed the view that there was no evidence of "turn ups" at the walls, the perimeter edge or on the downpipes. Dr Eilenberg suggested that it was possible that the paint-on membrane had been terminated just below or at the line of the tiles, and might explain why no turn-up was visible, but a turn-up would normally go higher than that.

263 The only physical inspection in relation to the existence or otherwise of a membrane applied to the slab, was undertaken by Mr Johnson. Michael Dikeakos lifted a tile against the wall of one of the balconies and Mr Johnson explained that he scraped away the adhesive and screed to expose the concrete and that he could find no sign of a paint-on membrane being present. There was also evidence from Mr Brown and John Newbold on this issue. Mr Brown's evidence was that no membrane was called up on this job and he had specified waterproof mortar. But Mr Newbold said that Mr Brown was mistaken about this, although he could not say whether the tiler used a screed mix with a waterproof additive, in addition to the paint-on membrane. Mr Newbold said that he had seen the tiler applying liquid membrane to some of the balconies.

264 Importantly, both experts considered that a definitive answer to the question whether a paint-on waterproof membrane had been applied could only be obtained by lifting tiles on at least a third of the balconies and taking samples from the slab and the walls. No tests approaching that level of rigour were undertaken in this case. Given that, and given that the other evidence concerning the application of a paint-on membrane as discussed above is equivocal, I am unable to be satisfied on the balance of probabilities that there is no membrane as alleged by Hope St. I therefore find that there is no provable loss to Hope St in relation arising from defects in the waterproofing of the balconies.

265 That leaves the question of what is to be done about the evidence of water leaking down the outside of down pipes that penetrate each of the balconies. There is no doubt that this is indicative of a defect, but the experts did not address rectification of that defect independently of the broader waterproofing issue. Mr Johnson's evidence was to the effect that the full balcony reconstruction recommended by him would resolve that problem, and he did not consider options or costing for dealing with that defect separately from the full balcony reconstruction.

266 Dr Eilenberg considered that in the absence of a full rework of the balconies, the only effective way to create a seal around the downpipes would be to inject a waterproofing agent under pressure between the PVC pipe and the concrete, for the full length of the penetration. There is no evidence of what that discrete item of rectification might cost, from the experts or otherwise. Schedule 1 to the revised FCC only allows $720 for "clean downpipes and repaint". In the absence of any other evidence about costs associated with rectifying this defect, I will assess the loss based on the schedule 1 to the revised FCC as $720 (plus GST).

267 Thus my assessment of loss to Hope St in respect of the scratches to the balustrades, the gaskets and the water leaking through the downpipe penetrations, is a total of $23,540, including GST.

268 The experts agreed that there were two options for the repair of the stormwater drainage system. Option A essentially involves cutting into the ground floor slab and removing and replacing the existing 150mm diameter main branch drain and all connections including the twin connecting pipes to the street kerb, at a cost in excess of $60,000. Option B is far less disruptive and involves relining the existing main branch drain and replacing the twin connecting pipes to the street kerb. There is evidence that the existing system does not conform fully with the plans. For example, the second of the Hay Reports states:

"Based on the information provided, the drainage layout for the premises differs in several aspects from the original design. The prominent differences are the redirection of Unit 3 drainage and the apparent absence of inspection openings on the main branch. It is also understood that the baffle in the orifice pit has not been provided".

269 On the other hand, neither the Hay Reports nor the reports or evidence of Mr Johnson or Dr Eilenberg suggest that the disconformity contributed to the problems that have been encountered with the stormwater system. Importantly, both experts agreed that the potential for back-flows and surcharges in the system was essentially a product of the floor level and the level of the existing road. And the system would require regular maintenance regardless of which option was chosen. Thus, on the expert evidence as a whole, I consider that the disconformity is in the nature of a technical breach,[40] and insisting on the full removal and replacement of the system under option A is out of all proportion to the benefit to be obtained.[41]

270 However, the CCTV footage has identified punctures in the pipework and other defects which the experts agreed can be rectified by implementing "option B". Option B involves fully flushing and clearing the existing 150mm main branch drain, repairing the damaged (punctured) sections by relining and replacing the twin connecting pipes to the street kerb. Although neither of the experts had determined a cost for this work in their reports, during a break in their concurrent evidence, they were able to make enquiries and return with an agreed calculation of a builder's cost for item 22 at $10,153. They did not say whether or not this was a GST inclusive figure, but given Mr Johnson's other calculations included GST, I will assume that it is. I therefore assess item 22 at $10,153.

Part 12 A of the Building Act

"Within its failure to mitigate resides the failure of Hope St at that time to have JJA require the plumber to attend site to rectify defects that were identified as plumbing matters and the electrician to attend site to rectify defects that were electrical issues. As such any claim by Hope St for defect rectification costs should, it is submitted, take into consideration the fact that the works of the plumber and the electrician are covered by enforceable industry warranties and guarantees. It would be unfair in the circumstances to now have JJA pay for the cost of this defect rectification when such rectification was possible prior to 24 April 2015 but Hope St refused JJA the ability to complete the defect work or to have its subcontractor plumber and or electrician complete."

272 I have accepted above that Hope St's failure to mitigate does operate to reduce its loss to the cost to JJ Armstrong of completing the defects and incomplete work. However, I do not accept that it extends to having JJ Armstrong require the plumber and electricians to attend site to rectify plumbing and electrical issues. On the facts, there is no evidence of either the plumber or the electrician being denied access in the September or October 2014 period. For the reasons discussed above, after 26 November 2014 any difficulties of access are not attributable to Hope St. There is in any event no evidence of issues of access for the plumber or electrician even after 26 November 2014, until as late as April 2015, when an inspection of the orifice pit by David Jones was arranged. It is clear that, by that time, the relationship of the parties had irretrievably broken down.

273 I otherwise agree with Hope St's submissions on this issue.[43] In particular, I agree that:

• under the Contract, responsibility for completing the works in accordance with the Contract, including any works to be undertaken by subcontractors, rests on JJ Armstrong; and

• it was open to JJ Armstrong to join the plumber as a defendant to the counterclaim for the purposes of claiming apportionment under Part IVAA of the Wrongs Act 1958 (Vic).

274 Based on the analysis above, I assess Hope St's total damages for defects and incomplete work as itemised in the report of Mr Johnson (inclusive of GST) as set out in the table below:

275 The process for the issue of a FCC under the Contract is clear. It begins (under clause N11.1 of the Contract) with the contractor submitting a final claim to the architect when each of N11.1(a), (b) and (c) is satisfied; N11.1(b) provides that "the contractor has rectified all defects and finalised all incomplete works." Next, the architect must promptly assess the final claim, request any additional information required and then issue the final certificate to the contractor and the owner (clause N12.1). The FCC must (among other things) give written reasons for any differences between the amount certified and the amount claimed (clause N12.2).

276 None of those things occurred here. Instead, in an attempt to bring some finality to the escalating dispute between the parties, PBA purported unilaterally to assess amounts outstanding under the Contract and certify them for payment. The covering email from Mr Brown described the revised FCC in the following terms: "So this Final Certificate (and it's [sic] supporting assessments)-is also the basis of a negotiation settlement which in our view is the fairest outcome".

277 In evidence, Mr Brown accepted that the revised FCC and the various assessments and adjustments represented effectively a negotiated settlement and his intent in issuing the FCC was to try to get the parties to resolve their differences. When Mr Brown prepared the FCC and nominated the dollar amounts that he did, he was looking for a "fair outcome" that would lead to an amicable settlement between JJ Armstrong and Hope St. He could not recall any final claim having been made by JJ Armstrong and confirmed that he did not issue a written request for a final claim under clause N11.4 of the Contract.

278 Clause N11.4 provides that the contractor must submit a final claim within 20 working days after receiving a written request to do so. There is an interesting question as to whether clause N11.4 contemplates that a written request can be made by the architect at a time when the contractor's entitlement to submit a claim has not yet crystallised under clause N11.1. My tentative view is that it does not, but it is unnecessary for me to reach a concluded view because no such written request was made in this case.

279 Similarly, there is an interesting question about whether the architect's power to determine the final claim under clause N11.5 of the Contract arises upon a failure by the contractor to issue a final claim in response to a written request under clause N11.4 (as JJ Armstrong submits), and thus the cross-reference in clause N11.5 to "a written request under subclause N11.2" must be an error. In view of the consecutive positioning of clauses N11.4 and N11.5 and the fact that clause N11.2 does not prescribe any form of "written request", my tentative view is that clause N11.5 intended to cross-reference clause N11.4, not N11.2. But again it is unnecessary to reach a concluded view, because no written request under any provision of clause N11 was made in this case.

280 The absence of any final claim by JJ Armstrong is apparent both from the evidence of Mr Brown discussed above, as well as from the fact that there is no reference to a final claim in any of the documents before the Court. Most notably, the correspondence and documents accompanying Mr Brown's first FCC and revised FCC state in unequivocal terms that PBA has determined itself to populate and calculate the various components of each FCC. There is nothing in that material to suggest any reliance on information, calculations or claims submitted by JJ Armstrong; quite the contrary.

281 In my view, the purported issue by Mr Brown of a final certificate under clause N12 of the Contract in the absence of a final claim by JJ Armstrong under clause N11.1 (or, if relevant, in the absence of a written request by Mr Brown to JJ Armstrong under clause 11.4 to submit such a claim), is a sufficient basis on which to find the revised FCC is invalid. The Contract clearly contemplates that the architect certifies "a claim", and thus it is the builder (not the architect) who sets the parameters of the issues that the architect must consider before issuing a certificate.

282 Further, that claim must be supported by a declaration made by the contractor that the contractor has performed its obligations under the Contract and all monies due to subcontractors at the date of the declaration have been paid (clause N11.2). In this case, the need for such a declaration would have required JJ Armstrong to confront during November 2014 at the latest, the impact of outstanding defects and incomplete work on its entitlement to be paid the retention sum.

283 Instead, Mr Brown issued the first FCC under cover of his 26 November 2014 email, and then issued the revised FCC on 24 April 2015. The actions of Mr Brown preparing and issuing these FCCs bore little resemblance to the procedure provided for in the Contract. This is not a case of a minor or technical departure from the strict terms of the Contract. It involved a fundamental recasting of the roles and responsibilities of each of the owner, contractor and architect as provided for in the Contract.

284 While I accept that the consequences of that departure in this case are not as profound as those that can flow from some alternative contract forms commonly used for large-scale construction projects (such as Australian Standard Contract AS4300, as discussed in Lysaght v Building Solutions Pty Ltd v Blanalko Pty Ltd [No 3][44]) ("Lysaght"), they are nevertheless significant. Indeed, their potential significance is exemplified by the detailed submissions by JJ Armstrong on the prominence that I should afford the revised FCC in determining the issues in this case. Accordingly, I am guided in the approach I should take to the construction of provisions of this kind by authorities faced with similar issues. In Southern Region Pty Ltd v State of Victoria (No 3) [2001] VSC 436 ("Southern Region"), Byrne J said at [13]:

I approach the question presently before me from the position that the procedures for certification, both progressive and final, in cl.42.1 carry with them serious consequences for the parties. This leads to the conclusion that a strict approach should be taken to their construction. These considerations have even more force where the procedure is leading to a Final Certificate for, as will be seen, the consequences of this are more significant for the parties than those flowing from progress payment certificates.

285 And as Vickery J later found in Lysaght, (citing Byrne J in Southern Region at [25]):

It follows that a certificate purportedly issued under cl 42.1 which does not satisfy the formal requirements of the clause is ineffective and invalid, or as Byrne J said in Southern Region: "... It was as if no certificate had issued at all".

286 In response to this basis of invalidity of the revised FCC, JJ Armstrong has submitted that at no stage has Hope St pleaded that JJ Armstrong as contractor has not made any final claim at all (as opposed to pleading that the final claim made by JJ Armstrong was invalid). It further submitted that: "Such a pleading could have been met with contrary evidence by JJA". It is true that Hope St did not in terms plead the failure by JJ Armstrong to submit a final claim as an element of the alleged invalidity of the revised FCC. However, the pleading in paragraph 5 of Hope St's further amended defence and counterclaim dated 10 August 2016 was, in my view, sufficient to enliven the absence or otherwise of a final claim by JJ Armstrong as an issue in the proceeding. In particular, had such a final claim (or anything that might be alleged to constitute a final claim) in fact been submitted by JJ Armstrong to PBA, it would have constituted a substantial (if not complete) answer to the allegations of invalidity on behalf of Hope St.

287 Further, I accept the submission on behalf of Hope St that the issue was only fully exposed during evidence at trial; notably the evidence of Mr Brown referred to above, and thus gave JJ Armstrong every opportunity to adduce evidence of the making of such a claim from both John Newbold and Ben Newbold. Counsel for JJ Armstrong has not identified either the category or content of any contrary evidence that JJ Armstrong might have produced and, as indicated above, the detailed documentary and oral evidence dealing with both versions of the FCC all points the other way. In the circumstances, I am satisfied even if the issue of the existence or otherwise of a final claim by the builder was not expressly raised on the pleading, this has not resulted in any relevant disadvantage to JJ Armstrong.

288 The revised FCC therefore satisfies at least two of the grounds for invalidity set out by Vickery J in Metier3 Pty Ltd v Enwerd Pty Ltd & Anor,[45] namely, it has not been issued in accordance with the terms of the Contract and is otherwise shown to be beyond the contractual power conferred on the architect. For completeness, I should also note my agreement with the other grounds for invalidity referred to in the Hope St's submissions, being:

• there is no provision in the Contract for PBA to withdraw the first FCC and replace it with the revised FCC and, more generally, Mr Brown had no power to deploy the FCC procedure to impose his own attempt at "mediating" the dispute between the parties; and

• PBA had no power under the Contract to impose the asserted agreed liquidated damages amount or to value the outstanding defects and uncompleted work.

289 Finally, even if the FCC were valid, it stands only as evidence of the matters stated in it. The Contract eschews any express statement of the quality to be ascribed to that evidence: it is neither "conclusive" nor even "prima facie" evidence of the parties' entitlements under the Contract. Thus it might provide a basis for a claim by a party, but only to the extent that there is no evidence to the contrary. In my view, for the reasons explained above, there is evidence to the contrary on both the key issues of the liquidated damages amount and the defects. In this context, epithets such as "significant weight" and "powerful, independent, contemporaneous" do not assist me. It is merely evidence; no more no less.

290 In this regard, I agree with Hope St's submissions that the decision of the New South Wales Court of Appeal in Abergeldie Contractors Pty Ltd v Fairfield City Council,[46] applies to a very different contractual paradigm than the one operating under the Contract. As Hope St submitted:

"There the reference to driving a "horse and cart (or perhaps a B-Double)" was in relation to the Security of Payments legislative scheme. The parties could not contract out of the legislative scheme and it was held that "knowledge of that legislative scheme is part of the context which must be considered in construing the Contract". The relevant context in which the FCC here must be considered includes provisions such as A8 and Section P concerning disputes in relation to the Architect's assessments contained in any purported FCC."[47]

291 As Hope St further submitted, where the parties here have adopted ABIC MW - 2008 Standard Form Contract and the terms of clause N15, they must be taken to have agreed to the effect of the FCC as not being conclusive evidence, and always subject to dispute under clause A8 and Section P:

"[T]he qualification in clause N15 read together with clause A8 and Section P makes it plain that either party had the right to dispute the Architect's assessment as contained in the Final Certificate. There is no provision which effectively requires the parties to "pay now and argue later" (a well known theme to the Security of Payments legislation). The reference in clause N14 to "must be paid", must also be read in light of clause P7.1 which permitted the Builder to apply for Summary Judgment on the Final Certificate, which it chose not to do."[48]

292 JJ Armstrong's substantive submissions on this issue[49] bear no relation to its pleaded case, which relied on the alleged failure by Hope St to obtain permission of the property owner Galbonti Pty Ltd ("Galbonti") for the works to be carried out. While JJ Armstrong does not appear to have wholly abandoned its pleaded case,[50] it has not advanced any argument to support that case beyond the pleading itself. Accordingly, on the pleaded case, I need say no more than I agree with Hope St's submissions that it is not supported either on the facts (permission was given) or on a proper construction of clause A4.3 of the Contract. The clause is intended to absolve the builder from commencing work where permission from the owner is in doubt, not to absolve the builder from obligations under the Contract once works are complete.

293 The case now advanced by JJ Armstrong apparently in addition to its pleaded case, is that Hope St is unable to claim for the cost of rectification of defects, as the right to make such a claim resides with Galbonti. Galbonti is not a party to the proceeding and has made no such claim, nor does it have a right to make any such claim on grounds of lack of privity. I reject this argument on two bases. First, it has not been pleaded and was advanced for the first time in JJ Armstrong's closing submissions. Unlike other instances where the facts and arguments in this case have departed from the pleadings as discussed above, in this instance:

• it was not foreshadowed at any time during the evidence; and

• I accept as submitted by Hope St that it is an issue about which further evidence could have been adduced, particularly evidence going to the nature of the contractual and ownership relationship between Hope St and Galbonti.

294 Secondly, and in any event, I agree with Hope St's submission that the argument is misconceived:

"Hope St's claim for damages for defects in the works the subject of the Contract, arises by reason of the fact that pursuant to the terms of the parties' promise, the Builder was required to provide to Hope St (no-one else) the full scope of works free of defects, and for which, Hope St (and no-one else) was required to pay the Contract price. Hope St has fulfilled its promise, but the Builder has not. That the structure or works which are the subject of the Contract is on land owned by Galbonti Pty Ltd is immaterial to any entitlement to claim damages for breach under this Contract. The defects do not affect Galbonti's land. They affect the structure on the land which, on the evidence, all parties plainly knew was being commissioned by Hope St under the Contract for the purposes of Hope St conducting a student accommodation business in that structure."

295 The question of what is payable and to whom is answered in the following table:

296 I note that Hope St has included in its final reconciliation additional amounts for building reports and for interest on delay damages. As to the amounts for the building reports, as I understand it, these were the amounts paid to Mr Johnson for his expert reports relied on by Hope St in the proceeding. These seem to me to be costs of the proceeding and should be dealt with as part of the orders on costs, not as a separate head of damages.

297 On the question of costs more generally, Hope St has essentially succeeded on both of its claims for delay damages and for defects damages, albeit for sums assessed to be lower than the sums claimed (and, in the case of the defects damages, considerably lower). On the other hand, those sums in total are more than sufficient to account for the retention amount claimed by JJ Armstrong. Thus if costs were to follow the event, I would be inclined to order that JJ Armstrong pay Hope St's costs on the standard basis, in default of agreement.

298 As to interest on delay damages, these turn out to be less than the retention amount and so, in my view, should not accrue interest without an appropriate allowance being made for Hope St's continued holding of that retention amount. My tentative view is that potentially competing interest claims should be dealt with by awarding interest to Hope St at the rate specified pursuant to s2 of the Penalty Interest Rates Act 1983 (Vic) on the net amount of its recovery ($53,031.65) on and from the date of its counterclaim, being 9 June 2016.

299 Based on the above analysis, my tentative view is that the orders in the proceeding should be in terms as follows:

(a) There be judgment for the defendant against the plaintiff in the sum of $53,031.65.

(b) The plaintiff pay the defendant interest on the judgment sum at the rate prescribed from time to time under s2 of the Penalty Interest Rates Act 1983 (Vic), on and from 9 June 2016.

(c) The plaintiff pay the defendant's costs of the proceeding (including reserved costs) to be taxed on the standard basis in default of agreement.

300 I will hear further from the parties on the terms of final orders.

I certify that these 111 pages are a true copy of the reasons for Judgment of His Honour Judge Woodward delivered on 8 September 2017.

Date by which the owner must give possession of the *site

1. CONDITION OF PRACTICAL COMPLETION IS THE CONTRACTOR TO PROVIDE ALL PRODUCT & EQUIPMENT MANUALS, CERTIFICATES, WARRANTY DOCUMENTS, AND ASBUILT DRAWINGS

The order of precedence of *contract documents is:

2. Any owner occupier conditions shown in schedule 2b.

3. The conditions set out in this contract and schedule 1.

.1 Under this contract, the contractor and the owner must:

1. begin the *works within 10 *working days after being given possession of the *site
2. diligently carry out all *necessary work and complete the *works to the standard set out in the *contract documents

1. bring the *works to *practical completion in accordance with clause M1.

1. give possession of the *site in accordance with this contract.

.1 The architect for the purposes of this contract is shown in item 2 of schedule 1.

.2 The architect is appointed to administer this contract on behalf of the owner and the owner warrants that the architect has authority to administer this contract.

.3 The architect is the owner's agent for giving instructions to the contractor. However, in acting as assessor, valuer or certifier, the architect acts independently and not as the agent of the owner.

.4 The owner must ensure that the architect, in acting as assessor, valuer or certifier, complies with this contract and acts fairly and impartially, having regard to the interests of both the owner and the contractor. The owner must not compromise the architect's independence in acting as assessor, valuer or certifier.

.5 The architect is not the owner's agent for giving or receiving notices under clause A8, section P and section Q.

A8 Disputing architect's certificate, written decision or failure to act

.1 If a *party wishes to dispute a certificate, notice, written decision or written assessment issued by the architect, or to dispute the failure of the architect to issue something, the *party must give the architect written notice under this clause within 20 *working days after:

1. receiving the certificate, notice, written decision or written assessment or
2. becoming aware of the failure of the architect to issue something.

.2 If the *party fails to give a notice under subclause A8.1, the *party will not be entitled to dispute the matter at all.

.1 Where the contractor or the owner is entitled to compensation as determined under this contract, that compensation, when paid in full, is the sole and complete remedy for the contractor or the owner under this contract."

.1 Unless otherwise shown in schedule 3, the order of precedence of the *contract documents is as follows:

1. any special conditions shown in schedule 2a
2. any owner occupation special conditions shown in schedule 2b

1. the conditions set out in this contract and schedule 1.

C7 Owner's release of security on *practical completion

.1 When the architect issues the notice of *practical completion, the contractor is entitled to the release of 50% of the amount of the security then held.

F1 Owner to give contractor possession of the *site

.1 The owner must give the contractor possession of the *site from the date shown in item 18 of schedule 1.

.1 The contractor may subcontract any part of the *works, but not the *works as a whole. The contractor is liable for the *necessary work done by its subcontractors.

.2 The contractor must take responsibility for any acts and omissions of its suppliers and subcontractors in relation to the *works.

.1 At the owner's request, the architect must instruct the contractor in writing to amend the program. When the contractor receives the instruction, it must amend the program and comply with the amended program unless it *promptly gives the architect written notice that it cannot reasonably comply with the amended program.

.2 An instruction issued under this clause is to be treated as an *urgent instruction.

H1 Time for making a *claim to adjust the contract

.1 The contractor is entitled to make a *claim to adjust the contract only if the contractor:

1. *promptly notifies the architect in writing of its intention to make a claim after receiving an instruction or, if no instruction is issued, *promptly notifies the architect after becoming aware of an event that will result in a claim and
2. submits the detailed *claim to adjust the contract to the architect within a time agreed in writing between the contractor and the architect or, if no time is agreed, within 20 *working days after receiving the instruction or, if no instruction is issued, within 20 *working days after becoming aware of the event that has resulted in the claim and, for these purposes, an event is not a consequence of an instruction.

.3 If the claim results from an *urgent instruction, suspension of the *works or a delay in the progress of the *works, the contractor is not required to give the first notification required under subclause H1.1, but the detailed claim must be submitted within 20 *working days after the *urgent instruction is issued or the suspension ends or the delay ends, whichever occurs first.

.1 A *claim to adjust the contract must contain the following details:

.1 The architect must *promptly assess the *claim to adjust the contract and in so doing the architect must consider the detailed claim submitted by the contractor and any further information the architect requests the contractor to supply.

.1 The architect must, within 20 *working days after receiving the claim, issue to the contractor and to the owner its written decision specifying any adjustment to the *contract price or any adjustment to the date for *practical completion, or both.

.2 The contractor may dispute the architect's decision or a failure to issue a decision issued under this clause in accordance with clause A8 but, in accordance with clause P1, must continue to perform its contractual obligations.

H6 Architect may adjust contract in absence of claim

.1 If the contractor has not made a *claim to adjust the contract in relation to any change which results from complying with any instruction given under section J for a *variation or from causes of delay noted in clause L1 or L2, the architect may adjust the contract at any time up to the issue of the final certificate under clause N12, or a certificate under clauses Q9 or Q17.

.1 The contractor must bring the *works to *practical completion by the date for *practical completion shown in item 27 of schedule 1 as adjusted in accordance with this contract. The *works are at *practical completion when, in the reasonable opinion of the architect:

1. they are substantially complete and any incomplete work or *defects remaining in the *works are of a minor nature and number, the completion or rectification of which is not practicable at that time and will not unreasonably affect occupation and use.

.1 At least 10 *working days before the date the contractor expects that *practical completion will be reached, the contractor must inspect the *works and prepare a detailed schedule of *defects and incomplete work and give a copy of the schedule to the architect.

.2 At the same time, the contractor must give the architect a written timetable for the correction of *defects and completion of incomplete work.

M3 Notification to architect of *practical completion

.1 When the contractor considers that the *works are at *practical completion, the contractor must notify the architect in writing and give a copy of the detailed schedule of *defects and incomplete work to the architect indicating that each item has been corrected or completed to the satisfaction of the contractor.

.2 The architect must commence its inspection of the *works *promptly and complete the inspection within an agreed time or, if none is agreed, within 10 *working days. The architect must issue a notice or instruction under clause M4, M5 or M6.

M4 Architect to decide if the *works have reached *practical completion

.1 If the architect decides that the *works have reached *practical completion, the architect must give written notice of *practical completion to the contractor and to the owner within 5 *working days after completing the inspection. The notice must state the date when *practical completion was reached.

.2 The architect must also notify the owner in writing that security must be released in accordance with clause C7.

M11 Possession of the *works before *practical completion

.1 If the owner takes possession of the whole of the *works or a separable part of the *works before the architect issues the notice of *practical completion, the whole of the *works or that separable part, as the case may be, are to be treated as having reached *practical completion. The architect must issue to the contractor and to the owner a notice of *practical completion for the *works or that separable part, as the case may be, within 5 *working days after being notified in writing that the owner has taken possession, unless clause M4 applies.

.2 Possession of the whole of the *works or a separable part of the *works, as the case may be, before the architect issues the notice of *practical completion, is to be treated as an instruction to amend the program under clause G9 and the contractor may make a *claim to adjust the contract.

.3 The requirements for making a *claim to adjust the contract and the procedures to be followed are stated in section H.

.1 If the *works or a separable part of the *works identified in item 29 of schedule 1 have not reached *practical completion by the date for *practical completion as adjusted, the architect must *promptly notify the contractor and the owner in writing of the owner's entitlement to liquidated damages.

.2 Up to 20 *working days after the date of issue of the notice of *practical completion, the owner may notify the architect in writing whether it will enforce its entitlement to liquidated damages against the contractor.

.3 The contractor is liable to pay or allow to the owner liquidated damages at the rate shown in item 30 of schedule 1.

.1 If the owner notifies the architect in writing under clause M12, then the architect must:

1. notify the contractor of the owner's decision within one *working day, and
2. deduct liquidated damages from the next and subsequent progress certificates, as applicable.

M14 Contractor to correct *defects and finalise work

.1 The contractor must correct any *defects or finalise any incomplete work, whether before or after the date of *practical completion, within the agreed time as stated in an instruction or if no time is stated, within 10 *working days after receiving a written instruction from the architect to do so.

.1 The defects liability period is shown in item 31 of schedule 1 and commences on the date of *practical completion of the *works.

M17 Contractor's obligations during and after defects liability period

.1 If there is any remaining *defect or incomplete work, or the contractor becomes aware by instruction from the architect or from its own observations of any *defect or incomplete work during the defects liability period, it must *promptly return to the *site and correct the *defect or finalise the incomplete work. This obligation continues until the *defect is corrected or the incomplete work is finalised, and does not come to an end when the defects liability period is over.

.2 The architect cannot give a first instruction to correct an outstanding *defect or to finalise any incomplete work after the end of the defects liability period, unless it is for the rectification of a latent *defect and the final certificate has not been issued.

.1 The contractor is entitled to submit to the architect a final claim for payment for a separable part, or the whole of the *works as the case may be when:

1. all defects liability periods have ended
2. the contractor has rectified all *defects and finalised all incomplete work it became aware of by instruction from the architect or from the contractor's own observations during the defects liability period and

1. the *works have been completed in accordance with this contract.

.1 The architect must *promptly assess the final claim. If the architect reasonably needs additional information to do so, the architect may ask the contractor for it. The contractor must *promptly give the architect any additional information the architect requests. The architect must, within a reasonable time (not exceeding 10 *business days) after receiving the final claim (or the additional information if requested) issue to the contractor and to the owner a final certificate setting out the amount due for payment.

.1 The final certificate must state the architect's assessment of all outstanding entitlements under this contract. The final certificate is evidence of the *parties' entitlements under this contract and that the contractor has performed its obligations under this contract, subject to any matter already in dispute under section P.

.1 Each *party must pay interest on any money that it owes the other but fails to pay on time. In the case of the owner, this includes any delay caused by the failure of the architect to issue a progress certificate on time.

.2 The interest rate is shown in item 34 of schedule 1.

.3 The interest is calculated daily, from the date the money should have been paid. The interest must be paid on the last day of each month. If interest due on the last day of a month is not paid, it is immediately capitalised and added to the money outstanding."

.1 This contract contains everything the owner or the architect has agreed with the contractor in relation to the matters it deals with. Neither *party may rely on an earlier contract, or on anything else said or done by the other *party (or by an officer, agent or employee of the other *party) before this contract was entered into.

.1 A reference to the singular includes the plural and the plural includes the singular.

claim to adjust the contract a claim made to the architect to adjust the *contract price (including *adjustment of time costs) or the date for *practical completion or both

1. in breach of any of the warranties set out in the *contract documents
2. not in accordance with the standard or quality of building work specified in the *contract documents"

[1] Craig Williamson Pty Ltd v Barrowcliff [1915] VicLawRp 66; [1915] VLR 450 at 452 per Hodges J

[2] Apple and Pear Australia Ltd v Pink Lady America LLC [2016] VSCA 280 at [160] and fn239

[4] Page 37, issue 4, cross-referencing paragraphs [44]-[47]

[6] [2015] ACTSC 188 at [72]- [80]

[8] For a specific reference to the implications of a clause being successfully challenged as a penalty, see Liquidated Damages and Extensions of Time in Construction Contracts, by Brian Eggleston, published by Wiley-Blackwell, 3rd ed at 3.3. See also Silent Vector Pty Ltd t/as Sizer Builders v Squarcini [2008] WASC 246 at [62]

[9] [2009] WASCA 157

[10] That is, it is not a "valid and mandatory" [emphasis added] liquidated damages clause: Silent Vector Pty Ltd t/as Sizer Builders v Squarcini [2008] WASC 246 at [62]

[11] Compare, for example, Mainteck Services Pty Ltd v Stein Heurtey [2014] NSWCA 184, Grocon Constructors (Victoria) Pty Ltd v APN DF2Project Pty Ltd [2015] VSCA 190 and Todd v Alterra at Lloyds [2016] FCAFC 15

[12] [2008] WASC 246 at [62]

[13] [2012] HCA 30; (2012) 247 CLR 205 at [10]

[14] Howe v Teefy [1927] NSWStRp 41; (1927) 27 SR (NSW) 301 at 306 per Street CJ (Gordon and Campbell JJ concurring) (approved Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 125; [1991] HCA 54; 104 ALR 1 at 43; [1991] HCA 54; 66 ALJR 123 per Deane J

[16] (2002) 209 CLR 95, per Gaudron, McHugh, Hayne and Callinan JJ at [25]

[18] [2001] FCA 1833; (2001) 117 FCR 424 at [369]

[19] Regreen Asset Holdings Pty Ltd v Castricum Brothers Australia Pty Ltd [2015] VSCA 286 [134], citing Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at 163-4 [25]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 [17]-[27], [161]; Filadelfia Projects Pty Ltd v Entirity Business Services Pty Ltd [No2] [2011] NSWSC 116, [38]

[21] County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193, per Spigelman CJ at [7]

[22] [2017] NSWSC 698 at [101]

[23] (1871) LR 6 QB 597 at 607

[24] (1990) 169 CLR 279 at 297

[25] (1996) 126 FLR 341 at 344

[26] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35]

[30] (1973) 1 ALR 497 [512]

[31] Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 at 124

[32] Beerens v Bluescope Distribution Pty Ltd [2012] VSCA 209 at [54]

[33] Citing S_ecured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd_ [1979] HCA 51; (1979) 26 ALR 567 at 577-578

[34] JJ Armstrong's submissions at [44] and Hope St's submissions at [8.17]-[8.19]

[35] [2017] VSC 268 at [105]

[39] Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 at [17], citing Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613.

[40] Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 at [16], citing Radford v De Froberville [1977] I WLR 1262, Per Oliver J at 1270.

[41] Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 at [18], citing Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344.

[44] [2013] VSC 435

[45] [2014] VSC 80 at [51]

[46] [2017] NSWCA 113 (Basten JA, [47]; Beazley ACJ and Meagher JA agreeing)

[50] See JJ Armstrong's submissions at Schedule 1 [11]