"13 This clause gives to the builder considerable discretion. It stands in contrast to clauses found in commercial building contracts where a progress claim is certified by an architect or some other party, and thereafter payment is required. This clause anticipates the owner of being, to a significant extent, at the mercy of the builder. But in my view, it clearly anticipates that when a progress claim is made, it will be paid. It does not anticipate an owner making payment of as much of the progress claim as the owner thinks is proper and appropriate. The first respondents would read into the clause a requirement that the progress claim be 'reasonable'; or, to adopt the wording used in par 6(2) of the defence to counterclaim, progress claims be 'properly made'. In my view there is no warrant for reading cl 25 in that way.
14 It is important to bear in mind how progress claims fit in with the scheme of a building contract. A builder is required to commit his funds to take the construction up to a certain point. He then estimates the percentage of the building works which have been completed. He is entitled to payment for those completed works. He is also entitled to be paid for variations. He might overestimate or underestimate the amount of work that has been completed. That is a risk which both parties have accepted by the terms of their contract. But once the progress claim is made, it must be paid in full by the owner. That is the obligation under the bargain - the counterpoint to the builder's obligation to expend his funds to take the construction to a point where the progress claim can be made.
15 If the owner is dissatisfied with the builder's claim, he has rights to take the matter to arbitration. Those rights are specifically preserved by cl 25(f). Moreover, by making payment of a progress claim, the owner does not make any admission that the claim is justified in whole or in part: see cl 25(d). But however aggrieved an owner might be by a progress claim, the contract does not allow him arbitrarily to decline to make payment, or pay only that part of the claim which he believes is due. To reach that conclusion, as the Arbitrator did, runs counter to the clear intent of the contract.
16 Counsel for the first respondents, in support of his submissions, postulated a situation where in his first progress claim a builder claimed 99 per cent of the contract price when it was clear that no more than 10 per cent of the building work had been done. In that situation, counsel submitted, the owner could not be required to pay the full amount of the progress claim. To require him to do so would be absurd. It followed, in counsel's submission, that there had to be a requirement of reasonableness read into cl 25.
17 In my view, even in that situation, an owner would be obliged to make payment of the progress claim. Pursuant to cl 25(b)(i), the progress claim must show the accumulated percentage of the contract sum appropriate to the stage to which the works have progressed. Doubtless, if the claim was made that a certain percentage of works had been completed and that claim was obviously wrong, it would not take an arbitrator long to put things to rights. But even in that situation the commercial risk of being asked to make an overpayment lies with the owner. That is the agreement that has been reached."