Decision
23The question of construction is one of considerable difficulty. On the one hand there is, as Mr Inatey submitted, the clear wording of cl 18.5. On the other hand there is, as Mr Corsaro submitted, a possibility that the right given to Macmahon, to be compensated for loss of profit in the event of a termination for convenience, might be circumvented by a wilful and knowingly unfounded termination (or purported termination) for breach in reliance on cl 22.3. That possibility could only be realised, as Mr Inatey submitted, if Macmahon relied on an asserted termination to bring the contract to an end.
24It is necessary to pay close attention to the language of cl 18 and, in that connection, to the language of the definition of Consequential Loss. It is also necessary to observe that cl 2.3, although not having contractual effect, nonetheless sets out clearly in para (f) the intention that no party has any liability to the other for indirect or consequential loss.
25When one looks at cl 18.4 one sees an overall limit of liability - to the equivalent value of the contract sum - with three stated exceptions. One of those stated exceptions (para (b)) includes wilful misconduct.
26Clause 18.5 adds another limit of liability, by excluding any liability for consequential loss. Clause 18.5 applies, unlike cl 18.4, "[d]espite anything else in this contract," and cl 18.5, again unlike cl 18.4, does not include any exception for liabilities such as those arising from wilful misconduct. That could be seen to embody a deliberate drafting choice.
27When one turns to the definition of Consequential Loss, para (b) makes it plain that any form of loss, whether direct or indirect, of the various kinds that are described, falls within the defined term. One of those categories of loss is "loss of contract". Although those words might appear to be somewhat obscure, it was common ground that they were intended to catch loss of the benefit both of the particular contract in which they appear - that is to say the contract between Cobar and Macmahon - and other, or third party, contracts, the benefit of which might be lost to one party as a result of some breach by the other of the parties' own contract.
28I think that the concession, if that is what it is, was properly made. The expression "contract" seems to me to be a shorthand way of saying "benefit of a contract". Although it does not have an initial capital letter (and, thus, is not "this Contract", which is defined to be the agreement with which I am concerned), nonetheless, on the basis that the general includes the particular, I think that the expression "loss of [the benefit of a] contract" encompasses losses both under the particular contract and, as I have said, under other contracts that in some way may be affected by breach of the particular contract.
29On that approach, the parties naturally must have taken into their consideration, when they made their contract, that the excluded Consequential Loss would include loss of the benefit of the very contract in which the provision excluding liability for consequential loss appears. Loss of the benefit of that contract would be, ordinarily, a consequence of accepted repudiation. That construction of the words "loss of contract" lends powerful support to the proposition, for which Mr Inatey contended, that cl 18.5 extended, in this case, to exempt his client from the consequences of (assumed but not proved) accepted repudiation.
30To my mind, notwithstanding the consequences to which Mr Corsaro adverted, the view for which Cobar contends is correct. The parties constructed a careful bargain in which they provided for the way in which liabilities each might have to the other would be limited or regulated. No doubt they did so because of (among other things) the unusual nature of the contract and the potential for consequential loss claims (in the ordinary meaning of that expression) to be both substantial and incapable of any precise estimation at the time the contract was made. If they chose to exclude such loss in the case of breach not amounting to repudiation (and in my view this is clear), it is understandable that they would select no different course in relation to breach capable of amounting to repudiation.
31In that context, it is appropriate to observe that it is not always easy to answer the question of what conduct may be, in a particular factual and contractual situation, repudiatory. In some cases, of course, there can be no doubt; but in other cases, difficult questions of characterisation may be involved.
32I accept, as Mr Corsaro submitted, that the construction for which Cobar contended would give either party the ability to act in a way that might deprive the other of the future benefit of the contract without having any liability for loss of that benefit. In Cobar's case, it would give it the ability to act thus to Macmahon without being liable to pay compensation for loss of profit under cl 22.7. But it does not follow that Cobar would escape without any liability at all.
33It is clear that accrued rights and liabilities would remain unaffected. In this case, it is not without significance that Macmahon's estimate of its damages claims, apart from the claim for loss of the opportunity to earn profit, is assessed in very large sums indeed. Whether or not those claims are valid is a different matter; but it must be assumed that those who prepared the summons and the list statement believed that there was a reasonable basis for pleading the damages case in the way it did.
34Further, and as I think is notorious in the field of human endeavour, termination for repudiation is not without risk, even for the innocent party who terminates, where that party is the principal under a complex construction or infrastructure contract. The consequences of accepted repudiation, including the need to find another contractor to complete the work, may be expensive and time consuming and of themselves a cause of very significant loss. Although some of such losses may be recoverable in an action for damages, recovery of a judgment is one thing, but recovery of money is another.
35That is perhaps a long-winded way of saying that, although the view to which I have come may indicate that Cobar could seek to sidestep its obligations, the practical likelihood is that it would be unlikely to do so. Whether or not that is an accurate summary of the situation, I am concerned in any event not so much with speculation as to commercial matters and costs but with the language that the parties have used. And as I have said, repudiation of itself does not bring a contract to an end.
36For the reasons I have given, I do not think that the clear words of cl 18.5 should be read down.
37I should note that Mr Corsaro referred to a number of authorities, including the decision of the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500, the decision of the Appeal Division of the Supreme Court of Victoria in Kamil Export (Aust) Pty Ltd v NPL (Australia) Pty Ltd [1996] 1 VR 538 and two decisions of my own in which I reviewed those and other cases. I accept, as Mr Corsaro submitted, that the approach to the interpretation of clauses excluding or limiting liability was laid down authoritatively by the High Court in Darlington at 510.
38I accept further, as Mr Corsaro submitted, that the decision in Kamil is authority for the proposition that in some circumstances an exclusion clause should not be construed in a way that would excuse or limit the consequences of breach by actions undertaken outside the operation or authority of the contract.
39I accept, finally, that in two decisions of mine to which Mr Corsaro referred (Lime Telecom Pty Ltd v Powertel Ltd (No 1), (No 2) [2008] NSWSC 324, 362), I construed the clause there in issue in such a way as to avoid what I saw was the consequence of depriving one party of the benefit of the agreement.
40It is not necessary to do more than say that I have sought to apply the approach to construction set out in Darlington and have taken into account the authorities, including Kamil and other cases to which Mr Corsaro referred, dealing with a construction which should avoid possibly depriving one party of the benefit of the contract.
41In relation to my own decisions, I need say no more than that they related to particular terms of the particular contract. Thus, it is not necessary to deal with the submission reluctantly put by Mr Inatey, that those decisions were erroneous.