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[1997] QCA 447
General information, not legal advice.
Court of Appeal (Qld)
1997-12-19
Multiplex Constructions P, Davies J, Pincus J, Lee J, Before Davies J
Original judgment source is linked above.
JOINT REASONS FOR JUDGMENT - DAVIES J.A. AND LEE J.
The question below and in this Court concerns the construction of cl.35.5 of a building contract dated 12 October 1995 between the appellant, the State of Queensland, as principal and the respondent as contractor for the construction of the Queensland Conservatorium of Music. The question of construction was decided by the learned primary Judge pursuant to an application made by the respondent under O.64 r.1A of the Rules of the Supreme Court. Although no question arises in this Court as to whether his Honour should have decided that question, because it had been urged below that he should not do so it is desirable to say something about that lest it may be thought, in future cases, that there should be any doubt about the correctness of his Honour deciding it.
It is true that deciding the question of construction here would not "settle the litigation between the parties", to adopt a phrase from the decision of Warrington J. in Lewis v. Green [1905] 2 Ch. 340 at 344 relied on below by the present appellant. But, whatever the position may have been in England in 1905, that is certainly not the correct approach now either under O.64 r.1A or under O.39 r.12. In both cases judges have a wide discretion permitted by those rules to decide questions. There are often questions in a dispute the decision of which, whilst it may not necessarily resolve the whole dispute, may nevertheless lead to its resolution, in a way which results in considerable savings in time and cost, often for reasons which are neither strictly legal nor logical. It is therefore desirable that, whenever possible, judges should decide summarily questions which can be conveniently so decided.
His Honour was therefore plainly right in deciding this question and it is somewhat surprising to find that the State of Queensland, which has an obligation in the administration of justice to ensure that the costs of litigation are minimised, should, as a litigant, take such a point for apparently adversarial reasons.
In his written outline of argument Mr. Gore Q.C. who appeared with Mr. M. Williams for the appellant, appended a copy of cl.35.5 to which he had added numbers to each of the paragraphs, thereby enabling them to be referred to numerically. As it is convenient to adopt that course we append that copy of cl.35.5 to these reasons.
The question of construction is whether the phrase "after the delay occurs" in the second line of para.3 means, as his Honour thought, after the period of delay is completed or, as Mr. Gore finally contended, after the point of time at which the contractor could properly say that delay has occurred, notwithstanding that it is still occurring; that is, after it has first occurred. That question arises because of a claim by the respondent for an extension of time for practical completion of 166 working days from 5 October 1995 to 20 June 1996 because of delay by the appellant in supplying a PABX telephone system for installation by the respondent. The claim was made either on 17 June or 17 July 1996. In either case it was rejected because, it was said, the first day of delay appeared to have been 5 October 1995 and consequently, in accordance with para.3, the claim should have been made by 1 November 1995. Whether the claim was made on 17 June or 17 July 1996 it was after the certified date for practical completion which was on 14 June 1996.
The learned primary Judge thought that the words which we have quoted from the third paragraph of the clause postulated that the delay had occurred. His Honour then said:
"To my mind such an expression is hardly consistent with a situation where the delay is still continuing; if the delay is continuing there is delay but it cannot accurately be said that the delay has occurred. Looked at in context the words would appear to be referring to the period during which the contractor is delayed; when the delay has occurred (that is the period of delay can be identified as having a beginning and an end) then the claim must be made within 28 days."
His Honour appears to have construed the phrase "after the delay occurs" as "after the whole of the delay has occurred". However it appears to us to be equally open to the alternative construction referred to earlier: that a point has already been reached at which the contractor has been delayed though that delay may be continuing.
The learned primary Judge also derived some support for his conclusion from the fact that, at the earlier date, the contractor may not be aware for how much longer the delay will continue or of the ultimate consequences of the delay on the completion date. That is, of course, correct, but we do not think that that would preclude the contractor from setting out the facts on which the claim was based. That would ordinarily require only a statement of the cause of the delay and how it is said that that cause has brought about the delay. The extent of the delay need not be stated until as soon as practicable thereafter: para.7.
The learned primary Judge then went on to reject a number of the appellant's arguments in support of its construction. It may be said at the outset that, to the extent that these arguments derive from the terms of cl.35.5, they are by no means compelling. Indeed it must be said that there is nothing in the language of that clause which gives any convincing support to either view of the construction of the above phrase. The two main arguments on the appellant's behalf which were advanced in this Court upon the language of cl.35.5 were as follows.
First it was submitted by the appellant, as it had been below, that the phrase "or as soon as practicable thereafter" in the seventh paragraph of the clause proceeded on the assumption that the claim required by the third paragraph must be given within 28 days of the earlier date contended for, this phrase allowing the contractor to wait until the delay ceases before giving written notice of the period of delay claimed. However, as the learned primary Judge pointed out, the extension of time necessary for practical completion might not coincide with the period of delay; it could be more or less. And the contractor may be unable, even at the time when the period of delay is complete, to say what period of extension is required by reason of that period of delay, so that the alternative which permitted the contractor to state the number of days extension claimed as soon as practicable after the claim has been made under the third paragraph may be equally necessary whichever construction is adopted.
Secondly the appellant relied on the eighth and ninth paragraphs of the clause, submitting that the superintendent would be unable to determine a reasonable extension, and in particular to decide whether the contractor had taken all reasonable steps to preclude the occurrence of the cause or to minimize the consequences of the delay, unless the notice required by the third paragraph was given promptly after the commencement of the delay. However, as the learned primary Judge pointed out, compliance with the first paragraph would give the superintendent sufficient information to investigate these matters because it required, where there was a possibility of delay, caused, amongst other reasons, by an act or omission of the principal, that the contractor notify the superintendent with details of that delay and the cause. It is true that the notice covered a wider category of cases than those covered by the third paragraph but it cannot be said that, in the light of it, unless an early notice was given under the third paragraph, the superintendent would be unable properly to determine a reasonable extension of time having regard to the matters referred to in the ninth paragraph. Nevertheless we think that paragraphs 8 and 9 support an argument that the construction for which the appellant contends leads to a more convenient and fair result, a question to which we shall return later.
Both parties also relied on cl.36.1 in support of their respective contentions. That clause related to the contractor's entitlement to damages for delay in completion of or disruption in the progress of work under the contract. It precluded any such entitlement unless three requirements were satisfied. The first was that an extension of time had been made or should properly have been allowed under cl.35.5. The second was that any such damages had not been included in the value of any variation and were not payable under any other provision of the contract. And the third requirement was that the contractor should within 28 days "after the commencement of the delay" have given a notice in writing to the superintendent claiming damages in respect of that delay giving particulars.
The appellant relied on the first of these requirements, submitting that, because it envisaged that an extension of time should have been made or should properly have been allowed under cl.35.5 before any entitlement to damages could arise and because the notice here was required to be given within 28 days after the commencement of the delay, that must be also what was envisaged in the third paragraph of cl.35.5. On the other hand the respondent contended that the difference in wording between the requirement in the third paragraph of cl.35.5 and the quoted phrase in the third requirement under cl.36.1 indicates that the notice under the third paragraph of cl.35.5 was not intended to be given within 28 days after the commencement of the delay.
These opposing contentions each have some merit. But the fact that they do is more an indication of how badly these clauses are drawn than of what the parties' expressed intention was. We do not think therefore that cl.36 assists much, either way, on the relevant question of construction.
In the end one is left to determine that question by having regard to the purpose of cl.35.5, and in particular the third paragraph of that clause in the context of the contract as a whole and the practical consequences of the competing views. These factors, in our view, tend to support the construction contended for by the appellant.
In the first place, unlike the learned primary Judge, we think that a natural meaning of the phrase "after the delay occurs" is after a time at which the contractor can say that it has been delayed notwithstanding that that delay may be continuing. Secondly the construction advanced by the respondent may lead to inconvenient and even unfair results in cases in which, like this one, the delay is substantial.
The purpose of the notice provision in the third paragraph, unlike the general warning notice of the possibility of delay required by the first paragraph, is to alert the superintendent to the need for investigation of the facts on which the claim is based in order to determine whether that justifies an extension of time for practical completion. The later any such notice is given after commencement of the delay, the later the superintendent may appreciate that need and the more difficult it may be for him to verify whether there has been delay and, if so, its cause. And where the delay and its cause continue for a very long while without any such notice being given the principal and the superintendent may be misled as to the likelihood of practical completion on the due date. Consequently, though it cannot be said that paragraphs 8 and 9 of cl.35.5 require adoption of the appellant's construction, that construction leads to a result which is more convenient and fair.
It is equally important to the contractor to know, at an early stage after delay has commenced, whether it will be entitled to an extension of time in respect of that delay or whether it must commit extra resources or incur extra expenditure to make up the time lost. Yet if the delay is one which, for example, will continue until the date fixed for practical completion the contractor, on the respondent's approach, might not be able to make an effective claim under the third paragraph even though it knew, shortly after the delay commenced, that it would continue until the date of practical completion.
Finally, whatever else may be said about cl.36.1, there is no logical reason why the 28 day period in that clause should be any different from the 28 day period stated in the third paragraph of cl.35.5. Absent any compelling reason they should, in our view, be given the same meaning. We would therefore give the same meaning to the phrase "after the commencement of the delay" in cl.36.1 as that given to the phrase "after the delay occurs" in cl.35.5.
It follows from what we have said that the meaning of the relevant phrase in the third paragraph of cl.35.5 is by no means clear. It is surprising that a contract of this size and importance should be so badly drawn. It would not have been at all difficult to express what was intended in clear and simple language. But, in the end, consideration both of the ordinary meanings of the words used and of the practical consequences of the competing constructions lead us to the conclusion that the appellant's contention should succeed.
We would therefore set aside the declaration and order made below and declare that, on the proper construction of cl.35.5 of the General Conditions of Contract, the written claim referred to in the third paragraph should be given by the contractor no later than 28 days after delay has first occurred notwithstanding that it may be continuing.
The appellant did not contend for this construction below or initially before this Court. It contended for a requirement that the claim be given no later than 28 days after the commencement of the delay. This argument confronted the logical difficulty, as Mr. Gore Q.C. ultimately conceded, that at the time of the commencement of delay no delay has occurred. As the appellant has therefore succeeded on an argument which was not advanced below we would make no order as to the costs of that hearing but we would order that the respondent pay the appellant's costs of this appeal.
35.5 Extension of time for practical completion
I have read the joint reasons of Davies J.A. and Lee J. and agree with them, subject to one reservation. This is that I would give the appellant the costs below, as well as the costs of appeal. Although the argument on which Mr Gore succeeded is not precisely that put below, the difference is in the mode of expression rather than one of substance; Mr Gore apparently argued below that time runs from the commencement of the delay whereas we are holding that it runs from a time, an instant later, when the delay has commenced.
I agree with the orders proposed by Davies J.A. and Lee J., except that I would, for the reason just explained, make a different order with respect to costs.