(2) The circumstance that no delay would have been caused had the design been rectified, and the relevant works performed, in the course of performance of other work under the contract.
251 It therefore follows that Stuart is not entitled to at least the first 11 days of the delay that the experts have quantified. Clause 9.01A makes it clear that this is so.
252 The more difficult question relates to the "paving" issue. As I have said in para [242] above, Mr King's view that this was, in effect, a variation. Accordingly, in his opinion, Stuart is entitled to the second part of the relevant delay.
253 It is conceptually somewhat difficult to understand how Mr George Papallo's requirement, that disabled access be provided not by means of a ramp at the Dolphin Street entrance but by raising the footpath at the Dolphin Street entrance, could be regarded as a variation. A variation is an increase or decrease in the Works or a change in the character or quality of any material or work (see clause 1.02.12 as amended by special condition 1.8). If the drawings had provided for disabled access by means of a ramp at the Dolphin Street entrance, then, clearly, Mr George Papallo's instruction would amount to a variation. However, the drawings did not so provide.
254 Stuart's obligations under the works included the revision of the Preliminary Documents into Final Documents that complied, relevantly, with the conditions of consent, the BCA and AS 1428.1. Final drawings that showed a ramp (constructed in accordance with AS 1428.1) at the Dolphin Street entrance would have satisfied Stuart's obligations in this regard. The question is, therefore, whether Stuart was required to do only what might be called the minimum work necessary to achieve compliance, or whether it was required to design and construct to a more elaborate standard.
255 The question is complicated because, as I have noted, the definition of "works" imports the notion of a 4 star serviced apartment building; the reference to "4 star" is a reference to something called the Australian Automobile Association Classification Scheme, dated January 1997.
256 The contract documents included the Australian Automobile Association's "National Classification Guidelines" for hotel/motel accommodation dated January 1997. It is clear that this is the document to which reference should be made for the purpose of understanding what is required. Four to 5 stars are said to indicate "accommodation offering exceptional standards". In terms of "appearance", the word "excellent" connotes "[a] property with exceptional visual appeal, uniqueness and landscaping, in keeping with the areas [sic] environment and carries [sic] no visual imperfections". It is said that "[t]his category represents the benchmark to the industry".
257 However, the overall rating under the "star" system appears to be the product of a detailed process of assessment that considers a vast number of aspects, of which exterior appearance forms but one small part.
258 There is nothing in the statement of "essential items for 4 star+ and 5 star rate of properties" to indicate that disabled access as required by Mr George Papallo, instead of that proposed by Mr Edmiston, would be required if the "4 star" classification were to be met.
259 Because the allocation of a star rating is the product of an overall assessment, it is not possible for me to say, reading the guidelines, whether provision of disabled access as proposed by Mr Edmiston would have resulted in a downgrading from 4 stars. In other words, there is no basis within the guidelines upon which I can determine that Mr George Papallo's solution was essential if the property was to carry a 4 star rating.
260 There is no evidence, expert or other, directed to the point. Accordingly, there is no basis upon which I can conclude that Feteni would have been entitled, under the contract and not as a variation, to have disabled access at the Dolphin Street entrance provided by raising the footpath rather than by ramping.
261 On the evidence, disabled access in accordance with Mr Edmiston's solution would have satisfied Stuart's obligation to design in accordance with relevant requirements and to construct in accordance with that design. That obligation could only be enhanced, or expanded, to take in Mr George Papallos' requirements, if there were evidence that would enable me to conclude that his solution, rather than Mr Edmiston's solution, was required on a fair reading of all relevant contractual conditions. There is no such evidence.
262 This analysis, I think, requires the conclusion that disabled access in accordance with Mr George Papallo's requirements (instead of Mr Edmiston's design) is a "variation". It is either an increase in the Works or a change in the character or quality of material or work that formed part of the Works. Notwithstanding the reservation that I have expressed in para [253] above, the same conclusion is available on a more literal approach. The relevant drawings did provide for disabled access (between the rear of the foyer and the carpark). Mr George Papallo's instruction required a different form of disabled access. Whether or not what was proposed by the drawings was "appropriate", Mr George Papallo's instruction, on a literal approach, was an instruction to perform a variation.
263 But analysing Mr George Papallo's requirements as amounting to variation does not resolve this aspect of EOT 3. Mr Plaister's point is not that the relevant work was not a variation (indeed, on one view of the experts' agreement, it was common ground that it was a variation; but I have not relied on that in concluding, for the reasons that I have already given, that it was a variation).
264 The problem relating to disabled access, and the need to provide compliant disabled access from the Dolphin Street entrance, should have been picked up in Stuart's revision of the Preliminary Documents into the Final Documents. That is something that should have happened during the Preliminary Period. Under the contract (as varied), the preliminary period was to end on 14 September 1998. Had Stuart picked up the problem during the Preliminary Period, it would presumably have provided for disabled access in the manner that, in November 1999, Mr Edmiston proposed. Had it done so then, presumably, Mr George Papallo would have requested that disabled access be provided as he preferred: by raising the level of the footpath at the Dolphin Street entrance. There might have been an argument as to the cost, but there is no reason to think that the work could not have been programmed in such a way that, even allowing for the need to obtain council and Telstra consent and raise and repave the footpath, it could have been completed without having any impact on the date for practical completion. In other words, if the problem had been recognised and dealt with when it should have been, I do not think that there would have been any delay to practical completion. There is no basis for concluding that the work could not have been carried out concurrently with other works and prior to practical completion.
The contractual requirements
265 The conclusions to which I have come make it unnecessary for me to consider the extent to which Stuart (otherwise) complied with the relevant requirements of the contract in relation to EOT 4. Had it been necessary to do so, I would have concluded that Stuart had complied with the requirements of clauses 9.01, 9.02 and 9.06.
Conclusion on EOT 4
266 I conclude that Stuart is not entitled to any extension of time for EOT 4.
The date for practical completion
267 It follows that the date for practical completion is 45 working days after 11 October 1999.
The date of practical completion
268 It is common ground between Stuart and Feteni that, subject to an esoteric argument as to Stuart's obligations to procure registration of the strata plan for the Coogee Sands Apartments and Feteni's alleged obstruction of Stuart's performance of that obligation, the last relevant event necessary to enable Stuart to obtain practical completion occurred on either 18 or 21 February 2000. On 18 February 2000, council issued an "occupation certificate" under ss 109C(1)(c) and 109H of the Environmental Planning and Assessment Act 1979. On the latter date, Mr Georgiadis forwarded a copy of that certificate to Mr Hickman and stated, perhaps optimistically, that "this certificate brings the project to an indisputable practical completion".
269 The requirements for practical completion, as amended by the special conditions to the contract, included "the obtaining by [Stuart] from [council] of a building certificate under the Local Government Act" as well as approval of, among other things, the relevant s 88B instrument and strata plan "all duly signed by [council] and in registrable form".
270 Special condition 73 expanded the completion obligations of Stuart. It is set out in para [25] above.
271 I do not propose to investigate the esoteric argument to which I have referred. That is because, as Feteni acknowledges, the most favourable (to Stuart) construction of the relevant contractual provisions, and the most favourable application of those provisions in the events that have happened, means that the date of practical completion was 21 days after 18 February 2000.
272 Subject to Stuart's submissions as to the effect of handing over part of the works in late 1999, that means that the date of practical completion is 10 March 2000.
273 However, Stuart argued that, because Feteni had taken possession of part of the works during October and November 2000 (in the circumstances that I have described above in relation to EOT 2), the effect was that practical completion of the whole of the works was deemed to have occurred when Feteni took possession of the first part.
274 Stuart's submission was based on the provisions of clause 9.10 of the contract. Clause 9.10 was amended by special condition 44. I have set out clause 9.10 in para [26] above, and the relevant effect of special condition 24 is dealt with in para [27] above.
275 Stuart's argument based on clause 9.10 formed part of its argument on the question of penalty. I trust that I am not doing Stuart an injustice by splitting up the argument and dealing with it now, in relation to practical completion, and in the next section of these reasons, in relation to penalty.
276 There is no doubt that, as the contract stood without the amendment effected by special condition 44, Feteni's occupation or use of part of the works before practical completion, in the absence of agreement or notice to the contrary, would have led to deemed practical completion. However, given that clause 9.10 was deleted, I find it impossible to see how this argument can be sustained.
277 There was no express agreement to the effect that taking possession of part gave rise to practical completion of the whole (or, indeed, of the part of which possession was taken). In the circumstances that I have described, particularly bearing in mind that Stuart made it plain that handing over part of the works was being done before practical completion, no such agreement could be implied.
278 If "the Architect" had any certifying role in respect of deemed practical completion based on early handover, there was no certification of practical completion by reason of early handover. Neither Tatton Park (which was deemed to be the architect), nor Edmiston Associates (which was named as the architect), certified that practical completion had taken place at any time when any part of the works was handed over.
279 Finally, I think, the deletion of clause 9.10.04 must be taken as signifying the clear intention of Stuart and Feteni that, absent express agreement, practical completion was not to be inferred from the handing over or use or occupation of part only of the works.
Penalty
280 The relevant contractual provisions are set out in paras [28] and [29] above. There is no reason to think that the stipulated sum of $15,000 per week should be characterised as "extravagant, exorbitant or unconscionable", to use the classic formulation cited with approval by Mason and Wilson JJ in AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170, 190 and itself cited with approval by Wilson and Toohey JJ in Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131, 139 (and cf Brennan J in the same case at 143).
281 The uncontested evidence was that Feteni's holding charges for the project, based on its borrowings and the rate of interest, were close to the stipulated sum. If one adds other holding charges and the opportunity cost of Feteni's own funds invested in the project, the stipulated sum must be entirely reasonable.
282 In my view, it is appropriate to have regard to holding costs in considering whether a stipulated liquidated damages amount is "extravagant, exorbitant or unconscionable": see the decision of Cole J in Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) 33 NSWLR 504, 513 (as to the admissibility of evidence if, notwithstanding the failure of Stuart to object, this is in issue); 519-521 (as to the use of holding costs as an appropriate indicium of the amount of liquidated damages).
283 Stuart submitted that the effect of giving early occupation of part of the works was to render the stipulated sum excessive. That may be accepted for the sake of argument, although what evidence there is on this point suggests otherwise. However, it is clear that the question of whether or not a stipulated sum is penal is to be considered from the point of view of parties at the time the contract is made: Plessnig at 142 (Wilson and Toohey JJ). If the effect of Stuart's agreement to hand over part of the works ahead of practical completion was to give Feteni a windfall in the event that it was also entitled to liquidated damages, then that was something that flowed from Stuart's subsequent agreement to hand over possession, not from something that was inherent in the contract at the time it was made.
284 Clause 10.14 does not bear on the point, simply because there was no agreement, or certification, as to the impact of handing over partial possession on liquidated damages. The harsh reality is that Stuart neglected to protect its position when it agreed to hand over part of the works.
285 If clause 10.14 were enforceable, it would provide a mechanism for the adjustment of liquidated damages. In that case, the question having been addressed when the contract was made, there could be no question of penalty. If clause 10.14 were not enforceable (because, as Feteni submitted, it was an agreement to agree), it could have no bearing on the question of penalty. If it was not effective to force Stuart to hand over possession of part of the works prior to completion then the impact, on liquidated damages, of Stuart agreeing so to do was, as I have said, something flowing from Stuart's subsequent act and not from the terms of the contract.
286 However one approaches the question, the stipulated sum of $15,000 per week cannot be regarded as penal in character.
Liquidated damages - other issues
287 Stuart raised three other arguments relating to the application of liquidated damages.
The notice argument
288 Firstly, Stuart submitted that liquidated damages could not be levied because "the Architect" had not given the requisite notice.
289 The requirement for notice arises under clause 10.14.01 and is picked up in clause 10.14.02:
"If such notice is given the Builder shall pay or allow … ".
290 The provisions of clause 10.14, in so far as they relate to practical completion of stages, are irrelevant. The only relevant provisions are, in the events that have happened, those contained in clause 10.14A. Clause 10.14A does not include any requirement for notice, of the kind set out in clause 10.14.01 and apparently made a condition of entitlement by clause 10.14.02. Nor do I think that there is any basis upon which the notice provisions in clause 10.14.01, .02 can be transported to, or imported into, clause 10.14A.
291 I do not need to consider the point, whether entitlement under clause 10.14 (excluding clause 10.14A) depends upon the giving of notice by the Architect. It is sufficient, to dispose of this argument, to say that no such notification requirement (assuming it to be a condition precedent to entitlement) affects Feteni's entitlement under clause 10.14A.
The grace period
292 Stuart submitted that the effect of clause 10.14A(ii) was that liquidated damages did not run until 4 weeks after practical completion had in fact occurred. If Stuart achieves practical completion within that 4 week period, it is not liable for liquidated damages. If it does not, then the "grace" allowed to it by the subparagraph expires.
293 The necessary consequence, in my view, is that if Stuart does not complete during the grace period then it remains liable to pay liquidated damages from the date for practical completion. Any other construction would render subparagraph (i) meaningless.
294 I should note that Stuart's submissions on this point related also to the question of penalty. That is because, Stuart submitted, "Feteni's genuine pre-estimate of loss for the first four weeks of delay was nil". On the construction that I think is correct, that is not the case. Feteni's estimate of loss for each of those weeks was $15,000. However, as a matter of grace, it agreed not to enforce its entitlement to those liquidated damages if practical completion could be achieved within the grace period.