55 They referred in submissions to the following quote from Hudson's Building and Engineering Contracts 11th ed (1995) Sweet & Maxwell at p 485 in these terms:
"Also, Romer U.J. indicated in the same case that a builder renouncing his obligations could not claim substantial performance. Similarly, in Dakin v. Lee there are passages to the same effect. .
Where, however, there has been apparent completion in the sense that "the work though finished' or done' is in some respects not in accordance with the contract" or "a man fully performs his contract in the sense that he supplies all that he agreed to supply but what he supplies is subject to defects of so minor a character that he can be said to have substantially performed his promise" Dakin v. Lee and Hoenig v. Isaacs show that the doctrine will apply.
Even in such a case, however, it is submitted that, in accordance with the overriding principle suggested above, there must be no element of deliberate disregard of his obligations by the contractor, if not in the commission of the original breach then at least, if detected in time, in refusing to remedy it.
One class of deliberate departure from the contract, however, may nevertheless qualify as a sufficient substantial performance, it is submitted. Exact performance of all details of a specification is not infrequently impossible in construction contracts because of some subsequent event or factor beyond the control of the contractor, for example, a particular material or product may no longer be obtainable, or the design may prove difficult or even impossible to construct due to unexpected physical conditions in cases where the contractor is responsible for completion under the contract. The duty to mitigate damage by a technical breach of contract (as, for example, by substituting a different available material or varying the work to overcome a difficulty) may be consistent with bona fide performance of the contract."
56 This has to be seen in the context of what is the nature of the doctrine of substantial performance. It is a doctrine, which allows the contractor to recover the sum due to him under an entire contract notwithstanding that there have been some defects or non-compliance with the Specification. What I am concerned with at the moment is not whether the contractor can recover but whether there is compliance with the Specification. In that area of discourse there is no room to maneuver. At the end of the contract when a contractor is claiming substantial compliance doing so of its own nature involves acceptance of non-compliance with the Specification. In my view the doctrine has no application to the present question and the court should not embark on a hypothetical determination of what will only be a relevant question at the end of the contract. There may be by then many more defects to consider in determining whether there has been substantial compliance. It was for this reason no doubt that McDougall J was reluctant to embark on a consideration of further downstream positions at this stage of the proceedings.
57 If one has to have regard to all the tests I would conclude that compliance with the Specification has not been demonstrated. If it is appropriate to have regard to only the 2008 tests then compliance has been demonstrated. The relevant difference is that it is on material that meets the specified grading requirements. Dr Berman's evidence does not however suggest that this fact will cause a different result. It may do or it may not.
58 It is clear that the 2008 results were obtained a short time before the hearing and after the dispute arose between the parties. That dispute arose because on 4 September 2008 the plaintiff had sent to the defendant a show cause notice to comply with the directions relating to the material. There was a response by the defendant in detailed terms refuting the notice and referring to the previous correspondence containing the test results. Accordingly the 2008 results were after that particular dispute arose. However the parties had for the purpose of resolving the dispute agreed on one variation to the factual circumstances namely the use of the processed Envir-O-Agg material to meet the grating requirements. They have not however so far as I am aware agreed to a factual variation in respect of the existing dispute namely that the relevant permeability test was the 2008 result.
59 It is important to remember the limits to which the Court can go in determining a preliminary question. In Bass v Permanent Trustee (1999) 198 CLR 334 the Court had the following to say on this matter.
" [45] The purpose of a judicial determination has been described in varying ways. But central to those descriptions is the notion that such a determination includes a conclusive or final decision based on a concrete and established or agreed situation which aims to quell a controversy. In R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd , Kitto J said:
"[J]udicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons ... [T]he process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which ... entitles and obliges the persons between whom it intervenes, to observance of the rights and obligations that the application of law to facts has shown to exist."
[46] Similarly, Professor Borchard in his pioneering work, Declaratory Judgments stated:
"A judgment of a court is an affirmation, by the authorized societal agent of the state ... of the legal consequences attending a proved or admitted state of facts. It is a conclusive adjudication that a legal relation does or does not exist. The power to render judgments, the so-called `judicial power,' is the power to adjudicate upon contested or adverse legal rights or claims, to interpret the law, and to declare what the law is or has been. It is the final determination of the rights of the parties in an action which distinguishes the judgment from all other public procedural devices to give effect to legal rights." (Footnotes omitted.)
[47] Because the object of the judicial process is the final determination of the rights of the parties to an action, courts have traditionally refused to provide answers to hypothetical questions or to give advisory opinions. The jurisdiction with respect to declaratory relief has developed with an awareness of that traditional attitude. In In re F (Mental Patient: Sterilisation) , Lord Goff of Chieveley said that:
"a declaration will not be granted where the question under consideration is not a real question, nor where the person seeking the declaration has no real interest in it, nor where the declaration is sought without proper argument, eg in default of defence or on admissions or by consent."
By "not a real question", his Lordship was identifying what he called the "hypothetical or academic". The jurisdiction includes the power to declare that conduct which has not yet taken place will not be in breach of a contract or a law and such a declaration will not be hypothetical in the relevant sense. Barwick CJ pointed this out in The Commonwealth v Sterling Nicholas Duty Free Pty Ltd . However, that is not the present case.
[48] It is true that some have seen the use of the declaratory judgment as little more than the giving of an advisory opinion. However, one crucial difference between an advisory opinion and a declaratory judgment is the fact that an advisory opinion is not based on a concrete situation and does not amount to a binding decision raising a res judicata between parties. Thus, the authors of one recent text on declaratory judgments emphasise that, where the dispute is divorced from the facts, it is considered hypothetical and not suitable for judicial resolution by way of declaration or otherwise. They say :
"If ... the dispute is not attached to specific facts, and the question is only whether the plaintiff is generally entitled to act in a certain way, the issue will still be considered theoretical. The main reason for this is that there may be no certainty that such a general declaration will settle the dispute finally. Subsequent to that declaration a person (the defendant himself or someone else) may be adversely affected by a particular act of the plaintiff. It may then be doubtful whether this act is covered by the declaration. In such a case the affected person will probably be entitled to raise the issue again on its special facts. Indeed, such a declaration will in effect be a mere advisory opinion."
[49] As the answers given by the Full Court and the declaration it made were not based on facts, found or agreed, they were purely hypothetical. At best, the answers do no more than declare that the law dictates a particular result when certain facts in the material or pleadings are established. What those facts are is not stated, nor can they be identified with any precision. They may be all or some only of the facts. What facts are determinative of the legal issue involved in the question asked is left open. Such a result cannot assist the efficient administration of justice. It does not finally resolve the dispute or quell the controversy. Nor does it constitute a step that will in the course of the proceedings necessarily dictate the result of those proceedings. Since the relevant facts are not identified and the existence of some of them is apparently in dispute, the answers given by the Full Court may be of no use at all to the parties and may even mislead them as to their rights. Courts have traditionally declined to state -- let alone answer -- preliminary questions when the answers will neither determine the rights of the parties nor necessarily lead to the final determination of their rights. The efficient administration of the business of courts is incompatible with answering hypothetical questions which frequently require considerable time and cause considerable expense to the parties, expense which may eventually be seen to be unnecessarily incurred. "
60 I should not therefore embark on the determination of something outside the relevant dispute which would be the case if I determined the matter only on the 2008 result. Accordingly, I am of the view that the material does not comply with the permeability requirements of the Specification.
61 Returning briefly to the meaning of the word "natural". The defendant advanced the argument, to which I referred in paragraph 27 of the judgement, that the meaning of the term "natural" must be viewed in the context of what it may possibly add to the performance characteristics of the drainage medium, specifically durability. On the defendants reasoning it followed that if the term "natural" has no bearing on the durability as required by the Specification then the concept of "natural" in itself was not important or de minimis. For the same reasons as expressed in relation to permeability this notion of substantial compliance does not apply in determining the present question; whether the Envir-O-Agg complies with the Specification. For the reasons expressed earlier, it is my view that Envir-O-Agg is not a natural material as required by the Specification.
62 I answer the questions as follows: