XJS World Pty Ltd v Central West Civil Pty Ltd

A Factually Dense Case

1. The proceedings were factually dense. In my view however, the proceedings can be adequately resolved by avoiding becoming entangled in that detail. As such I have attempted in these reasons to cut through the detail, and to resolve the matter as concisely as the circumstances permit. I consider this to be my obligation pursuant to s 56 of the Civil Procedure Act 2005 (NSW).
2. In structuring this judgment, I have used as a base the Defendant's Schedule of Issues, which I did not understand to be in dispute.

Delay

1. The plaintiff alleges that the defendant was in breach of the contract insofar as it failed to complete the works within three months, or at all.
2. Clause 2 of Part B of the Contract required the Defendant to "execute and complete the Works with due diligence and without delay." (Ex. PX1 p.145)
3. In my view, the contract placed no obligation for the works to be completed by the defendant within three months. The three month period to which the plaintiff refers, appears to derive from the words in the document headed "Quotation and List of Quantities" ("the Quotation") (See PX1 p.150). This document appears to be the "Schedule of Rates" referred to in Part D of the Contract Schedule (PX1 p. 143)
4. The words relied upon by the plaintiff are contained in paragraph 4 of the "Conditions related to Tendered Pricing" which appear at the foot of the Quotation. The words relied upon are "the civil works will need to be completed within three months of Contract engagement".
5. In my view, these words, being the words upon which the plaintiff relies, do not form part of the Contract.
6. As I have indicated, Part A clause 4D refers to the "Schedule of Rates". These rates are contained in the Quotation. Thus in my view the rates and quantities data contained in the Quotation formed part of the Contract. I do not consider however that the entirety of the Quotation document, including what were in reality the footnotes to the Schedule of Rates, and referred to as "Conditions related to Tendered Prices", constituted contractual terms.
7. I am further of the view that the words "will need to" where they appear in sub paragraph 4 of the Quotation Schedule (PX 1 P 150), indicate that the words were not intended to have contractual effect. The sentence in which those words appear is not expressed in the terms of contractual obligation, rather to my mind the sentence merely reflected an expression of the expectation of the contracting parties, which assisted the defendant in preparing the Schedule of Rates contained in the Quotation..
8. Further in my opinion, the possible existence of a contractual obligation to complete the works within 3 months is also inconsistent with the regime set forth in Part B of the Contract, which requires the works to be executed with "due diligence" (Part B clause 2). This obligation is coupled with a regime for extensions of time (Part B clause 11).
9. In my view, the regime set forth in Part B is not compatible with the notion that subparagraph 4 of the footnotes to the Quotation is contractual. In that regard, it should also be noted that the Contract contains what is sometimes referred to as a "hierarchy clause". Thus, where there is a discrepancy or ambiguity between contractual documents, the hierarchy dictates that Part B takes precedence over Part D (See Part B clause 1 (Ex. PX1 p.145).
10. Consequently, the subparagraph upon which the plaintiff relies, appearing as it does in Part D, even if it were a contractual term, is subservient to the due diligence obligation contained in Clause 2 of Part B.

Proof of Delay

1. In its submissions on breach constituted by delay, the plaintiff relied on communication between the parties concerning the issue of delay. Most of these communications reflected the parties frustration at delay occasioned by wet weather. It cannot be doubted that the works were bedevilled by wet weather. The plaintiff's reliance on communication of frustrations with delay, however in my view, do not establish the fact of any delay to the works, in any relevant contractual sense. More specifically, those communications do not establish that any delay, to which they refer, was caused by a lack of due diligence on the part of the Defendant.
2. The Plaintiff bears the onus of establishing the fact that the defendant was responsible for any delay. In my view, the Plaintiff has failed to discharge this onus. The plaintiff has not identified any particular delaying event, nor has it made any attempt to identify a period of delay. More specifically, the plaintiff has not proved a delay to the critical path of the works.
3. An obvious example of the failure of the plaintiff to prove its case on delay, is that the Plaintiff did not adduce any expert evidence of a programming expert to identify: 1. The relevant delays to the works; and 2. The reasons for the delays such as to establish attribution to the Defendant for those delays; and 3. the effect of those delays on the critical path.
4. In its detailed Chronology, the defendant sets forth a large number of events that could have, and I infer, did in fact delay the works.
5. These events include multiple instances of severe wet weather, which as I have indicated, seems clearly to have had very significant adverse consequences on the works at the Plaintiff's site. Rainfall records in evidence tendered by the defendant clearly established significant inclement weather in the relevant period. (Ex. PX1 p.855).
6. In relation to the issue of wet weather, Mr Evans, an officer of the Bathurst Council, who regularly inspected the site, explained in cross examination (at TP 88) that the site was unusually susceptible to wet weather: "Q. There was an issue with the wet subgrade of the proposed new road? A. Yep, that's correct. Q. And the subgrade was saturated; correct? A. Yes it was. Q. Due to extremely inclement weather? A. Yes and a high water. Q. And a high water table? A. Yeah, the subdivision is only about 800 metres from the Macquarie River. Q. Yes. A. So it's more or less on the flat (sic - flood) plain. HIS HONOUR Q. Would the consistent inclement weather in turn cause or help-- A. It doesn't help, like, it's just another issue-- Q. Does that cause the water table to rise? A. Well, the water will go down to a level that it can't go any further and it will start coming back up again."
7. Other events which no doubt would have delayed the project included the need to undertake variations to the works. The progress claims submitted by the Defendant throughout the works recorded cumulatively the various variations undertaken by the Defendant(see Ex. PX1 p.929-962). These variations doubtless themselves have contributed to delay, but the plaintiff makes no attempt to bring variation delay to account.
8. Thus it follows that in my view the plaintiff has failed to establish that the delays which undoubtedly occurred, can be contractually attributed to the defendant.
9. Finally, the defendant submitted that to the extent to which the Plaintiff contends that there was a failure on the part of the Defendant to complete the works "at all", that contention ignores the decision by the Plaintiff to terminate the Contract.
10. The defendant submitted that, upon what it says was the repudiatory termination of the Contract by the Plaintiff, the Defendant was discharged from further performance of its obligations under the Contract, to carry out any further work (McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476). It also argues that in any event the plaintiff cannot rely upon the defendant's failure to complete the Contract as the plaintiff by its actions in terminating the contract prevented it from so doing.
11. I agree with these submissions for reasons to which I shall now come.

Was the Plaintiff's Purported Termination Wrongful and Repudiatory?

1. It seems clear to me, that the Plaintiff began to run into cashflow difficulties in late 2022. These cash flow difficulties were evidenced inter alia by the defendant's bank statements (See exhibit DX1. See also TP 65.18 - TP 66.33 and text message of Mr Vance, the Principal of the Plaintiff, of 11 September 2022 in PX1 at p 200).
2. On or about 30 August 2022 (PX1 p. 963), the plaintiff ceased paying the defendant. In the face of this action, the defendant suspended the works for non-payment, which, in my view, was his entitlement. This suspension of the works in my view can be attributed to the plaintiff's cash flow difficulties. Thereafter, the plaintiff issued a Notice of Termination (Ex PX1 p.287).
3. The defendant submits that this termination was wrongful and repudiatory. I agree with this contention. In my view, the plaintiff had no legal right to terminate the contract, and that purported termination was therefore repudiatory.
4. In so concluding, I adopt with respect, what fell from Slattery J in Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd T/A Durie Design [2017] NSWSC 1171 at [344], where his Honour stated: "As a general rule wrongful termination of the performance of a contract, where a party has no legal right to do so, will constitute a repudiation of obligation because such an act indicates an absence of readiness or willingness on the part of the promisor to perform: White Trucks Pty Ltd v Riley (1948) 66 WN NSW 103,Smith v Butler (1901) QB 694-698 and Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 453." (Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd T/A Durie Design [2017] NSWSC 1171 at [344]).
5. The defendant also submitted that the plaintiff's conduct in purporting to terminate the contract, and appointing Mr Hagney to complete the contract, precludes the plaintiff from complaining that the defendant has not completed the works. It did so by reference to what is often referred to as "the prevention principle". In that regard, the defendant relied upon Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd (2017) 95 NSWLR 82 where the Court of Appeal stated : "The essence of the prevention principle is that a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party's non-performance."
6. I also agree with this contention.
7. In summary, I am of the view that the plaintiff did not validly terminate the Contract. I am further of the view that the Plaintiff in purporting to terminate, and by its ceasing to pay the defendant, has repudiated the contract. The Defendant was thereafter discharged from any further obligations thereunder (McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476). It was also prevented by the plaintiff from so doing.
8. I shall now turn to more specific allegations of contractual breach made by the plaintiff.

Failure to comply with the Calare Civil Plans

1. It was common ground that the Defendant was required to comply with the Calare Civil Plans (Ex. PX1 p.699).
2. I do not consider that the plaintiff has established any failure on the part of the defendant to comply with the Calare Civil plans. In that regard, it should be noted that the plaintiff: 1. made no submission explaining which part or parts of the Calare Civil Plans have not been complied with; 2. did not refer to any evidence identifying any noncompliance with the Calare Civil Plans; 3. has adduced no expert evidence that the defendant in fact did not comply with the Calare Civil Plans.
3. Finally, I should also add that the Plaintiff also made no submission, nor did it point to any evidence which proved that any non-compliance with the Calare Civil Plans by the defendant, has caused it any loss.
4. It follows that in my view therefore, this aspect of the Plaintiff's claim must also fail.

The Alleged Failure to carry out the works in accordance with Bathurst Council's Specifications, DA2015/0171 and Construction Certificate 2015/171/02

1. In this regard, there appeared to be three separate breaches alleged by the plaintiff. These were: 1. The alleged failure of the defendant to carry out the works in accordance with Bathurst Council's Specifications, DA2015/0171 and Construction Certificate 2015/171/02. 2. The alleged failure to carry out the works in accordance with Bathurst Council's Specifications. 3. The failure to carry out the works in accordance with DA2015/0171

Failure to carry out the works in accordance with Bathurst Council's Specifications

1. It was common ground that the Defendant was required to comply with the Bathurst Council's Specifications.
2. In my view however, this claim by the plaintiff must also fail. I am of that opinion as the Plaintiff did not: 1. explain what it submitted were, in fact, the Bathurst Council's Specifications which were not complied with; 2. make any detailed submission alleging a breach of the Bathurst Council's Specifications; or, 3. identify any evidence to support a contention that there was a non-compliance with the Bathurst Council's Specifications.
3. In addition, the Plaintiff, did not identify any probative evidence that any non-compliance by the defendant with the Bathurst Council's Specifications has caused it any loss.
4. The Plaintiff in its reply submissions referred to various forms of evidence which it submitted, established a failure by the defendant to comply with Council's requirements. I shall deal with the submissions on this topic and my conclusions on these submissions below: 1. Paragraph 7 of Mr Evans' affidavit of 30 October 2023. 2. I do not consider that this evidence supports the plaintiff's case as the paragraph was admitted into evidence but its use limited under s 136 of the Evidence Act to being evidence of Mr Evans' belief as to what the Council generally requires, as distinct from its requirements in this case. 3. Paragraph 12 and 13(a) of the same affidavit. 4. I do not consider that either paragraph assists the plaintiff's case. Paragraph 12 merely offers Mr Evans' opinion expressed in unhelpfully broad terms as to the quality of the defendant's work. These views are expressed without reference to the defendant's contractual obligations. Paragraph 13 in turn, is merely an introductory statement referable to the balance of paragraph 13, which balance was not read. It cannot assist the plaintiff. 5. Paragraphs 9 to 15 of Mr Hagney's affidavit. These paragraphs detail the work which Mr Hagney undertook. 6. I do not consider that those paragraphs have advanced the plaintiff's case. This is so as Mr Hagney details works which he undertook without reference to the defendant's obligations under the contract. 7. The Council's business records at PX1 503-504. 8. This document is an email from the Council to Mr Vance of 25 October 2022 which attached a list of conditions still outstanding on the site at the time. Unsurprisingly, this document, which deals with compliance issues in an extremely summary manner, makes no attempt to attribute any of the allegedly non-compliant items to the acts or omissions of the defendant, nor does the document attempt to link any item of alleged non-compliance to the defendant's alleged breach of contract.
5. The plaintiff in its written submissions in reply said that it is "axiomatic" that the matters listed in the email at PX1 p 503-504, constitute failures on the part of the defendant in relation to Council requirements.
6. I do not agree with this contention. In my view, the best that could be said of that document is that the Council list may arguably provide the first step in proof of contractual breach by the defendant. It does not, in my view, operate to prove any contractual breach by the defendant, in and of itself.
7. For these reasons, the Plaintiff's claim that the Defendant failed to comply with the Bathurst Council's Specifications must fail.

Failure to carry out the works in accordance with DA2015/0171

1. It was also common ground that DA2015/0171 was a Contract Document.
2. These alleged breaches were also not dealt with in the Plaintiff's Written Submissions, with the exception of the non-compliance with Condition 1, which concerns the Gilmore Street Intersection and Condition 17 (which are dealt with separately in these reasons).The only other condition of DA2015/0171 alleged by the plaintiff not to have been complied with is Condition 21.
3. Condition 21 is in the following terms: The applicant is to ensure that the water service to each lot is contained entirely within the boundary of the individual lot serviced. Any alterations that are necessary are to be the applicant's cost. The applicant is to arrange an inspection with Council's plumbing and drainage inspectors to ensure each property has a separate water supply within their respective boundaries. Reason: so that the development will have an adequate water service, having regard to the character and scale of that development, and because it is in the public interest to comply with Local Government (Approvals) Regulation, 1999 made under Local Government Act, 1993, Section 78A(4) of the Environmental Planning and Assessment Act 1979, as amended.
4. The plaintiff submitted that "Civil West had incorrectly installed water services in Lot 9 when they should have been in Lot 8, … which contravened Condition 21…"
5. The evidence upon which the plaintiff relies to make good this submission is to be found in Mr Hagney's affidavit at paragraph 11(e) (Ex. PX1 p.509). In that subparagraph, Mr Hagney identified works which he undertook in the following terms: 1. locating underground water pipes which had been installed on the wrong Lot (Lot 9) and relocating them to the correct Lot (Lot 8), including demolishing/excavating concrete driveways and relaying them as a result - pages 26-31 are emails dated 29 May 2023 between Andrew Burge and me;
6. This evidence and the conclusion which he draws about water services being installed in the wrong block appear to be based upon a series of emails between Mr Hagney and the plaintiff's surveyor. One of these emails, dated May 29, 2023, contains a question to the surveyor by Mr Hagney as to whether the water service had in fact been provided to the wrong block (Ex. PX1 p.537). This question was not answered by the surveyor.
7. The defendant submitted that the evidence of an unanswered question by Mr Hagney could not in and of itself found a breach of Condition 21. I agree with this submission.
8. Further in my view, Mr Hagney could not assist the plaintiff's case in relation to this alleged breach. I take this view as Mr Hagney explained that he did not know the scope of the works which the defendant had been contracted to perform. Indeed he never saw the defendant's Contract. Rather in undertaking his work, he was simply following a list of works for him to complete, which was provided to him by the plaintiff (TP 71.11-21).
9. Further, the evidence of Mr Withers, which I accept, was that the works to which the plaintiff refers as constituting this breach, was in fact a variation to the Contract (TP 126.5 - TP 128.7)
10. Finally, the defendant argued that if the alleged breach were established, the Plaintiff has neither proved any loss which has been caused by the breach, nor has it proved the quantum of any loss so caused.
11. The Plaintiff attempted to prove loss by reliance upon the invoice of Mr Hagney (Ex. PX1 p.535). I do not believe that Mr Hagney's invoice proves loss. This is so as that item of Mr Hagney's invoice upon which the plaintiff relies, is not itemised, rather the relevant water supply work has been invoiced by Mr Hagney as part of a group of three items, which are aggregated and described as "Extras- Plumbing". The total is $8,642.00. No attempt has been made by the plaintiff to isolate the costs associated with the alleged breach of contract by the defendant.
12. In summary, it is my view that the Plaintiff has not established this breach

Failure to carry out the works in accordance with Construction Certificate 2015/171/02

1. The defendant contended out that there is no provision in the Contract that, in terms, required the Defendant to comply with the Construction Certificate.
2. It says that the Plaintiff has not: 1. explained the basis upon which the Defendant could be said to be in breach of the Construction Certificate 2015/171/02 2. made any detailed submission alleging breach of the Construction Certificate 2015/171/02; or 3. identified any evidence from any contemporaneous document to support a submission that there was a non- compliance with Construction Certificate 2015/171/02.
3. Finally, the defendant noted that the plaintiff has not identified any evidence that any non-compliance with Construction Certificate 2015/171/02 has caused it any loss.
4. Accordingly, the defendant submitted that for these reasons the Plaintiff's claim that the Defendant failed to comply with Construction Certificate 2015/171/02 must also fail.
5. I agree with this submission to which the plaintiff offered no substantial rebuttal

Is the Defendant in breach of the Contract by failing to obtain endorsement and approval of the Works from Bathurst Council or perform the Works in compliance with Bathurst Council's Subdivision Construction Code?

1. I did not understand this issue to be a live one in the proceedings. As I understood the parties positions, this issue was directed to relief sought by the plaintiff in the nature of delivery up of documents, which relief was not ultimately pressed.

Is the Defendant in breach of the Contract by failing to comply with the road interface/intersection requirements pursuant to DA2015/0171 as concerns the new road (Ablett Court) and existing road (Gilmore Street)?

1. It was common ground that DA2015/0171 was a Contract Document.
2. In my view, in order to determine this issue, it is first necessary to identify the work which the Defendant was required to perform in relation to the DA. Part B clause 2 of the Contract required the Defendant to "execute and complete the Works … in accordance with the terms and conditions of the Contract." (Ex. PX1 p.145). The "Works" were defined as being limited to "the work the Contractor is … required to execute under the Contract …".
3. The defendant argued the contractually required "Work" could not have been intended to include every item that was included in the conditions of DA2015/0171. Indeed I did not understand the Plaintiff to contend otherwise.
4. Indeed it is clear that this is the case.
5. For example, it could not be said that the Defendant was required to make the payments referred to in either Condition 3 of the DA (Ex. PX1 p.49), or Condition 7 (Ex. PX1 p.50). It was also common ground that the Defendant was not required to provide the survey plans referred to in Conditions 32 to 35 (Ex. PX1 p.58).
6. The Defendant did not engage surveyors, and was not involved in any survey work. In fact the defendant built the intersection, the subject of this alleged breach, in accordance with the surveyor's set-out with which it was provided to him by the Plaintiff.
7. The Plaintiff alleges that in constructing the intersection, the Defendant failed to comply with Condition 1 of the DA (Ex. PX1 p.48). I do not accept this submission. In my view, Condition 1 was not a condition with which the Defendant was required to comply. In my view, that Condition sets out design parameters. These must apply to the "engineering plans, specifications …" referred to in Condition 2. Those plans and specifications were required to be provided to the Council "Prior To Issue of Construction Certificate", as the heading provides (PX1 p.48). The Defendant did not in fact commence the works until after the Construction Certificate was issued (Affidavit of Simon Withers dated 19 January 2024 at [17]).
8. DA2015/0171, containing Condition 1, was issued by Council on 21 July 2015 (PX1 p.47). This was more than four and a half years before the Construction Certificate was issued on 22 January 2021 (PX1 p.699), and nearly five years before the Contract was executed (PX1 p.144).
9. Thus it can be seen, that long before the defendant became in any way involved in the project, the Calare Civil Plans had been prepared, and endorsed for the purposes of the Construction Certificate (See PX1 p.699).
10. The defendant submitted that the Calare Civil Plans were the plans referred to in Condition 2 of DA2015/0171 (Ex. PX1 p.48), which show a design of the intersection (Ex. PX1 p.709). It says that these plans were the plans which became a Contract Document. The defendant submitted that these plans were prepared and approved by the Council as part of the Development Approval process, long before it had any involvement with the project..
11. The defendant also pointed out that the work required by the Contract, as set out in the Schedule of Rates (Ex. PX1 p.147), did not include any obligation on the part of the defendant to undertake any design work, or any re-design work, in relation to the intersection, which were included in the Calare Civil Plans.
12. I accept the defendant's contentions.
13. In my view, the plaintiffs claim in respect of the Gilmore Street intersection is quite misplaced. It was the defendant's task to construct the intersection pursuant to the plans upon which the Construction Certificate issued. That is to say the Calare Civil Plans. This is what the defendant in fact did.
14. In my opinion, the fact that now the statutory successor to the Roads and Maritime Services is apparently expressing some form of dissatisfaction with the intersection design, is something that cannot be laid at the defendant's door. The defendant constructed the intersection in the manner in which it was contractually bound.
15. The plaintiffs claim in relation to this issue must also fail.

Is the Defendant in breach of the Contract by failing to conduct routine inspection and testing of the Works in conformity with DA2015/0171, including compaction, soil heights, waterlines, road works, sewer lines and stormwater lines?

1. It was not in dispute that Condition 17 of DA2015/0171 contained certain obligations with which the Defendant was required to comply. These inspections and testing obligations were identified to by the Plaintiff in its written submissions in chief at [57].
2. The Plaintiff sought to establish that the routine inspections and testing were not undertaken. It did so however by simply referring to what it said was a lack of contemporaneous documentary evidence of the inspection and testing having been carried out.
3. I do not accept that the plaintiff's case in that regard can be established in this manner.
4. Rather I accept the evidence of Mr Withers who at TP 106.46ff stated: "Q. And you accept that when you provided those payment claims to XJS, that you never provided any documentation from council? A. No. Council would give us their certification, their certificates, at the end of the project Q. But they did certify at various points in the works, didn't they? They came and did inspections. A. They came and did inspections, but they don't actually hand us anything. It's done at the end of the project. Q. Mr Withers, can I take you to page 1033 in your affidavit? This is an engineering works inspection by council; isn't it? A. Yes, it is. Q. This was provided to you? A. It was. Q. It's not correct, as you said, that they don't give you anything when they carry out inspections? A. I requested this after the contract was terminated. I requested these 15 documents from council. Q. You're saying you never received a copy of it? A. While the works were going on, no. Q. That's one you received on 13 September 2021? A. We didn't receive this until after the contract was terminated."
5. Also at TP 107.49ff, Mr Withers stated: "Q. Mr Withers, do you accept that this reflects all of the inspections that were carried out by council? A. I believe there are others, but this is the only information I've received from Bathurst Council. Q. You don't have them, though. A. No, I don't. Q. Do you know if those inspections resulted in a pass, or fail? A. I believe that they passed, as in they were more inspections on the sewer lines. I don't have any paperwork from council on that."
6. I found Mr Withers to be an honest and reliable witness, who was present on site on a regular basis while the works were being undertaken. He was thus in a position to know how and when the relevant inspections were being undertaken in fact. He was also in a position to know the reality as to how, and when, those inspections would be documented.
7. I did not understand that his evidence in this regard to be contradicted
8. Thus it seems to me, that the plaintiff cannot found a breach of Clause 17 by simply referring to the fact of the absence of contemporaneous records. It seems to me that the absence of such records is to be attributed to those records not being provided by Council at the time of the relevant inspection or testing
9. I should add that in any event, the Plaintiff has not identified any loss alleged by it to be caused by a failure to conduct routine inspection and testing of the works. To the extent that this alleged breach is submitted to have caused delay; that delay has not been identified. Similarly, to the extent to which any additional costs might be said to have been incurred by this breach, none have been established on the evidence.
10. In summary therefore, I find that the Plaintiff has not established that the Defendant was in breach of the Contract by failing to conduct routine inspections and testing of the works in conformity with clause 17 of DA2015/0171.

Is the Defendant Liable for Liquidated Damages?

1. The plaintiff claims liquidated damages in the sum of $607,000. In my view, this claim must fail for the simple reason that the Contract makes no provision for the payment of liquidated damages
2. The Contract has a potential mechanism to provide a basis for a liquidated damages claim, but in my view, that contractual mechanism has not been activated in this case.
3. Condition 14 of part A of the Contract Schedule provides for the potential quantification of liquidated damages in the sum of $1000 per day (PX 1 p 144). The potentially operative clause for the creation of a right to liquidated damages in that sum is Condition 12 of Part B to the Contract conditions, which is in the following terms: "Clause 12 If the Contractor fails to reach Completion by the Date for Completion, the Contactor shall be liable at the rate set out in item 14 for the period from the Date for Completion until the Date of Completion." (See PX1 p 145)
4. It can be seen therefore that Condition 12 invites comparison between two contractually defined terms being: 1. The Date for Completion; and 2. The Date of Completion.
5. These terms in turn are defined as follows: "Date for completion means the date or the last day of the period of time stated in Item 8 as my be extended pursuant to this Contract Date of Completion mean the date when completion is achieved by the Contractor."
6. In my view, there can be no liquidated damages in this case for the simple reason that there is no agreed operative Date for Completion stated in Item 8 of Part A to the Contract (PX1 p 143).
7. The plaintiff seeks to overcome this problem by reference to the condition footnoted in the "Quotation" (PX 1 PP 149 - 150). The plaintiff refers to Condition 4 on that document which states: "The civil works will need to be completed within three months of the Contract engagement."
8. For this argument to succeed it must be concluded that Condition 4 becomes the Date For Completion for the purposes of Part A Condition 8, which is otherwise left blank.
9. I do not consider that reference to Condition 4 of the Quotation is sufficient to overcome the failure of the parties to nominate a contractual Date for Completion for the purposes of Part A Condition 8. As I have earlier indicated, in my view, the condition upon which the plaintiff relies is not a contractual provision, but rather is an expression of hope on the part of the parties as to how long the job will take. Again, as I have earlier indicated, the Condition is not expressed in the language of contractual obligation.
10. In my view, Condition 4 to the Quotation cannot be expected to become the Date for Completion for the purposes of clause 8 of part A and clause 12 of part B, as the plaintiff's submissions require.
11. I should also add that as I have earlier indicated, even if clause 4 of the Quotation Conditions is in fact contractual, it is inconsistent with clause 2 of part B which is in the following terms: "If there is any discrepancy or ambiguity between the Contract Documents, Part A shall take precedence over Parts B, C, D, E, F and each part in turn takes precedence over those that follow."
12. Thus, even if Condition 4 of the Quotation had contractual effect, Condition 8 of Part A and Condition 12 of Part B would take precedence over it.
13. As a consequence of the foregoing, it is my view that the Plaintiff's claim for liquidated damages must fail.

Conclusion on Breaches

1. For the above reasons I have concluded that the plaintiff has not established any of the breaches of contract which it has alleged.

Damages

1. As a consequence of this conclusion, it is thus strictly unnecessary for me to discuss the plaintiff's approach to damages in relation to its claim for general damages for specific breaches of contract relating to the costs of completion and rectification works. That said it may be helpful if I did make some mention of that approach.
2. In its written submissions, the plaintiff explained its approach to general damages as follows: "Costs of Completion and Rectification Work 96. XJS also seeks an order for damages at common law arising from Civil West's breach of contract. 97. In respect of the amounts paid by XJS to Ben Hagney, they were made in two respects. First, they were for works that rectified works Civil West had carried out incorrectly and which Bathurst Council required. In the second respect, works performed by Mr Hagney were for the completion of the works still outstanding under the contract for which XJS had been charged and paid in excess of the contract price."
3. I engaged Mr Horobin of counsel, who appeared for the plaintiff, in a discussion concerning the conceptual basis for this approach to the establishment of a claim for general damages. The Plaintiff's approach was explained to me on the basis that as the defendant had already been paid more than the stated lump sum price nominated in the contract ($300,109), it followed inexorably that whatever works which were undertaken and invoiced by Mr Hagney, must have been charged in order to either remedy the defects of the defendant, or to complete the contract. In other words, the argument was that all of Mr Hagney's invoices related solely to doing the work which the defendant had already been paid to undertake.
4. I note in this regard the plaintiff called Mr Hagney, who did not give evidence which supported such a case. If it be the case that Mr Hagney's invoices perfectly matched the plaintiff's claim of breaches which it makes against the defendant, Mr Hagney could have given evidence to that effect. He did not.
5. As such, I infer that his answers to questions going to the defendant's approach to damages if asked, would not have assisted the plaintiff's case (Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389)
6. There is a further reason why I do not consider that the plaintiff's approach to the proof of general damages flowing from specific breaches is maintainable. To my mind, the flaw in logic underlying the simple reliance on Mr Hagney's invoice to prove loss is that it implicitly assumes that the defendant was paid in excess of $300,109 for work which it undertook solely for the purposes of the contract, as it originally stood.
7. This assumption is quite incorrect. The evidence discloses that the defendant was paid in excess of the original contract sum because of variations required by the plaintiff, most of which were paid by the plaintiff without demur.
8. In summary, I am of the view that the plaintiff has failed to prove loss in the nature of general damages in relation to the specific breaches to which Mr Hagney's invoice was directed.
9. Recently in Carbone v Fowler Homes Pty Ltd [2024] NSWCA 192, the Court of Appeal stated: "[94] More generally, this is not a case where the plaintiffs should fail on the basis that they had not proven loss. The principles were summarised by Black J in Sabouni v Revelop Building and Developments Pty Ltd [2021] NSWSC 31 at [41]-[42]. In short, the Court must do the best it can to make a reliable assessment of damages, where damages are difficult to assess, including where a party has failed to lead the best evidence of damages: Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83, 125, 153; [1991] HCA 54. In Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 at [135], Beazley JA with whom Basten JA agreed said that: Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat the only remedy it provides for breach of contract, an award of damages …. Such damages should not be nominal only, notwithstanding that the award may be difficult to assess. … [95] That said, where damages were susceptible of evidentiary proof, but there is an absence of raw material to which good sense may be applied, "[j]ustice does not dictate that … a figure should be plucked out of the air": Troulis v Vamvoukakis [1998] NSWCA 237. Likewise, in McCrohon v Harith [2010] NSWCA 67 at [128], this Court said that an estimate of damages, in the nature of a "guess", should not be made where precise evidence of the damages suffered could have been adduced but was not. [96] Thus the law draws a distinction between cases of mere difficulty in proving damages, which must often be assessed on a counter-factual basis, and cases where damages are refused because the position is too speculative. In such cases it is important to have regard to the capacity of the plaintiff to adduce evidence, and how truly speculative the loss is."
10. In my view, the plaintiff's case on general damages for these specific losses was readily within its capacity to prove. Further, that alleged loss could not be described as speculative. In my view, the plaintiff has simply declined to undertake the proof of such a loss.
11. The Court should not be asked to pluck a figure out of the air.
12. Thus, even if the plaintiff had established breaches of the contract relating to the costs of rectification for defective works and completion, I would not have found that damages for these matters had been proved.

Variations: The plaintiff's Restitutionary Claim and the Cross Claim

1. In its claim in restitution, the plaintiff seeks to reclaim payments which it made to the defendant on account of variations. It does in broad terms on the basis that those payments should not have been made. In that regard it alleged the defendant's failure to establish compliance with various formalities of the contract in relation to variations. These formalities included proof of a direction by the principal to undertake the relevant variation, and in the absence of agreement between the parties as to their value, a valuation of that variation by the principal. (see Clause 10 of Part B, PX1 p 146).
2. The plaintiff in oral submissions also relied upon the failure of the defendant to supply documentary proof of the need for the multiple variations the subject of its variation claims.
3. I do not accept these arguments. The plaintiff has already paid for most of the invoices containing variation claims, and in respect of invoice 6 it has made the payment sought other than for the sum of $3,779.40.
4. No payment has been made in respect of the final invoice, namely invoice 7. This invoice is in the sum of $ 56,895.30. In that regard it should be noted however that the plaintiff's solicitor on 31 October 2022 advised the defendant that he had was holding "irrevocable instructions to pay your invoices from the proceeds of sale" and asking if he was "prepared to attend site as soon as possible" (PX1 p 971). At that time there was never any suggestion by either Mr Vance or his solicitor that the outstanding invoice was in dispute, on the basis of any failure to comply with contractual requirements relating to variations, or indeed at all.
5. In my view, if the plaintiff had an issue regarding the failure of the defendant to strictly comply with contractual requirements in relation to variations, then the plaintiff at the time of receiving each variation claim was put to an election. In my opinion, on receipt of an alleged disputed variation claim the Plaintiff was confronted with two options. It could elect to waive what it believed to be its rights to strict compliance with the contract (if they existed) and make the payment sought in the variation, or it could elect to rely on what it considered to be its contractual rights, and not make the payment.
6. In my view, the plaintiff has elected to take the former course by making the payments, in respect of Invoices 1 to 6 and in the case of Invoice 7, by giving its solicitors instructions to pay that invoice at a later time.
7. Thus in my view, the plaintiff has elected to not rely on its alleged legal rights to refuse to pay the variation claims, but rather has elected to waive those rights and make the payments.
8. Thus in my view, the plaintiff is not entitled to recover those payments either on a restitutionary basis, or at all.

The Defendant's Cross Claim

1. The defendant by way of cross claim sought the sum of $60,694.30 being the total of its unpaid invoices.
2. In my view, in circumstances where there was no issue in the proceedings as to whether the works the subject of the two invoices (6 and 7) were performed, the sum sought by the cross claimant became a debt due and payable to it under the Contract.
3. In answer to this, the plaintiff submitted that it was not required to make the variation payments on the basis that the defendant has already been overpaid. As I have indicated, the proposition that the defendant was overpaid has not been established by the plaintiff. The Plaintiff also relies on the failure of the defendant to comply with the contractual requirements as to variations. I have rejected that submission earlier in these reasons.
4. In addition to its claim to be paid the variation claims as a claim in debt under the Contract, the defendant also relied on the decision of the High Court in Liebe v Molloy (1906) 4 CLR 347 at 353 where Griffith CJ stated: "In case of any extra work required to be done or ordered eithel' by architect or propt'ietor such order must be in writing, stating the nature of the same together with the fixed amount, and to be signed by the architect and indorsed by the proprietor; otherwise no extra of any kind shall be recognized or paid for." In the general conditions of the contract it was specified by clause 6, " No works beyond those included in the contract shall be allowed or paid for without an order in writing from the employer and architect." Then followed a stipulation that if the contractor should be called upon to do work that he considered did not come within his contract and the architect refused to give an order, by which I understand an order in writing indorsed by the proprietor, he should nevertheless perform the work and give notice that he claimed to have the matter decided by arbitration. The works in question, amounting in value to over £5000, were, in one sense at any rate, extras. Whether works of that kind were contemplated in the specifications or drawings or not is a matter which it is not necessary to determine. The umpire found that no orders in writing indorsed by the owner were given in respect. of any of them, but he also found that the employer, Molloy, had such knowledge of those extras as might be fairly inferred from the fact that he was constantly on the works and taking an active interest therein. Before McMillan J., and before the Full Court, it was contended that upon these facts it ought to be inferred that the owner, Molloy, entered into an implied contract to pay the fair value of these works as extra works, and so McMillan J. held. On the other hand it was contended that no such inference could be drawn, and that view was accepted by the Full Court. The law on the subject may be very briefly stated. There was a written contract between the parties, and these items Cannot be brought within its terms. face of the express stipulation that" no extra shall be paid for unless ordered by an order in writing by the architect indorsed by the employer;" but that stipulation does not exclude altogether the implied doctrine of law that, when one man does work for another at. his request, all implied obligation arises to pay the fair value of it."
5. See also Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1989) 20 NSWLR 251 at 272.
6. In relation to the principle described by Griffith CJ in Liebe, the defendant submitted that the principal of the plaintiff, Mr Vance, was an experienced developer who must be taken to have known of the variation works. In my view this inference is readily available especially given the fact that the subdivision, the subject of proceedings, was being undertaken on property adjacent to the property on which he resided. Indeed some of the variations involved in the work involved work on his home block.
7. I should also add that sadly Mr Vance died before the hearing, and as such, he could not be cross examined on this or any other issue
8. In summary, it seems to me therefore that via a conventional contractual claim in debt, or by virtue of the principles referred to by Griffith CJ in Liebe, the defendant is entitled to sum sought in the cross-claim.

Quantum of the Cross Claim Debt

1. The defendant provided a detailed Schedule of Damages which was cross referenced to the evidence. I did not understand the plaintiff to place that quantum in question. Indeed as I have earlier indicated, its written submissions in reply on the cross claim stated that "Civil west has already been overpaid" which to my mind suggested that the unpaid invoices should be set off against that overpayment. There was certainly no suggestion in the plaintiff's reply submissions that the work the subject of the unpaid invoices had not in fact been undertaken.
2. Pursuant to the defendant's analysis of its damage which I accept, it is entitled to a payment in the sum of $55,158.82.

Conclusion

1. There should be judgment and verdict on the cross claim accordingly.
2. The plaintiff's claim has not been established and thus should be dismissed.

Costs

1. As the defendant wishes to be heard on costs I will make orders to facilitate this.

Orders 1. That there be judgment and verdict for the defendant against the plaintiff. 2. That there be judgment and verdict for the Cross Claimant against the Cross Defendant in the sum of $55,198.82. 3. Interest thereon at the rates pertaining from time to time pursuant to s 100 of the Civil Procedure Act 2005 (NSW) 4. That the plaintiff/cross defendant pay the defendant/cross claimant's costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 October 2024