FPM Constructions P/L v The Council of the City of Blue Mountains

In the matter of FPM Constructions P/L v The Council of the City of Blue Mountains, the dispute centred around the interpretation of a building contract and the allocation of payments, particularly those related to preliminaries. The case was heard in the Supreme Court of New South Wales. The contractor, FPM Constructions, challenged the council's payment certificate which allocated part of the lump sum for preliminaries on a percentage-of-works-completed basis, rather than on a time basis. FPM argued that the tender cash flow provided with the tender, which projected an even flow of sums for preliminaries, was incorporated into the contract and should have mandated a time basis for preliminaries payments.

The primary legal issue before the court was whether the contract implicitly required a time basis for the payment of preliminaries. The court examined whether the tender cash flow, which was submitted with the tender and incorporated into the contract, implied a time basis for preliminaries payments. Additionally, the court considered whether the lack of a clear identification of what constituted preliminaries in the contract affected the interpretation of the payment terms.

In its reasoning, the court found that neither the express terms nor the implied terms of the contract mandated a time basis for preliminaries payments. The tender cash flow did not explicitly or implicitly impose such a basis, and the absence of a clear definition of preliminaries did not lead to the conclusion that a time basis was required. The court held that the percentage-of-works-completed basis, as adopted by the Superintendent, was not necessarily incorrect, but the court would consider this in the context of any further claims. Furthermore, the court provided reasons for its interlocutory rulings on the stay of proceedings, summary disposal, and security for costs.

The court ultimately declined to make the declaratory order sought by FPM Constructions, finding that the time basis for preliminaries payments was not required by the contract. The court indicated that it would consider the merits of any further claims in the future.