Kyren Pty Ltd v Wunda Projects Australia Pty Ltd - [2012] SASCFC 23

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
KYREN PTY LTD v WUNDA PROJECTS AUSTRALIA PTY LTD & ORS
[2012] SASCFC 23
Judgment of The Full Court
(The Honourable Justice Sulan, The Honourable Justice Anderson and The Honourable Justice David)
15 March 2012
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS - VARIATIONS
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - RECOVERY ON QUANTUM MERUIT
Kyren Pty Ltd (“the appellant”) and Wunda Projects Australia Pty Ltd (“the respondent”) negotiated a contract related to the construction of an apartment building on North Terrace, Adelaide – the appellant, as principal, removed works from the respondent contractor – the respondent brought a claim against the appellant for unpaid works, variations and loss of profits – trial Judge found in favour of the respondent and dismissed the cross claim brought by the appellant.
The parties agreed to vary the contract substituting tax invoices for progress payment claims – whether the effect of the contractual variations was to render the tax invoices conclusive – whether the appellant repudiated the contract – whether the respondent complied with the notice provisions of the contract – whether the directions given by the superintendent before repudiation was accepted by the respondent were effective in withdrawing work from the scope of the contract – whether the appellant was entitled to liquidated damages under the contract – whether the trial Judge erred in not granting an application to reopen the case to allow the appellant to plead two additional matters not raised at trial.
Held: Appeal allowed in respect of two key issues raised on appeal – the Judge was in error in his conclusion that the tax invoices were conclusive – there was an express agreement between the parties that tax invoices would only be issued after the parties had inspected the works and agreed the percentage of the work that had been completed – Kyren was entitled to remove work from the respondent following its repudiation and breach of contract – until the respondent accepted the appellant’s repudiation, the contract remained on foot.
Building Work Contractors Act 1995 (SA) s 6, s 6(2), referred to.
Fox v Percy (2003) 214 CLR 118; Berry v Wong [2000] NSWSC 1002; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11110; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd (2002) 18 BCL 322; [2002] NSWCA 211; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; Shevill v The Builders Licensing Board (1982) 149 CLR 620; Kennedy v Collings Construction Company Pty Ltd (1989) 7 BCL 25; Jennings Construction Ltd v Q H & M Birt Pty Ltd (1986) 8 NSWLR 18; Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215; McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; Morris v Baron & Co [1918] AC 1; Nina's Bar Bistro Pty Ltd (Formerly Mytcoona Pty Ltd) v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613; Peter Turnbull and Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235; Roberts v The Bury Improvement Commissioners (1870) LR 5 CP 310; Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2005] SASC 112, discussed.
Berry v Berry [1929] 2 KB 316; Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd (1979) 144 CLR 596; Forslind v Bechely-Crundall [1922] SC (HL) 173; White and Carter (Councils) Ltd v McGregor [1962] AC 413; Barque Quilpué Limited v Brown [1904] 2 KB 264, considered.

KYREN PTY LTD v WUNDA PROJECTS AUSTRALIA PTY LTD & ORS
[2012] SASCFC 23
Full Court: Sulan, Anderson and David JJ
Background
The project
Negotiation history
The contract
The trial Judge’s findings
The appeal
Key Issue 1 - Legal effect of agreement to vary clause 42.1
Key Issue 2 - Repudiation
Key Issue 3 - Notice pursuant to clause 46.1
Key Issue 4 - Withdrawal of work from the scope of work
Key Issue 5 - Kyren’s entitlement to liquidated damages
Key Issues 6 and 7 - Application to reopen case
Wunda’s tax invoices and GST entitlement
Licence to carry out building work
Conclusion

THE COURT
Background
This is an appeal from a decision of a Judge of the District Court by Kyren Pty Ltd (“Kyren”), allowing a claim by the respondent, Wunda Projects Australia Pty Ltd (“Wunda”) in the sum of $629,934.40.
Anna Maria Marveggio is joined as the second respondent to the action as Trustee for the WPA Trust and WPA Nominees Pty Ltd is joined as the third respondent as Trustee for the Wunda Projects Trust. The second and third respondents were joined in the action after trial following the appellant becoming aware that Wunda operated for and on behalf of the Wunda Projects Australia Partnership of which the second and third respondents are members. When we refer to the respondent, this is to be taken to mean Wunda.
The project
The litigation relates to the building of a multistorey apartment building on North Terrace, Adelaide. On 2 June 2006, Wunda contracted with Kyren to carry out the internal finishing works on the building. The project was known as the “Palais project”. The primary purpose of the project was to provide accommodation for university students. Kyren’s plan was to complete the building for occupation by students in the 2007 academic year.
Ultimately, the contract divided the work into three areas:
·The installation of plasterboard petitioning, corridor and internal walling and ceilings (“CW works”), valued at $2.56 million;
·The completion of carpentry works, valued at approximately $163,000; and
·Painting works valued at approximately $165,000.
Wunda directly undertook the carpentry works, but subcontracted the CW and painting works to E & M Linings Pty Ltd (“E & M”) and Asset Painting & Maintenance Services Pty Ltd (“Asset Painting”) respectively.
Work commenced on 24 July 2006. The works did not progress as scheduled. After disputes arose in relation to the performance of the works, Kyren took the remaining CW and painting works out of Wunda’s hands on 18 January 2007 and, later, the remaining carpentry works on 1 February 2007. Kyren then paid other contractors to complete the works. Practical completion was achieved on 20 March 2007, approximately a month a half after the contracted practical completion date of 31 January 2007.
Negotiation history
In order to understand the various disputes that are the subject of the litigation and the issues argued in this appeal, it is necessary to trace the history of the negotiations and to describe the role of various persons involved in the negotiations and the subsequent administration of the contract.
In March 2006, Mr Kon Corolis (“Corolis”) was employed by Kyren to manage the development. Mr Theo Samaras (“Samaras”), a director of Kyren, authorised Corolis to engage Wunda to undertake the three packages of works.
The trial Judge described the circumstances in which the parties came together for the Palais project. He observed that Corolis, who had formally been employed by the Adelaide City Council, had had previous dealings with Wunda and, in particular, Mr Tony Basile (“Basile”), who was Wunda’s principal project manager.
The Judge observed that the parties had not previously been involved in any contractual relationship. Wunda had considerable experience in the fit-out of buildings, in particular apartments or residential spaces. Kyren was a relative newcomer in the project development business.
During a meeting held prior to the contract being signed, Wunda expressed concerns about Kyren’s payment practices. The Judge concluded that Samaras had stated, to demonstrate his good faith, that Kyren would meet payment claims on 14-day terms. When the contract was executed, the 14-day payment period related only to the CW works. So far as the carpentry and painting works packages were concerned, 28-day payment terms applied. Samaras gave evidence that the 14-day terms were limited to the CW works package only. Mr Bruno Marveggio (“Marveggio”), Wunda’s manager, and Basile gave evidence that the 14-day terms were to apply to all works packages, not simply the CW works. The Judge preferred the evidence of Marveggio and Basile. Despite this, the Judge found that, having received the draft contract, Wunda overlooked that the 14-day terms related to the CW works only and proceeded to sign. Accordingly, the Judge found that Wunda then became bound by those express contractual provisions. No application was made to rectify the terms of the contract.
On 22 May 2006, Wunda tendered in the amount of $3,361,399 plus GST, in respect of the painting, carpentry, CW and tiling works. Wunda was not successful in its tender for the tiling works. The tender document contained a number of exclusions and a condition that progress payments would be made 14 days from the date of invoice. The Judge concluded that it was common ground that, after Wunda’s tender was received, there was a further meeting of the parties at Kyren’s premises to discuss Wunda’s tender and inclusions or exclusions to the contract. There was then an amended tender letter dated 25 May 2006 which quoted a total project value of $2,888,340 plus GST. The 14-day payment term was not amended and it remained applicable to all works for which Wunda had quoted.
On 2 June 2006, Kyren wrote to Wunda. In the letter, Kyren stated that the contract between the parties was to be governed by general conditions of contract AS2124-1992, as varied. Kyren prepared the document with annexures and schedules. It was forwarded to and signed by Wunda’s representatives on 17 July 2006, and by Kyren’s representatives on 19 July 2006.
The trial Judge concluded that there was no discussion before 19 July 2006 about the 14-day payment terms being limited to the CW works. The Judge concluded that, in preparing the contract schedules, Corolis, of his own motion, and despite the tender terms, chose to confine the 14-day payment terms to the CW works and did nothing to alert Wunda to that fact.
The contract
It is important to set out in some detail the relevant contractual clauses, as they are central to the arguments advanced before the trial Judge and to be considered in this appeal. The contract executed by the parties was based on the Australian Standard General Conditions of Contract AS 2124-1992, with annexures and schedules (“AS 2124”). The trial Judge discussed the details of that contract in his reasons.
The Judge referred to the contract, which was divided into several sections or parts. He referred to some parts as follows:
(b)Part A, being an annexure containing particulars identifying the premises, the parties, the Superintendent and numerous provisions specifying particulars otherwise referred to in the General Conditions and including, in particular, the following:
·       ‘The Superintendent: … The Superintendent shall be the Project Manager’.
Here, it is common ground that the Project Manager was Corolis, hence he was also Superintendent.
·       The time for giving possession of the site was defined ‘As per Construction Program or by agreement’.
·       ‘The Date for Practical Completion: … 31 January 2007 and in accordance with the program for the respective trade packages to be agreed on by Contractor and Kyren P/L’.
·       Liquidated damages were fixed at $10,000 per week.
·       ‘Times for Payment Claims: (Clause 42.1): … within 28 days after receipt by the Superintendent of a claim for Payment for all packages.
… with the exception of:
within 14 days after receipt by the Superintendent of a claim for payment for the Wall Partition, Ceiling Systems and Linings Package’.
·       ‘The rate of i‘The rate of interest on overdue payments (clause 42.9): … Current Savings Market Interest Rate as advertised by the Commonwealth Bank’.
Part G contained the following clauses:
·    ‘2.    Construction Programme
a.   Time is of the essence in this Contract. The works are to be carried out on site in the shortest possible time, without compromising the standard or quality of the work, or safe work practices.
b.   The contractor is to determine with Kyren P/L a suitable work programme of dates and completion times for carrying out the works.
c.   Any changes to the agreed programme may only be made with the approval of Kyren P/L or its Superintendent.’
·    ‘5.    Variation
a.   All variations to the Contract must be approved in writing by Kyren P/L or its Representative prior to any work associated with the variation being undertaken. Failure to comply with this instruction may result in non-payment of variations’
The relevant clauses in AS 2124 were as follows:
Clause 2 is the definition section and elsewhere identifies Kyren as the Principal and Wunda as the Contractor. The following definitions are of assistance (the emphasis is ours):
‘Date for Practical Completion’ means –
(a) where the Annexure provides a date for Practical Completion, the date;
(b)…
but if any extension of time for Practical Completion is granted by the Superintendent or allowed in any arbitration or litigation, it means the date resulting therefrom;
‘Date of Practical Completion’ means –
(a)the date certified by the Superintendent in a Certificate of Practical Completion issued pursuant to Clause 42.5, to be the date upon which Practical Completion was reached; or
(b)where another date is determined in any arbitration or litigation as the date upon which Practical Completion was reached, that other date;
…
‘Specification’ means the specification referred to in the Contract and any modification of such specification thereafter directed or the use of which has been permitted by the Superintendent pursuant to powers contained in the Contract;
‘Superintendent’ means the person stated in the Annexure as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent and notified as such in writing to the Contractor by the Principal and, so far as concerns the functions exercisable by a Superintendent’s Representative, includes a Superintendent’s Representative;
…
‘work under the Contract’ means the work which the Contractor is or may be required to execute under the Contract and includes variations, remedial work, Constructional Plant and Temporary Works;
‘Works’ means the whole of the work to be executed in accordance with the Contract, including variations provided for by the Contract, which by the Contract is to be handed over to the Principal.
…
The contract provided for the appointment of a superintendent by Kyren who, in this case, was Corolis. Under clause 23, the superintendent was required to act honestly and fairly within the appropriate times prescribed under the contract, and to arrive at a reasonable measure or value of work, quantities or time.
23    SUPERINTENDENT
The Principal shall ensure that at all times there is a Superintendent and that in the exercise of the functions of the Superintendent under the Contract, the Superintendent –
(a)     acts honestly and fairly;
(b)acts within the time prescribed under the Contract or where no time is prescribed, within a reasonable time; and
(c)     arrives at a reasonable measure or value of work, quantities or time.
If, pursuant to a provision of the Contract enabling the Superintendent to give directions, the Superintendent gives a direction, the Contractor shall comply with the direction.
In Clause 23 ‘direction’ includes agreement, approval, authorization certificate, decision, demand, determination, explanation, instruction, notice, order, permission, rejection, request or requirement.
Except where the Contract otherwise provides, a direction may be given orally but the Superintendent shall as soon as practicable confirm it in writing.
If the Contractor in writing requests the Superintendent to confirm an oral direction, the Contractor shall not be bound to comply with the direction until the Superintendent confirms it in writing.
…
Clause 27 is as follows:
27 SITE
…
27.2 Access for the Principal and Others
The Principal and the Principal’s employees and agents may at any time after reasonable notice to the Contractor have access to any part of the Site for any purpose.
The Contractor shall permit the execution of the work on the Site by persons engaged by the Principal and shall cooperate with them and coordinate the Contractor’s work with their work.
If requested by the Contractor, the Principal shall provide to the Contractor the names of the persons so engaged.
The Contractor shall at all reasonable times give the Principal, the Superintendent, the Clerk of Works and inspectors appointed under Clause 22, and other persons authorized in writing by the Principal or by the Superintendent access to the work under the Contract at any place where the work is being carried out or materials are being prepared or stored.
The Principal shall ensure that the Contractor is not impeded in the execution of the Contractor’s work by any persons referred to in Clause 27.2, whilst exercising the right of access given by Clause 27.2.
…
Clause 33 deals with the progress and programming of the works. The clause provides that the superintendent may direct in what order and at what time the various stages or parts of the work under the contract are to be performed. There are provisions for the contractor to give notice to the superintendent if it cannot reasonably comply with the direction and, further, for reimbursement of any additional cost incurred as a result of compliance. The clause also provides for the furnishing of a construction program in writing by a contractor, voluntarily or by the direction of the superintendent, showing the dates by which, or the times within which, various stages or parts of the work are to be executed or completed.
33     PROGRESS AND PROGRAMMING OF THE WORKS
33.1   Rate of Progress
The Contractor shall proceed with the work under the Contract with due expedition and without delay.
The Contractor shall not suspend the progress of the whole or any part of the work under the Contract except where the suspension is under Clause 44.9 or is directed or approved by the Superintendent under Clause 34.
The Contractor shall give the Superintendent reasonable advance notice of when the Contractor requires any information, materials, documents or instructions from the Superintendent or the Principal.
The Principal and the Superintendent shall not be obliged to furnish any information, materials, documents or instructions earlier than the Principal or the Superintendent, as the case may be, should reasonably have anticipated at the Date of Acceptance of Tender.
The Superintendent may direct in what order and at what time the various stages or parts of the work under the Contract shall be performed. If the Contractor can reasonably comply with the direction, the Contractor shall do so. If the Contractor cannot reasonably comply, the Contractor shall notify the Superintendent in writing, giving reasons.
If compliance with the direction causes the Contractor to incur more or less cost than otherwise would have been incurred had the Contractor not been given the direction, the difference shall be valued under Clause 40.5.
Clause 33.2 is set out in full at paragraph [92] of this judgment.

Clause 34 deals with the suspension of works under the contract.
34     SUSPENSION OF THE WORKS
34.1 Suspension by Superintendent
If the Superintendent considers that the suspension of the whole or part of the work under the Contract is necessary –
(a)     because of an act or omission of –
(i)the Principal, the Superintendent or an employee, consultant or agent of the Principal; or
(ii)the Contractor, a subcontractor or an employee or agent of either;
(b)     for the protection or safety of any person or property; or
(c)     to comply with an order of a court,
the Superintendent shall direct the Contractor to suspend the progress of the whole or part of the work under the Contract for such time as the Superintendent thinks fit.
34.2 Suspension by Contractor
If the Contractor wishes to suspend the whole or part of the work under the Contract, otherwise than under Clause 44.9, the Contractor shall obtain the prior written approval of the Superintendent. The Superintendent may approve of the suspension and may impose conditions of approval.
34.3 Recommencement of Work
As soon as the Superintendent becomes aware that the reason for any suspension no longer exists, the Superintendent shall direct the Contractor to recommence work on the whole or on the relevant part of the work under the Contract.
If work is suspended pursuant to Clause 34.2 or 44.9, the Contractor may recommence work at any time after reasonable advance notice to the Superintendent.
34.4 Cost of Suspension
Any cost incurred by the Contractor by reason of a suspension under Clause 34.1 or Clause 34.2 shall be borne by the Contractor but if the suspension is due to an act or omission of the Principal, the Superintendent or an employee, consultant or agent of the Principal and the suspension causes the Contractor to incur more or less cost than otherwise would have been incurred but for the suspension, the difference shall be valued under Clause 40.5.
34.5 Effect of Suspension
Suspension shall not affect the Date for Practical Completion but the cause of suspension may be a ground for extension of time under Clause 35.5.
Clause 35 deals with the times for commencement and practical completion, the procedures for granting an extension of time for practical completion and the liability of the contractor to pay liquidated damages if it fails to complete the works in accordance with the contract. The relevant parts of clause 35, with the exception of clauses 35.6 and 35.7, which are set out in full in paragraph [133] of this judgment, are as follows:
35    TIMES FOR COMMENCEMENT AND PRACTICAL COMPLETION
…
35.2 Time for Practical Completion
The Contractor shall execute the work under the Contract to Practical Completion by the Date for Practical Completion.
Upon the Date of Practical Completion the Contractor shall give possession of the Site and the Works to the Principal.
…
35.5 Extension of Time for Practical Completion
When it becomes evident to the Contractor that anything, including an act or omission of the Principal, the Superintendent or the Principal’s employees, consultants, other contractors or agents, may delay the work under the Contract, the Contractor shall promptly notify the Superintendent in writing with details of the possible delay and the cause.
When it becomes evident to the Principal that anything which the Principal is obliged to do or provide under the Contract may be delayed, the Principal shall give notice to the Superintendent who shall notify the Contractor in writing of the extent of the likely delay.
If the Contractor is or will be delayed in reaching Practical Completion by a cause described in the next paragraph and within 28 days after the delay occurs the Contractor gives the Superintendent a written claim for an extension of time for Practical Completion setting out the facts on which the claim is based, the Contractor shall be entitled to an extension of time for Practical Completion.
The causes are –
(a)     events occurring on or before the Date for Practical Completion which are beyond the reasonable control of the Contractor including but not limited to –
industrial conditions;
inclement weather;
(b)     any of the following events whether occurring before, on or after the Date for Practical Completion –
(i)    delays caused by –
- the Principal;
- the Superintendent;
- the Principal’s employees, consultants, other contractors or                    agents;
(ii)actual quantities of work being greater than the quantities in the Bill of Quantities or the quantities determined by reference to the upper limit of accuracy stated in the Annexure (otherwise than by reason of a variation directed under Clause 40);
(iii)latent conditions;
(iv)variations directed under Clause 40;
(v)repudiation or abandonment by a Nominated Subcontractor;
(vi)changes in the law;
(vii)directions by municipal, public or statutory authorities but not where the direction arose from the failure of the Contractor to comply with a requirement referred to in Clause 14.1;
(viii)delays by municipal, public or statutory authorities not caused by the Contractor;
(ix)claims referred to in Clause 17.1(v);
(x)any breach of the Contract by the Principal;
(xi)any other cause which is expressly stated in the Contract to be a cause for extension of time for Practical Completion.
Where more than one event causes concurrent delays and the cause of at least one of those events, but not all of them, is not a cause referred to in the preceding paragraph, then to the extent that the delays are concurrent, the Contractor shall not be entitled to an extension of time for Practical Completion.
In determining whether the Contractor is or will be delayed in reaching Practical Completion regard shall not be had to –
-whether the Contractor can reach Practical Completion by the Date for Practical Completion without an extension of time;
- whether the Contractor can, by committing extra resources or incurring extra expenditure, make up the time lost.
With any claim for an extension of time for Practical Completion, or as soon as practicable thereafter, the Contractor shall give the Superintendent written notice of the number of days extension claimed.
If the Contractor is entitled to an extension of time for Practical Completion the Superintendent shall, within 28 days after receipt of the notice of the number of days extension claimed, grant a reasonable extension of time. If within the 28 days the Superintendent does not grant the full extension of time claimed, the Superintendent shall before the expiration of the 28 days give the Contractor notice in writing of the reason.
In determining a reasonable extension of time for an event causing delay, the Superintendent shall have regard to whether the Contractor has taken all reasonable steps to preclude the occurrence of the cause and minimise the consequences of the delay.
Notwithstanding that the Contractor is not entitled to an extension of time the Superintendent may at any time and from time to time before the issue of the Final Certificate by notice in writing to the Contractor extend the time for Practical Completion for any reason.
A delay by the Principal or the failure of the Superintendent to grant a reasonable extension of time or to grant an extension of time within 28 days shall not cause the Date for Practical Completion to be set at large but nothing in this paragraph shall prejudice any right of the Contractor to damages.
Clause 36 deals with the liability of the principal to pay the contractor any extra costs necessarily incurred by reason of the delay caused by events specifically referred to in Clause 35.5(b)(i).
Clause 40 deals with variations.
40     VARIATIONS
40.1 Variations to the Work
The Superintendent may direct the Contractor to –
(a)     increase, decrease or omit any part of the work under the Contract;
(b)     change the character or quality of any material or work;
(c)     change the levels, lines, positions or dimensions of any part of the work under the Contract;
(d)     execute additional work; and/or
(e)     demolish or remove material or work no longer required by the Principal.
The Contractor shall not vary the work under the Contract except as directed by the Superintendent or approved in writing by the Superintendent under Clause 40.
The Contractor is bound only to execute a variation which is within the general scope of the Contract.
The Contractor shall not be bound to execute a variation directed after Practical Completion unless the variation is in respect of rectification work referred to in Clause 37.
40.2 Proposed Variations
Upon receipt of a notice in writing from the Superintendent advising the Contractor of a proposed variation under Clause 40, the Contractor shall advise the Superintendent whether the proposed variation can be effected. If the variation can be effected, the Contractor shall –
(a)    advise the Superintendent of the effect which the Contractor anticipates that the variation will have on the construction program and time for Practical Completion; and
(b)    provide an estimate of the cost (including delay costs, if any) of the proposed variation.
The Principal shall reimburse the Contractor for the reasonable costs of complying with the requirements of Clause 40.2.
40.3 Pricing the Variation
Unless the Superintendent and the Contractor agree upon the price for a variation, the variation directed or approved by the Superintendent under Clause 40.1 shall be valued under Clause 40.5.
The Superintendent may direct the Contractor to provide a detailed quotation for the work of a variation supported by measurements or other evidence of cost.
40.4 Variations for the Convenience of the Contractor
If the Contractor requests the Superintendent to approve a variation for the convenience of the Contractor, the Superintendent may do so in writing. The approval may be conditional.
Unless the Superintendent otherwise directs in the notice approving the variation, the Contractor shall not be entitled to –
(a)     an extension of time for Practical Completion; or
(b)     extra payment,
in respect of the variation or anything arising out of the variation which would not have arisen had the variation not been approved.
The Superintendent shall not be obliged to approve a variation for the convenience of the Contractor.
40.5 Valuation
Where the Contract provides that a valuation shall be made under Clause 40.5, the Principal shall pay or allow the Contractor or the Contractor shall pay or allow the Principal as the case may require, an amount ascertained by the Superintendent as follows –
(a)     if the Contract prescribes specific rates or prices to be applied in determining the value, those rates or prices shall be used;
(b)     if Clause 40.5(a) does not apply, the rates or prices in a Priced Bill of Quantities or Schedule of Rates shall be used to the extent that it is reasonable to use them;
(c)     to the extent that neither Clause 40.5(a) or 40.5(b) apply, reasonable rates or prices shall be used in any valuation made by the Superintendent;
(d)     in determining the deduction to be made for work which is taken out of the Contract, the deduction shall include a reasonable amount for profit and overheads;
(e)     if the valuation is of an increase or decrease in a fee or charge or is a new fee or charge under Clause 14.3, the value shall be the actual increase or decrease or the actual amount of the new fee or charge without regard to overheads or profit;
(f)     if the valuation relates to extra costs incurred by the Contractor for delay or disruption, the valuation shall include a reasonable amount for overheads but shall not include profit or loss of profit;
(g)     if Clause 11(b) applies, the percentage referred to in Clause 11(b) shall be used for valuing the Contractor’s profit and attendance; and
(h)     daywork shall be valued in accordance with Clause 41.
When under Clause 40.3 the Superintendent directs the Contractor to support a variation with measurements and other evidence of cost, the Superintendent shall allow the Contractor the reasonable cost of preparing the measurements or other evidence of cost that has been incurred over and above the reasonable overhead cost.
…
The relevant clause dealing with claims for payment is clause 42 and Annexure A. I will return to this clause in detail later in these reasons, as its operation and effect were varied not long after the agreement was executed. The trial Judge found that the contract provided for payment to be made within 28 days after the receipt by the superintendent of a claim for payment, with the exception of the CW works, where payment was required within 14 days after receipt by the superintendent of a claim for payment. The Judge concluded:
Wunda’s witnesses said and I accept that having received the draft contract document, they overlooked that wording and proceeded to sign it, still believing 14-day terms applied to all claims. In the context of other observations I have made about their attention to detail, I am not particularly surprised at that evidence. At all events, it is clear and I find that Wunda then became bound by those express contractual provisions.
We have set out clause 42.1 in full in paragraph [39]. The other relevant parts of clause 42 provide:
42 CERTIFICATES AND PAYMENTS
...
42.2 Correction of Payment Certificates
At any time and from time to time, the Superintendent may by a further certificate correct any error which has been discovered in any previous certificate, other than a Certificate of Practical Completion or Final Certificate.
…
42.6 Effect of Certificates
The issue of a payment certificate or a Certificate of Practical Completion shall not constitute approval of any work or other matter nor shall it prejudice any claim by the Principal or the Contractor.
…
42.9 Interest on Overdue Payments
If any moneys due to either party remain unpaid after the date upon which or the expiration of the period within which they should have been paid then interest shall be payable thereon from but excluding the date upon which or the expiration of the period within which they should have been paid to and including the date upon which the moneys are paid. The rate of interest shall be the rate stated in the Annexure and if no rate is stated the rate shall be 18 percent per annum. Interest shall be compounded at six monthly intervals.
42.10 Set Offs by the Principal
The Principal may deduct from moneys due to the Contractor any money due from the Contractor to the Principal otherwise than under the Contract and if those moneys are insufficient, the Principal may, subject to Clause 5.5, have recourse to retention moneys and, if they are insufficient, then to security under the Contract.
…
Clause 43 relates to the payment of workers and subcontractors.
43    PAYMENT OF WORKERS AND SUBCONTRACTORS
(a)     Before the Principal makes each payment to the Contractor, the Superintendent may, not less than 5 days before a Payment Certificate is due, in writing request the Contractor –
(i)to give the Superintendent a statutory declaration by the Contractor or, where the Contractor is a corporation, by a representative of the Contractor who is in a position to know the facts declared, that all workers who have at any time been employed by the Contractor on work under the Contract have at the date of the request been paid all moneys due and payable to them in respect of their employment on the work under the Contract; and
(ii)to provide documentary evidence to the Superintendent that at the date of the request all workers who have been employed by a subcontractor of the Contractor have been paid all moneys due and payable to them in respect of their employment on the work under the Contract.
(b)     Not earlier than 14 days after the Contractor has made each claim for payment under Clause 42.1, and before the Principal makes that payment to the Contractor, the Contractor shall give to the Superintendent a statutory declaration by the Contractor or, where the Contractor is a corporation, by a representative of the Contractor who is in a position to know the facts declared, that all subcontractors have been paid all moneys due and payable to them in respect of work under the Contract.
(c)     If the Contractor fails –
(i)within five days after a request by the Superintendent under Clause 43(a), to provide the statutory declaration, or the documentary evidence (as the case may be) required pursuant to Clause 43; or
(ii)to comply with Clause 43(b),
notwithstanding Clause 42.1, the Principal may withhold payment of moneys due to the Contractor until the statutory declaration or documentary evidence (as the case may be) is received by the Superintendent.
If the Contractor provides to the Superintendent satisfactory proof of the maximum amount due and payable to workers and subcontractors by the Contractor, the Principal shall not be entitled to withhold any amount in excess of the maximum amount.
At the written request of the Contractor and out of moneys payable to the Contractor, the Principal may on behalf of the Contractor make payments directly to any worker or subcontractor.
If any worker or subcontractor obtains a court order in respect of moneys referred to in Clause 43(a) or (b) and produces to the Principal the court order and a statutory declaration that it remains unpaid, the Principal may pay the amount of the order, and costs included in the order, to the worker or subcontractor and the amount paid shall be a debt due from the Contractor to the Principal.
After the making of a sequestration order or a winding up order in respect of the Contractor, the Principal shall not make any payment to a worker or subcontractor without the concurrence of the official receiver or trustee of the estate of the bankrupt or the liquidator as the case may be.
Clause 44.2 provides that if the contractor commits a substantial breach of contract and the principal considers that damages may not be an adequate remedy, then the principal may give the contractor a written notice to show cause. Certain specific breaches are defined in clause 44.2 as substantial breaches. Clause 44.2 provides:
44.2 Default by the Contractor
If the Contractor commits a substantial breach of contract and the Principal considers that damages may not be an adequate remedy, the Principal may give the Contractor a written notice to show cause.
Substantial breaches include but are not limited to –
(a)     suspension of work, in breach of Clause 33.1;
(b)     failing to proceed with due expedition and without delay, in breach of Clause 33.1;
(c)     failing to lodge security in breach of Clause 5;
(d)     failing to use the materials or standards of workmanship required by the Contract, in breach of Clause 30.1;
(e)     failing to comply with a direction of the Superintendent under Clause 30.3, in breach of Clause 23;
(f)    failing to provide evidence of insurance, in breach of Clause 21.1; and/or
(g)     in respect of Clause 43, knowingly providing a statutory declaration or documentary evidence which contains a statement that is untrue.
Clause 44.3 provides that a notice shall specify the alleged substantial breach, and shall require the contractor to show cause in writing why the principal should not exercise its right to take out of the hands of the contractor the whole or part of the work remaining to be completed, or terminate the contract.
44.3 Requirements of a Notice by the Principal to Show Cause
A notice under Clause 44.2 shall –
(a)     state that it is a notice under Clause 44 of the General Conditions of Contract;
(b)     specify the alleged substantial breach;
(c)     require the Contractor to show cause in writing why the Principal should not exercise a right referred to in Clause 44.4;
(d)     specify the time and date by which the Contractor must show cause (which time shall not be less than 7 clear days after the notice given to the Contractor); and
(e)     specify the place at which cause must be shown.
Substantial breaches include a failure to make a payment in breach of clause 42.1, or failure by the superintendent to issue a certificate of practical completion. There are other failures which amount to substantial breaches but it is unnecessary to detail them for the purpose of this judgment. Clause 44 also deals with the right of the principal and the contractor to terminate the agreement.
44.4 Rights of the Principal
If by the time specified in a notice under Clause 44.2 the Contractor fails to show reasonable cause why the Principal should not exercise a right referred to in Clause 44.4, the Principal may by notice in writing to the Contractor –
(a)     take out of the hands of the Contractor the whole or part of the work remaining to be completed; or
(b)     terminate the Contract.
Upon giving a notice under Clause 44.2, the Principal may suspend payments to the Contractor until the earlier of –
(i)    the date upon which the Contractor shows reasonable cause;
(ii)     the date upon which the Principal takes action under Clause 44.4(a) or (b); or
(iii)    the date which is 7 days after the last day for showing cause in the notice under Clause 44.2.
If the Principal exercises the right under Clause 44.4(a), the Contractor shall not be entitled to any further payment in respect of the work taken out of the hands of the Contractor unless a payment becomes due to the Contractor under Clause 44.6.
44.5 Procedure when the Principal Takes Over Work
If the Principal takes work out of the hands of the Contractor under Clause 44.4(a) the Principal shall complete that work and the Principal may without payment of compensation take possession of such of the Constructional Plant and other things on or in the vicinity of the Site as are owned by the Contractor and are reasonably required by the Principal to facilitate completion of the work.
If the Principal takes possession of Constructional Plant or other things the Principal shall maintain the Constructional Plant and, subject to Clause 44.6, on completion of the work the Principal shall return to the Contractor the Constructional Plant and any things taken under this Clause which are surplus.
44.6 Adjustment on Completion of the Work Taken Out of the Hands of the Contractor
When work taken out of the hands of the Contractor under Clause 44.4(a) is completed the Superintendent shall ascertain the cost incurred by the Principal in completing the work and shall issue a certificate to the Principal and the Contractor certifying the amount of that cost.
If the cost incurred by the Principal is greater than the amount which would have been paid to the Contractor if the work had been completed by the Contractor the difference shall be a debt due from the Contractor to the Principal. If the cost incurred by the Principal is less than the amount that would have been paid to the Contractor if the work had been completed by the Contractor, the difference shall be a debt due to the Contractor from the Principal. The Principal shall keep records of the cost in a similar manner to that prescribed in Clause 41.
If the Contractor is indebted to the Principal, the Principal may retain Constructional Plant or other things taken under Clause 44.5 until the debt is satisfied. If after reasonable notice, the Contractor fails to pay the debt, the Principal may sell the Constructional Plant or other things and apply the proceeds to the satisfaction of the debt and the costs of sale. Any excess shall be paid to the Contractor.

Clause 44.7 provides that if the principal commits a substantial breach of contract and the contractor considers that damages may not be an adequate remedy, the contractor may give the principal a written notice to show cause.
44.7 Default of the Principal
If the Principal commits a substantial breach of contract and the Contractor considers that damages may not be an adequate remedy, the Contractor may give the Principal a written notice to show cause.
Substantial breaches include but are not limited to –
(a)     failing to make a payment, in breach of Clause 42.1;
(b)     failure by the Superintendent to either issue a Certificate of Practical Completion or give the Contractor, in writing, the reasons for not issuing the Certificate within 14 days of receipt of a request by the Contractor to issue the Certificate, in breach of Clause 42.5;
(c)     failing to produce evidence of insurance, in breach of Clause 21.1;
(d)     failing to give the Contractor possession of sufficient of the Site, in breach of Clause 27.1, but only if the failure continues for longer than the period stated in the Annexure; and/or
(e)     failing to lodge security in breach of Clause 5.
44.8 Requirements of a Notice by the Contractor to Show Cause
A notice under Clause 44.7 shall –
(a)     state that it is a notice under Clause 44 of the General Conditions of      Contract;
(b)     specify the alleged substantial breach;
(c)     require the Principal to show cause in writing why the Contractor should not exercise a right referred to in Clause 44.9;
(d)     specify the time and date by which the Principal must show cause (which shall not be less than 7 clear days after the notice is given to the Principal); and
(e)     specify the place at which cause must be shown.
The relevant remaining provisions of clause 44 are as follows:
44.9 Rights of the Contractor
If by the time specified in a notice under Clause 44.7 the Principal fails to show reasonable cause why the Contractor should not exercise a right referred to in Clause 44.9, the Contractor may by notice in writing to the Principal suspend the whole or any part of the work under the Contract.
The Contractor shall lift the suspension if the Principal remedies the breach but if within 28 days after the date of suspension under Clause 44.9, the Principal fails to remedy the breach or, if the breach is not capable of remedy, fails to make other arrangements to the reasonable satisfaction of the Contractor, the Contractor may by notice in writing to the Principal terminate the Contract.
The Contractor shall be entitled to recover from the Principal any damages incurred by the Contractor by reason of the suspension.
44.10 Rights of the Parties on Termination
If the Contract is terminated under Clause 44.4(b) or Clause 44.9 the rights and liabilities of the parties shall be the same as they would have been at common law had the defaulting party repudiated the Contract and the other party elected to treat the Contract as at an end and recover damages.
…
Clause 46.1 is set out in paragraph [115].
Clause 47 deals with dispute resolution and the procedures to be followed if a dispute arises. Clause 47.1 is set out in paragraph [83].
Clause 48 provides that none of the terms of the contract shall be varied, waived, discharged or released except with the prior consent, in writing, of the principal.
48 WAIVER OF CONDITIONS
Except as provided at law or in equity or elsewhere in the Contract, none of the terms of the Contract shall be varied, waived, discharged or released, except with the prior consent in writing of the Principal in each instance.
The trial Judge’s findings
At trial, there were a number of issues which included:
·The terms of the agreement, including the terms of any variation relating to payment, the time at which the parties agreed to vary the contract, and the effect of the variation;
·Problems with the progress of the works;
·The conduct of Corolis as superintendent;
·Notices of dispute;
·Delay;
·Extensions of time;
·Variation claims;
·Notices to show cause;
·Termination of the contract;
·Post-termination conduct; and
·Damages.
Judgment was awarded in favour of Wunda in the sum of $583,481 under the following heads of damage, net of GST:
·Outstanding tax invoices in the sum of $380,634;
·Variations of $83,900. Wunda’s entitlement to the variations is not challenged on appeal;
·Interest of $80,480;
·Loss of profit in the sum of $30,367; and
·In lieu of interest $8,100.
The trial Judge found that the unpaid tax invoices totalling $380,634 were payable, as they were conclusive. The Judge then made various adjustments. He concluded:
I have thus removed all variation claims from the Tax Invoices identified in paragraph 5 and the adjusted totals are for CW works $198,299, for carpentry $100,085, and for paintings $82,250, an overall adjusted total of $380,634, which I find Kyren is obliged to pay to Wunda by virtue of their agreement over payment of Tax Invoices and, further, by virtue of Wunda’s Notices to Show Cause.
The appeal
On appeal, the parties have agreed that there are seven key issues for determination by the Court:
·What was the legal effect of the agreement between the parties to vary clause 42.1;
·Whether Kyren repudiated the contract;
·If Kyren was in breach of the contract, whether Wunda complied with the notice provisions of clause 46.1;
·If Kyren did repudiate the contract, whether directions given by the superintendent before the repudiation was accepted by Wunda were effective under the contract to withdraw work from Wunda’s scope of work;
·Whether Kyren was entitled to liquidated damages under the contract for Wunda’s failure to complete the work by the date for practical completion;
·Whether the trial Judge ought to have allowed Kyren to reopen its case to plead the consequences of Wunda not being registered for GST purposes; and
·Whether the trial Judge ought to have allowed Kyren to reopen its case to plead the consequences of Wunda not having a licence to carry out building work pursuant to section 6(2) of the Building Work Contractors Act 1995 (SA) (“Building Work Contractors Act”).
These reasons will deal with each of the key issues.
Key Issue 1 - Legal effect of agreement to vary clause 42.1
Clause 42.1 provides as follows:
42.1 Payment Claims, Certificates, Calculations and Time for Payment.
At the times for payment claims stated in the Annexure and upon issue of a Certificate of Practical Completion and within the time prescribed by Clause 42.7, the Contractor shall deliver to the Superintendent claims for payment supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require. Claims for payment shall include the value of work carried out by the Contractor in the performance of the Contract to that time together with all amounts then due to the Contractor arising out of or in connection with the Contract or for any alleged breach thereof.
Within 14 days after receipt of a claim for payment, the Superintendent shall issue to the Principal and to the Contractor a payment certificate stating the amount of the payment which, in the opinion of the Superintendent, is to be made by the Principal to the Contractor or by the Contractor to the Principal. The Superintendent shall set out in the certificate the calculations employed to arrive at the amount and, if the amount is more or less than the amount claimed by the Contractor, the reasons for the difference. The Superintendent shall allow in any payment certificate issued pursuant to this Clause 42.1 or any Final Certificate issued pursuant to Clause 42.8 or a Certificate issued pursuant to Clause 44.6, amounts paid under the Contract and amounts otherwise due from the Principal to the Contractor and/or due from the Contractor to the Principal arising out of or in connection with the Contract including but not limited to any amount due or to be credited under any provision of the Contract.
If the Contractor fails to make a claim for payment under Clause 42.1, the Superintendent may nevertheless issue a payment certificate.
Subject to the provisions of the Contract, within 28 days after receipt by the Superintendent of a claim for payment or within 14 days of issue by the Superintendent of the Superintendent’s payment certificate, whichever is the earlier, the Principal shall pay to the Contractor or the Contractor shall pay to the Principal, as the case may be, an amount not less than the amount shown in the Certificate as due to the Contractor or to the Principal as the case may be, or if no payment certificate has been issued, the Principal shall pay the amount of the Contractor’s claim. A payment made pursuant to this Clause shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable and on determination (whether under Clause 47 or as otherwise agreed) of the amount so properly due and payable, the Principal or Contractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable.
Payment of moneys shall not be evidence of the value of work or an admission of liability or evidence that work has been executed satisfactorily but shall be a payment on account only, except as provided by Clause 42.8.
Notwithstanding Clause 42.4, the Principal shall be obliged to pay for any item of unfixed plant and materials where that item is –
(i)to be imported into Australia, provided the Contractor has given the Principal a clean on board bill of lading or its equivalent, drawn or endorsed to the order of the Principal and, where appropriate, a custom’s invoice for the item; or
(ii)listed in the Annexure and which is not an item to be imported into Australia, provided the Contractor establishes to the satisfaction of the Superintendent that the Contractor has paid for the item, and the item is properly stored, labelled the property of the Principal and adequately protected.
Upon payment to the Contractor of the amount which includes the value of the item, the item shall be the property of the Principal free of any lien or charge.
Except as provided in the Contract, the Principal shall not be obliged to pay for any item of unfixed plant and materials which is not incorporated in the Works.
[Our underlining.]
The effect of clause 42.1 in respect of progress claims, excluding payment on the issue of a final certificate, is as follows:
·     At times which are specified in the annexure (for example on a specified date each month), the contractor, in this case Wunda, shall deliver its claims for payment to the superintendent (Corolis) for amounts due. The claim is to be supported by evidence. Claims shall include the value of work done.
·     Within 14 days of receipt of a claim, the superintendent shall issue to the principal (Kyren) and the contractor (Wunda) a payment certificate stating the principal’s opinion as to the amount to be paid. The certificate shall set out the calculations of the superintendent to arrive at the figure and, if the figure is less or more than the claim, the reasons for the superintendent arriving at that figure.
·     If the contractor does not make a claim in the specified time, the superintendent may, nevertheless, issue a certificate for payment.
·     Within 14 days of the issue of a payment certificate, the principal must pay to the contractor the certified amount or, if an amount is due from the contractor to the principal, the certified amount is to be paid to the principal.
·     If no certificate is received within 14 days of a claim, the principal shall pay to the contractor the amount of the claim. Such amount is payable within 28 days of the receipt of the claim by the superintendent.
Annexure A to the contract required the parties to set out the terms of their agreement. Clause 42.1 indicates the times within which payment claims were to be issued. Those preparing and those eventually executing the documents, however, appear to have misunderstood the document. Under the heading “Times for Payment Claims”, the following endorsement was agreed to by the parties which varied the operation of clause 42.1:
within 28 days after receipt by the Superintendent of a claim for Payment for all packages.
with the exception of:
within 14 days after receipt by the Superintendent of a claim for payment for the Wall Partition, Ceiling System & Linings Package.
[Original emphasis.]
It is to be observed that this endorsement did not provide “Times for Payment Claims” pursuant to clause 42.1. Rather, it provided for a shortening of payment time from a maximum of 28 days from the superintendent receiving a claim, to 14 days from receipt. The parties, therefore, agreed that within 14 days of the receipt of a claim, or upon the issue of the superintendent’s certificate, but no later than 14 days from the receipt of the claim, payment as claimed or as certified, was to be made in respect of the CW works package only.
It is clear from the parties’ decision to alter the payment terms upon receipt of a tax invoice with respect to the CW works only, that due consideration was not given as to how clause 42.1 was to work. Nevertheless, the effect of the contract, as executed, is as we have described in paragraph [40].
The first progress claim under the contract was issued on 2 August 2006. It was for an amount of $36,921.50, inclusive of GST. It was described as a progress claim, and was specifically described as “This is not a tax invoice”. The due date for payment was “16/08/2006”.
Between 2 and 7 August 2006, soon after the submission of this progress claim, the Judge found that a discussion took place between Basile and Corolis. Basile gave the following account of that conversation:
Basile “We can produce a progress claim which we want to be paid within 14 days”.
Corolis “No, give me a Tax Invoice and we will pay you 14 days after that. I need a Tax Invoice for the bank”.
Basile“If we give you a Tax Invoice, then you have to pay it, because it can’t be changed”.
Corolis“That is not a problem. We will work it out. Don’t panic about the payments”.
Basile“How do you want me to break down the works”?
Corolis“Just keep it as the three packages; the percentages is done. We will walk around the site and evaluate it as a percentage of the works completed for each of the three packages”.
Basile“Ok, but we can’t do a Tax Invoice and then change it. It is against the law”.
Corolis“Just produce the Tax Invoice and it will be paid 14 days later”.
Despite this evidence, the Judge concluded that the agreement to inspect and agree the percentage of work completed before the issue of a tax invoice took place in October after a dispute had arisen over a tax invoice. The first progress claim had written on it “Just send a Tax Invoice no need for Progress Claims”. After the conversation between Corolis and Basile, the first progress claim was replaced by a tax invoice in the amount of $36,921.50. On the tax invoice, there was a handwritten endorsement “Okay to Pay”, and it was signed and dated “16/8/2006”.
The Judge concluded that the parties orally agreed to vary the general condition in clause 42.1 relating to the manner in which progress payment claims would be submitted and paid. He concluded that the parties agreed to waive the need for written consent of the principal to that variation, required by clause 48, and that the parties, at least for some time afterwards, acted upon that variation and waiver.
The terms of a contract may be varied by a subsequent agreement, whether oral or written.[1] An oral variation to a contract that is not required to be evidenced by writing may be made by a purely oral agreement unless the parties have agreed that all variations to an existing agreement are required to be in writing. The contract contains no such clause. Clause 48 requires Kyren to provide prior written consent to a variation. It does not deal with whether all variations need to be in writing. We agree with the trial Judge that the parties agreed to waive the requirement for written consent of the principal to that variation.
[1] Berry v Berry [1929] 2 KB 316.
The trial Judge’s findings which were not challenged are, first, that at the time the contract was executed, the parties had agreed that the payment of progress claims for the CW package would be within 14 days after the issue of a claim. Secondly, that after the first progress claim had been issued on 2 August 2006, the parties agreed that, rather than issue a progress claim, Wunda would issue a tax invoice which would be paid within 14 days. The tax invoice was to be conclusive. We will refer to this variation as “the first variation”.
In our view, when the Judge refers to the tax invoices as ‘conclusive’, he means that the tax invoices were to be payable in full on their face. This is to be compared with the previous progress claim system used by the parties which the Judge describes as a “contestable assertion.” While the tax invoices were to be conclusive, the Judge did consider the invoices to be subject to the variation claim procedure dealt with in clause 40 of the contract.
The effect of the Judge’s findings is that the contract, as executed, was orally varied between 2 and 7 August 2006 so that there was no requirement to issue a progress claim but, rather, a tax invoice would be issued and paid within 14 days. Thereafter, a number of tax invoices were issued by Wunda and duly paid.
On 13 October 2006, Tax Invoice 1797 – 006CW was issued in the amount of $748,049.50, including GST. Payment was due within 14 days. The amount was disputed, and handwritten amendments were made to it reducing the amount to $515,813.10. A further tax invoice was issued on 30 October 2006 (1797‑007CW). There was a discussion between Corolis and Basile. Basile gave the following evidence:
… I said, “Why did you cut the percentage?”. He said, “That is what I think has been completed”. I cannot now recall what I said, but I know that I was upset. We had just issued Tax Invoice 1797 – 007CW (on 30 October 2006). I do recall stressing to Corolis that there would have to be a walk around. To that time he had avoided walk arounds because he said he was too busy. He had also been delaying in signing cheques because he said that Theo Samaras was in China and had to sign the cheques. I recall saying something to the effect of, “I don’t care, we have to do these inspections at least fortnightly”. In fact, thereafter, we undertook the inspections almost weekly. Sometimes, Lian Cowling would also attend the inspections. I know that Lian took some notes, and it was from these notes that we produced our Tax Invoices. However, I do not know if her notes show the details of these inspections.
The inspections involved walking around the site and examining the work done. I would say something like, “that’s 20% done”, and Corolis would either agree or provide his own estimate of the percentage completed. I accepted his assessment of percentage completed because I knew that he would not agree to a percentage which was more than what we had completed. The Tax Invoices were drawn and issued to reflect the agreement we had reached onsite at these inspections. I fully expected that the full sum of the invoice would be paid. This is why I was so upset when Kyren underpaid Tax Invoice 1797 – 006CW.
From then on, tax invoices were to be issued after the parties had walked around the site and agreed upon the percentages of work completed. The tax invoices would be based on those agreed percentages and were to be paid within 14 days. We shall refer to that agreement as “the second variation”.

The trial Judge concluded:
I have already found that a conversation about 14-day payment terms proceeded 2 June, but am otherwise satisfied that the discussion relating to Tax Invoices occurred not when Basile claimed, but soon after the submission of Wunda’s first Progress Claim, that it related to all three packages, albeit that the time for payment of CW works only had been in the contract shortened to 14 days, and that it was then agreed between the parties that the Tax Invoice would be conclusive. I am otherwise satisfied that the conversation was in terms similar to those described by Basile and that later, in October following a dispute over a Tax Invoice, the parties agreed that prior to the submission of further Tax Invoices, they would walk around the site, agree upon the percentages of work completed and the following Tax Invoices based on those percentages would remain conclusive.
The Judge made the following findings:
In summary then, I find:
·    that between 2 and 7 August Corolis and Basile orally agreed to vary the payment terms of the General Conditions to provide that in lieu of the stipulated process for dealing with Progress Claims, Wunda would provide Kyren with a Tax Invoice based upon the proportion of the contracted works it had completed and Kyren would pay the amount of that invoice;
·    that that variation to contractual terms was not confirmed in writing by the Superintendent but I am satisfied Kyren waived that requirement and the parties, at least for some time afterwards, acted upon that variation and waiver;
·    that at the time those discussion first took place Basile also believed that the 14-day terms related to all packages but that was a consequence of his misapprehension as to the terms of the contract. It is plain, and he later had to acknowledge, that that payment time related to the CW package only;
·    that the terms of that agreement did not include contract variation claims under clause 40 but otherwise necessarily meant that Tax Invoices were conclusive and Kyren could not seek to adjust them;
·    that in about October, Corolis nevertheless sought to challenge the amount of a Tax Invoice that led to a discussion with Basile, following which the parties agreed to adopt the practice of undertaking a joint walk around the site and thereby ensuring agreement as to the value of the percentage claim to be made in the relevant Tax Invoice;
·    that, even so, for his own reasons Corolis found it difficult to make a time to complete all such inspections and Wunda simply continued to present Tax Invoices anyway;
·    that Kyren has later sought to contend that the Tax Invoice system differed in no material respect from the Progress Claims system in the Original contract and that Wunda’s Tax Invoices were not conclusive. For reasons expressed, I reject that contention.
What occurred thereafter was that Corolis failed to attend the inspections. Despite this failure, the Judge found that the parties had agreed and conducted themselves in a manner consistent with the position that, once a tax invoice was submitted, it became conclusive and payable. Nevertheless, Wunda issued tax invoices which were not paid. It is the unpaid invoices which are the subject of dispute between the parties.
Kyren submitted at trial that it was not Wunda’s case that the variation was simply a variation of clause 42.1, and that all the protections and provisions in the contract could remain effective. Counsel for Wunda submitted that the contract was varied so that a tax invoice could be submitted in lieu of a payment claim and that, once submitted, it could not be altered. Counsel contended that after Kyren paid less than the full value of a tax invoice, Corolis and Basile orally agreed that in the future, they would conduct a joint inspection and agree the proportion of work completed. Wunda would issue a tax invoice for the value of the completed work agreed by the parties, which would not be altered. Wunda’s case at trial was that clause 42.1 had no application after the parties had agreed to the amendment. In the words of their opening statement, counsel stated:
Wunda will submit that Clause 42.1 has been scotched and superseded by subsequent oral agreements of the parties’ authorised representatives.
Trial counsel submitted that clauses 42.2 and 42.6, to the extent that the clauses deal with claims for payment or payment certificates, have no work to do, and the final certificate concept, clause 42.8, also has no role to play as a final check between the parties. The submission was that the tax invoices were, in substance and effect, interim final certificates. The position now put by counsel on appeal is not consistent with that put at trial.
Counsel for Kyren on appeal submits that the trial Judge, in effect, concluded that clause 42.1 was no longer operative and a new oral arrangement had taken over. Kyren accepts that the effect of the second variation was that inspection was a condition precedent to the tax invoice being conclusive.
On appeal, Kyren contends that the trial Judge was in error in concluding that the tax invoices are a conclusive indication of the value of work completed. It is their case that the discussions which resulted in the variation of the contract required there to be an assessment of the works undertaken before a tax invoice was to be issued and become payable by Kyren. The disputed tax invoices were issued without the parties’ agreement as to the percentage of completed work.
Kyren challenges the Judge’s finding that a failure to inspect by Corolis created an obligation to pay the amount of the invoice. Mr Digby QC, for Kyren, submits that the failure of Corolis to attend the inspections meant that the default provisions of the contract were enlivened. He contends that, despite the failure of Corolis to inspect and agree with Basile the percentage of the work completed, the Judge’s conclusion that the tax invoice was immutable, is an error.
Counsel submits that the effect of the trial Judge’s finding was that the parties had abandoned the protection afforded to them under the contract. He submits that that could not have been their intention. Counsel submits that the variation as found by the trial Judge could never have had the effect that the tax invoices were to be conclusive as the parties would never have agreed to abandon the protections afforded by clause 42.1 of the contract. In addition, counsel contends that Wunda did not act on the basis that clause 42.1 of the contract had been displaced by other arrangements. Rather, Wunda relied on clause 47 when issuing Notices of Dispute. It was never suggested in those Notices of Dispute that the tax invoices were immutable or conclusive.
Mr Whitington QC contends that Kyren’s submission that the Judge was in error in concluding that the tax invoices were immutable cannot be supported.
The trial Judge’s finding that between 2 and 7 August 2006 Corolis and Basile orally agreed to vary the payment terms of the general conditions was not challenged on appeal. The conclusion that, in lieu of progress claims, Wunda would provide Kyren with a tax invoice based upon the proportion of the works it had completed, which Kyren would then pay was also not challenged. Likewise the finding that in October it was agreed that the parties would adopt the practice of undertaking a joint inspection of the site, thereby ensuring consensus as to the value of the percentage claimed, was not in dispute. Mr Whitington submits that the Judge’s conclusion that the tax invoices were conclusive is correct.
Mr Whitington contends that Kyren’s submission that the parties could not have agreed that the tax invoices were conclusive because the bargain, as found by the trial Judge, resulted in the contract becoming unworkable is misconceived. He submits that Kyren’s contention is, essentially, that the bargain, as found, was imprudent. Insofar as the appellant relies upon Fox v Percy,[2] Mr Whitington submits it has no application in this case. Fox v Percy dealt with the role of an appellate court in considering whether the factual findings of a trial judge can be supported, and the circumstances and basis upon which those findings may be reversed. Gleeson CJ, Gummow and Kirby JJ observed:[3]
However, the mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings.
[Footnotes omitted].
[2] (2003) 214 CLR 118.
[3] Fox v Percy (2003) 214 CLR 118 at 128 [28].
Mr Whitington contends that the terms of the variation were not so inconsistent with the original contract so as to destroy its substance. He submits that commercial parties commonly recognise the need to modify a contractual regime to which a court will give effect. He relies on Berry v Wong[4] and Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd.[5]In Berry v Wong, Young J dismissed an application for a restraint of trade to be enforced against a medical practitioner from practising within a certain radius of the practitioner’s former practice. Young J observed:[6]
…one expects with commercial contracts in this century that once a contractual regime exists parties will be constantly changing some of the vital terms of their agreement as their contractual regime steers its course through the various pot holes of business life.
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd was an appeal arising out of a contractual dispute over the rights to various computer programmes and the purchase of computing equipment and operating systems. McHugh JA, as he then was, made the following comments about commercial arrangements:[7]
Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of [the contracting parties’] relationship in the light of changing circumstances.
[4] [2000] NSWSC 1002.
[5] (1998) 5 BPR 11110.
[6] Berry v Wong [2000] NSWSC 1002 at [33].
[7] Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11110 at 11117.
As to Corolis’ failure to attend at the inspections, Mr Whitington submits that the Judge’s conclusion that Kyren was required to pay the tax invoice, even though no walk around had occurred and no agreement had been struck as to the value of the work completed, is sustainable on two bases.
First, he submits that the failure of Corolis to attend was a failure to certify pursuant to clause 42 of the contract. The tax invoice was to be treated as a progress claim and, therefore, became due and payable within 14 days of it being issued. He contends that, on that interpretation of the agreement, the amount becomes payable by the principal to the contractor. If, however, there ultimately is an amount found to be owed by the contractor to the principal that cannot be set-off under the tax invoice, the principal has a right to cross claim for any amount of overpayment under the contract as varied. Mr Whitington submits that the tax invoice is evidence of the value of work, but it is not conclusive evidence, so it remains open for the principal to assert that the tax invoice, notwithstanding that it has been paid, should not be a binding admission as to value of work to which the tax invoice related.
Mr Whitington agreed that the payment is not a payment on account, but it is simply a mechanism that, if a certificate is given, the principal must pay the contractor to maintain the contractor’s cash flow. Ultimately, there is to be a settlement of accounts. The contract variation does not stop a claim for overpayment.
The difficulty with Mr Whitington’s submission is that the parties agreed to vary the contract. If Kyren was in breach of its obligation to ensure Corolis attended an inspection to jointly assess the percentage of work completed, then that is a breach of the contract as varied. It does not follow that Corolis’ failure to attend is to be interpreted as a failure to certify pursuant to clause 42. The parties had agreed to abandon the payment regime provided by clause 42. We consider that the variation agreed to by the parties resulted in them abandoning the certification process. We reject Mr Whitington’s submission that the tax invoice is simply to be treated as if it were a progress claim. We observe that Wunda did not treat the failure of Kyren to pay as a breach of clause 42. Wunda did not treat the tax invoice as a progress claim under the contract.
The other basis upon which Mr Whitington submits that the trial Judge’s conclusion can be sustained is that the trial Judge has applied the rule in MacKay v Dick.[8] The trial Judge concluded:
the parties had agreed, as I find it, that Tax Invoices would represent a proportion of completed works and had settled upon an inspection process that would assess that proportion. Corolis had chosen not to be present at later inspections, so the fact that Wunda assessed a higher level of uncompleted works than the quantity surveyors might concede, became an outcome that Kyren was obliged, on the agreed Tax Invoice system, to accept and pay;
[8] (1881) 6 App Cas 251.
Mr Whitington submits that MacKay v Dick is authority for the proposition that it is an implied term in every contract that each party to the contract will do all within their reasonable power to give the other party the benefit of the contract. If a party fails to do that which the party has agreed to do, then the Court will hold that party to the contract as if it had done what was required.
In MacKay v Dick, the plaintiff sued to recover the price of a digging machine. The plaintiff delivered the machine which was to be tested. The defendant contended that the machine had not passed the performance tests required by the contract. The defendant was required to provide the facility to test the machine. The machine had not been tested because of the defendant’s failure to cooperate. The House of Lords concluded that the requirements of the contract should be treated as having been fulfilled. The consequence was that the plaintiff was entitled to recover the price of the machine without proving that it would have performed satisfactorily had it been properly tested. The defendant was prevented from relying on the term related to inspection and testing as a defence to the action. Lord Blackburn said:[9]
I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agree to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on the circumstances.
[9] MacKay v Dick (1881) 6 App Cas 251 at 263.
The implication of a duty of cooperation was approved by Mason J in Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd.[10] Mason J approved the statement in MacKay v Dick that each party to an agreement which requires something to be done is required to carry out their part of that agreement. Mason J said:[11]
It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith C.J. said in Butt v. M’Donald:
“It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.”
It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party’s obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself.
[Reference omitted.]
[10] (1979) 144 CLR 596.
[11] (1979) 144 CLR 596 at 607 - 608.
We consider that MacKay v Dick is distinguishable on its facts. In MacKay v Dick, there was an underlying contract for the purchase of a machine. The failure of the purchaser to provide a facility to test the machine was ancillary to the contract for sale. In the circumstances, it was not open to the purchaser to rely upon this failure as a basis for argument that the contract had not been completed.
In our view, here there was an express agreement that tax invoices would only be issued after the parties had inspected the work and had agreed the percentage of the work that had been completed. The failure of Corolis to attend at the inspections did not have the consequence that the tax invoices were then to be taken to be conclusive. It could not be implied that the parties agreed or intended that a failure of Corolis to inspect would result in the tax invoice being final and conclusive of the percentage of work completed.
In Carter on Contract, the learned author makes the following observation:[12]
In some of the older cases there was a tendency to treat prevention as equal to performance. Although this is still the case in some situations, for example, where the conduct in question prevents the fulfilment of a contingency which was to operate solely for the benefit of the party who prevented performance, usually the party whose performance has been prevented will simply have a claim for damages for breach of contract. For example, where an employer prevents an employee from performing an employment contract, the employee will be entitled to recover damages for breach but not wages which the employer agreed to pay for services rendered.
[Footnotes omitted.]
[12] J W Carter, LexisNexis Butterworths, Carter on Contract (at Service 25) [29-070].
In this case, the parties agreed that there would be an inspection process prior to the issuing of a tax invoice. It was never contemplated that if one of the parties did not attend the inspection, then an issued invoice would therefore be conclusive of the work completed. The very reason for the second variation was to ensure agreement as to the proportion of work completed before the tax invoice was issued.
Wunda, having determined they were to undertake the work, was entitled to recover from Kyren the value of that work. Alternatively, Wunda could have given Kyren notice that it regarded Corolis’ failure to attend as a fundamental breach which, if unrectified, would entitle Wunda to rescind the contract and sue for damages. The evidence did not establish that Wunda was entitled to payment if its claim was above the percentage of work completed.
The trial Judge was in error in his conclusion that the tax invoices were conclusive. We would allow the appeal and set aside that part of the assessment of damages totalling $380,634. We conclude that Wunda is entitled to recover for the work that had been completed at the time that the contract was terminated.

As we have concluded, Corolis’ failure to attend the inspections amounted to a breach of the contract as varied by the parties. We consider that Kyren’s conduct indicated an absence of readiness or willingness to perform its contractual obligations. This absence of readiness or willingness also involved a breach of condition, that Corolis attend the inspections.
As to the Judge’s findings in respect of repudiation, we consider that the Judge was correct in concluding that Kyren repudiated the contract. Kyren submits on appeal that the Judge was in error in concluding that the six identified matters, either considered separately or collectively, amounted to repudiation. We reject this contention. Although not each of the matters identified amounted to a breach of contract, collectively, excluding item 3, they amount to a fundamental disregard of the contract and of Kyren’s obligations. In our view, Kyren’s conduct, as identified under the six heads, indicated an absence of readiness or willingness to perform its contractual obligations. This absence had a fundamental effect on the fair carrying out of the bargain as a whole.[19]
[19] J W Carter, LexisNexis Butterworths, Carter on Contract [35-070]; Forslind v Bechely-Crundall [1922] SC (HL) 173 at 190.
We would reject this ground of appeal.
Key Issue 3 - Notice pursuant to clause 46.1
Kyren submits that Wunda failed to comply with clause 46.1 and is therefore not entitled to damages for loss of profit of $30,367 plus interest of $8,100.
Clause 46.1 provides that Wunda must give notice in a prescribed form to Kyren setting out any alleged breach of contract. Clause 46.1 provides:
46.1 Contractor’s Prescribed Notice
The Principal shall not be liable upon any claim by the Contractor in respect of or arising out of a breach of the Contract unless within 28 days after the first day upon which the Contractor could reasonably have been aware of the breach, the Contractor has given to the Superintendent the prescribed notice.
The Principal shall not be liable upon any other claim by the Contractor for any extra cost or expense in respect of or arising out of any direction or approval by the Superintendent unless within 42 days after the first day upon which the Contractor could reasonably have been aware of the entitlement to make the claim, the Contractor has given to the Superintendent the prescribed notice.
The prescribed notice is a notice in writing which includes particulars of all the following –
(a)     the breach, act, omission, direction, approval or circumstances on which the claim is or will be based;
(b)     the provision of the Contract or other basis for the claim or proposed claim and
(c)     the quantum or likely quantum of the claim.
This Clause 46.1 shall not have any application to –
(i)    any claim for payment to the Contractor of an amount or amounts forming part of the Contract Sum or any part thereof;
(ii)     any claim for payment for a variation directed by the Superintendent or to be made pursuant to Clause 12.3;
(iii)    any claim for an extension of time for Practical Completion; or
(iv)    the provisions of Clause 46.2.
The trial Judge found:
I am not persuaded that that provision applies where there has been a fundamental or substantial breach of the contract or, indeed, where one party has repudiated the contract. In any event, if the position is otherwise, I am satisfied that Wunda’s Notice of Dispute, purportedly given under clause 47.1, provided to Kyren all the information that could be insisted upon with respect to a clause 46.1 notice.
Mr Digby submits that the trial Judge was in error in equating Wunda’s Notice of Dispute issued pursuant to clause 47.1 to notice given pursuant to clause 46.1 as it provides notice of contractual claims rather than damages claims. He contends that the terms of the Notice of Dispute cannot be read as raising the issue of an entitlement to damages flowing from the termination of contract by Kyren. Mr Digby contends that the Notices of Dispute that were issued did not contain notice of the damages claim for repudiation and the failure of the owner to ensure that the superintendent behaved appropriately. He relies on Jennings Construction Ltd v Q H & M Birt Pty Ltd.[20]In that case, Smart J considered the operation of a similar notice clause in a standard form sub-contract agreement. Smart J made the following observations:[21]
The purpose of cl 47 is to ensure that notice is given at an early stage so that the contractor can inspect and investigate promptly the events or circumstances and consider his position. He may wish to issue a variation. In cases involving excavations he needs to inspect to satisfy himself as to the conditions and the quality of the material alleged.
[Emphasis added.]
[20] (1986) 8 NSWLR 18.
[21] (1986) 8 NSWLR 18 at 24.
Wunda submits that the termination provisions are not exclusive of the parties’ common law rights. Mr Whitington contends that clause 46.1 is directed at claims made by the contractor relating to a breach of contract while the contract is still on foot. Once the contract has been repudiated, the innocent party to the repudiation has a common law right to damages. Once the contract is terminated, the common law right to claim is activated and it is not necessary to comply with clause 46.1. Mr Whitington submits that the claim for loss of profits could be characterised as a claim for the contract sum, at least in part, and therefore no notice under clause 46.1 was required.
In our view, Kyren’s submission that Wunda failed to comply with clause 46.1 and is therefore not entitled to damages for loss of profits should be rejected. Wunda’s Notice of Dispute dated 31 January 2007 addresses the particulars required by clause 46.1. Specifically, the Notice of Dispute provides:
For the purposes of compliance with paragraph 46.1 of the contract, Wunda sets out;
1.   The breach, act, omission, direction, approval or circumstance on which the claim is or will be based are the items set out above including as set out in the points of dispute listed above numbered 1 – 5.
2.   The provision of the contract or other basis for the claim or proposed claim is as set out in each point as raised above, except, in addition to the above, Wunda does and will contend that there is an express or implied term attached to and part of paragraph 9 of the contract that the principal will not interfere in the contractual dealings and arrangements between a contractor and a subcontractor, at all, or unless it is necessary in the circumstances. Wunda contends it was not necessary in the circumstances of this instance.
3.   The amount is difficult to estimate, but in a effort to satisfy this paragraph Wunda sets out the amount of $800,000.
Wunda’s further Notice of Dispute dated 6 February 2007 also addresses the particulars required by clause 46.1 as follows:
For the purposes of compliance with paragraph 46.1 of the contract, Wunda sets out;
1.   The breach, act, omission, direction, approval or circumstance on which the claim is or will be based are the items set out above including as set out in the points of dispute listed above numbered 1 – 4.
2.   The provision of the contract or other basis for the claim or proposed claim is as set out in each point as raised above.
3.   The amount is difficult to estimate, but in an effort to satisfy this paragraph Wunda sets out the amount of $400,000.
Although the notice issued pursuant to clause 46.1 was contained within the two Notices of Dispute issued pursuant to clause 47, we are satisfied that there was sufficient compliance with the prescribed notice requirements of clause 46.1. While the clause 46.1 notice cross-referenced other paragraphs within the Notice of Dispute, Kyren was made aware of the basis upon which Wunda alleged there had been a breach of contract. In our view, the fact that the Notice of Dispute did not contain the exact basis upon which the later allegation of repudiation was made is not relevant.
Further, we agree with the submissions of Mr Whitington that Wunda would have been entitled to damages under the common law in any event following Kyren’s termination of the contract.
We would dismiss this ground of appeal.
Key Issue 4 - Withdrawal of work from the scope of work
The Judge found that Kyren, having repudiated the contract, acted unlawfully in taking the CW and painting works out of Wunda’s hands. The Judge did not permit Kyren to rely on clause 44.6 to hold Wunda accountable for the extra costs of completion of $838,156. The Judge concluded:
Kyren has otherwise sought to adjust the original contract sum by virtue of certain reductions in the scope of works which it purported to direct after what I have found was the termination of the contract. I am not persuaded it can do that. Having unlawfully repudiated the contract, the defendant cannot seek, as I find it, to rely upon clause 40.1 relating to the omission of part of the works under it.
[Our emphasis.]
The Judge added:
I have found that Kyren cannot have relied upon clause 40.1 and purportedly removed works from the contract after its own repudiation and the termination of the contract. Even so, there remain disputed reductions to the scope of works to be carried out which were said to have been effected during the course of the contract.
[Emphasis added.]
The Judge performed a detailed calculation of Wunda’s loss of profits arising from Kyren’s invalid removal of works in the sum of $219,787. He found $59,153.88 of works were validly taken away from Wunda during the course of the contract. In concluding that Wunda was entitled to loss of profits of $30,367, the Judge applied a profit margin to each of the packages of work based on his previous findings of the profit margins built into each of the works packages.
Mr Digby submits that the Judge erred at law in ignoring valid directions given by the superintendent withdrawing work from the scope of work prior to Wunda accepting Kyren’s repudiation on 19 March 2007. He contends that the superintendent was entitled to remove work from Wunda’s hands prior to this date and the right to a deduction in the contract price of $26,420.67 by reason of these directions had accrued in favour of Kyren. Mr Digby relies on Larratt v Bankers and Traders Insurance Co Ltd[22] that the election to terminate a contract for breach puts an end to the contract from the time of its communication. It is not retrospective to the time of breach. Mr Digby also relies on McDonald v Dennys Lascelles Ltd.[23]
[22] (1941) 41 SR (NSW) 215 at 226.
[23] (1933) 48 CLR 457.
McDonald v Dennys Lascelles Ltd concerned a contract to purchase land and the payment of instalments. Rich, Starke, Dixon and McTiernan JJ held that the instalments of purchase money upon the sale of land could not be retained or recovered by the vendor after the contract has been determined by his election to treat the purchaser's default as a discharge. Dixon J said:[24]
When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected.
[24] (1933) 48 CLR 457 at 476 – 477.
Wunda submits that the superintendent was acting in bad faith, and there was no authority for the superintendent to act in bad faith under the contract. Mr Whitington submits that whether or not the innocent party has yet elected to terminate the contract, the party in breach must not be allowed to act on the one hand as if they are no longer bound by the contract, but on the other hand purport to still exercise rights under it, for example by removing work pursuant to Kyren’s contractual rights under clause 40.1. Mr Whitington refers to the English case of Morris v Baron & Co.[25]
[25] [1918] AC 1.
In the United Kingdom, it has been held, in a limited context, that a party who is in breach of a contract cannot exercise rights under the contract, on the basis that a party cannot claim to exercise rights while repudiating the contract to a material extent.[26] In Morris v Baron & Co Lord Finlay LC said:[27]
A party to a contract which imposes certain obligations and confers certain rights upon him cannot claim to exercise these rights while repudiating his obligations in material particulars.
Morris v Baron & Co concerned an option in a contract that was exercisable by the repudiating party. Lord Finlay LC held that the option could not be exercised by the repudiating party, even though the other party was not acting on that repudiation.
[26] J W Carter, LexisNexis Butterworths, Carter on Contract [35-260]; White and Carter (Councils) Ltd v McGregor [1962] AC 413 at 444.
[27] [1918] AC 1 at 9 (Lord Finlay LC).
Priestley JA, in his dissenting judgment in Nina’s Bar Bistro Pty Ltd (Formerly Mytcoona Pty Ltd) v MBE Corporation (Sydney) Pty Ltd,[28] recognised that the dictum of Lord Finlay LC, although appropriate in some circumstances, does not universally apply. Priestley JA discussed the decision in Peter Turnbull and Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd[29] which held that repudiatory conduct, although unaccepted by the innocent party will relieve him from carrying out obligations on his side which it would in the circumstances be futile to fulfil.
[28] [1984] 3 NSWLR 613 at 632-3 (Priestley JA).
[29] (1954) 90 CLR 235.
Neither Morris v Baron & Co nor the minority judgment of Priestley JA in Nina’s Bar Bistro Pty Ltd can be said to stand for a generally-accepted proposition in Australia that if a party repudiates a contract, it is not able to enjoy its rights under the contract between the time of repudiation and when the other party accepts the repudiatory conduct and terminates the contract.
Accordingly, in our view, Kyren was entitled to remove the work from Wunda following its repudiation and breach of contract. Until Wunda accepted Kyren’s repudiation, the contract remained on foot. Kyren was therefore entitled to conduct itself in accordance with the contract until Wunda did accept its repudiation.
We would allow this ground of appeal. Wunda’s claim for loss of profits, therefore, is to be reduced by the value of the works that were validly withdrawn by Kyren.
Key Issue 5 - Kyren’s entitlement to liquidated damages
Clause 35.6 of the contact provides for the payment of liquidated damages in the instance of delay:
35.6 Liquidated Damages for Delay in Reaching Practical Completion
If the Contractor fails to reach Practical Completion by the Date for Practical Completion, the Contractor shall be indebted to the Principal for liquidated damages at the rate stated in the Annexure for every day after the Date for Practical Completion to and including the Date of Practical Completion or the date that the Contract is terminated under Clause 44, whichever first occurs.
If after the Contractor has paid or the Principal has deducted liquidated damages, the time for Practical Completion is extended, the Principal shall forthwith repay to the Contractor any liquidated damages paid or deducted in respect of the period up to and including the new Date for Practical Completion.
*35.7 Limit on Liquidated Damages
The Contractor’s liability under Clause 35.6 is limited to the amount stated in the Annexure.
The annexure to the contract sets liquidated damages at $10,000 per week.
Mr Digby submits that the Judge erred in failing to award Kyren $20,000 in liquidated damages, calculated at $10,000 per week between 5 March 2007, the date for practical completion as extended, and 19 March 2007, the date Wunda accepted Kyren’s repudiation. He submits that this period of time was always compensable under the contract. The Judge held:
But I am not persuaded that Kyren can rely on such a contention in circumstances where it has failed to revise the construction program in the manner I have discussed, failed to ensure the Superintendent granted Wunda appropriate extensions of time and then unlawfully repudiated the contract. In this respect, the factual circumstances differ from those in the Peninsula case (supra), where the contract had been terminated by reason of the builder’s breach and the court was focussing upon the question of how much the liquidated damages period should be written back to account for extensions of time that ought to have been granted.
My Digby contends that the Judge erred in finding that Wunda was entitled to an extension of time of five and a half weeks. He submits that this finding was made on the basis of evidence given by Wunda’s expert programming witness, Mr Brady, who was not asked to express a view about whether the date for practical completion should be extended.
Wunda relies on the trial Judge’s finding that, had Kyren acted as it should have, there was no evidence that Wunda would inevitably have needed until 20 March 2007 to complete the works. Mr Whitington submits that, as a general rule applicable to each contract, each parties agrees, by implication, to do all such things as are necessary on their part to enable the other party to have the benefit of the contract.
Mr Whitington contends that it is an implied term in building contracts that neither party shall do anything to hinder the other party from performing the contract.[30] He submits that when a contracting party is in breach of the implied term, the defaulting party has no claim based on non-conformance by the other party.
[30] Barque Quilpué Limited v Brown [1904] 2 KB 264.
One party may not rely upon the failure of the other party to perform their contractual obligations when it is the former who has prevented the performance. In Roberts v The Bury Improvement Commissioners,[31] Blackburn J said:
… it is a principle very well established at common law, that no person can take advantage of the non-fulfilment of a condition the performance of which has been hindered by himself ...
[31] (1870) LR 5 CP 310.
We consider Kyren is not entitled to recover or retain damages for delay in completion of the contract where, by Kyren’s own act, timely completion of the work has been prevented.
Given our conclusion that Kyren was not entitled to liquidated damages, it is not necessary for us to determine whether the trial Judge erred in his conclusion that the date for practical completion ought to have been extended by five and a half weeks.
We would dismiss this ground of appeal.
Key Issues 6 and 7 - Application to reopen case
On 27 August 2010, an application was made by Kyren to reopen the case after judgment was delivered but before final judgment had been pronounced. Judgment was reserved on 15 September 2009 after 46 days of hearing. A costs order in favour of the respondent Wunda was made on 3 August 2010.
Kyren submitted that the Judge’s consideration of Wunda’s entitlement to recover GST in proportion to the judgment sum was an issue upon which it should be permitted to be heard. Kyren argued that Wunda could not recover GST on any part of the judgment sum as it was not itself registered for GST purposes.
Wunda concedes that the first respondent was not registered for GST purposes at all material times. Wunda Projects Australia Partnership (“the Partnership”) was so registered. It was a partnership comprising Wunda Projects Australia Pty Ltd, Anna Maria Marveggio as trustee for the WPA trust and WPA Nominees Pty Ltd as trustee for the Wunda Projects Trust.
A further issue arose from Wunda carrying out the project as the agent of a partnership. Kyren sought leave to amend its defence to plead that Wunda was unlicensed to carry out building work and was therefore precluded from recovering any fee under or in relation to a building contract.[32]
[32] Building Work Contractors Act s 6(2).

Mr Whitington argues on appeal that Kyren is estopped by its conduct in the District Court from now pursuing these matters.
It is convenient for us to here briefly summarise the facts underlying Kyren’s application to reopen the case prior to judgment.
On 25 August 2010, Bruno Marveggio filed an affidavit deposing to the Partnership’s GST arrangements. He explained that the Partnership entered into contracts on behalf of Wunda and operated Wunda for and on behalf of the Partnership and, as such, the ABN under which all Wunda’s invoices had been presented attached to the Partnership rather than to Wunda itself. Wunda did, however, issue tax invoices in its own name but, as it always acted on behalf of the Partnership, quoted the Partnership ABN.
Kyren claims to have only become aware of the fact that Wunda was the agent of an undisclosed principal on about 25 August 2010, when the Marveggio affidavit was filed. It is contended that Kyren only discovered the nature of the relationship between Wunda and the Partnership upon Wunda’s filing of a Supplementary List of Documents at around the same time.
The Judge refused the application on all grounds finding that, even if Wunda was not registered for GST and could not rely on the Partnership’s registration to levy it, it nonetheless fell under a statutory obligation to level that impost and remit the proceeds to the Australian Taxation Office (“ATO”) and that the duty conferred upon it an entitlement to recover those moneys on all supplies made to Kyren. The Judge also refused to reopen the case to allow Kyren to join the other Partnership members in the litigation stating that Kyren should be bound by its decision made in or after 2007 not to join the other members. This was after Kyren conducted searches for the purpose of a security for costs argument. The searches revealed that the ABN on Wunda’s tax invoices belonged to the Partnership of which Wunda was a member.
In considering whether to exercise his power to reopen the case, the trial Judge said:
… [the] power to re-open the case must be exercised with considerable caution and against considerations of the need for finality in litigation and how best the interests of justice might be serve.
He referred to the following comments of Bleby J in Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2):[33]
Although no orders have been made, a fundamental principle of litigation requires that there be an end to litigation, and that the power to re-open to enable a re-hearing must be exercised with great caution: Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684; State Rail Authority (NSW) v Codelfa Construction Pty Ltd (1982) 150 CLR 29.
It is apparent that the defendants now wish to resile from forensic decisions made by their advisers during the course of the hearing. In University of Woolongong v Metwally (No.2) (1985) 59 ALJR 481 the Full Court of the High Court said, at 483:
“It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had and (sic) opportunity to do so.”
[33] Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2005] SASC 112 at [10] and [11].
In disallowing the application, the Judge was not persuaded that the circumstances were exceptional.
In his reasons, the Judge refers to the observations of a Master of the District Court who, in an earlier decision, refused to allow an application by Kyren for Wunda to provide security for costs. The Judge referred to the following observations of the Master:
It is clear that as of October 2007 the defendant was on notice that the ABN cited on Wunda’s invoices (and, indeed, on the Contractor Information Sheet which formed part of the contract itself) attached to a partnership of which Wunda was itself a member. That must reasonably have led Kyren to suspect (as it then submitted) that Wunda had contracted and was suing in a representative capacity. I thus find its present claim that it has heretofore had no knowledge of such matters to be somewhat overstated.
The Judge referred to the conduct of both parties and concluded that Wunda ought not be held accountable for Kyren’s default and delay which was attributable to its own lack of interest or diligence in the matter. The Judge said:
… I am not persuaded that Wunda acted in such a way as to deprive Kyren of relevant information. It was entitled to contract and sue in its own name as agent of an undisclosed principal and, given that liberty, I am not persuaded it fell under any obligation to make discovery of documents relevant to its representative capacity.
The Judge stated that the contention that Wunda was not registered for GST was always available to Kyren, but not pursued. Further, the Marveggio affidavit that made these formal disclosures did no more than formally confirm what Kyren had asserted in November 2007 was the likely position. Accordingly, that disclosure could not be said to have caught Kyren by surprise. Until the close of evidence at trial on 22 June 2009, Kyren remained on notice of these matters and was at liberty to conduct further enquiries, apply to join the other parties to the action and take other such action. Further, in the face of the conflict between Wunda’s letterhead and the partnership ABN contained within it, Kyren might properly have cross-examined Wunda’s witnesses at trial about the matter.
Wunda’s tax invoices and GST entitlement
In our view, it is not necessary to examine the intricacies of the GST legislation in order to decide the question of whether Kyren should be permitted to reopen its case. Whilst on a literal interpretation of the GST legislation it may be arguable that the tax invoices issued by Wunda were invalid, in our view it was simply too late in the day to raise this matter. That is all the more so when Kyren was on notice as early as October 2007 as to this discrepancy. The trial did not commence until 6 April 2009.
Kyren chose to take no action after it became aware of the discrepancy. It did not seek to join the other parties. In this matter, Kyren made a deliberate choice as to how it should proceed to trial and we take the view that Kyren is now estopped, by virtue of its conduct, from raising these matters. As the Judge says:
It appears to me that the defendant wishes now to resile from a forensic decision made in or after 2007 not to seek to join the other partnership members in the litigation and to raise consequential matters by way of special defence notwithstanding its belief about the plaintiff’s claim being a representative one nor the information and documentation it then had in its possession or otherwise had access to.
We agree with the Judge’s summation. We agree also with the Judge when he says that the application to reopen offends all case flow management principles.
Licence to carry out building work
Mr Digby submits that the Judge erred in refusing to grant Kyren leave to amend its defence to plead the consequences of the fact that the building work under the contract was performed by an unlicensed partnership. Section 6 of the Building Work Contractors Act states:
6—Obligation of building work contractors to be licensed
(1) A person must not—
(a)carry on business as a building work contractor except as authorised by a licence under this Part; or
(b)advertise or otherwise hold himself or herself out as being entitled to carry on business as a building work contractor unless authorised to carry on business as such a contractor by a licence under this Part.
Maximum penalty: $20 000.
(2) A person required by this Act to be licensed as a building work contractor is not entitled to any fee, other consideration or compensation under or in relation to a contract with another on whose behalf the person performed work as a building work contractor unless—
(a)the person was authorised to perform the work under a licence; or
(b)a court hearing proceedings for recovery of the fee, other consideration or compensation is satisfied that the person’s failure to be so authorised resulted from inadvertence only.
Kyren contends that the Judge was in error in failing to address the submission that Wunda’s claim ought to be dismissed as the principal was not licensed under the Building Work Contractors Act. In other words, the application seeks to argue a matter for the first time which, if successful, could render 46 days of hearing, or some considerable part of it, a waste of time.
The same comments apply to this aspect of the application to reopen the case as to the GST aspect. We consider that once Kyren, in 2007, decided to take no further action regarding the tax invoices, and with full knowledge of the Wunda situation, it is foreclosed from any later opportunity to argue questions as to which entity was licensed under the Building Work Contractors Act.
In 2007, in our view, Kyren should have conducted appropriate searches had it wished to amend its pleadings and put this matter in issue. It had the knowledge that Wunda was acting as agent for an undisclosed principal from 2007. Again, we think the short answer is that Kyren is estopped from raising this matter because of its conduct in the District Court.
The two aspects upon which Kyren seeks to reopen its case are related. It is our view that it is simply too late to do this. The application to reopen followed a 46 day trial, a very detailed judgment and then an argument and subsequent order on costs.
Conclusion
We would allow the appeal in respect of key issues 1 and 4. We would dismiss the appeal on all other grounds.
We would allow the notice of alternative contention. Wunda has a right to elect for payment by quantum meruit in order to recover for the work that had been completed at the time that the contract was terminated.
Prior to the hearing in this Court, detailed schedules were prepared by the solicitors for Kyren showing various scenarios and calculating the amounts owing depending on the findings of this Court. These were based on estimates from a quantity surveyor.
We consider that the parties should now easily be able to come to a final figure. We require the parties to meet and discuss those schedules and to attempt to agree the appropriate figure.
Too much time and money has been spent on this litigation. It is time it was finalised.
We will allow the parties 21 days to finalise a judgment figure based on our findings.