Mazelow Pty Ltd v Council of the Shire of Herberton

[2001] QSC 465

SUPREME COURT OF QUEENSLAND

CITATION:

Mazelow Pty Ltd v Council of the Shire of Herberton [2001] QSC 465

PARTIES:

MAZELOW PTY LTD
(plaintiff/applicant)
v
THE COUNCIL OF THE SHIRE OF HERBERTON
(defendant/respondent)

FILE NO/S:

SC 495 of 2000

DIVISION:

Supreme Court Trial Division

PROCEEDING:

Application for determination of a separate question

ORIGINATING COURT:

Supreme Court at Townsville

DELIVERED ON:

3^rd December 2001

DELIVERED AT:

Townsville

HEARING DATE:

16^th November 2001

JUDGE:

Cullinane J

ORDER:

The question raised can be answered in the following way:

“The terms of the contract do not preclude the plaintiff from accepting any repudiation thereof by the defendant by giving notice of its election to do so.   In electing to terminate the contract for repudiatory conduct the Plaintiff is not obliged to take the steps provided for in clause 47 for termination of the contract by the contractor".

Order the defendant to pay the plaintiff’s costs of the issue to be assessed

CATCHWORDS

CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS IN WRITING GENERALLY – application for determination as a separate issue a question of construction of a contract – where plaintiff agreed to perform certain works on a dam for the defendant council – whether the conditions of contract provide for an exclusive means of determining the contract with the result that the right at law to accept a repudiation by a notice electing to do so is excluded

Amann Aviation Pty Ltd v Commonwealth (1991) 100 ALR 267, cited
Heyman v Darwins Ltd (1942) AC 332, followed

COUNSEL:

A Moon for the applicant
M Amerena for the respondent

SOLICITORS:

Connolly Suthers for the applicant
McDonnells for the respondent

1. In this matter the parties have agreed and the Court has ordered that there should be determined as a separate issue a question of construction of a contract pursuant to which the Plaintiff agreed to perform certain works on a dam on the Old Wild River at Herberton for the Defendant council. Although the issue to be resolved was expressed somewhat differently in the pleadings the issue to be determined is whether the conditions of contract (general conditions of contract AS 2124-1992) provide by clause 44 thereof for an exclusive means of determining the contract with the result that the right at law to accept a repudiation by a notice electing to do so is excluded.

1. Argument centred upon clauses 44 and 47. 

1. These provide so far as is relevant for present purposes respectively as follows: 

“44 DEFAULT OR INSOLVENCY

44.1 Preservation of Other Rights

If a party breaches or repudiates the Contract, nothing in Clause 44 shall prejudice the right of the other party to recover damages or exercise any other right.

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.

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

1. DISPUTE RESOLUTUION

47.1    Notice of Dispute

If a dispute between the Contractor and the Principal arises out of or in connection with the Contract, including a dispute concerning a direction given by the Superintendent, then either party shall deliver by hand or send by certified mail to the other party and to the Superintendent a notice of dispute in writing adequately identifying and providing details of the dispute.

Notwithstanding the existence of a dispute, the Principal and the Contractor shall continue to perform the Contract, and subject to Clause 44, the Contractor shall continue with the work under the Contract and the Principal and the contractor shall continue to comply with Clause 42.1

A claim in tort, under statute or for restitution based on unjust enrichment or for rectification or frustration, may be included in an arbitration.

47.4 Summary or Urgent Relief.

Nothing herein shall prejudice the right of a party to institute proceedings to enforce payment due under Clause 42 or to seek urgent injunctive or declaratory relief in respect of a dispute under Clause 47 or any matter arising under the Contract".

1. It was common ground that the effect of authority was that there was a presumption that common law rights are not excluded and that these can be excluded only by explicit intention to do so.  See Beaumont J in Amann Aviation Pty Ltd v. Commonwealth (1991) 100 ALR 267.

1. For the Plaintiff it was argued that there is nothing in the terms of the contract, in particular clauses 44 and 47 which would justify the conclusion that the right to elect to accept repudiation by notice to that effect was excluded.  Indeed it was submitted that such a right is expressly preserved in clause 44.1.

1. According to the Defendant’s argument, clause 44 provides the right to determine the contract and requires a particular procedure to be followed.  Where this does not occur, the parties’ rights are governed by clause 47 and the terms of that clause are quite inconsistent with any right to bring the contract to an end by electing to accept repudiation.

1. I think that clause 47 begs the question which arises here or at least does not help in its resolution.  This clause is predicated on the contract remaining on foot and provides a mechanism for the resolution of a dispute between the parties where neither party is able, or desires to take, any step to determine the contract.  It is made expressly subject to clause 44.

1. The question to be answered here has to be answered by reference to the contact as a whole but it is in clause 44 in its relationship to the other provisions of the contract rather than in clause 47 that the answer will be found.

1. Although counsel for the Defendant was inclined to suggest that clause 44.1 should not be regarded as referring to acceptance of repudiation I can see no reason why it does not. The clause expressly refers to repudiation and the words “any other right” would include the right to elect to accept the repudiation and treat the contract as being at an end. This being so, such a right is expressly preserved and clause 44.1 stands in the way of any argument that there is an explicit intention to exclude the right.  On this approach, clause 47 would itself recognise such a right in its reference to that clause being “subject to clause 44".

1. Although it is unnecessary to make any further findings, I think that, absent clause 44.1, the same result would follow since I do not think that the contract reveals an explicit intention to exclude the right which the Plaintiff asserts here. I also think that there is substance in the Plaintiff’s argument that its assertion that the Defendant by its conduct repudiated the agreement and that the Plaintiff has as a result elected to determine the contract is not a “dispute” for the purposes of clause 47.

1. The position of a party to a contract when the other party has been guilty of repudiatory conduct has been stated by Viscount Simon in Heyman v Darwins Ltd (1942) AC 332 at 361; “--- the other party may rescind the contract, or (as it is sometimes expressed), ‘accept the repudiation’ by so acting as to make plain that in view of the wrongful action of the party who has repudiated he claims to treat the contact as at an end ---".

1. In my view then the question which is raised can be answered in the following way:

“The terms of the contract do not preclude the Plaintiff from accepting any repudiation thereof by the Defendant by giving notice of its election to do so.   In electing to terminate the contract for repudiatory conduct the Plaintiff is not obliged to take the steps provided for in clause 47 for termination of the contract by the contractor".

1. I order the Defendant to pay the Plaintiff’s costs of the issue to be assessed.