Midson Construction (Qld) Pty Ltd v The Haggarty Group Pty Ltd
[2021] QDC 280
•10 December 2021
DISTRICT COURT OF QUEENSLAND
CITATION:
Midson Construction (Qld) Pty Ltd v The Haggarty Group Pty Ltd [2021] QDC 280
PARTIES:
MIDSON CONSTRUCTION (QLD) PTY LTD
ABN 28 135 951 549
(Plaintiff)
v
THE HAGGARTY GROUP PTY LTD
ABN 62 142 220 184
(Defendant)
FILE NO:
BD889/21
DIVISION:
Civil
PROCEEDING:
Application
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
10 December 2021
DELIVERED AT:
Brisbane
HEARING DATE:
20 August 2021
JUDGE:
Porter QC DCJ
ORDER:
[1] As to the question whether clause 14(a) of the contract between the Plaintiff and the Defendant of 4 August 2020 (the Contract) is void for uncertainty, the answer is that the Contract is not void for uncertainty.
[2] As to the question whether clause 14(a) of the Contract is void as a penalty, the answer is that the Contract is not void as a penalty.
[3] As to the question whether, properly construed, the Plaintiff’s entitlement to recover liquidated damages for delay under the Contract was lost in circumstances where the following factual circumstances are assumed for the purposes of this application only:
(a) The Plaintiff was the cause of the Defendant’s delay; or
(b) The delay was caused by the Plaintiff’s breach of the Contract;
the answer is that the Plaintiff’s entitlement has not been lost in those circumstances.
CATCHWORDS:
CONTRACTS – REMEDIES – LIQUIDATED DAMAGES – PENALTY – where plaintiff claims liquidated damages from defendant under a subcontract – where defendant challenges liability for liquidated damages on three bases – where defendant contends that the liquidated damages clause in the subcontract is uncertain – where defendant contends that the liquidated damages clause is void as a penalty – where defendant contends that plaintiff is not entitled to liquidated damages because its acts prevented defendant from reaching Practical Completion and the so-called prevention principle is not excluded by the terms of the subcontract – whether the liquidated damages clause is void for uncertainty – whether the liquidated damages clause is void as a penalty – whether plaintiff’s entitlement to recover liquidated damages for delay under the subcontract was lost in circumstances where it is assumed that plaintiff was the cause of defendant’s delay or the delay was caused by plaintiff’s breach of the subcontract
LEGISLATION:
Uniform Civil Procedure Rules 1999 (Qld), r. 483, Part 5 of Chapter 13
CASES:
Andrews v ANZ Banking Group Ltd (2012) 247 CLR 205
C B Darvall & Darvall v Moloney (2006) 236 ALR 796
Clydebank Engineering and Shipbuilding Company v Don Jose Ramos Yzquierdo y Castaneda [1905] AC 6
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79
Grocon Constructors (Qld) Pty Ltd v Juniper Developer (No 2) Pty Ltd [2015] QCA 291
Hervey Bay (JV) Pty Ltd v Civil Mining and Construction Pty Ltd [2008] QSC 58
Kane Constructions Pty Ltd v Sopov [2005] VSC 237
Law v Local Board of Redditch [1892] 1 QB 127
Paciocco v ANZ Banking Group Ltd (2016) 258 CLR 525
Peninsula Balmain Pty Limited v Abigroup Contractors Pty Limited [2002] NSWCA 211
Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd (2017) 95 NSWLR 82
Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656
Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No 2) (2012) 287 ALR 360
620 Collins Street Pty Ltd v Abigroup Contractors Pty Ltd (No 2) [2006] VSC 491
SECONDARY
SOURCES:
J D Heydon, Heydon on Contract (Lawbook Co., 2019)
COUNSEL:
C. Matthews for the Plaintiff
J. Hastie for the Defendant
SOLICITORS:
Axia Litigation Lawyers for the Plaintiff
Shand Taylor Lawyers for the Defendant
Contents
Summary
Admitted and Uncontested Facts
The pleaded cases
The separate questions
Assumed and admitted facts: uncertainty question
Assumed and admitted facts: penalty question
Assumed and admitted fact: prevention question
Clause 14(a) is not uncertain
Proper construction of the LD Item
First limb of the LD Item
Second limb of the LD item
The LD Item is not a penalty
Haggarty’s contentions
Midson’s contentions
Principles
Analysis
The prevention principle
The issue
General principles
“Discretion” clauses in previous cases
The parties’ contentions
Analysis of the competing contentions
An alternative argument
Orders
Summary
The plaintiff (Midson) claims liquidated damages from the defendant (Haggarty) under a subcontract between the parties. Haggarty pleads, relevantly, that it is not liable for liquidated damages because:
(a)The liquidated damages clause in the subcontract is uncertain; or alternatively
(b)The liquidated damages clause is void as a penalty; or alternatively
(c)Midson is not entitled to liquidated damages because Midson’s acts prevented Haggarty from reaching Practical Completion, and the so-called “prevention principle” is not excluded by the terms of the subcontract.
The parties proposed, and I ordered, that separate questions dealing with these three issues should be determined as preliminary points. For the reasons which follow, I have determined that the liquidated damages clause is neither uncertain nor a penalty and that, on the proper construction of the contract, the prevention principle does not prevent Midson from recovering liquidated damages.
Admitted and Uncontested Facts
Midson is a construction company holding a QBCC licence in the Builder – Open class. Haggarty is the holder of a QBCC licence for roof and wall cladding.
On 21 January 2020, Midson entered into a written contract with a Catholic Church entity (the Principal) for the construction of stage 1 of a secondary college at Yarrabilba (the Head Contract). The Head Contract was in the form of an amended AS2124-1992 building contract and relevantly provided:
(a)By clause 2:
‘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;
‘day’ means calendar day;
‘Drawings’ means the drawings referred to in the Contract and any modification of such drawings notified to the Contractor by the Superintendent and includes such other drawings as may from time to time be supplied to the Contractor by the Superintendent, or the use of which has been permitted by the Superintendent, for the purposes of the Contract;
‘month’ means calendar month;
‘person’ includes a firm or body corporate or unincorporate or an individual;
‘Practical Completion’ is that stage in the execution of the work under the Contract when ---
(a) the Works are complete except for minor omissions and minor defects ---
(i) which do not prevent the Works from being reasonably capable of being used for their intended purpose; and
(ii) which the Superintendent determines the Contractor has reasonable grounds for not promptly rectifying; and
(iii) rectification of which will not prejudice the convenient use of the Works; and
(b) those tests which are required by the Contract to be carried out and passed before the Works reach Practical Completion have been carried out and passed; and
(c) documents and other information required under the Contract which, in the opinion of the Superintendent, are essential for the use, operation and maintenance of the Works have been supplied;
(b)By clause 35.2:
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.
(c)By clause 35.5, the Head Contract contained a contractual regime providing for the extensions of time on the application of Midson for specified delays;
(d)By clause 35.6:
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.
(e)By Annexure Part A:
…
# The Date for Practical Completion: Tender to nominate in their tender submission
(Clause 35.2)
# Liquidated Damages per day: $1,000.00/day
(Clause 35.6)
On 7 August 2020, Midson and Haggarty entered into a subcontract in writing by which, on the terms contained in the subcontract, Haggarty undertook to carry out the roofing and cladding works which formed part of the Head Contract works (the Subcontract).
The Subcontract relevantly provided:
(a)By Attachment 1: Subcontract Particulars:
Project
(clause 21)
Project Description: San Damiano Yarrabilba Secondary Catholic College Stage 1 (Q066)
Site
(clause 21)
980-1040 Yarrabilba drive Yarrabilba Qld
Commencement Date
(sub-clause 1.3)
Start date: 05 AUG 20
If nothing stated, the date notified by Midson Construction (QLD) Pty Ltd
Date for Completion
(sub-clauses 1.1, 11 and 21)
Finish date: 01 NOV 20
If nothing stated, the date notified by Midson Construction (QLD) Pty Ltd
…
Liquidated damages
(clause 14a)
As per Head Contract @ $1000 per day
+ at Cost of Midson Construction (QLD) Pty Ltd @ $1000 per day.
(b)By Attachment 2: Special Conditions of Contract:
6. For Practical Completion to be achieved, all warranties, certificates including Form
15& 16,Maintenance schedules, As Builts(if Required), Deed of Release signed and returned unamended to Midson and all works (Including any Defects or incomplete works) and documents required and requested are issued & completed to the satisfaction of the Client, Superintendent and the Principal Contractor.
(c)By Attachment 3: Subcontract General Conditions:
(i)By clause 1.1:
1.1 Subcontractor’s primary obligation
The Subcontractor must complete the work under the Subcontract by the Date for Completion, in accordance with the Subcontract and any applicable laws and standards.
(ii)By clause 11:
11. COMPLETION
(a) The Subcontractor must give Midson written notice five (5) Business Days before it anticipates achieving Completion.
(b) When the Subcontractor is of the opinion that Completion has been achieved, the Subcontractor must make a written request to Midson to issue a certificate of Completion.
(c) Upon receipt of a request under sub-clause 11(b) Midson will give to the Subcontractor:
(i)a notice certifying Completion has been achieved and the Date of Completion; or
(ii)a notice setting out reasons for rejecting the Subcontractor’s request for a certificate of Completion (and the provisions of sub-clause 11(b) will reapply).
(iii)By clause 13, relevantly:
13. DELAYS AND EOTS
13.1 Notifying Delays
(a) Within two (2) Business Days of becoming aware of anything which will delay any party of the work under the Subcontract, the Subcontractor must notify Midson in writing of the nature of the delay. A notice under this sub-clause 13.1(a) is a condition precedent to the Subcontractor’s entitlement to an extension of time.
(b) Within two (2) Business Days of the cause of the delay commencing (and weekly thereafter if the delay exceeds five (5) Business Days), the Subcontractor must provide Midson with details of the likely extent of the delay and its impact on the Date for Completion. A notice (or notices) under this sub-clause 13.1(b) must be in writing and is a condition precedent to the Subcontractor’s entitlement to an extension of time.
13.2 Entitlement to and Claims for an Extension of Time
The Subcontractor may be entitled to an extension of time for Completion if:
(a) The Subcontractor is or will be delayed in reaching Completion by the Date for Completion by any of the following causes of delay:
(i)an act or omission of Midson (including an act of prevention), Separate Contractors, the Principal, the Principal’s employees, agents or contractors, or the Superintendent;
(ii)a Variation;
(iii)a delay in granting Site access in accordance with sub-clause 7.1 [Non-exclusive possession];
(iv)a qualifying cause of delay stated in the Subcontract Particulars; or
(v)a cause of delay giving the Subcontractor an entitlement to an extension of time under another clause of the Subcontract,
and;
(b) The Subcontractor:
(i)has provided the notices required under sub-clause 13.1 [Notifying Delays]; and
(ii)used all reasonable endeavours to mitigate the effects of the delay (inclusive of re-sequencing the work under the Subcontract),
(c) If the Subcontractor considers itself entitled to an extension of time for Completion it must within five (5) Business Days of the delay ceasing:
(i)give to Midson a written claim for an extension of time together with a statement of the facts upon which the claim is based; and
(ii)supply to Midson an updated Subcontractor’s Program demonstrating the impact of the delay on the planned critical path network.
(d) If the Subcontractor is entitled to an extension of time Midson will determine a reasonable extension of time following receipt of the Subcontractor’s claim under sub-clause 13.2(c)(i) and the updated Subcontractor’s Program under sub-clause 13.2(c)(ii).
13.3 Delay Costs
If the Subcontractor has been granted an extension of time for a delay caused by a breach of the Subcontract by Midson, Midson will pay the direct costs reasonably and necessarily incurred by the Subcontractor up to the maximum amount stated in the Subcontract Particulars. The Subcontractor agrees this is the only compensation it may recover from Midson for any delay or disruption, including any delay or disruption arising from a breach of contract by Midson.
13.4 Unilateral right to extend
Notwithstanding that the Subcontractor is not entitled to, or has not claimed, an extension of time, Midson may at any time and from time to time, award an extension of time for any reason. Midson is not required to exercise its discretion under this sub-clause for the benefit of the Subcontractor.
(iv)By clause 14:
14. LIQUIDATED DAMAGES
(a) If the Subcontractor fails to achieve Completion by the Date for Completion, the Subcontractor must pay to Midson the liquidated damages stated in the Subcontract Particulars for every day after the Date for Completion until the Date of Completion or termination (whichever occurs first).
(b) The parties agree the amount for liquidated damages stated in the Subcontract Particulars is an agreed genuine pre-estimate of Midson’s loss and damages in the event Completion occurs after the Date for Completion.
(c) If the Head Contract Works do not reach Practical Completion by the date for Practical Completion under the Head Contract due to:
(i)a failure of the Subcontractor to reach Completion by the Date for Completion; or
(ii)a breach of any other obligation under the Subcontract by the Subcontractor,
the Subcontractor shall indemnify Midson against any liquidated damages under the Head Contract or any other damages that Midson becomes liable to pay under the Head Contract.
(v)By clause 21, headed Definitions:
21.1 Definitions:
…
Completion means that stage in the execution of the work under the Subcontract when in Midson’s opinion, the Works are complete except for minor omissions and minor defects, and all requirements for completion set out in the Trade Package have been met (inclusive of delivery, to Midson’s satisfaction, of all as-built documentation and /or plans (if required)).
…
Date for Completion means the date (or period of time) stated in the Subcontract Particulars for Completion (if period of time the last day of that period).
Date of Completion means the date certified by Midson in a certificate of Completion pursuant to clause 11 [Completion] to be the date on which Completion was reached.
…
Head Contract means the contract between Midson and the Principal as amended at the date of execution of the Subcontract.
Head Contract Works means the whole of the work to be executed and completed in accordance with the Head Contract (including variations).
…
Practical Completion means practical completion of the Head Contract Works (as certified by the Principal or the Superintendent as the case may be).
…
Trade Package means the document entitled ‘Trade Package’ referred to in the Subcontract Agreement.
The work under the Head Contract reached Practical Completion on 25 January 2021. The Date for Practical Completion under the Head Contract was to be nominated in the tender submission. It was not in evidence. However, (as will be seen) it is implicit in Midson’s pleadings that no Liquidated Damages were applied under the Head Contract. There is no evidence to the contrary.
The Date for Completion of the Subcontract was 1 November 2020. Haggarty did not reach Completion by that date. While not specifically admitted by Midson, it appears to be common ground that the site work component of the work required for Completion by Haggarty was completed by 18 December 2020. Further, while not specifically admitted by Haggarty, it appears to be common ground that Haggarty did not provide the last of the documentation contended by Midson to be a requirement for Completion until 5 August 2021, when Haggarty provided a warranty from Bluescope Steel.
The pleaded cases
In the context of the above admitted and uncontentious facts, Midson pleads by its statement of claim, relevantly, that:
(a)The Subcontract provides that liquidated damages comprise $1,000 plus an additional $1,000 if liquidated damages are applied under the Head Contract;
(b)Haggarty did not reach Completion under the Subcontract on the Date for Completion;
(c)As at the date of the statement of claim, liquidated damages of $162,000 had accrued and would continue to accrue at the rate of $1,000 per day until Completion is achieved;
(d)It is implicit in the particulars that only $1,000 has been sought for the period of the delay, consistent with the conclusion that no liquidated damages were applied under the Head Contract.
By its defence, Haggarty relevantly contends as follows.
Haggarty denies that it had not reached Completion (or that Midson cannot assert it did not) because it alleges:
(a)It reached Completion by 18 December 2020 because all the works under the Contract had been completed.
(b)Midson by certain conduct induced Haggarty to adopt the assumption that Midson accepted Haggarty had reached Completion on 18 December (or would not require strict compliance with the whole of the obligations which comprised reaching Completion), and that in reliance on that assumption, Haggarty did not promptly obtain the documentation required to reach Completion. Midson is said thereby to be estopped from asserting that Completion was not reached by 18 December.
(c)By conduct amounting to giving notice that the Defects Liability Period had commenced under the Subcontract, Midson had elected to rely on rights under those provisions and thereby lost its rights arising out of a failure to reach Completion.
(d)It had provided all the documents required for Completion under the Subcontract by 1 June 2021 and thereby reached Completion by that date at the latest.
Haggarty further denies that Midson is entitled to liquidated damages under the Subcontract for three reasons: because the liquidated damages item in the Subcontract is uncertain, because it is void as a penalty and because Midson lost the right to liquidated damages because of its acts of prevention.
These are the points raised by the separate questions to be determined in this application. However, to ensure precision in the scope of the issues determined by this judgment, it is convenient to set out how these three points are articulated in the defence.
As to uncertainty, Haggarty pleads:
9. As to paragraph 9 of the SOC, the Defendant:
…
(b) says that the Plaintiff has no entitlement to recover liquidated damages under the Contract because:
(i) the Plaintiff’s right to obtain liquidated damages is contained in clause 14(a) of the Contract;
(ii) clause 14(a) of the Contract refers to the rate of liquidated damages specified in the Subcontract Particulars;
(iii) the applicable item in the Subcontract Particulars (LD Item) states that:
“As per Head Contract @ $1000 per day + at Cost of Midson Construction (QLD) Pty Ltd @ $1000 per day”;
(iv)the LD Item:
(A) is incapable of being given any clear meaning or effect; and
(B) further or alternatively, is capable or susceptible of bearing more than one meaning;
(v)in the premises of the matters pleaded in sub-paragraph (i) to (iv), clause 14(a) of the Contract and the LD Item are void for uncertainty…
As to penalty, Haggarty pleads:
9. As to paragraph 9 of the SOC, the Defendant:
…
(c) says, alternatively to sub-paragraph (b), that the Plaintiff has no entitlement to recover liquidated damages under the Contract because:
(i) the Plaintiff was engaged, pursuant to a contract with the Corporation of the Trustees of the Roman Catholic Archdiocese of Brisbane (ABN 499 910 068 57) (Head Contract), to perform work for the construction of the San Damiano Yarrabilba Secondary Catholic College (Overall Project);
(ii) the works under the Contract were:
(A) required to be performed or carried out by the Plaintiff under the Head Contract;
(B) part of the Overall Project;
(iii)the Plaintiff’s right to liquidated damages under clause 14(a) and the LD Item of the Contract arose, on a proper construction of those provisions:
(A) irrespective of whether completion had been achieved under the Head Contract;
(B) irrespective of whether the Plaintiff was exposed to pay delay costs, whether in the nature of liquidated damages or otherwise, under the Head Contract; and
(C) by reason of sub-paragraphs (A) and (B), irrespective of whether the Plaintiff was suffering any loss or, alternatively, exposed to the risk of suffering any loss;
(iv)in the premises of the matters pleaded in sub-paragraphs (i) to (iii) herein, clause 14(a) and the LD Item constitute a penalty and, thereby, are unenforceable…
As to prevention, Haggarty pleads, relevantly, that:
(a)Midson caused Haggarty to be delayed by 13 days because Midson failed to provide access to the site to commence work on the date for commencement under the Subcontract;
(b)Midson cause Haggarty to be delayed by failing to provide access to Building C until 48 days after Haggarty ought to have been given access to that part of the site under the Subcontract;
(c)Haggarty may be entitled to an extension of time under clause 13.2(a) of the Subcontract where delay is caused by an act or omission by Midson or by a failure to give access to the site in accordance with the Subcontract;
(d)Haggarty was entitled to an extension of time under clause 13.2(a) for the each of the delays pleaded;
(e)Haggarty pleaded clause 13.4 above and alleged that Midson was required to exercise its power under that clause in good faith, reasonably and fairly, to grant extensions for the two delays alleged.
Based on these matters, Haggarty contends Midson was in breach of the Subcontract in not exercising its discretion to extend time unilaterally under clause 13.4. The question whether, on the proper construction of the Subcontract, the power conferred by clause 13.4 was required to be exercised in good faith, was initially contemplated as a question to be determined on this application but was not pressed.
Relevant to this application, however, Haggarty also contends that by reason of Midson’s acts preventing Haggarty from reaching Completion, the Date for Completion was set at large, or alternatively, extended until at least 18 December 2020, and Midson thereby lost its right to liquidated damages.
Midson replied.
As to the matters going to whether Haggarty in fact failed to reach Completion by the due date, Midson pleaded as follows:
(a)It denies that Haggarty reached Completion under the Subcontract on 18 December, because on the proper construction of the Subcontract, Completion required not only the completion of physical works, but also required the issue of all warranties and similar documents, and Haggarty did not provide all such documents until 5 August 2021;
(b)It denies any estoppel arises from its conduct on various grounds unnecessary to particularise here;
(c)It denies that it made an election in the manner alleged by Haggarty;
(d)It repeats its allegation that provision of necessary documents for Completion occurred on 5 August 2021.
As to Haggarty’s further propositions as to the entitlement to liquidated damages, Midson responds as follows.
As to uncertainty, it alleges:
6.The Plaintiff denies the allegation of law pleaded in subparagraph 9(b) of the Defence and believes the allegation to be untrue because:
(a) of the matters pleaded in paragraphs 3(d), 7 and 8 of the amended statement of claim filed dated 25 May 2021 [the statement of claim];
(b) on a proper construction of the Contract, liquidated damages were $1,000 per day, plus an additional $1,000 per day if liquidated damages were applied under the Head Contract;
(c) the Plaintiff’s entitlement to liquidated damages and the Subcontract Particulars were capable of being given clear meaning or effect in accordance with those terms;
(d) in the alternative:
(i) by clause 2.1 of the Contract, the Defendant was required to notify the Plaintiff within two business days of it become [sic] aware of any inconsistency or ambiguity in the Subcontract documents;
(ii) the Defendant did not give notice to the Plaintiff of any inconsistency or ambiguity of the kind alleged in subparagraph 9(d) despite the Defendant being on notice of liquidated damages being levied from at the latest 3 November 2020;
(e) in the premises, clause 14(a) of the Contract and the Subcontract Particulars are not void for uncertainty.
As to the allegation that the liquidated damages clause was void for uncertainty, it alleges:
7. As to the allegations pleaded in subparagraph (c) of the Defence, the Plaintiff:
(a) admits the allegations pleaded in subparagraph (i);
(b) denies the allegations pleaded in subparagraph (ii) and believes the allegations to be untrue because:
(i) the physical works under the Contract were required to be performed or carried out by the Plaintiff under the Head Contract and part of the Overall Contract;
(ii) the Works under the Contract were identified by reference to the express terms of the Contract;
Particulars
(1) Clauses 1.1, 1.9, 1.10, 2.3, 15, 20.10, 21.1, Attachment 4: Trade Package.
(c) denies the allegations pleaded in subparagraph (iii) and believes the allegations to be untrue because on a proper construction of the Contract:
(i) the Plaintiff’s right to liquidated damages under clause 14(a) of the Contract and the Subcontract Particulars arose upon the Defendant failing to achieve Completion by the Date for Completion under the Contract in accordance with its express terms;
(ii) liquidated damages would not apply in part, to the extent of $1,000 per day, if liquidated damages were not levied against the Plaintiff under the Head Contract and the Defendant had failed to reach Completion by 1 November 2020;
(iii) the $1,000 per day was a genuine pre-estimate of the loss the Plaintiff would suffer if the Defendant failed to achieve Completion by the Date for Completion under the Contract in circumstances where the Defendant’s estimated overhead costs were in the order of between $1,450 and $2,000 per day.
Particulars
(1) Schedule A to the reply.
(iv)at the time of entry into the Contract:
(1) the parties agreed that the liquidated damages in the Subcontract Particulars represented a genuine pre-estimate of the loss the Plaintiff may suffer should the Defendant not achieve Completion under the Contract;
(2) the Plaintiff was at risk of suffering loss in the payment of its overheads should the Defendant fail to achieve Completion by the Date for Completion;
(3) the Plaintiff was at risk of suffering loss in the payment of liquidated damages under the Head Contract, should the Principal or Superintendent (as the case may be) levy the same against the Principal for the Plaintiff’s Failure to achieve Practical Completion on the Date for Practical Completion under the Head Contract;
(v)the achieving of Practical Completion or some other matter in the Head Contract were irrelevant to the Plaintiff’s right to liquidated damages under clause 14(a) of the Contract and the Subcontract Particulars;
(vi)as a matter of law, clause 14(a) and the Subcontract Particulars did not constitute a penalty.
Schedule A particularises estimated overhead costs largely by reference to the costs of having a Site Manager, Site Foreman and Project Manager on site.
Midson denies that time was set at large by acts of prevention. It does so on the bases that:
(a)The program for the Subcontract works provided for 60 days for the completion of those works, giving Haggarty 29 days contingency;
(b)Midson gave sufficient access to the Site in accordance with the Subcontract for Haggarty to carry out works from 7 August 2020 and Haggarty could have commenced mobilisation works before then. Accordingly, any delay in providing access to the Site did not cause any delay to Haggarty in performing the works and any delay in commencing was caused by Haggarty’s own acts;
(c)Midson gave sufficient access to Building C to Haggarty in time for Haggarty to complete the Building C works, or alternatively, Haggarty could have dealt with any such delay by reprogramming its works. Accordingly, any delay in providing access to Building C did not cause any delay to Haggarty in performing the works and any delay in the Building C works was caused by Haggarty’s own acts.
Midson then turns to Haggarty’s allegation that it was “entitled to an extension of time under clause 13.2(a)” for the alleged delays. It denies that allegation by pleading the elements of an entitlement to an extension of time under clauses 13.1 and 13.2, and alleging that Haggarty did not take any of the steps required under those clauses to establish an entitlement to an extension of time. Although these allegations are technically subject to a deemed non-admission, it does not appear to be in dispute that Haggarty did not do so. Not only does Haggarty not plead any such entitlement, it relies on clause 13.4 to establish its defence.
Midson then responds to Haggarty’s reliance on clause 13.4. Midson denies any implied term that Midson’s discretion under clause 13.4 was required to be exercised in good faith, reasonably or fairly, for a number of reasons, but most relevantly to this application because:[1]
(d) the power conferred by clause 13.4:
(i) was to be exercised in the Plaintiff’s sole direction [sic]; and
(ii) was not required to be exercised for the benefit of [Haggarty]
…
[1] Paragraph 24(d) of the Reply filed 17 August 2021.
The balance of the pleadings is not relevant to this application.
The separate questions
On 23 and 29 July 2021, I made the orders by consent for the determination of the following questions pursuant to Rule 483(1) Uniform Civil Procedure Rules 1999 (Qld) (UCPR) (substituting terminology of this judgment):
(a)Whether clause 14(a) of the Subcontract is void for uncertainty (the uncertainty question);
(b)Whether clause 14(a) of the Subcontract is void as a penalty (the penalty question);
(c)Whether, properly construed, Midson’s entitlement to recover liquidated damages for delay under the Subcontract was lost in circumstances where the following factual circumstances are assumed for the purposes of this hearing:
(i)Midson was the cause of Haggarty’s delay; or
(ii)The delay was caused by Midson’s breach of the Subcontract (the prevention question).
Part 5 of Chapter 13 deals with Separate Questions. It provides:
Part 5 Separate decision on questions
482 Definition for pt 5
In this part—
question includes a question or issue in a proceeding, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise.
483 Order for decision and statement of case for opinion
(1)The court may make an order for the decision by the court of a question separately from another question, whether before, at, or after the trial or continuation of the trial of the proceeding.
(2)...
484 Orders, directions on decision
If a question is decided under this part, the court may, subject to rule 475, make the order, grant the relief and give the directions that the nature of the case requires.
485 Disposal of proceedings
The court may, in relation to a decision of a question under this part, as the nature of the case requires—
(a)dismiss the proceeding or the whole or part of a claim for relief in the proceeding; or
(b)give judgment, including a declaratory judgment; or
(c)make another order.
486 Form and content of separate question
A separate question or questions must—
(a)set out the question or questions to be decided; and
(b)be divided into paragraphs numbered consecutively.
In C B Darvall & Darvall v Moloney (2006) 236 ALR 796, Wilson J observed:
[42]The Court has a wide discretion whether to order the separate determination of questions, and the contemporary approach is to do so where questions can conveniently be so decided, even though this may not necessarily resolve the whole dispute. In Reading Australia Pty Ltd v Australian Mutual Provident Society Branson J reviewed the principles relevant to the application of a cognate provision in the Federal Court Rules. Her Honour noted that –
“(d) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined.”
[43]Here the parties presented the Court with a list of separate questions in relation to the estoppel and indemnity questions. In relation to the former they said –
“The following are the facts agreed upon by the parties”
and then set out in separate paragraphs more than 4 pages of facts upon which the Court was asked to determine certain questions. By agreement, those facts were supplemented at the hearing by a number of affidavits and a further agreed fact. In relation to the indemnity questions they said –
“The Court is asked to assume the following facts and contentions”
and then set out in separate paragraphs more than a page of facts and contentions, before saying –
“In light of the assumed facts and contentions, the following questions are stated for determination by the Court.”
[44]At the hearing it became apparent that those representing Darvalls saw a significant difference between “facts agreed upon between the parties” and “assumed facts and contentions” – a difference not recognised by those representing the liquidators. Senior counsel for Darvalls was at pains to dispel any suggestion that his clients had sought some forensic advantage. He submitted that there was utility in proceeding on the basis that if the Court considered the assumed facts to be sufficient to arrive at conclusions on the indemnity issues, that would foreclose the issue on those questions, but if it considered them insufficient, that would not foreclose the issue. The essence of his submission seemed to be that if the Court took the view that because of the assumed facts, no matter what other facts might be proved, his clients could not succeed, then a long factual inquiry would be obviated.
[45]It is not the Court’s function to determine questions on a hypothetical basis. The questions in relation to legal expenses incurred from 17 December 1999 are of mixed fact and law. In Bass v Permanent Trustee Co Ltd the High Court said –
“Special problems can arise where the preliminary question is one of mixed fact and law. As Brooking J pointed out in Jacobson v Ross, it is necessary in that situation that there be precision both in formulating the question and in specifying the facts upon which it is to be decided. His Honour added:
‘Care must be taken to ensure that, in one way or another, all the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable ... as facts assumed to be correct for the purposes of the preliminary determination, or as facts which both sides accept as correct, or as facts which are to be judicially determined. Failure to do this, and in particular failure to perceive that the facts alleged in a pleading are some only of the facts relevant to the determination of the preliminary question, may make the order for preliminary determination unfruitful.’
Quite apart from rendering the ‘order for preliminary determination unfruitful’, the failure to identify the relevant facts or the means by which they are to be ascertained may result in procedures which do not conform to the judicial process. That is a matter to which it will be necessary to return.”
(footnotes omitted)
The above passage recognises that a question can include a matter of law or mixed law and fact, and that a question can properly be resolved on the basis of assumed, as well as admitted, facts. However, it also sounds the important warning that there be precision in the identification of the assumed, admitted or proved facts upon which a matter of law is to be determined. That is a salutary warning. For the determination of a preliminary question of law to be efficacious, the factual basis upon which it is to be determined (admitted or assumed) must be clear. Otherwise, the determination has the potential to provoke further disputation about what the judgment decides.
Bearing those matters in mind, I now turn to expressly identifying the factual basis for the resolution of the three questions before the Court on this application.
Assumed and admitted facts: uncertainty question
As to the uncertainty question, the issues are joined by paragraph 9(b) of the defence and paragraph 6 of the reply. Those paragraphs, and the matters referred to in the reply which are incorporated from the statement of claim, are matters of construction only, rather than factual matters. The competing arguments otherwise turn on the construction of the Subcontract and the Head Contract, which were tendered.
There is only one point to clarify in this respect. Paragraph 6(d)(ii) of the Reply (see paragraph [22] above) alleged that notice of any ambiguity was given by Haggarty under clause 2.1 of the Subcontract. That is the subject of a deemed non-admission.[2] It was not dealt with in the evidence. It was not clear what the parties wished the Court to find or assume in this respect. However, the point is moot because, even if Midson’s allegation was correct, it would make no difference to my conclusion on the uncertainty question: if a Subcontract is demonstrably uncertain, I do not see how the failure of Haggarty to assert that can change an uncertain clause into a certain one. It might be that a claim in damages might arise, but none is pleaded, and the issue is otherwise irrelevant to the construction process.
[2] Rule 166(5) UCPR.
Assumed and admitted facts: penalty question
As to the penalty question, the issues are joined in paragraphs 9(c) of the defence and 7 of the reply set out above. Paragraph 9(c) refers only to matters of construction of the two contracts. Paragraph 7(c)(iii) of the reply alleges a fact, being Midson’s estimated overhead costs. It is not alleged that this was the figure at the time of entry into the Subcontract, though that is implied.
An affidavit of Mr Matthew Glossop, General Manager of Midson, was tendered without objection at the trial of the separate questions. He swore that at the time of entry into the Subcontract, average costs associated with the provision of staff and amenities on the project were $1,477.51 on a cost basis, and $1,918.80 on a charge out basis. No objection was taken to this evidence, nor was it challenged. I find those matters proved (though their importance remains to be seen).
Assumed and admitted fact: prevention question
The situation requires more scrutiny for the prevention question. As summarised in paragraphs [16] to [18] and [25] to [27] above, there are extensive contested allegations in those parts of the defence and reply which are relevant to Haggarty’s delay claims. The scope of that contest is narrowed by the assumed fact identified in the prevention question: that Midson was the cause of Haggarty failing to reach Completion by the Date for Completion either directly or because of some breach of contract by Midson.
There is, however, other fundamental assumptions implicit in the prevention question:
(a)That Haggarty did not comply with the EOT claim process in clauses 13.1 and 13.2 in respect of any Midson-caused delay; and
(b)The only basis upon which Haggarty could avoid liability for liquidated damages resulting from that delay is if Haggarty can rely on the prevention principle as setting time at large, despite the provision for extension of time in those clauses.
Those propositions were adopted as the common basis for the argument of the prevention question. Further, as I observed in paragraph [26], it is implicit in the Haggarty defence that it did not seek an EOT under the mechanism in clauses 13.1 and 13.2. Consistent with the position taken by the parties, I will decide the prevention question on the basis of those two additional assumptions.
Once those two assumptions are identified, the disputed allegations in paragraphs 9A to 9R in the defence and the reply (which are all expressly relied upon by Haggarty as sustaining its prevention contention: see paragraph 9(d)(i) of the defence) do not have to be resolved to determine the prevention question.
Clause 14(a) is not uncertain
The parties’ contentions focus on the LD Item in the particulars to the Subcontract set out in paragraph [6] above. The gravamen of Haggarty’s argument is that it is not possible to determine whether the LD Item requires payment of $1,000 per day or $2,000 per day. Midson primarily contends that, on its proper construction, the LD Item requires payment of a base line sum of $1,000 plus another $1,000 in circumstances where liquidated damages are applied under the Head Contract. It contends, alternatively, that it requires payment of $2,000. It contends that one or the other construction must be correct and that the LD Item is therefore not uncertain.
Courts should be slow to conclude that a contract is uncertain on the grounds that the language chosen by the parties lacks any meaning at all, or alternatively, has so many meanings that it is uncertain which meaning is intended. The correct approach in that context has been articulated as follows:[3]
[3] J D Heydon, Heydon on Contract (Lawbook Co., 2019) at [3.320].
[3.330] Impossibility versus difficulty
Even if a contract seems to have more than one possible meaning or lead to more than one result or use very wide language or throw up difficulties in its interpretation, it is not necessarily void if the processes of construction lead to the choice of the meaning. It is only void “if the court is unable to put any definite meaning upon the contract”. “[C]ourts will not lightly accept defeat in the search for meaning”.
The court’s reluctance to nullify contracts by demanding unrealistically high standards of clarity is reflected in a willingness to face up to difficulty in construction. The court, said Lord Wright, will not uphold any purported contract which is “so obscure and so incapable of any definite or precise meaning that [it] is unable to attribute to the parties any particular contractual intention”. Impossibility of identifying meaning, in that sense, is one thing. Mere difficulty in doing so is another. In approving the words just quoted, Barwick CJ said in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd:
[A] contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it… In the search for [contractual] intention, no narrow or pedantic approach is warranted, particularly in the case of contractual arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.
(footnotes omitted)
Where there are only two meanings suggested, it would be a surprising result if the Court was incapable of construing the Contract to sustain either one of the potential constructions. Indeed, most disputes over contractual construction involve this precise situation. I reject the submission that the Subcontract is uncertain in that context if it is possible to determine the proper construction of the LD Item. As I explain next, it is possible.
Proper construction of the LD Item
The real issue is which of the two possible constructions is correct. In my view, Midson’s primary construction is correct: that the LD Item requires Haggarty to pay a baseline sum of $1,000 a day plus a further $1,000 per day if liquidated damages are imposed by the Principal under the Head Contract.
I consider that construction to be correct for the following reasons.
If the intention of the parties was that, in all circumstances of failure to reach Completion under the Subcontract, liquidated damages of $2,000 were to be paid, then other things being equal, the liquidated damages clause would be expected to have specified that single sum. On the contrary, not only has the LD Item specified separate sums, but it has also attributed different descriptions to them. This is consistent with an intention that the sum to be paid is to be determined by reference to distinct considerations as between the two amounts identified. This is confirmed by the language used in the two limbs of the LD Item.
First limb of the LD Item
The first limb states “As per Head Contract @ $1000 per day” (the HC phrase). The Head Contract is identified in the Subcontract in generic terms, but in terms plainly identifying the contract between Midson and the Principal identified in paragraph [4] above. The relevant terms of the Head Contract are not in dispute. Relevantly, the Head Contract contained a liquidated damages clause, imposing liquidated damages of $1,000 per day for Practical Completion reached after the Date for Practical Completion.
Haggarty submitted that I should find that knowledge of the terms of the Head Contract was impossible for Haggarty to acquire, because it did not receive a copy of the Head Contract until recently. There was no evidence to support, or refute, either proposition, nor was there any concession or agreement that I should assume this fact to be true.[4] However, that creates no difficulty. In my view, it is irrelevant whether Haggarty actually knew of the liquidated damages provisions specifically, or the terms generally of the Head Contract, because in my view, a reasonable person in the position of Haggarty would be taken to have known or assumed that the Head Contract contained terms providing for liquidated damages. I form that view based on two matters:
(a)First, liquidated damages clauses are ubiquitous in commercial construction contracts; and
(b)Second, Haggarty, as a participant in the construction industry, would be taken to be aware that it was likely such terms existed, especially where there was a reference to the Head Contract in the LD Item in its own Subcontract.
[4] See paragraph 38 of Haggarty’s submissions and footnote 14 which is an Affidavit of Alexander Paul Tuhtan filed 6 August 2021 at paragraph [14].
Further, the Subcontract identifies the Head Contract expressly and makes use of references to the Head Contract in the terms of the Subcontract. Where it was possible (as it is here) unequivocally to identify the document referred to in the Subcontract at the time of entry into the Subcontract, that document may be used to construe the Subcontract, particularly where there are references to the Head Contract in terms defining the obligations of the parties.
Haggarty further submitted that, even if the HC phrase could be construed by reference to relevant terms of the Head Contract, the phrase is uncertain because it is unclear what is meant by “as per the Head Contract”. I disagree.
The starting point is the phrase “as per”. That phrase means, in this context, through or by.[5] So “as per Head Contract” means through or by the Head Contract. Recalling again that the HC phrase appears in an LD Item, the proper construction of the phrase, to my mind, is that liquidated damages of $1,000 per day will be payable under the Subcontract where liquidated damages are payable by Midson pursuant to the terms of the Head Contract.
[5] Macquarie Dictionary (5th ed).
This construction makes sense commercially. The LD item is concerned with the consequences of Haggarty failing to complete the work under the Subcontract by the due date. If Haggarty failed to complete the work, but there was no exposure to liquidated damages under the Head Contract, then that source of damage to the interests of Midson from Haggarty’s failure to perform would not arise. Alternatively, if Haggarty is late and Midson is in default of its own obligation to reach Practical Completion, then that creates damage to the interests of Midson flowing from the failure to reach Completion which it would rationally seek to recover from Haggarty.
In my view, the HC phrase properly construed means that the liquidated damages of $1,000 per day are to be paid by Haggarty if Haggarty fails to reach Completion by the due date, and for part or all of the time between the Date for Completion and Completion under the Subcontract, Midson is obliged to pay liquidated damages to the Principal under the terms of the Head Contract at $1,000 per day.
It only remains to observe that the LD Item applies only to each day after the Date for Completion under the Subcontract that Haggarty fails to complete the works. Read with the construction of the HC phrase in the previous paragraph, the consequence is that Haggarty is exposed to a liability to pay $1,000 per day to Midson for each day in that period that Midson is obliged to pay liquidated damages to the Principal under the Head Contract.
Second limb of the LD item
I have so far construed the LD Item by reference just to the HC phrase. Attention must now be turned to the second limb of the LD Item: “+ at Cost of [Midson] @ $1000 per day”.
In my view, this phrase objectively communicates that in addition to any amount of $1,000 per day payable under the Head Contract, there is an amount of $1,000 per day which is intended to represent an amount referable to the cost to Midson of failure by Haggarty to reach Completion by the due date.
Any ambiguity which might arise from the phrase, if read alone, disappears when one reads it in the context in which it appears. The phrase appears in an LD Item. Liquidated damages imposed for failure to complete a construction contract by a due date are self-evidently concerned with estimating loss arising from failure to fulfill the obligation to reach Practical Completion. Bearing that in mind, “cost to Midson” is plainly concerned with identifying the basis upon which the second sum of $1,000 arises: in relation to direct or internal costs to Midson of failure to reach Completion by the due date, contrasted with the separate external liability which might arise under the liquidated damages clause (which relates to damage to the Principal suffered because of Midson not reaching Practical Completion by the due date under the Head Contract).
I have considered all of Haggarty’s contentions not mentioned specifically above. I do not consider any of them justify a different construction of the LD Item, much less that the LD Item is incapable of a certain construction. There is only one further contention by Haggarty which requires explanation in these reasons.
Haggarty submitted that the construction contended for by Midson, and accepted in these reasons, would be unlikely given the terms of the indemnity in clause 14(c) of the General Conditions (see paragraph [6](c)(iv) above). Haggarty submits that it would be unusual for there to be two remedies for Midson in relation to exposure to liquidated damages under the Head Contract and that, looked at objectively, the parties would not intend that to occur. I disagree. There is nothing inherently unusual about the existence of two distinct contractual remedies for the same, or overlapping, liabilities (an indemnity clause included in the contract of guarantee springs to mind).
Further:
(a)The remedies are distinct. The LD Item creates an absolute obligation to pay liquidated damages under the Head Contract if they are payable by Midson. As is the way with such clauses, it makes it unnecessary to prove causation or quantum. The indemnity clause, on the other hand, requires proof of causation;
(b)The remedies are likely to complement each other in their operation. If liquidated damages are paid under the LD Item for liquidated damages under the Head Contract, then there will be no loss to which the indemnity can apply. If the liquidated damages clause is invalid, or not applied, then the indemnity will operate if Midson can prove causation.
For these reasons, I reject the contention that the LD Item is uncertain. Its proper construction is as contended for by Midson. That is, on its proper construction, the LD Item requires Haggarty to pay liquidated damages per day for each day after it fails to reach Completion by the Date for Completion as follows:
(a)$1,000 per day plus;
(b)A further $1,000 per day for each day Midson is obliged to pay liquidated damages to the Principal under the terms of the Head Contract in the period between the Date for Completion under the Subcontract and the date of Completion.
The LD Item is not a penalty
Haggarty’s contentions
Haggarty’s principal contention that the liquidated damages clause is void as a penalty is rather narrow. I will articulate it by reference to the way I have construed the LD Item. The contention ultimately developed was:
(a)At the time of entry into the Subcontract, the principal interest which Midson could properly protect by its liquidated damages clause in the Subcontract was the costs of maintaining its establishment on site later than it otherwise would have (establishment costs);
(b)This proposition is supported by the fact that Midson contends that its liquidated damages were a reasonable pre-estimate of loss by reference to establishment costs;
(c)At the time of entry into the Subcontract, reasonable persons in the position of the parties would have understood that liquidated damages could by payable under the Subcontract after Practical Completion under the Head Contract;
(d)It was inevitable that on reaching Practical Completion under the Head Contract, Midson would cease to maintain its establishment on site, and therefore would not be exposed to the risk of incurring establishment costs as a result of delay in Completion under the Subcontract;
(e)Midson has no other interest in Haggarty reaching Completion by the due date which could sustain the liquidated damages at $1,000 per day, particularly where all substantive work is completed and the only part of the Completion obligation outstanding is the provision of warranties and the like. Not only would the damage resulting from such non-compliance be minimal, but it was not consequent on the failure to reach Completion, but rather on the failure to comply with the substantive obligation to provide the warranties;
(f)The liquidated damages clause was a penalty because it could operate in a manner which required payment of $1,000 per day for late Completion, despite Practical Completion under the Head Contract, and despite the fact that Midson had no exposure to substantive loss in the form of establishment costs after that time. The operation of the clause in that way required payment of an exorbitant sum which constituted a punishment for the failure to reach Completion, rather than a genuine pre-estimate of loss.
Midson’s contentions
As I apprehended it, Midson did not cavil with Haggarty’s propositions in paragraphs (a) to (d), though it might resist the suggestion that the matter identified in paragraph (a) was its principal interest. Midson submits Haggarty’s contentions are wrong for the following reasons.
First, Midson contends that Haggarty’s approach to assessing the penal character of the clause wrongly focuses on just one possible scenario where the liquidated damages clause applies. Midson contends that the correct approach is to consider the liquidated damages amount to the maximum potential damage which could flow for failure of Haggarty to fulfil the single obligation of reaching Completion by the due date.
It points to the program incorporated into the Subcontract and correctly submits that it contemplates the Subcontract reaching Completion before the Head Contract. It submits that reasonable persons in the position of the parties would therefore have contemplated that the liquidated damages clause provided for costs of delay by Haggarty to Midson until Practical Completion, and additionally, both those costs and liquidated damages under the Head Contract, if such were applied under the Head Contract. Looked at in this way, the LD Item was a reasonable pre-estimate of the kind of damage which could result from delay under the Subcontract. The fact that in one factual scenario, assessed with the benefit of hindsight, the particular kind of loss did not eventuate cannot sustain characterisation of the clause as a penalty.
Second, Midson contends that even if it is correct to analyse the validity of the clause by reference to the particular factual scenario identified by Haggarty, the clause remains valid for two reasons:
(a)Midson relies on authorities which reject the proposition that the validity of Practical Completion clauses can be assessed by reference to the range of individual obligations which comprise Practical Completion. Midson contends that Haggarty’s argument focuses on a particular incident of the single obligation (in this case, providing warranties), and is thereby inconsistent with those cases; and
(b)Midson submits that even if the establishment costs come to an end, there would remain additional costs incurred by Midson in administering the process of pursuing Haggarty for incomplete work, including incomplete provision of warranties. These costs would be difficult to assess, but it cannot be said that the $1,000 per day amount is so exorbitant as to make it a penalty.
The significance of the second sentence is also seen when it is recalled that in Peninsula Balmain and 620 Collins Street, it was recognised that it was central to the recognition of the scope of operation of the prevention principle that the respective clauses could be construed as being for the benefit of the contractor.[23]
[23] Peninsula Balmain: see first underlined statement in paragraph [115] above; 620 Collins Street: see paragraph 27 of the judgment set out in paragraph [121] above.
For that reason, the answer to the third question is no.
An alternative argument
There is a further reason why the answer to the third question should be no, even if clause 13.4, on its proper construction, required Midson to consider exercising its discretion to extend time to respond to acts or omissions of prevention by it. The fact that acts of prevention by Midson might have engaged an obligation to consider exercising the discretion does not mean that, on the facts, exercising the discretion properly, Midson necessarily had to exercise the discretion to extend time.
In each of Peninsula Balmain, 620 Collins Street and Speirs, it had been established that, on the facts, an extension should have been granted and, in the former two cases at least, had been granted. Peninsula Balmain expressly recognised, however, that the circumstances might be such that a proper exercise of the discretion would be not to grant an extension, even where acts of prevention are alleged if, for example, the delay in seeking the extension meant that it was not possible properly and fairly to determine it.
Here, the Court assumes, for the purposes of the preliminary question, that there were acts of prevention by Midson. However, in my view, even that assumption is not sufficient to establish that the proper exercise of a discretion to extend time for the benefit of Haggarty necessarily requires an extension to be granted. There might, for example, be difficulty in identifying the causal link between the acts of prevention and the delay alleged. There might be prejudice flowing from the failure to claim the extension in a timely manner, which impacts on the exercise of the discretion.
It is unclear on the pleadings exactly how Haggarty articulates the consequence of success on its construction argument by way of defence. Paragraph 9R merely asserts that in breach of clause 13.4, Midson failed to extend time as Haggarty seeks. However, there is no pleading of a counterclaim for relief by which this Court would extend time in place of Midson (as seems to have occurred in Spiers), nor is there a claim for damages for breach of clause 13.4 which would possibly give rise to an equitable set-off. Although those observations go beyond the scope of the defined preliminary question, they do highlight the ambiguity surrounding how established acts of prevention lead to a remedy of any kind under clause 13.4.
In my opinion, on the assumed and admitted facts identified as informing the determination of the third preliminary question, the position is that Haggarty does not establish that Midson breached clause 13.4 by not granting the extensions of time which it seeks, even if the discretion, on its proper construction, to consider extending time for the benefit of Haggarty arose.
Notwithstanding this analysis, neither party raised this issue at the hearing. For that reason, I found my decision on my conclusion on the proper construction of clause 13.4.
Orders
As to the question whether clause 14(a) of the contract between the Plaintiff and the Defendant of 4 August 2020 (the Contract) is void for uncertainty, the answer is that the Contract is not void for uncertainty.
As to the question whether clause 14(a) of the Contract is void as a penalty, the answer is that the Contract is not void as a penalty.
As to the question whether, properly construed, the Plaintiff’s entitlement to recover liquidated damages for delay under the Contract was lost in circumstances where the following factual circumstances are assumed for the purposes of this application only:
(a)The Plaintiff was the cause of the Defendant’s delay; or
(b)The delay was caused by the Plaintiff’s breach of the Contract;
the answer is that the Plaintiff’s entitlement has not been lost in those circumstances.
0
1
0