Torcaso v Papaleo

[2001] NSWSC 314

CITATION:	Torcaso v Papaleo & Anor [2001] NSWSC 314
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	SC 15398/90
HEARING DATE(S):	26-28 February, 1 March, 5-6 March 2001
JUDGMENT DATE:	27 April 2001
PARTIES :	Michael Angelo Torcaso (Plaintiff/Cross Defendant) Virgilio Papaleo (1st Defendant/1st Cross Claimant) Marien Papaleo (2nd Defendant/2nd Cross Claimant)
JUDGMENT OF:	Studdert J

COUNSEL :	Dr R.J. Desiatnik (Plaintiff/Cross Defendant) D.H. Murr SC/J.C. Thompson (Defendants/Cross Claimants)
SOLICITORS:	Maurice Marshan (Plaintiff/Cross Defendant) Rodney Lewis & Co (Defendants/Cross Claimants)
CATCHWORDS:	Contract - deed of agreement for lease - commencement date provided - whether time of commencement essential - agreement to erect building to lock-up stage by certain date, subject to contingencies - whether promisor in breach.
CASES CITED:	Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290 Harrington v Browne (1917) 23 CLR 297 Bernard v Williams (1928) AER 698 Commercial Financial Corp v Dunlop Tyre & Rubber Goods (1942) 3 DLR 150 Williams v Greatrex (1957) 1 WLR 31 Honner v Ashton (1979) 1 BPR 9478
DECISION:	See para 97

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

STUDDERT J

Friday 27 April 2001

15398/90 MICHAEL ANGELO TORCASO v VIRGILIO PAPALEA & ANOR

JUDGMENT

1   HIS HONOUR: The plaintiff, Michael Angelo Torcaso, has sued the defendants seeking damages for the alleged repudiation of an agreement. The defendants have denied that there was any repudiation by them; on the contrary, they have resisted the plaintiff’s claim for a number of reasons and it is their case that they became entitled to, and did, rescind. The defendants have a cross claim against the plaintiff seeking damages for the plaintiff’s alleged failure to fulfil his obligations under the same agreement, and the plaintiff has denied liability in respect of that claim.

2   A separate trial of the issue of liability on both the plaintiff’s claim and the defendants’ cross claim having previously been ordered, the hearing proceeded before me for the determination of these issues only. The hearing went into a sixth day. In the plaintiff’s case evidence was given by the plaintiff, by Mr Pantaleo, whose evidence I will address shortly, and, in his case in reply, by Mr King, a building consultant. The defendants each gave evidence and Mr Brincat, who is an engineer and builder, was called in their case. It will be necessary to refer to some of the evidence given by these witnesses in the course of this judgment.

3   This unhappy litigation arises following the execution of a deed bearing date 30 September 1987. The execution of the document by the parties was not in issue, but the effect of the document most certainly was. Under the deed, the plaintiff, who owned a block of land at 560 Hume Highway, Casula, agreed to a lease of the property to the defendants for a term of ten years.

4   At the time that the deed was executed the land was vacant, but the Liverpool City Council had approved the erection of a building and carpark there, with the building to be used as a restaurant. It was in the contemplation of the parties that the defendants would occupy the building and the deed contemplated a long term lease of ten years with an option of renewal.

5   The deed (Exhibit A) contained these recitals:

“1. The lessor is the registered proprietor of property 560 Hume Highway, Casula in the said State (herein called ‘the property’) being the whole of the land in Folio Identifier 101/747318.
2. Liverpool City Council has approved the erection on the property of a restaurant building and car park.
3. The lessor has agreed to grant and the lessee has agreed to accept a lease of the property for the term of ten (10) years and on certain conditions.
4. This deed constitutes an agreement for lease.”

6   The deed recorded the agreement of the parties including the following provisions:

“1. The lessor shall grant and the lessee shall accept a lease of the property for the term of ten (10) years at the rent and on the terms and conditions set out and contained in the form of lease attached to this deed.
2. Subject to delays that may be caused by:
(i) weather
(ii) on the part of the lessor’s builder, works supervisor, works manager, subcontractors and employees or servants
(iii) strikes and lockouts
(iv) the supply of building materials and/or their availability
(v) on account of delay of any local and/or other authority in giving any necessary approval or doing any necessary inspections;
(vi) on account of delay of the lessor’s lending institution doing inspections necessary to be done before funding of loan or part of loan to build;
(vii) by any other matter cause or thing beyond the control of the lessor or his builder.
The lessor will on or prior to 1st April 1988 erect on the property to lock-up stage ready to be fitted out and decorated by the lessee the building approved by Liverpool City Council pursuant to Building Permit No. 341/87
3. The lessee will at its cost and expense decorate, paint, carpet, tile and fit out the building and install Kitchen and any cool rooms or cooling chambers and freezer which the lessee will do to the satisfaction of Liverpool City Council and in compliance with all Statutes, Ordinances and Regulations including the Pure Food Act and its Regulations. The lessor will permit the lessee and its workmen access to go onto the property during the construction of the building to take measurements and do such works when and so often as the lessor permits but as that the lessee and its workmen not interfere with the construction work by the lessor or its builder and subcontracts.
4. At lock-up stage the term of the lease shall commence and on the commencement of its term the lessee shall pay the first month’s rent. The term of the Lease shall commence on 1st April, 1988.
…………..
10. For the purpose of this deed lock-up stage shall mean when the building is erected and ready to be carpeted, tiled, painted and fitted out with light fittings, furnishings and fittings and ready for installing kitchen.”

7   The second sentence of para 4 of the deed above set out was in different type from that of the balance of that clause and from the balance of the deed. The initials of the parties to the deed appear in the margin of the document beside that sentence. Plainly the sentence was added before the deed was executed, but the circumstances in which this happened did not emerge in evidence. The evidence satisfies me that the plaintiff and the defendants consulted their separate solicitors before execution.

8   The building was not completed by 1 April 1988 and I shall shortly consider the evidence concerning the delays that occurred. One problem that occurred was that defective concrete was delivered to the site and poured and this pour was followed by lengthy delay. On 27 June 1988 the plaintiff’s solicitors wrote a letter (Exhibit P) to the defendants’ solicitors in the terms following:

“As your clients are aware certain problems have arisen in connection with the construction of building at the premises 560 Hume Highway, Casula because of low strength concrete supplied for slab.
As a result of that certain tests had to be carried out on the slab and Engineer’s advices obtained to ascertain whether or not slab had to be removed and another concrete slab constructed or whether same could remain and rectification works be done to put the problem resulting from low strength concrete in order.
It appears that the Engineers have now decided on remedial work necessary to be done to the slab.
We are, on behalf of our client, liaising with the Assessor for the concrete supplier in connection with claim being made by our client on it for damages and loss he has suffered by reason of delay caused by low grade concrete and in that connection we have furnished to Assessor what our client estimates his loss and damages at.
Under the Agreement to Lease, subject to certain matters contained in it, our client was on or prior to 1st April 1988 to give to your client the property at lock-up stage ready for installation of plant equipment etc., and furnishings.
Because of low grade concrete problem that naturally was not possible.
It is our view that the matter was one beyond our client’s control and beyond his builder’s control and because of that our client is not responsible to your client under the Leasing Agreement.
However, notwithstanding our view, if your clients claim our client under the Agreement for Lease is in any way liable to them because of the delay, it would be appreciated if you could immediately let us have details of what your clients consider or allege is their loss and the basis on what your clients claim that from our client.
We are, as indicated above, presently liaising with the concrete supplier’s Insurer claiming damage on behalf of our client and we would, if your clients have a legally justifiable claim against ours, make an additional claim on the assessor for that.
If your clients alleged any loss by reason of delay it should be, as indicated, quantified and the basis of loss stated and the legal basis on which your clients rely also stated.
In no way is this letter in any way an acknowledgement or indication that our client considers your clients have any claim for the delay. As stated any delay was one outside the control of our client and outside the control of his builder.”

9   On 1 July the defendants’ solicitors replied and their reply was received by the plaintiff’s solicitors on 6 July 1988. This letter (part of Exhibit Q) was in the following terms:

“We refer to your letter of 27th June, 1988.
Our clients have incurred considerable losses as the result of your client’s repudiation of the terms of their agreement. We will let you have an assessment of damages in due course.
In view of the contents of your letter, our clients have no option but to treat the agreement for lease as at an end and hereby give notice of its rescission.”

10   The letter of 1 July prompted the plaintiff’s solicitors to respond on 19 July 1988 (part of Exhibit R):

“We refer to your letter of the 1st instant and have now been able to obtain our client’s instructions in relation to it.
That letter is a clear indication that your clients no longer consider themselves bound by the Deed of Lease Agreement herein dated 30th September 1987 and it is considered it is a wrongful repudiation of that Deed of Lease Agreement.
Please be advised that we are instructed to respond to such wrongful repudiation by rescinding the contract between our clients.
If and when damages that flow from your clients wrongful repudiation are ascertained damages will be claimed from your clients.”

11   I now turn to consider the course of construction.

The course of the building work

12   The plaintiff engaged a builder in a building agreement dated 12 September 1987 (Exhibit D). The builder was Finestyle Homes Pty Limited and its managing director was Pasquale Pantaleo. It is not necessary to refer to the detail of the provisions of the agreement but the company (referred to in the agreement as ‘the supervisor’) and Mr Pantaleo (referred to in the agreement as ‘the manager’) agreed inter alia as follows:

“The Supervisor and the Manager shall arrange, supervise and manage the Constructions of the said Restaurant in accordance with the Plans and Specifications recited above, such work shall be commenced on or before the FIRST day of OCTOBER 1987 and be completed by the THIRTY FIRST day of MARCH 1988.”

13   Mr Pantaleo gave evidence concerning the progress of the building work. He had no records and was largely reliant upon his memory of events that occurred so many years ago. Mr Pantaleo said that work began on site towards the end of September 1987 with the erection of fencing. The excavation began in early October and was completed by the end of October. Delay was encountered in the excavation because of underground seepage and because of the engineer’s requirement that the piers be set deeper than was originally contemplated.

14   Mr Pantaleo said that the underpinning, the retaining wall around the carpark and the drains were completed by the Christmas break in December 1987. The Christmas break was from 23 December 1987 to 15 January 1988. Then the brickwork for the building up to first floor level was completed by the end of January 1988. The next stage was the formwork for the first floor slab and the columns supporting it. According to the witness, the formwork was done around 9-10 February. Some three or four days were lost, Mr Pantaleo said, because of a concrete strike, and the cement pour was already held up by rain. There was a problem in drying out the enclosed carpark area which, the witness explained, suffered from poor ventilation.

15   The concrete was poured on 27 February 1988 and work stopped three or four days thereafter because routine testing of the concrete revealed it was nowhere near the required strength. The testing was random testing, taken from four different delivery trucks, so that it was not possible to determine where the weak material had been poured. Work having stopped altogether, it did not resume again for approximately five months, that is not before the end of July 1988.

16   The engineer in charge of the project told Mr Pantaleo to stop when the defective concrete was detected and plainly the builder had to do what he was told. There is a question however as to whether it was reasonable for work to stop for as long as it did.

17   The sequence of events after 27 February 1988 I find to have been as follows:

(i) the second set of routine test results twenty-eight days after the pour again showed the concrete to be unsatisfactory;

(ii) on 29 March 1988 core samples were taken and these were analysed on 5 April 1988;

(iii) the concrete supplier, BMG, and the subcontractor who ordered the concrete were notified of the defective quality and BMG’s insurance assessors became involved. In April 1988 there were site meetings involving the plaintiff’s engineer, the plaintiff, his builder, the assessor and an engineer engaged by the assessor. Various samples were tested, including samples taken by the assessors on 14 April 1988;

(iv) Mr Smee of McMillan, Britton and Kell Pty Limited, engineers, inspected the site on 28 April 1988 and his recommendations to the assessors are contained in his letter of 3 May 1988, part of Exhibit M;

(v) on 9 May 1988 the plaintiff’s engineer told the plaintiff there were two alternatives, either to remove the slab and the columns or to provide an acceptable system of support, but at that time the plaintiff’s engineer made no recommendation;

(vi) those same proposals were considered by the plaintiff’s engineer and on 12 May 1988 the plaintiff’s solicitors wrote to the assessors (part of Exhibit M) identifying the concerns of the plaintiff’s engineer;

(vii) some time after 12 May 1988 the plaintiff’s engineer engaged an independent engineer, Mr Muirhead of Irwin, Johnston, Smith and Leuchars Pty Limited to assess the problems and, apparently influenced by what Mr Muirhead had to say, on 20 June 1988 the plaintiff’s engineer wrote to the plaintiff (Exhibit N) recommending a remedial course that did not involve the removal of the slab and all the supporting columns. This letter in effect advised the plaintiff of the course now recommended by his engineer;

(viii) then on 22 June 1988 the plaintiff’s builder submitted to the plaintiff’s solicitors revised costings for the work involving the rectification (Exhibit O), with such costings based on the assumption that the work would commence on 1 July 1988;

(ix) work did not commence on 1 July 1988 and on 18 July 1988 the builder sought the plaintiff’s written agreement to the new costings and evidence that the plaintiff had available finance;

(x) this was followed by a letter from the plaintiff on 25 July 1988 instructing that work proceed (part of Exhibit S);

(xi) work began by way of rectification at the end of July 1988 and this rectification work involved placement of bricks on the slab and leaving them in position for some four weeks. It also involved rectification and reinforcement work. There is a lack of precision as to when this rectification work was completed. Mr Pantaleo said in his evidence in chief that the work was completed in September 1988 but in cross examination he conceded that it was possible that the rectification was not completed until October, and the engineer’s memorandum of fees (Exhibit 8) indicates that the fee for design of the rectification work for the slab was itemised on 5 October and the fee for the final inspection of the rectification work was itemised for 21 October. The engineer stated in the letter written to the plaintiff on 21 October 1988 (Exhibit 4) that the final inspection of “the slab and subsequent strengthening” was carried out on 21 October 1988. I am not satisfied that the work of rectification was completed prior to 21 October 1988. Indeed, I consider it probable that the work of rectification was completed at about that date. Apart from the weighting of the slab with bricks, the remedial work was carried out after the basement slab was poured. This emerges from the evidence given by Mr Pantaleo (T163). The basement slab itself was poured on about 29 September 1988. Exhibit 8 reveals that the engineer inspected the slab on that date and I accept Mr Brincat’s analysis (T269) that “for the engineer to inspect the slab he would have had to inspect it prior to the pouring” . As Mr Murr submitted, the timing of the pouring of the basement slab is consistent with the rectification work (other than the weighting of the slab) beginning in early October, and proceeding to completion on 21 October 1988.

18   It would seem that following rectification it would have taken a further eight weeks to lock-up stage. In reaching this conclusion, I am mindful of the evidence that Mr Pantaleo gave that when the pour was carried out in February his anticipation was that lock-up stage would be by the end of April. On this analysis, from pour to lock-up involved a lapse of two months.

19   It would follow from the evidence of Mr Pantaleo set out above that, accepting that the rectification work was completed by 21 October, it would have taken a further period of three months to complete the building job and one month after lock-up before the defendants would have had access to fit out. On this analysis the defendants would have been able to proceed to fit out the building in the latter part of November and the building would have been completed for use towards the end of January 1989.

20   Of course, a consequence of the action taken by the defendants in July 1988 was that the plaintiff lost considerable time in finding another tenant for the building and it was not possible to complete the building work until it was known who this tenant was. Indeed, the search for a tenant resulted in lock-up for the building not being reached until 25 August 1989.

Were the defendants entitled to rescind as at 6 July 1988?

21   If this question is to be answered in the affirmative, then plainly the plaintiff’s action must fail. If the question is to be answered in the negative, then the plaintiff was entitled to regard the letter dated 1 July 1988 written on behalf of the defendants as being a repudiation of the contract by the defendants and the plaintiff’s action should succeed.

22   Mr Murr’s primary submission was that the proper construction of cl 4 of the deed of agreement for lease must result in the determination of this question in the defendants’ favour. Dr Desiatnik submitted to the contrary.

23   The wording of Exhibit A is most unsatisfactory. There is an obvious tension between cl 2 and cl 4.

24   I set out the provisions of cl 2 and cl 4 in para 6 above and I referred in para 7 above to the significant feature that the sentence “The term of the lease shall commence on 1st April 1988” was plainly an addition to that clause, initialled by the parties. Curiously neither defendant was able to explain, when cross examined about it, how that date came to be inserted (Mr Papaleo T 184; Mrs Papaleo T 237). In any event, my task is to construe the document. The settled principles of construction are conveniently summarised by Santow J in Spunwill Pty Limited v BAB Pty Limited (1994) 36 NSWLR 290 at 298-300. One of those principles is this:

“3. In construing a written document, the object is to discover and give effect to the contractual obligations that reasonable persons in the position of the parties would objectively have intended the document's language to create. The emphasis is thus on giving effect to the apparent intention of the parties, and direct evidence of the parties' actual subjective intentions and expectations is inadmissible for purposes of construction: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales at 348 and 352; Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834 at 840.”

25   It is not to be ignored that the parties to this deed had at the time solicitors advising them, and the compelling inference is that the sentence initialled was added by the solicitor acting for one of the parties to the deed to the knowledge of the solicitor acting for the other party(ies) to the deed.

26   Dr Desiatnik submitted the added sentence is superfluous. It only repeats a date already appearing in cl 2 and adds nothing to cl 4. To give the sentence the effect for which the defendants contend would be to ignore the significance of cl 2 and its obvious objective in making the date there expressed subject to the various contingencies contemplated in cl 2. Dr Desiatnik’s construction would leave the commencement date of the lease subject to delays in the progress of the building work.

27   Mr Murr was, in my opinion, correct in his submission that the deed contains provisions which are quite distinct:

(a) in cl 2 the lease provides for the erection of a building on the land the subject of the proposed lease which was to reach lock-up stage “on or prior to 1st April 1988” , subject to the contingencies provided for in that clause;

(b) cl 1 provides for the granting of a lease of the subject land for a term of ten years on terms set out in the form of lease attached to the deed. Clause 4 complements cl 1 in the sense that it defines the commencement date for the lease.

28   Clause 2 does not address the duration of the lease or the commencement of its term; it only deals with the obligation to erect a building to lock-up stage on or prior to the date specified, subject to the defined contingencies. It is by reference to cl 4 that the commencement date of the lease is to be determined. In its original form, that clause defined it by reference to the progress of the building work, but the effect of the additional sentence was to give it a firm commencement date. In my opinion this is a significant addition. Its effect is to provide for a fixed commencement date for the lease, but effect should also be given to the words of the first sentence, if this is reasonably possible, since that sentence was left in the clause and it is not to be presumed that this was by oversight.

29   Mr Murr submitted that cl 4 ought to be treated as providing, firstly, for the commencement date of 1 April 1988, and secondly, by necessary implication, either that lock-up stage must be reached by that date for the purposes of that clause or, alternatively, that it was to be a condition precedent to the commencement of the term that lock-up be reached by that date. He submitted that in the circumstances of this case it mattered not which of the alternative meanings for the first sentence was given.

30   Is such a construction reconcilable with the language of cl 2? I am persuaded by Mr Murr’s submissions that it is because cl 2 and cl 4 are concerned with different matters. Clause 2 is concerned with the lessor’s obligation to erect a building and it sets a date by which the building on the land to be leased is to reach lock-up stage. Indeed, the defendants have pleaded reliance upon cl 2 in their cross claim as basing the claim for damages therein made. The obligation to reach lock-up stage by 1 April 1988 was expressed to be subject to defined contingencies. The occurrence of one or more of these contingencies might operate to relieve the lessor of liability in damages for the failure to erect to lock-up stage by the specified date. It is to be observed that the clause does not specifically provide for postponement of the lock-up date, or for the consequences of failure to construct to lock-up stage by the specified date. There is no formula provided for determining the extension of the contemplated date if extension was contemplated. Mr Murr submitted since the document was drafted by solicitors that the omission of an express provision for extension of time and how the length of any extension was to be determined tells against an extension being allowed. Dr Desiatnik, on the other hand, submitted that it should be implied that, given the occurrence of a contingency or contingencies contemplated in cl 2, the date for the building to reach lock-up stage was to be extended for a reasonable period. In the immediate context it is unnecessary for me to chose between these competing submissions, although this may well assume relevance in the context of consideration of the defendants’ cross claim. Even without an extension provision, cl 2 could be effective to avoid a liability in damages under the clause for failure to build to lock-up stage by 1 April 1988. Plainly the clause still has work to do if the construction of cl 4 for which the defendants contend is a correct construction.

31   In any event, I have come to the conclusion that cl 4 should be given the effect for which Mr Murr contends. I incline to the view that the requirement that the building must have reached lock-up stage by 1 April 1988 is to be considered as a condition precedent, but it would suffice for Mr Murr’s purposes that the clause was to be regarded as requiring that lock-up stage be reached by that date.

32   It is true that there is no express stipulation in the deed that the commencement date provided in cl 4 was to be regarded as essential but that I perceive to be the probable purpose behind the inclusion of the added sentence. What was contemplated in the deed was the use of the property for commercial purposes. The deed recited the approval by the local council of the construction of a “restaurant building”. The very nature of the contemplated use made it desirable that there be a firm date upon which the lessees could act in planning for the commercial venture to be undertaken in the premises and in planning for a starting date.

33   Reference was made in the submissions in this matter to three authorities in support of the proposition that time may be deemed to be essential, notwithstanding the absence of an assertion in the contract to that effect, because of the nature of the contract, or the nature of the property or the surrounding circumstances.

34   Harrington v Browne (1917) 23 CLR 297 is one illustration. That concerned a contract for the sale and purchase of livestock in which a date was specified on or before which the delivery of the livestock was to be taken. The written contract provided that pro forma delivery was to be given and taken and that the sheep should be counted at the defendant’s station on or before 21 August. The plaintiff did not attend or claim delivery until 22 August and the defendant was held to be entitled to judgment. In the course of his judgment Barton J said 304-305:

“Was time then of the essence of the written agreement? No exception can be taken to the authorities quoted by the Court below. The most important of them, and it tells strongly in favour of the affirmative view, is the passage from the judgment of Cotton L.J. in Reuter v. Sala (4 C.P.D., 239, at p. 249), in which he says that to apply to mercantile contracts the rule of equity, which enforced certain contracts though the time fixed therein for completion had passed, ‘would be dangerous and unreasonable.’ Lord Blackburn, in his treatise on Contract of Sale (3rd ed., p. 244), cites this passage as an authority for his own statement that ‘in mercantile contracts, stipulations as to time (except as regards time of payment) are usually of the essence of the contract.’ The learned author fully cites a number of decisions for this rule.
As the legal position is thus undeniably stated, and as the written agreement is a mercantile contract, it follows that attendance to accept delivery at a date later than 21st August is no performance of his part by the plaintiff, unless it can be shown that a mercantile contract in this special instance has something in its terms which renders time unessential, or unless the circumstances of the country deprive it of its normal character. Certainly there is nothing in the Sale of Goods Code which imports any new element into it. Readiness to accept delivery after the 21st is no performance of an agreement to accept it on or before that date. As this mercantile contract would normally carry a specified time of delivery as of its essence it must be so interpreted unless something in its terms can be pointed to which shows that the specified term is unessential…”

35   In Bernard v Williams (1928) AER 698 it was determined that time was of the essence in a contract for the proposed lease of premises intended to be used to carry on a garage business. The plaintiff signed a document agreeing to purchase the lease with possession to be given “on or about” a certain date. The defendant agreed to do certain work necessary to permit of the intended use. The time for possession was subsequently extended by mutual agreement but before the extended date arrived it became apparent that the defendant would not be able to do the work he had undertaken to do by the extended date and the lessee refused to proceed. It was held in that case that time was of the essence and that the lessee was entitled to rescind because performance by the due date had become impossible.

36   Then in Commercial Finance Corp. v Dunlop Tyre and Rubber Goods (1942) 3 DLR 150 because a tenant in part of a building remained in possession for eleven days after the date fixed in an agreement between the landlord and an intending lessee for the commencement of a three year term of the whole of the building, the landlord was unable to give the intending lessee possession on the due date or within a further period of one week which the intending lessee allowed. When the tenant vacated the premises, the landlord tendered the lease originally agreed upon but the intending lessee rejected the tender. It was held that the landlord could not enforce the agreement, time being of the essence of the contract with a commencement date for the term of the lease being definitely fixed.

37   Each of the above cases is illustrative of circumstances in which time may be determined to be of the essence. None of these decisions is, of course, determinative of the issue which I now have to consider, namely whether time was of the essence in the present case, but I do find assistance in those cases that I have reviewed.

38   The principle that time may be of the essence, although this is not expressly stated, was also recognised by Morris LJ in Williams v Greatrex (1957) 1 WLR 31 at 43:

“Of course, there may be contracts in cases where land is going to be used for the purpose of trade or commerce or where there is the element of fluctuation in value or where minerals may become worked out: in such contracts, as the authorities show, there may be indications that time is of the essence of the contract, even though it is not in so many words stated to be of the essence of the contract.”

39   Since the present case concerned premises to be used for commercial purposes, the fixing of a firm starting date was of obvious practical significance, although such significance may have been greater for a function centre than for a restaurant. The evidence satisfies me that the defendants wanted to use the premises as a function centre, but this was a use not available under the terms of the relevant development application.

40   The council building approval (Exhibit 1) approved the use of the premises as a restaurant. Condition 2 of the approval was in these terms:

“2. The premises not to be used for receptions or similar functions (i.e. as a place of assembly).”

41   Clause 11 of the deed (Exhibit A) referred to the building permit and indeed annexed it. That permit contained this clause:

“5. Subject to the conditions of development consent…”

42   So it is that the defendants ought to have been aware that they could not use the premises other than as a restaurant. It is clear from the evidence of the defendants that this was not the use to which they wanted to put the premises. Before entering into the deed the defendants had been conducting two function centres at Liverpool and their interest in the subject premises was to provide them with a larger reception centre. I accept their evidence to that effect and I also accept that the desired use was made known to the plaintiff (T34-35). I accept that neither defendant appreciated when the deed was signed that as matters stood the premises could not be used as a reception centre, but they should have been so aware. I also accept the evidence Mrs Papaleo gave that the defendants, when they discovered the restriction as to use, considered this was a matter that could have been addressed by representations to the council or in the Land and Environment Court. In the events that happened, no representations were made to the council and no proceedings were taken by the defendants in the Land and Environment Court, so whether, had a lease been executed, the defendants would ultimately have been allowed to conduct a function centre is uncertain.

43   Be that as it may, however, for the use of the premises as a restaurant a firm starting date was of obvious practical importance. The premises had to be fitted out by the lessees and this required putting arrangements in place for the various trades. It also involved the purchase of equipment and supplies. It involved engaging the services of an architect to design the interior (Mr Papaleo T185-186). Clause 3 of the deed recorded what the lessees were to do by way of fit-out. It was to be their obligation to “decorate, paint, carpet, tile and fit out the building.” Theirs was the responsibility to install and fit out the kitchen and to address refrigeration and freezing requirements for the premises. The premises to be leased were large. The council, in approving the development required provision for ninety-three car parking spaces on site (see Exhibit 1), and it was contemplated that the premises would be capable of accommodating 400-500 patrons. Indeed, the defendants, prior to rescission, according to Mr Papaleo (T184), purchased fifty tables and 500 chairs for contemplated use there. The rental under the contemplated lease was to be $130,357.20 per annum in the first year of the lease. There was an obvious need for the lessees to know when they would be able to open their business, when they would be able to usefully advertise and when they could take bookings. Doubtless bookings are taken further in advance for weddings and similar functions than for dinner reservations, but all the considerations I have identified underline the importance of a firm date for commencement of the lease. This importance was reflected in the anxiety shown by the defendants in conversation with the plaintiff that the building be completed on time (see the cross examination of the plaintiff T28 and T40). I accept also the evidence given by the first defendant asserting its importance (T184, 217). The importance of a determined date is emphasised by the very manner of its addition and expression in the second sentence of cl 4, and I have concluded on balance that 1 April 1988 was intended to be and was an essential date for the commencement of this lease. Once the plaintiff failed in its obligation to provide the contemplated lease to commence on that date, the defendants were entitled to rescind.

44   Waiver has not been pleaded so no issue of that sort arises in this case.

45   Mr Murr submitted in the alternative that even if, contrary to the conclusion I have expressed, 1 April 1988 was not an essential date, the passing of which justified rescission, the defendants were, in any event, justified in rescinding by 6 July 1988 because the plaintiff’s delay was to be regarded as a fundamental breach of the agreement for lease.

46   I was referred in support of that submission to the statements of principle in the judgment of Mahoney JA in Honner v Ashton (1979) 1 BPR 9478 at 9439-9492. With such statements of principle I respectfully agree. His Honour said at 9490-9492:

“It is, in my opinion, proper to accept that a right to terminate the contract, ie, to put an end to the obligation further to perform it: Johnson v Agnew [1980] AC 367 at 392-3; [1979] 2 WLR 487 at 495 per Lord Wilberforce; may arise if there be ‘a fundamental breach’ of the contract. In this regard, the law looks not to the nature of the term breached and whether it is, of its nature, a condition, but to the nature of the particular breach and the consequences which actually flow from it. It should, in my opinion, be accepted that a particular breach of a non-condition can give rise to a right to terminate…
…I think that the right to terminate for fundamental breach should be seen as, in principle, distinct from the right to terminate for repudiation. There is, in my respectful view, sound English authority that a party may acquire a right to terminate a contract because of the nature and consequences of the particular breach, even though the term in question be not a condition in the traditional sense. In some of the English cases, the right to terminate is seen as arising merely because of the consequences of the particular breach…”

47   His Honour then proceeded to examine certain of the English authorities and turned to the position in Australia (at 9491):

“In Australia, the question whether breach of a non-condition can, apart from repudiation, give rise to a right to terminate a contract does not appear to have been finally determined: cf Sydney Corp v West (1965) 114 CLR 481 at 500-1; Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353 at 375-6; Direct Acceptance Finance Ltd v Cumberland Furnishing Pty Ltd [1965] NSWR 1504 at 1510 per Walsh J.
In my opinion, it should be accepted that a right to terminate may arise because of a fundamental breach and that that right is distinct from the right which may arise where what has happened amounts to repudiation. There are sound reasons why the right to terminate for breach should not be limited to breach of terms which are conditions. Experience has shown that the consequences of breach of a non-condition, though falling short of compliance with the test of frustration, may well, in a particular case, be of such significance to the injured party that to hold him to the continued performance of his obligations under the contract would be quite unjust. The recognition of the right to terminate for such a breach would allow that injustice to be avoided. In some of the cases, such injustice has, in a practical sense, been avoided by (with the benefit of hindsight) seeing the consequences of the particular breach as sufficient to warrant the conclusion that the term was initially of the nature of a condition. In other cases, the injustice has been avoided by treating the particular breach as a repudiation of the contract. But repudiation is normally (and in my opinion should properly be) seen to arise from the intention or at least the acts of the defaulting party. He is seen either to repudiate his obligations expressly or, whilst intending to fulfil the contract, to be ‘determined to do so only in a manner substantially inconsistent with his obligations and in no other way’; Ross T Smyth & Co v TD Bailey Son & Co [1940] 3 All ER 60 at 71-2 per Lord Wright; Larrett v Bankers & Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 at 233. But a serious breach of a contract may arise not only from the breach of the terms which depend upon the act or the intention of the defaulting party; it may arise by reason of non-fulfilment of terms which do not depend upon such matters, eg, terms which depend entirely upon the acts of third parties. Breaches of the latter kind may be ‘fundamental’ in the relevant sense but to refer to them as ‘repudiation’ is misleading and apt to lead to confusion. It is, I think, preferable to recognise that the right to terminate arises not from the imputation of repudiation, but from the consequences of the breach as such.”

48   In considering whether the delay which occurred past 1 April 1988 amounted to fundamental breach (and this is on the assumption that cl 2 was not to be construed in the manner for which the defendants primarily contended), it is necessary to consider the consequences of this delay. Those consequences I assess as being extremely significant indeed in the commercial setting of this agreement. By the beginning of July 1988 the contemplated commencement date for this lease was three months behind schedule, and there was the prospect of further indefinite delay. Dr Desiatnik submitted that when one has regard to the length of the proposed lease, namely of ten years with a five year option, such delay was not significant, but I am not attracted by that submission.

49   On the analysis of the evidence that I undertook earlier, the defendants would have been unable to commence the fit-out of the premises until the latter part of November 1988, and the building would not have been ready for use until the latter part of January 1989. The evidence established that the plaintiff had been unable in the period after the work ceased in February 1988 and before the letter of 27 June 1988 (Exhibit P) was written to provide to the defendants any meaningful information as to when construction work would be resumed. In this regard, I accept evidence in the defendants’ case that the plaintiff had been asked for information about this and I accept that the inquiries culminated in a visit made by the first defendant to the plaintiff’s premises at the Flemington Markets when the plaintiff informed his visitor “I have no idea when the building can be finished” (T192). The precise date of that visit was not fixed but I accept that the plaintiff’s response prompted the defendants to go to their solicitor forthwith to see if they could “get out of the lease” (T192) and this prompted the letter written on 1 July 1988 (part of Exhibit Q). Hence, I think it likely that the conversation at the markets took place shortly before 1 July 1988. When the plaintiff’s solicitors wrote the letter of 27 June 1988 the defendants were advised that a decision on remedial work had been made, but, of course, instructions to proceed with such work were not given to the builder until 25 July 1988 (part of Exhibit S).

50   At the time the defendants’ solicitors wrote the letter of 1 July 1988 (part of Exhibit Q) it would still not have been possible to make firm arrangements for fitting out the premises or addressing those other essential aspects in arranging for the effective use of the premises that I considered earlier in para 43 of these reasons. The defendants at that time faced further delay of indefinite duration.

51   It was, of course, no fault of the plaintiff personally that the construction of this building had such an unhappy history. I do not doubt that the plaintiff at all relevant times wanted to have the building completed. Delay was to his financial detriment. Once the faulty concrete was poured, the plaintiff was understandably guided by the experts he retained as to how and when the building work should proceed. Doubtless the plaintiff was concerned in his own interests to proceed in such a way as would not prejudice any right of redress he may have had against the concrete supplier or the subcontractor who were perceived to be responsible for what had occurred. However, it does not seem to me that these considerations can bear upon the question as to whether the defendants were entitled to rescind for fundamental breach.

52   In my opinion, even if contrary to the conclusion I have reached the primary submission advanced on behalf of the defendants was unsound, the delay that occurred between 1 April 1988 and the beginning of July 1988 was of such significance for the defendants that to hold them to the obligations assumed under the deed would have been unjust. If cl 4 was not to be regarded as making time of the essence, the further delay between 1 April 1988 and the beginning of July 1988 ought properly be considered as constituting a fundamental breach of the agreement contained in the deed such as would have entitled the defendants to terminate the agreement at the time the letter was written on 1 July.

53   For the reasons given, I conclude that the plaintiff’s claim against the defendants fails.

54   This brings me to a consideration of the defendants’ cross claim.

The defendants’ cross claim

55   The defendants seek in their cross claim damages for breach of the agreement, Exhibit A, and in doing so have pleaded reliance on cl 2 of that document. The basis of the claim was expressed in alternative ways in paras 5, 5A and 6 of the Second Further Amended Cross Claim:

“5. Subject to certain exceptions not presently material, it was a term of the agreement that the cross-defendant would on or prior to 1 April 1988 erect the building, described in the Deed by reference to a certain building permit issued by Liverpool City Council, to ‘lock-up stage’ (that term used herein within the meaning of the Deed) ready to be fitted out and decorated by the cross-claimants.
Particulars : Building Permit No. 341/87 dated 9th June, 1987.
5A. Further to paragraph 5, it was an implied term of the agreement that the cross-defendant should use all reasonable endeavours to secure the erection of the building to lock-up stage before or on, or in the alternative within a reasonable time after, 1 April, 1988.
6. In the alternative to paragraph 5, it was an implied term of the agreement that if the building was not completed, ready for fitting out by the cross-claimants, on or prior to 1 April 1988, then it would be so completed within a reasonable time thereafter and that all reasonable endeavours would be made to effect such completion within such reasonable time.”

56   In written submissions counsel for the defendants contended that if the defendants defeated the plaintiff’s claim, and they have, then the cross claim must succeed. However, that does not necessarily follow at all, particularly having regard to the conclusions I have reached on the plaintiff’s action, and Mr Murr acknowledged this in oral submissions. The defendants did not defeat the plaintiff’s claim in reliance upon cl 2, yet it is cl 2 on which reliance has been pleaded for the purposes of the cross claim. I observe at this stage that neither para 5A nor para 6 of the amended pleading sits comfortably with Mr Murr’s submissions concerning cl 2.

57   Clause 2 is itself most unhappily expressed. However, before turning to its consideration for the purposes of the cross claim, it is necessary to examine further the evidence as to what delayed the construction of the restaurant building. In paras 12-20 of this judgment, I reviewed the course of the building work but I will now refer further to the evidence given by the various witnesses in addressing the cross claim.

58   At the outset, I observe that the contract which the plaintiff entered into with Finestyle Homes Pty Limited and Mr Pantaleo provided for completion of the building works by 31 March 1988. The evidence of Mr Brincat and of Mr King satisfies me that was a reasonable building period if no significant problems had been encountered in the course of construction.

59   The plaintiff gave evidence that he attended the building site often and that the work proceeded regularly prior to the concrete pour and save for interruption by rain. However, the plaintiff gave evidence that he was aware that the following difficulties were encountered prior to 1 April 1988:

(a) he was aware that a lot of excavation had to be carried out and there was a need to underpin the building on the adjacent block;

(b) the work was disrupted by rain and the plaintiff was aware that the water had to be pumped out. He said it could take three or four days after rain for the ground to dry out;

(c) the plaintiff said the need arose to construct a power station because of added electricity requirements for the restaurant. The plaintiff said this involved drawing up plans and led to a delay of two weeks.

60   So far as the plaintiff was aware, the work appeared to be on time as at the end of January 1988 and he did not regard himself as having been responsible for any delay in the progress of the work. In that assessment he was supported by the builder, to whose evidence I will shortly refer.

61   The subcontractor poured the concrete on 27 February 1988 and this was followed by lengthy delay. The builder stopped work and there were tests carried out of the concrete seven days after the pour and twenty-eight days after the pour. The plaintiff said that he was urging the builder to hurry up because the tenant was waiting (T12). The plaintiff participated in a number of meetings at the office of the engineer, Mr Iorfino, and in April 1988 the plaintiff gave his solicitors instructions to make demands of the subcontractor and the supplier of the concrete. Hence the solicitor’s letter, Exhibit H. The plaintiff said in the period from March until June 1988 he was pushing the builder to resume the work.

62   On 9 May the plaintiff received the report from Mr Iorfino, Exhibit K, which posed what the engineer identified as two viable alternatives to address the problem with the faulty concrete:

“(a) To remove and replace the slab beams and columns to the original specification,
OR
(b) To provide an acceptable system of support to the slab beams and columns to overcome any doubts to the strength of the concrete or serviceability of the structure.”

63   The plaintiff was asked these questions in evidence and gave these answers (T17):

“Q. The letter that you have just seen and the second page gives an alternative to that, that is, providing a system of support rectification work?
A. That's right.

Q. Had that choice, before 9 May 1988 been given to you?
A. No.

Q. So that was the first time the alternative was given?
A. Yes.

Q. Was there any reason why between, March, April/May and getting this letter, was there any reason for those three months after the concrete was poured, March, April, May, that you didn't authorise tearing down the under strength concrete first floor slab?
A. I'm not a builder. I had to go by their advice. I can't say pull it down, because I'm not at liberty to say that. And also, I didn't know how long it was going to take - if I pull it down, it was going to happen again the same way, you know and I wanted the building finished. So I couldn't ask them to pull it down. First of all, like I said I didn't know whether it had to stay, or pull it down because nobody knew.

Q. Were you getting different advice, or the same advice or what?
A. No, there was two or three different advice and none of them were the same. If I pulled it down what do I do, more money. How long is it going to take?

64   On the following day the plaintiff received a further letter from Mr Iorfino (Exhibit L) which stressed the need in any system of support to address these matters:

“We feel that any proposed system must adequately address the following:-
(a) Structural adequacy of the most highly loaded columns, in particular those adjacent car spaces: 2, 5, 8, 9, 14, 16, 20, 23 & 26.
(b) Any proposed supporting columns to be founded on the foundation piers such that they do not exert any further eccentricity than the minimum allowable by the code. This is because all piers have been designed with no significant eccentricity from column loads.
(c) If columns are to be added and are of different creep properties than the existing concrete columns, allowances must be made such that the long term loads on the existing columns do not transfer to the new columns. That is, if creep is allowed to proceed in the existing columns, then the load in any proposed column of higher creep properties, such as steel, will increase and thus underestimating the effect mentioned in (b) above.
(d) The serviceability requirements of both the beams and the slabs must all be brought back to limits outlined by the code. This is to apply to areas carrying structures over or not.
(e) No proposed structural members are to directly interfere with the already limited driveway widths and car space sizes. That is, the proposed system must comply with the relevant parking code of Liverpool City Council.
(f) Areas that are exposed must be treated to overcome the somewhat lesser protective qualities of the weaker concrete mix.
We stress the urgency that the solution to this problem be sought as soon as possible and if further information or clarification is required, please contact this office.”

65   The plaintiff then went to his solicitors who wrote a letter to the loss adjustors retained for the concrete supplier seeking their urgent consideration as to the resolution of the problem.

66   It was not until 20 June 1988 that Mr Iorfino wrote to the plaintiff a letter posing a solution in the form of various recommendations (Exhibit N). These recommendations were:

“(a) The removal and replacement of the four (4) most highly stressed and now structurally inadequate columns.
(b) The placement of additional steel reinforcement to the 7 m slab span over the internal driveway. This reinforcement being 50 mm x 3 mm steel bars at 500 mm centres fixed to the underside of the slab using epoxy resin. This steel would then require fire rating as per Ord. 70.
(c) The preloading of the slabs in the toilet area. The period of preloading to be four (4) weeks minimum.”

67   The engineer added:

“It is in our opinion that if these recommendations are carried out successfully, then the structure generally will come close to its intended design requirements.”

68   Those recommendations followed the engagement on the plaintiff’s behalf of an independent engineer, Mr Muirhead, and it seems Mr Muirhead’s recommendations allayed Mr Iorfino’s concerns to the extent that he made the recommendations on 20 June 1988.

69   The plaintiff then sought particulars from his builder of the added building costs and these were supplied on 22 June 1988 (Exhibit O). The added building costs amounted to no less than $163,185,48. The plaintiff said that he then sought additional finance, and the builder wrote to the plaintiff on 18 July 1988 seeking written instructions to proceed, which were forthcoming on 25 July 1988. Rectification work started immediately after that. By then, of course, the defendants had given their notice of rescission effective from 6 July 1988.

70   The plaintiff’s evidence was that there had been no delay occasioned by any lack of finance prior to the end of June 1988. It was put to him in cross examination that even before the faulty concrete pour that there had been delay because the plaintiff did not have the money to pay the builder, but this he denied and the builder’s evidence supported him in this denial.

71   In cross examination of the plaintiff, it was put to him that delay in proceeding with the rectification work was prompted by his concern to have the cost of the work paid for either by the subcontractor who poured the concrete or by the supplier who provided it. The plaintiff was asked these questions and gave these answers at T58-59:

“Q. Was part of your reason for not doing as I suggested, and demolish and reconstruct the slab at some time shortly after 8 April 1988, based on the fact that you felt that somebody else was liable for it and that whoever was liable for it should pay for it?
A. No. I wanted to have the building finished. I told the engineer and told the builder, because I have got a tenant waiting…

Q. Wasn't it clear to you that the quickest way of solving this problem was going to be to accept that advice and to get the job done as he recommended it be done?
A. But it was not clear to me, because the concrete was already there. If it did not have to be pulled down, I do not have want to go through the demolishing again.

Q. Was the cost of redoing it part of your concern?
A. And the tenant was waiting for the building…

Q. Part of your concern at this time was to ensure that someone other than you paid for the remedial work?
A. The repairs?

Q. Yes?
A. Well, I wasn't thinking of that at the time. All I wanted to do was to finish the building.”

72   As to the delay in completion that occurred after the resumption of work at the end of July 1988 (see paras 17(xi), 18, 19 and 20 above), the plaintiff said that once the defendants rescinded there was a need to look elsewhere for a new tenant. He referred to the problems in finding a tenant (T90). It is unnecessary to go into the detail of those difficulties.

73   I accept the evidence of the plaintiff that I have reviewed above.

74   Mr Pantaleo had no significant records and was reliant upon memory in the evidence that he gave about the progress of the building work. I reviewed his evidence earlier at para 13 and following and I will not indulge in unnecessary repetition, but it is appropriate in the present context to address the evidence which Mr Pantaleo gave identifying occasions of delay and the duration of delays that occurred.

75   Because of the underground seepage and the need for extra digging, Mr Pantaleo said this delayed matters by one to two weeks. He said that there was a need for an additional pier and this added one to two days. Strikes affected the concrete pour causing loss of three or four days construction time.

76   Time was lost from rain and this held up the pour for some two weeks. Mr Pantaleo said that because of the nature of the soil even light rain affected the site. It is to be noted from Exhibit W that as at 26 February 1988 the engineer was recommending against a pour until such time as the moisture had dried up and the soil had stiffened sufficiently.

77   Mr Pantaleo said that in the period from January to February time was lost by the requirement concerning the added electricity substation. He estimated a lost time of one to two weeks. As to this, Mr Brincat did not consider that the work involved in the construction of the substation, although it could be a two week activity, should have affected the critical path of the building programme, and the first defendant said that he did not make any additional demands requiring the construction of a substation. However, I accept that there was an additional demand for such a purpose and I accept that it occasioned a delay of no less than one week prior to 1 April 1988.

78   In cross examination, Mr Pantaleo at one point agreed that the relevant lock-up stage would not have been reached until some time in May, and I have considered closely the evidence he gave in cross examination at T137-138. Elsewhere the builder said that had the concrete pour not proved to be faulty, the building would have been ready by the end of April and in re-examination he referred to time lost and said that had such time not been lost he would probably have finished the work at the end of March (T174).

79   Mr Pantaleo said that after the work stopped because of the faulty concrete, the plaintiff told him at meetings he was anxious to go ahead but Mr Pantaleo responded “It was beyond my control to do any more” (T120). I accept that Mr Pantaleo said that and I accept that this was an accurate response. In a practical sense, it seems to me that Mr Pantaleo’s resumption depended upon instructions which depended upon definition of the appropriate work from the engineer.

80   Mr Pantaleo said that if the slab and columns had to be removed and replaced, this would have occasioned delay of three to four months to which would have to be added presumably any problems with weather. In giving evidence to that effect, Mr Pantaleo said that this was remedial work of a type that he had never been called upon to do and the estimate given therefore must be weighed with caution. Mr Pantaleo said that he had no recall that the building work was ever delayed through any shortage of funds.

81   I accept the evidence of Mr Pantaleo which I have reviewed above.

82   Mr Papaleo said that he used to drive past the site during the period after building work commenced in 1987. He said that he spoke to the builder and can recall that at one stage the builder told him that everything was in order. However, Mr Papaleo did say that there was a stoppage after the brickwork had gone up. Understandably, Mr Papaleo could not remember dates but he thought there was a stoppage some time after Christmas. He also said, however, at another point, that the work seemed to be going smoothly up to the end of January. Mr Papaleo said that the builder told him that the stoppage was due to the fact that the owner had no money. The evidence of Mr Papaleo in this regard obtains some indirect support in one of the cash flow charts prepared by Mr Brincat but it is inconsistent with the evidence which the plaintiff gave and with the evidence that Mr Pantaleo gave. On balance, I accept the evidence of the plaintiff and his builder on this point. I do not find that the building work was delayed for want of finance at any time prior to the concrete pour.

83   Mrs Papaleo gave evidence but she said that she did not know much about building and although her impression was that the building work did not seem to be proceeding very quickly before the faulty concrete pour, I do not find that her evidence assists me on the question of delay.

84   Mr Brincat prepared a number of documents found in Exhibit 15, comprising various charts in the nature of cash flow and GANT charts. The first of the charts shows that Mr Brincat would have expected the building to have reached lock-up stage by 31 March 1988 but this did not take into account contingencies that I am satisfied occurred, nor did it take into account the length of the Christmas shutdown. Mr Brincat envisaged a shorter Christmas break.

85   Mr Brincat did not, of course, have the opportunity of seeing the progress of the building work. He readily acknowledged that his computer exercise and the charts that were prepared did not make any allowance for difficulties encountered by reason of the ground surface. The witness properly acknowledged that what he had done was to undertake an academic exercise (T304):

“Q. All your charts, the GANT charts and cash flow charts are all drawn up, of course, post-construction?
A. That's correct.

Q. Are they not Mr Brincat, in reality purely an academic exercise?
A. They are an academic exercise, to show in my view, what has happened on the site.

Q. But you can, you have the physical power through the computer, to produce whatever results you want?
A. Of course.

Q. You certainly don't have the advantage of being, as it were, Johnny on the spot, the builder?
A. That's correct.”

86   While I have considered Exhibit 15 and the oral evidence given by Mr Brincat, I do not find ultimately such evidence to be persuasive in the present case. Dr Desiatnik called Mr King in his case in reply and Mr King’s evidence was directed principally to Mr Brincat’s cash flow and GANT charts. Mr King made the obvious criticism about the charts that they did not make due allowance for the length of the Christmas holidays and the strike days. Again, however, whilst I have considered Mr King’s report, Exhibit AA, and the oral evidence that he gave, I do not find it to be of particular assistance in my present task.

87   A consideration of Mr Brincat’s evidence does not cause me to reject the evidence given by the builder and the plaintiff as to what occurred in the course of the building work, what problems were encountered, and what delays were occasioned thereby. I accept the evidence which each of these witnesses gave and which I have above summarised.

88   Accepting the evidence that the plaintiff and Mr Pantaleo gave as to the events that occurred up to 1 April 1988, I find that the progress of the work was delayed by the following:

(i) the difficult ground conditions causing seepage and requiring deeper excavation work than had been anticipated;

(ii) the need for extra strengthening and underpinning of the adjacent building;

(iii) the drawing up of plans for a substation for extra power requirements for the restaurant, and the construction of that substation;

(iv) strike activity;

(v) rain, with subsequent dampness delaying work, including the concrete pour;

(vi) defective concrete in the pour that took place on 27 February 1988.

89   But for the above difficulties, I find on the balance of probabilities that the building would have been erected to lock-up stage (as defined in cl 10 of Exhibit A) by 1 April 1988.

90   As to the lack of progress between 1 April 1988 and the date of rescission by the defendants, I do not find the plaintiff to have been responsible for this in any relevant sense. The plaintiff’s evidence satisfies me that he was at all times anxious to have the building work continue as quickly as possible. The plaintiff had no building or engineering qualifications. I accept, as the plaintiff said, that he had had no previous building experience. His evidence satisfies me that:

(a) the builder’s refusal to resume work without the “go ahead” of the engineer; and

(b) the delay by the engineer, Mr Iorfino, in making the recommendations which were finally made on 20 June 1988

placed the plaintiff in a position to which prudence required he await responsible expert advice. I do not intend to criticise the engineer for the time taken by him and for the steps taken by him before he took the decision reflected in his letter of 20 June 1988. To criticise Mr Iorfino for engaging Mr Muirhead would not be justified. I do not doubt that Mr Iorfino considered it to be his professional responsibility as the engineer responsible for this project to carefully consider the matter before he advised the plaintiff to proceed. Nor do I doubt that the plaintiff acted reasonably and responsibly in waiting for such professional advice. The plaintiff acted promptly in seeking the additional finance to meet the increased costs once Mr Iorfino had advised how the building should proceed, and in these circumstances the delay of approximately one month before giving the builder instructions to proceed I find to have been reasonable. I find that the plaintiff acted reasonably in his response to the dilemma caused by the faulty concrete from the date this event occurred until the date that notice of rescission was given by the defendants. Once the defendants gave notice of rescission, this event was causative of delay in completion of the building thereafter.

91   With the above findings in mind, I return to consider the cross claim and the terms of the agreement as alternatively pleaded (set out in para 55 above).

92   The obligation in cl 2 to erect to lock-up stage on or prior to 1 April 1988 was expressed to be subject to delays occurring from the defined contingencies, and it seems to me that failure to reach lock-up stage by 1 April 1988 attributable to one or more of those contingencies must answer and defeat the cross claim based upon the alleged breach of the term pleaded in para 5 of the cross claim. I am satisfied that each of the causes of delay identified in para 88 above was a cause which fell within one or other of those categories addressed in cl 2(i) to (vii), and that in combination such causes excused the failure to reach lock-up stage by 1 April 1988.

93   If Mr Murr is correct in the construction he urged of cl 2 when addressing the plaintiff’s claim, that is the end of the matter. The cross claim must fail because neither the term pleaded in para 5A of the cross claim or in para 6 thereof could be implied. Mr Murr’s submissions in point I considered at para 30 earlier. I find those submissions persuasive. Absent any formula for extension of the lock-up period, I do not consider either of the terms pleaded in 5A or 6 comprised part of the contract.

94   However, even if one or other of those implied terms was to be considered to form part of the contract, having regard to all the findings I have expressed above, the defendants have not satisfied me that the plaintiff failed to use all reasonable endeavours within the time pleaded in para 5A or, alternatively, the time pleaded in para 6 to meet the objectives as expressed in the alternative in those paragraphs.

95   For the above reasons, the cross claim fails and there will be verdict and judgment for the cross defendant on that claim.

Costs

96   Costs would ordinarily follow the event and this is so in considering both the plaintiff’s claim against the defendants and the defendants’ cross claim against the plaintiff. The issues arising on the plaintiff’s claim and the defendants’ cross claim were such that the evidence received was generally referable to both claims, and of course the claims were heard together. It seems to me therefore that the just and appropriate order for the Court to make is that each party should pay his and her own costs of both the claim and the cross claim.

Formal orders

97   1. Verdict and judgment for the defendants on the plaintiff’s claim.

2. Verdict and judgment for the plaintiff on the defendants’ cross claim.

3. Each party is to pay his and her own costs of the plaintiff’s claim and of the defendants’ cross claim.

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Last Modified: 05/01/2001