XJS World Pty Ltd v Central West Civil Pty Ltd

Case •

[2025] NSWCA 133

•

16 June 2025

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: XJS World Pty Ltd v Central West Civil Pty Ltd [2025] NSWCA 133
Hearing dates: 4 April 2025
Date of orders: 16 June 2025
Decision date: 16 June 2025
Before: Payne JA at [1];
Kirk JA at [2];
Adamson JA at [99]
Decision:

(1) Appeal dismissed.

(2) Appellant to pay the respondent’s costs.

Catchwords:

CONTRACTS – construction of standard form contract – terms in standard form contract may make provision for eventualities only to apply to the extent activated by parties – parties’ choice not to activate those provisions is not to be undermined by seeking to stretch other words in the contract to fill the purported gap

EVIDENCE – onus of proof – language of “shifting” onus apt to deceive – notion of doubtful utility at the end of a hearing or in an appeal

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999 (NSW), s 32(3)

Cases Cited:

Beaufort Developments Ltd v Gilbert-Ash Ltd [1999] 1 AC 266

Big River Timbers Pty Ltd v Stewart [1999] NSWCA 34; (1999) 9 BPR 16,605

Blatch v Archer (1774) 1 Cowper 63 at 65; 98 ER 969

Brady (Inspector of Taxes) v Group Lotus Car Cos plc [1987] 2 All ER 674

Carbone v Fowler Homes Pty Ltd [2024] NSWCA 192

Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719

Commissioner of Police (New South Wales Police Force) v Zisopoulos [2020] NSWCA 236; (2020) 299 IR 314

Elisha v Vision Australia Ltd [2024] HCA 50; (2024) 99 ALJR 171

Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303

Hyder Consulting (Australia) P/L v Wilh Wilhelmsen Agency P/L [2001] NSWCA 313

J & P Marlow (No 2) Pty Ltd v Hayes & McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Liebe v Molloy (1906) 4 CLR 347; [1906] HCA 67

Vetter v Lake Macquarie City Council (2001) 202 CLR 439; [2001] HCA 12

Texts Cited:

CR Williams, “Burdens and Standards in Civil Litigation” (2003) 25 Sydney Law Review 165

Category:Principal judgment
Parties: XJS World Pty Ltd (Appellant)
Central West Civil Pty Ltd (Respondent)
Representation:

Counsel:
PA Horobin (Appellant)
J Young / A Lim (Respondent)

Solicitors:
Hugh & Associates Lawyers (Appellant)
Blackwell Short Lawyers (Respondent)
File Number(s): 2024/408921
Publication restriction: Nil
 Decision under appeal 
Court or tribunal:
District Court
Jurisdiction:
Civil
Citation:

XJS World Pty Ltd v Central West Civil Pty Ltd [2024] NSWDC 465

Date of Decision:
9 October 2024
Before:
Weber DCJ
File Number(s):
2023/123947

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellant, XJS World Pty Ltd (XJS), entered into a contract engaging the respondent, Central West Civil Pty Ltd (CWC), to undertake civil construction works for development of land it owned in Bathurst NSW (the Contract). Disputes arose between the parties which culminated in XJS issuing a notice to CWC terminating the Contract. XJS engaged another contractor to work on the Property, before suing CWC in the District Court for liquidated and general damages arising from alleged breaches. CWC denied any such breach, said the purported termination was repudiatory, and cross-claimed for outstanding invoices for asserted variations. The primary judge dismissed XJS’s claim and upheld CWC’s cross-claim.

XJS appealed. The issues raised were:

(1) Did the Contract require that the works be completed within three months of engagement, and was XJS entitled to claim liquidated damages beyond that point?

(2) In any event, did XJS establish that CWC was responsible for delays in completion of the works?

(3) Did CWC breach the Contract by not carrying out the works in conformity with Bathurst Regional Council’s requirements?

(4) Did the primary judge err in concluding that XJS had not been entitled to terminate the contract, and its purported termination constituted a repudiation?

(5) Insofar as any breaches of contract by CWC were established, has XJS proved any loss suffered as a result?

(6) Did the primary judge err in dealing with claims made by CWC with respect to what it asserted were agreed variations to the works to be done?

The Court (per Kirk JA, Payne and Adamson JJA agreeing) dismissed the appeal and held:

1. As to the first issue: It is apparent that the Part B terms are derived from a standard form contract. The terms of such a contract may make provision for various eventualities which only apply if and to the extent that they are activated by the parties by completing relevant details. If the parties choose not to complete those details then they are choosing not to activate those provisions of the contract: at [36]. It is apparent that the parties had the option of setting a Date for Completion and they chose not to do so. That contractual purpose is not to be undermined by seeking to stretch inapposite words in par 3 of Part D to fill a gap as though the parties had not deliberately chosen to leave that gap: at [39]. The claim for liquidated damages thus also fails: at [40].

Big River Timbers Pty Ltd v Stewart [1999] NSWCA 34; (1999) 9 BPR 16,605; Beaufort Developments Ltd v Gilbert-Ash Ltd [1999] 1 AC 266; Elisha v Vision Australia Ltd [2024] HCA 50; (2024) 99 ALJR 171, referred to.

2. As to the second issue: The language of a “shifting” onus was employed here to refer to what has been called the “tactical” onus, being a tactical evaluation of who is winning at a particular point in time. That notion is liable to be confused with instances where there is an evidentiary onus requiring that the side bearing that onus points to sufficient evidence for an issue to be raised. It can also be distinguished from the principle of judicial reasoning that all evidence is to be weighed according to the proof which it is in the power of one side to have produced and the power of the other to have contradicted: at [45]. The notion is also of doubtful utility at the end of a hearing (or in an appeal) when the course of adducing evidence has come to an end. The question at that point with respect to a factual matter properly raised is whether the party bearing the legal burden of proof has discharged it. The risk of non-persuasion lies on the person bearing the legal burden: at [47]. The onus was on XJS to show that rain problems could not explain all the delays, yet it did not point to any convincing evidence establishing as much: at [52]. As regards the stormwater concern raised by the Council and the delays that followed, there is no basis to infer that those were caused by actions of CWC in breach of the Contract: at [53]-[56].

Blatch v Archer (1774) 1 Cowper 63; 98 ER 969; Brady (Inspector of Taxes) v Group Lotus Car Cos plc [1987] 2 All ER 674; Commissioner of Police (New South Wales Police Force) v Zisopoulos [2020] NSWCA 236; (2020) 299 IR 314; Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719, referred to.

3. As to the third issue: The primary judge accepted evidence given on behalf of CWC that there were more inspections than were recorded on the Council documents based on credibility finding of the witness. No compelling basis is established for an appellate court to overturn that finding: at [69].

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28, referred to.

4. As to the fourth issue: This issue fell away in light of XJS’s lack of success on the issues already addressed: at [73].

5. As to the fifth issue: The actual amount paid to a replacement contractor may be a method of calculating general damages provided the correlation between the work meant to be done by the first contractor and that subsequently done by the second is established. Here it was not: at [77]. XJS cannot assert that the cost for further work stemmed from CWC’s breaches without identifying the contractual obligation in question corresponding with the “rectification” work done: at [78].

Hyder Consulting (Australia) P/L v Wilh Wilhelmsen Agency P/L [2001] NSWCA 313, distinguished.

6. As to the sixth issue: There is a sound basis in the circumstances to infer that the identification of variations, the pricing of those variations, and that work was done giving effect to those variations, had been agreed between XJS and CWC: at [85]-[94]. In those circumstances the factual challenge made by XJS on appeal is not made out: at [95].

JUDGMENT

  1. PAYNE JA: I agree with Kirk JA.

  2. KIRK JA: The appellant, XJS World Pty Ltd (XJS), was a company owned and run by the late Mr Bernard Vance and his wife Ms Vickie Vance. XJS wished to develop land it owned in Bathurst NSW (the Property) by way of subdivision into ten smaller residential blocks for sale. In April 2021 it entered into a contract engaging the respondent, Central West Civil Pty Ltd (CWC), to undertake civil construction works for the proposed development (the Contract). CWC was operated by its director Mr Simon Withers.

  3. Disputes arose between the parties after work commenced. The disagreements culminated in XJS issuing a notice to CWC terminating the Contract, before suing CWC in the District Court for liquidated and general damages arising from alleged breaches. CWC denied any such breach, said the purported termination was repudiatory, and cross-claimed for outstanding invoices for asserted variations. Judge Weber dismissed XJS’s claim and upheld CWC’s cross-claim: XJS World Pty Ltd v Central West Civil Pty Ltd [2024] NSWDC 465 (J).

  4. XJS has appealed. Its amended notice of appeal raised nine interrelated grounds. CWC raised four points in a notice of contention, two of which were not pressed. In the end the issues raised by the parties were as follows:

  1. Did the Contract require that the works be completed within three months of engagement (ground 1)? Relatedly, was CWC liable to pay liquidated damages of $1,000/day for each day of non-completion after that period had expired (ground 7)?

  2. In any event, did XJS establish that CWC was responsible for delays in completion of the works such that CWC was in breach of the Contract for lack of due diligence (ground 2 and ground 4 in part)?

  3. Did CWC breach the Contract by not carrying out the works in conformity with the local council’s requirements, in particular as to inspections and testing required by the development consent (grounds 3 and 4)?

  4. In light of the conclusions on the issues just identified, did the primary judge err in concluding that XJS had not been entitled to terminate the contract because of the claimed breaches by CWC, and its purported termination constituted a repudiation (ground 5)?

  5. Insofar as any breaches of contract by CWC were established, has XJS proved any loss suffered as a result (ground 6)? CWC raised a point in ground 1 of its notice of contention which did not seem to add anything to this ground.

  6. Did the primary judge err in dealing with claims made by CWC with respect to what it asserted were agreed variations to the works to be done? Specifically, did his Honour err in not ordering restitution of amounts that XJS had paid with respect to some of these claimed variations (ground 8), and in upholding CWC’s cross-claim with respect to some further claimed variations (ground 9)? CWC asserted in ground 4 of its notice of contention that it was entitled to payment for the variations on a quantum meruit or implied obligation basis.

  1. I will deal with each issue in turn, after first setting out the context in which they arise. The dispute is to a large extent a factual one, albeit that an issue of contractual construction is raised. No error of substance has been shown. The appeal should be dismissed with costs.

Background

  1. In around 2015 the Vances decided to develop the Property by subdividing the block housing their then family home along with the adjoining vacant block into separate residential lots for sale. A development consent was issued by the Bathurst Regional Council in July that year and modified in 2020. A construction certificate was issued in January 2021. On Ms Vance’s evidence there was an informal arrangement between her and Mr Vance that he was to handle the proposed development of the Property on behalf of XJS given “Bernard is more familiar with building projects”.

  2. Mr Vance had previously engaged CWC for works on another property. In 2020 he and Mr Withers had discussions about CWC carrying out work for the development. The dealings between XJS and CWC were through Mr Vance and Mr Withers. XJS and CWC entered into the Contract on 15 April 2021. Further details of the Contract are set out below, when addressing Issue 1.

  3. There were significant delays in carrying out the works, as discussed below when addressing Issue 2.

  4. By the end of October 2022 CWC had issued seven progress claims to XJS with respect to works on the Property. Claims 1 to 5 were fully paid, whilst claim 6 was only partly paid and claim 7 remained wholly unpaid.

  5. On 28 October 2022 a representative of Council sent Mr Vance a table setting out development application conditions applying to the Property’s subdivision that were identified as “still outstanding”. That table showed that XJS owed Council some $170,000. Mr Vance forwarded the email and the spreadsheet to Mr Withers on the same day. The next day Mr Vance emailed Mr Withers again, calling for works at the Property to be completed “as a matter of urgency”. He said “I am 14 months overdue and a long way away from completion of the sub-division … Rain events do not explain the delay”. Mr Withers replied on 30 October, noting that “most of the outstanding items on the list are not part of my scope of works” and asked that Mr Vance “pay the outstanding and I will complete the outstanding contracted works”.

  6. On 31 October 2022 XJS’s then solicitor, Mr Ryan Cooney, emailed Mr Withers, stating, amongst other things:

I can confirm that I hold irrevocable instructions to pay your invoices from the proceeds of sale [ie of the subdivided lots], which will occur immediately after the subdivision has registered. Are you prepared to attend the site as soon as possible to attend to the outstanding items listed in your email below?

  1. On 18 November 2022 Mr Withers emailed Mr Cooney saying that “[w]e will be on site the week [of] the 28th Nov to complete the overland drain and tidy site”. The intended attendance was confirmed by Mr Withers in an email sent on 25 November 2022 to Mr Cooney, but in the end it did not occur. By letter dated 21 December 2022 XJS’s current solicitor issued a breach notice to CWC, alleging that CWC was in breach of the Contract because it had “not completed the Works by 19 July 2021, or at all” and “failed to comply with the Calare Plans” along with the construction certificate. The letter demanded that CWC remedy those breaches within seven days, saying otherwise the Contract might be terminated. It also claimed liquidated damages of $519,000. On 3 April 2023, by way of another letter from its solicitor, XJS notified CWC that it terminated the Contract.

  2. In May 2023 XJS engaged another contractor, Mr Ben Hagney, to work on the Property. On Ms Vance’s account, the purpose of this was “to complete the civil works for the Development and fix the defective works performed by CWC”. Mr Hagney carried out works from May to October 2023 and issued invoices to XJS totalling $107,734, which XJS paid.

  3. XJS initiated proceedings against CWC in the District Court in April 2023. The proceedings were heard in June and September 2024. Ms Vance, Mr Withers, Mr Hagney and a Mr Ian Evans (an engineer who consulted to XJS) each gave evidence. Mr Withers was found by the primary judge to be “an honest and reliable witness” (J [91]). Mr Vance was unable to give evidence as he had passed away in November 2023 from cancer. No adverse finding was made as regards Ms Vance, but the evidence she could give on the issues in dispute was limited.

  4. The issues in dispute below were summarised at J [5]-[8] (not all of these arise on appeal). XJS alleged that CWC breached the Contract by failing to carry out works within three months or a reasonable time thereafter, or at all; and that the works carried out were not compliant with the contractual requirements. For the alleged delay XJS claimed liquidated damages of $607,000 (calculated at $1,000/day times the number of days from three months after the Contract commenced to the date of the termination notice, less 14 days to allow for wet weather). XJS also sought to have CWC reimburse it for “costs of completion and rectification work” charged by Mr Hagney. Further, XJS claimed it overpaid CWC by $35,504.57 in excess of the fixed price under the Contract, for which it sought restitution (seemingly on the basis of mistake, although this was not spelt out). CWC denied any breach and said XJS’s purported termination was a repudiation of the Contract, discharging CWC from any further obligation. As for XJS’s restitutionary claim, CWC said the payments beyond the originally quoted scope was for additional work it carried out pursuant to variations of the Contract, and that XJS was still liable for amounts under certain outstanding invoices. It cross-claimed for $60,694.30 in payment of those outstanding invoices on the basis of the Contract as varied, or in the alternative on a quantum meruit basis.

  5. The primary judge handed down judgment promptly in October 2024, holding as follows:

  1. As to delay, the Contract “placed no obligation for the works to be completed … within three months” (J [14]). XJS did not discharge its onus to establish CWC’s responsibility for delay, where there were other causes for delay plausibly identified by CWC (J [23]-[29]). To the extent XJS complained of CWC not being able to complete the works it was because XJS decided to terminate the Contract (J [30]).

  2. XJS’s purported termination was “wrongful and repudiatory” (J [35], [37]-[39]). CWC’s suspension of work “can be attributed to [XJS’s] cash flow difficulties” (J [34]).

  3. As to the other alleged breaches that are relevant to the appeal, XJS failed to make any submission or adduce expert evidence of CWC not complying with the Calare Civil Plan (J [42]-[44]); XJS did not explain which Council specifications were not complied with or identify any evidence of non-compliance (J [47]); XJS “sought to establish that the routine inspections and testing were not undertaken … by simply referring to what it said was a lack of contemporaneous documentary evidence of the inspection and testing having been carried out” and that was insufficient to prove its case (J [87] and [93]); Mr Withers’ evidence to the effect that there were undocumented inspections and testings done onsite was to be preferred (J [91]).

  4. As to damages, “the Contract makes no provision for the payment of liquidated damages” (J [96]) for “the simple reason that there is no agreed operative Date for Completion stated in Item 8 of Part A to the Contract” (J [101]). Given his Honour found the alleged breaches were unsubstantiated it was “strictly unnecessary” for him to address XJS’s claim for general damages (J [110]). He nevertheless concluded that XJS did not establish its loss.

  5. As to variations (going to both XJS’s restitutionary claim and CWC’s cross-claim), his Honour understood it was not disputed that CWC carried out the works which it said were variations and for which it issued progress claims 6 and 7, thus the sum sought under those invoices was “a debt due and payable to it under the Contract” (J [131]). If XJS had an issue with CWC performing work and charging beyond the original work scope then it could have raised it as it received those variation invoices; because it “elected” to pay those invoices it paid, and indicated through its solicitor it would pay the outstanding amounts, it “waived” any right to demand strict compliance with the Contract (J [126]-[127]). In addition, applying the principle in Liebe v Molloy (1906) 4 CLR 347; [1906] HCA 67, because Mr Vance “must be taken to have known of the variation works” which was done on the Property, CWC should be entitled to recover payments for the work it had actually done (J [133]-[135]). Thus CWC was entitled to succeed on its cross-claim either on a conventional contractual basis or by virtue of the principle in Liebe, and XJS’s restitutionary claim was rejected.

Issue 1: the claimed requirement that the works be completed in three months

The terms of the Contract

  1. Part A of the Contract is identified as the “Contract Schedule”. It sets out 15 items. Items 1 and 2 identify the parties, with XJS identified as the “Principal” and CWC as the “Contractor”. Item 3 is as follows:

Brief Description of Works: Undertake the Civil Construction works for proposed 10 Lot Subdivision at 38 Gilmour Street Kelso as per Calare Civil Plans stamped for a Construction Certificate on 22nd January 2021. All works are also to ensure compliance with specifications and terms of DA 2015/0171.

  1. Item 4 is a list of “contract documents”:

Part A – Contract Schedule

Part B – Contract Conditions

Part C – All Civil Works as per Design Plans by Calare Civil and stamped acceptable for Construction Certificate in relation to the 10 Lot Residential at 38 Gilmour Street Kelso. Pursuant to Calare Civil Job No: 2015.0309 …

Part D – Schedule of Rates submitted by Central West Civil for the civil construction works to be undertaken to Bathurst Regional Council’s Specifications and requirements to achieve a Subdivision Certificate for the Subdivision.

Part E – Bathurst Council DA 2015/0171

Part F – Electrical Design drawing EDS67212

  1. Item 5 identifies the “basis of contract price” as “lump sum”. Item 6 provides the contract price for “stage two” is $300,109 exclusive of GST. A space is left for “stage one” but is crossed off by a hand drawn line. Item 7 sets the “commencement date” as 19 April 2021. Item 8, being the “Date for Completion”, is left blank. Item 11 provides that the date on which “Contractor Progress Claims” is to be submitted is the “last day of the month”. Item 14 says (in typewritten script) “Liquidated Damages: $1000 per day”.

  2. Above the signature blocks is the following:

By signing below the parties acknowledge and accept that the CCF MINOR CONTRACT CONDITIONS form part of and govern the agreement between the parties. Each of the signatories below warrant by signing this document that they are authorised to enter into this Contract on the behalf of the stated party.

  1. A document entitled “Contract Agreement – Part B. Contract Conditions” appears after Part A. The Part B terms can be inferred to be what is referred to in Part A as the “CCF Minor Contract Conditions”. So much is confirmed by evidence of the prior negotiations. Mr Withers had sent Mr Vance a quotation for the work on 16 March 2021, and later that day also emailed through a document entitled “CCF Minor Contract Agreement”. It is apparent that Parts A and B of the Contract were based upon this document, with some alterations made by the parties.

  2. Relevant clauses within Part B of the Contract are as follows:

Clause 1 – Interpretation …

“Completion” means that point in time when all the Works have been completed by the Contractor and signed off as accepted by Bathurst Regional Council’s Representative for the issue of the Subdivision Certificate with regard to the requirements of the Construction Certificate for the 10 Lot Subdivision …

“Date for Completion” means the date or the last day of the period of time stated in item 8, as may be extended pursuant to this Contract;

“Date of Completion” means the date when Completion was achieved by the Contractor; …

“Contract” means the agreement between the parties as evidenced by those documents listed in item 4; …

“Works” means the work that the Contractor is or may be required to execute under the Contract and includes Variations, remedial work, and temporary works. …

If there is any discrepancy or ambiguity between the Contract Documents, Part A shall take precedence over Parts B, C, D, E, F and each part in turn takes precedence over those that follow.

Clause 2 – Performance

The Contractor shall execute and complete the Works with due diligence and without delay and in accordance with the terms and conditions of the Contract. …

Clause 9 – Commencement & Completion

The Contractor shall commence the Works on the Commencement Date stated in item 7, or if no date is stated, within fourteen (14) days after the date of execution of the Contract by the Principal. The Contractor shall proceed with due expedition and without delay and shall bring the Works to Completion on or before the Date for Completion. …

Clause 11 – Extension of Time

If the Contractor has been delayed, or is likely to be delayed, in the performance of the Works for any reason or event beyond the reasonable control of the Contractor (the “Delaying Event”), then the Date for Completion shall be extended commensurate with the length and impact attributable to the Delaying Event.

Clause 12 – Liquidated Damages

If the Contractor fails to reach Completion by the Date for Completion, the Contractor shall be liable to the Principal for Liquidated Damages at the rate set out in item 14 for the period from the Date for Completion until the Date of Completion.

  1. Clause 13 provides for the issuing of a breach notice and the termination of the Contract in cases of substantial breach of the Contract.

  2. A document titled “Quotation Form and List of Quantities for 10 Lot Subdivision at 38 Gilmour Street. 26/01/21” appears to be what is identified in Part A of the Contract as the Part D “Schedule of Rates” (the Quotation Form). That document contains a list of work items, setting out the quantity for some items, the unit rate for some items, and a quoted amount for each item. At the end of that list the “total cost” is quoted at $330,119.90, which equates to the amount identified as the contract price for stage two with GST added. CWC noted in argument that one of the items – the “utility services” of trenching and backfilling – was only quoted at a rate (of $35/m), thus at least to that extent there was a variable aspect of the pricing.

  3. In this document, after the total cost quotation, are nine numbered paragraphs under the sub-heading “Conditions related to Tendered Prices”. There is some overlap between these paragraphs and the clauses in Part B. For example, par 1 says that “[p]ayment claims will be subject to Council’s endorsement of the work performed”, which overlaps with cl 7 in Part B. And par 6 says that “[t]he civil works to be undertaken will be as per the Calare Civil Design Plans stamped by Bathurst Regional Council on 22nd January 2021”, which overlaps with items 3 and 4 of Part A. The point at issue here relates to par 4 of these terms.

The claimed requirement for completion within three months

  1. Paragraph 4 within the conditions at the end of the Quotation Form states that “[t]he civil works will need to be completed within three months of Contract engagement”.

  2. The primary judge concluded that the Contract did not require works to be completed within three months. His Honour said the “Conditions related to Tendered Prices” did not form part of the Contract but were really just footnotes to the Quotation Form (J [16]-[17]). The words “will need to” is more in the nature of an expression of expectation than words of contractual obligation (J [18]). And the three month obligation was inconsistent with cl 2 of Part B which provides that works were to be carried out “with due diligence and without delay”, coupled with a regime for extensions of time in cl 11, and this point was reinforced by the hierarchy provision in cl 1 of Part B, by which the terms of Part B took precedence over terms in later parts (J [19]-[20]).

  3. Relatedly, his Honour rejected XJS’s claim for liquidated damages under cl 11 of Part B “for the simple reason that there is no agreed operative Date for Completion stated in Item 8 of Part A to the Contract” (J [101]). He rejected the argument that par 4 of the Quotation Form was sufficient to overcome the failure of the parties to nominate a Date for Completion because par 4 was an expression of hope and not a contractual obligation (J [104]).

  4. XJS challenged both conclusions. It said that the conditions at the end of the Quotation Form were part of a contractual document, and the relevant pages had been signed. The words in par 3 were capable of being given contractual effect. There was no sufficient basis to omit or correct the words as there was no absurdity, inconsistency or clear mistake involved in giving those words contractual effect. Indeed, the language was “unambiguous”. The reference to due diligence (etc) in cl 2 of Part B was as to the manner in which works were to be carried out rather than as to timing. For the extension mechanism in cl 11 to operate there must be a fixed time for completion. It argued that it was necessary to treat the three month completion requirement as contractual, otherwise three clauses of the Contract would be rendered inoperative and superfluous: cl 9, at least insofar as it required the Works to be done “on or before the Date for Completion”; cl 11, dealing with extensions of time to the Date for Completion; and cl 12 with respect to liquidated damages. In that context, it said, although item 8 in Part A did not specify a Date for Completion, par 3 of the Quotation Form should be understood to identify such a date.

  5. The relevant core principles of construction of commercial contracts were summarised recently in J & P Marlow (No 2) Pty Ltd v Hayes & McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117 at [89]-[90] and need not be repeated here.

  6. XJS’s arguments should not be accepted. To begin with, its assertion that the Contract is not ambiguous in relation to any required date for completion is undercut by its own submission that “the Contract cannot be read so as to give the term ‘Date for Completion’ its defined meaning”, such that instead par 4 should be construed as supplying the date.

  7. The terms within Part B of the Contract make clear and careful provision for specifying a “Date for Completion”, being “the date or the last day of the period of time stated in item 8, as may be extended pursuant to this Contract” (quoting the definition in cl 1). Non-compliance with that date has the potentially severe consequence of leading to a liability to pay liquidated damages of $1,000/day. It is apparent that the parties made a deliberate decision not to state a time in item 8 in Part A. That decision cannot simply be ignored. It is not for the Court to rewrite the Contract, or to insert words from another part of the Contract, so as to insert a time where the parties chose not to do so.

  8. That the parties should make such a choice is not surprising when the notion of “Completion” involves not only the works being done but also “signed off as accepted by Bathurst Regional Council’s Representative for the issue of the Subdivision Certificate” (quoting the definition in cl 1). Thus Completion was not something entirely in the control of CWC. Local councils are sometimes quick in certifying or approving works but commonly they are not. CWC would have taken a significant risk were it to have accepted a three month completion date in this sense.

  9. Further, the words in par 3 of the Quotation Form do not align with the Part B notion of Completion. Paragraph 3 speaks of the “civil works” being completed within three months, not the works-and-council-approval being completed.

  10. At one level the construction accepted by the primary judge does mean, as XJS argued, that some of the other clauses of Part B have limited work to do. However, its argument is overstated in this regard. Clause 9 not only addresses the commencement of the Works but also requires that the Contractor “shall proceed with due expedition and without delay”. That obligation links to, and echoes, the requirement in cl 2 that the Contractor “shall execute and complete the Works with due diligence and without delay …”. There is no reason to limit that requirement to the manner in which the Works are carried out, as XJS suggested; the reference to “without delay” speaks to timing. The effect of cll 2 and 9 is to impose a duty on the Contractor to proceed with due diligence, even if no hard completion date is specified. A failure to comply with that duty could sound in damages. It is true that the provision for an extension of time in cl 11 addresses specifically extending the Date for Completion, but it can also reasonably be understood to have the effect of affecting the more generic duty to proceed diligently. It is only cl 12 which is left with no work to do.

  11. In any event, the argument of superfluity has little force. To begin with, “even in legal documents (or, some might say, especially in legal documents) people often use superfluous words”: Beaufort Developments Ltd v Gilbert-Ash Ltd [1999] 1 AC 266 at 274 (Lord Hoffman); see also Big River Timbers Pty Ltd v Stewart [1999] NSWCA 34 at [16]; (1999) 9 BPR 16,605. Here, it is apparent from the words above the signature block in Part A that the Part B terms are derived from a standard form contract (and so much is confirmed by the prior negotiations – see above at [21]). The terms of such a contract may make provision for various eventualities which only apply if and to the extent that they are activated by the parties by completing relevant details. If the parties choose not to complete those details then they are choosing not to activate those provisions of the contract. That manner of operation of the Contract is echoed in cl 9 in Part B, which states that “[t]he Contractor shall commence the Works on the Commencement Date stated in item 7, or if no date is stated, within fourteen (14) days after the date of execution of the Contract by the Principal” (emphasis added). There is nothing surprising or uncommon about this type of contingent operation of contractual conditions. And it would be contrary to the understanding of a reasonable businessperson in the position of the parties to seek to stretch other words in the Contract in an attempt to give work to do to all the words of the Contract, as though a positive choice not to activate relevant provisions had not been made by the parties.

  12. What, then, of the argument that par 3 contains words in a contractual document – under a sub-heading referring to “conditions” – which can be seen as promissory? The point made by XJS has some force but it is not conclusive. Sometimes words in a contractual document are aspirational: eg Elisha v Vision Australia Ltd [2024] HCA 50; (2024) 99 ALJR 171 at [46]. Although the words “will need to be completed” can be seen as promissory, they are relatively informal in nature. They stand in contrast to the careful regime set out in Parts A and B. They are included in Part D, which is headed “Quotation Form and List of Quantities …”, and where the “conditions” are said to be “related to Tendered Prices”. These contextual considerations suggest that the par 3 reference was by way of explanation of the quoted work and prices rather than a distinct promise as to timing. Moreover, cl 1 of Part B provides that it takes precedence over later parts of the Contract “[i]f there is any discrepancy or ambiguity between the Contract Documents”. I have already noted that there is a degree of discrepancy between the notion of the Date for Completion in Parts A and B on the one hand and par 3 on the other (see above at [33]). And there is certainly a degree of ambiguity in seeking to read them together. As explained, Part B does contain relevant promises as to timing of completion of the works, even if those promises do not involve specification of a specific end date. It is that part of the Contract which addresses the issue, not Part D.

  13. As noted above, it seems that the CCF terms were first sent by Mr Withers to Mr Vance on 21 March 2021. Counsel for XJS took the Court to an email sent by Mr Vance to Mr Withers which attached a revised version of those terms, along with an earlier iteration of what became Part D. Counsel submitted that “at the point that Mr Withers for the respondent sought to tender for the works, he was aware that it was a condition that the works would be completed within the three months of contract engagement”, as that was a term within that iteration of Part D. Yet Mr Vance said in the covering email that “[t]his contract documentation forms the agreement between Principal and Contractor once signed and completed by both parties”, thus making the obvious point that the proposed terms were subject to agreement. The terms were then further altered to form the final Contract. It is that Contract which is to be construed, not earlier iterations. The submission did nothing to advance the debate.

  14. The construction propounded by CWC does not involve omitting words of the Contract, as XJS argued. Rather, it involves construing the legal effect of the words used. As a matter of text, context and purpose XJS’s arguments are not persuasive. It tried to extract from the words in par 3 of the Quotation Form a very specific type of promise for the purposes of Parts A and B of the Contract, with severe consequences of non-compliance with that promise. It is apparent that the parties had the option of setting a Date for Completion and they chose not to do so. That contractual purpose is not to be undermined by seeking to stretch inapposite words in par 3 of Part D to fill a gap as though the parties had not deliberately chosen to leave that gap. I note that it is not necessary to consider whether any of the other paragraphs at the end of the Quotation Form have binding effect.

  15. Thus ground 1 should be rejected. As a consequence ground 7, relating to the claim for liquidated damages, must also be rejected.

Issue 2: whether CWC was liable for the delays in completion

  1. Ground 2 states that the primary judge erred in finding that XJS did not discharge its onus in proving that CWC was responsible for the delays in completing the works. Ground 4 refers to the alleged failure of CWC to “complete the works with due diligence, or within 3 months (or a reasonable time thereafter) or at all”. As explained, cll 2, 9 and 11 imposed a duty on CWC to complete the works with due diligence and without delay, subject to allowing for delays for any reason or event beyond its reasonable control. The primary judge found that XJS had not clearly identified the period(s) of delay, nor established that that the delays that undoubtedly occurred could contractually be attributed to CWC (J [22]-[32]).

  2. It seems that establishing breach by way of delay was intended to found XJS’s claim that it was entitled to terminate the Contract and retain Mr Hagney to complete the works, for the costs of which it sought reimbursement from CWC. XJS accepted that it bore the burden of proof and persuasion on this issue. Its argument on appeal was in essence that it had discharged that onus, contrary to the conclusion of the primary judge.

  3. It was common ground that works on the Property were delayed by two key factors. First, the weather in the area was unusually wet for at least some of the time, making it impossible at times to carry out the planned work at the Property. Second, in September 2021 the Council raised concerns with stormwater pumping on the site and requested that a revised Soil and Water Management Plan (SWMP) be prepared. As to the first, there was a dispute about the extent of the delay caused by the rain. As to the second, there was disagreement about who was responsible for the problem identified by the Council and about whether CWC was unduly slow in responding.

  4. The primary judge noted that XJS had not adduced any expert evidence of a programming expert or such like to identify the relevant delays, who was responsible for causing the delay, and the effect of the delays (J [24]). XJS said in response that expert evidence was not required. XJS quoted McColl JA saying that a lack of due diligence may be established “by reference to a lack of activity on site over a significant period that could not be satisfactorily explained”: Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 at [181]. However, her Honour went on to reiterate that the onus of proof is on the claimant, and referred to whether “the facts established by the respondent are capable of giving rise to an inference of lack of due diligence” (ibid).

  1. Both parties referred to the notion of a “shifting” onus. That language can be apt to deceive: note Brady (Inspector of Taxes) v Group Lotus Car Cos plc [1987] 2 All ER 674 at 686-687. What is generally meant by that language – and the way in which XJS sought to employ it – is to refer to what has been called the “tactical” onus, that being simply “a tactical evaluation of who is winning at a particular point in time”: CR Williams, “Burdens and Standards in Civil Litigation” (2003) 25 Sydney Law Review 165 at 168. The “tactical” understanding of onus is liable to be confused with instances where there is an evidentiary onus requiring that the side bearing that onus points to sufficient evidence for an issue to be raised (after which the legal onus may be on the other side). It can also be distinguished from the principle of judicial reasoning that all evidence is to be weighed according to the proof which it is in the power of one side to have produced and the power of the other to have contradicted: Blatch v Archer (1774) 1 Cowper 63 at 65; 98 ER 969 at 970; Vetter v Lake Macquarie City Council (2001) 202 CLR 439; [2001] HCA 12 at [36]. As four members of the High Court recently stated, the “legal onus to prove loss arising from a breach of contract falls upon the plaintiff”, although “in some circumstances the common law facilitates its discharge”: Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719 at [127]; see further Commonwealth of Australia v Sanofi [2024] HCA 47; (2024) 99 ALJR 213 at [14]-[15].

  2. This Court has warned of the dangers of confusion when invoking the notion of a “shifting” or “tactical” onus. Macfarlan JA explained the point as follows in Commissioner of Police (New South Wales Police Force) v Zisopoulos [2020] NSWCA 236; (2020) 299 IR 314 (see also Bell P at [61]-[62] and [88] and Wright J at [170] and [215]):

[97] As stated in JD Heydon, Cross on Evidence (online ed, March 2020, LexisNexis Australia) at [7210] this type of [tactical] burden is “devoid of legal significance because there is no means of telling when it has been brought into existence or when it has been discharged”. This is because those conducting a case will not know whilst the case is in progress what the judicial officer is thinking about who will win if no further evidence is adduced. There is good reason therefore to avoid reference to the concept during a hearing. If reference is to be made to it in a judgment describing, in retrospect, the course that the hearing took, a name, such as “tactical onus”, should be used to preclude ambiguity.

[98] It can be confusing to describe the concept as the “evidential onus” as that term refers instead to the distinct concept of an onus of introducing evidence. That onus arises when a case will be decided without consideration of a particular issue unless the party upon whom the evidential onus rests adduces some evidence to require the party bearing the legal burden of proof to address it (see for example Purkess v Crittenden (1965) 114 CLR 164 at 168; [1965] HCA 34 and Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5 at [52]). …

  1. The notion of a “tactical” or “shifting” onus is also of doubtful utility at the end of a hearing (or in an appeal) when the course of adducing evidence has come to an end. The question at that point with respect to a factual matter properly raised is whether the party bearing the legal burden of proof has discharged it. The risk of non-persuasion lies on the person bearing the legal burden.

  2. Here, expert evidence was not necessary for XJS to establish its claim. His Honour was not suggesting that it was. But that it was not necessary does not mean it would not have assisted, especially in circumstances where the person involved in the project for XJS, Mr Vance, was not available to give evidence. XJS relied in substance on the documents in evidence. The question then is whether an inference can be drawn from that evidence that CWC bore such responsibility for the delays which occurred as to establish a lack of due diligence, taking account of the positive evidence given by Mr Withers.

  3. The starting point for XJS was the simple point that even if par 3 in the Quotation Form was not a contractual obligation, it still manifested an expectation that the civil construction works would take of the order of three months. The commencement date under the Contract was 19 April 2021. Yet the works were still not completed by 21 December 2022 when XJS sent its breach notice (see above at [12]). There is some obvious force in this point. Nevertheless, the onus was on XJS to establish a lack of due diligence, including taking account of any delaying events beyond the reasonable control of CWC.

  4. Counsel for XJS said that “there’s no dispute that there was inclement weather in the middle part of 2021”, but argued that “there’s no evidence after that time that it is a source of major delay post August 2021”. That submission is not correct. To begin with, rainfall records indicated that Bathurst received 1,022 mm of rain in 2021 and 973 mm in 2022, well above the average of 655 mm. Mr Withers testified that “[f]rom June 2021 to May 2022 … this project location was inundated with rain”, as a result of which “we were never able to have a ‘proper crack’ at the project for an extended period of time”. He also gave evidence that the site “is on River flats, black soil and encapsulated by a Levee wall, when it rained there was no where for the water to go”. In cross-examination he said that as at February 2022 “we hadn’t finished the road … because the weather was so bad”, adding that the “water table was up, and we couldn’t move on the site”. It will be recalled the primary judge found Mr Withers to be “an honest and reliable witness” (J [91]).

  5. Consistently with that evidence of Mr Withers, Mr Evans, giving evidence in XJS’s case, said in cross-examination that there was a high water table at the site, “it’s more or less on the flat [sic – flood] plain”, and with consistent inclement weather “the water will go down to a level that it can’t go any further and it will start coming back up again” (quoted at J [27]).

  6. Quite how much of the delays could be explained by rain was not clear, but it is apparent from this evidence that it was a very significant cause of delays. The onus was on XJS to show that the rain problems could not explain all the delays, yet it did not point to any convincing evidence establishing as much.

  7. Then there was the second issue – itself related to the extensive rain – with respect to the stormwater concern raised by the Council. Concerns were raised by Council officers in July 2021 about “mud tracking” arising from water being pumped off the Property. Discussions were held onsite that month involving those officers, Mr Vance and Mr Withers. A “show cause” letter sent by the Council dated 3 September 2021 records that in that meeting Mr Withers had said that a sediment basin had not been planned but eventuated after the discovery of river sand that had to be removed from the site. He also referred to above average rainfall and increased surface water in this regard. In that letter the Council directed XJS, amongst other things, to immediately cease discharging any water offsite from the sediment basin unless treatment and water quality testing had been undertaken, and to review its SWMP and provide within 14 days “an amended copy to Council that addresses changes to your site and mitigates the risk of water pollution incidents”. The letter referred to the Plan needing to be compliant with the “Landcom Blue Book”. The letter concluded that if XJS did “not show valid cause for failing to comply with development consent and causing Water Pollution” then a fine might issue for breach of environmental laws.

  8. The development consent for the project – which was included as part of the Contract – had provided that XJS was to submit a SWMP for the site which, by implication, was to be approved by the Council. It can be inferred that this had been done, presumptively with such a SWMP having been prepared by or on behalf of XJS. The events just described indicated that given what was occurring on and around the site the Council was requiring that the SWMP be amended, despite having previously approved it. There is no basis to infer that actions of CWC in breach of the Contract had led the Council to take this step. The fact that the Council wanted the Plan amended, and the link to drainage issues implicitly connected to the heavy rainfall, suggest to the contrary.

  9. The next piece of correspondence in evidence on this issue was a stop work notice issue by the Council by letter dated 18 January 2022. The letter stated that the Council had contacted XJS on 29 October 2021 requesting a response to the show cause letter. It said that an email received by Council on 1 November 2021 from XJS and CWC said that “the response was ‘waiting on the revised plan from Calare’ civil engineers”. There is no reason to attribute to CWC that delay in obtaining a plan from XJS’s consulting engineers. The letter indicated that a revised SWMP had been sent through on 1 December 2021, but it said there was no evidence that this Plan “had been reviewed by a suitably qualified engineer”. The Council said that the revised SWMP was not compliant with standards set in the Landcom Blue Book. On that basis it exercised an identified statutory power to direct XJS to immediately cease all work on the site until, first, an amended SWMP, reviewed by a suitably qualified person, had been submitted to Council addressing certain matters and, second, an inspection of the site had been arranged by Council officers to review implementation of site controls (etc). Both steps were required to be undertaken within 14 days.

  10. On 27 January 2022 an amended SWMP was sent from Calare Civil Consulting Engineers to Mr Vance, who then forwarded it to Mr Withers. That it was sent to Mr Vance suggests that it was the responsibility of XJS not CWC to have it prepared, consistently with the original obligation in the development consent. It appears that this amended SWMP was submitted to Council on 31 January 2022.

  11. An email from Council to Mr Vance and Mr Withers dated 9 May 2022 records that soon after the amended SWMP was submitted a phone call took place between Mr Withers and a Council officer; that Mr Withers agreed to implement and maintain all environmental controls (implicitly in compliance with the amended SWMP); and that once improvements were made a site inspection would be organised. The email says that Mr Withers then scheduled an inspection to occur on 28 April 2022, but that he did not attend the site at the scheduled time and Council representatives were unable to reach him. The email said that the Council was not satisfied that the actions required by the stop work letter of 18 January 2022 had been complied with.

  12. Presumably Mr Withers then rescheduled the inspection, as nine days later, on 18 May 2022, the same Council representative emailed again, referring to the completion of an onsite inspection earlier that day and confirming that “all directions [from Council to date] have been complied with”. Implicitly the stop work order of 18 January 2022 was then lifted.

  13. XJS complained of the fact that it took CWC three months after Council’s stop work order to arrange for an inspection. But the email itself referred to the need to undertake works prior to the inspection being arranged. And counsel for XJS accepted that it was “not clear from the documents” why the three month delay occurred. It pointed to no evidence establishing that that delay was due to lack of diligence by CWC.

  14. As regards the further delay between 28 April 2022, when the inspection was arranged to occur, and when the inspection actually took place on 18 May 2022, it can be inferred that Mr Withers bore responsibility for failing to attend an inspection he himself arranged. But that delay, once notified by the Council on 9 May, was only for a further nine days (and 20 days in total), which was not significant in the scheme of this development.

  15. XJS took the Court to some text message exchanges in December 2021 through to September 2022, but these threw little light on the causes of the delay.

  16. As explained above at [10], by 30 October 2022 Mr Withers was concerned that he had not been paid in full on the most recent invoices that he had issued. No further work took place after that. Counsel for XJS submitted that that was still some five or so months after Council had permitted resumption of the works and yet still the works were not completed. In response, CWC referred to correspondence sent from the Council to Mr Vance on 28 October 2022 which attached “a list of the conditions still outstanding for your subdivision”. Mr Vance had forwarded this to Mr Withers on 29 October 2022, saying that a program schedule of CWC had indicated project completion in August 2021, and “[r]ain events do not explain the delay”. Mr Withers responded the next day saying that once his invoices were paid he would arrange completion, and saying that “most of the outstanding items on the list are not part of my scope of works”. This material does not permit the Court to infer that the failure to complete the works in the five month period can be attributed to a lack of due diligence by CWC.

  17. There is some force in XJS’s submission that the primary judge’s reasons did not grapple in detail with the evidence. Nevertheless, given the context just outlined no error has been shown in his Honour’s conclusion that XJS did not establish that CWC caused the work delay in breach of its obligation to carry out the works with due diligence.

Issue 3: whether CWC failed to conform with applicable requirements

  1. XJS complains that the primary judge erred in failing to conclude that CWC breached the Contract by not carrying out the works in conformity with the Council’s requirements, including as to routine inspections and testing as required by the development consent (see J [46]-[52] and [86]-[95]). As for Issue 2, it seems that establishing such a breach was intended to support XJS’s claimed termination of the Contract and subsequent retaining of Mr Hagney.

  2. Although grounds 3 and 4 of the amended notice of appeal were expressed broadly, the focus in submissions was relevantly on condition 17 of the development consent, which stated that XJS was obliged to arrange inspection of the works by the Council’s engineering department at certain identified stages of development. Below that statement is a table of two columns setting out six categories of work and identifying one or more stages in each category for which inspection was to be carried out (adding up to 18 stages in all). Mr Withers accepted in cross-examination that he understood that CWC was required under the Contract to arrange for the relevant Council testing and inspection at various stages.

  3. The primary judge observed that XJS “sought to establish that the routine inspections and testing were not undertaken … by simply referring to what it said was a lack of contemporaneous documentary evidence of the inspection and testing having been carried out” (J [87]). His Honour found that to be insufficient. Instead, he accepted Mr Withers’ evidence that inspections were undertaken (J [91]). He also inferred from Mr Withers’ evidence that “[i]t seems to me that the absence of such records is to be attributed to those records not being provided by Council at the time of the relevant inspection or testing” (J [93]). He rejected the relevant allegation (J [95]).

  4. In this Court there was a lack of specificity in XJS’s complaint as to precisely what inspections should have been carried out by when, and which were not carried out such as to establish that CWC had breached its contractual obligations. Instead XJS referred to four documents with respect to the works:

  1. the table sent by Council to Mr Vance on 28 October 2022 which identified non-compliance to condition 17 with respect to “[e]ngineering inspections (option b)”, detailing that there were outstanding inspections “regarding water supply, storm water and subdivision final as well as service testing to be completed”;

  2. an email from a Council officer to Mr Vance dated 3 April 2023 which identified certain further testing required;

  3. another Council email to Mr Vance dated 14 April 2023 identifying a “list of items requiring rectification and completion”, some of which involved testing; and

  4. the “Engineering Inspection Record” of the Council which, XJS submitted, showed there had only been inspections in respect of two stages, for both of which there had been multiple failed inspections.

  1. There are two key problems with XJS’s submissions on this front. First, pointing to various Council documents about what had and had not been done may be the start of making out its claim. But such evidence does not establish of itself that CWC had breached a contractual obligation to organise inspections by the time the Contract had come to an end, especially in the context of there being extensive delays in the works being carried out, as discussed above.

  2. Second, Mr Withers gave evidence that “there were more inspections on the sewer lines” than were recorded on the Council documents. The primary judge accepted that evidence based on his conclusion that he found Mr Withers to be an honest and reliable witness (J [90]-[91]). That finding evidently was one based upon impressions formed as a result of seeing and hearing him give evidence. Generally an appellate court will only overturn such a finding on a compelling basis: Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. No such basis has been established by XJS. It is by no means implausible that the Council records may not record all inspections. That point is reinforced by the fact that the Engineering Inspection Record states, amongst other things, that “the only inspections arranged with myself are listed below” (it is not entirely clear who the author of the document is).

  3. Insofar as grounds 3 and 4 challenge the primary judge’s conclusion as to the alleged failure to meet inspection and testing requirements, they are not made out.

Issue 4: which side was entitled to terminate

  1. Ground 5 alleged that the primary judge “erred in determining that [XJS] was not entitled to terminate the Contract and that it had wrongfully terminated the Contract as stated at [35] and [39] of the reasons”. The ground on its face seems to go no further than challenging the conclusion of the primary judge that XJS had no right to terminate as it had not established the breaches alleged in grounds 1-4 said to give rise to such a right. The significance of this complaint was unclear. CWC did not claim any damages or monies dependent on establishing that XJS had wrongfully terminated the Contract (its cross-claim was based on work done prior to the relationship coming to an end).

  2. In any event, as noted above, Mr Withers indicated to Mr Vance on 30 October 2022 that he would arrange completion once his invoices were paid. It is not in dispute that his outstanding invoices were not paid. The then solicitor for XJS wrote to Mr Withers on 31 October 2022 saying he held “irrevocable instructions to pay your invoices from the proceeds of sale” of the subdivided land. Mr Withers said on 25 November 2022, in response, that he would attend the site. However, he explained in evidence that when he recalled that there was evidence that XJS owed money to the Council for the project, “I did not want to risk CWC doing further works and not being paid”. In this context the primary judge did not err in concluding that CWC had been entitled to suspend its works for non-payment (J [34]) and in accepting that XJS’s later termination of the Contract brought CWC’s obligations to an end (J [39]).

  1. Ground 5, read together with ground 4, really seemed to be directed to whether or not CWC had breached the Contract such that XJS was entitled to terminate. In that context counsel for XJS ended up accepting in the course of argument that if XJS did not “succeed on grounds 3 and 4, ground 5 falls away”. As addressed above, XJS has not established that CWC breached the Contract. That being so, it is not necessary to address this ground any further.

Issue 5: whether XJS proved any loss

  1. XJS complained in ground 6 that the primary judge erred in finding that XJS failed to prove loss suffered as a result of CWC’s breaches of the Contract. In light of the conclusions above that the alleged breaches on CWC’s part were not made out, the question of loss does not arise. I will address the issue for completeness.

  2. The primary judge dealt with XJS’s claim for general damages at J [111]-[121]. His Honour took issue with XJS’s approach of calculating its claimed losses simply by reference to what Mr Hagney had charged. His Honour noted that Mr Hagney’s evidence failed to establish any link between, on the one hand, the works he charged for and, on the other, the works CWC was contracted to do but allegedly failed to complete satisfactorily in breach of the Contract (J [113]-[114]). His Honour said that the failure of Mr Hagney to give evidence establishing that his “invoices perfectly matched the plaintiff’s claim of breaches” warranted the drawing of an inference unfavourable to XJS in this regard (J [113]-[114]). To the extent XJS said it also paid Mr Hagney for the completion of the works still outstanding under the contract, even though CWC had been paid an amount in excess of the original agreed price, that was rejected on the basis that his Honour was satisfied that part of XJS’s payments to CWC were for additional variation works (J [115]-[117]).

  3. His Honour was correct to reject the general damages claim as he did. XJS had failed to demonstrate that the only work that Mr Hagney did was either to rectify defective work by CWC or to complete the works which CWC had contracted to do and failed to complete. No doubt there was some – perhaps substantial – overlap between the works under the Contract and those which Mr Hagney undertook. Yet XJS could and should have identified what that overlap was, with some precision. It made little attempt to do so either in evidence or in its submissions below. Given that the claim was susceptible of proof, justice did not require that the primary judge perform some rough estimate: note Carbone v Fowler Homes Pty Ltd [2024] NSWCA 192 at [95]. As the primary judge said, the Court “should not be asked to pluck a figure out of the air” (J [120]).

  4. The lack of evidence establishing a direct connection between CWC’s alleged breaches and all of the work carried out by Mr Hagney was illustrated by Mr Hagney’s candid acceptance in cross-examination that he had “never seen the contract that CWC was required to perform”. XJS quoted R Meagher JA saying that the actual amount paid “was an impeccable alternative method of calculating cost”: Hyder Consulting (Australia) P/L v Wilh Wilhelmsen Agency P/L [2001] NSWCA 313 at [19]. That may be so provided the correlation between the work meant to be done by the defendant and that subsequently done by a replacement contractor is established. Here it was not.

  5. XJS referred to emails from Council dated 14 April 2023 and 25 August 2023 setting out works that were identified as outstanding matters which required rectification and completion. However, that the Council required certain matters to be done at that time does not establish that CWC had contracted to undertake all of those works. That is so even accepting that CWC had contracted to comply with the development consent. It is not necessarily the case that all that was later required to be done had been set out in the consent. XJS cannot assert that the cost for further work stemmed from CWC’s breaches without identifying the contractual obligation in question corresponding with the “rectification” work done.

  6. XJS has not shown error in the primary judge’s conclusion that it had not established its loss by reference to payments made to Mr Hagney. The other aspect of the argument involves the issue of variation, which is the subject of Issue 6.

Issue 6: the claims said to relate to variations

  1. Ground 8 asserts that the primary judge erred in not ordering restitution to XJS of an overpaid amount of $35,504.57, which was said to relate to variations. Ground 9 challenges his Honour’s upholding of CWC’s cross-claim with respect to some further claimed variations. The cross-claim related to an unpaid amount of $3,779.40 with respect to progress claim 6, and the amount of $56,895.30 being the entirety of progress claim 7. The primary judge upheld the cross-claim. The amount his Honour actually ordered that XJS pay on the cross-claim was the amount of $55,198.82, which appears to correlate to the amount claimed less GST. No cross-appeal has been brought by CWC with respect to his Honour not including that GST amount. CWC did assert in ground 4 of its notice of contention that it was entitled to payment for the variations on a quantum meruit or implied obligation basis. It is not necessary to deal with that contention.

  2. Variations and progress claims were dealt with in the Contract as follows:

Clause 1 – Interpretation …

“Variation” means a direction from the Principal to the Contractor prior to Completion to vary the Works, and includes a direction to delete or add to any part of the Works, to change the nature of the Works, or to vary the time for the completion of the Works. Any such variation must be within the general scope of the Works; …

Clause 7 – Payments

The Contractor shall submit a progress claim to the Principal at the times stated in Item 11 for work completed to the date of the progress claim. The progress claim shall be supported by evidence of the work completed by the Contractor such evidence to include Council Representatives documented endorsement in addition to the amount due.

In relation to payment for Variations forming part of the progress claim, the Contractor shall be entitled to be paid a reasonable price on account of the work completed in relation to such Variations. Within the time stated in Item 12, the Principal shall pay the Contractor the amount reasonably assessed by the Principal. …

Clause 10 – Variations

If the Principal directs the Contractor to undertake a Variation, the Contractor may undertake the Variation but shall not be obliged to undertake such Variation until the parties have reached agreement in relation to the price of the Variation. Failing agreement, the Variation shall be valued by the PRINCIPAL acting reasonably, based upon applicable rates contained in any Schedule of Rates forming part of the Contract, or otherwise at reasonable rates and prices.

  1. These provisions thus established that variations were works additional or different to those identified in the Contract which XJS had directed CWC to undertake. The value of the variations was to be as agreed by the parties, or otherwise as valued by XJS acting reasonably, based upon rates specified in the Contract or otherwise at reasonable rates and prices. There was no requirement that any direction to undertake variation works, or any agreement as to pricing, be recorded in writing.

  2. The amount of $35,504.57, for which XJS claimed restitution, was the difference between what it said it had paid to CWC ($365,624.47) and what it said was the total price agreed under the Contract ($330,119.90). An immediate problem with that claim is that the provision of trenching and backfilling for the utility services was identified in the Contract at a rate of $35/m, and CWC’s second progress claim of $40,000 (plus GST) encompassed a claim for such work (although the amount was not clearly itemised). The claim for such work was not a variation.

  3. In any event, the gravamen of XJS’s argument as regards both that amount and the amount covered by the cross-claim is that they related to purported variations, and that CWC had not proved that a direction had been given by XJS to do the varied works (as required by the contractual provisions just quoted), nor proved that those works had actually been done, nor proved that the parties had agreed (or alternatively that Mr Vance determined) to value the works in the amounts claimed (again, as required by the provisions in question). CWC noted in its submissions that it was actually XJS which bore the onus of proof with respect to its own restitutionary claim, but nothing turns on that for current purposes. There is evidence to support CWC on all of these points.

  4. An amount was first claimed for variations on progress claim 4, dated 15 April 2022. The invoice identified the “total variations” as valued at $72,538.70 (excl GST). That amount was not claimed in payment. Rather, an amount of $28,503.70 was identified as what was claimed by reference to these variations. Implicitly, further work was to be done in relation to the identified variations.

  5. That progress claim was paid without demur by XJS. Indeed, Mr Vance emailed Mr Withers a few days after receiving the claim, on 19 April 2022, saying “[l]et me know when you have time for discussion on variations and what might be attributable to third parties”. That email implies an acceptance that payment for the variation works had validly been identified. And both the email and the fact of payment without protest in turn implies an acceptance by Mr Vance that he had directed that the works be done, that the amount calculated for the variations was appropriate, and that the works had been done in part. That was sufficient to satisfy the contractual requirements.

  6. Progress claim 5 was issued on 23 May 2022. The invoices were formulated so as to repeat the earlier variations identified (in the amount of $72,538.70). An additional amount of $9,345.00 was claimed as work done by reference to those identified variations. The claim was paid in full. There is no evidence of any protest about any amount of the claim, including with respect to the variations earlier identified, claimed and paid for.

  7. Progress claim 6 was issued on 31 August 2022. Again, the variation amount of $72,538.70 was repeated. A further $4,779.00 was claimed against those variation works. This progress claim was for the total amount of $93,779.40 (incl GST), of which $90,000 was paid, leaving an amount owing of $3,779.40. On 30 October 2022 at 7:00pm Mr Withers emailed Mr Vance saying “[o]nce invoices are paid and up to date I will arrange completion”. Mr Vance responded promptly at 7:19pm acknowledging that “there is some minor amount unpaid” but disputing that was a proper basis for Mr Withers’ position. Again, there is no evidence of any protest as to the variations identified and claimed, even though by that stage Mr Vance was complaining about delays.

  8. Progress claim 7 was dated 16 October 2022 but sent on 30 October 2022 at 7:24pm, just after Mr Vance had sent the email just referred to. It was for the amount of $56,895.30 (incl GST). In this claim further variation amounts of approximately $40,000 were identified (ie on top of the earlier identified variation value of $72,538.70). An additional amount of $51,723.00 (excl GST) was claimed as against these variations, which represented the entire amount claimed in the invoice when GST was added. In fact, it was something of an overstatement to describe all these amounts as variations. The amount of $35,640.00 (excl GST) was allowed and claimed for the supply and installation of driveways. That variation amount replaced an allowance in earlier invoices of $23,340.00 (excl GST) for concrete driveways (against which $4,668.00 had been claimed in progress claim 6). This progress claim was not paid by XJS.

  9. On 31 October 2022, the day after claim 7 had been sent, a solicitor acting for XJS emailed Mr Withers saying that he had spoken to Mr Vance that morning, who had asked him to assist with finalising the subdivision. The solicitor said that “I hold irrevocable instructions to pay your invoices from the proceeds of sale”. The plural reference to “invoices” can be taken to encompass progress claims 6 and 7. This email implies an acceptance on behalf of XJS that the amounts were properly claimed and were payable by XJS.

  10. Mr Withers addressed these issues in his affidavit dated 19 January 2024. He relevantly said the following. He identified construction programs sent to Mr Vance, which were said to include variations. The programs and variations were “sent to and agreed to” by Mr Vance. No issues were raised with the work or the programs, including the variations, until CWC raised issues with outstanding invoices (seemingly referring to Mr Vance complaining about delays at the end of October 2022). CWC never submitted invoices for work that had not been completed. Progress claim 7 was for work and variations done at XJS’s request, including an additional driveway to Mr Vance’s own residence. Although Mr Withers referred to XJS belatedly complaining about delays, he does not suggest that Mr Vance had complained that variations had not been approved or properly priced.

  11. In cross-examination Mr Withers said that Mr Vance “approved all the variations”, and said of the variation relating to the driveways that “I spoke to Bernard on site about it”. He was not shaken in cross-examination on this issue. As noted, the primary judge accepted Mr Withers as an honest and reliable witness.

  12. Ms Vance gave evidence that she did not authorise any variations and, so far as she was aware, Mr Vance had not done so. She also said that in October or November 2022, after CWC failed to return to the site, “[w]e realised that XJS had overpaid CWC”. That evidence is of little weight given that she had asked Mr Vance “to handle the Development for XJS”.

  13. There is a sound basis in the circumstances to infer that the identification of variations, the pricing of those variations, and that work was done giving effect to those variations, had been agreed between Mr Vance and Mr Withers, given:

  1. Mr Vance’s email of 19 April 2022 after the first set of variations were identified;

  2. the payment of the progress claims save for part of claim 6 and all of claim 7;

  3. the irrevocable instruction given by XJS to its solicitor to pay the outstanding amounts on the latter two claims;

  4. the absence of any contemporaneous protest by XJS as to the identification of variations, the pricing of those variations, and that work was done giving effect to those variations; and

  5. the evidence of Mr Withers, which his Honour clearly accepted.

  1. In those circumstances the factual challenge made by XJS on appeal is not made out. His Honour expressed his conclusion in terms of XJS having waived or elected not to challenge any failure of CWC “to strictly comply with contractual requirements in relation to variations” (J [126]). As noted, there was no particular formality required by the Contract with respect to agreeing to variations. In context his Honour is best understood as simply having found that CWC had established a right to claim for the variations, and the language of election and waiver can be taken not to refer to any particular legal doctrine but to a factual inference drawn from the lack of protest. Even if his Honour meant something different, the facts outlined above indicate that his Honour’s conclusion that CWC’s contractual right to claim the variation amounts was well-founded, thus supporting CWC’s cross-claim, and defeating XJS’s restitutionary claim. It is not necessary to address CWC’s alternative restitutionary arguments in support of its position.

  2. I note that XJS made an argument that s 32(3) of the Building and Construction Industry Security of Payment Act 1999 (NSW) was relevant to the dispute, in circumstances where CWC’s progress claims referred to having been made under that Act. The point goes nowhere. CWC may have referred to the Act in its invoices but in the litigation it was making contractual claims, which claims it has made good.

Conclusion and orders

  1. No ground of the appeal has been made out. The appeal should be dismissed. There is no reason why costs should not follow the event.

  2. The orders of the Court should be as follows:

  1. Appeal dismissed.

  2. Appellant to pay the respondent’s costs.

  1. ADAMSON JA: I agree with Kirk JA.

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Decision last updated: 16 June 2025

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