St Hilliers Construction v Fitzpatrick Investments [2013] NSWSC 1856

St Hilliers Construction v Fitzpatrick Investments [2013] NSWSC 1856

  • Posted by Doyles
  • On September 19, 2015
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upreme Court
New South Wales
Medium Neutral CitationSt Hilliers Construction v Fitzpatrick Investments [2013] NSWSC 1856
Hearing Dates22/11/2013
Decision Date22/11/2013
JurisdictionEquity Division – Technology and Construction List
BeforeMcDougall J
DecisionDefendant (principal) not estopped from disputing entitlement of plaintiff (contractor) to have guarantee returned. Separate questions to be answered accordingly.
CatchwordsBUILDING & CONSTRUCTION – building contracts – whether guarantee should be released to a contractor – whether principal estopped from disputing contractor’s entitlement to have its guarantee returned – no question of principle
Legislation CitedUniform Civil Procedure Rules 2005 (NSW)
Cases CitedSt Hilliers Construction Pty Ltd v Fitzpatrick Investments Pty Ltd St [2013] NSWCA 104
St Hilliers Construction Pty Ltd (in admin) v Fitzpatrick Investments Pty Ltd [2012] NSWSC 804
CategoryProcedural and other rulings
PartiesSt Hilliers Construction Pty Ltd (under Deed of Company Arrangement)(plaintiff)
Fitzpatrick Investment Pty Ltd (defendant)
RepresentationSolicitors:
Colin Biggers & Paisley (plaintiff)
Clark McNamara Lawyers (defendant)

Counsel:
DT Miller SC / FMT Shaw (plaintiff)
F Corsaro SC (defendant)

File Number(s)2013/199783

JUDGMENT (EX TEMPORE – REVISED 22 NOVEMBER 2013)

  1. HIS HONOUR: On 8 November 2008, the parties made a building contract (the contract.) Under that contract, the plaintiff (contractor) agreed to design and construct for the defendant (principal) a commercial office building and other works at Docklands, which is, as I understand it, an inner area of the city of Melbourne.
  1. Under the contract, the contractor was required to provide three guarantees. Those guarantees were to be released (to the extent that they had not been converted) at the times and in the manner set out in the contract.
  1. In earlier proceedings, the contractor claimed the release of the first guarantee. The primary judge held that it had not satisfied the conditions for release of that guarantee ([2012] NSWSC 804). The matter went to the Court of Appeal. Their Honours, reversing the primary judge, said that the contract’s requirements had been satisfied ([2013] NSWCA 104).
  1. The contractor now seeks the release of the second of the three guarantees. The principal disputes its entitlement to have the guarantee returned to it. The contractor says that the principal is estopped, by matters necessarily decided in or by the decision of the Court of Appeal, from disputing the contractor’s entitlement to have the guarantee returned to it.
  1. On 13 September 2013, Stevenson J ordered that certain questions be

determined separately from and before the determination of other questions in the proceedings (UCPR rule 28.2):

28.2 Order for decision

The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings.

  1. In the course of the hearing, and upon the contractor’s considering its position further in respect of the fourth of those questions (paragraph 2 (c)), the order was varied by deleting that question.
  1. Since the separate question arises out of the decision of the Court of Appeal, I propose to set out the applicable contractual provisions and, to the extent that they are necessary, the background facts, by incorporating into these reasons the relevant paragraphs of the reasons of Emmett JA. His Honour gave what might be called the principal judgment. Sackville AJA, who agreed with Emmett JA, added some brief reasons of his own. The third member of the Court, Meagher JA, agreed with both Emmett JA and Sackville JA.
  1. I set out first [5] to [21] of the reasons of Emmett JA. Those paragraphs describe the conditions of the contract to the extent that they have been argued today.

[5] Clause 3.1 of the General Conditions provides that the Contractor must execute and complete the work under the Contract in accordance with the requirements of the Contract and that the Principal must pay to the Contractor, in accordance with the Contract, the Contract Sum. One of the critical provisions in the present dispute is found in section 5 of the General Conditions, which deals with “Security and Performance Undertakings”. Clause 5.1 provides that security and performance undertakings are for the purpose of ensuring the Contractor’s due and proper performance of the Contract.

[6] The effect of clause 5.2 and annexure part A of the General Conditions is that the Contractor must provide security consisting of three bank guarantees, one for an amount equal to 2.5 per cent of the Contract Sum, one for an amount equal to 2.5 per cent of the Contract Sum less $200,000 and one for the amount of $200,000. Clause 5.3 provides that the security is to be in the form of unconditional and irrevocable undertakings issued by a trading bank carrying on business in Australia.

[7] Clause 5.8, which deals with “Reduction of Security”, is critical to the present dispute. Under clause 5.8(A) the Principal’s entitlement to security is to be reduced to 50 per cent upon the later of:

a) issue of the Certificate of Practical Completion; and

b) the provision of all of the items referred to in paragraphs (c) to (h) inclusive of [clause] 42.3.

Under clause 5.8(B), on the expiration of the Defects Liability Period pursuant to clause 37, the Principal’s entitlement to security remaining after the reduction under clause 5.8(A) is to be reduced so that the security then held by the Principal will be $200,000. Clause 37 provides that the Defects Liability Period of one year was to commence at 4pm on the Date of Practical Completion.

[8] The Date of Practical Completion is defined in the Contract as meaning, relevantly, the date certified by the Superintendent in a Certificate of Practical Completion to be the date upon which Practical Completion was reached. The Superintendent under the Contract was Pyramid Pacific Pty Limited (the Superintendent). Certificate of Practical Completion is defined as the certificate referred to in clause 42.3.

[9] Thus, both limbs of clause 5.8(A) refer to clause 42.3. Clause 42.3 provides that the Contractor must give the Superintendent at least 21 days’ notice of the date upon which the Contractor anticipates that Practical Completion will be reached. When the Contractor is of the opinion that Practical Completion has been reached, the Contractor must request the Superintendent to issue a Certificate of Practical Completion. The Contractor must include in its notice to the Superintendent advice in writing as to the status and as to the anticipated dates for completion or provision of the following:

a) any defects and omissions identified in the Works to date;

b) reports on preliminary commissioning of services installations;

c) operating and maintenance manuals;

d) as built Design Documents;

e) all manufacturers’ and suppliers’ warranties and guarantees required to be assigned, novated or provided to the Principal;

f) a declaration and statement, made as at that date, in the form of annexure part F;

g) the Depreciation Schedule in a form approved by the Superintendent; and

h) each other document or matter required to be provided or satisfied for Practical Completion.

Clause 42.3(h) is also critical for the purposes of the present dispute and it will be necessary to return to that provision.

[10] It is significant that clause 42.3(f) refers to a declaration and statement in the form of annexure part F. It will also be necessary to return to annexure part F.

[11] Clause 42.3 then provides that, within 14 days after the receipt of the Contractor’s request to the Superintendent to issue a Certificate of Practical Completion, the Superintendent must either, give to the Contractor and to the Principal a Certificate of Practical Completion, or give to the Contractor the reasons for not issuing a Certificate of Practical Completion. When the Superintendent is of the opinion that Practical Completion has been reached, the Superintendent may issue a Certificate of Practical Completion, whether or not the Contractor has made a request for its issue. However, the Contractor must use all reasonable endeavours to complete and provide all of the items in paragraphs 42.3(e) to (h) above on the Date of Practical Completion and must, in any event, complete and provide all of such items within 28 days after the Date of Practical Completion.

[12] Under clause 42.3, the Certificate of Practical Completion to be given by the Superintendent to the Contractor and to the Principal must certify the Date of Practical Completion. As indicated, the Date of Practical Completion is the date certified in a Certificate of Practical Completion to be the date upon which Practical Completion was reached. While the Contractor may be of the opinion that Practical Completion has been reached, the Contractor cannot know with certainty the Date of Practical Completion until a Certificate of Practical Completion has been issued by the Superintendent. Therefore, it is more likely than not that, in the ordinary course, the second limb of clause 5.8(A) would occur after the first limb. That is to say, it might be expected that the Contractor would normally provide all of the items referred to in paragraphs 42.3(c) to (h) after the issue of the Certificate of Practical Completion by the Superintendent.

[13] Clause 42.5 provides that, within three months after the Date of Practical Completion, the Contractor must provide to the Superintendent a final payment claim endorsed “Final Payment Claim”, accompanied by declarations, statements and proof as required by paragraphs 42.1(a) to (d). Clause 42.1 relevantly provides that the Contractor must, at the prescribed times, deliver to the Superintendent claims for payment supported by evidence of the amount due to the Contractor, together with such information as the Superintendent may reasonably require. Each claim for payment must detail the percentage of the work under the Contract completed to date and must be accompanied by:

a) a statutory declaration and statements from the Contractor in the form of annexure part F and annexure part I;

b) a statement from each relevant Consultant and Major Sub-contractor who is responsible for design of any component of the work under the Contract that the work by the Contractor for which payment is claimed has been performed in accordance with the applicable Design Documents and the Contract. Each statement is to be in the form of annexure part F, attachment 2;

c) a cash flow schedule; and

d) where the payment claim includes certain kinds of work, a survey report in relation to that work.

[14] Clause 42.6 then provides that the Superintendent must issue to the Contractor and to the Principal a final payment certificate endorsed “Final Certificate” within 10 business days of the later of:

receipt of the Contractor’s Final Payment Claim;

where the Contractor fails to provide such a claim, the expiration of the period of three months after the Date of Practical Completion; and

expiry of the Defects Liability Period.

Within 14 days after the issue of the Final Certificate, the Principal must release to the Contractor the remaining bank guarantee provided by the Contractor in accordance with section 5.

[15] Thus, the scheme of section 5, in dealing with “Security and Performance Undertakings”, is that the Contractor must provide three bank guarantees for sums totalling 5 per cent of the Contract Sum. The first guarantee is for 2.5 per cent of the Contract Sum, the second is for an amount equal to 2.5 per cent of the Contract Sum less $200,000 and the third is for the amount of $200,000. The first is to be released upon the later of the issue of a Certificate of Practical Completion and the provision of the items referred to in paragraphs 42.3 (c) to (h). The second is to be released one year after the Date of Practical Completion and the third is to be released within 14 days after the issue of the Final Certificate under clause 42.6.

[16] That scheme is highly significant in relation to the dispute that has arisen between the Contractor and the Principal concerning the effect of certificates purportedly provided in order to satisfy the prerequisites of clause 5.8(A). In that regard, it is first necessary to consider clause 9.9 of the General Conditions in the context of the definition of Practical Completion.

[17] Practical Completion is defined as that stage in the execution of the work under the Contract when, relevantly:

(a) the Works are complete in accordance with the Contract … except for minor omissions and minor defects:

(i) which do not prevent the Works from being used for their stated purpose;

(ii) which the Superintendent determines the Contractor has reasonable grounds for not promptly rectifying; and

(iii) rectification of which will not prejudice the convenient use of the Works or any part thereof;

(c) a final occupancy permit or other like permission or requirement for the lawful use and occupation of the whole of the Works has been obtained;

(d) all certificates from Consultants in accordance with [c]lause 9.9 have been provided to the Superintendent;

(q) the following documents have been provided to the Superintendent in a form satisfactory to him:

(i) all as built documentation … ;

(ii) all operational manuals and maintenance documentation … ;

(iii) all warranties required to be provided under the Contract;

(iv) evidence that all tests or inspections required by the Contract have been carried out; and

(v) certification from each Consultant addressed to the Principal … that, in [the] view [of the Consultant], the parts of the Works relevant to [that Consultant’s] discipline have been completed in accordance with the Contract.

Paragraphs (d) and (q)(v) of that definition are also of critical importance to the present dispute.

[18] There is a certain degree of overlap between paragraphs (d) and (q) of the definition. The former refers to certificates from Consultants in accordance with clause 9.9. As will become apparent, clause 9.9 refers to Consultants’ certifying that the relevant work under the Contract has been completed in accordance with the Contract. Paragraph (q)(v) also refers to certification from each Consultant that the parts of the Works relevant to its discipline have been completed in accordance with the Contract.

[19] Section 9 of the General Conditions is concerned with “Assignment and Subcontracting”. Clause 9.7 deals with Consultants, and provides that all Consultants engaged by the Contractor must be experienced, competent, recognised as experts within their discipline and reputable. The Contractor must ensure that all Consultants engaged by the Contractor are approved by the Principal. The Contractor must also ensure that all Consultants will be engaged to provide the services required under the Contract and must comprehensively advise on all areas relating to their respective disciplines arising under the work under the Contract. Clause 9.8 provides that the Contractor must not terminate the appointment of a Consultant without the prior written consent of the Principal.

[20] Clause 9.9 then provides that it is to be a condition precedent to certain matters that all Consultants certify in writing that the relevant work under the Contract has been completed “in accordance with the Contract and the approved design documents”. The matters that are to be subject to that condition precedent are:

the issue of each payment claim;

any Certificate of Practical Completion;

acceptance of defects rectification; and

the Final Certificate.

Clause 9.9 stipulates that, where the certification relates to a claim for the payment of money, the form of certification in annexure part F is to be used.

[21] Clause 9.9 provides specifically for certifications from named disciplines and provides that, if necessary, the Contractor must appoint Consultants for that purpose. The Contractor must also ensure that all of the Consultants that provide the certifications required by clause 9.9 must be the Consultants that prepare theDesign Documents for the relevant parts of the work under the Contract. Design Documents are defined as all design documents, drawings, specifications and other information, samples, models, patterns and the like required by the Contract and created for the construction of the Works to reach Practical Completion.

  1. Emmett JA set out at [22] to [24] the detail of some of the annexures and attachments to the contract, but I do not think that it is necessary to repeat what his Honour said in those paragraphs.
  1. Next, turning to the background facts, I set out [26] to [32] of the reasons of Emmett JA.

[26] In accordance with section 5 of the General Conditions, the Contractor provided three guarantees by National Australia Bank Limited (NAB) as follows:

Bank Guarantee – M07140-2 for $941,748.90 dated 17 November 2008;

Bank Guarantee – M07140-3 for $741,748.90 dated 17 November 2008; and

Bank Guarantee – M07140-4 for $200,000 dated 19 November 2008.

[27] On 31 October 2011, the Contractor wrote to the Superintendent in relation to the Contract. The letter began with an assertion that the Principal had, by then, been in occupation of the entire physical works for over one year and that the Defects Liability Periods for the physical works had expired or would shortly expire. The letter of 31 October 2011 referred to letters from the Superintendent certifying that work under the Contract comprising separable portions had achieved Practical Completion as at 12 March 2010, 28 June 2010 and 22 November 2010. After referring to various other matters, the letter asserted that it was incumbent upon the Superintendent, acting honestly and reasonably, to issue a Certificate of Practical Completion in respect of the final separable portion. The letter referred to the power contained in clause 42.3 of the Contract. The Contractor requested that the Superintendent so certify.

[28] On 14 November 2011, the Superintendent wrote to the Contractor, referring to its letters of 15 March 2010, 28 June 2010 and 25 January 2011 in which a determination was made for the creation of separable portions of the Works. By the letter, the Superintendent advised that separable portion 6, the final separable portion, had achieved a stage equivalent to that of Practical Completion on 31 October 2011. The letter then said that, pursuant to clause 42.3 of the Contract, the Superintendent certified that the Date of Practical Completion for the entire works under the Contract was 31 October 2011.

[29] On 21 March 2012, under cover of a letter dated 20 March 2012, the Contractor provided to the Principal and the Superintendent a number of documents in virtually identical form. The documents were variously dated 10 March 2012, 13 March 2012, 14 March 2012 and 15 March 2012 and each was signed on behalf of one of the Consultants. The form of the documents is demonstrated by one of the documents, which is attached and hyperlinked to these reasons. Apart from the name of the “Discipline”, the name of the Consultant and the date, each document was in the same terms. The only difference is that, in the case of the architectural discipline, where provision was made to delete alternatives in paragraphs (a) and (c), neither alternative was deleted. Otherwise, each document was signed on behalf of the Consultant to which the relevant discipline related.

[30] It is of critical significance that paragraph (b) of each of the documents signed by the Consultants referred to the “[w]ork to the date of this [s]tatement”. Those words are the same as those that appear in attachment 2 of annexure part F to the General Conditions. However, the documents departed from the form of attachment 2 in the respects described below.

[31] On 15 May 2012, the Contractor went into voluntary administration. On 28 June 2012, the Principal exercised the power conferred by clause 44.11 and clause 44.4(a) of the General Conditions to take out of the hands of the Contractor the whole or part of the work necessary to be completed. Clause 44.11 relevantly provides that, if the Contractor informs the Principal in writing, or creditors generally, that the Contractor is insolvent or is financially unable to proceed with the Contract, then the Principal may, without giving a notice to show cause, exercise the right under clause 44.4(a) to take out of the hands of the Contractor the whole or part of the work remaining to be completed. If the Principal exercises that right, the Contractor is not entitled to any payment in respect of the work taken out of the hands of the Contractor, unless there is an adjustment, on completion, of the work taken out of the hands of the Contractor.

[32] Following provision of the documents in question to the Principal and the Superintendent, the Contractor demanded reduction of the security in accordance with clause 5.8 that would be effected by release of Bank Guarantee M07140-2. However, the Principal refused to do so, on the basis that the prerequisites for doing so have not been satisfied.

  1. It is of some importance to bear in mind what was the question argued in the Court of Appeal (and, of course, the question argued before the primary judge). Emmett JA described that question as follows:

[33] The question before the primary judge and the question in the appeal is whether the documents signed by the Consultants, which were given to the Principal and the Superintendent in March 2012, satisfy the condition specified in clause 9.9 of the General Conditions. That is to say, the question is whether it can be said that, by reason of those documents, all of the Consultants had certified in writing that the relevant work under the Contract had been completed “in accordance with the Contract and the approved design documents”.

  1. The decision reached by the Court of Appeal was that the documents that the contractor had furnished to the principal on 21 March 2012 (bearing in mind that the Superintendent’s Certificate of Practical Completion was dated 30 October 2011) complied with the requirements of cl 5.8 (A) (b) of the General Conditions (AS 4300 – 1995) of Contract. That is to say, the decision of the Court of Appeal was that, putting it the way Emmett JA did at [33], those documents satisfied the condition specified in cl 9.9 of the General Conditions.
  1. As a result, the Court of Appeal allowed the appeal, set aside the orders at first instance, and made orders including the following:

(i) The Court declares that, as at 21 March 2012, the defendant’s entitlement to security under the contract was reduced to 50 per cent of the security provided by the plaintiff.

(ii) The Court orders that the defendant return bank guarantee number M07140-2 in the sum of $941,748.90 issued by National Australia Bank Limited on 17 November 2008.

  1. The requirement for return of the second guarantee is contained not in cl 5.8 (A) of the contract (more accurately, of the General Conditions) but, rather, in cl 5.8 (B). For convenience, and although Emmett JA, in one of the paragraphs that I have lifted from his Honour’s reasons, described the effect of cl 5.8 (B), I set it out:

On the expiration of the Defects Liability Period pursuant to clause 37, the Principal’s entitlement to security remaining after the reduction under paragraph 5.8(A) above, shall be reduced so that the security then held by the Principal shall be $200,000.

  1. The provisions of cl 5.8 (B) direct attention to the definition of the “Defects Liability Period”. That is defined to mean the period or periods referred to in cl 37. Clause 37 provides for what might be called a primary defects liability period which, by reference to annexure A, is one year, to “commence at 4 pm on the Date of Practical Completion)”.
  1. Making another turn around the circle, the Date of Practical Completion is defined, as indicated at [8] of the reasons of Emmett JA, as follows:

Date of Practical Completion means:

(a) the date certified by the Superintendent in a Certificate of Practical Completion to be the date upon which Practical Completion was reached; or

(b) where another date is determined in any arbitration or litigation as the date upon which Practical Completion was reached, that other date.

  1. The starting point is that, unless there is a different determination in arbitration or litigation as to the date upon which Practical Completion is reached, the Date of Practical Completion is the date so certified by the Superintendent in a Certificate of Practical Completion. It will be remembered that the availability of such a certificate is one of the conditions set out in cl 5.8 (A) for release of the first guarantee.
  1. I draw attention to the fact that, in the paragraph of Emmett JA’s reasons where he set out the definition of Date of Practical Completion, he set out only the first limb – certification by the Superintendent. As his Honour said, that was, for his purposes, the “relevant” limb of the definition.
  1. It is of course correct to say that the second limb of cl 5.8(A), requiring provision of the items referred to in cl 42.3 (c) to (h), calls up other requirements. For convenience, I set out cl 42.3:

42.3 Certificate of Practical Completion

The Contractor shall give the Superintendent at least 21 days notice of the date upon which the Contractor anticipates that Practical Completion will be reached.

When the Contractor is of the opinion that Practical Completion has been reached, the Contractor shall in writing request the Superintendent to issue a Certificate of Practical Completion. When making such request the Contractor shall provide to the Superintendent the occupancy permit or like permission for the lawful occupancy of the Works or the relevant portion thereof. The Contractor shall include in its notice to the Superintendent advice in writing as to the status and as to the anticipated dates for completion or provision of the following as the case may be:

(a) any defects and omissions· identified in the Works to date;

(b) reports on preliminary commissioning of services installations;

(c) operating and maintenance manuals including final commissioning report of services installations;

(d) as built Design Documents;

(e) all manufacturers’ and suppliers’ warranties and guarantees required to be assigned, novated or provided to the Principal in accordance with Clause 9.10;

(f) a declaration and statement, made as at that date, in the form of Annexure Part F; and

(g) the Depreciation Schedule in a form approved by the Superintendent; and

(h) each other document or matter required to be provided or satisfied for Practical Completion.

Within 14 days after the receipt of the request, the Superintendent shall give to the Contractor and to the Principal a Certificate of Practical Completion certifying the Date of Practical Completion or give the Contractor in writing the reasons for not issuing the certificate.

When the Superintendent is of the opinion that Practical Completion has been reached, the Superintendent may issue a Certificate of Practical Completion, whether or not the Contractor has made a request for its issue.

The Contractor must use all reasonable endeavours to complete and provide all of the items in paragraphs (e) to (h) above on the Date of Practical Completion and must in any event complete and provide all of such items within 28 days after the Date of Practical Completion.

  1. Paragraph (h) is of particular significance. It takes the diligent reader back to cl 9.9, which is concerned with “certifications by consultants”. Again for convenience, I set out the first paragraph of that definition.

9.9 Certifications by Consultants

It shall be a condition precedent to the issue of each payment claim, any Certificate of Practical Completion, acceptance of defects rectification and the Final Certificate that all Consultants (but in relation to a payment claim, limited to those Consultants whose disciplines are relevant to any of the work under the Contract the subject of the payment claim) certify in writing that the relevant work under, the Contract has been completed in accordance with the Contract and the approved design documents, where the certification relates to a claim for the payment of money, using the form of certification in annexure Part F. Certifications are required from the following Consultants for the parts of the work under the Contract that relate to their disciplines:

(a) Architect; and

(b) landscape architect; and

(c) structural engineer; and

(d) civil engineer; and

(e) mechanical engineer; and

(f) electrical engineer; and

(g) hydraulic engineer; and

(h) fire services engineer; and

(i) facade engineer; and

(j) lift engineer;

(k) ESD consultant;

and, if necessary, the Contractor must appoint Consultants (with the approval of the Principal) for that purpose.

The Contractor must ensure, that all the Consultants that provide the certifications required by this Clause 9.9 must be the Consultants that prepare the Design Documents for the relevant parts of the work under the Contract, unless the Principal gives written approval, for a change in the Consultant, such approval not to be unreasonably withheld or delayed.

  1. It is not necessary to set out the descriptions of the various consultants whose certificates are required.
  1. When one looks at the conclusion that the Court of Appeal reached, and in particular at the declaration and order made, the Court must have been satisfied that each of the requirements of cl 5.8 (A) was met. Thus, it must have been satisfied that there had been given a Certificate of Practical Completion. And it must have been satisfied that the various documents provided by the contractor to the principal in satisfaction of cl 42.3 (c) to (h) did indeed meet that description. I repeat that the latter was the only issue stated by Emmett JA, at [33] of his Honour’s reasons, as requiring decision.
  1. Nonetheless, although the argument was concerned with whether the second limb of cl 5.8 (A) had been satisfied, it remains the case that the declaration and order could not have been made unless the first limb also had been satisfied.
  1. The condition for the release of the second guarantee is quite different. That occurs on the expiration of the Defects Liability Period, provided that the principal then has no outstanding claim against the security.
  1. Turning to the question of expiration of the Defects Liability Period, that requires a decision or determination to be made as to what the Defects Liability Period is. It is defined to mean “the period or periods referred to in clause 37”. Clause 37 provides that the defects liability period commences at 4 pm on the Date of Practical Completion.
  1. Thus, as a step to determining whether the contractor is entitled to have the second guarantee returned to it, a determination has to be made as to when the Defects Liability Period expired. That in turn raises as an issue what was the Date of Practical Completion. It raises that issue because the Defects Liability Period commences (as I have now said twice) at 4 pm on that date.
  1. Returning to the definitions, the Date of Practical Completion is not defined as the date when Practical Completion (as defined itself in the contract) is achieved. It is defined as the date certified as such by the Superintendent in a Certificate of Practical Completion, or, where another date is determined in arbitration or litigation, that other date.
  1. It seems to me to follow inevitably from the reasons of the Court of Appeal that their Honours were satisfied that the Certificate of Practical Completion that was given (I think on 14 November 2011), that certified Practical Completion as having occurred on 31 October 2011, was indeed a Certificate of Practical Completion for the purposes of the contract. If that is so, then the Date of Practical Completion, in accordance with the definition, is the date certified by the Superintendent in that certificate: 31 October 2011. However, it may not be necessary to go so far.
  1. The issue is whether anything expressly or necessarily decided by the Court of Appeal gives rise to an estoppel which prevents the principal from arguing, as it wishes to do, that the second guarantee need not be released. The principal wishes to argue, in effect, that the Defects Liability Period has not expired. It is only if the decision of the Court of Appeal estops the principal from contending for a different Date of Practical Completion than 21 March 2012 that the matter goes no further.
  1. In my view, the Court of Appeal did not decide that the Date of Practical Completion was 20 March 2012. What their Honours decided, and what is encapsulated in the declaration and order made, was that as at that date, the principal’s entitlement to security was reduced (in the amount of the first guarantee), and that the first guarantee must be returned. That conclusion followed because, their Honours said, it was not until 21 March 2012 that it could be said that both the limbs of cl 5.8 (A) had been satisfied.
  1. That this is so, is plain from the reasons of Emmett JA at [38], [39]:

[38] The documents could not reasonably have been understood by the Principal or the Superintendent as being anything other than a statement by the relevant Consultant that the work necessary to achieve Practical Completion had been completed in accordance with the applicable Design Documents and the Contract. That is the relevant work contemplated by cl 9.9. The reference to “the approved design documents” in cl 9.9 must, in the context of the General Conditions, be understood as a reference to “the applicable Design Documents”, an expression that is defined for the purposes of the Contract.

[39] The provision by the Contractor to the Superintendent and the Principal of the documents in question satisfied the condition precedent provided for in cl 9.9. The primary judge erred in reaching the contrary conclusion.

  1. Nothing in those reasons, or in my view in the orders made, entails the conclusion that the Date of Practical Completion was 21 March 2012. On the contrary, as I have indicated, it seems to me that the reasons, conclusion and orders made, would involve the proposition that, the Certificate of Practical Completion being sufficient to satisfy cl 5.8(A)(a), the application of the contractual definition of “Date of Practical Completion” means that it was the date certified by the Superintendent in that certificate.
  1. It was submitted for the contractor that this conclusion could not be correct. Mr Miller of Senior Counsel, who appeared with Ms Shaw of Counsel for the contractor, referred to the issues that had been raised on the “pleadings” in the matter that went to the Court of Appeal.
  1. There is no doubt, as Mr Miller submitted, that the issues raised by the principal in its list response went a lot further than the narrow issue that, the Court of Appeal said, was the question before the primary judge and before it. It does not seem to me to follow that, because wider questions had been argued, the decision of the Court of Appeal in favour of the contractor must necessarily be taken to have decided all those wider issues in its favour.
  1. Mr Miller pointed, also, to the interlocking definitions (for my part, I would prefer the word “circular” to “interlocking”), and submitted, in effect, that the requirements of cl 42.3(h), incorporating as it did cl 9.9, could not have been met, unless in fact Practical Completion had occurred on (rather than before) 21 March 2012. Again, I do not agree.
  1. In this context, I refer once more to what Emmett JA said at [38]. His Honour saw the statements in the documents in question as being to the effect “that the work necessary to achieve Practical Completion had been completed in accordance with the applicable Design Documents and the Contract”.
  1. It is to be noted that neither cl 42.3 nor cl 9.9 requires any consultant to certify that, for matters relevant to their particular disciplines, Practical Completion has in fact been achieved. The certification of Practical Completion is a matter for the Superintendent (and of course for an arbitrator or a court if the matter goes further).
  1. Thus, I conclude, bearing in mind the issue before the Court of Appeal and the different issue that is necessary to be decided in respect of cl 5.8(B), the principal is not estopped by reason of the decision of the Court of Appeal from taking the position that it wishes to take in relation to cl 5.8(B).
  1. There was some separate argument directed to the question of whether it was open to the principal, having disputed that Practical Completion had occurred at all in his defence in the earlier proceedings, should now be permitted to argue, as it wishes to do, the Practical Completion in fact occurred on 31 October 2011.
  1. That is a matter outside the ambit of the first of the separate questions. Whether or not it falls within the second or the third of those questions need not be considered, because those questions themselves only arise for consideration if the first question be answered “yes”.
  1. I answer the separate questions (to the extent that they remain relevant) as follows:

Question 1:

Whether, by reason of the judgment of the Court of Appeal of New South Wales in case 2012/234689 ([2012] NSWCA 104), the defendant is estopped or otherwise precluded from disputing that the Date of Practical Completion under the Design and Construct Building Contract made between the parties on 6 November 2008 (“the Contract”) was 21 March 2012.

Answer: “No”.

Question 2:

If “Yes” to 1, whether, on the proper construction of the Contract:

(a) the defendant is obliged to release or return to the plaintiff the Second Guarantee (as defined in the pleadings) (in the sum of $771,748.90).

(b) the ESD Defects Liability Period (as defined in the Contract) expired on 21 June 2013.

Answer: “Do not arise”.

  1. I direct that those answers be recorded. I will hear the parties on the question of costs and on the question of directions for the future conduct of the proceedings.

[Counsel addressed.]

  1. I order the plaintiff to pay the defendant’s costs of the separate questions.

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