DCT Projects Pty Limited v Champion Homes Sales Pty Limited

1. [1]

   MACFARLAN JA: I agree with the orders proposed by Gleeson JA and with his Honour’s reasons.

2. [2]

   GLEESON JA: This appeal concerns a building dispute relating to the construction of eight townhouses on two blocks of land owned by the first appellant, DCT Projects Pty Limited (Projects), at Courtney Road, Padstow. Projects is the trustee of a unit trust known as “The Developers Club Trust No 1” (the Trust). Mr Robert Brown had acted as trustee of the Trust prior to the incorporation of Projects on 23 September 2005. The second to sixth appellants are some of the unitholders in the Trust and at all relevant times were directors of Projects. The first respondent, Champion Homes Sales Pty Limited (Champion Homes), as its name implies, is a builder. The second respondent, Sredoje Malesev (Mr Malesev) is its managing director.

3. [3]

   Champion Homes sued Projects, ultimately claiming the amount of $317,484.18 said to be owing under a construction contract less the amount it had been paid. It also made a claim against the unitholders of Projects as guarantors for their respective proportion of the amount claimed.

4. [4]

   Projects and the unitholders cross-claimed against Champion Homes and Mr Malesev. At trial, the only cross-claim pursued was that brought by Projects which made claims for recovery of amounts asserted to have been overpaid as variations; for liquidated damages; for costs to complete, for late completion damages; and damages for alleged misleading and deceptive conduct relating to the cost of constructing retaining walls and the need for retaining walls, not included in the contract.

5. [5]

   After a hearing lasting seven days the primary judge (Ball J) delivered reasons for judgment on 26 May 2015 (a) rejecting the claim against Champion Homes for misleading and deceptive conduct; (b) finding that Projects’ termination of the contract was wrongful and Champion Homes was entitled to terminate the contract; (c) concluding that Champion Homes’ loss is $76,593.23 (being the amount that it claims ($317,484.18), less the amount by which its claim for variations should be reduced ($106,330.95) and less the amount of liquidated damages payable by it to Projects ($134,560)); and (d) dismissing Projects’ and the unitholders’ cross-claims. After awarding interest of $42,524.72 from the date of termination of the contract (which his Honour treated as 2 July 2008) to the date of judgment at the rate prescribed by Practice Note SC Gen 16, his Honour entered judgment in favour of Champion Homes in the amount of $119,117.95 and judgment for one-ninth of that amount ($13,235.33 inclusive of interest) against each of the second to ninth defendants: Champion Homes Sales Pty Limited v DCT Projects Pty Limited [2015] NSWSC 616.

6. [6]

   Projects and five of the unitholders have appealed.

Relevant facts

1. [7]

   The Padstow land was located on the southern corner of Courtney Road. It consisted of two blocks, both of which fronted Courtney Road. The larger block is roughly 18 metres wide and 150 metres deep and slopes approximately 17 metres downhill in a southerly direction. The second block is adjacent to the eastern side of the first and is approximately 17 metres wide and 53 metres deep.

2. [8]

   The proposed development by Projects provided for six townhouses to be located at the top end of the site – three on either side of a road that was to run down the middle. The plans provided that the road was then to turn right and left and to run down the western side of the larger block leading to the remaining two townhouses (known as units 4 and 5), which were to be located at the bottom of the site.

3. [9]

   The building work was put out to tender and the successful tenderer was Champion Homes. Its final tender price submitted on 9 September 2005 was $1,660,000, subject to a number of conditions. Relevantly, the “Other Conditions” included that the tender was subject to a survey report prepared by the builder’s surveyor and no allowance was to be made for retaining walls. The tender included the following statement:

4. [10]

   On about 22 September 2005, Mr Brown, as trustee of the Trust, accepted Champion Homes’ tender and agreed to pay a non-refundable tender fee of $40,000 at a later date. That fee was paid on 20 December 2005. There was a dispute at trial as to the nature of this payment and whether it formed part of the contract sum. The primary judge found that it was a deposit and was payable in addition to the contract sum.

5. [11]

   On 9 December 2005, Projects provided Champion Homes with contour plans of the site. These were used by Champion Homes to prepare preliminary plans. Mr Luke Wakeham, an architectural draftsman who worked under the supervision of Mr Cartagena, the drafting manager at Champion Homes, identified a number of issues in relation to those plans. Mr Wakeham prepared a document headed “Construction issues” dated 21 December 2005, which included reference to “large engineered retaining walls which would be required” adjacent to Units 3 and 5, as well as a “massive cut of 5.11 metres” adjacent to unit 5.

6. [12]

   On 9 February 2006, Champion prepared revised plans for the development.

7. [13]

   On 27 February 2006, there was a meeting on site between Mr McLean of Projects, and Mr Thorpe, Mr Petkovski and Mr Fordham of Champion Homes, and Mr Donovan, a consulting engineer. His Honour set out part of Mr Petkovski’s file note of the meeting (at [32]), but omitted reference to par 4 concerning a report required by Donovans Designs Pty Ltd (Donovans), civil and structural engineers. It is desirable to set out the relevant parts of that file note:

8. [14]

   Following the site meeting, on 1 March 2006, Mr Malesev wrote to Mr McLean attaching a revised draft of Schedule 2 setting out the progress payments to be made by Projects. The letter is significant for Projects’ misleading and deceptive conduct claim. Relevantly, the letter said:

9. [15]

   His Honour noted (at [33]) that there was a dispute whether the reference to “a further retaining wall at the back of the site” was intended to be a reference to the retaining wall to be built adjacent to units 4 and 5, or whether it was a reference to an existing retaining wall that was adjacent to a neighbour’s property. He found (at [112]) that it was likely that the discussion was limited to the existing retaining walls on the site and that there was no discussion of the new walls to be built. That finding may be doubted in view of par 4 of Mr Petkovski’s file note of the site meeting, but Champion Homes did not seek to challenge that finding in this Court.

10. [16]

    The construction contract dated 8 May 2006 between Projects and Champion Homes was a lump sum contract for $1,665,000, with nominated provisional sums and excluded costs for retaining walls unless specified in the tender or variations: Special Condition 53.2. The contract duration was 45 weeks. The nine unitholders of Projects (who were parties to the construction contract) guaranteed Projects’ obligations under the contract as to a one-ninth share each. Projects’ representative for the contract was stated to be “DPL Projects Pty Ltd, Mr Max McLean, director”.

11. [17]

    Work started on the site on 16 August 2006. There were delays in the progress of the work and Champion Homes made various claims for variations which led to disputes between the parties. On 8 November 2007, Champion Homes suspended work on the site. The parties entered into a Modification Agreement dated 13 December 2007 (the Modification Agreement) by which it was agreed, among other things, that Gleeds, quantity surveyors engaged by Projects, would value the variations in dispute, as well as future variations. However, further disputes arose and Champion Homes suspended work on another three occasions, the last suspension commencing on 18 June 2008. Following that suspension, Projects gave notice purporting to terminate the contract on 2 July 2008. In turn, on 7 July 2008, Champion Homes treated Projects’ notice of termination as a repudiation and itself purported to terminate the contract.

12. [18]

    As indicated above, Champion sued Projects for the amount which it claimed to be owing under the contract, ultimately $317,484.18, and the unitholders for their respective one-ninth shares of the amount claimed. By the time of the hearing, one of the guarantors, Mr Mark Nixon, was a bankrupt and the claim against him was not pursued.

13. [19]

    By its cross-claim Projects made the following claims. First, Projects claimed that it had overpaid Champion Homes the sum of $216,851.94 and sought to recover that amount. This amount related to variations which Projects contended were not properly claimable by Champion Homes.

14. [20]

    Secondly, Projects claimed liquidated damages at the contractual rate of $1,160 per day from the date of practical completion under the contract (which was 26 June 2007) to the date on which it purported to terminate the contract (2 July 2008), that is, 372 days. The total amount claimed was $431,520.

15. [21]

    Thirdly, Projects claimed cost paid to another builder, Linx Projects Pty Ltd (Linx), to complete the work ($588,954.11) less the costs of variations inclusive of GST, making a total of $557,306.36.

16. [22]

    Fourthly, Projects claimed late completion damages in the sum of $376,293.74 in respect of the period 3 July 2008 to the time of sale of the units on 1 August 2009.

17. [23]

    As already indicated, these claims by Projects were rejected by the primary judge except for part of the claim for liquidated damages and part of the claim for repayment of overpaid variations which were deducted from Champion Homes’ claim under the contract.

18. [24]

    Finally, Projects claimed that Champion Homes engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the TPA) (now the Competition and Consumer Act 2010 (Cth) Schedule 2 s 18 (Australian Consumer Law)) and that Mr Malesev was a person involved in that contravention within the meaning of s 75B(1) of the TPA. Projects alleged that Champion Homes gave misleading advice concerning the amount that should be allowed for rock excavation and removal, site excavation, and spoil and fill removal, in addition to misleading advice concerning the cost of constructing retaining walls. It was further alleged that Champion Homes failed to disclose to Projects that substantial excavation would be required and that it would be necessary to construct numerous and large engineered retaining walls which were far in excess of those that had been disclosed to Projects.

19. [25]

    Projects claimed that if Champion Homes had not engaged in misleading or deceptive conduct, it would not have entered into the construction contract. Projects claimed as its loss the costs of retaining walls ($361,694.14), the increased costs of excavation and the change in levels ($221,535.10) and the costs of a retaining wall built by another contractor, Earthpro ($10,950). These amounts totalled $594,179.24.

20. [26]

    His Honour rejected the misleading conduct claim, finding that there was no reasonable expectation of disclosure that retaining walls would be required, although not included in the contract.

Issues on appeal

1. [27]

   The notice of appeal raised nine grounds, some of which were connected. Projects identified three main issues, namely: (a) whether Projects lawfully terminated the contract on 2 July 2008 (ground 1); (b) whether Projects’ entitlement to liquidated damages should be reduced by the sum of $134,560 representing 256 calendar days as extensions of time (ground 2); and (c) whether Champion Homes’ non-disclosure of the need for retaining walls was misleading or deceptive or causative of loss or damage by Projects entering into the construction contract (grounds 7, 8 and 9).

2. [28]

   The remaining grounds of appeal were directed to challenging his Honour’s findings that the contract sum of $1,665,000 did not include the $40,000 non-refundable tender fee paid by Projects to Champion Homes (ground 4), allowing in full Champion Homes’ claims for variation 1 ($94,100) and variation 6 ($189,000) (ground 3) and allowing Champion Homes an amount of $95,000 for contract price adjustment (CPA) 5 with respect to stormwater and hydraulic works (ground 5). In addition, Projects challenged his Honour’s contingent findings as to Projects’ claim for damages (assuming its termination was lawful) disallowing the cost to complete the works after termination in the amount of $557,306.36 (ground 6).

3. [29]

   It is convenient to deal with the main issues in the order in which they were argued on appeal before addressing the remaining grounds.

Termination by Projects (ground 1)

1. [30]

   Projects’ case at trial was that it was entitled to terminate the contract on the basis that Champion Homes had repudiated the contract by not performing its obligations under the contract for a period of approximately six months after the Modification Agreement. Significantly, Projects did not seek to terminate the contract for breach relying upon its express contractual rights. This would have required Projects to have served a notice of default in accordance with cl 33 of the contract and allowed Champion Homes ten working days to remedy that breach.

2. [31]

   The primary judge summarised the history of the building works from the time of the commencement of the works on 16 August 2006 until the Modification Agreement on 13 December 2007: at [60]-[79]. It is unnecessary to refer to the detail of what occurred during this period, as it is common ground that the parties affirmed the contract by entering into the Modification Agreement. One matter, however, should be mentioned. His Honour found that the first suspension of work on the site by Champion Homes from 8 November 2007 until the Modification Agreement on 13 December 2007 was valid: at [178]. That finding is not challenged by Projects.

3. [32]

   His Honour summarised the building work which followed the Modification Agreement until termination of the contract by Projects on 2 July 2008: at [86]-[99]. It is necessary to refer to these findings in some detail, since they are critical to his Honour’s assessment of the repudiation claim. His Honour found that:

4. [33]

   The primary judge found that the evidence did not establish that Champion Homes evinced an intention not to be bound by the contract or an intention only to fulfil the contract in a manner substantially inconsistent with its obligations: at [123]. It is desirable to set out his Honour’s reasons in full:

5. [34]

   His Honour concluded that as Projects’ termination of the contract was wrongful, it followed that Champion Homes was entitled to terminate the contract (which it did on 7 July 2008): at [124].

6. [35]

   In written submissions, Projects emphasised that the contract contained two contractual obligations with respect to the timing of Champion Homes’ performance of the work. One was that “the building works will be done with due diligence and within the times stipulated in this contract”: cl 38.1(d). The other was Special Condition 38.2 to “use all endeavours to proceed with the building work under the contract with due expedition and without delay”.

7. [36]

   Projects next referred to Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 (Hometeam) at [169] as authority for the proposition that, depending on the circumstances, delay of itself may be sufficient to raise an inference of lack of due diligence. It was submitted by reference to Hometeam at [181] that delay in progress during construction could amount to a failure to perform the building works with due diligence if there was either (i) a failure to carry out a reasonable amount of work by a given time measured by reference to all the work performed under the contract or (ii) in absolute terms, by reference to a lack of activity on the site over a significant period that could not be satisfactorily explained. The contention advanced was that the lack of due diligence evinced an intention by Champion Homes not to be bound by the contract.

8. [37]

   In oral argument, Projects identified six matters as demonstrating that Champion Homes had repudiated the contract. Those matters were:

   1. (1)

      the delay in performance of the contract, in particular, the (unextended) date for practical completion was 27 June 2007 and by 2 July 2008 the works were at week 98 of a contract with a 45-week duration;

   2. (2)

      Champion Homes failed to carry out any work following reopening of the site on 14 December 2007 up until 19 December 2007;

   3. (3)

      Champion Homes threatened to suspend the works in early 2008;

   4. (4)

      the only work undertaken by Champion Homes after the Modification Agreement in December 2007 related to variations and CPA 5 in respect of hydraulic works;

   5. (5)

      Champion Homes failed to provide an updated works programme; and

   6. (6)

      the works were invalidly suspended by Champion Homes on 18 June 2007, and this was the fourth suspension of works since November 2007.

9. [38]

   Although the relevant principles concerning repudiation are not in dispute, it is desirable to say something first about those principles, as they provide the context in which Champion Homes’ words and conduct are to be assessed.

Relevant principles - repudiation

1. [39]

   For the conduct of a party to constitute a renunciation of its contractual obligations it must be shown that the party is either unwilling or unable to perform its contractual obligations, that is, it has evinced an intention to no longer be bound by the contract, or stated that it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and in no other way: Shevill v Builders Licensing Board [1982] HCA 47; 149 CLR 620 (Shevill) at 625-626 (Gibbs CJ); Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; 166 CLR 623 at 634, 647-648, 658; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; 233 CLR 115 (Koompahtoo) at [44]. Repudiation is a serious matter and is not to be lightly found or inferred: Shevill at 633 (Wilson J).

2. [40]

   Where inability to perform is declared the conduct amounts to a refusal to perform and the innocent party need not prove that the other party was actually unable to perform when the time for performance came: Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 at 437.

3. [41]

   A renunciation can be made either by words or conduct, provided it is clearly made: Universal Cargo Carriers Corporation v Citati at 436. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it: Koompahtoo at [44]; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 659 (Deane and Dawson JJ) and 647 (Brennan J).

4. [42]

   So far as factual inability to perform is concerned, what needs to be shown is that the party in question has become wholly and finally disabled from performing the essential terms of the contract altogether: Rawson v Hobbs [1961] HCA 72; 107 CLR 466 at 481; Almond Investors Ltd v Kualitree Nursery Pty Ltd [2011] NSWCA 198 at [62] (Bathurst CJ; Giles JA and Handley AJA agreeing). It is well accepted that factual inability must be proved “in fact and not in supposition”: Universal Cargo Carriers Corporation v Citati at 450.

5. [43]

   Here, Projects did not assert factual inability to perform. Projects asserted unwillingness to perform to be inferred from the words and conduct of Champion Homes (set out at [37] above).

6. [44]

   The first and overarching matter relied upon by Projects was the delay in performance of the contract. Project’s submissions pointed out on several occasions that the contract required completion within 45 weeks and that Projects had terminated the contract after 98 weeks. However, in argument, Projects accepted that the Modification Agreement was an affirmation of the contract and that the focus of the present enquiry therefore must be entirely on the period from 13 December 2007 until Projects’ letter of termination on 2 July 2008.

7. [45]

   Reference has been made above to his Honour’s factual findings concerning the building work which was undertaken following the Modification Agreement and the ongoing disputes as to whether payments were correctly made by Projects to Champion Homes. His Honour did not find that any of the disputes raised by Champion Homes were not genuine. Nor did his Honour find that Champion Homes was not genuine in asserting that the building works were delayed in part because of an absence of instructions from Projects, relating to various matters, including the retaining walls adjacent to units 5 and 6, the driveway lighting, and the requirement to notify affected adjoining owners concerning replacement of fences. Nor were any different findings sought by Projects on appeal.

8. [46]

   In support of its contention that Champion Homes failed to perform the works under the contract with due diligence, Projects pointed to the “Progress” of the works recorded in the independent QS reports prepared by Newton, Fisher & Associates Pty Ltd for Projects’ financiers dated 1 February 2008 and 12 May 2008. Under the heading “Progress”, the February 2008 QS report recorded the project status as follows:

9. [47]

   The report noted that six dwellings were almost complete and were waiting for the external works and the last two dwellings had the slabs laid, frames erected, roofing, plasterboard, joinery and brickwork complete, and with tiling and works on bathrooms progressing. Stormwater drainage was recorded as having been executed.

10. [48]

    The May 2008 QS report recorded that the position with respect to “fittings” and “external work” remained “0% complete” and that “services” were now “90% complete”. The report continued:

11. [49]

    Projects asserted that there was a lack of activity on site over a significant period that could not be satisfactorily explained. Projects accepted that it bore the onus of proving lack of due diligence by Champion Homes: Hometeam at [181]. There are three difficulties with Projects’ contention.

12. [50]

    The first is that this is not a case where there was a complete lack of activity on site between February and May 2008. It is acknowledged by Projects that work was undertaken in relation to variations and CPA 5 relating to hydraulic works. The work on the retaining wall adjacent to units 4 and 5 was completed by 26 May 2008, and the hydraulic and stormwater drainage works were substantially complete by 11 June 2008.

13. [51]

    The second difficulty is that the asserted lack of activity, at least with respect to “external works”, seems to be largely explained by a number of circumstances: some delay was caused by rain (and his Honour noted that Projects did not take issue with that assertion by Champion Homes: at [123]); the failure or delay by Projects in providing instructions on a number of items: at [123]; and the valid suspension of works by Champion Homes from 13 March 2008 until 15 April 2008: at [181].

14. [52]

    The third difficulty, as his Honour found (at [123]), is that Projects bore the onus of proving that work could have been done and did not discharge that onus. Mere reference to the “percentage complete” for the categories of work described in the QS reports in February and May 2008 does not establish that the work which Projects asserted could have (in fact) been done between February and early May 2008. As his Honour correctly recognised, it is possible that Champion Homes could have done more, and may have been in breach of clause 38.2 of the contract, but that did not amount to a repudiation of the contract: at [123]. In my view, no error has been demonstrated with respect to this finding.

15. [53]

    The next matter relied upon by Projects in support of its repudiation claim is that, on 19 December 2007, Champion Homes gave notice of a claim for extension of time from 14 December 2007 having reopened the site on that day as required by the Modification Agreement. In his letter to Mr Brown giving notice, Mr Malesev stated that:

16. [54]

    The “suspension of the building works” referred to by Mr Malesev which preceded this claim for an extension of time, commenced on 8 November 2007 and lasted up until the Modification Agreement on 13 December 2007. As already indicated, his Honour found that this first suspension by Champion Homes was valid and there is no challenge by Projects to that finding.

17. [55]

    In oral argument, counsel for Projects submitted that this claim for an extension of time was not bona fide (T7 at line 47). It seems, however, that this proposition was not put to Mr Malesev in cross-examination. Ultimately, counsel for Projects submitted that this claim for an extension of time (for eight days) was not the most important matter relied upon by Projects, but rather it “added flavour” to later events (T8, lines 35-36 and T9, lines 39-42).

18. [56]

    The next matter relied upon by Projects was that Mr Malesev threatened suspension of work by making unfounded allegations to WorkCover of unsafe work practices by Earthpro in March 2008, and contemplated actions that included locking the site and preventing Earthpro from carrying out further works, as an effective way of getting Projects to pay some more money very quickly. (Earthpro was the contractor engaged directly by Projects to construct the retaining walls adjacent to units 3 and 4.) Two observations can be made regarding this complaint.

19. [57]

    First, the evidence does not establish that Mr Malesev did not hold a genuine concern regarding alleged unsafe work practices by Earthpro in stockpiling dirt adjacent to the boundary near unit 3. Projects emphasised that Mr Malesev never took the step of engaging a consulting engineer to visit the site to check his safety concerns. This omission was relied upon as supporting an inference that Mr Malesev’s concerns were not genuine. Counsel for Projects accepted, however, that his Honour did not find that the threat to suspend works in and around unit 3 was a “pretence” by Mr Malesev. It seems that no such finding was sought at trial. Nor was such a finding sought in Projects’ statement of challenged findings of fact pursuant to the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) 51.36(2).

20. [58]

    Secondly, the contention by Projects that Mr Malesev “manufactured” a reason to threaten to suspend works ignores the context in which Mr Malesev sought legal advice in early March 2008 concerning whether Champion Homes was in a position to suspend all building works and issue a notice of breach. At that time, Projects had paid substantially less than the amount Champion Homes believed it was entitled to receive in relation to its claims which had been valued by Gleeds and accepted by Champion Homes. In oral argument, counsel for Projects accepted that there was a bona fide dispute between the parties as to whether Champion Homes had been paid the money that was due to it pursuant to the contract and the Modification Agreement. It is clear from the final sentence in Mr Malesev’s email to his solicitor of 3 March 2008, that the legal advice was sought in the context of seeking to pressure Projects “to pay some more money very quickly”.

21. [59]

    Whether the course contemplated by Mr Malesev was a good or bad idea is not to the point. Mr Malesev was seeking legal advice on what would be an effective way of getting paid more quickly. He had a legitimate and reasonable concern regarding non-payment by Projects. He ultimately did not carry out his threat to suspend part of the works near unit 3 due to safety concerns. That threat was overtaken by the events of 6 March 2008, when a notice of breach was issued by Champion Homes and the later (valid) suspension of works on 12 March 2008. I do not regard the earlier threat to suspend a small part of the works as repudiatory conduct.

22. [60]

    The next matter relied upon by Projects was that the only work undertaken by Champion Homes after the Modification Agreement related to variations and CPA 5, relating to the stormwater and hydraulic construction work. The complaint made was that the variation work had a margin of 20 percent as opposed to the fixed price portion of the contract, which, it was acknowledged, contained some inherent builder’s margin. Projects contended that Champion Homes was not attending to the core contract work but was undertaking other work which was more profitable to it.

23. [61]

    The first matter to note is that the premise of this contention was not established, since the builder’s margin in respect of the contract price was not identified in the evidence by Projects.

24. [62]

    Further, Projects acknowledged that after the third suspension commencing on 13 March 2008 and lasting until 15 April 2008, which was valid (at [181]), Champion Homes came back onto the site and performed “some” work in accordance with the contract. The complaint made was that Champion Homes did not perform “all of the contract work that was available”. This contention has been addressed above under the heading “delay”. For the reasons already given, the nature of the work undertaken does not provide a basis for demonstrating repudiatory conduct by Champion Homes.

25. [63]

    Projects pointed to the failure by Champion Homes to provide an updated works programme, despite repeated requests, as demonstrating an intention not to perform its obligations under the contract. Attention was drawn to Mr Malesev’s acceptance in cross-examination that he had been asked to do so by Mr McLean “half a dozen times”. However, Mr Malesev also explained in cross-examination that he told Mr McLean that he would have to pay for it. There was no evidence that Mr McLean agreed that Projects would do so. Nor did Projects contend that Champion Homes was contractually obliged to provide a revised building programme for no fee. Neither did it challenge Mr Malesev’s evidence in cross-examination that Champion Homes did not need a programme because they knew what they were doing.

26. [64]

    Projects pointed to its correspondence with Champion Homes in late May 2008 concerning this issue. That correspondence (dated 30 May 2008) does not really advance the argument. It contains assertions by Mr McLean that the reason Champion Homes would not produce a revised programme was because they would have to work to it. Mr Malesev replied to Mr McLean by email that day stating that he was still waiting for instructions concerning what work needed to be done relating to retaining walls adjacent to driveways, the driveway lights and the date that Projects would clear the boundaries so that the fences could be installed. Mr Malesev asserted that he was not contractually required to produce a work programme as Projects kept changing the scope of works and observed that the last cheque from Projects had bounced. That cheque was in the amount of $3,440.39 and there was evidence that it was dishonoured by the Commonwealth Bank on 30 May 2008. Projects did not submit that the evidence of the dishonour of Projects’ cheque for $3,440.39 was incorrect.

27. [65]

    Counsel for Projects acknowledged that there was no finding that the explanation given by Mr Malesev for not providing an updated works programme was contrived. Correspondence between Mr Malesev and Mr McLean relating to this issue continued in early June 2008. There was a continuing dispute as to whether Champion Homes had been provided with all relevant instructions, as previously requested.

28. [66]

    In my view, Projects has not demonstrated that the failure by Champion Homes to produce an updated works programme was unjustified, let alone a breach of the contract, nor that such conduct evinced an intention not to be bound by the contract, or to fulfil the contract only in a manner substantially inconsistent with its obligations.

29. [67]

    On 5 June 2008, Mr Malesev informed Mr McLean by email that due to weather conditions (heavy rains) that week, no work had been able to be carried out onsite for the whole week. Mr Malesev indicated that, weather permitting, he anticipated being able to complete the stormwater drainage works by the end of the following week.

30. [68]

    On 17 June 2008, Mr Malesev sent a further email to Mr McLean referring to their telephone conversation that day and requested instructions in relation to the driveway retaining walls and the removal of vegetation on the boundaries. He had been requesting those instructions since February 2008. Mr Malesev also advised that if payment of $45,498 was not made for the balance of Variation 6 relating to the stormwater drainage works by the close of business that day, Champion Homes would be suspending all works on the site until that payment was received in full. The amount claimed was not paid by Projects and accordingly, Champion Homes suspended works the following day, being 18 June 2008.

31. [69]

    Projects relies upon this fourth suspension as demonstrating that Champion Homes did not intend to fulfil its contractual obligations. I do not agree. It was not suggested that this suspension was not bona fide. His Honour’s finding that the fourth suspension was not valid was on the basis that Champion Homes had discharged the onus of proving that Projects had failed to pay CPA 5 (at [183]). However, his Honour had earlier found that Champion Homes suspended work under the contract because it believed, with some justification, that it had not been paid amounts due to it: at [123]. That finding was not challenged.

32. [70]

    In my view, Projects has not demonstrated that Champion Homes repudiated its obligations under the contract. It follows that ground 1 should be rejected.

Liquidated damages and Extensions of Time (ground 2)

1. [71]

   Item 13 of the particulars to the contract stated that liquidated damages were $1,160 per day.

2. [72]

   Clause 9 of the contract dealt with extensions of time. It relevantly provided:

3. [73]

   At trial, Projects claimed an entitlement to liquidated damages in the sum of $431,520. This claim was quantified as 372 days at $1,160 per calendar day. In its amended defence to the further amended first cross-claim (par 13), Champion Homes denied Projects’ claim for liquidated damages. In par 14 of its defence, Champion Homes asserted that it could not and was not obliged to provide a request for an extension of time as Projects was aware of the cause and Champion Homes could not determine the extent of any delay.

4. [74]

   His Honour noted that Champion Homes did not plead the extensions of time to which it says it was entitled; instead, in its defence to Projects’ amended cross-claim claiming liquidated damages, it simply denied that Projects was entitled to liquidated damages: at [154].

5. [75]

   At [155], his Honour referred to the two bases on which Champion Homes claimed in its written submissions that it was entitled to an extension of time. It is only necessary to refer to the first. This relied on claimed extensions on particular days and a letter from Champion Homes to Projects dated 23 August 2007.

6. [76]

   At [163], his Honour rejected the submission by Projects that Champion Homes was not entitled to an extension of time because none of the claims for extensions of time on which Champion Homes relied were made in accordance with the contract. His Honour referred to the requirement under cl 9.2 that Champion Homes give notice detailing the cause of the delay and the extension claimed and that the claim had to be made within 10 working days after Champion Homes became aware of “both the cause and the extent of delay”. His Honour found that if Champion Homes gave a notice that satisfied those requirements then, under cl 9.3, it was entitled to the claimed extension unless, within 5 working days of receiving the notice, Projects gave written notice disputing the extension claimed and “detailing the reasons why the extension of time is disputed”. His Honour observed that Champion Homes bore the onus of proving that it was entitled to an extension of time and that Projects bore the onus of proving that it gave a notice disputing the extension in accordance with cl 9.3.

7. [77]

   At [164], his Honour took the approach that, in the absence of any evidence to the contrary, it should be inferred that any claim for an extension was made within the 10-day period. He noted that the 10-day period ran from the time that Champion Homes became aware, relevantly, of the extent of the delay. He observed that in cases where the delay was caused by variations, that may not have been until work on the variation was complete.

8. [78]

   At [165]-[174], his Honour considered each of the five extensions of time claimed by Champion Homes and the claims in its letter dated 23 August 2007. He concluded that the five extensions of time claimed by Champion Homes satisfied the requirements of cl 9, but not the various claims in its letter dated 23 August 2007.

9. [79]

   His Honour then considered two additional categories of extensions. The first arose out of the Christmas period in 2007/2008. The second arose from the suspensions of work by Champion Homes. His Honour noted that Champion Homes claimed to have been delayed by those events and although they were not specifically referred to, reliance on them was consistent with Champion Homes’ general denial that it is liable for liquidated damages: at [175].

10. [80]

    With respect to the 2007/2008 Christmas period, his Honour found that Champion Homes was entitled to an extension of 43 days (at [176]).

11. [81]

    With respect to the suspensions of work, his Honour found that Champion Homes was entitled to an extension for the two periods for which it validly suspended work (at [178]). These were the first suspension, which commenced on 8 November 2007 and lasted until 13 December 2007 (36 days), and the third suspension which commenced on 13 March 2008 and lasted until 15 April 2008 (34 days): at [180]-[181]. His Honour found that the second suspension, which commenced on 5 February 2008 and lasted until 15 February 2008, and the fourth suspension, which commenced on 19 June 2008 and lasted until 2 July 2008, were not valid: at [182]-[183]. Those findings are not challenged on appeal.

12. [82]

    Accordingly, his Honour concluded that Champion Homes was entitled to extensions of time totalling 256 days. Since the total delay was 372 days, his Honour found that Projects is entitled to liquidated damages for a delay of 116 days at $1,160 per day, being $134,560: at [184].

13. [83]

    Projects contended that his Honour erred in allowing the extensions of time for three reasons. The first was that it was denied procedural fairness because his Honour should not have assessed such entitlements in the absence of Champion Homes pleading an entitlement to extensions of time. The second was that it was not possible for his Honour to have made any assessment of delay in any of the extension of time claims in the absence of expert evidence and a revised building programme. The third was that his Honour’s approach to the specific claims made by Champion Homes for extensions of time was erroneous in drawing inferences that the claims were made within time and ignoring evidence that Projects had disputed the claims within time.

14. [84]

    Although Champion Homes did not plead the extensions of time to which it ultimately claimed at trial it was entitled, the issue was clearly raised in the parties’ written submissions and Projects did not object at trial when the claim was made by Champion Homes in oral closing argument. Reference to the transcript of the hearing and the parties’ written submissions establishes the following.

15. [85]

    First, Projects’ outline of opening submissions dated 10 April 2015 addressed this topic in some detail presumably in anticipation that Champion Homes might claim extensions of time as an answer to Projects’ claim to liquidated damages. Certainly, Champion Homes should have expressly pleaded in its defence to the Projects’ cross-claim, that it was entitled to extensions of time, in addition to its general denial of Projects’ claim for liquidated damages for delay: UCPR, r 14.14(2). However, I do not consider that Projects was surprised when the matter was raised by Champion Homes in closing submissions. If it had been surprised, then it could be expected that an objection would have been taken by Projects at this point.

16. [86]

    Secondly, counsel for Projects cross-examined Mr Malesev on the topic of extensions of time. Projects contended that this cross-examination was only directed to challenging “some” of the claims for an extension of time. One was the claim for delay caused by rain, referred to in Champion Homes’ letter of 23 August 2007. Another was the claim for an extension of time immediately following the Modification Agreement on 13 December 2007. Whatever forensic decisions were made by Projects as to the scope of cross-examination on this topic, it chose to open up this issue in cross-examination.

17. [87]

    Thirdly, it is common ground that Champion Homes’ closing written submissions (dated 23 April 2015) contained references to claims for extension of time. Projects emphasised that these closing submissions were first provided to the court and counsel for Projects when counsel for Champion Homes commenced his oral closing submissions. That may be accepted. However, the written submissions on this topic were supplemented by the oral closing submissions of Champion Homes and Projects did not object to Champion Homes raising this issue. Nor did Projects submit that it was prejudiced by the late notice of Champion Homes’ claim for extensions of time. Counsel for Projects responded to these submissions in oral closing argument at trial by disputing any substantive entitlement of Champion Homes to claim extensions of time.

18. [88]

    In my view, Projects cannot now validly complain on appeal that it was denied procedural fairness. The issue was anticipated by Projects in its opening submissions, in circumstances where Champion Homes had denied Projects’ claim for liquidated damages. Projects had cross-examined on the issue, and responded in its closing submissions to Champion Homes’ submissions relying upon extensions of time as an answer to Projects’ claim for liquidated damages. Projects must be taken to have made a forensic choice not to object to Champion Homes raising the issue in its closing submissions. The present case is one in which the parties have deliberately chosen a different basis for the determination of the respective rights and liabilities to that in their pleadings: Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd [1990] HCA 11; 169 CLR 279 at 287.

19. [89]

    His Honour accepted that the issue of delay, the subject of the claims for an extension of time, required an answer to the question of whether, as a factual matter, an event caused a delay in the work: at [162]. Projects contended that his Honour erred in finding that the question of whether a particular event caused actual delay could be answered without a program of works. Projects argued that determining delay required an assessment of the works against the programme.

20. [90]

    His Honour identified the real issue as being whether Champion Homes had made proper claims for extensions of time under cl 9 of the contract. Importantly, the contractual regime provided by cl 9 does not depend upon a works programme.

21. [91]

    In my view, to the extent that Champion Homes was entitled to rely upon the contractual regime under cl 9, there was no error in his Honour’s finding that the claims for an extension of time were to be determined by reference to that contractual regime.

22. [92]

    For the purposes of this argument, the parties proceeded upon the assumption that in the absence of timely notification by the builder and the owner respectively, as required by cll 9.2 and 9.3 of the contract, Champion Homes was not entitled to an extension of time under cl 9.1 and Projects was not entitled to dispute the builder’s entitlement to an extension of time: see by analogy Australian Developments Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (NSWSC, Giles CJ Comm D, 30 January 1996, unrep), in relation to timely notifications of a claim for an extension of the date for practical completion.

23. [93]

    Projects raised six issues with respect to the timely notification of claims for an extension of time or disputes as to entitlements to make such claims.

24. [94]

    The first extension of time (of 35 days) was claimed in Variation 1 dated 13 September 2006. This variation related to changes in levels and set out the work required. The last paragraph of the variation stated:

25. [95]

    Projects complained that his Honour drew an inference that this claim was made within time: at [166]. It contended that the nature of the works associated with this extension of time were well-known to Champion Homes and certainly by no later than 10 August 2006. Accordingly, it was argued, that the extension of time claim dated 13 September 2006 was made out of time. Projects also contended that there was no assessment of how the 35 days was calculated, or allowed by his Honour.

26. [96]

    In my view, the inference drawn by his Honour - that this claim was made within time - was open on the evidence. The notice under cl 9.2 claiming an extension of time was required to be given by the builder within 10 working days “after becoming aware of both the cause and the extent of the delay”. The submissions of Projects focus only on Champion Homes’ awareness of the cause of the delay and ignore when Champion Homes became aware of the extent of the delay.

27. [97]

    In the case of Variation 1, Champion Homes’ letter to Projects of 10 August 2006 makes clear that, with respect to the proposed variations to the internal driveways and the recommendations of the flood survey report, certain matters remained outstanding before work, the subject of the variation, could be commenced. Those matters were relevant to the extent of the delay. They included the issue of a construction certificate (expected by 14 August 2006) and the need for Projects’ surveyor, Mr Bottaro de Nett, to attend on-site (expected on 11 August 2006) to undertake a survey and plan of consolidation to ensure that the retaining walls to be constructed by Champion Homes were correctly located on the boundaries.

28. [98]

    Having regard to the nature of the work the subject of Variation 1, it was reasonable for his Honour to infer that the extent of the delay was not known to Champion Homes until the works the subject of Variation 1 had been performed. Significantly, Projects did not put to Mr Malesev in cross-examination that he was aware of the extent of the delay in the works caused by Variation 1 prior to the date (13 September 2006) when Champion Homes submitted the claim for this variation. In my view, there was no error in his Honour’s finding that the claim was made within time.

29. [99]

    It is accepted that Projects did not dispute the claim for an extension within the five-day period. There was no error in his Honour’s conclusion that Champion Homes was entitled to the extension.

30. [100]

    The second extension (of 10 days) was claimed in Variation 4 dated 24 October 2006. This variation related to the construction of a stone retaining wall close to the driveway area and the above ground sewer pipe. His Honour noted that it raised the same issues as the extension claimed in Variation 1. Again, Projects did not dispute the entitlement to an extension within five working days and his Honour concluded that Champion Homes was entitled to the extension: at [167].

31. [101]

    Projects contended that his Honour overlooked that Projects had rejected this claim in its letter dated 30 October 2006 which relevantly stated:

32. [102]

    Although this notice was given by Projects within five working days of receiving Champion Homes’ notice under cl 9.2, Projects did not comply with cl 9.3 because it failed to detail the reasons why the extension of time was disputed. To simply assert that the works the subject of variation 4 (relating to the change in levels) “did not hold up any works” does not, in my view, detail the reasons why the extension of time was disputed by Projects.

33. [103]

    The third extension (of 10 days) was claimed in an email dated 26 October 2006 from Mr Malesev to Mr McLean. This claim related to delays in obtaining engineering details in relation to the retaining wall adjacent to units 4 and 5. His Honour accepted that the claim satisfied the requirements of cl 9 and was not disputed by Projects within five working days. Accordingly, Champion Homes was entitled to the extension.

34. [104]

    Projects contended that his Honour overlooked that this email was disputed by Projects within five working days. Again, it relies on its letter of 30 October 2006 which relevantly stated:

35. [105]

    There are two difficulties with Projects’ submission. The first is that Projects’ letter of 30 October 2006 does not in terms dispute the extension of time claimed. The second is, even if the letter is read favourably to Projects as disputing the claim for an extension of time, the response by Projects does not detail the reasons why the extension of time was disputed. Simply to refer to the timeline in the works for the subsequent laying of foundations for units 4 and 5, particularly when it was common ground that the building programme had been abandoned shortly after work commenced in August 2006, does not, in my view, satisfy the requirements of cl 9.3.

36. [106]

    The fourth extension (of 28 days) was claimed in Champion Homes’ letter dated 14 November 2006 relating to Variation 6. This variation related to the retaining wall adjacent to units 4 and 5. The claim of 28 days was for the time that it was expected to take to construct the wall. It was implicit in the claim that other work could not commence until the retaining wall was built. His Honour found that this claim satisfied the requirements of cl 9 and was not disputed by Projects within five working days: at [168].

37. [107]

    Projects contended that his Honour overlooked that this claim was disputed by Projects in its letter to Champion Homes dated 15 November 2006, which relevantly stated:

38. [108]

    Accepting that Projects disputed this claim within 5 days as required by cl 9.3, the statement by Projects (set out above) failed to detail how the additional work undertaken by Champion Homes did not impact on the “critical path” of the works. In my view, Projects’ letter of 15 November 2006 did not satisfy the requirements of cl 9.3 because it failed to detail the reasons why the extension of time was disputed.

39. [109]

    His Honour noted that in a letter sent by Champion Homes to Projects dated 19 December 2007, an extension of time was claimed for eight days before the commencement of the Christmas period and 35 days for the Christmas period itself: at [176]. His Honour found that there was no evidence to suggest that Mr Malesev was aware before the Modification Agreement was signed that it would not be possible to recommence work immediately: at [176]. He further found that the claim for an extension was made within time and that Projects did not dispute the claim within five working days. Accordingly, he allowed an extension of a total of 43 days in respect of the 2007/2008 Christmas period.

40. [110]

    Projects did not dispute that Champion Homes was entitled to 35 days with respect to the Christmas period.

41. [111]

    Projects disputed the allowance by his Honour of eight days before the commencement of the Christmas period. Projects contended that his Honour failed to ascertain how the delay of eight days was the responsibility or fault of Projects, or that that delay was beyond the control of Champion Homes entitling it to an extension of time. The first part of this submission misconceives the basis upon which Champion Homes claimed the extension of time.

42. [112]

    Champion Homes did not assert that the extension of time was because the building works were delayed by anything done or not done by Projects. Accordingly, there was no necessity for his Honour to consider whether the delay was the responsibility or fault of Projects. Champion Homes claimed that the delay was in consequence of a matter beyond its control, namely the difficulty in re-engaging contractors shortly before Christmas. His Honour had earlier found (at [86]) that Champion Homes could not itself commence work because of this difficulty. His Honour’s reference (at [176]), to there being no evidence to suggest that Mr Malesev was aware before the Modification Agreement was signed that it would not be possible to recommence work immediately, is to be understood as addressing the question of when Champion Homes became aware of the cause of the delay. That finding was not shown to be wrong. In my view, no error has been demonstrated in his Honour’s reasoning.

43. [113]

    Projects does not challenge his Honour’s finding that Champion Homes was entitled to extensions of time in relation to the first and third suspensions of work, which his Honour found to have been valid: at [179]. However, Projects contended that the extensions of time should only be in respect of work days and not calendar days.

44. [114]

    Projects pointed to the contract programme as providing for work to be performed on site on a five-day working week. It was argued, by reference to the builder’s programme, that his Honour should have allowed only 25 working days, not 36 calendar days, under the first suspension (for the period 8 November to 13 December 2007) and only 23 working days, not 34 calendar days, for the third suspension (for the period 12 March to 16 April 2008).

45. [115]

    This submission conflates the builder’s programme with the contract period stated in the contract. Clause 1 of the contract provides that the “contract period” means the number of calendar weeks or working days stated in Item 12 of Schedule 1, as extended relevantly, by cl 9. The expression “working days” means days other than Saturdays, Sundays or public holidays. Here, item 12 of Schedule 1 to the contract specified a contract period in terms of weeks, not working days, after the date on which the builder was obliged to commence the building works under cl 8.1, subject to cl 9 dealing with delays and extensions of time and the special conditions of the contract. The function and purpose of the builder’s programme was to provide for the order in which the works were to be completed.

46. [116]

    In the case of the first and third suspensions, Champion Homes validly suspended the works and each suspension extended beyond five working days. Accordingly, it follows that the relevant extensions of time are to be calculated by reference to the relevant calendar days for which the works were validly suspended, not working days.

47. [117]

    For the above reasons, ground 2 should be rejected.

Misleading conduct claim (grounds 7, 8 and 9)

1. [118]

   At [104], his Honour referred to the principles relevant to characterising conduct as misleading or deceptive, including the necessity to look at the conduct as a whole: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at [25].

2. [119]

   At [105], his Honour noted that in the case of silence, the question whether silence is misleading or deceptive is normally answered by asking whether the person alleged to have been misled or deceived had a reasonable expectation of disclosure. Reference was made to the principles summarised by Sackville AJA in Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [209], which was cited with approval by Barrett JA (Bathurst CJ and Beazley P agreeing) in Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94 at [192].

3. [120]

   At [106], his Honour observed that whilst Projects’ case, as finally put, did not clearly distinguish between positive representations and the case based on silence, the case had the following elements:

4. [121]

   At [107], his Honour concluded that Projects had not made out that case, giving the following reasons.

5. [122]

   First, the $40,000 tender fee was a deposit and not payment to Champion Homes for advice: at [108]. Nor was Champion Homes paid to give advice: at [110]. His Honour did not accept that anyone from Champion Homes said anything to Projects which suggested that Champion Homes was doing anything other than providing a quote for work to be done in accordance with its tender and preparing to do that work: at [110].

6. [123]

   Secondly, his Honour found that it was clear from the letter from Mr Malesev of 1 March 2006 that Champion Homes told Projects that the development approval plans did not reflect the correct levels and elevations and that work would need to be done to alter the levels. His Honour also observed that the 1 March 2006 letter and cl 47.4 of the contract (which was a special condition inserted by the parties) made it clear that, despite the site visit on 27 February 2006, Champion Homes “is unable to fix the estimated cost of rock excavation and site excavation and removal of spoil from the site”, and the provisional sum item of $52,000 in respect of rock excavation was to be understood in that context. Further, his Honour found that, in light of cl 47.4, Projects could not have understood Champion Homes to be representing that this provisional sum was a reliable estimate or that its previous estimate of $65,000 was conservative. His Honour found that there was no evidence that Champion Homes did not believe at the time of the inclusion of the provisional sum item of $52,000 that the estimate was an appropriate one: at [111].

7. [124]

   Thirdly, his Honour found that at the time of the site meeting on 27 February 2006, Champion Homes was aware that it would be necessary to construct substantial retaining walls and thought it unlikely that Champion Homes passed on that information to Projects. His Honour accepted that it was evident from Mr Malesev’s letter of 1 March 2006 that there was some discussion of retaining walls, however, as mentioned, he thought the likelihood was that the discussion was limited to the existing retaining walls on the site and there was no discussion of the new walls that had to be built. His Honour inferred that if it had been discussed it is likely that it would have been specifically referred to in Mr Malesev’s letter and further, likely that Mr McLean would have made enquiries concerning those walls: at [112]. His Honour continued at [113] – [114]:

8. [125]

   Fourthly, his Honour noted the absence of any contemporaneous complaint by Projects that it had been misled or deceived as soon as it became apparent that the costs for rock excavation etc. were substantially more than the provisional sum item that had been allowed in the contract and that it would be liable for substantial costs for retaining walls. Indeed, as his Honour observed, the first occasion that Projects alleged it had been misled or deceived was well after the contract had been terminated: at [115].

9. [126]

   With respect to reliance and causation, his Honour accepted the evidence led from Projects’ directors that Projects would not have entered into the building contract if it had known of the need for the retaining walls and the increased costs of rock excavation: at [117]. His Honour observed, however, that Projects did not claim that it was entitled to damages that would have put it in the position it would have been in had the misleading and deceptive conduct not occurred. Rather Projects had simply claimed the costs of the retaining walls (including the amount paid to Earthpro for the wall built by it) and the increased costs of rock excavation. He found that Projects did not incur those costs as a consequence of Champion Homes’ misleading and deceptive conduct. This was because the present case was not one where Projects “would have entered into the contract in any event and it could have proceeded with the contract without additional costs if the misleading and deceptive conduct had not occurred”: at [117].

10. [127]

    Finally, in relation to damages, his Honour observed that Projects only claimed part of its costs by way of damages without bringing to account the value of what it received, or proving that the difference between its total costs and the value of what it received was at least the amount of those costs. Accordingly, his Honour concluded that Projects had failed to prove that it had suffered any loss as a result of the misleading and deceptive conduct: at [118].

11. [128]

    The finding challenged by Projects is that it did not have a “reasonable expectation” that Champion Homes would have said something about the retaining walls that had to be built and their cost at either the site meeting on 27 February 2008, or in Mr Malesev’s letter of 1 March 2008. Projects contended that excavation and retaining walls were a material matter and the need for that work to be performed at significant cost to Projects should have been disclosed by Champion Homes.

12. [129]

    In its written submissions, Projects contended that his Honour omitted reference to two further “elements” when recording the “elements” of Projects’ misleading and deceptive conduct case: at [106]. The first was Champion Homes’ knowledge in February 2006 of the need for changes to the relative levels (RLs), extensive excavation and large engineered retaining walls. The second was that the 1 March 2006 letter referred to an increase in the contract period by five weeks to 45 weeks, in circumstances where it was impossible to perform the work in that time without the retaining walls being built prior to construction commencing.

13. [130]

    In oral argument, Projects pointed to two findings by his Honour as generating a reasonable expectation of disclosure. The first was that Projects wanted as firm as possible price before it signed the contract. The second was that Projects would not have proceeded with the contract had it known of the need for the retaining walls. Projects accepted that the only case sought to be made out on appeal was that based on Champion Homes’ silence. It did not rely on any positive representations from Champion Homes.

14. [131]

    In relation to damages, Projects submitted that the evidence that Projects would not have entered into the contract but for the misleading conduct was relevant to reliance on causation but not to the assessment of damages. It was argued that once causation is established, the amount of damage is not to be assessed by analogies to breach of contract or the law of tort. Projects contended that the prevailing principle is to provide compensation that will most fairly compensate the party for the wrongful conduct upon which it relied. Reference was made to Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388; HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; 217 CLR 640; and Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514. Projects claimed that its loss was represented by the costs required to complete the development that were not disclosed but were recently known by Champion Homes when the parties entered into the contract. These amounts were identified in its amended schedule of damages at trial totalling $594,180.24.

15. [132]

    Contrary to Projects’ written submissions, his Honour did not fail to consider Champion Homes’ knowledge of the revised plans. At [106(b)], his Honour referred to the review of the work that needed to be done by Champion Homes, and as a result of that review (in December 2005), it became aware that the elevations and plans did not complement each other and that it would be necessary to make significant changes to the elevations depicted in the DA drawings and to construct large retaining walls. He gave reasons why he did not accept that Projects had a reasonable expectation that Champion Homes would have said something about the retaining walls that had to be built and their cost: at [113] – [114].

16. [133]

    It can be accepted that his Honour did not refer to the request by Champion Homes that the contract period be increased by five weeks to 45 weeks. That is of little moment, given his Honour’s consideration of Projects’ contention that the 1 March 2008 letter was misleading because it failed to disclose the need for large engineered retaining walls. His Honour referred to this at [106(e) and (f)] and gave reasons for rejecting this contention: at [111]-[114].

17. [134]

    Ultimately, Projects’ case relied on the two findings identified above as generating a reasonable expectation of disclosure. That contention was correctly rejected by his Honour. In addition to the reasons given by his Honour, I would add the following observations.

18. [135]

    First, and most importantly, while it can be accepted that Projects informed Champion Homes that it wanted as firm a price as possible before contract, that says very little about a reasonable expectation of disclosure of matters which were expressly agreed not to be included in the contract, relevantly retaining walls. Counsel for Projects could not say whether Projects made any enquiries about whether a retaining wall would be required. Counsel accepted that Projects did not give evidence that it relied upon Champion Homes to disclose information concerning the need for retaining walls.

19. [136]

    The absence of any inquiry by Projects of Champion Homes concerning the need and likely cost of works expressly excluded from the contract is inconsistent with any reasonable expectation of disclosure. Likewise, the absence of evidence of reliance by Projects upon Champion Homes to disclose such information is also inconsistent with any such expectation being reasonable.

20. [137]

    Secondly, Projects could not satisfactorily explain in oral argument why either Projects or Mr McLean, its project manager, were not in a position to discern that retaining walls would be required in relation to a development on land which sloped downhill to significant degree. That retaining walls would be required was apparent from a physical inspection of the site. Mr Malesev gave unchallenged evidence to this effect in cross-examination; he said that this would have been known to Mr McLean, whilst conceding that he did not discuss that issue with him. Mr Malesev gave evidence that the DA approved drawings showed the natural ground level being almost at the height of the roof of the new dwelling and this meant that it would be necessary “to take some dirt away”.

21. [138]

    Mr McLean did not give evidence that he did not appreciate the need for retaining walls. He agreed in cross-examination that he discussed with the representatives of Champion Homes at the site meeting on 27 February 2006 that there needed to be some alterations to the plans to accommodate the changes in levels. He also accepted that he discussed at that site meeting “the fact that we had to pull out a pile of earth at the top and that would change the levels”. While Mr McLean disagreed that it was pointed out to him that there was going to be a retaining wall at the site of units 4 and 5, he accepted that it came as no surprise to him that Champion Homes charged a variation (Variation 6) for the retaining wall behind units 4 and 5. The only surprise was the price and the fact that the retaining wall collapsed in about the middle of 2007. There was an ongoing dispute between Projects and Champion Homes after that wall collapsed relating to the pricing and value and payment of Variation 6.

22. [139]

    Projects had its own project manager as its representative in respect of the contract, originally Mr Brett Burt, and later Mr McLean of DPL Projects Pty Ltd. His position within his company was variously self-described as Project Coordinator and Project Manager. Projects held out Mr McLean in the contract as its project manager. The fact that Mr McLean held no formal qualifications says very little. Mr Malesev gave unchallenged evidence that he expected Mr McLean to manage the development for Projects. In the circumstances outlined above, it was not unreasonable for Champion Homes not to volunteer information or advice on matters excluded from the contract; nor was it reasonable for Projects to have an expectation that Champion Homes would volunteer such information or advice.

23. [140]

    Thirdly, the contention by Projects that there was a deliberate withholding by Champion Homes of information concerning the need for the retaining walls should be rejected. The suggested motivation for the nondisclosure was to “get the job”. It can be accepted that the deliberate withholding of information may be a relevant circumstance in determining whether the circumstances gave rise to a reasonable expectation of disclosure. Significantly, however, this proposition was not put to the Champion Homes’ witnesses in cross-examination. This submission amounts to no more than speculation or conjecture.

24. [141]

    Finally, and contrary to Projects’ submissions, his Honour did not make a finding that Projects relied upon Champion Homes to disclose the need for the retaining walls which were excluded from the contract. The finding (at [125]) was that Projects did not complain about being misled at the time it became aware of the need for the retaining walls in November 2006. As indicated above, the absence of any contemporaneous complaint by Projects was inconsistent with a reasonable expectation of disclosure concerning the need for and cost of retaining walls.

25. [142]

    It follows that the accessorial liability claim against Mr Malesev must fail since the deceptive or misleading conduct claim against Champion Homes has not been made out.

26. [143]

    In light of the above conclusions, it is not necessary to deal with the question of damages. However, the following observations should be made. The first is that no complaint was made by Projects in relation to how his Honour dealt with the question of causation in the context of the failure to disclose a material matter. His Honour found that the question of causation was to be answered by asking what the position would have been if the need for the retaining walls had been disclosed. This approach was consistent with authority in this Court. In Smith v Noss [2006] NSWCA 37 at [25] Giles JA (Beazley and Ipp JJA agreeing) considered that causation in a failure to disclose case could be found where it was established that disclosure would have caused an inaction or action different from that which was in fact taken.

27. [144]

    Secondly, the case advanced by Projects at trial and on appeal was a “no contract” case. This has significance for whether Projects could recover the discrete loss it suffered in having to undertake the additional work by way of damages under s 82 of the TPA. His Honour found that in the circumstances of the “no contract” case, Projects was not entitled to recover a discrete loss, ignoring the value of what it had received under the contract. Against this, it can be accepted that there are circumstances in which a party is not required to prove that it had suffered loss on the whole contract.

28. [145]

    Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) [2006] NSWCA 282; 67 NSWLR 341 (Abigroup) involved a negative representation case. The principal represented in the tender documents that no plan was available for a certain outlet pipe. The contractor contended that had it been aware of the existence of the plan it would have factored into its tender work of a different order, and would have protected itself by not entering into the contract at the price that it did, and would have only entered into a contract if the tender was qualified or accurate information provided so as to allow for an appropriate increase in its tender price: at [23]. The appellant’s claim was for the discrete loss of doing additional work unrelated to any loss or profit on the contract as a whole: at [76]. Contrary to the findings of the trial judge, the appellant had not confined its case to an “alternative contract” case or a “no contract” case: at [75] - [76]. This Court (Beazley JA; Ipp and Tobias JJA agreeing) held (at [116], [154]-[155]) that the appellant was entitled to the discrete loss it suffered in having to undertake additional work by way of damages under s 82 of the TPA (see now s 236 of the Australian Consumer Law).

29. [146]

    Thirdly, although Abigroup was referred to in Projects’ written submission at trial and on appeal, the nature of the damages case advanced by Projects was confined to a “no contract” case. No argument was developed by Projects as to why, on a “no contract” case, it is entitled to recover a discrete loss it had suffered in having to undertake additional works by way of damages under s 82 of the TPA ignoring the value of what it had received under the contract. I do not detect any error in the primary judge’s approach to damages; however, it is unnecessary to express any concluded view on this issue for the resolution of this appeal.

30. [147]

    In my view, there was no error in his rejection of Projects’ misleading conduct case. Grounds 7, 8 and 9 should be rejected.

Determination of contract sum (ground 4)

1. [148]

   His Honour found that the contract price was $1,665,000 and the “clear intention” was that this amount was payable by Projects in addition to the $40,000 non-refundable deposit paid by Projects on 20 December 2005. Accordingly, Projects was not entitled to deduct the $40,000 from the contract price: at [128].

2. [149]

   As already indicated, his Honour rejected the characterisation of the $40,000 paid by Projects as a payment for services provided by Champion Homes, when dealing with the misleading conduct claim: at [108]. His Honour found that the $40,000 deposit was a requirement included in the first tender (submitted on 19 August 2005). He observed that there was no evidence to suggest that it was included at that time to cover the costs of further investigations and consultancy fees in order to permit Champion Homes to give advice or to permit it to fix costs that were described in the first tender as provisional sum items. He found that the requirement to make the payment simply carried through to the final tender (submitted on 9 September 2005). These findings are not challenged.

3. [150]

   His Honour continued (at [109]):

4. [151]

   Projects contended that his Honour erred in finding that the contract price of $1,665,000 was payment in addition to a deposit of $40,000. It pointed to three matters. First, that the $40,000 “tender fee” was paid to Champion Homes to “proceed with the tender”. This was a reference to a statement contained in a letter from Champion Homes to Mr Brown as the then trustee of the Trust dated 26 September 2005, and countersigned by Mr Brown (the 26 September letter agreement). This letter confirmed that the Trust was unable to pay the sum of $40,000 on acceptance of the tender but nevertheless wished to proceed with the tender on the basis that those monies would be paid in due course. The letter continued stating:

5. [152]

   Next, Projects pointed to a tax invoice issued by Champion Homes to Projects on 20 December 2005 described as a “Progress Payment Request” and referring to a “Request for payment of deposit on Tender”.

6. [153]

   Finally, Projects pointed to what occurred after the contract was signed. On 2 November 2006, Projects sought a credit of $40,000 described as “less deposit paid” in payment of variations 2, 3 and 4 and Champion Homes immediately objected to this deduction, asserting that credit for the $40,000 had already been given in “Tender Amendment 1”, which increased the cost of the contract works to $1,705,000. That increase related to an increase in the provisional sum for rock excavation and removal, site excavation, and spoil and fill removal by $45,000 to a provisional allowance of $52,000. Projects relied upon this assertion by Champion Homes as an implicit admission that it was entitled to a credit of $40,000 against the contract price.

7. [154]

   The starting point, as his Honour correctly identified, is that the $40,000 deposit was a requirement included in the first tender and in the final tender. On each occasion, in addition to the specified total building price, the tender by Champion Homes provided:

8. [155]

   Nothing in either the 26 September letter agreement, or the 20 December 2005 tax invoice, supports Projects’ argument that the $40,000 tender fee was to be included in the contract price, the subject of Champion Homes’ successful tender. Nor is it to the point that, following acceptance of its final tender in September 2005, Champion Homes agreed with Projects to allow time for payment of the $40,000, which was ultimately paid on 20 December 2005.

9. [156]

   Further and importantly, the terms of the contract are inconsistent with Projects’ contention. Schedule 1 of the Particulars of Contract provided under Item 4, Contract Price:

10. [157]

    The contract contained an express acknowledgement that the $40,000 tender fee had already been paid, and that the contract price would remain $1,665,000, making it clear that the tender fee of $40,000 was in addition to the contract price.

11. [158]

    The subsequent attempt by Projects post-contract to claim a credit of $40,000 in respect of the contract price and the response by Champion Homes, which counsel for Champion Homes acknowledged was a little misleading, does not affect the parties’ contractual rights and obligations. Projects did not assert that this correspondence gave rise to either a contractual variation supported by consideration, or an estoppel binding upon Champion Homes.

12. [159]

    Accordingly, I would reject ground 4.

Variations 1 and 6 (ground 3)

1. [160]

   The primary judge held that Projects was not entitled to challenge amounts claimed by Champion Homes for variations that had already been paid in accordance with the terms of the Modification Agreement: at [144]. His Honour reasoned as follows.

2. [161]

   First, under the Modification Agreement, the parties agreed on a mechanism for valuing provisional sum adjustment 3 and Variations 6, 13, 14, 15, 17, 19, 20, 21 and 22. They also agreed that Projects would pay Champion Homes $264,000 on account of those Variations, and Variations 1 and 12. Although the sum of $264,000 was payable on account of a number of variations, including Variations 1 and 12, the parties did not agree on a mechanism for determining the actual amount payable in respect of those two variations: at [136]. Rather, it was common ground that where the value of a variation had not been determined in accordance with the Modification Agreement before the contract was terminated, the value of the work should be determined by the Court having regard to the expert evidence: at [141].

3. [162]

   Secondly, following entry into the Modification Agreement, Gleeds proceeded to value the variations that it was required to value in accordance with that agreement, including Variation 1: at [142]. His Honour concluded that it was not open to Projects to challenge those amounts since it agreed to pay for the work covered by those variations in accordance with the Modification Agreement and it was bound by that agreement.

4. [163]

   Thirdly, by making payments that were additional to the provisional payments made under the Modification Agreement, his Honour found that Projects: (i) accepted that the provisional payments should be allocated to the variations and provisional sum items in respect of which Champion Homes made claims and that further amounts were due in respect of those items; and (ii) was bound by the agreement arising from that conduct: at [143].

5. [164]

   With respect to Variation 6 relating to retaining walls, his Honour found that this was valued by Gleeds in accordance with the Modification Agreement. Accordingly, Champion Homes was entitled to the amount as determined by Gleeds being $189,075.29: at [145].

6. [165]

   Variation 1, dated 13 September 2006, related to the change in the RLs of the work in order to achieve the gradients prescribed by Council and to comply with the development consent. The amount claimed by Champion Homes was $96,100. On 2 November 2006, Mr McLean sent an email to Mr Malesev of Champion Homes accepting all points in Variation 1 with the exception of the costs associated with the carport servicing units 5 and 6 totalling $7,840. The agreed variation totalled $86,260. On 15 November 2006, Mr McLean reported to Mr Brown of Projects that he had engaged an independent engineer to verify that the changes in the levels were required to obtain the construction certificate. The Modification Agreement described Variation 1 in cl 3.1 as “not complete”.

7. [166]

   His Honour seems to have thought that Gleeds valued Variation 1. Projects contended that this was an error. So much may be accepted. Variation 1 was not valued in either the Gleeds report of 19 February 2008 or its supplementary report of 16 May 2008. That, however, is unsurprising. The Modification Agreement, although referring to Variation 1 as “not complete”, did not expressly require Gleeds to value Variation 1. Nonetheless, for the reasons which follow, this slip by his Honour is of no consequence.

8. [167]

   In its further amended first cross-claim (par 26), Projects disputed liability for Variation 1 in the amount of $94,100, solely on the ground that it was not a variation under the contract, not that the work was incomplete. The contention relied upon by Projects at trial, and again on appeal, was that Champion Homes was not entitled to claim this variation because it was excluded by cl 12.5 of the contract.

9. [168]

   Clause 12 deals with “hidden site conditions”. Clause 12.1 provides that if either party believes that the surface or sub-surface conditions may not support or may affect the building work, the builder may, and must at the owner’s request, retain consultants to report on the site conditions. Clause 12.2 requires the builder to give the owner notice detailing any extra work required and the costs of that work. Clause 12.5 provides:

10. [169]

    Projects’ reliance on cl 12.5 is misplaced. Projects correctly points out that cl 1.2 of the contract provides that clause headings do not form part of the contract and cannot be used in its interpretation. Nonetheless, an examination of the whole of clause 12, and in particular cll 12.1 and 12.2, makes clear that this provision is addressed to extra work in consequence of surface and sub-surface conditions of the site which “may not support or are likely to affect the building works”. This is the context of the qualification in cl 12.5 on the builder’s entitlement to payment for extra work. The qualification provision is only satisfied if the actual site conditions differ from those either disclosed or known to the builder prior to the contract, or shown in the contract documents.

11. [170]

    Variation 1 relates to a different subject matter, namely, the additional works which were required because of the changes to RLs, shown on the DA approved plans to that required to comply with Council conditions of development consent. Those changes had nothing to do with the surface or sub-surface conditions of the site being able to support the building works. In my view, Clause 12.5 provides no answer to Champion Homes’ claim in respect of Variation 1.

12. [171]

    Variation 6, dated 13 November 2006, related to the retaining wall adjacent to Units 4 and 5. The amount claimed was $140,000. A revised Variation 6 dated 16 November 2006 claiming the same amount, was submitted by facsimile from Mr Malesev to Mr McLean following a meeting that day at the office of Champion Homes.

13. [172]

    The valuation of Variation 6 by Gleeds of $189,075.29 was contained in its first report dated 19 February 2008 and repeated in its supplementary report of 16 May 2008. His Honour allowed Champion Homes $189,075.29 for Variation 6.

14. [173]

    Projects contended that Gleeds subsequently revised its valuation of Variation 6 in its letter to Projects dated 25 June 2008. The context of the revised valuation was as follows. Gleeds had referred in par 3.10 of their earlier reports to the cost of the retaining wall exceeding normal expectations for a typical retaining wall. In its letter of 25 June 2008, Gleeds expressed the opinion that the cost of a proposed alternative design for the retaining wall was $122,000 plus GST. Projects contended on appeal that since the work for Variation 6 was not completed until 26 May 2008, it could rely upon the Gleeds letter of 25 June 2008 as a valuation of Variation 6, performed after its completion in accordance with cl 2.4 of the Modification Agreement.

15. [174]

    It is necessary to set out cll 2.3 and 2.4 of the Modification Agreement in full:

16. [175]

    Projects contended that, given what it described as the “final” Gleeds valuation of 25 June 2008, his Honour should not have allowed recovery of the $54,875.29, being the unpaid 25 percent based on the original valuation by Gleeds (of $189,075.29), and instead given a credit for $7,606.25 to reflect the amount allegedly overpaid by Projects.

17. [176]

    The difficulty with this contention is that the Gleeds valuation of 25 June 2008 related to a proposed “alternative design” for the retaining walls based on drawings received by Gleeds from CSG Engineers Pty Ltd on 20 June 2008. It is in respect of that design that the valuation of $122,000 plus GST, a total of $134,200, was provided by Gleeds. However, that is not what cl 2.1 of the Modification Agreement required Gleeds to value.

18. [177]

    The Gleeds valuation of 25 June 2008 did not assess the reasonableness of the cost of the retaining wall that was actually constructed by Champion Homes. It assessed another retaining wall, the subject of the “alternative design”. That assessment of 25 June 2008 does not, in my view, constitute a valuation by Gleeds in accordance with cl 2.4 of the Modification Agreement. His Honour was correct to ignore this subsequent revised opinion of Gleeds.

19. [178]

    Ground 3 has not been made out.

CPA 5 (ground 5)

1. [179]

   CPA 5 was a contract price adjustment relating to the provisional sum item for stormwater and hydraulic works. The provisional sum allowed in the contract for this item was $95,000. The total claim by Champion Homes in CPA 5 was $109,489. After allowing for the provisional payment of $64,000, the balance claimed by Champion Homes was $45,489.

2. [180]

   His Honour recorded that it was not disputed that Champion Homes had completed the stormwater and hydraulic works. He noted, however, that both experts agreed that insufficient information was provided to assess this claim. Mr Plaister was of the view that Champion Homes should recover nothing. On the other hand, Mr Zakos was prepared to allow the claim in full: at [151].

3. [181]

   His Honour was satisfied that Champion Homes did the work: at [151]. In the absence of evidence concerning value, his Honour took the approach that he should permit Champion Homes to recover the amount allowed in the contract – that is, the provisional sum of $95,000. Accordingly, his Honour reduced the claim by Champion Homes by $14,489 (that is, the amount claimed of $109,489 less the $95,000 allowed in the contract): at [151].

4. [182]

   Projects advanced two contentions. The first was that his Honour erred in regarding CPA 5 as the full item of work for all stormwater and hydraulic works for which the contract provided a provisional sum of $95,000. Projects pointed to CPA 3 which also related to drainage works of $15,000, as being included as part of the total provisional sum of $95,000.

5. [183]

   Secondly, Projects contended that his Honour erred by allowing the full value of the provisional sum allowance (which should have been $80,000) by finding that all stormwater and hydraulic works had been completed as claimed in CPA 5. Projects contended that the relevant work was not complete. Projects pointed to photographs contained in the report by the quantity surveyor, Gleeds, dated 15 September 2008 and a progress claim by the new builder, Linx, in respect of hydraulic services work as at 13 February 2009 in an amount of $20,770. The material in the Gleeds report contains photographs of what was said to be incomplete external works as at 5 August 2008.

6. [184]

   Counsel for Champion Homes fairly accepted that an error had occurred (at [151]) in his Honour’s reasons. His Honour should have treated CPA 5 as having a provisional sum value of $80,000, not $95,000. (It seems that a slip occurred in his Honour’s reasons because his Honour had earlier correctly identified (at [95]) the provisional sum item of $80,000 for the work the subject of CPA 5).

7. [185]

   Accordingly, the judgment in favour of Champion Homes should be reduced by $15,000, to $61,593.23 exclusive of interest. As a consequence, the judgment against each of the nine unitholders should also be reduced by one-ninth of $15,000, namely, $1,666.66 to $6,843.69 exclusive of interest. The award of pre-judgment interest should also be re-calculated.

8. [186]

   The Court was not taken to any documentary or oral evidence that demonstrated that the photographs of the works in the Gleeds report showed the extent and value of the stormwater and hydraulic works under the contract which were “incomplete” at the date of termination of the contract. Nor was the Court taken to any evidence demonstrating that the hydraulic services work later performed by Linx in February 2009 was the same work that Champion Homes was required to perform, but had not completed it under the contract.

9. [187]

   Insofar as Projects relied upon its letter of termination of 2 July 2008 as evidence of incomplete stormwater and hydraulic works, that submission is not borne out by the terms of the letter. Projects asserted in its termination letter that the only “substantial” works carried out on site since the Modification Agreement included, relevantly, stormwater and hydraulic works. The letter noted that “completion of that work has been asserted by Champion Homes but no certification or other evidence of completion has been provided”. The point being made by Projects in its letter related to the absence of certification or evidence of completion, rather than that the actual works had not in fact been completed. There was no error in his Honour’s finding that Projects had not disputed that the stormwater and hydraulic works had been completed by Champion Homes.

10. [188]

    In my view, ground 5 should be rejected.

Alternative findings on Projects’ damages (ground 6)

1. [189]

   In light of the conclusion reached above (that Projects wrongfully terminated the contract), it is not necessary to deal with the further contention that his Honour erred in finding that Projects failed to prove its costs to complete the contracted-for work after the termination of the contract. I would add, however, that I do not consider that his Honour’s reasons (at [188]) disclose appealable error. Simply stated, as his Honour found, Projects has not proved that the work that Linx did post-termination of the contract was necessary to complete the contracted-for works.

Conclusion and Orders

1. [190]

   The appeal has failed on all grounds advanced by Projects, except for ground 5, in respect of which Champion Homes conceded the error by the primary judge of $15,000 relating to the amount allowed for CPA 5. That concession by Champion Homes was first made in oral argument, and it was necessary for Projects to appeal to correct that error. The costs order on the appeal should reflect that limited success by Projects. In my view, the appropriate order is that Projects pay 90% of Champion Homes’ costs of the appeal. There is no reason to interfere with the costs order below.

2. [191]

   Taking into account the $15,000 error referred to above, Champion Homes is entitled to judgment against Projects in the amount of $61,593.23. It is entitled to judgment for one-ninth of that amount ($6,843.69) against the second to ninth defendants. In addition, it is entitled to interest at the rate prescribed by Practice Note SC Gen 16. That interest should run, as the primary judge found, from 2 July 2008 to 26 May 2015. A direction will be made that the parties agree the calculation of interest and submit a draft consent order, or in the absence of agreement, submit their respective calculations of interest and the Court will determine the matter on the papers.

3. [192]

   Accordingly, I propose the following orders:

   1. (1)

      Appeal allowed in part;

   2. (2)

      set aside Orders 1 and 2 made by the primary judge on 26 May 2015;

   3. (3)

      in lieu thereof, order:

   4. (4)

      the parties are to agree on the calculation of interest on the above judgments at the rates prescribed by Practice Note SC Gen 16 from 2 July 2008 to 26 May 2015, and submit a draft consent order within 14 days of the date of this judgment. In the absence of agreement between the parties, the parties are to file and serve their respective calculations of interest on the judgments and short written submissions in support, not exceeding 2 pages, within 21 days of the date of this judgment. The Court will determine the amount of interest on the papers;

   5. (5)

      appellants to pay 90% of the respondent’s costs of the appeal.

4. [193]

   SACKVILLE AJA: I agree with the orders proposed by Gleeson JA and with his Honour’s reasons.