Wesiak v D&R Constructions (Aust) Pty Ltd

1. [1]

   BEAZLEY P: I have had the advantage of reading in draft the reasons of McDougall J. I agree with his Honour’s reasons and proposed orders.

2. [2]

   SIMPSON JA: I agree with McDougall J.

3. [3]

   McDOUGALL J: By written contract made on 18 December 2011, the respondent (the builder) undertook to perform residential building work for the applicants (the owners). The parties agree that the contract has been terminated. Each says that it terminated the contract by reason of repudiation on the part of the other.

4. [4]

   Each party commenced proceedings in the New South Wales Civil and Administrative Tribunal (the Tribunal). The owners claimed damages for breach of warranty, the cost of having the works completed by another builder, and other matters. The builder claimed for work done over and above that for which the owners had paid.

5. [5]

   At first instance in the Tribunal, the Senior Member who heard the applications concluded that the builder had repudiated the contract by (as she found) wrongfully terminating it, and that the owners had accepted the builder’s repudiation as discharging the contract. She found that:

   1. (1)

      the owners were entitled to be paid a total of $237,034;

   2. (2)

      the builder was entitled to be paid $74,800; and

   3. (3)

      after setting off those claims, the builder was liable to the owners for $162,234.

6. [6]

   The builder appealed to the Appeal Panel of the Tribunal. The Appeal Panel concluded that it was the owners who had repudiated the contract, and that the builder had accepted this repudiation as terminating the contract. Accordingly, it upheld the builder’s appeal. That left unresolved the builder’s claim for outstanding payments under the contract. Since the parties could not agree on that, the Appeal Panel ordered that the matter be remitted to the Senior Member to decide.

7. [7]

   The owners seek leave to appeal from the decision of the Appeal Panel. Section 83(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (the Tribunal Act) provides that, in the circumstances presently applicable, an appeal is available by leave “on a question of law”.

The issues on the application

1. [8]

   Mr Davie of Counsel, who appeared for the owners, identified what he said were three errors of law in the reasoning of the Appeal Panel:

   1. (1)

      the Appeal Panel had erred in characterising the owners’ conduct, in particular the relevant correspondence (I shall refer to the detail of this later), as repudiatory. Mr Davie submitted that, viewed in context and as a whole, that conduct, including all relevant letters, could not properly be characterised as repudiatory;

   2. (2)

      on the contrary, it was the builder that had repudiated the contract, by suspending work under the contract without justification; and

   3. (3)

      in any event, even if his clients had repudiated the contract, it was not open to the builder to accept that repudiation and treat the contract as discharged, because it was then itself in breach of an essential term of the contract (again, because of its suspension of work).

2. [9]

   Mr Bambagiotti of Counsel, who appeared for the builder, submitted that findings as to repudiation were essentially fact-based. Thus, he submitted, the owners had failed to identify any error of law. In any event, Mr Bambagiotti submitted, the findings made by the Appeal Panel were not only open to it on the evidence, they were clearly correct. Mr Bambagiotti submitted, further, that the application raised no question of general principle, and thus that the grant of leave was not warranted.

3. [10]

   The application was heard on the basis that submissions would be treated as submissions on the appeal in the event that leave were granted.

4. [11]

   For the reasons that follow, I conclude that the reasons of the Appeal Panel do display an error of law in the way that the Panel treated the question of repudiation. Although I accept that the appeal raises no important question of principle (as Mr Bambagiotti submitted, the principles relating to repudiation are well known, and have been settled authoritatively by decisions of the High Court, to which I will refer later), nonetheless, in my view, the interests of justice require that leave be granted, that the appeal be allowed, and that consequential orders be made accordingly.

Factual background

1. [12]

   The contract was for a lump sum of $589,900 exclusive of GST. It contemplated that work would start on 16 January 2012, and be completed within about 10 months. There was some delay in commencement, and work started about a month or two late.

2. [13]

   The builder made nine progress claims between March 2012 and March 2013. The total amount claimed, including the contractual deposit and the value of a variation, was about $605,000.

3. [14]

   On 4 June 2013, the builder sent a tax invoice (the June invoice) to the owners. It claimed $27,000 for “works to date”, which were itemised (if that is the right word) in no more detail than as “waterproofing”, “painting”, “structural steel staircase” and “tiling”.

4. [15]

   The owners did not pay the amount claimed. Instead, they sought details of the amounts that they had paid to date. The builder sent them a schedule showing: the amounts paid; the amount it claimed for variations; and that a further $75,862 remained owing. There ensued email correspondence between the owners and the builder. The owners said that there was still a substantial amount of work to be done, and that they had paid more than the contract required them to do at that stage. The builder’s position was that the June invoice should be paid.

5. [16]

   In addition to the disagreements about payment, there was a disagreement as to whose obligation it was to supply certain PC items, including balustrades, a hot water system and internal staircases.

6. [17]

   By 26 July 2013, the parties having got nowhere in their correspondence, the builder gave what purported to be a notice of suspension of work, relying on cl 21(a) of the contract (see at [39] below).

7. [18]

   The notice recited, among other things, the giving of the June invoice and the owners’ failure to pay it. It stated that:

   1. (1)

      The Builder suspends building work under the Contract pursuant to Clause 21(b) of the Contract;

   2. (2)

      You must pay the progress claim within ten (10) days of this request otherwise the Builder will terminate the Contract at the expiration of the ten (10) day period [Clause 29 of the Contract].

8. [19]

   Each of the parties then retained solicitors to act. There was a mediation on 15 August 2013. It did not resolve the numerous disputes. The solicitors then corresponded, in effect continuing the settlement negotiations that apparently had been initiated at the mediation. The correspondence from DG Briggs & Associates (DGBA), acting for the owners, to Adams Partners Associates (APA), acting for the builder, was constructive, in the sense that their letters referred to the full detail of the matters in dispute, and set out the author’s clients’ instructions for the resolution of each matter.

9. [20]

   DGBA wrote to APA on 30 August 2013. In that letter, DGBA expressed their clients’ “primary concern” as being that “the costs of bringing the works to a conclusion exceed our clients’ remaining liability to your client under the Contract”. APA did not reply.

10. [21]

    On 13 September 2013, DGBA wrote again to APA. They noted that there had been no reply to the letter of 30 August 2013 and stated:

11. [22]

    The letter then set out in some detail two “options”, intended to resolve the dispute. The first proposed that the builder would resume work on site and complete the works. It set out details as to how and when payments would be made. The second provided for termination of the contract, with the builder to pay the owners $34,450. That sum was said to have been “determined as the difference between the payments made under the Contract and the value of the works completed under the Contract as set out in” a report prepared by a quantity surveyor retained for the owners.

12. [23]

    The letter then stated:

13. [24]

    That letter did elicit a response from APA, dated 16 September 2013. APA’s letter did not in terms address DGBA’s two letters. Instead, it referred to a document apparently prepared either for the purposes of or during the mediation, which appears to have set out the owners’ concerns in relation to various matters, including PC items and the like.

14. [25]

    APA’s letter concluded by summarising “the Builder’s present position”. That was said to be that the sum of $27,000 claimed by the June invoice was payable, and that there was a further $34,673 owing for variations. It stated that the builder would complete the works upon payment of the total of those sums, and with a regime for the balance of the contract price to be paid into and disbursed out of a controlled moneys account. The letter referred to various other matters, including that there should be “a Deed of Settlement”.

15. [26]

    The stated basis on which the builder would complete the works was not consistent in some respects (including the requirement for a controlled moneys account) with the contract. An available inference from this letter is that the builder was only prepared to resume work on the basis of the proposal set out.

16. [27]

    DGBA replied the following day. First, they responded in detail to the various comments made by APA as to items of work, and other matters, in dispute between the parties.

17. [28]

    Next, DGBA set out the owners’ position, in particular in relation to the builder’s statement of the terms on which it would resume work. The letter made it clear that the amount claimed by the builder was disputed, but that the owners would be prepared nonetheless to consider some of the builder’s requirements “if resolution of the dispute is achieved”. That comment referred, specifically, to the builder’s requirement that the balance of the contract price be paid into a controlled moneys account.

18. [29]

    The letter concluded:

19. [30]

    It is the passage set out in the previous paragraph that the Appeal Panel regarded as evidencing repudiation on the part of the owners.

20. [31]

    APA did not reply to that letter. On 26 September 2013, DGBA wrote again to APA. After referring to the letter of 17 September 2013, they said:

21. [32]

    APA did not reply to that letter.

22. [33]

    On 20 October 2013, the builder gave what was, or purported to be, a notice of termination of the contract. That notice recited, among other things, that:

23. [34]

    The notice then stated:

24. [35]

    On 24 October 2013, DGBA wrote to APA referring to a letter of 22 October 2013 (which was not before the Court) and to the notice of termination. The letter set out their clients’ position. It stated, among other things, that:

Relevant provisions of the contract

1. [36]

   The contract between the parties was documented in the Master Builders Association’s form BC4 (May 2006 Edition). By clause 1(a), the builder was required to “execute and complete the works required by the Contract”, subject to the terms, and the particulars of the work, set out in it.

2. [37]

   Clause 20 dealt with payment. I set out paras (a), (b):

3. [38]

   By the time the application for leave to appeal was heard, it was common ground that the June invoice did not comply with the requirements for a progress payment claim stated in cl 20(b). The Senior Member had found that the invoice was not a valid progress claim. She relied on the fact of non-compliance with cl 20(b), and rejected the proposition that in some way the owners were estopped from relying on this non-compliance. She also found, as a matter of fact, that the works sketchily identified in the tax invoice had not been completed as at the date it was issued and thus that, on the proper construction of the contract, the builder was not entitled to a progress payment for those incomplete works. None of those conclusions was disputed before the Appeal Panel or in this Court.

4. [39]

   Clause 21 dealt with suspension of work. I set out para (a):

5. [40]

   Clause 28 dealt with “Determination by the Owner”, and cl 29 with “Determination by the Builder”. I set out those clauses:

The Appeal Panel’s reasons

1. [41]

   After reciting the facts and referring to the relevant correspondence, the Appeal Panel turned to the proceedings at first instance in the Tribunal. It referred to the Senior Member’s finding that the June invoice did not comply with the provisions of cl 20 of the contract. It observed that none of the earlier progress claims had been in the proper form, but that they had been paid without protest. The Appeal Panel did not refer to the Senior Member’s conclusion that the owners were not estopped, by their conduct in paying previous invoices, from asserting that the June tax invoice was not a progress payment claim for the purposes of cl 20.

2. [42]

   The Appeal Panel said at [38] that it agreed with the Senior Member’s conclusion that the builder was not entitled to terminate on the basis of non-payment of the amount of $27,000. It did not say in terms why this was so, apparently because “we are of the opinion that the appeal must be allowed for other reasons”. It did however add:

3. [43]

   The Appeal Panel referred to the decision of the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61, in considering whether the owners’ failure to pay the sum of $27,000was a breach that would justify termination of the contract. (Quite how it could be a breach at all, in circumstances where, on the unchallenged findings of the Senior Member, the June invoice was not a valid progress payment claim, is a matter of some mystery.)

4. [44]

   The Appeal Panel then said at [39]:

5. [45]

   The Appeal Panel then considered the meaning of the expression “the value of the work performed” at [40], but expressed no view as to what was meant by it. It said that “it is not necessary that we answer this question”. Nor did it express a conclusion as to the builder’s entitlement to payment.

6. [46]

   The Appeal Panel did not refer to the Senior Member’s findings that the works of painting and tiling, which were among the works for which the June invoice claimed payment, were substantially incomplete at the time the invoice was given to the owners, and that thus the amount claimed by the invoice was not due and payable. As I have noted, the Senior Member relied on this as well as on non-compliance with cl 20 for her conclusion that the amount claimed by the invoice was not due and payable by the owners to the builder. The builder does not appear to have contested the Senior Member’s finding that the works the subject of the invoice were substantially incomplete. Certainly, Mr Bambagiotti did not suggest in this Court that this aspect of the Senior Member’s findings was wrong.

7. [47]

   The Appeal Panel then turned its attention to whether there was an appeal as of right. At [41], it concluded that there was. It will be necessary to return to that paragraph when discussing a particular submission made by Mr Bambagiotti.

8. [48]

   The Appeal Panel commenced its consideration of termination for repudiation at [42]. It said at [43] “that the common law right of repudiation applies even though there may be concurrent rights of termination given under the provisions of the contract”.

9. [49]

   The Appeal Panel then considered the decision of the High Court in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23. It deduced from that decision that what was required was an objective examination of the parties’ communications and actions, to see if they demonstrate “the requisite intention to repudiate” the contract.

10. [50]

    The Appeal Panel referred also to the decision of this Court in Protector Glass Industries Pty Ltd v Southern Cross Autoglass Pty Ltd [2015] NSWCA 16. It drew from this decision “the necessity of examining very closely the precise nature of the communications” for the purpose of seeing whether they manifested “the requisite intention to repudiate the contract”.

11. [51]

    The Appeal Panel then looked at the letters of 13, 17 and 26 September 2013. It referred to the concluding portion of the letter of 17 September (see at [29] above) and said at [52]:

12. [52]

    The Appeal Panel drew support for its analysis from the judgment of Fullagar J in Carr v JA Berriman Pty Ltd (1953) 89 CLR 327; [1953] HCA 31 at 351. In that case, his Honour observed that where a building owner “announces that he has engaged another contractor to carry out a large part of the work comprised in the contract”, the proper inference was “that the building owner does not intend to take the contract seriously, that he is prepared to carry out his part of the contract only if and when it suits him.”

13. [53]

    The Appeal Panel referred to the owners’ submission that the builder could not terminate the contract because it was then itself in breach, having wrongfully suspended work under the contract. The owners’ submissions to the appeal panel called in aid the decisions of the High Court in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235; [1954] HCA 25 and DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12.

14. [54]

    The Appeal Panel, referring to the reasoning in DTR Nominees, said that “[t]here is no suggestion on the evidence … that the appellant knew that the form of the claims was incorrect”. It said, further, “that the appellant at no stage indicated that it was not prepared to complete the building works under the contract until its solicitor had served the notice of termination on the respondents”. For those reasons, the Appeal Panel concluded that it “would not be justified in drawing an inference that … the appellant intended not to perform the contract according to its terms or that it repudiated the contract”.

Nature of the appeal to this Court

1. [55]

   The Tribunal Act deals with both internal appeals and appeals to this Court. Sections 80 and 81 deal with the former category. Sections 83 and 84 deal with the latter. I set out those four sections:

2. [56]

   Apart from the question of leave, s 83 of the Tribunal Act raises two questions of principle:

   1. (1)

      what is “a question of law”?

   2. (2)

      What orders may the Court make if it finds that there is an error of law?

3. [57]

   As to the first question, the starting point must be to observe that there is no universally applicable brightline distinction between questions of fact and questions of law. See Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389; [1996] HCA 36, where the Court (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) said at 394:

4. [58]

   Their Honours continued by referring to the distinction between the ultimate fact in issue and the facts adduced to prove or disprove that ultimate fact (often called the factum probandum and facta probantia respectively). Their Honours referred to the decision of Fullagar J in Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47; [1956] HCA 21 at 51, where his Honour said:

5. [59]

   Many statutes restrict appeals, either from Tribunals or from Courts, to questions of law; or (less frequently now than in the past) provide for the tribunal or lower court to state a case upon a question of law. As is apparent from the quoted passage in Agfa-Gevaert, many judges have sought to state what is, or is not, a question of law.

6. [60]

   Spigelman CJ (with whom Priestley JA agreed) said in Attorney-General for the State of New South Wales v X (2000) 49 NSWLR 653; [2000] NSWCA 199 at [25] that the phrase “question of law” uses “general words capable of application at different levels of generality”. In consequence, as his Honour said at [28], “[t]he determination of whether a particular alleged error in matters such as fact finding, the exercise of a discretion or a process of evaluation answers the description “question of law”, will depend on the scope, nature and subject matter of the statute” in which the phrase “question of law” is used.

7. [61]

   The statutory scheme presently under consideration indicates a clear intention that questions of fact that require to be resolved, for the purpose of deciding disputes within the jurisdiction of the Tribunal, ought be dealt with by specialist members applying their expertise.

8. [62]

   The distinction between questions of fact and questions of law, in the context of s 17 of the Land and Valuation Court Act 1921 (NSW) (which section provided for the Land and Valuation Court to state a case for the Full Court, on a question of law arising in a proceeding before it), was considered by the Full Court in The Australian Gas Light Company v The Valuer-General (1940) 40 SR (NSW) 126. In that case, Jordan CJ dealt with the distinction between questions of fact and questions of law at 137 – 138. Of present relevance, his Honour said at 138 (and I paraphrase) that:

   1. (1)

      a finding of fact cannot be disturbed if the facts upon which the finding is based are capable of supporting that finding, and there is evidence to prove those facts; and

   2. (2)

      conversely, a finding of fact can be disturbed if there is no evidence to support the facts on which the finding is based, or if the facts as found, even those supported by evidence, are incapable of justifying the finding of fact.

9. [63]

   In each case, I think, his Honour used the words “finding of fact” to denote the ultimate finding of fact that resolved the particular dispute; in the language preferred by Fullagar J in Hayes, the factum probandum. The asserted supporting facts are the primary findings; the facta probantia.

10. [64]

    The Chief Justice said, further, (and again I paraphrase) that:

    1. (1)

       if the facts found are necessarily within or outside a statutory test, a contrary decision is wrong in law; and

    2. (2)

       if the facts found are capable of being regarded as either within or outside the test, according to an evaluation of their weight, a decision either way by a tribunal of fact cannot be disturbed by a superior court that has jurisdiction to examine only questions of law.

11. [65]

    The present case does not concern a statutory test but, rather, the common law doctrine of repudiation. Nonetheless, in my view, what Jordan CJ said is relevant by analogy. If the primary facts found, being supported by evidence, are capable of justifying the Appeal Panel’s ultimate finding, that the owners repudiated the contract, there is no error of law. If, however, the primary facts found, whether or not supported by evidence, are incapable of justifying the finding of repudiation – are “necessarily outside” the legal concept of repudiation – there is error of law. And if those primary facts are not supported by the evidence, again there is error of law.

12. [66]

    So understood, I think that what Jordan CJ said as to the ability of the evidence adduced and the facts found on it to prove or disprove an ultimate fact is consistent with the approach of Fullagar J in Hayes.

13. [67]

    In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33, Mason CJ (with whom Brennan J agreed) said at 355 that “[t]he question whether there is any evidence of a particular fact is a question of law”. His Honour said, further, that “the question whether a particular inference can be drawn from facts found or agreed is a question of law”. He cited the decision of Jordan CJ in Australian Gas Light Company for this proposition, as well as his own decision in Hope v Bathurst City Council (1980) 144 CLR 1; [1980] HCA 16 at 8-9.

14. [68]

    Hope concerned a stated case under s 17 of the Land and Valuation Court Act. The question was whether the appellant had proved that he carried on the business or industry of grazing. Mason J, with whom Aickin J agreed (as did Gibbs and Stephen JJ, although giving additional reasons) said at 9 that:

15. [69]

    It followed, his Honour said (again at 9) that the contrary conclusion of the primary judge and the majority in the Court of Appeal amounted to an error of law “[b]ut for one circumstance”. That qualification may be put to one side for present purposes.

16. [70]

    In Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32, the plurality (Hayne, Heydon, Crennan and Kiefel JJ) said at [91] that a decision on a question of fact when there was no evidence to support it amounts to an error of law. I set out that paragraph (omitting citations):

17. [71]

    In Bell v Federal Commissioner of Taxation [2012] FCA 1042, Gordon J said at [84] that there will be error of law where a decision maker has made a finding of fact without probative evidence to support it, or drawn an inference that was not open on the primary facts. Her Honour referred to a number of decisions, including the judgment of Mason CJ in Bond. Her Honour referred also to the judgment of Spigelman CJ in Bruce v Cole (1998) 45 NSWLR 163 at 188. I add to her Honour’s citation the observation that Spigelman CJ (with whom in that case Sheller and Powell JJA agreed) had said at 187 that “an inference of fact must be open to be drawn”; relying, among other things, on what Mason CJ had said in Bond at 356.

18. [72]

    In Minister for Immigration and Multicultural Affairs v Al-Miahi [2001] FCA 744, the Full Federal Court (Sundberg, Emmett and Finkelstein JJ) said at [34]:

19. [73]

    In my view, the authorities to which I have referred, although they deal with different statutory appellate regimes, establish that an ultimate finding of fact can only be vitiated by error of law if:

    1. (1)

       there is no evidence to support that finding; or

    2. (2)

       the finding was not reasonably open on the whole of the evidence (“reasonably” in this usage denotes “rationally”, not “something on which minds may reasonably differ”).

20. [74]

    Put conversely, and adapting what Mason J said in Hope at 9, there will be no error of law if the evidence reasonably admits of different conclusions, one of which is the conclusion sought to be impugned.

21. [75]

    In the present case, for reasons that I give at [100] and following below, I conclude that the Appeal Panel’s ultimate finding, namely that the owners repudiated the contract by DGBA’s letter of 17 September 2013 (either by itself or read in conjunction with DGBA’s letter of 26 September 2013), was not reasonably open on all the facts found by the Appeal Panel, or found by the Senior Member and not challenged before the Appeal Panel. The Appeal Panel fell into error in that way because it did not take into account, in considering the question of repudiation, the significance of the unchallenged fact that the builder was not contractually entitled to suspend work when it did so. Further, in my view, the only conclusion reasonably open on the whole of the evidence is that it was the builder who repudiated the contract.

22. [76]

    The second question of principle concerns the power of this Court upon the hearing of an appeal under s 83 of the Tribunal Act. Section 83(3) permits the court hearing the appeal to make such orders as it considers appropriate in light of its decision on the appeal. However, the authorities suggest that this power may not be as wide as it seems.

23. [77]

    It has been said more than once that where an appeal is limited to a question of law, the existence of a question of law is not just a qualifying condition to ground the appeal, it is also the subject matter of the appeal itself. The authorities were discussed by Allsop P (with whom Giles JA agreed) in B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 at [47], [48].

24. [78]

    The authorities reviewed by Allsop P covered a number of different statutory schemes limiting appeals to questions of law. The effect of those authorities, his Honour said, is that the “appellate” jurisdiction conferred by a statutory provision such as s 83 of the Tribunal Act is original; it is in the nature of judicial review, not an appeal by way of rehearing.

25. [79]

    That point emerges clearly in Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue of the State of Victoria (2001) 207 CLR 72; [2001] HCA 49. That case concerned s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), which provided for an appeal from the Victorian Tribunal to the Court of Appeal (with leave) “on a question of law” in certain circumstances. Gaudron, Gummow, Hayne and Callinan JJ said at [15] that the court to which the appeal lay was “asked to exercise original, not appellate, jurisdiction and to do so in proceedings which are in the nature of judicial review”.

26. [80]

    In my view, the statutory scheme considered by their Honours is closely analogous to, so that the same may be said of, s 83 of the Tribunal Act.

27. [81]

    There is a question as to whether s 75A of the Supreme Court Act 1970 (NSW) has any operation. Allsop P referred to this in B&L Linings at [75], but found it unnecessary to express a conclusion. His Honour was clearly of the view that an appeal to this Court (under analogous provisions of the Administrative Decisions Tribunal Act 1997 (NSW)) was an original proceeding in the nature of judicial review, and not an appeal by way of rehearing: see for example at [77], [78].

28. [82]

    In B&L Linings, Allsop P said at [78] that “even if an error of law were demonstrated, this Court has no authority to engage in fact finding on the merits of the case”. At [79], his Honour left to another day the question, whether s 75A of the Supreme Court Act “may widen the powers of the Court to encompass the finding of facts”.

29. [83]

    Allsop P’s view that the Court has no authority to engage in fact finding on the merits of the case (leaving aside s 75A of the Supreme Court Act) appears to have been based on his Honour’s view of the nature of the statutory appeal: as being an original proceeding in the nature of judicial review. As I have indicated above, that analogy has been employed in many decisions on similar legislation around Australia. However, it is important to bear in mind that the source of the Court’s authority is found in the statutory regime that gives the right of appeal. In B&L Linings, the right of appeal was conferred by s 119 of the Administrative Decisions Tribunal Act 1997, and the powers of the Court were set out in s 120. Although the drafting of s 120 differs in form from the drafting of s 83 of the Tribunal Act, there is no distinction of substance (at least, so far as is relevant to this appeal).

30. [84]

    Basten JA commenced his judgment in B&L Linings, by stating at [121], his agreement “with the orders proposed by Allsop P and with his Honour’s reasons”. Basten JA said that his own reasons were “intended as a further explanation of the jurisdiction of this Court in hearing and determining the appeal”.

31. [85]

    Basten JA said at [126], [127] that the course of authority favoured the proposition that, in appeals of the kind presently under consideration, the powers of the Court are:

    1. (1)

       to decide whether a question of law had been answered erroneously;

    2. (2)

       if it had been, to decide the correct answer to be given;

    3. (3)

       “to make such orders disposing of the proceedings before the Tribunal as are necessary, based on the findings of fact made and inferences drawn by the Tribunal and where no other conclusion is open”; and

    4. (4)

       in limited circumstances, to make other appropriate orders, including orders exercising discretionary powers.

32. [86]

    There may be some difference between Allsop P and Basten JA, as to the powers of the Court on an appeal such as this. Basten JA made it clear at [139] that in his view, the powers of the Court were to be determined by reference to the statute that conferred them. Whether that indicates some divergence from the views expressed by Allsop P as to the relief the Court may grant, and (if it does) how that difference should be resolved, in my view should be left to be decided in a case where those points are material. In this case, they are not.

33. [87]

    It is clear that there is no difference of opinion between Allsop P and Basten JA as to the first two propositions stated by Basten JA. In an appeal of the kind presently under consideration, the function of this Court, having decided that the appeal identifies a question of law in the decision of the Appeal Panel, is to decide whether the Appeal Panel erred in its decision on that question of law. Of necessity, that task requires this Court to decide what is the correct answer to that question of law.

The test for repudiation

1. [88]

   In Koompahtoo, the joint reasons (Gleeson CJ, Gummow, Heydon and Crennan JJ) at [44] identified two senses in which the word “repudiation” is used. The first sense, their Honours said, “may be termed renunciation”. In this sense, “repudiation” encompasses “conduct which evinces an unwillingness or an inability to render substantial performance of the contract … conduct … which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations”. The test of repudiation in this sense, their Honours said, 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”.

2. [89]

   The second sense in which “repudiation” is used, their Honours said, is to “refer to any breach of contract which justifies termination by the other party”. Their Honours explained at [47] to [49] that a breach of contract by one party might entitle the other to terminate either where the obligation breached was one agreed by the parties to be essential (a condition), or where it was a sufficiently serious breach of a non-essential term. Their Honours said at [48] that whether a term is to be regarded as “essential”, so that any breach justifies termination, is a matter of construction of the contract:

3. [90]

   A finding that a party to a contract has renounced the contract or its fundamental obligations under it (has “repudiated” the contract, in the first sense referred to above) does not depend on the subjective state of mind or intention of that party. The question is whether, regarded objectively, that party’s conduct would convey to a reasonable person in the situation of the other party that the first party renounces the contract or some essential obligation under it. That is made plain in Laurinda: see for example Brennan J at 647; Deane and Dawson JJ at 657-658.

4. [91]

   In speaking of repudiation, reference is often made to the speech of Lord Wright in Ross T Smyth & Co Ltd v T D Bailey Son & Co [1940] 3 All ER 60. His Lordship (with whom the other members of the House agreed) said at 71 “that repudiation of a contract is a serious matter, not to be lightly found or inferred.” His Lordship’s observation does not mean that anything other than the civil standard of proof is involved where, in a case such as this, it is said that one party has repudiated its obligations to the other.

5. [92]

   In either of the senses identified by the joint reasons in Koompahtoo, the question, whether one party has repudiated the contract or its obligations to the other, is fact-dependent. Where the question is whether one party has renounced the contract or its fundamental obligations, the question is entirely one of fact, involving the characterisation of the conduct to see whether it meets (or is capable of meeting) the requisite standard. Where repudiation in the second sense is alleged, then there may be a legal issue as well, relating to the proper construction of the contract and the classification of the term said to have been breached. And in both cases, of course, the factual inquiry is not one carried out at large. It is one intended to ascertain whether the conduct in question satisfies the test for repudiation.

6. [93]

   The essentially factual nature of the inquiry is indicated by the judgment of Fullagar J in Carr. In that case, a builder agreed with a proprietor to erect a building on land owned by the proprietor. The proprietor was required to procure and deliver to the builder or its nominated sub-contractor structural steel to be fabricated for the purposes of the building. The proprietor breached the contract in two ways. First, it failed to prepare the site to receive the steel, and to give vacant possession of the site, so prepared, to the builder. Secondly, it failed to deliver the steel to the builder or its subcontractor, and instead delivered that steel to another contractor with whom it had arranged to carry out the necessary fabrication work.

7. [94]

   Fullagar J (with whom the other members of the Court agreed) said at 351 that the second breach standing by itself would amount “to such repudiation as justified rescission”. Regardless, his Honour said, when the second breach was viewed together with the first breach, “the case does not seem to admit of doubt”. His Honour said, of the combined effect of those breaches, that:

8. [95]

   There are from time to time cases where parties take a stand based on an incorrect understanding of their obligations under the contract in question. In those cases, there is a question as to whether the conduct of a party is such as to lead to the conclusion that it does not intend to perform the contract, however it is to be construed; or whether it is prepared, notwithstanding its contentions, to perform on the basis of the proper construction of the contract as determined by a court. In the latter case, as the majority (Stephen, Mason and Jacobs JJ, with whom Aickin J agreed) said in DTR Nominees at 433 – 434, there will be no repudiation. In the former case, it is scarcely necessary to add, there will be.

9. [96]

   The facts of the present case do not require further examination of their Honours’ reasoning on this point.

Decision – repudiation

1. [97]

   In my view, the Appeal Panel led itself into error because, when it sought to characterise the relevant communications set in their factual context, it disregarded entirely the builder’s wrongful suspension of work. In consequence, the Appeal Panel failed to consider the question of repudiation in the light of all relevant facts.

2. [98]

   Further, and again in consequence, the Appeal Panel failed to consider in any relevant way the significance of the fact that, by acting on that non-payment and suspending work under the contract, the builder was itself in breach.

3. [99]

   Those errors have two consequences. First, the finding that the owners repudiated the contract is not reasonably open on the whole of the evidence. Second, the only finding reasonably open on the whole of the evidence is that it was the builder that repudiated the contract. I deal with each of those propositions in what follows.

4. [100]

   The builder’s actions in insisting on payment of the $27,000, and suspending work because it had not been paid, are of fundamental importance in seeking to characterise the ensuing conduct of the parties and their correspondence. The builder’s attitude at all times was that it was entitled to be paid the sum of $27,000 claimed by the June invoice, and that, having suspended work on 26 July 2013, it would not return to work until that amount was paid. So much is clear from the only significant letter written by APA (at least, in the correspondence before this Court): the letter of 16 September 2013 which stated that the builder required, among many other things, payment of that sum before resuming work.

5. [101]

   Since the builder was not entitled to be paid the sum of $27,000, the owners’ failure to pay it could not have justified suspension of works. Nor could that failure have justified the builder’s purported termination of the contract. The first point is self-evident. As to the second, a failure to pay an amount that is not contractually due and owing could not of itself indicate “an intention not to be bound by the Contract”: to quote from recital D to the builder’s notice of termination (see at [33] above).

6. [102]

   Further, the Appeal Panel appears to have overlooked completely another significant aspect of APA’s letter: namely, its statement that the builder was prepared to complete work under the contract on the basis of the seven specified conditions. The obvious inference from the letter is that the builder was not otherwise prepared to resume work, or to perform its remaining obligations under the contract.

7. [103]

   One of those conditions related to payment for what the builder said were the outstanding amounts for work (the $27,000 claim) and variations. Others were that the balance of the contract price (or the builder’s view of it) be paid into a controlled moneys account, with payments made out of that account on receipt of progress claims. In my view, the proper reading of that letter is that the builder was indicating that it would only perform its contractual obligations if the contract were varied in the manner set out.

8. [104]

   Mr Bambagiotti submitted that this was an inappropriate characterisation of the letter. He submitted that it was not uncommon for parties to a contract who were in dispute to overstate their demands, with a view to giving way on some of those demands in the course of further negotiations. Even if that be correct, the plain fact in this case is that, on the evidence, this was the only formal statement of the builder’s position, at least after the mediation had been completed. There is nothing in the evidence, to the extent that it is before this Court, or in the findings of the Senior Member or the Appeal Panel, to suggest that the builder ever retreated from the position advanced in the letter of 16 September 2013.

9. [105]

   Nonetheless, DGBA’s response of 17 September 2013 stated that a condition as to payment into a controlled moneys account “will be considered if resolution of the dispute is achieved”. The obvious inference is that the owners were prepared to accept such a condition as part of an overall resolution of the dispute between them and the builder. The Appeal Panel did not refer to this in its consideration of the repudiation issue.

10. [106]

    The significance of DGBA’s statement, that the owners would consider a condition as to payment into a controlled moneys account, is reinforced when one turns to the concluding paragraphs of the letter: the paragraphs that, in the view of the Appeal Panel, evinced an intention to renounce the contract. The penultimate paragraph (see at [29] above) clearly invited “a reply to this letter”: among other things, a reply to the detailed position stated over the preceding six pages.

11. [107]

    The invitation to continue negotiations was renewed in DGBA’s letter of 26 September 2013 (see at [31] above). The only consideration that the Appeal Panel gave to this letter appears in the observation that its characterisation of the letter of 17 September 2013 “is reinforced by the tenor of” the later letter.

12. [108]

    I am prepared to accept that if the letter of 17 September 2013 were to be considered entirely in isolation, it could be read as stating that the owners intended to renounce their obligations under their contract, once certain conditions were satisfied. Whilst I do not think that that is the correct analysis of the letter, even read in isolation, I do not think that is entirely untenable.

13. [109]

    However, whether repudiation, in the sense of renunciation, has been proved depends on all relevant facts. As the Appeal Panel correctly reminded itself, the alleged repudiatory conduct must not be considered in isolation. It must be analysed with reference to its entire factual setting. That setting is not limited to the letter of 26 September 2013. It includes all the events and correspondence leading up to the letter of 17 September 2013 (to the extent that they are revealed in the material put before this Court or in the findings of the Senior Member and the Appeal Panel). Notably, those circumstances include the following matters:

    1. (1)

       the builder had suspended work because the owners had not paid it the sum of $27,000 demanded by the June invoice.

    2. (2)

       The builder was not entitled to insist on that payment for two reasons. First, the June invoice was not a progress claim for the purposes of the contract. Secondly, the work for which the builder claimed payment was substantially incomplete at the time the tax invoice was sent (and there is no evidence that it was completed thereafter).

    3. (3)

       Thus, the builder had no contractual justification for its suspension of work. It thereby breached its obligation under the contract to undertake and complete the works, which as I say at [124] below was the builder’s fundamental obligation under the contract.

    4. (4)

       The builder’s suspension of work placed the owners in an invidious position. They were apparently renting accommodation, and thus had to continue paying rent until the building work was completed (the Senior Member made findings to that effect, although she did not award them damages for their ongoing rental liabilities).

    5. (5)

       If the owners could not negotiate a resolution of their dispute with the builder, they would have no practical choice but to have the works completed by another builder.

    6. (6)

       The builder’s stated position was that it would only resume and complete the contract works if the contract were varied.

    7. (7)

       The owners had indicated a willingness to consider the variation sought by the builder, and had invited a continuation of negotiations.

14. [110]

    The Appeal Panel did not consider significant relevant aspects of the evidence: namely those referred to at subparas (1), (2), (3) and (6) above. Because it failed to consider those matters in its analysis of the effect of the concluding paragraphs of the letter of 17 September 2013, the Appeal Panel erred. Whether, in the circumstances, that amounts to error of law depends on whether, on the whole of the relevant evidence, its ultimate conclusion was, nonetheless, reasonably (i.e. rationally) open.

15. [111]

    In my view, when the letter of 17 September 2013 is analysed with reference to all relevant factual circumstances, it cannot in law amount to, or evidence, a repudiation by the owners of their contract with the builder. On the contrary, in my view, read in context, the letter is plain and unequivocal: the owners will terminate (because of the builder’s unlawful suspension of work) unless the builder resumes negotiations and, ultimately, the performance of its contractual obligations.

16. [112]

    Nothing in the letter stated that the owners had terminated (or purported to terminate) the contract. It stated that the owners “must mitigate their losses” and, as a result, intended “to proceed to terminate the Contract”. It stated that once they had obtained an acceptable quotation for the work, they would terminate the contract. However, immediately following those statements of future and conditional intention, the letter invited the builder to reply: clearly, in context (including what had been said as to the builder’s statement of its position), an invitation to continue negotiations.

17. [113]

    In my view, the letter of 17 September 2013, when read in context, does no more than state what the owners’ position would be if they could not come to a satisfactory resolution of their differences with the builder. A letter to that effect could not be a repudiation of the contract. It could not have that effect, or be properly so characterised, because it seeks the continued performance of work under the contract, on a basis acceptable to both parties.

18. [114]

    Nor do I think that the letter of 26 September 2013, considered either on its own or in conjunction with the earlier letter, evidences any renunciatory intention. True it is that the letter states that, in the author’s view, the dispute “will not be resolved by negotiation”. That was on any view understandable, given the builder’s failure to reply to the letter of 17 September 2013.

19. [115]

    However, having stated that position, the letter said that the owners “are now at liberty to terminate the Contract at any time”. Again, it did not state that the contract was (or was purportedly) terminated. On the contrary, it invited a resumption of discussions:

20. [116]

    Undoubtedly, the owners were stating that they were legally entitled to terminate the contract, as in my view they were. However, they refrained from doing so. Again, the invitation to the builder to resume negotiations is consistent with a desire to see the existing contract performed, and inconsistent with a repudiatory intention then held (regarded objectively).

21. [117]

    It is clear from the letters – in particular, the letter of 26 September 2013 – that the owners regarded themselves as being in a position to terminate the contract. A statement by one contracting party that it has an existing right against the other to terminate the contract is not of itself a statement that the first party does not intend to perform the contract, or intends to perform it only in a manner substantially inconsistent with its terms.

22. [118]

    The owners may, or may not, have been correct in saying that they had the right to terminate. But, correct or incorrect, the statement had no present effect when it was made. It was not accompanied by any statement that the contract was terminated, or that the owners then regarded themselves as no longer bound by it. On the contrary, as I have said more than once, it was accompanied by statements seeking a resumption of negotiations, so that the contract could be performed.

23. [119]

    In any event, I conclude, by 17 September 2013, the owners did have the right to terminate the contract. I shall explain why.

24. [120]

    At that time, the builder had been off the site for (at least) the best part of two months. In fact, on the findings of the Senior Member, no work had been done after the June invoice had been sent to the owners. That finding was not challenged either before the Appeal Panel or in this Court. In reality, therefore, the builder had done no work under the contract for more than three months before DGBA’s letter of 17 September 2013 was sent to APA.

25. [121]

    In my view, the builder’s conduct in stopping work until its invoice was paid was a breach of its fundamental obligation under the contract: namely, its obligation, subject to the terms of the contract, to execute and complete the contract works. By cl 10(b), the builder was required “to proceed with due diligence” so as to bring the works to Practical Completion within the stated time. Although that time had long since passed, this could not diminish the obligation to execute and complete the works with due diligence.

26. [122]

    Mr Bambagiotti submitted that, on the proper construction of the contract, the builder’s obligation to execute the contract works was not essential. He relied on cl 28(a)(ii) of the contract (see at [40] above). I do not agree with that submission. First, as cl 28 itself makes clear, the owners’ rights under it are in addition to, and not derogatory of, their rights generally. Secondly, the obligation of a builder under a construction contract to execute the contract work seems to me to be the paradigm example of an essential term. Thirdly, cl 28 on its proper construction covers dilatory performance of the works (or incompetent performance of them), but does not extend to unjustified total cessation. There is a very wide difference between, on the one hand, a builder who works in fits and starts (but never stops entirely) and, on the other, a builder who downs tools, leaves the site and undertakes other work.

27. [123]

    The inferences to be drawn from the facts either as found by the Appeal Panel or as found by the Senior Member and left undisturbed by the Appeal Panel include the following:

    1. (1)

       the builder was in breach of its essential obligation under the contract: the obligation to undertake and complete the subject building works.

    2. (2)

       That breach arose because the builder insisted on its asserted right to payment of the sum of $27,000 claimed by the June invoice, even though it had no entitlement to the progress payment by that tax invoice, and suspended work for non-payment.

    3. (3)

       The builder had no contractual justification for its suspension of work on 26 July 2013, nor indeed for what appears to have been its earlier cessation of work, once it learned that the owners did not propose to pay the $27,000 purported progress claim.

    4. (4)

       The builder made it clear, in particular through APA’s letter of 16 September 2013, that it was not prepared to perform the contract according to its terms, but only if the contract were varied in the manner set out in that letter.

28. [124]

    In the light of those inferences, the only conclusions reasonably (i.e. rationally) open are:

    1. (1)

       the builder’s conduct, considered overall, must be considered to be both a renunciation of its obligations under the contract and a refusal to perform an essential term of that contract.

    2. (2)

       After 16 September 2013 at the latest, the owners were entitled to treat the builder as having repudiated the contract, for either of the reasons just given, and to accept that repudiation as bringing the contract to an end and discharging them from the performance of their obligations.

    3. (3)

       Neither DGBA’s letter of 17 September 2013 nor its letter of 26 September 2013, read in context, can be read as stating that the owners thereby terminated (or purported to terminate) the conduct for the builder’s repudiation. Rather, those letters are to be read as stating that the owners regarded themselves as at liberty to terminate the contract, and would do so unless the builder resumed negotiations towards an acceptable solution.

    4. (4)

       The builder had no contractual or other legal right to terminate the contract, as it purported to do by its notice of 20 October 2013. Its purported termination constituted a further repudiation of the contract. The owners were entitled to act as they did, and to treat that repudiation as bringing the contract to an end.

29. [125]

    Mr Davie submitted that neither of DGBA’s letters of 17 and 26 September 2013 could be said, on its proper construction and having regard to the circumstances (known to both parties) in which it was written, to amount to a purported termination of the contract. I agree with that submission, as will be apparent from what I have said already. However, Mr Davie submitted that if they were to be so regarded, then it must follow, from the antecedent repudiatory conduct of the builder, that they should be regarded as terminating the contract by reason of that conduct. Again, I agree.

30. [126]

    It follows inevitably that as at 17 (and, if it matters, 26) September 2013, the owners did indeed have the right that they asserted: the right “to proceed to terminate the Contract”. Their assertion of that right could not in law amount to a repudiation of the contract.

31. [127]

    For those reasons, in my view, the Appeal Panel’s decision is wrong in law. First, on the whole of the evidence, the Appeal Panel could not rationally find that the owners had repudiated the contract. In the words of Mason CJ in Hope, that finding was not reasonably open on all the evidence. And in the words of Jordan CJ in Australian Gas Light Company, the primary facts found are necessarily outside (or inconsistent with) a conclusion of repudiation. And secondly, again on the whole of the evidence, the only finding reasonably open was that the builder had repudiated the contract.

32. [128]

    Before leaving the issue of repudiation, I should deal with a particular submission put by Mr Bambagiotti. He submitted that the Senior Member’s findings of fact were irrelevant, because the Appeal Panel had quashed her decision.

33. [129]

    Mr Bambagiotti referred to the decision of Campbell J in Mid-City Skin Cancer and Laser Centre Pty Ltd v Zahedi-Anorak (2006) 67 NSWLR 569; [2006] NSWSC 844 at, in particular, [323]. In that paragraph, his Honour discussed the effect of the High Court’s reversal of a decision of the Court of Appeal. His Honour said that a decision of an intermediate appellate court that is reversed “has no status as a binding precedent, even in relation to points on which the appeal was not taken”. His Honour said the justification for that conclusion “can only be that, when there is an appeal to the High Court, it is the decision of the High Court … which decides the litigation, not the decision of the Court of Appeal”.

34. [130]

    Campbell JA, this time in the Court of Appeal and speaking with the concurrence of Barrett JA and Sackville AJA, reaffirmed that view in Wardle v Agricultural and Rural Finance Pty Ltd [2012] NSWCA 107 at [209].

35. [131]

    Mr Bambagiotti based this submission on [41] of the Appeal Panel’s reasons. The Appeal Panel there said:

36. [132]

    Mr Bambagiotti read that paragraph as suggesting that the Appeal Panel had quashed the Senior Member’s decision for some failure on her part to exercise her discretion in determining the proceedings. I do not understand that argument. First, the word “discretion” does not appear to be appropriate. I think that what the Appeal Panel was trying to suggest was that the Senior Member had failed to exercise her jurisdiction, by not dealing with the builder’s argument as to repudiation which the Appeal Panel had summarised. Secondly, and in any event, the Appeal Panel did not quash the Senior Member’s decision because of some failure on the part of the Senior Member to consider the argument. It quashed the decision because in its view she had erred in concluding that it was the builder rather than the owners who had repudiated the contract.

37. [133]

    In my view, this point has no substance. First, this Court is deciding whether to grant leave to appeal from the decision of the Appeal Panel and, if leave is to be granted, whether the appeal should be allowed. That (if done) would of necessity involve setting aside the Appeal Panel’s order quashing the decision of the Senior Member.

38. [134]

    Secondly, Campbell J was concerned with the status as a binding precedent of a decision of an intermediate appellate court that has been overruled by the High Court. The particular question was whether judges otherwise bound by decisions of the intermediate appellate court would continue to be bound by its decision on points that were not the subject of the appeal. That has nothing whatsoever to do with the status of findings of fact made by a court or tribunal lower in the hierarchy that were not disturbed in an otherwise successful appeal to a court or tribunal above it in the hierarchy.

39. [135]

    Thirdly, the particular findings of the Senior Member with which I am presently concerned were not challenged in the appeal (or if they were, the Appeal Panel did not mention the challenge). As a matter of reality, they must be regarded as findings of fact that the party affected by them – the builder – did not challenge. The obvious inference is that the builder, at the very least, thought that the prospects of success of any such challenge were minimal.

Decision – effect of breach on purported acceptance of repudiation

1. [136]

   The conclusions just expressed are sufficient to justify the grant of leave and to allow the appeal. However, as I have noted at [8] above, Mr Davie submitted that in any event, it was not open to the builder to rely on what he characterised as his client’s anticipatory breach (on the assumption that either or both of the letters in question should be regarded as conveying an intention to breach the contract). That was so, Mr Davie submitted, because the builder was at that stage itself in breach of the contract. He relied on the majority reasons in DTR Nominees at 433. Their Honours there said, among other things, that:

2. [137]

   Resolution of this point requires some understanding of the facts in DTR Nominees. The respondent purchasers agreed to buy from the appellant vendor land described as lots 1 to 9 inclusive in a plan of subdivision annexed to the contract for sale. That plan showed a subdivision comprising 35 lots in all. In the usual way, the contract required the appellant to use “all due dispatch” to register the plan of subdivision, and provided that the respondents should not be required to complete until the plan was registered.

3. [138]

   Unknown to the respondents, the appellant decided to subdivide the land in stages: the first stage comprising lots 1 to 9, and the second stage comprising lots 10 to 35. The plan of subdivision lodged for registration was for the first stage only. The appellant maintained that, upon registration of its plan, the respondents were required to complete. The respondents maintained (correctly, as the High Court held) that they were not. However, the respondents went one step further. They gave notice purporting to treat the appellant’s actions as an “anticipatory breach”, and to rescind the contract for that asserted breach. In reply, the appellant, regarding the respondents’ notice as itself a repudiation, purported to terminate the contract.

4. [139]

   The majority in the High Court (Stephen, Mason and Jacobs JJ in a joint judgment, Aickin J concurring) held that the term breached by the appellant was not essential, and that the appellant had never done more than insist on a genuinely held but mistaken belief as to what the contract required it to do. In those circumstances, Stephen, Mason and Jacobs JJ said at 432, “[t]here is therefore no basis on which one can infer that the appellant was persisting in its interpretation willy nilly in the face of a clear enunciation of the true agreement”. Accordingly, their Honours held at 433, “the respondents were not entitled to rescind the contract … as they purported to do”.

5. [140]

   That led their Honours to consider “whether the appellant was entitled to rely on this ineffective rescission of the contract by the respondents as itself a repudiation of the contract”. They said at 433 that the appellant could not do so. The reason was that although the respondents “were in error in regarding themselves as entitled to rescind at the stage when they purported to do so … they were not in error in their interpretation of the contract”.

6. [141]

   Taking into account what their Honours thought to be “the true interpretation of the contract”, they said that the respondents’ conduct “did no more than evince an intention not to proceed with the contract on the basis of the incorrect interpretation then being advanced by the appellant”. In those circumstances, their Honours said, there was no “repudiation which would entitle the appellant to rescind when it was itself the party in error”.

7. [142]

   The passage in their Honours’ reasons on which Mr Davie relied (see at [139] above) occurred immediately after the last words that I have just quoted.

8. [143]

   The basis for their Honours’ rejection of the appellant’s claim that the respondents themselves had repudiated the contract was that the respondents’ conduct did not evince an intention to renounce the contract. Thus, there was no repudiation capable of acceptance. It is clear, in addition, that their Honours regarded the respondents’ stance as having been provoked by the appellant’s erroneous insistence on performance on the basis of its incorrect interpretation of the contract.

9. [144]

   In my view, what their Honours then said, as to the necessity for a party seeking to rescind for anticipatory breach be “an innocent party”, does not form part of the ratio of their Honours’ decision on the appellant’s cross-claim.

10. [145]

    At a level of some generality, it may be said that a promisee that is itself in breach of an obligation under a contract is not, merely because of that breach, prevented from relying on the promisor’s repudiation to terminate the contract. There are of course exceptions: for example, where the parties’ obligations are interdependent, and where it is one party’s own breach of obligation that has put the other into the situation that is claimed to evince a repudiatory intention. See, for example, Foran v Wight (1989) 168 CLR 385 [1989] HCA 51 and Peter Turnbull. Those cases are quite different; the point in each is whether the actions of the party in breach absolved the other from the need to show that it was ready and willing to complete, and would have completed but for the first party’s breach. Indeed, that is the very point made in the first sentence of the passage from DTR Nominees on which Mr Davie relied.

11. [146]

    In the present case, the builder was not calling on the owners to perform. Had the builder sought to do so, its own readiness and willingness to perform, on the basis of its contractual obligations properly construed, might have been a relevant consideration. The builder treated the owners’ conduct as repudiatory, and purported to terminate based on it. It was seeking to be discharged from the further performance of its obligations under the contract. If it were successful in doing this, it would remain liable for whatever damages might be proved as following from its earlier breach.

12. [147]

    Thus, if (contrary to my view) the builder had breached the contract, but not in a way that amounted to repudiation, that breach would not have prevented the builder from relying on any repudiatory conduct on the part of the owners and treating the contract as discharged thereby, unless it was the builder’s own breach that provoked or led to the owners’ repudiatory conduct. And if, as I think is the case, the builder’s conduct was repudiatory, it was open to the owners to accept it as bringing the contract to an end, and discharging them from further performance.

13. [148]

    There are numerous cases where a promisee in breach has been held entitled to treat itself as discharged, notwithstanding its breach, by repudiatory conduct on the part of the promisor: the oft-cited case of Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 is perhaps the best known of them, although only one of many.

14. [149]

    In my view, the correct position is revealed by the reasons of Deane J in Foran at 437-438. His Honour said:

15. [150]

    The true explanation of the passage in the joint reasons in DTR Nominees on which Mr Davie relied is, I think, that the appellant’s breach disentitled it from relying on the respondents’ purported rescission as repudiatory because it was the appellant’s genuinely held misinterpretation of the contract (and insistence upon that misinterpretation) that provoked the respondents’ action. It was a case where both parties were wrong in the course that they took, and in those circumstances the appellant would not have been entitled to rely on the consequences of its own wrong.

16. [151]

    If the passage is read more widely (as Mr Davie would have the Court read it), it seems, as is put in Carter’s Breach of Contract (LexisNexis Butterworths, 2011) at [8-25], to be “too broad a statement”.

Conclusion

1. [152]

   I would grant leave to appeal and allow the appeal with costs. I propose the following orders:

   1. (1)

      grant leave to appeal.

   2. (2)

      Direct that the draft notice of appeal dated 27 April 2016 be filed within 7 days.

   3. (3)

      Order that the appeal be allowed, that the orders of the Appeal Panel made on 12 February 2016 be set aside, and that in their place it be ordered that the appeal to the Appeal Panel be dismissed with costs.

   4. (4)

      Order the respondent to pay the applicants’ costs of the application for leave and of the appeal.