Colormode Pty Ltd v Civic Construction Group Pty Ltd [2024] QDC 148

DISTRICT COURT OF QUEENSLAND CITATION: Colormode Pty Ltd v Civic Construction Group Pty Ltd [2024] QDC 148 PARTIES: COLORMODE PTY LTD (Plaintiff) v CIVIC CONSTRUCTION GROUP PTY LTD (Defendant) FILE NO/S: BD 1924/21 DIVISION: Civil DELIVERED ON: 13 September 2024 DELIVERED AT: Brisbane HEARING DATE: 8, 9, 10, 26 April 2024; final written spreadsheets of claims and defences, 20 May 2024 JUDGE: Barlow KC, DCJ ORDERS: 1. There be judgment for the plaintiff in the sum of $38,120.80, plus interest in an amount to be determined. 2. The parties, by 27 September 2024, file and serve (and provide to my associate by email) written submissions on interest and costs. 3. Each party may, by 4 October 2024, file and serve (and provide to my associate by email) written submissions in response to the other’s submissions under order 2. 4. All written submissions be limited to 5 pages. CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – ESTOPPEL - RECOVERY – plaintiff, a painting contractor, and defendant, a building contractor, entered into three contracts between 2014 and 2016 – plaintiff seeks payment from the defendant, claiming that amounts are due under each contract primarily due to alleged variations in the contracted work - whether works were undertaken and, if so, were variations to the works under the contract - plaintiff also seeking the return of retention money held by the defendant under the contracts – whether the plaintiff is entitled to the return of retention money - defendant asserts that no money is owed to the plaintiff – defendant contends that any variations were -- 1 of 69 -- ii not properly sought and approved in accordance with the procedures, including strict time limits outlined in each contract - plaintiff accepts that not all variations were undertaken following the process specified in the contracts - plaintiff argues that the defendant waived compliance with these procedures, or is estopped from relying on non-compliance – whether the defendant waived compliance with, or is estopped from using, the procedures to deny the plaintiff’s claims – whether time limits prevent recovery of any parts of the plaintiff’s claims - defendant seeks liquidated damages for the plaintiff’s delay in completing the works under each contract - defendant seeks judgment in its favour for the balance after offsetting this amount against any potential liability to the plaintiff – whether time limits apply to the defendant’s offsetting claim. Uniform Civil Procedure Rules 1999, 149(d), r 172, r 173, r 5 Civil Proceedings Act 2011, s 20 Abergeldie Contractors Pty Ltd v Fairfield City Council [2017] NSWCA 113, considered AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140, considered Bartier v Kounza Investments Pty Ltd [2003] QSC 390, distinguished Capello v Lyons (2023) 111 NSWLR 570, applied Creative Building Services v Joeline Investments [2015] NSWSC 391, applied Hunters Green Retirement Living Pty Ltd v J G King Project Management Pty Ltd [2023] VSC 536, considered John Goss Projects Pty Ltd v Leighton Contractors (2006) 66 NSWLR 707, considered Legal & General Life Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314, considered RCR O’Donnell Griffin Pty Ltd v Forge Group Power Pty Ltd [2016] QCA 214, considered Re Concrete Constructions Group Pty Ltd [1997] 1 Qd R 6, distinguished TFW Printers Ltd v Interserve Project Services Ltd [2006] EWCA Civ 875, cited Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd [2011] QCA 312, applied Walton v Illawarra [2011] NSWSC 1188, considered COUNSEL: Mr G Coveney for the plaintiff Mr J Hastie for the defendant -- 2 of 69 -- iii SOLICITORS: KeyPoint Law for the plaintiff Shand Taylor Lawyers for the defendant Contents Summary .............................................................................................................................. 1 The contracts ........................................................................................................................ 2 The structure of these reasons .............................................................................................. 3 The Ferry Road claims ......................................................................................................... 4 Invoice 0074 - $23,860 ..................................................................................................... 4 Extras 1 - $6,775 .............................................................................................................. 8 Extras 2 - $1,700 ............................................................................................................ 11 Extras 2A - $9,475.......................................................................................................... 13 Extras 3 - $44,974 .......................................................................................................... 14 Extras 4 - $13,207 .......................................................................................................... 16 Summary of Ferry Road variation amounts ................................................................... 17 The Habitat claims .............................................................................................................. 18 Extras 3 - $92,519.21 ..................................................................................................... 18 Invoice 0056 - $6,090 ..................................................................................................... 20 Conclusions on Habitat claims ....................................................................................... 21 The Soko claims ................................................................................................................. 21 Invoice 86 - $62,712 ....................................................................................................... 21 Invoice 92 - $5,506 ......................................................................................................... 23 Contra charges - $24,739.75........................................................................................... 24 Contra charges Nos 1 & 2 – cleaning ($8,041.25) ..................................................... 27 Contra charge no 3 – cost overrun for levels 5, 6 and 7 ($11,728.50) ....................... 27 Contra charge 4 – abseiling works ($4,520) ............................................................... 29 Contra charge no 5 – replacement roller blind ($450) ............................................... 30 Conclusions on contra charges ................................................................................... 30 Variations - $164,541 ..................................................................................................... 31 Additional doors & frames as per quote 73 - $116,950 ............................................. 31 Wardrobe frames - $10,200 ........................................................................................ 32 Extra hours – failure to install timber door frames & skirtings prior to spray outs - $19,320 ....................................................................................................................... 33 Pool deck clean and stain - $560 ................................................................................ 33 Unit 505 - $4,451........................................................................................................ 33 Slab extra 1.5m length - $1,650 ................................................................................. 34 -- 3 of 69 -- iv Records 1-10, 47-50 - $11,410 ................................................................................... 34 Summary of Soko variation amounts ............................................................................. 36 Summary of findings on Colormode’s claims .................................................................... 36 Legal bases for Colormode’s claims .................................................................................. 36 Clause 2.1 ....................................................................................................................... 36 Colormode’s contentions ............................................................................................ 36 Civic’s contentions ..................................................................................................... 38 Discussion .................................................................................................................. 39 Variations - waiver or estoppel....................................................................................... 40 Retention amounts .............................................................................................................. 43 Are Colormode’s claims time barred or released? ............................................................. 46 Clause 37.4 (final payment claim & release) ................................................................. 46 Clause 41 (notification of claims & release) .................................................................. 48 Conclusions on Colormode’s claims .................................................................................. 50 Liquidated damages ............................................................................................................ 50 The result ............................................................................................................................ 53 Annexure A – Ferry Road contract terms........................................................................... 54 Annexure B – Habitat contract terms ................................................................................. 60 Annexure C – Soko contract terms ..................................................................................... 62 -- 4 of 69 -- 1 Summary [1] Colormode is a painting contractor. Civic is a building contractor. [2] On three occasions between 2014 and 2016, Colormode and Civic entered into a contract whereby Civic appointed Colormode as its sub-contractor to paint a residential apartment building in West End to be built by Civic. The buildings (all part of a development known as Riverpoint) were respectively referred to by the parties as Ferry Road, Habitat and Soko and the contracts were respectively referred to by those names. [3] In this proceeding, commenced well after the works under each of the contracts were completed, Colormode claims payment from Civic of amounts that Colormode asserts are due under each contract, substantially because of alleged variations to the works under the contracts. It also claims return of the retention money that was held by Civic under each contract. The total claimed by it (after it abandoned parts of its claims during the trial) is $552,018.23, including $95,919.27 retained by Civic, as security, from amounts due to Colormode. [4] Civic denies that it owes any money to Colormode. It denies that variations were sought and approved in accordance with the process provided in each contract. It contends that, under each contract, Colormode released it from any further claims by not making any final payment claim within the time provided for in each contract. It also asserts that Colormode did not complete the works by the contractually agreed dates for completion, as a result of which Colormode is liable to Civic for liquidated damages totalling $1,674,500. Civic seeks judgment in its favour for the balance after setting off that sum against its liability (if any) to Colormode. [5] Colormode accepts that it did not claim all variations in accordance with the process set out in each contract, but it maintains that neither it nor Civic insisted on compliance with that process, with the result that Civic waived compliance or is estopped from now relying on the process to deny Colormode’s claims. [6] For the following reasons, I find that: (a) Colormode has proved that it did works to the value of $65,952, for which it would be entitled to payment if it had complied with the variation provisions under the contracts; (b) Civic holds as security retention moneys totalling $95,919.27, which Colormode might have been entitled to have returned to it; (c) Colormode is entitled to the return of retention moneys totalling $38,120.80 plus interest on that sum, under the Habitat contract; (d) otherwise, Colormode’s claims were made too late, not having been made within the strict time limits imposed by the contracts; (e) Civic has proved the amounts claimed by it for liquidated damages, but it too has made its claim too late, also not having been made within the strict time limits imposed by the contracts; and (f) therefore, there will be judgment for the plaintiff in the sum of $38,120.80 plus interest to be determined. I shall seek submissions on the appropriate interest and the costs of the proceeding. -- 5 of 69 -- 2 The contracts [7] The three contracts were in materially similar (although in some relevant places, relevantly different) terms. Each was a lump sum contract in the form of an amended Australian Standard AS 4901-1998 subcontract comprising a formal instrument of agreement, subcontract conditions and various annexures. [8] It is necessary to set out the most relevant provisions of the contracts, as many of the issues involve the construction of those provisions and their application to the performance of each contract. Those provisions are set out in the Annexures to these reasons. [9] As can be seen, each contract provided for progress claims and payments to be made as works progressed, and final payment claims and a final payment, including the return of retention moneys at the end of the defects liability period. Each contract also set out a process for the making and payment of claims for variations to the works under the contract, with consequent increases or decreases to the total amount payable to Colormode under the contract. [10] The parties agreed the following facts concerning the Ferry Road contract: (a) the parties entered into the contract on 16 December 2014; (b) Colormode performed works under the contract from December 2014; (c) practical completion was achieved no later than 30 March 2015; (d) the defects liability period: (i) was for 12 months; (ii) started no later than 30 March 2015; and (iii) ended no later than 30 March 2016; (e) no final payment claim was given by Colormode to Civic before 15 October 2021; and (f) the superintendent was, at least prior to December 2017, Mr Richard Byatt. [11] They also agreed the following facts concerning the Habitat contract: (a) the parties entered into the contract on 30 June 2015; (b) Colormode performed works under the contract from August 2015 until August 2016; (c) practical completion was achieved no later than 28 June 2016; (d) the defects liability period: (i) was for 12 months; (ii) started no later than 28 June 2016; and (iii) ended no later than 28 June 2017; (e) no final payment claim was given by Colormode to Civic before 15 October 2021; (f) the superintendent was, at least prior to December 2017, Mr Richard Byatt; and -- 6 of 69 -- 3 (g) the total amount Civic paid to Colormode under the contract was $341,994.30.1 [12] Finally, the parties agreed the following facts about the Soko contract: (a) the parties entered into the contract on 20 December 2016; (b) Colormode performed works under the contract from December 2016 until September 2017; (c) practical completion was achieved no later than 21 June 2017; (d) the defects liability period: (i) was for 12 months; (ii) started no later than 21 June 2017; and (iii) ended no later than 21 June 2018; (e) no final payment claim was given by Colormode to Civic before 15 October 2021; (f) the superintendent was, at least prior to December 2017, Mr Richard Byatt; and (g) the total amount Civic paid to Colormode under the contract was $579,662.46. The structure of these reasons [13] I propose first to address each of Colormode’s claims for the amounts alleged to be owing to it (mostly for alleged variations) under each contract. This will include consideration of whether Colormode has proved what works were done and whether they were within the scope of the relevant contract works or were variations and, in the latter case, whether Civic directed the works (and, if so, in what manner). I shall, in each case, conclude whether Colormode has proved the value of works for which, subject to the defences raised, Civic may be liable. This will avoid consideration of the other issues in a claim-free vacuum. [14] I shall then consider the respective bases on which Colormode contends it is entitled to payment of the asserted amounts (other than retention amounts): first, under clause 2.1; then under clause 36 (variations); and then whether Civic waived reliance on clause 36 or is estopped from denying liability in reliance on that clause. [15] Next, I shall consider Colormode’s claims for the return of its retention amount under each contract. It is necessary to consider the retention amounts separately, as they raise a number of discrete issues. [16] I shall then move on to consider Civic’s defences to the effect that, regardless of the validity of any claims by Colormode, its claims were made late and are therefore barred under the contract and, in any event, Colormode has released Civic from its claims. [17] Finally, I shall consider Civic’s offsetting claim for liquidated damages. 1 Unless otherwise stated, all figures referred to in these reasons exclude GST. -- 7 of 69 -- 4 The Ferry Road claims [18] In paragraph 33 of the second amended statement of claim, Colormode pleads that, during the period from March 2015 to October 2015, Colormode, through its director, Mr Shilo Hasic, was directed by Civic to vary the Ferry Road works under the contract. The directions were either by Civic’s superintendent, Mr Byatt, or by Scott Widdicombe, or by Jack Marshall, Clemy Stuart, Stephen Maclaren (foremen employed by Civic) or by Ryan Widdicombe (a contracts administrator employed by Civic). [19] The claims under this contract are summarised in this table (taken from Colormode’s outline of argument): Invoice Ref. Amount INV-0074 $23,860.00 Extras 1 $6,775.00 Extras 2 $1,700.00 Extras 2A $9,475.00 Extras 3 $44,974.00 Extras 4 $13,207.00 Retention $17,999.70 Total $117,990.70 [20] Thus, excluding the retention, Colormode claims $99,991. I shall consider the evidence concerning each claim in turn. Invoice 0074 - $23,860 [21] Colormode issued an invoice for these works on about 16 February 2017, which is the date it bears.2 Civic accepts that it received that invoice shortly thereafter. The invoice was for work painting soffits between 5 and 27 October 2016, which Mr Hasic said was done at Mr Byatt’s request to repaint the timber ply soffits so that Civic could receive its retention for the project from the developer. Mr Hasic listed the hours of work done on each day that led to the total claimed amount.3 In the list he included a 2 Affidavit of Shilo Hasic affirmed 27 April 2023 (Hasic # 1), [195]; trial bundle (TB) (exhibit 1), volume 6 p 130. Mr Hasic is the director of Colormode. 3 Hasic # 1, [193]-[194]. -- 8 of 69 -- 5 column headed “Who gave verbal direction”, in which, for each day, he said it was “CS, RW and/or SM.”4 [22] On 9 March 2017 Mr Byatt, as superintendent, issued a payment schedule in which he rejected the claim.5 The reason that he expressed for doing so was that: As per the instruction from the Subcontract Superintendent under the defect liability period, Colormode were to rectify the identified defects to the painting work on the plywood soffits. Under clause 35 Defect liability and item 30 of the Subcontract the subcontractor shall carry out rectification of identified defects within a reasonable period for a time period of 12 months from Project Practical Completion. [23] In an affidavit by Mr Byatt, he said that he certified this claim at $0 as he had instructed Colormode to carry out the work during the defect liability period as the works were to rectify its own defects. He was aware that, if Colormode took issue with that determination, it should issue a notice to that effect within six days, which it did not do.6 [24] About 45 minutes before sending that payment schedule to Mr Hasic, Civic’s contract administrator, Jay Davidson, sent this email to Mr Hasic:7 In regards to the attached invoice No.0074, Civic believes this claimed work to be rectifying the defects identified on the above project by both the client and the Subcontract Superintendent. Please see attached email from Richard Byatt dated April 2016 instructing Colormode to rectify the painting defects to the plywood soffits. These rectification works fall under the defect liability period of the subcontract and are not chargeable to Civic. I will be issuing a payment schedule shortly outlining a zero payment of this invoice. [25] Later that afternoon, Mr Hasic responded by email to Mr Davidson:8 Those works were from the installers using pencil marks for the screws, that came out after time and the soffits were not maintained, I was then asked to recoat, this is not my fault I asked many times not to mark the soffits but civic and national plasterers never listened and then was never maintained. [26] The next morning, Mr Davidson responded saying:9 Your statements below are rejected and will be argued by Civic. [27] The email of April 2016 referred to in Mr Davidson’s first email appears to have been sent by Mr Byatt to Mr Hasic on 3 April 2016, in which Mr Byatt said:10 4 Respectively referring to Clemey Stuart, Ryan Widdicombe and Stephen Maclaren. Mr Stuart and Mr Maclaren, he said, were foremen employed by Civic, while Mr Widdicombe was, he said, Civic’s contracts administrator. Another relevant Civic person was Scott Widdicombe, who was the sole director of Civic between 2003 and 2021. Hasic #1, [182]. 5 TB 1168-1169. 6 Affidavit of Richard Byatt affirmed on 18 August 2023 (Byatt # 1), [38(a)], TB 1420. 7 TB 1166-1167. 8 TB 1170. 9 Trial bundle p 1170. 10 Trial bundle p 1506. The photos to which he referred are not in evidence. -- 9 of 69 -- 6 Can you make sure you keep the bloke you have had on Riverpoint there this week. … There are also some external defects that need to be attended to: … - A lot of the ply soffits look patchy, refer attached photos. [28] Mr Byatt appears to have followed up that email by another, sent on 26 April 2016, in which he said:11 I left a message on your phone this morning. We need to address the external items urgently. They are holding up the release of our retention. [29] Mr Hasic said, generally in relation to directions to vary works, that directions were normally given to him or Colormode’s staff “verbally” (which I take to mean orally) by one or more of the persons to whom he had referred earlier. Few were given in writing and notices under clause 36.5 were rarely given.12 As for the works claimed in this invoice, I have already described by whom, he said, directions were given: “CS, RW and/or SW.” However, his evidence about the directions for these works was vague and, in some respects, inconsistent. [30] Having set out the list in his affidavit, in cross-examination Mr Hasic said a number of things about the directions to do these works. At first, he said this was work to fix up some timber soffits for Civic to get its retention money from Stockwell.13 A little later, he said that he was emailed by Mr Byatt about the job and he also met Mr Byatt on site.14 He went on to say that Colormode was directed to do the work, he assumed, within a month or so before the works were started.15 He denied that the email of 3 April 2016 from Mr Byatt was the relevant direction, saying that that was for something else.16 He went on to say that, in a meeting two or three weeks before these works started, Mr Byatt gave him an oral instruction to do the works so that the developer would release the retention. When it was put to him that he did not really know, but it could be that the April email was for these works, he said it could be, but he doubted it “because we fixed those damn things up that many times.”17 [31] Colormode’s counsel submitted that I should accept Mr Hasic’s evidence that this work was done as a result of an oral request by Mr Byatt in or around early 201718 so that Civic could be paid its retention by Stockwell; the work was necessary to correct defects from other trades, particularly pencil marks made by the installers of the soffits, the work was additional to the scope of works under the contract and was a variation of the contract. 11 Trial bundle p 1505. 12 Hasic #1, [183]-[185]. The reference to clause 36.5 was mistaken, as there was no such clause in either the Ferry Road or the Habitat contract (although there was one in the Soko contract). 13 T2-42:33-36. “Stockwell” was, I understand, a shorthand reference to the developer of the project. 14 T2-44:31-32. 15 T2-45:33-39. 16 T2-46:30 – T2-47:9. 17 T2-49:3-14. 18 Mr Coveney must have meant 2016, as the works were undertaken between October 2016 and February 2017. -- 10 of 69 -- 7 [32] In a spreadsheet that the parties provided, at my request, after the trial had concluded (the Ferry Road spreadsheet19), Colormode summarised its basis for each of the items in this invoice as “rectifying other trades defects.” In the same schedule, the reasons Civic gives for rejecting each item were: A. The claim was not made in accordance with clause 37.1 of the Subcontract. B. The plaintiff is not entitled to payment to rectify its own defects. C. This claim is time barred, as no notice was given under clause 41.1 of the Subcontract. D. No claim is made for breach of clause 37.4. [33] Civic’s counsel submitted that Mr Hasic’s evidence was confused and unpersuasive, particularly in denying that the works done were in response to Mr Byatt’s April email. But, in any event, that email was not expressed as a direction and any oral direction was not given in accordance with the contract, nor did Colormode tell Civic, before carrying out the works, that it considered the works to be a variation. [34] I find that, by his email of 3 April 2016 and confirmed in his email of 26 April 2016, Mr Byatt, as superintendent, purportedly directed Colormode to repaint the soffits at Ferry Road. However, that direction did not set out the matters required in clause 35. It was not a valid direction under the contract. But, even more relevantly, by that time the Ferry Road contract had reached practical completion over a year earlier and the defects liability period had expired by no later than 30 March 2016. During that period Civic had not made any claim, nor had the superintendent given any direction, that the work later requiring correction was defective work by Colormode. In the circumstances, the direction was not valid. In effect, it was a request to do works that were not subject to the contract at all, because the works under the contract had been completed without any defects having been identified and the defects liability period had expired. Civic had no right to demand that those works, whether rectification works or variations, be done.20 [35] Given that Civic did not give Colormode any direction to rectify these works during the defects liability period,21 Civic could not have expected Colormode to do those works, outside the contract, without Civic having to pay it for the works done. While the delay between April and October 2016 before the works were started was not explained, I find that Mr Byatt continued orally to press Colormode to do those works, at the latest in a conversation between Mr Hasic and Mr Byatt in about September or October 2016, when Colormode finally commenced the works. Civic does not dispute that Colormode completed these works in a satisfactory manner. [36] The real issue is whether, in these circumstances, Colormode is now entitled to payment for these works. I find that it is not entitled to payment under the contract, as any obligation that might have arisen to correct defects in Colormode’s works (if there were such defects) had ended with the expiration of the defects liability period. Also, neither Civic nor Colormode complied with their respective obligations under the contract to direct and claim for variations in writing at particular times. These works were not, therefore, variations under the contract. 19 Which, upon receipt, I have had marked J for identification. 20 For a similar conclusion, although in a different situation, see TFW Printers Ltd v Interserve Project Services Ltd [2006] EWCA Civ 875, [34]. 21 Which may have engendered an additional defects liability period for these works, under clause 35. -- 11 of 69 -- 8 [37] Although Colormode is not entitled to payment under the contract, it also seeks payment on a separate basis, namely estoppel (either by representation – as pleaded – or by convention – as submitted in its counsel’s final address).22 I shall consider that basis for its claim later. Extras 1 - $6,775 [38] This claim is based on works described in an invoice dated 8 July 2015.23 Additionally, in his first affidavit at [199], Mr Hasic itemised the works the subject of this claim. He set out a table in which he described each item of work by the date when it was done, a brief description of the works (eg, “Defects in unit 6402”), the amount claimed and by whom the direction to do the works was given (all said “CS, RW and/or SM”). [39] Again, in the Ferry Road spreadsheet, Colormode claimed that these works were for “rectifying other trades defects.” Civic’s stated reasons for denying each claim were: A. This claim is time barred, as no notice was given under clause 41.1 of the Subcontract. B. No claim is made for breach of clause 37.4. C. No valid progress claim had been given. [40] Mr Byatt could not recall these works and could not assess them, but commented that some of the descriptions, such as “repaint” ceiling and walls suggested that the works were to rectify Colormode’s defects rather than variations or additional works.24 [41] Mr Hasic went on to say that, on or about 8 July 2015, he issued an invoice for these works, in the sum of $10,387.50.25 In a later affidavit, he said that, to the best of his recollection, he sent it by email to Jay Davidson.26 However, no such email is in evidence. He also said that he had since obtained advice about that invoice and Colormode now only claims $6,775 for the works shown.27 How that amount was reached and what works it encompasses were not explained. [42] Despite Mr Hasic’s “best recollection” referred to above, in cross-examination he accepted that the invoice was not actually sent to Civic until 27 April 2018, when Colormode’s solicitors sent it and other invoices to Civic.28 But, by putting that proposition to Mr Hasic, counsel for Civic appears to have misled him, as the letter from the solicitors did not refer to or attach this invoice. Despite both parties submitting that this invoice was sent with that letter, it clearly was not. [43] Mr Hasic said that the directions to undertake the works described in this invoice were provided in writing by defects lists.29 No such defects lists are in evidence. He also agreed that the amount claimed was incorrect and was later reduced to the amount 22 It does not seek, in the alternative, payment on a quantum meruit or similar basis (indeed it abandoned a claim based on restitution for work done that it had originally pleaded), nor on the basis that these works were under an additional, unwritten contract. It is therefore unnecessary to consider those possible grounds. 23 TB 1173-1176. 24 Byatt #1, [38(c)], TB1421. 25 TB 1173-1176. 26 Affidavit affirmed on 9 April 2024 (Hasic #4), [10]. 27 Hasic #1, [201]. 28 T2-49:31 – T2-50:1.The solicitors’ letter is at TB 1263-1267, with its attachments at TB 1268-1274. 29 T2-57:20-21, 29-30. -- 12 of 69 -- 9 now claimed.30 Mr Coveney submitted that that was the result of not charging for works described in the invoice and marked “CM” or Colormode. [44] It was put to Mr Hasic that he did not notify Mr Byatt that he considered any of the works in this invoice (or in extras 2 to 4) to be a variation. His response was somewhat obscure, saying “Defects, yes. Verbally. And Jack Marshall was part of it. He was one of their supervisor (sic) that was instructing us to do some of the works day in, day out.”31 Shortly after, he was asked whether he orally notified Mr Byatt on each occasion that the works constituted, in his view, a variation. His response was, “Even Richard said to do that. He said make sure anything that’s extra, write it down and take note.”32 [45] The following exchange then occurred between Mr Hasic and Mr Hastie:33 Right. But it’s fair to say, isn’t it, that you only – the way in which you wrote it down and took it – the process that you, in fact, followed was as follows, wasn’t it? You did the work, you took a record of – a handwritten record of doing the work, and then you gave that handwritten record you – if someone was available on Civic’s [indistinct] you had them sign the written record. That was the process, wasn’t it?---Not in Ferry. They just said keep the records and email it in. Right. But the records only came into existence after the work was performed; correct?---Well, it usually does. You do the work and then you do the records. Right. So there was never a situation then where having received a direction to perform certain work, you orally notified anyone that those works involved a variation before you, in fact, did the works. That never happened, did it?‑‑‑No, we – sometimes you don’t have the time because they just want it done, because otherwise you’re getting threatened by Scotty. Right. And these conversations that you were talking about with Mr Byatt, they don’t appear in your affidavit, do they?---I’m not sure. Right. Well, it would’ve been a pretty important thing to include if, in fact, that occurred, wouldn’t they?---Well, I’ve said it before. Right. Well, I suggest to you that those conversations never, in fact, happened?---Well, I wouldn’t have done the work. They don’t just start paying you something for nothing. Right. So if we go – – –?---Everything – everything I paint is a direction, I think you mentioned before. And when I do it, the program, how I do it, is all under direction. … Right. So what I’m suggesting to you, and I’ll break it into separate – into different parts, you never notified Mr Byatt or anybody else that you considered work to be a variation before you did the work, did you?‑‑‑On occasions with the defects, yes. As I said, it was all verbal then. And before – and you didn’t wait to receive a direction in writing for any of those people before, in fact, doing the works, did you?‑‑‑No, he just said get in there and do it. 30 T2-58:10-12; also footnote 27 above. 31 T2-70:6-10. 32 T2-70:44-47. 33 T2-70:49 – T2-71:27; T2-71:41-48. -- 13 of 69 -- 10 [46] Mr Coveney submitted that I should find that Civic directed Colormode to perform the works the subject of this part of the claim by defects lists placed in the relevant units; Colormode did those works, together with rectification of defects in its own work; and Colormode charged only for defects caused by other trades, which were not within the scope of works and were variations for which it was entitled to charge. [47] As to this, Mr Hasic said in his third affidavit that, although site instruction sheets were given to him for some of the defects, he asked David Widdicombe and Richard Byatt for a site instruction sheet for each unit where defects had to be rectified, but they refused to do so, which is why Mr Hasic created the handwritten schedules and diary notes and had a representative of Civic sign them. He said most often someone from Civic would leave tape or stickers on walls in the rooms to identify areas that needed attention. He went on to say that the vast majority of the “defects” were not defects in Colormode’s work, but were scuffs, scrapes or dints that Colormode would be told to rectify after other trades had finished in the units.34 [48] Mr Hastie submitted that I should not accept that directions were given by defects lists, given that none are in evidence for Ferry Road. He also submitted that defects lists for other contracts, such as Habitat, that are in evidence were not in the form of directions to vary works in any event, but are to rectify Colormode’s own defects. Also, it is clear from Mr Hasic’s evidence set out above that Colormode never gave Civic any notice that it considered works to be a variation before carrying out any of the works. On all those bases, Civic is not liable to pay Colormode for those works. [49] Regardless of the contention that Colormode cannot make this claim because it did not comply with the contractual process for claiming variations, I am not satisfied that the works described in the invoice and the amount claimed for them were works constituting variations for which Colormode may be entitled to claim payment. There are substantial omissions from Colormode’s evidence in support of the claim. It is not clear when the invoice was created, nor when it was provided to Civic, nor from what records it was created. No contemporaneous notes about the works, proved by the person who made them and from which the invoice may have been prepared, are in evidence. While I do not suggest that the invoice was created other than from contemporaneous notes, the absence of those notes reduces the cogency of the evidence about the works done and, in particular, the evidence fails to demonstrate how and by whom the responsibility for them was allocated. The evidence that Colormode claimed some of them to be variations is vague, but it is clear that no such contention was made by Colormode before it undertook the works. Finally, there is no breakdown that I can understand of how the amount claimed was made up: it cannot be gleaned from the invoice itself. For example, the claim for unit 6105 appears to summarise the works as divided between 5 hours for “NP” totalling $375, 4 hours for Civic ($300) and 2 hours for joinery ($150), a total of $825, with 3 hours for Colormode (apparently not charged). But, in the details of the works, only 1 hour is allocated to Civic despite charging for 4 hours and 6 hours are allocated to “NP”, yet only 5 hours are charged. On another occasion, the amount charged in the invoice includes the time that has been allocated as Colormode’s responsibility (see unit 6404). 34 Affidavit of Shilo Hasic affirmed on 7 April 2020 (Hasic #3), [4]-[6], TB vol 5:49. -- 14 of 69 -- 11 [50] Furthermore, all of the amounts claimed in the invoice are shown to be calculated by charging $75 an hour for the hours of work undertaken, whereas the scope of works provided:35 27. Day labour rate for additional work if requested by the contractor are to be charged at a rate of $50.00 per hour per man. Work dockets are required to be signed on a daily basic [sic] by the onsite Forman [sic]. [51] On my calculation, if one were to accept the hours said to have been worked on the items attributed other than to Colormode, at $50 an hour the correct amount to be charged would be $6,875. That is close enough to determine that the amount now claimed ($6,775) must have been calculated in that manner. But, for the reasons I have set out above, I am not satisfied that the extent and division of work set out in the invoice have been adequately proved on the evidence. [52] Overall, I am not satisfied that Colormode is entitled to payment by Civic, under the contract, for any part of this claim. Extras 2 - $1,700 [53] The works the subject of this claim were described in an invoice dated 21 March 2015.36 Colormode’s counsel submitted that it was not provided to Civic until 27 April 2018. A different version of the invoice was referred to in and attached to Colormode’s solicitors’ letter of that date. Mr Hasic said that, although he usually sent invoices to Civic on the dates they bore, he did not send this one around the time of the works being done because he had run over his computer and could not get access to the invoice for some time; he sent it during this litigation.37 He confirmed orally that it was sent by Colormode’s solicitors in 2018. [54] Again, in the Ferry Road spreadsheet, Colormode claimed that these works were “rectifying other trades defects.” Civic’s reasons for disputing that it is liable to pay for them are: A. This claim is time barred, as no notice was given under clause 41.1 of the Subcontract. B. No claim is made for breach of clause 37.4. C. No valid progress claim had been given. [55] The invoice refers to site instruction 5579.38 A handwritten version of that document appears to have been signed by a person with the initials DB, who was apparently a foreman employed by Civic.39 The form of that document is telling: it is headed with Civic’s name, addressed to “Riverpoint” and contains three boxes that allow for the document to be a site instruction, a variance to works or a request for information. The writer of the document had ticked the first of those options. The document also stated that it was “For Monday 21/3/15.” On that basis, one might think that Civic was giving an instruction that the writer did not consider to be a variation to the works under the subcontract. Written below the description of the works to be done is another description of the works and a calculation of the amounts to be charged for 35 TB 1099. 36 TB 1180; also TB 1271. 37 Hasic #1, [203]. 38 TB 1179. A typed version also appears at TB1278, which was an attachment to Colormode’s solicitors’ letter of 27 April 2018. T2-50:6-8. 39 Identified as such in annexure B to the statement of claim. -- 15 of 69 -- 12 those works. Those amounts (plus an extra $400 for doors to be stained) are in the invoice. [56] Very little evidence was given about this invoice or the site instruction and the works described in them, though Civic does appear to dispute that the works described in this invoice were in fact done by Colormode. Mr Byatt said in his affidavit that he could not remember these works and cannot now assess or comment on them.40 In his third affidavit, Mr Hasic said these and the other works referred to in Colormode’s claims were done by Colormode.41 I am satisfied, on the basis of Mr Hasic’s unchallenged evidence, together with the site instruction and the invoice, that the works were done by Colormode. [57] Mr Coveney submitted that, as it is agreed that the defects liability period started no later than 31 March 2015, this work was undertaken toward the very end of the principal period for works under the contract. The court should therefore infer that it is more likely than not that the work was for rectification of defects from other trades (ie, a variation) rather than work that formed part of the scope of works. Also, he submitted, Mr Hasic said he orally notified Mr Byatt that the works were a variation.42 [58] I do not accept that I should draw such an inference, nor was Mr Hasic’s evidence as clear as Mr Coveney’s submission implies. That evidence was general, dealing with all the Ferry Road claims, and almost immediately after he said that, the following exchange occurred with Mr Hastie:43 So there was never a situation then where having received a direction to perform certain work, you orally notified anyone that those works involved a variation before you, in fact, did the works. That never happened, did it?---No, we – sometimes you don’t have the time because they just want it done, because otherwise you’re getting threatened by Scotty. [59] The evidence about these works is unclear, but it is clear that Colormode did not notify Civic in writing, before doing the works, that it considered them to be a variation. [60] No evidence was given, nor was any submission made, about what a site instruction was and under what contractual provision it could be given. The closest provision I can identify in the contract is clause 32 (headed “Programming”). The relevant parts of clause 32 are set out in annexure A. [61] “Direction” is defined as including an instruction, so a site instruction is a direction. A direction or instruction may be given by a Subcontract Superintendent’s Representative appointed under clause 21, but there is no evidence that the person who signed this instruction had been so appointed. Furthermore, if this were a direction under clause 32 (as it appears to be), the invoice would arguably comprise a notice in response under the clause 32, but only if it had been given to Civic within five days of the direction. Although perhaps drawn up within five days, Mr Hasic said it was not given to Civic until 2018. In that case, the precondition to claiming for the works was not fulfilled. 40 Byatt #1, [38(b)], TB1420. 41 Hasic #3, TB vol 5:48, [3]. 42 Referring to T2-70:6-10 and T-71:1-4 43 T2-71:10-14. -- 16 of 69 -- 13 [62] Therefore, although I am satisfied that Colormode did the works, it has not demonstrated that they were done pursuant to a direction, nor that it asserted, before doing the works, that they were a variation. Under the terms of the contract, it is not entitled to claim payment for these works. Extras 2A - $9,475 [63] The works the subject of this claim were described in an invoice dated 22 July 2015,44 which claimed a total of $14,645. It was headed, “Additional work/defects 2”. Mr Hasic said it was not sent to Civic until 2018 and the amount in it was wrong, so Colormode only claims $9,475 for the works described in it. That appears to be based on 189.5 hours at $50 an hour. [64] In the Ferry Road spreadsheet, Colormode states the reasons for these claims as “additional works & rectifying other trades defects,” while Civic states its reasons for rejecting the claims as: A. This claim is time barred, as no notice was given under clause 41.1 of the Subcontract. B. No claim is made for breach of clause 37.4. C. No valid progress claim had been given. [65] The invoice is in similar format to the invoice for extras 1 and sets out considerable detail about the works that were done. It itemises the works by unit and by description and, at the end of the description for each unit, it sets out the hours worked for each of “NP”, “Civic”, “Joinery” and “CM”, showing the hours worked for each and claiming payment at $75 an hour for all except “CM”. The works were variously said to be for patching and repainting specified areas of the units. [66] Colormode’s counsel submitted that there are handwritten notes that support Extras 2A.45 The notes are dated between 8 April 2015 and 1 June 2015: that is, during the defects liability period for the contract. Mr Hasic said that Civic directed the work to be undertaken in the units by way of a defects list46 and other variations were directed orally by Mr Byatt or Scott Widdicombe.47 Mr Hasic’s evidence was that he orally notified Mr Byatt that the works were a variation.48 [67] The handwritten notes do appear broadly to record the works the subject of the invoice. They appear to have been made by a number of different people (presumably employees of Colormode) and to constitute contemporaneous notes of the works done, including at times the allocation of the works between the various parties referred to in [65] above. It is not clear who made those allocations, nor on what bases. [68] Again, Mr Byatt said he could not recall the works, but noted that he could not understand how Colormode apportioned works between itself, Civic or other trades and, again, the descriptions of repainting entire areas such as ceilings and walls suggested that those items could have been to rectify Colormode’s own defects.49 44 TB 1188-1195. 45 TB 1196-1211. 46 T2-58:47-9; T2-59:1, 13-15. 47 T2-59:17-19. 48 T2-70:6-10; T2-71:41-4. 49 Byatt #1, [38(d)], TB 1421-1422. -- 17 of 69 -- 14 [69] Civic’s submission was that Mr Hasic had not sufficiently identified how any of the directions for these works were given, nor by whom. Also, although he said in his oral evidence that some of the works were the subject of defects lists, he was unable to produce any such lists, nor is there any evidence that any such lists were expressed as directions to vary the works. [70] Having regard to Mr Hasic’s evidence, the apparently contemporaneous notes and the matters set out in the invoice, I am satisfied that the works described in the invoice were done in order to remedy defects in the various units. I am also satisfied that some of the works, which were all done during the defects liability period, were to rectify Colormode’s own defects and that the amounts charged were only for works that it claimed were either to rectify faults caused by other trades or otherwise to satisfy a request by Civic. In the absence of evidence to the contrary, I am satisfied that the works described other than as Colormode’s responsibility were to correct matters caused by other persons. However, on the evidence I am not satisfied that Civic formally directed that any of the latter works be done, nor that Colormode claimed, or Civic accepted, that the works for which Colormode charged were variations or were to rectify, at Civic’s expense, defects caused by other subcontractors. [71] In these circumstances, Colormode has not satisfied me that it is entitled, under the contract, to payment of this claim. Extras 3 - $44,974 [72] Colormode created an invoice to Civic dated 22 July 2015, for a total of $52,351.50. A copy of the invoice was provided to Civic under cover of Colormode’s solicitors’ letter of 27 April 2018.50 [73] In his first affidavit, Mr Hasic set out the individual items that he said comprised the works the subject of the invoice. He went on to say that he adopted “the corrected amount as being the amount that is payable for the Extras 3 invoice.”51 The invoice that he exhibited to his affidavit comprised not only the invoice that was sent to Civic’s solicitors (on which there is a notation on it that it was “created 2018 April not sent”52), but also another two page document purporting to be a tax invoice of the same date (but without an invoice number) in which the works the subject of the invoice were described.53 The latter document was not, it seems, included in the letter to Civic’s solicitors. [74] The detailed invoice is headed “additional work/defects.” The first item is “Cleaning doors, remove dirty marks 405 doors @ $20.00 each = $8,100.00 (civic),” followed by an amount for materials used in the cleaning process. The next five items are attributed in the detailed invoice to Civic, followed by three items attributed to Stockwell and the balance not attributed to anyone. There are differences between the amounts shown in that document and the amounts claimed in Mr Hasic’s affidavit, but Mr Hasic did not explain how, why or when he came to alter those amounts. In his first affidavit, Mr Hasic identified the date, methods of directions given and by 50 TB 1263, 1272. 51 Hasic #1, [206], [207]. TB 76-81. 52 TB 1213, exhibit 2; Mr Hasic identified the writer of that notation as his mother: T2-53. 53 TB 1214-1215. I shall refer to those two pages as the detailed invoice. -- 18 of 69 -- 15 whom for each item. The first two were said to have been by “CS, RW and/or SM.” Almost all of the rest were said to have been directed “Verbally, at site, by RB, between 5-14 days prior to the date on which the work was completed,” although two are by RB or SW. [75] In his oral evidence, Mr Hasic said that some of these and other works were the subject of defects lists he was given.54 Those defects lists are not in evidence. His evidence about those lists and oral directions by Mr Byatt and others was that:55 “Right. And again, you haven’t been able to produce anything that evidenced this – a direction of that kind – sorry, any – you haven’t been able to produce copies of those defects list? I’ll withdraw the question?‑‑‑They – – – The defects list – – –?‑‑‑They are somewhere. So there were – there was a few different ones handed out in Ferry Road. There was handwritten ones by Collin Stuart Clemmy, and then there was proper ones written up towards the end, and there was a lot of verbal directions on Ferry Road. A lot. Right. Okay. Hang on a minute. So were they verbal – I thought you said before that these were all by way of a written defects list in the context of Ferry Road?‑‑‑Defects to works in the units were. Yes. Okay?‑‑‑But outside of that, painting of fences, doing of decks, painting the odd wall on the outside or a little mark or steel beam were usually verbal by Richard. Car park floor is by Scotty.” [76] Civic’s reasons for rejecting this claim, as stated in the Ferry Road spreadsheet, are the same as for Extras 2A.56 Mr Byatt again said that he could not recall these works. He recorded that, having seen documents produced by Colormode in support of this claim, among other things he could not understand how Colormode apportioned the claim between different people and some of the descriptions were for works that were part of the scope of works, such as skirtings. He also noted that some items were claimed at fixed amounts (eg, $100 x 49 for “hot water service doors”), which was not consistent with the normal charging regime.57 [77] Civic submits that, put at its highest, Colormode’s evidence is that some of the works were directed by way of written defects lists. That evidence was vague. The lists are not in evidence and there is no evidence that they were expressed as a direction to vary the works. It should be inferred that they were not so expressed, as defects lists for the Habitat contract were not expressed to describe variations, but as lists of Colormode’s own defective works.58 The court should infer that lists of defective works generally were of Colormode’s defective works. [78] I am satisfied that Colormode did the works described in Mr Hasic’s evidence and the detailed invoice. Although the original documents from which the invoice was created were not in evidence, thus again reducing the cogency of Colormode’s evidence, I am satisfied that the process that Mr Hasic described, of keeping notes from which invoices were prepared, was the basis for the preparation of this invoice, as with others. 54 T2-58:47-49. 55 T2-59:4-19. 56 See [64] above. 57 Byatt #1, [38(e)], TB 1422-1423. 58 TB 1432-1502. -- 19 of 69 -- 16 [79] However, I cannot be satisfied that the works were variations or extras to the work under the contract. The scope of works was very generally expressed, but it included labour, materials and equipment necessary to complete the works in all areas; supply and application of internal and external painting and associated works to all levels of buildings 5 and 6 (basement to roof); full internal painting of all units and to common areas, lobbies and basements; patching and touch ups; painting to soffits both vertical and horizontal; painting exposed steel work; and allowing for all necessary protection of the works (including completed works) during construction and up to practical completion.59 [80] Apart from one item, all the works described in the detailed invoice and in Mr Hasic’s affidavit appear to me to fall within the scope of works. Having been done during the defects liability period, they would appear to constitute the rectification of defects. I also have no doubt that Colormode was directed orally to do the works, although Mr Hasic was not able to specify who directed them. Nor was he able to identify clearly the bases for his view that each item of the works was not within the scope of works, but was a variation to the works under the contract. [81] Unfortunately, this arises from the considerable delay between the works being undertaken and the claims being made, let alone the trial. It is worthy of note that the methods set out in the contract for making and determining claims for payment, whether for works within the scope of the contracts or for variations, is designed to require contemporaneous recording of the works done and of any claims that they are variations. Having ignored those requirements, Colormode now faces considerable difficulty in proving the facts on which it bases its claims. [82] The one exception to the works under the contract was the timber fence, for which Colormode claims $18,112.50 in labour (which, at $50 and hour, should be $12,050) plus materials of $1,320. From the description, it appears that this involved staining a timber fence outside the buildings. So far as I can ascertain, that was not within the scope of the works under the contract. It was therefore an “extra” item of work that, according to Mr Hasic’s affidavit, was orally directed by Mr Byatt or Mr Scott Widdicombe. [83] Colormode is not entitled to payment of any of the items comprising rectification of defects. It would have been entitled to claim $13,370 for the fence as a variation, before undertaking the work, but it did not make any such claim, nor is there in evidence any written direction to undertake that work. Nor has it claimed it on a quantum meruit or as works under a separate contract. Therefore, subject to questions of estoppel and waiver, it is not entitled to claim for the fence as work under, or outside, the contract. Extras 4 - $13,207 [84] These works were described in another document described as a tax invoice and headed “additional works/defects”.60 It sets out considerable detail of works said to have been undertaken in a number of units, a fence and a foyer, on 16 days between 27 July and 18 August 2015. It also says, “These works carried out by Jack Marshall.” The total amount claimed in this invoice was $20,545. It seems that the invoice did 59 General inclusions [14], trade specific inclusions [1]-[4], [6], [7], [11], [16]: TB 1097-1099. 60 TB 1220-1234. -- 20 of 69 -- 17 not get sent to Civic, but a different invoice of one page, cited as invoice 154 and dated 27 July 2015, was enclosed with the solicitors’ letter of 27 April 2018.61 Curiously, that invoice was for a different amount. In his affidavit, Mr Hasic said that the correct amount was $13,207.50.62 Again, the invoice claimed hourly rates at $75, whereas only $50 was allowed under the contract. The reduction from the total invoice amount of $20,545 to the amount now claimed appears to be a result of applying only $50 an hour to the works shown. [85] This detailed invoice appears to be based on hand written notes63 that record the dates, the locations and the works done in very similar words to the detailed invoice. The notes also appear to record the names of the people who did the work.64 In the detailed invoice, somebody has allocated some of the hours worked between Colormode, Civic and NP, but again no rationale has been explained for those allocations. In the Ferry Road spreadsheet, Colormode contends that all items for which it charged were “rectifying other trades defects” and that the direction to do them was given by “JM” – presumably Jack Marshall, whom Mr Hasic described as one of Civic’s supervisors who was instructing Colormode to do some of the works day in, day out.65 [86] In the Ferry Road spreadsheet, Civic gives the same reasons for denying the claims in this invoice as for Extras 1, 2, 2A and 3. Again, Mr Byatt could not recall the works. He made similar comments to those about the claims discussed above.66 [87] I am satisfied that the works described were undertaken by Colormode. The notes made at the time are clear. Having also been done during the defects liability period, it appears that they were to rectify defects. I accept Mr Hasic’s evidence that they were directed orally by Mr Marshall. As I have said, though, the division of responsibility for the works is unclear. These works also fall within the scope of works, so on the face of it they are works for which Colormode was responsible. [88] While it did undertake these works, they were either within the scope of works or were not the subject of directions made in accordance with the contract. Therefore, Colormode is not entitled to charge for them under the contract. Summary of Ferry Road variation amounts [89] I find, therefore, that Colormode has proved that it has undertaken works that were not within the scope of works in the Ferry Road contract, comprising: (a) $23,860 (invoice 74); (b) $9,475 (extras 2A); (c) $13,370 (extras 3). [90] The total of these amounts is $46,705. 61 TB 1273. Again, Mr Hasic agreed with a suggestion by Mr Hastie that the detailed invoice was not sent until Civic's solicitors became involved in April 2018 (T2-55:44-47), which seems to be incorrect, as it was not enclosed with the letter. 62 Hasic #1, [209]. 63 TB 1235 – 1256. 64 Frank, Ahmed, Mark, Sean. None of those people gave evidence. although I accept that they would be unlikely to remember the work they did and that the notes are business records of those works. 65 T2-70:8-10. 66 Byatt #1, [38(f)], TB 1423. -- 21 of 69 -- 18 The Habitat claims [91] In paragraphs 20 and 20A of the second amended statement of claim, Colormode pleads that, during the period between November 2015 and September 2016, Colormode, through Mr Hasic, was directed by Civic to vary the works under this contract. The directions were by Mr Byatt, or by George McQueen, Dale Blake or another foreman employed by Civic. The total value of the variations was $165,808, of which Civic has not paid $100,439.21. [92] In Colormode’s written closing submissions, its claims under this contract were described in this table: Invoice Ref. Amount Extras 3 (balance) $92,519.21 INV-0056 $6,090.00 Retention $38,120.80 Total (excluding GST) $136,730.01 [93] Thus, excluding the retention, Colormode now claims $98,609.21 for variations to the works. I shall deal with each invoice separately. Extras 3 - $92,519.21 [94] The works the subject of this claim, said to have been done between December 2015 and July 2016, were described in a 17 page invoice67 in which Colormode claimed $136,988. It is not clear when the invoice was given to Civic, but Civic accepts that it received it at some time in 2016. Civic responded to the claim in a payment schedule dated 9 September 2016.68 In that schedule, Civic disallowed the full claim, stating this reason: Certified at zero payment. Variation has not been submitted in strict accordance with the Subcontract agreement clause 36. No written approval/direction from the Subcontract Superintendent to vary works under the subcontract was given prior to these works commencing. Colormode has failed to provide sufficient information to allow Civic to make a [sic] appropriate response to this claim. No site instruction or orders to confirm this claim of additional works is correct and completed onsite. It seems as a lot of the ‘extras’ claimed are in fact rectification of defective painting works as outlined in the multiple defects lists issued under the subcontract. Part E Item 3.6 Trade Specific Inclusions, “Allow for surface preparation & making good before works. Starting works is acceptance of the surface”. The subcontract has no claim for repainting defective works. 67 TB 775-791. 68 TB 208-210. A clearer version is at TB vol 6, 121-123. -- 22 of 69 -- 19 [95] However, it appears that there were later discussions between the parties as, on 29 November 2016, Jay Davidson of Civic sent an email to Mr Hasic,69 to which he attached a copy of the detailed invoice on which, he said, Mr Byatt had outlined what amounts he considered were payable by Civic, totalling $44,468.79. Civic subsequently paid Colormode that amount. Colormode’s claim now is for the balance. [96] In his first affidavit, Mr Hasic said that these works were undertaken at Civic’s request from time to time. He identified the requests as, variously, verbally, by RB [or DB] at site between approximate dates, or simply as by GM.70 In most cases, he identified diary notes as supporting documentation.71 A comparison of the diary notes with the invoice shows a close correlation, supporting the accuracy of the descriptions in the invoice of the work done. Indeed, there was no real challenge to Mr Hasic’s evidence that the works were done. As Mr Coveney submitted, Mr Hasic was not challenged that the plaintiff did not in fact do the work, or that he was not provided the directions in the manner he suggested. [97] The challenge was instead that they were not done or claimed for in accordance with the contractual procedures. In cross-examination, it was put to Mr Hasic, and he agreed, that there was no written approval or direction to do the works and Colormode did not notify Civic that it considered the works to be variations to the contract – that is, clause 36 was not complied with. [98] In spreadsheets provided by the parties after completion of the trial,72 which dealt with each of the Habitat claims, Colormode claimed that these works were rectifying defects by other trades. Civic gave these reasons for declining the remaining claims: A. Claim is time barred pursuant to clause 41 of Subcontract. B. Clause 36 of Subcontract was not complied with. C. Clause 37.4 of Subcontract was not complied with. D. The plaintiff is not entitled to payment to rectify its own defects. [99] The descriptions of many of the works demonstrate that they involved patching, repainting, replastering and fixing damage to frames, walls, doors and other surfaces. It is impossible for me to determine individually which of them were to fix damage caused by other trades or which were within the scope of works in the contract. But, as with the Ferry Road contract, the scope of works in the Habitat contract included patching and touch ups, including making good; and allowing for all necessary protection of the works (including completed works) during construction and up to practical completion.73 The works described appear generally to fall within the scope of these descriptions. [100] I am not satisfied that the works the subject of this claim (other than those accepted and paid for by Civic) constituted variations to the contract. Most of them were undertaken during the principal period of the contract (that is, before the defects liability period commenced). There is no direct evidence of the directions that were given. Although Mr Hasic was able to recall three or four specific directions about 69 TB 816-834. 70 Hasic #1, [159], TB 42-66. 71 The diary notes are at TB 795-815. 72 The Habitat spreadsheets, which I have had marked K for identification. 73 General inclusions [12], trade specific inclusions [1]-[2], [4], [10]: TB 671-674. -- 23 of 69 -- 20 particular items of work, he did not appear recall most of them and he accepted that he never notified Civic under clause 36.1, that he considered them to be variations. [101] Therefore, I am not satisfied that Colormode is or was entitled to seek any further payment for these works. Invoice 0056 - $6,090 [102] This invoice was dated 18 October 2016.74 Mr Hasic said that he believed he sent it by email to Mr Davidson of Civic75 but, in his oral evidence, he said he had no recollection of having given it to anyone at Civic.76 He also said that he had made a series on handwritten notes of the works the subject of the invoice,77 which he described as “a series of defects that were required to be inspected or rectified.”78 However, in his oral evidence he said they were written by other people who worked for him.79 In those notes, substantial details of works done are recorded on a number of days between 19 August and 9 September (presumably in 2016). On each day, it is recorded that the works were 30% Colormode and 70% damage. Mr Hasic said that Mr Byatt had directed him to allocate the work on a percentage basis, but Mr Hasic accepted that the apportionment was very rough.80 Mr Byatt could not recall giving such a direction.81 [103] In the Habitat spreadsheet, Colormode claims that the works for which it claims payment were all rectifying defects by other trades. Civic’s reasons for not accepting liability are: A. Claim is time barred pursuant to clause 41 of Subcontract. B. Clause 36 of Subcontract was not complied with. C. Clause 37.4 of Subcontract was not complied with. D. No valid progress claim was given. [104] Again, Civic did not suggest that Colormode did not do the work. I am satisfied, from the contemporaneous notes and Mr Hasic’s evidence, that it did. Mr Coveney submitted that there is no basis to find that the work was within the original scope of works and therefore the court should find that it was a variation. However, the works were undertaken during the defects liability period and the descriptions of those works do not clearly identify them as anything other than the rectification of defects in Colormode’s works under the contract. There is no cogent evidence that the works were specifically directed by Civic, nor in writing. It is clear that Colormode never gave Civic notice under clause 36 that it considered them to be variations. [105] I find that the works were done, but no formal direction was given for them. The division of responsibility for the works is unclear. Colormode has not satisfied me that they were variations nor, if any were, which they were. Therefore, I am not satisfied that the works described comprised variations to the scope of works. 74 TB 868. 75 Hasic #4, [8]. 76 T2-95:49 – T2-96:1. 77 TB 869-906. 78 Hasic #1, [163]. 79 T2-96:35-36; T2-97:11-13. 80 T2-97:16-25. 81 T3-98:8-17. -- 24 of 69 -- 21 Conclusions on Habitat claims [106] I find, therefore, that Colormode has not proved that it has undertaken works outside the scope of works in the Habitat contract. Therefore, it has not demonstrated any entitlement to be paid a further amount under this contract. The Soko claims [107] Colormode’s claims under the Soko contract, as expressed by counsel at the end of the trial, comprise the following:82 Description Amount (ex GST) Invoice 86 (payment claim # 3) - levels 5 and 6 spray outs (certified for payment in progress certificate 3; decertified in progress certificate 4) $62,712.00 Invoice 92 -corridor spray outs on levels 5 and 6 $5,506.00 Unauthorised contra-charges $24,739.75 Variations – invoice 149 $164,541.00 Retention $39,798.77 Total (excluding GST) $297,297.52 [108] Therefore, excluding the retention claim, Colormode claims $257,498.75. Invoice 86 - $62,712 [109] This invoice was dated 25 April 2017.83 However, that is clearly wrong, as Civic gave Colormode a payment schedule in response to it on 12 April 2017, in which it stated that it had received the claim on 3 April 2017.84 The claim included claims of $31,356 for each of level 5 and level 6 unit spray outs: works that appear to have been undertaken and completed in March 2017. The payment schedule allowed those claims and the amount certified in that schedule was paid on 1 May 2017.85 [110] On 4 April 2017, Civic gave Colormode a notice under clause 39.2 of the contract.86 The notice asserted that Colormode had departed substantially from the construction 82 Although an additional $4,473, for units 4046 and 506 spray outs and final coats, is referred to in Mr Hasic’s first affidavit at [22] and in the closing outline at [209], in the table of Colormode’s claims at [210] of the closing outline, that sum is not claimed. I take it, therefore, to have been abandoned. 83 TB 274; vol 6, p 7. The schedule that apparently accompanied the invoice is at TB 285; vol 6, p 6. 84 TB 281-284; vol 6, pp 39-42. 85 Civic’s payment ledger and supplier ledger showing the payment are at TB 1613 and 1614, as proved by Mr Byatt in his first affidavit at [25]-[27]. 86 TB 301-302. See annexure C, where relevant parts of the clause are set out. -- 25 of 69 -- 22 program without reasonable cause. Civic required Colormode to show cause, by 5pm on 5 April, why Civic should not exercise its rights under clause 39.4 and elsewhere, including to take works out of the contract or to terminate the contract. [111] On 11 April 2017, Civic gave Colormode notice that it had not shown cause for its delay in completing the works in accordance with the construction program.87 The notice went on to say: Civic Construction Group has elected to take out the remaining internal painting works to Level 5, 6 & 7 out of the hands of Colormode. Civic Construction Group will engage another subcontractor to complete this portion of the subcontract works on behalf of Colormode. Under Clauses 39.4 of the subcontract, Civic reserves its rights to suspend payment until it becomes due and payable pursuant to subclause 39.6. Pursuant with subclause 39.6, the Subcontract Superintendent shall keep records of the cost of completing these works. Once these works taken out of Colormode hands have been completed the Subcontract Superintendent shall assess the cost thereby incurred and shall certify as moneys due and payable to Civic. This is calculated by the difference between the cost incurred and the amount which would otherwise have been paid to the Subcontractor if the works had been completed by the Subcontractor. Civic reserve all rights under the subcontract to recover costs incurred. [112] On 26 April 2017, Colormode gave Civic its progress claim #4, under invoice 92. In a document attached to that claim88 (but not in the spreadsheet constituting the claim itself), among other things it varied the amounts claimed for the unit spray outs on levels 5 and 6, now claiming $31,589.97 for each floor’s unit spray out and $2,753 for each floor’s corridor spray outs, calculated in this way: Units Ceilings $12,117.00 100% completed $12,117.00 Walls $29,208.00 66.66% completed $19,472.97 Corridor Ceilings $1,020.00 100% completed $1,020.00 Walls $2,600.00 66.66% completed $1,733.00 [113] On 18 May 2017, Civic gave Colormode payment schedule #4.89 In that schedule, it altered the amount payable for the levels 5 and 6 unit spray outs to nil and it consequently reduced the amount payable under progress claim #4 by the sum of the amounts claimed for those items: that is, by $62,712. It did not take into account the additional amounts shown in the new itemised part of the claim. Civic gave this explanation for those reductions: As per the notice to take works out of Colormode’s scope, Level 5 is now being completed by others. Zero payment is assessed for all internal painting works to recover the costs incurred. Once final the costs are received by Civic the Superintendent shall assess the difference between the costs incurred and the amount which otherwise would have been paid to Colormode if these works had been completed. The difference (being negative or positive) will be certified as money owing. If this balance is negative, Colormode shall pay Civic this certified amount within 15 business days of assessment. 87 TB 300. 88 TB 293. 89 TB 1523-1537; vol 6, pp 43-47. -- 26 of 69 -- 23 [114] Civic does not dispute that Colormode did this work or that, when it was done, it was within the scope of works under the Soko contract. The basis for retrospectively disallowing the claims appears to be that Civic claimed that it was entitled to withhold (or “suspend”) payment pending completion of painting works on levels 5 to 7 by a different subcontractor. [115] Whether Civic was entitled to do this depends on the effect of clause 39. The first thing to determine is what works were taken out of Colormode’s hands. That was made clear in the notice of 11 April 2017: it was “the remaining internal painting works” to levels 5, 6 and 7. It was not all of the internal painting works to those levels. Colormode remained entitled to be paid for the works that it had done on those levels, which included the unit and corridor spray outs on levels 5 and 6, to the extent that they had been completed. [116] On one view, Civic could only suspend payment for works that had to be redone by an alternative contractor once those works had been removed from Colormode’s contract. However, where the works removed are only additional works for which Colormode was not and would not become entitled to payment, some meaning must be given to the power to suspend payment pending completion of the works taken out. In the context of this contract and these works, I consider that payment for the works undertaken by Colormode on the relevant levels could be suspended until the remaining works taken from Colormode were completed by another subcontractor. [117] The result of this construction is that, at the time Civic disallowed the claims for the unit and corridor spray outs, it was entitled to do so until it could compare Colormode’s cost and quote for doing the remaining works on levels 5, 6 and 7 with the cost of an alternative subcontractor undertaking them. Whether Colormode is now entitled to payment depends on the outcome of the contra charges later deducted by Civic, most of which concerned works on those levels. I consider those charges below. Invoice 92 - $5,506 [118] This invoice and the accompanying payment claim #4 were dated 26 April 2017.90 The contracted amount for the corridor spray outs was $7,829 for each of levels 5 and 6.91 In the details apparently provided on 10 May 2017,92 Colormode claimed that the ceilings on each floor had been 100% completed, at a value of $1,020, and the walls had been 66.66% completed at a value of $1,733 (out of a total value for the walls of $2,600). Thus the claim was for $2,753 for each level. [119] Civic does not appear to dispute that Colormode had done the work to the extent claimed. In its payment schedule responding to this claim, it certified each of these claims at nil, with the same explanation as for the levels 5 and 6 unit spray outs.93 [120] Mr Hasic’s evidence was that Colormode did these works before the internal painting works on levels 5, 6 and 7 were taken out of the contract on 11 April 2017.94 90 The invoice is at TB vol 6, p 12, with additional details at pp 10-11; also TB 288 & 293. 91 As shown in the payment schedule at TB 295. 92 TB 293. See [112] above. 93 See [113] above. 94 Hasic #1, [22]. -- 27 of 69 -- 24 [121] As with the works under invoice 86, Civic was entitled to withhold payment for these works pending completion of the works for levels 5, 6 and 7 by another subcontractor. Whether Colormode is now entitled to payment depends on the outcome of the contra charges. Contra charges - $24,739.75 [122] In payment schedule 7, issued by Civic on 7 September 2017,95 Civic allowed Colormode’s claims for spray outs and final coats for units 406 and 506, in the amounts of $2,236.50 (a total of $4,473). It did not allow the amounts of $31,356 previously claimed by Colormode for levels 5 and 6 unit spray outs. It then reduced the total amount claimed by Colormode in progress claim #7 by deducting “contra charges.” The relevant items and the reasons given by Civic for not allowing claims and for claiming contra charges are the following: Item Amount allowed/ claimed Explanation Level 5 corridor spray out $0 Additional costs incurred and Contra Charges pending. Level 5 unit spray out $2,236.50 Combined unit 406 & 506 Painting 506. Level 5 unit final coats $2,236.50 Combined unit 406 & 506 Painting 506. Level 6 corridor spray out $0 Additional costs incurred and Contra Charges pending. Contra charge No. 1 – Extra cleaning July QCM invoice #0159 -$6326.25 Pursuant with clause 37.7 of the subcontract, and as per the emails issued [dated 8/5/17 & 28/6/17], Civic has incurred additional cleaning costs to as a direct result of subcontractors not cleaning up after themselves after completing defect lists to the project. Contra Charge amount calculations: As per spreadsheet 180.75hrs@$35/hr. Contra Charge No. 2 – Extra cleaning August QCM invoice #0234 -$1,715.00 Pursuant with clause 37.7 of the subcontract, and as per the emails issued [dated 8/5/17 & 28/6/17], Civic has incurred additional cleaning costs to as a direct result of subcontractors not cleaning up after themselves after completing defect lists to the project. Contra Charge 95 TB vol 6, pp 57-63. -- 28 of 69 -- 25 amount calculations: As per spreadsheet 49hrs@$35/hr. Contra Charge No. 3 – Cost overrun for painting works taken out of hand Level 5 to 7, Usher & Son Quotation #23373 ($263,355.00+GST) -$11,728.50 Pursuant with clause 39.4 of the Subcontract and the notice dated 11/4/17, Civic was forced to take a portion of the subcontract works out of the hands of Colormode. Usher & Son were engaged to completed level 5 to 7 of the project as Colormode could not complete the works as programmed. Colormode has insufficient labour to complete the project within the construction program. As such the extra over cost to engage Usher & Son to completed these works are being recovered by Civic. This amount is calculated by the difference in the costs incurred and the amount which would otherwise have been paid to Colormode if the works were completed under the Subcontract correctly. Colormode Subcontract allowance = $251,676.50+GST Usher & Son Quotation/payment amount = $263,355.00+GST Extra over subcontract amount = $11,728.50+GST Contra Charge No. 4 – Abseiling works 17/7/17 to 28/7/17 Reflections Inv #11793 required to complete and rectify the external painting. -$4,520.00 Pursuant with clause 37.7 of the subcontract, Civic has incurred additional costs for abseiling works to complete and rectify the external painting on the building. This is a direct result of the subcontractor’s works. Contra Charge amount -$4,520.00+GST. Contra Charge No. 5 – Replacement Roller Blind to unit 302 (Workhouse Interiors) -$450.00 Pursuant with clause 37.7 of the subcontract, Civic has incurred additional costs for the roller blinds to unit 302 bedroom after Colormode had removed and damaged the installed -- 29 of 69 -- 26 blind. Contra Charge amount -$450.00+GST. [123] Mr Coveney, for Colormode, submitted that Civic has not proved any of these contra charge claims. Mr Hastie, for Civic, accepted that the evidence about these charges was “slim”, but submitted that the Court should accept the payment schedule as a business record comprising evidence of the facts stated in it; that evidence is not contradicted and therefore the Court should accept it. [124] I agree that the payment schedule is evidence of the facts recorded in it, but it is not the only evidence about these charges. Neither counsel gave the Court any further assistance in determining the outcome of the dispute in respect of each charge, but I am obliged to consider all the evidence in reaching my conclusions about them. [125] Mr Coveney also submitted that any properly claimed contra charges should have been levied against the retention and not recorded as a decrease in the contract sum. He submitted that that appears to have been the position taken by Mr Davidson of Civic in emails in July 2016 about the Habitat project.96 In the first of those emails, Mr Davidson said that the relevant amount “will be withheld from your account on this project.” In the second, he said that Civic intended to “withhold/contra charge” the amount “from Colormode’s remaining claim/retention.” [126] It seems to me that Mr Davidson’s emails asserted that Civic had a choice to withhold contra charges from amounts payable under progress claims or from the retention amount, or both. In fact, Civic did deduct the two amounts referred to from Colormode’s progress claim #9 (invoice 22) for Habitat.97 But in any event, Mr Davidson’s opinion of Civic’s entitlement to assert contra charges is irrelevant. The question is what it was permitted to do, in respect of the Soko contra charges, under the Soko contract. [127] This issue is governed by clause 37.7 of the contract (see annexure C). Relevantly, in relation to any loss, cost, damage or other amount which Colormode is liable to pay to Civic under the contract, or that Civic in its bona fide opinion believes it has suffered or is likely to suffer as a result of an act or omission by Colormode, Civic may, after giving written notice to Colormode, deduct from, or set off against, any amounts due to Colormode in respect of the contract works, or have recourse to any security provided by Colormode under the contract. [128] Security includes retention money.98 Under clause 5.2, Civic may have recourse to security in respect of any claim to payment that Civic may have against Colormode. [129] Therefore, Civic was entitled to choose whether to deduct any contra charges from a progress payment or from the retention money (or both). [130] Civic also contends that, as Colormode did not issue a notice of claim under clause 41.1 for payment of these charges, it is out of time to make a claim for this sum. I shall consider this contention separately when considering the effect of that clause. [131] I shall now consider in turn whether Civic was entitled to deduct each of the charges. 96 TB 761, 765. 97 TB vol 6, p 116 at p 118. 98 Clause 1, definition of “security”, TB107. -- 30 of 69 -- 27 Contra charges Nos 1 & 2 – cleaning ($8,041.25) [132] Mr Byatt’s evidence about charges 1, 2, 4 and 5 was the same. He said that the expenses claimed were incurred because Colormode “failed to clean up after themselves and the Defendant incurred external painting rectification costs.”99 He exhibited to his affidavit both the payment schedule and some of the documents referred to in it.100 However, neither the QCM invoices nor the emails referred to in payment schedule 7 appear in the evidence. [133] Mr Hasic said, in respect of contra charges 1 and 2, that Colormode “did not contribute to the mess and kept their workplace clean. The plasterers, renderers and carpenters were generally the ones responsible for messes at Soko.”101 [134] I accept that, if Civic had proved that it had incurred these expenses as a result of Colormode not cleaning its workspaces (which it was required, under the contract, to do), Civic would be entitled, under clause 37.7, to set off the cost of cleaning up after Colormode. [135] However, Mr Byatt’s evidence about the matter was vague and he did not describe the alleged mess that Colormode did not clean up. Mr Hasic’s evidence was perhaps equally vague, but in the absence of details of the alleged failure to clean, that is understandable. Further, Civic has not proved the relevant invoices. [136] In the circumstances, I am not satisfied that Civic was entitled to set off these alleged expenses against the amounts payable to Colormode. Colormode was entitled to payment of these sums. Contra charge no 3 – cost overrun for levels 5, 6 and 7 ($11,728.50) [137] Colormode does not dispute that Civic was entitled to remove the balance of the painting works on levels 5, 6 and 7 from the Soko contract and to appoint another subcontractor to undertake those works. [138] Mr Byatt’s evidence was that, as explained in the payment schedule, Colormode’s allowance for undertaking this work was $251,676.50, but Usher & Son charged $263,355 for the same work. The contra charge amounts to the difference.102 [139] The quotation by Usher & Son is exhibited to Mr Byatt’s first affidavit (TB 1556). It sets out amounts for various items on each level, totalling $263,355. This includes amounts for ceilings and walls on each of the level. For each of levels 5 and 6, the amounts quoted are $13,710 for ceilings and $29,280 for walls.103 [140] As I have recorded above,104 in its progress claim #4, Colormode included $31,589.97 for unit spray outs for each of levels 5 and 6 and $2,753 for each level’s corridor spray outs. In each, ceilings were said to be 100% complete and walls 66.66% complete. Those works were done by Colormode before Civic took out from the contract the 99 Byatt #1, [30]. 100 TB 1549-1566. 101 Hasic #1, [27]. 102 Byatt #1, [30] 103 This quote did not distinguish between unit and corridor spray outs, so I assume it included both. 104 At [112]. -- 31 of 69 -- 28 remaining works for those levels and level 7. Colormode was therefore entitled to be paid for those works, subject to a deduction for any additional cost to Civic, over Colormode’s quoted costs, for the remaining works. Civic did not appear to contest that the works were completed to the extent claimed by Colormode and it certainly has not tendered any evidence contesting those claims. I find that Colormode did undertake those works, to the extent claimed by it, before Civic removed those levels from its contract. [141] Notwithstanding that Colormode had undertaken those works, Usher & Son’s quote appears to be for the entirety of painting works on each of levels 5, 6 and 7. In particular, it includes $13,710 for ceilings and $29,280 for walls on each of levels 5 and 6. As the ceilings on those levels had been completed and the walls had been two thirds completed, those works were not among the works taken out of the contract by Civic. The works taken out were the remaining works. Using the quote from Usher & Son for those items of work, Civic should not have paid that subcontractor (or, more accurately, was not entitled to deduct payment from Colormode) for ceilings ($13,710) or 66.66% of walls ($19,518.05) on those levels. [142] Taking these matters into account, Civic was entitled to compare the cost of the remaining works to Colormode’s quote for those works. That quote does not appear to be in evidence, but its amended claim (TB 293) apparently sets out its quote for levels 5 and 6. The best evidence from which to compare its quote and that of Usher & Son for the three levels is to take the amount that Civic stated, in its contra charge, was Colormode’s quote for the three levels, to remove the above items from that quote and the equivalent items from the Usher & Son quote and to compare the quotes for the remaining works. Thus: (a) Colormode’s quote for all work on levels 5-7 $251,676.50 (b) less cost of works completed on levels 5 & 6 -$68,685.94 (c) Colormode’s quote for remaining works $182,990.56 (d) Usher & Son quote for all work on levels 5-7 $263,355.00 (e) less equivalent cost of works completed by Colormode -$66,456.10 (f) Usher & Son quote for remaining works $196,898.90 (g) Resulting extra cost of remaining works [(f) – (c)] $13,908.34 [143] The result is that Civic may have under-claimed the amount that it was entitled to deduct by way of contra charges for the painting works that it removed from Colormode’s contract. It should not now be entitled to claim more than it did at the time. [144] However, in its payment claim, as well as deducting this contra charge, Civic did not allow Colormode’s claim for the painting works that it had done on levels 5 and 6. Nor did it allow the varied claim for those works, as included in the attachment to Colormode’s payment claim 4 to which I have referred above. As I have concluded above, Colormode was entitled to be paid for the works it had completed, subject to any deduction for any increased cost of the remaining works. [145] Therefore, taking account of Colormode’s revised claim for the works completed on levels 5 and 6 ($68,685.94) and deducting from that sum the additional cost for the -- 32 of 69 -- 29 remaining works that Civic claimed as against Colormode ($11,728.50), subject to the other defences raised by Civic, Colormode was entitled to payment of the difference for its works on those levels: that is $56,957.44. In failing to certify that amount, the superintendent was clearly in error. Contra charge 4 – abseiling works ($4,520) [146] I have set out above105 Mr Byatt’s evidence about this and other contra charges. It was very general. He exhibited to his affidavit a copy of an invoice from Reflections Services to Civic106 for $13,560, in which the work was described as “Carry out abseil works as requested by David Widdicombe.” Someone, presumably from Civic, has written on the invoice, “B/c tilers, painter + cleaners” and has divided the total sum equally between “QCM”, “Sungold” and Colormode. [147] Mr Hasic said, in respect of this contra charge, that “the work was done to clean the external part of the building. The building was dirty anyway, mainly due to ‘run-off’ (from building materials, and mainly from materials from the tiler).107 [148] Mr Byatt also attached to his affidavit, behind the invoice from Reflections, hand written notes that appear to be part of Reflections’ records of the work done on each day from 24 to 28 July 2017.108 The hours recorded appear to reflect the hours for which Reflections charged Civic in respect of those days. Those records have not been properly proved, but they are in evidence without objection and I infer that they are Reflections’ business records and constitute evidence of the work done. [149] The invoice includes charges for 2 men for 1 day over a period of five earlier days, in respect of which there is no record of the works. Therefore, I am not satisfied that that sum ($1,500) could be charged by Civic to Colormode, whether wholly or partly. [150] The notes for 24 July record work that, so far as I can ascertain, have nothing to do with painting or cleaning the building. The value of those works, as shown in the invoice (3 men for 1 day plus for one hour of overtime), was $2,520, no proportion of which can be debited to Colormode. [151] On 25 July, three men worked for nine hours. The work is described as “Builders clean, River face – clean tiles, metal flashing. Prep to paint slab ends, river face, + clean tiled ledges – southern face.” No hours are recorded for the individual jobs. Without further evidence, I am not satisfied that the “builders clean” constituted work made necessary by Colormode. The balance of the work described would be preparation for painting the areas described. Having regard to the estimate of one third of the work described in the invoice concerning Colormode, I am prepared to accept the evidence that one third of this day’s work ($2,520/3 = $840) could be charged to Colormode. [152] The work described on 26 July (3 men for 9 hours = $2,520) comprised painting slab ends on balconies and on tiled ledges, painting walls of the fire escape, replacing tiles on level 4, removing tile from unit 607 and painting hobs along the northern face. All 105 At [132]. 106 TB 1562. 107 Hasic # 1, [32]. 108 TB 1563-1565. -- 33 of 69 -- 30 of those painting works were within the Soko contract and were not cleaning. I consider that Civic was entitled to charge Colormode for them. Given the limited evidence, but having regard to the equal division estimated by Civic for all the work done over the days referred to in the invoice, I estimate that 2/3rds of this work was painting, therefore entitling Civic to charge Colormode $1,680. [153] On 27 July, 3 men worked for 8 hours. The works included painting slab ends and hobs and cleaning metal flashing. Again, I estimate that 2/3rds of this work was painting, resulting in an appropriate contra charge of $1,500. [154] On 28 July, 3 men worked for 6 hours, but it appears that Reflections charged a day rate of 8 hours for their work. Almost all the work appeared to be cleaning, but it did include painting slab ends. Again, having regard to Civic’s estimate, I attribute 1/3rd of this work to Colormode: $750. [155] The result is that Civic was entitled to a charge Colormode a total of $4,770, but it claimed only $4,520. Colormode’s challenge to that charge is unsuccessful. Contra charge no 5 – replacement roller blind ($450) [156] Civic recorded in its payment schedule that Colormode had removed and damaged the blind installed in the unit 302 bedroom. Mr Byatt gave no evidence about this blind,109 but he exhibited an invoice from Workhouse Interiors110 that described blinds apparently damaged in various apartments. For unit 302, it recorded, “Bed Blind put back wrong and now damaged. New Blind Needed. $450.” Someone, presumably from Civic, has written against that entry “Colormode”. (Other names are written against other entries.) [157] Mr Hasic said, in respect of this contra charge: I never saw the ruined roller blind or any roller blind ruined by our client at this project. I was not given any evidence or supporting document or photograph to substantiate the claim. [158] That may be the case, but if Colormode wanted to challenge this charge at the time it was made, it could have done so and sought substantiation. The charge is supported by the description in the payment schedule and the invoice. [159] In the circumstances, I am satisfied that Civic was entitled to claim this contra charge against Colormode. Conclusions on contra charges [160] The results of this discussion are that: (a) Civic was entitled to charge Colormode, and to offset against amounts due by it to Colormode, amounts totalling $16,698.50; (b) however, Civic was obliged to allow $68,685.94 for the works completed by Colormode on levels 5 and 6; 109 He simply included this charge within his description of contra charges 1, 2, 4 and 5 – see [132] above; a description that has no relevance to this charge. 110 TB 1566. -- 34 of 69 -- 31 (c) Colormode was therefore entitled to be paid the difference, that is, $51,987.44. Variations - $164,541 [161] In its pleading, Colormode claimed a substantial number of variations to the Soko contract, but at the conclusion of the trial it abandoned all except those claimed in its invoice 149.111 That invoice is dated 8 March 2018 and was sent by Colormode’s solicitors to Civic’s solicitors on 27 April 2018. Colormode claims that it is entitled to payment for the amounts making up the total, as variations to the scope of works. Mr Hasic’s evidence was that he kept note of the works referred to, which were signed off and approved by Alex Lafferty.112 Again, it is necessary to go through each of the items claimed. Additional doors & frames as per quote 73 - $116,950 [162] The first item in the invoice is the amount of $116,950 for “Additional doors & frames replaced joinery as per quote 073”.113 In a spreadsheet produced by the parties after the trial,114 Colormode claimed that these works were “additional works – note joinery had been replaced with timber that needed to be painted.” Civic’s reasons for rejecting the claim, as stated in that spreadsheet, were: A. Clause 36 of the Subcontract not complied with. B. Works already within scope of Subcontract and, as such, not a variation. C. Insufficient evidence to support claim. D. Progress Claim (Inv 149) not given within time. E. This claim is time barred pursuant to clauses 41 and 37.4. [163] Mr Hasic said nothing, in his affidavits, about this quote or to the effect that it was given to Civic on about the date it bears (or later), apart from including reference to it in his first affidavit in a table that , he said, “sets out the variations performed by the Plaintiff in respect of the Soko project.”115 In cross-examination, he said that the directions for this work were given orally. He said that Civic was trying to make Colormode paint frames for which it had not quoted and that therefore were not within the scope of works. At first, he said that Civic gave him a direction in an email to paint the frames, but he later agreed that Civic never gave Colormode a written direction to do additional work the subject of quote 73, which he had emailed to Civic before doing the works. He said that, when he first quoted for the Soko job, the timber doors and frames to which this quote referred were not referred to in the plans, so when the planned joinery was replaced by the timber doors and frames, he considered the work of painting the timber to be an extra. He refused to do the work, as he considered it to be a variation, but Scott Widdecombe threatened that, if Colormode did not do the work, Civic would get someone else to do it and take the money from Colormode. Civic did not give Colormode a written direction to do this work, but did give an oral direction and Colormode did the works to which the quote referred.116 [164] If this quote was given to Civic, it would clearly be a claim that the works described in it were a variation to the scope of works. However, Mr Byatt’s evidence about this 111 TB 487. Plaintiff’s written outline at trial, [211]. 112 Hasic #1, [91]. The notes referred to are at TB 492-541. 113 Quote 73, dated 4 April 2017, is at TB 489-491. 114 The Soko spreadsheet, marked L for identification. 115 Hasis # 1, [25] and p 17. 116 T3-21 – 26. -- 35 of 69 -- 32 claim was that he had no recollection of receiving or requesting quote 73. He was not sure what joinery was replaced with timber, but he said none of the joinery or doors and frames were replaced after Colormode had undertaken its works under the Soko contract. The items claimed all seemed to be within the scope of works and did not appear to reference a record signed by a representative of Civic.117 [165] Scott Widdicombe also gave evidence, but said nothing in his affidavits about whether or not he received this quote and threatened Colormode in the way Mr Hasic said. He was not asked about this quote or such a threat in cross-examination. [166] Based on Mr Hasic’s evidence and the absence of substantive conflicting evidence, I am satisfied that Colormode gave the quote to Civic at about the date that it bears. However, the notes to which Mr Hasic referred do not, in fact, appear to refer to the work for this item. Nor is there any email in evidence that refers to quote 73. Finally, the plans to which Mr Hasic referred, on which he said he based his quote and that did not include joinery, are not in evidence. The scope of works that forms part of the Soko contract that is in evidence relevantly provides that the contract sum included the supply and painting of the entire internal and external areas of this project and allowed for full internal painting of entire units which, on its face, would include any doors and door frames that were of a material that required painting. [167] In the absence of evidence of the plans on which the scope of works was based, although I accept Mr Hasic’s evidence that he gave the quote to Civic and that Colormode did the works referred to in it, the evidence is insufficient to demonstrate that the works described were not within the very broad description in the scope of works. Quote 73 did, in my view, constitute a claim in writing that the works to be done were a variation to the scope of works. But there was no written acceptance by Civic of that claim. Certainly there was no written direction for these works. [168] Consequently, I am not satisfied that Colormode was entitled, under the contract, to payment of this sum. Wardrobe frames - $10,200 [169] Mr Hasic gave no substantive evidence in his affidavits about this part of the claim. In cross-examination, he accepted that there were no handwritten records of this claim and there was no written instruction from Civic. He said that, in a meeting with Mr Byatt and both David and Scott Widdicombe, he told them that there would be a variation because Civic had decided to put timber frames around the wardrobes, which were not in the drawings on which he had based the contract sum. He said that he sent a quote that included this work, but he was not able to point to any such quote (nor did Mr Coveney).118 [170] In the Soko spreadsheet, Civic gave the same reasons why the claim was not payable as set out above in respect of quote 73. [171] I accept Mr Hasic’s evidence that Colormode did paint the wardrobe frames, but there is insufficient evidence, in the absence of evidence of the drawings on which the contract sum was based, to satisfy me that the work was a variation to the scope of 117 Byatt # 1, [36](g)(ii), TB 1416-1417. 118 T3-19 – 20. -- 36 of 69 -- 33 works. Furthermore, there is no evidence of a written direction to do the works, nor of a written claim that they were a variation. [172] Therefore, Colormode has not satisfied me that it is entitled to payment of this sum. Extra hours – failure to install timber door frames & skirtings prior to spray outs - $19,320 [173] In the Soko spreadsheet, Colormode claimed this as additional works due to defects by other trades. Civic claimed it was not payable because: A. Clause 36 of the Subcontract not complied with. B. Not a claim for variation but, instead, a claim for delay costs. C. Progress Claim (Inv 149) not given within time. D. This claim is time barred pursuant to clauses 41 and 37.4. [174] In his cross-examination, Mr Hasic agreed that this was really a claim for delay caused by the fact that doors and frames were not installed when Colormode first sprayed the units, so it was necessary to brush them instead of spraying them. It was a claim for delay or inconvenience. Having regard to that evidence, Mr Hastie submitted that Colormode’s claim was that:119 the need to paint those things were always within the scope of the contract, but they had to be done later, because they weren’t installed when they should’ve been. It was ultimately conceded that that was really in the nature of a claim for delay on – delay damages or inconvenience for having to re-sequence the work. It can’t, respectfully, be characterised as a proper variation. [175] I agree that any extra hours should have been claimed as a delay to the works that were within the scope of works. They did not constitute a variation to the works under the contract. No claim was properly made for such a delay. Colormode is not entitled to payment for this part of its claim. Pool deck clean and stain - $560 [176] In quote 73, one line item is “pool deck per hour”. Mr Hasic gave no evidence about this item in invoice 149. The notes to which he referred as recording the works referred to in the invoice do not mention the pool deck. Mr Byatt contended, in his first affidavit, that this item fell within the original scope of works. [177] The scope of works in the contract document does include, within the description of the works, “supply & application of finish to pool decking”.120 This item in the invoice is within that description. Colormode is not entitled to additional payment for it. Unit 505 - $4,451 [178] There is litte evidence of what work this part of the claim refers to. In the Soko spreadsheet, Colormode contends that the works were rectifying defects by other trades, but Mr Hasic gave no evidence of what those defects were, apart from referring to the notes at TB 492-541. In cross-examination, when it was put to him that there 119 T4-18. 120 TB 213. -- 37 of 69 -- 34 were no handwritten records or other information in his affidavit about this work, he said:121 There should be, because that was a direction from Richard Byatt, because that particular unit was in Usher’s contract in the end, becau – but the reason was the unit below on level 4 and the one on level 5 became one unit and Richard asked me to complete that unit. He went on to say that he had asked for an email, but there was nothing in writing, but he told Mr Byatt that it would be a variation. [179] Mr Hasic’s evidence is inconsistent with the assertion in the Soko spreadsheet that the works claimed in the invoice were to rectify defects by other trades. The only references to this unit in the notes to which Mr Hasic referred as supporting the invoice are at TB 494 and 524, which respectively concern fixing window scuffs and spending 30 minutes fixing balcony defects. There is no explanation or supporting material for the amount claimed for this item in the invoice. [180] I am not satisfied on the evidence that this work was done or that it was a variation. Colormode is not entitled to claim this sum. Slab extra 1.5m length - $1,650 [181] There is almost no evidence about this item. Mr Hasic was asked about it in cross- examination and appeared to accept that there was no written direction to do it, nor did Colormode tell Civic that it was a variation. The highest point of his evidence was that the direction came from Sam Healy (which is consistent with the assertion in annexure A to the statement of claim that the direction was given “verbally by external foreman Sam Healy in about March 2017”). [182] The evidence does not satisfy me as to the nature of the work, nor that it was a variation. Colormode is not entitled to payment of this sum. Records 1-10, 47-50 - $11,410 [183] The invoice claims this sum as made up of 163 hours of labour at $70 per hour.122 [184] These items are recorded, in invoice 149, as having been undertaken between 4 August and 11 September 2017. However, the records referred to (at TB 472-485) have different dates, records 1 to 10 apparently on 23 June 2017 and records 47-50 from 4 August to 17 August 2017. (Mr Hasic was shown the original records and agreed that TB 482-485 are records 47-50.) [185] In the Soko spreadsheet, Civic’s response to these claims is: A. Clause 36 of the Subcontract not complied with. B. Records do not support the claim because many pages marked "No charge" or contain no work said to be the defendant's responsibility. C. Progress Claim (Inv 149) not given within time. D. This claim is time barred pursuant to clauses 41 and 37.4. 121 T3-19. 122 The day labour rate for additional work in the Soko contract was $70 per hour: TB 214, item 25. -- 38 of 69 -- 35 [186] In respect of some pages of the records, it adds either that the page contains the notation “no charge for this page” or all the items mentioned are marked “Colormode” and are therefore not work for which it was entitled to charge. [187] Mr Hasic was cross-examined about each of these records.123 It was pointed out to him that, at TB 472 (record 1), 473 (record 2) and 479 (record 8), Mr Lafferty of Civic had signed and dated them and someone had written next to his signature “No charge for this page.” Mr Hasic said that was in his brother’s hand writing and he could not explain it. Records 3, 4, 5 and 6 (TB 474-477) were unsigned. Record 7 (TB 478) had also been signed and dated by Mr Lafferty, but all of the items on that page were designated as the responsibility of Colormode. Mr Hasic accepted that those items were defects for which Colormode was responsible. He also accepted that every item on records 8, 9 and 10 was Colormode’s responsibility. [188] On each of records 3 to 7 (TB 474-478) times are recorded for the works: a total of 22.5 hours, including for 12 items allocated as Colormode’s defects. Records 47-50 (TB 482-485) record a total of 41 hours (not 33 hours, as Mr Hastie put to Mr Hasic). It was put to Mr Hasic that, on TB 482, it also included “two hours of wall colour”, which he accepted and assumed was additional to the eight hours recorded above that line. However, what was put to him was clearly incorrect, as the record actually says “2 ltr of wall colour”: that is, two litres. [189] Thus, the total number of hours of work recorded in records 1-10 and 47-50 for items that did not include (or mostly did not include) items for which Colormode was responsible was 63.5 hours, not 163 hours claimed in invoice 149. Of the 63.5 hours, 12 items in records 3-6 were attributed to Colormode, for which it would not be entitled to charge Civic. If one deducted 1.5 hours for those items, at $70 per hour, the works chargeable to Civic as variations (if they had been approved as such) would total $4,340, not $11,410. Therefore, the maximum amount for which Colormode has proved it might be entitled to payment for these items is $4,340. [190] I accept that Colormode undertook the items of work recorded in these pages and that they were outside the scope of works. However, they were not approved or directed as variations, nor did Colormode claim in writing that they were variations. Even though some of the pages were signed by Mr Lafferty, that was not sufficient to constitute a direction under the Soko contract. This is made expressly clear in the scope of works, in which item 25 of the general inclusions stated: Variations are only to be approved by the contractors head office. The contractor's site manager shall only sign documents on record of hours or items completed. This is not an acceptance of a variation regardless of what the document supplied by the subcontractor or by the contractor may detail within. [191] Mr Lafferty therefore signed some of these records as accurate records of hours or items completed, not as a direction. Whether Colormode is entitled to be paid depends on my findings about the other issues raised and dealt with below. 123 T3-11 – T3-18. -- 39 of 69 -- 36 Summary of Soko variation amounts [192] I find, therefore, that Colormode has proved that, subject to further issues discussed below, it is entitled to the last mentioned amount ($4,340) for works it has undertaken within the scope of works in, and under variations to, the Soko contract. Summary of findings on Colormode’s claims [193] The net result of my findings on Colormode’s claims under each contract is that I am satisfied that it has proved the following claims for works undertaken by it under the respective contracts: (a) $46,705 under the Ferry Road contract; (b) nil under the Habitat contract; and (c) $4,340 under the Soko contract. [194] I shall now consider whether it is entitled to judgment for any of those sums on the various contractual or other bases on which it relies. Legal bases for Colormode’s claims Clause 2.1 Colormode’s contentions [195] Colormode relies on clause 2.1 of the subcontract conditions as the foundation of Civic’s obligation to pay it the contract sum as varied. Colormode contends that, as each contract was a lump sum contract, it is entitled to be paid the full amount of the lump sum plus variations, so its claim is for the difference between that amount (including variations) and the amount that Civic has paid. In Colormode’s submission, clause 37 provides a mechanism for the payment of progress amounts (including the final progress payment), but that is simply a mechanism for payment and it does not supersede or make redundant the obligation, under clause 2.1, to pay the contract sum. [196] Thus, in its statement of claim, it claimed the following amounts:124 (a) under the Ferry Road contract:125 (i) Contract sum $359,994.00 (ii) Plus variations $100,741.50 (iii) Total payable under contract $460,735.50 (iv) less payments made by Civic $341,004.30 (v) Balance outstanding (excluding retention) $118,741.20 (b) under the Habitat contract:126 (i) Contract sum $741,516.00 124 Although, as I have said earlier, it abandoned some of its claims for variations during the trial. 125 Statement of claim, 37H, 37K, 29. 126 Statement of claim, 24I, 24L, 26. -- 40 of 69 -- 37 (ii) Plus variations $165,808.00 (iii) Total payable under contract $907,324.00 (iv) less payments made by Civic $755,757.16 (v) Balance outstanding (excluding retention) $151,566.84 (c) under the Soko contract:127 (i) Contract sum (after removal of levels 5, 6 & 7) $557,634.60 (ii) Plus variations $337,965.06 (iii) Total payable under contract $895,599.56 (iv) less payments made by Civic $579,662.46 (v) Balance outstanding (excluding retention) $315,937.10 [197] Counsel for Colormode relied, in support of its construction of clauses 2.1 and 37, on Creative Building Services v Joeline Investments,128 in which McDougall J held that, although the contract under consideration provided that the proprietor would pay the price of the works “in the manner and at the times stated in this contract,” the submission of progress claims was not a condition precedent to being paid the contract sum. Similarly, in Capello v Lyons,129 the New South Wales Court of Appeal upheld a decision in which the primary judge had applied Creative Building Services and had held that non-compliance with the progress claim provisions did not mean that the builder was not entitled to payment, because the entitlement to payment was created under the equivalent of clause 2.1, not by the progress claim provisions. [198] Mr Coveney properly referred to a decision of the Queensland Court of Appeal in which “a different position appears to have been taken.”130 Mr Coveney sought to distinguish that case as having limited application to this case, because the general provision for payment of the contract sum provided that it be paid “in accordance with this Contract” – words that do not appear in clause 2.1 here131 and the case was not about what was payable at the end of the contract, when all the services had been performed. (I would add that the nature of the contract was also different.) [199] He submitted that the provision of a final payment claim is not a precondition to Colormode being paid any amount outstanding under these contracts after completion of the works, including variations. But, even if such a claim were necessary, it is clear that Civic’s superintendent would have issued a final certificate for nil,132 so it would have been pointless for Colormode to submit a final payment claim. The effect, as in 127 Statement of claim, 5E, 11I, 12, 13. 128 [2015] NSWSC 391, [29]-[31]. 129 (2023) 111 NSWLR 570, [35], [75]. 130 Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd [2011] QCA 312. 131 Philippides J (with whom the other members of the court agreed) expressly stated that Velvet Glove’s argument, that the equivalent of clause 2.1 prevailed over the more specific payment methods in the equivalent of clause 37, paid insufficient heed to the words “in accordance with” the contract, which accompanied the payment obligation in the general term in that contract: [71]. 132 Civic’s solicitors informed Colormode’s solicitors, in response to the latter’s letter of 15 October 2021 enclosing final payment claims under each contract, that Colormode had no ongoing entitlement to serve those claims but, if it did, then Civic certified that Colormode was entitled to nil for each amount claimed: exhibit 5. -- 41 of 69 -- 38 Bartier v Kounza Investments Pty Ltd,133 is that Colormode is dispensed from performing the precondition and should be treated as if it had performed it. Civic’s contentions [200] Civic contends that clause 2.1 merely describes the nature of the contract: it is a lump sum contract for the stated contract sum (plus or minus variations), rather than a schedule of rates contract. The obligation and process for payments are comprehensively set out in clause 37, which controls Colormode’s rights to be paid the subcontract price. That process includes time limits for the submission by Colormode to Civic of final claims for payment and the release of Civic from all further claims after that time limit expired. Colormode did not make a final payment claim within the time prescribed under clause 37 and therefore, by operation of that clause, Colormode ceased to be entitled to make any further claims and automatically released Civic from any further claims. [201] Mr Hastie submitted that, to construe clauses 2.1 and 37 in the manner for which Colormode contends would elevate a general provision (clause 2.1) over the specific provisions in clause 37 that govern the process for and rights to payment and to finalisation of the parties’ relationships under each contract. [202] Mr Hastie also submitted that the process of final certification under clause 37.4 is designed to bring finality to the contract and to determine finally the parties’ rights under it. Thus, as I understand his submission, the specific provisions of clause 37.4 regulate the right to payment of the lump sum (as varied) for which clause 2.1 provides. He relied on the following passage from the Court of Appeal, discussing a clause in a lump sum construction contract that covered “Payment claims, Certificates, Calculations and Time for Payment,” which was relevantly to similar effect as clause 37.4 in each of the Civic contracts:134 …the process involved is one of making, certifying and paying progress claims. Such claims and payments are, in building contracts in the common form, always intended to be provisional only. See Hudson’s Building and Engineering Contracts (11th ed., 1995), at paras 6.186–6.189. That is to say, they await the day when a final certificate issues, in which the ultimate indebtedness by one party to the other is ascertained and fixed. Before that stage is reached, it is generally correct to say that no payment is capable of finally determining the rights of the parties with respect to matters in dispute between them. [203] Mr Hastie submitted that, on the approach suggested by Colormode, the process which clause 37.4 creates for finally determining the parties’ rights under the contract, including by determining the “ultimate indebtedness by one party to the other” could be avoided. The parties cannot have intended that clause 2.1 would act as a separate and additional right to payment which stood outside the strictures of the regime in clause 37. To read the contracts in that way would be to fail to give clause 37 any real work to do. [204] Mr Hastie sought to distinguish Creative Building Services on the basis that the contract in that case was a “cost plus” contract, not a lump sum contract, and it did not appear to have provided for interim certification of works. As he said, the critical 133 [2003] QSC 390. 134 Re Concrete Constructions Group Pty Ltd [1997] 1 Qd R 6, at 12. This passage was, in fact, obiter. -- 42 of 69 -- 39 role which clause 37 plays here in linking an entitlement to payment to the process for the supervision and certification of work does not exist in a contract of that kind. [205] Civic also contends that, in construing a commercial contract, where it contains both general and specific provisions concerned with the same subject matter, the specific provisions prevail.135 That proposition supports the view that clause 37 governs the method and timing of payments of the contract sum, while clause 2.1 merely describes what that sum is and how it is ascertained. To construe the clauses otherwise would make many parts of clause 37 otiose. Discussion [206] The contracts in Creative Building Services and Cappello were certainly different to these contracts. But, as Simpson AJA said in the latter at [75], the primary judge had not concluded that the equivalent to clause 2.1 “overrode” the equivalent to clause 37. Rather, She correctly noted that it is cl 3 that imposes the obligation on the Cappellos to pay H&S and that cl 15 establishes a mechanism by which progress payments are to be made. [207] In Velvet Glove, Philippides J said that136 – MIM’s submissions correctly highlighted the flaw in Velvet Glove’s case and that is the failure to show how Velvet Glove’s contention that Velvet Glove had an accrued entitlement to the full amount of the lump sum, albeit payable by instalments during the currency of the contract, was to be accommodated by the specific and detailed mechanism for payment provided in cl 18.5. [208] Her Honour went on, at [61], [62] and [76], to say: MIM’s fundamental obligation was to pay for the Services in accordance with the contract (cl 2.1). Its payment obligations under the contract were to pay the Contract Price … (cl 11.1(a)). The Contract Price is the lump sum set out in Sch 5, where a lump sum price was accepted … Clause 11.1(a) thus specified the nature of the payment obligations. Clause 11.2 specified when and how those payment obligations were to be paid during the currency of the contract. An analysis of the contract indicates that cl 11 provides the mechanism for determining when and how the Contract Price and Reimbursable Expenses which the Principal has agreed to pay were payable during the currency of the contract. The parties have, by cl 11, agreed in effect to payment of the Contract Price and Reimbursable Expenses by means of progressive interim payments on account, upon the issue of an Approved Contractor’s Claim Form … [209] Similarly here, I consider that Colormode’s contention that clause 2.1 entitles it to payment of the contract sum regardless of whether it complies with the provisions in clause 37 for both progress and final payment claims, cannot “be accommodated” by the specific and detailed mechanisms for payments provided in clause 37. 135 Relying on Velvet Glove Holdings, [37], although in that paragraph Philippides J was summarising the principles that the trial judge had described. 136 At [72]. -- 43 of 69 -- 40 [210] Clause 2 of each contract is headed, “Nature of Subcontract.” Clause 2.1, headed “Performance and Payment”, requires the subcontractor to perform the works in accordance with the contract and the contractor to pay the subcontractor the lump sum provided (where one has been agreed), adjusted by any additions or deductions pursuant to the contract, for the performance of the works. The fact that each contract is for a lump sum and the amount of that lump sum are specified in clause 4 of the formal instrument of agreement. [211] Clause 2.1 therefore provides generally for the parties’ overall obligations to each other. But other provisions “regulate the circumstance in which the [subcontractor] becomes entitled to be paid, the intervals at which payment will be made … and what deductions from [and additions to] the Contract Price may be allowable.”137 Those provisions are in clauses 36 and 37. In particular, clause 37 provides for progress claims and payments (a process with which the parties complied up to practical completion) and for final payment claims and payments (which I shall discuss later). [212] Therefore, I reject Colormode’s contention that it is entitled, under clause 2.1, to payment of the lump sum plus or minus variations, irrespective of other provisions in the contract. Variations - waiver or estoppel [213] I have considered and reached conclusions on what works Colormode has proved that it did and that were not within the scope of works under the contracts. I turn now to consider whether Colormode is entitled to payment for those works. [214] Of course, it is necessary to consider these contentions only with respect to the works that I have found to be variations or otherwise related to any of these contracts: $46,705 concerning Ferry Road and $4,340 under the Soko contract.138 [215] Colormode claims for the variations that it contends it was directed to do and it carried out, not on the basis that it and Civic followed the steps required under clause 36, but on the basis that Civic never complied with that clause in giving directions for variations and Colormode similarly (and in reliance on Civic’s conduct) did not consider it necessary to comply with those provisions before carrying out and claiming for the directed variations. [216] Colormode contends that, as Civic asked Colormode to perform these works, did not do so by any formal directions, knew that Colormode was undertaking the works and accepted the benefit of the works, it waived the right to insist on compliance with clause 36. Additionally, or alternatively, Colormode contends that, by the parties’ conduct in Civic not giving formal directions or confirming them in writing, Civic being told orally that Colormode considered the works that it was asked to perform to be variations to the relevant contract and not disputing that assertion, and Colormode undertaking the works to Civic’s knowledge, the parties proceeded under a common assumption that directions need not be given in writing, nor need Colormode await written directions from the superintendent before carrying out works at Civic’s 137 Dennis & Clay (eds), Hudson’s Building and Engineering Contracts, Sweet & Maxwell, 14th edition (2020), [5-001]. 138 See [89] and [192] above. As I have found, however, the works described in invoice 74 concerning Ferry Road were not a variation, but were performed separately and outside the term of that contract. Nevertheless, Colormode asserts an estoppel concerning that claim, so it is necessary to consider it. -- 44 of 69 -- 41 request, yet Colormode would be entitled to be paid for those works upon claiming their value in a progress (or final) payment claim. It contends that, in the circumstances, Civic ought be estopped from relying on clause 36 to deny Colormode’s claims for variations. [217] Apart from clause 36 itself, Mr Coveney also directed the court’s attention to two clauses in the scope of works that also required directions to be given or confirmed in writing, with which Civic, and Mr Byatt in particular, did not comply.139 [218] During his cross-examination, Mr Byatt was pointed to clause 20 of the Soko agreement and he agreed that sometimes he did not confirm his oral directions in writing, yet he still expected Colormode to “put their thing in writing” (which I take to mean to claim that a direction is a variation).140 [219] Civic contends that, as Colormode never complied with clause 36 by giving notice to Civic that it considered certain works to be variations and awaiting a written direction from the superintendent before commencing the works, under the terms of that clause Colormode is not entitled to payment for any works that constituted variations. It submits that Colormode never believed, nor was misled by Civic into believing, that Civic would not require Colormode to comply with the procedures under clause 36 in order to have a right to claim for variations. It relies in particular on the following evidence.141 [220] First, Mr Hasic agreed that, in his experience, different builders take different attitudes toward the strictness with which the processes in a contract needed to be followed. He also said that, depending on the attitude which a contractor would take, he would adjust his processes accordingly. So, when he was dealing with a contractor for the first time, as he would have no insight into whether or not they would insist on strict observance, he would err on the side of caution and assume that they were likely to insist on strict compliance.142 [221] Secondly, Mr Hasic conceded that he had taken that approach with Civic. At the time of signing the Ferry Road contract, he assumed that he “…needed to strictly follow the process of the contract”. He later confirmed that evidence.143 [222] Thirdly, Mr Hasic also confirmed that that was his view when, in 2015, Colormode undertook the works claimed in each of Extras 1 to 4 under the Ferry Road contract (which were the first alleged variations for which Colormode now claims payment). Therefore, no estoppel could be raised in respect of those claims, as Colormode knew of the contractual process for variations and Mr Hasic did not know whether Civic would insist on that process having been undertaken before it agreed to pay for the works. [223] Fourthly, Mr Hastie submitted that the first variation claim that Colormode actually made was for Habitat Extras 3 in July or August 2016. (He must have meant that this 139 Clause 2.0, paragraph 20 and clause 3.0. To the extent that either clause was inconsistent with the subcontract conditions (as clause 3.0 appears to be), the latter has precedence: clause 5 of the formal instrument of agreement. 140 T3-101. The quoted words were in fact in Mr Coveney’s question, with which Mr Byatt agreed. 141 Defendant’s outline of argument, [132]-[154]. 142 T2-20:46-48; T2-21:1-10. 143 T2-38:1-11; T2-68:3-6. -- 45 of 69 -- 42 was the first claim made for Habitat extras, as the Ferry Road extras claims were made about a year earlier.) Civic’s response to that claim was to certify it for zero on the ground that the claim had not been submitted in strict accordance with clause 36 and there had been no written approval to vary the works before the works were undertaken. (This submission elides the fact that, after discussions, Civic subsequently did allow about 1/3rd of the claim as variations notwithstanding non- compliance with the contract.)144 [224] Fifthly, Mr Hasic agreed that he knew, when making the Soko contract, that, if Colormode did not comply with clause 36 in respect of any variations, there was a real risk that it would not be paid for that work.145 The first variation under that contract followed a written direction from Mr Byatt and was paid.146 The next was the subject of invoice 86, which included claims for ten variations (not the subject of Colormode’s claims in this proceeding). In Civic’s payment schedule in response,147 it rejected five of those variations on the basis that: This variation has not been submitted in strict accordance with the subcontract agreement Clause 36, specifically clause 36.5 Notification of Variations. Subcontractor failed to notify the Subcontract Superintendent in accordance with clause 36.5. No written direction was given by the Subcontract Superintendent to vary the WUS. Civic allowed four of the variations but stated that: Acceptance by Civic does not waiver rights under the subcontract, specifically clause 36.5. [225] Similar stances were taken by Civic in its next payment schedule,148 rejecting some variation claims for failure to comply with clause 36 and accepting other claims while stating that it did not waive its rights under that clause. [226] Mr Hasic agreed that, at those times and throughout the later works under the Soko contract, it remained clear to him that, if clause 36 was not complied with, there was a risk that Civic would refuse to pay for at least some variations, even though it might pay for others.149 [227] Subject to the following issue concerning the Ferry Road invoice 74, I am not satisfied that Civic made any representation, nor that it acted in any way that led Colormode to believe, that it need not comply with clause 36 in order to be entitled to claim for variations. Civic did not give written directions for variations, but neither did Colormode at any stage ask for such a direction before carrying out works that it considered to be variations. There were clearly differences of opinion about what works identified by Civic were variations and what were defects requiring rectification. The differences could and should have led Colormode to engage the contractual provisions that may have entitled it clearly to claim the works (or some of them) as variations. [228] Colormode, by Mr Hasic, knew at all times that there was a risk that, if it did not comply with the contractual procedures, Civic may not pay it for works that 144 See [94]-[95] above. 145 Referring to T2-100:34-38. 146 Payment claim 2: TB vol 6, pp 3-5. 147 TB vol 6, pp 39-42. 148 TB vol 6, pp 43-47. 149 T2-108:33-36; T2-115:40-42; T3-27:24-44. -- 46 of 69 -- 43 Colormode considered to be variations: either because Civic did not agree that they were variations or because Civic would rely on the contractual processes. The contract itself made it very clear that Colormode was not entitled to payment for variations unless it complied with clause 36. At the time of the Ferry Road contract, according to Mr Hasic, as he had not worked with Civic before, he did not know whether Civic would rely strictly on the contract, so he should have ensured that Colormode complied with it unless and until it was clearly told by Civic and the superintendent that it was not necessary. By the time of the Soko contract, Civic had already refused a payment claim for variations under the Habitat contract on the basis that clause 36 had not been complied with. In the circumstances, Mr Hasic and Colormode knew that, if it did not comply with that clause, there was a real risk that Civic would refuse payment for works that Colormode considered to be variations. [229] I am not satisfied, therefore, that Colormode relied on any representation or behaviour by Civic in not complying with the contractual procedure for variations to the scope of works under any of the contracts. Faced now with Colormode’s belated claims for payment for what it asserts are variations, Civic is not estopped, whether by representation or convention, from relying on Colormode’s failure to comply with that procedure as a basis for denying Colormode’s claims. Nor did it waive reliance on that clause. [230] The situation is slightly different with the works claimed in the Ferry Road invoice 74. I have found that Civic did not give a direction to rectify during the defects liability period for that contract. Both Mr Byatt’s request that Colormode do those works and Colormode’s work itself were undertaken after the defects liability period had expired. Colormode was therefore under no contractual obligation to do those works, whether they were needed in order to rectify its own defects or defects caused by other trades. However, again Civic made no representation to Colormode that it would be paid for the works, as variations, without a written agreement between them and there was no convention between them to that effect. [231] Civic’s reliance on the contract is misplaced, given that the works were undertaken outside the contract. However, both parties rely solely on the contract for their respective claimed rights concerning these works (apart from Colormode’s claim that Civic is estopped from denying liability under the contract, or waived reliance on the clause). As I have found that Civic did not waive, and is not estopped from denying Colormode’s claims on the basis of the contractual processes, the absence of any basis for such an estoppel or waiver extends to these works even though they were strictly outside the contract. [232] Consequently, Civic can rely on the contractual terms in answer to Colormode’s claims for variations, including the claim under invoice 74. Retention amounts [233] Colormode claims that, regardless of the outcome of its other claims, it is entitled to the return of the retention amount retained by Civic under each contract. The sums claimed are: (a) under the Ferry Road contract - $17,999.70; (b) under the Habitat contract - $38,120.80; and -- 47 of 69 -- 44 (c) under the Soko contract - $39,798.77. [234] In Mr Coveney’s final written submissions, he contends that, under each contract, Civic was required to return to Colormode 50% of the retention amount 14 days after its superintendent issued a certificate of practical completion and the balance 14 days after he issued a final certificate. Civic’s superintendent, Mr Byatt, failed to issue either certificate, which was in breach of his and Civic’s obligations under each contract. Those breaches have resulted in Colormode’s entitlement to the retention moneys not coming to fruition, thus causing Colormode loss in the sum of the retention amounts. [235] Colormode relies, at least in part, on the final payment claim and the deed of release that its solicitors forwarded to Mr Byatt on 15 October 2021. [236] Civic contends that no final certificate was issued because Colormode did not provide a final payment claim and a deed of release to the superintendent within 21 days of the expiry of the defects liability period under each contract. It also contends that the documents sent to Mr Byatt on 15 October 2021 had no effect as they were not sent within the time required under each contract and, at that time, Mr Byatt was no longer the superintendent under any of the contracts. [237] It also submits that it was only required to return the balance of any retention money on the later of the final certificate or the provision of the executed deed of release.150 The latter was not provided until October 2021, but by then the release of Civic from all claims by Colormode under clause 37.4 or clause 41 of each contract had taken effect. Therefore, Civic is not required to return the retention moneys to Colormode. [238] In fact, Mr Byatt did issue a certificate of practical completion under the Habitat contract on 29 June 2016.151 No such certificate was issued under the other contracts. [239] The security clause under the Ferry Road and Habitat contracts is identical. The clause under the Soko contract differs from the others only in one possibly material respect: it provides expressly that clause 5.2 survives the termination or expiration of the contract. [240] The substance of clause 5 in each contract, read with item 17 in the Annexure, is that: (a) security was to be provided in cash (or, in the Soko contract, by bank guarantee) – in this case, it was in cash; (b) further security was provided, effectively, by way of money retained by Civic from amounts due on progress certificates under clause 37.2; (c) Civic could have recourse to security, on giving written notice to Colormode, where an amount due to Civic by Colormode was not paid by the due date, or in respect of any claim to payment Civic may have against Colormode under the contract or otherwise; 150 In fact, under the Ferry Road and Habitat contracts, security was to be released within 14 days of the final certificate. Only under the Soko contract was it to be released within 14 days of the later of the final certificate and the deed of release. 151 TB 1653. -- 48 of 69 -- 45 (d) on the issue of the certificate of practical completion, the amount of security is reduced by 50% and Civic was obliged to return that proportion to Colormode within 14 days; (e) Civic’s entitlement to security ceased 14 days after the issue of the final certificate or (under the Soko contract) the supply of the deed of release (whichever is later), and Civic must then forthwith return the security to Colormode. [241] Clause 5.5 was not mentioned by either party but, in my view, it is important. Under that clause, Civic holds the cash and retention moneys constituting security on trust for Colormode until either party is entitled to receive them. It goes on to provide that interest earned on security not required to be held in trust belongs to the party holding the security. [242] Under clause 34.6 of each contract, where Colormode considered that practical completion had been reached, it was required to request the superintendent to issue a certificate of practical completion and, within 14 days, the superintendent was obliged to issue such a certificate or to give written reasons for not doing so. The superintendent could also issue such a certificate even though no request for it had been made. There is no evidence that Colormode made such a request under any contract, nor that Mr Byatt issued such a certificate, except for Habitat. [243] Under clause 37.4 of each contract, the superintendent was obliged to issue a final payment certificate (where no final payment claim had been made by Colormode) within 49 days of the expiration of the last defects liability period: that is, by 18 May 2016 (Ferry Road), 16 August 2017 (Habitat) and 9 August 2018 (Soko). Again, there is no evidence that Mr Byatt issued a final payment certificate under any contract. [244] Colormode submits that both of those steps were solely within Civic’s control and it cannot use its failure to issue them as a reason for not returning the security. [245] In my view, the crucial facts are that: (a) Civic holds the security on trust for Colormode until either party is entitled to receive them; (b) Civic has not given Colormode any notice under clause 5.2 that it claims recourse to any of the security; (c) Civic’s entitlement to security expressly ceased, in the case of the Ferry Road and Habitat contracts, on the issue of a final payment certificate or, in the case of Soko, on the provision by Colormode of the executed deed of release; (d) Civic did not issue a final payment certificate under any contract, notwithstanding its obligation to do so; and (e) Colormode did not give Civic a deed of release until 15 October 2021. [246] The consequence of these facts is that Civic was obliged to return the Ferry Road and Habitat retention moneys to Colormode, at the latest, within 14 days of the dates referred to in [243] above and the Soko retention moneys within 14 days of 15 October 2021. It has not done so. It holds those moneys (and interest on them) on trust for Colormode and, subject to whether Colormode’s claim for them is barred under the contracts, it is obliged to return them to Colormode. -- 49 of 69 -- 46 Are Colormode’s claims time barred or released? Clause 37.4 (final payment claim & release) [247] I turn now to the provisions regulating when and in what circumstances Colormode was entitled to payment of the contract sum. [248] On 15 October 2021, Colormode’s solicitors sent to Civic’s solicitors a letter that, among other things, enclosed what purported to be a final payment claim under clause 37.4 of each contract.152 In a responding letter,153 Civic’s solicitors relied on the time limits expressed in clause 37.4 of the Ferry Road and Habitat contracts and in that clause and item 31(c) of the Soko contract, in rejecting the proposition that Colormode was entitled to make a final payment claim outside the contractual time limits. Alternatively, they said, if there was such an entitlement, it was, by the solicitors’ letter, certified as nil for each claim. [249] Civic contends that each payment claim was made far too late. Under each of the Ferry Road and Habitat contracts, Coloromode was required to provide a final payment claim, together with an executed deed of release, within 21 days after the expiry of the last defects liability period. Under the Soko contract, Colormode was required to submit “Claim Documentation” within five business days of the expiration of the defects liability period and a final payment claim “may be made” two business days after the Claim Documentation “has been received”. As the defects liability period under each of those contracts expired no later than 30 March 2016, 28 June 2017 and 21 June 2018 respectively, the final payment claims were made many years too late and Colormode is not entitled to any of the payments claimed. [250] Colormode submits that, if the submission of a final payment claim and a deed of release is ordinarily a precondition to payment of the claim, Colormode is released from that condition in this case because it is clear that the claim would have been certified as nil, without any proper consideration of the claim. Mr Coveney referred to Bartier v Kounza Investments Pty Ltd,154 in which, he said,155 McMurdo J – preferred an interpretation (of that particular contract) which did require the builder to make a final payment claim as a condition precedent to payment.156 However, his Honour did not need to decide that point because, on the facts, his Honour found that it would have been useless to make that claim because the defendant would not have considered it.157 The effect was that the plaintiff was dispensed from performing the condition precedent and was entitled to be treated as if he had performed it.158 [251] Civic submits that McMurdo J’s preferred interpretation is consistent with numerous other cases concerning building contracts in particular. This type of time bar to making claims is a common feature of such contracts and parties will be held to them. There are good commercial reasons for providing for and enforcing these bars to late 152 TB vol 5, pp 52ff. 153 Exhibit 5. 154 [2003] QSC 390. 155 Plaintiff’s outline of submissions, [97]. 156 At [40]. 157 At [42]. 158 At [44]. -- 50 of 69 -- 47 claims, which are to be given their natural and ordinary meaning in the context of the contract as a whole.159 [252] In Bartier, McMurdo J said:160 I favour an interpretation which does require the builder to make a final payment claim as a condition precedent to payment. Clause 27.1 is in mandatory terms and there is a good commercial purpose in holding the parties to the timely performance of the steps set out in cl 27 and 28, because it promotes an expeditious determination of their ultimate entitlements and, if required, the process of dispute resolution according to cl 32. … The interpretation which I favour has the purpose of requiring each party to follow the expeditious regime provided by cl 32. [253] Similarly here, the evident purpose of clause 37 is to promote the expeditious determination of the contracting parties’ respective progress and ultimate entitlements and, at the conclusion of the works, the consequent bringing of the contracts to an end. This type of clause is not unusual in commercial contracts, particularly construction contracts. Where such a clause is clear, courts will give effect to it as barring any claim made after the time provided in the contract.161 [254] Clause 37.4 of the Ferry Road and Habitat contracts expressly requires the subcontractor to give the superintendent a final payment claim and an executed deed of release within 21 days of the expiry of the last defects liability period. It goes on to provide expressly that the completion, execution and delivery of those documents is a precondition to payment of the final payment claim. After the time for submission of the final payment claim the subcontractor releases the contractor from any claim not included in the final payment claim. [255] The equivalent clause in the Soko contract, although slightly differently worded, is to similar effect, though with different time limits. “Claim Documentation” is the documents referred to in item 31A (which includes an executed deed of release with a final payment claim). While item 31 provided that the final payment claim “may be made” two business days after the claim documentation “has been received”, in my view the proper construction of that item is that, if the subcontractor wishes (“may”) to make a final payment claim, it must do so within two business days of submitting the claim documentation. I do not consider that the use of the word “may” permits the subcontractor to make a final payment claim at any time after those two business days. That period must be “the time for submission of the final payment claim” referred to in the third paragraph of clause 37.4, by which the subcontractor releases the contractor from any other claims. [256] “Claim” is defined broadly in each contract as meaning: any claim, right of action or demand (or similar legal entitlement), in any jurisdiction, including but not limited to at law, in tort (including negligence), under statute, in equity including quantum meruit or restitution based on unjust 159 Mr Hastie referred to AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140, particularly at [280], [772] to [774]; and John Goss Projects Pty Ltd v Leighton Contractors (2006) 66 NSWLR 707. 160 At [40]. 161 See Dennis & Clay (eds), Hudson’s Building and Engineering Contracts (14th ed, 2020), 3-074. -- 51 of 69 -- 48 enrichment, for rectification, frustration or for any other legal or equitable remedy. [257] The breadth of that definition is extraordinary, given that payment claims are supposed to be for works under the contract or other money due under the contract,162 not for other types of claim described in this definition. However, clearly a final payment claim may contain claims other than under the contract itself and the release operates to release any claims not included in the final payment claim. [258] The effect of the clause in each contract is therefore that, as Colormode did not submit claim documentation within five business days of the expiration of each defects liability period and a final payment claim within a further two business days, it lost any entitlement to make a claim for a final payment for works under each contract or for any other claim “whatsoever in connection with the subject matter” of the contract.163 [259] However, notwithstanding the broad definition of “claim” and the reference in clause 37.4(a) to all other claims, the clause does not, in my view, apply to security held by Civic. Security is dealt with separately in clause 5. It is expressly held by Civic on trust for Colormode until either party becomes entitled to receive it. How security is to be dealt with at the end of the contract is expressly dealt with in that clause. Furthermore, Colormode is not entitled to the return of the balance of security until after the final payment certificate was issued by the superintendent. It would not, therefore, be entitled to claim the return of security in its final payment claim. Having regard to those specific provisions, security is excluded from the process in clause 37.4.164 [260] In my view, the same considerations apply to the 50% of the security that Civic was obliged to return after the certificate of practical completion was issued. A claim for the return of that amount would be made outside any claim for a progress payment at about the time of practical completion. Clause 41 (notification of claims & release) [261] Civic also relies on clause 41 of each contract as releasing it from any further claims by Colormode, whether under the contract or not, because Colormode did not give Civic notice of any such claim within six (in the case of Ferry Road) or ten (in the cases of Habitat and Soko) business days of the date when Colormode became, or should have become, aware of the events or circumstances on which the claim is based. Under clause 41.2, if Colormode did not give Civic any such notice, Colormode is not entitled to make the claim and Civic is “released for all time from the claim.” Civic contends that all the claims currently made by Colormode have been released under this clause because Colormode was, or should have been, aware of the basis for its claims many years ago and it gave no notice within the relevant periods. 162 See clause 37.1, 3rd paragraph. 163 For present purposes, I exclude a claim for the retention moneys, which I shall consider separately below. 164 A similar conclusion was reached byAttiwill J in Hunters Green Retirement Living Pty Ltd v J G King Project Management Pty Ltd [2023] VSC 536, at [211]-[216], on which Mr Coveney relied in support of this proposition. -- 52 of 69 -- 49 [262] At first blush, these clauses seem to have the effect for which Civic contends. However, its assertion demands closer analysis of the clause. [263] In each of the Ferry Road and Soko contracts, clause 41 commences, “Notwithstanding any other provision of the Subcontract,” but excludes progress claims under clause 37 from the purview of this clause. Therefore this clause does not apply to progress claims (including final payment claims) but it does apply to claims under any other clause. This may have a material effect on Colormode’s entitlement now to claim return of the retention money under these contracts. [264] On the other hand, this clause in the Habitat contract differs from the others. In this contract, clause 41.1 commences, “Except as otherwise provided by any other provision of the Subcontract,” thus excluding the operation of this clause where any other clause allows for a claim to be made, but not otherwise. [265] Neither form of release therefore applies to claims made under clause 37, as it provides for its own form of release. As I have found, that clause under each contract precludes Colormode from making the claims for variations or other payments (again, excluding retention money) that it now makes. [266] Does clause 41 apply, though, to the claims for return of the retention moneys? In my view, it does in the Ferry Road and Soko contracts, because the clause in those contracts begins, “Notwithstanding any other provision of the subcontract.” The release in clause 41 is very broadly worded. It is not limited to the types of claim that are released under clause 37, but otherwise it applies to all possible claims under, or connected with, the relevant contract. [267] Colormode’s entitlement to return of the balance of the retention moneys arose 14 days after the final certificate was due or (under the Soko contract) 14 days after it provided the executed deed of release. Either it was aware, or at the least it ought to have been aware, of its entitlement to claim the return of the retention moneys at those dates. It did not give any notice of its claims for retention under any of the contracts until, at the earliest, the invoice for the Ferry Road retention was given on 27 April 2018 and otherwise the service of its second further amended statement of claim on 21 November 2021. Those “notices” were given well after Colormode was, or ought to have been, aware of its entitlement. [268] The commercial purpose of this clause in each contract is identical to that of clause 37: to give the parties certainty that claims of any type arising under or relating to the contract are made and able to be dealt with promptly after the circumstances giving rise to them arise. Thus they can have commercial certainty that the contract and any claims relating to it are at an end, or that particular claims remain to be dealt with. [269] As Colormode did not given any notices to Civic within the specified time, it is no longer entitled to recovery of the retention moneys under either of the Ferry Road and Soko contracts. This may seem a harsh result, but it is the product of the contracts to which Colormode agreed. It is also not an unusual product of commercial building contracts of this nature. [270] However, the situation is different with the Habitat contract, given the commencing words of clause 41.1. Those words allow for the operation of any alternative right to make a claim that is specifically provided for in another clause of the contract; not -- 53 of 69 -- 50 just clause 37. Under clause 5, Colormode was entitled to return of the security, as to 50% 14 days after the issue of the certificate of practical completion (that is, on 12 July 2016165) and, as to the balance, 14 days after the due date for the issue of the final certificate (that is, 16 August 2017). Civic held those funds in trust for Colormode and, as Civic did not make any claim against that security, it ought to have returned that sum to Colormode by those dates. [271] Clause 5 therefore provides otherwise than clause 41. Civic is now obliged to return to Colormode the retention moneys under the Habitat contract, together with interest. [272] The rate of interest on the trust moneys is not specified in the contract. A method for ascertaining the rate of interest on moneys where there has been a “default in payment” is referred to in clause 37.5, but that clause appears to apply only to payments due under the regime for progress and final payments set up under clause 37. I shall therefore seek submissions as to the appropriate rate or rates of interest. Conclusions on Colormode’s claims [273] For the above reasons, Colormode is no longer entitled to claim any of the moneys the subject of this proceeding, except the retention money of $38,120.80 under the Habitat contract, plus interest from 13 July 2016 on 50% of that sum and, from 17 August 2017 on the total amount. Liquidated damages [274] Civic claims that Colormode is obliged to pay it liquidated damages under each contract for the delay between the date for completion and the actual date of practical completion of Colormode’s works under the contract. It asserts that the daily rate of such damages is $6,500 under each of the Habitat and Soko contracts and $9,000 under the Ferry Road contract. It contends that Scott Widdicombe was appointed superintendent of each contract on 2 March 2022 and that he certified the amount of liquidated damages in accordance with clause 37.4 of each contract in a letter of the same date.166 [275] Civic contends that the liquidated damages to which it is entitled are: (a) under the Ferry Road contract - $927,000 ($9,000 x 103 days); (b) under the Habitat contract - $403,000 ($6,500 x 62 days); and (c) under the Soko contract - $344,500 ($6,500 x 53 days). [276] Civic seeks to set off those damages against any amount that the court finds it to be liable to Colormode. Although it does not plead a counterclaim, in his written closing submissions and in his final address, Mr Hastie sought judgment for the balance of liquidated damages owing to Civic after allowing for any amount it is found to owe to Colormode. In this respect, it relies on rule 173 of the Uniform Civil Procedure Rules 1999. 165 The superintendent issued a certificate of practical completion stating that practical completion was reached on 28 June 2016: TB 1653. 166 TB1656-1657. -- 54 of 69 -- 51 [277] In response to that submission, Mr Coveney submitted that Civic has not made any claim, in its defence, for judgment for the balance after any setoff of liquidated damages and therefore, even if the court finds that it is entitled to such damages, there should not be judgment for any balance. He referred to rule 149(d), which requires that each pleading state specifically any relief the party claims. Civic’s defence did not state specifically that it sought judgment for any balance of liquidated damages over any successful claim by Colormode. It should not be permitted now to rely on s 173(2) as a basis for, or comprising, a counterclaim for the balance. [278] In responding to Colormode’s claims under each contract, Civic pleaded that it sets off the liquidated damages under that contract against any amount payable to Colormode, thus reducing the amount payable to nil.167 It did so in equity or under s 20 of the Civil Proceedings Act 2011 and r 172 of the UCPR. In each case, it then pleaded: Further, in respect of the sets-off pleaded in each of paragraphs […] above, the Defendant relies upon r 173 of UCPR. [279] I agree with Mr Coveney that the defence does not specifically and fairly claim judgment for the balance of liquidated damages after any setoff. Although Mr Coveney did not assert that he would have conducted Colormode’s case in any different way, or would have called other evidence, if he had been aware that that was Civic’s intention, Civic’s pleading is so obscure as to be a clear breach of pleading rules and contrary to its obligation to plead clearly and to conduct its defence in accordance with rule 5. If, therefore, I were to find that Civic is entitled to the liquidated damages that it claims, I would only permit a setoff to the extent of its liability to Colormode. [280] Nevertheless, it is necessary to consider Civic’s claim for liquidated damages. [281] The daily rate under each of the Habitat and Soko contracts is specified in item 27(a) as being $6,500. The Ferry Road contract does not specify a certain amount. Rather, it provides that it is the “Rate as ascertained by the subcontract superintendent up to the value of the Main Contract Liquidated Damages.” The latter daily rate is $9,000. In his letter certifying liquidated damages, Mr Widdicombe said, in respect of this contract, “I hereby determine that the applicable rate is $9,000 per day.” That daily amount is not challenged by Colormode. [282] Mr Coveney submitted that a certificate under clause 34.7 is necessary to establish a liability to pay liquidated damages for delay.168 The superintendent’s certification must comply with the terms of the subcontract.169 The court is also able to look at the product of the superintendent’s labours to see whether the task was performed in accordance with the parties’ contractual entitlement. As McDougall J has explained:170 167 As to Ferry Road, defence paragraphs 40N to 40P; as to Habitat, paragraphs 28N to 28P; and, as to Soko, paragraphs 15O to 15R. 168 RCR O’Donnell Griffin Pty Ltd v Forge Group Power Pty Ltd [2016] QCA 214 (RCR v Forge) at [103] (McMurdo JA, Applegarth J agreeing). 169 Legal & General Life Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 (Legal & General) at 336 (per McHugh JA). 170 Walton v Illawarra [2011] NSWSC 1188 at [57]. -- 55 of 69 -- 52 … it is open to the court to look at the challenged assessments (for extensions of time and valuation of variations and the like), to determine whether or not they equate to the contractual standard of reasonableness, and to substitute its own determination of what should reasonably have been allowed if they do not. [283] Mr Widdicombe’s calculation, under each contract, is based on the assumed latest date by when, the parties agree, practical completion occurred in each case. Colormode does not take issue with the mathematical calculation based on those dates. However, it contends that, in order to calculate liquidated damages in accordance with the contracts, it was necessary for the superintendent to satisfy himself properly of the actual date of practical completion. As no certificate of practical completion of either the Ferry Road or the Soko projects was issued by the superintendent at the time, Mr Byatt, it became necessary for Mr Widdicombe, upon his appointment as superintendent, to ascertain that date. In doing so, he should have had regard to all the elements identified in the respective contracts as going to constitute practical completion as defined. It is not enough for the superintendent merely to assume such a date. [284] Mr Coveney submitted that Civic did not plead any facts, and did not call any evidence, addressing the relevant elements. The existence or satisfaction of each of them is necessary for practical completion to have been reached.171 Therefore, Mr Widdicombe’s certification of the liquidated damages is manifestly wrong and there is no basis on which the court can establish the date of practical completion. Without that date, the claim for liquidated damages must fail. [285] Mr Coveney relied on the same grounds to oppose the determination of liquidated damages under the Habitat contract. However, with respect, Mr Coveney has overlooked that a certificate of practical completion was issued by the superintendent, Mr Byatt, for the Habitat contract.172 That certificate established that the date of practical completion under that contract was 28 June 2016: the very date used by Mr Widdicombe to calculate liquidated damages under that contract. Subject to the following issue, Civic would therefore be entitled to claim liquidated damages of $403,000 under that contract. [286] Mr Hastie submitted that RCR v Forge established that a liquidated damages certificate is both sufficient and necessary to create the liability, which arises from the certificate itself.173 He submitted that, as the liability is created by the certificate, it is unnecessary for the court to attempt itself to establish the relevant dates: they are conclusively stated in the certificate. Similarly with cases concerning whether a court can go behind a valuation (such as Legal & General), at most it should be concerned with whether the certifier performed the task that the contract required be performed. Here, there is no basis to say that Mr Widdicombe did not perform that task. Indeed, Mr Hasic’s own evidence – together with evidence of the date of practical completion of the contracts between Civic and the developer – demonstrated that practical completion under these contracts occurred no earlier than the dates adopted by 171 Abergeldie Contractors Pty Ltd v Fairfield City Council [2017] NSWCA 113 at [65] (Meagher AJ, Beazley ACJ agreeing). 172 TB 1653. 173 RCR v Forge, per Morrison JA at [14], [20]; per McMurdo JA (Applegarth J agreeing) at [103]- [104]. -- 56 of 69 -- 53 Mr Widdicombe. As it may have been later, his assessment is conservative and favours Colormode. [287] I am satisfied that the dates adopted by Mr Widdicombe as the dates of practical completion have been shown, on the evidence and the agreed facts, to be correct. But, even if they were not, a mistake by him is not sufficient to deprive his certification of its effect. By that certification, subject to the following he established debts due to Civic by Colormode for liquidated damages. [288] During addresses, I took Mr Hastie to task about why clause 37.4 did not prevent Civic from belatedly claiming liquidated damages. If it were able to do so, that would be inconsistent with the readily accepted commercial reasoning behind such a clause (commercial certainty that all claims are at an end). Mr Hastie conceded that that may be the case and perhaps that clause could be read as preventing later claims by either party, but he pressed the proposition that it did not prevent Civic’s current claim. [289] In my view, even if Civic were entitled to liquidated damages for late completion, it was obliged to make such a claim promptly: that is, within the time frames stated in clause 37.4. Under the fourth paragraph of that clause, the superintendent is required to issue a final certificate within 49 days of the defects liability period. That certificate is said to be conclusive evidence, subject to irrelevant exceptions, of any amount finally due and payable between the subcontractor (Colormode) and the main contractor (Civic). That must include any right in the contractor to liquidated damages. At the very least, by necessary implication, it was incumbent on the superintendent to determine any liquidated damages before the date by when he was obliged to issue the final certificate. The final certificate is “conclusive evidence of accord and satisfaction and in discharge of each party’s obligations in connection with the subject matter of the contract.” That is the case for each party. Where, as in this case, the superintendent did not certify any amount of liquidated damages, nor issue a final certificate, within the 49 day period, Civic does not now have any subsisting right to liquidated damages. [290] As with the time for Colormode to make its final payment claim, the time limit for the issue of a final payment certificate is strict. Both time limits serve the important commercial purpose of enabling the parties to be certain that their rights and obligations under the contract are at an end. Neither party can thereafter make any claim against the other. [291] Therefore, Civic is not now entitled to any liquidated damages, nor a setoff for such damages. The result [292] The result of this long and convoluted discussion is that Colormode has been successful only in one small aspect of claim and Civic has been unsuccessful in its claim for liquidated damages. [293] It will be necessary to determine the rate of interest on the retention money due to Colormode in order to give judgment for that sum. I shall invite the parties to provide submissions on that issue and on the costs of the proceeding. -- 57 of 69 -- 54 Annexure A – Ferry Road contract terms 2.1 Performance and payment The Subcontractor shall carry out and complete WUS in accordance with the Subcontract and directions authorised by the Subcontract. The Main Contractor shall pay the Subcontractor: (a) for work which the Main Contractor accepted a lump sum, the lump sum; and (b) for work for which the Main Contractor accepted rates, the sum of the products ascertained by multiplying the measured quantity of each section or item of work actually carried out under the Subcontract by the rate accepted by the Main Contractor for the section or item, adjusted by any additions or deductions made pursuant to the Subcontract. 5 Security 5.1 Provision Security shall be provided in accordance with Item 17 and shall be in a form, and on terms and conditions, approved by the Main Contractor in its absolute discretion. All delivered security, other than cash or retention moneys, shall be transferred in escrow. If the amount payable to the Subcontractor exceeds the subcontract sum due to adjustments in accordance with this Subcontract, the Main Contractor may require the Subcontractor to provide additional security. The Main Contractor is not required to pay any amount to the Subcontractor until such additional security is provided. ... 5.4 Reduction and release Upon the issue of the certificate of practical completion a party's entitlement to security (other than in Item 17(e)) shall be reduced by the percentage or amount in Item 17(f) or 18(d) as applicable, and the reduction shall be released and returned within 14 days to the other party. The Main Contractor's entitlement to security in Item 17(e) shall cease 14 days after incorporation into the Subcontract Works of the plant and materials for which that security was provided. A party's entitlement otherwise to security shall cease 14 days after final certificate. Upon a party's entitlement to security ceasing, that party shall release and return forthwith the security to the other party. 5.5 Trusts and interest Except where held by a government department or agency or a municipal, public or statutory authority, any portion of security (and interest earned thereon) which is cash or retention moneys, shall be held in trust for the party providing them until the Main Contractor or the Subcontractor is entitled to receive them. -- 58 of 69 -- 55 Interest earned on security not required to be held in trust shall belong to the party holding that security. ... 21 Subcontract Superintendent's Representative The Subcontract Superintendent may from time to time appoint individuals to exercise delegated Subcontract Superintendent 's functions, provided that: (a) no aspect of any function shall at any one time be the subject of delegation to more than one Subcontract Superintendent 's Representative; (b) delegation shall not prevent the Subcontract Superintendent exercising any function; (c) the Subcontract Superintendent forthwith gives the Subcontractor written notice of respectively: (i) the appointment, including the Subcontract Superintendent 's Representative 's name and delegated functions; and (ii) the termination of each appointment; and (d) if the Subcontractor makes a reasonable objection to the appointment of a Subcontract Superintendent 's Representative, the Subcontract Superintendent shall terminate the appointment. The Subcontractor shall forthwith notify the Subcontract Superintendent if the Subcontractor receives a purported direction from other than the Subcontract Superintendent, the Main Contractor or those authorised by either of them. 34 Time and progress 34.1 Progress The Subcontractor shall proceed with due diligence and without delay and shall ensure the WUS reaches practical completion by the date for practical completion. 34.6 Practical completion The Subcontractor shall give the Subcontract Superintendent at least 14 days written notice of the date upon which the Subcontractor anticipates that practical completion will be reached. When the Subcontractor is of the opinion that practical completion has been reached, the Subcontractor shall in writing request the Subcontract Superintendent to issue a certificate of practical completion. Within 14 days after receiving the request, the Subcontract Superintendent shall give the Subcontractor and the Main Contractor either a certificate of practical completion evidencing the date of practical completion or written reasons for not doing so. If the Subcontract Superintendent is of the opinion that practical completion has been reached, the Subcontract Superintendent may issue a certificate of practical completion even though no request has been made. 34.7 Liquidated damages -- 59 of 69 -- 56 If WUS does not reach practical completion by the date for practical completion, the Subcontract Superintendent shall certify, as due and payable to the Main Contractor, liquidated damages in Item 27(a) for every day after the date for practical completion to and including the earliest of the date of practical completion or termination of the Subcontract or the Main Contractor taking WUS out of the hands of the Subcontractor. If an EOT is directed after the Subcontractor has paid or the Main Contractor has set off liquidated damages, the Main Contractor shall forthwith repay to the Subcontractor such of those liquidated damages as represent the days the subject of the EOT. 35 Defects liability The defects liability period stated in Item 30 shall commence on the date of practical completion at 4:00 pm. If the date of expiry of the defects liability period is the same as the date of expiry of the defects liability period under the main contract, the Subcontract Superintendent shall, within 14 days of becoming aware of the date of expiry of the defects liability period under the main contract, inform the Subcontractor in writing of that date. the main contract, inform the Subcontractor in writing of that date. The Subcontractor shall carry out rectification at times and in a manner causing as little inconvenience to the occupants or users of the Subcontract Works as is reasonably possible. As soon as possible after the date of practical completion, the Subcontractor shall rectify all defects existing at the date of practical completion. During the defects liability period, the Subcontract Superintendent may give the Subcontractor a direction to rectify a defect which:(a) shall identify the defect and the date for completion of its rectification; and (b) may state a date for commencement of the rectification and whether there shall be a separate defects liability period therefore (not exceeding 12 months, commencing at 4:00 pm on the date the rectification is completed and governed by this clause). If the rectification is not commenced or completed by the stated dates, the Main Contractor may have the rectification carried out by others but without prejudice to any other rights and remedies the Main Contractor may have. The cost thereby incurred shall be certified by the Subcontract Superintendent as moneys due and payable to the Main Contractor. 36 Variations 36.1 Directing variations The Subcontractor shall not vary WUS except as directed in writing. If the Subcontractor has received an oral direction which it considers to be a direction to vary WUS it shall notify the Subcontract Superintendent within 3 days and must not commence any works until a direction in writing has been provided by the Superintendent to vary WUS. -- 60 of 69 -- 57 If the Subcontractor does not strictly comply with the requirements set out in this subclause, it shall not be entitled to make any claim in connection with a direction given orally. The Subcontract Superintendent, before the date of practical completion, may direct the Subcontractor to vary WUS by any one or more of the following which is nevertheless of a character and extent contemplated by, and capable of being carried out under, the provisions of the Subcontract: (a) increase, decrease or omit any part; (b) change the character or quality; (c) change the levels, lines, positions or dimensions; (d) carry out additional work; (e) demolish or remove material or work no longer required by the Main Contractor. 37 Payment 37.1 Progress claims Subject to subclause 37.0, the Subcontractor shall claim payment progressively in accordance with Item 31 while WUS is being carried out, at practical completion, and at the final payment claim under subclause 37.4. … Each progress claim shall be given in writing to the Subcontract Superintendent and shall include details of the value of WUS done and may include details of other moneys then due to the Subcontractor pursuant to provisions of the Subcontract. 37.2 Certificates The Subcontract Superintendent shall, within 10 business days after receiving such a progress claim, issue to the Main Contractor and the Subcontractor a progress certificate which: (a) identifies the progress claim to which it relates; (b) states the amount of the payment, if any, that the Main Contractor proposes to make (scheduled amount); (c) if the scheduled amount is less than the claimed amount, state why the scheduled amount is less, and if it less because the Main Contractor is withholding payment for any reason, the Main Contractor's reason for withholding payment; and (d) states the amount of retention moneys and moneys due from the Subcontractor to the Main Contractor pursuant to the Subcontract. If the Subcontractor does not make a progress claim in accordance with Item 31, the Subcontract Superintendent may issue the progress certificate with details of the calculations and shall issue the certificate dealing with the matters in paragraph (d). … The Main Contractor shall within 15 business days after receiving the progress certificate, or within 25 business days after the Subcontract Superintendent receives the progress claim, pay to the Subcontractor the balance of the progress certificate after deducting -- 61 of 69 -- 58 retention moneys and setting off such of the certificate in paragraph (d) as the Main Contractor elects to set off. If that setting off produces a negative balance, the Subcontractor shall pay that balance to the Main Contractor within 15 business days of receiving written notice thereof. Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUS has been carried out satisfactorily nor shall they prejudice any claim or defence by the Main Contractor. Payment other than final payment shall be payment on account only. 37.4 Final payment claim and certificate Within 21 days after the expiry of the last defects liability period, the Subcontractor shall give the Subcontract Superintendent: (a) a written final payment claim endorsed 'Final Payment Claim' being a progress claim together with all other claims whatsoever in connection with the subject matter of the Subcontract; and (b) an executed Deed of Release in the form found in Annexure Part I. The completion, execution and delivery to the Subcontract Superintendent and the Ma in Contractor of the Deed of Release shall be a precondition to payment of the final payment claim. The Main Contractor is entitled to withhold payment in full until the Deed of Release is completed, executed and delivered. After the time for submission of the final payment claim, the Subcontractor releases the Main Contractor from, and shall indemnify the Main Contractor against, any claim not included in the final payment claim. Within 49 days after the expiry of the last defects liability period or within 10 business days of receipt of the final payment claim, whichever is the earlier, the Subcontract Superintendent shall issue to both the Subcontractor and the Main Contractor a final certificate evidencing the moneys finally due and payable between the Subcontractor and the Main Contractor on any account whatsoever in connection with the subject matter of the Subcontract. Those moneys certified as due and payable shall, provided that the Subcontractor has completed, executed and delivered a Deed of Release, be paid by the Main Contractor or the Subcontractor, as the case may be, within 15 business days after the Main Contractor receives the final certificate, or within 25 business days after the Subcontract Superintendent receives the final payment claim. The final certificate shall be conclusive evidence of accord and satisfaction, and in discharge of each party's obligations in connection with the subject matter of the Subcontract except for: (a) fraud or dishonesty relating to WUS or any part thereof or to any matter dealt with in the final certificate; (b) any defect or omission in the Subcontract Works or any part thereof which was not apparent at the end of the last defects liability period; (c) any accidental or erroneous inclusion or exclusion of any work or figures in any computation or an arithmetical error in any computation; and (d) unresolved issues the subject of any notice of dispute pursuant to clause 42, served before the 7th day after the issue of the final certificate. -- 62 of 69 -- 59 41 Notification of claim 41.1 Communication of claims Notwithstanding any other provision of the Subcontract, the Main Contractor will not be liable upon any claim (other than a progress claim under clause 37) by the Subcontractor in respect of any matter arising out of or in connection with the Subcontract, the subject matter of the Subcontract or otherwise, including but not limited to, variations and claim for any form of loss or damages unless: (a) a notice of claim, together with full particulars thereof is lodged in writing with the Main Contractor and the Subcontract Superintendent not later than the time specified in this Subcontract, or if no time is stated, 6 business days after the date the Subcontractor becomes aware or should have become aware of the occurrence of the events or circumstances on which the claim is based; and (b) the notice outlines the legal basis of the claim and full details of the likely quantum. 41.2 Liability for failure to communicate If the Subcontractor does not give the Main Contractor and the Subcontract Superintendent the notice in accordance with subclause 41.1, the Subcontractor shall not be entitled to the claim and the Main Contractor shall be released for all time from the claim. The provision of a notice in accordance with subclause 41.1 is a precondition to any such claim for payment. 41.3 Subcontract Superintendent' s decision Within 10 business days of receipt of a notice of claim under subclause 41.1 the Subcontract Superintendent shall assess the notice of claim and notify the parties in writing of the decision. Unless a party within a further 21 days of such notification gives a notice of dispute under subclause 42.1 which includes such decision, the Subcontract Superintendent shall certify the amount of that assessment to be moneys then due and payable. -- 63 of 69 -- 60 Annexure B – Habitat contract terms Clause 2.1 as above in annexure A. Clause 5 as above in annexure A. Clause 34.6 as above in annexure A. Clause 34.7 as above in annexure A with the addition of the following paragraph. In addition to any liability to pay liquidated damages, the Subcontractor indemnifies the Main Contractor against any costs, losses or damages that the Main Contractor pays or becomes liable to pay to the Principal, under the Main Contract or otherwise, to the extent that such payment or liability arises out of the Subcontractor's failure to comply with subclause 34.1. Clause 35 as above in annexure A. Clause 36.1 as above in annexure A with the following changes: The removal of the following: If the Subcontractor has received an oral direction which it considers to be a direction to vary WUS it shall notify the Subcontract Superintendent within 3 days and must not commence any works until a direction in writing has been provided by the Superintendent to vary WUS. If the Subcontractor does not strictly comply with the requirements set out in this subclause, it shall not be entitled to make any claim in connection with a direction given orally. The addition of the following: If the Subcontractor has received a direction which it considers to be a direction to vary WUS which is not stated as such, it shall notify the Subcontract Superintendent within 3 business days and must not commence any works until a direction in writing has been provided by the Superintendent to vary WUS. If the Subcontractor does not strictly comply with the requirements set out in this subclause, it shall not be entitled to make any claim in connection with a direction unless that direction is specifically stated to be a variation. Clause 37.1 as above in annexure A. Clause 37.2 materially as above in annexure A: Clause 37.4 as above in annexure A. 41 Notification of claims 41.l Communication of claims Except as otherwise provided by any other provision of the Subcontract, the Main Contractor will not be liable upon any claim by the Subcontractor in respect of any matter -- 64 of 69 -- 61 arising out of or in connection with the Subcontract, the subject matter of the Subcontract or otherwise, unless: (a) a notice of claim, together with full particulars thereof is lodged in writing with the Main Contractor and the Subcontract Superintendent not later than the time specified in this Subcontract, or if no time is stated, 10 business days after the date the Subcontractor becomes aware or should have become aware of the occurrence of the events or circumstances on which the claim is based; and (b) the notice outlines the legal basis of the claim and full details of the likely quantum. Clause 41.2 as above in annexure A. Clause 41.3 as above in annexure A. -- 65 of 69 -- 62 Annexure C – Soko contract terms Clause 2.1 as above in annexure A. Clause 5 as above in annexure A. Clause 21 as above in annexure A. Clause 34.6 as above in annexure A. Clause 34.7 as above in annexure A. Clause 35 as above in annexure A. Clause 36.1 as above in annexure B with the following changes: The removal of the following: If the Subcontractor has received a direction which it considers to be a direction to vary WUS which is not stated as such, it shall notify the Subcontract Superintendent within 3 business days and must not commence any works until a direction in writing has been provided by the Superintendent to vary WUS. If the Subcontractor does not strictly comply with the requirements set out in this subclause, it shall not be entitled to make any claim in connection with a direction unless that direction is specifically stated to be a variation. The addition of the following: No variation directed by the Subcontract Superintendent shall be regarded as repudiation of the Subcontract by the Main Contractor even if the variation requires additional work outside of the general scope of the Subcontract Works or omits any part of the Subcontract Works for the purpose of the omitted work being carried out by the Main Contractor or another party engaged by the Main Contractor. 37.1 Progress claims The Subcontractor shall submit the Claim Documentation and claim payment progressively in accordance with Item 31 while WUS is being carried out, at practical completion, and at the final payment claim under subclause 37.4. An early progress claim shall be deemed to have been made on the date for making that claim. Each progress claim shall be given in writing to the Subcontract Superintendent and shall include details of the value of WUS done and may include details of other moneys then due to the Subcontractor pursuant to provisions of the Subcontract. Clause 37.2 as above in annexure A with the following changes: The addition of the following: -- 66 of 69 -- 63 If the Subcontractor does not make a progress claim in accordance with Item 31, the Subcontract Superintendent may issue the progress certificate with details of the calculations and shall issue the certificate dealing with the matters in paragraph (d). The Subcontract Superintendent in receiving a progress claim does so as an agent of the Main Contractor for the purposes of the Payments Act. The Main Contractor shall within 25 business days after the Subcontract Superintendent receives the progress claim, pay to the Subcontractor the balance of the progress certificate after deducting retention moneys and setting off such of the certificate in paragraph (d) as the Main Contractor elects to set off. If that setting off produces a negative balance, the Subcontractor shall pay that balance to the Main Contractor within 15 business days of receiving written notice thereof. Notwithstanding any other provision of this Subcontract, the Main Contractor shall be entitled to withhold payment to the Subcontractor in full until the Subcontractor provides to the Main Contractor: (e) in relation to each progress claim, a declaration in the form of Annexure Part G executed by a person authorised to do so on behalf of the Subcontractor; (f) in addition: (i) in relation to the progress claim at practical completion, a completed and executed Deed of Release - Practical Completion in the form contained in Annexure Part H; and (ii) in relation to the final payment claim, a completed and executed Deed of Release - Final in the form contained in Annexure Part I. 37.4 Final payment claim and certificate In accordance with Item 3l, the Subcontractor shall give the Subcontract Superintendent: (a) a written final payment claim endorsed 'Final Payment Claim' being a progress claim together with all other claims whatsoever in connection with the subject matter of the Subcontract; and (b) an executed Deed of Release in the form found in Annexure Part I. The completion, execution and delivery to the Subcontract Superintendent and the Main Contractor of the Deed of Release shall be a precondition to payment of the final payment claim. The Main Contractor is entitled to withhold payment in full until the Deed of Release is completed, executed and delivered. After the time for submission of the final payment claim, the Subcontractor releases the Main Contractor from, and shall indemnify the Main Contractor against, any claim not included in the final payment claim. Within 49 days after the expiry of the last defects liability period or within 10 business days of receipt of the final payment claim, whichever is the earlier, the Subcontract Superintendent shall issue to both the Subcontractor and the Main Contractor a final certificate evidencing the moneys finally due and payable between the Subcontractor and -- 67 of 69 -- 64 the Main Contractor on any account whatsoever in connection with the subject matter of the Subcontract. Those moneys certified as due and payable shall, provided that the Subcontractor has completed, executed and delivered the Deed of Release, be paid by the Main Contractor or the Subcontractor, within 25 business days after the Subcontract Superintendent receives the final payment claim. The final certificate shall be conclusive evidence of accord and satisfaction, and in discharge of each party' s obligations in connection with the subject matter of the Subcontract except for: (c) fraud or dishonesty relating to WUS or any part thereof or to any matter dealt with in the final certificate; (d) any defect or omission in the Subcontract Works or any part thereof which was not apparent at the end of the last defects liability period; and (e) any accidental or erroneous inclusion or exclusion of any work or figures in any computation or an arithmetical error in any computation. 37.7 Set off Without limiting any other rights of the Main Contractor, in relation to any loss, cost, damage or other amount which: (a) the Subcontractor is liable to pay to the Main Contractor under the Subcontract; or (b) the Main Contractor in its bona fide opinion believes it has suffered or is likely to suffer as a result of an act or omission by the Subcontractor; or (c) the Subcontractor is required to pay (or in the Main Contractor 's bona fide opinion is likely to be required to pay) to the Main Contractor arising out of or in connection with the Subcontract or any other agreement (whether in relation to this Project or otherwise), the Main Contractor may at any time after giving written notice to the Subcontractor: (d) deduct from or set off such losses, costs, damages or other amount against any amounts due to the Subcontractor under the Subcontract or otherwise at law in respect of the Subcontract Works or under any other agreement (whether in relation to this Project or otherwise); (e) have recourse to any security provided by the Subcontractor under the Subcontract or provided by the Subcontractor under any other agreement (whether in relation to this Project or otherwise). The provisions of this subclause 37.7 survive the termination or expiration of the Subcontract. 39 Default or insolvency 39.1 Preservation of other rights If a party breaches (including repudiates) the Subcontract, nothing in this clause shall prejudice the right of the other party to recover damages or exercise any other right or remedy. -- 68 of 69 -- 65 39.2 Subcontractor' s default If the Subcontractor commits a substantial breach of the Subcontract, the Main Contractor may give the Subcontractor a written notice to show cause. Substantial breaches include, but are not limited to: (c) substantial departure from a construction program without reasonable cause or the Subcontract Superintendent 's approval; 39.4 Main Contractor's rights If the Subcontractor fails to show reasonable cause by the stated date and time, the Main Contractor may by written notice to the Subcontractor: (a) take out of the Subcontractor 's hands the whole or part of the work remaining to be completed and suspend payment until it becomes due and payable pursuant to subclause 39.6; or (b) terminate the Subcontract. 39.5 Take out The Main Contractor shall complete work taken out of the Subcontractor 's hands … 39.6 Adjustment on completion of work taken out When work taken out of the Subcontractor 's hands has been completed, the Subcontract Superintendent shall assess the cost thereby incurred and shall certify as moneys due and payable accordingly the difference between that cost (showing the calculations therefor) and the amount which would otherwise have been paid to the Subcontractor if the work had been completed by the Subcontractor. Clause 41.1 as above in annexure A with the time specified being 10 business days instead of 6. Clause 41.2 as above in annexure A with the following addition: The provision of a notice in accordance with subclause 41.1 is a precondition to any such claim for payment. -- 69 of 69 --