ESR Investment Management 2 (Australia) Pty Limited v AllRoads Pty Ltd [2023] QSC 235 [2023] 45 QLR

SUPREME COURT OF QUEENSLAND CITATION: ESR Investment Management 2 (Australia) Pty Limited v AllRoads Pty Ltd [2023] QSC 235 PARTIES: ESR INVESTMENT MANAGEMENT 2 (AUSTRALIA) PTY LIMITED (AS TRUSTEE FOR 98 AND 114 GILMORE ROAD TRUST ABN 34 294 606 061) ACN 626 831 954 (applicant) v ALLROADS PTY LTD ABN 42 142 378 514 (respondent) FILE NO/S: BS No 11967 of 2023 DIVISION: Trial Division PROCEEDING: Hearing ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 3 November 2023 DELIVERED AT: Brisbane HEARING DATE: 13 October 2023 and 23 October 2023 JUDGE: Kelly J ORDERS: 1. It is declared that the 15 August letter from the respondent to the applicant did not inform the applicant that the respondent was “financially unable to proceed with the Contract” within the meaning of that expression as contained in cl 44.11(a) of the general conditions of the Contract. 2. It is declared that cl 44.10(d) of the general conditions of the Contract is limited to documents which as at the time of termination of the Contract: a. had been prepared by the Contractor or its subcontractors in relation to the Works; and b. the Principal was then entitled to be provided by the Contractor. 3. It is declared that the documents listed in Schedule 1 to the amended originating application are not documents prepared by the respondent or its subcontractors in relation to the Works, to which the applicant would otherwise have been entitled under the Contract, but -- 1 of 22 -- 2 for the termination, within the meaning of cl 44.10(d) of the Contract. 4. It is declared that, save for documents 29 and 30, the documents described in Schedule 1 to the amended originating application are ‘records of … matters relating to … the work under the Contract’, within the meaning of cl 31.10(a). 5. I will hear the parties as to costs. CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the applicant, a developer of land, was the principal under a contract entered into with the respondent, a civil contractor – where the contract was terminated – where the applicant seeks specific performance of certain obligations, said to have survived termination, concerned with the provision of documents – whether the applicant is entitled to specific performance of the obligations concerned with the provision of documents by the respondent Building Industry Fairness (Security of Payment) Act 2017 (Qld) Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36 Cigna Insurance Australia Ltd v General Newspapers Pty Ltd (1992) 7 ANZ Insurance Cases 61-121 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95 MLW Technology Pty Ltd v May [2005] VSCA 29 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Sunrise Auto Ltd v Deputy Commissioner of Taxation (1995) 133 ALR 274 COUNSEL: D Keane KC for the applicant D O’Brien KC for the respondent SOLICITORS: Mills Oakley for the applicant HopgoodGanim Lawyers for the respondent [1] The applicant, a developer of land, was the principal under a contract (“the Contract”) entered with the respondent, a civil contractor. The Contract has been terminated. In -- 2 of 22 -- 3 this proceeding, commenced by originating application, the applicant seeks specific performance of certain obligations, said to have survived termination, concerned with the provision of documents. [2] The proceeding went forward to a final hearing without pleadings. There were some interlocutory steps involving the return of subpoenas for production and subpoenas for production and to give evidence. Affidavits were filed and served. There was no substantive cross examination of any witness. To the extent that the affidavits contained different versions of conversations or events, no witness was challenged in cross-examination about their evidence, it has not been possible to make findings resolving the differences and the parties did not require differences to be resolved. In particular, the parties did not require the court to decide whether the Contract had been repudiated1 or the precise basis on which it had been terminated. That is, the parties were content for the issues raised by the proceeding to be determined on the basis that the Contract has been terminated but without the Court being required to form a view, or make findings, as to the legal basis for the termination. Background facts [3] On 11 October 2022, the parties entered the Contract. [4] The Contract required performance of civil earthworks for a development at Berrinba. There were five separable portions of earthworks, namely: (a) Warehouse 1 located at 98 and 114 Gilmore Road, Berrinba, Qld (“SP 1”); (b) Warehouse 1 located at 98 and 114 Gilmore Road, Berrinba QLD (“SP 2”); (c) Warehouse 2 located at 98 and 114 Gilmore Road, Berrinba QLD, including the construction of the boulder wall and the retaining wall (“SP 3”); (d) Warehouse 3 located at 191 Bardon Road, Berrinba QLD (“SP 4”); and (e) McPhee Drive services and finishing works (“SP 5”). [5] On 4 August 2023, the applicant’s senior project manager, Mr Dobrenov, received notification of a claim by one of the respondent’s subcontractors made under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“the BIF Act”) which asserted that the respondent was indebted to the subcontractor in the sum of $307,976.90 comprising unpaid invoices.2 [6] By on or about 15 August 2023: (a) SP1 and SP2 had reached practical completion;3 (b) The respondent was contending that it had achieved practical completion for SP3;4 (c) The respondent was contending that SP4 and SP5 were nearing completion.5 1 T1-14.31-.46. 2 Affidavit of John Dobrenov filed 12 October 2023 [13]. 3 Affidavit of Alexander Glen Behns filed 10 October 2023, Exhibit AGB-01, pp 188–189. 4 Ibid, pp 190. 5 Ibid [26]. -- 3 of 22 -- 4 [7] On 15 August 2023, the respondent wrote to the applicant (“the 15 August letter”).6 The terms of the 15 August letter are important and require setting out in full. “We would like to express our gratitude for the opportunity to work with you on the 66-82 Gilmore Road, Berrinba Civil Works Project and for your continued trust in [the respondent]. It has been a privilege to collaborate on this endeavour, and we are committed to delivering the highest quality results. Since being awarded the 66-82 Gilmore Road, Berrinba Civil Works Project in 2022, we have encountered unprecedented challenges that have significantly impacted the project’s timeline and costs. We feel it is essential to keep you informed about these circumstances and their implications on the project. The global COVID-19 pandemic has had far-reaching effects on industries worldwide, and the construction sector has not been exempt from its consequences. In Queensland and throughout Australia, lockdowns, travel restrictions, and workforce disruptions have led to delays and increased operational costs. The need for stringent health and safety protocols, as well as the uncertainty surrounding the pandemic, has also resulted in reduced productivity and increased expenses. Furthermore, the Australian Government's stimulus projects, while aimed at boosting economic recovery, have led to a surge in demand for construction materials and services. This heightened demand has subsequently driven up prices for essential materials such as steel, concrete, and asphalt, contributing to the escalating costs of the project. In addition to the domestic challenges, the ongoing conflict in Ukraine has triggered geopolitical instability that has rippled through the global economy. This instability has led to supply chain disruptions, particularly in the availability and cost of raw materials and critical components. The shortage of resources and the uncertainty surrounding their procurement have further strained our ability to manage costs effectively. The global shortages and supply chain disruptions are not limited to construction materials alone; they extend to equipment, machinery, and skilled labour. The competition for these resources has driven up prices and caused delays in project execution, despite our best efforts to mitigate these issues. In addition to these challenges, we must now address the influence of extreme wet weather conditions experienced last calendar year within Queensland. These weather conditions have further exacerbated project timelines, added unforeseen costs, and led to the depletion of company contingency funds designated for such unexpected costs. 6 Ibid, pp 191–193. -- 4 of 22 -- 5 While our team has been working tirelessly to navigate these obstacles and deliver on the promises we made in the initial stages of the project, we regret to inform you that the accumulated challenges have reached a point where we can no longer continue with the current financial constraints. As it has become evident that the cost to complete on our ongoing project far outweighs the projected revenue we will earn. As a responsible organisation, we have diligently explored various avenues to mitigate the impact of these challenges. However, given the magnitude of the cost escalations experienced over recent months, it has become increasingly unviable for [the respondent] to continue this project as per the original contractual obligations. Given the substantial cost escalations and the resulting difference between project cost to complete and the revenue yet to claim, continuing with the projects as originally planned would not be financially viable for our organisation. Based on our current position, the project's cost escalation, as outlined in the attached spreadsheet, has resulted in the following: Current Cost Escalation incurred to date: $483,756.89 + GST Cost Escalation to complete the project: $437,573.85 + GST Upon conducting a thorough contract review, [the respondent] has assessed the following financial aspects: Revenue to Claim: $1.4M Cost to Complete: $2.3M Cash Flow Loss: $0.9M Loss over 1month We propose a constructive dialogue to explore potential solutions collaboratively. We remain committed to finding an equitable resolution that serves the best interests of both parties. This may involve project adjustments, revisiting contractual terms, releasing cash retentions in full, or exploring alternative approaches to ensure the successful completion of the projects while acknowledging the financial realities. To initiate this discussion and comprehensively evaluate the project's situation, we request a meeting at your earliest convenience to discuss this matter. We appreciate your understanding and support during these trying times. We eagerly anticipate a productive discussion and the formulation of a resolution that aligns with the mutual interests of both parties.” [8] The 15 August letter was sent under a covering email which stated:7 “As discussed … please find the attached letter pertaining to the Cost Escalation experienced on the 66-82 Gilmore Road, Berrinba Civil Works. 7 Ibid, pp 195. -- 5 of 22 -- 6 We humbly request a suitable time this week to discuss in person an equitable way to move forwards.” [9] At about 3pm on 17 August 2023, a Microsoft Teams meeting was convened which included the respondent’s construction manager, Mr Behns and Mr Dobrenov. Mr Behns and Mr Dobrenov each gave evidence by way of affidavit. Their recollections about what was said during that meeting differed in some respects and, as I have earlier indicated, those differences are not able to be resolved. Each witness accepted that the discussion had concerned cost escalations and included an acknowledgment by Mr Behns that the costs escalation meant that the cost to complete the balance of the works exceeded the remaining revenue to be earned by the respondent under the Contract.8 Mr Behns and Mr Dobrenov recalled a further meeting on 18 August 2023. Again, their recollections about what was said during that meeting differed and it is not possible to resolve those differences. It was accepted by each witness that Mr Dobrenov had at least indicated that he was discussing matters with senior management of the applicant.9 [10] Between 15 August 2023 and 30 August 2023, the respondent continued to perform work under the Contract and other project specific meetings occurred while it awaited a response from the applicant.10 From around four to six weeks prior to 30 August 2023 there were significant delays in the procurement of trades and execution of works under the Contract and a number of items of work had not commenced as at the date of termination of the Contract.11 [11] On 30 August 2023, the applicant served a termination notice (“the 30 August Notice”) which contended that the 15 August letter amounted to a statement that the respondent was “financially unable to proceed with the Contract” within the meaning of that term as used in cl 44.11(a) so that the applicant was entitled to terminate the Contract under cll 44.11(a), 44.11(g)(i) and 44.4(b). The 30 August Notice also asserted that the 15 August letter was a repudiation of the Contract. [12] On 5 September 2023, the respondent wrote to the applicant disputing that the 15 August letter amounted to a statement that the respondent was “financially unable to proceed with the Contract” and inviting the applicant to withdraw the 30 August Notice.12 [13] The 30 August Notice was not withdrawn, and, on 7 September 2023, the respondent wrote to the applicant alleging that the applicant had repudiated the Contract and advising that it was terminating the Contract.13 [14] By letter to the respondent dated 11 September 2023, the applicant demanded the production of certain documents including quality assurance documents, documents required for certification, test results, Design Documents (as defined in the Contract) 8 Affidavit of Alexander Glen Behns filed 10 October 2023 [31]; Affidavit of John Dobrenov filed 12 October 2023 [21]. 9 Affidavit of Alexander Glen Behns filed 10 October 2023 [33]; Affidavit of John Dobrenov filed 12 October 2023 [28(a)]. 10 Affidavit of Alexander Glen Behns filed 10 October 2023 [34]. 11 Affidavit of John Dobrenov filed 12 October 2023 [16]. 12 Affidavit of Craig Robertson filed 22 September 2023, Exhibit CGR-1, p 180. 13 Ibid, p 184. -- 6 of 22 -- 7 and any applications made to statutory authorities in relation to the execution of the Works (as defined in the Contract).14 Material provisions of the Contract [15] The Contract was contained in a formal instrument of agreement, general conditions of Contract being an amended version of AS 2124-1992 (“the general conditions”), the applicant’s Project Requirements and certain annexures. [16] The general conditions included the following material clauses: (a) Clause 2.1: “‘Contract’ has the meaning given to it in Clause 2.1 of the Formal Instrument of Agreement; ‘Contract Documents’ has the meaning given to it in clause 2.1 of the Formal Instrument of Agreement; ‘Contract Specific Quality Plan’ means a document prepared in accordance with AS/NZS ISO 10005:2006, that forms part of the Contractor’s Quality System documentation and which outlines the specific activities, procedures and records to be used during the performance of the Works; … ‘Contractor’s Quality System’ meant a quality assurance system provided by the Contractor before commencing the Works, which must be in accordance with AS/NZS ISO 9000:2016 and AS/NZS ISO 9001: 2016, and with procedures to achieve quality as outlined in AS/NZS ISO 9000:2016 and AS/NZS ISO; … ‘Post Practical Completion Documentation’ means all certificates, operating and maintenance manuals, documents, and other information that are essential for the use occupation, operation and maintenance of the Works, including: (a) three (3) copies of all drawings depicting the ‘as constructed’ works, maintenance and operating manuals for all plant, equipment, apparatus, machinery, appliances and other items incorporated in the Works (including with respect to all electrical, fire, hydraulic, mechanical, security and communication services); (b) all operation, warranty and maintenance documentation and manuals (to the satisfaction of the Superintendent) for all finishes, fixtures, façade, wall ceiling, floor systems, joinery, glazing and waterproofing; (c) all warranty and guarantee records in relation to all plant, equipment, apparatus, machinery, appliances and other 14 Ibid, pp 188–191. -- 7 of 22 -- 8 items incorporated in the Works, (including with respect to all electrical, fire, hydraulic, mechanical, security and communication services); (d) a certificate from the Contractor, each consultant and any other person who is the author of any Design Documents certifying that the relevant Works the subject of the Design Documents they authored has been undertaken and completed in accordance with the Contract and that unless otherwise identified in the Certificate there are no known Defects in the relevant Works; (e) three hard copies and one soft copy of all Approvals, Design Documents and Programs; (f) a survey showing that the Works have been constructed within the boundaries of the land; (g) all certificates issued by any Authority in relation to the Works which have not previously been delivered to the Principal; (h) a list of all plant and equipment installed in the Works; and (i) commissioning reports; … ‘Practical Completion’ is that stage in the execution of the work under the Contract when– (a)15 the Works are complete and fit for their stated purpose and any purpose which may be reasonably inferred from the Contract except for minor omissions and minor defects– (i) which in the opinion of the Superintendent do not prevent the Works from being reasonably capable of being used for their stated purpose; (ii) which the Superintendent determines the Contractor has reasonable grounds for not promptly rectifying; and (iii)16 rectification of which will not inconvenience the Principal or prejudice the convenient use of the Works; (b) those tests which are required by the Contract to be carried out and passed before the Works reach Practical Completion have been carried out and passed; (c) all warranties, certificates, documents and other information which, in the opinion of the Superintendent, are required for 15 There is an obvious typographical error in the Contract where (a) is designated as (b). 16 As above, (iii) is designated as (ix). -- 8 of 22 -- 9 the use, operation, and/or maintenance of the Works have been supplied to the Superintendent; (d) the Contractor has provided the Superintendent with a certificate signed by a licensed surveyor stating that the whole of the Works are within the boundaries of the Site and that the structural elements of the Works are within the tolerances (if any) stated in the Contract; (e) any other requirements that must be satisfied or completed before Practical Completion can be achieved, as set out elsewhere in this Contract, are satisfied or completed; (f) the Contractor has satisfied all additional completion requirements prescribed in respect of Civil Works in the Principal’s Project Requirements; and (g) the Works are complete to a stage enabling the Principal to be provided with a Level 1 Certification from the Contractor’s geotechnical engineer that the Site has been prepared and filled in accordance with Level 1 Certification. … ‘work under the Contract’ means the work which the Contractor is or may be required to execute under the Contract and includes the Contractor’s Design Obligations, variations, remedial work, Constructional Plant and Temporary Works; … ‘Works’ means the whole of the work to be executed in accordance with the Contract, including variations provided for by the Contract, which by the Contract is to be handed over to the Principal.” (b) Clause 2.2 provided, inter alia, that clause headings and sub-clause headings in the general conditions did not form part of the general conditions and should not be used in the interpretation of the Contract. (c) Clause 4A provided: “Without limiting the generality of Clause 3.1, the Contractor warrants to the Principal that the Contractor (and, where applicable, its officers, employees, subcontractors, suppliers, agents and consultants): (a) at all times shall be suitably qualified and experienced, and shall exercise due skill, care and diligence in the execution and completion of the work under the Contract; (b) shall execute and complete work under the Contract in accordance with the Contract Documents so that the Works, when completed and the work under the Contract, shall: (i) comply with all the requirements of the Contract and all Legislative Requirements, -- 9 of 22 -- 10 (ii) comply with all relevant Australian Standards to the extent that they are not inconsistent with the requirements of the Contract and Legislative Requirements; and (iii) be in accordance with Best Industry Practice; and (iv) be fit for their stated purpose and any purpose which may be reasonably inferred from the Contract; …. (g) has obtained, or will be able to obtain, all necessary consents, permits or authorisations required by any one or more of the Authorities (other than those which the Principal is required to obtain in accordance with the Contract) necessary for it to carry out the work under the Contract in accordance with the requirements of the Contract; …. (i) has satisfied itself of the Legislative Requirements relevant to the work under the Contract and the Works, including in relation to work health and safety; … (m) is and will remain appropriately registered or licensed to the extent required by any relevant Legislative Requirements for the carrying out of the work under the Contract.” (d) Clause 30.2 provided: “(a) The Contractor shall: (i) plan, establish and maintain a conforming quality system in a form reasonable acceptable to the Superintendent; and (ii) ensure that the Superintendent has access to the quality system of the Contractor, its consultants and subcontractors (including the system approved by the Superintendent for the purpose of subclause 30.2(a)) so as to enable monitoring and quality auditing. (b) Any such quality system shall be used only as an aid to achieving compliance with the Contract and to document such compliance. Such system, and anything done or omitted to be done by or on behalf of the Principal or the Superintendent in relation to or in connection with the quality system shall not relieve the Contractor of the responsibility to comply with the Contract.” (e) Clause 31.10 provided: “(a) The Contractor shall make and keep accurate and comprehensive records of all matters relating to the -- 10 of 22 -- 11 Contractor’s tender and the work under the Contract for a period of 5 years after the Date of Practical Completion. The Contractor shall not destroy those records during this period without the prior written approval of the Principal. (b) Without limiting Clause 31.9, the Contractor shall, if given at least 2 Business Days’ prior written notice, grant access to the Principal and Superintendent and their representatives during normal business hours to inspect and take copies of the Contractor’s records referred to in Clause 31.10(a). The Contractor shall ensure that its personnel co-operate fully with the inspection, including by providing facilities and assisting the Principal and the Superintendent to access and take copies of electronic records.” (f) Clause 44 provided: “44 DEFAULT OR INSOLVENCY 44.1 Preservation of Other Rights Subject to Clause 44.10, if a party breaches or repudiates the Contract, nothing in Clause 44 shall prejudice the right of the other party to recover damages or exercise any other right or remedy, whether under the Contract, at law or otherwise. …. 44.4 Rights of the Principal If by the time specified in a notice under Clause 44.2 the Contractor fails to show reasonable cause why the Principal should not exercise a right referred to in this Clause 44.4, the Principal may by notice in writing to the Contractor— (a) take out of the hands of the Contractor the whole or part of the work remaining to be completed; or (b) terminate the Contract. Upon giving a notice under Clause 44.2, the Principal may suspend payments to the Contractor until the earlier of— (c) the date upon which the Contractor shows reasonable cause; (d) the date upon which the Principal takes action under Clause 44.4(a) or (b); or (e) the date which is 10 Business Days after the last day for showing cause in the notice under Clause 44.2. …. 44.5 Procedure when the Principal Takes Over Work If the Principal takes work out of the hands of the Contractor under Clause 44.4(a), or terminates the Contract under Clause 44.4(b), the Principal may without payment to the Contractor: -- 11 of 22 -- 12 …. (c) take possession of such of the Constructional Plant, , (sic) Design Documents and other things on or in the vicinity of the Site as are owned by the Contractor and are reasonably required by the Principal to facilitate completion of the work; …. (f) direct the Contractor to immediately return to the Principal all property of the Principal which is in the possession of the Contractor or its subcontractors, including any documents, information, materials, samples or other objects; and/or …. If the Principal takes possession of Constructional Plant, Design Documents or other things under Clauses 44.5(b) or (c), the Principal shall maintain the Constructional Plant and, subject to Clause 44.6, on completion of the work, shall return to the Contractor the Constructional Plant and any things taken under this Clause which are surplus, and, subject to Clause 13B, the Design Documents. …. 44.9 Rights of the Contractor (a) If by the time specified in a notice under Clause 44.7 the Principal fails to show reasonable cause why the Contractor should not exercise a right referred to in this Clause 44.9, the Contractor may by notice in writing to the Principal suspend the whole or any part of the work under the Contract. …. (c) The Contractor may, by written notice to the Principal, terminate the Contract, if, within 14 days of the date of suspension under this Clause 44.9, the Principal fails: (i) to remedy the breach; or (ii) if the breach is not capable of remedy, to make other arrangements to the reasonable satisfaction of the Contractor. (d) The Contractor shall be entitled to recover from the Principal any damages incurred by the Contractor by reason of the suspension under Clause 44.9(b) as assessed and certified by the Superintendent as moneys due and payable to the Contractor. -- 12 of 22 -- 13 44.10 Rights of the Parties on Termination …. (d) If the Contract is terminated by either party in accordance with Clauses 44.4(b), 44.9 or 45, or at common law, then the Contractor must immediately return or provide to the Principal all copies of documents provided by or on behalf of the Principal to the Contractor under or in respect of the Contract and any documents prepared by the Contractor or its subcontractors in relation to the Works to which the Principal would otherwise have been entitled under the Contract but for the termination. (e) If the Principal has terminated the Contract, the Principal may also, without payment of compensation, take possession of the Design Documents. (f) This Clause 44.10 survives termination of the Contract. 44.11 Insolvency If— (a) a party informs the other party in writing or creditors generally that the party is insolvent or is financially unable to proceed with the Contract; … then, subject to any statutory stay under the Corporations Act 2001, where the other party is— (g) the Principal: (i) the Principal may, without giving a notice to rectify, exercise the right under Clause 44.4(a) or (b); or (ii) upon request in writing by the Principal, the Contractor must novate the Contract to a solvent Related Company of the Contractor with the capacity and financial standing to perform the obligations of the Contractor under the Contract, as approved by the Principal and on terms reasonably requested by the Principal; or (h) the Contractor, the Contractor (sic) may, without giving a notice to rectify, exercise the right under Clause 44.9. The rights given by this Clause 44.11 are in addition to any other right or remedy, whether under the Contract, at law or otherwise and may be exercised regardless of whether there has been a breach of Contract.” (g) Clause 55.5 provided: -- 13 of 22 -- 14 “Termination of the Contract does not relieve any party from that party’s obligations under Clauses 4A, 5.5, 8.6, 8.7, 13, 30, 31.10, 44, 45, 47, 50, 51, 52, 54 and 55.” Real issues in dispute [17] The originating application materially sought the following by way of final relief: “…. 2. A declaration that the respondent has breached clause 44.5 and 44.10 of [the Contract] by failing to provide the applicant with copies of the documents listed in Schedule 1 to this application. 3. An order that the respondent specifically perform clause 44.5 and 44.10 of [the Contract] by providing the applicant copies of the documents listed in Schedule 1 to this application.” [18] The proceeding was initially listed in the Applications List. On the return date, it received a trial date in the Civil List. Prior to the trial date, the applicant issued subpoenas to the respondent and to one of the respondent’s consultants. Those subpoenas sought production of the documents identified in Schedule 1 to the originating application. [19] On the first day of the trial, documents were produced in response to the subpoenas and the parties had the opportunity to inspect those documents. On the second day of the trial, the applicant indicated an intention to amend the originating application. With the consent of the respondent, the applicant ultimately amended the originating application so as to materially seek the following by way of final relief: “2A. A declaration that the Applicant is entitled to inspect and copy the documents listed in Schedule 1 to this application pursuant to clause 31.10 of [the Contract]. 2. Further or in the alternative, A declaration that the respondent has breached clause 44.5 and 44.10 of [the Contract], by failing to provide the applicant with copies of the documents listed in Schedule 1 to this application. 3A. An order that the respondent specifically perform clause 31.10 of [the Contract] by providing the applicant access to inspect and copy, the documents listed in Schedule 1 to this application. 3. Further or in the alternative, An order that the respondent specifically perform clause 44.5 and 44.10 of [the Contract], by providing the applicant copies of the documents listed in Schedule 1 to this application.” [20] The amended originating application also made substantial amendments to Schedule 1. The effect of those amendments was that the applicant limited the claim for relief to the documents produced on subpoena, save for categories 29 and 30 of Schedule 1.17 17 T2-8.03-.06. -- 14 of 22 -- 15 [21] The parties agreed that the following real issues arise for determination:18 “1. Did the 15 August Letter inform [the applicant] that [the respondent] was ‘financially unable to proceed with the Contract’ so that cll 44.11(a), 44.4(b) and cl 44.5 are engaged? 2. If yes to 1, are the documents detailed in the Schedule to the Originating Application required to be provided to [the applicant] under cl 44.5(f) or (g)? In particular: (a) Are the documents ‘property of the Principal’ for the purposes of cl 44.5(f)? (b) Was the direction on 11 September 2023 for the production of those documents detailed in the Schedule to the Originating Application an ‘action concerning … the termination of the Contract’ for the purposes of cl 44.5(g)? 3. Is cl 44.10(d) limited to documents that, at the time of termination, there was an entitlement for the production of that document? 4. Are the documents, ‘documents prepared by’ [the respondent] or its subcontractors ‘in relation to the Works’, to which [the applicant] ‘would otherwise have been entitled under the Contract, but for the termination,’ within the meaning of those expressions, as contained in clause 44.10(d) of the Contract? 5. Are the documents ‘records of all matters relating to … the work under the Contract’ within the meaning of cl 31.10 of the Contract?” [22] These issues are fundamentally concerned with the proper construction of the Contract and, in particular, the general conditions. Although the general conditions were an amended form of standard form general conditions, research has not located any authorities directed to the meaning of the material clauses of the amended general conditions. [23] The correct approach to the interpretation of the Contract was not seriously in issue. [24] A convenient starting point is the often cited statement in Australian Broadcasting Commission v Australasian Performing Right Association Ltd, where Gibbs J said:19 “It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something 18 Further updated document of issues to be determined (MFI F). 19 (1973) 129 CLR 99 at 109–10. -- 15 of 22 -- 16 different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, ‘even though the construction adopted is not the most obvious, or the most grammatically accurate’, to use the words from earlier authority cited in Locke v Dunlop (1888) 39 Ch D 387, at p 393, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley’s Case (1880) 16 Ch D 681, at p 686. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503, at p 514, that the court should construe commercial contracts ‘fairly and broadly, without being too astute or subtle in finding defects’, should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf. Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, at p 437).” [25] The terms of a commercial contract are to be understood objectively by what a reasonable businessperson would have understood them to mean.20 The reasonable businessperson is someone placed in the position of the parties at the time of the Contract.21 It is from that person’s perspective that the court considers the language used by the parties, the surrounding circumstances known to them and the commercial purpose and objects of the contract.22 A court is entitled to approach the task of giving a commercial contract a business like interpretation on the assumption “that the parties intended to produce a commercial result”.23 A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.24 [26] In many cases, it may be possible to undertake the process of construction by reference to the contract alone. Usually, the process of construction occurs by reference to the contractual text and contextual notice provided by that text. It is always legitimate to look to context apparent from, or provided by, the contractual language.25 It may sometimes be legitimate to have recourse to events, circumstances and things external to the contract and which were known to the parties. Recourse to events, circumstances and things external to the contract may be necessary to identify 20 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544, 551 per Kiefel, Bell and Gordon JJ. 21 Ibid. 22 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 461–462 [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640, 656 [35] per French CJ, Hayne, Crennan and Kiefel JJ. 23 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640, 657 [35]. 24 Ibid. 25 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [46] per French CJ, Nettle and Gordon JJ; Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95, [45]. -- 16 of 22 -- 17 the commercial purpose or objects of the contract “where that task is facilitated by an understanding ‘of the genesis of the transaction, the background, the context … in which the parties are operating’”.26 [27] In the present case, the parties accepted that there were no extrinsic facts relevant to the construction of the Contract.27 The first issue [28] The applicant submitted that the 15 August letter fell to be interpreted, from the viewpoint of a commercial person, having regard to its context. The applicant’s submissions were directed towards how “notices given by parties to a commercial contract”28should be interpreted. The authority to which I was referred29 was directed to the approach to the construction of commercial contracts and notices given pursuant to such contracts. These principles may be accepted as uncontroversial. A difficulty with the applicant’s argument is that, by calling in aid these principles, it effectively assumed that the 15 August letter was in fact a notice given pursuant to the Contract. As the 15 August letter did not in terms purport to be a notice given pursuant to the Contract, I am not prepared to assume that it was objectively intended to be such a notice. [29] Before turning to its language, it may be noted that the applicant relied upon three matters of context in support of its submission as to the proper construction of the 15 August letter. Those matters comprised the receipt on 4 August 2023 of the subcontractor’s claim under the BIF Act, the evidence of a slowdown in the progress of the works prior to 30 August 2023 and the conversations during the meetings of 17 and 18 August 2023. I do not find any of these contextual matters to be of particular assistance to the proper construction of the 15 August letter. None of the matters relied upon constitute admissions by the respondent that it was “financially unable to proceed with the Contract”. To the extent that inferences were sought to be drawn from these matters, the inferences involved speculation and were not clear and compelling. [30] The ultimate question is whether, by the 15 August letter, the respondent informed the applicant in writing that the respondent was financially unable to proceed with the Contract. That question directs attention to the language of the 15 August letter. The applicant particularly emphasised the language “we regret to inform you that the accumulated challenges have reached a point where we can no longer continue with the current financial constraints”, “… it is becoming increasingly unviable for [the respondent] to continue this project as per the original contractual obligations” and “… continuing with the project as originally planned would not be financially viable for our organisation”. [31] The respondent’s submissions placed some emphasis upon the heading to cl 44.11 which I propose to ignore because of cl 2.2 of the general conditions. Otherwise, the respondent sought to emphasise that the contractual language in cl 44.11(a) was 26 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 117 [49] per French CJ, Nettle and Gordon JJ, citing Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640, 657 [35]. 27 T1-24.41 and T2-46.25. 28 Supplementary submissions on behalf of the applicant [14]. 29 MLW Technology Pty Ltd v May [2005] VSCA 29. -- 17 of 22 -- 18 directed to the circumstance of the respondent having informed the applicant in writing that the respondent “is financially unable to proceed with the Contract” not that it was “financially unviable” for the respondent to perform the Contract. The point of distinction sought to be drawn was between a situation where the respondent did not have the financial wherewithal to perform the Contract and a situation where the respondent would make a financial loss as a result of performing the Contract. [32] In my consideration, the respondent’s submission that cl 44.11(a) is fundamentally concerned with the financial position of the respondent should be accepted. It may be observed in this regard that a contemplated consequence of the Contractor informing the Principal in writing that the Contractor is financially unable to proceed with the Contract is that the Principal may request the Contractor to novate the Contract to a solvent related company “with the capacity and financial standing to perform the obligations of the Contractor under the contract”.30 [33] I find that the 15 August letter did not inform the applicant that the respondent was “financially unable to proceed with the Contract” within the meaning of that expression as contained in cl 44.11(a). I answer the first issue, no. The second issue [34] Given my answer to the first issue, it is not necessary to answer the second issue. The third issue [35] It was uncontroversial that, whatever the legal basis for the termination of the Contract, that basis fell within the type of termination contemplated by cl 44.10, so as to engage cl 44.10(d).31 [36] The Contract contemplated a number of different types of dealings with documents. Those dealings variously involved access32 to documents, access for the purpose of inspecting and copying,33 taking possession of documents,34 returning possession of documents35 and returning or providing documents.36 Against this background, the material, substantive obligation within cl 44.10(d), which survives termination of the Contract, is an obligation on the part of the Contractor to “immediately return or provide to the Principal … any documents prepared by the Contractor or its subcontractors in relation to the works to which the Principal would otherwise have been entitled under the Contract but for the termination”. Properly construed, that language directs attention to an entitlement, as at the time of termination, to the immediate provision of a document that had then been prepared. It is that entitlement which survives termination. To the extent that documents have been prepared by the Contractor or its subcontractors in relation to the Works, cl 44.10(d) is concerned with the Principal’s entitlement to be provided, or that is, supplied or furnished, with those documents. In my consideration, cl 44.10(d) is relevantly limited to any 30 Clause 44.11(g) of the Contract. 31 T2-31.10-.40. 32 Clause 30.2 of the Contract. 33 Clause 31.10 of the Contract. 34 Clause 44.5(c) of the Contract. 35 Clause 44.5(f) of the Contract. 36 Clause 44.10 of the Contract. -- 18 of 22 -- 19 documents that had been prepared at the time of termination, and in respect of which, the Principal had an existing entitlement to then be provided. [37] The third issue was framed in terms of an entitlement for “the production” of documents. That characterisation is not strictly reflective of the contractual language. I would answer the third issue as follows. Clause 44.10(d) is limited to documents which as at the time of termination of the Contract: (a) had been prepared by the Contractor or its subcontractors in relation to the Works; and (b) the Principal was then entitled to be provided by the Contractor. The fourth issue [38] There are three aspects to this issue, namely whether the documents are documents: (a) “prepared by” the respondent or its subcontractors; (b) in relation to “the Works”; (c) which, as a matter of entitlement, are to be provided to the applicant. [39] Ultimately, there was no issue about the first two aspects. The real issue concerned whether the documents were, as a matter of entitlement to be provided to the applicant. That issue falls to be considered against the background of my reasoning in relation to the third issue. [40] The applicant made a variety of submissions as to its entitlement to be provided with the documents. I address those submissions as follows: (a) By reason of the parties’ approach to the proceeding, the Court is not in a position to make any finding as to the legal basis for the termination of the Contract, other than to conclude that what has occurred has engaged cl 44.10. To the extent that the applicant sought to make a submission on the basis that cl 44.5 applied to the facts, the premise of that submission, namely that the applicant had lawfully taken the work out of the hands of the respondent under cl 44.4(a), was not established. I reject that submission which was made in respect of document categories 1, 9, 11 to 30, 33 to 37 and 41 to 45 of Schedule 1. (b) The applicant relied upon cl 31.10 as providing “a continuing right to obtain the … documents”. However, cl 31.10(b) confers upon the applicant a right of “access … to inspect and take copies of” the Contractor’s records referred to in cl 31.10(a). The clause does not impose an obligation on the respondent to “provide” documents to the applicant. I reject that submission which was made in respect of document categories 1, 9, 11 to 30, 33 to 37 and 41 to 45 of the Schedule 1. (c) The obligation imposed by cl 30.2, which is in terms of the Superintendent being given “access to the quality system of the Contractor, its Contractors and subcontractors”, is not to be equated with an obligation on the part of the Contractor to “provide” documents which comprise the quality system to the Principal. The applicant sought to equate the obligation of access with an obligation to provide documents. I reject that submission which was made in -- 19 of 22 -- 20 respect of document categories 1, 9, 11 to 30, 33 to 37 and 41 to 45 of Schedule 1. (d) The obligation imposed by cl 31.6 is to make test results “available by each party to the other”. The applicant sought to construe that clause as imposing an obligation on a party to “provide” test results to the other party. I reject that submission which was made in respect of document categories 9, 11 to 30, 33 to 37 and 42 to 45 of Schedule 1. (e) In broad terms, the applicant submitted to the effect that a document that would have been required to be produced to demonstrate that the respondent had achieved practical completion was a document to which the applicant was entitled as at the date of termination. That submission was effectively made in respect of document categories 1, 9, 11 to 30, 33 to 37 and 42 to 45. In my respectful consideration, that submission is overreaching. A document that may have been required to be produced to establish that a portion of the works was practically complete, is not to be equated with a document to which the applicant was entitled as at the date of termination. To the extent that the applicant relied upon the definition of “Practical Completion” as contained in cl 2.1, that definition relevantly speaks in terms of “certificates, documents and other information which … are required for the use, operation and/or maintenance of the Works”,37 a certificate signed by a licensed surveyor,38 and certification from the Contractor’s geotechnical engineer.39 None of the documents in Schedule 1 satisfy those descriptions. Further, to the extent that the applicant relied upon the definition of “Post Practical Completion Documentation” as contained in cl 2.1, that definition was limited to certificates, manuals, documents and other information essential for the use, occupation, operation and maintenance of the Works. There is no dispute that, as at termination, only SP1 and SP2 had reached practical completion and SP3, SP4 and SP5 were not practically complete.40 This definition can only have application to documents relating to SP1 and SP2. The evidence did not establish that any of the documents sought in Schedule 1 could properly be regarded as Post Practical Completion Documentation within the meaning of that definition. (f) To the extent that the applicant relied upon cl 2.1 to submit that, in respect of the documents concerning SP3, SP4 and SP5, those documents “would have been required to be produced to demonstrate that the Contractor has achieved practical completion”, that submission was not directed to an entitlement existing as at the time of termination. (g) In respect of documents concerning SP3, SP4 and SP5, to the extent that the applicant relied upon cll 2.1 and 42.7 to assert an entitlement to “Post Practical Completion Documentation”, those submissions were not directed to an entitlement existing as at the time of termination. 37 Clause 2.1(c) of the Contract. 38 Clause 2.1(d) of the Contract. 39 Clause 2.1(g) of the Contract. 40 Respondent’s outline of submissions [75]; Affidavit of Alexander Glen Behns filed 10 October 2023 [45]; Affidavit of John Dobrenov filed 12 October 2023 [11]. -- 20 of 22 -- 21 The fifth issue [41] The applicant relied upon cl 31.10 as founding a continuing obligation on the part of the respondent to provide access to the applicant to inspect and take copies of the respondent’s records of all matters relating to the work under the Contract. The parties were content to proceed on the basis that, in the circumstances of this case, the notice requirement provided for in cl 31.10(b) had been effectively satisfied.41 [42] The real issue as between the parties concerned whether the documents contained in Schedule 1 were to be regarded as “records” within the meaning of cl 31.10. The relevant language within cl 31.10(b) is “keep accurate and comprehensive records of all matters relating to … the work under the Contract”. The expression “work under the Contract” is defined to mean “the work which the Contractor is or may be required to execute under the Contract and includes the Contractor’s Design Obligations, variations, remedial work, Constructional Plant and Temporary Works”. The respondent sought to limit the meaning of “records” to “what are normally regarded as records, which are things like business records”42 and “documents that record the interactions between parties”.43 It was submitted that “records” did not extend to “things like drawings and plans”44 or to any document in relation to the project.45 In support of that submission, the respondent cited Sunrise Auto Ltd v Deputy Commissioner of Taxation46 as authority for the proposition that the term “record” has “a more confined definition”.47 Sunrise concerned whether a document might properly be described as “any record in the custody of the commissioner” within the meaning of reg 38 of the Income Tax Regulations.48 In the course of construing that expression, the Full Court observed that it may be accepted that the word “record” is a word of wide meaning49 and that its particular meaning is to be discerned from context.50 In the present context, the Contract used the word “record” along with words of wide import namely “all matters relating to … the work under the Contract”. In my view, there is no objective intention to limit or confine the meaning of “record”. In this context, “a record” should be interpreted as encompassing at least one of the plain meanings of that term, namely “information … preserved in writing or the like.”51 [43] In contending for a confined meaning of “record”, the respondent submitted that any other interpretation would render otiose other specific clauses of the Contract directed to the Principal’s right to documentation in specific identified circumstances. The clauses particularly relied upon by the respondent were cll 44.5(c), 44.5(f), 44.10(d) and 44.10(e). In my respectful view, the respondent’s reliance upon these clauses was misplaced. Clause 31.10, which survives termination, is not directed to any situation of identified fault and simply contemplates records being produced by the Contractor 41 T2-18.05-.15. 42 T2-14.12-.17. 43 T1-28.42. 44 T2-14.15-.16. 45 T1-30.12-.18. 46 (1995) 133 ALR 274, 283. 47 T1-34.44. 48 To the Income Tax Assessment Act 1936 (Cth). 49 Cigna Insurance Australia Ltd v General Newspapers Pty Ltd (1992) 7 ANZ Insurance Cases 61-121, 77,602. 50 Sunrise Auto Ltd v Deputy Commissioner of Taxation (1995) 133 ALR 274, 283. 51 Macquarie Dictionary, 8th Edition, p 1275. -- 21 of 22 -- 22 for the purpose of allowing the Principal, the superintendent and their representatives to take copies of those records. The clauses relied upon by the respondent were directed to quite different scenarios where there has been termination arising by reason of identified fault, or circumstances pertaining to one party, where the other party then becomes entitled to take possession of, as distinct from merely copy, documentation. [44] In terms of matters of context, it is clear that the “records” contemplated by cl 31.10 extend to electronic records.52 Clause 31.10 appears as part of a suite of clauses directed to the general subject of examination, inspections, measurement and testing of any material or work under the Contract.53 The records objectively contemplated are of all matters relating to the work which the Contractor is or may be required to execute under the Contract, including the Contractor’s Design Obligations, variations, remedial work, constructional plant and temporary works. These matters suggest, and I find, that the term “record” was objectively intended to include paper or electronic documents which preserved information concerning all matters relating to the work under the Contract. The documents identified in Schedule 1 (save for documents 29 and 30) all fall within that broad description. In particular they comprise as constructed drawings, geotechnical certification reports, compaction reports including compaction testing results, records and plans relating to unsuitable replacement and treatment of subgrade, retaining wall design drawings and sign off documentation, clearing reports, material quality testing reports, gravel compactions, testing reports, material supplier certifications, backfill and bedding test results, concrete compressive strength reports, liner certifications, bedding material test reports, material and supplier certifications and photos of sections of the works. [45] Clause 31.10 refers to records made and kept by the Contractor and is directed to documents in the possession of the Contractor. There was no evidence that documents 29 and 30 exist or are within the possession of the Contractor. [46] I answer question 5 as follows: save for documents 29 and 30, the documents described in Schedule 1 are “records of … matters relating to … the work under the Contract” within the meaning of cl 31.10(a). 52 Clause 31.10(b) of the Contract. 53 Refer to cll 31.1 to 31.9 of the Contract. -- 22 of 22 --