Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: St Hilliers Construction Pty Ltd v Fitzpatrick Investments Pty Ltd [2013] NSWCA 104
• Hearing dates: 2 April 2013
• Decision date: 09 May 2013
• Before: Meagher JA at [1]; Emmett JA at [2]; Sackville AJA at [45]

Decision

The Court:

1.Orders that the appeal be allowed.

2.Orders that the orders made by Hammerschlag J on 2 July 2012 be set aside and the following orders be made in lieu thereof:

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

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

(iii) The Court orders that the defendant pay interest on the sum secured by the bank guarantee at the rate prescribed by the Court, calculated from 21 March 2012.

(iv) The Court orders that the defendant pay the plaintiff's costs of the proceeding.

3.Orders that the respondent pay the appellant's costs of the appeal.

4.Directs that the parties make any written submissions as to costs of the proceeding at first instance no later than 16 May 2013.

5.Orders that order (iv) of the orders made in lieu of the orders of the primary judge, set out in order 2 above, be conditional upon no written submissions being filed in accordance with order 4.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: BUILDING AND CONSTRUCTION - where contract required contractor to provide bank guarantees as security for performance - where contractor entitled to reduction of security if conditions fulfilled - whether conditions satisfied
• Cases Cited: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579; Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522
• Category: Principal judgment
• Parties: St Hilliers Construction Pty Ltd (under Deed of Company Arrangement) (Appellant); Fitzpatrick Investments Pty Ltd (Respondent)
• Representation: Counsel: D T Miller SC/Ms N Shaw (Appellant); M G Rudge SC/B C A Bradley (Respondent); Solicitors: Colin Biggers & Paisley (Appellant); Clark McNamara Lawyers (Respondent)
• File Number(s): CA 2012/234689

Decision under appeal

• Citation: [2012] NSWSC 804
• Date of Decision: 2012-07-02 00:00:00
• Before: Hammerschlag J
• File Number(s): 12/234689

Judgment

1 MEAGHER JA: I agree for the reasons given by Emmett JA and Sackville AJA that this appeal should be allowed and the orders proposed by Emmett JA made.

2 EMMETT JA: This appeal is concerned with the construction of provisions of a building contract (the Contract) entered into on 6 November 2008 between the appellant, St Hilliers Contracting Pty Limited (the Contractor), and the respondent, Fitzpatrick Investments Pty Limited (the Principal). More particularly, it is concerned with the effect of certificates purportedly issued under the Contract by consultants to the Contractor (Consultants). The question is whether the certificates satisfied the prerequisites under the Contract for the reduction of the security provided by the Contractor for the performance of its obligations under the Contract. A judge of the Court concluded that they did not. The Contractor has appealed from that determination.

3 By the Contract, the Contractor agreed to carry out the Works (as defined). The Works consisted of the design and construction of a commercial office building in the Docklands area of Melbourne, comprising a basement carpark, a retail area and main entrance on the ground floor and seven office levels. The Contract consists of:

• a formal instrument of agreement;
• general conditions of contract AS4300 (the General Conditions);
• annexures part A to part T to the General Conditions; and
• the Contract Documents described in annexure part J to the General Conditions.

4 The relevant operative provisions of the Contract are to be found in the General Conditions. References in these reasons to clause numbers, unless the context indicates otherwise, are to provisions of the General Conditions.

The Relevant Provisions of the General Conditions

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

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

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

a) issue of the Certificate of Practical Completion; and

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

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

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

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

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

b) reports on preliminary commissioning of services installations;

c) operating and maintenance manuals;

d) as built Design Documents;

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

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

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

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

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

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

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

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

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

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

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

c) a cash flow schedule; and

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

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

• receipt of the Contractor's Final Payment Claim;
• where the Contractor fails to provide such a claim, the expiration of the period of three months after the Date of Practical Completion; and
• expiry of the Defects Liability Period.

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

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

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

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

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

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

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

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

...

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

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

...

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

(i) all as built documentation ... ;

(ii) all operational manuals and maintenance documentation ... ;

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

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

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

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

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

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

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

• the issue of each payment claim;
• any Certificate of Practical Completion;
• acceptance of defects rectification; and
• the Final Certificate.

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

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

22 Annexure part F to the General Conditions consists of a form of statutory declaration with two attachments. The statutory declaration is to be given by an authorised representative of the Contractor. It relevantly declares that:

• all remuneration payable to employees of the Contractor has been paid in full;
• all amounts due from the Contractor to sub-contractors have been paid in full;
• all progress claims under the Contract that the Contractor is entitled to submit have been submitted;
• each of the statements set out in attachment 1 is true and correct; and
• the Contractor has no reason to believe that any of the statements made by the Consultants in attachment 2 is not true and correct in every particular.

23 Attachment 1 is a statement by the Contractor:

• as to whether there are material issues between the Contractor or the Superintendent;
• as to whether there are material disputes between the Contractor and any sub-contractor;
• that work has been completed in accordance with applicable Design Documents and the Contract;
• that the Contract Sum, as adjusted, less the amounts claimed and amounts previously certified, allows sufficient money for the completion of the Works;
• as to whether the Project is progressing in accordance with the Contractor's program; and
• as to whether the Contractor is aware of any matters that may result in the environmental condition of the site or the Works not being fit for their intended use.

24 Attachment 2 is a statement by Consultants and Sub-contractors, under which the Consultant or Sub-contractor, with regard to the discipline for which that Consultant or Sub-contractor is responsible, states:

• whether there are material disputes with the Contractor in connection with the Works;
• that work to the date of this statement has been completed in accordance with applicable Design Documents and the Contract and there are no apparent defects that have not been notified to the Superintendent; and
• whether the Consultant or Sub-contractor is aware of any matters that may result in the site or the Works not being fit for their intended use.

Attachment 2 contains a heading "Progress Claim Statement" and provision for reference to a progress claim number. As will become apparent, the certificates in dispute in the proceeding were adaptations of attachment 2.

The Circumstances Giving Rise to the Dispute

25 Before dealing with the precise question of construction raised in the appeal, it is necessary to say something more about the progress of the Works, the giving of a Certificate of Practical Completion by the Superintendent and of the provision of statements by the Consultants.

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

• Bank Guarantee - M07140-2 for $941,748.90 dated 17 November 2008;
• Bank Guarantee - M07140-3 for $741,748.90 dated 17 November 2008; and
• Bank Guarantee - M07140-4 for $200,000 dated 19 November 2008.

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

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

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

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

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

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

The Question in the Appeal

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

34 The primary judge concluded that the documents did not satisfy that prerequisite in clause 9.9. His Honour considered that the words "[w]ork to the date of this [s]tatement" constituted a qualification and that therefore the statements constituted less than the fulfilment of the condition. His Honour considered that the Principal was entitled to receive, and clause 9.9 requires, an unqualified certification that the relevant work has been completed, not that work to a particular date has been completed. His Honour considered that the words in question constituted an important and unjustified qualification to the certification and that that conclusion was bolstered by the fact that the form of the documents was clearly an adaptation of the form to be used in relation to progress payments, which envisages future payments for future work yet to be done.

35 The question is whether, in the circumstances in which the documents were provided by the Principal and the Superintendent, each of the Consultants, by the language used, was to be understood, viewing the matter objectively, to be certifying that the relevant work under the Contract had been completed "in accordance with the Contract and the approved design documents". The reference to "relevant work" in clause 9.9 must be understood as reference to the work relevant to the particular discipline of the certifying Consultant.

36 It is important that, while the documents in question were clearly adapted from attachment 2 to annexure part F, significant changes were made to the form in attachment 2. Thus, there is no reference in the documents to "progress claim statement", or to a progress claim number. Rather, there is a reference to "CSC Docklands - M07140". It is common ground that that is a reference to the Contract. In lieu of a reference to a progress claim number, there is a reference to "Practical Completion". Further, the following words have been inserted into the statement:

"for the purposes of all progress claims and practical completion of the Project".

The express reference to Practical Completion in two different places can only indicate that the Consultant who signed a document was intending to do more than simply provide a certification in connection with a progress claim. It is quite apparent that the respective Consultants were intending to say something about the work necessary to achieve Practical Completion.

37 In that context, the reference to "[w]ork to the date of this [s]tatement" must be understood as a reference to work necessary to achieve Practical Completion. The definition of Practical Completion itself contemplates that the Works may not be complete because of minor omissions and minor defects that do not prevent the Works from being used for their intended purpose. It must be remembered that, on 14 November 2011, the Superintendent had certified 31 October 2011 as the Date of Practical Completion. Further, the Principal had actually been in occupation of the works for more than 12 months.

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

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

Notice of Contention

40 The Principal filed a notice of contention raising a question that should not have been seriously raised. The Principal contended that the primary judge erred in rejecting several affidavits sworn by Consultants. An example is an affidavit sworn on 11 April 2012 by Ms Jennifer Nolan, a director of the Consultant for the architectural services discipline.

41 Ms Nolan asserted that the statements contained in the document signed by her on behalf of the architect Consultant were made in respect of the agreement between the Contractor and the architect. She asserted, specifically, that "the Contract" referred to in paragraphs (b) and (c) of the document signed by her is the contract between the architect and the Contractor. Ms Nolan then asserted that the statements contained in the certificate signed by her were not made in respect of any other contract, including any contract between the Principal and the Contractor. She asserted that she had not been provided with, and was not aware of, the terms of any contract between the Contractor and the Principal and that the architect had never been provided with a copy of the Contract between the Contractor and the Principal.

42 Clearly, the assertions in the affidavit are concerned with what may have been a subjective understanding on the part of Ms Nolan as to the meaning of the document signed by her. As such, they were clearly inadmissible. The document must be construed according to its terms, in the context in which it was provided, and having regard to the relevant surrounding circumstances. The fact that Ms Nolan may have intended, if she did, to refer to some agreement between the architect and the Contractor, an intention that was not conveyed to anyone else by the document, can have no bearing on the meaning of the document. The notice of contention must be rejected.

Conclusion

43 It follows from the above that the appeal should be upheld. The order made by the primary judge that the proceeding be dismissed should be set aside. In lieu of the orders made by the primary judge, there should be a declaration that, as at 21 March 2012, the date when the documents in question were provided to the Principal and the Superintendent, the Principal's entitlement to security under the Contract was reduced to 50 per cent of the security provided by the Contractor under clause 5.2 of the Contract. The Principal should be ordered to return bank guarantee number M07140-2 in the sum of $941,748.90 issued by NAB on 17 November 2008. The Principal should be ordered to pay interest on the sum secured by the bank guarantee at the rate prescribed by the Court, calculated from 21 March 2012. The Principal should pay the Contractor's costs of the appeal.

44 It would appear to follow that the Principal should pay the Contractor's costs of the proceeding before the primary judge. However, the Court has heard no argument as to that question. If the parties wish to be heard on the question of costs, they should be directed to make written submissions on that question within seven days.

45 SACKVILLE AJA: I agree with the orders proposed by Emmett JA and with his Honour's reasons. I add the following brief observations. I use the same abbreviations as Emmett JA.

46 As Emmett JA has noted, the critical issue in this appeal is whether the "Consultants and Subcontractor Statements" ("Statements") issued by the various Consultants satisfied the requirement in cl 9.9 of the General Conditions. Clause 9.9 provides as follows:

Certifications by Consultants

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

...

47 The Statements completed by each consultant (set out in the hyperlink to Emmett JA's judgment and as attached) were clearly adapted from Attachment 2 to Part F of the Annexure to the General Conditions. Under the General Conditions, Attachment 2 is intended to be the statement used in relation to a claim for money, as appears from cll 9.9, 42.1(b) and the heading to Attachment 2 ("Progress Claim Statement - Progress Claim No"). As Emmett JA has pointed out, the Statements completed by the consultants incorporated some important amendments to the form of statement set out in Attachment 2.

48 The dispute as to construction comes down to this. The Principal says that the language of sub-para (b) of the Statement, insofar as it states that "Work to the date of this Statement has been completed in accordance with applicable Design Documents and the Contract", refers to work that has been completed at the date of the Statement, regardless of whether it has been completed in a manner that satisfies sub-para (a) of the definition of "Practical Completion" (cl 2). The Contractor's interpretation is that sub-para (b) of the Statement is intended to certify that the work done at the date of the Statements has been completed in a manner that satisfies sub-para (a) of the definition of "Practical Completion".

49 It is common ground that the contractual documents are to be construed objectively, paying close attention to the language used by the parties, the commercial circumstances that the document addresses and the objects it is intended to secure: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 at [22], per Gleeson CJ; Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522, at [15], per Gleeson CJ, McHugh, Gummow and Kirby JJ. It is also common ground that the Statements must be construed objectively having regard to the same matters.

50 On this basis, the Contractor's interpretation is to be preferred. The heading to the Statements (one of the changes to Attachment 2) makes it clear that they have been prepared for the purposes of "Practical Completion". The first line of the Statements records that the Consultant is making the various statements (including that in sub-para (b)) "for the purposes of all progress claims and practical completion of the Project". In my opinion, the bolded words can only convey to an objective reader that the Statement has been prepared to satisfy the requirement of cl 9.9 that the Consultants certify in writing that "the relevant work under the Contract has been completed in accordance with the Contract and the approved design documents". And that, in substance, is the language used in sub-para (b) of the Statement itself.

51 The inclusion in sub-para (b) of the words "to the date of this Statement" does not detract from this conclusion. The likelihood is that these words were included because the Statements were adapted from Attachment 2, which includes the words to which I have referred. In any event, the words are not mere surplusage. The General Conditions contemplate that some minor works may have to be carried out by the Contractor and, presumably, Subcontractors after the date of Practical Completion (see sub-para (a) of the definition of "Practical Completion"). The words in sub-para (b) of the Statement reflect the fact that minor remedial works and the like may still have to be undertaken after the date of Practical Completion and that the Statements do not relate to any such additional work.

52 The conclusion that the Contractor's construction of cl 9.9 and of the Statements is to be preferred can be reached without reference to the commercial context. However, the context adds force to the conclusion. The relevant matters include the following:

• the Superintendent had certified some months previously that the Project had reached Practical Completion;
• the Principal had entered into occupation of the premises well before the Consultants signed the Statements; and
• the Principal could not identify in argument any purpose served by the Statements other than to satisfy the requirements of cl 9.9 of the General Conditions.

For the reasons given by Emmett JA and for these additional reasons I agree with the orders made by his Honour.

**********

Decision last updated: 09 May 2013