Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Jabbcorp (NSW) Pty Ltd v Strathfield Golf Club [2021] NSWCA 154 Hearing dates: 28 June 2021 Decision date: 27 July 2021 Before: Basten JA at [1]; Leeming JA at [3]; Emmett AJA at [70]. Decision: Appeal dismissed with costs. Catchwords: CONTRACT – construction – design and construct contract – contractor claimed additional payment for works required pursuant to development consent – whether works were "Excluded Works" – significance of definition commencing "Notwithstanding any other clause" – significance of grammatical meaning of clause – clause required to be read as a whole, harmoniously with other provisions in contract Cases Cited: Angas Securities Ltd v Small Business Consortium Lloyds Consortium No. 9056 [2016] NSWCA 182 Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101; [2009] UKHL 38 Director of Public Prosecutions v Leys (2012) 44 VR 1; [2012] VSCA 304 Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2004] NSWSC 754 Fitness First Australia Pty Ltd v Fenshaw Pty Ltd (2016) 92 NSWLR 128; [2016] NSWCA 207 Gourmania Holdings Pty Ltd v Schlegel [2021] WASCA 28 Jabbcorp (NSW) Pty Ltd v Strathfield Golf Club [2020] NSWSC 1317 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Piper v Corrective Services Commission of New South Wales (1986) 6 NSWLR 352 Price v JF Thompson (Qld) Pty Ltd [1990] 1 Qd R 278 Re Bland Bros and the Council of the Borough of Inglewood (No 2) [1920] VLR 522 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 XL Insurance Co SE v BNY Trust Company of Australia Ltd [2019] NSWCA 215 Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 Texts Cited: R Dickerson, The Fundamentals of Legal Drafting (2nd ed, Little, Brown & Co, 1986) Category: Principal judgment Parties: Jabbcorp (NSW) Pty Ltd (Appellant) Strathfield Golf Club (Respondent) Representation: Counsel: M Christie SC, D Weinberger (Appellant) D Rayment, A Smorchevsky (Respondent) Solicitors: Mason Parkes Lawyers (Appellant) Swaab (Respondent) File Number(s): 2020/287957 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity – Technology and Construction List Citation: [2020] NSWSC 1317 Date of Decision: 1 October 2020 Before: Ball J File Number(s): 2018/379786 [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.] Judgment 1. BASTEN JA: I agree with Leeming JA that the appeal should be dismissed with costs; I also agree with his reasons. 2. The trial judge, Ball J, dealt expeditiously with a contractual dispute heard over four days, delivering judgment in under two weeks: Jabbcorp (NSW) Pty Ltd v Strathfield Golf Club [2020] NSWSC 1317. In addressing the amounts claimed by the builder in addition to the contract sum, in reliance on par (u) in the definition of "Excluded Works", the judge focused on the meaning of "[a]ny works required on the golf course and outside the construction boundary of the Site": at [65]-[89]. Ball J's reasoning is persuasive and complements that set out below. 3. LEEMING JA: This appeal reduces to a single issue of construction. The issue arises from the parties' contract to design and construct a new clubhouse, access road and associated works on a large parcel of land owned by the respondent Club, following the latter's sale of part of its land for residential redevelopment. 4. The parties had been divided on many issues. Some were resolved consensually during a hearing which occupied four days, and others by the judgment delivered, promptly, a fortnight later: Jabbcorp (NSW) Pty Ltd v Strathfield Golf Club [2020] NSWSC 1317, from most aspects of which no appeal has been brought. To the extent that the notice of appeal concerned variation 14, this was abandoned when the appeal was heard. What remains is, in substance, a single issue of construction, namely, whether Jabbcorp is entitled to be paid by the Club for variations 14A and 59. If it is, the amount (some $700,000 plus GST) was resolved by the primary judge, and is not disputed on appeal. The issue is whether those variations fall within the definition of "Excluded Works", thereby rendering the Club liable for payment over and above the $23,400,730 contract price. 5. The issue as presented in this Court diverges from what occurred at the time. The notices of variation, which were each dated 23 October 2018, described the variations as "Drainage, pavement and other works surrounding greenkeepers shed to the southern and western sides" and "Works on golf course and outside the construction boundary" respectively. Both stated that without the principal's "approval and direction of this variation", Jabbcorp was "not authorised to proceed with the Works". At trial, Jabbcorp seems to have maintained that the work to which variations 14A and 59 related was work which was not required to be done pursuant to the contract, or else was ambivalent on that issue. In this Court, Mr Christie (who had not appeared at first instance) candidly acknowledged on behalf of Jabbcorp that the work was required to be done. Matters which were common ground 1. Three matters which were common ground made this appeal more straightforward than the trial. 2. First, the details of the works the subject of the two variations do not matter. Consistently with the descriptions in the notices, they primarily related to the construction of a stormwater drainage system which discharged into the Cooks River to the south of the golf course, and pavement and other works surrounding a greenkeeper's shed. It will be sufficient for present purposes to observe that they were required to be undertaken by the terms of the Club's development consent and they were wholly or predominantly outside the immediate footprint of the new clubhouse. Indeed, the drainage system extended to the boundary furthest from the clubhouse. 3. Secondly, although there was extensive cross-examination at trial and lengthy affidavits from both sides concerning the negotiations leading up to and the drafts of the contract, the primary judge said that Jabbcorp's "appeal to the surrounding circumstances is largely misplaced" (at [69]), and no part of either side's submissions in this Court addressed those negotiations or the circumstances when regard may be had to such material. Save perhaps to note that both parties retained lawyers prior to signing the contract, there is no need for the purposes of this judgment to summarise that evidence or its treatment by the primary judge. 4. Thirdly, the issue in this Court was framed as one of construction of a written contract, without regard to surrounding circumstances. The parties' decision thereby to limit the scope of their dispute should be respected: cf Fitness First Australia Pty Ltd v Fenshaw Pty Ltd (2016) 92 NSWLR 128; [2016] NSWCA 207 at [32]. It follows that it is unnecessary to express any view as to the impact of an "entire contract" clause upon the use of evidence of surrounding circumstances had it been sought to be deployed. Instead, this litigation reflects the facts that (a) the parties to a commercial contract have chosen to record their bargain in a document and (b) the most powerful guide to the intention to be imputed to them ordinarily emerges directly from the language of that document. As was said in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [48], "[o]rdinarily, this process of construction is possible by reference to the contract alone." The Design and Construct Contract 1. The contract is very lengthy. It comprises a number of separate documents. The starting point is the "Formal Instrument of Agreement" which describes itself as "the Design and Construct Contract made on the 23rd day of December 2016" between the parties. Clause 1 provides as follows: "Documents The Contract Comprises: (a) Australian Standard AS 4902–2000 comprising: (i) General conditions of contract for design and construct (as amended); and (ii) Annexures Part A through to Part F. (b) Design and Construct Contract Documents as per attached list. In the event of a conflict or discrepancy between the Documents, the following order of precedence shall apply: A. Instrument of Agreement B. Conditions of the Contract C. The Principal's project requirements D. The Contractor's Tender (as annexed to the Contract) E. Construction Certificate Drawings F. Altis Costing Package, Finishes Schedule, Fixtures Schedule." 1. The attached list of "Design and Construct Contract Documents" included the Principal's Project Requirements, the Development Consent and an application to modify it, the Contractor's Tender, some presentation materials and numerous plans and drawings. 2. Clauses 2 and 4 of the Formal Instrument provide: "2. Obligations The Contractor must execute the Works and perform its other obligations under the Contract and the Principal must, subject to the Contract, Pay the Contract Sum and perform its other obligations under the Contract. ... 4. Contract Sum The Contract Sum is $23,400,730.00 (exclusive of GST)." 1. It was common ground that a modified form of AS4902-2000 described as "General conditions of contract for design and construct" applied. Clause 2.1 of the General Conditions contained in that document included the following: "The Contractor acknowledges that the Contractor takes full responsibility for, and must do everything necessary to design, construct and commission the Works in accordance with this Contract. The Principal must pay the Contractor the Contract Sum." 1. The same clause included: "The Contractor acknowledges that it is not entitled to receive any payment, other than the Contract Sum except as set out elsewhere in this Contract, on account of its execution of the Works. This clause shall not be interpreted as obliging the Principal to pay the Contract Sum except as in accordance with this Contract." 1. Clause 2.1A provided: "Guaranteed Maximum Price The Contractor acknowledges and guarantees that the maximum amount that will be payable by the Principal to the Contractor pursuant to this Contract is the Contract Sum." 1. The General Conditions commenced with some ten pages of definitions, expressed to be subject to the context otherwise requiring. Somewhat unpropitiously, there is a different definition of "contract sum" (which is uncapitalised, in contrast with the definition of the same capitalised term in cl 4 of the Formal Instrument), which is defined thus: "contract sum means the sum set out in the Formal Instrument of Agreement but excluding: (a) any additions or deductions which may be required to be made under the Contract; (b) the cost of the Excluded Works and works associated with the Excluded Conditions; and (c) any other payments required to be made as stated elsewhere in this Contract." 1. The term "the Works" appears throughout the Formal Instrument but is not defined in that document. Rather, it is defined in the General Conditions to mean: "the whole of the work to be carried out and completed in accordance with the Contract, including variations provided for by the Contract, which by the Contract is to be handed over to the Principal". 1. "Contract" was defined to mean "the agreement between the Principal and the Contractor which is evidenced by the Formal Instrument of Agreement" and "variation" was stated to have "the meaning in clause 36". 2. Jabbcorp acknowledged that the entirety of work done pursuant to variations 14A and 59 fell within that definition of "the Works". Jabbcorp's case turned upon the definition of "Excluded Works" which read, relevantly: "Notwithstanding any other clause means the following works which do not form part of the Contract Sum and if required to be carried out, will constitute a variation under this Contract: (a) electrical sub-station single line connection to the high voltage supply in excess of 6 metres from the electrical substation; (b) upgrade, relocation or extension of a supply main; (c) exterior façade at the cost of more than an average of $285 per metre squared; ... (t) Additional services and/or added works to the greenkeepers shed; (u) Any works required on the golf course and outside the construction boundary of the Site, including if those requirements are pursuant to the Development Consent; … (y) Provisions for the National Broadband Network beyond the area that is within the Site up to a pit within the clubhouse boundary; (z) Supply of turf for areas outside of the immediate Site and outside of the clubhouse boundaries; … (hh) Any work required to be carried out by Separate Contractors; … (kk) Exclusions as noted in the Contractors Tender (annexed to the Contract)." 1. There were in all 37 paragraphs identifying "Excluded Works" in the definition, from paragraph (a) to paragraph (kk). 2. The definitions defined "site" to mean "the lands and other places to be made available and any other lands and places made available to the Contractor by the Principal for the purpose of the Contract". "Variation" was defined to have the meaning given in cl 36, which in familiar form conferred a power upon the Principal's Superintendent to vary the contract, which in turn gave rise to pricing provisions and ultimately an increased liability to pay. 3. Clause 11.3 was in the following terms: "Development Consent conditions The Contractor acknowledges that is [sic] has been provided with the opportunity to review the Development Consent conditions and subject to any express provision to the contrary, has allowed in the Contract Sum for compliance with all such conditions except for the Excluded Conditions and those conditions which are set out in this Contract as being the Principal's responsibility." 1. The "Excluded Conditions" were some 65 specified conditions of the Development Consent issued by the local council on 15 December 2015. Significantly, conditions 21-27, which required provision of a stormwater runoff system by means of a gravity pipe to the Cooks River, in accordance with a concept plan dated 27 August 2015 and other detailed provisions to that end which may be passed over, were not Excluded Conditions. Nor was it said that the obligation to build the stormwater drains was the Principal's responsibility. Jabbcorp's submissions 1. Jabbcorp's submission was that all of the works falling within variations 14A and 59 were "Excluded Works". That was so because they were works which were outside the construction boundary of the Site, and for good measure they were required pursuant to conditions of the Development Consent. Jabbcorp submitted that they thereby fell within paragraph (u) "Any works required on the golf course and outside the construction boundary of the Site, including if those requirements are pursuant to the Development Consent". 2. That contention provoked debate as to the meaning of "the construction boundary of the Site". According to Jabbcorp, the construction boundary was revealed by a photograph taken shortly before the Contract was executed, which disclosed some temporary fencing or boarding around the footprint of the clubhouse. Some of the plans identified slightly different areas, generally around the footprint of the clubhouse, as the construction boundary. It is not necessary to summarise the evidence bearing upon this, or the parties' submissions. It is sufficient to proceed, favourably to Jabbcorp, on the basis that all of the works performed pursuant to variations 14A and 59 were outside the construction boundary of the Site for the purposes of paragraph (u) of the definition of "Excluded Works". 3. Jabbcorp also submitted that the definition of Excluded Works itself had an operative aspect. This was based on the definition's opening words. Jabbcorp maintained that the effect of those words was that works such as those undertaken pursuant to variations 14A and 59 did not form part of the Contract Sum, and were deemed to constitute a variation, in respect of which Jabbcorp was entitled to be paid separately from, and in addition to the Contract Sum. And Jabbcorp gave heavy emphasis in its written submissions to the opening words of definition "Notwithstanding any other clause". It said by reference to the authorities collected by Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2004] NSWSC 754 at [12]-[14] that "the express exclusion from the Contract Price in clause 1 has primacy over other provisions to the extent of any inconsistency", that the definition operated "to the exclusion of any other provision" and that other provisions "must yield" to it. 4. Jabbcorp prayed in aid various other provisions in support of its construction. It pointed to the definition of "contract sum" in the General Conditions, which excluded the cost of the Excluded Works from that sum. It noted that the final words in cl 2.1, whereby it acknowledged that it was not entitled to receive any payment other than the Contract Sum, were subject to an exception "except as set out elsewhere in this Contract", which was confirmatory of the primacy of the work achieved by the definition of "Excluded Works". It sought to address the possibility that cl 2.1A was inconsistent with this construction by contending that cl 2.1A was to be read by reference to the definition of "contract sum" in the General Conditions and the immediately preceding cl 2.1 which were said to contemplate payments above the contract sum, and by maintaining that cl 2.1A did not exclude Jabbcorp's right to be paid for variations. Against that background it was argued that cl 2.1A did not stand in the way of Jabbcorp's construction of Excluded Works. Mr Christie concluded: "We submit that 2.1A is referring to the amount that [is the] subject of the contract sum. That is the $23 million. It does not extend to cover variations. Otherwise one has a nonsensical contract." 1. Concerning cl 11.3, Jabbcorp submitted that although conditions 21-27 were not "Excluded Conditions", the acknowledgement was "subject to any express provision to the contrary", such that cl 11.3 did not tell against its construction of "Excluded Works". 2. Jabbcorp also relied upon cl 1.3.2 of the Principal's Project Requirements. That clause provided: "The Contractor is responsible for:- … 3. Delivery of the complete building envelope which meets all requirements of the relevant authorities. This includes façade elements, paving, roofing, below ground works, finishes and services, and associated works (access road & services) outside the boundary of the site." 1. The words "outside the boundary of the site" were submitted to support the construction that the works the subject of the disputed variations were "Excluded Works" outside the construction boundary of the Site. Consideration 1. It is convenient to attend immediately to the only point raised on appeal. The contract can, after all, only have one correct meaning, as was noted by Mitchell JA and Hill J, by reference to decisions of the High Court and this Court, in Gourmania Holdings Pty Ltd v Schlegel [2021] WASCA 28 at [190]. This Court's task is to determine whether the primary judge rightly or wrongly rejected Jabbcorp's construction of "Excluded Works" in paragraph (u) of the definition. My reasons for rejecting Jabbcorp's construction will sufficiently disclose the Club's submissions. It is unnecessary at this stage to summarise the reasoning of the primary judge, which in large measure responded to broader and different submissions made at trial. 2. The question is one of construction. The starting point is to identify the constructional choice which arises. In the present case, that is best done by a careful analysis of the definition of "Excluded Works" itself. 3. Although dealing with an exclusion in a policy of insurance, rather than the definition of "Excluded Works" in a Design and Construct Contract, the approach taken in this Court in XL Insurance Co SE v BNY Trust Company of Australia Ltd [2019] NSWCA 215 at [66], by reference to Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 at [53], is apposite: "It has been said that the starting point with a complex commercial document must be the literal or grammatical meaning of the exclusion. It is then necessary to consider the legal meaning of the exclusion, and then apply the legal meaning to the facts, in this case, as agreed between the parties for the purpose of determination of the separate questions ..." 1. Neither side assayed an analysis of the grammatical meaning of the definition of "Excluded Works". Nonetheless, this is the starting point. The syntactic structure of the definition is more complex than one might anticipate. Language is often like that. The syntax of the definition 1. The definition commences with the words "Notwithstanding any other clause". Those words are directed to the hierarchy of that clause in the event that it conflicts with any other. In Re Bland Bros and the Council of the Borough of Inglewood (No 2) [1920] VLR 522 at 533, Cussen J writing for the Full Court wrote of a statute which commenced "Notwithstanding anything in this Act contained" that: "As to the introductory words, the section should first be construed without them, and then, if there is anything in the other provisions of the Act inconsistent with the interpretation so arrived at, these other provisions must yield. This was in effect decided, as we understand, by all the justices of England in Sir Thomas Cecil's Case [[1597] 7 Rep fols, 19, 20], where it was said that the Act otherwise was to be no impediment to the interpretation of a section containing the words 'notwithstanding, etc'." 1. The approach has been repeatedly applied to similar words by appellate courts more recently: see Piper v Corrective Services Commission of New South Wales (1986) 6 NSWLR 352 at 358-359; Price v JF Thompson (Qld) Pty Ltd [1990] 1 Qd R 278 at 281, 283 and 287 and Director of Public Prosecutions v Leys (2012) 44 VR 1; [2012] VSCA 304 at [157]. It reflects the fact that the words only indicate the clause which prevails in the event of conflict, and say nothing as to whether there is a conflict in the first place. 2. Putting the opening four words to one side, the clause reads "Excluded Works … means the following works which do not form part of the Contract Sum and if required to be carried out, will constitute a variation under this Contract", followed by the 37 paragraphs of works. Between the words "the following works" and the listing of those works is a relative clause with two limbs: "which do not form part of the Contract Sum and [which] if required to be carried out, will constitute a variation under this Contract" 1. There is of course only one relative pronoun in the contractual text; I have repeated the word "which" above for clarity. For there can be no doubt that the subject of the verbs "do not form" and "will constitute" is the word "which" having as its antecedent "the following works". Nor can there be any doubt that it is "the following works" which, if they are "required to be carried out" will engage the conditional second limb. Ordinary English commonly omits unnecessary words, and the words "if required to be carried out" are to be understood as if they read "if they are required to be carried out". But the short point is that each limb of the relative clause is unequivocally expressed to apply to the works which are enumerated in the ensuing 37 paragraphs. 2. The two limbs of the relative clause are joined by "and". The first limb is in the present tense. The second limb is a conditional proposition which looks to the future. Both limbs have their own complexities. 3. The complexity in the first limb of the relative clause is in the nature of an ellipsis. The enumerated works in the 37 paragraphs involve physical activities on the ground. The Contract Sum is an amount of money. To say that specified works do not form part of the Contract Sum can only be regarded as an ellipsis for the amount of money which the principal is required to pay referable to the performance of those works, and which does not form part of the Contract Sum. 4. I did not understand that such a reading was in any way controversial. During the hearing Emmett AJA observed that there was an ellipsis, in that the works for which the Contractor was being paid the specified Contract Sum did not include the excluded works, and Mr Christie acceded to Basten JA's proposition that the definition of Contract Sum excluded the cost of the Excluded Works. In any event, there is no other way of reading the words. 5. The principal source of complexity in the second limb of the relative clause lies in the word "required". The fact that there is an obligation is clear, but the passive mood conceals precisely why it is that the excluded work must be carried out. Is it something which was required by the obligations undertaken when the contract was entered into? Or is it something which is required by some later decision? The passive "required" is equally apt to apply to both those possibilities. 6. But "required" is not construed in isolation. It occurs in a clause which is expressly contingent and future. The ordinary sense of the words "if required to be carried out" refers to works which may be the subject of an obligation under the contract, but need not be. They are prima facie inapt to describe works which, upon execution of the design and construct contract, Jabbcorp was thereby obliged to carry out. The contingency is after all to be found in the General Conditions of the self-same contract which imposes the obligation to design and construct the clubhouse in the first place. 7. Likewise, the ordinary sense of the words "will constitute a variation" refers to a status that those works do not presently have but will in the future have in the event that the Contractor becomes obliged to perform them. The clause looks forward to a time after the execution of the contract of which it forms part. 8. I turn to the 37 items enumerated after the relative clause, to which both limbs of the relative clause apply. There is a common theme in the works listed in the paragraphs. Most refer, explicitly or implicitly, to the possibility of doing something extra. Thus, as the Club observed in argument, paragraph (a) applied if the connection to the high voltage supply of electricity was in excess of 6 metres from a substation, but did not apply if it was not. Paragraph (b) applied if it were necessary to upgrade, relocate or extend a supply main, but did not apply if it were unnecessary to do so. Paragraph (c) applied if the cost of the exterior façade was more than an average of $285 per square metre, but not if it was not. Paragraph (t) referred to "additional" services and/or "added" works. There may be a debate as to what precisely the services or works are "additional" or "added" to, but once again the ordinary meaning of the words is to connote something extra. The same may be seen in "beyond" in paragraph (y) and "outside" (twice) in paragraph (z). It will be necessary to return to paragraphs (hh) and (kk) which take a different form. 9. Paragraph (u) is, of course, critical to the analysis. It contains the words "required" and "those requirements". The sense of "those" is that "those requirements" refers to the "any works required" which precedes it. Once again, "any works required" is in the passive, thereby leaving unstated how or by whom the requiring is effected. Hence the force of the concluding words "including if those requirements are pursuant to the Development Consent". The consent is replete with works which the Club was obliged to undertake, including the works to which variations 14A and 59 refer. The force of "including" is that works which were required by the Development Consent were necessarily capable of falling within the first half of the paragraph. Thus, since the drainage works were both "on the golf course" and "outside the construction boundary of the Site", they necessarily satisfied the paragraph. Jabbcorp understandably emphasised those words. The constructional choice 1. In the light of the above, it is possible to summarise the constructional choice posed by the definition. 2. Jabbcorp maintained that the works undertaken pursuant to variations 14A and 59 fell squarely within paragraph (u). They thereby were an instance of "the following works" in the opening words of the definition, and engaged both limbs of the relative clause: they did not form part of the works for which Jabbcorp was to be paid the Contract Sum, and they entitled Jabbcorp to charge an additional amount as if they were a variation. 3. The Club's competing construction focussed upon the contingency and futurity of the relative clause. It was put thus in oral submissions: "The submission which we make about that is that the words 'if required to be carried' and 'will constitute a variation' do not contemplate work which must be done under the contract. Those words only contemplate work which may be done if a decision is made that they are required. So we submit that the ordinary, reasonable businessperson reading that clause would assume - and reasonably, that … 'if required to be carried out' describes a class of work not currently the subject of an existing contractual obligation. The fact that Jabbcorp now accepts - because it did not accept below, that this work had to be done under the contract means that it cannot avail itself of the excluded works definition. Because it's too much of a strained construction of the language there to apply to work which it accepts had to be done. Your Honours will also note that there's a reference in the chapeau, 'will constitute a variation under this contract'. That is, we submit, a draftsperson's intention to pick up cl 36 … there is a power in the superintendent to direct the contractor to vary work under contract in specified ways. We submit that the use of the future tense in the chapeau 'excluded works' … 'will constitute a variation' is directed at flagging an intention that the variation procedure would be adopted in relation to any such excluded works as set out in cl 36." Resolution of the constructional choice 1. What is the meaning which is to be imputed to the parties' words? The question is objective. As the High Court explained in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [40], the question is what would a reasonable person understand by the language in which the parties have expressed their agreement. 2. Syntactical analysis explains the force of the competing constructions. Each has its weaknesses. That favoured by Jabbcorp derives its force from the ordinary literal meaning of the words in paragraph (u), but entails some straining of the relative clause at the commencement of the definition in order to dilute the futurity and contingency and to give rise to a deemed variation. That favoured by the Club sits well with the mood and tense of the words in the relative clause, but entails some departure from the ordinary meaning of the words in paragraph (u). That conflict cannot be resolved by mere grammatical considerations alone. 3. I have concluded that the Club's construction is the legal meaning of the definition, for the following reasons. 4. First, the clause must be read as a whole. What of the other 36 descriptions which are also "Excluded Works"? As the Club submitted, many involved works which went beyond some stated limit, such as a line to a sub-station which was longer than 6 metres, or an exterior façade which cost more than $285 per square metre. At the time the contract was entered into, whether those descriptions were engaged was probably not known. A reasonable person would understand those aspects of the definition to involve the agreement that if Jabbcorp were required to build a line which was longer than 6 metres, or to spend more on façade than $285 per square metre, then to that extent it was entitled to be paid extra. That requirement might come about for any number of reasons (the Club's request, a requirement of a construction certificate, a safety requirement imposed by a statutory authority) but however it occurred, such works were to be paid as if there had been a variation. 5. This was exposed during argument: "LEEMING JA: But the works we're concerned with, there was, as I understand it, never any doubt about them, that the contract when it was executed always required your clients to do them. There was no potentiality that there might be some requirement in the future, in which case the deemed variation provision would apply. That's right, isn't it? CHRISTIE: That is correct, except in one respect. As I said a moment ago, the deemed variation provision could apply, if there was a direction in the future to do further work or it could also apply, to use the express language of para (u), if the works were required by, for example, a development consent." 1. The response does not answer the textual difficulty. The words in the definition do not naturally apply to works which were required to be performed when the contract was executed, and it is no answer to say that if the appellant's construction is correct, then the definition applies such that there is a deemed variation. 2. Further, in very large measure, the other listed paragraphs contain works which sit well within the Club's construction of the definition. If the "something extra" in those other paragraphs turns out to be required then that extra work is an "Excluded Work" for which Jabbcorp is entitled to additional payment. The force of this consideration is that the opening words of the definition have to apply to all 37 of the listed items which follow. Conversely, Jabbcorp's construction has an element of the tail wagging the dog, insofar as it turns upon the words in paragraph (u) to colour the meaning of the opening words of the definition. 3. Secondly, there is the oddity in Jabbcorp's construction that the drainage works and works near the greenkeeper's shed are not merely "Works" (because they are required to be done by cl 2 of the Formal Instrument) which form part of the Contract Sum, but also "Excluded Works" for which Jabbcorp is entitled to be paid extra. That is an unlikely intention to impute to the parties. As Lord Hoffman once said, "[t]he words used as labels are seldom arbitrary", but are "usually chosen as a distillation of the meaning or purpose of a concept intended to be more precisely stated in the definition": Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101; [2009] UKHL 38 at [17]. Why would the parties be taken to have agreed that something be both included in the Works required to be undertaken for a fixed price, and simultaneously described as "Excluded Works", which, if undertaken, gave rise to a deemed variation and entitled Jabbcorp to an additional fee? 4. This point is not resolved by Jabbcorp's argument that "contract sum" in the General Conditions is defined so as to incorporate additions which may be required to be made under the Contract. If there is a discrepancy between the definitions of "Contract Sum" in the Formal Instrument and "contract sum" in the General Conditions of this unhappily worded contract, the former must prevail (a conclusion for which cl 1 of the Formal Instrument provides and which is reinforced by the capitalisation). Further, if anything is clear, it is surely that the work required to be done is determined at the time the contract was executed would entitle Jabbcorp to be paid the Contract Sum, and that work which Jabbcorp became obliged to perform by reason of a direction was work for which Jabbcorp would become entitled to be paid by reason of the clauses dealing with variations. 5. Thirdly, there is the fact that the definition of "Excluded Conditions" read with cl 11.3 makes specific reference to work required by the Development Consent for which Jabbcorp expressly acknowledges it has made allowance, as opposed to the balance. The work done pursuant to variations 14A and 59 was required by conditions which were not Excluded Conditions. 6. Jabbcorp's submission that cl 11.3 is expressed to be "subject to any express provision to the contrary" is not without force. However, in a contract in which the parties have taken the trouble to make provision for work required by the development consent for which Jabbcorp has made allowance, and work required by the development consent for which Jabbcorp has not made allowance, and in which the parties have identified dozens of "Excluded Conditions" so as to engage that clause, it is somewhat striking that conditions 21-27 involving work for which Jabbcorp seeks further payment have not been identified. It is difficult to avoid the conclusion that the specific definition of conditions "5, 6, 8, 9, 10, 12, 13, 28, 32, 35, 36, 40-50, 58 ..." in the bespoke and exhaustive definition of "Excluded Conditions" reflects a conscious decision not to incorporate conditions 21-27 within that definition. Surely the objective meaning to be imputed to the parties is that (a) the dozens of conditions which are nominated as "Excluded Conditions" reflect work for which Jabbcorp represented that it had made no allowance, and (b) Jabbcorp represented that it had allowed for the drainage works required by conditions 21-27? 7. Fourthly, there is the effect of cl 2.1A. It is simply not possible to reconcile Jabbcorp's construction with the plain intent of cl 2.1A. According to Jabbcorp, it may be entitled to more than the Contract Sum, to the extent that the Works include works which are required to be done and which fall outside the construction boundary of the Site, while remaining on the golf course (such as the drainage works). A reasonable person would understand by cl 2.1A that the maximum the Club would have to pay for Jabbcorp performing the works it had promised to construct when the contract was executed was the Contract Sum. 8. All those considerations point against a construction whereby work required to be done under the contract (such as the entirety of the disputed variations) falls within the definition of "Excluded Works". 9. The high point of Jabbcorp's submissions is the ordinary textual meaning of paragraph (u). The Club's submission is that the words refer to other work being undertaken on the site, and were included out of an abundance of caution, in much the same way that paragraph (hh) (work required to be carried out by Separate Contractors) is somewhat strained. However, there is no unstrained meaning that can be given to the contractual language of the clauses as a whole. Contrary to Jabbcorp's submission, the solution to the difficulties confronted by its construction is not to invoke the words "Notwithstanding any other clause" as if they were a trump. Those words do not resolve in Jabbcorp's favour any of the difficulties mentioned above. Conclusion 1. The two limbs of the relative clause in the definition of "Excluded Works" are directed to the same end. Something which is an Excluded Work is something which is not presently part of the work for which Jabbcorp is entitled to be paid $23,400,730 plus GST, and which if Jabbcorp is required to undertake it, will entitle Jabbcorp to be paid an additional sum because it will be a variation. The words "will constitute a variation" confirm that if sometime in the future the contractor is required to carry out the works in one or more of the 37 paragraphs, then sometime in the future, those works will constitute a variation. 2. This makes sense in light of the way in which the large majority of the 37 paragraphs are expressed. Read naturally, it picks up the possibility that Jabbcorp may be required to connect the sub-station to the high voltage supply by a connection which is longer than 6 metres, or may need to upgrade or relocate or extend a supply main, or spend more than $285 per square metre on the exterior façade. It provides a construction which is harmonious with cll 2.1A and 11.3. 3. Much of the reasoning of the primary judge addressed submissions which were advanced at trial which were not part of Jabbcorp's case on appeal. However, the foregoing is consistent with the reasoning of the primary judge at [76]-[77]: "[I]f Jabbcorp was required to undertake the work but entitled to charge an additional amount for that work, it is difficult to see how that entitlement can sit with cl 2.1A of the General Conditions or the warranty contained in cl 11.3 of the General Conditions. Against that background, a reasonable business person would not interpret para (u) as excluding all work outside the footprint of the clubhouse. Rather, the exclusion must be understood against the background in which the contract was entered into. That background included the fact that the Club was undertaking other work on the golf course at the same time as it was constructing the new clubhouse. In that context, the paragraph must be understood as making it clear that Jabbcorp was not responsible for carrying out other work on the golf course, even if that work was required as a condition of the development consent." 1. The primary judge recognised that the paragraph might have little work to do: at [78]. As Jabbcorp submitted, by reference to Angas Securities Ltd v Small Business Consortium Lloyds Consortium No. 9056 [2016] NSWCA 182 at [13], that is ordinarily a result courts should strain against. This is the presumption against surplusage. It is more memorably captured in Professor Dickerson's adage, "Every word should pay its own way": R Dickerson, The Fundamentals of Legal Drafting (2nd ed, Little, Brown & Co, 1986), pp 44, 138. However, in light of the fact that the contract was complicated, consisting of a number of documents, which contained some duplications and which did not necessarily fit together seamlessly (as confirmed by the order of precedence in cl 1 of the Formal Instrument), that presumption did not stand in the way of the construction determined by the primary judge. Orders 1. For those reasons, the primary judge was correct to conclude that the works reflected in variations 14A and 59 were not "Excluded works", and correct to dismiss Jabbcorp's claim. The grounds of appeal separately identified grounds based on certain back-charges, but those claims stood and fell with the submissions based on variations 14A and 59 and were not the subject of separate oral or written submissions. Accordingly, the appeal should be dismissed. There is no reason so far as I am aware for costs not to follow the event. 2. I propose that the appeal be dismissed with costs. 3. EMMETT AJA: This appeal is concerned with the meaning of a provision in a building contract made between the respondent, Strathfield Golf Club as Principal (the Club), and the appellant, Jabbcorp (NSW) Pty Ltd as contractor (Jabbcorp). The building contract was constituted by various instruments as follows: * Formal Instrument of Agreement executed on behalf of the Club and Jabbcorp (the Formal Instrument); * General Conditions of Contract for Design and Construct published by Standards Australia, as amended by the parties (the General Conditions); * Annexures A, B, C, D, E and F to the General Conditions; and * Design and Construct Contract documents, consisting of some 43 documents set out in a list attached to the Formal Instrument dated 23 December 2016 (the Design Documents). 1. The Formal Instrument recited that the Club wished to engage Jabbcorp to carry out the design and construction of "the Works on Site" and that Jabbcorp had agreed to accept the engagement and carry out and complete the "Works" and perform its other obligations in accordance with the terms of the contract. By cl 2 of the Formal Instrument, Jabbcorp promised to execute "the Works" and perform its other obligations under "the Contract" and the Club promised, subject to "the Contract" to pay "the Contact Sum" and perform its other obligations under the "Contract". Clause 4 provided: "The Contract Sum is $23,400,730.00 (exclusive of GST)". 1. The Design Documents included the following: * The Club's project requirements; * Development consent and application to modify the development consent made under s 96 of the Environmental Planning Assessment Act 1979 (NSW); * Jabbcorp's tender; * Costing package, finishes schedule and fixtures schedule of Altis, the Club's architect; and * Construction certificate drawings. 1. The Formal Instrument provided that, in the event of a conflict or discrepancy between the various documents that constituted the agreement between the parties, the following order of precedence was to apply: * Formal Instrument; * General Conditions; * The Club's project requirements; * Jabbcorp's tender; * Construction certificate drawings; and * Altis costing package, finishes schedule and fixtures schedule. 1. Section 2 of the General Conditions, which is headed "Nature of Contract" provides that Jabbcorp acknowledged that it took full responsibility for, and must do everything necessary, to design, construct and commission "the Works" in accordance with "this Contract" and that the Club must pay Jabbcorp "the Contract Sum". The parties acknowledge that the Contract Sum was fixed and was not subject to rise and fall in the cost of labour, equipment or materials for any reason whatsoever unless expressly provided for by the Contract. By cl 2.1, Jabbcorp also acknowledged that it was not entitled to receive any payment, other than the Contract Sum except as set out elsewhere in "this Contract", on account of its execution of "the Works". By cl 2.1A, Jabbcorp acknowledged and guaranteed that the maximum amount that would be payable by the Club to Jabbcorp pursuant to "this Contract" is "the Contact Sum". 2. Clause 1 of the General Conditions dealt with "Interpretation and construction of Contract". The term "contract sum" was defined as meaning the sum set out in the Formal Instrument but excluding: * any additions or deductions that may be required to be made under the Contract; * the cost of the Excluded Works and works associated with the Excluded Conditions; and * any other payments required to be made as stated elsewhere in this Contract. The Development Consent issued by Strathfield Council on 15 December 2015 in respect of the proposed works contained some 136 "other conditions". By cl 11.3 of the General Conditions, Jabbcorp acknowledged that it had allowed in the Contract Sum for compliance with those conditions except for the "Excluded Conditions". The term "Excluded Conditions" was defined as meaning more than a third of those conditions. 1. The term "Excluded Works" was defined in the General Conditions as follows: "Notwithstanding any other clause means the following works which do not form part of the Contract Sum and if required to be carried out, will constitute a variation under this Contract: … (i) Any work that arises out of, or is in relation to the Excluded Conditions; … (u) Any works required on the golf course and outside the construction boundary of the Site, including if those requirements are pursuant to the Development Consent; … (y) Provisions for the National Broadband Network beyond the area that is within the Site up to a pit within the Clubhouse boundary; (z) Supply of turf for areas outside of the immediate Site and outside the clubhouse boundaries; … (hh) Any work required to be carried out by Separate Contractors; …". 1. Clause 9.7 of the General Conditions, dealing with "Separate Contractors", provided that the Club and registered proprietors of lessees of land included within the Site would be entitled to arrange for persons to carry out certain specified works on "the Site of the Works", the execution of which was not included in the Contract, concurrently with the execution by Jabbcorp of the Works. The term "site" was defined as meaning: "[T]he lands and other places to be made available and any other lands and places made available to [Jabbcorp] by [the Club] for the purpose of the Contract". The term "the Works" was defined as meaning: "[T]he whole of the work to be carried out and completed in accordance with the Contract, including variations provided for by the Contract, which by the Contract is to be handed over to [the Club]". The term "Variation" was defined as having the meaning in cl 36. Clause 36, dealing with "Variations" contains the following: "36.1 Directing variations … 36.2 Proposed variations … 36.3 Variations requested by [Jabbcorp] … 36.4 Pricing …". 1. Clause 36.1 provided that Jabbcorp "shall not vary" work which Jabbcorp is or may be required to carry out and complete under the Contract (WUC) except as directed in writing. The clause also provided that the superintendent may direct Jabbcorp to vary WUC in various ways. Under cl 36.2, the superintendent may give Jabbcorp written notice of a proposed variation and Jabbcorp was required as soon as practicable after receiving such notice to notify the superintendent whether the proposed variation could be effected. The superintendent could direct Jabbcorp to give a detailed quotation for the proposed variation. 2. Under cl 36.3, Jabbcorp could at any time substitute any materials, finishes, systems or processes required by the Contract for any other materials, finishes, systems or processes of a similar quality if approved by the superintendent or could request a variation as otherwise contemplated by the terms of the Contract. Jabbcorp could request the superintendent to approve a variation for any design provided that any such variation did not adversely affect the quality of design or construction. The superintendent could, at its reasonable discretion, approve or reject Jabbcorp's request for a variation pursuant to cl 36.3. Under cl 36.4, the superintendent was required, as soon as possible, to price each variation in accordance with that clause and the price was to be added to or deducted from the Contract Sum. 3. The Club's project requirements consisted of the following: 1. Brief 2. Site 3. Scope of Works 4. External Services 5. Programme 6. Design Team Clause 1.1 of the Club's project requirements provided, under the heading "Core Detail", that Jabbcorp was responsible for ensuring that the final co-ordination of the works achieved the intent of the design and services required by the Club for the construction of a new golf clubhouse and access road. Clause 1.2 specified that the "Design Documentation" was identified within the "Building Contract". 1. Clause 1.3 dealt with "General Responsibilities". Clause 1.3.1 dealt with responsibilities of the Club and cl 1.3.2 dealt with the responsibilities of Jabbcorp for "Design and Construct". Clause 1.3.2 provided that Jabbcorp was to be responsible for delivery of the complete building envelope, which meets all requirements of the relevant authorities, including facade elements, paving, roofing, below ground works, finishes and services, and associated works (access road and services) outside the boundary of the site. 2. Clause 2 of Club's project requirements set out the site address as being Weeroona Road, Strathfield NSW and identified "Uses adjacent to site" as follows: "Northern Boundary - Rookwood Cemetery & Ausgrid Transmission Easement Eastern Boundary - Strathfield Golf Course Southern Boundary - Strathfield Golf Course Western Boundary - Rookwood Cemetery". Clause 2.2.1 provided that the building site was currently operating as part of the golf course and that that would be handed over to Jabbcorp prior to works commencing as well as allowing access to various parts of the golf course to dispose of excavation material. It also provided that Jabbcorp was required to provide services outside the boundary site to facilitate services to the building. 1. Under cl 3 of the Club's project requirements, the following project description was included: "The development involves the demolition of an existing wash-down & fuel storage awning, removal of the associated concrete slab, the removal of underground fuel tanks, removal of trees as defined in the approved DA and the construction of a new golf Clubhouse and access road. The works also include the supply and installation of the external services including water, gas, sewer and electricity (incl substation). All surrounding landscape works as per tender set of Landscape Architect drawings, where applicable. Project excludes FF&E." Under the heading "3.2 Inclusions" the following was stated: "All inclusions are noted on the architectural, Landscaping & engineering S96 drawings, the Altis Interiors Costing Package, the Altis Finishes Schedule, the Altis Fixtures Schedule." Clause 3.3 dealt with "Exclusions" and provided: "Exclusions include BMS System, Security Systems, AV Systems and any FF&E and as noted in the Contractor's Tender." 1. Jabbcorp submitted many notices of variation to the Superintendent. Relevantly, three were as follows: * NOV036 for "[p]aths and earthworks by Club – Rebate" for $40,180.00; * NOV014A for "[d]rainage, pavement and other works surrounding greenkeeper shed for the southern and western sides" for $278,065.00; and * NOV059 for "[w]orks on golf course and outside the construction boundary" for $422,838.00. In addition, there were 11 claims for "back-charges" for sums varying between $1,250.00 and $14,488.00 totalling $52,170.00. 1. Jabbcorp contended that the amounts in the notices of variation and the claims for back-charges fell within paragraph (u) of the definition of "Excluded Works". The Club, through the superintendent, rejected the claims. Jabbcorp commenced proceedings in the Technology and Construction List of the Equity Division claiming the relevant amounts. On 1 October 2020, for reasons published on that day, a judge of the Equity Division sitting in the Technology and Construction List ordered that Jabbcorp's proceedings be dismissed and that it pay the Club's costs of the proceedings. By amended notice of appeal filed on 2 February 2021, Jabbcorp appeals from the orders made by the primary judge. 2. It is common ground that the works described in the notices of variation and the back-charges all fall within the term "the Works" as defined in the General Conditions. Nevertheless, Jabbcorp contends, they are works "on the golf course and outside the construction boundary of the Site". 3. The better view of the provisions is that paragraph (u) was not intended to refer to work that was included in "the Works" that Jabbcorp undertook to execute by reason of cl 2 of the Formal Instrument. It refers, rather, to works beyond "the Works" provided for under the Formal Instrument, if Jabbcorp was required to carry out those works. It was not intended to refer to any work that Jabbcorp was required to execute pursuant to cl 2 of the Formal Instrument. 4. I have had the advantage of reading in draft form the reasons of Leeming JA. I agree with his Honour's reasons for concluding that the appeal should be dismissed with costs. I agree with the orders proposed by his Honour. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 July 2021