District Court New South Wales Medium Neutral Citation: Reward Interiors Pty Ltd v Master Fabrication (NSW AU) Pty Ltd [2022] NSWDC 536 Hearing dates: 22, 23 November 2021; 28 February; 1, 2, 3, 31 March; 1, 4, 5 April 2022 Date of orders: 28 October 2022 Decision date: 28 October 2022 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (1) Judgment for the defendant/cross-claimant in the sum of $21,753 inclusive of interest. (2) Otherwise dismiss the proceedings. (3) Reserve the question of costs. (4) Direct the parties to email to my associate by 5pm on 3 November 2022 written submissions on costs (maximum of 5 pages) and any documents on which they rely. Catchwords: BUILDING AND CONSTRUCTION – contract - delay of subcontractor - liquidated damages clause - head contractor entitled to take over works – impact of head contractor taking over works on rights of the parties – variations – assessment of value - damages Legislation Cited: Building and Construction Industry Security of Payment Act 1999, s 32 District Court Act 1973, s 134 Cases Cited: Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36, (1973) 129 CLR 99 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Bank of Queensland Ltd v Chartis Australia Insurance Ltd [2013] QCA 183 Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7, (2014) 251 CLR 640 MacMahon Construction Pty Ltd v Crestwood Estates [1971] WAR 162 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 Motor Yacht Sales Australia Pty Ltd v Blann [2020] NSWCA 349 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111 Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514; [2019] HCA 13 Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No 2) (2012) 287 ALR 360; [2012] WASCA 53 Visvalingam Pty Ltd v Vitarag Pty Ltd (No 2) [2022] NSWDC 294 Category: Principal judgment Parties: Reward Interiors Pty Ltd (plaintiff) Master Fabrication (NSW AU) Pty Ltd (defendant) Representation: Counsel: Mr E White (plaintiff) Ms L Cooper-Hackman (from 28 February 2022) (defendant) Solicitors: HWL Ebsworth (plaintiff) Madison Marcus Law Firm (from 28 February 2022) (defendant) File Number(s): 2020/187009 Publication restriction: None Judgment A. Introduction 1. Reward Interiors Pty Ltd sues its subcontractor, Master Fabrication (NSW AU) Pty Ltd, principally for damages for delay and incomplete work under a construction contract. Master Fabrication claims a smaller amount for an unpaid payment claim. B. Issues 1. Reward Interiors claims an amount of $291,000 for liquidated damages said to arise from delay by Master Fabrication. This claim depends upon the contents and the interpretation of the contract between them, as well as upon factual matters, including when certain time periods commenced. Master Fabrication asserts that no liquidated damages are payable, and alternatively, that the rate claimed is void as a penalty. 2. Reward Interiors also claims $322,569.23, being the costs of work it arranged and paid for that Master Fabrication had contracted to complete. 3. Thirdly, Reward Interiors claims $5,120 as the cost saving of a variation allowed to Master Fabrication to use a lower grade of steel. 4. Finally, Master Fabrication claims $64,504, being an unpaid amount payable pursuant to a payment claim under the Building and Construction Industry Security of Payment Act 1999. This claim and amount is not disputed by Reward Interiors, who submits it should be deducted from the amount claimed by it. 5. In the result, the issues between the parties can be listed as: 1. What documents comprise the contract. 2. What obligations in respect of delay did the contract impose on Master Fabrication. 3. Did Master Fabrication breach the contract in respect of delay. 4. What is the amount of delay damage to which Reward Interiors is entitled. 5. To what extent is Master Fabrication liable to Reward Interiors by reason of Reward Interiors taking over part of the works. 6. Does Master Fabrication owe Reward Interiors for the reduced cost of the lower value steel. 7. What is the correct amount of damages, bearing in mind variations. C. Formation of contract 1. Reward Interiors successfully contracted for a building project at St Joseph's Catholic Primary School at Schofields. [1] That contract was not in evidence. Reward Interiors sought tenders for the supply and installation of steel for the project, and Master Fabrication on about 26 June 2019 [2] submitted a quote with conditions dated 24 May 2019. [3] The quote nominated certain documents on which it was based, and stated a price of $958,000 plus GST. 2. Reward Interiors provided a program on 26 June 2019 that indicated steel was required on site for various parts of the works in August and early September, about five weeks after shop drawings would be complete for those parts, [4] along with a link to a dropbox [5] "for access to the current documents". [6] The email specified different dates for different parts of the works, for example, shop drawings for the upper roof, including priority columns, were to be complete on 28 June 2019, for Building A lower roof on 12 July, for Building B lower roof on 19 July, and for Building A and B Ground Floor on 26 July. [7] The Rewards Interiors program in that email contemplated staged provision of shop drawings, approval for production, and steel to be on site for the various parts of the works, from 28 June 2019 to 9 September 2019. 3. Further discussions about the works led to a revised price of $985,000 plus GST, confirmed by Ashok Patel of Master Fabrication on 1 July 2019. [8] That email stated: "[W]e have no problem to meet your programme dates provided shop drawings are ready for fabrication". A week later, on 9 July 2019, the parties had reached "agreement of the structural steel package at $995,000 + GST" and Reward Interiors provided a scope of works [9] with a "contract" the next day. [10] The pleadings of both parties alleged a contract was formed in early July; Reward Interiors alleged "[o]n or about 1 July 2019", [11] and Master Fabrication alleged "on or about 9 July 2019". [12] 4. Thereafter, "wet weather…caused rather extensive delays" and by 12 July a new program indicated the works would continue into late September. [13] 5. On 18 July 2019 Master Fabrication, by email, confirmed the price and "order" on certain conditions. [14] The email stated: "Supply of steel materials, labour for fabrication, surface treatment including installation for the structural steel as above Total Lump sum price $995,000.00 + GST Break up as below: Element Revised Docs Allowance Shop drawings Excluded Upper Roof $455,000.00 + GST Lower Roof including Ground floor Building A $262,000.00 + GST Lower Roof including Ground floor Building B $268,000.00 + GST Covered Link $10,000.00 + GST Total $995,000.00 + GST". 1. The email specified a number of conditions, including the basis of the crane allowance, the requirement for supply by Reward of all shop drawings, and that external steel would be "hot dip galvanised" and internal steel would have "one coat of zinc phosphate primer of 75 microns and additional final [coat]". [15] 2. The email also specified the "key stages of the works" to be: "○ Upper roof – columns ○ Upper Roof – remaining ○ Lower roof – Building A ○ Lower roof – Building B ○ Ground Floor – Building A … ○ Ground Floor – Building B", [16] and stated: "● For each stage, after the receipt of approved shop drawings issued for fabrication, Master Fabrication will require the minimum timeframe as follows: ○ 1 week for material procurement ○ 2 to 3 weeks for fabrications ○ 1 week for surface treatment ● This does not mean that that the entire job of approx. 150 tonnes can all be procured, fabricated and surface treated within 4 to 5 weeks. Reward Group must provide and notify the specific quantities and specific dates of requirement of steel for each stage, which are to be agreed in consultation with Master Fabrication to plan resources. ● Reward Group must provide reasonable site access, and availability of site, without interruption of other trades, and completion of other trades where steel will be installed. ● Each stage will require 7 to 10 working days weeks [sic] for installation. ● Our price is based on one site establishment and one visit for each stage, to complete the works in an efficient manner. ● Master Fabrication is entitled for inclement days during the project. ● Any RFIs from Master Fabrication, must be responded by Reward Group within 2 working days." [17] 1. Rates for works and machinery for "Additional and Variation Works" were specified, and "[a]ny variations need to be agreed in writing". 2. Emails between the parties in the period after 18 July 2019 appeared to assume acceptance by Reward Interiors. [18] On 8 August 2019, Lachlan McDonald of Reward Interiors wrote stating: "Hi Ashok, My apologies for the delay in providing you with the revised contract per our discussion regarding program. I've revised the attached to remove a commencement and completion date, as it is understood that the dates are dependent on supply of approved shop drawings. Please sign and return the attached at your earliest convenience. I hope to have construction drawings for C1 and C2 by COB Monday. Could you procure the necessary materials for these prior to issuing shop drawings to facilitate the shortest lead time for these items? Thanks". [19] 1. The evidence indicated that the email attached two documents: a "Purchase Order" [20] and printed "Terms and Conditions". [21] The Purchase Order was not signed, by either party. Ashok Patel of Master Fabrication responded by email within an hour, stating: "Thanks for the mail I will start organising the material for the columns immediately Regards Ashok". [22] D. What were the relevant contractual documents 1. Both parties pleaded a contract formed in early July 2019. [23] The parties accepted that the 8 August email, Purchase Order and Terms and Conditions became part of the contract, despite the pleadings, [24] although there was a pleaded reference to the email in cl C2. [25] The Purchase Order and Terms and Conditions attached [26] did not bear a date, contrary to the pleaded assertion. [27] 2. The primary documents used in argument comprised the 18 July 2019 quotation by Master Fabrication [28] and the email of 8 August 2019 [29] with the attached Purchase Order [30] and printed Terms and Conditions. [31] Although the email called for execution and return [32] of the Purchase Order, [33] there was no executed or returned Purchase Order in evidence. But there was never any dispute about its contents, nor was there, in the evidence, any recorded dispute about the contents of Master Fabrication's quote of 18 July 2019 being contractual. 3. In argument, Reward Interiors resisted the inclusion of the quote as part of the contract. There are several reasons why I have concluded otherwise. 4. First, the quote gives definition to the particular duties of Master Fabrication. It alone specifies particular drawings, the treatment and other aspects of the works. None of the 8 August email, Purchase Order or printed Terms and Conditions expressly incorporate any other specific plans, drawings or specifications. The Purchase Order referred to a one-page Scope of Works Revision A circulated on 9 July 2019 [34] and "the project documents", although the latter were unascertained. 5. Secondly, as indicated, there are words of agreement between the parties that occurred prior to and after the quote, and the earlier quote, indicating that the parties had agreed on the works and price, [35] subject to any later agreed variation. 6. Thirdly, the pleading indicates an earlier agreement in early July, a matter supported by the evidence of Mr Patel, [36] which was not challenged. The evidence and pleading of an earlier agreement before 8 August 2019 sits uncomfortably with the submission that the 8 August 2019 correspondence replaced all prior agreement documents. 7. Fourthly, there was no evidence of any disagreement with any of the terms of the quote. Mr McDonald was the Reward Interiors representative who engaged in the negotiations. He gave no evidence to indicate any dispute about the quoted terms. His email of 8 August 2019 was said to be "as per our discussions regarding program", which must have included the items in the Master Fabrication quote especially since "[t]he program of the primary works" in the Purchase Order [37] replicates features of the Master Fabrication quote. [38] 8. The absence of evidence from Mr McDonald was unexplained, allowing a Jones v Dunkel inference to be drawn, which I would draw, that would more readily allow an inference of agreement to the quote, and cause me not to draw inferences that any part was disputed, as evidence could have been given about that by Reward Interiors but was not. That Mr McDonald no longer worked for Reward Interiors [39] was not a sufficient nor satisfactory explanation for his absence, especially given the magnitude of Reward Interiors' claim. 9. The circumstance that the contents of the quote might differ from the Purchase Order or printed Terms and Conditions – not on major matters like price or works – is not a reason to reject the quote as non-contractual, any more than one would reject certain terms merely because they might not sit comfortably with others. To reconcile possible inconsistencies and ambiguities was a matter for construction. 10. As indicated, it is evident that the quote was an essential part of the deal. The price in the quote, including its break up in respect of the various parts of the works, was included without amendment in the Purchase Order. So also, was the timing proposed. [40] In my view, the quote was supplemented by the Purchase Order and Terms and Conditions, not replaced by them. The agreement was a type of the first category of agreement in Masters v Cameron, [41] where the parties were bound prior to the Purchase Order and printed Terms, but contemplated the later document, without concluding it would replace the existing document, save for when the subsequent document was a varied iteration of a previous document, such as the earlier versions of the Purchase Order and the Terms and Conditions. 11. Finally, the Purchase Order and printed Terms and Conditions expressly contemplated, in cl 3 of the latter, the possibility not only of an existing contract, but that any existing contract would prevail over the later printed Terms and Conditions (including the Purchase Order). [42] 12. Reward Interiors referred to cl 2 of the Terms and Conditions. It provides: "2 To the extent the Seller's terms and conditions are supplied with the G&S (including as printed on consignment notes or other documents), those terms and conditions will be of no legal effect and will not constitute part of this PO, even where executed by the Company." 1. Clause 2 seeks to exclude the seller's (i.e. Master Fabrication's) terms and conditions "supplied with the [goods and services] (including as printed on consignment notes or other documents)". That has no application to the terms on the Master Fabrication quote, which was provided well in advance of any goods or works under the contract. 2. In the result, the quote, the Purchase Order and the Terms and Conditions are each written documents that form part of the written contract, although no document presented by one party was executed by the other. Other documents referred to and incorporated in those documents are also contractual. [43] I would not include other drawings referenced in other non-contractual documents in the absence of consent or a reference in a contractual document. [44] The "project documents and Scope of Works Revision A, dated 9th July 2019" were referred to in the Purchase Order. [45] The latter document was in evidence, [46] but the ambit of the "project documents" was not defined. E. Obligation of Master Fabrication in respect of delay 1. The program for the work was evidently a concern of both parties during the negotiations as both Reward Interiors and Master Fabrication referred to it. However, the program referred to by Reward Interiors appeared to be solely in connection with the supply and installation of the steel by Master Fabrication, [47] whereas Master Fabrication regarded these communications as "programme dates" [48] and as at 18 July was still requesting "your detailed programme". [49] 2. Ordinarily, the program of the head contractor like Reward Interiors may be supposed to be a program for all the site works, that is, the program for Reward Interiors' completion of its contract with the school, rather than just the program for the steel. Such a program would be important to Master Fabrication since other works, for example, footings, would impact on the steelworks. The evidence did not include a detailed program of Reward Interiors' works or any program other than for the works of Master Fabrication. 3. The obligations on Master Fabrication in respect of delay are to be found in the contractual documents. The Master Fabrication quote spoke of Master Fabrication requiring a "minimum timeframe" after "receipt of approved shop drawings", subject to conditions, of five weeks until the completion of "surface treatment", and, potentially later, "7 to 10 working days … for installation", with an "inclement weather days" entitlement and a need for Master Fabrication's requests for information to be answered by Reward Interiors within two working days. [50] 4. The 8 August 2019 email also imposes no time requirement, and expressly notes the removal of a commencement and completion date. [51] But some relevant terms are included in the Purchase Order and the printed Terms and Conditions. 5. The Purchase Order from Reward Interiors, as indicated in the email, expressly did not specify a commencement date or a completion date. The space for those details was intentionally left blank. [52] 6. The Purchase Order stated: "Works: Structural Steel Supply and installation of structural steel, as detailed in the project documents and Scope of Works Revision A, dated 9th July 2019 The program of the primary works will be: - One week for material procurement, following issue of shop drawings – Two to three weeks for fabrication – One week for surface treatment – One week for installation, per stage Exception is made to the critical path columns, which are to be procured, fabricated and installed in a two week period from receiving shop drawings." [53] There followed a schedule with various amounts against "Bldg A – Lower Roof and Ground Floor", "Bldg B – Lower Roof and Ground Floor" and "Covered Link", with a total sum of $995,000 ex GST. This replicated the scheduled "Break up" in the Master Fabrication quote. [54] 1. In small print before the space for execution were the words: "Acceptance of this Purchase Order is subject to the Terms and Conditions attached on Page 3 and 4. These Terms and Conditions apply to and form part of all purchase orders (PO) issued by Reward Interiors Pty Limited T/A Reward Hotel Projects (the Company) for the purchase of goods and/pr services (G&S) Costs are exclusive of GST." 1. The Terms and Conditions were contained in two closely-typed printed pages. The form of the Terms and Conditions document had some confusing features. 2. First, the documents comprised four columns, two to each page, with the clauses in sequential columns, numbered 1 to 10, 19 to 38, 11 to 18, and 39 to 45. One might infer that the second and third columns had mistakenly been swapped, but unfortunately, the error was not so simple, since both the third and fourth columns commenced part way into a clause, and the second and third columns ended with an incomplete clause, [55] and swapping the columns would lead to formatting errors and meaningless clauses. 3. Reward Interiors sought to resolve this confusion by asserting that the part clause at the top of the third column, above cl 11, was a continuation of cl 38 (at the foot of the second column), and that the part clause at the top of the fourth column, above cl 39, was a continuation of cl 18 (at the foot of the third column). This made reasonable sense in respect of cl 18, but cl 38 [56] – an apparently important clause dealing with default – would have errors in both formatting and numbering, with two subclauses numbered 38(a). The informed third party would need to overlook these errors in understanding the document. 4. The printed Terms and Conditions are part of the contract. The problems identified operated to limit the value of the form of the document as an aid in construction, but otherwise the substance of the terms were clear enough. 5. The printed Terms and Conditions contain the following terms relevant to delay and liquidated damages: "Essential terms … 3. Where this PO [57] [Purchase Order] relates to G&S [58] the subject of a contract between the Seller [59] and the Company, [60] the terms of that contract apply to the extent of any inconsistency with these T&C. [61] … Delivery of Goods 5. The Seller must deliver the G&S to the delivery address by the delivery date. … Time and Program 7 The Seller shall apply sufficient materials, equipment and labour to enable the works to proceed in accordance with the company's program 8 The Seller shall, if necessary, work extended hours to enable the works to progress in line with the companies [sic] program. 9 The Seller has no claim against the Company for costs arising out of the sellers extended work hours. 10 If the Seller fails to complete the works by the given completion date, the Seller shall be liable for any costs incurred by the Company as a result of late completion. … 12 The Seller hereby indemnifies the Company against all claims. Losses or damages which are made against or incurred by the Company as a result of interference, disruption or delay caused by the Seller. All such claims, loss or damages shall be a debt payable by the Seller to the Company against which the Seller [sic] may deduct monies due or to be due to the Company. … Liquidated Damages and General Damages 19 If the Seller fails to complete the Works by the Completion Date, the Seller shall pay the Company liquidated damages in the amount of $3,000.00 for every day after the Completion Date of each separable portion to and including the earliest of the Completion Date or termination of the agreement or the Company taking the Works out of the hands of the Seller. … Default 38 Where the Seller defaults, the Company in its absolute discretion may: (a) where the goods are defective in material, function design or workmanship, the Company shall have the right to notify the Seller and either: (i) carry necessary repairs to the goods to correct such defect; or (ii) return the goods to the Seller for a credit, repair or replacement; with the cost of repairs or return to be borne by the Seller. (a) If the G&S are not delivered within the timeframe specified, elect to cancel the PO. (b) If the G&S fail to meet the standards required by the Company as stated in clause 1, the Company shall, in addition to other available remedies, have entitlement: (i) to cancel the balance of the PO; (ii) cancel any other POs not yet supplied and (iii) be compensated by the Seller for any costs and losses incurred by the Company or the Company's Client. (c) call on the indemnity provided by the Seller to the Company. (d) exercise its rights to damages and any other remedies available at law." [62] 1. As the agreement is between two commercial entities, the documents that comprise it are to be construed according to the principles of construction of commercial contracts. The Court is to adopt an objective approach, ascertaining the meaning conveyed to a reasonable person having the background knowledge common to the parties, including as to matters of law. [63] Reference is to be made to the contractual language, the surrounding circumstances and the purposes and objects secured by the contract. [64] This includes the background and context of the contract. [65] The contract is construed as a whole, [66] and generally the Court approaches the task of construction on the assumption that the parties intended to produce a commercial result. [67] 2. Nevertheless, if the words used are not ambiguous, the Court must give effect to them, unless the literal meaning "flouts business common sense" [68] or would lead to an absurd result. [69] 3. If the contract is open to two possible constructions, the preferred construction is one which will avoid apparently capricious, unreasonable, inconvenient or unjust consequences, [70] even if that construction is not the most obvious, [71] especially if it is "most consistent with business common sense". [72] (a) Liquidated damages 1. Clause 19 is an important clause in the claim of Reward Interiors. It is not without ambiguity. It uses the term "Completion Date", with the initial letters capitalised, three times, but each usage appears to have a different meaning, if the clause is intended to create a sensible obligation. The meaning of the first occurrence of the phrase is the date by which the whole of the works are contracted to be completed; the second occurrence means the date by which a "separable portion" of the works is contracted to be completed; and the third occurrence means the date by which the works, or a separable portion of the works, are completed. 2. The use of capitals might suggest "Completion Date" was a defined term. No definition is recorded in the printed Terms and Conditions, but there is, in the Purchase Order, reference to "Completion Date", which I infer is the place to which the capitalised term points. As I have noted, no completion date is specified, that section of the Purchase Order being incomplete and the email confirms the express intention to do so. It follows that there is no "Completion Date". 3. Accordingly, the clause is ineffective in the current context. Its operation is conditional upon the existence of a completion date and if there is no completion date, Master Fabrication (the Seller) cannot fail "to complete the Works by the Completion Date". As the completion date was expressly removed from the contract by the 8 August 2019 Purchase Order, there is no relevant operation of cl 19. 4. Reward Interiors argued that there were sequential completion dates for the various parts of the works, which were, it said, "separable portions" under the clause. However, not only does the contract not identify a completion date, but it also does not describe any part of the works as a "separable portion". The words "portion" and "separable" are not found outside cl 19, in any contractual document. Terms such as "stages" [73] or "Element[s]" [74] are used as labels of aspects of the project; sometimes the parts are unlabelled under the heading, "Description". [75] 5. Also, the parts of the project are not consistently differentiated. In the quote [76] (where the parts are described as Elements) and in the Purchase Order (where the parts are not titled), [77] the four parts of "Upper Roof", "Bldg A – Lower Roof and Ground Floor", "Bldg B – Lower Roof and Ground Floor" and "Covered Link" are identified and given different "Amount[s]" and "Rate[s]" as part of the contract price. But the Purchase Order elsewhere purports to define the "program" differently, identifying a shorter period for the "critical path columns", which is not one of the earlier identified parts. 6. Further, the Master Fabrication quote states the "stages" [78] differently from the "[e]lement[s]" [79] set out in the previous paragraph. There are six stages identified, named: "Upper roof – columns", "Upper Roof – remaining", "Lower roof – Building A", "Lower roof – Building B", "Ground Floor – Building A" and "Ground Floor – Building B". [80] The "Covered Link" is not mentioned. 7. These contractual documents suggest that there may be four, five, six or seven stages with none referred to as "separable" or as a "portion", and there is no specified completion date, either for the works as a whole, or for any of these component parts. 8. In addition, the Purchase Order and quote separate other aspects of the work according to timing as part of the "program": 1 week for material procurement, 2 to 3 weeks for fabrication, 1 week for surface treatment, and 1 week (or 7 to 10 working days) for installation. These are also parts of the works, named and identified with respect to periods of time. Reward Interiors did not argue, and in any event, I would not find, that these items of the program are "separable portions" with a defined "Completion Date" even though a period of time is allowed for them. 9. Finally, the Reward Interiors pleading appears to allege alternative separable portions – the four stages identified above, [81] or eight stages, separating delivery and installation of the four stages, [82] again indicating a lack of certainty about the supposedly agreed "separable portions". 10. The various and varied descriptions of parts of the works, the various names for the collection of varied parts, the division of the contract sum between some of the parts, the assignment of periods of time for other parts and the absence of any defined "portions", "separable portions" or "completion dates", all militate against any part of the works being a separable portion to which obligations attached to complete the works in a specified time. 11. If parts were to be agreed by the parties to be separable portions, that needed to be stated, not reasoned that there were parts which were separable portions. And each needed a specified completion date. This did not occur. The listing of various parts is not sufficient to make them separable portions for the purpose of cl 19, especially where, in different places, different collections of parts of the works are stated. 12. I find that there is no contractual basis to define a particular item of work as a separable portion to be completed by a certain date within the meaning of cl 19. It follows that the prerequisites for cl 19 to have a substantial operation are not present. Clause 19 is the only clause that purports to identify a right to liquidated damages. In the result, Reward Interiors has no sound claim for liquidated damages against Master Fabrication. 13. As the liquidated damages clause gives rise to no entitlement, there is no need to consider whether it is a penalty, as Master Fabrication argued, although the evidence of Mr Lee [83] tends against a finding that the rate in cl 19 was punitive. Whether it was a penalty would depend upon how it applied in practice, including whether it would apply to different stages at the same time. (b) General damages 1. I have found that Reward Interiors has no contractual entitlement to liquidated damages for delay. Damages for delay may be available, but not under cl 19. 2. The heading to cl 19 refers also to "General Damages", although there is no part of the clause that refers to general damages. These words in the heading could indicate that liquidated damages are the only means of obtaining damages for delay, and replaces general damages. I would conclude, with or without the heading, that any award of liquidated damages is in substitution of any right to general damages for delay, since it represents an agreed particularisation of the amount or rate of delay damages. But in circumstances where the clause is inoperative, I would not read the clause as precluding a claim for unliquidated or general damages for delay. The plaintiff has no entitlement to "double dip" on delay damages, but Reward Interiors has not "dipped once", so far as liquidated damages are concerned. 3. Clause 10 of the Terms and Conditions provides another avenue for Reward Interiors to claim damages for delay. However, like cl 19, it also required a failure by Master Fabrication to "complete the works by the given completion date". [84] The absence of a specified completion date precludes Reward Interiors an entitlement to damages under cl 10. 4. That same reasoning applies to cl 5, which imposes an obligation to deliver the goods and services, or in this case, the works, to the delivery address "by the delivery date". Again, there is no specified agreed delivery date, so cl 5 is inapplicable. 5. Clause 7 requires Master Fabrication to apply sufficient materials, equipment and labour "to enable the works to proceed in accordance with [Reward Interiors'] program". The "Works", capitalised, are defined in the Purchase Order, and despite the lower case, that definition may be applicable to the term in cl 7. Clause 10 supports this construction, confirming that "the works" is a reference to the works of Master Fabrication, not the larger works of Reward Interiors. 6. In the result, cl 7 appears to oblige Master Fabrication to adhere to the program of Reward Interiors, the "program of the primary works", as defined in the Purchase Order. This appears to be important to Reward Interiors' claim. 7. In addition, by cl 12, Master Fabrication agreed to indemnify Reward Interiors against all losses incurred by Reward Interiors "as a result of…delay caused by" Master Fabrication. Reading cll 7 and 12 together, and assuming cl 7 is referring to the Purchase Order "program", if costs are incurred by Reward Interiors as a result of Master Fabrication failing to adhere to the program of Reward Interiors, then Master Fabrication must indemnify Reward Interiors against those costs. Clause 12 of the printed Terms and Conditions is not in terms confined by delivery dates or completion dates. 8. It can be seen that the Reward Interiors program is largely derived from the "minimum timeframe" contained in the Master Fabrication quote, [85] although Master Fabrication's quote did not contemplate a two-week period for the "critical path columns", as is stated in the Purchase Order. The quote proposed a timeframe [86] otherwise almost identical to Reward Interiors' program. But it was a "minimum timeframe", and noted that "7 to 10 working days weeks" would be required for installation of each stage. I read a "minimum timeframe…require 7 to 10 working days" as allowing two weeks for installation rather than the one week allowed by Reward Interiors. It required access to the site without the interference of other trades and it prevailed over the Purchase Order because of cl 3 of the Terms and Conditions. 9. The indemnity under cl 12 raises questions about whether there was delay by Master Fabrication, and whether that delay caused loss to Reward Interiors. F. Did any delay by Master Fabrication constitute a breach of the contract causing loss 1. In assessing delay, it is obvious that the provision of works involves a period of time to complete. Both the quote and the Purchase Order contemplate that time is required by Master Fabrication, and allowed by the contract, for the various items of the works to be done. To constitute delay, the period of time to do the works, or an item of the works, must go beyond what the contract allows, for it would be inconsistent for the contract to allow Master Fabrication a period of time, and yet require it to indemnify Reward Interiors for costs of using that period. The contract must be construed in accordance with reasonable commercial practices. [87] Delay only creates a right of indemnity when it is a delay beyond that countenanced by the contract; it must be delay in breach of the contract. 2. Thus, to identify a loss claimable under the indemnity provision of cl 12, Reward Interiors must establish first, coincidence of meaning between the Reward Interiors program in cl 7 and the "program of the primary works" in the Purchase Order, secondly, a delay in breach of the contract, and thirdly, a loss occasioned by that delay. (a) The "program" 1. Ascertaining the meaning of "program" involves a contest between cl 7 of Reward Interiors' Terms and Conditions [88] and the Purchase Order, [89] and the time periods stated in Master Fabrication's quote of 18 July. [90] 2. I referred earlier to the possible alternative meanings of the Reward Interiors' "program". [91] But it is clear that the "program of the primary works" is the program for the works of Master Fabrication. And if that is not entirely the Reward Interiors program for the purposes of cl 7, I must infer that it would nevertheless be part of that program. 3. Still, there is a difference between the strict six-week program which Reward Interiors infers from the terms of the Purchase Order, and the "minimum" required time of about seven weeks, not necessarily consecutive, described in the quote. [92] 4. The program specified in the Purchase Order started with the issue of shop drawings and provided a period of a week or more for different components of the work. There was no overall period specified for which installation had to be completed except in respect of the upper roof columns where a period of two weeks was specified. In regard to other parts of the works, only separate periods of weeks for different components of those parts were specified. 5. Significantly, neither Reward Interiors' program nor the "minimum timeframe" in Master Fabrication's quote proposed a specified period of weeks such as six or seven for the works from shop drawings to installation (save for the upper roof columns). A period could be calculated, but any calculation assumes that each period followed sequentially immediately after the preceding period. It is not obvious that this is intended. The quote says that: "This does not mean that that the entire job of approx. 150 tonnes can all be procured, fabricated and surface treated within 4 to 5 weeks. Reward Group must provide and notify the specific quantities and specific dates of requirement of steel for each stage, which are to be agreed in consultation with Master Fabrication to plan resources." [93] 1. Even in the Reward Interiors' program, a calculated period from receipt of shop drawings to completion by installation, for any part of the works, is not obvious from the program in the Purchase Order. Both the text of the quote and the text of the Purchase Order seem to allow, for example, the possibility of an intervening period between surface treatment and installation, [94] a period which might be needed to ensure "reasonable site access, and availability of site, without interruption of other trades, and completion of other trades where steel will be installed". [95] 2. This caution is informed by the circumstance that supply of raw materials for the steel fabrication, and paint and its application are tasks not necessarily carried out by Master Fabrication, but depend upon other contractors, perhaps retained by them. [96] Master Fabrication appeared to perform the fabrication and installation tasks only, and retained others for supply of materials, surface treatment and delivery. 3. The position is similar with delivery. The contract does not specify a time for delivery and whether Master Fabrication was always responsible for it, although cl 5 in the Terms and Conditions indicates that it was. Reward Interiors did take upon the obligation to arrange delivery in respect of some items. [97] Reward Interiors' pleading in cll C4A and C6 contemplates that installation does not immediately follow upon delivery. [98] 4. In my view, the specification of a period of weeks for different parts of the works may oblige Master Fabrication to complete parts of the works in the period specified, but it does not create a binding agreement to complete all of the parts by the summation of the weeks. That would need to be expressly stated, and it was not. 5. And, as discussed earlier, [99] what is the "stage" that is to be completed in the time period supposed? Looking at the Purchase Order alone, the "critical path columns" are not listed under the heading "Description", and neither party has suggested that the "Covered Link", which is listed, is a relevant stage. [100] These matters suggest that the four items described are divisions for the purposes of cost, rather than time. The quote had six stages under the heading "Program", where the "minimum timeframe" is then specified, [101] although Reward Interiors did not assert that the quote relevantly defined the stages. 6. The absence of any reference to a total of six or seven weeks after the provision of shop drawings, the absence of any start date or even a starting event for any of the specified periods of weeks, and the uncertainty of what is a "stage", supports the conclusion that the program did not contractually oblige Master Fabrication to complete installation within the six or seven-week period. This conclusion is also supported by cl 3, which gives primacy to the "minimum timeframe" in the quote, over the program in the Purchase Order. 7. The two-week period in the Purchase Order for the upper roof columns conflicts with the quote of 18 July. The quote states that every stage of the works, evidently including the upper roof columns, [102] involves about seven weeks of work. So the contest is between the Purchase Order that specified the "program of the primary works" to include that the "critical path columns, which are to be procured, fabricated and installed in a two week period from receiving shop drawings", and the Master Fabrication quote, which specified six to seven weeks. [103] The resolution of this inconsistency lies in the printed Terms and Conditions. They provide for the quote to prevail. Clause 3 expressly states that where the Purchase Order relates to work the subject of a contract, the (existing) contract prevails over the inconsistent Terms and Conditions, which I read as including the Purchase Order. In this case, as I have found, the quote was contractual before the Purchase Order was issued and the Terms and Conditions received. 8. It follows that there was no specific breach established of a time requirement of the contract, in respect of any of the parts of the works. Any breach of delay could only be of a requirement to do particular works in a reasonable time. 9. For these reasons, I am not persuaded that there was an obligation on Master Fabrication to complete the works, or any part of the works, by a particular date. Rather, the program and the quote are more consistent with an obligation on Master Fabrication to, for example, complete one aspect of the task within a period, without defining a start or end date. That was not an obligation for which Reward Interiors contended. (b) Specific time periods 1. In case I am wrong, I propose to consider the delay breach alleged by Reward Interiors in Master Fabrication not complying with the alleged time limits. 2. Rewards Interiors asserted the delay by Master Fabrication was in breach of the contract in accordance with the following timetable [104] : Stage Date shop drawings received Date completion due Date work completed or taken over Difference between due date and completed date (days) Upper Roof Columns 23 August 2019 13 September 2019 26 September 2019 13 Building A Structural Steel 15 October 2019 26 November 2019 20 January 2020 56 Building B Structural Steel 8 November 2019 20 December 2019 20 January 2020 31 Upper Roof Steel 5 February 2020 18 March 2020 22 April 2020 (final delivery of steel) 35 1. Insofar as dates are given for receipt of the shop drawings, Master Fabrication only disputes this schedule in respect of the upper roof column and then only by a week. [105] However, Master Fabrication attributes the extended period for completion of the parts of the works to additional delays due to the conduct of Reward Interiors. 2. The absence of any definition of "shop drawing" in the Purchase Order – such as whether they be for the whole or only a part of the works – does not assist in determining the commencement of any timing obligation in the Purchase Order: the question remains whether the period of one week for material procurement commenced with the provision of shop drawings for part of the works, or the whole of the works. Earlier correspondence indicated the provision of shop drawings of different parts of the works at different times, [106] which suggests that the commencement of the "program of the primary works" [107] occurs with the issue of shop drawings of the relevant part, a conclusion I am inclined to accept, even though this would hinder Master Fabrication from procuring the material for the whole of the works, which might be supposed to be more efficient and economical. 3. In respect of the upper roof columns, the first component of the delay claimed, Reward Interiors asserted that these shop drawings were supplied on 23 August 2019. On this date, Mr McDonald of Reward Interiors sent an email to Mr Patel of Master Fabrication stating, "Please find attached approved production drawings for the upper roof columns," and indicated the urgency of the production of these items. [108] Whether "production drawings" is an alternative term for shop drawings was not clarified, but I infer that it is. 4. On the same day, Mr Patel responded requesting the "full package of this drawings including material list, nc files, parts drawing and dxf files", [109] a request which is in accordance with the Master Fabrication quote of 18 July 2019, which specified that: "All Shop drawings will be supplied by Reward Construction including material list, purlin detailed drawings, plate drawings with electronic files (DXF, NC files), bolts and anchor list, Surface treatment to be specifically mentioned on each member". [110] 1. In the absence of contrary evidence, I accept that the contract intended for the shop drawings to have this detail, both as the intended meaning of shop drawings, and for the purpose of assessing any delay by Master Fabrication. 2. Reward Interiors responded that afternoon, but did not forward the further material. More detail was provided by Reward Interiors on 30 August 2019. [111] This satisfies me that the "production drawings" supplied did not have the detail required, so that time did not start until 30 August 2019. 3. Perhaps for this reason, Reward Interiors accepted that time should not begin to run until 30 August, [112] and claimed that a delay beyond the two weeks in the Purchase Order commenced on 13 September. The 30 August date for shop drawings was the date evidenced by Master Fabrication. [113] 4. Installation of the roof columns was completed on 28 September 2019. [114] This would involve a delay of 15 days after the two-week period ending 13 September on Reward Interiors' case. 5. The second component of the delay claimed by Reward Interiors was in respect of the building A stage. There is no issue that shop drawings were provided on 15 October 2019. Reward Interiors asserted that the work was completed or taken over on 20 January 2020, [115] whereas Master Fabrication asserted that occurred on 13 January. [116] 6. By 8 January 2020, Reward Interiors "was considering whether it would continue with Master Fabrication". [117] 7. On 9 January 2020 work on the upper roof was suspended by Reward Interiors. [118] Although Reward Interiors asserts work was taken over on 20 January 2020, no evidence is mentioned and the affidavit of Mr Lee does not deal with that period from 13 to 20 January 2020. 8. The evidence included invoices for other contractors of that date i.e. 20 January 2020, which show that "MOVE STEEL + INSTALL" commenced on 13 January 2020. [119] 9. Accordingly, I infer that the work was taken over on that day,13 January 2020. 10. From the supply of the shop drawings on 15 October 2019 to the date the work was taken over on 13 January 2020, was a period of approximately 13 weeks, or six weeks longer than the period indicated in the quote. 11. Master Fabrication resists this period of delay. It points to a number of variations which operated to postpone the 15 October date to the date of 7 November, or 7 January or days in February, March and April. [120] Only the first two dates are relevant since the work was taken over in January. 12. On 7 November Master Fabrication requested more detailed drawings "with the splice and the measurement from the end" and also "including painting specification". [121] Further detailed "mark-up" was then supplied by Reward Interiors. [122] In the absence of explanation by Mr McDonald, I accept that the shop drawings were only then of sufficient detail to procure the steel for fabrication of the steel members for building A. For the purposes of assessing delay, any period would thus commence on 7 November 2019. 13. In respect of the asserted 7 January 2020 date, Master Fabrication refers to Court Book pp 982-987. [123] Those documents are dated from March 2020 and do not appear to justify a commencement date in January. 14. Accordingly, there was a period of approximately nine and a half weeks from 7 November until taking over of the works on 13 January. Although that is two weeks more than the period quoted, it does include the ordinary building and construction shutdown period over Christmas and New Year. No contractual document specifies an allowance for that period. However, there may be a question of whether damages were suffered by a delay from Boxing Day until 13 January. 15. There was additional evidence potentially exculpatory of Master Fabrication. On 10 December 2019, in an email to Mr Lee of Reward Interiors, Mr Patel asserted: "We will not accept any delay charges and liquidated damages. This was agreed today when Cameron Lancaster from your office visited today. During his visit, we have shown him the completed fabricated steel for building A lying at painter. Building A was completed last month by MF. Building A priority steel has already been installed and we have delivered whatever we can on site. Columns for building A is almost completed whatever we can as discussed with our site foreman Mick Meagher over the phone in the presence of Cameron Lancaster." [124] 1. Mr Cameron Lancaster was not called as a witness, although he swore an affidavit of 23 October 2020. Early in the trial that affidavit was read subject to objections. [125] But when the hearing later resumed, Mr Lancaster was not called, and his affidavit was no longer pressed as evidence. [126] The consequential acceptance of Mr Patel's evidence illustrates circumstances where installation has not followed immediately upon fabrication. 2. The third period of delay asserted by Reward Interiors was in respect of building B, from 8 November to 13 January. There is no dispute in respect of this period, save that Master Fabrication asserts that the commencement date was delayed to 18 December, or alternatively, 9 January or later. 3. On 18 December Master Fabrication sought section details in respect of certain "Plates" for "Building B", [127] and Reward Interiors responded with an incomplete revised drawing. After further correspondence and delays by Reward Interiors, [128] further reference measurements were provided on 6 January 2020. [129] 4. In these circumstances, I would not accept the period of delay by Master Fabrication asserted by Reward Interiors in respect of building B prior to 13 January 2020. Approved shop drawings are not provided until they are complete and final, with the necessary detail, and that did not occur until 6 January 2020. 5. Finally, Reward Interiors advances a claim for delay for the residue of the upper roof. It says the shop drawings were received on 5 February 2020, and the steel was delivered on 22 April, thereby asserting a period of about 11 weeks, or 4 weeks longer than a period of 7 weeks in the quote. 6. Master Fabrication asserts that the period for measuring delay commenced in late February or March, and no reasonable period had elapsed by 22 April 2020. 7. The evidence reveals that Reward Interiors gave instructions about surface treatments on 25 February 2020, [130] and subsequently added details, including measurements for drawings on 28 February 2020, [131] galvanizing on 12 March 2020, [132] drainage holes on 20 March 2020, [133] and delivery on 31 March 2020. [134] 8. Accordingly, it cannot be said that final drawings were provided until at least 12 March 2020, so the period of delay did not exceed the allowed contractual period asserted by Reward Interiors. 9. In the result, if, contrary to what I have found, Master Fabrication is contractually bound to complete each part of the work (as specified by Reward Interiors) in the period specified in the Purchase Order, there was an additional period of approximately two weeks for completion of the upper roof columns, and two and a half weeks for completion of the building A stage, but no additional period in respect of building B, or the residue of the upper roof. (c) A reasonable period 1. In the absence of a specific time obligation, Master Fabrication remained obliged to complete the works (and perhaps seven parts of the works) within a reasonable time. As McLure P in Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd (No 2) stated, when liquidated damages are unavailable because of the lack of a date from which "damages can run and the right to liquidated damages will be lost…The nominated time fixed for practical completion is replaced by an obligation to complete within a reasonable time." [135] The time that is reasonable is informed by those clauses that indicate what the parties anticipated about the duration of specific components of the works. 2. The list statement identifying Reward Interiors' case did not, in terms, allege a claim for an assessment of damages for unreasonable delay, only a claim for liquidated damages and a claim for the costs of the deleted works. But the claim was faintly put to assess delay damages, and Master Fabrication did not clearly oppose the entitlement to maintain that claim. 3. As indicated, the duration of a reasonable period for any part of the works is informed by the contract, and especially, by reason of the quote, [136] indicating that at least seven weeks would be a reasonable period. It is also informed by the circumstances surrounding the works. 4. In the context of six to seven weeks being specified in the quote as the minimum time period required, which prevails over the period of two weeks specified in the program, I am not satisfied that the four-week period for the critical path columns that was taken by Master Fabrication was other than a reasonable period, and so the delay of four weeks between the shop drawings and the completion of installation did not involve any breach. 5. Further, I would not find the delay over the Christmas/New Year period until 13 January in respect of building A to be unreasonable. In these circumstances, I am not satisfied that there was any unreasonable delay by Master Fabrication in breach of the contract. (d) Proof of loss 1. To enliven the right to indemnity for contravening delay under cl 12 also involves Reward Interiors establishing a loss. 2. As the liquidated damages claim is not established, it is incumbent on Reward Interiors to establish that costs and expense were incurred by reason of delay that would not otherwise have been incurred. Here there was, for example, no evidence that Reward Interiors was liable for any liquidated damages or other payments to the owner of the school project. There was some evidence of staffing costs incurred per week. [137] But there was no evidence that the overall project of Reward Interiors was delayed, or that those staffing costs were increased because steelwork remained to be completed. 3. I must infer that the Reward Interiors project continued beyond the supply and installation of the structural steel. If the structural steel was delayed, that alone would not establish that costs of the project were increased as a result. There was no critical path program in evidence, nor any expert evidence as to the impact of any delay by Master Fabrication on the school project of Reward Interiors. Were there any breach in respect of delay, Reward Interiors has not established that any cost or damage resulted, so there is no loss enlivening the indemnity under cl 12, or at common law. 4. The consequence of no damage being proved is that I would only allow the nominal sum of $100 for a breach, if one were found. 5. Accordingly, neither proof for damages, whether liquidated or unliquidated, nor delay in breach of the contract, is established and the claim is dismissed. G. Completion costs: Reward Interiors' claim for the costs of taking over and completing the works 1. Reward Interiors also claimed the costs of taking over part of the works that Master Fabrication had been contracted to perform. This was not because the contract with Master Fabrication was terminated for breach. Indeed, parts of the works were taken over whilst Master Fabrication continued with other parts of the works. Nor was the taking over of parts of the works a breach by Reward Interiors. Reward Interiors had a contractual entitlement to do so. 2. Under cl 22 to 24 of the Reward Interiors Terms and Conditions: "22 The Company shall from time to time prior to the completion of works by notice in writing, direct the Seller to carry out or execute any variations to the works, including deletion of some or all of the works from the PO. 23 A variation shall be valued using a fair and reasonable valuation for the variation, and assessed by the Company. 24 Pricing:- A Variation ordered and in accordance with this clause shall be priced using the following at the company's discretion: (i) Prior agreement; (ii) Applicable rates, or rates set out in the purchase order; (iii) Where payment for additional works is agreed on a day labour basis the following rates apply: Tradesman Labour: $45 per hour worked Trades assistant/labourer: $25 per hour worked Materials: Invoice cost plus five percent (5%) The rate includes allowance for wages, allowances, on-costs, overheads, profit, small tools and the like." [138] 1. I could find no other basis for Reward Interiors deleting some items of work from the contract. Clause 38(a) (second occurring), on the construction Reward Interiors asserted, provided that in the event of default, if goods and services are not delivered in the time specified, Reward Interiors may elect to cancel the Purchase Order. There was no specific provision allowing deletion of some of the works for delay. The power in cl 22 was exercised by Reward Interiors. It did not require any breach by Master Fabrication. 2. On 10 January 2020 Reward Interiors instructed Master Fabrication not to continue with any component for the upper roof. [139] As indicated earlier, Reward Interiors commenced installation of steel on 13 January 2020. On 31 January 2020 Reward Interiors proposed that Master Fabrication would continue to supply and would deliver the steel, but that certain painting and installation works would be done or arranged by Reward Interiors. Reward Interiors proposed certain credits for works formerly part of the contract with Master Fabrication, but were not to be done by them. [140] These works included painting and installation of building B first floor steel, installation of some remaining items on building A, and installation of the upper roof, at specified costs. Reward Interiors also proposed other works to be done by it – large screen frames on building A, painting of columns, installation of "Covered Link" and "Pod structural steel" – with costs to be determined. 3. Master Fabrication responded to this proposal [141] asserting: "The setoffs proposed by Reward are unacceptable. Reward took over the installation work without MF's consent or any right under the Contract. In the circumstances, the set-off for any work taken over by Reward must be MF's allowance for that work and not Reward's costs to carry it out." [142] 1. Master Fabrication claimed no damages for breach, nor for the lost profit in respect of these works. In submissions, it asserted that Reward Interiors did not vary the works by deleting the installation, submitting that there was no advance notice of Reward Interiors undertaking works which Master Fabrication was to do under the contract. 2. Reward Interiors did give notice in correspondence in December, and more particularly in January that it would do some of the installation work. Although Master Fabrication did not consent, Reward Interiors had a right under the contract to delete items of work that does not require consent. I think Reward Interiors' actions were effective to vary the contract, and delete part of the works. 3. However, Reward Interiors did not seek to value the variation deleting the works "using a fair and reasonable valuation for the variation" in accordance with cl 24 and the Terms and Conditions. Nor did Reward Interiors adopt the labour rates and materials rates specified in cl 24. No argument was raised that those rates are for additional work value rather than deleted work. Nor was there "[p]rior agreement" of the pricing. 4. Reward Interiors sought to have Master Fabrication pay the extra cost Reward Interiors incurred when it completed the deleted works. That is not the method of valuation prescribed by the proper construction of cll 22 to 24. Those clauses involve an assessment of the addition or reduction in costs to Master Fabrication, not the costs to Reward Interiors when it chooses to delete certain works. At least, that is the way I would interpret cl 24. The contractual provisions for variations, and the absence of the need for a breach for its exercise, means that the value of the deleted works must be based, as Master Fabrication asserts, on "MF's allowance for that work and not Reward's costs to carry it out". [143] To allow Reward Interiors to delete works, and charge Master Fabrication for Reward Interiors' cost of doing those works would not seem to accord with business common sense and would lead to an absurd and unreasonable result, at least where the power is not premised on a breach of contract. 5. A price adjustment for the deletion of works as part of a variation is not precluded by the Terms and Conditions. Rather, Reward Interiors' Terms and Conditions seem to countenance a price adjustment. But the contractual methodology specifies that Reward Interiors provide a fair and reasonable valuation of the saving to Master Fabrication as a result of the variation. That was not done. Reward Interiors is not entitled to its costs of completing the work deleted by it under its power to direct a variation. H. Contract sum and variations 1. The assessment of the cost savings of the deleted work reveals a significant misunderstanding in the way the case was conducted. By the conclusion of submissions, Reward Interiors asserted its claim to comprise its liquidated damages and its cost of completing the deleted work, less an amount of $68,730. [144] Reward Interiors was content to accept the supposed lesser amount claimed by Master Fabrication, namely $64,504, [145] as a credit against its claim for liquidated damages and the completion costs. If those claims were unsuccessful, as I have found, Reward Interiors would owe Master Fabrication $64,504. 2. However, although I reject Reward Interiors' methodology for the cost of deleted work and its claim for delay costs, that does not mean that it is not entitled to some credit as a result of deleting some of the works. The calculation of that amount is the fair and reasonable assessment of the cost saved by Master Fabrication. Although Reward Interiors did not do that task, Master Fabrication did, and as there is no evidence to the contrary, I accept its assessment of the savings. [146] 3. The following schedule indicates how the claims of the parties are to be reconciled to determine the amount owing under the contract: Plaintiff's calculation Defendant's calculation 995,000 Contract price (ex GST) 995,000 -49,000 Deduction for painting credit (Variation 4) [147] -49,000 0 [148] Deduction for deleted work [149] -59,341 57,337 Addition of agreed variations [150] 57,337 0 Addition of disputed variations [151] 58,971 9,720 Addition of variation amounts not claimed by defendant [152] 0 -944,327 Amount paid -944,327 68,730 Total owing to defendant (ex GST) 58,640 (which is $64,504 incl GST) [153] 1. Thus, while it appears that Reward Interiors is prepared to give credit for a sum more than $10,000 greater than that asserted by Master Fabrication, that calculation ignores the disputed variations of $58,971, a possible error in respect of Variations 16 and 17 and the value of the deleted work amount deducted by Master Fabrication. 2. As Master Fabrication has not claimed these amounts, they should be taken into account, to the effect that even though Reward Interiors is not entitled to recover its costs of completing the deleted works, it is entitled to the reduced sum Master Fabrication claims, which, bearing in mind the evidence, is the amount that I find to be the reasonable value of the deleted works, and the proper amount payable under the contract. 3. Once these amounts are considered, the entitlement of Master Fabrication to retain the monies paid or payable under the Security of Payments legislation depends upon the disputed variations. 4. The variations were allowed pursuant to a payment claim under the Building and Construction Industry Security of Payment Act 1999, but s 32 provides that nothing done under the Act affects contractual rights. 5. Further, no admission by Reward Interiors led to the variation claims being accepted. The entitlement of Master Fabrication to the amount of the payment claim resulted from Reward Interiors not serving a payment schedule. 6. There may be a question as to whether the proceedings allow Reward Interiors to recover that overpayment if there is one. There was no claim of restitution in the prayers for relief, although it is mentioned as an issue in the Amended Technology & Construction List Statement at cl A2. [154] A claim for damages likely does not embrace a claim in restitution. [155] Nevertheless, that claim is within this Court's jurisdiction under s 134(1)(h) of the District Court Act 1973, and Master Fabrication took no objection to an argument about variations. 7. As Reward Interiors is seeking to recover funds overpaid or prove a credit, in the first instance it bears the onus of proving an entitlement to recover. The Court was not assisted with a Scott Schedule by the parties as to contested variations, nor was there any expert evidence about them. In those circumstances, I propose to deal only briefly with them. All but Variation 12 were for relatively modest sums from less than $500 to less than $5,000. 8. There were eight disputed variations. Variation 2 was rejected by Reward Interiors on the basis that each involved rectification of defective work. [156] This reason is an admission that the work was done and was in addition to the contractual works. As there was no evidence of defective work, and the photos indicated to me no defect in the works done by Master Fabrication, I am not persuaded that Reward Interiors is entitled to recover that sum. 9. Variations 6, 7, 8 and 9 assert that drainage holes for surface treatment were within the contract sum. No document or drawing established that holes were part of the relevant steel members, and instructions were sought from Reward Interiors as to whether they were required. [157] In these circumstances, I would allow the variations. 10. Similarly with Variations 21 and 22, the variations are resisted because "shop drawings were not received". There is no assertion denying the existence of the shop drawings, or the additional cost, or that the shop drawings were somehow part of Master Fabrication's contractual obligations. I would allow the variation. 11. That leaves the largest variation, Variation 12, [158] which was for the extra cost of galvanising steel members when only painting had been allowed. These steel members were not disputed to be for the underside of the upper roof. 12. Reward Interiors argued that the members were always required to be galvanised under the contract. That obligation was found on some drawings, but perhaps more importantly, also the quote, in terms that "[a]ll external steel work will be hot dip galvanised" [159] whereas internal members only required two coats of paint. 13. So the question is whether the underside of the upper roof was "external steel work". Unassisted by industry meanings, I would regard steel work as being external if it was in any way exposed to the elements. If it was the structure of an external roof, but covered by the roof on top and by some cladding or sheeting below, the steel members would not, in my view, be "external" even if they form the structure of an external building as was the case with the upper roof. But here the members, though covered by the roof element, remain exposed or uncovered underneath. That is sufficient to make them "external". It may be that in the pricing of the upper roof, Master Fabrication did not allow for galvanising, [160] but the terms of the quote indicate that galvanising external members was to be part of the price. In that event, I disallow the variation. Reward Interiors is entitled to a credit of $44,481 plus GST. 14. There is also Variations 16 and 17, which were claimed by Master Fabrication at only 75% on 31 March 2020, [161] but allowed at 100% by Reward Interiors on 14 May 2020. [162] I would not disturb the concession granted by Reward Interiors to allow the whole of those two variations. I. The change in steel specification 1. The final claim by Reward Interiors is for $5,120 for the costs saving of a variation allowing Master Fabrication to use a lower grade of steel. 2. The parties accept that this was a variation, but Master Fabrication asserts that Reward Interiors has not established any loss. That may be so, but loss is not a requirement for the cost of a variation. 3. The assessment of the savings to Master Fabrication by the reduced steel specification is a fair and reasonable valuation of the variation. There was no real dispute as to these savings. The contract gives Reward Interiors this power to assess the valuation under cll 22 to 24. I accept the valuation of a saving of $5,120. J. Conclusion 1. The parties have agreed that Master Fabrication is entitled to $64,504 (inclusive of GST) on the cross-claim. From this sum, the valuation of the steel saving of $5,120 and the sum of $44,481, total $49,601 (with GST, $55,561), should be deducted, but another $9,720 should be added to the claim, or with GST, $10,692, for Variations 16 and 17, which were allowed in full. So the set-off is $44,869 inclusive of GST. K. Interest 1. As Reward Interiors was obliged to pay the amount of the progress claim, interest on the unpaid amount of $64,504 should be paid from 21 days after the payment claim issued 31 March 2020, [163] being 21 April 2020. But Reward Interiors is also entitled to interest on its funds to be set-off. In these circumstances, interest should be paid on the net amount owing of $64,504 less $44,869, being $19,635, from 21 April 2020 until today, amounting to $2,118. This produces a total judgment sum of $21,753. L. Costs 1. The parties asked that I reserve the question of costs to await written submissions. M. Orders 1. The orders of the Court are: 1. Judgment for the defendant/cross-claimant in the sum of $21,753 inclusive of interest. 2. Otherwise dismiss the proceedings. 3. Reserve the question of costs. 4. Direct the parties to email to my associate by 5pm on 3 November 2022 written submissions on costs (maximum of 5 pages) and any documents on which they rely. ********** Endnotes 1. Court Book ("CB"), p 91. 2. CB, p 97. 3. CB, p 98. 4. CB, pp 102-103. 5. CB, p 103. 6. CB, p 101. 7. CB, pp 101-103. 8. CB, p 101. 9. CB, pp 105-106. 10. CB, p 108. 11. Amended Technology & Constriction List Statement ("AT&CLS"), 4 December 2020, at cl C1; CB, p 23. 12. Technology and Construction List Response ("T&CLR"), 17 December 2020, at cl C.1; CB, p 30. 13. CB, p 111. 14. CB, pp 118-121. 15. CB, p 118. 16. CB, p 119. 17. CB, p 120. 18. See CB, pp 123-124. 19. CB, p 129. 20. CB, pp 131-132. 21. CB, pp 133-134. 22. CB, p 129. 23. See [9] above. 24. See AT&CLS at cl C1; CB, p 23, T&CLR at cl C.1; CB, p 30. 25. AT&CLS at cl C2(1); CB, p 23. 26. See CB, pp 131-134. 27. See AT&CLS at cl C2(2) and (3); CB, p 23. 28. CB, pp 118-121. 29. CB, p 129. 30. CB, pp 131-132. 31. CB, pp 133-134. 32. CB, p 129. 33. CB, p 132. 34. CB, p 106. 35. CB, p 105. 36. Affidavit, Ashok Patel, 15 December 2020, at [7]. 37. CB, p 131. 38. See CB, p 120. 39. See affidavit, Jimmy Lee, 23 October 2020 at [6]. 40. Cf CB, pp 120 and 131. 41. [1954] HCA 72; (1954) 91 CLR 353. 42. See CB, p 133. 43. See e.g. CB, p 118. 44. E.g. the dropbox link at CB, p 103. 45. CB, p 131. 46. CB, p 106. 47. See e.g. CB, pp 102, 111. 48. CB, p 101. 49. CB, p 116. 50. CB, p 120. 51. CB, p 129. 52. CB, p 131. 53. CB, p 131. 54. CB, p 118. 55. See CB, pp 133-134. 56. CB, pp 133-134. 57. "purchase orders", see CB, p 133 definitions before cl 1. 58. "goods and/or services", see CB, p 133 definitions before cl 1. 59. Master Fabrication cf CB, p 131 "Sub Contractor". 60. "Reward Interiors Pty Limited", see CB, p 133 definitions before cl 1. 61. "terms and conditions", see CB, p 133 definitions before cl 1. 62. CB, pp 133-134. 63. Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [11]; [2001] HCA 70 at [11]. 64. Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514 at [44]; [2019] HCA 13. 65. Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7, (2014) 251 CLR 640 at [35]. 66. Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36, (1973) 129 CLR 99 at 109. 67. Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [15], see also Motor Yacht Sales Australia Pty Ltd v Blann [2020] NSWCA 349 at [35]-[36]. 68. Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201; Maggbury at [43]. 69. Bank of Queensland Ltd v Chartis Australia Insurance Ltd [2013] QCA 183 at [37]. 70. Bank of Queensland Ltd at [37]; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109. 71. Bank of Queensland Ltd at [37]. 72. Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900, 2908 at [21]. 73. CB, p 119. 74. CB, p 105 cf p 131. 75. CB, p 131. 76. CB, p 118 77. CB, p 131. 78. CB, p 119. 79. At CB, 118. 80. At CB, p 119. 81. See AT&CLS at cl C3, C4, C5 and C6. 82. See AT&CLS at c; C4A and C6. 83. Affidavit, Jimmy Lee, 23 October 2020, at [94]. 84. My emphasis. 85. CB, p 120. 86. CB, p 120. 87. Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [51]. And see [43]-[45] above. 88. CB, p 133. 89. See [63]-[67] herein. 90. CB, p 120. 91. See [31]-[32] above. 92. CB, p 120. 93. CB, p 120. 94. See especially CB, p 120. 95. CB, p 120. 96. See e.g. CB, p 197. 97. E.g. CB, p 657. 98. See AT&CLS, pp 24-25. 99. See [50]-[54] herein. 100. CB, p 131. 101. CB, pp 119-120. 102. CB, pp 119-120. 103. CB, p 120. 104. Affidavit, Jimmy Lee, 23 October 2020, at [93]. 105. Affidavit, Ashok Patel, 15 December 2020, at [36], third column. 106. E.g. CB, pp 102-103. 107. CB, p 131. 108. CB, p 137. 109. CB, p 137. 110. CB, p 118. 111. CB, p 145. 112. See CB, p 770, email of 11 September 2019. 113. Affidavit, Ashok Patel, 15 December 2020 at [36]; CB p 699. 114. Affidavit, Jimmy Lee, 23 October 2020, at [21]. 115. Affidavit, Jimmy Lee, 23 October 2020, at [93]. 116. Defendants' schedule regarding dates of completion. 117. Affidavit, Jimmy Lee, 23 October 2020, at [51]. 118. CB, p 232. 119. CB, p 361 120. See Defendants' schedule regarding dates of completion. 121. CB, p 832. 122. CB, p 832. 123. See Defendants' schedule regarding dates of completion, footnote 9. 124. CB, p 211. 125. Tcpt, p 37(47). 126. Tcpt, p 63(46). 127. CB, p 783. 128. See CB, pp 784-785. 129. CB, pp 785-786. 130. CB, p 810. 131. CB, p 779. 132. CB, p 816. 133. CB, pp 295-296. 134. CB, p 657. 135. (2012) 287 ALR 360; [2012] WASCA 53, at [48]. See also Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 1 BLR 111; MacMahon Construction Pty Ltd v Crestwood Estates [1971] WAR 162 at 167 per Burt J. 136. CB, p 120. 137. Affidavit, Jimmy Lee, 23 October 2020, at [94(a)-(c)]. 138. CB, p 133, emphasis added. 139. CB, p 232. 140. CB, p 234. 141. CB, pp 238-240. 142. CB, p 238. 143. CB, p 238. 144. See PWS, 16 March 2022 at [170]-[172]. 145. See PWS, 16 March 2022 at [171]. 146. See CB, pp 300-301. 147. See CB, pp 300, 351. 148. Omitted by the plaintiff. 149. As can be seen from CB p 300, the credit for deleted work comprised 66% of the upper roof installation (total $30,030); 5% of the fabrication surface treatment delivery and installation of building A ($8,515); 40% of the building B installation ($19,296)and 15% of the supply fabrication galvanising and delivery of the covered link ($1,500), a total of $59,341. 150. See CB, p 351. 151. See CB, pp 301 and 351, including variations 2, 6, 7, 8, 9, 12, 21 and 22. 152. For 25% of variations 16 and 17 – cf CB, pp 301 and 351. 153. Cf PWS, 16 March 2022, at [171] and applicant's submissions to cross-claim, 16 March 2022, at [9]. 154. CB, p 22. 155. See Visvalingam Pty Ltd v Vitarag Pty Ltd (No 2) [2022] NSWDC 294 at [39]-[45]. 156. CB, p 351. 157. CB, pp 295-296. 158. Significantly larger than all the other disputed variations combined. 159. CB, p 118. 160. Cf CB, p 300. 161. CB, pp 300-301. 162. CB, p 351. 163. CB, pp 298–301. 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: 07 November 2022