DECOR CEILINGS PTY LTD v COX CONSTRUCTIONS PTY LTD; COX CONSTRUCTIONS PTY LTD v DECOR CEILINGS PTY LTD

Judgment of The Honourable Justice Besanko 20 December 2005

ARBITRATION – THE AWARD – APPEAL OR JUDICIAL REVIEW -POWERS OF COURT
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS^ THE CONTRACT

Appeals against award of arbitrator by contractor and subcontractor – contractor ordered to pay subcontractor sum for delay claim – subcontractor appealed on basis mat additional hours claim should also have been allowed – global claim – submitted that arbitrator erred in requiring corroborative evidence in support of such claim – contractor appealed on basis that delay claim should not have been allowed – submitted that both delay claim and additional hours claim failed because subcontractor did not follow procedures specified in contract for dealing with loss and damage resulting from delay or disruption and that those procedures provided exclusive means of recovery for such loss and damage; alternatively, that both claims failed because subcontractor did not serve notice before claim.

Held, dismissing contractor’s appeal and allowing subcontractor’s appeal – in relation to contractor’s appeal, no reason to interfere with conclusion of arbitrator as to what constituted contract – ordinary remedies for breach of contract not excluded – as to notice before claim point, held that such notice a condition precedent – no obligation on subcontractor to plead it –

Appellant: DECOR CEILINGS PTY LTD (SCCIV-04-545)
Counsel: MR B JENNER WITH MR T GRACE – Solicitor: JOHNSON WINTER SLATTERY
Respondent: COX CONSTRUCTIONS PTY LTD (SCCIV-04-545) Counsel: MR F DOUGLAS QC WITH MR R ROSS-SMITH (30 JUNE 2005); MR R ROSS-SMITH WITH MR M THOMAS (27 SEPTEMBER 2005) – Solicitor: LYNCH MEYER
Respondent: DECOR CEILINGS PTY LTD (SCCIV-04-566) Counsel: MR B JENNER WITH MR T GRACE – Solicitor: JOHNSON WINTER SLATTERY
Appellant: COX CONSTRUCTIONS PTY LTD (SCCIV-04-566) Counsel: MR F DOUGLAS QC WITH MR R ROSS-SMITH (30 JUNE 2005); MR R ROSS-SMITH WITH MR M THOMAS (27 SEPTEMBER 2005) – Solicitor: LYNCH MEYER

Hearing Date/s: 30/06/2005,27/09/2005 File No/s: SCCIV-04-545, SCCIV-04-566

no reason to interfere with, arbitrator’s finding that contractor did not give proper notice of this point – in relation to subcontractor’s appeal, arbitrator erred in requiring corroborative evidence – award returned to arbitrator to be determined in accordance with reasons.

Commercial Arbitration Act IP 86 S 38; Supreme Court Rules 1987 r 46.07, referred to. Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd 545/04; Cox Constructions Pty Ltd v Decor Ceilings Pty Ltd 566/04 (2004) 235 LSJS 81; Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd [2005] SASC 146; Masters v Cameron (1954) 91 CLR 353; Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310; Baulkham. Hills Private Hospital Pty Ltd vGR Securities Pty Ltd (1986) 40 NSWLR 622; G R Securities Pty Ltd v BauMam Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631; Hudson Investment Group Ltd v Australian Hardboards Ltd [2005] NSWSC 716; Graham Evans Pty Ltd v Stencraft (2000) 16 BCL 335; Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689; Mancorp Pty Ltd v Baulderstone Pty Ltd (trading as Baulderstone Hornibrook) (No 2) (1992) 60 SASR 120; Jennings Construction Ltd vQH& MBirt Pty Ltd (1986) 8 NSWLR 18; Opat Decorating Service (Aust) Pty Ltd v Hansen Yuncken (SA) Pty Ltd (1994) 11 BCL 360; Leigh ton Contractors Pty Ltd v South Australian Superannuation Fund Investment Tnist (1995) 12 BCL 38; Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (1996) 12 BCL 317; Baese Pty Ltd v if A Bracken Building Pty Ltd (1990) 6 BCL 137; Zuk v Miller [1957] SASR 25; Nauru Phosphate Royalties Trust v Matthew Hall Mechanical & Electrical Engineers Pty Ltd [1994] 2 VR 386; John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd (1996) 8 VR 681; John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2004] Scot SC 713, considered.

DECOR CEILINGS PTY LTD v COX CONSTRUCTIONS PTY LTD; COX CONSTRUCTIONS PTY LTD v DECOR CEILINGS PTY LTD (No 2)

Civil

BESANKO J: These are two appeals by leave granted trader s 38 of the Commercial Arbitration Act 1986 (“CAA”).

Decor Ceilings Pty Ltd (“Decor”) and Cox Constructions Pry Ltd (“Cox”) were parties to a contract for the performance of building work at premises at Milner Street, Hindinarsh, in the State of South Australia. Cox was the main contractor and Decor was a subcontractor. The work to be carried out by Cox was the construction of a Training and Development Unit at the Hindniarsh Education Development Centre at Milner Street, Hindniarsh. I will refer to this as “the TDU project”. The work to be carried out by Decor was the provision of ceilings, partitions and wall linings for the TDU project I will refer to the work to be carried out by Decor as “the works”.

A number of disputes arose between Cox and Decor and they were referred to arbitration.

The arbitrator made an interim award on 12 May 2004. Neither party was happy with the award and each made an application to this Court seeking leave to appeal pursuant to s 38 of the CAA.

Relevantly, that section is in the following terms:

    1. Without prejudice to the right of appeal conferred by subsection (2), the Court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law on the face of the award.
    2. Subject to subsection (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award.
    3. On the determination of an appeal under subsection (2) the Supreme Court may, by order—
      1. confirm, vary or set aside the award; or
      2. remit the award, together with the Supreme Court’s opinion on the question of law which was the subject of the appeal, to the arbitrator or umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration,and where the award is remitted under paragraph (b) the arbitrator or umpire shall, unless the order otherwise directs, make the award within three months after the date of the order.
    4. (4) An appeal under subsection (2) may be brought by any of the parties to an arbitration agreement—
      1. with the consent of all the other parties to the arbitration agreement; or
      2. subject to section 40, with the leave of the Supreme Court.
    5. Where the award of an arbitrator or umpire is varied on an appeal under subsection (2), the award as varied shall have effect (except for the purposes of this section) as if it were the award of the arbitrator or umpire.

On 18 August 2004, Anderson J granted leave to appeal to Decor in relation to two grounds of appeal. He refused Cox’s application for leave to appeal (Decor Ceilings Pty Ltd v Cox Constructions’Pty Ltd 545/04; Cox Constructions Pty Ltd v Decor Ceilings Pty Ltd 566/04 (2004) 235 LSJS 81). Cox applied to the Full Court of this Court for leave to appeal from the decision of Anderson J.

Before that application was heard, I ruled on an application by Decor to strike out a notice of alternative contentions filed by Cox in Decor’s appeal, by which ruling I allowed Cox to raise certain matters by way of the notice of alternative contentions {Decor Ceilings Pty Ltd v. Cox Constructions Pty Ltd [2005] SASC 146).

On 30 June 2005, I heard submissions on Decor’s appeal and on the notice of alternative contentions filed by Cox. I reserved my decision.

On 23 August 2005, Cox’s application to the Full Court was heard. The Full Court granted leave to appeal from the decision of Anderson J and granted leave under s 38 of the CAA in relation to two grounds of appeal.

On 27 September 2005,1 heard submissions from the parties in relation to Cox’s appeal. The submissions were of a supplementary nature, because a number of them had already been made by Cox in the context of its notice of alternative contentions.

I have before me Decor’s appeal, Cox’s notice of alternative contentions in Decor’s appeal, and Cox’s appeal. I have jurisdiction to determine the questions of law for which leave has been given.

At the arbitration, each party made claims against the other in relation to the performance of the works. The arbitrator made an order that Cox pay to Decor the sum of $102,883. A summary of the arbitrator’s findings in relation to the items claimed by one or other of the parties is as follows:

Contract Sum 689,800.00
Progress Payments (625,752.00)
Agreed Variations and Back-charges Net 18,093.00
The Subcontractor’s Delay Claim 40,655.00
The Subcontractor’s Additional Hours Claim 0
The Contractor’s Damages Claim 0
The Contractor’s Indemnity Claim 0 Variations and Backcharges
CV280 Credit for Wall Linings 0
IV90 Repairs for External Flashings 0 .
IV147,148 Insulation 0
IV32 (Part) Stair 2 (1,855.00)
IV32 (Part) The Front Canopy 0
IV32 (Part) HE Sugars Labour – (9,360.00)
IV29 Columns 0
CV274 Insulation Batts (2,760.00)
IV146 Fire Shutters (5,938.00)
Balance due to Subcontractor 102,883.00

Three of the above items are in issue on these appeals. They are those items described by the arbitrator as the subcontractor’s (Decor’s) delay claim and additional hours claim, and the backcharge described as IV32 (Part) HE Sugars Labour.

Decor submits that the arbitrator erred in not allowing the amount claimed for its additional hours claim. The amount claimed was $202,804. Decor’s claim was what has been called a global claim (see [28], point 10, below) and the arbitrator found that the first of four necessary elements for such a claim was not made out. It was said the arbitrator erred because, in effect, he required Decor to bring forward corroborative evidence in support of the first element hi relation to the backcharge, Decor claims that if it succeeds in relation to the additional hours claim, the backcharge should not have been deducted.

Cox submits that the two global claims made by Decor, namely, the delay claim and the additional hours claim, failed because there was an exclusive procedure specified in the contract between the parties for dealing with loss and damage resulting from delay or disruption, and that procedure had not been followed. Alternatively, the claims failed because a notice before claim required by the contract was not served by Decor. If Cox’s submissions are correct, the delay claim should not have been allowed and there are additional or alternative reasons for disallowing the additional hours claim.

Before considering the issues on the appeal, I will set out the relevant conditions of the contract between Cox and Decor, the questions of law that I must decide, and the important findings made by the arbitrator.

The contract

Both parties accepted that there was a contract between them. However, both before the arbitrator and before this Court there was a dispute as to the terms of that contract.

Decor alleges that the contract was made on 31 March 1999 and consists of a number of documents. Relevantly for the purposes of the issues on the appeals, the contract included the Australian Standard Subcontract Conditions AS2545-1993 (“AS2545-1993″). AS2545-1993 contains 49 .standard conditions for a subcontract between a main contractor and a subcontractor. There are two annexures to the conditions and they are called Part A and Part B. Part A is a form to be used for the inclusion of information relevant to the particular case such as the applicable law, the name and address of the main contractor, the principal, the superintendent and the date or period for substantial completion. Part B3 in addition to containing forms such as a certificate of substantial completion, is to be used for such deletions, amendments or additions to the standard conditions as may be agreed between the parties in the particular case. It is Decor’s case that it is AS2545-1987 in its non-completed form that is part of the contract. For the purposes of the issues on these appeals, the following conditions are relevant:

35.5 Extension of Time for Substantial Completion

When it becomes evident to the Subcontractor that anything, including an act or omission of the Principal, the Superintendent, the Main Contractor, the Main Contractor’s Representative, the Main Contractor’s other subcontractors or the employees, consultants, other contractors or agents of any of them may delay the work under the Subcontract, the Subcontractor shall promptly notify the Main Contractor’s Representative in writing with details of the possible delay and the cause.

When it becomes evident to the Main Contractor that anything which the Main Contractor is obliged to do or provide under the Subcontract may be delayed, the Main Contractor shall give notice to the Main Contractor’s Representative who shall notify the Subcontractor in writing of the extent of the likely delay.

If the Subcontractor is or will be delayed in reaching Substantial Completion by a cause described in the next paragraph and within 21 days after the delay occurs the Subcontractor gives the Main Contractor’s Representative a written claim for an extension of time for Substantial Completion setting out the facts on which the claim is based, the Subcontractor shall be entitled to an extension of time for Substantial Completion.

The causes are –

  1. events occurring on or before the Date for Substantial Completion which are beyond the reasonable control of the Subcontractor including but not limited to — industrial conditions; inclement weather,
  2. any of the following events whether occurring before, on or after the Date for Substantial Completion —
    1. delays caused by — the Principal; the Superintendent; the Main Contractor; the Main Contractor’s Representative; the Main Contractor’s other subcontractors;
      the employees, consultants, other contractors or agents of any of the above;
    2. actual quantities of work being greater than the quantities in the Bill of Quantities or the quantities determined by reference to the upper limit of accuracy stated in the Annexure (otherwise than by reason of a variation directed under Clause 40);
    3. latent conditions;
    4. variations directed under Clause 40;
    5. repudiation or abandonment by a Nominated Secondary Subcontractor,
    6. changes hi the law;
    7. directions by municipal, public or statutory authorities but not where the direction arose from the failure of the Subcontractor to comply with a requirement referred to in Clause 14.1;
    8. delays by municipal, public or statutory authorities not caused by the Subcontractor,
    9. claims referred to hi Clause 17. l(v);
    10. any breach of the Subcontract by the Main Contractor,
    11. any other cause which is expressly stated in the Subcontract to be a cause for extension of time for Substantial Completion.

Where more than one event causes concurrent delays and the cause of at least one of those events, but not all of them, is not a cause referred to in the preceding paragraph, then to the extent that the delays are concurrent, the Subcontractor shall not be entitled to an extension of time for Substantial Completion.

In determining whether the Subcontractor is or will be delayed in reaching Substantial Completion regard shall not be had to –
whether the Subcontractor can reach Substantial Completion by the Date for Substantial Completion without an extension of time;
whether the Subcontractor can, by committing extra resources or incurring extra expenditure, make up the time lost

With any claim for an extension of time for Substantial Completion, or as soon as practicable thereafter, the Subcontractor shall give the . Main Contractor’s Representative written notice of the number of days extension claimed.

If the Subcontractor is entitled to an extension of time for Substantial Completion the Main Contractor’s Representative shall, within 35 days after receipt of the notice of the number of days extension claimed, grant a reasonable extension of time. If within the 35 days the Main Contractor’s Representative does not grant the full extension of time claimed, the Main Contractor’s Representative shall before the expiration of the 35 days give the Subcontractor notice in writing of the reason.

In determining a reasonable extension of time for an event causing delay, the Main Contractor’s Representative shall have regard to whether the Subcontractor has taken all reasonable steps to preclude the occurrence of the cause and minimize the consequences of the delay.

Notwithstanding that the Subcontractor is not entitled to an extension of time the Main Contractor’s Representative may at any time and from time to time before the issue of the Final Certificate by notice in wilting to the Subcontractor extend the time for Substantial Completion for any reason.

A delay by the Main Contractor or the failure of the Main Conn-actor’s Representative to grant a reasonable extension of time or to grant an extension of time within 35 days shall not cause the Date for Substantial Completion to be set at large but nothing in this paragraph shall prejudice any right of the Subcontractor to damages.

36. DELAY OR DISRUPTION COSTS

Where the Subcontractor has been granted an extension of time under Clause 35.5 for any delay caused by any of the events referred to- in Clause 35.5(b)(i), the Main Contractor shall pay to the Subcontractor such extra costs as are necessarily incurred by the Subcontractor by reason of the delay.

Where the Subcontractor has been granted an extension of time under Clause 35.5 for any delay caused by any other event for which payment of extra costs for delay and disruption is provided for in the Annexure or elsewhere in the Subcontract, the Main Contractor shall pay to the Subcontractor such extra costs as are necessarily incurred by the Contractor by reason of the delay.

Nothing in Clause 3 6 shall –

  1. oblige the Main Contractor to pay extra costs for delay or disruption which have already been included in the value of a variation or any other payment under the Subcontract; or
  2. limit the Main Contractor’s liability for damages for breach of contract

Notwithstanding anything hereinbefore provided in Clause 36, the Main Contractor’s liability to pay extra costs for delay or disruption caused by the Principal, the Superintendent or the employees, consultants, other contractors or agents of either of them or to pay damages for breach of contract where such breach is caused by breach of the Main Contract by the Principal shall only be to the extent to which the extra costs incurred or damages suffered by the Subcontractor have been recovered by the Main Conn-actor from the Principal or included in the reimbursement to the Main Contractor by the Principal by reason of delay in the progress of the Main Contract Works.

46. TIME FOR NOTIFICATION OF CLAIMS

46.1 Subcontractor’s Prescribed Notice

The Main Contractor shall not be liable upon any claim by the Subcontractor in respect of or arising out of a breach of the Subcontract unless within 28 days after the first day upon which the Subcontractor could reasonably have been aware of the breach, the Subcontractor has given to the Main Contractor’s Representative the prescribed notice.

The Main Contractor shall not be liable upon any other claim by the Subcontractor for any extra cost or expense in respect of or arising out of any direction or approval by the Main Contractor’s Representative unless within 42 days after the first day upon which the Subcontractor could reasonably have been aware of the entitlement to make the claim, the Subcontractor has given to the Main Contractor’s Representative the prescribed notice.

The pi-escribed notice is a notice in writing which includes particulars of all the following:

  1. the breach, act, omission, direction, approval or circumstances on which the claim is or will be based;
  2. the provision of the Subcontract or other basis for the claim or proposed claim; and
  3. the quantum or likely quantum of the claim.. This Clause 46.1 shall not have any application to –
    1. any claim for payment to the Subcontractor of an amount or amounts forming part of the Contract Sum;
    2. any claim for payment for a variation directed by the Main Contractor’s Representative or to be made pursuant to Clause 12.3;
    3. any claim for an extension of time for Substantial Completion;
    4. the provisions of Clause 46.2; or
    5. any breach of contract by the Principal or direction of the Superintendent to which Clause 47.4 applies.

Part A of AS2545-1993 contains provision for infonnation relevant to
clause 36 in the following terms:
# Extra costs for Delay or Disruption Event
(Clause 36)

Cox alleges that the contract was made in August or September 1999 and
included certain amendments to AS2545-1993. The relevant amendments are . to clause 36 and an insertion in Part A. They are as follows:

2.8 CLAUSE 36: DELAY OR DISRUPTION COSTS

Delete Clause 36 and in lieu thereof substitute the following new Clause 36: 36 DELAY OR DISRUPTION COSTS
Where the Subcontractor has been granted an extension of time under Clause 35.5 for any delay caused by any of the events referred to in Clause 35.5 (b)(i), the Main Contractor shall pay to the Subcontractor extra costs by applying the relevant rate set out in Annexure Part A to the number of days extension granted in respect of the event.

Where the Subcontractor has been granted and [sic] extension of time under Clause 35.5 for any delay caused by any other event for which payment of extra cots [sic] for delay or disruption is provided for in the Annexure, the Main Contractor shall pay to the Subcontractor extra costs by applying the relevant rate set out in the Annexure Part A to the number of days extension granted in respect of the event

Nothing in Clause 36 shall oblige the Main Contractor to pay extra costs for delay or disruption which have already been included in the value of a variation or any other payment under the Subcontract
For the purposes of Clause 36, an event referred to in Clause 35.5(b)(i) shall be an event, which relates solely to the Subcontractor.

Part A:
# Extra costs for Delay or Disruption: Event
(Clause36) …….Nil

There was also a small amendment to the period prescribed in clause 46.1, but that is not material to the issues on the appeals.

In summary, and relevant to the issues on the appeals, Decor submitted that the contract included conditions 35.5, 36 and 46 in their original form, and Part A in its uncompleted form. I will refer to these, as a group, as “the original conditions”. Cox, on the other hand, submitted that the contract included conditions 35.5, 36 and 46 as amended (although, as I have said, the amendments to clause 46 are not material) and Part A as completed. I will refer to these, as a group, as “the amended conditions”.

The questions of law

The grounds of Decor’s appeal are as follows:

The Reasonableness of Decor’s Tender Price

1. The learned arbitrator erred as a matter of law and misdirected himself about the nature of evidence necessary to establish reasonableness and in particular he:-

1.1 found it was necessary for the appellant to call evidence of an independent and expert nature in addition to the evidence given by Decor’s estimator (Mr Erbsland) and his tender “take-offs” file. (Reasons pp 72-73);

1.2 erred in treating the extra judicial commentary of Justice Byrne as prescriptive and confused the ability to call more evidence with an obligation to call more evidence. (Reasons p 72); and

1.3 failed to consider effect of the decision of ACT Supreme Court in Chadwick Industries ats Concrete Constructions which was referred to the learned arbitrator by the appellant

The Back-charge for H E Sugars & Co Labour – $9,390

2. In the event that this Honourable Court makes an order in terms of ground 1 above then there is no legal basis upon which the respondent is entitled to a credit for the cost of another contractor providing labour which the appellant would otherwise have provided. As a consequence the learned arbitrator should not have reduced the Interim Award to the Appellant by $9,360.

The first ground relates to the arbitrator’s approach to the first element of Decor’s global claim in relation to additional hours and the second ground relates to the backcharge.

The grounds of Cox’s appeal are as follows:

1. The Learned Arbitrator erred as a matter of law in awarding the Respondent $40,655 for its delay claim (reasons p 76). The Learned Arbitrator should have found that the lack of proper notices given to the Appellant by the Respondent
‘ prevented the Respondent from succeeding on its delay claim.

2. The Learned Arbitrator erred as a matter of law and fact in finding that the subcontract between the Appellant and the Respondent was comprised of:

(a) the Appellant’s Invitation to Tender
(b) the documents attached to that Invitation
(c) the drawings and specification referred to in the attachments
(d) the Respondent’s first offer dated 15 September 1998
(e) the CFC scope of works later provided to the Respondent
(f) the Respondent’s amended offer dated 18 February 1999
(g) the Appellant’s letter of acceptance dated 31 March 1999
(h) the attachments to that letter, namely, the Annexure 1 Scope of Works and the Annexure 4 Construction Program Schedule 4
(i) the General Conditions of Contract AS2545-1993, Annexures Part A and B, both in uncompleted form; and
(j) the terms of the Head Contract AS2124-1992 (Reasons p 51)
The learned Arbitrator should have found that the subcontract between the Appellant and the Respondent included the subcontract agreement that the Appellant sent to the Respondent on 8 July 1999 and in any event, that the ‘nil damages’ clause in the subcontract with respect to extensions of time applied.

The first ground raises two matters. First, it raises Cox’s argument that the procedure provided in the contract, and, in particular, clauses 35.5 and 36 thereof, is an exclusive procedure for claiming loss and damage resulting from delay or disruption, and was not complied with by Decor. Secondly, it raises Cox’s argument that the notice before claim procedure provided for in clause 46 of the contract precluded Decor’s claim for loss and damage resulting from delay. The second ground of appeal raises the challenge to the arbitrator’s conclusion as to what constituted the contract and, in particular, his conclusion that it included the original conditions and not the amended conditions.

The matters raised in Cox’s notice of alternative contentions are as follows:
Upon the hearing of the appeal, the Respondent will contend that the portions of interim award subject of the appeal should be upheld for the reasons given by the Arbitrator, and in the alternative, and additionally also, upon the following grounds:
1. That the terms of the sub-contract between Cox Constructions Pty Ltd (“Cox”) and Decor Ceilings Pty Ltd (“Decor”) (“the subcontract”) excluded Decor’s claim for damages for disruption, which is a question of law.
.2. In particular, material to alternative contention 1 above, that the contract provided for notices to be given for. Decor’s claim as a condition precedent to any entitlement, which notices were not given and the interpretation of the contract being a question of law.
3. Material to alternative contention 2 above, that the requirement for notices and Decor’s failure to give notices was sufficiently pleaded by Cox, which interpretation of the pleadings is a question of law.
4. In particular, material to alternative contention 1 above, that the amount of damages agreed between Cox and Decor and provided for in the subcontract in respect of Decor’s disruption claim was nil (“the nil damages term”), which interpretation and application of a contractual, term is a question of law.
5. Material to alternative contention .4 above, that the nil damages term was included as part of the subcontract terms, which interpretation of the subcontract terms is a question of law.
The important findings made by the arbitrator
28 The important findings made by the arbitrator are as follows:
1. The head contract for the TDU project was between the Minister for Government Enterprises as principal and Cox as main contractor. The contract was for a lump sum and included Australian Standard General Conditions of Contract AS2124-1992 (“AS2124-1992″), as amended by the parties. AS2124-1992 is the companion contract to AS2545-1993.
2. Cox was given possession of the site on 27 January 1999 and the contract period for Cox was 42 working weeks. With extensions, the date for practical completion became 28 January 2000. The date of practical completion was 2 May 2000, a delay of some three months.
3. A subcontract for the carrying out of the works was entered into between Cox as main contractor and Decor as subcontractor on 31 March 1999 and it consisted of the following documents:

Besanko J
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(1) Cox’s invitation to tender and documents attached to that tender and the drawings and specifications referred to in the attachments;
(2) Decor’s first offer dated 15 September 1998;
(3) the CFC scope of works provided to Decor;
(4) Decor’s amended offer dated 18 February 1999;
(5) Cox’s letter of acceptance dated 31 March 1999 and the attachments to that letter, namely, the annexure 1 Scope of Works and the Annexure 4 Construction Program Schedule 4; and
(6) the general conditions of the Contract AS 2545-1993, annexures Part A and B, both in uncompleted form and, by incorporation, the terms of the Head Contract AS2124-1992.
The contract period for Decor for the performance of the works was a period of 15 weeks.
4. Some months later, a representative of Decor returned to Cox a Part A and Part B (as amended by Cox) with some further amendments effected by Decor. That was not a manifestation of agreement by Decor to the amended Part A and Part B proposed by Cox, but rather a counter-offer, which was not accepted by Cox.
5. Decor was to be given access to the site on 28 June 1999, but in fact was not given access to the site until 3 August 1999.
6. Cox was in breach of a number of the conditions of the contract between it and Decor, namely, breaches of the following conditions of AS2545-1993:
(1) Clause 23, relating to the appointment and functions of a main contractor’s representative.
(2) Clause 27, relating to the obligation on Cox to give Decor access to the site and, more particularly, in the period 3 August 1999 to late December 1999, the obligation to provide Decor with sufficient work areas to allow it to complete the works within the contract period of 15 working weeks.
(3) Clause 33, relating to the progress and programming of the works and, more particularly, the obligation to provide proper information to allow Decor to coordinate its works, as a result of which Decor was not in a position to coordinate its works with the first fix services in a “proper” manner. This resulted in Decor being held on

Besanko J
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site, in the arbitrator’s words, “well past the time that it could have completed its subcontract works if there had been no breach”.
7. Decor’s delay claim and additional hours claim were not made pursuant to clause 35.5 of AS2545-1993. Decor did not claim to be entitled to an extension of time pursuant to clause 35.5. It had not complied with the notice provisions in clause 35.5 and had the claim been made pursuant to that clause it would have failed.
8. The damages claim and me related indemnity claim by Cox in relation to what was said to be a 16-week delay by Decor failed because it was not Decor which had caused the delay. Cox was held on site because, to use the arbitrator’s words, “of delays to [sic] its own account”.
9. The question of whether Decor had complied with clause 46 was first raised by Cox in its closing submissions. It was not raised by Cox in its position paper. Decor’s representative, Mr HembHng, did not initial the clause in its original form, nor was he taken to it in cross-examination. In those circumstances, Decor was not given proper notice by Cox of its reliance on clause 46 and therefore did not have a proper opportunity of investigating matters such as the “first day” it could have “reasonably become aware of the breaches of contract” and the “first day” it could have “reasonably become aware of its entitlement to make a claim”. Accordingly, Cox was not permitted to raise the alleged non-compliance with clause 46.
10. The claims by Decor for delay and for additional hours were what have been called global claims; that is, Decor does not seek to attribute any specific loss to a specific breach of contract, but is content to allege a composite loss as a result of all the alleged breaches. In other words, it has not sought to establish that particular events on site were directly linked to particular delay periods adding up to 22 weeks of delay, nor to additional labour hours adding up to some 5,000 hours.
11. In relation to Decor’s delay claim, Decor had to show and had shown the following:
11.1 Decor was entitled as a matter of contract to complete the works within 15 weeks.
11.2 Cox was in breach of terms of the contract affecting that entitlement. Cox acted in breach of clauses 27 and 33 of the contract causing delay to Decor’s works.
11.3 The period Decor was held on site, namely, some 22 weeks beyond the contract period of 15 weeks, exceeded its reasonable expectation based on the contract.

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11.4 The breaches of contract by Cox were the only “causally significant factor” causing Decor to be held on site for longer than 15 weeks. Decor was not responsible for any delay. Decor’s inability to provide significant labour resources at the beginning of 2000 was caused by Cox’s breaches of contract.
12. Decor’s delay claim should be allowed in the sum of $40,655 for the 22 weeks that it was held on site. This sum is comprised of administration and supervision costs of $36,960 and hire costs in relation to plant and equipment held on site of $3,695.
13. . Decor’s additional hours claim met the second, third and fourth elements ^^y^aof a global claim. However, it did not meet the first element in that it had
not been established that it could reasonably have expected to perform the works within the labour hours allowed in its tender. Decor had not proved the accuracy of the.tender allowances.
As to the second and third elements, the arbitrator said that Cox’s breaches of contract caused Decor to incur additional labour costs, and that Decor had incurred some 15,000 hours of labour costs, which was well in excess of the allowable hours.
As to. the fourth element, the evidence and, in particular, further evidence from Cox’s representative, Mr Cox, did not establish that there were any causally significant factors other than Cox’s delay.
I mention at this point that there is a strong challenge by Decor to the arbitrator’s conclusion as to the first element and it is submitted that he in effect imposed an obligation on Decor to call corroborative evidence and that that was an error of law. The reasoning of the arbitrator is important and is contained in the following paragraphs:
I find on the basis of the evidence that the Subcontractor established its position in relation to the second, third and fourth tests. However it did not meet the first test because the accuracy of the tender allowances was not proved in the arbitration, and on that basis I disallow the Subcontractor’s additional hours claim. The requirements for the proper proof of the accuracy of the Subcontractor’s original estimates were dealt with at length in the parties’ Closing Submissions, and I summarise the competing positions now.
For its part, the Subcontractor said that it had to do no more than it had in fact done, namely, present Mr Erbsland and his tender work sheets to the Hearing, with Mr Erbsland confirming both his capacity to make accurate estimates, and the accuracy of the estimates for the TDU project The Subcontractor was aware that it could have done more and Mr Jenner referred to the following extract from Justice Byrne’s Total Cost and Global Claims:
“The court must be satisfied by proper proof that this element is made out. How this is achieved in a given case is a matter of evidence. Usually the tender is produced and the estimator swears its validity. In support of this,

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or perhaps in substitution, an independent witness may express an opinion on the matter. This evidence may be corroborated by evidence of competitive tenders of a similar amount. In the case where the proprietor has’itself analysed and approved the tender as reasonable, evidence of this may be very persuasive.”
However, despite this prescription, the Subcontractor chose not to pursue any of the alternative avenues of proof, and in. fact the Subcontractor declined the opportunity to reopen its case to lead expert evidence from a professional quantity surveyor. Further, the Subcontractor confirmed that the Contractor had refused to produce tenders from competing subcontractors, but then failed to seek an order in the arbitration requiring the Contractor to produce the relevant documents. The Subcontractor said that it had met its obligation in relation to proof by presenting Mr Erbsland’s evidence, which had not been challenged in cross-examination, and that it was up to the Contractor to prove that the Subcontractor’s original allowances were wrong.
The Contractor disagreed with these propositions and said that the onus of proof for the accuracy of the estimate lay with the Subcontractor. The Contractor said that it did not have an obligation to test Mr Erbsland’s evidence, or to lead any evidence about proper quantum. The Contractor said that if I decided that Mr Erbsland’s estimates were accurate, and that the Subcontractor could reasonably have expected to complete the work within the labour hours estimate, then I would be making an assessment in the absence of proper proof, giving evidence to myself, and in doing so technically misconducting myself in the arbitration.
I have a layman’s understanding of the law in relation to these matters, and it is my understanding that arbitrators should not make assessments where proper proof could have been, but was not, provided. In an appeal against my award in Sabemo v AIW, Justice Mullighan in the South Australian Supreme Court said that my actions in making an assessment in the absence of proper proof of costs constituted technical misconduct, and the award was set aside. In these circumstances, I accept the submissions of the Contractor, and I find that the Subcontractor failed to prove the accuracy of its labour estimates, meaning that its claim for additional hours must fail.
I note that the arbitrator did not accept evidence from. Mr Cox, on behalf of Cox, to the effect that Decor’s estimate in terms of man-hours was not correct. However, it did not follow that Decor had established that its estimate was accurate.
14. Cox engaged H E Sugars & Co to provide floating labour to the site in February 2000. As I understand it, this was providing labour resources to Decor for work it was required to perform under its contract with Cox. It would otherwise have had to pay for it and the arbitrator considered it appropriate to deduct it from the figure awarded to Decor, which was calculated by reference to the contract sum and progress payments made to Decor by Cox.

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Issues on the appeals
29 Decor’s appeal is the first in time and relates to the additional hours claim and the backcharge. The latter item stands or falls with the challenge to the additional hours claim. As I have said, Decor submits that the arbitrator erred in law by, in effect, requiring Decor to produce corroborative evidence of its assertion that the hours allowed in its tender were reasonable in the sense it could be reasonably expected that the works could be carried out within that time. As I understand it, Cox did not dispute the submission that if that is what the arbitrator did, then that would be an error of law. However, Cox submits that the arbitrator did not approach the matter on that basis. Cox submits that the arbitrator was simply not satisfied that the fact had been established and that that is not a question of law.
30 However, Cox submits that, if it becomes relevant, there were other more fundamental reasons why the additional hours claim should have been rejected. They are the same reasons why the arbitrator should have rejected Decor’s delay claim and are as follows. First, the contract between the parties included the amended conditions, and under those conditions there could be no claim for damages because the notice provisions in clause 35.5 constituted an exclusive procedure for claiming loss and damage resulting from delay or disruption and had not been complied with by Decor. Even if that is wrong, the claim could not succeed because the contract provided that the damages were to be Nil. In the alternative, although it was accepted by Cox that the argument was stronger under the amended conditions, even under the original conditions, the notice provisions in clause 35.5 constituted an exclusive procedure and Decor’s global claims must fail. Secondly, and irrespective of whether the contract included the original conditions or the amended conditions, Decor’s claim must fail because it did not comply with the notice before claim provisions in clause 46.
31 Logically, the starting point is the challenge by Cox to the arbitrator’s finding that the conditions of the contract between it and Decor included the original, and not the amended, conditions.
Cox’s appeal
1. The contract between the parties
32 It is surprising mat in a contract of this value the question of what constitutes the contract is in issue.
33 hi order to determine the issue, it is necessary to consider the course of events in more detail and, for this purpose, I rely upon the findings of fact made by the arbitrator.
34 Cox lodged a tender for the TDU project in September 1998 and received a letter of acceptance on 18 December 1998. As I have said, Cox took possession of the site on 27 January 1999.

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35 Cox invited tenders for the subcontract work involved in the TDU project in September 1998. Plans and specifications were made available. Mr Volker Erbsland, a professional builder and representative of Decor, prepared the tender on behalf of Decor. That tender was lodged in September 1998 and was for a fixed price of $587,000. Cox received ceiling and partition quotations from other subcontractors. In December 1998, Decor quoted a separate price of $86,000 for CFC cladding and, in early January 1999, it revised that price to $110,000. On 18 February 1999, Decor made what it called an “overall submission” of $689,800. On 31 March 1999, Cox wrote to Decor in the following terms:
Re: Traning and Development Unit, Hindmarsli
We confirm your appointment as the ceiling and wall lining subcontractor for the above project to carry out all works detailed herein for the sum of $689,000.00.
Your Subcontract Agreement will be the companion contract (AS2545-1993) to the head contact [sicj for the works (AS2124-1992) with amendments as set out in the project specification.
The Subcontract Agreement will be for the entire ceiling and wall linings package as detailed by the attached Scope of Works and Construction Schedule and shall be carried out in accordance with the tender documentation, all Addendums issued during the tender period and all post tender documentation as set out in the Head Contract, which shall constitute part of the contract documents.
We are in the process of preparing the formal instrument of agreement which will be available at our offices for you [sic] endorsement in due course.
In the meantime we instruct your company to commence works as previously agreed in accordance with this correspondence.
36 It is clear from the terms of this letter that Cox was appointing Decor the ceiling and wall lining subcontractor for the TDU project and that Decor was instructed to commence the works as previously agreed. At the same time, it is clear that the parties envisaged that a more formal agreement would be prepared and executed. That follows from the reference in the letter dated 31 March 1999 to AS.2545-1993, which includes Part A and Part B, and the nature of those documents, and the reference to the preparation of the formal instrument of agreement
37 As I have said, the arbitrator found that there was a contract between Cox and Decor as at 31 March 1999. That was Decor’s case.
38 In April, May and June 1999, Mr Erbsland, on behalf of Decor, began writing to Cox, requesting information including set-out, expansion joints and fixing methods for CFC and plasterboard linings, samples and programming details. The date shown on the programme or schedule given to Decor by Cox with its letter dated 31 March 1999 for commencement of works was 28 June 1999.

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39 On 7 My 1999, Decor wrote to Cox advising that “we have not sighted a contract for the project as yet”.
40 At about this time, Cox had in fact prepared a package of contractual documents, including Part A of AS2545-1993, with relevant information, and Part B, with deletions, amendments and additions to the standard conditions. The package of contractual documents was said by Cox to have been sent to Decor by Cox on or about 8 My 1999 with a letter in the following terms:
RE: TRAINING AND DEVELOPMENT UNIT – HINDMARSH
Please find enclosed your Sub-Contract Agreement (consisting of two originals) for the above project.
The document must be signed, initialled on each page and returned to our office urgently for counter signing. Should you require a signed copy return both contracts signed. An endorsed copy will be returned in due course.
The following information is required under the Head Contract.
1. Your registration number for Workcover [sic] (unless previously provided to us).
2. Certificate of currency on your insurers [sic] letterhead for Public Liability Insurance for the amount noted on Aimexure 3.
The certificate should be endorsed to include Cox Constructions Pry Ltd as Main Contractor.
3. Please fill in the enclosed employee registration form, fill in ALL details for each employee you intend to use on this project, and return same to this office with the signed Sub Contract Agreement.
4. Payee Declaration Form in relation to Prescribed Payments Tax (unless previously provided to us).
Please note that no progress claim will be recognised or payment made until the Sub Contract Agreement has been signed and returned and the above documentation provided.
Progress Claims are to be received (in writing) by the 7* day of each month. We look forward to a mutually successful project.
41 There was a dispute between the parties as to when Decor received the package of contractual documents. Mr Erbsland says that he did not receive the package until a meeting on site on 2 August 1999. The arbitrator did not resolve that dispute.
42 Mr Hembling, a representative of Decor, and Mr Erbsland discussed the terms of the contract proposed by Cox, and Mr Hembling initialled most, but not all, of the pages in the package of the contractual documents. Some items

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in Part A and Part B, and other items in the contractual documentation, were changed by Mr Hembling. The package of contractual documents, as amended by Decor, was returned to Cox by Decor on 5 August 1999.
43 As I have said, Decor started work on site on 3 August 1999.
44 On 10 September 1999, Cox wrote to Decor, drawing attention to pages that had not been initialled (which Cox said it assumed was inadvertent), amendments made by Decor, which it accepted, and three amendments made by Decor, which Cox said that it did not accept. As to those three points, Cox said:
6. PAGE 4.13 CLAUSE C3.10 DOT POINT 7
The deletion of this clause was not approved and as such is not accepted.

10. PAGE 4.17 LAST DOT POINT
We are puzzled by the deletion of this clause which is the same clause that formed part of our letter of appointment sent to you on the 31/3/99. We note that you proceeded to work without raising objection to this cause [sic] until the 5/8/99. As such you have already accepted this clause.

11. PAGE 4.19 ANNEXURE 4
We confirm that this part of the agreement (the construction program) caused some concern, as you were unsure as to the time frame required to cany out the external cladding. As such it was agreed to replace the program once a significant amount of external cladding was completed to enable the time frame for the same to be more accurately identified. This has since occurred we refer you to our program issued to you on the 24/8/99. We note this program was developed in consultation with and agreed with your Mr Volker Erbsland prior to its issue on the 24/8/99. As a consequence of circumstances on site (which we will address under separate cover at the appropriate time) we acknowledge that you claim the north elevation is not currently available. We therefore propose to principally adopt the program of the 24/8/99 with the modification that works in all areas are to be commenced immediately as the areas become available.
45 The three areas of contention at that point involved what the arbitrator called “programming and delay matters”.
46 The letter from Cox to Decor dated 10 September 1999 concluded with the following statement:
We have returned the Agreement unendorsed, as we will not endorse an agreement that has been amended without prior agreement. Notwithstanding this we maintain the agreement between our companies is binding as varied by this correspondence.

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47 Decor wrote to Cox on or about 15 September 1999. Decor said at the beginning of the letter:
We refer to your letter of 10/9/99 advising that an agreement has been reached between our companies, which is binding by your correspondence, which is not the case.
48 The letter goes on to deal with the construction programme or schedule, that was still the main point of contention at that stage. The arbitrator found that the programme or schedule put forward at that stage by Cox was not agreed to by Decor.
49 As I understand it, there was no further correspondence between the . parties that addressed the question of the execution by them of a formal
agreement. Decor proceeded to carry out the works that were the subject of the tender.
so . Decor gave Cox the package of contractual documents as amended by it on 5 August 1999 and commenced work on the site at about the same time (3 August 1999).
51 Cox submits that a contract came into existence in early August 1999 and consisted of the package of contractual documents, as amended by Decor, and returned to Cox on 5 August 1999. The agreement was manifested by Decor commencing work on the site, and the fact that Cox, knowing that Decor had commenced work, failed to immediately object to the amendments proposed by Decor.
52 Decor submits that Cox should not be permitted to put this case on appeal because it is different from the case put to the arbitrator. Decor submits that Cox’s case before the arbitrator was that the contract constituted the package of contractual documents prepared by Cox (ie, the package of contractual documents without Decor’s proposed amendments) that was accepted by Decor when it started work on the site on 3. August 1999.
53 A third possibility, which seems to be pleaded by Cox in one of its position papers, is mat the contract was concluded on 10 September 1999 and consisted of the package of contractual documents as amended by those amendments made by Decor and accepted by Cox in its letter of 10 September 1999. I note that in ground two of its notice of appeal, Cox alleges that the contract between it and Decor included the “subcontract agreement” that Cox allegedly sent to Decor on 8 My 1999.
54 For reasons which will become apparent, I do not need to resolve the question of whether Cox’s case on appeal represents a departure from its case before the arbitrator and, if so, whether that should be permitted.
55 Clearly, as at 31 March 1999 the parties had reached agreement upon terms of a contractual nature and they had also agreed that there would be a

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formal contract Whether, in that situation, there was a binding contract in March 1999 is a matter to be determined having regard to the intention of the parties objectively ascertained. In Masters v Cameron (1954) 91 CLR 353 the High Court referred to three classes of case, in the first two of which there is a binding contract and in the third of which there is not. The Court said (at 360):
Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
56 There is said to be a fourth class of case in which there is a binding contract. In Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310, the High Court said (at 317):
The case is not one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contact, containing, by consent, additional terms.
57 An example of a case in which it was held that the agreement fell within the fourth class of case is Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628. On appeal (G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631), McHugh JA (with whom Kirby P and Glass JA agreed) said (at 634):
However, the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke y Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty LtdvKS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.
Even when a document recording the terms of the parties’ agreement specifically refers to the execution of a formal contract, the parties may be immediately bound. Upon the proper construction of the document, it may sufficiently appear that “the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms”: Sinclair, Scott & Co Ltd v Naughton (at 317).
(See also Hudson Investment Group Ltd v Australian Hardboards Ltd [2005] NSWSC 716.)

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58 Cox submits that tide agreement reached on 31 March 1999 was not a binding contract, or, if it was, it was overtaken by the later agreement in August 1999. Cox pointed to the fact that not only were a number of matters not agreed as at 31 March 1999, but in fact the reference in the letter of that date to AS2545-1993, including Part A and Part B, clearly showed that the parties contemplated that a number of matters were to be agreed. A similar point was considered by the Full Court of the Federal Court in Graham Evans Pty Ltd v Stencraft (2000) 16 BCL 335. Dowsett J (with whom French and Whitlam JJ agreed) said (at [63]):
The learned trial Judge appears to have concluded that there was no concluded agreement, largely because there was no agreement as to the variations to be made to AS 2124, including the completion of blank spaces. In my view that was also irrelevant because the parties had agreed to be immediately bound, subject to the expectation that such agreement would be superseded by the written agreement when executed. There was always the possibility that such an agreement would not be executed, but that would not have affected the agreement already made. It is of the nature of a contract of the “fourth class” that terms of the proposed ultimate agreement remain to be negotiated. Similarly, it does not matter that, as his Honour observed, the parties “each proposed their own version of the contract.” This was merely an element of the negotiation process.
59 The question whether there was a binding contract in March 1999 is not an easy one, and it is clear that there were a number of matters to be agreed as at March 1999. Nevertheless, I have reached the conclusion that the agreement of 31 March 1999 falls within the fourth class of case, hi reaching that conclusion, I am influenced first, by the fact that the essential terms appeared to have been agreed at that time and none of the matters identified by Cox in submissions as matters to be agreed seemed incapable of determination by reference to usual practice or the custom of the trade. I agree with Decor’s submission that the price, scope of work, construction period and programme, and standard conditions were agreed at that time. Secondly, Cox itself saw matters as sufficiently agreed at that time to instruct Decor to commence works.
60 In my opinion, there was a binding agreement at 31 March 1999 and it included the original conditions. However, it will be the amended conditions that will be relevant if there was a later, more formal or detailed, agreement as alleged by Cox.
si No doubt, by the time Mr Hembling initialled the pages of the package of
contractual documents in July or August 1999, there was a good deal of common ground between the parties and a level of detail agreed. However, I do not think one can apply the reasoning which lies behind the fourth class of case to what occurred in July or August 1999, because by that stage what the parties had in mind was a final, complete and formal contract. If one leaves out of consideration for the moment the fact that Decor commenced work on site on 3 August 1999, I think it is quite clear that the parties did not reach

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agreement in My or August 1999 on a final, complete and formal contract. What was proposed by Cox in the package of contractual documents was not fully accepted by Decor, which made amendments to the proposal. Cox did not accept Decor1 s amendments as it made clear in its letter dated 10 September 1999, and Decor did not accept the position asserted by Cox, as it made clear in its letter to Cox dated 15 September 1999. I cannot think the fact that Decor started work on site on 3 August 1999 makes the critical difference in circumstances in which, as I have found, the parties had the agreement of 31 March 1999 and, on any view of the facts, it was important for Decor to commence work as soon as possible. I am not prepared to draw the inference from the fact that Decor commenced work on the site on 3 August 1999 that that constituted agreement by Decor to the package of contractual documents put forward by Cox, or that Cox’s failure to object to the commencement of work constituted acceptance by Cox of the package of contractual documents as amended by Decor. Cox referred to the fact that Mr Hembling, a representative of Decor, had initialled a number of pages of the package of contractual documents and given evidence, so it was said, that he agreed to certain clauses set out in the package. I do not think that these facts assist Cox. The question is whether there has been a manifestation of mutual assents, which is essential to the making of a contract, and which is to be objectively ascertained. In July and August 1999, the parties were working towards agreement on a final, complete and formal agreement, but, for the reasons I have given, they did not achieve that end.
62 In view of the conclusion I have reached above, it is not necessary for me to consider Decor’s submission that Cox’s argument placed undue weight on the date of commencement of work on site and that the important event was the commencement of work under the contract, and that that had occurred in April or May 1999. I would only make this observation. The arbitrator made limited findings on this topic and they are set out in [38] above. Decor seemed to be asking me to go further and make my own findings of fact with respect to this topic, something that I would not be prepared to do.
63 For the purposes of this appeal, the relevant conditions of the contract between the parties are the original conditions.
2. The procedure in clauses 35.5 and 36
(A The arbitrator found, and. it is not disputed that, subject to a short period
in the order of 14 days, Decor did not serve a notice seeking an extension of time under clause 35.5. The arbitrator said that if Decor’s claim had been made under that clause, it would have failed. Cox submits that the procedure under clause 35.5 was an exclusive procedure and that it was not open to Decor to ignore the procedure and to bring a claim for general damages for breach of contract.

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65 Cox’s submission that Decor’s claim fails for non-compliance with the notice before claim provision in condition 46 is a related submission and arises whether the relevant conditions are the original conditions or the amended conditions. I will deal with it separately because there is a point about whether Cox is entitled to raise it.
66 There is no doubt that parties can, if they wish, make compliance with a certain procedure a precondition to an extension of time by reason of delay or disruption or a claim for loss and damage resulting from delay or disruption. The question whether the parties have done that is to be determined as a matter of the construction of their contract. An intention to exclude the ordinary remedies arising on a breach of contract must be expressed in clear and unmistakable terms {Gilbert-Ash (Northern) Ltd v Modem Engineering (Bristol) Ltd [1974] AC 689 per Lord Diplock at 717-718; Mancorp Pty Ltd v Baulderstone Pty Ltd (trading as Baulderstone Hornibrook) (No 2) (1992) 60 SASR 120).
67 Cox referred to a number of authorities in which it was held that a notice referred to in a contract was a necessary precondition to a claim under the contract.
es In Jennings Construction Ltd v Q H & MBirt Pty Ltd (1986) 8 NSWLR
18, an arbitrator awarded a subcontractor an amount for additional compaction work and the contractor appealed to the Supreme Court of New South Wales. Clause 47 of the contract between the contractor and the subcontractor was in the following terms:
47. The Contractor shall not be liable upon any claim by the Sub-Contractor in respect of any matter arising out of this Contract unless the claim, together with full particulars thereof, is lodged in writing with the Contractor not later than fourteen (14) days after the date of the occurrence of events or circumstances on which the claim is based or written notice of intention to make the claim specifying the nature of the claim is lodged with the Contractor within that time and the claim, together with full particulars thereof, is lodged in writing with the Contractor not later than fourteen (14) days before the issue of the Final Certificate under the Head Contract.
The arbitrator held that there was an implied term that the subcontractor could perform the work and be paid a reasonable remuneration, and that clause 47 had no application. Smart J held that the arbitrator had erred and that the subcontractor was obliged to comply with clause 47. In the course of his reasons, Smart J said (at 24-25):
The puipose of cl 47 is to ensure that notice is given at an early stage so that the contractor can inspect and investigate promptly the events or circumstances and consider his position. He may wish to issue a variation. In cases involving excavation he needs to inspect to satisfy himself as to the conditions and the quality of the material alleged.

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Clause 47 is a troublesome clause whose meaning, operation and relationship to some of the other clauses is not clear. It is in the nature of a residual clause which imposes the obligation to give notice where money is claimed for work over and above the minimum work’if optimum conditions exist and there is no other clause specifically dealing with the procedures to be followed in relation to the particular matter in question.

Unless notice is given the contractor may not be alerted to the proposed claim and given the opportunity to investigate and check. The requirement of written notice, which is so common in construction contracts, puts the matter on a formal and readily identifiable basis.

Giving effect to cl 47, as earlier suggested, neither leads to an absurdity nor defeats the main object of the contract. The way in which cl 47 has to be read has previously been indicated.
69 . In Opat Decorating Service (Aiist) Pty Ltd v Hansen Yuncken (SA) Pty Ltd (1994) 11 BCL 360, a subcontractor wished to claim an extension of time for the completion of works under the subcontract by reason of delay. Two clauses in the subcontract were relevant and they were in the following terms:
31(b) Where the subcontractor is delayed in the execution of the works by any cause arising out of any breach of the provisions of this contract or out of any other act or omission on the part of the contractor his employees or agents or by any act or omission on the part of the principal, the superintendent or the employees, professional consultants or agents of the principal or by any other cause (except a cause arising out of any breach of the provisions of this contract or any other act or omission on his own part or on the part of his employees, agents or subcontractors or their employees or agents) and that delay might reasonably be expected to result in a delay in the execution of the work under contract, the subcontractor shall if he desires to claim an extension of time for completion of the Works give to the contractor not later than fourteen (14) days after the cause of delay arose notice in writing of his claim for an extension of time for completion of the works together with a statement of the facts which he bases his claim.

47. The contractor shall not be liable upon any claim by the subcontractor in respect of any matter arising out of this contract unless the claim, together with full particulars thereof, is lodged in writing with the contractor not later than fourteen (14) days after the date of the occurrence of events or circumstances on which the claim is based, or written notice of intention to make the claim specifying the nature of the claim is lodged with the contractor with that time and the claim, together with full particulars thereof, is lodged in writing, with the contractor not later than fourteen (14) days before the issue of the Final Certificate under the Head Contract.
The subcontractor did not give the required notices within time and the arbitrator held that this was fatal to its claim. The subcontractor appealed to the Full Court of this Court. Bollen J (with whom Prior and Duggan JJ agreed)

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held that compliance with clause 31(b) was a necessary step to the granting of an extension of time. His Honour characterised clause 47 as a reminder to the subcontractor. After referring to a number of relevant authorities, Bollen J said (at 364):
Let me look at cl 3 l(b). It begins by speaking of circumstances in which the parties contemplate that the appellant might want an extension of time within which to complete work. The parties when negotiating the contract, knowing the exigencies of the trade, agreed that some such circumstances might arise. What should be done about it? They answered this question by saying that the notice should be given by the appellant to the respondent, by subcontractor to contractor. They decided something about the time within which notice should be given. What did they decide? They decided that it should be given within fourteen days after the cause of delay arose. They knew the exigencies of the trade. They knew what practical questions or issues would arise when notice was given. They knew when it was best for the notice to be given. They fixed on that fourteen day period. And they meant the clause which emerged from these deliberations to be effective within its terms. That is to say they meant what cl 3 l(b) says to be the position. They meant to bind themselves to it
And cl 47 is perhaps a fortification of that view. It is “residual”. But that does not matter. I say again that I see cl 47 as a reminder (supra). I think that is the best way to look at s 47 here.
I respectfully agree with the arbitrator and with Mohr J about the meaning and operation of cl 31 (b). It is a mandatory provision. I agree, with respect, that Mohr J is correct in his interpretation of cl 47 although I do not think that matters.
70 In Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (1995) 12 BCL 38, a contractor claimed for the costs of alleged delays from the principal of a large building project. The arbitrator rejected the claim and an application for leave to appeal was rejected by a single judge of this Court. The contractor applied to the Full Court for leave to appeal. It was unsuccessful. King CJ referred to the clauses in the contract dealing with variations, delays, extensions of time and time adjustment and delay, and delay costs. It is not necessary to set out those provisions. It is sufficient to say that King CJ construed the various notice provisions in the contract as conditions precedent to a claim (at 46-47). For example, a notice was required before the work was carried out if the party performing the work wished to claim it as a variation.
71 In Australian Development Corporation Pty Ltd v White Constiiictions (ACT) Pty Ltd (1996) 12 BCL 317, a question arose as to whether a contractor was entitled to an extension of the date for practical completion. Clause 4.4.1 of the contract between the principal and the contractor read as follows:
4.4.1 If the Company is delayed at any time in the progress of the Project by any cause whatsoever beyond the control of the Company (which are the causes of delay listed in Article 4.4.2) then the Date for Practical Completion shall be extended by a period equal to the extent of such delay to the Company. Within 30 days of when the Company reasonably believes that delay has occurred within the meaning of this clause, it shall notify the Developer of the time of

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commencement and actual or estimated termination of the delay, the cause thereof and the manner in which the progress of the Project has been or will be delayed and the Developer shall determine the time by which the Date for Practical Completion shall be extended.
Giles CJ Cornni D considered whether the contractor was entitled to an extension of the date for practical completion and he discussed a number of cases to which I have referred. Giles CJ rejected the submission that the notice requirement in clause 4.4.1 was not mandatory and he said (at 339):
The contract called for practical completion by particular dates subject to extensions of time. Any extension of time was for specified cause, cause which had to he beyond the control of ACT, and for a period equal to the delay to ACT. The time by which the date for practical completion should be extended was to be determined by ADC, and it was therefore necessary that ADC be in a position rationally to assess the existence of a cause of delay, whether it was a cause of delay of one of the specified kinds, whether it was beyond the control of ACT, and what the extent of the delay to ACT was. Imposing the notification requirement upon ACT was a deliberate and important part of the mechanism for determining the time by which the date for practical completion should be extended. It was in mandatory terms (“shall notify”) equivalent to the mandatory terms imposed on ADC (“shall determine the time”), and as in Wormald Engineering Pty Ltd v Resources Conservations Co International to give ADC no more than an action for damages if timely notification was not given would not be satisfactory — it would leave difficulties of proving what ADC would or might have done had timely notification been received and quantifying the damage suffered, which the parties are unlikely to have intended. Although, as ACT pointed out, article 4.4.1 did not state that the date for practical completion would not be extended unless timely notification was given, nor did cl 40.2 in Wormald Engineering Pty Ltd v Resources Conservations Co International or cl 31 in Opat Decorating Service (Aust) Pty Ltd v Hansen Yuncken (SA) Pty Ltd expressly state a condition precedent and the statement of a condition precedent in cl 47 in Opat Decorating Service (Aust) Pty Ltd v Hansen Yuncken (SA) Pty Ltd was regarded as no more than a reminder.
In my opinion, therefore, in the absence of timely notification as required by article 4.4.1 ACT was not entitled to extension of the date for practical completion.
72 Decor referred to the decision of Giles J in Baese Pty Ltd v RA Bracken
Building Pty Ltd (1990) 6 BCL 137 (“Baese”). The proprietor sued the builder for general damages for late completion of a house. There was a procedure under the contract whereby the proprietor, through the architect, could serve a notice on the builder after practical completion, claiming liquidated or ascertained damages on the basis that the building work should have been completed earlier. In the appendix to the contract, the parties had specified a set amount for the liquidated or ascertained damages. The builder argued that the notice procedure was the only remedy available for late completion and that the proprietor could not bring a claim for general damages. Giles J rejected that submission, referring to the fact that the terms of the clause dealing with the notice procedure was not in imperative terms and the fact that the procedure was designed for the benefit of the proprietor in that it relieved him from the obligation to prove his damages. The case is distinguishable from the present in at least two respects. First, unlike the clause in Baese which used the word

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“may”, clause 35.5 uses the word “shall”, and secondly, the notice procedure in Baese was one adopted after practical completion, whereas the procedure in this case is to be adopted within 21 days after the delay occurs.
73 Like the authorities to which Cox referred, Baese ultimately turns on. the particular contractual provisions under consideration in the case. Baese and the authorities to which Cox referred are helpful, but the decision in this case turns on the words used in clauses 35.5 and 36.
74 Clause 2 of AS2545-1993 provides that the clause headings and sub-clause headings are not part of the contract and shall not be used in the interpretation of the contract.
75 There are three stages in the procedure under clauses 35.5 and 36. The first is the notice claiming an extension of time, the second is the granting of an extension of time, and the third is a claim for such extra costs as are necessarily incurred.
i6 Assuming for the moment that the main contractor acts in breach of
contract, and that that breach causes delay or disruption and consequent loss and damage to the subcontractor, it seems to me that it cannot be said as a general proposition that the subcontractor may only claim pursuant to clauses 35.5 and 36, and may not make a claim for general damages for breach of contract. For example, if it is assumed that there is compliance with the first two stages (ie, a notice claiming an extension of time for substantial completion is served and an extension of time for substantial completion is granted), the subcontractor is not restricted to a claim for “such extra costs as are necessarily incurred by the subcontractor by reason of the delay”. For instance, in an appropriate case, it may claim for loss of profit. Clause 36 itself provides that nothing in the clause limits the main contractor’s liability for damages for breach of contract. Another example is if it is assumed that there is compliance with the first stage (ie, a notice claiming an extension of time for substantial completion is served) but the second stage is not complied with because the main contractor does not grant an extension of time. A claim under clause 36, whether in its original or amended form, is predicated on the basis that the subcontractor has been granted an extension of time and I do not think that the act of the main contractor in refusing an extension of time could exclude a claim by the subcontractor for general damages. Again, I refer to the fact that clause 36 states that nothing in the clause limits the main contractor’s liability for damages for breach of contract.
77 Having regard to those conclusions, I cannot think that compliance with
the first stage is a necessary precondition to a claim for general damages for breach of contract causing delay or disruption. I recognise that it is in the interests of both the contractor and the subcontractor to know of delays as soon as they occur, so that they can organise their work and the work of others on site. That, no doubt, would be conducive to what Cox called “good contract

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administration”. However, clauses 35.5 and 36 do not expressly preclude a claim, for damages otherwise than pursuant to those clauses, and I think that clause 35.5 would, have been be framed quite differently – and perhaps in similar terms to clause 46 – if the intention of the parties was that a notice claiming an extension of time for substantial completion was a necessary precondition to a claim for damages for delay or disruption caused by a contractor’s breach of contract.
78 In my opinion, Decor’s delay claim and its additional hours claim do not fail by reason of the fact that it did not comply with the procedure in clauses 35.5 and 36.
79 In case I am wrong about the conditions that constitute the contract, I will consider Cox’s submission on the basis that the amended conditions form part of me contract between the parties.
so The meaning of the amendments is not easy to discern. The provision in
the original clause 36, which provides that nothing in condition 36 limits the main contractor’s liability for damages for breach of contract, has been removed. In my opinion, that is a relevant consideration, but by no means decisive. In other words, of itself it would not cause me to alter my previous conclusion. To conclude otherwise would be to find that the subcontractor could only recover for loss and damage caused by delay or disruption if the main contractor had granted an extension of time under clause 35.5, and, in my view, that cannot be right
si The intention of the parties in inserting the word “Nil” in the relevant
section in Part A is far from clear. Having regard to the original form of the first two paragraphs of clause 36, it would seem that that section in Part A is for the insertion of other events (ie, other than those referred to in clause 35.5(b)(i)), for which the extra costs referred to in the second paragraph are recoverable. That remains as one reading of the amended clause 36 and the insertion in Part A. The other reading, which is the one for which Cox contends, is that the word “Nil” in Part A means a nil relevant rate for the purposes of the first paragraph of clause 36, and no “other events” and a nil relevant rate for the purposes of the second paragraph of clause 36. I would be inclined to favour the first reading and, in those circumstances, the amendments to the conditions would not alter the conclusion I have reached in relation to the original conditions. Even if I adopted the reading advanced by Cox, the amendments would not alter the conclusion I expressed in relation to the original conditions. On Cox’s reading of the amendments, they would go a good deal further than the original conditions. They would not simply provide an exclusive procedure for the recovery of loss and damage for delay or disruption caused by breach of contract, but they would preclude any recovery for breach of contract causing delay or disruption, no matter how serious the

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consequences. Such an intention would need to be expressed in clear and unmistakable terms, and it is not so expressed in the amended conditions.
3. The notice before claim provision in clause 46
82 Cox submits that Decor’s delay claim and additional hours claim should have been rejected because Decor did not give a notice under clause 46. Cox referred to the same cases it referred to in the context of its submissions in relation to clauses 35.5 and 36.
83 The arbitrator made no finding as to whether Decor had or had not given a notice before claim under clause 46. He heid that Cox had not given proper notice to Decor of the point and should not be allowed to raise it. The arbitrator said that, because notice of the point had not been given, Decor had been deprived of the opportunity to lead evidence in the arbitration of the “first day” it could have “reasonably become aware of the breaches of contract” and the “first day” that it could have “reasonably become aware of its entitlement to make a claim”. The arbitrator noted in the course of bis reasons that at the preliminary conference “the parties agreed to publish position papers with more particulars than would normally appear in court-based pleadings”.
84 There are two issues here. The first is whether it was in fact Decor which carried the onus of establishing compliance with clause 46. If so, it was said by Cox that I should find that it had failed to discharge that onus. Secondly, it was said by Cox that even if it was under an obligation to give notice of the point, it had in fact done so and the contrary conclusion of the arbitrator was wrong.
85 As to the first issue, Cox submits that compliance with clause 46 was an essential fact in the action and not a condition precedent {Zuk v Miller [1957] SASR 25). As such, it was a matter Decor had to plead and prove. For its part, Decor submits that compliance with clause 46 was a condition precedent and did not need to be pleaded, and, in support of its submission, it referred to r 46.07 of the Supreme Court Rules 1987, which is in the following terms:
46.07 Averment of the performance or occurrence of all conditions precedent necessary for the case of the plaintiff or defendant shall be implied in his pleading and any condition precedent, the performance or occurrence of which is intended to be contested, shall be distinctly specified in his pleading by the plaintiff or defendant (as the case may be).
86 In my opinion, Decor’s submission is correct, and compliance with clause 46 is properly described as a condition precedent. Clauses in similar terms have been so described in the cases (Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (supra) per King CJ at 47; Jennings Constructions Ltd v 0 H and M Bin Pty Ltd (supra) (at 29)). It follows that it was up to Cox to raise the point.

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87 I very much doubt the second issue is a question of law within the terms
of the leave granted by the Full Court. However, rather than decide the issue on that ground, I will deal with the merits of the submission. I have read Cox’s allegations in its pleadings, or, more accurately, its position paper, and I am not satisfied that the arbitrator erred in concluding that Cox had not given proper notice of the point in its position paper. Cox also referred to various documents consisting of notices under the contract which it had collated and tendered or at least suggested that it would tender. Cox submitted that, by reason of that fact, Decor ought to have been on notice about the need to prove compliance with clause 46. There was a dispute before me about what documents were tendered, or at least on what basis. I have considered the material and I am not satisfied that the arbitrator was wrong to conclude that Cox had not given proper notice of the point. He was ideally placed in terms of considering the point.
as The arbitrator found that Decor would suffer prejudice if Cox was
allowed to raise the point at the stage it did in the proceedings. He referred to. the fact that Decor was not given the opportunity to lead evidence of the “first day” it “could reasonably have been aware of the breach” and of the “first day” it “could reasonably have been aware of the entitlement to make the claim”. I am not sure that both these matters are relevant, as the first two paragraphs of clause 46.1 seem to me to be alternatives, but, in any event, that does not detract from the significance of at least one of them. In submissions before this Court,’ Decor said that, in addition, it had been deprived of the opportunity to plead and prove matters such as waiver and estoppel. Again, I find it difficult to see how this is a question of law within the terms of the leave granted by the Full Court, but again, even assuming that it is, I see no reason to interfere with the conclusion of the arbitrator. This was a long arbitration, proceeding over what the arbitrator described as 29 sitting and part-sitting days. The arbitrator was ideally placed to consider questions of prejudice and there are no reasons to interfere with his conclusions in relation to the notice before claim provision in clause 46.
Decor’s appeal
The rejection of the additional hours claim
89 The issue here is a narrow one. It is not suggested that the arbitrator did
not accurately identify the four elements of a global claim and, in those circumstances, it is not necessary for me to discuss the authorities to which I
was referred: Nauru Phosphate Royalties Trust v Matthew Hall Mechanical & Electrical Engineers Pty Ltd [1994] 2 VR 386; John Holland. Construction & Engineering Pty Ltd v Kvaemer R J Brown Pty Ltd (1996) 8 VR 691; John Doyle Constiiiction Ltd v Laing Management (Scotland) Ltd [2004] Scot SC 713. In addition to these authorities, there is a helpful discussion of the relevant issues by Byrne Jinan article “Total Costs and Global Claims” ((1995) UBCL397).

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90 The arbitrator said that to succeed on its additional hours claim, Decor must show, inter alia, that it could reasonably have expected to perform the subcontract works within the hours allowed in its tender. It was this fact that the arbitrator found had not been established, and it was his approach to the evidence necessary to establish this fact that was challenged by Decor.
91 In order to understand the arbitrator’s reasoning, it is necessary to consider the evidence that he had before him as to the first element of Decor’s global claiin for additional hours. .
92 Mr Erbsland prepared Decor’s tender and he gave evidence of how he did that. He referred to his estimates of the costs of various items comprising the works. His calculations are known in the industry as “take-offs”.
93 I was given, and have read, a part of Mr Erbsland’s evidence in which he is taken through his take-offs (which were also put before me) and asked to explain his calculations. Importantly, for present purposes, he estimated that the works would involve 9,305 hours of work. Mr Erbsland gave evidence of how he calculated the period it would take to complete the work.
94 The following features of Mr Erbsland’s evidence on this topic should be noted:
1. He did not, in express terms, give evidence that his estimate was reasonable, having regard to his knowledge of industry rates, standards and practices.
2. He was not cross-examined by counsel for Cox on the calculations and reasons for his estimates.
95 The arbitrator, in dealing with Mr Erbsland’s evidence on this topic, did not indicate that he had any concerns about his veracity or reliability. He had earlier said that Mr Erbsland was an experienced professional builder in relation to ceiling and partition contracting and, as counsel for Decor pointed out, he had accepted Mr Erbsland’s evidence on a number of other topics.
96 The arbitrator was concerned that Mr Erbsland’s evidence did not go far enough in terms of establishing the first element. His warning to himself that he could not draw on his own experience and knowledge of the industry is clear
evidence of that fact.
9i The issue comes down to this: did the arbitrator consider that,
irrespective of the force of Mr Erbsland’s evidence, there was a requirement for corroborative evidence and that this element was not made out because that corroborative evidence was not forthcoming? That was the contention of Decor, and Cox did not dispute that if that was the arbitrator’s approach, then that was an error of law. Cox, on the other hand, contended that the arbitrator

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did no more than find that he could not be satisfied on the basis of Mr Erbsland’s evidence of the first element and then gave examples, not by way of necessary corroboration, of evidence that might have satisfied him of the relevant fact. In my opinion, even if the arbitrator did what Cox suggested, that is not a complete answer to Decor’s submission if he did not appreciate that it was open to him to infer from his evidence that the estimate of hours to complete the works was reasonable.
98 In my respectful opinion, the arbitrator has erred in requiring corroborative evidence of the first element of a global claim. He has referred to the observations of Byrne J in his article that in support of, or perhaps in substitution of the estimator producing his tender and swearing its validity, an independent witness may express an opinion on the matter as a “prescription”. There is no such prescription. Even if this interpretation of the arbitrator’s reasons is incorrect, at the very least, he has erred in not considering whether he should infer from Mr Erbsland’s evidence that Decor could reasonably expect to complete the works in the hours allowed in the tender.
99 In my opinion, the error of law which I have identified has meant mat the arbitrator did not find that the first element of Decor’s global claim for additional hours was made out. That was the finding that should have been made. Mr Erbsland was an experienced professional builder and the arbitrator accepted Mr Erbsland’s evidence in a number of areas. There is no reason to think that the arbitrator did not find him to be a truthful and reliable witness on the topic of his estimate of the hours required to complete the works. Importantly, he was not challenged on his estimates in cross-examination. In my opinion, the first element of Decor’s global claim for additional hours was made out.
100 Before leaving this topic, I mention that I was referred to certain comments made by the arbitrator when he raised the point about the sufficiency of the evidence in support of the first element with counsel for the respective parties in closing addresses. I do not think I am permitted to look at those comments, but in any event, it is the reasons of the arbitrator to which I must direct my attention.
101 My conclusion, that the four elements of Decor’s global claim for additional hours were made out, does not enable me to dispose of the claim. Decor’s claim was comprised of a number of calculations, only some of which were the subject of findings by the arbitrator. The hours included in the estimate (9,305 hours) and the hours actually spent on the works (15,901 hours) do not seem to be disputed by Cox, but there are findings to be made as to the deductions for unloading materials on site and the labour component of variations and these are relevant to the calculations. There is also the question of the proper hourly rate, whether it is $34.90 per hour or $31.08 per hour. The matter must go back to the arbitrator for him to perform the relevant

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calculations on the basis of the evidence as it stands, and, on the basis that the four elements of the global claim for additional hours are made out.
2. The backcharge
102 Not a great deal was said about this item in the submissions. I accept Decor’s submission that if the additional hours claim is allowed, the backcharge should not have been deducted from Decor’s claim. Had Decor performed the work reflected in the backcharge, that would have been an addition to its additional hours claim. The arbitrator should not deduct this item from Decor’s claim if he allows the additional hours claim.
Conclusions
103 Decor’s appeal should be allowed and the interim award of the arbitrator should be set aside. The interim award will be remitted to the arbitrator to be reconsidered in accordance with these reasons.
104 Cox’s appeal should be dismissed.
los I will hear the parties as to the appropriate orders and costs