Report on the Codelfa construction PTY LTD V State rail Authority of NSW (1982) HCA 24

      The report is about the Codelfa construction PTY LTD V State rail Authority of NSW( 1982)HCA 24, which was the construction contract of the railway and it was very famous. It can also be referred to the modern construction throughout the world. The contract is basically a court trial which was started because of seven days working and three shifts per day, as well as the work, was so noisy and vibrant that made the disturbance in the surrounding. This report is providing a brief overview of the contract in which its history along with some significant background related things are discussed which tells that the contract was approved for 130 days. After the overview, the important facts and some issues related to this project are provided in the relevant facts and legal issues in the case section. The proceedings and sayings are also discussed and at the end of this report, the case was dismissed after giving briefing by Justice Brennan.

Cordelia Construction Pty Ltd v State Rail Authority

            The Cordelia construction is an Australian contact law case that is now become the most valuable contact in Australia and gives as the authority for the modern approach to the contractual construction. The case is related to the construction company whose works had been held by the order as well as highly influenced the eastern suburbs railway line’s development. The questions of the frustration, parol evidence rule as well as the construction are addressed into the terms of contract law. From the well-established English method related to the extrinsic evidence user, the case diverged in the contractual interpretation. Further on the overview of this contract, a tender was accepted by the commissioner of railways through Codelfa to excavate the tunnels for railway in New South Wales.

            The contract or the project was provided for Codelfa by certain dates to complete the work in only 130 weeks. It was a very difficult and hard task which was provided for Codelfa but the work had been started on this contract. The work was commenced by Codelfa and stared three shifts in the day in the whole week without taking any leave. The project work was heavy and the very noisy that produced the vibrations. Furthermore, the local residents and the council led to many applications for the injunction. With the result that Codelfa was decreased to continue work in the tunnel for the six days of the week, it granted the injunction. The construction teams were allowed to perform their work in only six-day and their Sunday will be off including they are also restricted to perform three shifts a day. It was a piece of faulty advice and common assumption that the work will not be disturbed and restricted. To cover the cost as well as lost profits, the additional sums were claimed by Codelfa from the commissioner and the labor was not able to work for twenty-four hours as estimated.

Relevant Facts and legal Issues in case

            In this section, some important facts, as well as the legal issues with this case, are discussed that will provide brief information that what they were difficulties and what were the consequences in the contract. First of all, this research report on the selected contract discusses the relevant facts as well as the legal issues in the case. Justice Brennan had set out some significant facts which are leading to such an argument in the judgment he made.

            The first fact is that the new south wales parliament created a corporation which was the commissioner for the railways. The commissioner for railways was appointed for the eastern suburb’s railway in Sydney as the construction authority. Furthermore, it was associated with the construction by of the contract for the two single-track tunnels excavation, the concrete lining of tunnels, an underground excavation at the Bondi Junction station site, an open cut excavation at the Woollahra station site, commencing at the Edgecliff and running through Woollhara to Bondi Junction, as well as some escalator shafts and concrete roadbed construction (Caspersz, 2012).

The tender of Codelfa for this project was successful as well as the agreement was accomplished among Codelfa and commissioner which subsequently state the rail authority of NSW took more than the commission functions. Although, several types of documents including general conditions, drawing of the project as well as construction specification were incorporated by the contract. The agreement needed Codelfa to begin the work on the project. The related information is given below.

According to the contract, Codelfa was required by the contract to begin the work into sixty days after receiving notice to proceed with the work on the project. The specific dates further required to complete the confirm stages of work as well as to complete all of the construction works including construction and fixing the railway tracks into the 130 weeks. The construction program had to make as well as approve the revision which had to adhere. Further information was also provided on this contract that the time should be of the contract essence while the measure of the protection was given to Codelfa if it should delay in making and approving the contract. Some other facts are also provided in the contract that it shall not entitle the commissioner to cancel the contract due to any kind of delays in the project completion or the separable parts having to the reasons outside of the contract or without the negligence of the contractor.

            If the engineer shall be notified by the contractor the cause of any kind of defaults or the delays into the beginning of ten days in writing or into this kind of the more period as it shall be granted by the engineer for the receipt of the notice or the copy of the notice having the information of the causes of delay. Furthermore, the facts, as well as the extent of the delay, shall be ascertained by the engineer as well as extend the time of the contract to complete the construction works when the fact results justify the extension on the receipt of this notice form the contractor in the opinion of the engineer.  Furthermore, the contract is also providing information that the factual findings of the engineer will be final, binding as well as conclusive on the contractor.

            The work was begun by Codelfa under the following notice for this project to proceed with the operating shifts for three times in a single day and a total of seven days’ work or full day work. Although, the considerable noise as well as vibrations were generated due this work and including the debris and stones blasted out of the area at the time. The injunction was sought by the resident of Woollahra soon after the beginning of the work as well as including the local council the subsequently. Although, it granted injunctions that controlled the working of Codelfa between 10 in the morning and 6 in the evening every day. While the undertaking not to carry out the work excavation on Sunday was also given by Codelfa subsequently. It was claimed by Codelfa from the commissioner further to cover up the costs consumed on the project incurred as the result of not become able to work in the three shifts in the single day or grant permission to work on the Sunday for recovery instead of going in the loss in the contract as the change result. The argument was made on this situation or claim discussed (Brennan, 1982).

            Moreover, it should imply the warranty in the contract for the breach in which the damages should be recovered by Cordelia. In the other sense, the contract which is approved for Codelfa must be held and injunction issues have frustrated including Codelfa must recover the quantum meruit that expectedly be greater and over the payable dues according to this contract.  

Discussion on Issue of Implied Term

            All of the high court members agreed upon the term that there was no kind of implied term even though, it can suppose that the term was required to provide the efficacy of the business to the contract. But it was not clearly written or mentioned in the contract that what the parties should have agreed and the had they changed their minds on this matter. Thus, there was no term mentioned in the contract that might be indicated. So, it was clear that it was going without any saying. In the discussion of the criteria for the term’s implication, Justice Brannan did refer it with the approval to the judgment of the high court in paragraph 20 insecure income real estate v St Martin’s investments Pty Ltd [1979].

·         It should be equitable as well as reasonable

·         It should also be essential to provide the efficacy of the business to the contract. That’s why no any kind of term will be implied if the contract is active without it.

·         It must also be very obvious that it also goes without any saying

·         Should also have the ability for the clear expression

·         And, it should not express any contract term on the contrary context.

Discussion on the Issue of Frustration

            The majority of the high court members thought considered that the Codelfa contract has been frustrated as dissented on this point by Justice Brennan. The main question or problem in this contract whether the resulting condition forms the injunctions were different fundamentally from the expected by the contract. So, Justice Mason also state on paragraph 55 on the basis of the arbitrator factual findings that;

“The contract performance in the occurred even was is fundamentally different than the contract performance in the circumstance as well as it interpreted and contemplated in the surrounding circumstances.”

            On the law of the frustration, it was referred by his honor to the variety of authorities as well as also highlighted that he did also agree and satisfied with the adopted the approach by Lord the Redcliffe and Lord Reid in the Devis contractors. At the paragraph number 40, Lord Redcliffe (1956) AC said at page 729 that; “ Frustration happens at whatever point the law perceives that without default of either party a legally binding commitment has gotten unequipped for being performed in light of the fact that the conditions wherein execution is called for would render it a thing fundamentally not the same as that which was embraced by the agreement. It was not this that I vowed to do”

The cases were proceeding in the court where Judges were attentively listening to the whole case saying. Justice Brennan was very strong in his point because he has given several reasons for frustrations and other reasons for restrictions in the working of the project. He also highlighted another important point that the engineer who is hired to proceed with the construction work did not cease the work in the tunnels because he had no kind of instructions of law or order in the written from the contractor. So, the engineer had not stopped the work into the tunnels. Furthermore, due to the problem in the working shifts, Codelfa did claim again that there is not any kind of implication in the contract. Thus, in the proceeding of this case, his honor continued on the issue criteria.

            In response to the claim from the party that the contract was frustrated at the time of ordering the injunction. Into the further proceeding, it was also referred then by his honor at the page of 30 to Lord Radcliffe's judgment in the “ Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3 (1956) AC 696, at p 729,” that highlighted and mentioned that the frustration will happen or generated; “ At the time of the law perceives that without default of either party a legally binding commitment has gotten unequipped for being performed because the conditions wherein execution is called for would render it a thing fundamentally not the same as that which was attempted by the agreement. Non haec in foedera veni. It was not this that I vowed to do.”

After the proceeding, his honor concluded by the judges listening to his saying and analyzing his pieces of evidence on the frustrations and the frustrative actions. They rightly dismissed.

Conclusion of Codelfa construction PTY LTD V State rail Authority of NSW (1982) HCA 24

It is concluded that the Cordelia construction is an Australian contact law case that is now become the most valuable contact in Australia and gives as the authority for the modern approach to the contractual construction. The work was commenced by Codelfa and stared three shifts in the day in the whole week without taking any leave. To cover the cost as well as lost profits, the additional sums were claimed by Codelfa from the commissioner and the labor was not able to work for twenty-four hours as estimated. The new south wales parliament created a corporation which was the commissioner for the railways. The tender of Codelfa for this project was successful as well as the agreement was accomplished among Codelfa and commissioner which subsequently state the rail authority of NSW took more than the commission functions. Codelfa was required by the contract to begin the work into sixty days after receiving notice to proceed with the work on the project. While the undertaking not to carry out the work excavation on Sunday was also given by Codelfa subsequently. It should imply the warranty in the contract for the breach in which the damages should be recovered by Cordelia. The main question or problem in this contract whether the resulting condition forms the injunctions were different fundamentally from the expected by the contract. Due to the problem in the working shifts, Codelfa did claim again that there is not any kind of implication in the contract.

References of Codelfa construction PTY LTD V State rail Authority of NSW (1982) HCA 24

Brennan, J. (1982). Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 (11 May 1982). CODELFA CONSTRUCTION PTY. LTD. v. STATE RAIL AUTHORITY OF N.S.W.

Caspersz, T. (2012). Do contracts mean what they say? This article was first published in the June 2012 issue of the Australian Corporate Lawyer, 26.