Codelfa Construction Pty Ltd V State Rail Authority (NSW)

149 CLR 337
41 ALR 367

(Judgment by: WILSON J)

Between: Codelfa Construction Pty Ltd
And: State Rail Authority (NSW)

High Court of Australia

Judges: Stephen J
Mason J
Aickin J

Wilson J
Brennan J

Subject References:

Judgment date: 11 May 1982


Judgment by:

I have had the advantage of reading the reasons for judgment of my brethren Mason and Aickin. I agree with their Honours that in the circumstances of this case the correct conclusion is not that a term must be implied in the contract but that the grant of an injunction on 28 June 1972 restraining the contractor in the manner of execution of the work may well have frustrated the contract, and that a finding as to frustration and its consequences lie within the jurisdiction of the Arbitrator. I respectfully adopt the reasons advanced by each of their Honours in support of those conclusions. It follows that because of cl. G.46(5) of the contract (the Scott v. Avery (1856) 5 HLC 811 (10 ER 1121) clause), the Supreme Court did not have jurisdiction to deal with the frustration claim.

I also agree with Mason J. on the question of interest.

With regard to the proper construction of the rise and fall clause, I agree with Aickin J. that cl. G.28(3) provides for what has been described as compounding escalation. I also agree that variations in shift allowances, sick pay and accident pay are not to be taken into account in ascertaining the "average weekly wage" save in so far as the awards mentioned in the sub-clause include loadings for sick pay and accident pay within the ordinary wage structure, thereby accommodating such loadings within "the ordinary hourly rate of pay". Subject to the two comments which I now make, I agree with the reasons which led his Honour to those conclusions.

First, it was urged for the contractor that the combination in cl. G.28(3) of the concepts of "average weekly wage" and "marginal rates of pay" together satisfied the description of the "minimum rate of wages" in cl. G.28(1); it therefore included shift allowances, by reason of cl. G.28(4). I agree with the Court of Appeal in rejecting the argument for the reason that the relevant awards associate marginal rates of pay with the basic wage to form the applicable hourly rate, which when multiplied by forty leads to the average weekly wage. I am unable to discern any basis on which to import cl. G.28(4) into the construction of cl. G.28(3).

Secondly, although the clause requires each successive variation to proceed on the basis of a determination of "the value of the uncompleted portion of the contract", a determination which necessarily has regard to all earlier variations, I am unable to agree that it is a necessary consequence of such a construction that the scheduled rates themselves are subject to adjustment with each variation. Clause G.28(3) requires that, in the case of a rise in wage costs of the stipulated kind, the variation be effected directly and in a global way by simply charging a sum against the Department's account. I do not think it is necessary or appropriate to translate that sum into a percentage increase to each of the scheduled rates. Those rates will remain the same. When the contractor becomes entitled to a further escalation, the clause requires the Engineer to determine "the value of the uncompleted work". This figure must represent the total sum to which the contractor would become entitled if it completed the work immediately prior to the further adjustment. The Engineer will determine it by estimating the quantity of work that remains to be done, assessing its initial value by applying the scheduled rates, and then adjusting the figure by adding as a lump sum that proportion of all previous rises which corresponds to the quantity of work that remains to be done. The resultant figure will represent the updated value of the uncompleted work to which the new escalation is to be applied.

I would strike out the frustration action for want of jurisdiction. In the case stated by the Arbitrator, I would allow the appeal in part and allow the cross-appeal in part.