The appellant subcontractors entered into four subcontracts with Lend Lease Building Pty Ltd ("Lend Lease") which provided, amongst other things, for the retention of monies by Lend Lease. The subcontractors were entitled to the release of the retention moneys at the expiration of the "Defects Liability Period", as defined in the subcontracts (which also made reference to the Head Contract).
The subcontractors completed the works they had been contracted to perform and made a claim for the release of retention monies held by Lend Lease. The primary judge dismissed the subcontractor's claim, holding that the time at which they were entitled to the release of the retention monies had not yet arrived. The subcontractors argued that the subcontracts should be read so that the "Defects Liability Period" expired 24 months after the Date of Substantial Completion of the subcontracts (contrary to the definition of the "Defects Liability Period" in the subcontracts), and that this construction was consistent with the commercial purpose of the retention of monies by Lend Lease.
The Court of Appeal dismissed the appeal and held (at 41) that "In order to supply, omit, or correct the words in a contract, the literal meaning of the contractual words must be an absurdity and the objective intention of the parties must be self-evident". The meaning of the "Defects Liability Period" in the subcontract was not held to be absurd, and it was held that the primary judge did not err in giving effect to it.
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