Codelfa Construction v State Rail Authority of New South Wales (1982) 149 CLR 337

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Facts
  • Codelfa was contracted to build tunnels for the Rail Authority of NSW, 24/7 so it would be finished in time. They believed the Rail Authority had permission to do so.
  • Part way into the contract, an injunction was granted against the work following complaints from the neighbours. Codelfa agreed to only work at day time.
  • Extra costs were incurred by this, and the State Rail Authority refused to pay, saying they didn’t act according to the contract.
  • Codelfa argued that either there was an implied term in the contract for this circumstance, OR that they should be paid on quantum meruit.
Issue
  • What is the Australian perspective on the parol evidence rule and implied terms?
Held
  • Mason J: Rectification contains a term actually agreed on. Based on actual intention.
  • Implication (by contrast) is a term that was not agreed, but is said would have been there . Based on presumed intention.
  • Courts are reluctant to imply terms. In order to imply a term, it must give business efficacy, “go without saying”, doesn’t contradict other terms, etc
  • Parol evidence rule: outside evidence only accepted when face value is confusing
  • Outside evidence can resolve ambiguity but not raise it
  • A term cannot be implied because there are too many ways the parties may have chosen to resolve the issue
  • Frustration, however, can succeed.
  • Codelfa is entitled to be paid

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