- Unreported Judgment
- Appeal Determined (QCA)
SUPREME COURT OF QUEENSLAND
Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd  QSC 85
CIVIL MINING & CONSTRUCTION PTY LTD
WIGGINS ISLAND COAL EXPORT TERMINAL PTY LTD (ABN 20 131 210 038)
Supreme Court at Brisbane
19 May 2017
23, 24, 25, 26, 27, 30 and 31 May 2016
1, 2, 3, 6, 7, 8, 9, 10, 13, 14, 15, 16 and 17 June 2016
8, 9, 11, 15, 16, 17, 18, 19, 29, 30 and 31 August 2016
26, 27, 28, 29 and 30 September 2016; Plaintiff’s Post Hearing Written Submissions filed 10 October 2016; Corrigenda to the Plaintiff’s and Defendant’s Written Submissions filed 8 December 2016
I will hear the parties further as to final orders and further directions including in respect of:
CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – VARIATIONS – where the plaintiff was a Queensland-based construction company – where the defendant was involved in the business of constructing coal and export facilities – where the plaintiff was a contractor of the defendant – where the plaintiff and defendant entered into a bulk earthworks contract for a package of construction works – where the plaintiff engaged subcontractors to carry out certain construction works – where variations and directions affected the contract works – where practical completion was delayed – where the contract works were varied – whether the plaintiff was overpaid as a result of variations and delay to the contract works
CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – SETTLEMENT OF DISPUTES – where dispute arose in relation to a bulk earthworks project – where certain claims were already the subject of statutory adjudication process – whether the plaintiff was required to repay the defendant any amount that the defendant already paid to the plaintiff – where the defendant counterclaimed
CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – DETERMINATION OF COSTS where variations and directions affected the contract works – where the defendant counterclaimed – where the defendant alleged overpayments to the plaintiff under the contract works – where the defendant claimed liquidated damages – whether terms of contractual construction entitle the plaintiff to additional payments for delay – whether the plaintiff was entitled to additional payments for variations to the contract works – whether the defendant was entitled to claw back any amounts already paid under the contract
CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – GENERAL – where variations and directions affected the contract works – where the contract works were ultimately different to those contemplated under the contract– where the contract works were varied – whether the plaintiff was entitled to amounts already paid for works which the plaintiff did not complete – whether the plaintiff was entitled to additional amounts to those initially contemplated under the contract - whether the defendant was entitled to claw back any amounts already paid under the contract as a result of the variations
CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – REMUNERATION – CERTIFICATES – FINALITY OF CERTIFICATE - Construction and effect of final certificates issued under General Conditions of AS2124 – where the parties issued its final certificate, obliging the plaintiff to pay the defendant $12,269,507.88 with respect to its claimed progress payment — where the defendant claims the amount of the final certificate less the items otherwise the subject of these proceedings – where the plaintiff served notice of dispute under contract with respect to final certificate – whether the plaintiff was overpaid under the contract as a result of amounts re-valued in the final certificate
CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLTEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where adjudication decision made in favour of the plaintiff under Building and Construction Industry Payments Act 2004 (Qld) — whether the defendant is entitled to recover amounts the plaintiff successfully claimed through statutory adjudication
Building and Construction Industry Payments Act 2004 (Qld)
Coastal Protection and Management Act 1995 (Qld)
Competition and Consumer Act 2010 (Cth), Schedule 2
Fisheries Act 1994 (Qld)
Queensland Building and Construction Commission Act 1991 (Qld)
Queensland Building and Construction Commission Regulation 2003 (Qld)
Queensland Building Services Authority Act 1991 (Qld), s67V
Sustainable Planning Act 2009 (Qld)
Alstom Limited v Yogokawa Australia Pty Ltd & Anor (No 7)  SASC 49, cited
Alucraft Pty Ltd (in liq) v Grocon Ltd (Unreported, Supreme Court of Victoria, Smith J, 22 July 1993 – 15 February 1994, 22 April 1994), distinguished
Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99, cited
Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345, cited
Chaplin v Hicks  2 KB 786, distinguished
City Inn v Shepherd Construction Limited (2008) 24 Const LJ 590, cited
CMA Assets Pty Ltd v John Holland Pty Ltd (No 6)  WASC 217, cited
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, cited
Collins v The Queen (1975) 133 CLR 120, cited
Commonwealth of Australia v Verwayen (1990) 170 CLR 394, cited
Cook’s Constructions Pty Ltd v Stork Food Systems Aust Pty Ltd  QSC 179, cited
Cooke v Commissioner for Taxation (2002) 51 ATR 223, cited
Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd  NSWSC 1163, cited
Currie v Dempsey (1967) 69 SR (NSW) 116, cited
Danidale Pty Ltd v Abigroup Contractors Pty Ltd  VSC 391, cited
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588, cited
Donnison v The Employers’ Accident and Live Stock Insurance Co Ltd (1897) 24 R 681, cited
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, cited
Dura (Australia) Constructions Pty Ltd (in liq) v Hue Boutique Living Pty Ltd (No 3)  VSC 99, cited
Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) (2013) 29 BCL 19, cited
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, cited
Eric Preston Pty Ltd v Euroz Securities Ltd (2011) 274 ALR 705, cited
Hawker Noyes Pty Ltd v New South Wales Egg Corporation (Unreported, Supreme Court of New South Wales, Brownie J, 11 November 1988), distinguished
Henry Boot Construction Ltd v Alstom Combined Cycles Ltd  BLR 247, cited
Industrial Installations & Relocations Pty Ltd v Leiner Davis Gelatin International Ltd (Unreported, Supreme Court of Victoria, Rolfe J, 5 May 1998), cited
Jones v Dunkel (1959) 101 CLR 298, distinguished
Macdonald v Longbottom (1860) El. & El. 977; 120 E.R. 1177, cited
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, cited
Martinek Holdings Pty Ltd v Reed Construction (Qld) Pty Ltd  QCA 329, applied
Monadelphous Engineering Pty Ltd & Muhibbah Construction Pty Ltd trading as Monadelphous Muhibbah Marine v Wiggins Island Coal Export Terminal Pty Ltd  QSC 160, cited
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, applied
Murphy v R (1989) 167 CLR 94, cited
North Ganalanja Aboriginal Corporation v Queensland (1996) 185 CLR 595, cited
Nosic v Zurich Australian Life Insurance Ltd  1 Qd R 67, cited
Paino v Paino  NSWSC 1313, cited
Penvidic Contracting Co Ltd v International Nickel Co of Canada Ltd  1 SCR 267, cited
Prenn v Simmonds  1 WLR 1381;  3 All ER 237, cited
Skilled Group Ltd v CSR Viridian Pty Ltd & Anor  VSC 290, distinguished
Stockland (Constructors) Pty Ltd v Darryl I Coombs Pty Ltd  NSWSC 323, distinguished
Thiess Watkins White Construction Ltd v Commonwealth (1992) 14 BCL 61, cited
Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd (1972) 127 CLR 253, distinguished
Vassallo Constructions Pty Ltd v Andergrove Lakes Pty Ltd  FCA 862, cited
Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604
WMC Resources Ltd v Leighton Contractors Pty Ltd  WASCA 10, distinguished
Yorkshire Water Authority v Sir Alfred McAlpine & Son (Northern) Limited (1985) 32 BLR 114, distinguished
B D O’Donnell QC with S J Webster for the plaintiff
D Kelly QC with J J Baartz and M G Lyons for the defendant
Thomson Geer for the plaintiff
Corrs Chambers Westgarth for the defendant
Relevant Terms of the Contract
CMC’s primary lay witnesses
(a) Ben Vance
(b) Manish Pancholi
(c) John Henderson
(d) Matthew Grey
(e) Veronika Haber
(f) James Barry
WICET’s primary lay witnesses
(a) Andre Miroshnikoff
(b) David Enright
(c) Scott Karandrews
Jones v Dunkel inferences
Approach to findings of fact
CMC’s challenge to the expertise of Mr Abbott
CMC’s challenge to the expertise of Mr Tsipis
Earthworks Claim (Variation 141)
(a) The Nature of the Claim
(b) The Delay Events
(i) Directions – Delay to Commencement
(ii) Directions – Delay to the Construction of the Haul Road
(iii) Directions – Cultural Heritage and Flora
(iv) Directions - Soft Spot and Tertiary Bund
(v) Direction – Truck Bogging (Stop Work Direction)
CMC’s Contractual Basis for the Earthworks Claim
Measurement of the Delay
The GPN Borrow Pit (alternative claim)
Piling claim (Variation 142)
Direction 1 – Beales Creek waterway barrier permit
Direction 2 – Non-conformance report 01 (NCR01)
Direction 3 – Postponement of Rail Receival Piling Works
Direction 4 – Suspension Direction
Direction 5 – Suspension due to Specification Uncertainty
Direction 6 – Stop Work Direction
Direction 7 – Piling Hammer Claim
Quantum – Piling Claim
(i) Quantum – Directions 1 - 6
(ii) Quantum – Piling Hammer Claim
Pyealy Creek Bebo Arch Claim (Variation 103)
(a) Factual Findings
(b) The Variation Claim
Item 9 – Drop Structure
Item 11 – Blinding Layer under Bebo Arch footings
Item 12 – Concrete Class 40Mpa/20 in Bebo Arch footings
Item 14 – Supply and install Bebo Arch sections
Item 15 – Concrete class 40Mpa/20 in Bebo Arch wingwalls
Item 16 – Supply and install a spandrel
Item 17 – Concrete Class 32 MPa/20 in spoon drain
Item 18 – Guardrail with beam
Quantum total for Bebo Arch Variation 103
Delay Claim (Variation 17)
Issue 1: Qualifying cause of delay
(i) Delay Event 10 – Financier consent delay
(ii) Delay Event 11 – Flood damage delay
Issue 2: Methodology and programs
Issue 3: Critical Path Analysis
Delay Event 1 – Beales Creek Permit Delay
Delay Event 2 – Rail Receival Permit
Delay Event 3 – NCR 01
Delay Events 4 and 5
Delay Event 6 – Stop Work Direction
Delay Event 7 – Hammer Direction
Delay Event 8 – Pyealy Creek Bebo Arch redesign delay
Delay Event 9 – Bebo Arch additional work delay
Delay Event 10 – Financier Consent
Delay Event 11 – Flood Damage Delay
Issue 4: Concurrent Delays
Issue 5: Other non-compliances with clause 35.5
Findings of fact for Issue 5
Quantum – Delay Claim
Environmental Management Claim (Variation 90)
Geolon 600 Claim (Variation 63)
Interest under the Contract
Interest under the QBCC Act
(a) Pavement works for the Rail Receival Bulk Earthworks Package
(b) Pavement Works for the Rail Receival Access Road
(c) Pavement Works for the Overland Conveyor Platform package
(d) Fauna Bridges
(a) Adjudication Fees and Interest
(b) OLC Claim (Variation 30)
Final Certificate and Scott Schedule
WICET’s Primary Claim
The Alternative Claim to Re-valuation
Cell 1 – Variation 65: 104 Raise the Bunds
Cell 12 – Variation 56 – Additional Topsoil Quantities
Cell 13 – V32 PVMi5 GC08 Scope Transfer OLC works – Variation 32
Cell 14 – 075 PVN 578 Rail Receival Basins on Hold – Variation 51
Cell 15 – Filling Reclamation Bunds Area C – Item 89
Cell 17 – Granular Material OC South – Ch 0 to Ch 3803 – Item 94
Cell 18 – 124 Quantity Increase in Piling – Variation 75
Cells 21 and 24 – Bridge Abutment Protection – Type 4 Abutment B – Item 66 and Abutment A – Item 65
Cell 25 – 079 Additional Pavement Testing – Variation 54
Cell 32 – 028 Ground Surface Treatment Omitted Item – Variation 45
Other omitted items
Cells 3 to 11
Cell 20 – 004 Dynamic Testing of Piles
Cell 27 – 029 Supply and Install Expansion Joint
Cell 52 – 072 Bearing Pedestals
Cell 54 – 131 Omitted Item – Evaporation Compound
Lack of Evidence – Cells 39, 41, 47, 50, 60, 61 and 62
Cells 39 and 41 – OC Access Roads – Items 114 and 119
Cell 47 – 002 Bridge Work Design
Cell 50 – Item 91 – Clay Liner
Cell 60 – Variation 77
Cell 61 – Variation 43
Cell 16 – Variation 62 – 099 Piling Specification Change
Cell 22 – 101 Reclamation C Drop Board Structure – Variation 63
Cells 23, 26 and 35 – 074 Fencing Drawing Amendment Cost – Variation 50 – Items 122 and 123
Cell 28 – Item 87 Exc-box-out for pavements
Cell 34 – 083 Drainage Blanket on OLC and Rec C
Cell 94 – Granular Material
Cell 97 – Item 81
Conclusion – Final Certificate and Scott Schedule
Relevant General Conditions and Schedules
C-3 Contract Price Schedules
C-4 Rates for Pricing Variations
- This case concerns a dispute between the defendant, Wiggins Island Coal Export Terminal Pty Ltd (WICET) as principal and the plaintiff, Civil Mining & Construction Pty Ltd (CMC) as contractor arising from a bulk earthworks contract performed between September 2011 and March 2013 near Gladstone in Queensland.
- CMC is a Queensland-based construction company which builds earthworks, roads, bridges and drainage works.
- WICET carried on a business principally involved in the construction of a new coal export facility located at Golding Point as part of the Port of Gladstone. The facility is known as the Wiggins Island Coal Export Terminal.
- On 7 September 2011 CMC entered into a contract (the Contract) with WICET for the performance of a package of construction works south of Hanson Road titled “GC09 Bulk Earthworks and Civil Works (South of Hanson Road)” (the GC09 Project).
- CMC’s construction package was for, inter alia, the construction of the following elements of the GC09 Project:
- the Reclamation C Bunds, being large earthen bunds designed to drain dredged spoil through three ponds before being released into the Calliope River (Reclamation C Bunds);
- the Overland Conveyor, being the earthworks component of the flat conveyor platform from the Rail Receival area to Hanson Road (OLC);
- Beales Creek Bridge, being a piled bridge over Beales Creek for the OLC (Beales Creek Bridge);
- Pyealy Creek Bebo Arch, being a concrete culvert over Pyealy Creek for the OLC (Pyealy Creek Bebo Arch);
- earthworks and road works at the Rail Receival Platform and Reid Road; and
- the Rail Receival Overpass, being a piled bridge over the rail line for traffic from Reid Road (Rail Receival Bridge), (together, the Contract Works).
- CMC’s work under the GC09 Project was one of more than 20 packages of work that WICET was seeking to have completed by various contractors. The GC09 Project was among the first substantial packages of work to commence.
- The firm Worley Parsons was engaged by WICET to manage the GC09 Project (and other packages) and individuals from it were nominated to act as the Representative of the Principal’s Representative under the terms of the Contract (PRR).
- Aurecon Hatch was engaged by WICET to provide the design and ongoing design services for the GC09 Project (and other packages).
- In carrying out the Contract Works for the purposes of the GC09 Project CMC engaged subcontractors. CMC’s subcontractor for the earthworks was AE Group. CMC’s piling subcontractor, which performed the piling on the Beales Creek Bridge and the Rail Receival Bridge, was Avopiling.
- On 6 October 2011, Worley Parsons provided CMC with a formal notice to proceed with the Contract Works.
- On 31 October 2011, Worley Parsons approved CMC’s Baseline Program. Both the approved Baseline Program, and the Contract, provided that the Date for Practical Completion was 30 August 2012.
- On CMC’s case, during the project a series of directions (from WICET via Worley Parsons) and events significantly affected CMC’s progress and changed the character and extent of CMC’s work in carrying out the Contract Works, including:
- a direction from WICET to mobilise in relation to bulk earthworks notwithstanding that WICET had failed to obtain a clearing permit sufficient to allow CMC to construct haul roads to access the Reclamation C Bunds;
- the removal of a substantial quantity of material from the part of the borrow pit (the GPN Borrow Pit) from which CMC was to source fill for the construction of the Reclamation C Bunds;
- a series of directions from WICET which altered and prolonged CMC’s work in constructing the Reclamation C Bunds;
- a direction to mobilise from WICET in relation to piling activities in circumstances where WICET had failed to obtain a waterway barrier permit necessary for the construction of the piling pad at Beales Creek, which was a prerequisite for the piling work;
- a series of directions from WICET which restricted and varied the piling work being carried out on the Site; and
- a complete redesign of the Pyealy Creek Bebo Arch due to the fact that the drawings issued to CMC failed to match existing site conditions.
- As a result of the abovementioned issues, inter alia, CMC ultimately achieved Practical Completion on 26 March 2013. The last activity finished was the Pyealy Creek Bebo Arch.
- CMC claims about $14.5 million arising from four major claims:
- a claim for variations and directions which affected the bulk earthworks on the Reclamation C Bunds, in the sum of $5,889,858.89 (the Earthworks Claim also referred to as Variation 141);
- a claim for variations and directions which affected the piling works for the Beales Creek Bridge and the Rail Receival Bridge, in the sum of $1,636,316 (the Piling Claim also referred to as Variation 142);
- a claim for variations to the design of the Pyealy Creek Bebo Arch, in the sum of $1,371,249 (the Pyealy Creek Bebo Arch Claim also referred to as Variation 103);
- a claim for delay costs for the works as a whole (the Delay Claim also referred to as Variation 17).
- There are also two smaller, discrete, claims in respect of which CMC claims about $310,000 (approximately half of which remains in dispute) as variation costs relating to increased environmental management (the Environmental Management Claim) and a change from the installation of Geolon 400 to the installation of Geolon 600 (the Geolon 600 Claim). CMC also has an alternative claim for payment of damages for additional costs incurred in relation to a latent condition or misrepresentation, concerning the GPN Borrow Pit (the GPN Borrow Pit Claim). This claim is an alternative claim to the Earthworks Claim.
- WICET itself has brought a counterclaim for $12.5 million including:
- alleged overpayments made to CMC under the Building and Construction Industry Payments Act 2004 (Qld) (the BCIP Act);
- liquidated damages (which is relevant to the Delay Claim); and
- repayment of amounts WICET alleges it overpaid CMC under the Contract which have been re-valued in the Final Certificate (the Final Certificate Claim).
- I consider CMC’s claims in the following order:
- Earthworks Claim (Variation 141);
- Alternative Claim (GPN Borrow Pit);
- Piling Claim (Variation 142);
- Pyealy Creek Bebo Arch Claim (Variation 103);
- Delay Claim (Variation 17) including WICET’s claim for liquidated damages;
- Minor claims:
- Environmental Management Claim (Variation 90);
- Geolon 600 Claim (Variation 63); and
- Interest and bank guarantee.
- Because the issues in relation to each of these claims are numerous they are best identified when dealing with the individual claim. Similarly, any relevant findings of fact are also dealt with in respect of each claim. The starting point however, for a consideration of both the claims of CMC and WICET, is the relevant terms of the contract.
Relevant Terms of the Contract
- The Contract comprises the following parts:
- a formal instrument of agreement;
- modified AS2124-1992 General Conditions of Contract (the General Conditions);
- Section C – Contract Schedules;
- Section F – Special Conditions of Contract (including numerous lengthy appendices); and
- Section D – Scope of Work (including appendices which comprised Contract Drawings, Specifications (Aurecon Hatch), Scope of Works, 3D Model, Department of Main Roads Drawings and Department of Main Roads Specifications).
The Contract is lengthy and is found in Volumes 2 to 6 of the Court Book. The General Conditions are based on the standard AS2124 provisions. The parties did, however, agree on relevant variations to some of the standard provisions, including clause 36 which deals with delay or disruption costs.
- The parties differ as to the proper construction of numerous contractual clauses. In identifying in this section of the judgment the relevant clauses of the contract I highlight, on a preliminary basis only, the primary construction issues. I resolve these issues when dealing with the individual claim. The Contract is a commercial contract. It should therefore be construed in accordance with the principles identified by French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd. A number of the relevant clauses and schedules are lengthy and have therefore been incorporated into this judgment as Annexure A.
- The formal instrument of agreement, in clause 5.1, states an order of precedence for the various contractual parts. This order of precedence follows the order of the parts identified in  above. Clause 5.2 of the formal instrument of agreement refers to the order of precedence in the following terms:
“Without limiting any part of the General Conditions of Contract, if there is any ambiguity, conflict, discrepancy or inconsistency between the documents comprising the Contract, the order of precedence listed in Clause 5.1 above applies.”
- Clause 3 of the formal instrument of agreement deals with payment of the contract sum:
“Subject to the Contractor properly performing its obligations under the Contract, the Principal shall pay the Contractor the Contract Sum in accordance with the Payment Schedule which appears in Section C of the Contract.”
The term “Contract Sum” is defined in the General Conditions to mean –
“where the Principal accepted a lump sum, the lump sum;
- where the Principal accepted a lump sum, the lump sum;
- where the Principal accepted rates, the sum ascertained by calculating the products of the rates and the corresponding quantities in the Bill of Quantities or Schedule of Rates;
- where the Principal accepted a lump sum and rates, the aggregate of the sums referred to in paragraphs (a) and (b),
including provisional sums but excluding any additions or deductions which may be required to be made under the Contract.”
- The term “Payment Schedule” in clause 3 of the formal instrument of agreement is not a defined term in the General Conditions.
- Section C contains contract schedules. C-3 is the contract price schedule. C-3.1 contains a summary of the Contract Sum. C-3.2 identifies lump sum prices and C-3.3 contains the schedule of rates. C-3.4 deals with provisional sums. Schedule C-3 is set out in Annexure A.
- Clause 33 of the General Conditions deals with the progress and programming of the works. Clause 33.1 provides that the Contractor shall not suspend the progress of the whole or any part of the work except where the suspension is directed or approved by the Principal’s Representative under clause 34. Clause 33.1 relevantly provides that if compliance with the direction causes the Contractor to incur more or less cost than otherwise would have been incurred had the Contractor not been given the direction, the difference shall be valued under clause 40.5.
- Clause 33.2 concerns the construction program. Clause 33.2 provides that a “construction program” is a statement in writing showing the dates by which, or the times within which, the various stages or parts of the work under the Contract are to be executed or completed. Clause 33.2 requires the Contractor to furnish to the Principal’s Representative a construction program within the time and in the form specified in the Special Conditions of Contract at Appendix F2 and to revise the construction program as specified in those Special Conditions. Clause 2.2 of the Special Conditions contained in Appendix F2 requires the Contractor’s program to be developed using Critical Path Method and presented on a time-scaled bar chart fully continuous in logic that clearly highlights the critical path(s) throughout the network. Pursuant to clause 2.5 of Appendix F2, CMC submitted a construction program that was approved as suitable by WICET. This program became the Baseline Program. Clause 2.5 provides that it is the Baseline Program against which actual time performance will be measured and further, that no changes would be made to the Baseline Program without the prior agreement, in writing, of the Principal’s Representative. It is common ground that there was only one Baseline Program approved by WICET and no revised Baseline Program was ever approved by WICET.
- Clause 34 of the General Conditions deals with suspension of the works. Clause 34.1(b) provides that if the Principal’s Representative considers that the suspension of the whole or part of the work under the Contract is necessary for the protection or safety of any person or property, the Principal’s Representative shall direct the Contractor to suspend the progress of the whole or part of the work under the Contract for such time as the Principal’s Representative thinks fit. Clause 34.4 deals with the cost of such a suspension. Any cost incurred by the Contractor by reason of a suspension under clause 34.1 or 34.2 is borne by the Contractor. However, if the suspension is due to an act or omission of the Principal, the Principal’s Representative or an employee, consultant or agent of the Principal and the suspension causes the Contractor to incur more or less cost than otherwise would have been incurred but for the suspension, the difference shall be valued under clause 40.5. This wording is similar to clause 33.1, which also provides that if the Contractor has incurred more or less cost than otherwise would have been incurred had the Contractor not been given the relevant direction, the difference is also valued under clause 40.5.
- Clause 35 of the General Conditions deals with the time for commencement and Practical Completion. Clause 35.2, when read with Schedule C-5 “Key Dates”, identifies the date for Practical Completion as 30 August 2012.
- Clause 35.5 concerns extensions of time for Practical Completion. Clause 35.5 provides that if the Contractor is or will be delayed in reaching Practical Completion by one of the causes identified in (a) or (b), then it is entitled to give the Principal’s Representative a written claim within 28 days after the delay occurs, seeking an extension of time for Practical Completion. The causes include delays caused by the Principal or the Principal’s Representative and an increase in actual quantities of work being greater than the quantities determined by reference to the upper limit of accuracy stated in the annexure. The annexure identifies the limits of accuracy applying to quantities for which the Principal accepted a rate or rates (clause 3.3(a)) as being an upper limit of 20% and a lower of 20%. Another cause identified by clause 35.5(b)(iv) is a variation directed under clause 40 of the General Conditions. There are, however, limitations to CMC’s ability to claim an extension of time. First, the cause of the delay must be a cause listed in the fourth paragraph of clause 35.5. Further, CMC is required to demonstrate that the activities delayed are on the critical path in the construction program referred to in clause 33.2. A further restriction is that where more than one event causes concurrent delays in achieving Practical Completion and the cause of at least one of those events but not all of them, is not a cause referred to in the fourth paragraph then to the extent that the delays are concurrent, CMC is not entitled to an extension of time for Practical Completion. Clause 35.6 is the liquidated damages clause. Clause 35.7, when read with the annexure, places a limit on liquidated damages of 10% of the Contract Sum. The full text of clause 35 is set out at Annexure A.
- Clause 36 concerns delay or disruption costs. It is contingent on the Contractor having been granted an extension of time under clause 35.5 for any delay caused by an event listed in clause 35.5(b)(i), relevantly delays caused by the Principal or the Principal’s Representative or agent. The Principal is required to pay to the Contractor “such extra Direct Costs as are necessarily incurred by the Contractor by reason of the delay and for on-Site overheads attributable to the delay valued by the Principal’s Representative under Clause 40.5”. The Principal’s Representative’s valuation is required to exclude any off Site overheads or profit. The term “Direct Costs” is defined in clause 2 to mean costs that are reasonably and necessarily incurred by the Contractor and which do not include any profit, loss of profit or off-Site overheads. The full text of clause 36 is set out in Annexure A.
- Clause 40 deals with variations. Clause 40.1 identifies variations to the work as including directions by the Principal Representative to the Contractor to either increase, decrease or omit any part of the work under the Contract or to change the character or quality of any material or work or to execute additional work. Clause 40.3 provides that unless the Principal’s Representative and the Contractor agree upon the price for a variation, the variation directed or approved by the Principal’s Representative under clause 40.1 shall be valued under clause 40.5. Clause 40.5 is not only the basis for valuing a variation; it is also the clause referred to in clauses 33.1, 34.4 and 36. It is an important provision in the determination of the present dispute:
Where the Contract provides that a valuation shall be made under Clause 40.5, the Principal shall pay or allow the Contractor or the Contractor shall pay or allow the Principal as the case may require, an amount ascertained by the Principal’s Representative as follows–
- if the Contract prescribes specific rates or prices to be applied in determining the value, those rates or prices shall be used;
- if Clause 40.5(a) does not apply, the rates or prices in a Priced Bill of Quantities or Schedule of Rates shall be used to the extent that it is reasonable to use them;
- to the extent that neither Clause 40.5(a) or 40.5(b) apply, reasonable rates or prices shall be used in any valuation made by the Principal’s Representative;
- in determining the deduction to be made for work which is taken out of the Contract, the deduction shall include a reasonable amount for profit and overheads;
- if the valuation is of an increase or decrease in a fee or charge or is a new fee or charge under Clause 14.3, the value shall be the actual increase or decrease or the actual amount of the new fee or charge without the regard to overheads or profit;
- if the valuation relates to extra costs incurred by the Contractor for delay or disruption, the valuation shall include a reasonable amount for overheads but shall not include profit or loss of profit;
- if Clause 11(b) applies, the percentage referred to in Clause 11(b) shall be used for valuing the Contractor’s profit and attendance; and
- daywork shall be valued in accordance with Clause 41.”
- The term in clause 40.5(b) “Schedule of Rates” is defined in clause 2 of the General Conditions to mean:
“any schedule included in the Contract which, in respect of any section or item of work to be carried out, shows the rates or respective rates of payment for the execution of that work and which may also include lump sums, provisional sums, other sums, quantities and prices.”
- I have already dealt with the Schedule of Rates contained in C-3. There is no dispute between the parties that Schedule C-3 constitutes a “Schedule of Rates”. Schedule C-4 deals with rates for pricing variations. It provides that variations shall be performed on a Unit Rates or a Daywork Rates basis at the sole discretion of the Principal’s Representative. Schedule C-4.2 deals with the Daywork Rates. Schedule C-4.2 lists a schedule of Daywork labour rates. Immediately behind this Schedule is a document entitled “Schedule of Daywork, Indirect Personnel and Facilities Rates”. This document gives a rate which is described as “Overall Composite Daily Rate (includes Staff and facilities)” of $38,000 per day. There is a dispute between the parties as to whether Schedule C-4 constitutes a “Schedule of Rates” for the purposes of clause 40.5(b) and in particular Schedule C-4.2. The full text of clause 40, together with relevant extracts from Schedule C-4 are set out in Appendix A. There is a further dispute as to whether the Overall Composite Daily Rate constitutes a contractually prescribed specific rate for the purposes of clause 40.5(a) in valuing a claim for delay and disruption under clause 36.
- Clause 41 deals with Dayworks. The full text of clause 41 is set out in Annexure A. The Principal’s Representative may direct that variations under clause 40 shall be carried out as Daywork.
- Clause 42 deals with certificates and payments, including in clause 42.8 the Final Certificate. The full text of clause 42 is set out in Annexure A.
- There are a number of construction issues that arise for consideration. WICET submits that it is important for the Court to precisely identify whether the delay events for CMC’s Earthworks Claim (Variation 141) should be viewed as variations under clause 40.1, directions under clause 33.1 or suspensions under clause 34. This is because these clauses prescribe different things which are to be valued. This raises for consideration the proper construction of clause 40 and in particular what constitutes a variation for the purposes of clause 40.1. Further, if the delay events for the Earthworks Claim are to fall within clauses 33.1 or 34 rather than 40.1, WICET submits that they should be valued on the basis of cost. CMC however, submits that whether it has incurred more or less cost is a threshold question, not the measure of CMC’s entitlement. Once that threshold question is overcome the valuation, according to CMC, proceeds (similar to a variation) in accordance with the mechanisms set out in clause 40.5. This raises for consideration the proper construction of clauses 33.1 and 34.4 and in particular the words “to incur more or less cost than otherwise would have been incurred” (but for the direction or suspension).
- As to clause 36, WICET submits that money claimable under this clause in respect of the Delay Claim (Variation 17) is to be calculated only by reference to cost which would not have been incurred at all, but for the delay. WICET further submits that there must be a causal link between the delay event and cost incurred. CMC’s Delay Claim is only for on-Site overheads it says are attributable to the delay. CMC construes clause 36 to permit these on-Site overheads to be valued by the Principal’s Representative pursuant to clause 40.5. This, according to CMC, would permit the Overall Composite Daily Rate of $38,000 found in Schedule C-4.2 to apply to each day of any extension of time. WICET disputes this contention. WICET also disputes CMC’s submission, that by reference to pre-contractual negotiations, the Overall Composite Daily Rate constitutes an agreed rate of CMC’s on-Site overheads to be used should CMC be granted any extension of time.
- These and other contractual construction issues are addressed in more detail in respect of the relevant individual claim.
CMC’s primary lay witnesses
- CMC called among other witnesses:
- Mr Ben Vance, the Project Manager until September 2012;
- Mr Manish Pancholi, the Project Manager from September 2012 until Practical Completion;
- Mr John Henderson, the Senior Engineer responsible for the construction of the Beales Creek Bridge and the Rail Receival Bridge;
- Mr Matthew Grey, the Senior Engineer responsible for the Pyealy Creek Bebo Arch;
- Ms Veronika Haber (Goreva), the engineer with responsibility (under the supervision of Mr Henderson and then Messrs Vance and Pancholi); for the Beales Creek Bridge and Rail Receival Bridge; and
- Mr James Barry, CMC’s Project Superintendent.
- Apart from Mr Barry all of the primary witnesses called by CMC were engineers who worked on the Project. Apart from Mr Barry, none of CMC’s primary witnesses now work for CMC and none have any financial interest in the outcome of the litigation.
- Mr Vance was the on-Site Project Manager for CMC from the start of the project until September 2012. He is an experienced earthworks project director and engineer. By the time he took up his post as Project Manager he had some 12 years’ experience in senior roles on construction projects and had a further eight years of experience working as an engineer. He has significant experience in working on projects involving bulk earthworks and the construction of bridges.
- Mr Vance gave evidence over a period of eight days including being cross-examined for approximately two days. He gave detailed evidence, by reference to contemporaneous documents, as to the progress of the works undertaken by CMC pursuant to the Contract, including the delays and variations the subject of CMC’s claims. I deal with the details of his evidence below in relation to the specific claims. In observing Mr Vance in giving evidence over the course of eight days I formed a favourable view of his credit and considered him an impressive witness. He demonstrated a good recollection of events, which reflected his close involvement in those events.
- WICET submits however, that Mr Vance was not a witness of credit and was “an advocate for CMC who was necessarily defensive of a job, the profit margin for which was under continual scrutiny”. Senior counsel for WICET went further in oral submissions suggesting that “some parts of [Mr Vance’s] evidence … are not the answers of an honest witness …”
- WICET seeks to support these submissions by reference to discrete pieces of Mr Vance’s evidence and certain internal emails, some of which I deal with below. My preliminary observation however, is that there is very little dispute of fact in this case. Whether delays or variations to the GC09 Project were the fault of WICET rather than that of CMC may be largely resolved by reference to contemporaneous documents, uncontested evidence and of course, the relevant terms of the Contract.
- In paragraphs 23 to 65 of its written closing submissions, WICET identifies 10 aspects of Mr Vance’s evidence which are said to reflect poorly on his credit. Given that I consider below Mr Vance’s evidence in detail in respect of each relevant claim it is sufficient to deal with three aspects raised by WICET.
- The first is in relation to Variation 6 which is not a variation in dispute in the present proceedings. In respect of this variation CMC, by a letter signed by Mr Vance, claimed an additional amount for “Fauna Spotter/Catcher (not Habitat Tree Related)”. This was in circumstances where CMC had in fact included an amount for Fauna Spotters/Catchers in its tender allowance. WICET submits that the following exchange in cross‑examination shows that Mr Vance was “evasive” and “dishonest”:
“You’d already allowed for cost of $17,135 for fauna spotter/catchers, but you were making this claim as if no such allowance had been made?--- The advice from our commercial department was that we’d allowed that in error and that our claim should be based on the – on the contract, which this did not require us to do this.”
“I want to put to you squarely that to the extent that you deleted the reference to the budget allowance of $17,135, that was an act of dishonesty on your part?--- I wouldn't agree with that, and I’ll explain why, if you don’t mind. At the end of the day if we miss something we have no chance of recovering that cost. If we accidentally include something and give that back, there is absolutely no chance that if we fail to include something we should have, like miss a roller out of earthworks, that we will ever recover that cost. So the view taken was that this is a contractual matter, not a matter of exactly what we did or didn’t allow for.”
- In my view, these passages do not support WICET’s submission that Mr Vance was “evasive” and “dishonest”. His evidence was to the effect that even though, in his opinion, CMC had internally allowed for this item, he ultimately deferred to his commercial managers on a question of contractual entitlement.
- Another aspect identified by WICET which is said to reflect adversely on Mr Vance’s credit is his response to an email sent by Mr Ahern (an owner of CMC). Mr Ahern’s email was in relation to Variation 104 which concerned raising the Reclamation C Bunds. Whilst work commenced on Variation 104 it was ultimately abandoned. In the relevant email Mr Ahern enquired of Mr Vance: “Surely you and Jamie (Mr Barry) can come up with an option/solution to profiteer immensely out of the situation?” Mr Vance responded: “Working on it; As I said this situation suggests better opportunities than 10%.”
- In cross-examination Mr Vance suggested that his response to Mr Ahern’s email was “fair comment”: “I think that’s a – a fair comment. I mean, we’ve done a lot of day works on this job and made, basically, nothing out of it. This is a variation. You’d hope to do better than that.”
- WICET submits that this evidence reveals that Mr Vance was looking for profit for CMC rather than applying the terms of the Contract. Mr Ahern gave evidence and explained his email which uses the word “profiteering” as follows:
“What did you mean by that email Mr Ahern?--- I meant by – you know, we’re a commercial entity and attempting to increase our profit on a variation because we – well, essentially the project had been – this is at a point in time where the project staff were becoming quite frustrated with the continuous changing and we were being delayed and disrupted and, you know, we work on relatively fine profit margins in relation to the actual activity cost and with – it doesn’t take long for a delay or disruption or change in methodology for our margin to be eroded. So we were attempting to try and claw back some profitability through a change in scope. However, bearing in mind we have a contract, we have schedule rates for each work activity, we have variation rates and day work rates, which we have to abide by, and we’ve got Worley Parsons administering the contract. So the opportunity to profiteer immensely isn’t all that great.”
- It was suggested to Mr Ahern in cross-examination that his email reveals CMC’s attitude to the whole of the Contract. Mr Ahern rejected this suggestion stating that CMC had suffered a significant loss on the Project.
- The reference to “profiteering” in Mr Ahern’s email may therefore be understood as CMC seeking to increase its profit margin in relation to Variation 104 in order to recoup losses that had already been incurred from delays and disruptions. Mr Ahern’s use of the word “profiteering” in his email and Mr Vance’s response does not, in my view, adversely reflect on Mr Vance’s credit.
- WICET also seeks to impugn Mr Vance’s credit by reference to his email response dated 4 December 2012 to Mr McGilvray, who was formulating CMC’s Earthworks Claim. The methodology used by Mr McGilvray to calculate this claim is referred to as “the measured mile”. This methodology requires a consideration of actual production rates. Mr McGilvray, rather than examining production rates over a period of time, sought to use the best week on the project. Mr Vance did not agree with McGilvray’s approach. His responses in cross-examination on this topic rather than reflecting poorly on his credit demonstrate that Mr Vance was willing to make appropriate concessions:
“And I want to put some propositions to you: what the reality – or what’s happening here with this email is that the commercial manager of CMC is telling you, as the project manager, to make adjustments to the claim which have enormous significance in terms of dollars?--- If you look at the date, on the 4th of December I wasn’t the project manager. I agree with the rest of what you’re saying.
And you’re making those adjustments?--- I’ve made that in the spreadsheet and sent it back to him. I disagreed with those adjustments, but it was not my call.
… And I want to suggest to you that this email – your alteration to the figures, in the way you did, is dishonest?--- As I said, I agree it’s the wrong thing to do. But what period you take for the measured mile is probably something people can disagree about. I wouldn't have submitted the claim in that form, but it was not my call at the time. I guess with measured mile you’ve got a choice between a larger claim, or a stronger claim, which has a better basis. Using a shorter period generates a larger claim, but in my opinion it doesn’t represent what happened or the – a fair answer. So I would tend to agree with you that that claim is inflated by what’s been done there.”
- This was not the only concession made by Mr Vance. As I discuss below in considering the Earthworks Claim, CMC now accept in light of Mr Vance’s evidence, that any period of delay in the construction of the Reclamation C Bunds ceased on or about 18 February 2012. This evidence of Mr Vance which significantly shortened the period of delay claimed by CMC in relation to the Earthworks Claim, was forthcoming in evidence‑in‑chief. Mr Vance made other concessions in cross-examination which included the fact that he was being paid by CMC for his time in giving evidence and further, that while he had no problems with his initial Worley Parsons’ counterpart, Matthew Knowles, Mr Vance’s relationship with Mr Knowles’ replacement, Andre Miroshnikoff, was not good.
- Ultimately this case does not rest on an assessment of the credibility of the relevant witnesses. To the extent however that WICET seeks to impugn Mr Vance’s credibility I am not persuaded that I should depart from my initial favourable assessment of Mr Vance’s creditworthiness.
- Mr Pancholi was CMC’s Project Manager from September 2012 until March 2013. He is an experienced engineer. I found Mr Pancholi to be an honest and forthright witness. I accept CMC’s submissions that Mr Pancholi’s evidence should be accepted as reliable.
- Mr Henderson was the Senior Engineer responsible for the construction of the Beales Creek Bridge and the Rail Receival Bridge. There was no real challenge to his credibility and I accept his evidence as reliable.
- Mr Grey was CMC’s Senior Engineer responsible for the Pyealy Creek Bebo Arch. There is no dispute between the parties that the variations to the design of the Pyealy Creek Bebo Arch (Variation 103) constitute a variation under the Contract. The cost of these variations to the design and the time taken to construct the redesigned Pyealy Creek Bebo Arch are however matters of dispute between the parties. Mr Grey was cross-examined in relation to the delay concerning the construction of the redesigned Bebo Arch. I deal with his evidence in this respect when considering the Delay Claim (Variation 17). Having observed Mr Grey, he was in my view, a witness of credit who did not seek to exaggerate any aspect of his evidence. He demonstrated a detailed knowledge of the effect of the redesign of the Bebo Arch on both the delay to and cost of construction.
- Ms Haber (Goreva) was CMC’s engineer with responsibility (under the supervision of Mr Henderson and then Messrs Vance and Pancholi) for the Beales Creek Bridge and Rail Receival Bridge. Her evidence was primarily relevant to the Piling Claim (Variation 142). Ms Haber impressed me as a witness who gave careful consideration to each question posed. Her answers were direct and to the point. I accept her as both a truthful and reliable witness.
- Mr Barry who was CMC’s Project Superintendent was also a credible witness. There was no serious challenge to the reliability of his evidence.
WICET’s primary lay witnesses
- Mr Miroshnikoff is an experienced Senior Project Engineer/Project Manager. He was employed by Worley Parsons in April 2012 as a package manager for three contracts, namely GC07, GC08 and GC09. Mr Miroshnikoff was not therefore solely involved in the GC09 Project, nor did his involvement cover the first seven months of the GC09 Project from September 2011 to March 2012. He was not located on the GC09 site, although he visited and drove through it with some regularity. Mr Miroshnikoff had an “Inspector/Surveillance Officer”, namely Mr Scott Karandrews. Mr Miroshnikoff reported to the Construction Manager, Mr David Walls.
- In mid-2013 Mr Miroshnikoff was seconded to WICET and was subsequently employed full time with WICET from about April 2014 to November/December 2015.
- I accept CMC’s submission that there were significant gaps and errors in Mr Miroshnikoff’s recollection. There are two ready explanations for these deficiencies. First the mere passing of time. The second and more compelling explanation however is that unlike CMC’s witnesses, Mr Miroshnikoff was responsible for three rather than one contract and had a divided focus. Not only were there gaps in his recollection, there were also obvious errors he made in valuing claims and in particular in relation to the Bebo Arch.
- His evidence must be approached with some caution given his limited involvement with the GC09 Project.
- Mr Enright is presently employed as a project manager and commercial manager with Worley Parsons. He commenced with Worley Parsons as a senior contracts administrator in or around March 2011. He is not an engineer but has a Bachelor of Science in information systems and a Masters degree in business and project management. He was involved in compiling the tender documents and co-ordinating site visits during the tender period.
- Mr Enright’s evidence was limited to discrete topics which included meetings between WICET and CMC representatives in respect of access across Beales Creek and the pre‑tender site visit to the GPN Borrow Pit. He did not have a good recollection of specific discussions that occurred on those occasions. Nor did Mr Enright have a good recollection of what occurred during the site visit on 10 February 2011 in relation to the GPN Borrow Pit. CMC submits that Mr Enright’s inability to recollect specific discussions reflects poorly on his general credit. The fact that Mr Enright did not have a good recollection is, as WICET submits, unsurprising given that the matters in question occurred over five years ago. It remains the case however that Mr Enright’s evidence was of limited assistance.
- Mr Karandrews has 14 years’ experience working as a superintendent in the construction industry. He is a plumber and drainer by trade. He was employed by Worley Parsons as a client superintendent to oversee the GC09 package of works. In evidence-in-chief he stated that he performed that role from in or about October 2011 to 22 December 2012. He clarified this evidence in cross-examination. He actually commenced with Worley Parsons in July 2011 but was on-Site in October 2011. CMC, by reference in part to Mr Karandrews’ clarification of his commencement date with Worley Parsons, submits that his evidence shows a lack of attention to or disregard for detail. I do not accept this submission. I view his answers given in cross-examination as to when he commenced with Worley Parsons as nothing more than an appropriate clarification of his evidence-in-chief.
- Apart from when he was on leave, Mr Karandrews was on-Site every day. Initially he reported to Matthew Knowles and David Walls and subsequently to Andre Miroshnikoff and Chris Cilliers. Mr Karandrews maintained a hard copy daily diary and subsequently, at Worley Parsons’ request, an electronic diary.
- Given that Mr Karandrews was on-Site on a daily basis I had the expectation that he would be able to assist the Court by giving detailed evidence of relevant events. His evidence was however more general in nature. While I accept him as a truthful witness he was, on occasions, unable to recollect important events or conversations. For example, in relation to the delay to CMC’s work at the Reclamation C Bunds arising from a cultural heritage issue, Mr Karandrews’ evidence was as follows:
Now, do you recall an issue arising with scar trees giving rise to a cultural heritage issue?--- Yes.
And are you able to say in relation to what area of the site that issue
arose?--- The scar tree?
Yes?--- I can’t recall, sorry.
Do you have – recall having any discussion with any representative of CMC about that issue when it arose?--- Yes. I believe it was Mr Vance.
And today do you have any recollection of that discussion?--- I’m having trouble remembering back that far.
All right. Could I ask if you could be shown WIC.504.030.3408 at 3426. Now, Mr Karandrews, is this an extract of what you refer to as your electronic diary?--- Yes. That’s correct.
And it’s a page of your electronic diary for 9 January 2012?--- Yes.
Would it assist your recollection as to when the cultural heritage issue was resolved to have regard to your electronic diary?--- Yeah.
With your Honour’s leave?
HIS HONOUR: Yes. Thank you.
MR KELLY: I’d ask you, having regard to that extract from your electronic diary, are you able to say to the court when you recall the issue as to what I’ve termed the cultural heritage issue was resolved?--- Yeah. So the cultural heritage issue was resolved that day. So after reading this diary I now understand the area in which we’re talking about. So it was the cultural heritage area that was at access B on the rec C bunds.
Yes. Can I ask you to – I’ve taken you through a period of time with the no‑go zone maps and you’re now familiar with the period of the cultural heritage issue?--- Yep.
In terms of your observations of CMC’s plant and equipment during that period of time of the no-go zone areas and the cultural heritage issue?--- Yep.
How often were you on site during those periods?--- Every day that I was on roster.
And during that period did you observe CMC’s plant on site?--- Yes, I did.
And do you have any particular recollection today of observing CMC’s plant being on standby or not operating during this period?--- I don’t recall it being on standby. I believe the plant was working towards the rec C bunds and also on the overland conveyor corridor.”
- Mr Karandrews’ difficulties in recollecting conversations that occurred in 2012 is unsurprising. It is the case however that the more detailed recollection of the witnesses called by CMC, such as Mr Vance, Mr Henderson, Mr Grey and Mr Barry, is largely uncontested.
Jones v Dunkel inferences
- Both parties submit that the other party has failed to call certain witnesses. For example, WICET submits that CMC’s failure to call Mr Storrier, who was a programmer for CMC during the GC09 Project, gives rise to a Jones v Dunkel inference.
- Similarly, CMC submits that as WICET did not call the majority of the senior engineers and employees involved in the GC09 Project and who were directly involved in extensive conversations and written correspondence about which evidence has been given, that the relevant inference should be drawn. That is, the Court should draw the inference that nothing that any of these witnesses had to say would have assisted WICET’s case and, to the extent there is doubt or ambiguity in the evidence, the Court should resolve it against WICET.
- As WICET correctly submits, no inference may be drawn unless evidence is given of facts requiring an answer. The rule only applies where a party is required to “explain or contradict” something. The evidence of the missing witness must be such that would elucidate a particular matter. Accordingly, rather than seek to apply the inference generally as submitted by CMC, I will have regard to any Jones v Dunkel inference only to the extent that it is necessary for me to make a relevant finding of fact. I would observe however, that WICET’s failure to call a number of senior engineers involved in the GC09 Project and in particular Mr Vance’s counterpart Mr Matthew Knowles, means that much of CMC’s evidence was uncontested and may be accepted. This observation does not require the drawing of any Jones v Dunkel inference, rather it is apparent from WICET’s case as presented.
Approach to findings of fact
- Given the thousands of documents tendered and the number of claims, I requested the parties to identify the specific findings of fact sought. CMC, in accordance with this request, has specified the findings of fact which it seeks in its written closing submissions and in Exhibit 429 which is entitled “Findings of Fact Sought by the Plaintiff (Variations 141, 142 and 17)”. As I have already observed, much of the evidence in this case is uncontested. To the extent that WICET takes issue with a particular finding of fact sought by CMC, this is noted in the third column of Exhibit 429.
- Where a finding of fact is not disputed and based on my own assessment of the evidence, I have adopted the finding of fact sought by CMC. I refer to my own assessment of the evidence because of WICET’s qualification noted on Exhibit 429, namely that:
“Where a reference to the Defendant’s Submissions is included in the third column, that reference identifies where the Defendant takes issue with the finding sought. Where no such reference is included, it should be taken that the Defendant does not admit the finding sought. Paragraphs within the identified range but which are not referred to in the table below are agreed.”
CMC’s challenge to the expertise of Mr Abbott
- Two experts were called to give programming evidence in respect of the delay events relevant both to the Earthworks Claim (Variation 141) and the Delay Claim (Variation 17). Mr Gerard King was called as the expert programming witness for CMC, while Mr Stephen Abbott was called as the expert programming witness for WICET.
- These experts gave their evidence concurrently. Prior to the commencement of this concurrent evidence CMC filed written submission challenging Mr Abbott’s expertise. Mr Abbott has produced an expert report on delay dated 2 November 2015, a joint expert report on delay with Mr King dated 28 April 2016, an expert report on earthworks dated 3 February 2016 and a joint expert report with Mr King on earthworks dated 20 May 2016.
- In response to CMC’s written submissions, WICET filed written submissions dated 15 August 2016 and was granted leave to read and file an affidavit of Mr Abbott sworn 14 August 2016. After conducting a voir dire in which Mr Abbott gave evidence, I ruled that his expertise in programming had been established. I indicated that I would give reasons in my judgment. These are my Reasons.
- CMC submits that Mr Abbott does not hold any qualification as an engineer generally or as a programmer specifically. In addition to the absence of a formal qualification of this kind, his CV does not disclose any significant study of, or direct experience in, a programming task. According to CMC what Mr Abbott’s CV discloses is experience in the construction industry, in the roles of carpenter, building foreman, project manager and state building manager. The construction works in which Mr Abbott has had direct experience involved the construction of buildings (as distinct from earthworks, bridges or roads). Most significantly, according to CMC, Mr Abbott’s CV does not identify any or any substantial work in programming. CMC therefore submits, by reference to the relevant authorities, that Mr Abbott has not demonstrated that by reason of specified training, study or experience he has become an expert.
- CMC submits that the fact that a person has extensive involvement in aspects of construction does not make them an appropriately qualified expert to give evidence in specific sub-disciplines. CMC relies on the decision of Einstein J in Stockland (Constructors) Pty Ltd v Darryl I Coombs Pty Ltd. His Honour stated at  – :
“There is no doubt that Mr Farrant is, by his training, study and experience, shown to have acquired specialised knowledge in certain areas permitting him to express opinions wholly or substantially based upon that knowledge. In this regard he has acquired specialised knowledge in the following areas:
●quantity surveying expertise;
●the ability to read and understand architectural and building design drawings;
●construction and project management of construction projects including the overseeship of the construction process
●the making of arrangements for consultant specialists to prepare documents;
●the making of arrangements for the calling and letting of tenders.
He has also had an extensive involvement in the programming of construction projects, the budgeting of those projects, site inspections of such projects, contract administration and related activities. This is however essentially the role of an overseer.
Mr Farrant is not, however, a programmer with programming expertise in terms of the ability to assess the timing, the logic and methodology of the design and construction processes to be in a position to assess and determine with precision how the various disciplines and the works may be managed to create the ultimate ‘as built’ construction, but his construction and project management experience has permitted him to gain some general knowledge of some of these processes.”
- Einstein J identified that Mr Farrant’s evidence purported to address 17 different areas of specialised knowledge. This included programming. His evidence was that he was “involved in the programming of projects”. Einstein J held that the witness was not qualified to express opinions in relation to matters of architecture, engineering, structural steel detailing and programming. As is evident from the discussion below, Mr Abbott’s experience in programming is entirely different to that of the expert considered by his Honour.
- Whilst it is true that Mr Abbott does not have any formal qualifications in programming, the evidence reveals that he has extensive experience in the programming of construction projects. He has been involved in the construction industry for 36 years. As a result of that experience he has developed detailed knowledge of the construction process that he uses in the planning and programming of major construction projects. He was first exposed to formal planning and programming software in or about 1990. He has extensively used this programming software. Since 1990 he has provided planning and programming services in relation to major construction projects across Australia. In his affidavit Mr Abbott in paragraphs 7 to 25 details, in a non-exhaustive way, his programming experience from 1989 to the present. This includes the creation of contract programs for major projects and the review and critique of hundreds of construction programs.
- He has personally provided forensic, planning and programming services on numerous construction projects across Australia in the various sectors of the industry including building construction, civil, mining, rail and oil and gas sectors.
- In the voir dire, whilst Mr Abbott accepted that he was not “a specialist programmer”, he stated that the roles he has held in the industry have involved programming as an inherent part of those roles. Mr Abbott’s evidence was that he has the ability or the expertise to compile construction programs and is familiar with the relevant computer software. Mr Abbott’s established expertise therefore falls into a completely different category to that of the expert considered by Einstein J in Stockland.
- I am satisfied from Mr Abbott’s reports, including his joint reports with Mr King, his affidavit sworn 14 August 2016 and his evidence given on the voir dire that he has substantial experience in the programming of construction projects.
- CMC also seeks to challenge the admissibility of Mr Abbott’s expert reports on the basis that he was assisted in preparing the reports by a specialised programmer, Mr Wigginton. CMC submits that Mr Wigginton’s involvement leads to the problem identified by Stone J in Cooke v Commissioner for Taxation, namely that it was not possible to tell from the report which parts of it, if any, were prepared solely by the relevant expert. As her Honour noted:
“To be admissible, an expert opinion must be wholly or substantially based on the expert witness’s specialised knowledge. … This requirement clearly cannot be met if it is partly based on the knowledge or opinions of someone else.” (citations omitted).
- CMC’s submission should be rejected. The evidence of Mr Abbott given in the voir dire shows that in the compilation of his expert reports he was involved in instructing Mr Wigginton and reviewed his work. As Mr Abbott supervised and reviewed Mr Wigginton’s programming work for the purpose of compiling the report, coupled with the fact that Mr Abbott has the necessary programming knowledge to review Mr Wigginton’s work, I accept that the opinions expressed in the reports are those of Mr Abbott.
- CMC makes further discrete objections to various paragraphs of Mr Abbott’s reports. On 17 May 2016, CMC delivered objections to the various paragraphs of the reports of Mr Abbott. On 11 August 2016, CMC expanded upon those objections by delivery of written submissions containing a schedule of detailed objections. Those objections constitute Annexure A to CMC’s written closing submissions and are pressed. WICET’s response to those objections constitutes Annexure D to its written closing submissions. Where it is necessary I deal with those specific objections when I come to consider in more detail Mr Abbott’s expert evidence. It may be generally observed however, that to the extent that Mr Abbott bases his opinion on an unproven assumption, instruction or fact, I treat his opinion in that respect as irrelevant.
CMC’s challenge to the expertise of Mr Tsipis
- Mr George Tsipis was called by WICET as its quantum expert. Mr Tsipis produced four reports dated 16 November 2015, 3 December 2015, 18 February 2016 and 16 May 2016 together with a joint expert report on quantum with CMC’s quantum expert, Mr Paul Roberts, dated 18 July 2016.
- On 17 May 2016 CMC delivered objections to various paragraphs of the reports of Mr Tsipis. On 16 August 2016, CMC expanded upon those objections by delivery of written submissions with a schedule of detailed objections. Those detailed objections are included at Appendix B of CMC’s closing submissions and are pressed. WICET’s response to the objections to specific paragraphs of Mr Tsipis’ reports are set out in Annexure E to WICET’s written closing submissions. Similar to my approach in relation to the objections to specific paragraphs of Mr Abbott’s reports, I deal with CMC’s objections to Mr Tsipis’ reports when I consider the issue of quantum in relation to each claim. As a preliminary observation, however, where either Mr Tsipis or Mr Roberts as quantum experts express an opinion in relation to the proper construction of the Contract all parties accept that this is a matter for the Court.
- CMC’s primary objection to the admissibility of Mr Tsipis’ reports is that he does not hold any qualifications in the field of quantity surveying (such as Bachelor of Science (Quantity Surveying) or a Bachelor of Applied Science (Quantity Surveying)). On 29 August 2016 I ruled that Mr Tsipis’ reports were admissible. These are my Reasons for that ruling. It may be accepted that quantity surveyors are recognised as having a skill set that relate to contracts and cost, particularly cost estimation and control, on construction projects. This does not mean, however, that a qualified engineer experienced in costing cannot also give a relevant expert opinion. This however would appear to be the basis of CMC’s objection. CMC submits:
“It is accepted that Mr Tsipis is a qualified engineer and has broad experience in the construction industry and in preparing expert reports. But what is required is demonstrated expertise in the specialised field of quantity surveying.”
- I accept WICET’s submission that the flaw in CMC’s objection is that it assumes that one must be a quantity surveyor in order to express the opinions which Mr Tsipis expresses.
- Mr Tsipis is a qualified civil engineer with over 29 years’ experience in the design, procurement and construction of projects located in Australia, New Zealand and Asia. For the last 21 years, he has worked as a consultant to contractors, owners and lawyers in all aspects of contractual claims. This includes the assessment and formulation of variation, delay, prolongation, disruption and acceleration claims and the preparation of expert reports for dispute resolution proceedings including facilitation, mediation, adjudication, arbitration and litigation proceedings.
- On 29 August 2016 I gave leave to WICET to read an affidavit of Mr Tsipis sworn 17 August 2016. In paragraph 5 of his affidavit Mr Tsipis gives an overview of his qualifications and experience. He refers to being a member of the Australian Cost Engineering Society and the Association for the Advancement of Cost Engineering. From evidence filed by CMC it appears that it is not difficult to obtain such membership. Putting to one side Mr Tsipis’ membership of those organisations, his affidavit details extensive experience as a cost consultant and quantum expert in over 75 matters in the last 20 years. This experience commenced in or about 1986 when he carried out cost assessments while working for Evans Deakin Industries Ltd. In his affidavit Mr Tsipis explains that between 1986 and 1994 he progressed through the roles of assistant site engineer, site engineer, project engineer, project engineer and project manager and project engineer and design manager on a series of significant projects. He explains that during this period he gained:
“… substantial on-site experience in a wide range of building, construction, engineering, mining, infrastructure and civil construction projects, including projects which involved works similar to the works carried out by CMC on the GC-09 works which are the subject of these proceedings, namely, bulk earthworks including the construction of earthen bunds and ponds, concrete foundations, bridgeworks, road construction and drainage works.”
- From 1994 to the present Mr Tsipis was a principal at Evans & Peck and then E3 Advisory. In those roles, he has prepared claims for contractors, provided advice in relation to claims and provided independent quantum assessment services. Mr Tsipis explained that his professional qualifications as a registered professional engineer permit him to interpret designs, design changes, changes in materials and quantities and changed construction methodologies. This was emphasised by Mr Tsipis in response to certain questions in cross-examination on the voir dire:
“And I don’t see here – correct me if I’m wrong – that you identify any professional experience in estimating costs or quantities for tenders?--- Estimating quantities. That’s all part of the process of putting together documents.
Well, you haven’t been specifically employed in a role in your affidavit for estimating costs or quantities for tenders?--- But that’s what you do as an engineer.”
- From both his evidence and reports and in particular his contribution to the joint report with Mr Roberts, I am satisfied that Mr Tsipis is qualified to give expert opinion in respect of the valuation of the claims the subject of these proceedings.
- CMC also sought to challenge the admissibility of Mr Tsipis’ reports on the basis that he was assisted in the preparation of these reports by two other persons with formal qualifications and/or formal professional experience working as quantity surveyors, namely Mr Scott Echberg and Mr Eric Lien. Mr Tsipis stated in cross-examination in the voir dire however, that whilst he was assisted by Mr Lien, it was Mr Tsipis who assessed the claim. Mr Tsipis was personally involved in calculating and assessing cost. Mr Tsipis emphatically denied that Mr Lien and Mr Echberg had drafted virtually all of his original reports. He also emphatically rejected any suggestion in cross‑examination in the voir dire that he did not review all of the underlying calculations and work of both Mr Lien and Mr Echberg. Ultimately in oral submissions CMC accepted that Mr Tsipis was in fact heavily involved with the production of his reports.
Earthworks Claim (Variation 141)
(a) The Nature of the Claim
- Pursuant to the Contract CMC was required to complete the bulk earthworks described in Section 7.3 of Part 5 of the Scope of Works. This included the construction of the Reclamation C Bunds. These bunds were earthen walls constructed for creating ponds for the placement of dredged spoil. Three sets of bunds were to be constructed, namely the primary bund, the secondary bund and the tertiary bund. Each of these bunds was to be comprised by a number of connected earthen retaining walls.
- The basic method of construction of the bunds involved:
- the placement of geofabric by way of light machinery and labour;
- the placement of a layer of drainage rock (which had been excavated and hauled by CMC from the GPN Borrow), which was a limited push of about 30 metres by a small bulldozer;
- the wrapping of a second layer of geofabric;
- the placement of approximately 500 millimetres of general fill (which has been excavated and hauled by CMC from the GPN Borrow) pushed out by a small bulldozer; and
- the placement of subsequent layers of general fill, subject to a construction design limit of 0.5 metres per week maximum and hold of two weeks for every one metre of lift.
When complete the bunds stood up to 30 metres wide and covered some 6.6 lineal kilometres.
- CMC’s planned method of construction of the bunds involved:
- rapidly building the entire “footprint” of the bunds, being the bottom layers of drainage rock and first general fill, which could then be used for vehicles throughout the bunds;
- cycling activities on top of this footprint to avoid delays by the construction design limit on the placement of general fill; and
- cycling the activities involved with the process of placing geofabric, drainage rock and general fill in order to keep all labour and plant occupied and productive.
- Adopting this method of construction, CMC planned to haul and lay 4,000m3/day of fill material utilising two teams. Each team was a geographic workfront being operated by a bulldozer, water carts, compactors and geofabrics team, with haul trucks placing material where it was needed at any given time. Mr King described a team as “a geographical area” on the bund. Mr Barry’s evidence was that CMC had enough machinery and men to form two teams. Mr Roberts’ understanding of what constituted a team was that there was one set of resources which would move from one location to various others.
- Where CMC was able to work unimpeded, the target production of 4,000m3/day was feasible. CMC’s production records show that:
- from March 2012, CMC was able to achieve production of more than 5,000m3/working day;
- from May 2012, CMC was able to achieve production of more than 6,000m3/working day.
- CMC worked on the bunds on a 14 day roster and would work on Sundays when the work required it. As the job progressed and the interference with CMC’s work lessened, CMC mobilised additional equipment to site. Exhibit 32 is an accurate representation of the plant, labour, equipment and facilities mobilised by CMC to construct the Reclamation C Bunds and the dates on which they were mobilised. The plant was not demobilised until after the Reclamation C Bunds were completed. As to CMC working on Sundays when the work required it, Mr King and Mr Abbott in their joint expert report on earthworks agreed that CMC did not work all Sundays during the construction of the Reclamation C Bunds. They further agreed that whilst the contemporaneous records indicate that CMC completed some works on some Sundays, by reference to CMC’s target production charts, CMC did not plan to and, for the most part, did not execute the main bulk earthworks on Sundays.
- CMC did not achieve a 4,000m3/working day prior to 18 February 2012.
- Given the size, nature, design and methodology of construction of the Reclamation C Bunds, CMC’s ability to duly progress its construction was dependent upon:
- the start date for access to the Reclamation C Bunds;
- the availability of two access points into the Reclamation C Bunds; and
- the operation of multiple workfronts within the Reclamation C Bunds.
- On 7 September 2011, Mr Walls and Mr Enright of Worley Parsons and Mr Vance, Mr Ahern and Mr Semmler of CMC attended a meeting. At this meeting CMC explained its planned access methodology and the requirement for multiple workfronts to construct the Reclamation C Bunds.
- The Baseline Program approved by Worley Parsons on 31 October 2011, records the parties’ recognition that CMC would:
- access the Reclamation C Bunds by 14 October 2011;
- have two access points into the bunds. WICET was under no contractual obligation to provide two access points to the bunds, nominated by CMC or otherwise. The parties did however contemplate two points of access;
- utilise two teams at these access points to construct specifically identified bunds on pre-assigned workfronts; and
- complete the Reclamation C Bunds on or before 19 March 2012.
- CMC had earlier given a marked-up drawing (Marked-Up Bund Drawing) to Mr Knowles of Worley Parsons identifying the areas in which each team would work and the access points. CMC had also formally identified its required access points in September 2011.
- Reading the Baseline Program together with the drawing CMC’s approach was:
- to undertake the works with two teams (each with its own workfront);
- the teams were assigned specific access points, being:
- Bund Team 1 Start Access to Bunds Ks1 from Access A; and
- Bund Team 2 Start Access to Bund Kn from Access C (also referred to as Access B).
- the teams were assigned to specific bunds, being:
- Bund Team 1 – Bunds Ks, J, N, P, O (Team 1 Bunds) 3510m; and
- Bund Team 2 – Bunds Kn, Km, Mn, Ms, L (Team 2 Bunds) 2865m.
- the teams were assigned start and end dates as follows:
- Team 1 Bunds – start on 14 October 2011 and finish on 17 March 2012;
- Team 2 Bunds – start on 14 October 2011 and finish on 19 March 2012.
- CMC did not in fact commence construction of the Reclamation C Bunds until 23 November 2011 and they were not completed until 4 July 2012.
- CMC’s case is that its work in constructing the bunds was seriously impeded by WICET issuing a series of directions under the Contract. CMC alleges that these directions resulted in a significant delay in the overall time taken to complete the bunds. CMC identifies these impediments as falling into four main categories with the following features:
“Delay to commencement
- Although CMC was given notice to proceed with the contract works on 6 October 2011, WICET failed to obtain a clearing permit until 24October 2011, and directed CMC not to begin even limited clearing until 4 November 2011.
Delay in completing haul roads
- Although WICET approved CMC’s Baseline Program which identified two access points on 19 September 2011, it did not obtain (or even seek) clearing approval to construct the access point closest to the Borrow Pit for many months.
- WICET did not obtain a “species management plan” – necessary for clearing many habitat trees located in the region of the haul roads – until 11 November 2011. That meant that CMC had to clear around the habitat trees – and initially only to the more distant access point.
Delay from cultural heritage direction
- Just after CMC constructed a second access from the main haul road into the area of the bunds, that area became unavailable because cultural heritage artefacts were discovered. WICET had to carry out cultural heritage preservation activities for some time and CMC did not regain access until 9January 2012.
Delay from soft spots
- CMC was directed not to travel beyond two different points on the bunds in December 2011 and February 2012 respectively. This limited the areas in which CMC could productively work and contributed to the prolongation of the work.”
- CMC’s case is that the combination of these various directions amounted to a variation to the works, imposed by WICET, which (at least) changed the character of the works – from the operation contemplated in the Baseline Program of having two points of access and multiple workfronts (on and from 14 October 2011) to a different animal. Alternatively, CMC submits that the various directions which WICET gave amounted to directions to vary the order and timing of the works or to suspend a part of the works for which CMC is also entitled to a valuation and payment under clause 40.5 of the General Conditions. The claim is one for non-critical delay in respect of which an extension of time is not sought.
(b)The Delay Events
(i)Directions – Delay to Commencement
- CMC was required to construct an access road from the GPN Borrow Pit to the Reclamation C Bunds to be used for it to haul material for the construction of the bunds. The construction of the haul road involved the clearing of native vegetation, including significant species. WICET was required to obtain a Clearing Permit under the Nature Conservation Act 1992 (Qld) prior to clearing works starting.
- On 19 September 2011, CMC requested the utilisation of existing access tracks to construct the haul road to the Reclamation C Bunds by way of a Request for Information (RFI) emailed by Mr Grey of CMC to Mr Knowles of Worley Parsons.
- CMC would have started construction of the Reclamation C Bunds from the GPN Borrow to Access B first and started construction of the bunds while finishing the haul road to Access A.
- On 6 October 2011, CMC received a letter dated 5 October 2011 from WICET which instructed it to proceed immediately in undertaking all work under the Contract.
- At meetings between representatives of CMC, Worley Parsons and Aurecon Hatch on 7 October 2011 and 12 October 2011, representatives from Worley Parsons stated that WICET would obtain the Clearing Permit shortly and encouraged CMC to mobilise equipment to the Site.
- On 12 October 2011, WICET, by way of an email from Mr Knowles, informed CMC that Worley Parsons did not expect a Clearing Permit for access to the Reclamation C Bunds for two months and directed CMC to re-prioritise the Contract Works in the absence of the Clearing Permit.
- CMC identifies the following directions as delaying the commencement of work at the Reclamation C Bunds which was to commence by 14 October 2011:
- a Start Works Direction issued 6 October 2011;
- a Permit Direction issued 12 October 2011; and
- a Limited Clearance Instruction issued 2 November 2011.
- CMC submits that the effect of these directions was to vary the Contract Works (or direct the timing of the Contract Works) and caused additional cost to CMC, which was unable to start construction of the haul road to the Reclamation C Bunds due to the lack of a clearing permit, delaying the completion of the Reclamation C Bunds. Specifically:
- The Start Works Direction was a formal notification pursuant to clause 8(b) of the Instrument of Agreement to CMC to immediately proceed with all of the Contract Works. If not for the Start Works Direction, CMC would not have mobilised plant and equipment to the Site from that date and would not have incurred the costs of this plant and equipment mobilised to Site whilst unable to work on the Reclamation C Bunds.
- The Permit Direction directed CMC to re-sequence and re-program the Contract Works in the absence of the Clearing Permit.
- The Limited Clearance Instruction directed CMC to:
- construct the haul road in accordance with the Clearing Permit (necessitating survey coordinates);
- changed the haul route by directing CMC to construct the haul road to Access A only (contrary to the Baseline Program);
- construct the haul road without removing the specified habitat trees until the Species Management Plan had been approved.
CMC submits that these directions were directions pursuant to clauses 40.1 or 33.1 of the General Conditions, either changing the sequencing or methodology of the Contract Works or alternatively, directing the time and manner in which the clearing works for the haul road should be performed. CMC pleads that the effect of these three directions was to cause additional cost to CMC by restraining it from starting construction of the haul routes required for Team 1 and Team 2 to construct the Reclamation C Bunds by 22 days from 14 October 2011 to 4 November 2011.
- WICET however, submits that it is not liable for this alleged delay event. WICET identifies three problems with CMC’s claim:
- the directions upon which CMC bases its claim are not directions pursuant to clauses 33, 34 or 40.1;
- the claim presupposes that CMC’s access to the specific haul road to the bunds was a contractual risk allocated to WICET under the Contract when it was not; and
- for all or most of the alleged period, there were concurrent causes of delay for which CMC was responsible, such that there is no or very little “additional” cost attributable to any delay caused by WICET.
- As to the first matter, I consider WICET’s submissions below where I deal with CMC’s contractual basis for the Earthworks Claim.
- As to the second problem, WICET emphasises CMC’s attempt to give significance to the fact that it was not provided access to the top and bottom of the bund (which WICET refers to as access A (top) and access C (bottom)) as sought in RFI 0002. WICET submits that CMC uses the absence of the access at Access C as the basis for asserting that the access given to it by WICET amounted to a variation (an alleged change in “character” of the works). It is common ground that WICET was not contractually obliged to give CMC access via Access A and Access C. It is also common ground that CMC does not plead that WICET ought to have provided access to the bunds exactly where CMC wanted. What is pleaded however by CMC is that the Baseline Program always contemplated multiple access points. It also contemplated two teams working on the bunds on multiple fronts. CMC’s case is that the effect of not providing access in accordance with the Baseline Program was that a change in methodology as to the construction of the bunds was required. It is this change in methodology that is said to constitute a variation which prolonged the construction of the bunds. WICET did ultimately provide two access points, namely Access A (top) and Access B (intermediate access). Access B was approximately 300 metres further up the western side of the Reclamation C Bund than Access C. There were however delays in relation to Access B being available and capable of being utilised. These are discussed below but include the Cultural Heritage Direction and further Flora Directions. The restrictions arising from the Cultural Heritage Direction, for example, lasted until 9 January 2012. CMC alleges that from 14 October 2011 to 9 January 2012 (a period of approximately three months) it was limited to just one point of access for the purposes of constructing the Reclamation C Bunds because of directions given by WICET through Worley Parsons.
- Whilst there is no dispute that it was WICET which obtained the clearing permit for the haul road, WICET nevertheless submits that it was not contractually obliged to do so. This is because CMC, pursuant to the Contract, was responsible for designing and constructing temporary works. Further CMC was, by the Scope of Work, responsible for the construction of haul roads. CMC was required to make use of existing haul routes and make due allowance to upgrade when necessary. In my view however, by reference to the wording of the Flora and Fauna Management Plan which forms part of the Contract, it was WICET’s responsibility as the Principal, to ensure all necessary permits and approvals relevant to terrestrial flora and fauna were obtained prior to construction commencing.
- As to the third problem, WICET seeks to identify a number of concurrent causes of delay for which it alleges CMC is responsible. These include a failure on the part of CMC to comply with its contractual obligation to give two weeks’ notice of carrying out clearing works. This contractual obligation arises under Appendix A to the General Conditions which contains the Flora and Fauna Management Plan. Item A4 of Table 5.1 required CMC to give notice to WICET prior to commencing any clearing within the project area. The fauna spotter/catcher had to ensure that load reduction trapping occurred during the two weeks prior to commencement of clearing in any area. This trapping was simply to reduce the amount of terrestrial fauna that was present in a given clearing area prior to the main clearing event occurring. Item A5 of Table 5.1 required CMC to give the spotter/catcher two weeks’ notice prior to clearing works commencing. WICET submits that CMC failed to give this notice. Accepting that there was such a failure, the question is whether such a failure constitutes a concurrent delay event. I accept CMC’s submission that it was WICET’s own conduct which prevented CMC complying with its contractual obligation to give two weeks’ notice. The reality was that CMC was waiting for the Clearing Permit and instructions from WICET to start the clearing works and both parties were aware of this fact. Mr Vance explained the reason why the two weeks’ notice had not been given:
“We certainly didn’t on this occasion because we didn’t know that we were getting that site instruction to commence – to allow us to commence clearing.”
- The Clearing Permit was obtained by WICET on 24 October 2011. It was however conditional upon the approval of the Species Management Plan. CMC had no advance notice of the day the Clearing Permit would be obtained by WICET. As an interim measure however, Aurecon Hatch produced a series of “No Go Zone” maps to manage CMC’s access to the Site and permit limited clearing pending the approval of the Species Management Plan. This resulted in the Limited Clearance Instruction of 2 November 2011. On 2 November 2011, CMC was issued with a site instruction to “proceed with clearing as shown on an attached map”. The map attached to the Limited Clearance Instruction is a “No Go Zone” map, which relevantly indicated (schematically):
- areas which CMC was not permitted to access – by red hatching; and
- habitat trees which CMC was not permitted to clear – by yellow squares.
The clearing could not however commence until the clearing boundaries for the haul road were provided by WICET.
- The Clearing Permit and Limited Clearance Instruction did not include survey points to enable CMC to properly set out the works by identifying the precise extent of where clearing was permitted and not permitted. In order to start clearing, CMC required electronic survey coordinates of the boundaries of the areas in the No Go Zone map. These coordinates for the boundaries were not provided until the afternoon of 4 November 2011, with clearing works commencing on 5 November 2011. These details were confirmed by Mr Vance in an email to Mr Knowles dated 28 November 2011.
- WICET submits however, that the evidence shows that the survey coordinates were not an impediment to CMC clearing. I do not accept WICET’s submission. Mr Grey’s evidence was that without the survey coordinates CMC would not know whether it was clearing within the restricted area. Mr Grey’s recollection was that CMC commenced clearing either on 5 or 6 November 2011. His evidence was to the effect that CMC was not permitted to clear outside the boundary, as a result of which it needed to know the exact limits. I accept this evidence.
- Mr Vance’s evidence was to the same effect, namely that CMC required the survey coordinates prior to clearing. Mr Vance accepted in cross-examination that some minor clearing took place on 4 November 2011. He maintained however, that CMC did not do any clearing until it had survey coordinates “because otherwise you’re at quite significant risk.” In cross-examination it was suggested to Mr Vance that his evidence was inconsistent with a prior statement he had made in an email dated 17 January 2013. In this email in response to a statutory declaration of Mr Enright of Worley Parsons Mr Vance stated:
“I agree with him, we only put these in because Ian was of the view they show the incompetence of these guys, don’t believe this actually had any impact on the earthworks, other than ongoing irritation …”
- Mr Enright’s statutory declaration in paragraph 19(b) alleged that adequate advance survey information was duly provided to facilitate all clearing activities. Mr Vance explained the alleged inconsistency between his evidence at trial and what he had stated earlier. He explained that Mr Enright was referring to other areas of the Site apart from the haul road. Mr Vance’s evidence was that the lack of survey coordinates for the initial haul road had a significant impact. I accept Mr Vance’s explanation. It is consistent with Mr Grey’s evidence. Further, Mr Vance’s statement in the 17 January 2013 email was in response to a general observation of Mr Enright rather than specifically in relation to the survey coordinates for the haul road.
- Two further concurrent delays identified by WICET are the lack of availability of CMC’s earthmoving fleet until the end of October 2011 and the failure of CMC to obtain an excavation/penetration permit until 3 November 2011. The evidence does not, in my view, support WICET’s submission that either of these matters constitute concurrent delays caused by CMC.
- Mr Vance’s evidence was that WICET requested CMC on or about 11 or 12 October 2011 to be ready to commence once the clearing permit was obtained:
“In fact, at one of these meetings Dave Walls, who was their construction manager, stated that he wanted us to have a dozer parked this far off a tree, leaning on a tree ready to go. That was where they wanted us to be when we got this permit – or when they got this permit and were able to provide it to us.”
“I was concerned about doing that given we didn’t have the permits, because once I mobilised plant there are substantial costs involved. So we’ve warned them verbally in the meeting and I emailed Mathew Knowles after this meeting putting my concerns down as well. We weren’t – we weren’t as anxious to move buildings and people and everything onto site when we couldn’t touch trees, as they were for us to do it because, obviously, that starts costing you money immediately.”
The email referred to by Mr Vance in the above passage is from him to Mr Knowles dated 13 October 2011. In that email Mr Vance relevantly stated:
“As per discussions, we have not at the moment slowed down any mobilisation, and are looking instead to utilise resources in other areas of the work and render the assumption that by the time they arrive the clearing permit will be in place and we will be able to commence.
Where we to put on hold on any heavy plant that is coming, which we have not, there would them be the potential for further delays if that plant where to become occupied elsewhere (which it would in the current market).” (sic)
- Mr Knowles had emailed Mr Vance the previous day (12 October 2011), informing CMC that Worley Parsons did not expect a clearing permit for alternative access to the western side of the Reclamation C Bunds for two months. The email directed CMC to re-prioritise the Contract Works in the absence of the Clearing Permit.
- On 20 October 2011, Mr Vance sent a Notice of Delay to Mr Knowles which provided notice of the delay to the start of construction of the Reclamation C Bunds due to the lack of the Clearing Permit.
- On 21 October 2011, Mr Cole of Aurecon Hatch applied for the Clearing Permit for access to the Reclamation C Bunds via Access A and an Intermediate Access not provided for on the Baseline Program and not requested by CMC.
- On 24 October 2011, Ms Cook of Aurecon Hatch emailed a copy of the Clearing Permit to individuals at WICET and Worley Parsons. On the same date Mr Knowles forwarded the email and Clearing Permit to Mr Vance at CMC. The email from Ms Cook states that:
“… the clearing approved under this permit is still conditional upon the approval of the Species Management Program.”
- The receipt of the Clearing Permit did not permit work to commence. CMC was directed that until WICET obtained approval for its Species Management Program no substantial clearing could commence. In particular, Mr Knowles told CMC that a Species Management Plan was required prior to the start of construction of the haul road.
- The consequence of the Permit Direction was that CMC was not permitted to access the Bunds at Access B as it had requested, but would have to build the access road to Access A and the new Intermediate Access.
- CMC started mobilisation of plant, facilities and equipment to the Site on or about 25 October 2011. Had the Clearing Permit been in place earlier, CMC could have mobilised plant and equipment to the Site earlier and been ready to commence work on the bunds on 14 October 2011. In particular, CMC originally planned to carry out the clearing work using its own equipment or that of a contractor other than its main earthworks subcontractor.
- At a meeting between representatives of CMC, Worley Parsons and Aurecon Hatch on 2 November 2011, representatives from WICET stated that the Species Management Plan was forecast to be completed by WICET “within the next week” and that in the meantime, “Go” and “No Go” clearing maps would be issued for use around areas of significant species.
- In spite of Mr Vance’s stated intention to mobilise, referred to in  above, WICET refers to evidence suggesting that CMC’s earthmoving fleet was not available until the end of October 2011 and was not mobilised sufficient for construction until 2 November 2011. As such, WICET submits that CMC would not have been able to start work in any event. In CMC’s Monthly Progress Report Number 1, November 2011 under the heading “Overview”, “Mobilisation” the following notation appears:
“Mobilisation sufficient for construction was completed on 02 November 2011, no significant work where allowed by the principal contractor prior to agreeing mobilisation was sufficient to commence.”
I note that the same report identifies the top five problems as including:
“Clearing permits, species management plane [sic] and cycads have held up clearing and commencing hauling material.”
- Whilst Mr Vance accepted that the statement in the report concerning mobilisation was correct, his answer was qualified by his belief that CMC had enough “gear to start the works at the start”. CMC’s “Plant, Machinery and Light Vehicle Site Access Approval Form Register” shows that a subcontractor of CMC did not have a dozer on-Site until 3 November 2011. CMC’s subcontractor’s (AE Group’s) “Schedule of Plant/Labour/Equipment used for Reclamation C Bunds” shows plant required for hauling (that is, dump trucks) being available from 28 October 2011. These documents only evidence when CMC’s subcontractors mobilised particular pieces of equipment to the Site. They do not evidence CMC’s own capacity to mobilise the necessary plant and equipment to construct the haul road had WICET obtained a clearing permit that was not subject to the approval of a Species Management Plan or that required the identification of No Go Zones. Mr Vance’s evidence was that CMC had the ability to have machinery on-Site so as to commence work earlier than the end of October 2011:
“Well, for a start, Alexanderson’s original contract didn’t include the haul roads. The original intent was to build the haul roads – haul roads, site access, whatever you want to call them, there’s been a couple of bits of language used – but their contract included building the access roads around the borrow pit, whatever they needed to do in the area of the borrow pit they were going to work in, but the access roads down to the bunds CMC were going to perform, and we had access to other plant from other plant hire contractors, as well as our own plant, in this period if the work had become available. I – we never put real pressure on Alexanderson to change this because, clearly, we didn’t have access to site.”
- Mr Vance’s evidence was that CMC was able to bring a dozer to site within a day or so of having an area which CMC could clear. I therefore find that had an unconditional clearing permit been in place, CMC was in a position to mobilise the necessary equipment to site for the construction of the haul road.
- The second concurrent delay event is CMC’s failure to obtain an excavation/penetration permit until 3 November 2011. Such a permit was required by section 9.3 “Permit to Work” of Appendix F6 to the Contract. The Clearing Permit obtained by WICET on 24 October 2011 was, as I have already observed, conditional upon the approval of a Species Management Plan. Mr Grey first submitted the permit to excavate for the GC09 haul road to Worley Parsons on 1 November 2011. Mr Grey explained the nature of an excavation permit. It is for the purpose of identifying any existing services, such as underground services or overhead services, to make sure that construction activities do not cause damage to those services. The permit in effect seeks permission from Worley Parsons to carry out the relevant construction activities. On 3 November 2011 Worley Parsons requested Mr Grey to provide a sketch showing the area to be cleared. This was provided by Mr Grey on the same day. The permit was approved by Worley Parsons on 4 November 2011. Mr Vance referred to an excavation permit in the following terms:
“These things are done in every area you open up and they’re usually redone at intervals during a project. So it’s one of those standard documents that is carried out on a regular basis during the construction. A tick and flick, essentially. … It’s a permit from Worley Parsons. We fill it in, it went to Dave Coker, he signed it off the same day and sent it back.”
- Mr Vance explained the permit has nothing to do with Government and that the permit did not hold up the commencement of construction of the haul road. I do not consider in light of this evidence, that the submission of the excavation permit by CMC on 1 and 3 November 2011 constitutes a concurrent delay. It was an internal document as between CMC and Worley Parsons not involving any third party agencies. It was a permit that was able to be approved within a short time-span. There is no evidence that any failure on the part of CMC to apply earlier for the excavation permit or to provide other documents was an impediment to the start of works.
(ii)Directions – Delay to the Construction of the Haul Road
- CMC’s pleaded case is that on 5 November 2011 it commenced clearing and grubbing activities for the purpose of constructing haul routes from the GPN Borrow Pit to the Reclamation C Bunds. CMC pleads that the construction of the haul route from the GPN Borrow Pit should have taken seven calendar days. This is the assumption made by Mr King in his expert report on the Earthworks Claim. CMC alleges that because of two “No Go Zones” Directions given on 8 November 2011 and 18 November 2011 the construction of the haul road was delayed by 12 days. CMC’s pleaded delay period is between 7 November 2011 and 23 November 2011.
- It is common ground that the haul road took 19 days in total to construct. The assumption made by Mr King in his report on instructions, that the haul road should have only taken seven days, is not supported by the evidence. Mr Vance’s evidence was as follows:
“It’s approximately half the length if we’d been able to access at access point B. So it would reasonable to assume that – about half the duration to build that haul road. That means our five days in our baseline program was probably a little bit optimistic. So nine – eight, nine days to do that would have been a reasonable sort of assumption to get access at point B, and you then could have started the bunds while you finished the haul road to point A on the drawings I was using earlier.”
This is a general estimate made by Mr Vance.
- Mr Grey’s evidence was that the yellow squares on the No Go Zone plan showing habitat trees affected the construction of the haul road because they constituted “obstacles in the way which the road had to go around, or narrowed the lane width to allow access”. His evidence, which I accept, was that it would have been much quicker to clear a track without any limitations. His evidence was that without these limitations the haul road could have been constructed within 10 days, enabling CMC to gain access to the Reclamation C Bunds. Mr Grey had involvement in the planning and construction of the haul road and was the person who submitted the RFI regarding the haul road and also permits for clearing for the haul road. Given this involvement, I accept his estimate of 10 days over Mr Vance’s general estimate of between eight and nine days. This reduces any period of alleged delay between 7 November 2011 and 23 November 2011 to nine rather than 12 days. Nor is it readily apparent, given that the first No Go Zone Direction was issued on 8 November 2011, why CMC is entitled to claim that the delay period commenced on 7 November 2011. Worley Parsons did issue a site instruction dated 2 November 2011 which attached maps showing hollow and habitat trees. It is, however, no part of CMC’s pleaded case that the Limited Clearance Instruction of 2 November 2011 caused any delay between 5 to 7 November 2011. This pleading point has been taken by WICET. WICET submits that CMC has not pleaded the cause of the delay prior to the issue of the No Go map on 8 November 2011. CMC’s submissions accept the pleaded delays from 7 November 2011 but do not otherwise address WICET’s point. CMC’s pleaded period of delay should therefore be reduced from nine to eight days.
- WICET submits that CMC’s claim in relation to this delay event must fail because:
- the No Go Zone maps are not directions under clauses 33, 34 or a variation under clause 40 of the Contract;
- any delay caused by the habitat trees was negligible because –
- the habitat trees only appeared on the site of the haul road, and
- the habitat trees could be cleared by 11 November 2011; and
- further, and in any event, CMC should have programmed 17 days to build the haul road.
I consider the submission in (a) above when I deal with CMC’s contractual basis for its claim. I do not accept WICET’s submissions made in (b) and (c).
- The map attached to the Limited Clearance Instruction was the first “No Go Zone” map issued to CMC. The No Go Zone maps detailed areas of the site which CMC could and could not access by way of:
- red hatching showing areas CMC was not allowed to access as they were to be assessed;
- yellow squares representing habitat/hollow trees which could not be removed until a Species Management Plan had been approved; and
- green dots representing grass trees, which were a protected species which were relocated.
This No Go Zone map permitted CMC to start clearing the access road from the GPN Borrow Pit to the Reclamation C Bunds to Access A only.
- I have already referred to Mr Grey’s evidence as to how the No Go Zone Directions affected the construction of the haul road. Mr Vance’s evidence as to the effect is as follows:
“Primarily, because we ended up building a bund on either side of the haul road, the narrowness of the haul road and the fact that we were leaving trees effectively in what should have been haul road was part of the reason that I believe we were instructed to build those bunds on that part of the haul road. Those bunds slowed construction of the haul road.”
- Mr Vance did however accept in cross-examination that the instruction to build the side berms on the haul road was not received until 23 November 2011. Mr Barry’s evidence was that the requirement to go around habitat trees whilst constructing the haul road added “at least a week, if not more” to the time it took to construct the haul road. Accepting that Mr Vance was mistaken as to the timing of the instruction to construct the side berms to the haul road the evidence of Mr Grey and Mr Barry, which I accept, supports a finding that the No Go Zone Directions given on 8 and 18 November 2011 did affect the time it took to construct the haul road and gain access through Access A to the Reclamation C Bunds.
- In respect of the 18 November 2011 No Go Zone Direction WICET submits that the issue preventing clearance of the habitat trees was approval of the Species Management Plan. That occurred on 10 November 2011. Accordingly, from that date there ought to have been no delay caused by the habitat trees. Further, that Mr Grey’s evidence to the effect that the habitat trees could not be cleared until the process document was agreed with WICET (which was issued on 18 November 2011) does not constitute a sufficient explanation as to why the habitat trees could not be cleared from 11 November 2011. I do not accept this submission. The Species Management Plan provided to CMC on 11 November 2011 was a detailed document, 50 pages in length plus attachments. I accept Mr Grey’s explanation that the implementation of this Plan required a process document to be agreed before habitat trees could be removed. I further note that the email from Mr Knowles to Mr Vance of 18 November 2011 enclosing No Go Zone map (Version 3) also enclosed the process for clearing habitat trees. This version of the No Go Zone map stated that CMC could start clearing habitat trees. This instruction was only given on 18 November 2011.
- As to WICET’s submission that CMC should have programmed 17 days to build the haul road, this is based on Mr Abbott’s opinion as to the appropriate time that should have been programmed for the construction of the haul road. Even though the Baseline Program only provided five days for the construction of the haul road, CMC’s own evidence supports the finding that the haul road would have taken something in the order of 10 days to construct. I do not however accept Mr Abbott’s opinion that it would have taken 17 days to construct the haul road in the absence of the No Go Zone Directions. Mr Abbott’s analysis is based on certain assumptions as to road width and composition having regard to his experience. His analysis was also based on further assumptions as to how the haul road would be constructed. These assumptions cannot be reconciled with how the haul road was in fact constructed. CMC submits that the Court should accept evidence from the witnesses who built the haul road, which contradict Mr Abbott’s opinion. I accept that the haul road Mr Abbott assumed that CMC constructed bears little relationship to the haul road that was actually constructed on‑Site.
- Both experts, Mr Abbott and Mr King, proceeded on the basis that the Baseline Program did not provide an activity for the construction of the haul road. Mr Vance’s evidence, which I accept, was to the effect that the entry “construction access tracks, quarry and reclamation area” were the words used in the program for the construction of haul roads for gaining access to the Site. Mr Vance and Mr Grey identified some of the differences between how the road was actually constructed and Mr Abbott’s assumptions:
- a road base layer was not placed by CMC on the formation;
- there was no compaction of the sub-base or base;
- no wearing course was placed.
Mr Grey described CMC’s method of haul road construction as being “a little bit more simplistic” than that proposed by Mr Abbott.
(iii) Directions – Cultural Heritage and Flora
- On 23 November 2011 CMC completed the haul road to the furthest access point to the Reclamation C Bunds, namely Access A, and began construction of the Team 2 bunds from the northwest corner near Hanson Road, being the bunds marked Kn, M and L on the marked-up bund drawing. As from 23 November 2011 CMC was able to commence the construction of the Team 2 bunds from Access A. CMC’s claim however is that by various directions, including the Cultural Heritage Direction, CMC did not gain access via Access B (the intermediate access) until 19 January 2012. This according to CMC disrupted and delayed the Team 1 Works by 57 calendar days from 24 November 2011 to 19 January 2012.
- The first direction was the issuing of a plan entitled “No Go Zones” (Version 4) on 5 December 2011. The red shading on this plan shows that approximately 30% of the Reclamation C Bunds were marked as No Go Zones.
- The Cultural Heritage Directions were given by WICET on 14 and 17 December 2011. According to Mr Barry, it took CMC two weeks to clear an access to Access B to the Reclamation C Bunds. This involved a clearing operation leaving the habitat trees in place and a subsequent operation to remove the habitat trees. The second access was achieved sometime in mid-December. CMC could not, however, commence the Team 1 construction of the Reclamation C Bunds because upon arrival at this access point it was informed that the area had not been investigated for cultural heritage artefacts. Mr Barry met with Mr Karandrews and Ms Johnson, who was WICET’s cultural heritage representative. This meeting occurred where Access B meets the tidal area of the Reclamation C Bunds. Mr Barry was informed by Ms Johnson that CMC could not commence the second front because of cultural heritage concerns. Mr Barry recalls informing Mr Karandrews and Ms Johnson that the direction would cause a “severe impediment to progress”. The ultimate result according to Mr Barry was that a No Go Zone area was in place for weeks. CMC had machinery in place at Access B when the Cultural Heritage Direction was given. This machinery was intended by CMC to go straight out to the Reclamation C Bunds to commence construction. The Cultural Heritage Direction prevented CMC from opening a second access to the Reclamation C Bunds at this point and affected CMC’s production at the Reclamation C Bunds.
- On 14 December 2011, CMC sent a notice of delay to Worley Parsons requesting urgent clarification of the locations of the Reclamation C Bunds affected by the Cultural Heritage Direction.
- After the oral Cultural Heritage Direction was given on 14 December 2011 Ms Johnson, after being prompted by Mr Barry, sent through emails on 17 December 2011 outlining concerns that had been raised in relation to a considerable number of artefacts that had been identified during previous work in the area subject to the construction of the Reclamation C Bunds.
- On 17 December 2011, Mr Barry received two emails from Ms Johnson which forwarded two emails from Mr Gall of Archaeo Group:
- the first email from Mr Gall attached a map identifying cultural artefacts located in the vicinity of Access B at the Reclamation C Bunds; and
- the second email attached additional maps from Mr Gall identifying cultural artefacts and Mr Gall’s email which stated (inter alia) that:
“In summary, there is a very high risk that activities currently occurring west Hanson rd as part of the WICET project will cause harm to cultural heritage. As per my previous advice email to yourselves and Terry Forsyth following my site inspection of Friday last week it is my professional opinion that work on these bund walls should cease until a systematic survey and mitigation/collection program can be undertaken by a team of PCCC representatives and an archaeologist. It is understood that this needs to occur as a matter of urgency and as such we have an archaeologist currently on standby to go to Gladstone to assist as required.”
- On 17 December 2011, Mr Vance sent a letter to Mr Walls which stated that the Cultural Heritage Direction had caused delay by limiting the number of work fronts CMC could work on and attached a map identifying the location of the affected area at Access B.
- On 9 January 2012 the suspension relating to the Cultural Heritage Directions ended and CMC was able to access the Reclamation C Bunds by way of the haul road through Access B.
- On 14 January 2012 WICET issued CMC with a plan entitled “No Go Zones” (Version 5). On 19 January 2012 WICET issued CMC with a further plan entitled “No Go Zones” (Version 5) which removed the access restrictions to CMC due to the further Flora Directions. Mr Barry accepted in cross-examination that this No Go Zone map had no impact on CMC’s works within the bunds. He accepted that by 14 January 2012 the No Go Zone Map (Version 5) had little impact on CMC’s work on the Reclamation C Bunds.
- CMC submits that the effect of these directions was to vary the Contract Works (or direct the timing of the Contract Works) and cause additional cost to CMC by restraining CMC from starting construction of the Team 1 Bunds. As to the No Go Zone Maps (Version 4 and Version 5) issued by WICET on 5 December 2011 and 14 January 2012, CMC submits that these resulted in No Go Zones over approximately 30% of the Reclamation C Bunds being the southern and western parts of the Reclamation C Bunds and most, if not all, of the Team 1 Bunds. CMC alleges that the Cultural Heritage Directions prevented it from utilising a second access to the bund marked K on the marked-up bund drawing and progress a second work front at the Reclamation C Bunds. The practical effect was to keep CMC to one access into the bunds (Access A) until about 9 January 2012.
- WICET submits that this claim is flawed in a number of respects. First, CMC has no contractual entitlement arising from the Cultural Heritage Directions or the issuing of the No Go Zone Maps (Version 4 and Version 5). I deal with this submission in considering CMC’s contractual basis for the Earthworks Claim. WICET also raises a defect in CMC’s pleaded claim as well as identifying concurrent delays.
- As to the pleading point, WICET submits that CMC’s claimed delay period incorrectly commences on 24 November 2011. The claim is for disruption and delaying the Team 1 Works by 57 calendar days from 24 November 2011 to 19 January 2012. This is in circumstances where the No Go Zone Map (Version 4) was not issued until 5 December 2011. This according to WICET produces a defect in CMC’s pleading. CMC submits, however, that this is not a defect as CMC’s claim for delay to the start of the Team 1 Works only correctly starts on the date that CMC accessed the bunds and started the Team 2 Works. The difficulty I have with CMC’s submission is that it is not readily apparent how the delay to the commencement of the Team 2 Bund Work impacted on the ability of Team 1 to commence at Access B. As WICET correctly submits, CMC has not pleaded that the No Go Zone maps issued on 8 and 18 November 2011 continued to impact the work until 5 December 2011. That case has not been pleaded. As to the end date of the delay, the Cultural Heritage Direction was lifted on 9 January 2012. No Go Zone Map (Version 4) issued on 5 December 2011 was, however, still in place. It was not until the issuing of No Go Zone Map (Version 5) on 14 January 2012 that, as acknowledged by Mr Barry in the evidence referred to above, Team 1 was in effect unrestricted in constructing the bunds. CMC was however able to access the Reclamation C Bunds through Access B from 9 January 2012. It follows that the period of delay for these directions is not 57 days between 24 November 2011 and 19 January 2012, but rather between 5 December 2011 and 9 January 2012. The delay period now claimed by CMC in terms of valuing the Earthworks Claim for the period between 24 November 2011 to 18 February 2012 is 30 days.
- In respect of the concurrent delays, WICET submits that the issue of fleet size and truck breakdowns in January 2012 was a significant issue for CMC during this period. This concurrent delay has, however, been taken into account by CMC in its valuation of the Earthworks Claim. Mr Vance took this issue into account and considered an appropriate allowance for any excessive maintenance issues during this period as being three days. Mr Roberts has also made an adjustment to his valuation for these breakdowns. I accept CMC’s submission that the evidence from Mr Vance, Mr Grey and Mr Barry was all to the effect that whilst there was an unusual number of breakdowns in January 2012 for a period of up to 10 days, it was not an ongoing problem and was not a significant cause of productivity losses on the project. The minutes of the CMC weekly project team meeting number 3, dated 13 January 2012 records the following:
“Program slipping on earthworks both Excavation and Bund placement productivities.
Major contributory factor is AE plant fleet size and number of breakdowns, consistently 4 trucks down. CMC opinion is 12 trucks minimum required to meet targets.”
- Mr Vance, however, did not accept that the blame for the loss of productivity up to 13 January 2012 could be laid at the feet of Alexanderson. Mr Vance identified the delay from truck breakdowns as being for a defined period in January 2012. To similar effect was Mr Barry’s evidence that truck breakdowns contributed “very little” to the length of time the Reclamation C Bunds took to construct.
(iv)Directions - Soft Spot and Tertiary Bund
- CMC’s pleaded case is that on 19 December 2011 WICET instructed CMC not to perform filling or traverse piezometer location SP-C-17 at the Reclamation C Bunds as the ground was too soft for filling to continue and the trucks to traverse. This is referred to as the First Soft Spot Direction. CMC alleges that the effect of the First Soft Spot Direction was to cease work beyond the location of SP-C-17 and prevent CMC from progressing past SP-C-17 on the perimeter bund, which had an impact on CMC’s productivity. The combined effect of the cultural heritage restriction and the First Soft Spot Direction was to limit CMC to one point of access into the bunds, and to a relatively small area in the north-west corner of the bunds for the first few months.
- On 3 February 2012, WICET instructed CMC to prioritise the completion of the tertiary bund cell (Team 1 Bunds) and construct a temporary hauling access from Access B to the “finger” bund. This is referred to as the Tertiary Bund Direction.
- On 7 February 2012, WICET instructed CMC not to perform filling or traverse piezometer location SP-C-11 at the Reclamation C Bunds as the ground was too soft for filling to continue. This is referred to as the Second Soft Spot Direction. The First Soft Spot Direction and Second Soft Spot Direction are each recorded contemporaneously by a CMC Daily Costing Sheet dated 8 February 2012, and in a meeting between representatives of CMC, Worley Parsons and Aurecon Hatch on the same date.
- On 26 April 2012, WICET issued CMC with Site Instruction number 0056, which instructed it to install temporary stabilisation bunds at piezometer location SP-C-17, and prevented it from undertaking bulk fill on the primary bund until completed. This is referred to as the Third Soft Spot Direction.
- CMC pleads that the effect of the Soft Spot Directions was to cause additional cost to it by:
- preventing CMC from performing bulk earthworks at or past piezometer location SP-C-17 until 18 April 2012; and
- delaying the Team 2 Works by 73 calendar days from 7 February 2012 to 18 April 2012 and on 1 May 2012.
- Whilst this is CMC’s pleaded case, CMC concedes both in its written closing submissions and in oral submissions that if Mr Vance’s evidence as to the establishment of multiple fronts for the construction of the Reclamation C Bunds by 18 February 2012 is accepted, then the Soft Spot Directions and the Tertiary Bund Direction did not cause a substantial delay to the construction of the Reclamation C Bunds. By reference to CMC.503.021.9523 Mr Vance identified temporary access tracks that had been constructed by CMC across the primary bund which permitted construction on four separate fronts. The progress thereafter, according to Mr Vance, was “spectacular”:
“So from what point would you say your progress started to improve spectacularly? What event? … The last week of February when – there was a hiccup on this bund, a – a little bit of pumping, we had to put another layer of material on it to use it effectively as a haul road, but once we were across here and we got a few of these fronts happening – put it this way, there was never a problem putting our trucks to work again.”
The date put on this event by Mr Vance was 18 February 2012. It was at or about this time that CMC in the construction of the Reclamation C Bunds achieved for the first time 4,000m3 per day.
- Although both WICET and CMC made extensive submissions in relation to the Soft Spot Directions and the Tertiary Bund Directions CMC has in effect abandoned this delay event. As stated by Senior Counsel for CMC in oral submissions:
“We say the soft spots did have an effect but their effect was reduced once multiple workfronts were opened up in the tertiary bunds. So we don’t say they had no continuing effect, but they did reduce – the practical constraints on the work were significantly reduced once multiple workfronts were opened up.”
- As WICET correctly submits, although CMC appears to accept that this claim has no merit, CMC’s submissions still seem to assert that the Soft Spot Directions had an impact on the work to be compensated for by some insignificant amount. However the impact has not been identified nor has the insignificant amount been quantified. In light of the way CMC seeks to ultimately value the Earthworks Claim, it is unnecessary for me to deal further with this alleged delay event. The delay period between 24 November 2011 to 18 February 2012 is now limited by CMC to 30 days for Team 1 in respect to the Cultural Heritage and Flora Directions. No part of the delay between 24 November 2011 and 18 February 2012 is referrable to any delay to the construction of the Reclamation C Bunds by Team 2 as a result of the Soft Spot Directions or the Tertiary Bund Directions.
- CMC has also abandoned its pleaded claim for delay due to rain and Easter events.
- There is, however, a separate and further event that delayed the construction of the Reclamation C Bunds. This was a Stop Work Direction given on 8 March 2012 which is referred to by the parties as the “truck bogging”.
(v)Direction – Truck Bogging (Stop Work Direction)
- On 8 March 2012, by email from Mr Walls to Mr Vance, CMC was instructed to stop all works. The email identified the reason for the instruction as:
“Yesterday afternoon WP Superintendent Scott Karandrews and AH representative Bindu Madhava had advised the trucks to only haul over the drainage layer side of the bunds.
At approximately 4pm this afternoon, it was observed that a 50T truck had become bogged on its right side in the area previously instructed.”
- The bogging occurred on the bund on the boundary between the tertiary and secondary bund, being the bund marked “N” on the marked-up bund drawing, within the Team 1 Bunds.
- It is common ground that the Stop Work Direction issued on 8 March 2012 constituted a suspension of the works pursuant to clause 34 of the General Conditions. Such a suspension may be given under clause 34.1 if the Principal’s Representative considers that the suspension of the whole or part of the work under the Contract is necessary for the protection or safety of any person or property. In those circumstances clause 34.4 provides that any cost incurred by the Contractor by reason of a suspension under clause 34.1 shall be borne by the Contractor. If the suspension is, however, due to an act or omission of the Principal, or the Principal’s Representative, employee, consultant or agent and the suspension causes the Contractor to incur more or less cost than otherwise would have been incurred but for the suspension the difference shall be valued under clause 40.5.
- CMC pleads that the effect of the Stop Work Direction was to cause it additional cost by delaying the Team 1 Works by four calendar days and 1.5 hours for the period 8 March 2012 to 12 March 2012. WICET pleads that the reason the instruction was given was because of the Principal Representative’s concern in respect of overall site safety. The bogging of the truck was the second serious safety incident that had happened in two days. It had occurred in direct contravention of the Principal Representative’s direction of 7 March 2012 that CMC was only to operate the haulage trucks on the drainage side of the bunds. WICET admits that CMC undertook no work over the claimed days. However, as the direction was properly characterised as a direction as to safety or as a result of an act or omission of CMC, it does not entitle CMC to a valuation of additional cost under clause 34.1. CMC submits that WICET has provided no evidence of a second serious safety incident as alleged and in CMC’s submission, the incident was not of a kind to reasonably justify a four day shutdown. Relevantly, much of the Reclamation C Bunds (and the entire site) was soft and muddy ground, with more than 20 separate bogging incidents occurring, and CMC had a practice in place to remove bogged vehicles. This was the only bogging which resulted in an order to stop work from WICET. CMC therefore submits that it was unnecessary to stop the entire Contract Works, or, in fact, any works except in the immediate vicinity of the bogged truck for half a day and it was unnecessary to stop the entire Contract Works for the duration of four days.
- I do not accept CMC’s submission as it relates to the suspension of work at the Reclamation C Bunds. In my view, the evidence supports WICET’s submission that it was not the cause of the suspension because a suspension was necessitated by either:
- the protection or safety of any person or property; or
- an act or omission of CMC (by itself or its subcontractor).
- The email of 8 March 2012 from Mr Walls to Mr Vance foreshadowed a full investigation of the incident:
“WP expect a full investigation into this incident, and works can only resume when the Contractor can fully demonstrate that the contractor undertake works in a safe manner ensuring the protection and safety of all personnel and property on site.”
Mr Wall in his email specifically referred to clause 34.1(b) and the suspension being imposed for “the protection or safety of any person or property”.
- There are photographs of the bogged truck which show that when it was bogged it was on a “major lean”. The driver of the truck had to jump out of the cabin. Mr Barry admitted CMC had been told not to drive on the drainage side of the bunds but drew a distinction between whether the discussion involved an “instruction” or was simply a “conversation” or “discussion”. I accept WICET’s submission that the distinction drawn by Mr Barry is artificial. The real issue is whether CMC (and its subcontractor) was doing something it was advised against. Mr Barry in an email to Mr Vance dated 13 March 2012 referred to the “instruction/advice” received on Wednesday, 7 March. This email concludes:
“At the end of the day the truck driver and dozer operator went against all instructions/procedures/methodologies we have in place and as a result has become bogged all be it quite a bad one.”
- An incident investigation report was prepared following a meeting between representatives of the relevant subcontractor, CMC, Worley Parsons and WICET on 10 March 2012. This report referred to a supervision instruction that was given “not to access back that far on the bund”. Mr Vance accepted that the bogging on 8 March 2012 was “the worse bogging (CMC) had on site”. Having looked at the relevant photographs, I do not accept CMC’s submission that the suspension was issued without apparent cause and was unreasonable. Even though Mr Walls was not called to explain the reasons for suspending all work on-Site, it must be accepted that the suspension, at least in relation to the Reclamation C Bunds, was based on safety considerations. Whether the suspension should have been Site-wide is dealt with below in respect to the Piling Claim (Variation 142). The fact that the suspension was based on safety considerations is highlighted by what occurred during the four days of the suspension. Mr Karandrews who advised Mr Walls to issue the suspension stated that over the four days CMC conducted reviews of the work method statements with their crews at their site office and considered how safety could be improved on-site. Mr Karandrews sat in on these meetings. The work method statements under consideration did not only relate to trucks but all aspects of the work.
- The site instruction to stop works was lifted on 12 March 2012 by way of an email from Mr Walls to Mr Vance.
CMC’s Contractual Basis for the Earthworks Claim
- CMC’s primary submission is that the combined effect of the series of directions discussed above constitutes a variation for the purposes of clause 40.1. The direction had the effect of preventing CMC from following the planned and contractual methodology and sequencing for the construction of the Reclamation C Bunds. The directions are therefore ones which “change the character … of any work”.
- Clause 40.1 uses the language that the Principal’s Representative “may direct” the Contractor to change the character of any work. Similarly, the language of clause 40.3 speaks of “the variation directed”. None of the directions could be described as express directions to change the character of the work. Clause 40.1 does not speak in terms of a direction or any combination of directions having a particular effect. Rather, it is the direction itself which requires the relevant variation. There is, in my view, nothing in the language of clause 40.1 when read with clause 40.3 which supports CMC’s submission that it is permissible to have regard to the combined effect of directions for the purposes of determining whether a variation has been directed.
- Even if one was permitted to have regard to the combined effect of the directions, they do not constitute a variation. This is because there has been no change in the “character of any work”. As to the meaning of the word “character” in clause 40.1(b), CMC refers to a number of dictionary definitions. Consistent in these dictionary definitions is the concept of the character of something or someone being “distinct”. CMC submits that these dictionary definitions are mainly directed to a human being or to an inanimate object or thing. Here the word is used in clause 40.1(b) in reference to work, an activity. By reference to clause 40.1(a) and (c) it may be accepted that the character of work may vary even if there is no increase, decrease, omission, change in levels, lines, positions or dimensions of any part of the work. This is because clause 40.1(b) must have an independent and additional operation to those types of variations contemplated in 40.1(a) and (c). CMC’s submission is that directions which prevent the Contractor following the contractual methodology and sequencing of work come within the description of directions that change the character of work under clause 40.1(b).
- CMC emphasises by reference to the definitions of “work under the Contract” and “Works” that under clause 40.1 a variation includes any increase, change to the character of or change to the positions of any part of the (broadly expressed) “works under the Contract” – including changes to the use of Constructional Plant and changes to work even if it is not to be handed over to the Principal.
- CMC submits and I accept that the planned methodology for the construction of the Reclamation C bunds can be discerned from the Contract itself. The methodology may be gleaned from the drawings for the bunds and from the approved Baseline Program. Both form part of the contractual documentation. The methodology included two separate access points with two teams working on multiple work-fronts. The methodology was to lay a first footprint comprised of a layer of drainage rock and the first layer of fill on top. The entire first footprint (once completed) would service a roadway throughout the bunds, giving access to all parts of the bunds, and allowing the entirety of each succeeding layer to be laid down at one time. CMC submits that the combined effect of the various directions given to it was that:
- it could not commence work on the bunds until 23 November 2011;
- for the first two-and-a-half months it had only one access into the bunds (until 9January 2012);
- for the first few months it was confined to working in one corner of the bunds, being the north/east corner;
- the limited area in the north/east corner available for work was further restricted by the First Soft Spot Direction on 19 December 2011, and by the cultural heritage restriction on 14 December 2011, which effectively limited work to one bund (being bund M);
- progress was further impeded by the Second Soft Spot Direction on 7 February 2012, which effectively closed off further access on bund M. The practical effect was that CMC was confined to entering through the intermediate access point, down the finger bund (bund O), giving it effectively one passageway into the bunds; and
- it was not until CMC completed the finger bund (bund O), and the temporary haul road across the tertiary bund (which was a continuation of the finger bund across) to bund P, that the Contractor was able to open up multiple work-fronts, such that the men and machines on-Site were fully engaged. That was approximately 18February 2012.
CMC therefore submits that the net effect of these directions was an inability to pursue the planned methodology. That changed the “character” of the work in constructing the bunds, within the meaning of clause 40.1(b) of the General Conditions.
- CMC refers to Yorkshire Water Authority v Sir Alfred McAlpine & Son (Northern) Limited. The Court held that the work method statement was a method of construction under the contract and that a direction to change the method of works was a variation. In that case the method statement (like the Baseline Program in the present case) was duly incorporated into the agreement as a contract document. It therefore became a specified method of construction by agreement between the parties. The Court held that where there was a specified sequence or method of construction which could not be followed because of impossibility, the contractor was entitled to a variation. The Court recognised, however, that this question turned solely on the proper construction of the particular contract. The variation clause in Yorkshire Water Authority was in different terms to clause 40.1:
“The Engineer shall order any variation to any part of the Works that may in his opinion be necessary for completion of the Works and shall have power to order any variation that for any other reason shall in his opinion be desirable for the satisfactory completion and functioning of the Works. Such variations may include additions omissions substitutions alterations changes in quality form character kind position dimension level or line and changes in the specified sequence method or timing of construction (if any).”
- The variation clause in Yorkshire Water Authority expressly contemplated a variation as being constituted by a change in the specified sequence method or timing of construction. The Court was not concerned with the issue of whether a change in program constituted a change in the “character of the Work”.
- CMC also relies on Alucraft Pty Ltd (in liq) v Grocon Ltd where, the Court stated that:
“I can see no reason, however, why in a particular case a programme might not become a contractual document with contractual force. Much would depend on the terms of the contract and the conduct of the parties.
The issue I must consider is the contractual effect of CL1.4 in the circumstances that a sub contract programme was agreed to by the parties. The contractual obligations upon Alucraft is spelt out in CL1.4. Once the parties agreed upon a sub contract programme the provisions of that clause imposing the obligation upon the sub contractor to “‘complete the subcontract works in accordance with the sub contract programme”’ could operate and the obligation imposed on the sub contractor by the express term crystallised. If the sub contract programme was later varied, so the obligation would vary.”
- I accept WICET’s submission that this case does not assist CMC. The part of the judgment quoted above was in relation to a contention by the subcontractor that a term should be implied into the contract. The term sought to be implied was that the builder would afford to the subcontractor sufficient access to the site to enable it to complete the works in accordance with the approved program. The Court upheld the implication of that term. WICET submits that the fact that the subcontractor had to rely on an implied term to advance a breach claim supports WICET’s position that a mere change in methodology and sequencing does not constitute a variation because it does not change the character of any work. The bunds as-built substantially reflected the bunds as planned.
- CMC’s alternative submission is that the Permit Direction, the Limited Clearance Direction, the No Go Zone Directions and the Cultural Heritage Directions were directions under clauses 33.1 or 34.1 or both – to vary the order and timing of the works or to suspend a part of the works. WICET accepts that a direction which has the effect of changing the sequencing of work may give rise to an entitlement under clause 33.1.
- The Start Works Direction is relied on by CMC for the purposes of identifying WICET’s instruction to CMC to proceed with all of the Contract Works. It was this instruction that led to CMC mobilising plant and equipment to the site from that date. The Start Works Direction itself does not constitute a direction under clause 33.1 because it is not a direction as to what order or at what time the various stages or parts of the work under the Contract shall be performed. Rather, it is a notice that instructs the Contractor to do the work specified in the Contract with no stipulation as to timing or order. The Start Works Direction however, informs and gives context to both the Permit Direction and the Limited Clearance Direction. WICET submits that neither the Permit Direction nor the Limited Clearance Direction constitute directions to CMC to perform various stages or parts of the works under the Contract in a particular order and at specified times under clause 33.1. All the directions did was to require CMC to plan around the constraint, not to perform the stages or parts of the work in a particular order or at specified times. I do not accept this submission. These directions required CMC to change the sequencing of the Contract Works by directing the manner in which the clearing works for the haul road should be performed. The sequencing of the work was altered by the Limited Clearance Direction in that it directed CMC to construct the haul road in accordance with the Clearing Permit and change the haul route by directing CMC to construct the haul road to Access A only (contrary to the Baseline Program). Similarly the two “No Go Zones” Directions given on 8 and 18 November 2011 altered the sequencing and the timing of the construction of the haul road. The No Go Zone maps identified by way of yellow squares habitat trees on the haul road to the Reclamation C Bunds which CMC was not permitted to remove until approval of the Species Management Plan. CMC could only remove habitat trees from the haul road after 18 November 2011 when No Go Zone Map 3 was issued. These directions therefore fall within clause 33.1.
- Similar considerations apply to the No Go Zone Map (Version 4) issued by Worley Parsons on 5 December 2011.
- As to the Cultural Heritage Directions given by WICET on 14 and 17 December 2011 whereby CMC was directed not to commence any work at Access B, these directions not only altered the sequencing of the work on the Reclamation C Bunds, but also constituted a suspension of part of the work under the Contract pursuant to clause 34.1. The relevant act or omission of the Principal for the purposes of this clause was the failure of WICET to have previously dealt with these cultural heritage issues. It does not matter whether the relevant directions fall under clause 33.1 or 34.1 because both clauses deal in the same way with the costs of such directions. In both instances if the direction causes the Contractor to incur more or less costs than otherwise would have been incurred but for (the direction or the suspension), the difference is valued under clause 40.5. Clause 40.3, which deals with pricing a variation, relevantly provides that the variation directed under clause 40.1 shall be valued under clause 40.5. At first blush, it appears that whether the directions constitute a variation under clause 40.1 or directions or a suspension under clauses 33.1 and/or 34.1 makes no difference because all roads lead to a valuation under clause 40.5. WICET however, submits that directions under clause 33.1 or clause 34.1 are to be valued on the basis of costs. This is because both clauses 33.1 and 34.1 (and 34.4) refer to the directions or suspension causing the Contractor to incur more or less costs than otherwise would have been incurred had the Contractor not been given the direction or suspension. It is the “difference” which is valued pursuant to clause 40.5. According to WICET, CMC must establish whether the direction or suspension caused CMC to incur more or less costs than would otherwise have been incurred. CMC, however, submits that whether it has incurred more or less costs is a threshold question to allow it a valuation pursuant to clause 40.5, not the measure of CMC’s entitlement. WICET’s submission apparently extends to “actual costs” in that it pleads that CMC did not pay any additional costs to its subcontractor in relation to the alleged delay in respect of the Permit Direction, the Limited Clearance Direction and the No Go Zone Directions and is therefore not entitled to any amount.
- CMC submits that all that needs to be established under clauses 33.1 and 34 is that, as a threshold matter, it incurred some extra costs. The word “costs” should be interpreted liberally since it stands in contrast to the term “Direct Costs” which is a defined term.
- CMC’s position is that if it was WICET’s intention that the valuation mechanism for claims under clauses 33.1 and 34.4 was to be based on the “costs that were reasonably and necessarily incurred by the Contractor” (that is, a costs incurred basis), WICET would have amended clauses 33.1 and 34.4 to include and rely upon the concept of “Direct Costs”, as is the case for clause 36. Rather, clause 33.1 and 34.4 provide for the valuation mechanism set out in clause 40.5, which refers to the use of rates.
- Similarly, the concept of “Direct Costs” is not introduced into clause 40.5, which is the valuation clause under the Contract. CMC submits that this supports the proposition that if it was the parties’ intention that the valuation mechanism for claims under clause 40.1 was to be limited to the “costs that were reasonably and necessarily incurred by the Contractor” (that is a costs incurred basis), the parties would have amended clause 40.5 also to include and rely upon the concept of “Direct Costs” as is the case for clause 36.
- Once that threshold matter has been established, the valuation proceeds (similar to a variation) in accordance with the mechanism set out in clause 40.5. That valuation does not involve a consideration of actual costs (for that would involve no valuation at all – simply an inquiry into invoices) – but rather proceeds on the basis of contractual rates (clause 40.5(a) and (b)) or reasonable rates (clause 40.5(c)). There is good commercial sense to this because it limits the significant uncertainty which would arise if liability was merely a function of actual cost.
- According to CMC, the rates at Schedule C-4 are rates intended to capture all costs associated with particular types of work, labour or plant in a fixed, agreed amount.
- There is no dispute that CMC paid additional costs to its subcontractor in relation to the Cultural Heritage Directions. Nor can it be really disputed that CMC has incurred additional costs in respect of the other directions.
- WICET submits that the incurring of additional costs is not a threshold question, but rather the measure of entitlement. What is called for is a “costs differential assessment”. In support of this submission, WICET refers to various clauses of the Contract which contemplate two types of valuations under clause 40.5. The valuations under clauses 3.3, 11, 14.1 and 40.1 are valuations of work or variations to the work (that is a price-based valuation). This is to be contrasted to valuations on the basis of costs or the difference in costs (a costs-based valuation) as contemplated by clauses 8.1, 14.3, 27.5, 28.2, 28.3, 33.3, 34.1 and 36. From this analysis WICET submits that it is clear that the incurrence of cost is not a threshold issue to valuation, but rather identifies that which is to be valued.
- WICET refers to Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd. This case is relied on as highlighting the distinction between cost-based claims and price-based claims. The case was concerned with a claim by a builder for its additional costs incurred due to a change in sequence. The builder sought these additional costs as a variation. Clause 9 of the relevant contract provided that all variations were to be valued and the sum involved to be added to or deducted from the contract sum. The valuation of a variation was in accordance with three rules. First, the variation was priced by reference to a bill of quantities, or if no such bill of quantities had been provided appropriate current rates. Second, where there were no appropriate current rates, a fair valuation of the variation according to measurements adopted by the architect was to be made. Finally, if in the opinion of the architect the valuation of the variation could not be ascertained by either of the above methods, the builder upon notification to that effect could proceed with the works and present in such form as the architect may direct a correct record of the cost of the variation, together with evidence supporting the same. Any certificate issued to the builder by the architect pursuant to the clause was to include a reasonable allowance for overhead and profit. Stephen J stated:
“In my view cl. 9 does not concern itself with the case of any increased cost to the builder of doing the contract work or supplying the contract materials and which is said to flow from delays or difficulties encountered in the course of construction; such a situation is only dealt with, in certain circumstances, in cl. 1(e) of the conditions, to which I will later return.
The theme running through the whole of cl. 9 is that of valuation; its first paragraph calls for the valuation of variations by the architect, followed by alteration to the contract sum. Its second paragraph then provides for the machinery applicable to that task of valuation; … The third rule applies where the architect concludes that the two preceding rules cannot be applied, in which case the works are to be proceeded with and the builder is to present to the architect ‘a correct record of the cost of the variations’.”
- His Honour concluded that the third rule in clause 9 was not applicable to a claim for increased cost due to delays and change of sequence. Such a claim could have been covered by clause 1(e) which provided:
“If compliance with Architect’s Instructions involves the Builder in loss or expense beyond that provided for in or reasonably contemplated by this contract, then unless such instructions were issued by reason of some breach of this contract by the Builder, the amount of such loss or expense shall be ascertained by the Architect and shall be added to the Contract Sum.”
- Stephen J drew a distinction between clause 9 and clause 1(e) as follows:
“This sub-clause is expressly aimed at compensating the builder for loss due to matters unforeseen at the time of the making of the contract, and when the draftsman directs himself to this task he does not refer to valuation or to measurements and is not concerned with the issue of certificates or with allowance for overhead and profit. Instead the architect is given the task of ascertaining the amount of loss or expense in which the builder has been involved beyond that provided for in or contemplated by the contract; the amount so ascertained is to be added to the contract sum. The present claim might readily enough fall within cl. 1 (e) had there been an architect's instruction, as defined in cl. 1 (a). The contrast between its terms and those of cl. 9 emphasizes the inapplicability of cl. 9 in the present case.”
- From the above passages WICET submits that the case provides an example of where the High Court has identified the conceptual difference between the valuation of cost-based claims and price-based claims under construction contracts. Whilst that may be accepted, clause 1(e) considered by Stephen J in Tuta is differently worded to clauses 33.1 and 34.4. Both clauses expressly refer to a valuation under clause 40.5 of any difference in cost. That is, the very distinction drawn by Stephen J cannot be drawn in the present case because “the theme” running through clauses 33.1 and 34.4 (similar to clause 9 considered by Stephen J in Tuta) is that of valuation. The reference to valuation means that CMC is not entitled to claim its actual or incurred cost caused by a direction under 33.1 or a suspension under 34.1. What CMC is entitled to is a valuation of additional cost. If WICET’s construction was to be accepted it would mean in effect that the actual cost difference incurred by the Contractor because of the relevant direction or suspension would be fully calculated and then valued in accordance with clause 40.5. The exercise contemplated by clause 40.5 is one of valuation by reference to either prescribed specific rates or prices or a schedule of rates or by reference to reasonable rates or prices. What clause 40.5 does not contemplate is the auditing of actual costs by reference to this valuation methodology.
- What is to be valued under clause 40.5 is the additional cost incurred by CMC as a result of complying with WICET’s direction and/or suspension. CMC’s case as articulated in oral submissions is that the additional costs incurred by CMC that are to be valued is the provision of workers and machines for the two delay periods. The first delay period is from approximately 14 October 2011 to 23 November 2011. The second delay period (in respect of the Cultural Heritage Directions) is from 5 December 2011 to 9 January 2012. It is the provision of workers and machines during these delay periods that CMC seeks to have valued pursuant to clause 40.5.
- The parties also differ as to the proper construction and application of clause 40.5. I have quoted this clause and the definition of “Schedule of Rates” in  and in  above. The Contract as I have already observed, contemplates a valuation being undertaken under clause 40.5 in a number of scenarios quite apart from clauses 33.1, 34.4 and 40.3.
- CMC submits that on a plain meaning of the terms in clause 40.5 the valuation mechanism under the Contract is mechanical and not discretionary. It does not envisage regard to subsidiary factors in producing a valuation such as actual costs or Direct Costs. Clause 40.5(a) is the first valuation criteria in the cascading regime. It provides that where the Contract prescribes specific rates or prices for determining the value of the work, then those rates or prices shall be used. Pursuant to clause 40.5(a) a valuation must principally be based on prescribed contract rates or prices. CMC’s position is that whether a direction is made pursuant to clause 40.1, 33.1 or 34.1, clause 40.5(a) refers to the specific Contract rates contained in Schedule C-4.
- According to WICET, if CMC’s submission that clause 40.5(a) refers to the specific contract rates contained in Schedule C-4 was to be accepted, the price vs. cost distinction “carefully and deliberately drawn in the Contract” would be of no consequence. Further, CMC’s submission does not recognise that Schedule C-4:
- is concerned with price-based valuations of variations;
- confers upon the Principal’s Representative the sole discretion to order a variation on a Dayworks basis.
- According to WICET this is important because variations on that basis provide no disincentive to the Contractor to perform inefficiently as they are compensated on the basis of time not production, with the consequence that it is in the Principal’s interest to monitor such works more carefully. This is reflected in the Contract by the additional administrative requirements which apply to Daywork variations (that is requiring verification and signature from the Principal’s Representative).
- Clause 40.5(a) expressly identifies which rates or prices shall be used. They are specific rates or prices which are “prescribed” under the Contract to be applied in determining the value. If the value to be determined is that of a variation, then the C-4 rates for pricing variations would fall within clause 40.5(a). This is because the Contract by Schedule C‑4 prescribes specific rates or prices to be applied in determining the value of a variation. If the Principal’s Representative under clause 41 directs that a variation should be carried out as Daywork, Schedule C-4.2 would fall within clause 40.5(a) as prescribed specific rates or prices under the Contract to be applied in determining the value of a variation that is directed to be undertaken as Dayworks. Schedule C-4 does not, however, prescribe specific rates or prices to be applied in valuing compliance by the Contractor with a direction under clauses 33.1 or 34.1. Such directions are not variations, let alone variations directed to be carried out as Dayworks. It follows that I accept WICET’s submission that a valuation under clause 40.5(a) in respect of a direction given under clause 33.1 or clause 34.1 does not permit such a valuation to be conducted by reference to Schedule C-4. The rates and prices in Schedule C-4 are not contractually prescribed specific rates and prices for valuing costs under clauses 33.1 or 34.4.
- WICET raised another construction issue in respect of Schedule C-4 in oral submissions. WICET submits that Schedule C-4 does not fall within clause 40.5(a) because the schedule does not prescribe the rates or prices to be applied. Schedule C-4 is headed “Rates for pricing variations”. The second paragraph reads:
“Variations shall be performed on a Units Rate or a Daywork Rates basis at the sole discretion of the Principal’s Representative.”
- According to WICET, this discretion permits a choice of rates. As such the rates and prices in Schedule C-4 are not prescribed rates to be applied in determining the value. Reference is made to clause 62 of the General Conditions which states in clause 62(a) that the Principal’s Representative may exercise their discretions and rights under the Contract in their absolute discretions. In my view, the mere fact that the Principal’s Representative has an absolute discretion whether variations shall be performed on a Units Rate or Daywork Rates does not mean that these rates are not prescribed. They are prescribed in the sense that if the variations are directed to be performed on a Dayworks Rates, then the rates in Schedule C-4.2 are to be applied. The discretion to be exercised, whilst absolute, is limited to a choice of prescribed rates. Under clause 40.3 the Principal’s Representative and the Contractor remain free, of course, to agree upon the price for a variation. Unless they do agree upon a price, the variation directed or approved by the Principal’s Representative under clause 40.1 is to be valued under clause 40.5. In the present case, the discretion was never exercised by the Principal’s Representative to direct any variations to be performed on a Daywork Rates basis.
- As the Contract does not prescribe rates or prices for the valuation of the cost differential arising from a direction given under section 33.1 or 34.1, the next cascading clause that requires consideration is clause 40.5(b). This clause requires the rates or prices in a Schedule of Rates to be used to the extent that is reasonable to use them. By reference to the definition of “Schedule of Rates” CMC submits that Schedule C-4 falls within this definition. CMC submits that the criteria for clause 40.5(b) includes the application of the schedules of rates found in both Schedule C-3 and Schedule C-4 to the Contract to the extent that it would be reasonable to use them.
- As a preliminary point it may be accepted that clause 40.5(b), when it speaks of using a Schedule of Rates “to the extent that it is reasonable to use them”, is not inviting an inquiry as to whether the rates and prices in the Schedule of Rates are high or low. The inquiry, rather, is whether it is reasonable to use the rates and prices in the Schedule of Rates. That is, it is the reasonableness of using the rates and prices, and not the reasonableness of the prices or rates, which has to be considered.
- WICET submits that Schedule C-4 is not a “Schedule of Rates” as defined for the following reasons:
- the “Schedule of Rates” in the Contract is Schedule C-3;
- for Schedule C-4 to be a “Schedule of Rates” it must be a schedule “in respect of any section or item of work to be carried out”. Schedule C-4 arguably does not fit this definition because it provides rates without reference to the work to be carried out (quantities). Its rates are on a unit or hourly basis;
- a “Schedule of Rates” is a well-known term within the construction industry. It has been described as a schedule which “stipulate[s] quantities of work to be performed, and the rates at which such work is to be performed so that, in the event that more or less work is actually involved, the total price will vary”;
- Schedule C-4 does not contain rates with reference to quantities of works;
- CMC’s construction of clause 40.5(b) “makes a mockery” of the cascading regime in clause 40.5 for the valuation of variations. Schedule C-4 is a schedule which, by its title, is specifically for “pricing variations”. That is why, pursuant to clause 40.5(a), Schedule C-4 rates can be applied for variation work (if there is a specific rate or price in Schedule C-4 for the varied work). If it is determined that Schedule C-4 does not contain a specific rate for the variation, it would seem odd to nevertheless apply a rate from that schedule. The better interpretation is that, if there is no specific price for a variation in Schedule C-4, the contract rate in Schedule C-3 (which obviously still includes profit) might be reasonable to use;
- by its interpretation, CMC is trying to enliven the application of Schedule C-4 rates “through the back door”. It should not be permitted to do so.
- I accept WICET’s submission that Schedule C-4 is not a “Schedule of Rates” as defined. There are two primary reasons for this conclusion. First, an examination of Schedule C‑4 (in particular as compared to Schedule C-3) is not a schedule in respect of any section or item of work to be carried out. Schedule C-4 does not show “the rate or respective rates of payment for the execution of that work”. Schedule C-3, by comparison, gives a description of the work to be carried out under the Contract, the quantity, the units and the relevant rate, so as to arrive at an amount. Schedule C-3 therefore reflects the definition of “Contract Sum” which provides in (b):
“where the Principal accepted rates, the sum ascertained by calculating the products of the rates and the corresponding quantities in the Bill of Quantities or Schedule of Rates.”
The definition of “Contract Sum” includes provisional sums but excludes any additions or deductions which may be required to be made under Contract. WICET therefore submits and I accept that the Contract establishes that the schedule of rates is what is to be used to price the work to be carried out under the Contract. WICET’s submission is also consistent with clause 3.3 which is headed “Adjustment for Actual Quantities – Schedule of Rates”. Clause 3.3 relevantly states:
“Where otherwise than by reason of a direction of the Principal’s Representative to vary the work under the Contract, the actual quantity of an item required to perform the Contract is greater or less than the quantity shown in the Schedule of Rates; and where the Principal accepted a rate for the item the rates shall apply to the greater or lesser quantities provided that where limits of accuracy are stated in the Annexure the rate shall apply to the greater or lesser quantities within the limits and quantities outside the limits shall be valued under clause 40.5 as if they were varied work directed by the Principal’s Representative as a variation.”
The term “Schedule of Rates” as used in clause 3.3 can only be read as a reference to Schedule C-3.
- The second reason for accepting WICET’s submissions is that the valuation regime established under clause 40.5 is a cascading regime. Schedule C-4 contains prescribed specific rates or prices to be applied in determining value in particular circumstances. In order to ascertain an amount the Principal’s Representative only applies clause 40.5(b) if clause 40.5(a) does not apply. If CMC’s submission was to be accepted, it would mean that the prescribed specific rates or prices which could not be applied in determining the value of, for example, the cost differential arising from a direction given under clause 33.1 or 34.1, may nevertheless be used under clause 40.5(b) to ascertain an amount. This would in effect defeat the cascading regime established by clause 40.5.
- Where neither clauses 40.5(a) nor 40.5(b) apply clause 40.5(c) states that reasonable rates or prices shall be used in any valuation made by the Principal’s Representative. In Danidale Pty Ltd v Abigroup Contractors Pty Ltd Habersberger J stated that a reasonable rate is assessed by having regard to what a party would have had to pay under a normal commercial arrangement and to the cost of the work actually performed. CMC submits that clause 40.5(c) properly construed requires, as far as possible, adaption of rates and prices otherwise included in the Contract. CMC refers to Sergeant and Wieliczko, “Construction Contract Variations” where the authors argue that the rates and prices contained in the Contract are crucial when valuing any change. They further suggest that, where possible, contract rates should be extrapolated to value different items of work:
“They are used for valuing variations when the extras are simple ‘more of the same’ but are also normally relevant when valuing dissimilar work. It may be possible to derive rates from certain items of work in the contract sum breakdown when valuing a quite different item of work.”
- CMC also refers to the following passage in Hudson’s Building and Engineering Contracts to support the argument that where a “reasonable rate” must be derived, it can be derived from the contractual rate. The authors also emphasise the sanctity of rates in that parties should not be permitted to argue that certain rates are too profitable or unprofitable as a reason for not using them to value claims:
“… variation valuation clauses require an initial adherence to the quoted rates or prices in any bills or schedules forming part of the contract, or the use of an ‘analogous’ price derived from those prices … if no sufficiently similar priced items units are available for ‘analogous’ prices to be derived from them, most valuation clauses then provide for ‘reasonable’ or ‘suitable’ or ‘applicable’ or ‘fair’ rates and prices or valuations to be used, but rarely if ever expressly do more to define the criteria to be applied in that situation. In accordance with what has been called the ‘shopping list principle’, such ‘reasonable’ or ‘fair’ rates or prices or valuations should have regard to the Contractor’s general level of pricing, disregarding any element of profitability or unprofitability, just as in the case of the Contractor’s ‘prices’ or any ‘analogous’ prices derived from them … there seems no logical reason for a possibly very different price level to apply simply because no sufficiently similar item is to be found.”
- By reference to Hawker Noyes Pty Ltd v New South Wales Egg Corporation and WMC Resources Ltd v Leighton Contractors Pty Ltd CMC submits that clause 40.5 does not permit an unfettered exercise of discretion in ascertaining a valuation. Rather, there is a fixed, standard and objective criteria on which valuation should be made. The words of the clause and the intention of the parties indicate the valuation under clause 40.5(c) is to be based, as far as possible, on contractual rates or prices, adapted if necessary to meet particular circumstances.
- Both cases and both texts to which CMC refers concern the valuation of variations. I have found, however, that the relevant directions do not constitute a variation but fall within clauses 33 and 34. It is not readily apparent why a Principal’s Representative in seeking to apply reasonable rates or prices would necessarily have reference to prescribed specific rates or prices applicable to variations, including those directed to be performed on a Daywork Rates basis. Further, as I have found that Schedule C-4 does not constitute a “Schedule of Rates” as defined, if CMC’s submission is accepted it would permit the application of the Schedule C-4 rates and prices in circumstances where such application would not be permitted by either clause 40.5(a) or 40.5(b). CMC’s construction would in effect neutralise the cascading regime established under clause 40.5. The situation is different if what is being valued is a variation. In such a case it may be permissible to have regard to Schedule C-4 for the purposes of ascertaining a reasonable rate under clause 40.5(c).
- WICET further submits that the rates for plant referred to in Schedule C-4.3 are inclusive of profit. CMC submits that Schedule C-4.2 simply deems these rates to be inclusive of profit. This does not therefore mean that these rates actually include profit. The deeming provision simply operates, according to CMC, as a “cap” to prevent any additional cost to be added to any variation claims. The purpose of the clause is to ensure that the agreed rates (and no more or no less) would be used to value the claim for the item. The relevant rates in Schedule C-4.3 however have been expressly agreed to include profit. It is not a deeming provision. Clause 4.2.2 of Schedule C-4.2 simply states that the rates for constructional plant specified in Schedule C-4.3 are inclusive of profit. This is to be contrasted with clause 4.2.1, which states that the labour rates specified in Schedule C‑4.2 “shall be deemed” to include profit.
- As will become clear below when I consider the valuation exercise carried out by Mr Roberts and Mr Tsipis, there is in any event, very little difference between a valuation carried out by applying the rates in Schedule C-4 as opposed to the application of reasonable rates by reference to the rates charged by CMC’s relevant subcontractor for constructing the Reclamation C Bunds, namely AE Group. I do not however accept that the use of reasonable rates under clause 40.5(c) for a valuation concerning a direction given under clauses 33.1 or 34.1 should exclude profit.
- Clause 40.5(f) states that if the valuation relates to extra costs incurred by the contractor for delay or disruption, the valuation shall include a reasonable amount for overheads but shall not include profit or loss of profit. WICET submits that as the proper mechanism for the valuation of the costs is pursuant to clauses 33.1 or 34.4, the proper approach under the Contract for a valuation of costs under clause 40.5 is to conduct the valuation pursuant to clause 40.5(f) or clause 40.5(c) having regard to clause 40.5(f). WICET submits that because CMC’s Earthworks Claim is for delay, the valuation must observe the requirements of clause 40.5(f) and include a reasonable amount for overheads, but exclude profit. CMC’s entitlement, therefore, is limited to any extra cost in overheads incurred as a result of complying with the directions. I do not accept this submission. Clause 40.5(f) refers to extra costs incurred by the Contractor for delay or disruption. Such costs are contemplated by clause 36 which deals with delay or disruption costs. Clause 36 deals with the situation where the Contractor has been granted an extension of time under clause 35.5, that is an extension of time for Practical Completion. The Earthworks Claim is not one for delay or disruption costs in the context of an extension of time for any delay caused by an event listed in clause 35.5(b)(i). CMC’s claim as pleaded is that the combined effect of the directions amounted to a variation or, alternatively, were directions pursuant to clause 33.1 and 34. For reasons stated above, I do not accept that the directions constitute a variation for the purposes of clause 40.1. CMC’s Earthworks Claim may, however, be described as a claim under clause 33.1 and 34.4, measured by reference to the delay caused to the progress of the Reclamation C Bunds. As CMC submits, there is a difference between a delay measurement and a delay claim. Delay is the measurement of late completion of works. According to CMC, the nature of the directions was to result in delayed progress and so delay is the appropriate measure to determine CMC’s entitlement pursuant to clause 40.5.
- Clause 40.5(f) is, in my view, only referable to a delay or disruption claim pursuant to clause 36. Where such a claim is made clause 40.5(f) requires the valuation to include a reasonable amount for overheads but not include profit or loss of profit. Clause 40.5(f) does not state how one is to value the quantum of a delay or disruption claim. Rather, it identifies specific items that may or may not be included in a valuation undertaken, for example, pursuant to clauses 40.5(a), (b) or (c). Clause 40.5(f) does not therefore apply to the valuations contemplated by clauses 33.1 and 34.4.
Measurement of the Delay
The Pleaded Case
- CMC by paragraph 137C of its eighth further amended statement of claim pleads that the effect of the Start Works Direction, Permit Direction and Limited Clearance Direction was to cause additional costs to CMC by restraining it from starting construction of the haul routes required for Team 1 and Team 2 to perform the bulk earthworks by 22 calendar days from 14 October 2011 to 4 November 2011. From my findings above, I accept that the Permit Direction and the Limited Clearance Direction resulted in a delay of 22 days.
- Paragraph 137I pleads that the No Go Zone Directions caused additional cost to CMC by delaying the construction of the haul route from the GPN Borrow Pit to the Reclamation C Bunds by 12 calendar days between 7 November 2011 and 23 November 2011. I have found that the delay period was 8 rather than 12 days.
- Paragraph 160AD pleads that the effect of the Cultural Heritage Directions and Further Flora Directions was to cause additional cost to CMC by:
- suspending the construction of the haul road from the GPN Borrow Pit to the Reclamation C Bunds at Access B until 19 January 2012; and
- disrupting and delaying the Team 1 Works by 57 calendar days from 24November 2011 to 19 January 2012.
As I have already observed, CMC now only claims 30 days in relation to this period in accordance with Exhibit 426.
- CMC submits that the effect of the directions and their measurement of impact on the time taken to complete the Reclamation C Bunds involved disruption which produced a prolongation of the job. CMC has sought to measure the additional days that CMC’s plant and equipment were on the Site to construct the Reclamation C Bunds. CMC submits that it is open to the Court to utilise any measure provided to it in order to make the factual determination of how many days the Reclamation C Bunds were delayed.
- WICET refers to the Society of Construction Law Protocol which defines “prolongation” as “the extended duration of the works during which costs are incurred as a result of a delay.” According to WICET, prolongation is quantified by identifying the cost incurred during the extended duration of the works. Mr Vance estimated that CMC’s work in completing the bunds was prolonged by approximately three months:
“The combination of late access and the impediments to access or the areas we couldn't work in in November, December, January and February didn’t prevent some work happening, but it did not allow us to achieve the productions we needed – or the work fronts we needed to carry out the project. Now, prior to doing this analysis I would have said around three months in terms of how much we were delayed. That’s more of a feeling and the fact that in those three months we didn’t achieve an awful lot of work. And having done this analysis? … Having done this analysis – what did I come up with – around 78 days or something, which is a little bit less than three months.”
- Mr Barry’s evidence was that the various restrictions added to the length of time it took to complete the Reclamation C Bunds by two months.
- Both CMC and WICET have made extensive submissions as to the measurement of the delay. These submissions canvas the expert evidence of Mr King and Mr Abbott and an exercise carried out by Mr Vance which the parties refer to as the “Vance Measurement”. Many of these submissions deal with delay events that are no longer pressed by CMC. The delays to the commencement of the works (22 days) and to the construction of the haul road (8 days) and delays caused by the Cultural Heritage and Further Flora Directions (30 days) may be generally viewed as delays to CMC having access to the Reclamation C Bunds. These delays in access led CMC’s plant and equipment being on the Site to construct the Reclamation C Bunds longer than was anticipated. WICET does not dispute as a general proposition that for some periods of time particular parts of the work could not progress. Delays to access would generally fall within this category. WICET submits however, that it does not follow from that basic proposition that CMC incurred additional costs. WICET submits that the Earthworks Claim must fail for the following reasons:
- Mr King did not undertake any productivity analysis and should have done so;
- Mr King’s analysis ignores what would have occurred but for the directions;
- The Vance Measurement which purports to demonstrate lost productivity and prolongation was objected to and does not constitute part of CMC’s pleaded case.
- For reasons which follow, I am satisfied that CMC has established, through Mr King and Mr Vance (together with the evidence of Mr Barry referred to above) that it has incurred additional costs as a result of the directions by being required to have plant and equipment on-Site for an additional period of 60 days.
- As to (a), CMC accepts that Mr King did not perform a disruption measurement of CMC’s resources at the Reclamation C Bunds. CMC submits, however, that this could not possibly be fatal to its claim or “make it impossible to quantify” as alleged by WICET. WICET submits that Mr King does not assess prolongation because the delay he identified is delay during the course of the work (not delay to the end of the job). I accept, however, as CMC submits, that Mr King assessed delay events to the Reclamation C Bunds which impacted the Reclamation C Bunds as a whole. The methodology adopted by Mr King is outlined in his Earthworks Report:
“In reaching my opinions as to the extent of delay to the progress of the earthworks to the Reclamation C bunds, I have:
- considered the planned rate of progress of the earthworks to the Reclamation C bunds;
- considered the actual rate of progress of the earthworks to the Reclamation C bunds by reference to the Lot Register data;
- identified that the completion of Layer 1 to the bunds as performed by both Team 1 and 2 was delayed by over 6 months;
- identified that the execution of the remaining work to the bunds after completion of Layer 1 was performed in a shorter duration than planned by both Team 1 and Team 2;
- identified (by reference to the assumptions that I have been given and the contemporaneous records) what delay events impacted on the completion of Layer 1 of the Reclamation C earthworks; and
- reached an opinion as to the duration of the delaying events which impacted Layer 1 of the Reclamation C earthworks.”
- This methodology does not, in my view, lead to WICET’s conclusion that Mr King’s report does not permit an examination of additional costs. Conceptually I have no difficulty in finding that the delay to commencement of 22 days and the delay in constructing the haul road (8 days) prolonged the completion of the Reclamation C Bunds by 30 days. Similarly in relation to the Cultural Heritage Direction and Further Flora Directions, this delayed the commencement of Team 1 Works at Access B. CMC had machinery in place at Access B when the first Cultural Heritage Direction was given. This machinery was intended by CMC to go straight out to the Reclamation C Bunds to commence construction. The Cultural Heritage Directions prevented CMC from opening a second access to the Reclamation C Bunds at this point and affected CMC’s production at the Reclamation C Bunds. WICET, however, submits that Mr King ought to have considered the overall progress of the works and whether resources employed on delayed activities were employed to other productive work. This means in the context of the Cultural Heritage Directions that Mr King should have analysed whether the plant and machinery delayed at Access B could have been utilised to increase production at Access A. Mr King did not accept that the reallocation of resources to another bund would mean that the work would finish any earlier.
- In the course of cross-examination Mr King stated that he had departed from a “measured mile” loss of productivity analysis conducted in respect of a previous pleading because the records did not support it. Because of the level of detail of the information he was unable to draw an accurate measured mile analysis that was sustainable.
- I accept CMC’s submission that in determining the number of days that the Reclamation C Bunds were delivered late, it is acceptable to perform an analysis of the factual matters in the claim, including dates from which CMC experienced access issues and (as Mr King has done) measure these events against actual progress.
- As to (b), WICET criticises Mr King for failing to undertake the same task as Mr Abbott, where he set up a potential framework for “additional cost” by correcting errors in CMC’s Baseline Program to identify how long the Reclamation C Bund works would have taken in any event. According to Mr Abbott’s analysis, even without the alleged directions, the works would have continued past the alleged delay events. Mr Abbott’s Adjusted Baseline Program shows a completion date for the Reclamation C Bunds of 21 July 2012. This represents a completion date that is 124 days later than CMC’s Baseline Program. Mr King is criticised by WICET for not considering the veracity of CMC’s Baseline Program when completing his assessment.
- WICET summarises Mr Abbot’s revisions to the Baseline Program as follows:
- Mr Abbott identified that the Baseline Program did not comply with the technical specifications in the Contract: the construction constraints for the placement of bund material in layers were not properly reflected, which meant that the Baseline Program contained logic and sequencing flaws;
- Mr Abbott changed the duration of activities based on the stated productivity of 2,000m3 per day and the proper quantity of material to be placed at the bund;
- Mr Abbott made further changes to the duration of activities based on CMC’s realistic (revised) production rate; and
- Mr Abbott made changes to reflect CMC’s planned working week and calendar.
- For the reasons set out in paragraphs  –  of CMC’s closing submissions I do not accept and cannot rely on Mr Abbott’s analysis. The flaws in Mr Abbott’s analysis may be summarised as follows:
- a significant number of factual assumptions made by Mr Abbott about the Contract Works are inconsistent with what actually occurred on-Site as demonstrated by the evidence in particular of Mr Vance, Mr Grey and Mr Barry, whose evidence I generally accept. Mr Abbott, for example, adjusts the Baseline Program by allowing an extra 21 calendar days for the construction of the haul road. This is because Mr Abbott asserts the Baseline Program did not include an activity for the construction of the haul road. Mr Abbott’s assumption is not correct. Mr Vance’s evidence was that the construction of the haul road was provided for in activity 4RCL-1005. Mr Abbott assumes that the construction of the bunds would not have commenced before 24 November 2011. Mr Vance’s evidence, which I accept, was that CMC intended to commence construction of the Reclamation C Bunds by 14 October 2011. Further adjustment is made by Mr Abbott to the Baseline Program on the basis that CMC never planned to achieve the productivity used in the Baseline Program. He asserts that CMC only ever planned to achieve the lower levels of productivity recorded in its target production charts provided with its monthly reports. By reference to these charts he extends the duration for construction of the bunds by a further 41 days. This is unsupported by the evidence.
- Mr Abbott’s analysis was a theoretical exercise undertaken by him in circumstances where his experience is in constructing building projects such as apartments, hospitals and stadiums. Mr Abbott has limited experience in major earthworks projects. WICET did not call any evidence such as engineers experienced in earthworks to say that the methodologies and planning involved in Mr Abbott’s Adjusted Baseline Program were appropriate.
- A key part of Mr Abbott’s analysis of planned productivity is reliance on the target figures listed by CMC and CMC’s target production charts provided with its monthly reports in January 2012. This was during a period impacted by the delays to the Reclamation C Bunds. They should not have been used by Mr Abbott in recalculating CMC’s productivity rate to be 2,878m3 per day for all resources. As explained by Mr Vance in relation to Mr Abbott’s use of these production charts:
“When that figure was put in there was a target in early January it was done at that time on the basis of the access we had at that time, which was not the access A and B that appear in the program, and at that time we were impacted by soft spots and cultural heritage issues. It was a target to try to set the earthworks team to achieve with the constraints that we had at the time. It’s not a replacement for the baseline program, it’s a target based on the actual conditions we were encountering at that time. … Targets like this are set up to try and give the team a bit of motivation, give them something to try and achieve. They’re generally a realistic target that you believe you can achieve at the time … So the way he’s using it is incorrect.”
- It is convenient at this stage to make some preliminary observations in relation to the expert evidence of Mr King and Mr Abbott. For reasons that are developed in more detail below in dealing with the Delay Claim, I generally prefer the evidence of Mr King over that of Mr Abbott. These experts gave their evidence concurrently. In retrospect, the giving of concurrent evidence was a mistake. This was primarily for two reasons. First, there were too many fundamental points upon which Mr King and Mr Abbott differed which detracted from the effectiveness of them giving their evidence concurrently. Secondly and more fundamentally, my view is that Mr Abbott adopted the role of being an advocate for WICET. For example, paragraphs 180 to 186 of Mr Abbott’s Earthworks Report contained opinions express by Mr Abbott as to CMC’s state of mind:
“180. The evidence indicates that CMC either simply ignored the construction delivery plan that was encompassed by its Baseline Program or that it made a conscious decision to change its delivery plans. In my view, the reasons behind the change are irrelevant. What is clear, however, is that by the adoption of the Target Production Charts and the new (lower than stated in the CMC Baseline Program) production rates set out therein, CMC had apparently embarked on a delivery plan for construction of the Bunds that was fundamentally different to that shown in the CMC Baseline Program. …
185. In my view, this is indicative that CMC had little if any regard to its own Baseline Program when executing the Bund construction works and, in fact, it is evident from the Target Production Charts that CMC established a new methodology by which to manage construction and document progress.”
- The difficulty I have with Mr Abbott expressing his opinion in these terms is that there was an obvious reason CMC had to adopt a different methodology than that contemplated in the Baseline Program. CMC was initially delayed in gaining access to the Reclamation C Bunds which, instead of being through two access points, was restricted to one. When a second access point opened up, namely Access B, the Cultural Heritage Directions and Further Flora Directions deprived CMC of its ability to use this access for the purposes of opening up multiple fronts as contemplated by the Baseline Program. To ignore this obvious explanation for an initial change in methodology and to in effect suggest that CMC never intended to follow this methodology and to achieve the production rates in the Baseline Program demonstrates a lack of objectivity.
- As to (c), it is first necessary to explain the Vance Measurement. Mr Vance’s approach by reference to exhibits 22 and 31 was to:
- identify CMC’s actual daily work and the duration to construct the bunds;
- identify the period during which CMC was minimally affected in carrying out the work – April, May and June 2012;
- calculate a theoretical daily production on the basis of the average production during April, May and June 2012 at 4,600m3;
- exclude days in which CMC did not work (on the basis of actual production records), excepting the truck bogging incident;
- make deductions to account for periods in which Mr Vance would have expected lower production;
- identify that CMC, if unimpeded, would have placed the volume of material sufficient to complete the Reclamation C Bunds by 28 May 2012; and
- make a deduction of three days for normal truck breakdowns in January 2012.
- Mr Vance has calculated that CMC completed the Reclamation C Bunds 73.5 days later than it could have if not impacted by the events pleaded by CMC. WICET objected to CMC providing this evidence from Mr Vance and continues to do so in its closing submissions. First, WICET submits that the Vance Measurement is not part of CMC’s pleaded claim. WICET submits that Mr Vance’s analysis does not fit within the pleaded periods of delay. This is not correct. Mr Vance’s estimate is within rather than greater than the pleaded periods of relevant delay that are pressed. I accept CMC’s submission that the final calculation of the correct period of delay is a matter which is dependent on all of the evidence and ultimately to be determined by the Court. From the evidence of Mr Vance, Mr Grey and Mr Barry I accept that the relevant directions did prolong the construction of the Reclamation C Bunds. The initial delay was to the commencement of work. Mr Vance and Mr King both measured this delay being from 14 October 2011 to 23 November 2011. The only difference is that Mr Vance has not deducted any days for presumed haul road construction as his evidence is that these roads were intended to be constructed under the Baseline Program prior to this date. As for the delays caused by the Cultural Heritage Directions and Further Flora Directions, the Vance Measurement fits within the delay events as identified by Mr King. WICET submits, however, that Mr Vance’s measurement does not fit within the pleaded periods of delay because Mr Vance has determined that, if CMC was unimpeded, it would have moved the necessary volume of material by 28 May 2012 (from 23 November 2011). Because CMC completed the works on 4 July 2012, Mr Vance considered that the works had been delayed by a total of 37 days. That is, Mr Vance identified a period of prolongation being from 28 May to 4 July 2012. That period of prolongation does not sit with any of the pleaded delay periods. Further, CMC’s attempt to insert the Vance prolongation period into Team 1 for the Cultural Heritage and Further Flora Directions is, according to WICET, “opportunistic and plainly untenable”:
“It is untenable because the delays identified by the Vance prolongation period were not limited to the matters the subject of DE3. This is acknowledged in CMC’s submissions, and by Mr Vance in his evidence. For example:
- at , CMC submits that the impact of the soft spot directions (which are ultimately abandoned), is ‘taken into account in the Vance Measurement’. If that is the case, then inserting the Vance prolongation period into DE3 overstates the true impact of DE3;
- Mr Vance’s evidence is to the effect that the key impacts on productivity lasted until the end of February 2012. DE3, as pleaded, is a delay between 23 November and 19 January. If Mr Vance’s evidence is that delays occurred at least up until the end of February 2012, it is improper to put his prolongation period into DE3 only.”
- I do not accept this submission. The case that is advanced by CMC does fit within the case pleaded. The delay caused by the Cultural Heritage Directions and Further Flora Directions were ones which in effect deprived CMC of a second access point. Until those cultural heritage issues were dealt with, CMC was unable to operate on multiple fronts using two teams. It was this inability to do so which had a direct impact on CMC’s production rates. As noted in  above, on 17 December 2011 Mr Vance sent a letter to Mr Walls which stated the Cultural Heritage Directions had caused delay by limiting the number of work fronts CMC could work on and attached a map identifying the location of the affected area at Access B. It was only on 9 January 2012 that the suspension relating to the Cultural Heritage Directions ended and CMC was able to access the Reclamation C Bunds by way of the haul road through Access B. The practical effect of the directions, therefore, was to keep CMC to one access into the bunds (Access A) until about 9 January 2012. The period of delay in relation to these directions is now much less than the period pleaded. The 30 days now sought in relation to this period of delay fits within the pleaded period.
- I have considered the further submissions outlined in  –  of WICET’s reply submissions which deal with CMC’s contention that the Vance Measurement has not been properly challenged. In spite of WICET’s objections to the Vance Measurement, I am content to rely on it. The Vance Measurement is simply an assessment by him as to how much earlier the Reclamation C Bunds would have been finished but for the relevant directions given by WICET. The main source material used by Mr Vance in compiling Exhibit 31 is contained in a document to which no objection was taken. The Vance Measurement ultimately confirmed Mr Vance’s and Mr Barry’s evidence as to the effect of the directions on the completion of the Reclamation C Bunds. This is evident from the following exchange:
“Mr O’Donnell: Mr Vance, just ignoring the graph that’s on the screen for the moment, could I ask you this: apart from your work on the graph, if I asked you to estimate had you had the access that you asked for from the start for the reclamation C bunds and had you not had the various impediments in your work on the bunds about which you’ve given evidence, would the work in completing the bunds have finished earlier and if so, by how much?--- Yes, it would have finished earlier. I don’t believe there was any possible doubt about that, really. By how much? I have carried out a calculation as requested and I can take you through it, if you like.
All right. But I was asking you before you did the graph, if I’d asked you that question, what would have your best estimate have been?--- I would have said about three months.”
The graph to which Senior Counsel was referring was Exhibit 31.
- CMC accepts that the precise duration of the delay caused by WICET’s conduct is difficult to perfectly measure. By reference to Chaplin v Hicks and Penvidic Contracting Co Ltd v International Nickel Co of Canada Ltd CMC submits that a difficulty in ascertaining its entitlement must be dealt with by this Court making the best assessment possible on the evidence. If the Court is satisfied that directions given by WICET affected CMC’s work and that, on the balance of probabilities a delay of a particular order of magnitude resulted, it is not necessary for CMC to mathematically demonstrate the exact length of the delay (indeed it would be impossible for any plaintiff to do so).
- Whilst it is correct, as WICET submits, that Chaplin v Hicks is not addressing an issue of causation I am satisfied that the relevant directions did prolong the construction of the Reclamation C Bunds by at least 60 days. The fact that my assessment aligns with Mr Barry’s estimate is coincidental. His evidence does, however, generally support this finding. Mr Barry was the person on-Site.
- The two quantum experts Mr Roberts and Mr Tsipis gave concurrent evidence. I found the evidence of both Mr Roberts and Mr Tsipis helpful. Both were willing to concede points and both sought to reach common ground. The major difference in their approach ultimately was based on the proper construction of the Contract, in particular clause 40.5, which was acknowledged to be a matter for the Court.
- Mr Roberts’ valuation approach to the Earthworks Claim was to examine the actual plant, equipment and labour utilised by CMC to construct the Reclamation C Bunds by reference to the delay periods identified by Mr King. Mr Roberts’ exercise included:
- identifying the plant used to excavate, haul and fill the material at the Reclamation C Bunds by reference to actual mobilisation dates and the fact that the plant was not demobilised until the Reclamation C Bunds were completed. These mobilisation dates were largely agreed between Mr Roberts and Mr Tsipis;
- a productivity adjustment of 85% to the plant to account for maintenance and breakdowns;
- identifying the geofabric labour and plant required to place geofabric at the Reclamation C Bunds and the actual dates of construction by reference to CMC’s records; and
- the site facilities required to build the Reclamation C Bunds.
- Mr Roberts then applied rates contained in Schedule C-4.2 being Daily Rates applicable to variations. As I have found that the Earthworks Claim is not a variation and that Schedule C-4.2 is not a “Schedule of Rates” the valuation by Mr Roberts using this schedule is not permissible under clause 40.5(a) or (b). Mr Roberts, however, undertook an alternative valuation under clause 40.5(c) using reasonable rates or prices. He has adopted CMC’s subcontractor rates plus 12.5% for overheads and profit. WICET submits that even on Mr Roberts’ alternative approach, the calculation does not reflect cost because Mr Roberts uses the subcontractor’s rates and adds 12.5% for profit and overheads. Mr Tsipis also adopted the rates set out in the AE Group subcontract. He considered they provided a reasonable basis of the cost incurred by CMC. Mr Tsipis, however, has excluded any reasonable amount for profit because of clause 40.5(f). I have construed clause 40.5(f) as imposing terms on a valuation carried out under either clause 40.5(a), (b) or (c) in respect to a delay or disruption claim brought pursuant to clause 36. It follows that I accept Mr Roberts’ approach as being correct in respect to the alternative claim.
- Mr Tsipis’ primary valuation, however, is based on an assessment of the costs incurred by CMC in relation to the AE plant, geofabric installation and facilities claims. Mr Tsipis values this claim at nil because he found no evidence of payment by CMC to its subcontractor AE Group for the claimed plant or additional payment in respect of the other claimed categories. This, however, is based on a construction of clauses 33.1 and 34.4 as requiring an assessment based on actual cost. I have rejected this construction above. It is irrelevant to a valuation exercise conducted pursuant to clause 40.5(c) in respect of directions given under clauses 33 and 34 whether CMC has actually paid its subcontractor additional amounts. What is contemplated under clause 40.5(c) is a valuation exercise by reference to reasonable rates or prices, not an assessment of actual costs. I am satisfied that Mr Roberts’ valuation is of the difference in costs incurred by CMC as a result of the directions given by WICET pursuant to clauses 33 or 34.
- CMC’s valuation for the Earthworks Claim is summarised in Exhibit 426. Dealing first with the delay to commencement and construction of the haul roads, I have arrived at a delay of 30 days. Mr Roberts’ alternative valuation for this delay period based on 34 days is $271,820.25. By dividing $271,820.25 by 34 days and multiplying this figure by 30 days, I assess the quantum for this period at $239,850. As to the delay caused by the Cultural Heritage Directions and the Further Flora Directions, CMC now only seeks a period of delay of 30 days. Mr Roberts’ alternative valuation is in fact higher than his valuation by using Schedule C-4.2 rates. The figure I have arrived at, however, is that contained in Item 3(a) of Exhibit 426 being an amount of $1,309,659.
- This was described in oral submissions as a “more conservative” alternative. CMC explained this “more conservative” approach as follows:
“[Mr Vance’s] evidence would suggest the delay was spread over the period. But we’ve included it as a sort of more conservative analysis because your Honour might recall the evidence is that as the job progressed, more equipment was brought onto site. And so the later you go on the job, and indeed, the later you go into January and February, the more value each day is worth: because there’s more equipment on site, so if it’s a delay day, there’s more equipment to value. So the averaging approach in a sense gives equal weighting to delay early and late.”
This approach is in my view, more consistent with my findings made in paragraphs ,  and  above. The disruption from the Cultural Heritage Directions and the Further Flora Directions had largely resolved by 9 January 2012.
- The 30 day period identified by CMC is inclusive of adjustments made by Mr Vance for truck breakdowns in early January and the truck bogging incident. Given my findings in relation to the truck bogging incident, I have made no allowance for the Site suspension imposed by WICET. The figure of $1,309,659 is not only a more conservative approach, it also takes into account a 15% discount imposed by Mr Roberts. This reflects the productivity adjustment of 85% referred to above.
- In oral submissions in reply WICET suggested that I should further discount these figures and treat the claim as essentially one for loss of opportunity. A discount was submitted to be appropriate because any assessment relies on the Vance Measurement. That is, no expert gave the Court the benefit as to whether there were any shortfalls or limitations in the approach adopted by Mr Vance. The Vance Measurement is, however, only part of the totality of the evidence upon which I have relied in assessing whether the relevant directions prolonged the construction of the Reclamation C Bunds. The figures should not be further discounted.
- I therefore assess the quantum of the Earthworks Claim at $1,549,509. I deal with the question of interest later in these reasons.
The GPN Borrow Pit (alternative claim)
- This claim is an alternative claim to the Earthworks Claim because both the GPN Borrow Pit Claim and the Earthworks Claim relate to (largely) the same plant (dump trucks, excavators) over the same period of time. This position has been taken by CMC in order to avoid any suggestion of double counting. As this claim is an alternative claim, given my findings in relation to the Earthworks Claim, it is not strictly necessary to determine it. I will however, set out my findings.
- CMC claims the actual cost it incurred to its subcontractor, AE Group (plus an allowance for 12.5% for overheads and profit), for additional work made necessary because significant material was removed from the GPN Borrow Pit between tender and CMC’s arrival on-Site.
- CMC pleads that on 1 November 2011, the physical condition of the GPN Borrow Pit was materially different from the condition it was in at the time of an earlier inspection. This inspection occurred on 10 February 2011 and was carried out by Mr Semmler on behalf of CMC. Mr Webb and Mr Enright were also present representing WICET. CMC pleads that the difference in the condition which is referred to as the “latent condition”, was as follows:
- material had been removed from the northern area of the GPN Borrow Pit;
- the surface level of the material in the northern area of the GPN Borrow Pit was materially different from the surface level at the time of the inspection;
- there was approximately 334,000 BCM less material in the GPN Borrow Pit, including the northern area, than at the time of the inspection.
On 1 November 2011 CMC notified WICET that the GPN Borrow Pit did not, at that time, have the volume of material present at the time of the submission of its tender and gave formal notice of encountering a latent condition.
- As a result of this latent condition and certain representations made by WICET in documents and at the inspection, CMC alleges that substantial material had to be removed from more distant and more difficult to access locations in the GPN Borrow Pit and it was required and did pay its subcontractor an additional sum of $515,728.
- The basis for CMC’s claim is either as a latent condition under clause 12 of the General Conditions of the Contract or for damages for misleading or deceptive conduct arising from misrepresentations made to CMC by WICET before it entered into the Contract pursuant to Schedule 2 of the Competition and Consumer Act 2010 (Cth).
- Clause 12.1 defines latent conditions as:
“(a) physical conditions on the Site or its surroundings, including artificial things but excluding weather conditions, which differ materially from the physical conditions which should reasonably have been anticipated by an experienced and competent contractor at the time of the Contractor’s tender if the Contractor had –
- examined all information made available in writing by the Principal to the Contractor for the purpose of tendering; and
- examined all information relevant to the risks, contingencies and other circumstances having an effect on the tender and obtainable by the making of reasonable enquiries; and
- inspected the Site and its surroundings; and
(b) any other conditions which the Contract specifies to be Latent Conditions.”
- Clause 12.3 provides that if a latent condition causes the Contractor to carry out additional work, use additional constructional plant or incur extra costs which an experienced and competent Contractor could not reasonably have anticipated at the time of tendering, a valuation shall be made under clause 40.5. The valuation in the present case was one conducted under clause 40.5(c) by reference to the additional sum paid to the subcontractor plus a 12.5% uplift for overheads and profit.
- By reference to a diagram of the GPN Borrow Pit Mr Vance explained in evidence what was involved in CMC winning material from an area further back in the pit. This diagram shows a green haul road and a red haul road. In respect of the green haul road Mr Vance stated that approximately 70% of the material came from that area of the GPN Borrow Pit and approximately 30% through the red haul road route. Mr Vance in a letter to Worley Parsons dated 1 November 2011 outlined that material had been removed from the GPN Borrow Pit between the time of tender and the time of the awarding of the Contract. This letter attached a survey plan of the pit comparing levels from pre-tender documents to then current GPN Borrow Pit levels which revealed approximately 335,000m3 of material had been removed. According to Mr Vance, this meant that trucks had to travel a longer distance along haul roads which had quite steep grades.
- CMC planned to exploit a particular area of the GPN Borrow Pit which was shown in its Borrow Pit Management Plan submitted with its tender, and again shortly after the Contract was executed. Attached to the Borrow Pit Management Plan was a schematic drawing of CMC’s contractual plan for extracting material from the GPN Borrow Pit. Mr Vance accepted that the diagram was schematic in nature and was not meant to be exact. He accepted in cross-examination that at the time of writing the Borrow Pit Management Plan, CMC did not have a plan for haul routes within the GPN Borrow Pit area. As explained by Mr Vance, however, this was because CMC was planning to “pretty much take it from the front here”. Mr Vance also accepted that whilst CMC intended to extract material from the red hatched part of the schematic diagram, it did intend to go beyond the red hatched area.
- CMC’s primary witness for this claim was Mr Semmler. He worked as an estimator for CMC. His role was to price the project and examine the tender documents for this purpose. The GPN Borrow Pit was where the majority of CMC’s material was to come from to construct the project and in particular, the Reclamation C Bunds and the OLC. This material included general fill material, drainage rock material and clay.
- By reference to the Borrow Pit Management Plan and a diagram entitled GC09 GPN Borrow Pit Area Layout Plan (which was a document he created) Mr Semmler showed where the resource was proposed to be worked with one working face connected by an internal haul road to the working platform where the drainage material would be produced.
- Prior to creating the Borrow Pit Management Plan, Mr Semmler made a site visit on 10 February 2011. He was accompanied by ten other contractors who were tendering for the GC09 and GC10 Contracts. The GC10 works were largely works to be carried out on the other side of Hanson Road. Mr Semmler was taken along with the other contractors by bus to the site. The site visit included the GPN Borrow Pit. Whilst Mr Semmler did not take notes of the inspection, he did take photographs. Mr Semmler observed an operator already carrying out extraction work at the Borrow Pit. This was the Gladstone Ports Corporation which was carrying out quarrying works.
- Mr Semmler recalls Mr Webb saying that the GC09 Contract would be awarded first and the successful contractor would have to establish into the Borrow Pit so that they would generally have “first bite” at the Borrow Pit in terms of where they wished to set up and work from. The GC09 Contractor would then negotiate with the GC10 Contractor. By reference to one of the photographs, CMC.507.001.0125, Mr Semmler recalls Mr Webb indicating the area where the successful GC09 Contractor could extract material. According to Mr Semmler, what he saw at the site visit of the GPN Borrow Pit and what was said to him by Mr Webb constituted the basis for CMC’s tendering. He also had reference after the site visit to a geotechnical report. A subsequent document was supplied containing an assessment of the GPN Borrow Pit around 2 March 2011. This document depicted an area which, in Mr Semmler’s view, fitted “very well” with the area indicated in the course of his site visit. This is the area in the top part which lies between the red dotted outline and the black line that divides the pit in half. By reference to Exhibit 95, which shows the various coloured haul roads in the GPN Borrow Pit which was referred to by Mr Vance, Mr Semmler stated that no part of CMC’s tender contemplated using the area to the left-hand side where the red and green haul roads terminate.
- WICET called Mr Webb and Mr Enright. As at 2011 Mr Webb was employed as a construction manager for Worley Parsons for the WICET Project. He was based in Brisbane and left Worley Parsons in June 2011. He is a qualified engineer. He recalls attending the site visit on 10 February 2011. Whilst he had been to the site once before, Mr Webb had never previously visited the GPN Borrow Pit. By reference to a photograph, Mr Webb stated that this photograph showed a considerably larger cleared area than what there was at the time of the inspection. His recollection was that at the time of inspection the left-hand side of the cleared area shown in the photograph was treed. Mr Webb recalled that the Gladstone Ports Corporation was operating a quarry from the GPN Borrow Pit. He does not recall whether there was any quarrying operation on the date of the inspection. He did not have a specific recollection of where the quarrying operation was being carried out. He recalls that a representative of the Gladstone Ports Corporation was present at the inspection in order to give the site visitors some information on access into the GPN Borrow Pit and the area that was going to be available to them if they were the successful contractor. His general recollection is that the area that was going to be made available to the successful contractor was, effectively, uncleared. Mr Webb could not, however, recall any discussions he had with the potential contractors during the site visit. He does not recall indicating an area in the north part of the GPN Borrow Pit. If he did say anything to the potential contractors, it would simply have been repeating what was said by the Gladstone Ports Corporation representative.
- Mr Enright recalls attending the inspection. Mr Lano from BMD, which was a potential contractor, took notes of the inspection, which were circulated. Mr Enright recalls responding to Mr Lano’s email containing his minutes, giving some qualifications to certain notes that he did not entirely agree with. Mr Enright recalls observing plant and equipment carrying out quarrying operations in the Borrow Pit at the time of the site visit. Mr Enright prepared a document shortly before giving evidence where in red hatching he indicated the area he believed the quarrying activities were being carried out on the date of the visit, 10 February 2011. Mr Enright has no recollection of Mr Webb, during the inspection, saying words to the effect that an area would be used by the successful bidder for the project, whilst indicating a northern area of the Borrow Pit. Mr Enright did not have any specific recollection of discussions during the inspection. He doubted whether the GC10 Contractor would need to negotiate with the successful bidder regarding the use of the GPN Borrow Pit. Like Mr Semmler and Mr Webb, this was also Mr Enright’s first visit to the GPN Borrow Pit. Mr Enright does not recall inspecting the Borrow Pit after 10 February 2011. Mr Enright was, however, able to mark a red-hatched area on a document a week before his evidence which essentially showed the northern area (that is the area CMC alleges Mr Webb said was available to the successful tenderer) as being the area he observed quarrying activities taking place on the date of the inspection.
- The Aurecon Hatch Report at figure 1.1 shows the area which had not yet been exploited as the northern area. Figure 1.1 shows the area then currently being exploited as the “southern section”. Figure 1.1 is therefore generally consistent with what Mr Webb is alleged to have explained to Mr Semmler and others. It is, however, inconsistent with Mr Enright’s recollection that the area being exploited for quarrying at the time of the inspection was the northern area. The Aurecon Hatch Report is dated 24 November 2010 but was not issued to the tenderers until March 2011, approximately a month after the inspection.
- It is evident from the discussion of Mr Semmler, Mr Webb and Mr Enright’s evidence above that Mr Semmler had the better recollection of what was said at the site inspection. Mr Webb was apologetic for being unable to recall the specifics of any conversation. Mr Enright had little or no recollection of what was said in relation to the area to be used for extracting material by the successful tenderer. It is unsurprising that Mr Semmler would have the clearest recollection given that he was attending the inspection as CMC’s estimator. He was an experienced estimator who was ultimately responsible for drafting CMC’s Borrow Pit Management Plan. This plan and in particular the areas identified for material to be extracted is consistent with what Mr Semmler had been told by Mr Webb. Mr Semmler was the only person (of the three witnesses) who took photographs on the day. Further as CMC submits, Mr Semmler, unlike Mr Enright and Mr Webb, was only concerned with tendering for the GC09 Contract, whereas Mr Webb and Mr Enright were conducting a site visit in relation to GC09 and GC10. WICET criticises Mr Semmler for not taking any contemporaneous notes of the site visit. He did, however, take photographs. The fact that the notes of another potential contractor who attended the site visit do not record the representations is not an obstacle to Mr Semmler’s evidence being accepted. As CMC submits, the notes of Mr Lano from BMD are very brief for an inspection which lasted four or five hours. They cannot therefore be considered comprehensive notes. Mr Lano also represented a party who was tendering for both GC09 and GC10.
- Mr Semmler’s evidence is also consistent with the formal tender document from Aurecon Hatch issued after the site visit. WICET submits, however, that neither the Aurecon Hatch Report or the Geotech Report should be interpreted as asserting that the “northern area” (or any area of the pit) would remain untouched. Whilst Mr Semmler, Mr Webb and Mr Enright appreciated that quarrying was being carried out in the GPN Borrow Pit by Gladstone Ports Corporation, the Aurecon Hatch Report was issued without qualification and was not subsequently withdrawn or corrected by WICET. It was a document that both Mr Enright and Mr Webb had responsibility for compiling or reviewing. Further, no concerns were raised by either Mr Enright or Mr Webb, who were involved in reviewing CMC’s Borrow Pit Management Plan as part of CMC’s tender submission. This plan also identified the northern area as the relevant area for extracting materials.
- I therefore find that the representations pleaded in paragraph 65D of the eighth further amended statement of claim were made. The representations were made in the context of a site visit organised by WICET to facilitate tenderers inspecting the site, including the GPN Borrow Pit.
- WICET submits however, that CMC could not have relied on the representations to form a view that the northern area of the pit would remain in the condition it was at the time of the inspection. This is because quarrying work was being undertaken at the time of the inspection. This submission ignores that the representation identified an area for the extraction of material for the successful tenderer. The representation given in the context of a site inspection for tenderers, which would include an estimator such as Mr Semmler, unsurprisingly resulted in him relying on the representation for the purposes of pricing the tender. Further, it is not clear how CMC could have conducted its own survey prior to tender in circumstances where the site was privately held.
- CMC summarises the consequences of the removal of the material from the area in which CMC were planning to exploit as follows:
- the material that was left was hard and rocky;
- the general fill needed to build the bunds was basically gone from the front area;
- CMC instead had to win the majority of the material from the “back end” of the Borrow Pit;
- as a result CMC had to build longer haul roads and trucks had to travel longer distances at slow speeds because of the grade of the roads.
- To fall within the definition of “latent conditions” a condition must differ materially from the physical conditions which would reasonably have been anticipated by an experienced and competent contractor at the time of the contractor’s tender if the contractor had carried out those matters in clauses 12.1(a)(i) to (iii). I am satisfied that these requirements are met.
- WICET submits that CMC has mistaken the relevant requirements of clause 12. In paragraph 66L of the eighth further amended statement of claim CMC pleads that on 1 November 2011 the physical condition of the GPN Borrow Pit was materially different from the condition it was in at the time of the inspection. WICET therefore submits that CMC does not allege that the physical condition of the GPN Borrow Pit was materially different to the condition at the date of its tender or revised tender, which is the language of clause 12.1. CMC does plead, however, in paragraph 65K:
“In the premises of paragraphs 64 to 65J above, an experienced and competent contractor at the time of the original tender and further and alternatively, at the submission of the Revised Tender Price, would reasonably have anticipated that the Northern Area of the GPN Borrow Pit would remain substantially in the condition it was in at the time of the Inspection.”
- In compliance with clause 12.2 CMC gave notice of the latent condition. I accept CMC’s submission that under clause 12.3 it is entitled to a valuation under clause 40.5 for the extra costs it incurred. Such a valuation is pursuant to clause 40.5(c) being for reasonable rates and prices.
- Had it been necessary I would also have found that, for the reasons above, CMC has also established its misleading or deceptive conduct claim.
- CMC submits that a valuation of the extra cost it has incurred as a result of the latent condition is the additional amount it paid to its subcontractor AE Group. This claim was made on 19 July 2012. Item 9.2 of AE Group’s claim is entitled “GPN Cut to Reclamation Bunds and OLC Fill”:
“As outlined in this submission, the Subcontractor has been required to haul material from areas of the GPN borrow area to the West of that envisaged at tender time.
Total Volume sourced from western parts of GPN and hauled to bunds including increased haul distances to bunds and OLC is 86,300 m³ (estimated and subject to final survey being provided by the Contractor).
Appendix C details the calculation of actual cost of Excavation and Filling from the GPN for a representative sample. Additional costs are as follows:
Total volume to date 86,300 m³ (subject to survey)
Cost rate $10.80/m³
Contract rate (composite) $6.66/m³
Extra over rate $4.14/m³
Claim to date $357,282
Total volume 86,300m³ (subject to survey)
Less losses (15%) 12,945m³
Nett volume 73,355m³
Cost rate $5.91/m³
Contract rate $3.75/m³
Extra over $2.16/m³
- CMC claims a mark up on this amount of 12%. WICET submits that it is apparent that the amount claimed covers not just haulage distances within the GPN Borrow Pit but alleged additional haulage to the Reclamation C Bunds and to the OLC. WICET therefore submits that it is not possible to determine from AE Group’s claim which of the alleged costs relate to the distances travelled in the Borrow Pit and which relate to the haul to the Bunds and the OLC. In these circumstances, even if CMC has established the existence of the latent condition, it has failed to establish the additional costs for its alleged increased haul distances within the GPN Borrow Pit.
- Mr Roberts did not value this claim. Mr Tsipis valued this claim at nil or alternatively at between $65,000 and $95,000. The reasons for this nil valuation are outlined in  of WICET’s Written Closing Submissions. CMC explains that the only significance of the fact that the subcontractor was hauling to two locations, namely the Reclamation C Bunds and the OLC, is that CMC could perhaps have disentangled part of the claim (the part relating to the OLC haul) and advanced it concurrently with the Earthworks Claim. CMC submits that because it has done so does not prejudice WICET or undermine CMC’s claim.
- AE Group’s claim is referrable to the requirement to source materials from a different location in the GPN Borrow Pit. The claim as summarised by the subcontractor is as follows:
“6.3 GPN Cut to Reclamation Bunds and OLC Fills
From February to now the subcontractor has been, on occasion, required to source materials from the GPN well to the west of that part of the GPN which would have been reasonably expected at tender time.
9.2 GPN Cut to Reclamation Bunds and OLC Fill
As outlined in this submission, the Subcontractor has been required to haul material from areas of the GPN borrow area to the West of that envisaged at tender time… The total claim by the contractor in respect of Mass-Haul from the GPN Cut is $515,728.”
- The subcontractor’s claims does, in my view, reflect CMC’s claim.
- I do not accept Mr Tsipis’ alternative valuation. It is based on an inaccurate factual assumption as to the percentage of materials which are to be extracted from different areas in the GPN Borrow Pit. In particular he underestimates the use that CMC actually made of the longest haul route. This is dealt with Mr Vance in his evidence.
- I therefore make a precautionary assessment of quantum on the alternative claim at $580,194.90.
Piling claim (Variation 142)
- Part of the works which CMC was required to carry out under the Contract comprised piling works at Beales Creek and the Rail Receival Bridge. CMC’s case is that WICET, by itself or through Worley Parsons, issued a series of seven directions to CMC from 26 January 2012. These directions are pleaded to have had the effect of:
- prolonging, interrupting, increasing and changing the character of the Beales Creek piling work and the Rail Receival piling work; and
- increasing the cost and expense of the Beales Creek piling work and the Rail Receival piling work.
- There is no dispute that CMC complied with these directions. CMC asserts that it is entitled to have the additional cost and expense arising as a result of these directions valued pursuant to clause 40.5 and to be paid the amounts so valued. The amount claimed is $1,636,316.20. This is on the basis that the directions constitute either a variation pursuant to clause 40.1 or directions pursuant to clauses 33 or 34. The directions are also relevant to the Delay Claim (Variation 17). CMC relies on each of the seven directions as entitling it to an extension of time for Practical Completion giving rise to a claim for delay or disruption cost pursuant to clause 36.
- The written submissions in respect of the Piling Claim are extensive. I deal first with each of the seven directions.
Direction 1 – Beales Creek waterway barrier permit
- The analysis commences with a direction to mobilise CMC’s piling subcontractor, Avopiling, to Site to carry out the Beales Creek piling works in the absence of an appropriate permit to enable Avopiling to carry out those works. As to this direction and the other six directions, CMC submits that whilst they are discrete in a number of ways, the repeated underlying cause (as with other aspects of the case) was the dysfunctional relationship between Aurecon Hatch and Worley Parsons. In relation to this first direction CMC identified in oral submissions that, for the purpose of the Variation 142 Claim, the focus is on the direction given by WICET to CMC to mobilise Avopiling, as justifying a claim for the cost of the subcontractor. As an event relevant to the Delay Claim, however, the focus is on the absence of the waterway barrier permit as being something that was needed in order to progress the piling at Beales Creek. One of the first issues to be determined is whether on or about 26 January 2012 CMC was directed by WICET to mobilise Avopiling to carry out the Beales Creek piling work notwithstanding that WICET had not obtained a waterway barrier permit sufficient for this work to be carried out. WICET submits that neither it nor Worley Parsons issued a direction to mobilise. It simply confirmed that there was nothing preventing mobilisation. CMC’s claim, based on the alleged direction, should therefore be rejected.
- The starting point is Mr Vance’s evidence. The direction to mobilise, on CMC’s case, was given in the course of a conversation between Mr Knowles and Mr Vance. The conversation was by telephone. It took place in the context that there had been delays in commencing the Beales Creek piling work. CMC was about to mobilise Avopiling. Mr Vance recalled the conversation with Mr Knowles as follows:
“Is there anything you know of that would prevent us doing that? Was what I said to him. It might have been – not have been those exact words, and his response was that we should mobilise and that any little issues there were would come out in the wash. We needed to start the bridge.”
- The mobilisation referred to in this conversation was Avopiling mobilising to drive piles at Beales Creek. Mr Vance stated that Mr Knowles wanted CMC to go ahead with mobilisation and his view was that any issues “would come out in the wash, that we’d sort them out”. After this conversation a direction was given by CMC to Avopiling to mobilise to Site. The mobilisation occurred on or about 2 February 2012. Mr Vance was not cross-examined as to his recollection of this conversation, nor was Mr Knowles called by WICET.
- CMC refers to clause 23 of the General Conditions of the Contract. Clause 23 relevantly provides:
“Except where the Contract otherwise provides, the Principal’s Representative may give a direction orally but shall as soon as practicable confirm it in writing. If the Contractor in writing requests the Principal’s Representative to confirm an oral direction, the Contractor shall not be bound to comply with the direction until the Principal’s Representative does so. If the Principal’s Representative gives a direction in relation to the work under the Contract or the Contract, the Contractor shall comply with the direction.”
- In the present case WICET did not confirm the direction to mobilise in writing nor did CMC request written confirmation of the oral direction. Clause 23 does however, contemplate the giving of an oral direction with which CMC would be required to comply. WICET submits that the proper interpretation of Mr Vance’s conversation with Mr Knowles is that:
- Mr Vance told Mr Knowles that CMC was mobilising and sought confirmation of any matters which prohibited it from doing so;
- Mr Knowles confirmed that there was nothing which prohibited mobilisation.
- I do not construe the conversation in this way. It constitutes, in my view, a direction from Mr Knowles that CMC should mobilise Avopiling. Both Mr Knowles and Mr Vance would have appreciated that cost would be incurred upon mobilisation. Mr Knowles specifically referred in this conversation to any issues “coming out in the wash” once mobilisation occurred. I therefore find that Mr Knowles did give an oral direction to Mr Vance to mobilise Avopiling for the Beales Creek piling work.
- WICET submits that CMC would have mobilised Avopiling irrespective of any direction from WICET. WICET refers to evidence which reveals that Avopiling was mobilising at CMC’s request prior to the date of the alleged direction to mobilise given on 26 January 2012. WICET points to contemporaneous documents which show that from 11 January 2012 onwards, there were detailed communications between CMC (by Mr Henderson) and Avopiling (by Mr Lewis) in relation to the timing of mobilisation. WICET submits that these documents show that at least from 24 January 2012, Avopiling was committed to mobilisation and CMC was aware of that commitment and acting on the basis that Avopiling was mobilising. The contemporaneous documents referred to by WICET are summarised in its written closing submissions at . These documents include an email from Mr Lewis to Mr Henderson dated 20 January 2012 which stated:
“As it stands we are currently planning to mobilise to site on 30-31st Jan 2012 and most of our guys have completed a medical. With the public holiday and associated RDO’s next week we need to start bringing in transport from Tuesday to get kit preloaded. This is where we start to spend money. As per discussion last night we kindly request that you offer a directive by Monday COB on whether we are to continue to plan to mobilise for w/c 30.1.12 or else advise on what course of action we take on the pile treatment.”
- The significance of the email is that it was sent on 20 January 2012, approximately six days prior to any direction to mobilise.
- Another contemporaneous document referred to by WICET is an email from Mr Lewis to Mr Henderson dated 24 January 2012 which states:
“Plant and materials are going to be loaded out soon and this is needed to firm up details with our transport providers.”
- Mr Henderson forwarded this email internally. He was cross-examined in relation to this email. He agreed that the email was consistent with the suggestion that Avopiling was beginning to mobilise as at 24 January 2012. This is not surprising given that there had been a considerable delay in relation to the Beales Creek Bridge already. It is uncontroversial that extensive preparations were already underway to mobilise Avopiling. The purpose of Mr Vance’s call to Mr Knowles on 26 January 2012 was however, to confirm whether there were any issues which would prevent mobilisation of Avopiling. Any decision on the part of CMC to mobilise Avopiling was one for Mr Vance to make.
- I accept Mr Vance’s evidence that in spite of the preparations to mobilise as evidenced in the contemporaneous documents, he would not have proceeded unless Mr Knowles had directed CMC to mobilise Avopiling. Mr Vance’s evidence was that the final decision to mobilise was taken in late January after he had spoken to Mr Knowles about the readiness and whether CMC should mobilise. It was the conversation that he had with Mr Knowles that influenced his final decision. I accept Mr Vance’s evidence that CMC would not have mobilised Avopiling without Mr Knowles’ confirmation. Mr Vance’s evidence in this respect was not challenged.
- CMC’s case is that the practical effect of the direction to mobilise was that it incurred the cost of having its subcontractor Avopiling on-Site for a period between 3 February and 17 February 2012, during which time no work was able to be carried out because the piling pad could not be built. In order to carry out the piling work CMC intended to construct a temporary piling pad in Beales Creek itself. This required a sufficient waterway barrier permit. An issue is which party was contractually obligated to obtain the relevant permit. The issue is resolved upon a proper construction of the Contract. The starting point is clause 56(d) of the General Conditions of the Contract. This provides that the Contractor shall obtain all approvals or licences required by any of the requirements referred to in clause 14.1(a) to (d) applicable to the work under the Contract, except those listed in Annexure Part A. Clause 56(d) therefore provides an exception to CMC being obligated to obtain all approvals or licences. Appendix A refers to Appendix F7 which contains Environmental Management Requirements. Annexure A page 5 in the last item refers to approvals the Contractor is required to obtain (clause 56) as being those detailed in Part 4 – section F Special Conditions of Contract, Appendix F7. Appendix 1 to Appendix F7 is entitled “Construction Environmental Management Plan”. Table 2.2 of Appendix 1 contains a summary of environmental approvals required. One of the approvals is “Development permit for operational works (tidal works) and the disturbance of marine plants for the Beales Creek Bridge and Reclamation Area C Outlet”. Under the column headed “status” it refers to a development permit obtained 24 January 2011. Under the column “responsibility for obtaining approval” it shows “Principal”. CMC submits that by reference to these clauses and appendices, WICET was responsible for obtaining all permits required for Beales Creek Bridge. This is to be contrasted with other approvals in table 2.2, which identify the Contractor as being the entity responsible for obtaining the relevant approval.
- WICET, by reference to the “status” column in table 2.2 of Appendix 1 to Appendix F7, submits that it has fulfilled its contractual obligation. It obtained a permit on 24 January 2011 in relation to the permanent works at Beales Creek. WICET submits that Appendix F7 does not oblige it to obtain the amended permit. According to WICET, given Appendix F7 does not resolve the matter, it is necessary to have regard to other contractual provisions relating to permits. The On-Site Specification is incorporated into the Contract by the Scope of Work. Clause 6.3 of the Specification states:
“6.3 Permits and Approvals
The Contractor shall comply with the conditions and requirements of all relevant permits and approvals.
The Principal will obtain permits and approvals to allow certain construction activities to be undertaken. The Principal shall supply the Contractor with a copy of all permits and approvals obtained by the Principal.
The Contractor shall obtain any permits and approvals not provided by the Principal that are required to carry out the construction works, including but not limited to: additional environmental permits and approvals. … The Contractor shall maintain copies of all permits and approvals on site, and make this information available to the Principal on request.”
- WICET submits that clause 6.3 expressly notes that it would obtain approvals to allow certain construction activities to be undertaken. Consistent with that position, WICET obtained the approval on 24 January 2011 which, by its terms, provided for, in terms of waterway barriers, the barriers which would be established by the permanent structure. I do not accept this submission.
- Table 2.2 not only identifies the relevant approvals that are required, but also the legislation pursuant to which they are required. The legislation for the relevant approval for which WICET was responsible included the Sustainable Planning Act 2009 (Qld), the Coastal Protection and Management Act 1995 (Qld) and the Fisheries Act 1994 (Qld). Table 2.2 does not in any place make the Contractor responsible for approvals under the Coastal Protection and Management Act nor the Fisheries Act. CMC submits that table 2.2 should be read as making it the Principal’s responsibility to obtain all permits for that activity under that legislation. The “status” column merely details what had so far occurred, that is, the current status of the exercise of obtaining permits under that legislation. The “status” column does not however, exhaust the Principal’s obligation. I accept this submission. Further, as a matter of construction, the Contract only obliged CMC to obtain those permits listed in Appendix F7, and no more. Where any permit or approval was not so listed (including the waterway barrier permit), it became WICET’s responsibility.
- I also accept CMC’s submission that nothing in clause 56 or Appendix F7 suggest that permits are limited to “permanent works”. When one examines the permits CMC was to obtain, including permits in relation to the storing of chemicals, abrasive blasting and regulated waste and transport these were plainly not permits for permanent works.
- As to clause 6.3 of the On-Site Specification, this would suggest that contractually WICET was responsible for obtaining permits and approvals. Where those permits and approvals were not obtained by WICET, then clause 6.3 states that CMC shall obtain any permits and approvals not provided by WICET that are required to carry out the construction works. This extends to additional environmental permits and approvals. If clause 6.3 of the On-Site Specification was to operate as WICET submits, it would be inconsistent with the contractual obligations in the principal clauses of the Contract. Clause 56(d) imposes responsibility on CMC to obtain some construction approvals and on WICET to obtain all other construction approvals. Clause 6.3 purports to shift responsibility onto CMC to obtain any approvals “not provided by the Principal”. Under the Contract however, CMC is only ever responsible for obtaining the approvals identified as its responsibility pursuant to clause 56(d) read with Appendix F7. On WICET’s construction, clause 6.3 of the On-Site Specification could bring about a situation where contractual responsibility fell to CMC to obtain approvals, merely by WICET not performing its own contractual obligation to obtain those approvals. It follows that I do not accept WICET’s submission that clause 6.3 of the On-Site Specification informs rather than conflicts with clause 56(d) and Appendix F7.
- I therefore find, as a matter of construction, that WICET was contractually obligated to obtain the waterway barrier permit to allow CMC to carry out the Beales Creek piling work.
- WICET submits that even if it was its responsibility to obtain the permit it did not become aware of CMC’s construction methodology using a temporary piling pad until 18 January 2012. Before considering the relevant evidence in relation to this issue and making my factual findings it is helpful to set out some of the relevant chronology. On 13 May 2010, Aurecon Hatch on behalf of WICET applied to the Department of Environment and Resource Management (DERM) for a development permit for the construction of the Beales Creek Bridge. WICET obtained this approval on 15 September 2010 which was a development approval for operational work including the construction or raising of waterway barrier works associated with the construction of the Beales Creek Bridge. Also obtained was a permit to construct a waterway barrier across Beales Creek. The parties referred to this as the Decision Notice. The Decision Notice did not permit CMC to carry out the Beales Creek piling works. A further permit was ultimately required to accommodate CMC’s proposed work methodology. Aurecon Hatch on behalf of WICET obtained the further permit. This was not granted until 19 April 2012. WICET alleges that CMC did not inform it of the proposed methodology until the issue of RFI 0121 on 10 January 2012. This RFI stated that CMC proposed to construct a temporary crane and piling pad on the north and south banks of Beales Creek to facilitate piling and bridge works. RFI 0121 was approved by WICET on 18 January 2012. The necessity for a permissible change to the Decision Notice was not known, on WICET’s case, until March 2012.
- CMC alleges that it confirmed with WICET that it would adopt a construction method using a temporary piling pad in post-tender meetings starting from 5 April 2011. Both Mr Semmler and Mr Ahern of CMC gave evidence to the effect that:
- during the post-tender meetings, CMC and WICET held discussions about CMC’s construction methodology for Beales Creek Bridge. These discussions included CMC explaining the use of a piling platform in the bed of the creek in order to carry out piling at Beales Creek.
- CMC and WICET also discussed an alternative construction methodology, involving the construction of a full platform across Beales Creek with a concrete culvert in the middle to allow tidal flow. This alternative methodology would have enabled trucks to cross Beales Creek to provide another access point to the Reclamation C Bunds, but would also allow piling from the platform.
- CMC asked the Worley Parsons representatives (either Mr Enright, Mr Webb or MrPowell) whether Worley Parsons had obtained all environmental permits to allow CMC to construct the piling platform across Beales Creek. Either at that meeting or at a subsequent meeting held shortly afterwards, one of Worley Parsons’ representatives confirmed that Worley Parson had received all environmental permits required, including the waterway barrier permit.
- WICET submits that both Mr Semmler and Mr Ahern are mistaken in their recollection. Both witnesses gave evidence of conversations which had occurred many years earlier and in respect of which they had not kept any contemporaneous record. CMC submits however that Mr Semmler’s and Mr Ahern’s evidence is supported by contemporaneous documents. The agenda for the meeting conducted on 5 April 2011 provided at Item 7 that the parties planned to spend 90 minutes discussing “review of technical proposals” including “all key execution details of the project” and “the Scope of a Work and all key technical details of the project.” The spreadsheet entitled “GC 09 Meeting Linton Notes (05042011)” which was prepared in advance of the meeting as “talking points” for discussion during the meeting and was then subsequently provided to CMC states at Item 10 that:
“Maintaining access at Pyealy Creek during bridge construction (tidal effects without disrupting normal tidal flows) and post-construction due to load limits for plant on the bridge and single lane capacity on Beales Creek Bridge. How does the contractor plan to remove the piling/form work/crane platforms after bridge construction; if an alternative access for traffic past the work site is proposed when will this be removed given width/loading restrictions of the bridge?”
- WICET suggests that it is not clear that this notation is referring to a piling platform rock pad within the creek. Item 10 is however generally supportive of Mr Semmler’s and Mr Ahern’s recollection.
- Mr Enright gave evidence in respect of this topic. He did not recall any discussion about piling methodology in the pre-contract meetings. He recalls CMC’s work methodology being discussed in a “broad sense”, but not in any particular detail. He recalls the access across Beales Creek being discussed post-contract, but not prior. Mr Webb did not have any recollection of the proposed Beales Creek methodology. Mr Enright took minutes of this meeting. Item 38 states “Permit/approvals – CMC confirm none of the obligations/permits/approvals prevent CMC from using their propose methods of construction”. Mr Enright’s handwritten notes from the same meeting state “environmental approvals – tidal works bridges … no permit blocking works based on CMC intended methods of construction etc.” CMC refers to Mr Enright’s handwritten notes as supporting the evidence given by Mr Semmler and Mr Ahern that it was WICET which confirmed that it had obtained all permits required by CMC to construct the Beales Creek Bridge including, by necessary implication, the relevant waterway barrier permit. Mr Enright’s evidence was that the reference to “no permit blocking works” was a reference to a statement made on behalf of CMC by either Mr Ahern or Mr Semmler that the planned construction methodologies were achievable based on “the current permitting”. Mr Enright’s evidence was that if the issue of the piling pad and permits was discussed he would have minuted it.
- WICET submits that there is no reason for the Court not to accept the evidence of Mr Enright as it is cogent and reliable. It submits that the difficulty with the evidence of Mr Semmler and Mr Ahern is that it bears all the hallmarks of reconstruction many years after the event. In respect of Mr Ahern the date of his witness summary (18 May 2016) was the first time that he had provided instructions as to his recollection of the meeting which occurred in 2011. I do not accept these submissions.
- Mr Ahern was and remains a pre-contract manager at CMC and also a director of CMC. Since graduating he has had 22 years of experience as a pre-contract manager. It was Mr Ahern who drafted the agenda for the meeting of 5 April 2011. He was able to recall with some detail what was discussed at the meeting. As is evident from Item 7 of the agenda there was to be a detailed discussion in respect of CMC’s construction methodology including the Beales Creek Bridge. He recalled that the methodology of using a platform in the creek so that piling rigs could access the central piers was discussed. He referred to the use of a piling platform within the creek as constituting “standard practice”. The piling pad was something that had to be removed. Mr Ahern specifically recalled that there was discussion of a waterway barrier permit at the meetings. What was discussed was whether the construction methodology proposed would fit within the waterway barrier permit. His recollection is that it was a WICET representative who stated that the permit would allow this option to be constructed. Mr Ahern could not recall which WICET representative made this statement. Mr Ahern explained that the reason he had a good recollection of the meetings was because CMC’s construction methodology was being explained in detail.
- It was not suggested to either Mr Ahern or Mr Semmler in cross-examination that their recollection of these discussions was a reconstruction. I accept that it was a WICET representative who stated that the waterway barrier permit covered the construction of the piling pad in Beales Creek. At the time of the meeting of 5 April 2011 CMC was not in possession of the Decision Notice in relation to Beales Creek that had been obtained by WICET. No representative of CMC at the meeting was therefore in a position to say whether the construction methodology was covered by the Decision Notice. Secondly, as CMC submits, the issue of lack of or inadequate environmental permits was a central issue to a tendering contractor. Mr Ahern described it as the “number 1 risk on this project”. I accept that it was therefore inherently likely that the issue would be raised in meetings called for the purpose of clarifying issues during the tender process and that CMC would seek assurances from WICET that sufficient approvals had been obtained. Whilst WICET called Mr Webb and Mr Enright who attended the meeting, it did not call Mr Cronk and Mr Powell both of whom had engineering or construction backgrounds to give evidence. Their absence was not explained. CMC submits it should be inferred that their evidence would not assist WICET. I do not need to draw such an inference to make the necessary factual findings.
- I accept the evidence of Mr Semmler and Mr Ahern and find that WICET was aware, as early as the pre-contract meetings, that the waterway barrier permit was required to cover a construction methodology that included a piling pad in Beales Creek.
- On 13 October 2011 CMC was provided with the Decision Notice for the construction of the Beales Creek Bridge. Upon receipt Mr Vance reviewed the Decision Notice and promptly passed it on to Mr Henderson and Mr Gilltrap for further review. On 19 October 2011 Mr Gilltrap notified Mr Vance that he did not think the Decision Notice allowed for the construction of temporary works at Beales Creek. Mr Vance gave evidence of a conversation he had with Mr Knowles in which he notified him that CMC was concerned that the Beales Creek approval and permit may not allow temporary works to be carried out, including for the installation of the temporary piling platform. WICET submits that Mr Vance’s evidence of this conversation “was too vague to be of any real assistance to the Court” and that his recollection “was extremely vague”. Mr Vance’s evidence-in-chief referred to concerns being expressed to Mr Knowles about whether the waterway barrier permit enabled the construction of a culvert and the piling platform. I note that the Notification of Potential Delays sent by Mr Vance to Mr Knowles on 20 October 2011 only refers to the culvert rather than the piling platform:
“It does not appear to us from the documents we have received to date that the water way barrier approvals for either Beales Creek or Pyealy creek with [sic] allow the construction of temporary access culvert to facilitate construction and in particular bulk earthworks.”
- This letter does not directly corroborate Mr Vance’s recollection of his conversation with Mr Knowles. Mr Vance was cross-examined in relation to this conversation. He did not accept that the first time CMC informed WICET of the construction methodology for Beales Creek Bridge was RFI 0121 sent on 10 January 2012. He referred to his conversation with Mr Knowles in relation to the waterway barrier permit. Mr Knowles was not called by WICET to give evidence in relation to this or any other conversation. I accept Mr Vance’s evidence that he had raised CMC’s proposed construction methodology using a piling platform with Mr Knowles on 19 October 2011 in the context of the adequacy of the waterway barrier permit.
- On 4 November 2011 CMC issued an updated construction program with its weekly report which included an activity for 60 days duration for WICET to obtain the waterway barrier permit allowing the temporary works at Beales Creek. The program under the heading “Beales Creek Temp Works Waterway Barrier Permit” at Item CP-1180 records “Waterway barrier permit approval for temp works … 60 days … 5 November 2011 to 14 January 2012”. This program therefore contemplated that WICET would obtain the necessary waterway barrier permit by 14 January 2012. The creation of this program and the issuing of it to WICET is generally consistent with Mr Vance having raised the issue with Mr Knowles.
- WICET refers to two alleged concurrent delays. First it submits that CMC contributed to the delay in WICET obtaining the waterway barrier permit and secondly WICET asserts that CMC did not have any compliant pile liners for the Beales Creek Piling Works in any event. As to the first alleged concurrent delay event the permit which allowed the works to be performed in accordance with CMC’s piling methodology was granted on 19 April 2012. WICET alleges that it did not know that a further permit would be required until around 21 March 2012 once DERM had considered a work method statement prepared by CMC. The original Decision Notice stated in condition 3:
“The work method statements must be provided to DERM at least 30 days prior to construction works beginning. Any comments or further information required by DERM within 20 days of the statements being submitted must be actioned by the applicant to DERM’s satisfaction.”
The applicant referred to was WICET.
- WICET submits that by clause 14.1(d) of the General Conditions of the Contract CMC was required to comply with the requirements of “permits, approvals, and requirements of persons acting in the exercise of statutory powers.” That obligation, properly construed, according to WICET, required CMC to comply with condition 3 of the Decision Notice. CMC sent a work method statement relating to the Decision Notice to WICET on 10 January 2012. According to WICET the problem for CMC is that the document provided on 10 January 2012 was not a work method statement of the type required by the Decision Notice. It was an RFI which purported to explain, from an engineering perspective, CMC’s proposed design for the temporary crane and piling pads.
- An environmental manager from Aurecon Hatch, Ms Marr, gave evidence that the work method statement required by condition 3 had to include information about environmental controls. The controls would be measures to mitigate risk such as water quality monitoring, erosion and acid sulphite soil. On 2 February 2012 on request from Ms Marr, CMC provided further work method statements. Ms Marr still considered these documents to be inadequate because they did not contain environmental controls for works. On 3 February 2012 Ms Marr sent an email to Mr Bignell of CMC to ask whether a risk assessment had been prepared for the placement of rock and geofabric in the creek. Later on 3 February 2012, following a further discussion with Ms Marr, CMC representatives provided a number of documents in relation to the piling at Beales Creek. On 6 February 2012 Aurecon Hatch sent DERM a series of emails to supplement the RFI provided on 25 January 2012. On 17 February 2012, DERM approved the work method statement, but noted that CMC’s proposed methodology for a temporary crane pad design in the waterway was potentially not included in the existing approval. DERM requested further information in relation to the temporary crane pad design. This further information was provided on 27 February 2012. The issue as to whether the crane pad design was within the existing approval was not resolved until 17 March 2012. Another government department, DEEDI, ultimately required a permissible change application which was sent by WICET on 5 April 2012 and approved on 19 April 2012. The application for permissible change explained that it was the proposed construction methodology for piling which was the impetus for the application.
- In the above circumstances, WICET’s submits that CMC has no entitlement to a valuation of the claimed plant and labour for the period 3 to 18 February 2012. This is because the timing of CMC’s work method statement meant that it would have incurred the claimed amounts in any event. Secondly, CMC caused the delay in obtaining the permissible change to the permit.
- WICET’s submissions are however, premised on CMC being contractually obligated to provide the work method statements to DERM pursuant to condition 3 of the Decision Notice because of clause 14.1(d) of the Contract. I do not accept this as a correct premise. Schedule C-10 to the Contract deals with work method statements and requires CMC to provide general and contract specific work method statements within the time specified in Appendix D1. The approval and permit constituting the Decision Notice were obtained by and issued to WICET. CMC’s obligation to provide work method statements under the Contract is different from a requirement in the Decision Notice for work method statements to be provided to DERM. There was no contractual obligation for CMC to do so. As CMC submits, its contractual obligation to provide work method statements for the piling pad in Beales Creek was complied with at the beginning of January 2012. These work method statements were approved by WICET on 18 January 2012. No obligation under clause 14.1(d) for CMC to comply with the requirements of permits imposed on it a requirement to provided work method statements to DERM in accordance with condition 3 of the Decision Notice. The permit having been issued to WICET and obtained by WICET it was ultimately WICET’s responsibility to provide the work method statements required by condition 3.
- I have found that CMC’s construction methodology of using a piling pad in Beales Creek had been communicated to WICET at the post-tender meetings and in Mr Vance’s conversation with Mr Knowles. WICET was also in receipt of CMC’s updated construction program dated 4 November 2011 which specifically referred to an activity of WICET obtaining a waterway barrier permit allowing the temporary works at Beales Creek. WICET was therefore in a position to seek any information it required from CMC for the purposes of complying, in a timely fashion, with condition 3 of the Decision Notice. WICET had received the Decision Notice as early as January 2011 and was aware of the requirements of condition 3. Once WICET became aware, even in a general way, of a proposal for a temporary piling pad in Beales Creek it or its representatives could have liaised with DERM and CMC to ensure that condition 3 was fulfilled.
- WICET pleads that a waterway barrier permit was in any event unnecessary on the ground that the piles for the Beales Creek Bridge could have been constructed in a manner which did not require a waterway barrier permit.
- Mr Vance’s evidence was that it was not practical to carry out the piling work at Beales Creek without having to build a temporary piling pad in the middle of the creek. A barge could not be used to drive the central piles because Beales Creek was a tidal estuary. It was not wide and turned into a little gully with mud in the bottom at low tide. Nor was it practical to seek to use a Junttan Rig with a 9 tonne hammer from the sides of Beales Creek because the hammer needed to be within a metre or two of the piles being driven. Mr Vance was of the view that using a crane from the sides of the creek would require a “massive crane” and there would be significant safety concerns. WICET submits however that Mr Vance’s evidence on this issue should be rejected because a proposal was provided by Avopiling for use of a temporary bridge. This document was shown to Mr Vance in cross-examination. He could not ascertain how it was relevant. His evidence as to the feasibility of other possible construction methods apart from using a piling pad remained unchallenged. As CMC correctly submits, no evidence was led by WICET that the piling could have been carried out using a temporary bridge/platform under the existing development approval (nor that the design was practical in the circumstances). That is, there is no evidence that a similar issue of the insufficiency of the permit would not have arisen with a temporary bridge.
- Mr Vance’s evidence was that during a meeting on or around 17 February 2012 Mr Walls asked whether there was any alternative method of constructing the Beales Creek Bridge. Mr Vance’s recollection is that he stated there was no alternative method and was supported in this respect by Mr Karandrews. I therefore find that there was no alternative methodology which was available to CMC that would not have required the revised waterway barrier permit.
- The second concurrent delay relied on by WICET is the allegation that CMC did not have compliant pile liners during 3 to 18 February 2012 and would not have therefore been able to carry out the Beales Creek piling works even had the necessary waterway barrier permit been obtained by WICET. The liners did not arrive on-Site until around 10 February 2012. They were discovered to be defective and had to undergo testing. Six liners were found not to be defective. The liners did not pass all the relevant testing until around early March 2012. WICET therefore submits that even if it had obtained a waterway barrier permit which allowed the construction of the piling pad CMC would not have been able to continue with the substantive works in any event. I do not accept this submission. It was never put to any of CMC’s witnesses that the defect in the pile liners would have otherwise delayed the Beales Creek Bridge piling work had there been a waterway barrier permit. Whilst the onus of proof remains on CMC to establish its claim, to the extent that WICET relies on the defects in the liners as constituting a concurrent delay WICET, in my view, carries at least an evidentiary onus of establishing the concurrent delay. There is, as CMC submits, a complete absence of evidence. As all parties knew that no waterway barrier permit was in place there was no urgency in relation to the defective pile liners. There is no evidence as to what CMC would have done in relation to the defective liners had a waterway barrier permit been in place. There is therefore no sound basis to conclude that any defects in the Beales Creek pile liners would have caused any actual delay in the piling works.
- I find that the direction to mobilise was a direction under clause 33.1 entitling CMC to a valuation under clause 40.5. The valuation is pursuant to clause 40.5(c) without reference to clause 40.5(f).
Direction 2 – Non-conformance report 01 (NCR01)
- WICET issued NCR01 on 14 February 2012. NCR01 referred to MRTS 78 which is the Main Roads Structural Steel specification. NCR01 stated:
“Welding Procedure Specifications (WPS) defining the method, preparation and sequences to be adopted are required for all weld types. It is the Contractors responsibility to ensure that all processes which require pre-qualified procedures and/or work methods are tested and qualified before work begins.”
- NCR01, in effect, required CMC to test the Rail Receival liners prior to their installation. The practical effect of NCR01 was that CMC was obliged to suspend the Rail Receival piling works until “non-destructive testing” had been carried out on the Rail Receival steel liners.
- CMC alleges that it was subsequently agreed in a meeting attended by CMC, Worley Parsons and Aurecon Hatch personnel that testing would only be required if the liners were confirmed by Aurecon Hatch to be structural. They were not structural. The testing found no defects and the liners were used “as is”.
- CMC claims a price for plant (Avopiling) and labour unable to work in the period from 24 February to 6 March 2012 being the period which CMC asserts it was unable to work while the testing was occurring.
- There is a dispute as to whether the claim is properly characterised as being made under clauses 33.1, 34.1 or 40.1 of the Contract. CMC’s case is that NCR01 constituted a variation under clause 40.1 because it imposed an additional requirement on CMC which did not form a part of its original scope of works, namely to carry out testing on the liners for the Rail Receival Bridge before proceeding with piling. It did so because WICET proceeded on the wrong basis that CMC was required to comply with the Main Roads Structural Steel specification (MRTS78) in respect of the Rail Receival pile liners. MRTS78 was a specification for structural steel. CMC asserts that in reality:
- it was not required to comply with MRTS78 in relation to the fabrication of these liners, which were non-structural and governed by a different specification, MRS11.63; and
- in any event, at the time NCR01 was issued, WICET had not issued MRTS78 as a contractual document, despite requests by CMC (and contrary to WICET’s obligations under clause 8.3 of the General Conditions of Contract).
- WICET submits however:
- there was no variation because the testing required by NCR01 was part of CMC’s Scope of Work under the Contract;
- CMC has no entitlement to the price claimed for plant and labour on standby for the relevant period because the amounts were only incurred because CMC had not complied with its contractual obligation with respect to welding and testing of the Rail Receival liners.
- WICET submits that the effect of the application of NCR01 to the Rail Receival liners was that CMC was obliged to comply with its contractual obligation and weld and test the Rail Receival liners to the structural standard. CMC ultimately undertook the testing required. It confirmed the testing on 6 March 2012. The test results for the Rail Receival liners were delivered on 12 March 2012. NCR01 was closed-out on 15 March 2011 because all of the Rail Receival liners passed the relevant requirements.
- WICET further submits that it does not matter that MRTS78 had not been issued formally under the Contract. This is because any failure by WICET to formally issue the standard did not alter CMC’s contractual obligation. The Contract, by the Rail Receival drawing, directed CMC to the standards. These standards were publically available.
- For reasons which follow I find that NCR01 constituted a direction pursuant to clause 40.1 of the Contract to increase part of the work under the Contract, namely an additional requirement for non-destructive testing on the Rail Receival liners. This variation resulted in CMC being unable to proceed with the Rail Receival piling work.
- My conclusion arises in the context of the following factual findings.
- The methodology for installation of the pile liners at the Rail Receival Bridge was as follows:
- holes were bored into the earth using the bored piling rig, and the steel liners were advanced into the holes until reaching the desired depth;
- once they had reached that depth, an area beneath the bottom of the liners was excavated (referred to as the “socket” or “base”);
- following excavation of the socket, the hole was filled with re-enforcement and concrete to create the concrete pile, all the way to the bottom on the socket; and
- as a result, the socket was intended to transfer the weight of the bridge into the surrounding rock and earth, rather than the steel pile.
- This is contrasted with the piling at the Beales Creek Bridge, where the methodology was as follows:
- the steel liners were hammered, or driven, into the ground to the desired depth using the piling hammer rig;
- the earth inside the steel piles was then excavated to a certain depth part way down the piles using the bored piling rig;
- the steel pile was filled to that depth (part way down the steel pile) with re‑enforcement and concrete; and
- as a result, the steel pile itself was expected to transfer the weight of the bridge into the surrounding rock and earth.
- Given these contrasting methodologies, the steel liners at Beales Creek were “structural”, in that they were intended to support a weight, whereas the steel liners at the Rail Receival were “non-structural, in that they did not support weight.
- The fact that the Rail Receival liners were non-structural is not only an admitted fact it is also consistent with the evidence from the witnesses and with the email from Mr Knowles of 6 March 2012. In his email Mr Knowles stated:
“The intent of the design is a temporary sleeve that becomes sacrificial once the piles are complete”.
- Dane King was employed by WICET as a quality field inspector. His main responsibility was in respect of quality control and quality assurance. He would verify whether the Contractor had complied with project specifications, Australian Standards and the relevant drawings. The pile liners for the Beales Creek piling work arrived on-Site on about 9 - 10 February 2012. According to Mr King the Rail Receival liners did not arrive on-Site until 14 February 2012. Mr King’s recollection of the date however was in response to a leading question. There is a contemporaneous document that evidences the liners for the Rail Receival piling work arrived on-Site on 24 February 2012, (which is the beginning of the delay period for this direction alleged by CMC).
- Shortly after the pile liners for the Beales Creek piling works arrived on-Site, namely 9 - 10 February 2012 Mr King attended CMC’s Site office and said, inter alia, that the liners “had to be rejected because some of the paper work wasn’t submitted” referring to “MRS1178”. The two CMC engineers who were present in the site office objected to Mr King’s statement. The two CMC engineers present were Mr Hale who was the site engineer and Ms Haber (Goreva) who was the engineer responsible for the Beales Creek Bridge and Rail Receival Bridge. Ms Haber produced a copy of RFI 0029 dated 25 October 2011 to Mr King showing that CMC had requested the issuance of amongst other specifications, Main Roads specification, MRS11.78. Ms Haber confirmed in evidence that the specification had not been issued at the time of this conversation, despite the passage of approximately three and a half months and despite Worley Parson having responded to RFI 0029 on or about 10 November 2011.
- Following the conversation, Mr King discussed the issue with Mr Piper who was a qualified welding expert and Mr King’s direct supervisor. It was decided that a non‑conformance report would be issued. This led to NCR01 being issued on 14 February 2012.
- According to CMC, a number of the details in NCR01 were inaccurately expressed:
- first, despite the drawing reference in NCR01 being drawing 1532-B-DR-0002 REV 1 which comprised the general notes related to the construction of the Beales Creek Bridge, NCR01 was in fact directed (and treated as applying) to both the Beales Creek and Rail Receival liners.
- secondly, despite the reference in NCR01 to MRTS78, CMC had been directed on about 1 November 2011 to construct the Works in accordance with the third edition of the Main Roads specification, otherwise referred to as the MRS11 series. Consequently, the reference to the fourth edition MRTS78 in NCR01 should properly have been a reference to MRS.11.78 (the corresponding third edition).
- thirdly, despite the fact that NCR01 was notionally issued under MRTS78, Mr King in fact took the requirements including in the “details” of the NCR from a different document, Australian Standard 1554, not MRTS78.
- On 29 February 2012 a number of CMC and Worley Parsons personnel met to discuss NCR01 and the topic of welding rectification and testing. Present at the meeting for CMC was Mr Henderson, Mr Tiltman, Ms Haber and Mr Hale. Mr King, Mr Knowles, Mr Piper and Ms Alexander were present for Worley Parson. There are two sets of Minutes for this meeting. The original Minutes were prepared by Ms Alexander who had an administration role. Mr King read and checked these Minutes before distributing them. To the best of his recollection the original Minutes constitute a true and correct record of what was discussed. The original Minutes record that MRS78 had not been issued. The Minutes further record:
“●in reference to NCR Piles, CMC failed to submit MRS 78 prior to commencement.
- overall CMC are now required to submit: 1. Procedure Cert, Mill cert (Steel origin), NDT, Spec 0006 Welding Procedures.
- CMC raised the issue, is this structural steel or temp steel, documents they referred to and provided to the supplier was the Bill of Quantity in which does not reference to Structural Steel. DP advised J1554-1 leads to Spec - 78 & Visa [sic] versa.
- CMC required clarification if this is structural or temp (Aurecon/Hatch will decide). Currently manufactured to non structural terms.
- DP advised all Welding on Site is to refer to 0006 specification.”
- The reference to DP is to Mr Piper of Worley Parsons. The reference to “Spec0006” is to the Aurecon Hatch steel specification. Ms Haber took handwritten notes during this meeting and immediately following the meeting, sent an email to the various attendees including the Worley Parsons’ representatives reflecting what had been agreed. At point 7 of that email it states:
“(non-destructive testing) if required (WP/AH to confirm whether the liners are structural steel or temporary works). All the welding tests to be done as per specs WIG-1000-S-SP-00006 Rev.1 as well as MRS 11.78 clause 15.54.1 if the liners are confirmed to be structural steel …”
- The views expressed in that email were not challenged at the time by Worley Parsons. Ms Haber’s evidence was that in the meeting of 29 February 2012, it was stated that if the Rail Receival liners were permanent, non-destructive testing was to be performed but if the liners were temporary, then the testing was not required. CMC confirmed at the meeting that the liners for the Rail Receival Bridge were temporary works. Ms Haber stated that the reason CMC held this view was because the pile drawings for the Rail Receival Bridge in the general notes made a distinction between cast-in-piles in which it referred to cast-in-piles having to be done in accordance with MRTS63. This specification referred to cast-in-piles only and not to structural steel. This was the view ultimately expressed by Mr Knowles in his email of 6 March 2012.
- WICET submits that Ms Haber’s recollection is not supported by the original Minutes. The original Minutes according to WICET, indicate that Mr Piper held and expressed the view that the pile liners had to be welded to a structural standard, even if they were not structural. Mr Piper was not called as a witness. Irrespective of whether he was called, it is a matter of construction as to which standard applied. If it is accepted that Mr Piper did express this opinion at the meeting it is simply his opinion. To the extent there is any conflict between the original Minutes and Ms Haber’s notes I accept the accuracy of her notes. The original Minutes whilst having been checked by Mr King were drafted by Ms Alexander whose only involvement was apparently to take the Minutes. Ms Haber was a qualified engineer with an appreciation for the issues relating to NCR01. While Mr King gave evidence that he checked the Minutes prior to sending them to CMC that review occurred several days after the meeting and without reference to any contemporaneous notes. In contrast, Ms Haber’s handwritten notes were taken during the meeting and her email was sent immediately following the meeting. Both these documents are consistent with her corrected Minutes. Mr Henderson also gave evidence that Ms Haber’s corrected Minutes more accurately reflected what had been discussed. More importantly no one from Worley Parsons challenged at the time, Ms Haber’s account of what had occurred at the meeting on 29 February 2012.
- As I have already observed, whether the requirement for non-destructive testing of the liners for the Rail Receival piling work contained in NCR01 was a contractual requirement is a matter of construction.
- WICET by reference to paragraph 7.1 of Appendix F3, drawing 1513-B-DR-0002 (REV 1) (Note S2 and S6) and structural steel specification (WIG-1000-S-SP-0006): MRTS78 alleges in paragraph 182 of the sixth further amended defence and counterclaim that the Rail Receival liners were required to be tested. CMC highlights that no part of WICET’s defence relies upon non-compliance with Australian Standard 1554. Irrespective of whether WICET has properly pleaded its reliance on AS1554 or whether the relevant Main Roads specifications had been issued under the Contract, NCR01 should not have been issued in respect of the Rail Receival liners. This conclusion arises from a consideration of the Contract, the drawings and the relevant standards and specifications. For the Rail Receival Bridge the Aurecon Hatch drawing identified requirements for “Piles” and “Steel” under discrete headings.
- WICET refers to items S2 and S6 under the heading “Steel”. S2 refers to welding to conform to AS1554.1 and MRTS78 fabrications of structural steel work. Item S6 states that steel work is to be grade 350 and fabricated to the requirements of MRTS78 fabrication of structural steel work. CMC submits however, that the correct note in the Aurecon Hatch drawing for the Rail Receival Bridge which governs pile liners is item P5 under the heading “Piles” which states “cast-in-place piles shall be constructed in accordance with MRTS63 cast-in-place piles.” I accept CMC’s submission that requirements falling under the heading “Steel” should be interpreted as governing the structural steel forming part of the Rail Receival Bridge. The reference to the requirements of MRTS78, “Fabrication of Structural Steel”, supports this interpretation because MRTS78 only governs the requirements for structural steel. Structural steel work is referred to in both item S2 and item S6. It is an admitted fact that the pile liners for the Rail Receival piling work were not structural. This interpretation is also consistent with the opinions of two CMC engineers namely Ms Haber and Mr Henderson.
- Whilst the Court is permitted to have reference to this evidence for the purposes of interpreting the specifications in the Aurecon Hatch drawing it is in my view, unnecessary to do so. The wording of the requirements relating to “Steel” as compared to the requirements relating to “Piles” supports CMC’s interpretation. Further if S2 and S6 were to apply as well as P5 this would give rise to inconsistent obligations for the same item namely non-structural liners. This is because item S6 requires the contractor to comply with MRTS78 whereas item P5 requires the contract to comply with MRTS63.
- Accepting that item P5 is applicable, the specification referred to is MRTS63. This specification does not impose a requirement that welding accord with MRS11.78. Rather it imposes a requirement that welding be as per Australian Standard 1554. AS1554 did not require testing to be carried out on the finished welding product. More importantly as CMC submits, there is no hold point in Australian Standard 1554. That is, there is no entitlement under AS 1554 to stop work until compliance is achieved unlike MRS11.78, which does have a hold point. WICET accepts that AS1554 does not contain any “hold points” requiring the cessation of work until a step has been carried out. WICET however refers to section 4.1.1 of the Standard which provides that a welding procedure may be approved on the welding procedure sheets by a representative of the principal. Properly construed, this non-mandatory obligation, according to WICET, when coupled with the requirement for approval set out in section 10.14 of the Aurecon Hatch specification WIG-1000-S-SP-0006 provides a hold point. I do not accept this submission. Section 10.14 simply does not provide for any “hold points”.
- WICET also relies on clause 7.1 of Appendix F3 of the Contract which provides:
“Where the Contractor’s Scope of Work includes fabricated weldments Welding Procedure Specifications (WPS) defining the method, preparation and sequences to be adopted to achieve a satisfactory welded joint shall be provided for all weld types required in the execution of the Contractor’s scope.”
- I accept CMC’s submission that this requirement only applies where welding was required to be carried out by CMC within the scope of works required under the Contract. That is, where CMC’s Scope of Work required welding. The Scope of Work did not require welding of the liners to be carried out by CMC. Accordingly, this requirement did not apply.
- In relation to NCR01 I therefore conclude that it constitutes a variation. The effect of the issuing of NCR01 was that CMC was required to carry out testing on the Rail Receival pile liners which it did not have to carry out under the Contract. NCR01 also caused the works to cease from 24 February 2012 until that testing had been carried out (6 March 2012), and necessarily prolonged and interrupted the works. NCR01 therefore either constituted a direction pursuant to clause 40.1(d) of the Contract to “execute additional work” or was a direction to “increase … any part of the work” pursuant to clause 40.1(a). It is irrelevant to a consideration of whether NCR01 is a variation that CMC claims the cost of plant and labour being on standby while the testing was carried out. I therefore do not accept WICET’s submission that the claim is more properly characterised as one under either clauses 33.1 (direction regarding timing of the work) or clause 34.1 (direction to suspend the work) of the Contract.
Direction 3 – Postponement of Rail Receival Piling Works
- It is common ground that on 22 February 2012 CMC was instructed by WICET, through Worley Parsons, to postpone the Rail Receival piling work until WICET had obtained an approval from Queensland Rail (QR) of CMC’s work method statement.
- By 22 February 2012 Avopiling had mobilised from the Beales Creek Bridge site to the Rail Receival Bridge site to commence piling at Abutment A. Abutment A was not within the rail corridor.
- On the same date, a direction was given by Mr Karandrews of Worley Parsons that CMC cease all piling works at the Rail Receival Bridge until an approval from QR had been obtained. Mr Karandrews’ direction was confirmed by Mr Knowles in a subsequent conversation with Mr Vance. Mr Vance’s recollection of this conversation is that Mr Knowles expressed concern that CMC did not have permission from QR “to work there”. Mr Vance informed Mr Knowles that he did not believe this would be an issue because CMC was not working within the rail corridor. Mr Knowles supported Mr Karandrews’ direction that work should stop until the issue had been put to QR.
- The direction is recorded in the minutes of a Contract Progress Meeting on 22 February 2012:
“WP noted that there was to be no piling until approval granted QR.”
- Mr Enright gave evidence in relation to this notation in the minutes. His recollection was that it related to work method statements for the piling within the rail corridor and WICET required QR approval before the works could proceed. The effect of Mr Enright’s recollection is that the direction to cease piling was limited to piling in the rail corridor. WICET therefore submits that as the piling at Abutment A did not fall within the rail corridor the direction should not have delayed the Rail Receival piling works. There is no other suggestion in the evidence that Mr Karandrews’ direction as discussed between Mr Vance and Mr Knowles suspending piling work at the Rail Receival Bridge was in any way limited to piling in the rail corridor. Nor, in my view, do the minutes record any such limitation. Further this limitation is not pleaded in WICET’s defence. By paragraph 187 of the sixth further amended defence and counterclaim WICET alleged that the relevant direction was given because CMC by its subcontractor Avopiling, mobilised plant and equipment across the QR rail crossing on 21 and 22 February 2012 without an approval work method statement from QR or from Worley Parsons. It is common ground that Avopiling used a public crossing for this purpose and as such no approval from QR was required nor any provision of a work method statement.
- As I observed in  above Mr Enright did not have a good recollection of specific discussions that occurred in the pre-tender site visit to the GPN Borrow Pit. I accept, as WICET submits, that this is unsurprising given the matters in question occurred over five years ago. It is therefore surprising that Mr Enright would have a specific recollection enabling him to expand on the meaning of a minute taken on 22 February 2012. As there is no other evidence which would support the direction being limited to piling work in the rail corridor I am not prepared to act on Mr Enright’s recollection. My finding is that the direction as communicated by Mr Karandrews, and as later discussed between Mr Vance and Mr Knowles, extended to all piling work at the Rail Receival Bridge.
- CMC complied with the direction. On 23 February 2012, QR confirmed that it did not need to approve CMC’s work method statement.
- CMC alleges that as a result of the direction it was unable to carry out the Rail Receival piling work on 22 and 23 February 2012, a delay of approximately two days. WICET however submits that there was no delay because the Avopiling records of 22 and 23 February 2012 suggest that Avopiling was doing preparatory work which had to be done anyway and there was therefore no hold up of piling. WICET refers to photographs of the plant on 22 February [2.33pm] and 24 February [7.22am]. The photos show the equipment in its pre (22 February) and post (24 February) rigged state. WICET submits that from a comparison of the two photographs work was performed on 23 February 2012 to establish the rig as stated in the Avopiling and CMC daily records. Mr Vance conceded that Avopiling undertook work on 22 and 23 February 2012. His evidence was however that the work Avopiling was able to carry out on those days was minimal. No piling was able to be undertaken and the impact of the direction was to hold up the works for approximately a day and a half. He stated that the activities that were carried out were not very productive and could have been done while piling. Mr Vance’s evidence was not challenged in cross-examination. As CMC correctly submits his evidence is not inconsistent with the contemporaneous documents. There is no suggestion in the contemporaneous documents that any actual piling occured on 22 and 23 February 2013. Mr Vance’s evidence was that some (not all) of the activities could have been carried out in parallel with the piling works. The Avopiling daily report sheets record that all piling equipment was on standby for the whole of the two days. Mr Vance’s assessment was that the direction resulted in a delay of about a day and a half rather than two days. The contemporaneous photographs and documents referred to by WICET do not in my view constitute a proper basis for rejecting Mr Vance’s unchallenged evidence.
- WICET further submits that if CMC was unable to undertake work on 23 February 2012, the requirement for an excavation permit and a pad certificate was likely the cause. WICET refers to the evidence of Mr Karandrews. His evidence was that for the piling work at Abutment A at the Rail Receival Bridge, CMC would require an excavation permit to do any earthworks in preparation for the crane pad which itself had to be certified. A crane could not be lifted on to a crane pad until the certificate had been issued. Mr Vance in cross-examination was shown an Avopiling document relating to access and permits. Mr Vance did not have any recollection of this topic. Mr Vance was also shown the Avopiling daily report sheet for 23 February 2012. Under the heading “Delays/Instructions from Client/Variations” it notes “3.30pm verbal confirmation of excavation permit and pad certificate Abutment A rail bridge”. Mr Vance assumed that the reference to the excavation permit was the same standard document CMC did with Worley Parsons all the time. As to the pad certificate he stated that it was something that would be needed prior to actually operating the crane.
- As to CMC’s allegation that it was unable to carry out the Rail Receival piling work on 22 and 23 February 2012 by reason of the direction WICET pleads that CMC’s inability to carry out the piling work was caused by an act or omission of CMC for the reasons set out in paragraph 187 of the Defence, discussed at  above. Paragraph 187 of the Defence does not refer to any failure of CMC to obtain an excavation permit or pad certificate as constituting concurrent delay events. Neither was any such failure put to Mr Vance as constituting concurrent delay events. The documents in themselves do not permit a finding in the light of Mr Vance’s evidence that the excavation permit and pad certificate were concurrent delay events.
- CMC submits that the issuance of the direction increased the work it had to carry out, within the meaning of clause 40.1(a) of the Contract, and was therefore a variation. The additional work referred to is that on 22 February 2012 CMC was required to organise a meeting with representatives of QR and on 23 February 2012 CMC’s representatives were required to attend the meeting with QR and following that meeting the Rail Receival piling work could recommence. The direction in my view, constitutes one pursuant to clause 34.1. The proper characterisation of the direction was that it was a suspension of part of the work under the Contract, namely a suspension of the Rail Receival piling work. The direction was given by Mr Karandrews and confirmed by Mr Knowles on a mistaken basis namely that CMC required, but had not obtained, QR approval of a work method statement. I accept Mr Vance’s assessment that the delay that resulted from the direction to suspend was one and a half days.
Direction 4 – Suspension Direction
- This Direction was a Site-wide suspension of all work following the truck bogging incident in the Reclamation C Bunds. I have already dealt with this Direction in  to  above. The Direction was issued on 8 March 2012. CMC complied with the Direction and was not able to carry out the Rail Receival piling work between 8 March 2012 and 12 March 2012. I have concluded that WICET was not the cause of the suspension at the Reclamation C Bunds. CMC submits, however, that WICET should not have suspended the Rail Receiving piling work.
- WICET pleads that the reason the Suspension Direction was given was because of concerns held by Worley Parsons as to overall Site safety due to the bogging of the truck:
- being the second serious safety incident in two days; and
- occurring in direct contravention of a direction of 7 March 2012 that CMC was only to operate the haulage trucks on the drainage sides of the Bunds.
- CMC submits that the Suspension Direction was, insofar as it caused the Rail Receival piling work to cease, plainly unnecessary. Mr Vance gave evidence that there was no connection between the Suspension Direction and the works being carried out at the Rail Receival Bridge because:
“The Rail Receival Bridge is a different subcontractor, different team, different people operating in a different area. It’s difficult to see any connection at all there, from my point of view.”
- In an email exchange between Mr Vance and a CMC estimator (Mr Webster) in April 2012, Mr Vance in effect confirmed that the Site was shut down for four days based on “safety”. He also suggested that the four day shutdown could have been prevented by an earlier intervention by CMC after the first minor bogging.
- The bogging of the truck on 8 March was the “worse bogging (CMC) had on Site”. The serious bogging followed a bogging earlier that day. As set out in Mr Walls’ direction to suspend on 8 March 2012 the truck bogging had followed a long term injury (LTI) on 29 February. A man had the end of his thumb crushed when he got it stuck between chains lifting a small engine of a caravan CMC had on the Reclamation C Bunds.
- There is no evidence to suggest that the suspension was imposed for anything other than safety concerns. Whilst the truck bogging incident and LTI only occurred in the C Bunds and involved a different CMC subcontractor to the one carrying out the Rail Receival piling work, I accept that the cause of the Site-wide suspension was a concern about CMC’s safety practices. This is evident from the Incident Investigation Report. The Report refers to the fact that various safety statements were in place for the task being performed at the Reclamation C Bunds on 8 March 2012. The Report also noted that the driver of the truck had no previous experience with the soft soil section of the project. The Report further noted that whilst safety procedures were in place they had not been followed. The Report referred to “poor management of risk associated with tasks being performed”. The author of the Report made the following recommendations:
- Reinduct all project employees;
- JSEA and change management interactive toolbox;
- Fatigue management toolbox;
- Laminated charts for trucks and crib sheds;
- Positioning of bollards to highlight dump area for trucks;
- Placement of bollards for Bund edge delineation;
- Permit boards placed at work fronts;
- Restart with all supervisors to ensure all required SWMS and JSEA’s prior to commencing;
- Follow up feedback on effectiveness of risk assessment review.
- Whilst some of these recommendations are specific to works at the Reclamation C Bunds the recommendations had a wider application which included reinducting all project employees.
- As I have observed in  above, during the four days of the suspension CMC conducted reviews of the work method statements with its crews at the Site office and considered how safety could be improved on-Site. Mr Karandrews sat in on those meetings. The work method statements under consideration did not only relate to trucks but all aspects of the work. There is no evidence that at the time CMC objected to conducting this review. In its own Notice of Suspension to AE Group dated 11 March 2012 CMC referred to the fact that works had been suspended due to “health and safety concerns”.
- CMC submits that in circumstances where Mr Walls was not called, the real reasons for suspending all work on the Site were never satisfactorily explained. WICET did however, call Mr Karandrews who was the person who advised Mr Walls to direct the suspension. That advice was only given on the basis of Mr Karandrews’ safety concerns. WICET cannot in my view, be criticised for not calling Mr Walls. The reasons for the suspension are revealed in Mr Walls’ email in which he specifically refers to clause 34.1(b) of the General Conditions of the Contract which deals with a direction to suspend for the protection or safety of any person or property. The email foreshadowed a full investigation of the incident stating that works could only resume when CMC could fully demonstrate that it would undertake works in a safe manner ensuring the protection and safety of all personnel and property on-Site.
- I therefore find that WICET was not responsible for the cause and extent of the Site-wide suspension. CMC therefore has no entitlement to a valuation for the suspension. It also follows that CMC is not entitled to an extension of time for the Suspension Direction in respect of its Delay Claim.
Direction 5 – Suspension due to Specification Uncertainty
- In order to understand CMC’s claim in respect of this direction, it is necessary to set out the chronology of events. I have taken this chronology largely from the evidence of CMC’s primary witness in respect of this direction, Mr Henderson. He was CMC’s senior engineer responsible for the construction of the Rail Receival Bridge. The alleged direction is in respect of the certification of the pile sockets for piles A5 to A8 located at Abutment A at the Rail Receival Bridge site.
- On 25 February 2012 Mr Henderson had a telephone conversation with Mr Knowles of Worley Parsons. Mr Henderson instigated the telephone call because there were two relevant specifications in relation to piles. First was the Aurecon Hatch “Bored Piles Wiggins Island Coal Terminal Gladstone Ports Corporation” document dated 8 December 2009 revision B. Section 6 of this document dealt with pile construction. Clause 6.2 relevantly provided:
“Each pile boring shall be inspected by the Principal’s representative prior to the placing of concrete in it. This inspection shall be carried out from the ground surface using reflected sunlight or a suitable electric light to check that the foundation material is as specified over the base area and the socket length and that the excavation is free of water. The Contractor shall provide all equipment necessary to make a complete inspection of the pile.”
- The second specification was a Main Roads specification, MRS11.63 of 1999. The specification was in respect of cast-in-place piles. In Table 1 of the specification standard work items were identified. These included item 7412 which dealt with the excavation below toes of liners. The Work Operations incorporated in item 7412 for a Contractor included the excavation of material, disposal of excavated material, dewatering and provision of temporary liners if required. Item 7412 as drafted in the 1999 specification did not refer in terms to a Contractor being required to engage a geotechnical engineer.
- Clause 10.3 of MRS11.63 of 1999 relevantly stated:
“Sockets are to be logged, inspected and verified by the Contractor using a qualified geotechnical engineer prior to casting of concrete. Such inspection shall ensure that the minimum socket length and diameter have been achieved and the classification of the rock into both lithological and weathering type has been undertaken. A strength classification is not be undertaken to ensure that the required friction and base capacities have been achieved. Approval of the socket prior to concreting is a Hold Point 3.”
- Mr Henderson appreciated that the Aurecon Hatch specification contemplated that each pile boring would be inspected prior to the placing of concrete in it. He also appreciated that the Main Roads specification required pile sockets to be logged, inspected and verified by the Contractor using a qualified geotechnical engineer prior to the casting of concrete. In spite of the reference to the “Contractor” in clause 10.3 of MRS11.63 of 1999, as the Pay Item 7412 did not refer to a geotechnical engineer, Mr Henderson was of the opinion that the Main Roads specification did not make it the Contractor’s responsibility to engage a geotechnical engineer. I note that the Aurecon Hatch specification only refers to each pile boring being “inspected” by the “Principal’s representative”. Clause 6.2 does not expressly require the Principal’s representative to be a geotechnical engineer. Although Mr Henderson gave evidence as to his understanding as to how the specifications operated, their proper construction is a matter for the Court. Mr Henderson’s opinion does however, give some context as to why he telephoned Mr Knowles on 25 February 2012.
- Mr Henderson had a general recollection of his conversation with Mr Knowles. He identified the purpose of calling Mr Knowles was to confirm that Worley Parsons or Aurecon Hatch would be performing the role as the Principal’s Representative identified in clause 6.2 of the Aurecon Hatch specification. As the conversation is an important one and is alleged by CMC to constitute a direction given by Worley Parsons, I will set it out in full:
“What was the substance of what you said? … To establish that the requirement to inspect the sockets and the pile excavations would be carried out by Worley Parsons and Aurecon Hatch.
Did you identify what sockets and what pile excavations? … Yes … Or where on site? … Yes
Do you recall what you said about that? … That we were working at abutmentA on rail receival bridge and that we’d be progressing with works down there now that the NCR was lifted.
And what was said about having a geotechnical engineer present? … Matt responded by telling me that Scott and Bindu would be performing the role of the inspection, and it made sense to me, being that Scott would ordinarily sign off our hold points in different parts of the works, and also that Bindu was Aurecon’s geotechnical engineer.
All right. So after he said that, did you make any response to him? … No, other than confirming that we would – we would maintain communications with Scott regarding when we required him to be present.
All right. And was anything more said in the conversation? … Not that I recall, no.”
- Mr Knowles was not called by WICET to give evidence. It is however, unnecessary to draw a Jones v Dunkel inference. As I have observed in  above, there was no real challenge to Mr Henderson’s credibility and I accept his evidence as reliable. Mr Henderson’s recollection of the conversation and the context in which it occurred does not however support CMC’s pleaded case. Paragraph 183FF of the eighth further amended statement of claim pleads that on 25 February 2012 WICET’s agents, Worley Parsons, instructed CMC that in accordance with the Aurecon Hatch specification, agents of the Principal’s representative would “certify” the pile bases at Abutment A of the Rail Receival piling works. This instruction is particularised by reference to Mr Henderson’s telephone conversation with Mr Knowles on 25 February 2012. No mention is made of certification in this conversation as recalled by Mr Henderson. Mr Henderson was seeking confirmation from Mr Knowles that Worley Parsons or Aurecon Hatch would be performing the role of the Principal’s Representative for the purposes of clause 6.2 of the Aurecon Hatch specification. There is no requirement for such an inspection to be conducted by a geotechnical engineer under clause 6.2. The inspection contemplated by clause 6.2 is one to be carried out from the ground surface using reflected sunlight or a suitable electric light. The purpose of the inspection is also quite limited, namely “to check that the foundation materials is as specified over the base area and the socket length and that the excavation is free of water.” The mere fact that Mr Knowles identified two persons, one of whom was a geotechnical engineer, to carry out the inspection does not constitute an instruction that Dr Bindu Madhava (Dr Bindu) would certify the pile borings at Abutment A. According to Mr Henderson’s recollection, Mr Knowles responded by telling him that Scott Karandrews and Dr Bindu would be performing the role of inspection. This conversation simply amounted to Mr Knowles confirming the Worley Parsons and Aurecon Hatch personnel who would be the Principal’s representative for the purposes of clause 6.2 of the Aurecon Hatch specification. In my view, nothing said expressly or arising by implication in the course of this conversation relieved CMC of otherwise complying with the requirements of MRS11.63 of 1999. Those requirements in clause 10.3 of that specification not only required inspection but also logging and verification.
- On 27 February 2012 Mr Henderson sent an email to Mr Knowles:
“Confirming our conversation on Saturday 25th February regarding the certification of the pile bases and that this will be completed by Scott and Bindu and the hold point released accordingly. We will maintain our ongoing coordination with Scott in regards to the release of hold points.”
The reference to “hold points” can only be understood as a reference to Hold Point 3 in paragraph 10.3 of MRS11-63 of 1999. Whilst this is a contemporaneous document, it does not reflect Mr Henderson’s own recollection of his conversation with Mr Knowles of 25 February 2012. The email refers to “certification” which was not mentioned in the conversation. Further, the conversation, as recalled by Mr Henderson, was for the purpose of Mr Knowles confirming the Principal’s representatives for the purposes of clause 6.2 of the Aurecon Hatch specification. Mr Henderson’s email of 27 February 2012 did not and could not unilaterally alter CMC’s contractual obligations to comply with MRS11‑63 of 1999 in undertaking the piling work at the Rail Receival Bridge site.
- Mr Henderson handed over to Mr Hale, a CMC site engineer, the responsibility for arranging a process for inspections. Mr Hale was generally responsible for Quality Assurance for which the release of hold points formed part. Mr Hale was thereafter to be responsible for liaising with Mr Karandrews directly in regards to inspection timing.
- Avopiling made a request to CMC on 6 March 2012 requesting a geotechnical engineer to be present at 12 pm the following day in relation to piles being bored at Abutment A.
- On 6 March Mr Hale sent an email to Mr Karandrews: “We will be looking to get the geotech (Bindu John tell me) out around 11:00am tomorrow to start looking at the piles for certification purposes.”
- Mr Knowles emailed Mr Henderson on 8 March 2012 in respect of the 25 February 2012 conversation:
“The conversation was that Scott and Bindu would be in attendance to visually inspect the bases. The Contractor still has an obligation to
MRS11.63 Cast In Place Piles – ‘Actual foundation levels shall be determined by the Contractor using a qualified geotechnical engineer …’”
Mr Knowles attached MRS11.63 of 1999. At the time this email was sent neither MrKarandrews nor Dr Bindu had attended Abutment A in order to inspect the piles. MrHenderson did not know whether any attempts had been made to contact MrKarandrews and/or Dr Bindu for this purpose.
- Having received this email Mr Henderson rang Mr Knowles. Mr Henderson recalls that he said words to the effect that he understood that Worley Parsons and Aurecon Hatch “were performing the inspections” and that was how CMC went about its business but it had now changed. Mr Knowles’ response was that the specification required the Contractor to provide that certification. Mr Henderson may have expressed some annoyance.
- Mr Knowles then sent a further email on 8 March 2012. In this email Mr Knowles again referred to MRS11.63 of 1999 and also MRS11.68. He stated that if CMC were having difficulty securing a qualified geotechnical engineer from Coffey, he suggested they contact Golder Associates in Gladstone. Mr Knowles’ email also referred to the fact that Mr Vance at that time was absent.
- By 13 March 2012 CMC had bored piles A5-A8 at Abutment A. The next part of the works was the concreting of the piles. Clause 10.3 of the Main Road’s specification required the pile sockets to be logged, inspected and verified by CMC using a qualified geotechnical engineer prior to casting of concrete. Approval of the pile sockets prior to concreting constituted Hold Point 3. CMC had arranged for its own geotechnical engineer Mr Tully of Golder Associates to attend the Site. Mr Tully was unable to attend the Site until 9 am on 13 March 2012. As matters transpired, Mr Tully could not certify the boring piles. This meant that the holes could not be filled with concrete and remained exposed and open to the elements.
- Mr Vance attempted to resolve the situation on about 13 March 2012 by first ringing Mr Knowles and subsequently elevating his request to Mr Sharples of WICET. Mr Vance asked Mr Knowles whether Dr Bindu could certify the piles as he was a geotechnical engineer. Mr Knowles replied that he did not have the authority to request Dr Bindu to do that and it was unlikely. Mr Knowles suggested that Mr Vance ring Mr Sharples to request Dr Bindu to carry out the certification. Mr Vance’s conversation with Mr Sharples did not resolve the issue. Mr Sharples in effect said it was up to Mr Vance whether CMC proceeded with concreting the pile sockets.
- CMC refers to Mr Vance’s conversation with Mr Knowles on 13 March 2012 in paragraph 183F of the eighth further amended statement of claim. This conversation constitutes the particulars of an allegation that CMC was instructed by Worley Parsons to cease the Rail Receival piling work as WICET was uncertain as to the Main Road specifications which CMC should follow with respect to the piling works and accordingly who had responsibility to inspect the pile sockets. This is referred to in the pleading as the March Rail Receival Instruction. This instruction is said to constitute a direction either pursuant to clause 40.1, 33.1 or 34.1 of the Contract. CMC pleads that between 14 March 2012 and 27 March 2012 it was not able to carry out the Rail Receival piling work by reason of the March Rail Receival Instruction. The particulars of paragraph 183F of the eighth further amended statement of claim state that Mr Knowles gave Mr Vance an oral instruction to the effect that the pile sockets would not be signed off or inspected by agents of WICET. Mr Vance’s recollection of this conversation with Mr Knowles does not support CMC’s pleaded case. The reason CMC could not continue with the piling work at Abutment A was that Mr Tully was not in a position to certify the pile sockets.
- When Mr Tully of Golders arrived on-Site on 13 March 2012 Mr Henderson instructed him to inspect the materials being generated by the excavations and to log those materials. Mr Henderson gave this instruction because it accorded with the requirements of MRS11.63 of 1999. The Main Road’s specification also required the geotechnical engineer to “verify” the pile sockets.
- This distinction was recognised by Mr Tully in an email he sent to Mr Henderson on 15 March 2012:
“Logs of bored pile sockets A5-A8 are attached. As requested I have logged the holes only. Whoever is providing approval/certification of the pile should do their own calculations, based on materials encountered during the drilling.”
- In spite of Mr Knowles’ emails of 8 March 2012 Mr Henderson still believed that Worley Parsons or Aurecon Hatch would provide the certification of the piles.
- On 16 March 2012 CMC instructed Avopiling not to place concrete within bored pile A5‑A8 until further notice. This was stated to be “due to outstanding geotechnical certification of the pile bases”.
- On 16 March 2012 Mr Knowles emailed Mr Henderson seeking confirmation that CMC were following the specification requirements for MRS11.63 in respect to the Rail Receival piling work. This was not a reference to MRS11.63 of 1999 but rather to MRS11.63 of 2009. Mr Henderson stated in evidence that the requirements in the 2009 version of the specification are “slightly” different to the 1999 version. In the 2009 version, work item 7412 had been expanded to include the following:
“(f)Inspection by Contractor’s Geotechnical Engineer;
(g)Geotechnical certification of socket; and
(h)Geotechnical certification of pile base.”
Clause 10.3 of the 2009 version relevantly stated:
“Actual foundation levels and socket dimensions shall be determined by the Contractor on the advice of the Geotechnical Assessor subject to the minimum requirements shown on the drawings.
Sockets are to be logged, inspected and certified by a geotechnical engineer prior to casting of concrete. The Geotechnical Assessor shall certified that the factored geotechnical strength is greater than the design loads shown on the drawings in accordance with AS 5100.3 and the socket complies with the minimum requirements shown on the drawings.
Geotechnical Assessor certification of the socket and or pile base prior to concreting is a Hold Point.”
- By reference to clause 10.3 of the 2009 version it would appear that when Mr Knowles was quoting from MRS11.63 in his emails of 8 March 2012 he was actually quoting from the 2009 rather than the 1999 version of the specification. CMC had been previously directed on 28 October 2011, to construct “Works under the Contract”, in compliance with the third edition Main Road’s specification MRS11-1999.
- In Mr Henderson’s view the requirements in the 2009 specification required the Contractor to provide the geotechnical engineer. Irrespective of the changes made to the 1999 specification, the fact that Mr Karandrews and Dr Bindu were to undertake an inspection as the Principal’s Representative in accordance with clause 6.2 of the Aurecon Hatch specification did not relieve CMC of its contractual obligation to comply with MRS11.63 of 1999. Clause 10.3 of the 1999 specification in my view, made it the responsibility of CMC to have the sockets logged, inspected and verified by a qualified geotechnical engineer prior to the casting of the concrete. Further, the change in wording between the 1999 and 2009 specification from “verify” to “certify” is not significant.
- On or about 20 March 2012 a meeting was conducted between representatives of Worley Parsons, Aurecon Hatch, CMC and Golder in relation to the issue of certification. The persons in attendance included Mr Knowles, Mr Vance, Mr Henderson and Mr Tully. Dot point 3 of the notes of the meeting state:
“Golder logged and viewed drill samples that were taken by CMC,
- Cannot verify as did not witness samples being taken, also gaps in samples.
- 4 piles were drilled to 1m from socket depth
- Geotech normally in attendance for drilling of sockets.”
- The notes record that two options were considered for “verifying/certifying” the open sockets. The notes also record that the sockets had not been certified and that Golder could not “verify/certify” the sockets as they were not on-Site to witness the extraction of materials. The notes record that Golder were to review MRS11.63 to confirm whether the suggested options would satisfy the requirements to certify. It is also recorded that future piles would be constructed/installed in accordance with MRS11.63 of 2009. Mr Henderson accepted that these notes were an accurate record of what was discussed at the meeting. The notes refer to the normal practice of a geotechnical engineer being in attendance for the drilling of sockets. There was no suggestion in Mr Henderson’s conversation with Mr Knowles on 25 February 2012 that Dr Bindu would or should be in attendance for the drilling of the pile sockets. Mr Henderson could not recall any discussion at this meeting regarding any distinction between the concepts of “verifying” as opposed to “certifying” sockets.
- As the piles on Abutment A had to await certification, CMC gave a site instruction to Avopiling on 20 March 2012 to mobilise to Abutment B. It took approximately two days for Avopiling to mobilise to Abutment B.
- CMC’s case in respect of Direction 5 fails. CMC, on the evidence, has failed to establish the alleged instruction pleaded in paragraph 183FF or the March Rail Receival instruction pleaded in paragraph 183F of the eighth further amended statement of claim. Mr Knowles never gave an instruction to Mr Henderson that Dr Bindu would “certify” the pile sockets at Abutment A. Nor was any instruction given that Dr Bindu would “log” or “verify” the pile sockets for the purposes of the relevant hold point to be released. The suggestion that Mr Knowles revoked this instruction by his email of 8 March 2012 is not supported by the evidence. There was no such instruction given. Even on Mr Henderson’s own recollection of the conversation of 25 February 2012 it cannot be accepted, as CMC submits, that Mr Knowles said that Dr Bindu and Scott Karandrews would “inspect and certify” the pile bases with the hold point then released.
- As CMC remained contractually bound to apply MRS11.63 of 1999 to the Rail Receival piling work, any delay caused by a failure to comply with the requirements of clause 10.3 rest solely with CMC.
Direction 6 – Stop Work Direction
- On 16 May 2012 WICET instructed CMC, by an email from Mr Miroshnikoff to Mr Vance to stop all works. As a result of this direction CMC was not able to carry out the Rail Receiving piling work on either 16 or 17 May 2012.
- CMC pleads that the Stop Work Direction was a direction either pursuant to clause 40.1, 33.1 or 34.1 of the General Conditions of the Contract.
- The direction arose in the following circumstances. CMC remobilised Avopiling from Abutment A of the Rail Receival Bridge to Abutment B from 20 March 2012. Following works having been completed at Abutment B, Avopiling mobilised to Pier 1 by about 16 April 2012 and then back to Abutment A on 24 April 2012. Once work recommenced at Abutment A, it became apparent that, as a result of the extended time in which the bored holes had been left open to the elements, piles A5 and A6 had substantially collapsed. In accordance with the instructions from the geotechnical engineer CMC had engaged on-Site, Mr Tully, Avopiling proceeded to backfill the piles with low strength concrete and rebore. On 4 May 2012 Dr Bindu emailed Mr Miroshnikoff (who had taken over from Mr Knowles) in the following terms:
“We understand that the excessive caving of ‘socket material’ was occurred in three piles of Abutment A. Please advise the Contractor’s Geotechnical Engineer to submit a detailed report on geotechnical issues with time line. The report shall include following background, ground profile of each pile, possible cause and extent of caving, remedial measure adopted and certified geotechnical capacity of pile.
Please provide a copy of recording of borehole camera for all piles for our records.”
- On 8 May 2012 CMC issued NCR16. The description of non-conformance in NCR16 was:
“Piling to Abutment A Piles A5, A6, A7, A8 commenced without a geotechnical engineer present. CMC were of the understanding that piling for this project would be certified by the Principal Contractor (Worley Parson). The Principle [sic] did not advise CMC that this was not the case and that piling would be undertaken MRS11.63 [Sept 09] until piles A5, A6, A7, A8 were within 2m of their design toe. This specification MRS11.63 (Sept 09) had not been issued at this time in the works.”
- The NCR identified as the relevant corrective action the engagement of Golder Associates by CMC to log and certify the piles as per MRS11.63. The preventative action identified was that a site instruction had been issued clarifying the specifications and issue dates. On 16 May 2012 at 8.48am Mr Miroshnikoff emailed Mr Vance as follows:
“Scott advises that piling is to re-commence today, with a concrete pour this afternoon.
Further to our discussions on Monday, we discussed that your geotech was to submit a proposal to AH for comment, as part of the NCR process. A meeting between your geotech and AH (Bindu) was to occur today.
The outcome of this meeting was for AH to review the methodology in order for them to signoff the NCR, and proceed with piling once all agreed.
This has not happened.
As a result we cannot allow piling to continue until the NCR has been reviewed and methodology agreed.
Please stop all works until this is closed out.”
- From this email it would appear that Mr Miroshnikoff did not action Dr Bindu’s request of 4 May 2012 until on or about Monday 14 May 2012.
- Mr Vance replied to Mr Miroshnikoff’s email at 10.32am on the same day:
“My recollection of the discussion is that we were going to organise a meeting ASAP, however, Bindu was not available until today. (we don’t believe this is a practical level of staffing for a project of this size).
There is no NCR which would prevent these works proceeding; There is no clarity on what we would report on, we are proceeding in line with our geotechnical advice and they are people who certify this works, they are very confident of how they are proceeding, as are our specialist contractor.
Further, to date, of 16 NCR’s raised on this project and submitted WP for closure, one has been closed, we are not sure where in the system the rest are, they are in your court.
I have tried to call you twice, I will take this as an instruction to cease work, this would be a change under clause 33.1, formal correspondence will follow in due course.”
- Mr Vance gave evidence that prior to receiving Mr Miroshnikoff’s email on 16 May 2012, he had not received any written communication requiring CMC to answer particular concerns or produce any report concerning the procedure to be followed in filling the bored holes.
- On 16 May 2012 Dr Bindu again emailed Mr Miroshnikoff stating that Aurecon Hatch would like to review the Contractor’s geotechnical remedial measures before proceeding with the construction to ensure the design intent.
- Colin Walker, who was Dr Bindu’s superior at Aurecon Hatch, emailed Dr Bindu on 17 May 2012 suggesting that Aurecon Hatch should not make any formal request or demand for information from Worley Parsons. He referred to the list he had prepared as being based on requirements outlined in the specification and key information that he believed would be required if Aurecon Hatch was requested to assess the piles. Mr Walker stated that he was not concerned with contractual issues, such as approval of construction procedure by Worley Parsons but included it to outline the process of the specification. He further stated that acceptance of the piles was the responsibility of Worley Parsons, but in order to provide any technical advice, he believed Aurecon Hatch would require construction records and the constructor’s proposed remedial measures.
- On the same day Mr Karandrews wrote to Mr Vance identifying what Worley Parsons required to move forward “on this situation”. Mr Karandrews then repeated Dr Bindu’s original request for a detailed report covering the same issues as Dr Bindu had previously identified.
- Mr Vance in responding to Mr Karandrew’s email expressed his frustration with this request:
“You don’t certify piles until you do them, that’s why you inspect with camera etc. on the day. They will decide whether it is acceptable or not once we are at full depth and they have examined the borehole. We have not got there yet. We can provide those records, however, Is or is there not a problem with the methodology we have been using and have already used on other signed off piles on site? This Methodology is a standard way of treating the situation encountered, do they have a problem with it or not? This is pretty standard procedure stuff.”
- On the same day, 17 May 2012, Mr Vance, Mr Henderson and Mr Tully met with Mr Miroshnikoff, Mr Karandrews, Dr Bindu and Mr Walker to discuss the issue. Mr Vance gave evidence that at this meeting Mr Walker said words to the effect that if Golders was happy with the proposed remediation works, Aurecon Hatch did not have a problem with it.
- WICET submits that this evidence should not be interpreted as signifying that a report was not to be provided prior to the recommencement of work. I accept Mr Vance’s recollection of what was said by Mr Walker. Mr Miroshnikoff was unable to recall whether he attended the meeting. Dr Bindu accepted an account of what was said by Mr Walker at the meeting which was consistent with Mr Vance’s evidence. Dr Bindu was an entirely truthful witness. Mr Walker was not called to give evidence by WICET. Mr Walker’s alleged statement at this meeting is however consistent with his email to Dr Bindu of 17 May 2012 in which he suggested that Aurecon Hatch should not make any formal request or demand for information from Worley Parsons. This was in the context that Aurecon Hatch were not certifying the piles. This role was being undertaken by Golders. As to how Golders dealt with the partially collapsed piles was a matter for it as the certifier. The methodology which had been adopted by Golders was described by Mr Vance in his email as “a standard way of treating the situation encountered”. The Stop Work Direction arose because Dr Bindu had requested information from Worley Parsons. This RFI was ultimately not supported by Dr Bindu’s superior, Mr Walker.
- I do not accept, as WICET submits, that there was a connection between NCR16 and the remedial action in relation to the piles. NCR16 does not relate to the issue of the collapsed piles. The NCR concerned the failure of CMC to have a geotechnical engineer present at the commencement of piling. This is evident from the description of the non-conformance and the corrective action identified in the NCR. Once the corrective action had been taken there was no longer any suggestion that Aurecon Hatch would be certifying the piles. This was to be undertaken by Golders having been engaged by CMC.
- WICET submits that CMC was under a contractual obligation to supply a geotechnical report as requested. The contractual obligation identified by WICET is clause 9 of Appendix AF3 to the Contract “non-conforming materials, products and services”. This clause establishes the procedure for a NCR. Clause 9.2 requires corrective action. Clause 9.1 requires all closed out NCRs to be “verified and approved by the PR representative”. This submission fails for two reasons. First it is not pleaded in WICET’s defence. More importantly clause 9, properly construed, does not give the PRR the power to require something to be done over and above the Contractor’s contractual obligations. CMC in carrying out the Rail Receival piling work was required to comply with both the Aurecon Hatch specification and MRS11.63 of 1999. There was no contractual obligation for the certifying geotechnical engineer engaged by CMC to provide a report to Worley Parson or Aurecon Hatch.
- CMC submits that the effect of the Stop Work Direction was to impose an additional obligation on CMC that was not imposed by the Contract. This was accepted by Mr Miroshnikoff in cross-examination:
“The effect of your stop work was to impose, I’m suggesting, a dual obligation on the contractor; not only to have its geotechnical engineer certify for the final geotechnical capacity of the piles, but also for the contractor to satisfy WICET’s geotechnical engineer as to the method being used in using these collapsed holes? … That’s correct.”
- Irrespective of how Mr Miroshnikoff construed the Stop Work Direction any determination of the contractual basis for the direction is a matter for the Court. CMC submits that the Stop Work Direction constitutes a variation for the purpose of clause 40.1. It submits that the impact of the direction was that:
- CMC’s work on the piling was interrupted and prolonged;
- CMC’s construction methodology was changed; and
- CMC was required to carry out additional work (such as arranging for Mr Tully to produce a report on its methodology for approval by Aurecon Hatch) which it was not otherwise required to carry out under the Contract.
- CMC did provide a geotechnical report by email to Worley Parsons from Mr Henderson in the mid-afternoon of 17 May 2012. The document was a memorandum from Golders which, in general terms, described how the sockets had been redrilled, filled with concrete and tested for stability. Later on 17 May 2012 Mr Miroshnikoff emailed Mr Henderson and Mr Vance to the effect that CMC could continue with the piling works. He had consulted with Aurecon Hatch and received confirmation that the material provided by CMC was suitable to allow the works to progress. The Stop Work Direction is better characterised as a direction to suspend part of the work under the Contract. Whilst it may be argued that the requirement for the additional report falls within clause 40.1(d) namely a direction to execute additional work, the direction was to stop all work until the report was supplied. That is, even if there was an additional contractual obligation imposed by WICET on CMC, the actual direction given was one to suspend piling work at Abutment A. A direction may only be given under clause 34.1 if the Principal’s Representative considers it necessary because of an action or omission of the Contractor, subcontractor or an employee or agent of either. WICET submits that the Stop Work Direction was issued because of an omission of CMC: a failure to deliver corrective action required to close out an NCR in relation to the collapsed pile walls at Abutment A. I do not accept this submission. There was no contractual obligation which required the provision of a report from Golders. The responsibility for certifying the piles, which would include determining the appropriate remedial action, was a matter for Golders not Aurecon Hatch. Even though Mr Miroshnikoff in his email of 16 May 2012 sought to link NCR16 with the provision of the report, NCR16 did not relate to any remedial action in respect of the partially collapsed piles. Even if WICET sought a greater oversight of CMC’s rectification work it was not necessary, in order to achieve this oversight, to give the Stop Work Direction. Nor was this desire for greater oversight an action or omission of CMC, Avopiling or Golders for the purposes of clause 34.1(a)(ii) of the Contract. I find that the suspension was therefore due to an act or omission of Worley Parsons. CMC is therefore entitled to a valuation under clause 40.5 pursuant to clause 34.4.
Direction 7 – Piling Hammer Claim
- In order to carry out the Beales Creek piling work, CMC utilised a 9 tonne hammer. On 8 June 2012 CMC was instructed by WICET to change the hammer apparatus used to carry out the Beales Creek piling work to achieve the geotechnical capacity specified in the contractual design drawings and specifications. The issue is whether that instruction constituted a variation pursuant to clause 40.1 of the General Conditions of the Contract. I make the following findings of fact.
- On 16 November 2011, Aurecon Hatch issued as part of the Contract the Annexure to Main Roads Specification MRS11.66 (MRS11.66.1) which provided, inter alia, that the piling hammer was to be “proposed by the Contractor and accepted subject to Superintendent approval”.
- A 9 tonne hammer was proposed by CMC on 12 January 2012 by way of ATP48 containing CMC’s “Process Procedure for Driven Steel Tubes”, nominating a Junttan PM26 piling rig with a Junttan HHK7/9SS Hydraulic Impact Hammer to carry out the Beales Creek piling works.
- WICET accepts that it approved the use of the 9 tonne piling hammer. WICET, alleges however, that CMC issued a “wave equation analysis” which “in effect, demonstrated that a 9 tonne hammer could perform the work to the design”. The wave equation analysis is only an estimation based upon input data which is unknown at the time of the analysis. This is evident on the face of the document. For example, the analysis states that it is "based on mathematical models which… [u]nder certain conditions… only crudely approximate, often complex, dynamic situations" and "should be used with prudence".
- The initial wave equation analysis was conducted on 4 October 2011 by Dynamic Pile Testing Australia Pty Ltd (DPTA) and predicted that the ultimate geotechnical capacity would be achieved with a set of about 10 mm per 10 blows from a maximum stroke of 1.5 m of the 9 tonne hammer. That analysis was caveated by DPTA stating that PDA testing undertaken during the early stages of piling would provide "further verification on the parameters adopted in this analysis".
- That initial analysis prompted CMC to issue RFI 0210 on 18 April 2012 which raised concerns held by CMC that, as a result of the "very small set mm per 10 blows forecast as required to achieve the ultimate capacity", the piles would not be able to achieve the minimum pile toe levels specified in the drawings and that attempts to reach those levels had potential to damage the pile liners.
- Ultimately, the response from Aurecon Hatch to that RFI was given on 25 May 2012 relaxing the required pile toe levels to a minimum of -20 m RL.
- Further wave equation analysis was carried out on 21 May 2012 by DPTA and approved by WICET on 29 May 2012. The effect of that analysis was that DPTA predicted, based on certain assumed input data (including geological conditions), that the pier piles would achieve the required ultimate geotechnical capacities at sets of 28 mm per 10 blows from a hammer stroke of 1.5 m by a 9 tonne hammer.
- Following Aurecon Hatch having obtained the permissible change to the original Decision Notice (allowing the construction of the temporary piling pad) on 19 April 2012, construction on the piling pad commenced from about 26 April 2012 and was largely completed by late May 2012.
- Avopiling completed piling at the Rail Receival Bridge area and remobilised back to Beales Creek to commence driving piles there by about 25 May 2012.
- Following initial driving with the 9 tonne hammer, on 31 May 2012, DPTA carried out PDA testing on pile P4 (at Pier 2). Mr Henderson emailed the results of that testing to Mr Miroshnikoff noting that CMC were achieving the set required by the wave equation analysis, however the tests did not show the pile achieving the required ultimate geotechnical capacity and requesting direction and input from Aurecon Hatch and Worley Parsons on continuing to drive the piles. The test results attached to that email showed that the measured geotechnical capacity was 6,446 kN (as compared to the required ultimate geotechnical capacity of 8,340 kN) and noted that:
The less than 2 mm set recorded on both tests suggests that the pile was not fully resistance activated during testing and the solution provided is representative only of the activated and not the ultimate geotechnical capacity of the pile at the time of testing.
- On 2 June 2012, Mr Taylor emailed Mr Henderson providing a response from Aurecon Hatch to the pile test results provided by CMC. The response, in effect, was that:
- the hammer being used had “insufficient energy transfer to achieve the required ultimate capacity”;
- CMC should undertake further pile driving using “suitable piling apparatus that can provide the required hammer energy”;
- the requirements for acceptance of the piles were that:
- they achieve the geotechnical capacity specified on the design drawings/specification; and
- the length of galvanised pile extend to a minimum of 1m below the base of the concrete pile infill.
- On the same day, Mr Walker of Aurecon Hatch emailed Mr Miroshnikoff stating that Aurecon Hatch had undertaken a review of the pile analysis provided by CMC and found an error in the hammer efficiency adopted. The email stated:
“The GRLWEAP analysis indicates that the hammer currently being used appears to have insufficient energy transfer to achieve the required ultimate capacity and therefore reference made to pile refusal measured by set is not relevant. The pile capacity can be confirmed by re-strike or provided by further pile driving, using suitable piling apparatus that can provide the required hammer energy. The piles must achieve the geotechnical capacity specified on the design drawing/specification to be acceptable. The length of galvanised pile shall extend to a minimum of 1m below the base of the concrete pile infill to be acceptable.”
- Mr Taylor’s email to Mr Henderson was followed by Site Instruction 63 issued on behalf of WICET on or about 8 June 2012. This instruction stated:
“The contractor is instructed to use suitable piling apparatus that can provide the required hammer energy to achieve the geotechnical capacity specified on the design drawing/specification for the construction of Beales Creek bridge, the length of galvanised pile shall extend to a minimum of 1m below the base of the concrete pile infill.”
It is this instruction that CMC alleges constitutes a variation.
- On 18 June 2012 Mr Vance wrote on the instruction CMC’s view that the direction constituted a variation. Mr Vance signed and returned the instruction. CMC on the same day issued a direction to Avopiling to mobilise a larger hammer to Site.
- On 15 June 2012 Avopiling raised concerns regarding the cost and risk of mobilising the larger hammer to Site. CMC then issued RF1 231 to Worley Parsons which, inter alia, noted that “only a fraction of the ultimate base resistance would be achieved during driving and testing” and that “additional driving may only increase resistance…[which]…may be insufficient to achieve the required design resistance”. That RFI also enclosed an email from Mr Dunstan of Coffey Geotechnics which set out a detailed analysis of the pile testing results.
- On 19 June 2012, Avopiling provided CMC with a detailed analysis of the pile results from Dr Ng. Included within that email was Dr Ng’s opinion that:
One thing for sure is that the actual capacity of the pile is a lot more than what has been currently demonstrated. To achieve full ultimate capacity of the pile, it need [sic] to move by about 1% of its diameter i.e. 10mm per blow. It wouldn't be hard to imagine that any hammer that can do that would likely be crushing the pile in the process.
- That email was passed on to Mr Miroshnikoff and Mr Taylor on the same date.
- CMC then attempted to arrange for the mobilisation of the larger hammer to Site. Mr Vance gave evidence that piling hammer rigs are not necessarily available when needed and are often occupied on other jobs. CMC directed Avopiling to mobilise the piling hammer to Site and sought to expedite the mobilisation of the hammer. However, Avopiling had to cross-hire the larger hammer from another firm and, at the time, it was being utilised on another job, which became delayed.
- WICET submits that it should not have taken CMC from the date of the direction (8 June) to the date of mobilisation (23 August) to obtain a new hammer. WICET identifies as the primary reason for this delay Avopiling’s reluctance to mobilise a larger hammer because it did not want to take the perceived risk of using the larger hammer. Those concerns were expressed to CMC by Avopiling in writing soon after CMC had directed Avopiling to mobilise a larger hammer to Site. Mr Vance’s evidence, which I accept, was to the effect that CMC did all it could to procure the larger hammer as soon as possible, including by having conversations, writing letters and holding meetings. His evidence was that the delay was caused by Avopiling not possessing a larger hammer, and having to hire one from a third party on a job which ran late. There is contemporaneous correspondence which supports the proposition that Avopiling could not obtain a hammer because of availability concerns. In mid-June 2012 Avopiling was sourcing quotes for a hammer. In July Avopiling stated that the availability concerns meant that the hammer could not be delivered until 18, then 23, then 30 July 2012. Avopiling did however continue to express concerns as to the use of the larger hammer. On 12 July 2012 Avopiling sent an email to CMC which stated:
“The crux of the issue from our perspective is that they [Worley Parsons or Aurecon Hatch] will need to take on board these risks of using the bigger hammer. We are on record (and I state it again here for the avoidance of doubt), as saying that we will not take on board any responsibility for either the costs, programme implications of using this hammer or equally as important the risk of structural damage to the piles that may result.”
- WICET refers to further correspondence from Avopiling to CMC and meetings that occurred from 24 July 2012 through to 17 August 2012 from which it makes the submission that the primary and overriding driver of the delay in procuring the hammer was CMC’s subcontractor not wanting to take the risk of the piling. These submissions are also relevant to any valuation of the Piling Hammer Claim. I further consider the parties’ submissions concerning Avopiling’s delay in mobilising the larger hammer to Site in considering the quantum of this claim.
- On 18 July 2012, a meeting was convened on-Site for the parties to discuss the methodology of driving with the 14 tonne hammer. At that meeting, CMC expressed the view that the size of the hammer was not the issue with the pile driving, but rather the thickness of the pile walls or the ground conditions. Also discussed was galvanising and the other options available to rectify the galvanising issue.
- On that date, Ms Haber also sought provision of a revised steel pile driving construction methodology from Avopiling for use of the 14 tonne hammer.
- Initially, Avopiling had confirmed the hammer would be available to be mobilised to Site by 18 July 2012, however that was progressively delayed. In addition, Avopiling sought to abrogate the risk of mobilising the larger hammer by requiring CMC to provide guidelines on the energy to be imparted into the hammer and refused to mobilise the hammer until those guidelines were provided.
- Subsequently, another meeting was held in Brisbane on 17 August 2012 where it was discussed and agreed that Dr Bindu would be on-Site full time assisting Mr Karandrews and that the drop heights would commence at 0.5m and be increased incrementally. Following that meeting, the14 tonne Piling Hammer Rig was mobilised to Site by about 23 August 2012.
- As to the driving of the piles with the 14 tonne hammer, CMC seeks a factual finding that during the driving of the piles using the 14 tonne hammer, Dr Bindu and Mr Karandrews communicated to CMC their proposals for the appropriate drop heights to be used with the 14 tonne hammer. The communications were made by Mr Karandrews based upon advice from Dr Bindu. Those drop heights were then recorded by CMC’s supervisor, Mr Downey. Ms Haber gave evidence that Dr Bindu was advising as to how to proceed and the hammer height drop. Dr Bindu accepted that he would nominate the drop height of the hammer to Mr Karandrews which Mr Karandrews would then communicate to CMC and Avopiling. Dr Bindu was on the telephone to a number of Aurecon Hatch personnel in Brisbane, including Mr McCarthy, Mr O’Connor and Mr Kemp. WICET has extracted relevant parts of the evidence in respect of this issue at  of its Written Closing Submissions. This includes the evidence of Mr Miroshnikoff. In cross-examination Mr Miroshnikoff would not accept that Dr Bindu was directing at what height the hammer would be dropped. The distinction drawn by Mr Miroshnikoff however, appears to be between Dr Bindu giving a direction as opposed to offering comments about the drop height. The distinction is unimportant. Irrespective of whether Dr Bindu and Mr Karandrews’ involvement was more in the nature of working with CMC and Avopiling, I find that the drop heights of the hammer were those provided by Dr Bindu. I therefore make the factual finding sought by CMC.
- The piling works were completed by CMC obtaining a report from a third party, namely Dr Seidel of Foundation Specialists Group. Dr Seidel reached his conclusion by applying a different “radiation dampening factor” to the test results he reviewed.
- As at the commencement of driving of the piles, the relevant contractual pile driving requirements were as follows:
- that the piles be drive to a minimum depth of -20 metres RL;
- that the piles achieve the Ultimate Geotechnical Pile Capacity specified in Drawing WIG-1532-B-DR-0006 Rev 2 (Pile Details Plan); and
- that the piles be driven to a depth sufficient to ensure that the galvanising portion of the piles extend to at least one metre past the “in situ RC toe level”.
- It is uncontroversial that the piles were driven to the minimum toe depth required.
- The piling experts (Mr Simmons and Mr Shaw) jointly agree that all the piles had, in fact, achieved the required ultimate geotechnical pile capacities when being driven by the 9 tonne hammer. They also agree that the PDA testing carried out at the time significantly under represented the actual ultimate geotechnical pile capacity of the piles.
- At paragraph 6.3.9 of his report dated 30 November 2015, WICET’s piling expert, Mr Shaw, states that:
Tables 5 and 6 show that, for the depths to which the piles were actually driven to, the required ultimate geotechnical pile capacity was achieved using both static design methods (Decourt & Poulos) and dynamic design methods based on the results of PDA testing (Hiley).
- In cross-examination, he also stated:
MR O’DONNELL: And that leads to your conclusion in 6.3.9 that, in your opinion, under the driving of the piles by the 9-tonne hammer, the required ultimate geotechnical capacity was, in fact, achieved?
DR. SHAW: That’s correct.
- Similarly, at paragraph 79 of his report dated 5 August 2015, CMC’s piling expert, Mr Simmons, states:
My calculations of Ultimate Geotechnical Pile Capacity with depth and the Ultimate Geotechnical Pile Capacities using the Hiley pile driving formula informed me that the as-driven piles had reached the specified Ultimate Geotechnical Pile Capacities.
- Pursuant to the drawings, galvanising for the pile liners for Beales Creek were initially required to extend the full length of the pile liners. CMC queried this design by issuing RFI 0016 on about 30 September 2011. WICET’s response varied the design such that the galvanising was only required to extend to 1m past the “in situ RC toe level”.
- CMC adopted that design, with the consequence that when the piles were unable to be driven to the anticipated depths, the galvanising was similarly left short.
- During the meeting on 18 July 2012, the parties discussed potential alternatives if the galvanising depths could not be achieved. Ultimately, the piles were never able to be driven to a sufficient depth to achieve the galvanising requirement, which WICET dealt with by setting off a sum calculated as being equivalent to the reduction in design life of the piles.
- CMC submits that the 8 June 2012 instruction to mobilise a larger hammer constitutes a variation. The equipment CMC was contractually obliged to provide in order to drive the piles at Beales Creek was a 9 tonne hammer. The relevant contractual specification was MRS.11.66.1. It is common ground that this specification constitutes a contractual document. Clause 6.5 of the specification required that the hammer used for driving shall be equivalent to the type nominated in Clause 1 of Annexure MRS11.66.1 and shall be capable of delivering the minimum energy input per blow stated in Clause 2 of Annexure MRS11.66.1. The relevant annexure provided that the proposed hammer shall be proposed by the Contractor and accepted subject to superintendent approval. CMC proposed a 9 tonne Junttan hammer. This was approved by WICET.
- While CMC accepts that it remained contractually responsible for the pile driving requirements, WICET’s instruction of 8 June 2012 went beyond WICET simply insisting that CMC achieve the contractual pile driving requirements. By the instruction WICET sought to have CMC achieve these requirements by use of a larger hammer. CMC submits that it was quite another thing for WICET to direct CMC how it was to go about achieving the contractual requirements.
- There is a dispute between the parties as to whether the 14 tonne hammer had any impact on or provided any benefit in terms of achieving the pile driving requirements. It may be accepted that the depth of galvanising was not achieved by the 14 tonne hammer. Whether the ultimate geotechnical capacity had already been achieved by the 9 tonne hammer or was subsequently achieved by the 14 tonne hammer is not an issue I need to resolve. The issue of geotechnical capacity was ultimately resolved by the provision of Dr Seidel’s report. In determining whether the instruction of 8 June constitutes a variation, it is irrelevant whether it was reasonable and logical for WICET to seek to resolve the problem by instructing that a larger hammer be mobilised.
- In my view, the instruction does constitute a variation. It falls within clause 40.1(a), namely a direction to increase any part of the work under the Contract. The term “work under the Contract” is defined to mean a number of matters including “Constructional Plant”. This term itself is defined to mean appliances and things used in the execution of the work under the Contract but not forming part of the Works. The 8 June instruction required CMC to mobilise to Site Constructional Plant which it was not otherwise contractually required to mobilise. By clause 40.3 of the Contract the variation is to be valued under clause 40.5.
Quantum – Piling Claim
- The parties dealt with the issue of quantum in respect of Directions 1 to 6 separately from the Piling Hammer Claim. I have adopted the same approach.
(i)Quantum – Directions 1 - 6
- In light of my findings above, the issue of quantum only arises in relation to Directions 1, 2, 3 and 6. I have found that only one of these directions (Direction 2) constitutes a variation under clause 40.1. The other directions were given pursuant to clauses 33.1 or 34.1.
- WICET submits that for Directions 1, 3 and 6 the relevant test is whether CMC has incurred more cost by reason of the direction. In accordance with this submission WICET’s quantum expert Mr Tsipis’ primary valuation for the piling claim in relation to these directions is nil. This is because CMC has not, in fact, paid its subcontractor Avopiling anything for the claims in respect of these directions. WICET submits that CMC’s Piling Claim seeks only the cost of Avopiling’s resources being on standby. Whilst Avopiling claimed against CMC two items relating to standby the fact that CMC did not pay these claims means that it has not incurred any actual cost. I have already rejected WICET’s submissions in this respect. A further factor is that WICET has not pleaded that CMC had “not paid any additional cost to its subcontractor”. Nowhere in the Contract is CMC’s entitlement to a valuation under clause 40.5 capped by reference to what CMC has actually paid its subcontractor. If CMC incurred more costs as a result of a direction under clauses 33.1 or 34.1 its entitlement under the Contract is to a valuation under clause 40.5 pursuant to clause 33.1 or 34.4. A valuation under clause 40.5 does not expressly or impliedly limit such a valuation to the amount actually paid by CMC to its subcontractor. Mr Tsipis’ primary valuation should therefore be rejected.
- Similarly for reasons I have already stated Mr Roberts use of Schedule C-4.3 pursuant to clause 40.5(a) should also be rejected. Mr Roberts’ approach was, pursuant to clause 40.5(a), to use the Schedule C-4.3 rates for items the subject of the piling claim or where there were no rates in Schedule C-4.3 use the Avopiling subcontractor rates plus 12.5% for profit and overheads. It is not appropriate for Mr Roberts to use the rates in Schedule C-4.3 in valuing the claims in respect of Directions 1, 3 and 6. The rates in Schedule C‑4.3 prescribed specific rates referable to valuing a variation directed to be undertaken as Daywork. Directions 1, 3 and 6 did not constitute variations let alone variations directed as Daywork under clause 41. Nor was the variation constituted by Direction 2 directed to be undertaken on a Daywork basis. CMC however submits:
- in relation to the valuation of Daywork under the Contract, clause 40.5(h) and clause 41 do not contemplate the use of Schedule C-4.2;
- clause 41 specifically lists six different items to be used to value work performed on a Daywork basis;
- the rates in Schedule C-4.2 are not Daywork rates in the sense described in clause 41. They are better understood as “daily” or “hourly” rates that may be used for variation work;
- CMC does not rely on clause 41 for its entitlement to value the works pursuant to Schedule C-4. Clauses 33.1 and 34.4 expressly take the party to clause 40.5. The order of precedence as set out in clause 40.5 takes you to the agreed rates in Schedule C-4 (either under clause 40.5(a), 40.5(b) or as a proxy for reasonable rates under clause 40.5(c)).
- I do not accept this submission. Under the cascading regime of clause 40.5 the rates in Schedule C-4.2 and Schedule C-4.3 do not constitute prescribed specific rates to be applied in determining the value of directions given under clause 33.1 or 34.1 or variations not directed to be undertaken as Daywork. The rates are prescribed specific rates for a variation directed as Daywork. Nor are the Schedule C-4.3 rates engaged by clause 40.5(b). Schedule C-4.3 does not constitute a “Schedule of Rates”. The rates may be applied under clause 40.5(a) where a variation is directed to be undertaken as Daywork. Whilst it may be accepted that neither clause 40.5(h) or clause 41 expressly refer to the rates in Schedule C-4.2 or Schedule C-4.3 both clauses generally refer to the Daywork rates contemplated by the Schedule. Clause 40.5(h) states that Daywork shall be valued in accordance with clause 41. Clause 41 contemplates the Principal’s Representative directing that a variation be carried out as Daywork. Schedule C-4 similarly provides that “variations shall be performed on a Unit Rates or a Daywork Rates basis at the sole discretion of the Principal’s Representative.” Both clause 41 and Schedule C-4 contemplate the keeping of records by the Contractor for verifying the work actually performed by the Contractor. Under clause 41 for example, the Contractor is required to record each day, particulars of all resources used by the Contractor for the execution of the Daywork and each day furnished to the Principal’s Representative particulars and copies of timesheets, wages sheets, invoices, receipts and other documents evidencing the cost of the Daywork. The Principal’s Representative under clause 41 may direct the manner in which matters are to be recorded. Under Schedule C-4 the Contractor is similarly required to provide timesheets, payroll records and such other information as the Principal’s Representative may require for varying the work actually performed by the Contractor. Whilst clause 40.5(h) and 41 do not expressly refer to the use of Schedule C-4.2 or C-4.3 there is a commonality in not only subject matter (Daywork), but also the Daywork being directed by the Principal’s Representative and the requirement for the Contractor to maintain daily records.
- The appropriate valuation for the relevant directions is in my view, to be undertaken pursuant to clause 40.5(c) which refers to reasonable rates or prices. Both Mr Roberts and Tsipis have undertaken alternative valuations by reference to reasonable rates. Mr Roberts has estimated what constitutes a reasonable rate by reference to Avopiling’s rates plus 12.5% for profit and overheads. There is little difference in the valuations arrived at by Mr Roberts and Mr Tsipis by reference to reasonable rates.
- Mr Roberts has also by amendments to his report provided a further alternative valuation. Some of the directions in respect of the Piling Claim are also covered in CMC’s Delay Claim. In the event that the Court decides that the Delay Claim for the period covering the Piling Claim succeeds, and that the Avopiling rates apply, Mr Roberts has included an alternative amount using 5% in lieu of 12.5% in order to remove 7.5% for overheads. This is because if the Delay Claim succeeds to the extent that a period within which the Piling Claim is included, then there would be double counting on the overheads. The quantum of the Delay Claim encompasses the claim for overheads. In dealing with the Delay Claim below I find that Directions 1, 2, 3 and 6 are relevant delay events. Accordingly, Mr Roberts third alternative valuation which does not include overheads should be adopted.
- For Direction 1, the Beales Creek piling permit, Mr Roberts’ third alternative valuation using Avopiling rates as reasonable rates plus 5% for profit is $141,593. Mr Tsipis’ valuation is $96,675. The difference is that Mr Tsipis excludes the period 3 to 8 February 2012. Mr Tsipis is of the view, by reference to the Avopiling daily report sheets, that Avopiling was still completing an enabling process and was therefore not able to start work in any event. WICET submits that as the claim is based on duration based cost (for example stand by), CMC’s entitlement should be reduced to the extent it caused the delay. Mr Roberts’ valuation should not be reduced as WICET submits. There is no pleading by WICET that CMC’s entitlement in respect of Direction 1 is to be reduced on account of the enablement process. The quantum of CMC’s claim is identified in paragraph 192A(b) of the eighth further amended statement of claim and Annexure D1. WICET did not seek further and better particulars of CMC’s quantum claim in this respect.
- The only other relevant dispute between Mr Roberts and Mr Tsipis concerns concurrent delay in respect of Direction 5 dealing with specification uncertainty. As CMC has failed in this claim the dispute as to a concurrent rain event does not need to be resolved.
- I therefore assess quantum in respect of events 1, 2, 3 and 6 of the Piling Claim as follows:
Direction 1 – Beales Creek waterway barrier permit $141,593
Direction 2 – NCR01 $73,868
Direction 3 – Postponement of Rail Receival Piling Work $22,680
Direction 6 – Stop Work $6,930
(ii)Quantum – Piling Hammer Claim
- I have determined that this claim constitutes a variation under clause 40.1 of the Contract. The valuation of the variation must therefore be carried out pursuant to clause 40.5.
- For reasons already expressed the proper approach under the Contract is to conduct a valuation pursuant to clause 40.5(c) using reasonable rates. Both Mr Roberts and Mr Tsipis have undertaken alternative variations using reasonable rates plus an allowance of 12.5% for profit and overheads. Both experts have quantified the claim by reference to the “Hammer Piling Schedule” which is Avopiling’s claim against CMC for cost associated with the additional hammer. CMC has paid its subcontractor Avopiling $749,831.63 in respect of this claim because of a statutory adjudication process. A valuation under clause 40.5(c) is not however limited to this amount. By reference to the joint expert report of Mr Roberts and Mr Tsipis, the experts have been able to agree on the quantum for various items falling within the Piling Hammer Claim:
|(a)||Mobilisation and demobilisation of hammer||$32,625|
|(b)||Hire of 14 tonne hammer||$97,200|
|(c)||Pile testing with 14 tonne hammer||$80,718.75|
|(d)||Extension of liners and weld test cost||$31,381.31|
|(e)||Testing and engineering advice||$30,749.06|
CMC’s claim of $2,081.25 for hammer hire, mechanic and flights is no longer pressed.
- In spite of the agreement of the experts as to quantum for items (c), (d) and (e), WICET submits that these amounts should not be allowed or, in the case of the testing and engineering advice, reduced. As to pile testing with the 14 tonne hammer this claim includes a cost referred to as “Establishment for PDA testing” and “PDA test”. WICET in relation to this item and a number of other items questions whether there is a sufficient nexus between the hammer direction and the various items claimed as part of the variation. Mr Tsipis and Mr Roberts agree that the PDA testing was a consequence of the Hammer Direction, and have therefore included the item in their valuation. WICET submits that these costs should not be included in any valuation because the PDA testing was required under the Contract. I do not accept this submission. The PDA testing required under the Contract was substantially increased as a result of the Hammer Direction. As a result of the Hammer Direction, substantial and repeated PDA testing was required to be carried out. The PDA testing claimed is that claimed by CMC’s subcontractor as being required due to the Hammer Direction and is therefore properly claimable by CMC.
- As to the agreed amount of $31,381.31 for the extension of liners and weld test costs this claim arises as a result of CMC having to extend and weld the liners due to the damage caused to the piles from the use of the 14 tonne hammer. I have found that WICET was responsible for the instructions as to the drop heights for the 14 tonne hammer. The driving of the piles using the 14 tonne hammer damaged the piles such that sections were required to be cut off and rewelded. I find that WICET is responsible for the extra cost arising from this damage. I reject WICET’s submission that the damage to the piles was caused by a failure on the part of Avopiling to strike the piles concentrically. This allegation is not pleaded by WICET nor is it supported by the evidence.
- WICET submits that there is a difference between the cost incurred in relation to the sufficiency of the 14 tonne hammer and the cost incurred in relation to resolving the issue of geotechnical capacity. The former are incurred in relation to the 14 tonne Hammer Direction. The latter would have been incurred in any event without the Direction because it was necessary for CMC to achieve geotechnical capacity. CMC produced all invoices in relation to these costs. Mr Vance gave evidence that these costs “were all related to the issues around what hammer and what to do to resolve these piles”. I therefore adopt the agreed amount of the experts for this item.
- Mr Tsipis in the joint report suggests a deduction of $83,268 in respect of the Junttan Rig. WICET now accepts that the deduction suggested by Mr Tsipis should not be made.
- In the joint expert report there are two entries relating to the APL crane. The first is for the period that the crane was used during the piling work with the 14 tonne hammer and the second entry concerns the period the crane was on-Site awaiting the mobilisation of the 14 tonne hammer. In the joint report Mr Roberts uses the terms APL crane and APL Liebherr L873 crane interchangeably. In each instance the reference is to the same crane. I have already dealt in part with WICET’s submission that CMC is substantially responsible for the delay in procuring the hammer. The case sought to be advanced by WICET is that in spite of CMC immediately requesting Avopiling to mobilise a large crane to site (on 8 June 2012), the real reason for Avopiling’s delay in mobilising, known to CMC, was unresolved issues as to who would assume the risk of driving the piles with the larger hammer. Whilst some of the contemporaneous documents to which I have already referred evidence Avopiling expressing those reservations, it remains the case that Avopiling did not itself own a 14 tonne hammer. It had to source the hammer from a third party supplier. The 14 tonne hammer was being used on a different project. The evidence is that it was simply not available until it was mobilised to site. Mr Vance rejected the suggestion that the delay in mobilisation occurred because Avopiling did not want to accept the risk of damage being caused to the piles by a bigger hammer. His evidence, which I accept, was that the hammer was delayed on another project. I find that CMC is not responsible for the delay in mobilising the 14 tonne hammer to Site. CMC not only directed Avopiling to mobilise the 14 tonne hammer but had numerous conversations and sent correspondence seeking to achieve mobilisation. CMC also explored whether another piling contractor was available to perform the works however no one was available. Another difficulty with WICET’s submission is that it is no part of WICET’s pleaded case that CMC is not entitled to a valuation for this item because it was responsible for the delay in bringing the 14 tonne hammer to Site.
- As to the use of the APL crane it is uncontroversial that the 14 tonne hammer was suspended from the crane when used. The crane therefore had to be on-Site while the hammer remained on-Site. It follows that the period of use of the 14 tonne hammer necessarily included the use of the APL crane. WICET also submits that there ought to be a deduction to account for the time that the APL crane would have spent on-Site finalising the works with the 9 tonne hammer. Mr Vance gave evidence to the effect that, without the Hammer Direction, the APL crane would have demobilised when the 9 tonne hammer left Site. WICET submits however that there is presently no evidence as to how long the crane would have remained on-Site with the 9 tonne hammer. This submission ignores the fact that the work of the 9 tonne hammer had effectively finished at the time the Hammer Direction was given.
- WICET further submits that CMC has not established through the evidence that the APL crane was required to remain on standby between the date of the Hammer Direction and the recommencement of piling on 23 August 2012. There was however evidence from Mr Vance as to why the crane remained on-Site. His evidence was that:
- had the Hammer Direction not been issued, the crane would have been demobilised;
- the crane remained on-Site for the entire period until mobilisation of the 14 tonne hammer to Site;
- it would have been costly to derig, demobilise, remobilise and rerig the crane, in the order of $100,000; and
- at the time, CMC expected that the 14 tonne hammer would be mobilised much sooner that ultimately eventuated.
- Mr Vance’s evidence in this respect was not challenged and may be accepted.
- Using Mr Roberts’ alternative valuation as identified in Appendix 5.2 of his report I assess quantum for the use of the APL crane at $86,785.71. For the standby of the APL crane from visit 1 to visit 2 with the 14 tonne hammer I assess quantum in the amount of $98,111.25.
- The experts were unable to agree in relation to a further item of quantum in respect of the Bored Piling Rig R416. It is common ground that the Bored Piling Rig was required to be on-Site for the 14 tonne hammer works. WICET submits that the demobilisation and remobilisation of the Bored Piling Rig occurred at the convenience of CMC. CMC was however obliged under the Contract to take steps to mitigate the impact of any delays. Mr Vance’s evidence was that:
“I think we have an obligation to protect the principal where possible from cost. Having that rig sit there for an unknown period till you got a hammer would not have been economical.”
- I accept Mr Vance’s evidence. I also accept Mr Vance’s evidence that the Bored Piling Rig was required to remain on-Site for the final stage of the Beales Creek piling works. His evidence was that once the piles were certified the Bored Piling Rig was used to finish the work. This work required the piles to be bored in order to clean them and apply reinforced concrete. Mr Vance could not suggest any way the standby of the Bored Piling Rig could have been avoided. I therefore assess quantum for this item on the basis of Mr Roberts’ alternative valuation at $181,687.50.
- CMC also claims the cost of having to move the 14 tonne hammer between the banks of Beales Creek on two occasions. Moving equipment such as a 14 tonne hammer rig around Site required the use of a semi-trailer referred to as a “float” which resulted in additional cost. WICET does not contend that these relocations did not occur, or that CMC did not incur cost as a result, but alleged there is an absence of evidence to support the fact the relocations were required due to the Hammer Direction. I accept CMC’s submission that if the Hammer Direction had not been issued, those costs would not have been incurred.
- I therefore assess quantum in relation to the Bored Piling Rig R416 Item at $181,687.50.
- I assess quantum for the Piling Hammer Claim as follows:
|•||Mobilisation/demobilisation of hammer||$32,625.00|
|•||Hire of 14 tonne hammer||$97,200.00|
|•||Use of APL crane||$86,785.71|
|•||Pile testing with 14 tonne hammer||$80,718.75|
|•||Bored Piling Rig R416 including
mobilisation, standby and intra-float moves
|•||Extension of liners and weld test cost||$31,381.31|
|•||Standby of APL crane||$98,111.25|
|•||Testing and engineering advice||$30,749.06|
|Total for Piling Claim:||$639,258.58|
Pyealy Creek Bebo Arch Claim (Variation 103)
- CMC’s Contract Works included the construction of a pre-cast arch culvert in Pyealy Creek as part of the construction of the OLC. The parties agree that WICET issued CMC with revised drawings for the construction of the Bebo Arch which constituted a direction pursuant to clause 40.1 of the General Conditions to vary the Contract Works. The parties also agree that CMC performed these works.
- The Bebo Arch is relevant to CMC’s claim for a valuation for the variation pursuant to clause 40.5 and CMC’s Delay Claim. I make the following factual findings in relation to the construction of the Bebo Arch.
- The Baseline Program provided for all of the elements of the structure and their planned duration, and sets out that the Bebo Arch structure:
- planned to start on 14 November 2011;
- planned to finish on 8 February 2012; and
- had a total duration of 75 days.
- The Baseline Program provided that the Bebo Arch structure had a significant amount of float, accordingly, it could be started 79 days late and meet the milestone date for the OLC and was not a priority structure in late 2011 and early 2012.
- The construction of the structure did not start as planned in November 2011 due to:
- clearing permit issues, including the no go zones and removal of habitat trees; and
- the prioritisation of the construction of the OLC to meet early objectives, which resulted in a temporary access being constructed and used through Pyealy Creek, creating a safety issue for any works within Pyealy Creek. It is not suggested (or pleaded) that CMC was responsible for the decision to postpone starting work on the Bebo Arch at this time.
- On 11 April 2012, by a RFI sent by Mr Henderson to Worley Parsons (RFI 0195), CMC identified that the design of the Bebo Arch structure footings did not include design details (including reinforcement) for the pedestal footing and requested these details.
- In mid-April 2012, CMC stopped hauling trucks through the temporary access over Pyealy Creek to the OLC and prepared to start the construction of the Pyealy Creek Bebo Arch. This included a survey which determined that the design for the Pyealy Creek Bebo Arch did not match Pyealy Creek. The creek was materially deeper and on a different alignment than that provided for in the design drawings.
- On 23 April 2012, by a letter from Mr Vance to Mr Walls, CMC provided a notice of delay in relation to the difference between the design of the Bebo Arch and Pyealy Creek.
- On 24 April 2012, by a RFI sent by Mr Henderson to Worley Parsons (RFI 0217), CMC stated that:
“The Bebo arch situates in Pyealy creek is misaligned with the existing creek bank. This misalignment will mean significant cut quantities outside of the project boundaries exposing significant and in places vertical batter faces. The design fish passage location additionally appears to be positioned on the incorrect side of the creek. The design creek invert is significantly higher than that found on site, meaning an effective 'step up' to the new structure together with significant changes being required to the drains which run into the structure from the OLC.
Attention must be drawn to previously submitted RFI-0105 where the previous design fill levels already exceeded that allowable above the specified arch. Should the design require lowering of the arch in its entirety a 'cover slab' will be required to maintain the allowable fill levels above the arch within the manufacturers specification. Please refer to the attached sketches for further details.”
- The issues raised in RFI 0217 were addressed in a meeting between representatives of CMC, Worley Parsons and Aurecon Hatch:
- the creek levels were deeper by 1.5 metres, meaning that the current design was for the structure to be in mid-air and not feasible to construct;
- the actual alignment of the creek meant that it would not go through the Bebo Arch as designed; and
- the entire structure had to be redesigned to match existing conditions.
- On 27 April 2012, Mr Mower of Aurecon Hatch provided a formal response to RFI 0217 and stated that Aurecon Hatch were mobilising resources to provide a revised design and drawings at the earliest opportunity. Despite this assurance, CMC would not receive the final design drawings for all aspects of the Bebo Arch until 19 September 2012, some 19 days after the Date for Practical Completion of 30 August 2012.
- Without the revised design CMC could not start construction work to the structure at the Pyealy Creek Bebo Arch. But for the need for a changed design, CMC could have started construction works in April 2012 and would have completed the construction of the structure before Practical Completion.
- On 16 May 2012, Worley Parsons issued CMC with preliminary design drawings for the revised Pyealy Creek Bebo Arch, which were not issued for construction (the 16 May Drawings).
- On 21 May 2012, CMC provided a notice of delay in relation to the lack of design for the Pyealy Creek Bebo Arch.
- On 29 May 2012, Mr Vance sent an email to Mr Miroshnikoff attaching marked up versions of the 16 May Drawings identifying issues and mistakes in the preliminary design drawings.
- On 30 May 2012, by an email from Mr Miroshnikoff to Mr Vance, Worley Parsons issued CMC with further preliminary design drawings for the revised Pyealy Creek Bebo Arch (the 30 May Drawings). As at 30 May 2012, CMC did not have a drawing or design from which it could start construction of the Pyealy Creek Bebo Arch.
- On 4 June 2012:
- By a RFI sent by Mr Grey to Worley Parsons (RFI 0228), CMC provided marked up copies of the 30 May Drawings identifying missing details in the design.
- By a letter from Mr Vance to Mr Walls dated 2 June 2012, CMC provided a notice of delay in relation to the outstanding design issues at the Pyealy Creek Bebo Arch.
- On 8 June 2012, Mr Vance sent an email to Mr Miroshnikoff providing notice that CMC may need approval to clear outside the clearing boundaries for the construction of the northern end of the Pyealy Creek Bebo Arch.
- On 14 June 2012, Mr Grey sent an email to Mr Taylor attaching drawings to determine the clearing coordinates for the construction of the upstream end of the structure, and Mr Taylor sent an email to Mr Vance confirming that the Pyealy Creek Bebo Arch structure may be outside of the clearing permit.
- In mid-June 2012, CMC started general excavation at Pyealy Creek to create safety benching and a crane pad for the construction of the structure.
- On 18 June 2012:
- Ms Marr of Aurecon Hatch sent an email to Mr Grey stating that Aurecon Hatch was in the process of establishing whether an amendment to the clearing permit would be required to allow additional clearing works.
- Mr Cunniffe of CMC sent an email to Ms Marr identifying the area and trees which were required to be cleared for the construction of the Pyealy Creek Bebo Arch.
- By a letter from Mr Vance to Mr Bourke, CMC provided a notice of delay in relation to the clearing boundary at the Pyealy Creek Bebo Arch.
- On 22 June 2012, CMC's geotechnical engineer visited the Site and calculated the bearing capacity for the in-situ material beneath the Bebo Arch footings. On the same date, Mr Grey sent an email to Mr Walker of Aurecon Hatch requesting design details for the mass concrete to be placed beneath the footings.
- On 28 June 2012, by way of a RFI sent by Mr Grey to Worley Parsons (RFI 0236), CMC noted that its geotechnical engineer had rated the in-situ material at less than the required kPa required for the revised Bebo Arch footings and requested dimensions and limits for the blinding layer of mass concrete.
- On 3 July 2012, Worley Parsons responded to RFI 0236 by instructing CMC to excavate founding material, place 150mm mass blinding concrete for the footings and 50mm mass blinding layer for other working areas for the Bebo Arch. This site instruction was a change to the works as it required:
- CMC to excavate an addition 100mmm of material in the footings;
- placing 150mm blinding concrete in the footings; and
- placing 50mm of blinding concrete on other working areas.
- On 2 July 2012, Mr Grey sent an email to Mr Taylor seeking details of the spandrel pedestal for the footings as requested in RFI 0228. CMC needed this information to construct the footings for the Bebo Arch.
- On 11 July 2012:
- Ms Marr sent an email to Mr Grey requesting a drawing highlighting the area of vegetation required to be cleared to construct the Bebo Arch for the purposes of amending the clearing permit. Mr Grey responded on the same date providing this drawing.
- By a RFI sent by Mr Grey to Worley Parsons (RFI 0242), CMC referred to all prior RFI’s in relation to Pyealy Creek Bebo Arch and sought resolution of:
(i) the outstanding inconsistencies between the pre-cast and in-situ elements of the structure; and
(ii) the clearing permit to the upstream and of the structure.
- By a letter from Mr Vance to Mr Bourke, CMC provided a notice of delay in relation to the design issues and change in construction methodology to the Pyealy Creek Bebo Arch.
- CMC did not have a design from which it could begin construction of the Pyealy Creek Bebo Arch.
- In or about July 2012, in discussions between Mr Miroshnikoff, Mr Taylor and Mr Vance:
- Mr Miroshnikoff expressed frustration at the time it was taking to get the design for the structure and asked if CMC could engage a designer to design the works in order to start construction of the structure; and
- Mr Taylor stated that there was an issue of payment between WICET and Aurecon Hatch.
- On 20 July 2012, by a letter from Mr Vance to Mr Bourke, CMC proposed to engage a designer to design the pedestal for the spandrel requested in RFI 0195 on 11 April 2012 and an in-situ concrete slab for the wingwalls.
- On 25 July 2012, by an email from Mr Taylor to Mr Grey, CMC received revised drawings which permitted CMC to begin construction of the footings.1356 However, at this date:
- the clearing permit had not been approved for the northern third of the structure; and
- the design for the wingwalls was still outstanding.
- The revised designs received by CMC required it to construct a considerably more substantial structure than that provided for in the original design, including because:
- the footings were wider;
- the footings were increased in height from 750mm to 1600mm, necessitating additional formwork and the installation of a working platform to facilitate working at the height requirements for their construction; and
- the reinforcementwithin the footings had become more complex and larger (from 24mm to 28mm);
- tie beams were required to be constructed perpendicular to the footings, connecting them together.
- On 26 July 2012, CMC commenced digging out the base of Pyealy Creek for the concrete footings. This excavation did not include the upstream end of the structure which was subject to the clearing permit amendments. The lack of a clearing permit to the upstream of the structure affected the efficiency in the construction of the Pyealy Creek Bebo Arch footings.
- From 26 July 2012 to 3 September 2012, CMC constructed the blinding layer, and footings for two-thirds of the Pyealy Creek Bebo Arch from the downstream end of the structure.
- On 10 August 2012, Mr Taylor sent an email to Mr Grey attaching a copy of the amended clearing permit for the construction of the northern (upstream) end of the Pyealy Creek Bebo Arch. This permit included the obligation to perform fauna relocation activities.
- On 15 August 2012, by an email from Mr Karandrews to Mr Vance, Worley Parsons confirmed that the fauna trapping at the northern end of Pyealy Creek had commenced on 14 August 2012 and would be complete by 17 August 2012.
- On 17 August 2012 and 18 August 2012, by a letter from Mr Bourke to Mr Vance dated 16 August 2012 and an email from Mr Miroshnikoff to Mr Vance, Worley Parsons alleged that CMC was able to start works in an unobstructed manner and that CMC had dedicated minimal resources to the works.
- These allegations were incorrect as:
- CMC was unable to clear the upstream end of the structure due to the lack of a clearing permit until 18 August 2012;
- further resources would not have assisted with the speed of construction due to this constraint; and
- CMC had more resources on-Site than alleged by Worley Parsons.
- On or about 17 August 2012, Mr Vance telephoned Mr Bourke about the letter dated 16 August 2012 and was informed by Mr Bourke that he "wasn’t close enough to the facts to know, he just signed the letter.”
- On 18 August 2012:
- CMC had access to begin clearing and excavation to the northern end of the Pyealy Creek Bebo Arch, and started these works.
- By a letter from Mr Vance to Mr Bourke, CMC provided a notice of delay in relation to the revised design and clearing permits.
- From 18 August 2012 to 18 September 2012, CMC excavated, constructed the blinding layer, and footings for the last one-third of the Pyealy Creek Bebo Arch from the upstream end of the structure.
- With respect to the construction of the footings:
- They were constructed in two longitudinal segments due to the late delivery of the clearing permit, and this process was slower than if CMC had been provided with unimpeded access to the entire area for construction.
- They were constructed with one crew of resources due to uncertainty with respect to the timing of the provision of the clearing permit.
- They were constructed with two separate concrete pours, being the base and vertical components.
- They took 42 working days to complete.
- The original design for the structure included the supply and placement of pre-cast concrete wingwalls in Pyealy Creek. This process is almost always faster and generally less expensive than an in-situ concrete pour. Due to the change in design to the structure, the pre-cast supplier was required to fabricate a specialised mould for the wingwalls and as this fabrication was expected to be slower, a decision was made to change the design to cast in-situ wingwalls.
- As at 24 August 2012, CMC had not received drawings which would have allowed it to commence construction of the wingwalls for the Pyealy Creek Bebo Arch.
- On 28 August 2012, Mr Miroshnikoff sent an email to Mr Vance attaching drawings for the Pyealy Creek Bebo Arch wingwalls and instructing CMC to commence works on the excavation of wingwalls footings, testing for bearing capacity, blinding layer and reinforcement scheduling (28 August Drawings).
- The 28 August 2012 drawings did not provide the dimensions to allow CMC to commence construction of the wingwalls, or procure the materials to do so. In particular, the correct dimensions were needed to schedule and order reinforcement for the structure.
- On 30 August 2012:
- By a letter from Mr Vance to Mr Bourke, CMC provided a notice of delay in relation to the design issues due to the lack of sufficient design information for the wingwalls to the Pyealy Creek Bebo Arch.
- At a meeting between representatives from Worley Parsons, CMC and Aurecon Hatch, CMC reiterated that it could not start works on the wingwalls until the dimensions were provided.
- On 31 August 2012, Mr Miroshnikoff emailed Mr Vance forwarding wingwall design drawings with dimensions for the wingwalls (31 August Drawings).
- Those dimensions were plainly incorrect and would have resulted in CMC building an absurd structure. On 1 September 2012, Mr Grey sent an email to Mr Walker at Aurecon Hatch stating that the length of the wingwalls provided must be incorrect as the specified length was only 1.504m, which could not be correct.
- On 3 September 2012, Mr Walker sent Mr Grey an email confirming that he would have the dimensions on the 31 August Drawings checked. On this date, CMC did not have sufficient design details to begin procuring steel reinforcements for the wingwalls.
- On 10 September 2012:
- By a letter from Mr Vance to Mr Bourke, CMC provided a notice of delay in relation to the design issues for the wingwalls to the Pyealy Creek Bebo Arch.
- CMC still could not begin procuring reinforcement for the construction of the wingwalls for the Pyleay Creek Bebo Arch.
- On 12 September 2012, Mr Taylor sent an email to Mr Grey attaching further drawings for the Pyealy Creek Bebo Arch, including wingwalls (12 September Drawings).
- On 13 September 2012:
- Mr Miroshnikoff sent an email to Mr Vance, which attached the 12 September Drawings indicating that they were preliminary and directing CMC to proceed with the drawings and to advise if further details were required.
- Mr Grey sent an email to Mr Taylor providing comments on the 12 September Drawings, identifying errors and inconsistencies in dimensions.
- On 14 September 2012, by a letter from Mr Vance to Mr Bourke, CMC provided a notice of delay in relation to the design issues for the wingwalls to the Pyealy Creek Bebo Arch, identifying issues on the 12 September Drawings which prevented CMC from ordering reinforcing steel.
- On 18 September 2012, by a RFI sent by Mr Grey to Worley Parsons (RFI 0266), CMC requested that WICET address the issues identified on the 12 September Drawings.
- On 19 September 2012, Mr Miroshnikoff sent an email to Mr Vance attaching further design drawings for the Pyealy Creek Bebo Arch wingwalls (19 September Drawings). The 19 September Drawings (finally) resolved all outstanding issues with the wingwalls and allowed CMC to proceed with their construction (including ordering reinforcement).
- The revised design for the wingwalls changed the methodology, character and type of works performed, specifically:
- each pre-cast wingwall was to be installed as a single unit onto compacted base material, whereas the new design required CMC to construct an in-situ footing, then an in-situ wall;
- the associated works with pouring concrete in-situ, including the placement of reinforcement and formwork for six metre high walls
- Between 14 September 2012 and 10 October 2012, CMC:
- installed the rock mattress;
- constructed the pedestal for the spandrel;
- performed granular backfilling works to the sides of the footings;
- installed the arch segments and spandrels by crane; and
- secured the spandrels for the concrete pout of the wingwalls.
- The revised design for the Pyealy Creek Bebo Arch changed the installation methodology of the pre-cast arch segments as:
- CMC had originally planned to utilise a small crane to install the arches from the middle of Pyealy Creek;
- however, with the changes to the revised design, specifically the increased height of the footings and additional tie beams, the original methodology could not be followed. CMC installed the pre-cast segments by a larger (more expensive) crane on the bank of Pyealy Creek.
- With respect to the construction of the wingwalls:
- CMC started on 10 October 2012 and finished on 11 November 2012;
- The wingwall footings (horizontal components) took 17 days to complete (including formwork and tying reinforcement).
- The wingwall footings were poured on two separate days (upstream and downstream).
- The wingwall walls (vertical components) took 31 days to complete (including formwork and tying reinforcement).
- The wingwall walls were poured in two lifts per pour on each end of the structure.
- Due to the increased height of the wingwalls, the formwork had to be certified by an engineer, and anchor blocks had to be constructed to support the formwork, which materially changed the duration of construction.
- From 4 December 2012 to 9 January 2013, CMC performed backfilling works to Zone B. With respect to the placement of material at Zone B (being three metres to the lower sides of the arch above the granular material), the volume of material was not significant, but the time taken for construction was substantial as:
- the backfill was placed in layers with a bobcat or similar;
- after each layer was placed, it had to be tested;
- the level difference between either side of the arch could not exceed 600mm due to a design constrain; and
- the area closest to the arch had to be hand compacted on both sides.
- From 10 January 2013 to 21 January 2013, CMC performed backfilling works to Zone C. Due to the change in design, the volume of material excavated and backfilled in this zone increased substantially. With respect to the backfilling in this zone CMC used a grader to spread material and padfoot to compact it.
- From 22 January 2013 to 15 February 2012, CMC did not perform works at the Pyealy Creek Bebo Arch. WICET had failed to obtain its financier’s consent to the variation works.
- Further, during this period, from 24 January 2013 to 27 January 2013, the Site experienced inclement weather. As a result, after the financiers’ consent was provided on 11 February 2013, CMC performed flood reinstatement works to the Pyealy Creek Bebo Arch. This was completed by 20 February 2013.
- From 21 February 2012 to 5 March 2012, CMC finished backfilling works to Zone C.
- From 6 March to 23 March 2013, CMC constructed the OLC on top of Pyealy Creek including subbase layers and performed drainage works such as the drop structure and spoon drain. The revised design to the Pyealy Creek Bebo Arch changed these works as the depth and reinforcement of the spoon drain changed.
- Between 23 March 2013 and 26 March 2013, CMC:
- installed the guardrail and fencing over Pyealy Creek; and
- placed hydromulch on top of the arch structure.
- The revised design to the Pyealy Creek Bebo Arch changed these works as the guardrail increased in length and changed to include a tight radius bend that was required to be manufactured specially.
(b)The Variation Claim
- CMC’s variation claim in respect of the Bebo Arch is comprised of 20 items relating to different parts of the work for the Bebo Arch. Twelve of the items are agreed. The difference between the parties on three of the disputed items namely 11, 17 and 18 is less than $20,000. In respect of the remaining items, the experts disagree variously on rate, quantity and pricing methodology. In determining the quantum of these remaining items there are four contractual construction issues that arise.
- First, as the parties are agreed that Variation 103 constitutes a variation under clause 40.1, the variation, by clause 40.3 is to be valued under clause 40.5. The cascading regime under clause 40.5 requires an amount to be ascertained first by reference to specific rates or prices prescribed by the contract pursuant to clause 40.5(a). Schedule C-4 deals with rates for pricing variations. Schedule C-4.1 which contains Unit Rates for variations falls within clause 40.5(a) in that it prescribes specific rates or prices to be applied in determining the value for a variation. If an item is able to be valued by reference to specific rates or prices then under the cascading regime of clause 40.5 the valuation is conducted by reference to the Unit Rates in Schedule C-4.1.
- Secondly, if there is no specific rate or price to be applied in determining the value under Schedule C-4.1 a valuation cannot be made under clause 40.5(b). I have already determined that Schedule C-4 does not constitute a “Schedule of Rates” and cannot therefore be used for a valuation under clause 40.5(b).
- Thirdly, clause 40.5(c) which applies when neither clause 40.5(a) or 40.5(b) apply permits the valuation by reference to “reasonable rates or prices”. In  above I have already referred to the decision of Habersberger J in Danidale Pty Ltd v Abi Group Contractors Pty Ltd where his Honour stated that a reasonable rate is assessed by having regard to what a party would have had to pay under a normal commercial arrangement and to the cost of the work actually performed. Here the use of reasonable rates and prices is for valuing a directed variation. WICET submits that if it is determined that Schedule C-4 does not contain a specific rate for the variation, it would seem odd to nevertheless apply a rate from that schedule. The better interpretation according to WICET, is that if there is no specific price for a variation in Schedule C-4, the contract rate in Schedule C-3 (which still includes profit) might be reasonable to use. CMC however, submits that there is nothing improper about adjusting the rates in Schedule C-4 pursuant to either clause 40.5(b) or 40.5(c). As to 40.5(b) as Schedule C-4 does not constitute a “Schedule of Rates” it cannot be used to the extent that it is reasonable to use it for a valuation under clause 40.5(b). Such a conclusion also would prohibit carrying out a valuation under clause 40.5(b) by adjusting the rates in Schedule C-4.
- The important question however is whether in valuing a variation under clause 40.5(c) by reference to reasonable rates and prices, adjusted rates in Schedule C-4 may be utilised? WICET accepts that there is nothing, in principle, improper about adjusting a Schedule C-3 or Schedule C-4 rate for the purpose of a valuation pursuant to clause 40.5(c) for a directed variation. That clause permits a valuation by reference to “reasonable rates”. WICET submits however that as the test is whether the rate in either Schedule C-3 or Schedule C-4 is “reasonable” clear evidence would be required in order to demonstrate that a Schedule C-4.1 Unit Rate is reasonable. WICET submits that those rates are much higher than the Contract Price for the work as revealed in Schedule C-3. I do not accept WICET’s submission that a reasonable rate, for the purposes of clause 40.5(c), may not be arrived at by adjusting a Unit Rate in Schedule C-4.1. Any differences in rates in valuing a variation between Schedule C-3 and Schedule C-4.1 may be explained by reference to the subject matter that these schedules address. Schedule C-3 contains the Contract Price Schedules. Schedule C-4.1 contains rates for pricing variations. Importantly, the Unit Rates contained in Schedule C-4.1 are agreed rates as between the parties. If an adjustment of these Unit Rates results in an application of “reasonable rates or prices” for the purposes of clause 40.5(c) then a variation may be valued accordingly. This is to be contrasted with valuing a direction, for example under clause 33.1 or 34.1 or an extension of time under clause 36.
- Fourthly, WICET submits that additional or increased quantities arising from a variation will only attract Unit Rates to the extent the quantity is outside the upper limit of accuracy stated in Annexure Part A to the Contract. The stated “limit of accuracy” rate in Annexure Part A to the Contract is 20%. WICET’s interpretation is that where there is a variation, and the variation results in increased quantities, it is only the quantity over and above 120% of the original quantity to which the rates in Schedule C-4.1 can be applied. CMC’s interpretation is that where there is a variation then the whole of the variation is to be valued under clause 40.5, and that allows the application of the Unit Rates to the whole of the valuation.
- I do not accept WICET’s construction. WICET relies on clause C-4.1.3 of Schedule C-4 which states:
“Unless specifically stated otherwise in this Schedule the unit rates shall apply to work that is additional or with increased quantities (outside the upper limits of accuracy stated in the Annexure Part A) and to work that is deleted or with reduced quantities (outside the lower limits of accuracy stated in the Annexure Part A) under the Contract.”
- The “limit of accuracy” rate in Annexure Part A has its genesis in clause 3.3 of the General Conditions of the Contract which relevantly states:
“Where otherwise then by reason of a direction of the Principal’s Representative to vary the work under the Contract, the actual quantity of an item required to perform the Contract is greater or less than the quantity shown in the Schedule of Rates; and where the Principal accepted a rate for the item the rate shall apply to the greater or lesser quantities provided that where limits of accuracy are stated in the Annexure the rate shall apply to the greater or lesser quantities within the limits and quantities outside the limits shall be valued under clause 40.5 as if they were varied work directed by the Principal’s representative as a variation.”
- The opening words of clause 3.3 contain a carve out, “where otherwise than by reason of a direction of the Principal’s Representative to vary the work under the Contract”. Variation 103 falls within this carve out. I accept CMC’s submission that the effect of clause 3.3 is that if the quantity is increased because of a directed variation, then the below/above 120% difference in rates dictated by clause 3.3 has no application. In that event, because there is a variation, the whole of the variation must be valued under clause 40.5. This is mandated by clause 40.3 which requires “the variation directed” to be valued under clause 40.5. Clause 4.1.3 of Schedule C-4 mandates the application of the Unit Rates both to work that is additional (that is a variation) or with increased quantities (outside the upper limits of accuracy stated in Annexure Part A). Consequently, to the extent that they are applicable, the Unit Rates in Schedule C-4.1 should be applied to work that is a variation. Contrary to WICET’s submission, its construction does not permit clause 3.3 of the General Conditions and clause 4.1.3 of Schedule C-4 to operate in harmony so as to give effect to both. This is because the 120% difference does not apply to directed variations pursuant to clause 3.3 but WICET would have clause 4.1.3 of Schedule C-4 operate so as to apply to a directed variation.
- The resolution of these four construction issues largely resolves the valuation of the remaining eight disputed items.
Item 9 – Drop Structure
- The Drop Structure is the feature which drains water from the OLC on top of the Pyealy Creek Bebo Arch into the creek. CMC constructed it by spraying a shotcrete on reinforced mesh on to the bank of Pyealy Creek. The dispute relates to the applicable rate to apply to a quantity of 182.2m³ of sprayed shotcrete. CMC applies the rate of $1,800 per m3 based on Schedule C-4.1 item 2.1.9 “spraycrete”. WICET applies a rate of $1,244 per m3 based on Schedule C-3 item 70 “shotcreting”. Mr Roberts applied the rate at item 2.1.9 of Schedule C-4.1 on the basis that he was instructed to do so. Mr Tsipis stated that “shotcrete” is the term usually used to describe pneumatically applied mortar or concrete used for slope and surface protection, swimming pool construction, tunnel lining, special architectural features, and renovating existing structures, in lieu of cast-in-place concrete. Whereas “spraycrete” is a term used for sprayed mortar for decorative or minor surface protection where large-aggregate mortar or concrete for structural purposes is not required. Mr Tsipis did however, accept in cross-examination that the terms “spraycrete” and “shotcrete” can be used interchangeably and can both be used to described decorative work or minor surface protection work. It was common ground that there was no decorative or minor surface protection work contemplated under the Contract for CMC to carry out. Mr Tsipis also accepted that where sprayed concrete is being used for purposes other than minor decorative work or surface protection work, such as under a contract for major civil works, it is more typical to use cubic metres when measuring that work. The rate in Schedule C-4.1 for spraycrete is in cubic metres. CMC submits, and I accept, that this is indicative that the works contemplated by Schedule C-4.1 of the Contract were not in the nature of minor decorative work. The rate in Schedule C-4.1 is a rate specifically agreed to be used for variations. Whilst Mr Tsipis conceded that the more typical measurement for minor decorative was square metres, he had seen such work measured both in square metres and cubic metres.
- As the terms may be used interchangeably and the shown rate was in cubic metres, it is appropriate to value item 9 by reference to the Schedule C-4.1 rate of $1,800 per m3. The appropriate value for item 9 is therefore $327,960.
Item 11 – Blinding Layer under Bebo Arch footings
- The parties agree that the applicable quantity for this item is 39.32m3. Mr Roberts uses the rate of $1,000 per m3 from item 2.1.2 in Schedule C-4.1. This item refers to 10MPa in blinding layer. WICET criticises this approach on the basis that the concrete strength used by CMC on-Site was 20MPa. Both parties accept that the difference is nominal. Even if item 2.1.2 does not constitute a prescribed rate for the purposes of clause 40.5(a) I am satisfied that it may be used in a valuation as a reasonable rate pursuant to clause 40.5(c).
- The appropriate value for Item 11 is therefore $39,320.
Item 12 – Concrete Class 40Mpa/20 in Bebo Arch footings
- Both parties accept that the design of the footings changed. Mr Tsipis valued the item at $548,607.60. Mr Roberts valued the item at $1,047,480. The difference between the experts is not only the rate to be applied to the work but also the extent to which that rate is to be applied to the quantity of the work.
- Mr Tsipis considered that the revised design of the Bebo Arch footings did not change the nature of the footings and only caused an increase in quantity. Therefore, the Schedule C-3 item 173 rate applies up to the 20% upper limit of accuracy above the Contract quantity. For the quantity above the upper limit, the Schedule C-4.1 item 2.1.3 rate is applicable. Mr Tsipis has therefore applied the Schedule C-3 item 173 rate of $960.50 per m3 to the Contract quantity of 226 m3. He has applied the same rate to the quantity within the 20% upper limit of accuracy above the Contract quantity that is 45.2 m3. Mr Tsipis has then applied the Schedule C-4.1 item 2.1.3 rate of $2,800 per m3 to the quantity above the 20% upper limit of accuracy above the Contract quantity that is 102.9 m3.
- Mr Roberts however considered that the revised design changed the nature of the work. Mr Roberts values this variation by reference to clause 40.5(a). Schedule C-4.1 item 2.1.3 is a specific rate which is applicable namely “40MPa structural – footings”.
- As a matter of contractual construction I have already determined that the valuation approach of Mr Tsipis is not appropriate. The upper limit of accuracy of 20% is not applicable to a valuation of a variation.
- Mr Tsipis in his third supplementary Quantum Report dated 16 May 2016 at  stated:
“… the revised design changed some aspects of the footing dimensions and reinforcement of the Contract design, plus added the tie beams. In my opinion, the taller footing pedestal and tie beams caused CMC to carry out more-labour intensive work than the Contract footing design, that is more extensive form work and more difficult concrete placement. Accordingly, I consider that the Schedule C-4.1 Item 2.1.3 rate of $2,800 per cub metre should apply to the aspects related to the more labour/intensive work. However, the rate cannot be applied to the unchanged Contract design.”
- Mr Tsipis however, in cross-examination did not hold to the opinions he expressed in paragraph 169 of his Report. He acknowledged that it was not possible to separate out how the C-4 item 2.1.3 rate applies to the changed Contract design or the unchanged Contract design. What would be required is for Mr Tsipis to identify the actual variation and then identify the cost of that variation. Mr Tsipis has not undertaken that valuation exercise. He does however summarise the salient features of the revised design in paragraphs 681 to 683 of his report dated 16 November 2015.
- Whilst Mr Tsipis is a qualified civil engineer I prefer the evidence on this topic of Mr Grey. Mr Grey was CMC’s Senior Engineer responsible for the Pyealy Creek Bebo Arch. He had a detailed knowledge of the effect of the redesign of the Bebo Arch. He was specifically asked to address WICET’s proposition that the new design of the footings represented, in effect, an increase in quantities rather than a change in character:
“I think that that argument would be true if the length of the structure increased and kept the same cross-section as this. If that was the same then you perhaps could, but by changing the cross-section of the structure and the steel then I’d disagree.”
- I accept CMC’s submission that the changes to the footings were wholesale and fundamental and plainly far more extensive than a mere increase in quantities.
- Item 12 should therefore be valued at $1,047,480.
Item 14 – Supply and install Bebo Arch sections
- The only remaining aspect of this item that is disputed is the amount to be deducted for the access road. The amount in dispute is minus $46,778.22. WICET in its written closing submissions submits that given the state of the evidence, I should simply adopt a midpoint in respect of the minus $46,778.22. There was however evidence from Mr Vance and Mr Grey that the additional cost to upgrade the access ramp would be between $10,000 and $15,000. CMC submits and I accept that the higher of these figures should be adopted.
- The appropriate value for item 14 is therefore $348,841.63 being:
- $267,153.60 for Schedule C-3 item 184, as agreed by the parties;
- Less $28,000 for the non-use of a 90 tonne crane as agreed by the experts;
- Less $3,221.78 for pavement to the access road into Pyealy Creek as agreed by the experts;
- Less $15,000 for upgrading the access ramp;
- Plus $10,412 for construction of the crane pad as agreed by the parties;
- Plus $117,497.81 for the 280T crane as agreed by the parties.
Item 15 – Concrete class 40Mpa/20 in Bebo Arch wingwalls
- The revisions to the Pyealy Creek Bebo Arch design changed the wingwalls from pre‑cast elements (which included footings) to a design where they were constructed in-situ. The parties agree that the applicable quantity for this item is 76.88 m3. The dispute is in relation to the applicable rate to be applied to this quantity.
- Mr Roberts is of the opinion that the Schedule C-4.1 item 2.1.8 rate of $3,200 per m3 for 50Mpa structural concrete less an adjustment of $20 per m3 for the difference in concrete strength is the most appropriate rate for these variation works. Mr Roberts’ valuation relies on clause 40.5(a) or 40.5(b).
- Mr Tsipis is of the opinion that:
- Schedule C-4 item 2.1.8 is not applicable because it applies to 50MPs structural items;
- No rates in Schedule C-3 are applicable to this item;
- A rate that is 25% higher than item 134 of Schedule C-3 of $1,800 per m3 is a reasonable rate for this item.
- Mr Tsipis has therefore valued this item under clause 40.5(c).
- Mr Roberts cannot value item 15 pursuant to clause 40.5(a) because there is no specific rate in Schedule C-4.1 for 40 MPa concrete. Nor can Mr Roberts value the item pursuant to clause 40.5(b) as Schedule C-4.1 does not constitute a “Schedule of Rates” as defined. WICET submits that Mr Tsipis is the only expert who has given evidence of a reasonable rate pursuant to clause 40.5(c). It is however ultimately a task for the Court to determine the valuation of this item. A reasonable rate for the purpose of clause 40.5(c), in the context of valuing a variation, may be arrived at by reference to a similar agreed rate in Schedule C-4.1 as adjusted. It is irrelevant that Mr Roberts did not undertake this valuation exercise by reference to reasonable rates under clause 40.5(c). I am content to adopt the valuation of Mr Roberts (impermissibly carried out under clause 40.5(a) and 40.5(b)) as constituting a reasonable rate for the purposes of clause 40.5(c).
- The appropriate value for item 15 is therefore $244,478.40.
Item 16 – Supply and install a spandrel
- The amount in dispute in relation to item 16 is $35,475.21.
- CMC was required to install two pre-cast spandrels either end of the Pyealy Creek Bebo Arch. The dispute turns on whether the spandrel is an omitted item from Schedule C-3 for which CMC is entitled to additional payment.
- Clause 3.3 of the General Conditions (as amended) states “if the Schedule of Rates omits an item which should have been included, the item shall be valued under clause 40.5 as if it was extra work directed by the Superintendent Principal’s Representative as a variation.” Clause 3.4 of the General Conditions states:
“Notwithstanding any other provision in the Contract, minor items not expressly mentioned in the Contract but which are necessary for the satisfactory completion and performance of the work under the Contract shall be supplied and executed by the Contractor. The cost of such minor items shall be deemed to be included in the Contract Sum.”
- There is no specific line item for spandrels in Schedule C-3. For this reason, Mr Roberts concludes that it must be an omitted item for which CMC’s is entitled to payment. Mr Tsipis however concludes that spandrels were part of the Scope of Work by reference to drawings and specifications. That CMC was entitled to a further allowance for spandrels was in fact accepted by WICET (through Mr Miroshnikoff) in the Final Certificate – where CMC was given an entitlement to $40,746.62. WICET now resiles from that position.
- CMC does not dispute that spandrels are included in its Scope of Works. The question is whether the spandrels “should have been included” as a separate item in Schedule C-3 to the Contract.
- CMC identifies the key factors suggesting that the spandrels should have been included as a separate item in Schedule C-3 as follows:
- The spandrels are heavier than the majority of the original pre-cast wingwalls components, and these components had day separate items. They cannot be regarded as “minor items”.
- Item 187 which relates to the supply and installation of Bebo Arch sections, is not a lump sum item, but a rate per arch segment. It is difficult conceptually to understand this as extending to spandrels. The number of spandrels would always stayed fixed – at two – whereas the number of arch segments could conceivably vary up or down. In those circumstances, if the rate actually included spandrels it would either under- or over-compensate CMC.
- If the spandrels were included in item 187, then the number of “items” CMC should have been paid for is not 21 (which were all arch segments), but 23 (to account for the additional spandrels).
- These keys factors do, in my view, lead to a conclusion that the spandrels were a “non‑minor” item omitted from Schedule C-3.
- Accordingly, the appropriate value for item 16 is $35,475.21.
Item 17 – Concrete Class 32 MPa/20 in spoon drain
- CMC conceded this item in its pleading.
Item 18 – Guardrail with beam
- The revisions to the Pyealy Creek Bebo Arch increased the length of the guardrail and added two tight radii at two locations near the upstream end of the Pyealy Creek Bebo Arch. Mr Grey’s evidence was that the revised radii was a special item which was manufactured separately. Mr Roberts is of the opinion the revised radii has changed the character of the work and that it is reasonably to apply the cost charge by CMC’s supplier for these items plus an uplift of 12.5%. Mr Roberts’ use of a reasonable rate pursuant to clause 40.5(c) arose because he does not consider that Item 329 of Schedule C- 3 “Steel beamed guard rail, w beam (MC22)” was an appropriate rate for the guardrail at the Bebo Arch. Mr Tsipis did however consider this an appropriate rate and applied it pursuant to clause 40.5(b). I accept Mr Grey’s evidence as to the changes to the guardrail. The revised radii was a special item which was manufactured separately. Mr Roberts’ reasonable rate under clause 40.5(c) should therefore apply.
- WICET however objects to the admissibility of the invoice relied on by CMC in relation to this item. WICET submits that the invoice is subject to its hearsay objection and should not be relied upon by the Court. The document may however, in my view be relied upon. It is an invoice dated 21 March 2013 issued to CMC and more specifically to Mr Grey. It is stated to be for “GC09 guardrail – Bebo Arch scope change.”
- I therefore value item 18 at $31,230.
Quantum total for Bebo Arch Variation 103
Item 1 $192,545.40
Item 2 $23,382.93
Item 3 $64,984.20
Item 4 $37,946.55
Item 5 $82,524.69
Item 6 $21,109.76
Item 7 $20,826.00
Item 8 $48,610.17
Item 9 $327,960.00
Item 10 $83,985.99
Item 11 $39,320.00
Item 12 $1,047,480.00
Item 13 $310,464.00
Item 14 $348,841.63
Item 15 $244,478.40
Item 16 $35,475.21
Item 17 Nil
Item 18 $31,230.00
Item 19 $13,904.00
Item 20 Nil
- CMC concedes that the amount paid to CMC with respect to Variation 103 by WICET was $2,152,589.18. Accordingly, CMC is entitled to an additional payment of $822,479.75.
- WICET in its counterclaim pleads a claw back in respect of Variation 103 on the grounds that the value of the work was “$1,979,689.83” in circumstances where it had paid to CMC $2,152,589.18 for the work in relation to the Bebo Arch. WICET does not press its counterclaim in respect of Variation 103.
Delay Claim (Variation 17)
- CMC relies on 11 Delay Events. The first seven relate to the Piling Claim. The remaining four relate to delays in respect of the Bebo Arch Variation and include WICET’s alleged delay in obtaining its financier’s consent. The total delay from these 11 events as pleaded by CMC is 243 days 21.5 hours. The original date for practical completion under the Contract was 30 August 2012. The actual date of practical completion was 26 March 2013. CMC therefore completed the works 208 days after the original date for practical completion. CMC accepts that even though the delay period pleaded is approximately 243 days any entitlement to an extension of time pursuant to clause 35 of the General Conditions of the Contract should be capped at 208 days. CMC makes a primary and alternative submission as to the proper construction of clause 36 of the General Conditions of the Contract. The primary submission is that clause 36 provides for an assessment of the extra cost and on-Site overheads by reference to the extended time it took CMC to achieve practical completion; that is, the difference between the date for practical completion and the actual date of practical completion. CMC’s alternative submission is that clause 36 permits the assessment of the cost to be at the time of the relevant delay. On this alternative submission CMC seeks the cost in relation to the full 243 days. CMC’s primary submission is that the “delay” referred to in clause 36 should be construed as a reference to any delay in achieving practical completion. I proceed on the basis that any extension of time should be capped at 208 days. Where a Delay Event has not been caused either by WICET, its representatives or agents, the period of that Delay Event should be subtracted from the total of 243 days and 21.5 hours.
- WICET has previously granted CMC extensions of time under the Contract for a total of 18 days. Whether CMC is entitled to an extension of time for any of the Delay Events depends on whether it can bring itself within the contractual requirements of clause 35.5. The full text of clause 35.5 is set out in Appendix A to these Reasons.
- WICET submits that clauses 35.5 and 36 of the Contract pose a number of hurdles which all need to be determined in CMC’s favour before it can establish the claimed entitled to an extension of time and delay compensation.
- CMC’s entitlement to an extension of time for each Delay Event depends on the following:
- First, whether CMC was, in fact, delayed by a “qualifying cause” (being a cause listed in the fourth paragraph of clause 35.5 of the General Conditions). A qualifying cause includes delays caused by WICET, its representatives or agents and also variations directed under clause 40;
- Secondly, the methodology that should be applied to properly analyse the impact of the Delay Event. WICET identifies this issue as being which delay analysis methodology reflects the contractual requirements for an extension of time;
- Thirdly, (applying that methodology) whether the activities delayed are on the critical path in the construction program; and
- Fourthly, whether CMC has met the requisite contractual preconditions to its entitlement to an extension of time arising.
- WICET identifies a further issue namely, if the claimed delays are on the critical path and were caused by WICET, are there concurrent causes of delay? CMC is not entitled to an extension of time if more than one event causes concurrent delays and the cause of at least one of those events is not a cause referred to in the fourth paragraph of clause 35.5 of the Contract.
- CMC's position is that the delays to completion of the Contract Works were as follows:
Dates of Impacted Delay
Beales Creek Piling Permit
12 January 2012 – 17 February 2012
Rail Receival Permit Delay
22 – 23 February 2012
24 February 2012 – 6 March 2012
10 days 6 Hours
Suspension Direction Delay
8 – 12 March 2012
4 days 1.5 hours
14 March 2012 – 27 March 2012
13 days 7 hours
Stopwork Direction Delay
16 May 2012 – 17 May 2012
1 day 7 hours
Beales Creek Piling Hammer Direction Delay
16 June 2012 – 28 June 2012
Pyealy Creek Bebo Arch Redesign Delay
29 June 2012 – 25 July 2012
Pyealy Creek Bebo Arch Additional Work Delay
111 working days
Financier Consent Delay
22 January 2013 – 11 February 2013
Flood Damage Delay
13 February 2013 – 20 February 2013
243 Days 21.5
- CMC contends for a total extension of time for practical completion to 30 April 2013.
Issue 1: Qualifying cause of delay
- As to the first seven Delay Events I have already determined in considering the Piling Claim that Delay Events 1, 2, 3, 6 and 7 constitute a “qualifying cause” on the basis that they were either caused by WICET, its representatives or agents or constituted directed variations. I have also determined that Delay Events 4 and 5 are not qualifying causes. This reduces CMC’s total delay from 243 days 21.5 hours to 226 days 13 hours.
- As to Delay Events 8 and 9 the Pyealy Creek Bebo Arch Delays, WICET admits that both of these Delay Events were caused by “qualifying causes” within the meaning of clause 35.5(b).
- WICET disputes that Delay Events 10 and 11 constituted qualifying causes.
(i)Delay Event 10 – Financier consent delay
- CMC’s pleaded cased is that by reason of the failure of WICET to obtain the consent of its Financier earlier than 11 February 2013 CMC did not undertake the variation works at the Bebo Arch between 22 January 2012 and 11 February 2012 and was delayed in its performance of the Works under the Contract for that period. The claim arises from WICET's alleged failure to obtain the consent of its financier, CBA Corporate Services (NSW) Pty Limited (Financier), for variation works including, in particular, variation works associated with the Bebo Arch. As a result of WICET's delay in obtaining the relevant consent, CMC ceased to undertake the variation works, which resulted in the delayed completion of the Bebo Arch.
- I make the following findings of fact in relation to this Delay Event:
- Part E of the Annexure to the General Conditions of the Contract contains a Tripartite Deed between CMC, WICET and the Financier (Tripartite Deed). Pursuant to the Tripartite Deed WICET was required to obtain the consent of the Financier for variation work and CMC was not permitted to undertake variation work without the consent of the Financier.
- On or about 7 December 2012 CMC issued a payment claim to WICET pursuant to the BCIP Act. The payment claim included amounts for variation works. In response, WICET issued a payment schedule on 21 December 2012. The payment schedule relevantly stated that the Contractor had agreed that variation claim items in excess of $10million were deemed not to be variations and therefore could not be the subject of a variation claim. CMC then lodged an adjudication application on 4 January 2013.
- By way of adjudication response on 11 January 2013 WICET notified CMC that the Financier had not provided its consent to variation works being undertaken by CMC and that variation works should not be carried out until that consent was obtained. This included existing variation claims, the most prominent being the construction of the Bebo Arch that was in progress at the time.
- On 21 January 2013 CMC notified Worley Parsons that it would suspend the variation works at 5.00pm on 22 January 2013 until such time as the Financier confirmed its consent to the variation works (which included the Bebo Arch Variation) and a commensurate increase in the total amount payable by WICET under the Contract. CMC’s notification attached a letter from CMC to Worley Parsons which, in particular, referenced paragraph 26 of WICET’s adjudication response.
- Accepting that consent was required for the variation works and in accordance with its obligations under the Tripartite Deed WICET sought the consent of the Financier on 22 January 2013.
- On 22 January 2013 (having not received confirmation that consent had been obtained) CMC informed Worley Parsons that all work on variations (including the Bebo Arch) had ceased pending the provision of the Financier’s consent.
- From 22 January 2013 to 15 February 2013, CMC did not perform works at the Pyealy Creek Bebo Arch due to the lack of the Financier’s consent.
- During the period 24 January 2013 to 27 January 2013, the Site experienced inclement weather. The period of delay between 22 January 2013 and 11 February 2013 was 21 days. On 14 February 2013 CMC notified Worley Parsons that:
- The suspension of work caused by WICET’s failure to obtain the Financier’s consent (prior to the issue of the Bebo Arch Variation) had directly impacted the critical path works.
- CMC claimed an extension of time of 22 days (from 22 January 2013 to 13February 2013).
- On 8 February 2013, CMC received a facsimile from the Financier. The facsimile referred to the request for consent by WICET on 22 January 2013, and provided its consent to the variation work. The facsimile did not attach the particular variations to which consent had been provided and as such CMC was unable to proceed with the relevant variation work.
- On 11 February 2013 the Financier provided its consent to the variation works. On 12 February 2013 CMC confirmed to Worley Parsons that:
- the Financier had provided consent to the variation works (which included the works at the Bebo Arch).
- CMC had commenced remobilisation on 11 February 2013 to recommence the variation work.
- CMC submits that on the proper construction of clause 4.3(c) of the Tripartite Deed:
- WICET was required to determine if the relevant variation work required the consent of the Financier;
- WICET was required to notify CMC if the relevant variation work required the consent of the Financier; and
- CMC was not required to request that WICET obtain the consent of the Financier or serve notice prior to complying with the direction to undertake the variation.
- WICET accepts that practically it had the obligation under the Tripartite Deed to obtain the relevant consent. WICET had the relationship with the Financier and therefore the ability to obtain the consent required. WICET however submits that on a proper construction of the Tripartite Deed, if CMC considered there was a variation which would have resulted in the relevant thresholds being exceeded, it ought to have taken steps (for example, by informing WICET) so that the requisite consent could be obtained. I do not accept WICET’s submission.
- There is no express obligation in the Tripartite Deed as contended by WICET. Nor would such an obligation need to be implied to give the Deed business efficacy. As CMC correctly submits, the existence of such an implied term fails on almost every basis. The only party in a position to know whether the Financier’s consent would be required (and to obtain that consent) was WICET. This is because:
- WICET’s representative (at the direction of WICET) was the only party in a position to issue directions to vary the works under the Contract – therefore, WICET was the party in a position to decide whether to issue particular variations;
- WICET’s representative was the only party in a position to value the variation works under the Contract; and
- Practically, WICET was the only party that was in a position to obtain the relevant consent from the Financier as it was the party with the finance contract relationship with the Financier.
- WICET further submits that CMC was not directed to suspend the work as the adjudication submission was not a direction to suspend the work. WICET however in its adjudication response dated 11 January 2013 made it clear to CMC that the operation of clause 4.3(c) of the Tripartite Deed required CMC to not undertake the relevant “variation work” unless it had prior consent. Whilst it was CMC that suspended the work I do not accept that the suspension was not caused by WICET. WICET through the adjudication response had effectively informed CMC that it would not be entitled to any payment for work performed at the Bebo Arch. Without WICET obtaining the Financier’s consent, CMC was placed in a commercially difficult situation of carrying out works for which it may ultimately not be paid. CMC’s pleaded case is not based on its notice to suspend the works at Bebo Arch but rather WICET’s failure to obtain the consent of its Financier earlier than 11 February 2013. WICET, as it acknowledges, had the obligation to obtain the relevant consent. As a result of WICET’s failure to obtain that consent CMC’s obligation to carry out and right to payment for the relevant variation works was compromised.
- WICET’s failure in this respect constitutes a qualifying cause of delay.
(ii)Delay Event 11 – Flood damage delay
- A rain event caused flooding at the Bebo Arch site during the period 24 January 2013 to 27 January 2013. The wingwalls suffered heavy scouring and a transfer of large silt deposits occurred that required removal. As a result of the damage caused by the flooding, CMC was required to carry out reinstatement and rectification works at the Bebo Arch which resulted in the delayed completion of the Bebo Arch by eight calendar days from 13 February 2013 to 20 February 2013.
- The key finding of fact sought by CMC is that the suspension associated with Delay Event 10 impacted the progress of the works at the Bebo Arch such that the impacts of inclement weather would have been avoided. CMC’s pleaded case relies on the late provision of the final Bebo Arch redesign drawings. CMC pleads that it was not issued with construction drawings for the Bebo Arch by WICET until 25 July 2012 constituting a 26 day delay (Delay Event 8). WICET submits that CMC has not led evidence that the Bebo Arch would have been finished by the date of the rain event. Mr Pancholi’s evidence was limited to the effect of the suspension arising from the failure of WICET to obtain its Financier’s consent on the progress of the work at the Bebo Arch. His evidence was that if there had been no suspension of the works because of the Financier consent issue, the wet weather event would have had a “different effect” on the Bebo Arch.
- His evidence was as follows:
“And doing the best you can, what difference did the fact of the financier consent suspension have? What effect did that have on the subsequent effect of the wet weather? --- As I mentioned before, we were very close to the finishing and the process – when you are backfilling in the layers you seal the layers, as you go and when you’re on the final layer it’s sealed for permanent completion of the work. If we were to continue this on 22nd, 3rd before the rain we would have managed to seal the area, seal the road and would have mitigated the impact. Wouldn’t have completely eliminated but definitely would have helped if we’d have continued the work to mitigate the potential subsequent impact.”
- WICET submits that on the evidence, Delay Event 10 must be decided in CMC’s favour for it to have an entitlement pursuant to Delay Event 11. This is not correct. For reasons stated below I have concluded that CMC is entitled to an extension of time of 26 days in respect of Delay Event 8. This is the Bebo Arch redesign delay. It is also the pleaded delay relied on by CMC in relation to Delay Event 11. CMC is entitled to the extension of time for Delay Event 8 because I have determined that the Bebo Arch was on the critical path. The main damage caused by the rain event from 24 January 2013 to 27 January 2013 was heavy scouring to the wingwalls and a transfer of large silt deposits. Mr Pancholi’s evidence (which was not challenged) was to the effect that had CMC conducted works at the Bebo Arch on 22 and 23 January 2013 it would have managed to seal the area and the road prior to the rain event and would have mitigated the impact. Had the works on the Bebo Arch not been further delayed by Delay Event 8, it may be accepted that the works described by Mr Pancholi would have been completed well before the rain event. It is not to the point whether the Bebo Arch would have been completed by the time of the rain event but rather whether the works which would have wholly mitigated the flood damage would have been completed.
- I accept that Delay Event 8 and the suspension associated with Delay Event 10 did impact the progress of the works at the Bebo Arch such that the impacts of inclement weather between 24 to 27 January 2012 would have been avoided. Delay Even 11 therefore constitutes a qualifying cause.
- Before dealing with Issue 2 concerning methodology and programs it is convenient to summarise the approach of the two experts. The two experts who gave evidence in relation to delay were Mr King and Mr Abbott. The differences in their approach, including their methodology and the programs they used were stark.
- Whilst it is for the Court to determine whether CMC has demonstrated those matters required by clause 35.5(B)(1) to (5), there are aspects of the evidence of both experts which have assisted me in determining whether CMC is entitled to an extension of time. For reasons which are made evident below I generally gained more assistance from the evidence of Mr King and preferred his evidence.
- In his report of 17 August 2015 Mr King sought to provide an analysis of CMC’s entitlement to extensions of time. Mr King identified the Baseline Program. He also identified that updated programs were furnished by CMC on various dates from 17 December 2011 to 29 March 2013. According to Mr King the updated programs effectively provided a “status update” of the progress of the works on the project. He referred to these programs as “statused programmes”. Mr King relied upon the statused programs in carrying out his analysis as he was of the opinion that they comprised reliable evidence of the dates upon which activities actually started and finished and were forecast to start and finish. As I have previously observed there was only ever one Baseline Program and no revised Baseline Programs were approved by the Principal’s Representative.
- Mr King’s methodology involved him undertaking the following steps:
- he considered the statused program that was issued prior to the commencement of the alleged delay;
- he determined the criticality (or otherwise) of the relevant activity prior to the delay occurring;
- he reached an opinion as to the impact to the delay on the date for practical completion by introducing a delay activity into the program to model the claimed delay; and
- he considered any programs that were produced during the period that the delay was occurring to determine whether the criticality of the relevant activity was maintained.
- This methodology is referred to as the Time Impact Method. This method constitutes a prospective approach.
- Mr King’s methodology was however different in the case of the Bebo Arch delay. In relation to Delay Event 9 for example, Mr King:
- determined that the Bebo Arch was on the critical path during the period of the claimed delay;
- determined which work activities within the Bebo Arch construction were on the actual critical path;
- compared the planned and actual duration for the Bebo Arch activities which were on the actual critical path;
- determined whether CMC had claimed for an increase in scope for these activities; and
- reached an opinion as to the delay duration for those activities where an increase in scope had occurred.
- This methodology adopts the “as-planned” v “as-built” approach. The approach is a retrospective one in which Mr King compared the Baseline Program with an as-built program.
- Mr Abbott’s delay analysis initially involved certain adjustments to the Baseline Program to create the “SJA Adjusted Baseline Program”. The primary adjustment to the Baseline Program made by Mr Abbott was done on instructions. He adjusted the Baseline Program to include a revised duration of the settlement surcharge period from 90 calendar days to 182 calendar days. Mr Abbot was instructed to assume that:
- surcharge monitoring was within CMC’s Scope of Work;
- the surcharge settlement period for the Beales Creek work was for a nominal period of six months and ought to therefore have been reflected in CMC’s program accordingly.
- Mr Abbott then prepared a “Programme of the Day” by statusing the SJA Adjusted Baseline Program using the works progress data contained in the most contemporaneous CMC “working program” so as to create a separate program which reflected the state of the works at a point in time as close as possible prior to the commencement of the alleged Delay Event. Mr Abbott stated that it is essential that the Program of the Day:
- accurately reflects the as-built portion of the project up to and including an accurate status of the works as at the status date of the program;
- accurately reflects the forward looking, planned portion of the project. This section of the project should be in line with the previous approved sequence and timing of the works, free from manipulation that may artificially influence the program.
- In order to assess the effect of each Delay Event Mr Abbott inserted the Delay Event into the Program of the Day. He then observed any impact on the Completion Date. Mr Abbott adopted a time impact analysis being a prospective approach in relation to all Delay Events including Delay Events 5, 9, 10 and 11.
- Whilst there are obvious differences in the methodology adopted by the respective experts one common feature is that they both sought, either by Mr King using CMC’s statused programs or in Mr Abbott’s case the Programs of the Day, to gain an accurate reflection of CMC’s intentions going forward. As stated by Mr King in the Joint Expert Report on Delay, “it is essential that the Contractor in developing the updated version of the Baseline Programme, that it modify the programme in order to reflect its intentions going forward.”
- WICET submits that Mr Abbott’s methodology accords more with the Contract and accepted delay analysis methodology and should be preferred by the Court. If however the Court is not persuaded by the evidence of Mr Abbott it should not accept the evidence of Mr King given “his unashamed departure from the Contract”. WICET further submits that it is open to the Court to reject all of the expert evidence if it finds that none of it is sufficiently compelling and cogent. In those circumstances WICET urges the Court not to embark upon any speculative analysis but rather find that CMC has not discharged its onus to prove an entitlement to any extensions of time under the Contract. The necessity to reject outright the evidence of Mr King or Mr Abbott does not, in my view, arise.
- CMC submits that in the course of the concurrent evidence, Mr Abbott demonstrated:
- an argumentative, overbearing and uncivil personality (as acknowledge by WICET);
- a lack of independence;
- a tendency towards mechanical application of his own method without demonstrating sufficient reasoning or common sense; and
- a willingness to provide evidence outside his own expertise for the benefit of WICET.
- Comparatively, according to CMC, Mr King is a recognised industry expert with a wealth of experience in delay analysis in litigious matters. He has also applied a common sense approach consistent with the Delay Protocol and the lay evidence that was led at trial.
- CMC’s suggestion that Mr Abbott lacked independence relies on my request to Mr Abbott in the course of the concurrent evidence that civility be maintained. I did not appreciate Mr Abbott shaking his head vigorously in disagreement to an answer given by Mr King. That episode does not however reflect on Mr Abbott’s independence as an expert. I accept WICET’s submission that the Court’s observations of Mr Abbott’s demeanour in the course of the concurrent evidence should not be determinative of whether his analysis is accepted or not accepted.
- As to CMC’s submission that Mr Abbott demonstrated a willingness to provide evidence outside his own expertise for the benefit of WICET, CMC refers to paragraphs 44, 45, 145, 146, 154 of Mr Abbott’s expert report on delay dated 2 November 2015. These paragraphs to which objection was taken, do evidence Mr Abbott expressing concluded views as to matters of contractual construction and factual findings which are matters for the Court not for Mr Abbott. His opinions in these respects are inadmissible. In each instance however Mr Abbott’s inadmissible opinions were, almost invariably supportive of WICET’s position. This became evident in an exchange I had with Mr Abbott in relation to Delay Event 9. The exchange concerned Mr Abbott’s unwillingness to acknowledge that some CMC programs he relied on for his Program of the Day already had inbuilt delay which he should have taken into account. Mr Abbott sought to justify his failure to take this inbuilt delay into account by suggesting that the Bebo Arch could have been constructed in a much shorter period. I deal with this issue in more detail below.
- WICET’s primary criticism of Mr King is that his approach did not comply with the Contract and that he did not explain in his report why he adopted a different methodology for Delay Events 9, 10 and 11.
Issue 2: Methodology and programs
- The issue is whether the Contract permits both a prospective and retrospective delay analysis. WICET submits that Mr King’s retrospective delay analysis in respect of Delay Event 9 using an “as planned” v “as built” analysis is not permitted by clause 35.5 of the Contract.
- In my opinion the better view is that the Contract permits both a prospective and retrospective delay analysis.
- Paragraph 3 of clause 35.5 provides that:
“If the Contractor is or will be delayed in reaching Practical Completion … and within 28 days after the delay occurs the Contractor gives the Principal’s Representative a written claim … the Contractor shall be entitled to an extension of time for Practical Completion.”
Clause 35.5 further provides:
“The Contractor will only be entitled to an extension of time for Practical Completion pursuant to this Clause if –
- the Contractor –
- demonstrates to the satisfaction of the Principal that the Contractor has been or will be actually delayed in achieving Practical Completion.”
- The use of the disjunctive “or” gives the Contractor a choice to demonstrate that either it has been actually delayed or it will be actually delayed in achieving Practical Completion. The past tense “has been” as CMC submits, contemplates looking backwards, after the delay event has expired, to demonstrate that (with knowledge of hindsight) the Contractor has actually been delayed in achieving Practical Completion. CMC further submits that the retrospective approach is particularly appropriate if the activity delayed occurs towards the end of the project, such that the time at which the claim for the extension comes to be assessed is after Practical Completion has been achieved.
- WICET makes the following submission:
“Whilst the word ‘has’ (much like the word ‘is’) might, viewed in isolation, suggest a retrospective analysis, the word is immediately followed the critical words by ‘or will be’. The phrase ‘has or will be actually delayed’ should have the same meaning as ‘is or will be delayed’. Further the insertion of the word ‘actually’ does not require a retrospective analysis. If that were intended, the word ‘actually’ would not have been proceeded by ‘will be’. On a proper construction, the word ‘actually’ simply emphasises that CMC is only entitled to a EOT if Practical Completion is affected.”
- I do not accept this construction. The use of the words “has been … actually delayed” addresses past delay permitting or indeed inviting retrospective analysis. A Contractor would be entitled to an extension of time for Practical Completion if it demonstrates either a past or future delay. Further as CMC correctly submits, WICET’s construction does not give the word “actually” any work to do.
- My interpretation of clause 35.5 as permitting both a prospective and retrospective delay analysis rest on the ordinary meaning of the term “has been or will be actually delayed”. Both parties referred to the Society of Construction Law Delay and Disruption Protocol which is an industry publication concerning delay analysis. This Protocol has been updated by a Rider prepared in July 2015 (Rider 1). The Protocol recognises the primacy of the Contract in undertaking any delay analysis. It states that a Contract will take precedence over the Protocol, and that the method of delay analysis will be dictated by the relevant Contract. Rider 1 provides in paragraphs 11 and 14:
“… there was a strong argument put forward that contemporaneously submitting and assessing an EOT application and awarding an EOT on a prospective basis (specifically, through the use of time impact analysis) can sometimes lead to unrealistic results …
Another key difference introduced by Rider 1 to the Protocol (and the 2nd edition) is the removal of the preference for a particular delay analysis methodology where that analysis is carried out time distant from the delay event or its effect. This is because the Contract terms, the circumstances of the project, the claim or the dispute and the available project records (amongst other matters) are all crucial factors in determining the most appropriate methodology and these matters will vary between projects.
Despite this change, irrespective of the methodology, fundamentally the conclusions of the delay analysis must be sound from a common sense prospective in light of the facts that actually transpired on the project. This is because a theoretical delay analysis which is divorced from the facts and common sense is unhelpful in ascertaining whether in fact the relevant delay event caused critical delay to the completion date and the amount of that delay.”
- The Protocol and Rider 1 recognise the primacy of the Contract. The parties referred me to a number of authorities on this issue. As these cases did not consider the actual words of Clause 35.5(B)(5) they are of limited assistance in determining whether clause 35.5 permits both a prospective and retrospective delay analysis.
- Pursuant to clause 35.5 (B)(1) the Contractor will only be entitled to an extension of time for Practical Completion if among other matters it has demonstrated the activities delayed are on the critical path in the construction program referred to in clause 33.2. Clause 35.5 does not expressly prescribe how the Contractor may demonstrate this requirement.
- Clause 33.2 is set out in Annexure A to these Reasons. The first paragraph of clause 33.2 defines, for the purpose of clause 33, a “construction program” as being a statement in writing showing the dates by which, or the times within which, the various stages or parts of the work under the Contract are to be executed or completed. The third paragraph of clause 33.2 states that the Contractor shall furnish to the Principal’s Representative a construction program within the time and in the form specified in the Special Conditions of the Contract at Appendix F2 and will revise the construction program as specified in the Special Conditions of the Contract at Appendix F2.
- Schedule F2 is also set out in Annexure A to these Reasons. Clause 2.5 of Schedule F2 is headed “Baseline Construction Program”. It provides that the Contractor shall submit a detailed breakdown of the program contained in Schedule C6 in accordance with clause 33.2 of the General Conditions of Contract. Once the Principal’s Representative has reviewed the construction program and gives a direction that it is suitable as a Construction Program, it shall become the Baseline Program against which actual time performance will be measured. No changes shall be made to the Baseline Program without the prior agreement, in writing, of the Principal’s Representative.
- Clause 2.6 of Schedule F2 deals with revisions to the Baseline Program. The Contractor is required to review the Baseline Program when any one of the following events occurs:
- progress of the Works falls significantly behind or otherwise departs significantly from that shown in the Baseline Program;
- a contract variation is issued and the Principal’s Representative agrees the variation affects the Contract Date for Practical Completion;
- there is a change in method of working adopted by the Contractor that the Principal’s Representative determines should be ref