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CITE

Unreported Judgment
Appeal Determined (QCA)

Thiess Pty Ltd v Arup Pty Ltd[2012] QSC 185Applegarth J
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Thiess Pty Ltd v Arup Pty Ltd[2012] QSC 185

SUPREME COURT OF QUEENSLAND

CITATION:	Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors [2012] QSC 185
PARTIES:	THIESS PTY LTD ABN 87 010 221 486 (first applicant) and JOHN HOLLAND PTY LTD ABN 11 004 282 268 (second applicant) v ARUP PTY LTD ABN 18 000 966 165 (first respondent) and PARSONS BRINCKERHOFF AUSTRALIA PTY LTD ABN 80 078 004 798 (second respondent) and BDO (QLD) PTY LTD ABN 45 134 242 434 (third respondent)
FILE NO:	4441 of 2011
DIVISION:	Trial Division
PROCEEDING:	Originating Application
ORIGINATING COURT:	Supreme Court of Queensland
DELIVERED ON:	10 July 2012
DELIVERED AT:	Brisbane
HEARING DATE:	10-11, 14-18, 21-23 and 25 May 2012
JUDGE:	Applegarth J
ORDER:	Within 7 days the first and second respondents submit draft minutes of orders reflecting the declarations to be made in their favour and the resolution of the Access to Records Dispute. Within a further 14 days the parties confer in relation to the terms of declaratory and other orders. The proceedings be adjourned to 16 August 2012 for the purpose of any further submissions as to the form of orders. The applicants’ counterclaim for alleged contravention of the Trade Practices Act 1974 (Cth) is dismissed.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where applicants (“TJH”) engaged first and second respondents (“PBA”) as consultants – where TJH and PBA entered into a Collaborative Consultancy Agreement (“CCA”) for design of infrastructure project – where Schedule 7 to the CCA governs compensation of PBA for work performed under the CCA – where Schedule 7 establishes a “3-element” compensation model – where first element reimburses PBA for “actual cost” related to work performed under the CCA – where TJH contends that the words “actual cost” in cl S7-1 of the CCA bear their ordinary meaning – where TJH contends that later provisions in Schedule 7 relate only to the quantum of progress payments and do not govern PBA’s entitlement to compensation – where PBA contends that the words “actual cost” in cl S7-1 in relation to staff rates are defined by cl S7-3 – whether, upon proper interpretation of the CCA, cl S7-1, cl S7-3 and cl S7-4 specify and thereby define costs for which PBA is to be compensated by TJH EQUITY – GENERAL PRINCIPLES – MISTAKE – EQUITABLE RELIEF IN CASE OF MISTAKE – Rectification – Particular cases – where, following negotiations, TJH and PBA entered into the CCA as a written agreement – where Schedule 7 to the CCA refers to various “multipliers” to be applied to “raw rates” in determining compensation under the agreement for cost of personnel – whether, had the CCA mistakenly recorded the parties’ agreement, TJH and PBA held a common intention at the time of entering into the CCA that the multipliers would not be “subject to audit” – whether PBA engaged in conduct lacking in good faith precluding it from seeking the remedy of rectification TRADE PRACTICES AND RELATED MATTERS – MISLEADING OR DECEPTIVE CONDUCT – Trade Practices Act 1974 (Cth) (“TPA”) – where TJH and PBA entered into the CCA following negotiations – where those negotiations included discussion about a 2.8 multiplier to be applied in determining cost of full time staff under the CCA – whether PBA engaged in conduct in breach of s 52 TPA by failing to disclose that it had not undertaken a specific examination of its financial records, as pleaded by TJH, prior to entering into the CCA CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the CCA provided for “Compliance Audits” to be undertaken by an auditor and the production of a “Compliance Audit Report” – whether the investigations undertaken by Easdown Consulting Pty Ltd (“Easdown”) constitute Compliance Audits for the purposes of the CCA – whether the report produced by Easdown constitutes the Compliance Audit Report contemplated by the CCA – whether, in the alternative, TJH is estopped from denying that the investigations undertaken by Easdown constitute Compliance Audits and the report produced by it the Compliance Audit Report CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE – Agreement to amend existing contract – where a meeting of TJH and PBA representatives with responsibility for administering the CCA purported to amend certain principles relevant to PBA’s compensation under the agreement – whether agreement was reached at that meeting – whether it was agreed that the reduced overtime rate of 1.1 would apply after 37.5 hours or 45 hours – whether, in the alternative, TJH is estopped from denying that agreement was reached at that meeting that the reduced overtime rate of 1.1 would apply after 45 hours Trade Practices Act 1974 (Cth), s 52 ACIL v England Unreported, Supreme Court of South Australia, 1 November 1995; BC9502398, cited Australasian Performing Right Association Ltd v Austarama Television Pty Ltd [1972] 2 NSWLR 467, cited Byrnes v Kendle (2011) 243 CLR 253, cited Carmichael v National Power Plc [1999] 1 WLR 2042, cited Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, followed Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, cited Coghlan v Pyoanee Pty Ltd [2003] 2 Qd R 636, cited Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329, cited Elders Lensworth Finance Ltd v Australian Central Pacific Ltd [1986] 2 Qd R 364, cited Establissements Georges et Paul Levy v Adderley Navigation Co Panama SA (“The Olympic Pride”) [1980] 2 Lloyd’s Rep 67, cited Grundt v The Great Boulder Pty Goldmines Ltd (1937) 59 CLR 641, cited Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55, cited Kimberly NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Dig) 53,195, cited MacDonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152, cited Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336, cited Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, cited Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603, considered Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd [2010] QSC 006, followed
COUNSEL:	A J Myers AO QC, P L O'Shea SC and T J Bradley for the applicants P A Freeburn SC and J P O'Regan for the first and second respondents
SOLICITORS:	Freehills for the first and second applicants Schweikert Harris for the first and second respondents Clayton Utz for the third respondent (excused from appearing during the trial)

Introduction

PART A: THE INTERPRETATION OF THE CCA’S COMMERCIAL FRAMEWORK

PART B: PBA’S ALTERNATIVE CLAIM FOR RECTIFICATION

PART C: MISLEADING OR DECEPTIVE CONDUCT

PART D: THE COMPLIANCE AUDIT ISSUE

PART E: THE OVERTIME ISSUE

PART F: THE ACCESS TO RECORDS DISPUTE

PART G: CONCLUSION

[1] – [31]

[32] – [86]

[87] – [209]

[210] – [265]

[266] – [301]

[302] – [349]

[350] – [359]

[360] – [372]

Introduction

The applicants (“TJH”) and the first and second respondents (“PBA”) are parties to a “Collaborative Consultancy Agreement” (“the CCA”) dated 16 May 2008 in respect of the Airport Link, Northern Busway (Windsor to Kedron) and East-West Arterial Gateway Projects. TJH engaged PBA as consultants for the design of the project.

Some of the matters in dispute in these proceedings arise because TJH and PBA contend for different interpretations of the terms of the CCA that govern PBA’s entitlement to compensation under the agreement. The proper interpretation of those provisions has implications for the audits and other steps that the Collaborative Agreement Auditor carries out and the documents of PBA to which it is entitled to have access.

Clause 16.1 of the CCA states that the compensation “set out in the Commercial Framework will be the sole compensation to the Consultant for the complete fulfilment of all of their obligations under this Agreement.” The Commercial Framework contained in Schedule 7 to the CCA provides a “3-Element” compensation model. Clause S7-1.1.1 relevantly provides:

“... the Consultant will be compensated for participating in carrying out Collaborative Agreement Work in accordance with the following ‘3-Element’ model, where:

Element 1 =The following costs incurred directly by the Consultant on the Collaborative Agreement Work will be reimbursed at actual cost subject to audit:

(i)the cost of personnel performing the Collaborative Agreement Work, including mistakes, rework and wasted effort, but not including costs incurred as a result of, or in committing, remedying or addressing a Wilful Default;

(ii)Project-specific overheads related to the Collaborative Agreement Work; and

(iii)actual costs of Project-specific plant and materials (being items the Consultant would not be required to procure if located in their respective home locations).

Reimbursement to the Consultant under Element 1 must not include any recovery of non Project-specific overheads or profit or costs arising under clause 22.4(b)(ii).

Element 2 =A fee (‘the Fee$’) to cover normal profit and a contribution towards recovery of non Project-specific overheads. The entire Element 2 fee paid or payable to the Consultant for all work under this Collaborative Consultancy Agreement is ‘at risk’ based on outcomes of Element 3, in accordance with this Commercial Framework.

Element 3 =A share of ‘gain’ or ‘pain’ depending on how our collective actual performance compares with pre-agreed targets in various cost and non-cost key result areas (KRA).”

Later clauses of Schedule 7 make detailed provision about each of the three elements. For example, cl S7-3 relevantly provides the following about staff rates under Element 1:

“S7-3.1.2 Actual Element 1 rates for the Consultant’s staff, Consultant’s contracted staff, and sub-consultants’ staff will be calculated as ‘multiplier’ x ‘Raw Rate’, with the ‘Raw Rate’ to be confirmed during the Compliance Audit.

	Raw Rate	Element 1 Multiplier
Consultant Full Time Staff	= Total Salary Package/1950 = $hrs	= 2.8
Consultant Staff (other than Full Time) including Permanent Part Time Staff, and In-House Contract Staff	= Hourly rate to be determined by CCA Auditor	= to be determined by CCA Auditor
Consultant Contract Staff (staff employed by and integrated into the Consultant team for ALNB or EWAG works only)	= agreed hourly rate	= 1.5
Consultant’s Sub-consultants	= agreed hourly rate	= 1.1

S7-3.1.3Without limiting clause S7-4.1.1, items not included in the Raw Rate include project specific hardware and software, travel ‘allowables’ to and from project design office from home office, out-of-town specialist travel and accommodation costs (by agreement with Collaborative Agreement Manager), vehicles for CPS, personnel protective equipment (PPE), etc.

S7-3.1.4Actual items included in the Element 1 staff rates comprise (without limitation) salary and salary related overheads, sick leave and the like, tax including superannuation, holiday leave and pay, training not specifically project related, work tools (including hardware and software normally used), staff procurement costs, home office administration support, bonuses, promotions (including salary increases associated with same), mobile phone (including costs), etc.”

Clause S7-4 contains a table that provides “a high-level summary of what is reimbursable under Element 1” and states that the bases of reimbursement in each category will be as set out in the Compliance Audit Report. Clause S7-5 specifies the manner in which the Element 2 Fee is calculated. Clause S7-6 contains detailed provisions in relation to Element 3 and commences, “We will share gain/pain as detailed below in this clause S7-6.”

The CCA provides for TJH to appoint a Collaborative Agreement Auditor whose “overriding brief is to carry out audits, to audit and verify Consultant Collaborative Agreement Costs incurred by Participants and to ensure that in respect of all payments made pursuant to this Agreement that PBA receives its exact entitlements as set out in Schedule 7.”^[1]

Clause S7-1.3.1 provides:

“Within one month of the Commencement Date of this Collaborative Agreement the Collaborative Agreement Auditor will conduct investigations (‘Compliance Audits’) on the Consultant’s financial records:

(a)to clarify the basis of reimbursement under Element 1; and

(b)to ensure that the demarcation between items reimbursable under Element 1 and items that are deemed to be covered under Element 2 (and therefore not directly reimbursable) is clear.”

Clause S7-1.3.2 provides:

“All Payments made pursuant to this Collaborative Agreement are subject to investigation by the Collaborative Agreement Auditor and are subject to validation by the Collaborative Agreement Auditor that they are in accordance with the terms of compensation set out in this Schedule 7 and the principles of reimbursement determined during the Compliance Audits or those principles as amended by the Collaborative Leadership Team (CLT).” (emphasis original)

Clause S7-1.3.3 provides:

“TJH will only be liable to reimburse costs to the Consultant to the extent such costs are verified by the Collaborative Agreement Auditor. Any payment made by TJH shall be on account only until verified by the Collaborative Agreement Auditor.”

Clauses S7-1.3.1 and S7-1.3.2 envisage two distinct roles for the Collaborative Agreement Auditor. The first is to conduct the investigations described in cl S7-1.3.1 as “Compliance Audits” within one month of the commencement date of the CCA. The second is to undertake tasks of investigation and validation in respect of payments made pursuant to the CCA.

Easdown Consulting Pty Ltd (“Easdown”) was appointed by TJH as the Collaborative Agreement Auditor pursuant to the CCA. In June and July 2008 Easdown conducted investigations into PBA’s financial records. Easdown produced a report dated 25 July 2008 (“the Easdown Report”).

The Easdown Report was circulated to TJH and PBA and was considered and discussed at a meeting of the Collaborative Agreement Leadership Team (“CLT”) at its meeting on 28 August 2008. The CLT comprises three representatives of TJH and two representatives of PBA, and is established under the CCA to administer the agreement and “provide guidance and leadership to the parties with respect to the Collaborative Agreement Work.” The CLT Meeting on 28 August 2008 (“CLT‑3”) addressed the issue of overtime, and made a decision about overtime that comprised an amendment of the principles of reimbursement pursuant to cl S7-1.3.2.

After CLT-3 PBA claimed reimbursement on the basis that CLT-3 had decided:

the multiplier should be 1.1 for overtime hours; and

overtime hours comprised hours worked in excess of 45 hours per week.

For a long time thereafter claims by PBA were made, validated, certified and paid on this basis. Much later TJH asserted that this was wrong, and that CLT-3 had in fact agreed that overtime comprised hours worked in excess of 37.5 hours per week. I shall refer to this as “The Overtime Issue”. In these proceedings PBA seeks a declaration in accordance with what it contends was the CLT-3 decision, which it says was confirmed shortly after CLT-3 in an e-mail to the Collaborative Agreement Manager (“CAM”). Alternatively, it seeks a declaration that TJH is estopped from denying that the CLT amended the principles of reimbursement to the effect that the multiplier should be 1.1 for overtime hours and that overtime hours comprised hours worked in excess of 45 hours per week.

After July 2008 Easdown accessed certain records of PBA and validated progress claims. In July 2009 a meeting of the CLT determined that Easdown was not required to conduct audits of PBA’s progress claims until further notice.

In April 2010 the CLT resolved to instruct Easdown to resume investigation and validation of PBA’s progress claims, however, Easdown did not complete any validation of further progress claims and on 23 July 2010 resigned as Collaborative Agreement Auditor.

Subsequently, the third respondent (“BDO”) was approached by TJH to undertake the role of Collaborative Agreement Auditor. It was appointed in October 2010.

BDO sought access to certain records and a dispute arose as to whether PBA was obliged to provide access to them. The contentions of the parties in that regard appear in a schedule to the second further amended defence and counterclaim and it is convenient to refer to this dispute as the “Access to Records Dispute”. The Access to Records Dispute arises principally due to different contentions between TJH and PBA about the basis of PBA’s entitlement to be reimbursed for the costs incurred directly by PBA for the Collaborative Agreement Work.

PBA contends Easdown’s investigations in June and July 2008 were the “Compliance Audits” provided for in cl S7-1.3.1 and that the Easdown Report is the “Compliance Audit Report” referred to in cl S7-4 of the CCA.

It was not until 9 August 2011 that TJH asserted that Easdown did not undertake the Compliance Audits required by the CCA. PBA’s primary position is that Easdown undertook the Compliance Audits required by the CCA. Its alternative position is that TJH is estopped from denying that the Easdown investigations and the Easdown Report produced as a result of them are Compliance Audits for the purposes of the CCA. It is convenient to refer to this aspect as the “Compliance Audit Issue”.

The issue of interpretation

The issue of interpretation centres on whether PBA’s entitlement to be reimbursed the actual cost of personnel performing the Collaborative Agreement Work is governed by the detailed provisions of cl S7-3. This is PBA’s position. TJH contends that cl S7-3 relates only to the calculation of payments on account of PBA’s entitlement, and that PBA’s entitlement to reimbursement is not governed by cl S7-3.

PBA seeks a declaration that the result of multiplying a personnel member’s “Raw Rate” by the applicable multiplier constitutes “actual costs” of PBA for the purposes of cl S7-1 of Schedule 7 of the CCA.

Related to this fundamental issue of contractual interpretation is an apprehension on PBA’s part that BDO (with TJH’s encouragement) has sought access to documents of PBA to which it is not entitled under the CCA because those documents are not related to the calculation of actual costs, as specified in the CCA. An associated issue is PBA’s contention that BDO is seeking certain documents (“the Disputed Records”) on the basis that the multipliers stated in cl S7-3 (and the multiplier for “Consultant Staff (other than Full Time)” determined by Easdown) are not fixed and are subject to audit. PBA seeks declarations to the effect that these multipliers are fixed (having been either agreed in the CCA or determined by Easdown) and are not subject to audit by the Collaborative Agreement Auditor.

The rectification issue

In the alternative, PBA pleads that if on the proper construction of the CCA:

the values of the multipliers are subject to audit by the Collaborative Agreement Auditor; and

the Collaborative Agreement Auditor is entitled to access its records so as to verify the values of the multipliers,

then this is inconsistent with the common intention of the parties, as disclosed in their communications in negotiating the CCA. It seeks rectification of the CCA on the basis that its effect is inconsistent with the consensus reached during those negotiations and the common intention of the parties. It seeks an order that the CCA be rectified by inserting at the end of cl S7-3.1.2 the following:

“Notwithstanding any other provision of this Collaborative Agreement, the value of the multipliers set out in this Collaborative Agreement are not subject to audit by the Collaborative Agreement Auditor, and the value of the multipliers determined by the Collaborative Agreement Auditor during the Compliance Audit are not subject to further audit by the Collaborative Agreement Auditor.”

TJH’s submissions describe the issue of whether the multipliers are “subject to audit” as a “non-issue”. It does not contend that they are, and submits that the “point at issue is whether PBA are obliged to provide BDO with access to their financial and accounting records so that BDO can audit PBA’s actual costs.”

TJH submits that if its view of the interpretation issue is adopted the remedy of rectification is unnecessary and lacks utility. It argues that even if the agreement was rectified in the form sought by PBA, the Collaborative Agreement Auditor can still access the Disputed Records for a variety of purposes, including ascertaining PBA’s “actual costs” which may be very different to the amount that is payable under the CCA on account of PBA’s true entitlement.

TJH opposes PBA’s alternative claim for rectification on a number of grounds. These include that the common intention alleged by PBA was not held by the persons who controlled the conduct of Thiess and John Holland in relation to their entry into the CCA. TJH also pleads that the Court in its discretion should refuse to rectify the CCA because of conduct of PBA that was wanting in good faith and likely to mislead or deceive TJH.

Misleading or deceptive conduct

TJH also relies on PBA’s alleged conduct as constituting a contravention of s 52 of the Trade Practices Act 1974 (Cth). In essence, TJH argues that dealings between the parties in the course of negotiations gave rise to a reasonable expectation that if there had been no examination of the nature described in sub-paragraph 85(r) of TJH’s defence, then PBA would disclose that fact to TJH before it executed the CCA. The examination is pleaded as one involving a careful analysis of the financial records of PBA for a period reasonably close to 2007 by a person with accounting or audit qualifications or experience which had ascertained:

“(i)that multiplying the ‘raw cost’ of PBA’s full time employees who were to perform the design and certification work of the kind described as ‘Collaborative Agreement Work’ in the CCA by a multiplier of 2.8 yielded a figure which was no more than the actual cost to PBA of:

(A)those personnel performing work of that kind; and

(B)overheads related to that work that were specific to the Project; and

(ii)what value of the multiplier would yield a figure which was no more than the actual cost to PBA of those personnel performing the said design and certification work and the said overheads and did not include any recovery of overheads not specific to the Project or any profit.”

TJH pleads that PBA refrained from disclosing that there had been no such examination, that the failure to disclose was not inadvertent and that the conduct was likely to mislead or deceive.

PBA disputes that its conduct gave rise to a reasonable expectation of the kind alleged, and submits that TJH witnesses did not claim to have such an expectation. Further, any failure to disclose was not deliberate.

The issues

Against that background, the substantial issues may be summarised as follows:

The interpretation of the CCA’s Commercial Framework;

PBA’s alterative claim for rectification;

TJH’s discretionary defence to the claim for rectification and its counterclaim on the grounds of misleading or deceptive conduct;

The Compliance Audit Issue;

The Overtime Issue;

The Access to Records Dispute.

These proceedings were commenced by TJH as a result of unresolved disputes over BDO’s access to certain documents. Directions were made for pleadings and TJH in its counterclaim seeks a declaration in relation to certain disputed records. However, resolution of the underlying issue of contractual interpretation and, if necessary, the claim for rectification, may serve to quell at least part of the Access to Records Dispute. TJH and PBA agreed at the conclusion of the hearing on 25 May 2012 that the making of any declarations in relation to the Access to Records Dispute should await the resolution of other issues, and the provision to BDO of an opportunity to be heard concerning the form of any declaratory relief that may affect it. BDO was excused from appearing during the trial. No substantive relief was sought against it, and it indicated, through its solicitors, that it would abide the orders made by the court on the substantive issues that were tried between TJH and PBA.

PART A:THE INTERPRETATION OF THE CCA’S COMMERCIAL FRAMEWORK

The issue of interpretation arises in the context of a dispute over access to PBA records which are sought for a variety of reasons, including management accounts which TJH says will “enable BDO to verify which costs are being claimed in the Element 1 multiplier of 2.8”. More generally, TJH contends that BDO, as the Collaborative Agreement Auditor, is entitled to access such records as are necessary to verify the actual costs incurred by PBA. The Access to Records Dispute prompts consideration of the provisions of the CCA that relate to audits, including the Collaborative Agreement Auditor’s “overriding brief” to audit and verify Consultant Collaborative Agreement Costs and “to ensure that in respect of all payments made pursuant to [the CCA] that [PBA] receives its exact entitlement as set out in Schedule 7.” This, in turn, directs attention to Schedule 7 which governs PBA’s entitlement to compensation.

The issue of interpretation arises in respect of PBA’s entitlement to compensation for the cost of personnel performing the Collaborative Agreement Work. However, resolution of the issue of interpretation has broader implications with respect to reimbursement of other costs, being project-specific overheads and project-specific plant and materials.

The immediate issue of interpretation is whether cl S7-3 with respect to staff rates specifies, and thereby defines, PBA’s entitlement to compensation for such costs, or only governs the quantum of payments to be made on account of PBA’s entitlement to compensation. Expressed differently, the issue is whether PBA’s entitlement to be compensated by being reimbursed for costs incurred directly by it at “actual cost” subject to audit is determined by the application of specific provisions such as cl S7‑3.

TJH’s essential submission is that the meaning of “actual cost” in cl S7-1 is its ordinary meaning, unqualified and unaffected by later clauses such as cl S7-3. According to TJH, cl S7-3 is not concerned with PBA’s entitlement to compensation. Its purpose is submitted to be the calculation of payments which are made on account.

PBA’s position is that while cl S7-1.1.1 sets out the broad compensation framework, later clauses such as S7-3 and S7-4 define what costs are to be reimbursed under Element 1. Clause S7-3 is a contractual prescription that the actual costs of staff are to be calculated in accordance with the formula of “multiplier x raw rate”. PBA submits that the CCA specifies the formula by which its actual costs of personnel performing work are to be calculated for the purposes of Element 1. According to PBA, the product of the formula is PBA’s actual labour and related on-costs. Clause S7-3 defines PBA’s entitlement to be reimbursed for personnel costs, not simply the quantum of progress payments on account of its entitlement. According to PBA, if cl S7-3 was limited to calculating progress payments, then this purpose would be stated, but it is not.

Relevant provisions

In addition to the most relevant provisions which have been quoted in the Introduction, it is necessary to refer to a number of additional provisions which are relevant to the issue of interpretation and provide the context in which the Commercial Framework contained in Schedule 7 falls to be interpreted.

The CCA contains certain “Behavioural Commitments” by which the parties agreed to work together in delivering the Collaborative Agreement Work and to:

“share all risks and opportunities associated with the delivery of the Collaborative Agreement Work except those we have specifically agreed will be retained by one party only.”^[2]

The parties agreed to “fully disclose to the other any conflict of interest or duty that exists or may arise in connection with the performance of the Collaborative Agreement Work”.^[3] They undertook to establish and maintain “an environment which encourages honest, open and timely sharing of information with respect to the Collaborative Agreement Work.”^[4] By cl 1(f) they undertook “to act reasonably and to do all things properly and reasonably within [their] power that are necessary to give effect to the spirit and intent of this Agreement.” Clause 1(g) provides:

“We undertake to act in good faith in conducting all activities arising out of this Agreement and will:

(i)be fair and honest; and

(ii)not impede or restrict each other’s performance.”

Clause 22 creates a “Limited ‘No Blame’ Framework”. Subject to its provisions, the parties stated that they did not “intend to allocate blame or legal liability to Participants for errors, mistakes and poor performance”. However, cl 22 qualifies this by making detailed provision for the allocation of liability for certain design errors.

The day-to-day affairs of the Collaborative Agreement are managed and co-ordinated by a management team known as the Collaborative Management Team (“CMT”), operating under the leadership of the CAM. The CMT supervises and manages the Integrated Project Team in the performance of the Collaborative Agreement Work. The CMT is made up of persons from each of the Participants.

As previously noted, the CLT is the leadership team that directs and governs the CCA, and comprises three representatives of TJH and two representatives of PBA. The CLT meets at least once every month and, with limited exceptions, every decision by the CLT must be unanimous.

Reference also should be had to the following provisions of the CCA:

(a)Clause 18.1(a) which provides:

“By the last business day of each month (or such other date as decided by the CLT), the Collaborate Agreement Manager will, with input from the Participants, prepare and submit a Payment Certificate to TJH which includes:

(i)costs incurred individually by each Participant, separated into the Airport Link, Northern Busway, and East-West Arterial Gateway (EWAG) elements of the Collaborative Agreement Work; and

(ii)entitlements of the Consultant to Fees and (if applicable) Performance Adjustments.”

(b)Clause 18.1(d) which provides:

“At the frequency specified in the C.A.M.P. or as determined by the CLT, Certificates must be accompanied by a statement by the Collaborative Agreement Auditor confirming that the amounts shown in the certificate are in accordance with the terms of this Agreement.”

(c)Clause 18.3(b) which provides:

“Progress payments by TJH will not be evidence of the value of work, or an admission of liability, or that the work has been executed satisfactorily, but will be deemed to be provisional payments on account and subject to a final verification audit by the Collaborative Agreement Auditor.”

(d)Clause 20.1(a) which provides:

“[The Participants] acknowledge that it is of paramount importance that all commercial aspects of this Agreement are administered in a transparent manner that demonstrates to both Participants that all payments made under this Agreement are in accordance with the terms of this Agreement.”

(e)Clause 20.3(a) which provides:

“Until all payments under this Agreement have been made, the Collaborative Agreement Auditor will have access at all reasonable times to the personnel and Records of the Participants that are related to Consultant Collaborative Agreement Costs pursuant to this Agreement.”

Clause 31.3(a) is an “Entire Agreement” clause which states:

“This Agreement as amended from time to time contains the entire agreement between us in relation to the Collaborative Agreement Work. This Agreement supersedes all prior arrangements whether written or oral and any heads of agreement, letters of intent, representations, warranties, promises, statements, negotiations and other documents in relation to the Collaborative Agreement Work issued or entered into prior to this Agreement.”

Clause 31.3(b) confirms that the provisions of the CCA were not intended to be legally binding until it had been signed on behalf of each participant by a person or persons authorised to represent that participant.

Clause 21 provides for the resolution of disagreements, and requires the parties to use their best endeavours to settle any Collaborative Agreement Disagreement in good faith and in a manner consistent with the Collaborative Agreement Charter. In the event that a dispute cannot be so resolved or if at any time a party considers that the other party is not making reasonable efforts to resolve the dispute, the party may by notice in writing refer such dispute to arbitration or litigation.

The provisions of the CCA, including the Behavioural Commitments contained in cl 1, the provisions for the sharing of risks and opportunities and the three-limb compensation model in Schedule 7 comprising reimbursement of costs, a fee to cover normal profit and a contribution towards recovery of non project-specific overheads and a share of “gain” or “pain” (depending on how the parties’ collective actual performance compared with pre-agreed targets), permit the CCA to be described as a “relationship-based agreement” or a form of “soft-contracting”. These labels are used in contradistinction to other labels such as “hard-dollar contract” to provide a general description of the contract. The CCA is styled a “Collaborative Consultancy Agreement”. The contract’s detailed provisions in relation to the parties’ relationship, delivering the Collaborative Agreement Work and the compensation for that work are more important than any label. Relevantly, cl 31.4(a) states:

“This Agreement is not intended to create nor will it be construed as creating any legal partnership, joint venture or fiduciary relationship between us and it will not give rise to any obligations between us apart from those obligations expressly stated in this Agreement or imposed by law.”

The parties’ submissions on the issue of interpretation

The parties’ extensive submissions on the issue of interpretation have been briefly summarised above. TJH submits that the expression “actual costs” in the Commercial Framework bears its ordinary meaning, “actual” meaning “existing in act or fact; real.”^[5] It contends that the interpretation asserted by PBA strains against the balance of the CCA, is not in accordance with what commercial people would understand the words to mean and is not consistent with “business commonsense”. It submits that if PBA’s interpretation were open, it would not be the “more commercially sensible” construction.

According to TJH, it made good commercial sense for the parties to agree a process for calculating the progress payments that was simple, leaving any debate about the overall accuracy of the interim calculations to occur outside the progress payment regime. In those circumstances, and in the context of the balance of the CCA, the “evident purpose” of cl S7-3.1.2 (and cl S7-3.1.3 and cl S7-3.1.4) was to provide a simple way of calculating progress payments, without the burdensome process of auditing PBA’s exact costs every month.

PBA responds by reference to the terms and structure of Schedule 7, which after stating in cl 7.1 the model for compensation, later specifies the costs of personnel and in cl S7-3.1.2 prescribes how these costs are to be calculated. In doing so it prescribes that “Actual Element 1 rates” for PBA staff will be calculated in accordance with the stated formula. The evident intention is that the “actual” staff rates are to be calculated as “multiplier x raw rate” so that the product of this formula is taken to be the actual staff rates.

As to TJH’s “business commonsense” argument, PBA responds that it is clearly not commercially sensible to leave such a fundamental point, the amount of compensation payable, undetermined until an audit some time after the work has been undertaken. This is particularly the case where there may be uncertainty and difficulty in drawing a line between project specific on-costs and non project-specific on-costs. Accordingly, the commercially sensible approach was to define at the outset how such costs are to be calculated, rather than to leave it as a matter of potential dispute.

PBA also argues that the provisions for payment “on account” of TJH’s entitlement are on account only until verified by the Collaborative Agreement Auditor. In any event, in the case of staff rates, PBA’s entitlement is to be calculated in accordance with the specific provisions of Schedule 7. While in each case the “Raw Rate” is to be confirmed during the Compliance Audit, the other part of the formula, the multiplier, is not required to be confirmed or otherwise reviewed. The Schedule’s detailed provisions in relation to fixed multipliers, for one other multiplier to be “determined by the CCA Auditor” and for “raw rates” to be confirmed by the Collaborative Agreement Auditor are said to not sit comfortably with “TJH’s theory that all payments, whether verified or not, are subject to some universal or overriding right of open book audit.” PBA contends that it makes no business sense for the parties to establish the ground rules for compensation at the outset if at any time thereafter the Collaborative Agreement Auditor was to carry out some overriding or universal audit.

As noted, TJH submits that the formula to calculate actual personnel and other costs in cl S7-3 and cl S7-4 is only a calculation for the purpose of provisional progress payments. In response PBA makes a number of submissions. It is necessary to refer to only some of them. First, PBA submits that there is nothing express or implied in cl S7-3 to indicate that it applies only to progress payments. Second, provisions in the CCA for progress payments (cl 18.3) and providing for audits do not suggest that the multipliers and raw rates are provisional. Thirdly, the use of the expression “Actual Element 1 rates ...” in cl S7-3.1.2 is inconsistent with TJH’s argument. If cl S7-3.1.2 was concerned with the calculation of progress payments it would read “For the purposes of progress payments, Element 1 rates ... will be calculated as ...”. Fourthly, PBA’s interpretation envisages that Element 1 payments will be audited, except for the multiplier. On PBA’s interpretation, the raw rate, the hours worked and every cost claimed for disbursements is subject to audit or verification. Accordingly, the staff rates are subject to audit.

TJH argues that PBA’s preferred interpretation gives no effect to the detailed description of Element 1 in cl S7-1 in relation to the parties’ respective obligations and entitlements concerning payments under the CCA, and no effect to the reflection of that in the payment provisions of cl S7-9. These provisions address the quantum of payments prior to practical completion and upon practical completion (when there is a provisional estimate of the net amount of the gain/pain under Element 3), and also provide for a final payment calculated by the addition of the three elements from which the total amount already paid is deducted. The total cost of items reimbursable under Element 1 for the purpose of the final payment is based on “actual cost of items already invoiced to and/or paid by the Consultant”, with accruals being not acceptable. TJH relies upon the reference to “actual cost” in the payment provisions of cl S7-9 as a further indication that the expression “actual cost” is not defined by reference to the detailed provisions of cl S7-3 and cl S7-4.

TJH also argues that PBA’s interpretation would create an inconsistency between cl S7-1.1.1 and cl S7-3.1.2, which could not be reconciled so that the later clause should be rejected as repugnant and the earlier clause should prevail. More generally, and importantly, it argues that an interpretation of cl S7-3.1.2 that would entitle PBA to recover profit and non project-specific overheads under Element 1 would be repugnant to the substance of the contract in relation to compensation.

PBA responds that to suggest, as TJH does, that cl S7-1.1.1 should prevail over the later provisions in determining PBA’s entitlements misconceives the relationship between these provisions. According to PBA, cl S7-1.1.1 prescribes the model for compensation and later clauses, including cl S7-3, contain specific provisions about how these actual costs are to be calculated. These include the detailed provisions of cl S7-3.1.3 and cl S7-3.1.4 which define the items that are included in the Element 1 staff rates and items that are not included in the Raw Rate. There is no inconsistency between the earlier clause that prescribes the model for compensation and later detailed provisions which prescribe the method of calculating PBA’s actual costs. Contrary to TJH’s submissions, the formula does not entitle PBA to recover profit and non project-specific overheads. The parties agreed on rules specifying or defining what its actual costs (including staff and project-specific overheads) are to be and how they are to be measured for the purpose of the agreement. PBA submits that the parties have agreed to a method for the reimbursement of PBA’s costs. Schedule 7 in effect says, “We will reimburse your costs at these rates”.

PBA’s submissions acknowledge that there is obviously no precision in the application of a multiplier and there is no evident intention that it be precise. PBA notes that even in the case of an Alliance Agreement (which might allow parties to agree multipliers before entry into such an agreement on the basis of an Establishment Audit that is undertaken before the agreement is executed) it is plain that costs vary from time to time and so figures fixed by or agreed after an Establishment Audit can only be proxies for anticipated future costs.

It is to avoid the costs, uncertainty and potential for dispute associated with the calculation of actual cost at the end of a long project that parties agree in a case such as this to a formula for the calculation of actual costs, and thereby define the meaning of “actual cost” for the purpose of their agreement. This definition is of actual costs for the purpose of the agreement, not simply the regime for progress payments.

Discussion – the issue of interpretation

I conclude that the interpretation contended for by PBA best accords with the words and structure of the provisions of the CCA that determine PBA’s compensation. Contrary to TJH’s submissions, PBA’s interpretation accords with what commercial people would understand Schedule 7 as a whole to mean, and in that regard, makes commercial sense. It makes sense for parties to an agreement of this kind to define the consultant’s entitlement to be reimbursed costs incurred directly in performing the work. If the provisions of cl S7-3 and cl S7-4 were not intended to define PBA’s entitlement to reimbursement of staff and other costs, and were included only for the purpose of progress payments on account of its entitlement, then one would expect this to be stated, for example, by the inclusion of words at the start of cl S7-3.1.2, such as, “For the purpose of payments made ...”. Instead, cl S7-3.1.2 refers to “Actual Element 1 rates ...” and this provision specifies and thereby defines PBA’s actual costs, with audits to ensure that PBA receives its entitlement as set out in Schedule 7.

The interpretation which I favour is not inconsistent with the apparent intention of the parties, which was to define PBA’s entitlement to compensation in accordance with the “3-Element” compensation model by the detailed provisions of Schedule 7. Such an interpretation does not ignore and is not repugnant to the term “actual cost” in cl S7-1.1.1 or in cl S7-9. Instead, it gives meaning to those words according to the terms and structure of Schedule 7 viewed as a whole. Had Schedule 7 only included cl S7-1, with its reference to “actual cost”, then the parties may have committed themselves to a broad-ranging inquiry into the actual costs incurred by PBA over the life of this lengthy project followed by litigation of that issue if the amount could not be agreed. This would include extensive inquiry over the preceding years into whether certain on-costs constituted the actual cost of personnel performing the work. It would include vexed issues of whether costs associated with the project, such as the cost of making staff who were employed on it redundant and the cost of redundant office space which was leased for the purpose of performing the Collaborative Agreement Work, constitute actual costs for which PBA was entitled to reimbursement. Any inquiry by an auditor into PBA’s actual cost would be followed by arbitration or litigation if the parties could not agree what PBA’s actual costs were. These inquiries and dispute resolution processes would be required to be undertaken to determine PBA’s actual costs in the absence of provisions that defined them.

Viewed in isolation, cl S7-1 leaves actual costs to be determined according to its ordinary meaning after the event in litigation if the parties are unable to agree. However, the inclusion of additional provisions in Schedule 7 which specify, among other things, a formula for the calculation of PBA’s personnel costs, indicates that the parties chose to define PBA’s entitlement to be reimbursed by reference to these provisions.

The terms of cl S7-3 and cl S7-4 govern PBA’s entitlement to reimbursement, not simply the mechanics for progress payments.

TJH submits that the “evident purpose” of the provisions about staff rates was to calculate progress payments. But this purpose is not evident from the words of cl S7-3 which, when read in the context of cl S7-1, define the terms of PBA’s compensation.

The provisions of the CCA, including cl S7-1.3.3, which state that payments made by TJH are “on account”, require consideration of the entitlement of PBA in respect of which payment is on account. Depending on the circumstances, a payment on account may be subject to verification of an entitlement to the payment or the entitlement to compensation. In general terms, the CCA provides for progress payments which are “deemed to be provisional payments on account and subject to a final verification audit by the Collaborative Agreement Auditor”.^[6] The evident purpose of such provisions is to ensure a regular cash flow to PBA during the progress of the work. It is unnecessary to refer to the extensive case law cited in TJH’s submissions to the effect that progress payments are advanced to be treated as sums paid on account of whatever the contractor might eventually be entitled to recover under the contract, and that such payments are provisional and subject to adjustment at the end of the contract. It is sufficient to observe that payments are on account of whatever PBA might eventually establish its entitlements to be.

The CCA makes detailed provision in relation to Payment Certificates and also for a Final Payment Certificate. Payments made in respect of the Final Payment Certificate are deemed to be in full and final settlement of all entitlements to compensation arising pursuant to the Commercial Framework, except for further payments which become due under provisions for pass-through insurance payments or matters that have been deliberately or fraudulently concealed.^[7] Again, the reference to entitlements to compensation directs attention to those parts of Schedule 7 in which PBA’s entitlements are specified.

Any audit that verifies the amount of the final payment must have regard to PBA’s entitlement to be reimbursed for the actual costs of items that are reimbursable to it under Element 1, and the actual cost of those items is specified and thereby defined by the specific provisions of Schedule 7.

In the case of compensation for the costs incurred directly by PBA of personnel performing the Collaborative Agreement Work, project-specific overheads and project-specific plant and materials, these costs are defined by cl S7-1, cl S7-3 and cl S7-4.

TJH’s argument that to define PBA’s “actual cost” by reference to these provisions permits it to be reimbursed in amounts that are more or less than its actual costs, contrary to the commercial objective of the CCA and the apparent intent of the parties, tends to ignore that the parties, by their agreement, specified or defined how actual costs were to be calculated. PBA’s entitlement is to reimbursement at “actual cost” as defined in the agreement, not the actual costs which might be determined by a process of arbitration or litigation in the absence of those specific terms.

The “actual costs” as defined by the parties’ agreement and calculated in accordance with agreed multipliers might differ from “actual costs” as determined by a lengthy process once all of those costs were audited and litigated. TJH argues that this fact supports the conclusion that the relevant provisions, including the application of agreed multipliers, relates to progress payments. According to TJH it makes commercial sense for the parties to have PBA’s actual costs determined according to the ordinary meaning of “actual cost” once those costs are incurred, if necessary in litigation after the conclusion of the project and without reference to cl S7-3 and cl S7-4.

This argument is met, in my view, by PBA’s submission that it is not commercially sensible to leave such a fundamental point, namely the amount of compensation payable, undetermined until an audit some time after the work has been undertaken, and that a commercially sensible approach, supported by the terms of the agreement, is to define at the outset how such costs are to be calculated.

PBA’s interpretation reflects a commercially sensible approach of defining in the agreement how actual costs are to be determined, thereby permitting progress payments to be made on the basis of such a defined entitlement, rather than leave PBA’s actual costs to be worked out after the project is completed.

The proper interpretation of the contract is not determined in this case simply by competing contentions about which interpretation is the “more commercially sensible” construction. It is determined by the words of the agreement that were chosen by the parties, and the structure of Schedule 7. By their words, the parties stated the compensation model and how each of the elements of that compensation model was to be determined. Element 1 defines PBA’s entitlement to be reimbursed at “actual cost” by reference to all of Schedule 7, not simply the general words of cl S7-1. In respect of personnel costs, PBA’s costs were specified to be calculated according to the formula in cl S7-3.1.2 with the items to be included in the Element 1 staff rates further defined by cl S7-3.1.3 and cl S7-3.1.4.

Consequences of this interpretation

One immediate consequence of the interpretation of the CCA that I have adopted is to justify granting PBA declaratory relief. PBA’s further amended statement of claim sought a declaration that:

“The result of multiplying a personnel member’s ‘Raw Rate’ by the applicable multiplier constitutes ‘actual costs’ of PBA for the purposes of S7-1 of Schedule 7 of the CCA.”

Subject to hearing the parties about the form of this declaration, and any other declarations that may be appropriate as a result of my decision on the issue of interpretation, I intend to make such a declaration.

Resolving the issues of interpretation also has implications for the Access to Records Dispute which I will address further at the conclusion of this judgment. In simple terms, if BDO has sought access to documents in order to determine PBA’s “actual costs” on the basis that they are determined other than in accordance with the actual costs specified in cl S7-1, cl S7-3 and cl S7-4 of Schedule 7 of the CCA, then BDO’s requests may have extended beyond documents that are related to the Consultant Collaborative Agreement Costs.

PBA seeks declarations that the figure stated in the CCA as the relevant Element 1 multiplier:

is a figure agreed by the parties to the CCA; and

is not subject to audit by the Collaborative Agreement Auditor.

TJH submits that such declarations are unnecessary. TJH accepts that the multipliers are agreed and describes the issue of whether the multipliers are subject to audit as being a “non-issue”, since TJH does not contend that they are. I consider that declarations to the effect that the multipliers are agreed and are not subject to audit by the Collaborative Agreement Auditor have utility in quelling at least part of the Access to Records Dispute.

There remains scope for audits of payments made and to be made so as to ensure that payments accord with PBA’s entitlements, as set out in Schedule 7. If PBA has been paid in accordance with its entitlements, as defined in Schedule 7, and the Collaborative Agreement Auditor has certified to this effect, then there may be no practical need for BDO to revisit these payments. PBA will have been paid in accordance with its entitlement. If, however, there has been an error in the making of payments and PBA has been paid more or less than its entitlement, then it should be open to the Collaborative Agreement Auditor to investigate the matter. Also, if for example, the CLT agrees to amend the principles of reimbursement determined during the Compliance Audits and these amendments have retrospective effect, then it would be necessary for the auditor to investigate payments that have been made and validate future payments to ensure that payments are in accordance with PBA’s entitlements.

If the CCA has been administered properly then payments on account of entitlements under Element 1 should match PBA’s entitlement to be reimbursed its actual costs under this element. Elements 2 and 3 are subject to separate calculations and may affect the amount of any final payment.

On the interpretation that I have adopted, the Collaborative Agreement Auditor has a role in determining PBA’s actual costs as calculated in accordance with the terms of cl S7-1, cl S7-3 and cl S7-4. This does not extend to an investigation of PBA’s “actual costs” on a different basis, and it does not require the auditor to subject the agreed multipliers, or a multiplier determined by the Collaborative Agreement Auditor in respect of consultant staff (other than full time), to an audit to determine their appropriateness.

The auditor has functions as part of its overriding brief to audit and verify Collaborative Agreement Costs and to ensure that in respect of all payments made pursuant to the CCA PBA receives its exact entitlement as set out in Schedule 7. These include, in the case of Element 1, audits of the Raw Rate, the hours worked, costs claimed for project-specific overheads and project-specific plant and materials. These audits are necessary to determine PBA’s entitlements and also to validate payments made pursuant to the CCA since, by cl S7-1.3.2, all payments made pursuant to the agreement are subject to validation by the Collaborative Agreement Auditor that they are in accordance with the terms of compensation set out in Schedule 7 and the principles of reimbursement determined during the Compliance Audits or those principles as amended by the CLT. The audits that the Collaborative Agreement Auditor is authorised to undertake in order to calculate PBA’s entitlements and to validate that payments are in accordance with those entitlements require the auditor to access PBA’s records. So too do other tasks entrusted to the Collaborative Agreement Auditor.

Whilst the Collaborative Agreement Auditor has a number of functions to perform under the CCA, it is not part of the auditor’s role to revisit agreed multipliers to ascertain if their application to Raw Rates yields a product that differs from PBA’s “actual costs” as determined without reference to the specific provisions of Schedule 7 about how those costs are to be determined. It is not part of the Collaborative Agreement Auditor’s overriding brief, or any part of any more specific brief under the CCA, to undertake some broader audit of PBA’s actual costs without regard to the fact that the whole of Schedule 7, and not just cl S7-1, defines what they are for the purposes of the CCA.

PBA is entitled to declarations reflecting the interpretation of the CCA which I have made. It is also entitled to declarations of the kind sought by it to the effect that each multiplier is a figure agreed by the parties to the CCA and is not subject to audit by the Collaborative Agreement Auditor. Subject to hearing the parties as to the form of declaration, it seems appropriate to make a declaration in the form sought in paragraph 78(b) of the further amended statement of claim that:

“The Collaborative Agreement Auditor is not entitled to access to the personnel and records of PBA so as to verify the figure of 2.8 specified in S7-3.1.2 as the Element 1 multiplier for consultant full time staff.”

Subject to further submissions concerning the form of declarations, there should be a declaration of the kind sought by PBA in its final submissions, namely that:

“On its proper construction, cl 20.3 of the CCA does not permit the Collaborative Agreement Auditor access to personnel and records related only to the multipliers specified in S7-3.1.2 or determined by Easdown pursuant to S7-3.1.2.”

The resolution of the issue of interpretation may not resolve all of the matters in issue in the Access to Records Dispute. However, the declarations made in respect of the issue of interpretation should make it clear to the Collaborative Agreement Auditor that its investigations and the records to which it is entitled to have access are limited by the terms by which the parties chose to define PBA’s entitlement to compensation for actual costs.

I conclude that upon a proper interpretation of the CCA, the figures of 2.8, 1.5 and 1.1 specified in cl S7-3.1.2 are agreed by the parties to the CCA and not subject to audit by the Collaborative Agreement Auditor. If the determination made by Easdown of a multiplier for consultant staff (other than full time) is found to have been determined as part of the Compliance Audits, then that multiplier will not be subject to audit by the Collaborative Agreement Auditor.

The agreed multipliers are not subject to audit so as to verify that the figures of 2.8, 1.5 and 1.1 are reflective of actual costs. Once the multiplier for consultant staff (other than full time) is determined during the Compliance Audits, it is not thereafter subject to further audit for the same purpose.

BDO is not entitled to access the records of PBA in order to determine “that the Element 1 multiplier of 2.8 comprises actual Element 1 costs”. The figure of 2.8 was agreed by the parties and is not subject to revision on the grounds that the auditor is of the opinion that it is too high or too low to compensate PBA for its actual costs. The Collaborative Agreement Auditor is entitled to know the items that are included within the multiplier of 2.8 so as to ensure a demarcation between the items reimbursable under Element 1 and items that are deemed to be covered under Element 2. The CCA itself identifies items that are included in the Element 1 staff rates and items that are not included in the Raw Rate. The Compliance Audits and the Compliance Audit Report should have clarified such matters. The CCA provided for the parties to develop procedures and systems to implement the intent of the terms of compensation in Schedule 7 and which meet the requirements of the Collaborative Agreement Auditor. If, however, the Collaborative Agreement Auditor remains in doubt concerning the items that are included within Element 1 staff rates, items that are reimbursable as project-specific overheads and items that are deemed to be covered under Element 2, then the Collaborative Agreement Auditor may need to undertake inquiries and investigations so as to clarify these matters.

The prescribed functions of the Collaborative Agreement Auditor do not extend, however, to undertaking an open-ended investigation into PBA’s actual costs on the basis that such costs might be determined without reference to the specific terms of Schedule 7. For the reasons that I have given on the issue of interpretation, PBA’s entitlement to be reimbursed at actual cost is governed by the specific provisions of cl S7-3 and cl S7-4. Those provisions specify and thereby define PBA’s entitlements, and not simply the calculation of progress payments that are made on account of those entitlements.

PART B:PBA’S ALTERATIVE CLAIM FOR RECTIFICATION

The rectification issue has been introduced at [23] to [26] above. My conclusion that the agreed multipliers are not subject to audit by the Collaborative Agreement Auditor and that the multiplier determined for consultant staff (other than full time) that is determined by the Collaborative Agreement Auditor during the Compliance Audit is not thereafter subject to a further audit by that auditor, makes it unnecessary to determine PBA’s alternative claim for rectification. However, it is appropriate to make findings of fact that are relevant to this alternative claim since a large amount of evidence was given in connection with it and my findings are based, in part, on my assessment of witnesses. Before doing so I shall state the legal principles that are relevant to the rectification claim.

Legal principles – rectification

The purpose of the remedy of rectification is to make an instrument conform to the true agreement of the parties where the writing, by common mistake, fails to express that agreement accurately.^[8] The Court must be satisfied that the instrument does not reflect the true agreement of the parties.^[9] An applicant for rectification must clearly show that the parties had at all relevant times an intention which was to be given effect by the document to be rectified and that that document does not give effect to the transaction.^[10]

It is generally accepted that rectification is available not only when the parties intended to use different words but also when they mistakenly thought their words bore a different meaning.^[11] The authorities on this point were discussed by McMurdo J in Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd,^[12] and I respectfully adopt what his Honour said.

The relevant “common intention” must have been disclosed to the other party. It is necessary for them to “know enough of each other’s intention for it to be said that there is a common intention”.^[13] The common intention is sometimes referred to as an “agreement”; however this expression simply serves to emphasise the consensual nature of the common intention. It does not require the agreement to amount to a contract.^[14] It is necessary to show a common intention of the parties that continues to the time of execution of the document in question, but an antecedent concluded contract is not needed.^[15]

The disclosure need not have been of the express terms of the parties’ mutual agreement but there must have been an outward expression of accord from which the intention may be inferred. There must be a common intention:

“manifested by some act or conduct from which one can see that the contractual intention of each party met and satisfied that of the other. There must be seen to exist objectively a consensual relationship between the parties and not merely one which remained undisclosed in the course of the negotiations.”^[16]

When dealing with a claim for rectification a court is not entitled to determine the common intention of the parties by confining itself to the correspondence between them and any relevant conduct, and treat as irrelevant any inconsistent evidence to the effect that, subjectively speaking, no such common intention was held. This issue was addressed in obiter dicta in Ryledar Pty Ltd v Euphoric Pty Ltd.^[17] Tobias JA (with whom Mason P and Campbell JA agreed) stated that the common intention which must be established by clear and convincing proof to justify rectification must be “the actual or true common intention of the parties”.^[18] His Honour observed that evidence of that intention may be ascertained “not only from the external or outward expression of the parties manifested by their objective words or conduct but also from evidence of their subjective states of mind.”^[19] In a case where the correspondence between and/or conduct of the parties establishes “a positive lack of an objective common intention” then that evidence must be taken in conjunction with the evidence (if any) of their subjective states of mind to determine whether the necessary common intention has been established.^[20]

In a case where the correspondence and/or conduct positively establishes the necessary common intention, then assertions by the party opposing rectification of his or her subjective state of mind which is inconsistent with that party’s outward manifestation of his or her intention, being unexpressed and uncommunicated, are unlikely to trump his or her expressed intention.^[21]

A party subsequently acting as if the instrument stood in the form into which it is sought to be rectified may be strong evidence of that party’s intention to execute the instrument in its rectified form.^[22]

In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales, Mason J stated:

“Rectification ensures that the contract gives effect to the parties’ actual intention ...”^[23]

The reference to “actual intention” may be contrasted with the parties’ “presumed intention” which is considered in the context of determining the meaning to be given to a contractual provision.^[24] In the context of rectification reference is sometimes made to the “subjective intention” of the parties instead of their “actual intention”. Campbell JA in Ryledar Pty Ltd v Euphoric Pty Ltd preferred to use the term “subjective intention”. His Honour cited a passage from the judgment of Street J in Australasian Performing Right Association Ltd v Austarama Television Pty Ltd:

“... the true principle involves finding an identical corresponding contractual intention on each side, manifested by some act or conduct from which one can see that the contractual intention of each party met and satisfied that of the other. On such facts there can be seen to exist objectively a consensual relationship between the parties.”^[25]

After considering that passage and other relevant authorities Campbell JA concluded that the common intention must be in some manner disclosed and stated:

“... the common intention that is required to grant rectification is subjective. Even though there is a requirement for the intention to be disclosed before it can count as a common intention, that disclosure need not be by words that say in substance ‘This is my intention’. The need for disclosure fills the role of being a limitation on the types of subjective intention that can be enforced through the remedy of rectification, or a limitation on the circumstances in which a subjective intention must exist before it can be enforced through the remedy of rectification.”^[26]

Ryledar Pty Ltd v Euphoric Pty Ltd supports the proposition that the actual intention of the parties may be ascertained not only from the external or outward expressions of the parties manifested by their words or conduct, but also from evidence from the parties about their subjective states of mind. The existence of the actual intention required to establish rectification may be positively established in a particular case by outward expressions by a party of such an intention, leaving evidence given by that party that it did not subjectively have that intention to carry little weight in the determination of what the party’s actual intention was.

A similar point was made by Mustill J in Establissements Georges et Paul Levy v Adderley Navigation Co Panama SA (“The Olympic Pride”):

“The prior transaction may consist either of a concluded agreement or of a continuing common intention. In the latter event, the intention must have been objectively manifested. It is the words and acts of the parties demonstrating their intention, not the inward thoughts of the parties, which matter.”^[27]

This approach was endorsed by the House of Lords in Chartbrook Ltd v Persimmon Homes Ltd. Lord Hoffmann stated:

“Now that it has been established that rectification is also available when there was no binding antecedent agreement but the parties had a common continuing intention in respect of a particular matter in the instrument to be rectified, it would be anomalous if the ‘common continuing intention’ were to be an objective fact if it amounted to an enforceable contract but a subjective belief if it did not. On the contrary, the authorities suggest that in both cases the question is what an objective observer would have thought the intentions of the parties to be.”^[28]

After reviewing the authorities Lord Hoffmann observed that the admission of evidence of the subjective state of mind of one of the parties is not inconsistent with an objective approach to what the terms of the prior consensus were.^[29] This was consistent with earlier authority that:

“The evidence of a party as to what terms he understood to have been agreed is some evidence tending to show that those terms, in an objective sense, were agreed. Of course the tribunal may reject such evidence and conclude that the party misunderstood the effect of what was being said and done.”^[30]

According to Lord Hoffmann, in a case in which the prior consensus was based wholly or in part on oral exchanges or conduct, such evidence may be significant. On the other hand, where the prior consensus is expressed entirely in writing, such evidence is likely to carry very little weight. It is not, however, inadmissible. Evidence of subsequent conduct may also have some evidential value.^[31]

Lord Hoffmann’s conclusions in relation to the issue of rectification were not necessary for the decision since the appellant was entitled to succeed on the issue of the construction of the contract. However, the issue of rectification was fully argued and the other members of the House of Lords expressed their agreement with Lord Hoffmann. TJH submits that I should follow the statements of Lord Hoffmann, which were approved by other members of the Appellate Committee and correctly state the existing law. In the absence of authority binding on me to the contrary, I consider that I should do so.

Chief Justice Doyle in ACIL v England^[32] adopted a similar approach in concluding that an objective test should apply to the determination of the existence of a common intention. In dealing with a rectification claim, his Honour considered that ACIL, having expressed its agreement was “taken to have continued to share the common intention on the basis of an objective assessment of its conduct”.

In Byrnes v Kendle,^[33] Heydon and Crennan JJ observed that “the actual state of mind of either party is only relevant in limited circumstances”, and the examples given included where the equitable remedy of rectification is available. Their Honours did not consider the manner by which the actual state of mind of a party and the existence of an alleged common intention are to be determined. Authorities can be found in which reference is made to the fact that rectification turns on the subjective intentions of the parties. However, these authorities do not contradict the observations of Tobias JA in Ryledar Pty Ltd v Euphoric Pty Ltd as to how the actual (or subjective) common intention of the parties is to be ascertained. I respectfully adopt the observations of his Honour and the additional remarks of Campbell JA in that case and also respectfully follow the observations of Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd.

These and other authorities appear to support the following propositions:

The actual intention of each party is relevant in deciding whether they had the alleged common intention.

The actual intention must have been disclosed.

In determining whether there was the alleged common intention and the terms of the “prior consensus”, a Court is not confined to communications between the parties and their conduct from which the relevant intention may be inferred. Evidence of their subjective intention, including statements about their understanding of what was agreed, is admissible, and in some circumstances may be decisive.

Where, however, the evidence given by a party about his or her subjective intention is inconsistent with the terms of their correspondence and/or conduct it may carry little weight.

The existence or otherwise of a “common intention” (or prior consensus or prior concluded agreement) is determined on the basis of an objective assessment of the parties’ communications and conduct. Whilst evidence from a party about his or her subjective intention is admissible as to whether the alleged consensus was reached, the question of whether such a consensus existed and continued involves an objective assessment. The authorities suggest that the test is what an objective observer would have thought the intentions of the parties to be. In this regard, it is not the inward thoughts of the parties which matter but whether the alleged intention has been objectively manifested. To adopt the words of Street J, the intention on each side must be manifested “by some act or conduct from which one can see that the contractual intention of each party met and satisfied that of the other. On such facts there can be seen to exist objectively a consensual relationship between the parties.”^[34]

Evidence – rectification

During 2007 and until May 2008 TJH and PBA conducted negotiations about the terms upon which TJH would engage PBA as consultants for the design of the project. The negotiations were principally conducted by discussions and correspondence between Joseph Smogurzewski and Sue Ross for TJH, and Luke van Heuzen and Frank Vromans for PBA.

It is useful to briefly describe the individuals referred to in the evidence relevant to rectification:

Name	Relevant organisation	Relevant position/Title
Josef Smogurzewski	Thiess and TJH	Thiess Senior Project Manager – Design (to October 2006 and October 2008 to June 2011) TJH Project Design Director (October 2006 to October 2008)
Susan (Sue) Ross	TJH and John Holland	TJH Contracts Manager (August 2007 to March 2008) John Holland Northern Region Contracts Manager (March 2008 to January 2009)
Luke van Heuzen	PBA	Project Director (November 2006 to October 2010)
Frank Vromans	Arup	Director (to 30 April 2010)
Adrian Baron	John Holland	General Counsel, Northern Region (to December 2010) National Commercial and Risk Manager (Energy & Resources) (December 2010 to 14 October 2011)
William (Bill) Buckland	Thiess	Executive Manager of Design
John Doyle	Thiess	Manager, Business Strategy (Australian Operations)
Mark Lynch	Thiess	Group Counsel (to September 2007) Executive General Manager, Strategy and Development (from September 2007)
Craig Manly	TJH	TJH Airport Link Project Design Director (20 October 2008 to 20 July 2011)
David Moran	TJH and John Holland	TJH D&C Bid Director for APL (August 2006 to May 2008) TJH Airport Link Project Director (May 2008 to October 2008) TJH Airport Link Project Controls Director (October 2008 to February 2009) General Manager, Southern Region (John Holland, February 2009)
Walter Piccoli	Thiess	Senior Commercial Lawyer Development Director (Strategy & Development)
David Saxelby	Thiess	Chief Executive, Australian Operations (to 14 February 2007) Managing Director (14 February 2007 to 5 August 2011)
Robert Care	Arup	Chief Executive Officer and Chairman
Sonny Connors	PBA	Member, Tender Team (to May-June 2008) Commercial Manager, Airport Link Project (from May-June 2008)
James Gregg-Mantle (Jim Mantle)	Parsons Brinckerhoff	Director of Operations, Australia-Pacific (1 November 2007 to 1 January 2008) Managing Director, Australia-Pacific (from 1 January 2008)
Julienne (Kiri) Parr	Arup	Regional Legal Counsel
Roger Pattison	Parsons Brinckerhoff	Regional Director, Queensland (at time of Airport Link Project) Director of Energy, Mining and Industry (Present)
Grant Smallhorn	Parsons Brinckerhoff	General Counsel Company Secretary
James (Jim) Ross	Project Control International Pty Ltd	Director, Advisory Services

A large amount of evidence in the form of witness statements, oral evidence and numerous exhibits relates to the issue of rectification. This is due, in part, to the lengthy period over which negotiations took place and the number of witnesses whose communications and state of mind were potentially relevant to the issue of rectification. The following is a summary of the evidence.

Prior to 2007 some of the parties had entered into contracts which may loosely be called “Alliance Agreements”. These are agreements which provide for audits to be carried out to determine how the costs of the consultants are to be determined. Before negotiations commenced in relation to the Airport Link Project (“APL”), Parsons Brinckerhoff and Arup had worked together on a bid for the Gateway Upgrade Project (“GUP”) and conducted negotiations with representatives of a joint venture between Thiess and Baulderstone Hornibrook. Arup and Parsons Brinckerhoff suggested in August 2006 a “Collaborative Design Fee Approach” which would compensate it for carrying out work under a four element model, the first element of which involved reimbursement of expenditure. It proposed, in relation to labour and staff, reimbursement based on actual raw cost per employee with due allowance for certain on-costs and multipliers applied to the raw cost. The multipliers for internal staff, contract staff and sub-consultants were 2.8, 1.7 and 1.1 respectively. The commercial negotiations in relation to the GUP ceased in about mid-September 2006 when Thiess and Baulderstone Hornibrook were advised that they had been unsuccessful at winning the tender.

At about this time discussions commenced about the APL and Parsons Brinckerhoff entered into a joint venture with Arup in relation to it. Preliminary discussions related to a so-called “soft contracting” approach which had some of the features of an Alliance Agreement. On 20 December 2006 Mr van Heuzen wrote to Mr David Moran, the Bid Director for TJH. Mr van Heuzen advised that Parsons Brinckerhoff and Arup were in the process of formalising a joint venture for the purpose of providing design services to the Thiess John Holland joint venture, referred to previous discussions and proposed that the parties “further develop the ‘collaborative arrangements’ which were initiated in the GUP negotiations and which have been undergoing further development since then …”.

On 22 December 2006 Mr van Heuzen sent a draft Pre-Bid Agreement to Mr Buckland of TJH. A further draft was circulated on 15 January 2007. This draft, and the Pre-Bid Agreement that was eventually entered into on 16 March 2007, included as cl 6.2 a provision that the parties use their respective best endeavours to agree, amongst other things, the basis of reimbursement of the consultants’ actual cost. Schedule 4 provided for a consultancy agreement to be prepared on the basis of a draft Collaborative Agreement which was to be “extensively reviewed during the Bid period and as a result of the process contemplated in cl 6.2”.

In its original form cl 6.2 of the draft Pre-Bid Agreement provided for PBA to allow TJH’s auditor to conduct investigations on the financial records of PBA to provide the basis for determining “the methodology by which the Limb 2 Fee is calculated and to clarify the basis of reimbursement under Limb 1.” On 2 February 2007 Mr van Heuzen proposed an amendment to this clause which provided for a third party auditor to conduct investigations on “agreed financial records” of PBA. This change was accepted by representatives of TJH and qualifies what would otherwise have been a commitment to an “open book” audit. The Pre-Bid Agreement (also referred to as the Bid Agreement) was signed on 16 March 2007.

Negotiations in relation to the terms of the CCA began in earnest around August 2007.

I am satisfied that in the course of these negotiations and on more than one occasion Mr van Heuzen and Mr Vromans said to Mr Smogurzewski and Ms Ross words to the effect that:

(a)the three element compensation model was not an alliance structure and one implication of this was that there would be a more restricted audit regime;

(b)the Element 1 multipliers would be agreed and would not be subject to audit.

They explained that one of the reasons for PBA requiring this was that Parsons Brinckerhoff and Arup were separate companies which operated under different business models and that, as a result, they had different cost bases. In addition, Arup had complicated accounts which were very difficult to audit for the purposes of establishing a multiplier. As a result, it would be difficult to establish by audit multipliers for the purposes of the first element in the compensation model.

Mr Smogurzewski and Ms Ross accepted this in discussions which occurred in late 2007 and early 2008.

Mr Lynch, who acted as an in-house lawyer for Thiess gave evidence that he attended a meeting with Mr Smogurzewski, Mr Buckland, Mr Piccoli, Mr van Heuzen and Mr Vromans on 3 August 2007 in which discussions occurred about the CCA. According to Mr Lynch, in the course of the discussion Mr Vromans and he said words to the following effect:

“Vromans:PBA are going to be remunerated under the agreement using a fixed multiplier that is not subject to audit.

Lynch:No Frank, we’re not going to re-cut the deal. We have already agreed the payment scheme in the Pre‑Bid Agreement you have signed. Under that document you’ve agreed to be paid your actual costs under limb 1, absent any margin or profit. Everything under limb 1 is subject to full open book audit and you’ve agreed to that already. All of your profit and some overhead will be in limb 2. The payment regime is just like an alliance agreement. You need to be very clear on this – we’re not going to entertain anything different.

Vromans:Ok”.

Mr Vromans says that he is sure that Mr Lynch did not say these words and that he is sure he did not say words to the effect of “okay”. He is sure because if anyone had said those words he would have recalled it and he does not recall anyone from TJH insisting that the multipliers would be subject to audit. This was a fundamental point so far as Mr Vromans was concerned. I accept his evidence that he would not have agreed to such a position without, at the very least, leaving the issue open to further negotiation.

Mr van Heuzen has no recollection of Mr Lynch saying the contentious words or of Mr Vromans agreeing. He is confident that he would recall this because it would have marked a major change from the preferred model that PBA was seeking. Also, if such a thing had been discussed, Mr van Heuzen would have made a note of it in his contemporaneous notes of the meeting since it represented a fundamental change to PBA’s negotiating position.

No other participant at the meeting gave evidence supporting Mr Lynch’s recollection.

I accept that Mr Lynch honestly recalls the conversation set out in his witness statement. However, I am not persuaded that a discussion in those terms occurred. Mr Lynch first recalled this conversation in recent months. He explained that he was asked to recall it some months ago, and stated, “I haven’t consciously sort of turned my mind to it and tried to reconstruct it until – until recent months”. His recollection led to a late amendment in the form of subparagraph 85(ga) of the second further amended defence and counterclaim filed on 12 April 2012. Mr Lynch’s recollection of the conversation is not recorded in any note taken by a participant in the meeting and is not reflected in subsequent discussions between participants, or in the documents generated by them. I accept the evidence of Mr van Heuzen and Mr Vromans that they have no recollection of the contentious words being said, and that if they had been said they would have been contentious and that they would recall them.

On 5 September 2007 Mr van Heuzen emailed to Mr Smogurzewski, Ms Ross and Mr Vromans a draft of the compensation framework that was proposed. The attached document included agreed multipliers as part of the Element 1 reimbursement of expenditure. It proposed reimbursement based on “actual raw cost per employee” with due allowance for certain on-costs that traditionally apply to labour and staff. The multiplier rates applicable to the contract were stated to be 2.8, 1.7 and 1.1 for internal staff, contract staff and sub-consultants respectively. This commercial model was circulated by Mr Smogurzewski in advance of a meeting to be held on 11 September 2007. The commercial summary was discussed at that meeting and I accept the evidence of Mr Vromans that the meeting discussed, among other things, the multipliers. He took a contemporaneous note which referred to these “factors”.

That the 11 September 2007 meeting reached a general consensus about the commercial model, and the first element in particular, is confirmed by the contents of an internal PBA meeting that occurred on 24 September 2007 which reported that Limb 1 was “essentially agreed to by Sue Ross (seems to agree multipliers and auditors) (2.8)”. Ms Ross’ evidence is to the same effect, namely that agreement was reached upon the multipliers and the multiplier of 2.8 in particular very early on in the negotiations.

On 12 October 2007 Ms Ross emailed to John Holland’s in-house lawyer, Mr Baron, a document called “Brief Outline of Proposed Agreement”. Relevantly, it described the first element and in relation to labour and staff costs recorded the basis of reimbursement as multiplication of costs per employee (raw cost) by multipliers. This document stated the multipliers in the same amounts as had been discussed at the meeting and in earlier correspondence.

On 19 October 2007 Mr Smogurzewski made a presentation to the Oversight and Sign‑off Committee (“OS & SO Committee”) that was established by the parent company of both Thiess and John Holland, Leighton Holdings Ltd. Mr Moran and other senior executives were present. Mr Smogurzewski’s presentation included a PowerPoint presentation in relation to the main features of the CCA. It stated:

“Agreed multipliers for internal, contract and subcontract staff”.

It referred to an audit of hours, but contained no reference to an audit of the agreed multipliers. Neither Mr Moran nor anyone else who received that presentation contested that PBA’s reimbursement was based on agreed multipliers. Mr Smogurzewski was apparently authorised to continue to negotiate the CCA on this basis.

At a meeting on 23 October 2007 Mr Smogurzewski told the PBA representatives that the model had been presented to the OS & SO Committee and that TJH was happy with the model proposed.

From time to time the individuals who had responsibility for negotiating the commercial arrangements and the terms of the CCA, particularly the schedule to it which would contain the terms upon which PBA would be compensated, reported to employees within their respective organisations about the state of their negotiations. They would forward by email copies of documents summarising the commercial model, drafts of the CCA or drafts of Schedule 7. For example, in late October 2007 a Commercial Model document prepared by Mr van Heuzen was circulated, and was considered by TJH’s lawyers, Mr Piccoli and Mr Lynch. On 25 October 2007 Mr Piccoli told Mr Lynch in an email that the attached document represented “the commercial parameters agreed at the project level that will be included in the CCA.” He also advised in the same email that “Sue Ross has advised that an audit will be undertaken before the CCA is signed. This is to be done before the Bid Date.”

On 1 November 2007 Ms Ross sent to Mr Baron a document titled “Collaborative Consultancy Agreement” which stated:

“Basis of Schedule 7 – Commercial Framework

The following commercial proposal is subject to verification at a commercial workshop to be held.

ELEMENT 1 – REIMBURSEMENT OF DIRECT COSTS

The Consultant will be paid its direct costs, subject to audit, incurred providing the Services, for labour/staff costs and project specific plant and materials.

Labour & Staff

Reimbursement based on actual labour/staff costs per employee with due allowance for statutory on-costs. Multiplier rates, subject to independent audit, are:

Internal Staff (ie employees of PB and/or Arup – raw cost x 2.8
Contract Staff – raw cost x 1.7
Sub-contractors – raw cost x 1.1

…

ELEMENT 2 – FIXED CONTRIBUTION

The Consultant will be paid a fixed sum margin, in instalments for the period of the intended Services, to cover overheads, profit & margin.” (emphasis added)

This document suggests that the multiplier rates were to be subject to independent audit.

By early November 2007 discussion between the parties led to an understanding that the draft Collaborative Consultancy Agreement which had been attached to the Pre-Bid Agreement would be replaced by a different style of document to be drafted by Mr Baron. On 2 November 2007 Mr Piccoli observed to Mr Lynch that this form of document represented “a significant shift from your version”.

On 5 November 2007 in an email exchange between Mr van Heuzen and Ms Ross, Mr van Heuzen stated:

“There is no requirement for any establishment audit just a compliance audit once the project is proceeding.”

TJH did not contest this proposition and in later drafts of the agreement the terms Compliance Audit or Compliance Audits were used rather than Establishment Audit.

Throughout this period as the negotiations of the commercial framework’s detail were progressed, drafts of the body of the CCA and drafts of Schedule 7 to it were developed and circulated. To some extent the drafting of the body of the CCA and the drafting of Schedule 7 to it were separate processes.

On 6 December 2007 Ms Ross circulated a further draft of the CCA after a negotiation meeting.

On 7 December 2007 Mr van Heuzen emailed to Mr Gregg- Mantle, Parsons Brinckerhoff’s Director of Operations, and others within Parsons Brinckerhoff documents which included a document styled “0003 Contract Model APL draft” in anticipation of a presentation to occur at a meeting of Parsons Brinckerhoff’s Risk Review Committee on 10 December 2007. After that meeting, and on 11 December 2007 Mr Gregg-Mantle emailed Mr van Heuzen and others about a number of issues. In respect of the CCA he complimented PBA’s team on its work and commented:

“Double-check the wording against the 2.8 and the role of the auditor – I (sic) hate to find that we’ve got to justify the 2.8 (if we win the job the real number should be going south at a rate of knots).”

Mr van Heuzen and Mr Pattison were given the task of having “the deal signed” as a matter of priority.

On 21 January 2008 Ms Ross sent an email to a number of people, including Mr Buckland, Mr Smogurzewski, Mr Doyle, Mr Moran and Mr Baron of TJH and Mr Vromans, Mr Connors, Mr van Heuzen, Mr Pattison and Ms Parr of PBA, which invited the addressees to complete an attached spreadsheet and attend a workshop on 1 February 2008. It seems that the main topic of the workshop was to be a facilitated open discussion of the CCA with particular reference to the issue of variations. A briefing document which Ms Ross attached to her email provided a background to the CCA and relevantly stated that its key features included:

“•Collective responsibility for most aspects, although the Consultant remains responsible for the integrity of the design

•Open-book compensation model (as explained further below)”.

The document went on to describe that it was envisaged that the compensation to PBA would be in accordance with a three-element model. The first element was described as follows:

“Element 1 - Expenditure on the Work under the Collaborative Agreement (including mistakes, rework and wasted effort) and related project-specific overheads will be reimbursed at actual cost subject to audit. Reimbursement to the Consultant under Limb 1 must not include any recovery of non project-specific overheads or profit.”

The second element was a fee to cover “normal profit” and a contribution towards recovery of non project-specific overheads.

Notes taken by Mr van Heuzen at the 1 February 2008 meeting indicate that the commercial model appendix was to be the subject of action by Mr Jim Ross (a consultant with special expertise in this area), Ms Ross and Mr van Heuzen.

On 8 February 2008 Mr Piccoli advised Mr Baron, Ms Ross, Mr Moran and Mr Williams (Thiess’ General Counsel) of his review of the new draft CCA which he described as a “radical departure from the style of arrangement documented in the original pre-bid agreement and from the principles negotiated between Thiess and PB last year.” Mr Baron confirmed later that day that his instructions from senior John Holland and Thiess personnel were that the original document did not reflect the commercial framework agreed with PBA and for this reason it was discarded completely. On 15 February 2008 Ms Ross circulated Draft 6 of the CCA. On the same day she emailed to Mr Baron a document that summarised the commercial framework. This document was prepared for the purpose of explaining the commercial framework to insurance brokers. Importantly for present purposes, the document states in respect of the commercial framework that the payment of Element 1 was “subject to audit confirming the hours worked by individuals”. Mr Baron used this document as the basis for additional work that he undertook that day and that night. At 10.07 pm on 15 February 2008 he sent by email to Mr Piccoli, Ms Ross, Mr Smogurzewski and Mr Moran a document that outlined the legal and commercial framework. In respect of the commercial framework the document stated:

“THE COMMERCIAL FRAMEWORK

[12]In essence the commercial framework is based on PBA being potentially compensated in three ways (or elements):

(i)Element 1 – comprises expenditure on the work under the agreement including direct costs, mistakes, re-work and wasted effort, project related overheads and project related plant and materials. Payment of Element 1 is made (subject to audit confirming the hours worked by individuals) regardless of performance.

(ii)Element 2 – comprises PBA’s fee (includes profit and a contribution to head office overheads) which is a fixed amount based upon an agreed average charge out rate multiplied by the Target Hours, multiplied by 20%. Payment of Element 2 is made (subject to audit) based upon the Target Hours.

(iii)Element 3 – comprises a share of any net gain, depending on how performance (cost underruns and overruns, and various key results areas measured by key performance indicators) compares with pre-agreed targets. Payment of Element 3 is subject to the achievement of targets.

[13]The ‘gainshare’ under Element 3 is to incentivise PBA to deliver the work under the collaborative agreement for less than the Target Hours. The KRA’s that will be developed by TJH and PBA under Element 3 are designed to ‘incentivise’ PBA to exceed certain performance indicators, and to strive for outstanding performance to increase the value of the project outcomes to TJH.” (emphasis added)

PBA relies upon this document as indicating that Mr Baron thought, and told TJH representatives, that the Element 1 audit was limited to verifying the hours worked, and did not involve an audit of the multiplier. Mr Baron’s email and the attached document were forwarded by Mr Smogurzewski to Mr Buckland on 18 February 2008.

In advance of an important CCA negotiation meeting that was scheduled for 26 February 2008 Mr Jim Ross had undertaken a revision of the drafting of Schedule 7, and this was provided to Ms Ross who in turn sent it to Mr Smogurzewski, Mr van Heuzen and Mr Vromans.

The meeting of 26 February 2008 included a detailed discussion of Schedule 7 and the 2.8 multiplier in particular. Notes of the items included in the “2.8 factor” and items that were not included in it were recorded on a whiteboard. The evidence given about this meeting, including a copy of the whiteboard and contemporaneous notes of it, show that the parties reached a consensus about the items that were to be included in the 2.8 multiplier and those that would not be included. This evidence suggests that a consensus was reached that the 2.8 multiplier, and any other multipliers, were not subject to audit, but there remained a need to clarify what items were included within it.

On 29 February 2008 Mr van Heuzen emailed Ms Ross with a copy of his “discussion notes following our meeting on the draft schedule earlier this week”. The notes included reference to the fact that:

“Audit is a compliance audit; not an Alliance Establishment Audit. SR to ensure that the brief to Easdown is appropriate.”

Mr van Heuzen’s review of the draft CCA included a marginal note “agreed multipliers” which indicates his understanding that the multipliers were agreed.

Drafts of the CCA were progressed in March 2008 leading to a CCA negotiation meeting on 12 March 2008. After that meeting, and at the request of Mr Smogurzewski, Mr van Heuzen attached to an email sent to Mr Smogurzewski, Ms Ross and Mr Vromans a summary of their discussions. The attached Commercial Model Summary relevantly states:

“3.4Commercial framework

The commercial framework is based on four element (Elements 3 & 4 have been combined in the CCA) based on a risk share model. In brief it comprises:

Element 1: cost recovery based on an agreed multiplier of 2.8.

…

7Risks

…

Commercial Risk

...

7.1.1Fee Risk

Fee risk is generally contained with the commercial model as follows:

Escalation; pay rate escalation risk is managed by TJH. The model is based on an agreed multiplier based on actual rates of pay for individuals. The PBA margin is locked in at the 2007 rate; i.e. no net benefit to PBA from escalation.” (emphasis added)

The references in this document to an “agreed multiplier” were a clear disclosure by PBA that it understood that agreement had been reached for cost recovery based on an agreed multiplier. In terms of cl 6.2 of the Pre-Bid Agreement, which required the parties to use their best endeavours to agree the basis of reimbursement of the consultants’ actual costs, the negotiations undertaken by the parties had reached agreement at this point that Element 1 costs in respect of labour would be on the basis of an agreed multiplier.

On 20 March 2008 Ms Ross circulated a further draft of the CCA directing attention to the revised Schedule 7. The changes to it included a change in cl S7-1.3.1 to change reference to the “Establishment Audit” to a “Compliance Audit”. This reflects an apparent understanding that the audit to be undertaken differed from the kind of Establishment Audit that normally would be undertaken under an Alliance Agreement.

On 26 March 2008 Mr van Heuzen sent to Mr Smogurzewski, Ms Ross, Mr Baron, Mr Connors and Mr Vromans his comments on the draft Schedule 7. In respect of paragraph S7-1.3.1(a) he stated:

“Note our previous discussions that this relates to a specific brief yet to be provided, noting that it is not an establishment audit in the sense of an Alliance. The basis for reimbursement will be determining base rates et al but not include an audit of PBA and Arup accounts.”

This comment suggests that the audit to be undertaken would not extend to an audit of the agreed multipliers so as to determine whether the agreed multipliers were reflective of PBA’s actual costs. Such an audit of the agreed multipliers would have required virtually open access to Parsons Brinckerhoff’s and Arup’s accounts, and Mr van Heuzen was indicating that there would not be an audit of all of Parsons Brinckerhoff’s and Arup’s accounts.

Mr van Heuzen in the same email suggested that paragraph S7-1.3.1(b) was not required under the model, but this suggestion was subsequently rejected.

Mr Smogurzewski forwarded Mr van Heuzen’s comments about Schedule 7 to Mr Buckland for his information and discussion.

Another CCA negotiation meeting occurred on 27 and 28 March 2008. On 28 March 2008 Mr van Heuzen circulated a further draft of Schedule 7 which included updates from that day’s discussions, including the reinstatement of the provisions of cl S7-1.3.1. The draft of cl S7-3 stated in respect of staff rates:

“S7-3.1.2 Actual Element 1 rates for PBAJV staff will be calculated as 2.8 x Raw Rate, with the Raw Rate to be confirmed during the Compliance Audit.”

This indicates that Mr van Heuzen understood that the parties’ discussions were to the effect that the “Raw Rate” would be the subject of the Compliance Audit. There is no suggestion that the multiplier would be subject to the Compliance Audit. There was no communication from TJH representatives that Mr van Heuzen’s summary of their discussions did not accurately record the agreement which had been reached.

On 28 March 2008 Mr Buckland, who had been sent Mr van Heuzen’s email of 26 March 2008, advised Mr Smogurzewski of his comments on certain worked examples and offered to become involved in the discussions. It appears that Mr Buckland understood that PBA’s position was that the basis for reimbursement would be “determining base rates et al but not include an audit of PBA and Arup accounts.”

Further negotiations occurred at a meeting on 2 April 2008. The parties agreed that the relevant “Raw Rate” needed to be defined and that the Compliance Audit would be within one month of the Commencement Date, not prior to execution as previously drafted. On 4 April 2008 Mr van Heuzen circulated to Ms Ross, Mr Smogurzewski and Mr Vromans amendments to the draft Schedule 7 incorporating these and other amendments that had been agreed on 2 April 2008. Clause S7-3.3.2 was amended to add a definition:

“Raw Rate = Total Salary Package (including benefits)/1950 hrs as verified by the Compliance Auditor”.

This email was forwarded by Mr Smogurzewski to Mr Buckland. Mr Vromans reported to others within Arup, including Mr Care, the nature of the commercial arrangement that had been reached.

On 8 April 2008 Mr Smogurzewski emailed Ms Ross with an attachment of the printout of the whiteboard of the meeting of 26 February 2008 and stated:

“You will recall that at a recent meeting on 26-02-2008 Luke, Frank, Bill and we discussed what was and what was not included in the x 2.8 cost recovery multiplier for Element 1 costs – please refer to the attached file.

Was it our intention to include this table in the CCA document? - I believe probably it would be.

Your comments please.”

Ms Ross responded that she thought it should be and had revised cl S7-3.1.2. When cross-examined on this email exchange, Ms Ross confirmed that her understanding at the time was not that the multiplier would be subject to audit, but that the audit would be with respect to salary packages, with the auditor looking at the terms of engagements of individuals and determining whether they would be paid under the 2.8, the 1.5 or the 1.1 multiplier. There would also be an audit of the hours that had been worked. I accept Ms Ross’ evidence that she understood at all material times that the audit would not extend to an audit of the multiplier itself.

On 9 April 2008 Mr Ross circulated the latest draft of the CCA. On 10 April 2008 a “CCA page-turn meeting” occurred which was attended by Mr Buckland, Mr Smogurzewski, Mr Baron and Ms Ross on behalf of TJH and Mr van Heuzen and Mr Vromans of PBA. As a result of those discussions Mr van Heuzen prepared a draft table for inclusion in cl S7-3 which tabulated the Element 1 multiplier of 2.8, 1.5 and 1.1 for PBA staff, PBA contract staff and PBA sub-consultants respectively and set out the Raw Rate. This table was included in cl S7-3.1.2 in the course of finalising Schedule 7.

In email exchanges on 16 April 2008 the topic of PBA employees who were not under standard employment conditions but who were on “alternative employment arrangements such as permanent part time” arose. In due course agreement was reached that the Raw Rate for these employees would be determined by the Collaborative Agreement Auditor.

On 22 April 2008 Mr Baron emailed to Mr Smogurzewski an outline of the Commercial and Legal Framework and stated, “Can you distribute within TJH as you see fit.” Relevantly, the framework was unchanged from that outlined a few months earlier in the document drafted by Mr Baron, and in respect of Element 1 still stated, “Payment of Element 1 is made (subject to audit confirming the hours worked by individuals) regardless of performance.” Mr Baron’s framework document was forwarded by Mr Smogurzewski to Mr Buckland, Mr Piccoli, Mr Moran and Mr Williams on 23 April 2008. On 24 April 2008 Mr Buckland forwarded the same CCA summary to various individuals at Thiess, which suggests that he regarded the document as a suitable summary.

It appears that further discussions occurred within TJH in early May 2008 in relation to the CCA, but there is no evidence that the discussion turned to the topic of whether multipliers were other than agreed or would be the subject of audit. Arrangements were made within each entity for the CCA in its final form to be executed.

The CCA is dated 17 May 2008. The agreement commenced on the date that the contract between BrisConnections and TJH for the design, construction and commissioning of the project became effective. That “D & C Contract” was made on 2 June 2008 and the last of the conditions precedent to it was satisfied on 30 July 2008.

In anticipation of this, TJH progressed discussions with Easdown. On 16 June 2008 Ms Ross emailed Mr John Easdown (with copies to Mr Smogurzewski, Mr Baron and Mr van Heuzen) in the following terms:

“TJH have entered into a collaborative agreement with our designers (a jv of Arup and PB) for the design and construction phase services for Airport Link, Northern Busway and EWAG works. ...

The terms of the CCA (and round-table discussions on the matter of CCA audit requirements) require an establishment audit to take place to verify multiplier factors which are applied to raw employment rates for each employee (of the designers’ joint venture), and will be used for payment purposes. The CCA auditor would be required to verify the multiplier was applicable for each employer, without requiring a full ‘establishment’ audit in the usual sense of the word.”

On 17 June 2008 Mr Smogurzewski sent a letter to Easdown that had been drafted by Ms Ross and which was to the same effect. It also attached a briefing note which indicated that Easdown would “verify the Element 1 multipliers given in the CCA”. Ms Ross explained in her evidence that the reference in her email to an establishment audit “to verify multiplier factors” was not intended to suggest that the multipliers would be subject to an audit, but was explained in the following sentence which indicated that the auditor “would be required to verify the multiplier was applicable for each employer, without requiring a full ‘establishment audit’ in the usual sense of the word.” I accept that Ms Ross had this understanding of the respects in which the auditor was required to verify the multiplier.

Easdown initially responded to Mr Smogurzewski in an email of 1 July 2008 attaching a facilitation letter which sought, amongst other things, management accounts. The minutes of the first CLT meeting that occurred on 7 July 2008 record the appointment of Mr Easdown and that there were “minor scope misunderstandings” that were being resolved. This entry suggests that the scope of the Easdown audits was being clarified, and on 10 July 2008 Mr Easdown in an email to Ms Ross and Mr Smogurzewski acknowledged “the agreement to limit the scope of the Establishment Audit to verification of the Multipliers currently agreed in the agreement.” Mr Easdown amended the facilitation letters so as to only request “the financial information to allow for the verification of the build up of the multipliers including the salary on-costs and the indirect office costs”.

On 15 July 2008 Mr Easdown and his employee, Mr Henderson, met with Mr Smogurzewski, Ms Ross and two PBA employees, Mr Connors and Mr McVey. Mr Connors gave evidence that a discussion occurred at that meeting that the audit was a compliance audit only, and did not involve the multipliers being audited as they had been agreed in the CCA. Mr Connors’ evidence in this regard is confirmed by his notes of the meeting that it was a “compliance audit only – agreed multiplier in CCA”. Mr Connors also recalls that no one at the meeting said or did anything that indicated to him that they disagreed with this position.

Preparations were made for Mr Easdown to undertake the audit. The first day of the actual audit was 22 July 2008. Mr Easdown met with Mr Smogurzewski that day. Mr Easdown’s evidence is that he told Mr Smogurzewski that Easdown had not been provided with the financial information that would enable it to verify the multipliers, and that Mr Smogurzewski said in response words to the effect that:

“Easdown Consulting were not to verify the multipliers specified in the CCA, as they had already been agreed by the parties.”

Mr Easdown was cross-examined about this conversation and I accept his recollection of it. His recollection is not contradicted by any evidence from Mr Smogurzewski.

Mr Smogurzewski’s conversation with Mr Easdown on 22 July 2008 has significance in respect of Mr Smogurzewski’s understanding of the agreement which had been reached with PBA. It is significant evidence that he understood that the multipliers had been agreed by the parties and Easdown was not required to verify their accuracy.

Mr Easdown circulated drafts of his report and on 1 August 2008 Mr Smogurzewski emailed to Mr Moran, Ms Ross, Mr Baron and Mr Buckland a copy of the Easdown Report. The Report stated on page 5:

“In accordance with your instructions, this review has been limited to the following procedure:

Determine multipliers for Consultant Staff (other than Full Time) including Permanent Part Time Staff and In-House Contract Staff.

We have deemed this to include personnel engaged on a casual basis;

Confirm multipliers noted on staff schedule of rates are appropriate for the classification of staff;
Identify costs included in/excluded from multipliers; and
Confirm hourly rates have been correctly calculated.”

On page 13 the Easdown Report stated:

“We understand that the 2.8 multiplier has been agreed to apply for this Project.”

After receiving this report neither TJH nor PBA suggested that Easdown was mistaken in its understanding, nor that the audit that it had undertaken should have extended beyond identifying the costs included in or excluded from the multipliers to an audit of the multipliers themselves. It was not until 9 August 2011, some three years later, that TJH suggested that the Easdown Report was incomplete.

Discussion – the rectification issue

It is convenient to first address the facts summarised in the last few paragraphs in relation to TJH’s subsequent conduct. As Tobias JA observed in Ryledar Pty Ltd v Euphoric Pty Ltd,^[35] a party subsequently acting as if the instrument stood in the form into which it is sought to be rectified may be strong evidence of that party’s intention at the time to execute the instrument in its rectified form. The conduct of Mr Smogurzewski and Ms Ross in briefing Mr Easdown, and Mr Smogurzewski’s specific instructions to Mr Easdown that he was not to verify the multipliers specified in the CCA as they had already been agreed by the parties, is significant. It indicates that Mr Smogurzewski and Ms Ross understood that the multipliers were agreed and were not subject to any audit other than the steps required by Mr Easdown to identify costs that were included in or excluded from the relevant multiplier and to verify the multiplier was applicable to each employer. This would involve confirmation that the multipliers noted on staff schedules of rates were appropriate for the classification of that employee.

The subsequent conduct of Mr Smogurzewski and Ms Ross is consistent with the parties having reached a consensus in the course of their pre-contractual negotiations that the multipliers were agreed and not subject to audit.

The subsequent conduct of TJH which is presently relevant is not confined to the subsequent conduct of Mr Smogurzewski and Ms Ross. It extends to the conduct of the officers of TJH to whom the Easdown Report was circulated and those who attended the CLT meeting on 26 August 2008 which discussed the Easdown Report. No representative of TJH suggested that Easdown was mistaken in relation to the scope of the audit that it was required to undertake pursuant to the CCA, that the multipliers had not been agreed and that it was required to audit them.

The subsequent conduct of TJH, particularly its conduct in the days, weeks and months following the signing of the CCA and the engagement of Mr Easdown to undertake the Compliance Audits, is strongly supportive of PBA’s case on rectification.

The evidence that I have reviewed in relation to the course of negotiations in 2007 and 2008 leading up to the signing of the CCA strongly supports the conclusion that the multiplier of 2.8 was agreed at an early stage of negotiations. The nature of the audit to be undertaken was also the subject of negotiation and eventual consensus. Although reference can be found in the document sent by Ms Ross to Mr Baron on 1 November 2007 to multiplier rates being subject to independent audit, the respects in which multiplier rates were to be verified by the auditor were clarified in the course of negotiations. Importantly, the documents exchanged by the parties in the course of those negotiations and the drafts of Schedule 7 clarified that the initial audit was to be a Compliance Audit, not an Establishment Audit. This required the Collaborative Agreement Auditor “to clarify the basis of reimbursement under Element 1” and to ensure a demarcation between items reimbursable under Element 1 and items that were deemed to be covered under Element 2 (and therefore not directly reimbursable). Neither the parties’ discussions nor the documents that recorded their negotiations suggested that the value of the multiplier of 2.8 or any other agreed multiplier was to be audited. They did not suggest that it was any part of the auditor’s function to audit all of Parsons Brinckerhoff’s and Arup’s accounts in order to ascertain whether the agreed multipliers were appropriate and reflected PBA’s actual costs. On the contrary, the communications between the parties and the evidence given by those involved in the negotiations are to the effect that it was understood that the required Compliance Audits were different to an Establishment Audit under an Alliance Agreement. Importantly, Mr van Heuzen’s email of 26 March 2008 recorded that the basis for reimbursement would be determining base rates and would not include an audit of Parsons Brinckerhoff and Arup accounts. This proposition was not contested and was apparently accepted.

The Commercial Model Summary that was provided to TJH on 12 March 2008 made explicit reference to cost recovery based on “an agreed multiplier of 2.8”. It was probably implicit in the consensus that multipliers were agreed and that they were not subject to audit, at least not subject to an audit that might result in the agreed value of the multiplier being displaced. If this was not implicit, it was made explicit in the course of negotiations and communications which clarified that the audit did not extend to an audit of multipliers and that PBA’s entitlement to payment of Element 1 costs was “subject to audit confirming the hours worked by individuals”. Documents circulating within TJH which summarised the commercial framework which had been agreed indicated that Element 1 required an audit of the hours worked and matters that would be relevant to determining the Raw Rate to which the agreed multipliers would be applied, not an audit of the multipliers themselves.

Viewed objectively, the communications and conduct of the parties during the negotiations supports the conclusion that a consensus was reached that the multipliers were agreed and not subject to audit.

The intention of PBA

PBA understood that the multipliers were agreed, save for the multiplier for consultant staff (other than full time) which was to be determined during the compliance audit, and that the multipliers would not be subject to audit so as to verify their accuracy or appropriateness. This is apparent from the substantial volume of documents that were generated by or received by PBA representatives in the course of the negotiations. It is also established by the evidence given in these proceedings by Mr van Heuzen and by Mr Vromans who had the conduct of those negotiations on behalf of PBA. Each was an impressive witness and I accept their evidence.

Mr Gregg-Mantle (often described in the evidence as Jim Mantle), who held the position of Managing Director, Australia-Pacific for Parsons Brinckerhoff since 1 January 2008 and in the year before that was the Director of Operations, Australia-Pacific, was also an impressive witness. His understanding of the agreement was based upon discussions with Mr van Heuzen and Mr Pattison. He understood that the 2.8 multiplier was fixed and not subject to audit. He gained this understanding as a result of the briefing that he received on 10 December 2007 and understood the limited role of the auditor. He instructed others following that presentation to double-check that the wording of the CCA reflected this understanding. His understanding did not change and was reinforced by later briefings. This included a briefing about the “worst case scenario” if the hours on the project ran “massively over”. Mr Gregg-Mantle was told that in such an event PBA would “lose the 20% [Limb 2] and be left with the 2.8”. I have earlier found that, as a matter of interpretation, the multiplier is fixed and not subject to audit. However, for the purposes of the alternative claim for rectification, I find that at all times up to the time that he signed the CCA, Mr Gregg-Mantle understood the 2.8 multiplier to be fixed and not subject to audit.

Mr Care signed the CCA on behalf of Arup and did so on the basis of conversations with Mr Vromans. He understood that PBA was to be reimbursed on the basis of a multiplier of 2.8 which was fixed for the duration of the project. As CEO and the Australasian chair of Arup it was not his practice to read every contract and he signed the CCA on the basis of advice which was given to him. Mr Care was not required for cross-examination.

Arup’s regional legal counsel, Ms Parr, had a limited role in the negotiation of the CCA and reviewed various drafts of it. Prior to the execution of it, she did not form a view about whether the multipliers in Schedule 7 were subject to audit since she regarded the scope of the audit to be a commercial matter to be considered by Mr Vromans. Parsons Brinkerhoff’s General Counsel and Company Secretary, Mr Smallhorn, was not required to comment on or review Schedule 7 and relied on Mr Pattison and Mr van Heuzen to undertake the commercial negotiations. He also relied on their recommendation to sign the CCA in his capacity as Company Secretary.

I conclude that PBA had the intention alleged by it in its claim for rectification.

The intention of TJH

Mr Smogurzewski was not called as a witness. Accordingly, my conclusion in relation to his understanding of any consensus reached during the negotiations must be based upon an assessment of the documents that he created or documents he probably would have read and his conduct, along with evidence concerning the discussions that occurred in meetings at which he was present. In relation to the last matter and on the basis of the evidence given by Mr van Heuzen, Mr Vromans and Ms Ross, I find that Mr Smogurzewski participated in meetings at which the issues of multipliers and audits were discussed and were agreed. At a relatively early stage in the negotiations it was agreed that the multipliers, including a multiplier of 2.8 for PBA’s full time staff, were to apply for the duration of the project. Mr Vromans and Mr van Heuzen explained, and Mr Smogurzewski and Ms Ross accepted, that one reason why PBA wished multipliers to be agreed were practical difficulties in conducting audits of Parsons Brinckerhoff’s and Arup’s respective accounts.

I also find that in the course of their negotiations, Mr Smogurzewski and Ms Ross on behalf of TJH agreed that the three element compensation model proposed had only some of the features of an alliance structure, and that a more restricted audit regime would apply than that of an Establishment Audit under an Alliance Agreement because, amongst other things, the Element 1 multipliers were agreed and would not be subject to audit.

I am satisfied that Mr Smogurzewski and Ms Ross agreed to these matters. The evidence of Mr van Heuzen, Mr Vromans and Ms Ross, which I accept, is not simply that these matters were raised for discussion by PBA, such that any failure by TJH to disagree with these matters might not necessarily signify acceptance of them. These matters were both discussed and agreed by TJH’s representatives in the negotiations.

Ms Ross now works in the Middle East and is no longer employed by John Holland. Her evidence was given in the form of a witness statement and oral evidence by video link. There is no suggestion that her evidence was biased, and I found her to be a witness who honestly recalled the matters about which she was asked to give evidence.

The fact that Ms Ross gave evidence by video link and was required to access documents about which she was asked questions presented some practical difficulties in the giving of her evidence. The evidence that she gave under cross-examination had a slightly argumentative tone on occasions. However, overall, Ms Ross did her best to answer questions in somewhat difficult circumstances.

She commenced employment with John Holland in August 2007 as the Contracts Manager for the Northern Region and worked for the TJH joint venture for the APL. Her arrival post-dated the Pre-Bid Agreement, but she was briefed about it and would have had access to it, if required. She was sent copies of relevant terms of it on 11 September 2007.

Shortly after Ms Ross took on her role she was briefed by Mr Moran. I accept Ms Ross’ evidence that Mr Moran told her in an initial briefing that he was very happy with the design work done by PBA for the bid and wanted to retain the same team for the detailed phase of the project, assuming that TJH would win the contract. In a later briefing Mr Moran explained to Ms Ross the model which he said had been agreed between TJH and PBA, which included a three element commercial model, the idea of “pain-share gain-share” and how it would work. This model was new to Ms Ross and she recalls that Mr Moran said to her words to the effect that TJH had agreed to pay a 2.8 multiplier for PBA’s full time staff as part of the first element for reimbursement of cost. I accept Ms Ross’ evidence that she understood from an early stage that the 2.8 multiplier was a fixed figure which had been agreed for the duration of the project.

Mr Moran had a different recollection of his briefing of Ms Ross. I accept that Mr Moran provided Ms Ross with a briefing about the general principles of reimbursement and explained that it was her job to negotiate the actual terms that gave effect to those general principles. However, I prefer Ms Ross’ recollection of the briefing to the extent that it conflicts with Mr Moran’s recollection. Whilst Mr Moran may have touched upon the topic of having an audit of PBA’s books and records, I do not accept that he has a reliable recollection of what he said in this regard to Ms Ross some time after September 2007. Mr Moran had enormous responsibilities in respect of what was expected to be a $4 billion project and was required to attend to many matters. Understandably, he was unable to recall whether he read documents and his recollection on other matters of detail was understandably lacking. Given the number of meetings that Mr Moran was required to attend during this period, it would be surprising if he had a good recollection of the words he used in his briefing with Ms Ross. I have reached the conclusion that he does not. On the other hand, Ms Ross would be likely to recall the briefing since it was a matter of great importance to her. She would be likely to recall if Mr Moran gave her instructions which conflicted with matters that were being discussed at about the same time with Mr Smogurzewski, Mr van Heuzen and Mr Vromans.

I accept Ms Ross’ evidence that during the negotiations of the CCA the parties understood that the multipliers were to be agreed and applied for the duration of the project. She explained that there are few notes regarding the multipliers because they were agreed and so did not warrant much discussion. She also understood that the audits under the CCA were to check the “Raw Rate” (which included verifying salary packages), to verify that the correct multiplier had been applied to each employee and to verify disbursements claimed under the first element. However, the audits were not to audit the 2.8 or other specified multipliers.

Mr Moran is the General Manager, Southern Region for John Holland. He is a highly experienced professional civil engineer with extensive experience on infrastructure projects. He was appointed to the role of Bid Director for the project and reported to the D & C Steering Committee on day-to-day management issues associated with the project. He also reported to the OS & SO Committee that was established by the parent company of both Thiess and John Holland, Leighton Holdings Ltd. Once the Pre-Bid Agreement was signed Mr Moran’s focus was on preparing a bid that would succeed. He was not heavily involved in the negotiation of the draft CCA and those negotiations on behalf of TJH were conducted by:

(a)Mr Smogurzewski, who was at that stage the Design Director for the bid;

(b)Mr Buckland, who was Mr Smogurzewski’s supervisor within Thiess;

(c)Ms Ross, who was engaged to assist in finalising the contract negotiations; and

(d)Mr Baron, who was at the time the General Counsel for John Holland Northern Region.

The negotiating team reported to Mr Moran in relation to the conduct of their negotiations and were expected only to reach agreement with PBA on terms that were consistent with the principles set out in cl 6.2 of the Pre-Bid Agreement and the draft CCA attached to it. However, as is apparent from the course of events, the draft CCA attached to the Pre-Bid Agreement was discarded in preference for a new form of CCA that was drafted by Mr Baron. This fact was noted and reported to senior management within TJH. The relevant provisions of cl 6.2 of the Bid Agreement required the parties to use their best endeavours, including by participating in such workshops or other fora as TJH may reasonably require, to agree the “basis of reimbursement of [PBA’s] actual costs (Limb 1)”. Neither cl 6.2 nor the Schedule 4 attached to the Pre-Bid Agreement, which described the three-limb compensation model, attempted to define how PBA’s actual costs were to be calculated. This was one of the matters that Mr Smogurzewski and Ms Ross were authorised to negotiate. Mr Smogurzewski was able to call upon Mr Buckland who had a kind of “mentoring” role.

Of course, the negotiating team did not have authority to depart from the three-limb compensation model and the parameters set by cl 6.2 of the Pre-Bid Agreement. However, it had authority to negotiate the terms upon which PBA’s entitlement to reimbursement of its costs were to be calculated and the scope of audits that were required to give effect to those arrangements.

The negotiating team reported their progress and Mr Smogurzewski and Ms Ross involved Mr Buckland, Mr Baron and others, as required. In addition, Mr Smogurzewski presented the commercial arrangement to the OS & SO Committee on 19 October 2007. His presentation described one of the “main features” of the CCA as “Agreed multipliers for internal, contract and subcontract staff”, and referred to an audit of timesheets. It made no reference to an audit of multipliers. Mr Moran led that presentation and neither he nor anyone else within TJH indicated any difficulty with these aspects. In fact, the evidence indicates that they were happy with the proposed commercial model and told Mr Smogurzewski this.

Because Mr Moran and other senior TJH executives delegated the task of negotiating the terms of the CCA to a negotiating team, it is unlikely that they gave much attention to reports and other documents received from the negotiators which were to the effect that the multipliers were agreed and the audits did not extend to an audit of the multipliers. In Mr Moran’s case, he was focused upon winning a $4 billion bid and mobilising a workforce to carry out the required work if the bid succeeded. The contract for the design represented only about five per cent of the total project value. Mr Moran had an enormous workload in managing the bid and although he was copied in on emails his involvement was limited. Usually he would not have the time to read attachments to emails. The documents sent to him about the commercial model and the terms of the agreement that had been negotiated were to the effect that the 2.8 multiplier was agreed. It is unlikely that Mr Moran has a good recollection of what he was told by Mr Smogurzewski and Ms Ross from time to time about the state of the negotiations. Mr Smogurzewski and Ms Ross both understood that the multipliers were agreed and would have been unlikely to mislead Mr Moran or anyone else about this aspect, if asked. The presentation which Mr Moran saw on 19 October 2007 referred to agreed multipliers for staff and the documents sent to him in the following months stated what the multipliers were. I conclude that Mr Moran understood these aspects of the commercial model.

Mr Baron was not directly involved in commercial negotiations although he attended some meetings at which both the TJH and PBA negotiators were present. With the knowledge and agreement of the parties, Mr Baron was asked to provide an alternative Collaborative Consultancy Agreement to that which had been appended to the Bid Agreement and his principal role was in drafting such a document. The drafting of Schedule 7 involved a different, but related process and was principally undertaken by Ms Ross and Mr Smogurzewski, with the assistance of Mr Jim Ross. As previously noted, Mr Baron was one of the recipients of Mr van Heuzen’s Commercial Model Summary of March 2008 which contained a reference to an “agreed multiplier”. Mr Baron also prepared a summary of the commercial and legal framework which referred to payment of Element 1 being “subject to confirming the hours worked by individuals”. This was drawn from an earlier document sent to him by Ms Ross. The documents which he received did not state that the multiplier was subject to audit.

Mr Baron gave evidence that at no time did he consider that there had been any amendment to a fundamental principle of the agreement, which was that all payments made as reimbursement of costs of the Consultant were subject to audit. I accept his evidence in this regard. However, the present issue does not relate to the auditing of payments. Drafts of the agreement and the agreement in its final form make provision for payments to be audited. The present issue relates to the definition of PBA’s entitlement, including whether multipliers were agreed, not the auditing of payments.

Mr Buckland was the Executive Manager of Design at Thiess at the relevant time and was involved in the negotiation of the Bid Agreement between TJH and PBA. He also attended a number of meetings relevant to the negotiation of the CCA and would discuss amendments proposed by PBA with Mr Smogurzewski from time to time. However, the negotiations were mainly conducted by Mr Smogurzewski and Ms Ross. Mr Buckland’s witness statement records that he understood that cl 6.2 of the Bid Agreement described the commercial arrangement with PBA that was to operate throughout the negotiation of the CCA and that it was always his intention that the CCA provide for the auditor to access PBA’s records in order to establish PBA’s actual costs. However, this evidence does not directly address the negotiation of how PBA’s actual costs were to be calculated and the scope of the audits that would be undertaken on what cl 6.2 of the Bid Agreement referred to as “agreed financial records”. As matters transpired, Mr Buckland was kept informed of the negotiation of these matters. He was provided with revisions of Schedule 7 which specified multipliers and indicated that the Raw Rate was to be confirmed during what was described as the Compliance Audit. He attended the page-turn meeting on 10 April 2008 in which the detailed provisions of the then draft of the CCA were considered.

Whatever understanding Mr Buckland may have had of the scope of an audit of PBA’s actual costs at the end of the project, or at some other time, the scope of the Compliance Audits was defined by the specific terms of Schedule 7, and the documents sent to Mr Buckland would not have provided a basis for him to understand that a multiplier of 2.8 or other multipliers were other than agreed, or that they were subject to audit.

In addition to Mr Baron, other lawyers from TJH including Mr Lynch and Mr Piccoli were involved in the circulation of drafts of the CCA. However, they did not play a role in the negotiation of the commercial terms and they were not decision-makers in this regard.

I find that persons with authority to negotiate the commercial framework which was to become a schedule to the CCA, and to document the same, understood that the multipliers were agreed and not subject to audit. They had authority to negotiate these terms, but did not have authority to contractually bind TJH to them. The parties always understood that the negotiation and documentation of the agreement was subject to a contract being executed by persons with authority to execute the same.

The decision-makers on behalf of TJH were authorised to negotiate the terms of the commercial framework and the terms of Schedule 7 in particular. They had authority to do so within the broad parameters of a three limb compensation model. Mr Smogurzewski and Ms Ross were authorised to conduct the required negotiations, and did so with appropriate input from Mr Buckland, Mr Baron and others. Like their PBA counterparts, Mr Smogurzewski and Ms Ross understood and intended that the values of the multipliers specified in cl S7-3.1.2 as the Element 1 multipliers were values agreed by TJH and PBA, and would not be subject to audit by the Collaborative Agreement Auditor. They understood and intended that the Collaborative Agreement Auditor would not be entitled to access PBA’s records so as to verify the values of those multipliers. In respect of the value of the multiplier for consultant staff (other than full time) Mr Smogurzewski and Ms Ross intended and understood that it would be determined by the Collaborative Agreement Auditor during the Compliance Audit, and once it was determined it would not thereafter be subject to audit.

These matters were addressed by TJH during negotiations, even if some TJH employees did not give the specific matter a great deal of consideration due to the demands placed upon their time or the limited role that they played in negotiations. These matters were agreed in the course of meetings and were also documented and disclosed in communications between the parties.

That TJH had the intent contended for by PBA in PBA’s alternative claim for rectification is confirmed by TJH’s subsequent conduct, particularly the instructions given by Mr Smogurzewski to Mr Easdown on 22 July 2008 and TJH’s response to the Easdown Report which clearly stated the extent of the steps undertaken by Easdown during the Compliance Audit, and stated that:

“We understand that the 2.8 multiplier has been agreed to apply for this project.”

This clearly stated a matter that had been long agreed between the parties, namely that the reimbursement of PBA’s staff costs was based upon an agreed multiplier. If the senior management and employees of TJH who received and considered the Easdown Report had a different understanding then one would have expected the issue to be raised shortly after the receipt of the Easdown Report. The fact that it was not disputed by TJH, and the fact that TJH did not suggest that Easdown should conduct more extensive audits in order to complete the required Compliance Audits, strongly suggest that TJH understood at all relevant times that the multipliers were agreed and not subject to audit.

I conclude that TJH had the intention alleged in PBA’s alternative claim for rectification. Each party had the same actual intention in this regard. It was the common intention of the parties.

The subject matter of PBA’s alternative claim for rectification

It is important to recall that the rectification issue relates to the multipliers and auditing of them. Some of TJH’s submissions related to a different point. TJH submits that none of the persons alleged by PBA to have held the relevant intention on behalf of TJH and none of the persons who controlled what Thiess and John Holland did in relation to the CCA:

“held an intention to prevent the Auditor from auditing PBA’s actual costs of performing the Collaborative Agreement Work, or of auditing the payments made or to be made by TJH to PBA in respect of that work.”

This is not inconsistent with the intention alleged by PBA in its alternative claim for rectification. TJH may be taken to have intended that PBA’s actual costs, as defined in the CCA, of performing the Collaborative Agreement Work would be audited, and also that payments made on account of its entitlement would be audited. PBA’s actual costs, as defined, would need to be audited to ensure that it received “its exact entitlement as set out in Schedule 7”,^[36] including by payment of the final payment calculated in accordance with cl S7-9.3. The agreement provided as much. The agreement also provided for all payments made pursuant to the CCA to be subject to investigation and validation by the auditor to ensure that they were in accordance with the terms of compensation set out in Schedule 7.^[37]

Both parties may be taken to have intended that the Collaborative Agreement Auditor should carry out audits to verify that PBA received its exact entitlement as defined in the CCA. Accordingly, the scope of the intended audits turns upon the definition of, amongst other things, PBA’s “actual costs”. The definition of that matter was the subject of negotiation between the parties, principally Mr van Heuzen and Mr Vromans on behalf of PBA and Mr Smogurzewski and Ms Ross on behalf of TJH, and the terms agreed between the authorised representatives of the parties in that regard were documented. I have found, as a matter of contractual interpretation, that the actual costs were specified, and thereby defined, by reference to cl S7-3 and cl S7-4.

If the effect of the CCA is to allow PBA to recover costs on a basis different to that which certain TJH executives, such as Mr Saxelby, Mr Moran and Mr Doyle subjectively intended, then their evidence might have been relevant to a claim for rectification by TJH. However, no such claim for rectification was made.

The issue of whether the CCA prevents the auditor from auditing PBA’s “actual costs”, calculated without reference to the multipliers and other specific provisions of cl S7-3 and cl S7-4, relates to the issue of construction which I have earlier addressed. TJH does not seek a declaration that PBA’s actual costs are to be determined without reference to cl S7-3 and cl S7-4, but that was its essential position in response to PBA’s case in relation to the proper interpretation of the CCA. TJH did not seek a declaration to reflect its preferred interpretation as to how “actual costs” were to be calculated. It did not make an alternative claim for rectification in the event that its preferred interpretation was not adopted.

As TJH’s submissions in response to PBA’s claim for rectification make clear, on TJH’s preferred interpretation of the CCA, rectification of the CCA in the terms sought by PBA would not affect PBA’s obligation to provide BDO with access to their financial accounting records so that BDO can audit PBA’s actual costs. On TJH’s interpretation, the actual costs are not specified or defined by reference to the agreed multipliers or other provisions of cl S7-3 and cl S7-4. As paragraph 100 of TJH’s written submissions make clear, TJH does not contend that the multipliers are “subject to audit”, and describe this as a “non-issue”.

TJH’s evidence is to the effect that its relevant employees always intended that the auditor should audit PBA’s actual costs. But this relates to a different subject matter to the subject matter of PBA’s rectification claim. PBA’s rectification claim concerns the specific intention alleged by PBA, namely that each party intended that the multiplier was agreed and not subject to audit.

The relevant decision-makers and the relevant minds within TJH for the purpose of PBA’s rectification claim

The parties’ submissions canvass authorities that relate to the identity of the relevant decision-maker for the purpose of a claim for rectification. The authorities refer in different contexts to “the decision-taker”, the “decision-maker”, the person or persons to whom authority was delegated to negotiate and conclude an agreement and the person “whose job it was to make the required business judgment as to the terms upon which [the party] should contract”.^[38] These and similar expressions refer to an employee or employees to whom a company has delegated authority to act on its behalf in relation to a particular transaction. If the employee acts in accordance with his or her authority, then his or her intention in doing so may, depending on the circumstances, be capable of being regarded as the intention of the company.^[39] In some circumstances the intention of the “decision-maker” will be different to the intention of the person who negotiated the contract or the person who executes the contract. The expressed intentions of “a mere negotiator” who is not also the “decision-maker” and who does not share those intentions with the person who is the decision-maker on behalf of the company may be immaterial.^[40]

The application of principles in relation to the attribution of intention for the purposes of rectification depends upon context, including whether the relevant decision-maker is the person authorised to negotiate the terms of the agreement and conclude those negotiations, or is the person authorised to execute the contract that binds the parties.

The application of the principles depends on the subject matter of the claim for rectification, since a person may be authorised to make the required business judgment or decision as to certain terms but not authorised to do so in relation to other terms.

As discussed above, in this case the relevant subject matters are the terms of the agreement concerning multipliers and auditing of them. Mr Smogurzewski and Ms Ross were authorised to negotiate those terms on behalf of TJH. They negotiated those terms in accordance with their authority and their intentions about whether the multipliers were agreed and not subject to audit are relevant in determining whether TJH had the intention alleged by PBA.

The persons who executed the CCA on behalf of TJH intended that it give effect to what had been agreed previously with respect to multipliers and auditing of them. They largely relied on others to negotiate and document the terms of Schedule 7 in relation to multipliers. But they, or others upon whose advice they relied before signing the CCA, were not ignorant of what had been agreed in that regard. For example, some of them knew as a result of the OS & SO Committee presentation on 19 October 2007 that the commercial framework involved agreed multipliers. Subsequent communications confirmed to TJH executives that multipliers were agreed and stated what they were. The persons within TJH who oversaw the work of the negotiators knew that multipliers had been agreed and that the CCA did not provide for them to be audited, or were content to leave these matters for the decision of others.

They did not intend that the agreed multipliers be audited. They may have intended that PBA’s actual costs be audited, but that is a different subject to the subject of PBA’s claim for rectification.

To the extent that it is necessary to consider the state of mind of employees of TJH other than those who were authorised to negotiate and conclude the terms of the CCA with respect to multipliers and the extent to which they were to be audited (those negotiators being the relevant “decision-makers” whose state of mind must be considered for present purposes), the other employees of TJH have not been shown to have had a different state of mind in respect of the relevant subject matter.

In deciding what TJH’s intentions were at the time it entered the CCA and during the times leading up to its execution with respect to the subject matter of PBA’s rectification claim, the relevant “decision-makers” were:

the individuals who were delegated authority to negotiate the terms of the CCA in relation to multipliers and their auditing; and

the individuals who were authorised to execute the CCA on behalf of Thiess and on behalf of John Holland.

As to (a), these individuals had the intent alleged by PBA, and their decision to agree fixed multipliers which were not subject to audit was within their authority. As to (b), these individuals apparently intended that the CCA give effect to what had been previously agreed with respect to multipliers and auditing of them.

Burden of proof

PBA as the party seeking rectification bears the onus of proof which has been described as a “heavy burden”^[41] requiring “convincing proof”^[42] or “clear and strong”^[43] evidence. The burden is high where the agreement is the result of prolonged negotiations which lead to a formal instrument in circumstances in which both parties have been advised by skilled legal advisors, as is the case here.

The existence of an entire agreement clause, of the kind found in cl 33.1(a) of the CCA, is not, of itself, a bar to rectification.^[44] To order rectification I must be satisfied that the instrument does not reflect the true agreement of the parties. I take account of cl 33.1(a) which is to the effect that the CCA supersedes all prior agreements. However, I am satisfied that the CCA was intended to record the agreement that had been earlier reached and that cl 33.1(a) is not a bar to PBA’s alternative claim for rectification.

Conclusion – rectification

I am satisfied that at the time TJH and PBA entered into the CCA it was their common intention that:

(a)The values of the multipliers specified in cl S7-3.1.2 as the Element 1 multipliers were values agreed by TJH and PBA and would not be subject to audit by the Collaborative Agreement Auditor;

(b)The value of the multiplier for Consultant Staff (other than full time) including Permanent Part Time Staff, and In-House Contract Staff would be determined by the Collaborative Agreement Auditor during the Compliance Audit and, once so determined, thereafter would not be subject to audit by the Collaborative Agreement Auditor;

(c)The Collaborative Agreement Auditor would not be entitled to access to the personnel and records of PBA so as to verify the values of the multipliers specified in cl S7-3.1.2.

If I had reached the conclusion that, on the proper construction of the CCA, the values of the multipliers were not agreed and were subject to audit by the Collaborative Agreement Auditor, and that the Collaborative Agreement Auditor was entitled to access PBA’s records so as to verify the values of the multipliers and to further audit the multiplier determined by the Collaborative Agreement Auditor during the Compliance Audit for consultant staff (other than full time), then the CCA would have been inconsistent with the common intention of the parties. By common mistake, it would have failed to accurately record, or to give effect to, the common intention of the parties that I have found. Subject to discretionary considerations concerning the grant of relief, PBA would have been entitled to rectification and the form of relief sought by it would have been appropriate.

PART C:MISLEADING OR DECEPTIVE CONDUCT

Introduction

TJH alleges in paragraphs 85-92 of its second further amended defence and counterclaim that PBA engaged in conduct that was misleading or deceptive or likely to mislead or deceive. It relies on these matters as a discretionary defence to PBA’s claim for rectification and also as the basis for its counterclaim for contravention of s 52 of the Trade Practices Act 1974 (Cth), which was in force at the relevant time.

As to the discretionary defence, a party seeking equitable relief must come with “clean hands”. When a party whose conduct has been improper in a transaction seeks relief in equity, that relief will be refused.^[45] Two conditions must be satisfied by the party which seeks to resist equitable relief on the ground of the misconduct of the applicant. First, such conduct must be wanting in good faith. Secondly, it must be “in the transaction” which is the basis of the proceeding.^[46] TJH submits that PBA’s breach of the norms stipulated in s 52 in the circumstances of this case also amounts to conduct wanting in good faith. It relies upon the contractual context, including the promise contained in Schedule 4 of the Pre-Bid Agreement of March 2007 that committed the party to “an open dialogue on program and cost estimate” and “transparency of process during bid”.

Significantly, TJH’s misleading or deceptive conduct case does not plead that PBA positively represented that the multipliers advanced by it in negotiations were the result of a certain examination or any other particular process. Its case is not of a positive representation, but that PBA “refrained from disclosing to TJH that there had been no examination of the nature described in [paragraph 85(r) of the second further amended defence and counterclaim]”. Its case is that the conduct of PBA set out in various sub-paragraphs of paragraph 85 in the circumstances “gave rise to the reasonable expectation that if there had been no examination of the nature described in paragraph [85(r)], PBA would disclose that fact to TJH, prior to TJH entering into the CCA”.

The examination pleaded in subparagraph 85(r) is of a particular kind. It is summarised in paragraph [27] above, however, it is appropriate to set it out in full:

“There had been no examination of the financial records of PBA which had ascertained:

(i)that multiplying the ‘raw cost’ of PBA’s full time employees who were to perform the design and certification work of the kind described as ‘Collaborative Agreement Work’ in the CCA by a multiplier of 2.8 yielded a figure which was no more than the actual cost to PBA of:

(A)those personnel performing work of that kind; and

(B)overheads related to that work that were specific to the Project; and

Particulars

The examination referred to is a careful analysis of the financial records of PBA by a person with accounting or audit qualifications or experience.

The financial records of PBA referred to are the electronic and physical versions of documents recording PBA’s:

salary overheads (the costs of administration and management of labour, training, annual holidays, public holidays, sick leave, long service leave, other excused absence, additional compensation, other salary costs, payroll tax and workers compensation); and
other overheads (including the costs of contract personnel, travel and accommodation, staff welfare, rent, cleaning, electricity and gas, building maintenance, equipment maintenance, computer maintenance, depreciation and staff recruitment),

for a period reasonably close to 2007.

The expression ‘raw cost’ bears the same meaning as in cl. 3.1.1 of the document referred to in paragraph (h) above.

The expressions ‘PBA’s full time employees’, ‘actual cost to PBA’, ‘related to that work’, ‘specific to the Project’, ‘not specific to the Project’ and ‘a period reasonably close to 2007’ bear their ordinary meanings.”

It is convenient to refer to this pleaded examination as an “85(r) examination”. PBA does not suggest in its defence that such an examination took place.

TJH does not plead that it had, or an entity in its position would have had, a reasonable expectation of a different kind, such as that the multipliers proposed by PBA were the result of a genuine, or reasonable, attempt by PBA to nominate a multiplier that would yield a reasonable estimate of its expected actual cost when applied to the expected “Raw Cost” of an employee. TJH’s case is not that there was a reasonable expectation that the multiplier was a genuine or reasonable estimate and that PBA was acting in good faith in proposing them. Its case is of a reasonable expectation of a particular matter, namely of an 85(r) examination, and that if there had been no such examination PBA would disclose that fact to TJH.

Legal principles

Silence or non-disclosure of information can be misleading or deceptive in various circumstances.^[47] Whether silence constitutes misleading or deceptive conduct depends on all the relevant circumstances, and it is dangerous to essay any principle by which they might be exhaustively defined. However, “unless the circumstances are such as to give rise to the reasonable expectation that if some relevant facts exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist”.^[48] Asking whether a reasonable expectation of disclosure exists is an aid to characterising non-disclosure as misleading or deceptive and has been described as a practical approach to the application of the prohibition in s 52.^[49]

Sometimes a reasonable expectation of disclosure will not exist because parties to a commercial negotiation are not expected to disclose information which is confidential, and the starting point for their negotiations is the caveat emptor doctrine. On other occasions, a reasonable expectation of disclosure will exist because of the nature of the relationship, or because positive conduct or statements in the course of negotiations imply that a certain fact or matter exists or does not exist. A failure to qualify a statement made earlier in negotiations may be misleading or deceptive in the circumstances. Where, however, this is not the case, the reasonable expectation of disclosure of a certain fact must be found elsewhere. In this case, TJH seeks to source it by reference to the negotiation and entry into the Pre-Bid Agreement and the parties’ subsequent negotiations in relation to the commercial framework and the terms of Schedule 7, as pleaded in paragraph 85 of the second further amended defence and counterclaim. Whether conduct is misleading or deceptive or likely to mislead or deceive must be assessed on the basis of these facts and all the relevant circumstances.

Summary of respective cases

Before turning in greater detail to the circumstances relied upon by each party, it is appropriate to summarise their respective cases on the issue of misleading or deceptive conduct.

TJH notes at the outset of its submissions that its witnesses believed that Element 1 costs under the CCA were subject to audit. Accordingly, it acknowledges that the accuracy of the multiplier was “much less important than if Element 1 costs were not subject to audit”. However, it submits that the multiplier was still of significance, given its role in relation to progress payments, and that role was sufficient to found the reasonable expectation relied on. TJH seeks to clarify that it does not assert that it relied on representations of the accuracy of the 2.8 multiplier to enter into the CCA. Rather, its case is said to be that “had [it] been told that the figure of 2.8 was, seemingly, plucked out of the air, [it] would have requested an audit before signing the CCA.” This submission does not capture TJH’s pleaded case, which is not that the figure of 2.8 was “plucked out of the air” but that it did not follow an 85(r) examination. In any event, TJH submits that so far as compensation payable to PBA was concerned, the negotiations took place against the shared view of the parties that Element 1 was designed to reimburse PBA for its actual costs, and was not to include any non-project-specific overheads or profit. The negotiations are submitted to have been conducted on the basis that “PBA stated that this could be achieved by using a multiplier for internal staff of 2.8”. Such a positive statement is not expressly pleaded, and I take this submission to be an attempt to summarise the general effect of the Pre-Bid Agreement and the communications pleaded at length in paragraph 85. Against that background, TJH relies upon the fact that PBA did not say that there had been no examination of their financial records to ascertain that multiplying the raw cost of PBA’s full time employees by a multiplier of 2.8 yielded a figure which was no more than the actual cost to PBA of those personnel, together with project-specific overheads.

In short summary, TJH’s case is that the relevant communications, including PBA’s commercial model summary, conveyed the clear meaning in respect of Element 1 that the multiplier of 2.8 would result in cost recovery, and nothing more. PBA had proposed a multiplier of 2.8 on that basis and, in the circumstances leading up to the execution of the CCA, PBA’s conduct in not disclosing that there had not been an 85(r) examination was not inadvertent. It deliberately refrained from disclosing to TJH that there had not been an 85(r) examination.

TJH pleads that its expectation, namely that if there had been no 85(r) examination PBA would disclose that fact, is to be assessed objectively. It contends that the reasonableness of the expectation is to be assessed objectively and not by reference to the subjective intentions of any individual. However, without prejudice to this contention, it pleads that the persons who held the expectation on behalf of TJH were Mr Doyle, Mr Moran and Mr Buckland.

PBA responds that TJH’s case is a clever but artificial approach that involves an omission in the absence of any positive conduct, and in the absence of any actual assumption by TJH that there had been an 85(r) examination. It submits that even accepting that concepts of good faith and transparency somehow bound the parties in their negotiations leading up to the CCA, there is no factual basis for concluding that PBA had some obligation to disclose that there had been no 85(r) examination, or indeed any examination, whether it be in a detailed report supported by quantity surveyors or a “back of the envelope” estimate. Having regard to the facts alleged in paragraph 85 of the second further amended defence and counterclaim and the course of negotiations, PBA submits that there is nothing to support the allegation that PBA hinted, or suggested, that it had actually conducted an 85(r) examination, or was proposing to do so.

The suggestion that it was reasonably expected that PBA would have carried out such an examination is described as both unlikely and unrealistic because:

(a)no evidence establishes that PBA could ever have sensibly “ascertained” what its future costs could be for the project, when all that could possibly have been done was to make an estimate of likely future costs for a project which was anticipated to last four years and which would transform PBA’s business and its cost base;

(b)the estimated cost would depend upon the mix of full time employees, contract staff and sub-consultants, all with different multipliers;

(c)even in an Alliance model contract, the multipliers which apply are a matter for negotiation, with different views about what is comprehended by the concept of actual costs;

(d)in such negotiations consultants in the position of PBA may accept a lower or higher multiplier for some or other of its work in return for a greater or lesser “upside” on the other limbs of the payment.

PBA submits that TJH’s pleaded case is artificial, based upon an expected examination which had “ascertained” that the multiplier would yield no more than the actual cost to PBA when PBA had two different cost bases and could only estimate or predict the likely costs of the project. The actual costs could not be ascertained because for PBA this project was not “business as usual”. TJH’s case is said to be predicated on demonstrating that it was expecting a degree of precision in ascertaining the actual cost to PBA when, in reality, the parties could only have contemplated that the application of a multiplier was designed to arrive at a reasonable estimate or prediction of the likely costs of a project that would occupy four years. The examination posited by TJH is one that had “ascertained” that multiplying the “Raw Cost” of PBA’s full time employees who would in the future perform the project work, by a multiplier of 2.8, yielded a figure that was “no more than the actual cost to PBA of that work and the overheads specific to the project.” PBA submits that no such precise figure could ever be calculated because all that could ever be done was to estimate the future costs and the pleaded expectation is unrealistic and not reasonable.

It adds that apart from the pleaded expectation not being reasonable upon an objective assessment, the evidence from relevant TJH witnesses does not support the allegation that TJH held such an expectation.

If TJH establishes the reasonable expectation for which it contends, it must also establish that PBA’s failure to disclose that there had been no such examination was not inadvertent. TJH submits that PBA believed that the figure of 2.8 could not be justified and that the failure to disclose that there had been no 85(r) examination to justify the multiplier was clearly deliberate.

PBA submits in response that there is no evidence that PBA deliberately refrained from disclosing that there had not been an examination of the type described in paragraph 85(r) and that its representatives can hardly have known that TJH was interested in knowing whether there had been such an examination in arriving at the multipliers, or in the process by which the multipliers were derived. It submits that there is no basis for concluding that it was under some obligation to disclose to TJH the degree to which it had examined its records, let alone the absence of an 85(r) examination, and there is no basis for concluding that there was a deliberate refraining from disclosing that there had been no 85(r) examination.

If TJH establishes the misleading or deceptive conduct contended for then an issue of causation arises (the issue of the quantum of its loss and damage not having been tried at this stage). The causation issue requires consideration of whether TJH has established its pleaded case as to what it would have done if PBA had disclosed that no 85(r) examination had been undertaken by it. I will return to the causation issue after considering whether TJH has established the misleading or deceptive conduct alleged by it.

Discussion – alleged misleading or deceptive conduct

Before the CCA was signed, TJH had entered into agreements with consultants which are referred to as Alliance Agreements. The features that make these agreements identifiable as Alliance Agreements are that the parties agree to work co-operatively on the basis of a sharing of risk and reward for the purpose of achieving agreed outcomes, based on principles of good faith and trust and an open book approach to costs. TJH had entered into such agreements in early 2007 with Parsons Brinckerhoff, particularly the Westgate Freeway Project Alliance Agreement and the Project Alliance Agreement dealing with the upgrade of the Pacific Highway between Coopernook and Herons Creek.

Parsons Brinckerhoff and Arup had also entered into Alliance Agreements, including (in the case of Parsons Brinckerhoff) the Alliance Agreement in respect of the Tullamarine-Calder Freeway Interchange and (in the case of Arup) the Ipswich Motorway Upgrade Agreement.

Discussions between Thiess as part of a Thiess and Baulderstone Hornibrook joint venture and both Arup and Parsons Brinckerhoff on the other hand occurred in connection with the GUP that entailed duplication of the Gateway Bridge in Brisbane. The Thiess and Baulderstone Hornibrook joint venture did not succeed in winning the contract. However, these discussions formed the background to the development of a “collaborative model” for future agreements to be entered into. The so-called “collaborative model” might be contrasted with what was described as a “hard contract approach” to delivering a project. Depending upon its terms, it might include certain features of an Alliance Agreement in respect of compensation.

As discussions progressed between TJH and PBA in late 2006 and early 2007, and drafts were circulated of a possible Pre-Bid Agreement, the proposal that emerged was that any such Pre-Bid Agreement would require the parties to use “their best endeavours, including by participating in such workshops or other fora as TJH might reasonably require to agree” a number of matters. There were many such matters which needed to be addressed to agree compensation arrangements under such a “Collaborative Agreement”. They included the basis of reimbursement of “the Consultant’s actual costs (Limb 1), a fixed fee to cover the consultant’s normal profit, an amount for the assumption of risks under the agreement and recovery of non project-specific overheads (Limb 2) and pain/gain share arrangements by which the Limb 2 fee might be adjusted depending on how actual outcomes compared with pre-agreed targets (Limb 3).”

I accept PBA’s submission that the fact that one or more of the parties had previously entered into agreements referred to as “Alliance Agreements” is not evidence that the CCA was an Alliance Agreement, or that the parties proposed that it was to be an Alliance Agreement, or even that it was to have any particular feature of an Alliance Agreement. TJH does not plead that the CCA is an Alliance Agreement or that it possessed any particular feature of an Alliance Agreement. The parties did not describe their agreement as an Alliance Agreement. They deliberately chose the label “Collaborative Consultancy Agreement”. The relevant issue is not whether features of the agreement which they reached resemble certain features of a different form of agreement, but the terms that they negotiated and whether the circumstances relied upon by TJH give rise to a reasonable expectation of the kind alleged by it.

The matters alleged by TJH including, by way of background, prior Alliance Agreements and the course of negotiations in relation to the Pre-Bid Agreement and the CCA itself, do not include any allegation that the basis of reimbursement of the consultant’s actual costs and the multipliers in particular, were based upon, or would be based upon, a particular examination, let alone an 85(r) examination. TJH’s pleaded case is not that PBA positively represented that it had conducted such an examination or was proposing to do so.

I do not consider that the matters pleaded by TJH justify the conclusion that those matters gave rise to the reasonable expectation that if there had been no 85(r) examination PBA would have disclosed that fact. I accept PBA’s submissions that in the circumstances that prevailed at the relevant time, it was unrealistic and unreasonable to expect that Parsons Brinckerhoff and Arup had undertaken an examination of their respective financial records of a kind which would have “ascertained” whether the value of a multiplier which would yield a figure that was no more than the “actual cost” to PBA.

Mr Vromans explained that, apart from anything else, it would not be possible during or before the negotiations to “ascertain” the “actual cost” of performing the contemplated design and certification work, as the bulk of the work was yet to be done and the costs were yet to be incurred and could not be known. Mr Vromans gave persuasive oral evidence as to why he did not undertake an 85(r) examination in this case. He explained that the project “was not a business as usual project”. It required a high level of hiring which would result in the loss of important assets from Arup’s usual teams. An analysis of what the cost to Arup might be would not be one that could be conducted on the basis of an auditor-type analysis with reference to historical records. The APL was much larger and more complex than other projects and one could not ascertain what the project would do to Arup’s cost base. Mr Vromans gave a persuasive explanation as to why the costs could not be “accurately determined upfront”.

Mr van Heuzen and Mr Vromans explained to the TJH representatives in the course of the negotiation that a fixed multiplier had been proposed because of the difficulty in ascertaining the actual costs of the separate companies and because of the complex nature of Arup’s accounts.

As the parties’ negotiations progressed they became more focused. For example, the negotiators discussed the matters that were to be taken as included in the multiplier. If TJH had an expectation that PBA had conducted an examination of the nature described in paragraph 85(r) then one would have expected the TJH representatives to inquire of the results of that examination since it had a direct bearing upon the actual costs that TJH would be required to reimburse and the reasonableness of the multipliers. Rather than giving rise to an expectation of the kind alleged (reasonable or otherwise) the course of negotiations between the parties tended to indicate that there had not been such an examination. One of the reasons given by PBA for not agreeing to a wide-ranging Establishment Audit was the difficulty of examining the respective records of Parsons Brinckerhoff and Arup in order to determine a multiplier that would reflect their respective costs.

The commercial model summary attached to Mr van Heuzen’s email of 12 March 2008 indicated that the figure of 2.8 was PBA’s 2007 figure. After describing the commercial framework and that under Element 1, cost recovery was based on an agreed multiplier of 2.8, Mr van Heuzen’s commercial model summary addressed aspects of commercial risk and in respect of fee risk stated that fee risk “is generally contained within the commercial model as follows:

Escalation; pay rate escalation is managed by TJH. The model is based on an agreed multiplier based on actual rates of pay for individuals. The PBA margin is locked in at the 2007 rate; i.e. no net benefit to PBA from escalation.”

This suggests that PBA was using its 2007 figures to calculate costs and profit, rather than having undertaken an 85(r) examination so as to arrive at a multiplier that was ascertained by reference to, amongst other things, the actual cost to PBA of the work that was to take place on the project over the coming years.

I do not consider that the matters relied upon by TJH, when considered in the light of all other relevant circumstances, gave rise to a reasonable expectation of the kind alleged. At best for TJH, the relevant circumstances may have given rise to a reasonable expectation that the multiplier of 2.8 and any other multiplier was PBA’s estimate of a multiplier that, if applied to raw rates (to be determined) would likely yield PBA’s predicted likely costs.

The course of negotiations and the background to them did not give rise to a reasonable expectation that the proposed multipliers were the product of an 85(r) examination. They, along with other commercial aspects, were the subject of negotiation. It was open to TJH to inquire of PBA how the multipliers had been arrived at, including the nature of any examination that had been undertaken to estimate whether the use of the multipliers would yield a figure which was more or less than PBA’s estimated future cost. The evidence is unpersuasive that the circumstances gave rise to a reasonable expectation of the kind alleged by TJH. If anything, the course of negotiations tended to indicate that there had not been such an examination. It is sufficient, however, to conclude that in light of all the relevant circumstances, including those pleaded by TJH in paragraph 85 of its pleading, the conduct of PBA did not give rise to a reasonable expectation that if there had been no examination of the nature described in paragraph 85(r), PBA would disclose that fact to TJH, prior to TJH entering into the CCA.

I accept that the reasonableness of the alleged expectation is to be assessed objectively, and not by reference to the subjective expectation of any individual. However, for completeness I should note that the persons nominated in TJH’s pleading as having had the relevant expectation did not in fact have it. These and other TJH witnesses gave evidence about a number of matters. Whilst, for example, Mr Saxelby of Thiess gave evidence of an expectation of transparency in the negotiation of the CCA, he did not read Schedule 7 or understand at the time the CCA’s basis for payment. He did not give evidence that he expected an 85(r) examination. Mr Doyle of Thiess did not say that he expected an 85(r) examination, or even that PBA would put forward multipliers that could be justified in an audit process. Mr Moran received documents in relation to the negotiation of the commercial framework, but entrusted the negotiations to others. He and others may have expected during the early stages of the negotiations that there would be a pre-contract Establishment Audit, but as negotiations progressed this was not agreed. Even in the early stages of the negotiations when it was expected that there would be an Establishment Audit, neither Mr Moran nor anyone else said that they understood that there had been an 85(r) examination or that there would be such an examination. The same applies in relation to Mr Buckland.

Any general expectation that individuals such as Mr Doyle, Mr Moran and Mr Buckland may have had to the effect that the commercial model would result in PBA being reimbursed its actual costs differs from an expectation that an 85(r) examination had been carried out or would be carried out by PBA, giving rise to an expectation that if no such 85(r) examination had occurred, PBA would disclose this fact.

In fact, as TJH’s submissions acknowledge, the accuracy of the multipliers proposed by PBA was not particularly important to those individuals if Element 1 costs were subject to audit. I conclude that the multipliers, and how they had been arrived at, were not matters of concern to Mr Doyle, Mr Moran and Mr Buckland. If they were concerned about them, their concerns were not apparently expressed in any communications to PBA or to employees of TJH.

I conclude that the TJH negotiators, and those to whom they reported, were content to accept the multipliers advanced by PBA as reasonable and as having been advanced in good faith by PBA in the course of commercial negotiations. The evidence does not support the conclusion that the TJH employees, including those nominated in TJH’s pleading, namely Mr Doyle, Mr Moran and Mr Buckland, expected that PBA had undertaken or would undertake an 85(r) examination, and therefore expected that PBA would inform TJH that there had been no such examination.

Significantly, during the lengthy period of negotiations, TJH did not apparently inquire of PBA to confirm that an 85(r) examination had taken place or inquire about its outcome. This is not because TJH expected that such an examination had taken place and was satisfied that the multipliers advanced by PBA were based upon such an examination. TJH made no inquiry about the outcome of an expected 85(r) examination, not because it had an expectation, let alone a reasonable expectation, that PBA had undertaken an 85(r) examination. Instead, it is likely that TJH was content to agree the multipliers proposed by PBA because it understood them to be figures advanced by PBA in good faith. TJH does not seek to prove that the multipliers were not advanced in good faith, were not reasonable estimates or were not reasonable figures advanced in the context of negotiations which preceded and followed the Pre-Bid Agreement.

At least some TJH employees had no interest in the multipliers and how they had been derived. This may be because they assumed that an Establishment Audit of the kind undertaken in certain Alliance Agreements would precede the signing of the CCA and lead to a negotiation of revised multipliers. They also may have assumed that notwithstanding the terms of the commercial model which included fixed or agreed multipliers, the multipliers did not define PBA’s actual costs for the purposes of Element 1 reimbursement. Whatever their reasons, senior TJH representatives did not appear to be concerned about the multipliers that were specified in the drafts of the CCA and in the summaries of the CCA that were sent to them. I conclude that neither the TJH employees nominated in subparagraph 85(q) of TJH’s defence nor any other relevant TJH employee had the expectation alleged.

In conclusion, TJH has not established that the matters alleged in paragraph 85 of its second further amended defence and counterclaim gave rise, in the light of all the relevant circumstances, to a reasonable expectation that if there had been no 85(r) examination PBA would disclose that fact to TJH prior to TJH entering into the CCA. This conclusion addresses the pleaded factual foundation of TJH’s misleading or deceptive conduct case. It is appropriate, however, to address the additional issues of whether any failure to disclose that there had been no 85(r) examination was deliberate, and the issue of causation.

The circumstances do not support the conclusion that PBA’s representatives appreciated that TJH expected, or that TJH might reasonably expect, PBA to disclose that there had not been an 85(r) examination.

I accept Mr van Heuzen’s evidence that he had never heard of a consultant undertaking such an exercise and he had never been involved in such a specific examination for anything other than an Alliance Contract. I accept that he did not consciously or deliberately refrain from telling any of the TJH representatives that PBA had not undertaken an 85(r) examination.

I accept Mr Vromans’ evidence to the same effect. His evidence is that, when negotiating a contract, he would take steps to estimate the value of the multiplier that he would be happy to accept. However, he has never been involved in, or heard of, a consultant undertaking an 85(r) examination for the purpose of negotiating an agreement with a contractor. For the reasons earlier stated, Mr Vromans explained that the actual costs to be incurred on the APL could not be ascertained by an “auditor-type analysis” based on historical records because this was not a “business as usual project”.

Mr Pattison also gave evidence that he did not consciously or deliberately cause negotiators on behalf of PBA to not tell TJH that an 85(r) examination had not been performed. I accept his evidence, including his evidence regarding conversations about how the 2.8 multiplier was arrived at.

Mr Gregg-Mantle also gave evidence, which I accept, that he did not consider causing the negotiators to either tell or not tell TJH that a project-specific audit on APL had not been conducted. He did not consciously refrain from disclosing the same. His reason was that it did not occur to him to conduct, or to consider conducting, such an examination. He believes it to be a “completely novel concept”. He had never had any experience of such an examination, nor had he heard of such an examination occurring on a consultant’s books anywhere in the industry. Since the concept of such an examination did not occur to him the issue of telling or not telling TJH did not arise.

TJH places reliance upon Mr Gregg-Mantle’s email of 11 December 2007 in which he stated:

“I (sic) hate to find that we’ve got to justify the 2.8 (if we win the job the real number should be going south at a rate of knots)”.

This is submitted by TJH to confirm that the failure to disclose was not inadvertent and to demonstrate that PBA believed that the figure of 2.8 could not be justified. As a result, the failure to disclose that there had been no 85(r) examination to justify the 2.8 multiplier as a measure of actual costs is submitted to have been clearly deliberate, and not inadvertent.

Mr Gregg-Mantle explained that Parsons Brinkerhoff’s multiplier at that time was more than 2.8, and that the totality of its charge out rate was in the 3.3 to 3.4 range. This included corporate overhead and profit (which the CCA set at 20% under limb 2). In reviewing the multiplier of 2.8 he was concerned with the direct costs of staff delivering the project. He rejected the proposition put to him in cross-examination that the 2.8 was “pretty fat”, and said that he thought at the time that the 2.8 was an adequate representation of an applicable “overhead rate for the contract”. He explained that his e-mail reference to the real number going “south at a rate of knots” was that the contract was of such a magnitude that it gave the chance to change the performance of his business over time. It was a project worth hundreds of millions of dollars, and involved substantial growth to the existing business. Mr Gregg-Mantle explained that he hoped to make the business as efficient as possible and to drive down the multiplier over the course of the contract. I accept his evidence.

These matters, at best for TJH, tend to suggest that PBA had sound commercial reasons for attempting to reach agreement on the multipliers in the hope that future efficiencies and changes to its cost base would reduce the multiplier over the course of the project. Of course, such a reduction would not bring into account costs that would be sustained once the project was over, including costs of the kind addressed in Mr Vromans’ evidence. However, Mr Gregg-Mantle’s hope that the multiplier would reduce below 2.8 “at a rate of knots” tends to suggest that PBA negotiated a reasonable arrangement. It does not provide a sufficient basis to conclude that Mr Gregg-Mantle knew that TJH would have expected an 85(r) examination to take place, and deliberately refrained from disclosing that no such examination had occurred. I accept Mr Gregg-Mantle’s evidence that he had never heard of such an examination and therefore did not consciously or deliberately fail to disclose that PBA had not undertaken such an examination.

I conclude that TJH has failed to establish its misleading or deceptive conduct case. Its discretionary defence to PBA’s rectification claim is not made out and its counterclaim for a contravention of s 52 of the Trade Practices Act should be dismissed.

It is strictly unnecessary to address the issue of causation, however, I will do so for completeness.

TJH’s case is that had the fact that no 85(r) examination had occurred been disclosed it would have insisted upon an audit prior to entry into the CCA to establish the proper value of the multiplier. It says that such an audit would have been agreed to and carried out and that TJH would have required, and PBA would have agreed, for the value determined by the audit to be inserted as the value of the Element 1 multiplier for full time staff.

I am not persuaded that this is likely.

PBA representatives were resistant to a pre-contract audit for a variety of reasons. Mr van Heuzen’s evidence is that he would only have recommended an audit if there was a “no blame” regime and if the Element 2 and 3 aspects were reconsidered. Mr Vromans’ evidence was that he could not say what would have happened if TJH had pressed for a pre-contract audit. He did not exclude arriving at such an agreement, but it is likely that other changes to the CCA would have been sought including an adjustment to Elements 2 and 3. His evidence is that if an audit had been requested later in the negotiations he would have regarded it as TJH reneging on the deal and a breach of trust. Mr Gregg-Mantle would have resisted a proposed pre-contract audit.

If the issue of an 85(r) examination had arisen in negotiations and PBA had disclosed that it had not undertaken an 85(r) examination, and did not propose to undertake one, then it is likely that PBA representatives would have explained that such an examination was not conducted by it in projects of this kind and, so far as it knew, was not normally undertaken. PBA would have provided its reasons for not having undertaken such an examination and why it was too complicated and difficult to undertake such an examination. I think it likely that TJH would have accepted its explanation and not sought to renegotiate the multipliers or other commercial aspects of the arrangement. If it had sought to do so, PBA probably would not have agreed to an audit of the kind pleaded by TJH.

If, as seems likely, PBA had resisted a request to introduce an audit, and sought to re-open negotiations on the basis of re-negotiating other aspects of the commercial arrangement, then it is quite likely that TJH would not have pressed the point. It is likely that Mr Vromans and others would have explained the practical difficulties associated with such an audit and the problems of basing any estimate of PBA’s actual costs upon historical records.

I think it likely that PBA would have given some additional explanation in the course of negotiations about the basis for the 2.8 multiplier (and other multipliers) and TJH would have accepted its position.

Parsons Brinckerhoff’s multiplier at the time was certainly more than 2.8 and, as later emerged in discussions of multipliers after CLT‑3, it asserted that its usual multipliers were normally 3.4 to 3.6 for a 37.5 hour week. I think it likely that PBA would have continued negotiations with TJH and TJH would have accepted the multipliers nominated by PBA as being advanced in good faith and reasonable in the circumstances.

I am not persuaded that TJH would have required, and PBA would have agreed, for multipliers to be determined according to an audit. I think it more likely that the negotiations would have continued and reached a commercial outcome, including provision for audits, similar to that which was agreed.

PART D:THE COMPLIANCE AUDIT ISSUE

Clause S7-1.3.1 of the CCA contemplated that within one month of the commencement date of the CCA, the Collaborative Agreement Auditor would conduct investigations (described as “Compliance Audits”) on PBA’s financial records:

“(a)to clarify the basis of reimbursement under Element 1; and

(b)to ensure that the demarcation between items reimbursable under Element 1 and items that are deemed to be covered under Element 2 (and therefore not directly reimbursable) is clear.”

Easdown was engaged by TJH in June 2008 and initially assumed that the task required of it was akin to an Establishment Audit under an Alliance Agreement. The scope of the audit/verification that it was required to undertake was subsequently clarified, particularly in discussions between Mr Easdown and Mr Smogurzewski on 22 July 2008. Mr Easdown and Easdown’s employee, Mr Henderson, gave evidence about the investigations that they undertook. I accept their evidence. Documents were reviewed and Easdown’s representatives spoke to a number of people. Clause S7-3.1.2 of the CCA required the Element 1 multiplier for consultant staff (other than full time) including permanent part time staff and in-house contract staff to be determined by the Collaborative Agreement Auditor. Easdown proceeded to make those determinations and its determinations are recorded in respect of permanent part time staff, in-house contract staff and casual and agency staff at pages 6 and 7 of the Easdown Report.

Easdown was also required to determine the “Raw Rate” for PBA’s staff, contracted staff and sub-consultant staff, and did so. The results of its inquiries and the rates arrived at are set out in the Easdown Report that contained spreadsheets which disclosed Easdown’s determinations of these matters.

TJH pleads that the investigations undertaken by Easdown did not:

clarify the basis of reimbursement under Element 1, as required by cl S7-1.3.1(a) of the CCA;
ensure that the demarcation between items reimbursable under Element 1 and items that are deemed to be covered under Element 2 is clear, as required by cl S7-1.3.1(b) of the CCA;
confirm the “Raw Rate” for each of the four categories of staff, as required by cl S7-3.1.2 of the CCA;
determine the “Hourly rate” for Consultant Staff (other than Full Time) including Permanent Part Time Staff and In-House Contract Staff, as required by cl S7-3.1.2; and
determine the multiplier for Consultant Staff (other than Full Time) including Permanent part Time Staff and In-House Contract Staff, as required by cl S7-3.1.2.

As noted, the CCA provided for the Collaborative Agreement Auditor to “clarify” the basis of reimbursement under Element 1. Another purpose of the Compliance Audits was to “ensure that the demarcation between items reimbursable under Element 1 and items that were deemed to be covered under Element 2 (and therefore not directly reimbursable)” was clear. I am satisfied that Easdown undertook these tasks. In doing so it was aided by the provisions of Schedule 7 of the CCA, including cl S7-3.1.3 and cl S7-3.1.4 which specified certain items that were not included in the Raw Rate and items that were included in the Element 1 staff rates, along with a table in cl S7-4.1.1 which summarised what was reimbursable under Element 1. The Easdown Report confirmed that Easdown representatives had discussed reimbursable costs with Arup and Parsons Brinckerhoff, and identified within the report the likely costs to be incurred on the project and whether those costs were reimbursable or non-reimbursable.

Incidentally, cl S7-1.1.4 required the parties to the CCA to develop procedures and systems to implement the intent of the terms of compensation and which met the requirements of the Collaborative Agreement Auditor so as to ensure that costs are allocated to separate cost codes as necessary, so that the intent of Schedule 7 could be implemented and validated by the Collaborative Agreement Auditor. There is no basis to conclude that such procedures were not developed.

As to TJH’s first two contentions, I am satisfied that Easdown undertook the tasks of clarification and demarcation referred to in cl S7-1.3.1. It was not necessary for Easdown to set out in the Easdown Report full details of the investigations undertaken, including discussions that it had with individuals about the basis of reimbursement under Element 1 and the demarcation of items that were reimbursable under Element 1 from items that were not reimbursable under that element. Still, the reimbursement of costs was addressed at some length at pp 10-16 of the Easdown Report. This included a list of items that were deemed to be included within the Element 1 multiplier and tables of reimbursable expenses and non-billable expenses.

The Easdown Report, and the evidence given in relation to the steps taken by Easdown also establish that, contrary to TJH’s submissions, Easdown confirmed the “Raw Rate” for each category of staff, determined the hourly rate for consultant staff (other than full time) and determined multipliers for such staff.

It is apparent that Easdown did not conduct an Establishment Audit of the kind that might be conducted under an Alliance Agreement. However, it was not required to do so. Easdown conducted Compliance Audits of the kind described in cl S7-1.3.1 of the CCA and the Easdown Report addressed the reimbursement of costs. It constituted a Compliance Audit Report of the kind contemplated by cl S7-4.1.1. Whether or not the investigations undertaken by Easdown were Compliance Audits is not determined by comparing what Easdown did with what it might have done if required to undertake an Establishment Audit with a view to determining appropriate multipliers for each category of staff costs or, more generally, investigate what PBA’s actual costs were expected to be. The Compliance Audit Issue is determined by reference to what is stated in the CCA, and the instructions given by TJH to Easdown in relation to the scope of investigations that were required of it in undertaking Compliance Audits.

TJH’s submissions proceed on the basis that Easdown was required to investigate and interrogate Parsons Brinckerhoff’s and Arup’s financial records so as to ensure that Element 1 costs were reimbursed “at actual cost”. However, this is not what Schedule 7 provided and Mr Smogurzewski explained to Mr Easdown that the CCA was different to an Alliance Agreement. He was specifically instructed to the effect that Easdown was not to verify the multipliers specified in the CCA, as they had already been agreed by the parties.

The opinions of Mr Walsh, who gave expert evidence on behalf of TJH, were based on the assumption that “the product of the raw rate and the multiplier is to provide the Consultant with reimbursement of their actual costs (save for those directly reimbursable outside the staff rates).”

Mr Walsh assumed that the agreement should be interpreted in a certain manner, and that this affected the task of the auditor in performing Compliance Audits and in arriving at a raw rate that would result in the reimbursement of actual costs. Mr Walsh’s approach to what was required in performing Compliance Audits generally reflects TJH’s preferred interpretation of the CCA and generally likens the task of the auditor under the CCA to the task of undertaking an Establishment Audit under an Alliance Agreement. I do not favour such a view.

In addition, it is not consistent with Mr Smogurzewski’s understanding of the agreement and the consequent scope of the Compliance Audits to be carried out by Easdown. His understanding was conveyed to Mr Easdown. Ms Ross had a similar understanding. In short, they understood that the multipliers, save for the multiplier for consultant staff (other than full time) which was to be determined by the auditor, had been agreed and were not subject to audit.

In July 2008 Mr Easdown was given to understand (correctly in my view) that the multipliers specified in cl S7-3 were not provisional and subject to audit, and that it was not part of the Collaborative Agreement Auditor’s role to audit or verify those multipliers so as to permit a conclusion as to whether they were too high or too low to reflect PBA’s “actual cost”. Mr Easdown was specifically told that he was not to verify those multipliers as they had already been agreed.

I have earlier stated that I accept Mr Easdown’s evidence about what he was told by Mr Smogurzewski in this regard on 22 July 2008. Mr Easdown and Mr Henderson were cross-examined about their respective recollections and the suggestion was made by TJH that Mr Easdown did not have a genuine or reliable recollection of what was said to him by Mr Smogurzewski, and that his recollection had been prompted by Mr Henderson’s recollection (which was based on hearsay). I do not accept this. The fact that Mr Easdown might have told Mr Manly in September 2009 that he could not recall why he did not audit the multiplier does not mean that on careful reflection for the purpose of giving evidence about this topic and after reference to contemporaneous documents, he was unable to recall matters. Mr Easdown made himself available to speak to the lawyers for each party in these proceedings and did so. He and Mr Henderson were separately interviewed by PBA’s lawyers in relation to their respective recollections. There is no evidence that they gave inconsistent versions of events to TJH’s lawyers. The fact that Mr Easdown could not remember all of the people that were spoken to during the course of the Compliance Audits does not mean that he does not recall speaking to Mr Smogurzewski on a matter of importance on the first day that the audit began in earnest. I conclude that he did. That TJH did not call Mr Smogurzewski to give evidence to the contrary suggests that Mr Smogurzewski’s evidence on this point would not have assisted TJH’s case that such a conversation did not occur between Mr Easdown and Mr Smogurzewski.

The contents of the Easdown Report are consistent with Easdown having been told that it was not to verify the multipliers specified in the CCA as they had already been agreed. Page 5 of the Easdown Report stated that, in accordance with its instructions, the review had been limited to certain identified procedures. Notably, the procedures did not include an audit or verification of multipliers. It relevantly stated that Easdown had been required to determine multipliers for consultant staff (other than full time), to confirm that multipliers noted on a staff schedule of rates were appropriate for the classification of staff and to identify costs “included in/excluded from multipliers”. Page 13 stated in the context of overtime:

“We understand that the 2.8 multiplier has been agreed to apply for this Project.”

In short, the Easdown Report indicates that Easdown was not required to audit or verify multipliers that had already been agreed. It was still required to investigate, and in that sense audit or verify, what items were comprised within the agreed multiplier. This was necessary in order to clarify the basis of reimbursement under Element 1 and to ensure that there was no double-compensation for certain on-costs or overheads.

Easdown was required to determine the multiplier for consultant staff (other than full time) and did so using the 2.8 multiplier for full time staff as a benchmark. Mr Easdown and Mr Henderson made adjustments to it as they thought appropriate rather than attempt to build up a multiplier for those staff. That Easdown used this approach is apparent from the Easdown Report. At no time did anyone suggest that they were unhappy with this approach or had expected or wanted Easdown to construct a multiplier for these categories “from scratch” by reviewing relevant financial statements.

Mr Walsh’s opinion is that it is not possible for an auditor to determine the appropriate multiplier for consultant staff (other than full time) by reference to another multiplier and without access to information detailing how that multiplier has been built up and validated in respect of that other category. I respect Mr Walsh’s opinion, but do not consider that it was outside the terms of Easdown’s engagement to adopt the approach which it did, namely use the 2.8 multiplier for full time staff as a benchmark and make adjustments to it. Mr Easdown and Mr Henderson had an appreciation of the items that were included in or not included within the agreed 2.8 multiplier. The determination or determinations that they made in respect of consultant staff (other than full time) were determinations that were open to be made on the approach taken by them. The Easdown Report’s determination of an Element 1 multiplier for consultant staff (other than full time) was a determination made by Easdown within the meaning of the CCA and it does not cease to be such a determination because, in Mr Walsh’s opinion, a different approach could and should have been taken.

In summary, TJH has not made out the propositions advanced by it. I find that the investigations undertaken by Easdown did in fact clarify the basis of reimbursement, ensure a demarcation between items that were reimbursable under Element 1 and items that were not, confirmed Raw Rates for each of the four categories of staff, as required by cl S7-3.1.2, and determined the multiplier for and the hourly rate for consultant staff (other than full time).

The substance of what Easdown did is reported in the Easdown Report. None of the recipients of the Easdown Report, including a number of TJH employees, said at the time that Easdown had failed to conduct the required Compliance Audits and that it was not a Compliance Audit Report for the purposes of cl S7-4.1.1. That clause provided that if there was any misalignment between the table in that clause governing reimbursement of costs and the Compliance Audit Report, the Compliance Audit Report would take precedence. The Easdown Report was treated by TJH and PBA as having reported the results of the Compliance Audits.

PBA has established an entitlement to a declaration which resolves the Compliance Audit Issue. It seeks in paragraph 78(c) of its pleading a declaration that the Easdown investigations referred to in paragraph 7 of its pleading constitute a Compliance Audit for the purposes of cl S7-1.3.1 and cl S7-3.1.2 of Schedule 7 of the CCA. I will hear the parties in relation to the form of declaration. It may be necessary to address a minor issue of form since the former clause refers to “Compliance Audits” and the latter refers to the “Compliance Audit”. The substance of the matter in issue is that the investigations conducted by Easdown were Compliance Audits within the meaning of cl S7-1.3.1 and constituted the Compliance Audit referred to in cl S7-3.1.2.

PBA also seeks a declaration that the CCA does not entitle BDO, as the Collaborative Agreement Auditor, to now carry out a new Compliance Audit. TJH does not seek an order that BDO is now entitled to complete the Compliance Audits and submits that the declaration should not be made. It notes, however, that some of the things that BDO is to do in discharging its overriding brief will be enlarged in scope by the failure of Easdown to carry out all of the work comprised in the Compliance Audits. I consider that there is utility in making a declaration that the CCA does not entitle BDO, as the Collaborative Agreement Auditor, to now carry out a Compliance Audit within the meaning of cl S7-3.1.2, or Compliance Audits within the meaning of cl S7-1.3.1. Such a declaration is appropriate to resolve the Compliance Audit Issue and it will assist in the resolution of the Access to Records Dispute.

Estoppel in respect of the Compliance Audit Issue

My conclusion that Easdown conducted Compliance Audits for the purposes of cl S7-1.3.1 and a Compliance Audit for the purposes of cl S7-3.1.2 makes it unnecessary to resolve PBA’s alternative claim that TJH is estopped from denying these things. However, I shall briefly state my findings in relation to these matters.

The principles governing an estoppel of the kind pleaded by PBA are not in issue.^[50] In simple terms, the principle is that the law should not permit an unjust departure by a party from an assumption of fact which it has caused another party to adopt or accept for the purpose of their legal relations. PBA, in asserting an estoppel by representation, must show that it acted or refrained from acting upon an assumption about a state of affairs, that this assumption was induced by TJH’s representation and that it will suffer detriment if TJH is allowed to resile from its representation by setting up rights which are inconsistent with the assumption.

PBA relies upon the following facts:

The Easdown Report was received by TJH in late July 2008 or early August 2008;
It was actively considered by TJH during this period and in advance of the CLT-3 meeting on 26 August 2008;
The evidence of Mr Moran and Mr Baron that, as a result of reading the Easdown Report, they were aware that Easdown had not audited the multipliers specified in cl S7-3.1.2;
That nothing was said or done by TJH in this regard, and nothing else was said by TJH to the effect that Easdown had not conducted a Compliance Audit/Compliance Audits, as required by the CCA;
The Easdown Report clearly stated the extent of the investigations undertaken by Easdown;
The Easdown Report was discussed at CLT-3;
No complaint was made about it then or thereafter;
PBA’s representatives agreed at CLT-3 to vary the multiplier regime applying to overtime;
At no time until 9 August 2011 did TJH assert that the Easdown investigations underlying the Easdown Report did not constitute the Compliance Audit/Compliance Audits for the purposes of Schedule 7.

PBA submits that TJH’s silence during this period of years amounts to a representation to PBA that it viewed the Easdown investigations as Compliance Audits and the Easdown Report as the Compliance Audit Report for the purposes of Schedule 7. It submits that it was incumbent on TJH to advise PBA shortly after TJH received the Easdown Report and, at the latest, prior to CLT-3 on 26 August 2008 when the Easdown Report was considered that it took the view that Easdown had not complied with the requirements of Schedule 7 of the CCA.

PBA contends that it relied upon TJH’s representation and that it will suffer detriment if TJH is allowed to resile from the representation. It submits that it would have conducted itself differently and, amongst other things, if it had understood that TJH did not regard Easdown as having completed the Compliance Audit, its representatives at CLT-3 would not have agreed at that meeting to vary the multiplier regime applying to overtime. It also submits that it has incurred costs in preparing progress claims and wasted costs in preparing claims based upon the principles determined by the Compliance Audit, and will be exposed to incurring further costs in adjusting past payment claims and making new payment claims based upon principles which (according to TJH) have yet to be determined by the Collaborative Agreement Auditor in the course of the required Compliance Audit. In short, PBA submits that, the parties having accepted the Easdown Report as setting out the rules, it will be disadvantaged if it is now forced to re-bill for its work over a four year period on the basis of new, and as yet unspecified, rules.

In response, TJH submits that PBA’s pleading relates to whether the Easdown investigations constituted the “Compliance Audit” for the purposes of the relevant clauses whereas cl S7-1.3.1 in referring to investigations defines them as “Compliance Audits”. PBA’s pleading, including the declarations sought in respect of cl S7-1.3.1 in paragraphs 78(c) and (d), is said to not correspond with the terms of the relevant clause. TJH submits that it does not contend that the Easdown investigations were not a “Compliance Audit”, merely that Easdown did not do all the things that would be comprised in Compliance Audits.

I regard TJH’s submissions on this aspect as referrable to the form of any declaration, not the substance of the Compliance Audit Issue, as litigated. The case, as conducted, related to the investigations undertaken by Easdown and whether, because of the scope of those investigations and the contents of the Easdown Report, Easdown had failed to undertake the investigations required by cl S7-1.3.1 and had not conducted the Compliance Audit referred to in cl S7-3.1.2. This was the substance of the matter in dispute and is also the matter of substance in relation to PBA’s alternative claim based on estoppel.

In response to PBA’s estoppel argument TJH relies on the fact that during the relevant period in August 2008 and thereafter there were more pressing matters, such as the mobilisation of a large workforce and the delivery of design packages for approval for construction, and that, in the circumstances, the Court should not accept PBA’s submission that it was incumbent on TJH to advise PBA if it took the view that the auditor had not complied with the requirements of Schedule 7. It also relies upon the changes in personnel including the departure of Mr Moran and the replacement of Mr Smogurzewski as the CAM. It will be necessary to refer later to evidence in relation to TJH’s review of payment claims relevant to an estoppel argument relating to the overtime issue. The present issue is whether it was incumbent on TJH to advise in or around August 2008 that it did not consider that Easdown had conducted the investigations required by the CCA and that the Easdown Report was not a Compliance Audit Report. I consider that it was incumbent upon TJH to do so. As busy as both parties were in August 2008, they both considered the Easdown Report and used it as the basis for their discussions at CLT-3. The Easdown Report stated in clear terms the extent of the investigations undertaken by Easdown and made clear that the multiplier of 2.8 had not been audited because it had been agreed. TJH was aware in August 2008 and prior to CLT-3 that Easdown had not audited the multipliers specified in cl S7-3.1.2. By not raising this matter, or any other matter in relation to the adequacy of the Easdown investigations and whether the Easdown Report should be treated as the Compliance Audit Report for the purposes of Schedule 7, TJH induced PBA to assume that TJH regarded the same as Compliance Audits and treated the Easdown Report as the Compliance Audit Report.

PBA acted on the basis of this assumption. PBA would suffer a detriment if TJH was now allowed to assert that the Easdown investigations did not constitute the Compliance Audits referred to in cl S7-1.3.1 and there had been no Compliance Audit for the purpose of cl S7-1.3.2.

I accept PBA’s submission that if it had understood that TJH did not regard Easdown as having completed the Compliance Audit its representatives at CLT-3 would not have agreed to vary the multiplier regime. I accept the evidence of Mr Vromans and Mr Pattison that they would have refused to do so on the basis that PBA could not assess any proposed change to the remuneration principles until the clarification of the original framework was complete. Until that was done, PBA would have continued to charge a multiplier of 2.8 on all overtime hours for full time staff.

PBA acted on the basis that the Easdown Report set the ground rules for payment. If it had understood that TJH did not accept the Easdown Report as having done so, PBA would have sought resolution of the issue and the determination of the relevant principles. It would have organised its affairs accordingly, and made payment claims on the basis of those principles, not on the basis of the principles established by the Easdown Report. If TJH was permitted to now assert that there had not been a Compliance Audit for the purposes of cl S7-3.1.2 and that the Compliance Audits had yet to be completed, it would be necessary for a new Compliance Audit to be undertaken for the purpose of determining PBA’s entitlement to remuneration. Although TJH does not seek an order that BDO complete the Compliance Audits, its contention that the Compliance Audits have not been undertaken and that Easdown did not undertake a Compliance Audit for the purposes of cl S7-3.1.2, if accepted, would require these matters to be attended to by BDO or some other Collaborative Agreement Auditor. Their task would be an enormous one and it was the complexity of such a task that was one of the reasons that certain issues of loss and damage were not tried in May 2012. The Collaborative Agreement Auditor would confront the issue of whether it was required to conduct investigations and reach determinations in respect of Raw Rates and multipliers based upon information as it stood in August 2008 or determine these matters on the basis of what PBA’s actual costs have been over the last four years.

The costs and consequences to PBA of having new ground rules for remuneration fixed on the basis of a new Compliance Audit constitute a real and material detriment in addition to the detriment of having agreed to vary the multiplier regime applying to overtime.

The fact that the CCA provides for PBA to recover its costs of undertaking the project work does not persuade me that PBA will not suffer a detriment if TJH is permitted to deny that the Easdown investigations constituted Compliance Audits and a Compliance Audit for the purpose of cl S7-3.1.2, and that the Easdown Report constituted a Compliance Audit Report which set the ground rules for reimbursement of costs.

I conclude that the parties conducted themselves in mid-2008, at CLT-3 in particular, and for some years thereafter on the basis that Easdown had conducted Compliance Audits for the purpose of cl S7-1.3.1 and a Compliance Audit for the purpose of cl S7-3.1.2. The parties treated the Easdown Report as a Compliance Audit Report. PBA negotiated a variation of the multiplier regime in relation to overtime on this assumption. It would suffer substantial detriment if TJH was allowed to depart from the assumed state of affairs. Accordingly, if it had been necessary to decide the issue, I would have found that TJH is estopped from denying that the Easdown investigations constituted Compliance Audits for the purposes of cl S7-1.3.1 and a Compliance Audit for the purposes of cl S7-3.1.2 of Schedule 7 of the CCA, and is estopped from denying that the Easdown Report constituted a Compliance Audit Report for the purposes of Schedule 7 of the CCA.

PART E:THE OVERTIME ISSUE

The CLT-3 meeting on 26 August 2008 considered the issue of overtime and what the Easdown Report had said in relation to the agreed multiplier in that regard. PBA alleges that the meeting decided that:

(a)the multiplier should be 1.1 for all overtime hours; and

(b)overtime hours comprised hours worked in excess of 45 hours per week.

TJH denies the second element. Its case is that the CLT decided to amend the principles of reimbursement so that the multiplier for all overtime hours was 1.1 and that this decision occurred in the context of the Easdown Report which referred to overtime as time worked in excess of 37.5 hours.

The overtime issue is whether the CLT agreed that the reduced overtime rate of 1.1 would apply after 37.5 hours or after 45 hours. Of course, the possibility exists that neither party is correct in their contentions and that there was no agreement in fact reached on the issue. The overtime issue relates to what was agreed at the CLT-3 meeting, not what was agreed afterwards in communications between employees of TJH and PBA.

The five representatives of the CLT who were present at the meeting and who had authority to reach unanimous agreement to amend the principles of reimbursement were Mr Vromans and Mr Pattison for PBA, and Mr Moran, Mr Buckland and Mr Baron for TJH. The meeting was also attended by Mr Smogurzewski in his capacity as the CAM, Dr Kerryn Hurd (a guest facilitator) and Ms Carolyn Spencer, who worked with Mr Smogurzewski and took the minutes of the meeting.

The Easdown Report of 25 July 2008 had stated the following in respect of overtime in a section of the report relating to reimbursement of costs:

“It has been agreed that overtime is time worked in excess of 37.5 hours per week and will be paid at single rates to employees.

When claiming for overtime the following rules have been developed and agreed:

Overtime from 37.5 to 45 hours per week is to be approved by the Area Manager.

Overtime in excess of 45 hours per week is to be approved by the Project Director.

All overtime for permanent staff is to be claimed with a multiplier of 2.8

Oncosts for overtime are normally only Payroll Tax and Workers Compensation. Therefore the 2.8 multiplier is overstated as overtime would normally only bear a multiplier of approximately 1.05 in this case. We understand that the 2.8 multiplier has been agreed to apply for this Project.”

On 25 August 2008, the day before CLT-3, a CMT meeting took place. Mr Smogurzewski, Mr van Heuzen and Mr Connors (PBA’s Commercial Manager with respect to the APL) discussed the multiplier to be applied to overtime hours. Mr van Heuzen said words to the effect that PBA had negotiated the CCA on the basis that the multiplier of 2.8 would apply to all hours. There was a discussion to the effect that the issue of whether a lower multiplier should apply to hours in excess of 45 hours per week was an issue that had to be decided at the CLT, and was not an issue that could be decided by the CMT.

The agenda for CLT-3 included numerous matters and amongst the matters requiring decision were certain items arising from the Easdown Report, including the multiplier for overtime hours. It is apparent from the Easdown Report that Easdown understood that the parties had agreed that a multiplier of 2.8 was to apply for the hours worked by PBA’s full time staff (including overtime) and raised for the consideration of the parties that a different rate should apply to overtime.

The CLT meeting on 26 August 2008 addressed many matters. Mr Moran recalls that an item “overrun on the cost estimate” was a large focus of the meeting. He was concerned with the costs that had been incurred to date against the design work that had been expected to be produced to meet the requirements of the construction schedule. At some stage, Mr Smogurzewski raised the items arising from the Easdown Report, and said words to the effect that an issue had arisen in relation to the multiplier that should apply for overtime worked by PBA. Recollections of what was said on this point and the basis upon which the parties’ discussion concluded differ. Given the different recollections and the significant financial implications of the overtime issue it is necessary to refer in some detail to the evidence that bears upon what was said and agreed at the meeting. The evidence includes the contents of witness statements and oral evidence.

Mr Vromans says that the discussion on overtime began with Mr Moran referring to the part of the Easdown Report that commented on the multiplier applying to overtime, and that Mr Moran said words to the effect that PBA were “ripping him off” by charging a 2.8 multiplier on overtime hours in circumstances where PBA would have already covered their costs. According to Mr Vromans, the PBA representatives responded by saying words to the effect that:

(a)PBA had given TJH an agreed number of hours and it was up to TJH how they spent those hours. If TJH chose to spend them in a shorter amount of time, this would require more overtime;

(b)however, PBA understood TJH’s concern as business costs are usually recovered against normal project working hours.

Discussion then followed about “business as usual” operations for Parsons Brinckerhoff and Arup. It was explained that while junior staff could generally claim overtime, senior staff were subject to more complex arrangements which could vary between projects, depending on the job. Mr Pattison or Mr Vromans also said that while the Easdown Report had suggested a multiplier of 1.05 for overtime, PBA thought that 1.05 was too low to allow for the on-costs associated with overtime and that 1.1 should apply. Mr Vromans recalls that Mr Pattison then said words to the effect that PBA was willing to reduce the multiplier from 2.8 to 1.1 on overtime for junior staff, and would not charge for time in excess of 45 hours for senior staff. At the end of the discussion, Mr Moran said words to the effect of: “So, we’re agreed overtime will be charged at 1.1”. In response Mr Pattison said words to the effect that: “Yes, we’re agreed but the 1.1 is for hours worked above 45 hours”.

Mr Vromans took contemporaneous notes of the meeting. The relevant section of his notes reads:

“7.Audit Report

Multiplier for O/T hours

O/T Factor Agreed

Propose 1.1 – above 45 hrs

No bill O/T grades 8 & 9”.

Mr Vromans was not cross-examined about the question mark that appears in his notes, and to what it relates.

Under cross-examination Mr Vromans confirmed that Mr Pattison had said words to the effect, “Yes we’re agreed, but the 1.1 is for hours worked above 45 hours”, and that Mr Moran nodded. Following this, everyone went quiet and they then moved on to the next item on the agenda. Although Mr Moran did not say that he agreed with what Mr Pattison proposed, Mr Vromans said that “he sort of did a double-take and moved on which I read as agreement.” He explained that in the context of a long discussion where the parties were trying to reach an agreement, the PBA representatives read Mr Moran’s conduct as signalling agreement and that it would have been beholden on Mr Moran to say that he did not agree.

Mr Vromans’ oral evidence on this issue impressed me as being a reliable account of what was said and done at the meeting.

After the meeting there was an email exchange in which Mr van Heuzen sought clarification about what had been agreed at the meeting. When he was told what had been agreed, Mr van Heuzen thought that Mr Vromans and Mr Pattison had “given away the farm” (to use his words). At about 2.53 pm on 28 August 2008 Mr van Heuzen emailed Mr Pattison (with copies to Mr Vromans and Mr Connors). His email commenced:

“Roger,

As per our discussion last night, there is some confusion regarding the decisions made by the CLT in relation to the financial model within the CCA.”

Mr van Heuzen then set out what he understood the CLT had agreed and sought confirmation that his understanding was correct. Mr Pattison replied that the first two points were correct. The other point related to an issue about car park fringe benefits tax of no present relevance. The two points that Mr Pattison confirmed as being correct were:

“•Senior staff will be capped at 45 hours; as per PBA JV decision of last meeting. This includes Arup associate level staff and above, and for PB, those staff to be included in the Executive scheme. This will also apply to Adrian Jones of Halcrow.

•Overtime (> 45 hours) for remaining staff is to be billed to TJH at a reduced multiplier of 1.1. This revised bill rate is to be backdated to the commencement of detail design work.”

Mr Pattison advised Mr van Heuzen and Mr Vromans that he had drafted an email to Mr Smogurzewski. He later sent them a draft, and they did not disagree with its contents.

Mr Pattison then sent his email to Mr Smogurzewski at 5.25 pm on 28 August 2008. It is convenient to refer to this email as “the Pattison email”. The Pattison email stated:

“Jo, following up on the phone call yesterday to clarify the CLT agreement on overtime hours the agreement is:

All staff charge 45 hours at 2.8 multiplier (this is how we built up our fee). Note for a 37.5 hour week our multiplier is normally 3.4 to 3.6.

Senior staff (e.g. Associates and Executives; i.e. those on bonus schemes or similar) will not charge hours above 45 hours per week.

Other staff will only charge above 45 hours a week if approved by the PD at a multiplier of 1.1.”

Mr Vromans attended CLT-4 at which the minutes of CLT-3 were tabled and accepted. Mr Vromans’ evidence is that it did not occur to him to ask for a more detailed description in the minutes of CLT-3 of the agreement reached about overtime. At the time he was not aware that there was any difference of view between the parties as to what had been agreed at CLT-3, and he thought it was common ground that the reference to “overtime” in the minutes was a reference to hours in excess of 45 hours per week.

Mr Pattison’s recollection of the conversation about overtime at CLT-3 was that Mr Moran raised the issue and said words to the effect of: “You’ve recovered your cost in normal hours”. There was then a discussion in which the PBA representatives explained that salaried staff were generally able to claim overtime, while more senior staff (called “Associates” at Arup and “Executives” at Parsons Brinckerhoff) may be on a package that provided for performance bonuses and did not allow them to claim overtime. Either Mr Vromans or Mr Pattison said words to the effect that PBA would agree not to charge TJH for senior staff hours in excess of 45 hours per week. Mr Moran then summarised the discussion saying words to the effect that people who get paid overtime would be paid overtime and people who were recognised through other means such as a bonus would not be paid overtime.

Mr Pattison then recalled saying words to the effect that while the Easdown Report had mentioned 1.05 as a multiplier on overtime, that was too low and it should be 1.1. He said that PBA would agree to apply a multiplier of 1.1 for overtime but the multiplier would remain 2.8 for the first 45 hours per week. He says that Mr Moran said that he agreed and that none of the other representatives said that they disagreed. This evidence in the form of a witness statement was the subject of cross-examination, and under cross-examination Mr Pattison appeared to have a reasonably good recollection of the relevant exchange. Mr Pattison accepted that at one stage Mr Moran had said words to the effect that in relation to people who were not senior staff or executives that compensation should be at the rate of 1.1, not 2.8. Mr Pattison said that he did not agree with that, but agreed with 1.1 provided it started at 45 hours and that 2.8 remained up to the 45 hours.

Mr Pattison accepted that there was some confusion about what was agreed at the meeting, and after the meeting he was contacted by Mr Smogurzewski, who suggested that there was some confusion about the agreement. Mr van Heuzen, who had to work out what had been agreed at a meeting that he did not attend, also sought clarification of the decision. By that stage, Mr Pattison had already undertaken to prepare an email for Mr Smogurzewski.

I accept that in speaking to Mr Smogurzewski shortly after CLT-3 and in communicating with Mr van Heuzen and Mr Smogurzewski by email on 28 August 2008, Mr Pattison recorded his recollection of what had been agreed at CLT-3. I reject the suggestion that Mr Pattison or anyone else on behalf of PBA sought to fabricate a basis for a decision advantageous to PBA. The “Pattison email” of 28 August 2008 was Mr Pattison’s genuine recollection of the agreement and was drafted and sent by him so as to record his understanding of what was agreed. It was also important for Mr van Heuzen and other persons involved in the management of the project to be told in writing what had been agreed. Mr Pattison sent his email to Mr Smogurzewski because Mr Smogurzewski had asked for the same in order to clarify what had been decided at CLT-3.

Mr Pattison attended CLT-4 and the minutes for CLT-3 that were tabled at that meeting read in part:

“The CLT agreed that the multiplier should be 1.1 for all overtime hours”.

Mr Pattison said that it did not occur to him to seek a more detailed description of the decision, since the decision to the effect that the 1.1 multiplier was to apply for all staff hours in excess of 45 hours per week had already been clarified in his email to Mr Smogurzewski, and he had not received any response from TJH that indicated they disagreed with his understanding of the agreement. Accordingly, he thought that all parties were “on the same page” as to what had been agreed at CLT-3. He did not think that the minutes for CLT-3 were wrong, but did not consider them in any great detail because of the prior communications. Mr Pattison accepted under cross-examination that the minutes were inconsistent with his email to Mr Smogurzewski.

Mr Smogurzewski was not called as a witness by either party. It is necessary to explain in the present context the role that he played, particularly in connection with the Pattison email.

On 1 September 2008 Mr Smogurzewski forwarded the Pattison email to Mr van Heuzen and to Mr Connors of PBA. The email was forwarded without any comment but followed a request by Mr van Heuzen for a record of what had been decided at CLT-3 in relation to overtime. On 2 September 2008 Mr Smogurzewski also forwarded the email to Ms Spencer, stating, “Keep this email for us to refer to in the CLT minutes preparation”. There is no evidence about the extent to which Mr Smogurzewski or Ms Spencer used the Pattison email in preparing the minutes of CLT-3. Just as TJH seeks to rely upon the minutes as supportive of its case, PBA relies upon the Pattison email and Mr Smogurzewski’s conduct in relation to it as supportive of its case. It relies upon Mr Smogurzewski’s response to the Pattison email, both in forwarding it to Mr van Heuzen and Mr Connors, and in sending it to Ms Spencer for the purposes of the preparation of minutes, as indicating that he accepted the Pattison email as correctly recording what had been agreed. PBA’s case is that if Mr Smogurzewski had disagreed with the accuracy of the Pattison email as recording what had been agreed at CLT-3, or was in real doubt on that topic, then he would have acted differently, for example, by responding to Mr Pattison, by seeking further clarification from Mr Moran, Mr Buckland and Mr Baron and by not sending it to Mr van Heuzen, Mr Connors and Ms Spencer.

Of course, Mr Smogurzewski was not a member of the CLT. He attended its meetings and took direction from it. He was not authorised to act on behalf of the CLT. Any consensus that arose between Mr Pattison and Mr Smogurzewski, or between Mr Smogurzewski and Mr van Heuzen as a result of their communications on or about 28 August and 1 September 2008 does not amount to an agreement reached by the CLT. The present relevance of the Pattison email is that Mr Smogurzewski, who was present at CLT-3, appears to have treated it as an accurate record of what was agreed at the meeting.

The Pattison email was not sent by Mr Pattison to Mr Moran, Mr Buckland or Mr Baron, who were the TJH members of the CLT. This is because it was sent to Mr Smogurzewski, at his request. PBA does not allege that the Pattison email was sent to or received by Mr Moran, Mr Buckland or Mr Baron. I turn to their evidence of what was said at the meeting.

Mr Moran’s witness statement recalled that at CLT-3 Mr Smogurzewski introduced the issue of the multiplier that should apply for overtime worked by PBA. Mr Moran says that he did not lead the discussion on the point. His recollection was that the discussion that occurred was about whether the multiplier should be 1.05 or 1.1. He did not recall there being any discussion in relation to overtime only applying after 45 hours per week, and did not recall any agreement being reached that overtime should only apply to hours worked beyond 45 hours per week. He recalled a separate discussion to the effect that PBA senior staff would not charge at all for any hours worked beyond 45 hours per week.

Mr Moran’s oral evidence, both in his evidence-in-chief about what was said at CLT-3 and in cross-examination upon that topic, gave me the clear impression that he had a poor recollection about what was said at the meeting. He did not apparently recall, as other witnesses did, that after Mr Smogurzewski introduced the agenda item Mr Moran took up the topic. I accept the evidence of other witnesses that Mr Moran accused PBA of ripping him off and spoke in a very determined and animated way at the beginning of the discussion. In his evidence-in-chief Mr Moran could only really recall the discussion that led to an agreement to make the multiplier for overtime 1.1, and could not recall whether anything else was discussed. Under cross-examination it was apparent that he had no recollection of the discussion that occurred about senior people at PBA and their bonus arrangements. He did not believe that Mr Pattison said that overtime would apply from 45 hours, and did not recall him saying that.

Mr Moran’s evidence does not persuade me that Mr Pattison did not say the things that he and Mr Vromans recalled being said about the multiplier of 1.1 applying after 45 hours. This is not to be critical of Mr Moran or the manner in which he gave his evidence. He did his best to honestly recall what was said. But his recollection was not as good as the witnesses whose evidence I have already discussed. Although all of the relevant witnesses were extremely busy individuals at this time, Mr Moran’s workload was enormous and, so far as he was concerned, the overtime issue was not a major focus of attention for CLT-3. It is possible that he did not hear the words that Mr Pattison finally said on the topic of overtime or, having heard them, did not attribute any great significance to them. The difference between a multiplier applying at 37.5 hours and 45 hours is significant, but it may not have been such an important matter to Mr Moran at the time, and he may have been content to conclude the discussion on the basis that the multiplier of 1.1 would apply after 45 hours. As he stated in his evidence, it was expected that some people were going to work 50 or 55 hours. A resolution of the kind for which PBA contends may have seemed a reasonable one in the circumstances. In this regard, it is to be recalled that Mr van Heuzen, after he was told about Mr Pattison and Mr Vromans agreeing that a multiplier of 1.1 would apply after 45 hours thought that they had “given away the farm”.

Mr Buckland addressed what happened at CLT-3 in a witness statement, and after I excluded a particular paragraph on the grounds that it was conclusionary he gave some oral evidence-in-chief. To the extent that his witness statement and his evidence-in-chief conflict, I prefer his oral evidence. He recalled Mr Moran initiating the discussion, and Mr Vromans and Mr Pattison responding, with Mr Pattison being the main person speaking on behalf of PBA. He recalled discussion about the fact that the project was not a normal situation. After discussion, Mr Moran responded, and Mr Buckland could not remember exactly what he said. He recalled that Mr Pattison said that 1.05 was not an appropriate figure and that without much more discussion there was agreement that the figure would be 1.1. He could not precisely remember Mr Moran agreeing to the 1.1. He could remember Mr Pattison saying that they would invoice at 1.1 and that for senior people they would not charge over 45 hours in a week. He could not recall anything else being said before the meeting progressed to the next item. Mr Buckland acknowledged under cross-examination that he was unable to recall any specific conversation at CLT-3, but could remember some things because he recalled Mr Moran being very determined at the beginning of the meeting and he could remember some other statements by various people. Mr Buckland’s inability to recall the detail of what was said in relation to the 1.1 multiplier and the hours to which it would apply is apparent from his witness statement. Although his evidence-in-chief provided some additional detail in respect of the substance of the discussion over whether the revised figure should be 1.05 or 1.1, Mr Buckland’s lack of any recollection of what was said after that topic was resolved does not persuade me that the things that Mr Vromans and Mr Pattison alleged were said were not said. I gained the impression that Mr Buckland had a fairly poor recollection of what was said on points of detail in relation to the overtime issue.

Mr Baron could not recall any specific discussion during CLT-3 as to when overtime would commence (that is whether after 37.5 hours or 45 hours per week). He recalled the discussion about the appropriate multiplier for overtime and recalled that after discussion Mr Moran indicated that he would be prepared to accept a multiplier of 1.1 and there was agreement on that topic. Mr Baron gave his evidence thoughtfully and carefully. He recalled a discussion about who would be applying for overtime and was able to recollect the discussion in a health and safety context about ensuring that senior people were not working significant hours on the project. But Mr Baron could not recall anything else, save for the fact that there was agreement that the multiplier for overtime should be 1.1. As his witness statement makes clear, Mr Baron simply does not recall any specific discussion as to whether overtime would commence after 37.5 hours or 45 hours per week.

In the light of the evidence from each of the relevant witnesses, I make the following findings. Mr Smogurzewski raised the agenda item and Mr Moran initiated the discussion. Mr Vromans and Mr Pattison responded and explained in some detail arrangements for overtime for junior staff and the more complex arrangements that applied for senior staff. Mr Pattison in particular said that the multiplier of 1.05 for overtime was too low and that a multiplier of 1.1 should apply. He also indicated that PBA would not charge for time in excess of 45 hours for senior staff. Mr Moran indicated that the multiplier of 1.1 for overtime was acceptable. The discussion on that topic concluded with Mr Pattison saying words to the effect, “Yes, we’re agreed but the 1.1 is for hours worked above 45 hours”. Neither Mr Moran nor anyone else expressed any disagreement with this statement.

I have had regard to the possibility that, viewed objectively, there was no actual agreement reached as to when the multiplier of 1.1 for overtime would begin to apply. However, I am satisfied that Mr Pattison concluded the discussion with the words that I have described and that, in the circumstances, the absence of any further discussion on that point signified TJH’s agreement to that proposal. Viewed objectively, the point at which the discussion concluded signified TJH’s acceptance of Mr Pattison’s statement that the multiplier of 1.1 applied for hours worked above 45 hours.

I prefer the evidence of Mr Vromans and Mr Pattison as being a more reliable recollection of what was said. Mr Vromans’ contemporaneous note tends to support PBA’s case about the agreement that was reached, namely that the multiplier of 1.1 would apply after 45 hours. As previously noted, I reject the contention that the Pattison email was an attempt to advance a different position to that reached at the meeting. It was prepared by Mr Pattison, based upon his recollection of what had been agreed. It was prepared relatively soon after the meeting. It was prepared to confirm what Mr Pattison told Mr Smogurzewski in their telephone conversation and at Mr Smogurzewski’s request. It also was sent to Mr van Heuzen and Mr Vromans so that it could be a record for their purposes about what had been agreed. Mr van Heuzen understandably sought clarification about what had been agreed. He needed to know what had been agreed so that he and other members of the CMT could implement it. Mr van Heuzen was aggrieved that Mr Pattison and Mr Vromans had “given away the farm” by agreeing that the agreed multiplier of 2.8 should be reduced to 1.1 in respect of overtime hours worked after 45 hours. However, his grievance did not induce Mr Pattison to manufacture a false account of the decision. The Pattison email was Mr Pattison’s recollection of the agreement which had been reached.

In light of the Pattison email having been sent to Mr Smogurzewski, and then forwarded by Mr Smogurzewski to others for their information, it is understandable that Mr Vromans and Mr Pattison understood that agreement had been reached on the overtime issue and did not detect that the minutes of CLT-3 did not define when overtime began for the purpose of applying the reduced multiplier of 1.1. On one view, the minute was incomplete in this regard. On another view insofar as the minute suggested that overtime commenced at 37.5 hours, it was inconsistent with what had been agreed. The reason why the minutes did not go into greater detail in defining when overtime began for the purpose of the application of the reduced multiplier was not explained. The persons responsible for the minutes, Mr Smogurzewski and Ms Spencer, were not called as witnesses.

I do not consider that the form of the minutes of CLT-3 and their adoption at CLT-4 require me to reach a different conclusion to the one which I have reached as to what was said at CLT-3. Those persons who attended CLT-4 thought that the minutes reflected what had been agreed. To the extent that their recollections now differ, I prefer the recollection of Mr Vromans and Mr Pattison.

The resolution of the overtime issue should be reflected in a suitably-worded declaration to the effect that CLT-3 decided that the multiplier should be 1.1 for all overtime hours and that overtime hours comprised hours worked in excess of 45 hours per week. There is no dispute that the parties also agreed that senior staff from PBA would not charge for hours above 45 hours per week. Still, a suitable form of declaration might include this qualification.

I conclude that CLT-3 agreed that a multiplier of 1.1 should apply for overtime hours, being hours worked in excess of 45 hours per week, save for senior staff (being Associates and Executives) who would not charge for hours worked above 45 hours per week. The agreed multiplier of 2.8 continued to apply for hours worked up to and including 45 hours.

Alternative claim for estoppel – overtime

My conclusion about what was decided at CLT-3 in relation to the multiplier of 1.1 regarding overtime makes it unnecessary to reach a decision in relation to PBA’s alternative claim that TJH is estopped from denying that CLT-3 amended the principles of reimbursement pursuant to cl S7-1.3.2 of the CCA to the effect that the multiplier of 1.1 applied to overtime hours, and overtime hours comprised hours worked in excess of 45 hours per week. However, for completeness I will address this alternative claim. The essential basis of PBA’s alternative claim for estoppel is that at no time until 16 December 2009 did TJH assert to PBA that the multiplier for overtime was contrary to that specified in the Pattison email, and that the parties conducted matters on the basis that the Pattison email recorded what had been decided at CLT‑3. PBA relies upon TJH’s silence up to 16 December 2009 in circumstances to be discussed as a representation that the multiplier was 1.1 for overtime hours worked in excess of 45 hours. The factual basis for PBA’s case in this regard is essentially as follows:

Mr Pattison clarified the agreement with Mr Smogurzewski on 27 August 2007 by telephone and on 28 August 2008 by email.

On or about 1 September 2008 Mr Smogurzewski attended a CMT meeting with Mr van Heuzen and Mr Connors during which Mr van Heuzen asked Mr Smogurzewski to provide written confirmation of the decision made at CLT-3 regarding overtime, and Mr Smogurzewski then forwarded Mr Pattison’s email to Mr van Heuzen and Mr Connors.

Each of the 10 reports of Easdown as Collaborative Agreement Auditor after CLT‑3 until June 2009 (when the CLT discontinued the monthly audits), being reports which were provided to TJH stated:

“During our review of the CLT minutes we noted that in their meeting held on 26 August 2008 the CLT approved the application of a multiplier of 1.1 to service hours in excess of 45 hours. The application of the 1.1 multiplier is to apply to all personnel with the exception of thirteen identified personnel whose hours are limited to 45 hours.”

Between 26 August 2008 and November 2009 PBA issued to TJH some 15 progress claims, each of which stated:

“Agreed Reduction for 1.1 multiplier on hrs >45 per week”; and

“Agreed Reduction for 45 hrs/week cap for Senior Staff”.

With respect to each of those 15 progress claims, TJH either paid the progress claim in full, or to the extent it did not pay the progress claim in full, did not claim that it was not liable to pay the progress claim in whole or in part on the basis that PBA had applied a multiplier of 1.1 for hours in excess of 45 hours per week whereas it should have applied a multiplier of 1.1 for hours in excess of 37.5 hours per week.

In January 2009 at a CLT meeting on or about 20 January 2009 Mr van Heuzen for PBA tabled a paper entitled “Project Rates” which stated:

“The CLT have directed two changes to the costs recovery model which have been applied:

(a)A reduction in the Element 1 multiplier (from 2.8 to 1.1) for overtime hours in excess of 45 hours for all consultant staff.

(b)A 45 hour weekly limit on our senior associate/executive staff thus restricting the proportion of hours by hire rate staff.”

Mr Manly, who was Design Director for TJH after October 2008 and was appointed as CAM under the CCA on 2 December 2008, reviewed the paper in or about January 2009.

Mr Manly, on various occasions after 30 March 2009, sought information from PBA about its invoices. These included a request for a full breakdown of disbursements, information about individual employees and staff rates, and the separation of Element 1 and Element 2 costs. However, Mr Manly and TJH did not question the multiplier on overtime until around September 2009 when he reviewed the minutes for CLT-3. He discussed the issue of whether the 2.8 multiplier was subject to an audit with Mr van Heuzen after that.

Mr Manly raised a concern about the approach PBA was taking to staff overtime in a letter dated 4 September 2009. These and other issues remained unresolved and in December 2009 Mr Manly as CAM deducted $3,760,298.89 from PBA’s November 2009 progress claim. He applied the multiplier of 1.1 to overtime. In December 2009 the parties exchanged correspondence about what had been decided at CLT‑3. Mr Manly said that he was not aware of the Pattison email prior to 16 December 2009 when he received an email from Mr van Heuzen.

As to Mr Smogurzewski’s email of 1 September 2008, which forwarded the Pattison email to Mr van Heuzen and Mr Connors, the present issue is not whether Mr Smogurzewski had authority to bind TJH contractually, and whether the Pattison email was an accurate account of what was decided at CLT-3. I have earlier found that it was. Relevantly, Mr Smogurzewski’s conduct in forwarding it to Mr van Heuzen and Mr Connors on 1 September 2009 represented that he treated it as an accurate record of what had been decided. He did so after being asked by Mr van Heuzen and Mr Connors for written confirmation of the CLT decision. The Pattison email was sent without any qualifying comment, such as a statement that Mr Smogurzewski was not sure whether it reflected what had been decided or that TJH did not accept that it accurately recorded what had been decided. Mr van Heuzen understood that Mr Smogurzewski was advising that he regarded the contents of the Pattison email as an accurate description of the agreement reached at CLT-3. Mr Connors understood the same thing. Their respective understandings in this regard were reasonable. Whatever confusion Mr van Heuzen may initially have apprehended existed as a result of verbal reports he received about what had been decided at CLT-3. The email exchanges culminating in Mr Smogurzewski’s email of 1 September 2008 clarified the matter.

After sending his email on 28 August 2008, Mr Pattison did not receive any response from TJH that indicated that they disagreed with his understanding of what had been agreed at CLT-3.

Given the absence of any statement from TJH that it did not agree with the contents of the Pattison email, it was reasonable for PBA to conclude that the Pattison email accurately reflected what had been agreed at CLT-3, and to not interpret the minutes of CLT-3 as stating a different position.

The fact that PBA made 15 progress claims which stated that the agreed reduction to a multiplier of 1.1 applied to hours greater than 45 hours per week, and that TJH did not query or contest these claims, served to reinforce TJH’s understanding of what had been agreed. Ten different reports from Easdown stated in the clearest possible terms that the CLT on 26 August 2008 had approved the application of a multiplier of 1.1 to service hours in excess of 45 hours, with the exception of 13 identified personnel. TJH’s silence in the circumstances, and its conduct in paying progress claims that were verified on this express basis represented to PBA that it accepted that the principles of reimbursement had been amended at CLT-3 and that a reduced multiplier of 1.1 would apply to hours worked in excess of 45 hours per week. TJH may have sought other information in relation to PBA’s invoices but its conduct in not questioning the multiplier on overtime until late 2009 only served to reinforce the representation conveyed by its silence and conduct. In early 2009 it did not question the contents of the paper that was tabled at the CLT meeting on 20 January 2009 to the same effect.

PBA relied upon what is pleaded as the “Overtime Multiplier Representation”, by organising its affairs, adjusting its accounting systems and processes to allow for a reduced multiplier of 1.1 for hours in excess of 45 hours per week, issuing progress claims and refraining from claiming overtime in excess of 45 hours for senior consultants.

PBA alleges that it will suffer detriment if TJH is permitted to resile from the representation. It submits that as a result of TJH’s representation it lost the opportunity to seek to obtain TJH’s agreement to the arrangement that PBA had intended to offer and that it thought had been struck. It argues that it lost the opportunity to organise its affairs with the knowledge that the reduced multiplier applied from 37.5 hours, not 45 hours. It argues that a reduced multiplier from 37.5 hours would have provided an incentive for it to organise its design team in a way that minimised their need to work overtime. It would have been better off financially with a larger design team that reduced the need for individuals to work overtime, with the result that a greater number of hours would have been worked within normal hours (attracting the higher multiplier of 2.8) rather than as overtime hours (attracting the reduced multiplier).

Mr Vromans’ evidence is that if he had become aware after CLT-3 that TJH had the view that the reduction of the multiplier applied from 37.5 hours then he would have indicated that PBA had a different understanding of the agreement and sought to resolve the matter. If TJH had not agreed to a reduced multiplier from 45 hours per week then he would have instructed Mr van Heuzen and Mr Connors to continue to charge a multiplier of 2.8 on all hours until further notice. If, however, TJH had convinced him (or the CLT resolved that) the reduced multiplier of 1.1 was agreed to apply from 37.5 hours then he would have explored ways in which PBA could have performed its obligations under the CCA while minimising hours in excess of 37.5 hours per week. He says that he would have instructed senior staff to seek to limit the amount of overtime they needed to do and review the size and make‑up of the design team and other things to address the matter. I accept his evidence. TJH submits that his evidence that he would have explored alternative ways does not amount to an identification of any detriment. However, I consider that Mr Vromans’ evidence does identify real or material detriment that PBA will suffer if TJH is permitted to resile from the Overtime Multiplier Representation. TJH submits that the suggestion that PBA would have employed more staff and reduced the number of staff working overtime would have been conduct directly counter to the behavioural commitments contained in the CCA. I do not accept this is the case. It was open to PBA to organise its affairs in the manner that Mr Vromans said would have been done had the matter not been resolved in the manner proposed by PBA.

PBA organised its affairs and submitted progress claims on the basis that it was entitled to claim at a multiplier of 2.8 up to and including 45 hours per week. If TJH was permitted to resile from the Overtime Multiplier Representation then PBA will have been denied the opportunity to organise its affairs so as to reduce the amount of overtime that was performed.

In addition, PBA would incur costs in attempting to reverse processes and systems that were established. Substantial costs would be incurred. I take into account the evidence that in around September 2008 it was able to make certain adjustments relatively quickly to implement the reduced multiplier. However, the task of revising systems and amending its accounting systems in respect of the entire life of the project would be more substantial, and it is not apparent that PBA would be entitled to recover these costs (assuming they can be readily quantified) on the basis that such costs are costs “incurred directly” by it on the Collaborative Agreement Work.

I conclude that the Overtime Multiplier Representation was relied upon by PBA to assume that the CLT-3 decision was as recorded in the Pattison email and as reflected in its invoices, reports of the Collaborative Agreement Auditor that were produced in 2008-2009 and as stated in the paper tabled at the CLT on 20 January 2009. PBA reasonably assumed that the reduced multiplier of 1.1 applied for hours in excess of 45 hours per week. PBA would suffer a significant detriment if TJH was permitted to resile from the Overtime Multiplier Representation. In the circumstances, it would be unconscientious to permit TJH to resile from its representation. Had I not concluded that the CLT-3 decision was as PBA contends, then I would have found that TJH was estopped from departing from the assumption that PBA reasonably adopted about the terms of the CLT-3 decision.

PART F: THE ACCESS TO RECORDS DISPUTE

As discussed in the section of this judgment that deals with the consequences of the interpretation of the CCA adopted by me, the resolution of issues of interpretation may resolve parts of the Access to Records Dispute. My findings in relation to the Compliance Audit Issue and the Overtime Issue may also resolve certain requests made by BDO for access to records.

As I have found, the prescribed functions of the Collaborative Agreement Auditor do not extend to undertaking an open-ended investigation into PBA’s actual costs on the basis that such costs might be determined without reference to the specific terms of Schedule 7. PBA’s entitlement to be reimbursed at actual cost is governed by the specific provisions of cl S7-3 and cl S7-4.

Some of BDO’s requests for management accounts, profit and loss reports and working papers, and TJH’s submissions on those topics, tend to suggest that BDO is entitled to access those documents in order to determine whether PBA has been reimbursed in excess of what a subsequent audit might find its actual cost to be on the basis that the specific provisions of cl S7-3 and cl S7-4 relate only to the calculation of progress payments. Such an approach would not be justified by the proper interpretation of the CCA.

BDO sought to justify some of its requests for access to records on the basis that the records will enable it to determine “that the Element 1 multiplier of 2.8 comprises actual Element 1 costs”. I have earlier found that it is not part of the prescribed function of the Collaborative Agreement Auditor to audit the agreed multiplier, at least in the sense of ascertaining whether the application of the multiplier to the raw rate yields more or less than PBA’s actual staff costs as determined without reference to the specific provisions of cl S7-3 and cl S7-4.

There remains, however, scope for the Collaborative Agreement Auditor to audit payments and to audit and verify the Consultant’s Collaborative Agreement Costs and to ensure that PBA receives its exact entitlements as set out in Schedule 7.

Some of BDO’s requests for documents are made on the basis that it has been unable to verify the Raw Rate for staff as required in cl S7-3.1.2. For example, it requested information about whether superannuation has only been included in “Raw Data” and not in any other part of Element 1 staff costs. These requests and other requests for documents to enable BDO to determine what the Element 1 multiplier of 2.8 comprises may constitute an attempt to address matters which have been previously addressed by Easdown and the CCA itself. For example, cl S7-3.1.4 states that the items included in Element 1 staff rates include superannuation, and the Easdown Report confirmed this. It is not part of BDO’s function to again undertake the Compliance Audits that were performed by Easdown or to produce a new Compliance Audit Report to replace or supplement the Easdown Report.

If, however, there is a need to clarify the basis of reimbursement under Element 1 and to ensure a demarcation between items reimbursable under Element 1 and items that are deemed to be covered under Element 2, then the precise issue should be identified and resolved by the parties if possible. If the issue forms part of the Access to Records Dispute and the parties are unable to resolve the same then the Court may need to resolve the issue in the form of declarations.

The fact that Compliance Audits were undertaken does not deprive the Collaborative Agreement Auditor of its prescribed functions that include the carrying out of audits to verify costs incurred by participants and ensuring that payments made to PBA accord with its entitlements. This includes ensuring that staff costs that are reimbursed as part of the cost of personnel performing the Collaborative Agreement Work are not also reimbursed as project-specific overheads. Computer hardware and software that constitute “work tools” and fall within “staff rates” are an example. Likewise, there is an important function for the Collaborative Agreement Auditor to ensure that there is not “double dipping” or impermissible reimbursement of non project-specific overheads. These are not reimbursed under Element 1. The Element 2 fee (if any) contributes towards the recovery of such non project-specific overheads. The costs of maintaining a computer in an empty city office that has been vacated by an engineer who works at the project site may be an example.

The matters addressed in the lengthy table annexed to the second further amended defence and counterclaim in respect of disputed records are many and varied. My conclusions on the substantive issues that I have addressed concerning the interpretation of the CCA, the Compliance Audit Issue and the Overtime Issue may narrow the matters that remain in dispute over access to records. As earlier indicated, it is appropriate to allow BDO an opportunity to be heard concerning the form of any declaratory relief that may affect it, including any declarations in relation to the Access to Records Dispute.

I propose to list the matter for further review and submissions concerning the form of declarations and other orders to be made. I presently propose to hear that matter on 16 August 2012 or some other date that is convenient to the Court and to the parties.

PART G: CONCLUSION

The terms of cl S7-3 and cl S7-4 of the CCA govern PBA’s entitlement to reimbursement, not simply the mechanics for progress payments.

Element 1 defines PBA’s entitlement to be reimbursed at “actual cost” by reference to all of Schedule 7, not simply the general words of cl S7-1. In respect of personnel costs, PBA’s costs were specified to be calculated according to the formula in cl S7-3.1.2 with the items to be included in the Element 1 staff rates further defined by cl S7-3.1.3 and cl S7-3.1.4.

The reasons for the interpretation favoured by me appear earlier in these reasons. In essence, I have found that the specific provisions of cl S7-3 and cl S7-4 specify and thereby define PBA’s entitlements, and not simply the calculation of progress payments that are made on account of those entitlements.

This interpretation affects the records to which the Collaborative Agreement Auditor is entitled to access. The prescribed functions of the Collaborative Agreement Auditor do not extend to undertaking an open-ended investigation into PBA’s actual costs on the basis that such costs might be determined without reference to the specific terms of Schedule 7.

The interpretation submitted by PBA accepts that the agreed multipliers are not necessarily reflective of actual costs. The parties, by the words they chose in their contract, defined PBA’s actual costs by reference to a multiplier, rather than leaving them to be determined by some other process which, in the absence of agreement between the parties, would lead the actual costs of PBA over the course of a four year project being determined by arbitration or litigation. The fact that the PBA approach to interpretation accepts that the multipliers are not necessarily reflective of actual costs is not a compelling reason to reject that interpretation. Any agreed multiplier, if it defines a party’s entitlement, has the potential to be not reflective of actual costs as determined according to their ordinary meaning. The same could be said of an agreed multiplier that follows a full open-book Establishment Audit before an agreement is made. It is obvious that costs may vary from time to time and so fixed multipliers (as in the CCA) or multipliers that are agreed after an Establishment Audit in the case of an Alliance Agreement can only be proxies for anticipated future costs.

Because of my conclusions on issues of interpretation it is unnecessary to grant PBA’s alternative claim for rectification. However, for the reasons given by me, had I reached a different conclusion about the agreed multipliers, then PBA would have established its alternative claim for rectification.

That claim for rectification was not defeated by the discretionary defence raised by TJH since PBA did not engage in misleading or deceptive conduct by not disclosing that there had not been an 85 (r) examination.

TJH’s counterclaim for this alleged contravention of the Trade Practices Act 1974 (Cth) is dismissed.

The investigations conducted by Easdown in June and July 2008 were Compliance Audits within the meaning of cl S7-1.3.1 and constituted the Compliance Audit referred to in cl S7-3.1.2.

PBA has established an entitlement to a declaration in its favour in relation to the Overtime Issue. I have concluded that CLT-3 agreed that a multiplier of 1.1 should apply for overtime hours, being hours worked in excess of 45 hours per week, save for senior staff (being Associates and Executives) who would not charge for hours worked above 45 hours per week. The agreed multiplier of 2.8 continued to apply for hours worked up to and including 45 hours.

Orders

Subject to hearing the parties as to the form of declarations, PBA should have declarations substantially in the form of sub-paragraphs 78(a), (aa), (ab), (ac), (b), (ba) and (k) of the further amended statement of claim to reflect my determination of the issues of interpretation. As to the Compliance Audit Issue, in lieu of the form of declaration sought in sub-paragraph 78(c), I propose a slightly modified declaration, namely that:

“The Easdown investigations referred to in paragraph 7 of the further amended statement of claim constitute Compliance Audits for the purposes of cl S7-1.3.1 and the Compliance Audit for the purpose cl S7-1.3.2 of Schedule 7 of the CCA.”

Also, I will declare that the CCA does not entitle BDO, as the Collaborative Agreement Auditor, to now carry out a Compliance Audit within the meaning of cl S7-3.1.2, or Compliance Audits within the meaning of cl S7-1.3.1.

As indicated, to reflect my determination of the Overtime Issue there should be a declaration to the effect that CLT-3 decided that the multiplier should be 1.1 for all overtime hours and that overtime hours comprised hours worked in excess of 45 hours per week, save for senior staff (being Associates and Executives) who would not charge for hours worked above 45 hours per week.

I will hear the parties on 16 August 2012 in relation to the terms of declaratory and other orders and, if required, the issue of costs.

Footnotes

[1] Clause 20.2(c).

[2] Clause 1(b).

[3] CCA, cl 1(d).

[4] CCA, cl 1(e).

[5] Shorter Oxford Dictionary 6th ed 2007.

[6] Clause 18.3(b).

[7] CCA, cl 18.3(c).

[8] Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350 per Mason J.

[9] Ibid at 351.

[10] Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 331 and 345.

[11] Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 at 1122 per Lord Hoffmann.

[12] [2010] QSC 006 at [90]-[96].

[13] Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at 660 [281].

[14] Ibid at 662 [289]-[290]; Chartbrook Ltd v Persimmon Homes Ltd (supra) at [60].

[15] Ryledar Pty Ltd v Euphoric Pty Ltd (supra) at 655 [259] per Campbell JA and the authorities cited therein.

[16] Elders Lensworth Finance Ltd v Australian Central Pacific Ltd [1986] 2 Qd R 364 at 367-368.

[17] Supra.

[18] Ibid at 642 [182].

[19] Ibid.

[20] Ibid at [183].

[21] Ibid at [185].

[22] Ibid at [184].

[23] (1982) 149 CLR 337 at 346.

[24] Ibid at 352.

[25] [1972] 2 NSWLR 467 at 473.

[26] Supra at 667 [316].

[27] [1980] 2 Lloyd’s Rep 67 at 72.

[28] Supra at 1126.

[29] Ibid at [64].

[30] Carmichael v National Power Plc [1999] 1 WLR 2042 at 2050-2051.

[31] Chartbrook Ltd v Persimmon Homes Ltd (supra) at [65].

[32] Unreported, Supreme Court of South Australia, 1 November 1995; BC 9502398.

[33] (2011) 243 CLR 253 at 285-286 [101].

[34] Australasian Performing Right Association Ltd v Austarama Television Pty Ltd (supra) at 473.

[35] Supra at 642 [184].

[36] CCA, cl 20.2(c).

[37] CCA, cl S7-1.3.2 and cl 18.

[38] Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd (supra) at [126].

[39] David Hodge QC Rectification – The Modern Law and Practice Governing Claims for Rectification for Mistake, Sweet & Maxwell, 2010, 3-148.

[40] Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 55 at [41].

[41] Establissements Georges et Paul Levy v Adderley Navigation Co Panama SA (“The Olympic Pride”) (supra) at 72.

[42] Pukallas v Cameron (1982) 180 CLR 447 at 452 per Wilson J.

[43] Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429 at 431/

[44] MacDonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152 at 156.

[45] Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 4th ed, Butterworths 2002 at [3] – [110].

[46] Coghlan v Pyoanee Pty Ltd [2003] 2 Qd R 636 at 642-643.

[47] Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 368 [16] per French CJ and Kiefel J.

[48] Kimberly NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,195 at 53,195 approved in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41 per Gummow J and in turn cited with approval in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (supra) at 370 [20]-[21].

[49] Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (supra) at 370 [20]-[21].

[50] Grundt v The Great Boulder Pty Goldmines Ltd (1937) 59 CLR 641 at 674-676 per Dixon J.

Editorial Notes

Published Case Name:
Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors
Shortened Case Name:
Thiess Pty Ltd v Arup Pty Ltd
MNC:
[2012] QSC 185
Court:
QSC
Judge(s):
Applegarth J
Date:
10 Jul 2012

Litigation History

Event	Citation or File	Date	Notes
Primary Judgment	[2012] QSC 131	17 May 2012	Court's ruling on an objection to the admissibility of an expert's report relied on by the applicants: Applegarth J.
Primary Judgment	[2012] QSC 185	10 Jul 2012	Dispute between parties over differing interpretations of the terms of an agreement that governed the respondent's entitlement to compensation under the agreement. Declarations as to the proper construction of the agreement made: Applegarth J.
Appeal Determined (QCA)	[2013] QCA 65	02 Apr 2013	Appeal allowed to the limited extent of deleting a declaration made below. Appellant ordered to pay the respondents costs: McMurdo P, Muir JA, Gotterson JA.

Appeal Status

Appeal Determined (QCA)

Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Australasian Performing Right Assn Ltd v Austarama Television Pty Ltd	View on:NSWLR(1972) 2 NSWLR 467	2 citations Jump To Cite 1 - (1972) 2 NSWLR 467 Cite 2 - (1972) 2 NSWLR 467
Bishopgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd	View on:NSWLR(1981) 1 NSWLR 429	1 citation Jump To Cite 1 - (1981) 1 NSWLR 429
Byrnes v Kendle	View on:JADE(2011) 243 CLR 253	2 citations Jump To Cite 1 - (2011) 243 CLR 253 Cite 2 - (2011) 243 CLR 253
Carmichael v National Power Plc	View on:ICLRUK[1999] 1 WLR 2042	2 citations Jump To Cite 1 - [1999] 1 WLR 2042 Cite 2 - [1999] 1 WLR 2042
Citing Chartbrook Limited v Persimmon Homes Limited	View on:ICLRUK[2009] 1 AC 1101	2 citations Jump To Cite 1 - [2009] 1 AC 1101 Cite 2 - [2009] 1 AC 1101
Codelfa Construction Pty Ltd v State Rail Authority of NSW	View on:JADE(1982) 149 C.L R. 337	2 citations Jump To Cite 1 - (1982) 149 C.L R. 337 Cite 2 - (1982) 149 C.L R. 337
Coghlan v Pyoanee Pty Ltd	[2003] 2 Qd R 636; [2003] QCA 146	2 citations Jump To Cite 1 - [2003] 2 Qd R 636 Cite 2 - [2003] 2 Qd R 636
Commissioner of Stamp Duties (NSW) v Carlenka	View on:NSWLR(1995) 41 NSWLR 329	2 citations Jump To Cite 1 - (1995) 41 NSWLR 329 Cite 2 - (1995) 41 NSWLR 329
Demagogue Pty Ltd v Ramensky	(1992) 39 FCR 31	1 citation Jump To Cite 1 - (1992) 39 FCR 31
Elders Lensworth Finance Ltd v Australian Central Pacific Ltd	[1986] 2 Qd R 364	2 citations Jump To Cite 1 - [1986] 2 Qd R 364 Cite 2 - [1986] 2 Qd R 364
Grundt v Great Boulder Pty Gold Mines Ltd	View on:JADE(1937) 59 CLR 641	2 citations Jump To Cite 1 - (1937) 59 CLR 641 Cite 2 - (1937) 59 CLR 641
Hawksford Trustees Jersey Ltd v Stella Global UK Ltd	[2012] EWCA Civ 55	2 citations Jump To Cite 1 - [2012] EWCA Civ 55 Cite 2 - [2012] EWCA Civ 55
Kimberley NZI Finance Ltd v Torero Pty Ltd	(1989) ATPR (Digest) 46-054	2 citations Jump To Cite 1 - (1989) ATPR (Digest) 46-054 Cite 2 - (1989) ATPR (Digest) 46-054
MacDonald v Shinko Australia Pty. Ltd.	[1999] 2 Qd R 152; [1998] QCA 53	2 citations Jump To Cite 1 - [1999] 2 Qd R 152 Cite 2 - [1999] 2 Qd R 152
Maralinga Pty Ltd v Major Enterprises Pty Ltd	View on:JADE(1973) 128 CLR 336	2 citations Jump To Cite 1 - (1973) 128 CLR 336 Cite 2 - (1973) 128 CLR 336
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited	View on:JADE(2010) 241 CLR 357	2 citations Jump To Cite 1 - (2010) 241 CLR 357 Cite 2 - (2010) 241 CLR 357
Pukallus v Cameron	View on:JADE(1982) 180 CLR 447	1 citation Jump To Cite 1 - (1982) 180 CLR 447
Ryledar Pty Ltd v Euphoric Pty Ltd	View on:NSWLR(2007) 69 NSWLR 603	2 citations Jump To Cite 1 - (2007) 69 NSWLR 603 Cite 2 - (2007) 69 NSWLR 603
The Olympic Pride	[1980] 2 Lloyd’s Rep 67	2 citations Jump To Cite 1 - [1980] 2 Lloyd’s Rep 67 Cite 2 - [1980] 2 Lloyd’s Rep 67
Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd	[2010] QSC 6	2 citations Jump To Cite 1 - [2010] QSC 6 Cite 2 - [2010] QSC 6

Cases Citing List of cases on Queensland Judgments citing this Judgment

Case Name	Full Citation	Frequency
Parsons Brinckerhoff Australia Pty Ltd v Thiess Pty Ltd	[2013] QSC 75	2 citations
Thiess Pty Ltd v Arup Pty Ltd	[2013] QCA 65	3 citations

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Thiess Pty Ltd v Arup Pty Ltd[2012] QSC 185