Abigroup Contractors Pty Ltd v Sydney Catchment Authority - [2005] NSWSC 662

No judgment structure available for this case.

CITATION:
Abigroup Contractors Pty Ltd v Sydney Catchment Authority [2005] NSWSC 662

HEARING DATE(S): 23/05/2005 to 26/05/2005

JUDGMENT DATE :

11 July 2005

JURISDICTION:
Equity

JUDGMENT OF:
McDougall J at 1

DECISION:
I direct the parties, within fourteen days of today's date, to bring in Short Minutes of Order to give effect to these reasons. If the parties cannot agree on the proper costs order to be made, I will hear argument on costs.

CATCHWORDS:
TRADE PRACTICES - where Court of Appeal remitted application for adoption of Referee's report - whether conduct misleading or deceptive - whether plaintiff relied on alleged misleading or deceptive conduct - whether Court should make own findings or refer issues to Referee or another referee - whether Referee's finding that plaintiff suffered no loss or damage should be adopted - - whether Court should adopt or reject Referee's finding that plaintiff was not delayed in achieving Practical Completion - whether Court should adopt or reject Referee's finding that there was no agreement that a claim for extension of time could be brought notwithstanding cl 35.5.5 of contract - whether plaintiff entitled to extension of time under cl 35.5 or cl 23. - ESTOPPEL - estoppel by convention - estoppel by representation - whether plaintiff estopped from bringing s 52 claim - - DAMAGES - causation - assessment of damages - whether damages assessed on "no contract" or "alternative contract" basis - nature of alternative contract - whether plaintiff proved loss or damage on either basis.

LEGISLATION CITED:
Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth)

CASES CITED:
Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60
Coghlan v S H Lock (Australia) Ltd (1985) 4 NSWLR 158
Con-Stan Industries of Australia Pty Ltdv Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, 244
Eslea Holdings Pty LTd v BUtts (1986) 6 NSWLR 175
Foxman Holdings Pty Ltd v NMBE Pty Ltd (1995) 38 NSWLR 615
Franks & Anor v Berem Constructions Pty Ltd (NSWCA 2/12/98, unreported; BC 9806367)
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 79 ALJR 190
Hughes Bros Pty Ltd v Minister for Public Works (Rolfe J, 17 August 1994, unreported; BC 9402885)
IOOF Australia Trustees (NSW) Ltd v Tantipech (1998) 156 ALR 470
Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1989) ATPR (Digest) 46-048
March v Stramare (E&MH) Pty Ltd (1991) 171 CLR 506
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
Murphy & Anor v Overton Investments Pty Limited (2004) 78AYR 324
Oraka Pty Ltd v Leda Holdings Pty LTd (1997) ATPR 41-558
Peninsula Balmain Pty Limited v Abigroup Contractors Pty Limited [2002] NSWCA 211
Seven Sydney v Fuji Zerox [2004] NSWSC 902
Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254, 284
Super Pty Ltd v SJP Formwork (Aust) P/L (1992) 29 NSWLR 549
The Commonwealth v Verwayen (1990) 170 CLR 394
Waltip Pty LTd v Capalaba Park Shopping Centre Pty Ltd (1989) ATPR 404-975
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514
White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193
Zuereb v Viola (1988) 18 NSWLR 453

PARTIES:
Abigroup Contractors Pty Ltd - Plaintiffs
Sydney Catchment Authority - Defendants

FILE NUMBER(S):
SC 55045/01

COUNSEL:
J.T. Gleeson SC with S.A. Kerr - Plaintiff
S.R. Donaldson SC with M. Dempsey SC - Defendant

SOLICITORS:
Clayton Utz - Plaintiff
Phillips Fox - Defendant

LOWER COURT JURISDICTION:

ABIGROUP CONTRACTORS PTY LIMITED v SYDNEY CATCHMENT AUTHORITY [2005] NSWSC 662….

INDEX TO JUDGMENT
Para

Procedural history 2

Factual background 4

Abigroup’s representation case 6

Agreed issues 10

The relevant principles 11

First issue 15

Concept Design Report 16

The Detailed Specification 21

Concept design stage geological investigation 24

Construction of the representation 27

Conclusion on construction of representation 42

Was the representation misleading or deceptive? 43

Conclusion on the first issue 49

Second issue 50

Third issue 57

Fourth issue 82

Fifth issue 83

Abigroup’s pleaded case 86

Abigroups’s approach to causation 91

The Authority’s approach to causation 94

The referee’s approach 99

The authorities relied on 109

The “correct” representation 110

No contract or alternative contract 116

Alternative analysis: no contract case 126

Sixth and seventh Issues 148

Eighth and ninth Issues 149

The s 82 Case 151

The contractual case 152

No entitlement in any event 156

Tenth issue 158

Eleventh issue 163

Twelfth issue 165

Conclusion 172

Orders 173

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

McDOUGALL J

MONDAY, 11 JULY 2005

SYDNEY CATCHMENT AUTHORITY

JUDGMENT

1 HIS HONOUR: The plaintiff (Abigroup) contracted with the Sydney Water Corporation (Sydney Water) to construct an auxiliary spillway for the Warragamba Dam. The contract was a lump sum contract under which Abigroup bore the risk that more work than allowed for in its tender might be required, including by reason of latent conditions. In one critical respect – excavating to solid rock and refilling with cement stabilised fill – the quantities were substantially greater than expected. Abigroup said that it had been induced to enter into the contract by misleading or deceptive conduct on the part of Sydney Water. It sued to recover what it said was its loss. The proceedings were referred to a referee for enquiry and report. The referee found, in substance, that there had been no misleading or deceptive conduct; that Abigroup had not shown that it relied on what it said was the misleading or deceptive conduct; that Abigroup had not shown that it had sustained loss; and that, in any event, Abigroup was estopped from pursuing this claim. The question for the Court is whether the report should be adopted.

Procedural history

2 The defendant (the Authority) is the statutory successor to Sydney Water. It sought an order that the relevant findings in the report be adopted. Abigroup sought orders that those findings be rejected, and that alternative findings, in its favour, be made in their place. Nicholas J heard the competing notices of motion in February 2003. He gave judgment on 23 July 2003, ordering that the report be adopted: [2003] NSWSC 634.

3 Abigroup appealed. The Court of Appeal (speaking through Beazley JA, with Ipp and Tobias JJA agreeing) allowed the appeal, and set aside the orders made by Nicholas J. They remitted the notices of motion for rehearing: [2004] NSWCA 270; see also [2004] NSWCA 459, where their Honours varied the orders initially made.

Factual background

4 The factual background, and the essential issues, were set out by Beazley JA in paras [1] to [13] and [17] to [25]. I gratefully adopt, and for convenience repeat, what her Honour said in those paragraphs:

“1 BEAZLEY JA: The appellant was the successful tenderer for a contract to design, develop and construct an auxiliary spillway (the spillway) for Warragamba Dam for a contract price of $85,709,094.55. The contract was entered into on 24 December 1998 with the Sydney Water Corporation (SWC). Under the Sydney Water Management Act 1998, the respondent is responsible for any liability the SWC may have in relation to this claim.
2 Warragamba Dam itself had been constructed over a 24 year period between 1948 and 1962. The purpose of the spillway was to increase the capacity of the Dam to withstand major flooding. In brief, the spillway was to consist of three portions, an upstream portion, a middle portion and a downstream portion. The construction of the middle portion and, more particularly, the design concept documents that relate to that portion of the spillway, are the only aspects of the contract relevant to the issues on the appeal.
3 The middle portion of the spillway was to be constructed from reinforced concrete in an area over and adjacent to Folly Creek. Folly Creek runs in a generally north-easterly direction across the proposed spillway alignment towards the Dam proper. The contract provided that the contractor was not permitted to change the design nor the configuration of specified elements of the Concept Design without approval (clause DS3.4). This restriction included the overall geometry of the spillway which meant that the spillway level could not be changed without approval.
4 Under the contract, the contractor was required to excavate down to a solid rock base and refill with cement stabilised fill to the level necessary to support the spillway. The extent of fill, or conversely the level of the rock base, in the Folly Creek portion of the proposed spillway was of particular relevance to a tenderer as the proposed contract was a lump sum contract under which the contractor bore responsibility for dealing with latent conditions. Thus, if the level of fill was greater than assessed by the successful tenderer, that party bore the increased cost of both the excavation and the amount of refill required to support the spillway at the design level.
5 The risk of errors in the Specifications also lay with the contractor. Accordingly, the need for a tenderer to have accurate information available to it at the time of preparing the tender, was of critical importance. This was particularly so as, whilst tenderers were entitled to go on site and carry out their own investigations, there was no effective opportunity for them to do so. In the first place the time for the lodgement of tenders was relatively short – a period of 7 weeks. More particularly, however, there was no encouragement for tenderers to go on site. This was explained by the respondent’s project manager Mr. Alaeddin. He said “[I]t could be a disaster on site” if each of the tenderers sought permission to carry out geotechnical investigations before submitting a tender. Senior counsel for the respondent also conceded before the trial judge that this was the case.
The Tender
6 Included in the documents that comprise the Invitation to Tender were:
(i) a concept design report;
(ii) concept design drawings;
(iii) a Detailed Specification; and
(iv) a detailed geological investigation.
7 Some of this documentation, including the geotechnical report, was prepared by the Department of Public Works and Service (the DPWS), which had been engaged by the respondent to develop the design concept for the spillway with a view to that design concept being provided to the selected tenderers. The successful tenderer was to be engaged to develop and complete the design and to construct the works.
8 The respondent appointed its own project manager for the works, Australian Water Technology (AWT). AWT was involved in the project at the pre-tender stage and provided information to the DPWS relating to, inter alia, drainage in Folly Creek.
9 The appellant engaged SMEC Australia Pty Limited (SMEC) as a design consultant. It was required, as part of its engagement, to assist in the preparation of the tender. Its role in this regard was to prepare the required design aspects of the tender and estimate the volume and type of material to be excavated and removed.
The appellant’s claim
10 The appellant claimed that the tender contracts contained a representation as to the non-existence of any plans of, relevantly for the purposes of the appeal, an outlet pipe that drained water through an embankment over Folly Creek (the outlet pipe), which was misleading and deceptive in contravention of the Fair Trading Act 1987 (NSW) and the Trade Practices Act 1974 (Cth).
11 The matter upon which the appellant relied to base its claim that the respondent had engaged in conduct that was misleading and deceptive was the fact that the respondent had in its possession at the time that it issued the Tender documents, but failed to make available to the tenderers, additional documents and, critically for the purposes of this appeal, a plan dated 30 November 1951 entitled “Folly Creek Disposal Area Fill over 30” Pipe” (the 1951 cross-section). It was alleged this showed a cross-section of the outlet pipe. The cross-section also showed the level of fill above the original rock level at Folly Creek. The respondent accepted that if the 1951 cross-section was available, then, with other material, the appellant could have identified the location of the pipe which in turn would have provided information from which the underlying rock level could have been checked or deduced.
12 For the reasons stated at [4] above, this information was important to tenderers to enable them to accurately assess the amount of fill to be excavated and the amount of refill required so as to appropriately cost their tenders. As this information was not available to the appellant as the successful tenderer, it relied upon the information provided in the geotechnical report as to the rock level in Folly Creek. There was no dispute in the proceedings but that this information was “wildly wrong”.
13 The appellant commenced proceedings in the Common Law Division of the Supreme Court claiming damages for the losses it claimed it thereby suffered. The proceedings were referred to a Referee under Pt.72 r.2(1) of the Supreme Court Rules. The Referee made his report on 8 August 2002. The appellant failed on all claims before the Referee. The essence of the reasoning of the Referee was that whatever is shown on the 1951 cross-section it did not reveal a pipe that had been laid to carry water through the embankment for the simple reason that the embankment was not then constructed. The appellant argues however that the question that should have been addressed is whether the cross-section depicted the outlet pipe.
…
17 As I have said the original dam was built over a lengthy period, construction being completed in about 1962. In the early part of the construction, a road was built over Folly Creek. Some fill was deposited in the Creek at this time. A 30 inch drainage pipe was also laid in the Creek. On the basis of ordinary engineering principles that pipe would have been laid at about the level of the rock surface and, it would follow, before the fill was deposited. Later, and it would seem in 1963, a more permanent road (described as a land road or land bridge) was built across Folly Creek (AT 68). That road was built by placing a significant quantity of fill in the Creek, thereby creating a major embankment (the embankment). As a result, there was a damming effect on the upstream side of the embankment, creating what was referred to in the evidence as a “retention basin”. The retention basin then needed to be drained through the embankment into the creek.
18 There was no dispute in the proceedings that there was a pipe which provided this drainage. There was a question, however, whether the 30 inch pipe shown in the 1951 cross-section was the pipe used to drain the retention basin. The appellant’s contention was that it was the same pipe. The respondent did not directly deny this. Rather, its position was that there was no evidence that it was the same pipe, there being no evidence which demonstrated that the outlet pipe shown on the 1951 cross-section extended as far upstream as the known location of the drain entry point. The respondent submitted that whilst it did not know of any other pipe, it would be a “striking coincidence” if the pipe used to drain water through the fill placed there in about 1960 at the time of the construction of the road, finished “at the same point where ultimately an inlet was required to drain the retention basin that was built when it was decided to build the land bridge across Folly Creek”. More specifically, it contended that the 1951 cross-section did not depict the pipe that drained the embankment for the simple reason that the embankment was not then built. I will return to this issue later as it throws up the essential point raised by the appellant on the appeal.
19 There were a number of references to the fill in Folly Creek in the tender documents. In Clause 4.3 of the Geological Investigation it was noted that there were deposits of fill from the original construction of the dam and associated works distributed around the site and that the most extensive of those deposits occurred near Folly Creek. The clause continued:
“In Folly Creek there are extensive fill deposits that mantle the valley base. Some 120 m upstream of the hairpin bend in Valve House Road, an embankment of fill has been placed across the creek. A 0.78 m diameter concrete pipe passes creek flow beneath this embankment and well downstream, with its outlet occurring near a footbridge across the creek … .” (emphasis added)
It is to be noted that 0.78 m is the metric equivalent of 30 inches.
20 There were two other references to the embankment and the outlet pipe in the tender documents. In the Detailed Specifications, under the heading “Surface Water”, clause DS-59.2.14(c) provided:
“The Contractor is to design and construct surface water drainage systems as follows:
…
(ii) Folly Creek Drainage
During the closing phases of the original Warragamba Dam construction Folly Creek was filled in just upstream of the right side of the auxiliary spillway alignment forming an embankment of some 20m height. No plans are available of this embankment or of the outlet pipe … . Detailed design development will include the following main issues:
· …
· If the existing pipe is located and is unsuitable to incorporate into the final design it shall be blocked off and any potential piping of the fill material via the inside or outside the drain shall be eliminated. The design and construction of this drainage system must prevent fill material piping along any new pipe drain.”
(emphasis added)
21 A similar statement was made in clause 2.10.2 of the Concept Design Report. Subclause 2.10.2.3 then stated:
“Folly Creek Drainage
During the closing phases of the original Warragamba Dam construction Folly Creek was filled in just upstream of the now proposed auxiliary spillway forming an embankment of some 20m height. No plans are available of this embankment or of any outlet pipe but allegedly local runoff from the surrounding areas is piped away from this detention basin … The catchment area is about 40 hectares.
… If the existing pipe is located and is unsuitable to incorporate into the final design it shall be blocked off and any potential piping of the fill material via the inside or outside the drain shall be eliminated”
(emphasis added)
The emphasised portions of these clauses comprised the material that the appellant contended contained the representations upon which it based its claim. I will refer to these two statements as the representational material.
22 In late 1999, the existence of the additional documents was discovered. Of those only the 1951 cross-section is relevant to the issues on the appeal. As I have mentioned the cross-section is dated 30 November 1951. There is a date stamp on the top right hand corner containing the notation “work as executed 11 Nov 1963”. There are two lines drawn on the cross-section – a top horizontal line bearing the notation “road under construction”, which then slopes sharply to the right and bears the description “slope of fill as at 25/11/51”. There is then a lower line, which also slopes down to the right, marked “original surface”. At a point marked 300 feet (which corresponds to 92 chains) a 30 inch pipe is depicted.
23 On the appellant’s case the 1951 cross-section depicted the outlet pipe referred to in the representational material.
24 As a result of the information contained in the additional documents, the appellant discovered that the rock level was substantially lower than represented in the geological investigation report. This meant that the extent of fill was greater than the appellant had assessed in its tender. The appellant had allowed for excavation of approximately 24,300 m3. However, due to the substantially lower rock level, the extent of excavation actually required was approximately 130,033 m3, a difference in the order of 105,733 m3.
25 The appellant contends that had the 1951 cross-section and the other additional material been available at the time of tender, it would have been able to determine the natural rock level in Folly Creek and thus the depth of excavation required. From that, the appellant would have realised that the respondent’s geotechnical information relating to the rock level was erroneous by a significant margin and either sought further information from the respondent, or tendered on a different basis than it did. It contends that having tendered on the basis of the information provided by the respondent, it suffered a significant loss as it was required under the contract to absorb the increased cost of excavation and refill. The increased cost to the appellant was, on its claim, $8,294,000. The appellant made other associated claims and sought damages in a total sum of approximately $14.5 million.”
5 As to para [24] of her Honour’s reasons, the parties agree that the reference to the actual excavation required (which her Honour stated at 130,033m3) should be 204,518m3, so that the difference against what was allowed (24,300m3) should be in the order of 180,218m3. Nothing turns on this.

Abigroup’s representation case

6 The representations upon which Abigroup relied were set out in paras 15A, 16 and 21A of its statement of contentions. So far as is relevant, those paragraphs read as follows:

“15A. The Concept Design Documents represented:

(a) that during the construction of the original Warragamba Dam an embankment of fill was placed in the Folly Creek area over Folly Creek; and
(b) a pipe had been laid to carry Folly Creek through the embankment (‘ outlet pipe ’).

16. The Concept Design Documents represented

(a) during the closing phases of the original Warragamba Dam construction, Folly Creek was filled in just upstream of the auxiliary spillway alignment forming an embankment of some 20m height;

(b) SWC had no plans of this embankment or of the outlet pipe.
Particulars

(i) Clause DS-59.2.14(c) of the Specification.
(ii) Concept Design Report para. 2.10.2.3.”

…

21A. Further and in the alternative, by issuing the documents and drawings comprising the Invitation to Tender, including the Concept Design Documents, in circumstances where:

…
SWC represented that:

(i) the documents and drawings comprising the Invitation to Tender, including the Concept Design Drawings, issued to the Plaintiff contained all investigations and all necessary information to enable the Plaintiff to determine a tender price for the Works;

…
(vii) there were no plans of the embankment or the outlet pipe
...”

7 The parties accepted that para 15A(a) related to work done in about 1960, and that para 15A(b) referred to work done in about 1951. The reference in the particulars to para 17 to cl DS-59.2.14c of the specification is a reference to the material set out in para [20] of the reasons of Beazley JA. The reference to para 2.10.2.3 of the Concept Design Report is a reference to the material set out in para [21] of her Honour’s reasons.

8 Both the referee and Nicholas J treated the representation alleged in para 16 of the statement of contentions as one relating to an outlet pipe through the embankment. Thus, they considered, the representation was not falsified by the existence of the 1951 cross-section, because of necessity that could not relate to an outlet pipe constructed through an embankment built in 1960. The Court of Appeal held that this approach was erroneous. As Beazley JA said at para [61]:

“61 … The Referee did not, in his report, expressly determine what the representation was. Rather, as I have indicated, he proceeded upon a particular basis, namely, that the case concerned the question whether the 1951 cross-section depicted an outlet pipe flowing through the embankment. However, the appellant’s case, based directly on the representational material, was that the representation related to the absence of plans of any outlet pipe. The Referee did not at any stage address that case.”

9 At para [69], her Honour said that Nicholas J “linked the representation as to the construction of the embankment with the existence of the outlet pipe, then proceeded to determine the matter on the same basis as did the referee, namely that the case concerned representations about “plans brought into existence in about 1960”. Thus, her Honour said at para [73], Abigroup’s “claim has been determined without consideration having been given to the representation it alleges was made, namely, that there was a representation, that there were no plans of any outlet pipe, whereas there was such a plan, namely the 1951 cross-section. [Abigroup] was entitled to have that case considered … “.

Agreed issues

10 The Court of Appeal had dealt with a number of matters. Some (such as whether Sydney Water had made the representations itself, or had merely passed them on) were determined adversely to the Authority and can be put to one side. The parties agreed that the issues that required determination, having regard to the scope of the remitter, were as follows:

“Project”)

(a) paragraph 2.10.2.3 of the Concept Design Report; and

(“Representation”),

Trade Practices Act

Fair Trading Act

2. Did the Plaintiff rely on the misleading or deceptive conduct described above in submitting its tender and subsequently entering into the Contract with the Defendant for the Project?

Trade Practices Act

Fair Trading Act

4. In respect to the issues described in paragraphs 1-3 above, should the Court:

(a) make its own findings on those issues on the evidence adduced before the Referee; or

(b) refer those issues to the Referee or to another referee?

5. Should the Court adopt or reject the finding of the Referee that the Plaintiff had not suffered any loss or damage by the misleading or deceptive conduct described above?

6. If the answer to 5 above is “reject”, in respect of the assessment of the loss or damage suffered by the Plaintiff in relation to all matters except those relating to delay to and acceleration of the Project, should the Court:

(a) adopt or reject the findings of the Referee as to the quantum of damage in respect of the specific items claimed by the Plaintiff; and

(b) make the assessment itself on the evidence adduced before the Referee or refer that assessment to the Referee or to another referee?

7. If the Court is of the view that it should itself assess the loss or damage suffered by the Plaintiff on all matters except delay and acceleration, what is the amount of that loss or damage?

8. Should the Court adopt or reject the finding of the Referee that the Plaintiff was not delayed in achieving Practical Completion of the Project by the requirement to carry out substantially more work than had been anticipated in Folly Creek?

9. If the Court decides to either reject or otherwise not adopt the finding of the Referee described in paragraph 8 above, should the Court:

(a) refer that matter back to the Referee;

(b) refer it to another referee; or

(c) set it down for hearing before a judge of the Court?

10. Should the Court adopt or reject the Referee’s finding that there was no agreement between the Plaintiff and the Defendant on or about 1 July 1999 to the effect that a claim could [sic] brought for an extension of time notwithstanding non-compliance with the requirements of clause 35.5.5 of the contract?

12. If the answer to 10 above is no, and the Plaintiff ultimately establishes that it was delayed in achieving Practical Completion of the Project by the requirement to carry out substantially more work than had been anticipated in Folly Creek, is the Plaintiff nevertheless entitled to an extension of time by virtue of clause 23 of the Contract?”

The relevant principles

11 SCR Pt 72 r 13 empowers the Court to adopt, vary or reject a report in whole or in part, and to decide any question for itself either on the evidence taken before the referee or on that and additional evidence. It reads:

13 Proceedings on the report

(2) Evidence additional to the evidence taken before the referee may not be adduced before the Court except with the leave of the Court.”

12 The principles by which the discretion conferred by the Rule is to be exercised are well known, and were not in dispute. I stated them, at least to my own satisfaction, in Seven Sydney v Fuji Xerox [2004] NSWSC 902. I set out what I there said at paras [11] and [12]:

“11 The principles to be applied, in exercising the discretion conferred upon the Court by Pt 72 r 13 to adopt, vary or reject in whole or in part a report of a referee, are well established. There are a number of cases to which, customarily, reference is made. They include Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; the unreported proceedings in that case before Giles J (19 May 1992: the relevant considerations referred to by his Honour are sufficiently extracted in the decision of the Court of Appeal); Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60; White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193; and Foxman Holdings Pty Ltd v NMBE Pty Ltd (1995) 38 NSWLR 615. As to the nature and content of the referee’s obligation to give reasons, the relevant authorities include Xuereb v Viola (1988) 18 NSWLR 453 and Hughes Bros Pty Ltd v Minister for Public Works (Rolfe J, 17 August 1994, unreported; BC 9402885).

(2) The discretion to adopt, vary or reject the report is to be exercised in a manner consistent with both the object and purpose of the rules and the wider setting in which they take their place. Subject to this, and to what is said in the next two sub paragraphs, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised.

(3) The purpose of Pt 72 is to provide, where the interests of justice so require, a form of partial resolution of disputes alternative to orthodox litigation; that purpose would be frustrated if the reference were to be treated as some kind of warm up for the real contest.

(4) In so far as the subject matter of dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh.

(5) Where a report shows a thorough, analytical and scientific approach to the assessment of the subject matter of the reference, the Court would have a disposition towards acceptance of the report, for to do otherwise would be to negate both the purpose and the facility of referring complex technical issues to independent experts for enquiry and report.

(6) If the referee’s report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, patent misapprehension of the evidence refers to a lack of understanding of the evidence as distinct from the according to particular aspects of it different weight; and perversity or manifest unreasonableness mean a conclusion that no reasonable tribunal of fact could have reached. The test denoted by these phrases is more stringent than “unsafe and unsatisfactory”.

(7) Generally, the referee’s findings of fact should not be re-agitated in the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise. Thus, the Court will not ordinarily interfere with findings of fact by a referee where the referee has based his or her findings upon a choice between conflicting evidence.

(8) The purpose of Pt 72 would be frustrated if the Court were required to reconsider disputed questions of fact in circumstances where it is conceded that there was material on which the conclusions could be based.

(9) The Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee such evidence and submissions as they desire.

(10) Even if it were shown that the Court might have reached a different conclusion in some respect from that of the referee, it would not be (in the absence of any of the matters referred to in sub para (6) above) a proper exercise of the discretion conferred by Pt 72 r 13 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report.

(11) Referees should give reasons for their opinion so as to enable the parties, the Court and the disinterested observer to know that the conclusion is not arbitrary, or influenced by improper considerations; but that it is the result of a process of logic and the application of a considered mind to the factual circumstances proved. The reasoning process must be sufficiently disclosed so that the Court can be satisfied that the conclusions are based upon such an intellectual exercise. “

13 To that statement I add the following:

(1) The right to be heard does not involve the right to be heard twice.

(2) A question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come is not raised “by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it”. The real question is far more limited: ”to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence.”

(3) Where, although the referee’s reasons on their face appear adequate, the party challenging the report contends that they are not adequate because there was very significant evidence against the referee’s findings with which the referee did not at all deal, examination of the evidence may be undertaken to show that the reasons were in fact inadequate because they omitted any reference to significant evidence.

14 The first point restates the aphorism of Mahoney JA in Super at 567. The second, third and fourth points are drawn (and include direct quotations) from the judgment of Hodgson CJ in Eq (with whom Priestley JA agreed and with whom, as to the relevant principles, Fitzgerald AJ also agreed) in Franks & Anor v Berem Constructions Pty Ltd (NSWCA 2/12/98, unreported; BC 9806367). If I may say so with respect, I regard what his Honour said as giving content, on the facts of the particular case, to the operation of relevant principles rather than as stating any new principle.

First issue

15 Underlying the first issue is the question of construction of the representation. The resolution of that question requires an understanding of the context in which the relevant statements appear.

Concept Design Report

16 The function of the Concept Design Report was explained in its introduction. It is sufficient, for present purposes, to refer to the first two paragraphs:

“This report represents the background to the concept design of the Warragamba Dam Auxiliary Spillway. It is this concept design which will be further developed by the Design Development and Construct (DD&C) Contractor’s detail designer. The Concept Design Report will be read in conjunction with the design requirements set down in the Specification for the DD&C Contract Documentation.

The report covers three broad aspects of work. The first is the concept design of the Auxiliary Spillway itself and the second is the concept design of the modifications required to the existing dam. The third covers various miscellaneous aspects such as the continuation of services at the dam, environmental issues and constructability of the works.”

17 Section 2 of the Concept Design Report then dealt with various elements of the works to be undertaken and to other matters (including, in s 2.3 “Geotechnical Investigations”). Section 2.10 dealt with drainage. The first subsection, 2.10.1, dealt with sub-surface water. The second subsection, 2.10.2, dealt with surface water. Within that second subsection, s 2.10.2.3 dealt with Folly Creek Drainage.

18 The first two unnumbered paragraphs read as follows:

“During the closing phases of the original Warragamba Dam construction Folly Creek was filled in just upstream of the now proposed auxiliary spillway forming an embankment of some 20m height. No plans are available of this embankment or of any outlet pipe but allegedly local runoff from the surrounding areas is piped away from this detention basin (see AWT memorandum dated 9th June 1998 attached at Appendix B). The catchment area is about 40 hectares. Folly Creek was also filled in near the river and Access Shaft and runoff is charged into the river via a concrete box culvert. No plans are available for the extent of fill or the nature of the revetment wall.

The current concept design maintains the upper Folly Creek as a detention basin with a “low” flow pipe (nominally 600mm diameter) installed by trenchless technique under the existing fill and leading into the 12m deep drainage structure at the spillway right training wall as shown on Drawing 5007/66. Flows of the order of 100 year ARI would overflow the existing and new fill via erosion protected rockfilled gabion steps and an open channel protected against erosion by reinforced grass (using Tensar Mat or Enkamat 7020) and over the 4m wide slot in the top of the wall into the spillway. If the existing pipe is located and is unsuitable to incorporate into the final design it shall be blocked off and any potential piping of the fill material via the inside or outside the drain shall be eliminated. Similarly, attention would have to be paid to prevention of fill material piping along any new pipe drain. A new concrete inlet structure with galvanised steel trashracks (child-proof) is required.”

19 The AWT memorandum referred to made a number of comments, including the following:

“There is a drainage from the fill saddle to lower reaches of Folly Creek almost to the Ejector Station situated on the Lower Valve House Road. The entry and exit points of this drain are indicated on the attached plan. The exit of this drain can be seen just above shaft 3. Here drainage enters Folly Creek again before travelling under the Valve House Road near the Ejector Station and flowing into the river. This drain carries all water entering Folly Creek above the fill saddle.

All water entering Folly Creek below the fill saddle travels naturally down Folly Creek, under Valve House Road via two 1200mm SWD at the upper bend, then joins with waters exiting the drain from above the fill saddle, and travels again below Valve House Road near the Ejector Station before finally entering the river.

The mouth of the drain at the fill saddle is most likely partially overgrown, however the drain performs well under heavy rains and there has been no reports of blockages or backing up of water. The drain is approximately 900mm – 1050 mm in diameter where it exits into Folly Creek near Shaft 3. Investigations at the fill saddle would need to be undertaken to determine the diameter at the inlet.”

20 The “attached plan” showed a “drain entry point” immediately upstream of the embankment, and a “drain exit point” some distance downstream from the embankment. It also showed areas of the surrounding land that drained into Folly Creek “above fill saddle” and other areas that drained into Folly Creek “below fill saddle”. (The embankment was variously referred to as an embankment, a saddle or a fill saddle.)

The Detailed Specification

21 The contract was one for the design and construction of the auxiliary spillway. Thus, the successful contractor was required to design, as well as construct, the works; and all that was to be done for a lump sum. The function of the Detailed Specification was to set out in some detail the elements of the works to be designed and constructed. Section DS-3.3 of the Detailed Specification recognised that the “basic arrangements and layouts of all critical elements of the works [are] based on … known geological conditions [among other things] … , documented in, among other things, the Concept Design Report.”

22 Section DS-59.2.14 of the Detailed Specification dealt with “Water Management & Drainage”. However, the Authority submitted, it was necessary to read what was there said in the light of (among other things) section DS-16, which said certain things about the information provided to tenderers. Section DS-16.1, “General”, read as follows:

“The Principal does not represent that information made available to the Tenderer/Contractor shows completely the existing site conditions as it may contain errors, omissions or be misleading. Notwithstanding that the Principal has provided or provides to the Tenderer/Contractor information concerning the Site, the Existing Facility, the concept design, detail design of the Works, or other information attached hereto, this information could be incomplete or include errors.

The Tenderer/Contractor must not rely upon the information but must independently check the accuracy or otherwise of all information including design elements provided by the Principal which should be checked against errors and/or discrepancies and advise the Superintendent accordingly. The Principal is not responsible for any interpretation, deductions and conclusions made by the Tenderer/Contractor from the information made available and the Tenderer/Contractor shall accept full responsibility for any such interpretations, deductions or conclusions.

The information is made available to inform the Tenderer/Contractor of the Principal’s investigations and the Tenderer/Contractor shall in formulating his working methods and programs, assess the information contained in the reports and make allowance for such assessments.

The Tenderer/Contractor shall fully familiarise himself with the site and any further site investigations which the Tenderer/Contractor may consider necessary and which shall be at the Tenderer/Contractor’s expense.

The Principal shall not be liable for any incorrect, misleading or inaccurate information provided.”

23 The first subsection of section DS-59.2.14 required Abigroup to “develop, maintain and operate a drainage system” which met a number of objectives. The second section dealt with sub-surface drainage systems, including foundation drainage at Folly Creek. The third subsection dealt with surface water drainage at Folly Creek:

“(c) Surface Water

The Contractor to design and construct surface water drainage as follows:

…

During the closing phases of the original Warragamba Dam construction Folly Creek was filled in just upstream of the right side of the auxiliary spillway alignment forming an embankment of some 20m height. No plans are available of this embankment or of the outlet pipe. Folly Creek was also filled in near the river and Access Shaft and runoff is charged into the river via a concrete box culvert. No plans are available of the extent of fill or the nature of the revetment wall. Detail design development will include the following main issues:

· Upper Folly Creek is to be maintained as a detention basin with a “low” flow pipe (nominally 600mm diameter) installed by trench-less technique under the existing fill and leading into the 12m deep drainage structure at the spillway right training wall as shown on Drawing 5007/66.

· If the existing pipe is located and is unsuitable to incorporate into the final design it shall be blocked off and any potential piping of the fill material via the inside or outside the drain shall be eliminated. The design and construction of this drainage system must prevent fill material piping along any new pipe drain.

· Flows of the order of 100 year ARI should overflow the existing and new fill via erosion protected rock-filled gabion steps and an open channel protected against erosion by reinforced grass (using Tensar Mat or Enkamat 7020 or equivalent) and over the 4m wide slot in the top of the wall into the spillway.

· A new concrete inlet structure is required with galvanised steel trash-racks (child-proof) and appropriate security fencing. The Contractor shall undertake the structural design of this structure, including determination of area dimensions.

… “.

Concept design stage geological investigation

24 The material provided to Abigroup included the results of extensive geological investigations undertaken by the Department of Public Works and Services (Public Works). That material apparently comprehended the results of earlier investigations (undertaken for the original dam, and during its construction period), further investigation carried out in subsequent years, and investigations carried out in 1998 specifically for the purposes of the spillway project. It was, as the evidence before the referee acknowledged, a comprehensive investigation and report.

25 The summary referred to the fill that had been dumped in Folly Creek. It said that “[t]he fill is likely to be variable in composition” and “has been dumped in an uncontrolled manner and is likely to have variable states of compaction.” That was why the fill was required to be removed and replaced with, in the events that happened, cement stabilised fill, to support the spillway.

26 The fill was described in greater detail in section 4.3 of the report. That section included the information quoted by Beazley JA in para [19] of her Honour’s reasons. Figure 15 annexed to the report showed, immediately upstream of the embankment, a location described as“fill covered intake to drainage pipe beneath main fill” and, again well downstream, a location described as “outlet of 0.78 dia. drainage pipe beneath fill, on sand stone outcrop.”

Construction of the representation

27 Abigroup focussed on the following words:

(1) From section 2.10.2.3 of the Concept Design Report: “During the closing phases of the original Warragamba Dam construction Folly Creek was filled in just upstream of the now proposed auxiliary spill forming an embankment of some 20 metres height. No plans are available of this embankment or of any outlet pipe … “.

28 That is the representation set out in para 16 of the statement of Abigroup’s contentions and referred to in para 21A (see para [6] above). It is also alleged in para 21B (which relates to the making of the contract on the basis of the representation).

29 The referee rejected Abigroup’s representation case because he found that the relevant plans, including the 1951 cross-section, “were prepared long before the completion of the Dam and could not have been plans of the embankment then created.” (R 261). Further, he found, “[t]here is no evidence that any plans brought into existence at about 1960 showed the matters referred to in” the pleaded representation … “ (R 435). The referee construed the representation – that is to say, both aspects of the representation – as relating to the embankment. It was, however, Abigroup’s case that the representation as to the absence of the (or any) plan of the outlet pipe was not linked to the fill embankment.

30 It was because the referee had failed to consider that aspect of Abigroup’s case that the Court of Appeal concluded that he had not addressed a relevant – indeed vital – issue: see Beazley JA at paras [53] (setting out Abigroup’s case on this point) and [61] (in substance, accepting Abigroup’s submission).

31 Nicholas J approached the matter on the same basis as had the referee. The Court of Appeal thus concluded that his Honour had decided the question of adoption without considering the particular representation on which Abigroup relied: see para [69] (in which her Honour referred back to her summary of the reasoning of Nicholas J in paras [63] to [68] and [73]).

32 Sydney Water contended before the Court of Appeal, as it contended before me, that the representation on which Abigroup relied related to the (or any) pipe that was used to take water from the upstream to the downstream side of the embankment. Beazley JA referred to this submission at para [55].

33 If the Authority’s submission on this point were correct – ie, if the representation as to the outlet pipe were to be construed as relating to an outlet pipe for the detention basin upstream of the embankment - then this aspect of Abigroup’s challenge to the order of Nicholas J adopting the report must have failed. If that were the proper construction of the representation, then it would be arguable that the referee and Nicholas J had dealt with this aspect of Abigroup’s case on the correct basis. Further, if that were the proper construction of the representation but for some reason the referee and Nicholas J had not dealt with this aspect of the case on a correct basis, Abigroup’s case on this issue still would have failed. In either case, the Court of Appeal would not have remitted for further hearing the question of adoption of the report.

34 It is, I think, correct to say that the Court of Appeal did not in terms make a finding as to the proper construction of the representation relied upon by Abigroup. It may be that, at least by implication, their Honours rejected the construction for which the Authority contended. However, given that the Court of Appeal simply set aside the order of Nicholas J adopting the report, and remitted the question of adoption for further hearing, it may be that their Honours took that course because the discretion to adopt had miscarried. On that approach, it would be open to me, as the Authority submitted it was, to consider the question of construction and deal with it on what it submitted were its merits, without being constrained by the approach that is at least implicit in the Court of Appeal’s reasons.

35 I am not sure that this is so. But even if it were, I would reject the submission that the representation relied upon should be construed in the limited way for which the Authority contended. Regardless of whether, strictly speaking, there is a decision of the Court of Appeal on this point by which I am bound, I think that this aspect of Abigroup’s challenge to the report succeeds.

36 I reach that view because I do not think that, construing the representation in context, it is limited in the way for which the Authority contended. The Authority submitted that, in section 2.10.2.3 of the Concept Design Report, the context was drainage – specifically drainage of surface water – and that the first sentence of s 2.10.2.3 (relating to the construction of the embankment in about 1960) necessarily governed the reference to “any outlet pipe” in the following sentence. For essentially the same reasons, it submitted, the same approach should be taken to the construction of the representation in section DS-59.2.14 of the Detailed Specification.

37 However, the context includes not just the matters to which the Authority referred but also the material in the Concept Design Geological Investigation (Geological Investigation).

38 It is apparent from the totality of the material made available to tenderers (including Abigroup) that the embankment was constructed so as to form a detention basin in Folly Creek upstream of the embankment, and that there was some sort of pipe to enable water to flow from that detention basin to a point downstream of the embankment in Folly Creek. At this point, it is relevant to note that only one such pipe – that identified in the Geological Investigation as “[a] 0.78m diameter concrete pipe [that] passes the creek flowing beneath this embankment and well downstream” - was identified in the evidence. The evidence of Mr Neville, an employee or former employee of Public Works who, it was either conceded or shown,

39 The concept of a detention basin upstream of the location of the embankment (which in effect was to be replaced by a section of the spillway wall) with water being passed from that detention basin to a point downstream of the site of the embankment (ie, downstream of the spillway wall) was retained in the Concept Design Report and Detailed Specification. Thus, the existing arrangements for taking water through the embankment remained relevant, and required investigation.

40 When the representations are read in context, and having regard to the existing and continuing requirement for there to be a detention basin with water passing from it to a point downstream of the spillway, I do not think that it is the proper construction of the words “or of any [the] outlet pipe” that they relate only to an outlet pipe constructed for the purpose of enabling water to pass from a point upstream to a point downstream of the fill embankment. In other words, I think, the proper construction of the representation is that the reference to “any [the] outlet pipe” is not to be constrained by the reference to the embankment.

41 Thus, in section 2.10.2.3 of the Concept Design Report, I think that the words “any outlet pipe” refer to any outlet pipe, whenever constructed, that serves the purpose of conveying water from a point upstream to a point downstream of the embankment. They are not to be limited to a pipe placed during the construction of the embankment. Equally, in section DS-59.2.14 of the Detailed Specification, I think that the words “the outlet pipe” likewise refer to the outlet pipe which (it was known) served that function. In each case, I think, the words extend (although they may not be limited) to the 0.78m diameter pipe referred to in the Geological Investigation.

Conclusion on construction of representation

42 For these reasons, I conclude that the referee erred in his approach to the construction of the critical representation on which Abigroup relied. That makes it necessary to consider whether the representation was misleading or deceptive.

Was the representation misleading or deceptive?

43 Abigroup’s case was that the 1951 cross-section showed a (or the) drainage pipe that was in place beneath the embankment. The Authority’s case was that this had not been shown to be so; alternatively, that the referee’s finding that it had not been shown to be so was open to him on the evidence, so that there was no basis for the Court to interfere with that finding.

44 The reasons that the Court of Appeal gave for upholding Abigroup’s submissions in relation to the representation issue – in substance, that the referee had failed to consider this critical aspect of its case – must mean that the referee also approached the question of the identification of the pipe shown in the 1951 cross-section on an incorrect basis. Indeed, I think, this is in substance what Beazley JA said in para [61]. The referee’s approach to the primary, and critical, question – what was the proper construction of the representations relied on – has been shown to be wrong. It must follow, since that approach coloured his approach to the secondary or consequential question – were the representations, properly construed, misleading or deceptive – is open to review in any event.

45 Further, as Beazley JA indicated in para [60] of her reasons, the evidence on the identification of the pipe shown in the 1951 cross-section as the pipe referred to in the representations was all one way. Her Honour said:

“60 However, the evidence was more specific than conceded by the respondent. Mr Gray, Mr Braybrooke and Mr Alaeddin all gave evidence that the pipe shown in the 1951 cross-section was the outlet pipe referred to in the representational material. Further, there was no cross-examination of any of these witnesses to the effect that the 1951 cross-section or any cross-section showing a pipe, in engineering terms, could not be a plan – and in this case a plan of the outlet pipe. Further, to the extent the AWT contour plan was relevant, the appellant demonstrated that when it is compared with the 1951 cross-section, the position of the inlet and outlet points is such that the outlet pipe depicted on the cross-section is located at a point along the pipe that flows between the inlet and outlet points.”

46 The parties agreed that the reference to “Mr Alaeddin” should be read as a reference to Mr Lehmann, a surveyor from whom Abigroup had adduced the unchallenged evidence referred to in para [54] of her Honour’s reasons. Mr Alaeddin was an employee of Sydney Water, and I do not think that he gave evidence of the kind referred to by her Honour in para [60]; or if he did, I was not referred to it.

47 The evidence of Mr Lehmann, a surveyor, was particularly cogent. As her Honour noted in para [54], that evidence was unchallenged; and as her Honour noted in para [47], the referee accepted Mr Lehmann’s evidence. For convenience, I set out para [54]:

“54 This conclusion, according to the appellant indicated that the trial judge, like the Referee, had simply failed to deal with the case it had advanced or had misapprehended it. In relation to the latter point, it was argued that this was not a case that merely involved the trial judge assessing whether the Referee had weighed all the evidence and reached a determination on the evidence as evaluated. Rather, the appellant had established that the respondent had in its possession a cross-section of the outlet pipe and that it had adduced unchallenged evidence by Mr. Lehmann and others that the pipe depicted in the cross-section was the same pipe as referred to in the respondent’s tender documents. The appellant pointed out that the Referee found there was an express representation, and made the further finding that the cross-section showed that the rock levels were lower than represented in the tender. This was critical and, the appellant submitted, established the misrepresentation. It was submitted that for his Honour to have rejected the appellant’s case he must have overlooked that the Referee accepted Mr. Lehmann’s evidence and failed to understand that its case was that there had been a representation as to the now non-existence of the outlet pipe.”

48 Thus, the evidentiary position is that:

(1) There was unchallenged evidence from a number of witnesses identifying the pipe shown in the 1951 cross-section as the outlet pipe referred to in the representation.

(2) There was no evidence in rebuttal.

(3) There was no evidence that more than one pipe had ever been built in, or under, the embankment.

(4) Mr Neville, who was responsible for the preparation of the drawings, conceded that the pipe shown in the 1951 cross-section might be the pipe referred to in the representations, and said further (as I have indicated in para [38] above) that he was aware of only one pipe passing under or through the embankment.

(5) The two pipes were of the same dimension; the parties did not dispute, as Beazley JA noted in para [19], that 0.78 metres is the metric equivalent of 30 inches.

Conclusion on the first issue

49 In those circumstances, I think, it is open to conclude, and I do conclude, that the pipe shown in the 1951 cross-section was the outlet pipe referred to in the representation. Thus, I conclude, the representation properly construed, denying the existence of any such plan, was misleading or deceptive.

Second issue

50 The referee concluded that reliance had not been established. However, as Beazley JA said at para [79], that finding was infected by the erroneous approach that the referee took to the construction of the representation. Further, as her Honour said at para [78], there was direct evidence of reliance. Her Honour returned to this at para [80], concluding that the evidence must have been overlooked by the referee because of his misunderstanding of Abigroup’s case. For convenience, I set out para [80]:

“80 The appellant says that, in any event, on its case as properly understood, there was direct evidence of reliance. Mr. Alaeddin said:

“[The 1951 cross-section] does show the outlet pipe. In my opinion, that document depicts the location of fill above the original surface level.

I have also been shown [the additional documents] … Had I received those documents … at the time we were assisting Abigroup to prepare its tender, the first question I would have asked of Abigroup was whether there was any other information accompanying those documents or whether there was (sic) any other sectional plans which had not been provided to SMEC. Assuming the answers to those questions were no, SMEC would then have used those documents in conjunction with the other information that was provided to SMEC.

In my opinion, the [additional documents] …show the ground levels on the right hand side of the spillway which are lower than the anticipated bedrock level shown in the Concept Design Report (and the documents referred to in that report) and on the Concept Design Drawings.

51 The parties agreed that the reference to Mr Alaeddin should be read as a reference to Mr Gray of SMEC, a consultant to Abigroup that assisted Abigroup in the preparation of its tender.

52 Again, Beazley JA considered Nicholas J’s approach to the question of reliance was infected by his Honour’s erroneous construction of the representations: see para [83]. In addition, her Honour found that Nicholas J had overlooked evidence of reliance: see para [84], which for convenience I set out:

“We had to use the information supplied in the tender documents because there was nothing else.””

53 Thus, her Honour concluded in para [86]:

“86 In this case, the evidence was all to the same effect. The representational material was contained in the Invitation to Tender, from which it could and probably would, be inferred was intended as an inducement to submit the tender in the terms the appellant did. The appellant’s witnesses accepted that the geotechnical information contained in the Invitation was accurate and that they considered it was reasonable for them to proceed on that basis (absent any other available information such as historical plans to indicate to the contrary, or at least to raise a question in the minds of those charged with considering the material). The appellant treated the information as accurate, even though it bore the risk of any inaccuracy, but it did so in circumstances where it had no practical opportunity to do its own site inspections. All of those factors were matters that should have been taken into account by the Referee, and in turn the trial judge. In my opinion, they were all factors from which reliance could be inferred.”

54 The Authority had contended before the Court of Appeal that, because there was no evidence of reliance, the appeal should in any event be dismissed. Her Honour rejected that submission at para [87]:

“87 It follows, in my opinion, that the respondent’s contention that the appellant cannot demonstrate that it relied on the representation or treated it as material has not been made out and therefore does not provide a reason to dismiss the appeal.”

55 I take that as a finding, binding on me, that there was evidence of reliance. Even if it is not to be so understood, the evidence to which Beazley JA referred (the content of which was proved, and the subject of submissions, before me) is clearly capable of supporting a conclusion of reliance. If it were necessary for me to reach an affirmative conclusion of reliance (ie, if I were not bound to do so by the finding of the Court of Appeal), I would do so on the basis of that evidence.

56 I therefore conclude that Abigroup has made out its case of reliance.

Third issue

57 The referee concluded that the estoppel defence was made good (R 583). He relied on an “acknowledgment” signed by Mr Havercroft on behalf of Abigroup, on 28 November 1998 (before the contract was made), by which Abigroup acknowledged that the documents listed in the acknowledgment might be incomplete, contain errors, or be misleading; and must not be relied upon. The documents to which that acknowledgment referred did not include the Concept Design Report or the Detailed Specification in which the representations are to be found. The parties agree that, for this reason, it is open to the Court to reconsider the question of estoppel. Nicholas J did not do so. Accordingly, the question of estoppel is included in the remitter from the Court of Appeal.

58 The estoppel defence on which the Authority relies is based on clauses 12 and 12A of the General Conditions of Contract. Those conditions were referred to in the Concept Design Report and Detailed Specification, and formed part of the material given to prospective tenderers, including Abigroup. They read as follows:

“12. SITE CONDITIONS

The Contractor accepts the condition of the Site and of the Existing Facility. The Contractor has not relied on any information provided by the Principal relating to the Site or the Existing Facility or as to any other matter relating to the performance of the contract. The Contractor has itself conducted all necessary investigations of the Site, its environs and the Existing Services.

12A. PRINCIPAL’S INFORMATION

12A.1 The Contractor acknowledges that it has received certain information from the Principal, including but not limited to information listed in DS-16.7 of the Detail Specification, Schedule 39 and various addenda.

12A.2 Subject to Clause 28.1, the Principal gives no warranty and makes no representation as to the completeness or the accuracy of any information provided by it to the Contractor.

12A.3 The Contractor acknowledges that it has not relied on the information and shall make no claim and has no entitlement arising out of the condition of the Site or the Existing Facility.”

59 The reference to clause 28.1 can be disregarded. The parties did not suggest that it was relevant to the estoppel issue.

60 The Authority also relied on sections DS-16.1, 16.2 and 58.2 of the Detailed Specification. Section DS-16 reads as follows:

DS-16. INFORMATION AVAILABLE TO THE TENDERER/CONTRACTOR

DS-16.1 General

The Principal does not represent that information made available to the Tenderer/Contractor shows completely the existing site conditions as it may contain errors, omissions or be misleading. Notwithstanding that the Principal has provided or provides to the Tenderer/Contractor information concerning the Site, the Existing Facility, the concept design, detail design of the Works, or other information attached hereto, this information could be incomplete or include errors.

The Tenderer/Contractor must not rely upon the information but must independently check the accuracy or otherwise of all information including design elements provided by the Principal which should be checked against errors and/or discrepancies and advise the Superintendent accordingly. The Principal is not responsible for any interpretation, deductions and conclusions made by the Tenderer/Contractor from the information made available and the Tenderer/Contractor shall accept full responsibility for any such interpretations, deductions or conclusions.

The information is made available to inform the Tenderer/Contractor of the Principal’s investigations and the Tenderer/Contractor shall in formulating his working methods and programs, assess the information contained in the reports and make allowance for such assessments.

The Tenderer/Contractor shall fully familiarise himself with the site and any further site investigations which the Tenderer/Contractor may consider necessary and which shall be at the Tenderer/Contractor’s expense.

The Principal shall not be liable for any incorrect, misleading or inaccurate information provided.

DS-16.2 Geological Information

The Geological information available for reference by the Tenderer/Contractor is given in the Appendices.

The Tenderer/Contractor is to allow for encountering any materials or conditions in the site including contaminated material which require [sic] special treatment under EPA and WorkCover Guidelines. Payment for handling and off site disposal of such material shall be made in accordance with relevant items of the Schedule of Rates.

The Tenderer/Contractor shall note that in the past, areas within the Spillway alignment or nearby may have been used for a concrete batching plant, mechanical workshops, disposal of construction spoil, and for burial of other materials from the previous construction works carried out on Warragamba.

Indications from staff employees and review of historical photos detailed large amounts of fill may had [sic] been dumped down the embankment of Folley’s [sic] Creek. Presently some drums and wires can be seen protruding from the side of the fill.”

61 I do not think that section DS-58.2 was in evidence. However, the Authority said that it read as follows:

“The Contractor shall make his own deductions and conclusions as to the nature of the materials to be excavated, the difficulties of making and maintaining the required excavations and of doing other work affected by the geology and other conditions of the site and accept [sic] full responsibility therefore. The Geological Reports provide factual and interpretative information.”

62 In the absence of any dispute from Abigroup, I am prepared to proceed on the basis that section DS-58.2 (which was in evidence before the referee) was in those terms.

63 The Authority put its case on estoppel on two bases. The first was estoppel by convention; the second was estoppel by representation. The two were conflated, as paras 143 to 144 of the Authority’s written submissions show:

Trade Practices Act

144. SCA did not seek to bind Abigroup to a mere promise not to rely upon an enactment. Rather, it sought to prevent Abigroup from pursuing a case in damages which asserted as its factual foundation a statement of Abigroup’s position which was directly contrary to that represented by Abigroup to be the basis upon which it contracted, namely, that but for the alleged misrepresentations, it would not have entered into the contract.”

64 The referee summarised the estoppel defence at R 65, and dealt with it at R 571-583. He appears to have treated the defence as one of promissory estoppel only. That having been said, I am not sure that the addition of conventional estoppel is significant in the outcome, for reasons that I shall explain. In any event, as I have said in para [57] above, the Authority accepted that the referee had erred in his approach to the question of estoppel; and Nicholas J did not deal with it.

65 The question of estoppel becomes relevant only if it is assumed that Sydney Water was guilty of misleading or deceptive conduct. In the circumstances of this case, the doctrine of estoppel only arises for consideration if it is concluded that:

(1) the representation as to the absence of any plan of the (or any) outlet pipe was misleading or deceptive; and

(2) in some material way that representation induced the making of the contract; and

(3) in consequence (“by” that misleading or deceptive conduct) Abigroup suffered loss.

66 It is clear that, if one party (A) to a contract was induced to enter the contract by misleading or deceptive conduct (for example, a material misrepresentation of fact) on the part of the other (B), B cannot escape liability because the contract contains a term that purports to acknowledge that (for example) there was no anterior representation made to A, or on which A relied; or that purports to exclude liability for the consequences of any such representation. See the judgment of Burchett J in Oraka Pty Ltd v Leda Holdings Pty Ltd (1997) ATPR 41-558. Although his Honour’s decision was reversed on appeal, the relevant principle was affirmed by the majority in the Full Court: (1998) ATPR 41-601 at 40, 517-40-518 (Branson and Emmett JJ).

67 The same principle applies to any document, including dehors the contract, that would purport to exculpate B from the consequences of its misleading or deceptive conduct. See Waltip Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) ATPR 40-975; Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1989) ATPR (Digest) 46-048; and IOOF Australia Trustees (NSW) Ltd v Tantipech (1998) 156 ALR 470.

68 Tantipech concerned the lease of a shop in a suburban shopping centre. The trial judge held that the tenant had been induced to enter the lease by misleading or deceptive conduct on the part of the landlord’s agent. Clause 25.07 of the lease contained a “whole transaction” clause and purported to “cancel” any representations. In addition, it contained a statement by the tenant that he entered the lease without relying on any representation or warranty save as listed. There was also a collateral deed made whereby the tenant agreed to indemnify the landlord against any claim in respect of any representation not disclosed in the lease, and whereby the deed was agreed to be a complete bar to any such claim. The Full Court held that neither cl 25.08 of the lease, nor the relevant terms of the deed, could defeat the tenant’s claim. That reflected, their Honours said, the public policy underlying s 52 of the Trade Practices Act. That public policy, they held at 479, “must extend to any document which purports to excuse a representor from liability for contravention of section 52”.

69 That public policy was exposed in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83, 98-99 (Lockhart J, with whom Burchett and Foster JJ agreed). The Full Court paid attention to the function of s 52 as part of the consumer protection provisions of the Act. They said that the policy underlying the section required that it could not be ousted by private agreement:

“Parliament passed the Act to stamp out unfair or improper conduct in trade or commerce; it would be contrary to public policy for special conditions such as those with which this contract was concerned to deny or prohibit a statutory remedy for offending conduct under the Act.”

70 The effect of an estoppel by convention is to bind parties to an agreed or assumed state of facts as the basis of their legal relationship: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, 244. A conventional estoppel may prevent a party to a contract from contending that a term has a meaning inconsistent with that assumed by the parties as the basis of their relationship. Thus, in Eslea Holdings Pty Ltd v Butts (1986) 6 NSWLR 175 at 185, Samuels JA, with whom Kirby P agreed, upheld the view of the trial judge that a conventional estoppel prevented the appellant “from contending that on its true legal construction [a] guarantee has the limited operation which it otherwise enjoys”. The appellant was estopped from contending that a guarantee given by it did not extend (as, on its terms, properly construed it would not extend) for the benefit of certain entities.

71 In this case, the conventional estoppel and the terms of the contract are to the same effect. It is for that reason that I said earlier that I do not think that the conventional estoppel stands in any different position to an argument based on the terms of the contract themselves. If the Authority could not rely on the relevant terms because of the policy explained in Henjo and applied in Tantipech and the other cases to which I have referred, why is it in any better position because those terms are binding on Abigroup not as a matter of contract but as a matter of conventional estoppel? This illustrates the point made by Samuels JA (with whom Hope JA agreed) in Coghlan v S H Lock (Australia) Ltd (1985) 4 NSWLR 158 at 167. Estoppel in pais, or estoppel by representation, depends on the making of a representation, and holds the representor to that representation. Estoppel by convention does not. In the latter case, the estoppel may arise from an assumed state of affairs in which representation plays no part; in the former, representation is an essential element of the estoppel.

72 I therefore conclude that the defence of estoppel, in so far as it is based on conventional estoppel, should not succeed. I now turn to the alternative formulation, based on estoppel by representation.

73 The basis on which an estoppel by representation binds the party making the representation is that it would be unjust, in all the circumstances, to permit that party to act inconsistently with the representation. See the analysis of Mason CJ and Wilson J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 404-406. As Brennan J put it in The Commonwealth v Verwayen (1990) 170 CLR 394 at 428-429, “equitable estoppel yields a remedy in order to prevent unconscionable conduct on the part of the party who, having made a promise to another who acts on it to his detriment, seeks to resile from the promise”. (If I may say so, I do not think that his Honour’s statement of principle is the less illuminating because his Honour dissented in the result in that case.) That is why, as his Honour said in the immediately following sentences at 429, “[t]he remedy is to effect … “the minimum equity to do justice” … . The remedy is not designed to enforce the promise although in some situations … , the minimum equity will not be satisfied by anything short of enforcing the promise.” In the same case, Deane J at 444 identified the “central principle” of the doctrine of estoppel by conduct as being “that the law will not permit an unconscionable – or, more accurately, unconscientious – departure by one party from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that other party’s detriment if the assumption be not adhered to … “.

137 The Court held in Murphy that lessees who entered into a lease on the basis of misleading or deceptive representations as to outgoings were entitled to recover, by way of damages, damages to compensate them for outgoings greater than those represented to them. That was so even though there was no evidence that the amount that they paid for their leasehold interest was greater than its true value at the time, or that its true value was diminished because of the greater outgoings (compared to those represented) that were charged.

138 The core of the Court’s reasoning is found at 333 [54]-[55]. Their Honours said that the statement of estimated outgoings given to the plaintiffs was misleading because it did not take account of all amounts that could be charged as outgoings. That meant, as their Honours said, that the obligation undertaken by the plaintiffs to pay outgoings might be larger than they had been led to believe would be the case. Their Honours said that the plaintiffs did not suffer loss until the contingency – that the defendant would charge outgoings in accordance with its actual entitlement, and not in accordance with the representations - was realised. It might never have done so. It was only when it decided to do so that the adverse risk eventuated. Their Honours said:

“In the present case, the finding that the appellants had been induced to enter the lease by a statement of estimated outgoings that was misleading, because it did not take account of all amounts that could properly be charged as outgoings, meant that the appellants undertook an obligation which may, but need not, have proved to be larger or more costly than they had been led to believe. There may be cases in which a person misled in this way suffers loss upon entering the agreement. That may be so if it could be shown that the sum paid exceeded the market value. But that was not this case. No evidence at trial suggested that they had paid more than market value. There was no misrepresentation about the nature or quality of the property being acquired. The first appellant knew and understood that the lease obliged the appellants, as tenants, to pay outgoings in amounts which the lessor was to determine.

What the appellants did not know was that the estimate of outgoings they were given did not provide for all the outgoings that were then being incurred. Here, therefore, the appellants suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid (that items other than those used to form the estimate were then being incurred and could be charged as outgoings) was first realised. That was a contingency in the sense that the adverse risk might never have eventuated. When the lease was entered in 1992, the respondent was charging levies in relation only to limited categories of the overall outgoings. The respondent might have chosen to continue to charge the appellants only for those limited categories. On the other hand, it was possible that after 1992 it might decide to charge for wider categories. It was only from the time when it in fact decided to depart from the 1992 position and charge for the wider categories that the adverse risk eventuated. When it did but only then, the appellants suffered loss and damage. …“.

139 On that analysis, there is a crucial distinction between the facts in Murphy and the facts in this case. In this case, the true rock level was at all material times the same. The amount of excavation required was at all material times the same. The amount of stabilised fill required was at all material times the same. When Abigroup entered the contract with Sydney Water, it undertook the obligation to excavate (including in and around the Folly Creek embankment) to rock, so as to provide a sound base for the stabilised fill, and to place stabilised fill to the design level required for the base of the spillway. Further, it undertook that obligation at its risk, in that it bore the risk of latent conditions. Thus, when Abigroup entered the contract, it was bound at its own cost and risk to remove between 4 and 5 times more material than was allowed for in its price, and (presumably) to place between 4 and 5 times more stabilised fill than was allowed for in its price. Abigroup suffered loss, in respect of the excavation and stablilised fill in the Folly Creek region, when the contract was entered, although the extent of that loss was not known until the work was completed. Loss suffered was because, due to the latent conditions, the volume of work that Abigroup became obliged to perform on entering the contract was vastly greater than that allowed for in the price.

140 In this sense, there is no question of contingency. This is not a case where loss might or might not occur, depending on a decision taken by a third party. It is a case where loss was bound to occur upon, and by virtue of the terms of, the contract; and in turn because of the misleading or deceptive conduct that induced Abigroup to make that contract.

141 I think that my analysis of the decision in Murphy, and my distinguishing it from the facts in this case, is supported by the decision in HTW Valuers. In that case, the defendant (appellant) valued a shopping centre, the purchase of which the plaintiff (respondent) was considering. The plaintiff agreed to buy the shopping centre induced (among other things) by the defendant’s valuation. There was a new shopping centre under construction nearby. The defendant knew of that. The trial judge found that the defendant should have qualified its valuation advice by cautioning the plaintiff about the uncertain effect the new shopping centre would have on the profitability (and, therefore, value) of the shopping centre that the plaintiff bought.

142 The Court considered that the plaintiff suffered damage on entering the contract to buy the shopping centre. It was then worse off because, on that day, the purchase price exceeded the market value. The Court said at 197 [28]:

“[28]…If the plaintiff had learned the day after entering the contract to buy the Plaza, or the day after completing that contract, that the defendant's conduct had been misleading in the sense ultimately found by the trial judge, it could have started proceedings then and there. There was unchallenged evidence from Mr Dodds that on either of those dates the plaintiff was in fact worse off as a result of the defendant's breach, since the market value was less than the price. It was not necessary to wait for nearly two years to ascertain that some loss had been suffered. The plaintiff could have found out at once that it had bought something which was worth less than that which it had agreed to pay and did pay. It could have recovered at least the difference between the price paid for, and the market value of, the Plaza. The limitation period would have begun to run.”

143 Thus, the Court said 197 [29], the case before it could be distinguished from Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514. Wardley was a case where the plaintiff sustained only the risk of loss, or the contingency of loss, when it entered into the contract. HTW Valuers, on the Court’s analysis, was a case where the plaintiff sustained actual loss on entering the contract.

144 For similar reasons, their Honours at 197 [30] distinguished the case before them from Murphy. That was because, in Murphy, loss was contingent on the respondent’s exercising its discretion to increase the charges; and that contingency might or might not occur. But in HTW Valuers, the risk to which the defendant, by its misleading or deceptive conduct, had not alerted the plaintiff had its impact on the plaintiff when the plaintiff entered the contract. The Court said (omitting citations):

Wardley Australia Ltd v Western Australia

Murphy v Overton Investments Pty Ltd.

Murphy v Overton Investments Pty Ltd

.

Murphy v Overton Investments Pty Ltd

145 Thus, their Honours said at 198 [32], the case resembled “cases where a wrong results in the immediate loss of a chance or commercial opportunity which had some value, although the process of measuring the worth of that chance or opportunity depends on estimating the significance of events which are, or may be, yet to come.” And at 198 [33], their Honours confirmed that “[t]here is no doubt, then, that from the moment it contracted to buy the Plaza, the plaintiff suffered a loss.”

146 I regard the reasoning in HTW Valuers, and the basis on which the Court there distinguished its decisions in Wardley and Murphy, as supporting the approach that I have taken in this case to Abigroup’s “no contract” case in so far as Abigroup sought to support that case by relying on the decision in Murphy. Accordingly, I do not understand the decision in Murphy to require that the no contract analysis should lead to any outcome different to that set out in para [135] above.

147 Thus, if it were necessary to consider the matter on the basis of a no contract analysis, I would conclude that Abigroup has not proved that it suffered loss. It follows, on this hypothesis, that I would adopt the referee’s conclusion although not his reasoning.

Sixth and seventh Issues

148 It follows from what I have just said that these issues do not require consideration.

Eighth and ninth Issues

149 Abigroup claimed to have been delayed in its completion of the works by reason of the additional work required in the Folly Creek area. If there were a relevant delay in achieving practical completion then the question of extension of time would be raised. If Abigroup were entitled to an extension of time then it might be entitled to delay costs. If there were no entitlement to an extension of time (because of the answers to issues 10 or 12) then there might be a claim for damages. In this context, Abigroup sought the cost of the alleged delay either as damages under s 82 or as damages for breach of contract.

150 Logically, the starting point in a consideration of these issues is the question posed by issue 8 relating to delay in achieving practical completion. However, because of the view to which I have come on other issues, and for the reasons that follow, I do not need to give a concluded answer to issue 8. That is because (as will be seen) I conclude that issues 10 and 12 should be answered adversely to Abigroup. On that basis, the contract provides a complete answer to any claim for an extension of time; and my conclusion in respect of the fifth issue necessarily means that Abigroup can have no discrete claim for damage in respect of the alleged delay in achieving practical completion. Any such claim must be recoverable (if at all) either under the alternative contract analysis that, seemingly, was pressed before the referee, or alternatively under the no contract analysis that was pressed before me. Since neither basis is made good, the components that might be thought to bear on the quantification of the claim (because they form part of the actual cost incurred by Abigroup in performing its obligations) go nowhere in terms of damages. Just as my answer to the fifth issue disposed of the sixth and seventh issues (see para [148] above), it disposes of any claim for damages in respect of the eighth issue.

The s 82 Case

151 As to the claim under s 82, Abigroup submitted that Sydney Water’s misleading or deceptive conduct required it both to complete for a fixed sum that made allowance for the extra work required in the Folly Creek area and to complete by a fixed date which, again, made no allowance for that work. The conclusions to which I have come on Issue 5 means that (as with Issues 6 and 7) I do not need to consider this aspect of Issue 8. Thus, Abigroup’s complaint that the referee failed to consider this aspect of its claim under s 82, even if it be correct, goes nowhere.

152 The Authority contended that Abigroup’s claim under the contract was barred by cl 35.5.5 of the general conditions. Clause 35 deals with “times for commencement and practical completion”; subcl 35.5 deals with “extension of time for practical completion”. Relevantly, it reads as follows:

Extension of Time for Practical Completion

153 Abigroup appeared to accept (subject to what it contended in relation to cl 23, which I consider below in relation to Issue 12) that cl 35.5 is a bar to its claim in contract (either for damages for breach of contract or for an extension of time under the contract). However, it contended, there was an oral agreement made between Abigroup and Sydney Water’s Superintendent that the Superintendent would consider a delay claim following completion of the excavation for the spillway, and that if the Superintendent considered that there had been a delay within the contract, he would grant an extension of time notwithstanding that Abigroup had not submitted the required notices (see R 527).

154 The referee concluded that no such agreement had been made (see R535 and 541). He concluded further that Abigroup should not be permitted to raise an alternative, unpleaded and unparticularised, reply of waiver (see R 539); and that, in any event, he was not satisfied that the Superintendent or his representative did not act in good faith in deciding not to allow the claim (see R 538).

155 Abigroup challenged the referee’s conclusion on the alleged agreement. I discuss this in the next section of these reasons (dealing with Issue 10). Because I conclude that the challenge fails, and that this aspect of the report should be adopted, it is unnecessary for me to spend further time on issues 8 and 9.

No entitlement in any event

156 Nonetheless, if it were necessary for me to do so, I would uphold the referee’s report on the question of delay. On that question, the principal dispute was between the experts called for Abigroup (Mr Hammond) and the Authority (Mr Senogles): whether the works in the Folly Creek area were on the critical path to completion. Messrs Hammond and Senogles were experts in the science, (or art) of construction programming. They held conflicting views; and they were unable to resolve their conflicts even after they had conferred and produced a joint report. The referee considered their evidence, relatively briefly, at R 543-570. He preferred the approach taken by Mr Senogles. He concluded that Abigroup had not on the facts made out any case of delay that would (assuming compliance with the contract) entitle it to an extension of time.

157 Abigroup attacks the referee’s reasoning. If it were necessary for me to do so, I would conclude that the referee reviewed the evidence and the issues in a way that gives me the required level of confidence in his conclusion. Were it necessary for me to consider the matter, I would not conclude that this aspect of the referee’s reasons should be rejected; on the contrary, because I hold a degree of comfort sufficient to enable me to conclude that those reasons should be adopted, I would so conclude.

Tenth issue

158 The referee referred to the evidence for and against the alleged agreement at R 378 and 379. The witnesses were Mr Walton (of Abigroup) and Mr van Breda (of Sydney Water). The referee did not in those paragraphs express a conclusion. However, at R 380 the referee referred to Mr van Breda’s account of what he said at a pre-tender meeting held on 4 September 1998. The referee accepted that Mr van Breda at that meeting referred to the inability of Sydney Water to guarantee the geological information; the “risk exposure” that tenderers would have to carry; and the desirability of tenderers carrying out their own investigations. The statement of Mr van Breda at that meeting could not be regarded as consistent with the statement attributed to him by Mr Walton, from which the alleged oral agreement is said to arise.

159 The referee analysed the claim, and the evidence, at R 528 and following. He considered the alleged conversation in the light of two subsequent items of correspondence (R 531 and 533) and concluded at R 535, that there was no agreement as alleged by Abigroup.

160 In my judgment, this conclusion was open to the referee. Further, as the referee noted, the conversation itself was not in terms indicative of agreement; as he put it in R 528 “at best Mr van Breda agreed to look at the issues when the excavation was complete.” Having regard to Mr van Breda’s comment, in the same conversation, that Abigroup had to bear some risk for latent conditions, including rock levels (i.e. that variations in rock level were Abigroup’s risk and not Sydney Water’s), I do not think that the referee erred in his analysis of the conversation.

161 Certainly, having regard to the principles that I have set out above as to the approach that this Court should take when considering the question of adoption, I do not think that the referee’s conclusion shows patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding. Nor do I think that the referee’s conclusion on this issue is one that no reasonable tribunal of fact could have reached. Indeed, as I have said, I conclude to the contrary: that the conclusion was open to the referee on the evidence.

162 I therefore conclude that Issue 10 should be answered by adopting the referee’s finding on this point.

Eleventh issue

163 The phrasing of Issue 11 is unfortunate, in that it refers to the answer to question 10 being “yes” (and Issue 12 refers to the answer being “no”) whereas Issue 10 is not a “yes/no” question but an “adopt/reject” question. However, I understand, contextually, that in Issue 11 “yes” means “reject”, and that in Issue 12 ‘”no” means “adopt”.

164 On that understanding, Issue 11 does not arise for consideration.

Twelfth issue

165 On my understanding of Issue 12 (see para [162] above, it does arise for consideration because of my answer to Issue 10.

166 Clause 23 of the General Conditions reads as follows:

SUPERINTENDENT

167 Abigroup relied on the decision of the Court of Appeal in Peninsula Balmain Pty Limited v Abigroup Contractors Pty Limited [2002] NSWCA 211 at para [69] to [72]. In that case, the Court of Appeal confirmed that the obligation of the Superintendent to act reasonably under cl 23 meant that the Superintendent could grant an extension of time even if the contractor had not followed the cl 35 procedure.

168 This issue was not raised, and therefore not argued, before the referee. It was first raised by Abigroup in its written submissions on the first adoption hearing (before Nicholas J). It is worth noting that, although the Court of Appeal gave its judgment in Peninsula Balmain on 3 July 2002, the relevant point had been argued before and upheld by the referee in that case. The hearing in this case before the referee took place between 17 June and 17 July 2002. Thus, even though the decision of the Court of Appeal in Peninsula Balmain was not given until the latter part of the hearing, the underlying principle should have been well known to and understood by Abigroup because of its success before the referee in the Peninsula Balmain litigation.

169 If this point were now to be considered, there would need to be a further hearing to establish the factual foundation for the submission: i.e. what is required in the exercise of the Superintendent’s obligations under Clause 23 in the particular circumstances of this case.

170 Abigroup has not explained why it did not raise this point before the referee, in particular given that the referee in Peninsula Balmain delivered his report in Februry 2001, and Barrett J held on 3 September 2001 that this aspect of the report should be adopted (Abigroup v Peninsula [2001] NSWSC 752). The transcript of the proceedings before the referee in this case shows that the decisions of both Barrett J and the Court of Appeal in Peninsula Balmain were referred to.

171 In the absence of any explanation for the failure to plead, particularise or otherwise raise the point before the referee, I do not think that Abigroup should now be allowed to raise it. As I have indicated in para [169] above, it is not a point that can necessarily be determined on the evidence as it presently stands. I am fortified to an extent in that conclusion by the finding of the referee, to which I have already referred, in R 538 that he “was not satisfied that the Superintendent’s representative did not act in good faith in determining not to allow the claim.”

Conclusions

172 For convenience, I set out each of the issues and my answer to it:

“Project”)

(a) paragraph 2.10.2.3 of the Concept Design Report; and

(“Representation”),

Trade Practices Act

Fair Trading Act

Answer

2. Did the Plaintiff rely on the misleading or deceptive conduct described above in submitting its tender and subsequently entering into the Contract with the Defendant for the Project?

Answer:

Trade Practices Act

Fair Trading Act

Answer:

4. In respect to the issues described in paragraphs 1-3 above, should the Court:

(a) make its own findings on those issues on the evidence adduced before the Referee; or

(b) refer those issues to the Referee or to another referee?

Answer

The court should make its own findings. They are as I have set out above (read in conjunction with the relevant paragraphs of these reasons).

5. Should the Court adopt or reject the finding of the Referee that the Plaintiff had not suffered any loss or damage by the misleading or deceptive conduct described above?

Answer:

The court should adopt the referee’s submission on this issue .

(a) adopt or reject the findings of the Referee as to the quantum of damage in respect of the specific items claimed by the Plaintiff; and

(b) make the assessment itself on the evidence adduced before the Referee or refer that assessment to the Referee or to another referee?

Answer:

Does not arise.

Answer:

Does not arise.

Answer:

Does not arise; but if it did arise, the court should adopt the referee’s finding.

(a) refer that matter back to the Referee;

(b) refer it to another referee; or

(c) set it down for hearing before a judge of the Court?

Answer:

Does not arise.

10. Should the Court adopt or reject the Referee’s finding that there was no agreement between the Plaintiff and the Defendant on or about 1 July 1999 to the effect that a claim could [sic] brought for an extension of time notwithstanding non-compliance with the requirements of clause 35.5.5 of the contract?
Answer:
The court should adopt the referee’s finding.

Answer:

Does not arise; but if it did arise for consideration the court should adopt the referee’s finding that the plaintiff is not entitled to an extension of time under cl 35.5 of the contract.

Answer

Does not arise, because this issue has not been pleaded; or because it was not raised before the referee, and the question posed might not be susceptible of answer on the evidence as it presently stands.

173 I direct the parties, within fourteen days of today’s date, to bring in Short Minutes of Order to give effect to these reasons. If the parties cannot agree on the proper costs order to be made, I will hear argument on costs.

****************

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Citations

Abigroup Contractors Pty Ltd v Sydney Catchment Authority [2005] NSWSC 662

Most Recent Citation

Abigroup Contractors v Sydney Catchment Authority [2007] NSWSC 220

Cases Citing This Decision

5

Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) [2006] NSWCA 282

G&S Engineering Services Pty Ltd v MACH Energy Australia Pty Ltd (No 3) [2020] NSWSC 1721

Invacare v Hartog [2007] NSWSC 1172

Cases Cited

26

Statutory Material Cited

2

Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211

Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902

Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784

CITATION:	Abigroup Contractors Pty Ltd v Sydney Catchment Authority [2005] NSWSC 662
HEARING DATE(S):	23/05/2005 to 26/05/2005
JUDGMENT DATE :	11 July 2005
JURISDICTION:	Equity
JUDGMENT OF:	McDougall J at 1
DECISION:	I direct the parties, within fourteen days of today's date, to bring in Short Minutes of Order to give effect to these reasons. If the parties cannot agree on the proper costs order to be made, I will hear argument on costs.

CATCHWORDS:	TRADE PRACTICES - where Court of Appeal remitted application for adoption of Referee's report - whether conduct misleading or deceptive - whether plaintiff relied on alleged misleading or deceptive conduct - whether Court should make own findings or refer issues to Referee or another referee - whether Referee's finding that plaintiff suffered no loss or damage should be adopted - - whether Court should adopt or reject Referee's finding that plaintiff was not delayed in achieving Practical Completion - whether Court should adopt or reject Referee's finding that there was no agreement that a claim for extension of time could be brought notwithstanding cl 35.5.5 of contract - whether plaintiff entitled to extension of time under cl 35.5 or cl 23. - ESTOPPEL - estoppel by convention - estoppel by representation - whether plaintiff estopped from bringing s 52 claim - - DAMAGES - causation - assessment of damages - whether damages assessed on "no contract" or "alternative contract" basis - nature of alternative contract - whether plaintiff proved loss or damage on either basis.
LEGISLATION CITED:	Fair Trading Act 1987 (NSW) Trade Practices Act 1974 (Cth)
CASES CITED:	Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60 Coghlan v S H Lock (Australia) Ltd (1985) 4 NSWLR 158 Con-Stan Industries of Australia Pty Ltdv Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, 244 Eslea Holdings Pty LTd v BUtts (1986) 6 NSWLR 175 Foxman Holdings Pty Ltd v NMBE Pty Ltd (1995) 38 NSWLR 615 Franks & Anor v Berem Constructions Pty Ltd (NSWCA 2/12/98, unreported; BC 9806367) Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 79 ALJR 190 Hughes Bros Pty Ltd v Minister for Public Works (Rolfe J, 17 August 1994, unreported; BC 9402885) IOOF Australia Trustees (NSW) Ltd v Tantipech (1998) 156 ALR 470 Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1989) ATPR (Digest) 46-048 March v Stramare (E&MH) Pty Ltd (1991) 171 CLR 506 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 Murphy & Anor v Overton Investments Pty Limited (2004) 78AYR 324 Oraka Pty Ltd v Leda Holdings Pty LTd (1997) ATPR 41-558 Peninsula Balmain Pty Limited v Abigroup Contractors Pty Limited [2002] NSWCA 211 Seven Sydney v Fuji Zerox [2004] NSWSC 902 Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254, 284 Super Pty Ltd v SJP Formwork (Aust) P/L (1992) 29 NSWLR 549 The Commonwealth v Verwayen (1990) 170 CLR 394 Waltip Pty LTd v Capalaba Park Shopping Centre Pty Ltd (1989) ATPR 404-975 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193 Zuereb v Viola (1988) 18 NSWLR 453
PARTIES:	Abigroup Contractors Pty Ltd - Plaintiffs Sydney Catchment Authority - Defendants
FILE NUMBER(S):	SC 55045/01
COUNSEL:	J.T. Gleeson SC with S.A. Kerr - Plaintiff S.R. Donaldson SC with M. Dempsey SC - Defendant
SOLICITORS:	Clayton Utz - Plaintiff Phillips Fox - Defendant

Procedural history	2
Factual background	4
Abigroup’s representation case	6
Agreed issues	10
The relevant principles	11
First issue	15
Concept Design Report	16
The Detailed Specification	21
Concept design stage geological investigation	24
Construction of the representation	27
Conclusion on construction of representation	42
Was the representation misleading or deceptive?	43
Conclusion on the first issue	49
Second issue	50
Third issue	57
Fourth issue	82
Fifth issue	83
Abigroup’s pleaded case	86
Abigroups’s approach to causation	91
The Authority’s approach to causation	94
The referee’s approach	99
The authorities relied on	109
The “correct” representation	110
No contract or alternative contract	116
Alternative analysis: no contract case	126
Sixth and seventh Issues	148
Eighth and ninth Issues	149
The s 82 Case	151
The contractual case	152
No entitlement in any event	156
Tenth issue	158
Eleventh issue	163
Twelfth issue	165
Conclusion	172
Orders	173