ACN 009 009 072 Pty Ltd (In Liquidation) v Infra Tech Projects Pty Ltd (ACN 124 541 260) (In Liquidation)
[2023] WASC 270
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ACN 009 009 072 PTY LTD (IN LIQUIDATION) -v- INFRA TECH PROJECTS PTY LTD (ACN 124 541 260) (IN LIQUIDATION) [2023] WASC 270
CORAM: FORRESTER J
HEARD: 8 JUNE 2023
DELIVERED : 24 JULY 2023
PUBLISHED : 26 JULY 2023
FILE NO/S: CIV 1861 of 2022
BETWEEN: ACN 009 009 072 PTY LTD (IN LIQUIDATION)
Plaintiff
AND
INFRA TECH PROJECTS PTY LTD (ACN 124 541 260) (IN LIQUIDATION)
Defendant
Catchwords:
Assessment of damages - Turns on own facts
Legislation:
Corporations Act 2001 (Cth)
Evidence Act 1906 (WA)
Evidence Act 1995 (NSW)
Rules of the Supreme Court 1971 (WA)
Result:
Damage assessed at $2,902,687.45 plus interest
Category: B
Representation:
Counsel:
| Plaintiff | : | J Sexton & JM Healy |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Barry Nilsson Lawyers (WA) |
| Defendant | : | No appearance |
Cases referred to in decision:
ACN 009 009 072 Pty Ltd (in liq) v Australian Securities & Investments Commission [2022] WASC 221
City of Stirling v Dueschen [2011] WASC 126
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Noske v The Queen [2017] WASC 56
R v Fysh [2012] NSWSC 1266
Robinson v Harman (1848) 1 Ex. 850, 154 ER 363
FORRESTER J:
Introduction
This is an application by the plaintiff for an assessment of damages following the entry of default judgment in its favour on 16 September 2022.
The plaintiff is in liquidation and has subrogated its rights in relation to its claim and the sum indemnified under its relevant insurance Policy to its insurers. Unless it is necessary to distinguish between the plaintiff and its insurers, for convenience I will refer to them both as the plaintiff.
Evidence filed on behalf of the plaintiff
The plaintiff relied upon the following materials:
(1)an affidavit of Jonathan Edward O'Riordan sworn on 5 April 2023;
(2)an affidavit of Ian McWalter affirmed on 11 April 2023;
(3)an affidavit of Michael Massarotto affirmed on 2 June 2023;
(4)an affidavit of Ian McWalter affirmed on 7 June 2023;
(5)an affidavit of Michael Massarotto affirmed on 7 June 2023; and
(6)an affidavit of Michael Massarotto affirmed on 27 June 2023.
Participation of the defendant
The defendant did not file an appearance and has not participated in the proceedings in any way.
The default judgment was served on the liquidator of the defendant (the Liquidator) on 10 October 2022 with the appropriate notice to the defendant.
On 16 May 2023, the plaintiff notified the Liquidator of the date of the hearing for the assessment of damages and provided to him copies of the plaintiff's submissions and the affidavit of Mr O'Riordan sworn on 5 April 2023 and the affidavit of Mr McWalter affirmed on 11 April 2023.
The affidavit material shows that the Liquidator appointed to the defendant indicated in September 2022 that the liquidation has no funds and that he will abide by the decision of the court. He confirmed that position by email dated 1 June 2023.[1]
[1] Affidavit of Michael Massarotto affirmed on 2 June 2023, Annexure MM3.
On the basis of the materials before me, I am satisfied that the defendant has been given proper notice of the hearing for the assessment of damages and has elected not to participate in it. Accordingly, the matter was heard in its absence.
Statement of Claim
The proceedings were commenced by writ on 19 August 2022. The Statement of Claim (SOC) filed alleged breach of contract and negligence on the part of the defendant, and claimed damages, any associated taxes payable, interest and costs.
In summary, the SOC alleges that on or about 3 April 2014, the plaintiff, Pindan Contracting Pty Ltd, and the defendant, InfraTech Projects Pty Ltd entered into a contract, backdated to 10 March 2014, pursuant to which the defendant contracted to carry out works at the Rosewood Aged Care Group site in Leederville. The works were to supply all plant, equipment, labour and materials and complete installation of the soil mixing system works including rectification of defects in the works, testing and certification to complete an impermeable barrier to suppress water rising upwards to allow basement excavation and allow for a concrete slab to be laid. It further agreed to repair, seal and make watertight the areas where water seepage occurred around foundation piles and secant wall piling from the side walls of the excavation (the Works). The contract sum was $970,000 including GST.
The Works were to be progressed and completed between April 2014 and June 2014.
Pursuant to a subcontract, the defendant became liable to the plaintiff on a full indemnity basis for any cost, expense, loss or damage which the plaintiff may suffer or incur in connection with their failure to progress and/or complete the Works on time.
The defendant was also liable to the plaintiff for any Works which were defective or non‑compliant, and upon provision of a defects notice, was obliged to remediate the Works to the plaintiff's satisfaction, failing which the plaintiff was entitled to engage a subcontractor to make good the default, at the expense of the defendant, payable as a debt immediately due and payable.
Further, in the event of a default, the defendant was deemed to be in breach of the contract and was liable to pay to the plaintiff on a full indemnity basis costs, loss or damage in connection with the default, plus interest at a rate of 12% per annum. Further, in the event of particular defaults the plaintiff was entitled to terminate the contract. The defendant was also liable to pay liquidated damages up to a maximum of $280,000.
The defendant breached certain terms of the contract, and the Works it performed between April 2014 and July 2014 were defective and not compliant with the performance obligations of the contract, in that the barrier installed by the defendant was not impermeable. As a result, there was free ingression of water into the excavation and the barrier which was installed cracked and heaved upwards, in about September 2014.
In September 2014, the plaintiff provided notification of breach of contract to the defendant. From that point until about January 2015, the defendant attempted to rectify the default, and continued to engage experts and investigators until about June 2015. In the meantime, the plaintiff engaged contractors to maintain and monitor dewatering of the site from about 26 July 2014. It also sought advice from other contractors regarding the performance of the Works and rectification options.
In January 2015, the plaintiff dismissed the defendants from completing the rectification works and took them over with a solution proposed by another contractor.
Further, it engaged additional site supervision, labour resources, earthworks contractors and architectural contractors to enable completion of the basement excavation works and the ground floor concrete slab to be laid.
In addition to the costs directly involved in rectifying the Works, the plaintiff incurred substantial dewatering costs, water discharge and associated costs imposed by the Water Corporation, and electrical charges.
Having failed to appear, the defendant is taken to have admitted the allegations contained in the SOC,[2] and I consider the facts as outlined above to have been established.
[2] City of Stirling v Dueschen [2011] WASC 126.
Pursuant to O 13 r 3 of the Rules of the Supreme Court 1971 (WA), the plaintiff has sought an assessment of damages.
History of proceedings
The history of these proceedings is somewhat prolonged, but is necessary to recount to some extent. A more complete history appears in ACN 009 009 072 Pty Ltd (in liq) v Australian Securities & Investments Commission.[3]
[3] ACN 009 009 072 Pty Ltd (in liq) v Australian Securities & Investments Commission [2022] WASC 221 [6] ‑ [23].
In April 2016, the defendant's solicitors advised the plaintiff that they had instructions to accept service of any proceedings but declined to inform the plaintiff of the identity of the defendant's insurer. At that point the plaintiff's insurers had not yet finalised the plaintiff's claim. After a progress payment in May 2017, the plaintiff and its insurers were involved in negotiations as to the final settlement of the claim. Ultimately, they were unable to finally resolve the matter until March 2023.
On 19 August 2018, the defendant was deregistered. At that point, no proceedings had been commenced.
The defendant's solicitors continued to decline to provide the name of the defendant's insurer.
In May 2019, the plaintiff instructed counsel in relation to an application pursuant to s 601AG of the Corporations Act 2001 (Cth) (Act) enabling it to claim directly against the defendant's insurers. However, in error, the proceedings were commenced in the name of the liquidator and not the company, and the application was dismissed in December 2021.
In the interim, orders had been made for the winding up of the plaintiff and a liquidator was appointed. Proceedings had also been commenced which enabled the plaintiff to determine the identity of the defendant's insurer.
Following the dismissal of the s 601AG application, proceedings were commenced for the reinstatement of the defendant under s 601AH of the Act and an order that the limitation period not run during the deregistration of the defendant. On 1 July 2022, Hill J ordered the reinstatement of the defendant and ordered that the limitation period be suspended for a period of 24 months. These proceedings were then commenced.
Admissibility of evidence
The claim for damages is supported by documentation annexed to the affidavit of Mr O'Riordan, who is the Claims Recovery Manager of the plaintiff's co‑insurer and notional lead insurer, under an insurance policy in force at the relevant time (Policy).
The claim was notified in October 2014. In May 2015, more details of the potential claim were provided, and in June 2015, the co‑insurers engaged solicitors in relation to the claim. In late August 2015, the plaintiff estimated the costs of the claim to be almost $3.2m.
In October 2015, the co‑insurers engaged Forensic Technical Adjusting, and specifically Mr Ian McWalter as a loss adjustor in relation to the claim. A grant of indemnity was confirmed in October 2015, granting reasonable direct costs and expenses in loss mitigation and rectification.
Between 20 November 2015 and 1 December 2017, Mr McWalter prepared and provided eight reports and some supplementary emails in relation to the plaintiff's claim and whether the costs claimed were reasonable and direct.
I have read the reports and correspondence of Mr McWalter, which comprehensively set out the results of his investigations and the reasons for his recommendations. From those reports, it is clear that it was difficult, at times, to assess whether all of the additional works carried out by the plaintiff, and services engaged by the plaintiff, were attributable to the defendant's default and, in some cases, whether they were necessary at all.
Some of Mr McWalter's affidavits annex spreadsheets summarising various invoices making up the plaintiff's claim. However, the invoices are not attached. The spreadsheets are by no means complete, and there is no spreadsheet setting out the individual amounts claimed, or what they are for. Each of the reports contains a table setting out what has been claimed by the plaintiff, and what Mr McWalter recommends by way of payment. The body of each report contains explanations for his recommendations.
Following recommendations of their solicitors, the co-insurers made a number of payments to the plaintiff as follows:
Date of payment
Amount paid by co-insurers
2 December 2015
$250,000 ($350,000 minus $100,000 deductible)
24 February 2016 - 17 March 2016
$1,000,000
24 June 2016 - 30 June 2016
$800,000
9 December 2016 - 23 December 2016
$455,000
5 May 2017
$401,025.55
March 2023
$250,000 (settlement of final payment)
TOTAL
$3,156,025.55 (plus $100,000 deductible)
In these proceedings, the plaintiff relied upon the expert opinion of Mr McWalter to establish that what was paid to the plaintiff under the Policy was as a result of the loss caused by the breach of contract by the defendant.
Many of the claims made by the plaintiff were said to have required extensive investigation and scrutiny and a number were ultimately not accepted as being reasonable and direct expenses associated with the default on the part of the defendant. For example, a large proportion of the plaintiff's very substantial claims for dewatering were rejected after the loss adjustor considered their rationale. A number of other claims were either wholly or partly rejected by the co‑insurers as being not covered by the Policy or not attributable to the breach of contract by the defendant.
The total claim on the part of the plaintiff to 20 December 2016 was over $5.1m. The recommended total payments to that date, on the advice of Mr McWalter, were $3,043,071.10. They were allocated as set out in the table which is Annexure 'A' to this judgment.
Even then, Mr McWalter expressed some reservations about the dewatering costs and whether further amounts should be deducted, and the co‑insurers determined that the amount of $37,045.42 should be deducted for dewatering costs which would have been incurred in any event.
The total amount paid in accordance with Mr McWalter's recommendations was $3,006,025.55 (including the deductible).
The claim was eventually resolved on a final basis by way of settlement between the plaintiff and its co‑insurers, with a payment of $250,000.
Admissibility of evidence
In Mr McWalter's affidavit, he sets out his substantial qualifications and experience as a loss adjustor in the construction field. He states that he continues to hold the opinions expressed in his reports, to the effect that the payments recommended by him were properly supported by the information he obtained in the course of his investigations, and that the amounts claimed were reasonably incurred in connection with the breach by the defendant.
I have no difficulty in accepting that Mr McWalter is appropriately qualified to give the opinion sought to be adduced. However, in order for an opinion to be admissible, the opinion must be based on admissible evidence, and that evidence must ordinarily be adduced. In this case, none of the supporting material, such as the invoices, site diaries, correspondence from the plaintiff to Mr McWalter in which explanations were given for the rectification works, other expert opinions on which Mr McWalter relied, or any other material was sought to be tendered.
In response to a query regarding this, the plaintiff submitted that the reports of Mr McWalter[4] should be admitted pursuant to s 27B of the Evidence Act 1906 (WA).
[4] Annexures JO10, JO17, JO23, JO27, JO28, JO29, JO37 and JO46 to the affidavit of Mr O'Riordan (as confirmed by Mr McWalter's affidavits affirmed on 11 April 2023 and 7 June 2023).
That provision reads:
If a court is satisfied that particular evidence that a party to a proceeding proposes to adduce is so voluminous or complex that it would be difficult to assess or comprehend it if it were adduced in narrative form, the court may direct the party to adduce the evidence in another form, including in the form of a chart, summary or other explanatory document.
In Mr McWalter's affidavit affirmed 7 June 2023, he stated that the source information formed part of the 2.65 gigabytes of information he received when he prepared his reports. He saved it in a folder structure which now contains more than 1070 documents, some of which are a number of pages in length. In total, he said, there are more than 10,000 pages of documents, in addition to a number of MS Excel spreadsheets. It took approximately 400 hours for him and his team to review those documents.
Mr McWalter estimated that it would take 50 hours to provide the source information for his reports, which would produce the same result as has already been recorded in the summary spreadsheets contained in his reports.
In support of its application under s 27B of the Evidence Act, the plaintiff relies upon Noske v The Queen,[5] in which Hall J cited, with apparent approval, the ruling of McCallum J in R v Fysh.[6] In Fysh, McCallum J ruled that an expert could give evidence as to the fact that certain information did not appear in documents, despite the fact that this was not an issue which required specialised knowledge, subject to the need for a proper jury direction. McCallum J indicated that:
The obvious way in which such evidence might be given in the case of voluminous documents is by way of summary in accordance with s 50. As noted during argument, subs (3) of that section provides that the opinion rule does not apply to evidence adduced in accordance with a direction under the section. It follows, in my view, that any person, expert or otherwise, who had read all the documents could give evidence (if the court so directed) in the form of a conclusion as to what information they did not contain.[7]
[5] Noske v The Queen [2017] WASC 56 [12] - [14].
[6] R v Fysh [2012] NSWSC 1266.
[7] R v Fysh [28] - [31]. The reference to s 50 is a reference to s 50 of the Evidence Act 1995 (NSW) which is broadly equivalent to s 27B Evidence Act 1906 (WA).
In both Fysh and Noske the evidence relied upon by the expert had been collated and provided to the other party to the proceedings and that party would have been entitled to check the source documents and test the evidence if it did not support the evidence given.
In this case, there is no evidence that the source documents have been provided to the defendant. However, the defendant, through the Liquidator, has been made aware of the plaintiff's claim and indicated it did not seek to be heard.
I am satisfied that the evidentiary material underpinning Mr McWalter's quantification of the plaintiff's claim, and his expert opinion regarding it, is so voluminous and complex as to make it difficult to assess or comprehend in the form in which it presently exists.
I am also satisfied that Mr McWalter's reports constitute explanatory documents which provide both an adequate summary of that evidentiary material, and comprehensively explain the reasoning process behind his expert opinion.
In those circumstances, I consider it to be appropriate to admit those parts of Mr McWalter's reports which summarise the documents supporting the plaintiff's claim and which lay the foundation for his expert opinion to be admitted pursuant to s 27B of the Evidence Act.
Without having determined the issue, it is also likely that the evidence would have been admissible pursuant to s 79C of the Evidence Act, had the plaintiff sought to address the criteria in s 79C(1).
General principles
As a general rule, where a breach of contract has been established, the innocent party is entitled to be placed in the same position as if the contract has been performed.[8] The plaintiff bears the onus of proving, on the balance of probabilities, the damages for the loss.[9]
[8] Robinson v Harman (1848) 1 Ex. 850, 154 ER 363, 365; Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80.
[9] Commonwealth v Amann Aviation Pty Ltd (80).
In the present case, the claim is entirely made up of the cost of works required to place the plaintiff in the same position as it would have been had the defendant properly performed its obligations under the contract. That in itself is a cost far in excess of the original contract sum.
Importantly, the plaintiff is not entitled to be placed in a better position than it would have been had the defendant complied with its obligations under the contract. It is therefore necessary to ensure that the damages claimed do not incorporate costs which would have been incurred in any event as part of the project in which the plaintiff was engaged. It is plain this was considered by Mr McWalter as part of his assessment.
In assessing the evidence, it is not appropriate for me to simply accept Mr McWalter's opinion as conclusive, even if it is uncontradicted. I am required to form an independent judgment as to the expert evidence, and the weight to be attached to it.[10]
[10] Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, 732 - 733, 745.
Assessment
From an early stage, Mr McWalter noted concerns as to whether certain works being carried out were mitigation works or, alternatively, works which were the result of design changes.[11] Further, there were very substantial costs incurred for, and associated with, dewatering at the site, of which works Mr McWalter queried the necessity. Throughout his reports, the latter topic attracted considerable scrutiny.
[11] See, for example, JO10, 70 - 71.
The plaintiff initially claimed costs from as early as May 2014, but mostly commencing from about 1 July 2014. Mr McWalter reviewed the history of the works performed by the defendant up to and including that point, and the works performed after that date in relation to issues being identified with the impermeable barrier, and formed the view that charges prior to 1 October 2014 would normally be back charged to the defendant. Accordingly, Mr McWalter recommended the costs claimed be limited to those incurred on or after 1 October 2014.
In relation to the dewatering, that appears to have commenced briefly in July 2014. It was turned off by 14 July 2014, but then was turned back on in early August 2014, and does not appear to have been turned off again, apart from possibly a short time in April/May of 2015. This resulted in significant costs being incurred in water discharge costs and hire of dewatering equipment.
In his report dated 27 January 2016, Mr McWalter identified $842,253.46 was spent between 11 September 2014 and 30 June 2015. However, he was sceptical as to what the works achieved or set out to achieve by way of mitigation, and observed that '[c]lose to $850k has been spent on, literally, pouring money down the drain but with little or no work being done on the site.'[12] He also held concerns as to the claims for related costs, such as site supervision. However, he indicated the need for further investigations to take place.
[12] JO17, 105.
Ultimately, in January 2016, Mr McWalter recommended a possible progress payment of $1,018,479.29 of the claimed $2,495,337.10, which resulted in the payment by the co-insurers to the plaintiff of $1m in February and March 2016.
In his report dated 24 May 2016,[13] Mr McWalter provided an update on the invoices received in relation to Water Corporation costs and the dewatering works, which had resulted in an increase in the claim of almost $800,000. He also addressed the plaintiff's claim for $691,052.69 related to a difference in the costs of earthworks, which required further assessment. He recommended a further progress payment of $810,326.24, out of the additionally claimed $1,300,619.55.
[13] JO23, 208.
In his report dated 13 October 2016, Mr McWalter noted that the plaintiff had not produced any expert reports or evidence that it had taken technical advice as to the dewatering process it carried out in relation to the works. In his opinion, the plaintiff was also unable to substantiate its claim as to the causation of some of the water ingress. There were also issues with the plaintiff providing all of the invoices and other documents supporting its claims.[14]
[14] JO27, 236, 237.
By his report dated 14 November 2016,[15] Mr McWalter continued to have concerns as to the amount claimed for dewatering and the substantial change between the estimate in March 2016 and the actual costs invoiced, for which 'no real explanation' had been provided. Further, the change in the costs of the earthworks was not all able to be attributed to the breach by the defendant, and the amount recommended to be allowed was substantially reduced. He recommended a further progress payment of $454,863.13.[16]
[15] JO29, 260.
[16] JO29, 267; JO30, 269, 287.
In his report dated 2 March 2017,[17] Mr McWalter again dealt with the issue of the dewatering costs and the earthworks costs, and suggested that, in respect of some additional claims, the plaintiff's response be sought. However, he recommended a further payment of $399,892.31. He also noted that there was an amount of $183,338.10 which did not appear to have been paid by the plaintiff to the defendant and said:
In the normal course of events we would tend to the view they should be deducted from any potential settlement but will await your views.[18]
[17] JO37, 341 - 357.
[18] JO27, 357.
Ultimately, a final payment was paid to the plaintiff of $401,025.55, which involved a deduction for dewatering costs which would always have been incurred, and an adjustment to account for rounding which had previously occurred for the purpose of progress payments.[19]
[19] JO41, 387.
In January 2018, the co-insurers offered a sum of $80,000 to the plaintiff to resolve the claim in its entirety. This was made up of amounts for:
(1)further payment of electricity costs of $28,000 (which Mr McWalter said, in his report dated 2 March 2017,[20] that he had only been able to apply a 'best estimate' approach to assessing);
(2)$44,090.38 for 'net difference in earthworks';
(3)$7,909.62 for hire of equipment and labour for loading up the basement slab, offered on 'purely commercial grounds, having regard to the relatively small amount involved and to bring the final indemnity payment to $80,000.'[21]
[20] JO46, 410.
[21] JO47, 417.
Mr McWalter's assessment, which is said to have formed the basis for the offer of $44,090.38 for the 'net difference in earthworks' is referred to in the letter of offer dated 12 January 2018. The assessment is 'set out in his file note of 31 August 2017.'[22]
[22] JO47, 417; Affidavit of Michael Massarotto affirmed on 27 June 2023, MM5, 11.
Mr McWalter expressed some concerns as to the merits of the entire claim for equipment hire and labour costs relating to the loading up of the basement slab. The resolution of those concerns does not appear in the material produced before me. However, the original claim was for $36,513, and Mr McWalter provisionally allocated a sum of $18,257 towards it, on the basis that at least part of the claim was justified. Accordingly, I am satisfied that this claim properly falls to be included.
It is plain the offer to the plaintiff by its co‑insurers was rejected, for the next document produced by way of evidence was a Deed of Settlement and Release between the plaintiff and its co-insurers dated 8 March 2023 (Deed).[23] Under the Deed, in addition to the $3,006,025.55 already paid, the co‑insurers agreed to pay a further $250,000 to resolve all matters between them and the plaintiff and the costs thereof.
[23] JO49, 421.
While it may well have been an appropriate commercial resolution of the claim by the plaintiff under its Policy with the co‑insurers, none of the affidavit material produced provides any support for the payment of the $250,000 (other than the items referred to in [64] above). The most recent evidence available to me was Mr McWalter's opinion, expressed in his report dated 2 March 2017,[24] that the plaintiff was not entitled to recover further sums than already recommended by him.
[24] JO37, 341.
It was submitted that the plaintiff clearly had additional claims for loss arising out of the defendant's failure to properly perform the Works, even if they were not covered by the Policy, and that I should regard the $250,000 (or such part of it as I was not satisfied was otherwise justified) as being proved on that basis.
Counsel for the plaintiff was only able to identify two such claims which were submitted to fall into this category. These claims were those Mr McWalter recommended be rejected as not being covered by the Policy, while indicating they could likely be recovered by the plaintiff by other means.
The first of these was a claim for edge protection (securing the perimeter for safety) costs of $11,910. Mr McWalter was of the view that the increased costs would be recoverable as delay costs, against the defendant separately by the plaintiff.[25]
[25] JO17, 107; JO23, 212.
However, it is plain from his reports that, where he determined a claim was not covered by the Policy, Mr McWalter did not apply the same scrutiny to the supporting documentation as he did where the claim was either wholly or partly covered. In the case of this claim, no detail was provided as to the costs, or even whether Mr McWalter sighted any invoices relating to them.
Further, in his affidavit affirmed on 7 June 2023, Mr McWalter only verified that his recommendations were referable to the underlying source documents supporting the amount being claimed on the Policy. He does not attest to verifying the supporting documents of the claims rejected.
Accordingly, I am not satisfied this loss has been proved to the requisite standard.
The plaintiff also claimed $114,623.83 for the cost of additional site access works by the excavation subcontractors. Mr McWalter recommended that claim be rejected, but suggested the costs should be the subject of a variation/charge back. However, these site works were carried out prior to the Works by the defendant, and I am not satisfied they relate to the failure by the defendant to carry out its obligations under the contract. Even if it were otherwise, the same issue arises as to the relative lack of scrutiny of the invoices in relation to this claim as in the edge protection claim and I would therefore be left with the same concerns as to proof of the amount of the loss.
It may also be that the plaintiff would have had a claim for costs incurred prior to 1 October 2014, which were ultimately not covered by the Policy and which Mr McWalter considered might be able to be back charged to the defendant. However, again, Mr McWalter did not apply the same scrutiny to these costs as he did to those which he recommended be covered by the Policy and I am unable to be satisfied as to these costs.
In might be argued that the settlement under the Deed reflected the position that the plaintiff arguably had a greater claim under the Policy than Mr McWalter had recommended be paid. However, the entirety of the evidence relied upon by the plaintiff in supporting the assessment of damages is Mr McWalter's opinion. If I do not accept his opinion, there is no other evidence upon which I could include an amount in the sum assessed.
Also unresolved is whether the plaintiff had or had not paid to the defendant the $183,338.10 outstanding portion of the contract sum. On the evidence adduced, Mr McWalter was of the opinion that sum had not been paid.
I provided the plaintiff's legal representatives with the opportunity to adduce further evidence in this respect. No additional evidence has been adduced which satisfied me that the outstanding contract sum had been paid.[26]
[26] Affidavit of Michael Massarotto affirmed 27 June 2023 [7].
In putting the plaintiff in the same position as if the contract had been performed, it must be assumed that it would have paid the whole of the contract sum. As Mr McWalter noted, if that did not occur, that sum should be deducted from the amount awarded for loss and damage. The fact that the plaintiff's co‑insurers did not do so does not mean that they should be entitled to recover the sum as part of the assessment of damages.
On behalf of the plaintiff, it was submitted that the defendant could have brought a counterclaim or advanced a set off against the plaintiff's claim, had it so desired. It having failed to do so, it was submitted that its 'ability to do so has now merged by way of res judicata into Pindan's judgment against it, or at the least an issue estoppel now arises.'[27]
[27] Plaintiff's Supplementary Outline of Submissions dated 27 June 2023 [4].
Alternatively, it was submitted that:
… to the extent that [the plaintiff] had overpaid [the defendant] for the works it performed, then [the plaintiff] would have had a right to pursue recovery of that overpayment by way of damages. [The plaintiff] has elected to not advance any claim of damages in respect to any such overpayment and seeks to only recover the costs associated with the rectification of the defective way in which [the defendant] had undertaken its ground block installation works in the below ground car park at the Rosewood aged care facility in Leederville.[28]
[28] Plaintiff's Supplementary Outline of Submissions dated 27 June 2023 [5].
Finally, it was submitted that there was a large difference between what the plaintiff had asserted it had expended and what I might be persuaded was justifiable. The plaintiff submits I can be satisfied on the balance of probabilities that the claim by the plaintiff against the defendant was at least the amount for which the plaintiff is seeking judgment, even if the amount of $183,338.10 is required to be taken into account in the assessment of the quantum of damages.
In my view, each of those submissions must be rejected. The plaintiff has elected to rely solely upon the expert opinions of Mr McWalter in making out its claim. In doing so, it has provided no other evidence upon which I can be satisfied to the required standard that the plaintiff suffered the loss claimed.
I allow the plaintiff's claim in the sum of $2,902,687.45.
Interest
The history of the matter is important when considering the matter of the award of interest.
On the face of it, the lengthy delay in final resolution of the matter as between the plaintiff and its co-insurers should not be permitted to unduly extend the period over which interest is to be awarded. However, by adducing further evidence the plaintiff has established, to my satisfaction, that the length of time taken to bring these proceedings was substantially extended not only due to the deregistration of the defendant, but also the refusal of the solicitors on the part of the defendant (on instructions) to supply to the plaintiff the name of its insurers.
While I accept that an error in identification of the applicant in the s 601AG proceedings also contributed to the delay, there is no reason why the plaintiff should not be awarded interest in respect of that period, having regard to the justification for the award of interest generally.
Interest will be payable on the progress payments from the date each was made, with the exception of the last two payments, as they have not been justified in full. The second last payment will be reduced to $297,687.45 and interest will be payable on that from 5 May 2017.
After delivering my reasons, I invited further submissions from the plaintiff as to the interest calculations. I order payment of interest to the plaintiff in the sum of $1,235,876.41. Annexure B sets out the calculations.
I order that the costs of these proceedings be payable by the defendant to the plaintiff to be taxed if not agreed.
ANNEXURE A
| Item | Claim to 20 December 2016 | All Previous Progress Payment Assessments | Current Assessment | Cumulative Assessed Total |
| 1. Edge Protection July 2014 onwards | $13,474.29 | Nil | Nil | Nil |
| 2. CMW Costs | $21,735.00 | $27,735.00l | Nil | $21,735.00 |
| 3. Water Corporation Costs | $928,128.48 | $723,759.45 | $74,166.23 | $797,925.69 |
| 4. Mobile Dewatering Services & Costs | $2,109,313.73 | $1,334,978.78 | $244,720.50 | $1,579,699.28 |
| 5. MDW Environmental Services | Incl in above item | Incl in Item 4 above | Nil | Incl in above |
| 6. Additional Site Access Works | $114,623.83 | Nil | Nil | |
| 7. Net difference in Earthworks | $793,650.64 | $340,000.00 | $60,000.00 | $400,000.00 |
| 8. Site Supervision costs | $246,440.83 | $145,813.96 | ($35,320.50) | $110,493.46 |
| 9. Site labourer costs | $79,681.53 | $34,161.59 | Nil | $34,161.59 |
| 10. Traffic M'ment- mob/demob of Infratech plant | $2,202.00 | Nil | Nil | Nil |
| 11. Electrical costs July onwards | $150,108.98 | $4,000.00 | $18,000.00 | $22,000.00 |
| 12. Rockwater Modelling Report | $13,160.00 | $6,500.00 | Nil | $6,500.00 |
| 13. Design costs to lift all sub- basement works | $98,705.00 | Nil | Nil | Nil |
| 14. Vibropile Mobilise and Demobilisation costs due to Infratech varying scope of works | $31,492.89 | Nil | Nil | Nil |
| 15. Additional Dilapidation Reports and Monitoring Reports | $49,590.00 | $32,230.00 | $17,270.00 | $49,590.00 |
| 16. Bank Guarantee Costs | $63,640.16 | Nil | Nil | Nil |
| 17. Water Control Costs (new) | $201,575.31 | Nil | Nil | Nil |
| 18. Additional Supervision and labour | $151,042.12 | Nil | Nil | Nil |
| 19. Load out from basement and labour | $36,513.00 | Nil | $18,257.00 | $18,257.00 |
| 20. Additional Stormwater Pumps | $37,745.62 | Nil | Nil | Nil |
| 21. Reticulation from Bore to Mains | $2,709.08 | Nil | $2,709.08 | $2,709.08 |
| 22. Installation of Temporary Rising Main | $5,930.00 | Nil | Nil | Nil |
|
| $5,151,462.49 | $2,643,178.79 | $399,892.31 | $3,043,071.10 |
ANNEXURE B
| Payment No | Final amount interest calculation based on | Date interest calculated from | Interest Rate | Total interest |
| Payment 1 - Part 1 | $225,000 | 26 November 2015 | 6% per annum | $103,450.69 |
| Payment 1 - Part 2 | $125,000 | 30 November 2015 | 6% per annum | $57,390.41 |
| Payment 2 - Part 1 | $500,000 | 23 February 2016 | 6% per annum | $222,575.34 |
| Payment 2 - Part 2 | $500,000 | 17 March 2016 | 6% per annum | $220,684.93 |
| Payment 3 - Part 1 | $400,000 | 22 June 2016 | 6% per annum | $170,169.86 |
| Payment 3 - Part 2 | $400,000 | 28 June 2016 | 6% per annum | $169,775.34 |
| Payment 4 - Part 1 | $227,500 | 6 December 2016 | 6% per annum | $90,538.77 |
| Payment 4 - Part 2 | $222,500 | 16 December 2016 | 6% per annum | $88,183.15 |
| Payment 4 - Part 3 | $5,000 | 22 December 2016 | 6% per annum | $1,976.71 |
| Payment 5 | $297,687.45 | 5 May 2017 | 6% per annum | $111,131.21 |
| Total payment amount | $2,902,687.45 | Total interest | $1,235,876.41 |
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AT
Associate to the Honourable Justice Forrester
26 JULY 2023
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