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BMD Major Projects Pty Ltd v Victorian Urban Development Authority

BMD Major Projects Pty Ltd v Victorian Urban Development Authority

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Case Copied 19 October 2007 74 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 6453 of 2004

BMD MAJOR PROJECTS PTY LTD	Plaintiff
v
VICTORIAN URBAN DEVELOPMENT AUTHORITY	Defendant

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JUDGE:	PAGONE J
WHERE HELD:	Melbourne
DATE OF HEARING:	31 July 2007
DATE OF JUDGMENT:	19 October 2007
CASE MAY BE CITED AS:	BMD Major Projects Pty Ltd v Victorian Urban Development Authority
MEDIUM NEUTRAL CITATION:	[2007] VSC 409	Revised 15 November 2007

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BUILDING AND CONSTRUCTION CONTRACTS – Latent condition – Requirements of notice – Meaning of forthwith – Whether identification of precise location of latent condition necessary for notice – Whether physical conditions differed materially from what the contractor should reasonably have anticipated – Objective standard – Whether reasonable enquiries made – Valuation for additional work at “reasonable rates” – Notice for delay sufficient for contractual variation – Contractual variation for the convenience of the contractor – Payment certificate issued – Breach of duty of care

TRADE PRACTICES — Misleading and deceptive conduct – s 52 Trade Practices Act

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Golvan QC with Mr P Kelly	Rigby Cooke with Carter Newell
For the Defendant	Mr H Foxcroft SC with Ms G Gray	Corrs Chambers Westgarth

TABLE OF CONTENTS

A. Preliminary observations........................................................................................................... 2

B. BMD’s contract claim for latent condition.............................................................................. 3

1. Quarry Floor Stockpiles/Southern Stockpile claim............................................................ 5

(a) Notification.......................................................................................................................... 5
(b) Extent of 2 August 2002 notification................................................................................. 7
(c) Estoppel.............................................................................................................................. 12
(d) The latent condition.......................................................................................................... 13
(e) Breach of contractual warranties....................................................................................... 22

2. Avenue Stockpile, Eastern Stockpile and Northern Stockpile........................................ 23
3. Quantum: over excavation.................................................................................................... 25

(a) Additional placement of Type B and Type C material in “quarry floor” stockpile........... 26
(b) Additional placement of Type A material in Eastern Stockpile........................................ 31
(c) Additional placement of Type A in the Avenue Stockpile................................................. 32
(d) Additional placement of Type A in the Northern Stockpile.............................................. 33
(e) Additional wet base treatment........................................................................................... 33
(f) Additional works as a result of a change in topography in the area of the Northern Stockpile. 37
(g) Additional works as a result of haulage requirements in the area of the Avenue Stockpile 38
(h) Additional costs for material processing........................................................................... 40
(i) Value of delay claims caused by the latent conditions....................................................... 42

4. Second latent condition: oversized rock............................................................................. 49

C. Contractual variation................................................................................................................. 59

1. Stockpiling of Type A material............................................................................................ 60
2. Extra layers and tolerances in placing Type B material................................................... 65
3. Additional tolerances at Type A/B interface..................................................................... 68
4. Geofabric claim....................................................................................................................... 71

D. Certificates and payments........................................................................................................ 74

E. Trade Practices Claim................................................................................................................ 80

F. Unjust enrichment...................................................................................................................... 91

G. Liquidated Damages................................................................................................................. 92

H. VicUrban’s counterclaim.......................................................................................................... 93

I. Second Bank Guarantee............................................................................................................. 98

J. Orders and Costs......................................................................................................................... 98

HIS HONOUR:

BMD Major Projects Pty Ltd (“BMD” or “the contractor”) primarily claims against the Victorian Urban Development Authority as the successor to the Urban and Regional Land Corporation (“VicUrban” or “the principal”) under a “latent conditions” clause of a contract between them dated 22 March 2002 based upon AS 2124 1992.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] VSC 409
Decision Date: 19 October 2007

CaseChat Overview and Summary

The case of BMD Major Projects Pty Ltd v Victorian Urban Development Authority was heard by His Honour Justice Pagano in the Supreme Court of Victoria, Commercial and Equity Division. The primary dispute between the parties involved BMD's claims for latent conditions, contractual variations, and other relief against VicUrban. BMD sought compensation for latent conditions that resulted in additional excavation and processing costs, as well as for delays and other issues. VicUrban, on the other hand, denied any liability for the claims and raised a counterclaim for damages due to BMD's alleged failure to maintain the required capping layer.

The court examined various legal issues, including the requirements for notice of latent conditions, the meaning of "forthwith," the extent of the latent conditions, and whether BMD should have reasonably anticipated the conditions. The court also considered whether BMD breached contractual warranties and if VicUrban was estopped from relying on strict compliance with the contract. The court ultimately determined that BMD provided effective notice of the latent conditions and that the conditions were indeed latent, as they differed materially from the physical conditions that should reasonably have been anticipated by BMD at the time of the tender. BMD was also found to be entitled to compensation for the additional work and costs incurred due to the latent conditions.

In addition to the latent condition claims, the court evaluated BMD's claim for contractual variations, including the stockpiling of Type A material, extra layers and tolerances in placing Type B material, and additional tolerances at the Type A/B interface. The court concluded that BMD was entitled to payment for these variations. The court also found that BMD was not liable for liquidated damages, as it was entitled to extensions of time for completing the works.

Finally, the court dismissed VicUrban's counterclaim for failure to maintain the required capping layer, ruling that the primary cause for the need to redesign the surface levels was the shortfall of materials available for placement.

In conclusion, the court ordered VicUrban to pay BMD the sum of $2,549,850.89 for the claims under the contract, repay $670,000 for liquidated damages, and return the remaining bank guarantee. The court dismissed BMD's other claims and VicUrban's counterclaim.

Orders