Caboolture Park Shopping Centre Pty Ltd v White Industries (Qld) Pty Ltd
[1989] FCA 377
•20 Jul 1989
IN THE FEDERAL COURT OF AUSTRALIA )
1
QUEENSLAND DISTRICT REGISTRY 1 No. G198 of 1986 1 GENERAL DIVISION 1
BETWEEN: CABOOLTURE PARK SHOPPING
CENTRE PTY. LTD.(Applicant) AND : WHITE INDUSTRIES (QLD)
PTY. LIMITED(First Respondent) AND BETWEEN: PAKS CONTRACTORS PTY. LTD.
(Second Cross-Claimant)AND : CABOOLTURE PARK SHOPPING
CENTRE PTY. LTD.(Second Cross-Respondent) AND : WHITE INDUSTRIES (QLD.)
PTY. LTD.
(Third Cross-Respondent) /;- - - -
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Coram: Ryan J ' . J
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Date: 20 July 1989 1 .! - / '
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l '; ' .- Place: Brisbane
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FINDINGS OF FACT AND REASONS FOR JUDGMEN$-~:.
ON ISSUES PERTAINING TO THE SUBCONTRACT ., i, -
Caboolture Park Shopping Centre. The sub-contract between WIQ and Paks was made in November 1985 and is described in the
First Schedule thereto as a "lump sum contractq'.,The contract I sum was $1,450,456.00. As a result of an amendment made by leave on 20 June 1988, Paks now claims $697,456.09, being the balance of the original sub-contract sum plus the value of six specified variations less payments already received of $1,510,799.75.
OF, AND THE PERFORHANCE OF WORK BY,
PAKS CONTRACTORS PTY. LTD.
By its cross-claim filed on 13 April 1988, the second cross-claimant, Paks Contractors Pty. Ltd. ("Paks"), has claimed moneys allegedly due to it for the performance of work as a sub-contractor to the third cross-respondent, White Industries (Qld.) Pty. Ltd. ("WIQ"), on the erection of the
The first of those specified variations was described
as follows:
"(i) Variation Order No. 7/1 $43,120.00"
These particulars have been given by paragraph 9 of Paks' cross-claim:
"This sum is for a site allowance the subject of a request for variation signed by or on behalf of White Industries and dated the 5th day of March, 1986 and approved by Caboolture Park in its letter to White Industries dated the 17th day of March, 1986."
WIQfs defence to the cross-claim of Paks includes the following paragraph:
"WIQ admits the allegations contained in paragraph 9 of the cross-claim and in the further and better particulars of that paragraph."
The reference there was to paragraph 1 of further and
better particulars of its cross-claim which Paks supplied on
11 May 1988 and which was in the following terms:
"1. Further Particulars of Variation No.(i)
By Clause 44 of the Sub-contract, it was provided that the Sub-Contract price included a site allowance of $0.40 per hour for actual hours worked, and that this allowance was built into all schedule rates for calculation of the Sub-
contract price. Subsequent to the making of the Sub-contract, the site allowance which Ppks was required to pay its workers involved in the Sub- contract was $1.10 per hour."
On 5 March 1986, WIQ, by its project manager, Mr Rickards, raised a request for variation to budget ("RVB") No. V07/01 in respect of a:
"Site allowance to cover the additional 70c (61,600 X 70c) 43,120.00"
An analysis was then provided showing how the total number of 61,600 man hours was arrived at and the RVB concluded with a statement that the amount of $43,120.00 should be paid to Paks in four instalments as it completed each quarter of its sub-contract.
On 14 April 1986, Caboolture Park's architect, Lynch &
Blow Pty. Ltd. ("Lynch & Blow"), issued to WIQ, Contract
Variation No. 17, the operative part of which reads:
"The Builder is authorised to Original Contract Sum carry out the following $13,375,000.00 Variations to the Contract Adjusted Contract Sum
Previous Certificate
$15,126,806.00 Deductions Additions
FORMWORR (WIQ NO. V07/01)
Site Allowance
Nett variation $ 43,120.00
Adjusted Contract Sum $ 15,169,926.00 I,
Copies of Contract Variation No. 17 were forwarded to the Melbourne and Brisbane offices of Hersfield Developments Corporation Pty. Ltd. ("Hersfield") which has been admitted on behalf of Caboolture Park to have been its agent. Those copies were apparently received without any complaint or demur by Hersfield.
By c1.3 of the sub-contract between WIQ (in the sub-contract called "the Company") and Paks, the provisions of the head contract between Caboolture Park and WIQ were incorporated in the sub-contract as follows:
"3. PROVISIONS OF HEAD CONTRACT INCORPORATED HEREIN
A.
(i)
Except to the extent that they are strictly inconsistent with the express provisions of this Sub Contract all provisions of the Head Contract as may be applied and/or related to the Works and to the rights and obligations to be observed performed and complied with by the Company and the Principal under the Head Contract in relation to the Head Contract Works and in particular the works shall be deemed to be included in and to form part of this Sub-Contract which shall be read as though such provisions of the Head Contract were (mutatis mutandis) expressly set forth herein. And in particular (without limiting the generality of this Clause) the provisions of the Head Contract which
Principal and of the Company one with the govern the rights and obligations of the other shall govern (mutatis mutandis) the corresponding rights and obligations of the Company and the Sub-Contractor one with the other in respect of this Sub-Contract.
(ii)
Where the provisions or any part(s) thereof of this Sub-Contract are silent on any matter(s1 or thing(s) which are dealt with in the provisions of the Head Contract then, to the extent of such silence, the provisions of the Head Contract shall likewise apply to and shall be deemed to be incorporated into this Sub-Contract by virtue of paragraph (i) hereof.
(iii) In the application of the provisions of the Head Contract as provided by paragraphs (i) and (ii) of this Clause, the terms here- after set out shall be interpreted to mean as follows:
1. 'Contractor' shall mean 'Sub-Contractor1
2. 'Engineer' and 'Engineer's
Representative' shall both mean the
Company's 'Project Manager' at the site
of the Works for the time being3. *Worksr shall mean the 'Works1 as more particularly described in the Schedule annexed hereto 4. 'Authorityv shall mean 'Companyv
5. 'Contract' shall mean 'Sub-Contract'
6. 'Constructional Plant' shall mean all appliances or things of whatsoever nature required by the Sub-Contractor in or about the execution completion or maintenance of the Works."
The reference in the RVB to the site allowance reflected the following note to c1.44 of the sub-contract which specified additional special conditions:
"NOTE: The contract price has included a site allowance of 40c per hour for actual hours worked, and same is built into all schedule rates. "
By c1.5.01 of the head contract it was provided: "5.01 The Architect shall act for and on behalf of the Proprietor as his agent where this is so provided for or required by this Agreement and
5.01.01 The Proprietor shall not act contrary to that authority and the Builder shall be entitled to disregard any contrary action by the Proprietor; and
5.01.02 all things done and all actions taken by the Architect purkuant to this Clause shall, subject to Clause 5.02, be deemed done and taken by the Proprietor for the purposes of this Agreement and are hereby agreed by the Proprietor as ratified and confirmed as such."
Clause 5.02.02 in turn provided:
"That the Architect is hereby authorised to act as the assessor, valuer or certifier in respect of the following matters:
(i) Progress Certificates
(Clauses 10.02 and 10.06);"
In view of the admission in WIQ's defence to Paks' cross-claim and the way in which RVB V07/01 was raised by WIQ and approved by Lynch 6 Blow, I can only conclude that both
W I Q and Caboolture Park agreed that an amount of $43,120
should be paid to Paks in respect of the increased site allowance. Paks has therefore established an entitlement to that amount.
The second variation specified by Paks in its amended cross-claim is described as follows:
"(ii) Variation: Claim dated 8th ~ u l y 1986 - $51,350.86"
These particulars of that variation were given by paragraph
10 of the amended cross-claim:
"10. Particulars of Variation No (ii):
This variation was the result of:(i) Instructions by White Industries to yaks to perform work in accordance with drawings: Lynch & Blow 8122WD18, Lynch & Blow $ 1 2 2 ~ ~ 3 2
Amendment D, Ove Arup No. 3907/26 Revision E and Ove Arup No. 3907/35 Revision D, the first two (2) of which drawings were issued by White Industries to Paks on or about the 21st day of November, 1985 and the other two
(2) of which drawings were issued by White
Industries to Paks on or about the 24th day of April, 1986; and
(ii) Instructions by White Industries to Paks to perform form work below the ground level.
Full particulars of the amounts claimed in respect of this variation are contained in the letter from Paks to White Industries dated the 8th day of July, 1986."
The letter from Paks to WIQ, dated 8 July 1986, set out sixteen items of alleged variations, all apparently in respect of work performed below ground level, together with a claim for an additional amount in respect of the increased site allowance. The total claim was for $68,724.50. After receiving that claim, WIQ apparently checked the quantities expressed as square metres claimed by Paks and the rate per square metre. Adjustments were noted by hand, apparently by Mr Rickards of WIQ, reducing the claim to an allowable amount of $51,350.86. As a result of that process, WIQ issued RVB 07/10 which contained the following notation:
"Variation per Measure 8.7.86 $51,350.86''
Then follows an annotation in another hand, apparently that of Mr McAllister of Caboolture Park:
"O.K. J.McA.
Submit to Ove Arup for
verification"
Beneath that annotation is the following comment handwritten
l,
in block letters and initialled by Mr Rickards:
"This is not an Ove Arup task1
WIQ checked out tender drawings as compared
to current working drawings"
Below that comment is another handwritten notation apparently made and initialled by Mr Poppleston of Caboolture Park which reads:
"Refer LB for verification with contract rates."
RVB 07/10 is signed by Mr Rickards on behalf of WIQ and dated 18 ~ u l y 1986. Beneath that signature and date appears this notation, followed by Mr Rickards' initials and the date 1 September 1986:
"WIQ have measured quantities and applied rates. The above variation value is reduced to $51,350.86.'
Mr Pask, the managing director of Paks, gave evidence that, shortly after his company had been awarded the formwork sub-contract, he was approached by Mr McGilvray, who was then construction manager for WIQ, and requested to provide
was necessary because after excavations had commenced for the formwork for the footings. Mr Pask suggested that the request footings of the shopping centre the surrounding earth began to cave in. According to him, Mr McGilvray then said, "We will have to get you to do work below the ground floor level which you haven't priced, but we will give that to you as a variation".
Mr Pask was cross-examined at some length~by Mr Perry
of counsel for Caboolture Park about the work of forming tunnels, columns and "blade" columns below ground level. He described how Paksl claims .for variations were reduced when the work involved was remeasured by Mr Norton of WIQ. It was put to Mr Pask that the pre-tender drawings showed columns below ground level, but he asserted that Paks was not to include in its tender the cost referable to those columns.
Hr Pask denied that pre-tender drawings by Ove Arup &
Partners disclosed "blade" columns on the King Street alignment but agreed that they detailed tunnels below level 1, which he was not asked to price in his tender. The following explanation for that was given by Mr Pask at p. 1094 of the transcript:
"[Ilt is common practice with builders to - particularly in a take off situation, what is classed as a take off, that they will ask all subcontractors to price on an equal basis, and that basis is a - is one that normally starts at a given level and in this particular instance it was the ground slope level. And although we as subcontractors are aware that there is a possibility of groundwork happening underneath, the - it is normal practice that they do this, because the builders will then take a punt, for instance on excavation, that when they come to actually excavate it, if they find that they can
without having to use formwork, well, of course, cut the pedestals out and that sort of thing there is no price for formwork required. It would seem silly for somebody to pay for formwork when it is not necessary. And also it can become very misleading if subcontractors are given the drawings and told to include all of that, because it does not give a fair indication of the price where, for instance, one subcontractor may turn around and say, well, I believe when they dig this out we will not have to form this up and vice versa. So it could blow the price from one subbie to another dramatically apart."
Evidence was also given about formwork below ground level by Mr Mason who, at the relevant time, was'employed by WIQ as its site co-ordinator on the Caboolture Park project. He testified that the original design of the works provided for ducting to evacuate gases from the carpark to be carried at a fairly high level through the structure of the building and out through the rear wall on Elliott Street. That design was abandoned in favour of one where the exhaust ducting was carried below the ground level slab. That design change necessitated a wide and deep excavation in which concrete pipes could be laid. That change in turn required that any footing6 in the area be taken below the lowest level of the excavation so that, as Mr Mason described it, "in actual fact, we put another level of columns into certain parts of the building".
Under cross-examination by Mr Perry of counsel for caboolture Park, Mr Mason accepted that columns in the vicinity of fire escape tunnels were required even by the original design to be taken below the bottom of the excavation for those tunnels. He also accepted that at least
pre-tender drawings. some of the sub-ground fire stairs were shown on the As to the "blade" columns, Mr Mason's evidence was that
they were introduced during the course of the works at theinstigation of Ove Arup & Partners:
11
... due to the original design of the soil
retention system being deleted from the contract in its entirety for cost savings, and that
particular original design had what is! called contiguous piling - it was a continuous ,barrier of concrete against the soil, and it was capped off in the original design with a concrete reinforced beam in which holding-down bolts were inserted. Now, doing away with that elaborate system and going back to something simpler introduced the need for what is called the blade column. So a series of columns were put in instead of the original proposal, and cost savings were consequently achieved."
In re-examination by Mr Hunter P.C. for WIQ, Mr Mason stated that, had various items claimed by Paks as variations, including the work below ground level, been included in the subcontract price it would have been higher. He also expressed the opinion that it was reasonable to apply the schedule of rates contained in the Paks subcontract in quantifying the amount allowed to Paks in respect of those variations.
~t has been pleaded in paragraph 14(c)(vii) of Caboolture Park's amended reply and answer to WIQ1s cross-claim that the cost of the extra depth of columns below ground level, the "blade" columns, the formwork to sublevel tunnels and the stairs below ground level would not have been incurred had it not been for WIQ's negligence.
The following particulars of that negligence are
given:
"The Cross-Applicant has claimed, or allowed to be claimed variations which related to those works, excluding variations, which were to be performed by the Builder and which were provided for in the agreement referred to in paragraph 2 of the Amended Statement of Claim.
The said conduct on the part of the Cross-Applicant was negligent, in that it was the responsibility of the Cross-Applicant under the said agreement (and, in particular, Clause 6.01 thereof), and further or alternatively it was the usual practice within the building trades generally for a head contractor to ensure that variations not be claimed in respect of works which are comprised within the plans and specifications under the head contract."
Those particulars might have been understandable had it been alleged that WIQ had approved claims for variations submitted by Paks in respect of work which was comprised within the plans and specifications incorporated in the sub- contract between Paks and WIQ. However, as pleaded, they raise an issue between WIQ and Caboolture Park as to the proper construction of the head contract. Whatever be the resolution of that issue, I am unable to see that by making, or allowing Paks to make, any of the claims embodied in RVB 07/10, wIQ has been guilty of negligence. Nor has any basis been established on the pleadings or in the evidence for suggesting that Caboolture Park has suffered any damage as a result of the making of any of those claims.
A further particular of negligence referable in part to
RVB 07/10 is set out as follows in sub-sub-paragraph (ix) of
paragraph 14(c) of Caboolture Park's amended reply and answer :
"(ix) The Cross-Applicant has claimed, or allowed to be claimed, variations in respect of works which were not authorised by either the Cross- Applicant or the Cross-Applicant's architect.
The said conduct on the part of the Cross- Applicant was negligent, in that it was the responsibility of the Cross-Applicant under the Agreement referred to in paragraph 2 of the Amended Statement of Claim (and, in particular, Clause 6.10 thereof), and further or alternatively it was the usual practice, within the building trade generally for a head contractor to make, or allow to be made, variation claims in respect of works not authorised by the principal or his architect. As
a consequence of the Cross-Applicant's said negligence the following variation claims have been incurred which would not otherwise have been incurred:-
(a) V0 7/10
Clause 6.10 of the head contract is in the following
terms:
"6.10 The Architect may instruct Variations and the Builder shall carry out the same subject to the following:
6.10.01 Unless otherwise agreed all Variations shall be within the general scope of this Agreement so as to be of a character and extent contemplated by and capable of being executed under the applicable conditions of this Agreement.
6.10.02
The Contract Sum shall be subject to any appropriate adjustment under Clause 10.16 and the Date for Practical Completion shall take into account any extra time or reduction of time under
Clauses 9.07 and 9.08 respectively.
6.10.03 All such Variations shall be authorised in writing by the Architect before the variation work is commenced unless the Architect is of the opinion that the matter is one of such urgency that the Builder should proceed without awaiting a written instruction, in which case the Architect shall authorise the Variation in writing as soon as
practicable thereafter.
The
provisions of Clause 5.04 shall
be read and construed subject to the provisions of , this paragraph."
By cl. 1.06.04 of the head contract "the Architect" is
defined as:
"The person, partnership or corporation appointed by the proprietor as such for the purposes of this Agreement, namely
Lynch & Blow Pty Ltd Architects
of Suite 3 Portman Place
220 Boundary St Queensland 4000
or any other person, partnership or corporation appointed by the Proprietor pursuant to the provisions of Clause 5.07 and including persons with authority to act on behalf of the Architect."
It is arguable that the revised drawings issued by Lynch & Blow or Ove Arup & Partners, or the notation "submit
to Ove Arup and Partners O.K. J.NcA8' by Mr McAllister on RVB 07/10, constituted an authorization in writing by the Architect or a person with authority to act on behalf of the Architect of the kind contemplated by cl. 6.10.03 understood in light of the definition in cl. 1.06.04. However, it is unnecessary for present purposes to resolve that argument because, as with the allegation of negligence pleaded in
paragraph 14(c)(vii), that made in sub-sub-paragraph (ix), as far as it is related to Variation Order 07/10, is unsupported by any allegation or evidence that Caboolture Park has suffered any loss or damage as a result of the making of the claim detailed in that variation order.
The value of $51,350.86 attributed to RVB 07/10 by WIQ when it assessed that part of Paksl claim included an amount of $612.36 in respect of the increased site allowance to which I have already referred in examining what is described in the amended cross-claim as "Variation (i)". It is accepted on behalf of Paks that, if Variation (i) be allowed in full, no amount in respect of the increased site allowance is recoverable as part of Variation (ii). Accordingly, in respect of that variation, Paks is entitled as against WIQ to $50,738.50.
The third variation claimed by Paks is described in its amended cross-claim, as further amended by leave on 20 June 1986, as:
"(iii) Variation: Claim dated 28th July, 1986 $37,057.00"
Particulars of that variation are given as follows in paragraph 11 of the amended cross-claim:
"11. particulars of Variation No.(iii):
These variations were effected by the submission of invoices from Paks to White Industries and the acceptance thereof by White Industries by its signing each such invoice. Particulars of such invoices and the date thereof are set out in the two page schedule to the letter from Paks to White Industries dated the
28th day of July, 1986."
The schedule to the letter from Paks to WIQ listed by number and date some thirty-eight dockets or invoices showing beside each docket number a total number of hours of "day labour" claimed which was further dissected into ordinary hours, hours claimed at time and a half and hours claimed at double time. Those dockets were comprehended as follows in RVBs raised by WIQ:
I
RVB Docket Nos Amount V07/04 21 to 32 (excluding 6,556.25 no. 23)
Each of those RVBs was approved by Hr Poppleston on behalf of Hersfield and certified as a variation by Lynch &
Blow. However, it appears that WIQ later claimed that an error had been made in calculating the amount referable to day labour hours worked at time and a half, and that to correct that error the total amount of $34,504.50 should be reduced to $33,716.00. In the course of his evidence-in-chief Hr Pask, the managing director of Paks, accepted the propriety of that correction. To the revised amount of $33,716.00, it was contended, on behalf of Paks, that there should be added $3,371.60 or ten per cent representing a "rule of thumb" component in respect of the cost of materials used in carrying out day labour tasks and not otherwise charged for. Neither WIQ nor Caboolture Park disputed that
contention.
The fourth "variation" claimed by Paks also embodied charges for day labour. It was quantified in the amended cross-claim by Paks in the sum of $15,984.10 and particulars of it were given as follows by paragraph 12 of that pleading:
"12. particulars of Variation No. (iv): !
Full particulars of these variations are contained in written site instructions from White Industries to Paks and invoices from Paks to White Industries, which site instructions and invoices are set out in the schedule to the letter dated the 29th day of August, 1986 from Paks to White Industries."
The schedule to the letter from Paks to WIQ of 29 August 1986, like that to the earlier letter of 28 July 1986, contained a list, by number and date, of twenty-three of Paksp dockets or invoices for day labour charged to WIQ, again broken down into hours charged at ordinary time, time and a half and double time. Beside each docket or group of dockets was listed the number of the site instruction issued
by WIQ for the relevant work to be done.
It is convenient to examine separately each of the broad categories of work for which that collection of dockets claimed payment.
(a) Airshaft Holes
Docket 61 claims that sixteen hours at ordinary time and two hours at time and a half were spent on this
work in the area of stair 13. Mr Mason who, as I have already indicated, was then employed by WIQ as its site
co-ordinator on the Caboolture Park shopping centre project, explained that air-shaft holes were part of a system for extracting air from underground tunnels. It appears that in the original design of the works, those tunnels were located at a higher level. As a result of a design change it became necessary to introduce holes in the walls of the building in the area,of stair 13 through which the air shafts were to protiude. Under cross-examination by fir Perry for Caboolture Park, fir Mason confirmed that the air-shafts required formwork where they were set in concrete at "the commencing end and the existing end". However, his evidence that the extra work detailed in the Paks docket 61 had been necessitated by a design change after the formwork sub-contract had been let was not challenged on behalf of Caboolture Park.
(b) Encasing of fire-rated columns
The evidence disclosed that there are four acceptable methods of ensuring that steel columns achieve a fire rating. One such method involves encasing the steel in concrete to a minimum effective thickness of 40 mm.
Ove Arup & Partners, the structural design consultant
to Caboolture Park, specified that method after the formwork sub-contract had been let out to tender. As a result, Paks was required to erect and strip additional special formwork to enable the relevant columns to be
encased in that way. Dockets numbered 22, 23, 24, and 25 detail the labour involved in that work and it has not been disputed on behalf of Caboolture Park that the work was done or that the hours claimed in respect of it were reasonable. It is also significant that an earlier claim by Paks for the cost of day labour employed in connexion with encasing fire-rated columns was initialled by way of approval by Mr McAllister on
behalf of Caboolture Park and was included in Contract Variation No 35 certified by Caboolture Park's architects, Lynch 6 Blow, on 3 November 1986.
(C) Staging area and walkway on roof
Dockets numbered 23, 24 and 10 contain claims by Paks in respect of this work. The last mentioned docket claimed 80 hours at ordinary time in forming up a landing and walkway on the King Street elevation and in removing the same structure and replacing it on the east elevation. (A notation on that docket in the hand of Mr Rickards of WIQ indicates that the structure was placed on the roof to protect roof sheeting.) M r Mason's evidence, which was not challenged by Counsel for Caboolture Park, was that the original design of the building called for the motor room for the passenger lift to be located in the basement. It was eventually relocated at the top of the lift shaft, as a structure protruding through the roof. That design change necessitated a walkway to protect the roof surface while the motor room was being constructed and
fitted out. There is no dispute that the extra work claimed by Paks under this head was done, or that the
hours spent on it were reasonable.
(d) Cleaning and patchinp
Paks docket No. 28 claimed eighteen hours at ordinary time, twelve hours at time and a half and six hours at double time for "patching Coles area". The only evidence in respect of this claim apaft from the document itself is that of Mr Hason that the work was "all part of the scramble to get things done" by the date on which the Coles Supermarket part of the building was required to be handed over to the tenant.
Docket 31 claimed forty-eight hours at ordinary time and one and a half hours at time and a half for "cleaning and patching as instructed". No oral evidence was specifically directed to this claim but the docket was raised on 8 August 1986, one day after docket No. 28, and discloses on its face that it was for work performed pursuant to the same site instruction. I infer, therefore, that the work was of the same kind and similarly necessitated by the requirement for the supermarket area to be completed for hand-over by the due date.
The work detailed in dockets 28 and 31 was clearly not of a kind which would ordinarily have formed part of the Paks sub-contract package. It was done by Paks, and
there is no dispute that the hours claimed were in fact
expended on it.
(e) Hanging doors
The Paks docket 32 claimed fourteen hours at double time for "hanging doors as per instruction". The docket was raised on 9 August 1986 and countersigned by Mr Caccioppoli, WIQ's foreman in charge of finishes to
the premises, particularly in the area pf the Coles supermarket. I infer that the need to haSe this work done by day labour arose from the same circumstances as pertained to patching and cleaning in that area. The hanging of doors was also clearly outside Pakst formwork sub-contract package. Equally clearly, the work was done and there is nothing to suggest that the number of hours claimed for it has been inflated.
( f ) Formation of nibs for shop windows
Docket 11 claimed two and a half hours at ordinary time
worked on 18 August 1986 "to form nib in Shop 10 for
windows". Docket 15 made a claim for similar work on
the same day in Shop 11. Docket 6 claimed for similar
work on the next day in Shops 20 and 19 and for
stripping and removing the formwork involved. Mr Hason
explained that the shops fronting King Street were
re-arranged after the floor slabs in that area had been
cast. To accommodate that re-arrangement, "Lynch & Blow brought out a design which ... allowed the casting of
additional concrete of narrow width but reasonable
height to let the footpath bear against it and attached the window frame to it". It is clear from that evidence that the forming of these nibs was work in addition to that for which Paks had initially tendered, and was made necessary by a design change. Again, there is no doubt that the work was done or that the hours claimed were actually worked.
(g)
Lost formwork stairs I
Dockets numbered 26, 27 and 30 claimed f&r labour in forming lost formwork stairs in fire passages 12, 13 and 14. That work was performed between 6 and 8 August 1986 pursuant to the same W I Q site instruction (No. 2626). Docket 4 claimed twenty-six hours at ordinary time on the same site instruction to "reform lost formwork stairs F/passage 14" and four hours at ordinary time to remove formwork. It does not appear from the evidence what made it necessary for that formwork, first erected on 8 August 1986, to be reformed. Docket 5 claimed twenty hours at ordinary time on 19 August 1986 to "form lost formwork stairs in shop 6". Because that work was performed pursuant to the same site instruction as the formation of the nibs to shops 20 and 19 (No. 2633), I infer that it became necessary as a result of the re-arrangement of the shops described in sub-paragraph (f) above. Mr Mason's evidence was that the lost formwork stairs in fire
passages 12, 13 and 14 were not shown in pre-tender drawings supplied to Paks and that Mr Rickards and he
agreed with representatives of Paks that it was more
economical to allow that formwork to be lost than to
undertake the work involved in recovering it.
Although the evidence referable to this aspect of the Paks claim is scanty, I am satisfied, on the balance of probabilities, that the work was additional to that comprised in Pak's sub-contract with W1Q:and that it did occupy the manhours claimed for it.
(h) Other stairs
Docket 7 claimed thirty-six hours at ordinary time to "form four sets of stairs in mall, strip and remove formwork". The work was apparently performed on 25 August 1986, pursuant to the same site instruction as the formation of the nibs to shops 20 and 19 (No. 2633).
Docket 13 claimed twelve hours at ordinary time "to
form stairs from Shop 6 - access stairs - spiral stair deleted - Plan reverts to original Drwgs". A note in
the hand of Mr Rickards indicates "Started then stopped
- First Attempt - Second Attempt - See section 45". The
work itemized in docket 13 was also referable to site instruction No 2633 and was said to have been carried out on 19 August 1986.
No oral evidence was directed to this aspect of the
as a result of a revision of drawings and perhaps a
Paks claim. However, I infer that it became necessary,
reversion, in part, to an original drawing, to accommodate the re-arrangement of the shops on the King Street frontage to which I have referred in sub- paragraph (f) above. Again, I am satisfied that the
work was additional to that comprehended i? Paks's sub- -contract with WIQ and that the hours dlaimed were reasonably necessary for its performance.
(j) Footings, beam and plinth
Docket 1 claimed sixteen hours at ordinary time "to form footing" and four and a half hours at ordinary time to "remove formwork from footing, clean and
stack". The work was done on 18 August 1986. Docket 3 claimed twenty-four hours at ordinary time for "labour and materials to form beam" and five hours at ordinary time for "labour to strip and remove beam", all that work being done on 20 August 1986.
Docket 2, also in respect of work done on 20 August 1986, claimed two hours at ordinary time for "labour and materials to form plinth" and one hour for "labour to remove formwork".
The evidence does not permit a finding of where the
claim was located or what made the construction of footing beam or plinth involved in this aspect of the those items necessary. However, because the work was performed on site instructions issued by WIQ, and because the dockets were signed on behalf of WIQ, all apparently by the same employee of that company, I find
that the work was of a kind for which Paks,was entitled to charge at day labour rates and actually'occupied the hours claimed.
It will be apparent from my review of the components of "Variation (iv)" claimed by Paks that it is entitled, as against WIQ, to payment in respect of all of the day labour comprised in that claim. The amount of that entitlement was quantified by Mr Rickards of WIQ in RVB 07/24 at $14,531 which has been accepted by Mr Pask on behalf of Paks. To that amount should be added a margin of ten per cent representing the cost incurred by Paks in supplying the materials involved in that work of which Mr Mason said, "[Klnowing the nature of the work and who contributed the materials, yes, 10 per cent would be fair reimbursement". It has been conceded by Hr Pask on behalf of Paks that such a margin of ten per cent is appropriate to satisfy its claim for materials referable to the day labour charges which were processed by WIQ as RVB 07/26. Accordingly, Paks has made out its claim against WIQ in respect of "Variation (iv)" for the full amount of $15,984.10.
The fifth variation relied on by Paks in its amended
cross-claim is related to a staircase for which $4200 is
claimed. The particulars are as follows:
"This variation was requested by White Industries when it issued to Paks a drawing, Lynch & Blow A3/73 Revised on or about the 9th day of September, 1986."
A copy of that drawing, annexed to the amended cross- claim, depicts a spiral staircase between levels 4 and 5 of the shopping centre. It appears that Mr Pask was requested by some representative of WIQ to quote a price for the formwork necessary to construct a staircase in accordance with that drawing. When he received that request, Mr Pask initially proposed that Paks should carry out the work of erecting and stripping the formwork for the staircase and charge at an hourly rate for the time expended and for the value of materials used. However, he was introduced to somebody whom he understood to be a quantity surveyor jointly retained by WIQ and Caboolture Park. That person told Mr Pask that a variation claim calculated in the way he had suggested was no longer acceptable and that a lump sum price for the work had to be submitted. Mr Pask accordingly submitted a price of
$4200. He asked for a written request for a variation but was
instructed to proceed with the work by Mr Rickards of WIQ who
assured him that Paks would be paid for it.
WIQ itself attempted to obtain approval for the work from Lynch & Blow by the following letter dated 17 September
1986 :
"We submit for your consideration the costs associated with design changes regarding the
above project.The scope of works includes the construction of access stair No. 02, all as per Lynch & Blow A3 drawing No. 73-C.
The budget estimate for the above works is
$16,181.25.
Please note that the above estimate of cost is
NETT.Your urgent approval of the above is requested to allow works in this area to proceed."
In the attached schedule, the following item appeared:
"Formwork to curved stair
Paks $4250"
There is no evidence that any reply was received by either WIQ or Paks. Nor was there any explanation for the discrepancy between the price of $4200 submitted by Paks and the amount of $4250 claimed by WIQ for Paks's contribution to the staircase.
It is clear that the work involved in the staircase was additional to that covered by the sub-contract between Paks and WIQ. There is no dispute that the work was done. Nor can it be contested, at least by WIQ, that the price of $4200 had been agreed on for the performance of that work.
The claim for $4,200 embodied in Variation Order 07/30 was among those particularized in paragraph 14(c)(ix) of Caboolture Park's amended reply and answer to WIQvs cross- claim as claims which would not have been incurred had it not
variation claims in respect of work not authorized by been for WIQ1s negligence in making or allowing to be made Caboolture Park or its architect. It is arguable that the issue of Lynch & Blow's drawing A3/73 was sufficient authorization. However, like the similar argument discussed at p.12 above, that argument does not require resolution for present purposes because there is no allegation or evidence that Caboolture Park has suffered any loss or damage as a
result of the staircase having been constructed without
\
proper authorization.
The sixth variation claimed by Paks has been described
in these proceedings as its "major claim". It is set forth
as follows in paragraph 8 of the amended cross-claim of Paks:
"(vi) Variation: Claim dated 16th October 1986 - $606,088.88"
The following particulars of that variation are given in paragraph 14 of the amended cross-claim:
"14. Particulars of Variation No. (vi): (i) These variations were requested by White Industries when it issued to Paks certain drawings prepared by V.S.L. Prestressing (Aust) Pty Ltd involving changes to the works to be performed by Paks under the Sub-contract. Those drawings and their approximate dates of issue are as follows:
Date
m ~ e c e m b e r , 1985
89-2 Revision B 22nd November, 1985
89-3 Revision F -. - ~ - - ~ - 20th December, 1985
89-4 Revision C 2nd January, 1986 89-5 Revision G 26th March, 1986 89-7 Revision B 17th December. 1985 89-9 Revision E 11th February, 1986 89-10 Revisin D 16th January, 1986 89-11 Revision C 24th January, 1986
89-12 Revision D 1st May, 1986
89-13 Revision C 1st April, 1986 89-14 Revision C 31st January, 1986 89-15 Revision A 30th January, 1986 89-16 Revision B 21st February, 1986 89-17 Revision E 27th March, 1986 89-18 Revision G 15th April, 1986 89-19 Revision H 16th May, 1986 89-19 Revision G 10th April, 1986 89-20 Revision E 15th April, 1986 89-21 Revision F 17th June, 1986 (ii) Paks says that the amount payable in respect of such variations are as follows:
Additional labour cost
(19025.28 hours X $21.50
per hour ) Additional materials
(1abour:materials -
70%/30%)
Cost of acceleration for $13,986.00 additional frames in high areas (as per letter from Paks to W.I.Q. 18 April 1988)
Transport up and back for $3,520.00 frames (as referred to in
the said letter)
Additional amount for site $4,235.00 allowance (as calculated in
W.I.Q.'s letter to Paks
dated 27th May 1986)
TOTAL $606,088.88 (iii) Full particulars of the calculation of the sums referred to in (ii) are contained in the claim for variation submitted by Paks to White Industries dated the 16th day of October, 1986."
Paragraph 23 of the amended cross-claim of ~ a k s is also
relevant to the major claim and is in these terms:
"23. Alternatively, insofar as any of the works herein described as variations to the Sub- contract are not payable by White Industries to Paks pursuant to the terms of the Sub-contract, such sums are payable by White Industries to Paks for work done and material supplied by Paks to White Industries at the request of White
Industries."
It was contended by Mr Crowley Q.C., who appeared with Mr McMurdo and Mr Samios for Paks, that the work involved in this "major claim" was not performed pursuant to a "variation" to the sub-contract between Paks and WIQ but was the subject of a new contract. Reference was made in this context to Wren v Emmett Contractors Pty. Ltd. (1969) 43
A.L.J.R. 213 where a building contract bound the builder "to execute and complete the works ... in accordance with the
said plans and specifications or any authorised variations
thereof ...". The contract also obliged the builder to
execute any variations required on the written authority of the architect and stipulated that such variations "whether involving addition to, omission from or alteration of the works" should not vitiate the contract. A question having arisen between the plaintiff builder and a guarantor of payment by the owner under the contract, Barwick CJ (with whom Ritto and Owen JJ agreed) observed, at 216:
"There was then a question of law, namely, if the additional work did not fall within the scope of the variation clause of the building contract was it done under a separate arrangement between the company and the respondent - that is to say, separate and distinct from the building agreement, and limited to the additional work. Or was the building agreement varied tacitly if not expressly by the company and the respondent so as to bring this additional work within the scope of the respondent's obligation under the contract. Thirdly, there was the possibility that the building contract had been abandoned altogether and that the parties had resorted to a new contract, the subject matter of which was to be found partly in the subject matter of the written contract and partly in the additional work directed to be done by the respondent. If it should be concluded that there was no variation of the contract but simply additional work done under a separate and distinct arrangement then
guarantee but only a lesser sum." the sum claimed was not recoverable under the
The possibility that additional or different work might be done by a contractor and yet not be a "variation" within the meaning of the original contract was also adverted to by Owen J at 223 in these terms:
"By way of illustration I mention one matter, namely the electrical work which was expressly excluded from the contract of 6th November and which the company was to arrange to have .carried out by persons other than the plaintiff. if that work was done by the plaintiff, it might well have been found not to have been a 'variation' of the works within the meaning of that contract. To decide whether or not this was so would involve an investigation into all the circumstances leading up to the performance of the work and, prima facie, it would seem to me to be unlikely that had the plaintiff refused to perform it, it would have laid itself open to an action for breach of contract."
Reference was also made, on behalf of Paks, to Brooking on Building Contracts (2nd Edn.) para 11.2 where it is observed:
"While there is always a power to order variations in the sense that the proprietor and the contractor may agree that variations are to be executed, there is no right to order variations unless the contract expressly or by implication so provides, and insistence by a proprietor who has no such riqht upon a variation may amount to a repudiation of th; contract: ~ttridge v Vermin Board of District of Hurat Ba (1928) SASR 124;
9301 sAsR 210. Almost i5variably written building agreements expressly empower the proprietor or architect to order variations. See, for example, cl 1 of Ed 5b, cl 40 of CA24.1 and cl 6.10 of MBW 1."
It is therefore appropriate to refer to the relevant terms of the sub-contract between Paks and WIQ. 'Works' is defined in the sub-contract to mean:
"... the materials to be supplied and the work to be executed as defined and set out in the Schedule annexed hereto and in the Head Contract and includes all modified extra additional substituted or varied work ordered by the Principal in accordance with the provisions of the Head Contract or the Sub-Contract and all obligations of the Sub-Contractor to be performed under this Sub-Contract."
The provisions of the head contract between Caboolture Park and WIQ were expressly incorported in the Paks sub- contract by c1.3 thereof which is reproduced at pp 4-5 of these reasons.
The short description of the Works in the First Schedule to the sub-contract was:
"Super R Mart and Speciality Shops having three (3) levels of carparking under and mezzanine level for offices etc."
In the same Schedule, as I have already noted, the sub- contract was described as a "lump sum contract" and the contract sum was stipulated as $1,450,456.00. Clause 8 of Appendix C to the sub-contract dealt specifically with variations by providing:
"Variation:
No variations, additions or omissions from the works claimed by the Contractor [Paks] shall be paid by the Company [WIQJ unless the Company has given WRITTEN approval for such work.
These variations will be claimed for by the Contractor at the end of each month that these variations have been carried out by the Contractor. Any claims after that month will not be accepted by the Company."
Also annexed to and forming part of the Paks sub-contract was a "Schedule of Rates". To illustrate its nature I reproduce
here the prefatory words and the first three items: "FORMWORK
SCHEDULE OF RATES
Prices for formwork shall include for designs, inspections, all necessary boarding and supports, erecting, framing, cleaning and boring to accommodate reinforcing bars etc.
Formwork to side of pad or strip footings is not
included.
Formwork associated with level 1 slab on. ground
is excluded i.e. edge forms, joints, grated drain
trenches, sumps, pits, spoon drain etc.
Formwork to sides of square ' M $24.00 isolated column Formwork to sides of circular a2 $35.00 isolated column 400mm dia.
Formwork to soffit of post M2 $23.50 ,I
Tensioned slab ...
The obligation on Paks to submit that schedule of rates was imposed by cl. 7 of Appendix C to the Paks sub-contract which provides under the heading "Payments":
For 'Lump Sum Contract1 the Contractor shall submit a Schedule of Rates necessary for compilation of variations.
"Variations" were provided for by c1.6.10 of the head
contract which is in these terms:
"6.10 The Architect may instruct Variations and the Builder shall carry out the same subject to the following:
6.10.01 Unless otherwise agreed all Variations shall be within the general scope of this Agreement so as to be of a character and extent
contemplated by and capable of being executed under the applicable conditions of this Agreement.
6.10.02 The Contract Sum shall be subject to any appropriate adjustment under Clause 10.16 and the Date for Practical Completion shall take into account any extra time or reduction of time under Clauses 9.07 and 9.08 respectively.
6.10.03All such Variations shgll be authorised in writing by the Architect before the variation work is commenced unless the Architect is of the opinion that the matter is one of such urgency that the Builder should proceed without awaiting a written instruction, in which case the Architect shall authorise the Variation in writing as soon as
practicable thereafter. The provisions of Clause 5.04 shall be read and construed subject to the provisions of this paragraph."
It was said by Mr Crowley for Paks that there were difficulties in incorporating those provisions of the head contract in the sub-contract because the sub-contract contained no reference to an "architect" and no definition of "builder". However I see no such difficulty. Clause 3A(i) of the sub-contract expressly requires that document to be read as though applicable provisions of the head contract "were (mutatis mutandis) expressly set forth' in the sub-contract. Among the changes which I consider to be required by the phrase "mutatis mutandis" are the substitution of "Company" for "Proprietor" and "Contractor' for "Builder".
Having made those changes, it is necessary then to give effect to the incorporation in the sub-contract of c1.5.01 of the head contract which is also reproduced earlier in these reasons, at pp 5-6 above:
"5.01 The Architect shall act for and on behalf of the Proprietor as his agent where this is so provided for or required by this Agreement and
5.01.01 The Proprietor shall ngt act contrary to that authority and the Builder shall be entitled to disregard any contrary action by the Proprietor; and
5.01.02 all things done and all actions taken by the Architect pursuant to this Clause shall, subject to Clause 5.02, be deemed done and taken by the Proprietor for the purposes of this Agreement and are hereby agreed by the Proprietor as ratified and confirmed as such."
In my view, the combined effect of those provisions is to remove any difficulty of the kind said to arise from the absence from the sub-contract of any express reference to "the Architect". It follows that, upon the Architect instructing variations as contemplated by cl. 6.10 of the head contract, a relevant sub-contractor is bound to carry out those variations as fully as if the power to instruct them had been expressly conferred by the sub-contract itself.
However, Paks asserted that even if there was power in WIQ under the sub-contract to order variations, the work involved in its "major claim" involved changes of such magnitude and difficulty that had it refused to perform that work it would not have been liable for breach of the
sub-contract.
It was on the basis of that assertion that Paks sought to found the contention to which I have earlier adverted, that there was a new agreement or "arrangement" under which Paks would be paid on a time and cost basis for the work involved in its "major claim". However, the pleading contains
no allegation that any separate agreement wts concluded between Paks and WIQ after the extent of the changes to the formwork had been revealed by March 1986. The effect of that omission was extensively canvassed by all Counsel in the course of their final submissions, but no application was made on behalf of Paks to amend its pleading to allege that any new agreement, of the kind to which I have just referred, had been made. Accordingly, I have only to consider whether Paks's "major claim' is to be valued as a variation claimed pursuant to c1.8 of Appendix C to the Paks sub-contract, or whether the work involved in that claim was "so peculiar, so unexpected and so different from what any person reckoned or calculated upon" that Paks is entitled to be paid on a
quantum meruit . (See Thorn v London Corporation (1876) 1
A.C. 120 at 127). After referring to that passage from Thorn v London Corporation, Lord Reid in Davis Contractors Ltd. v Fareham Urban District Council 119561 A.C. 696 observed at 721:
"On this view there is no need to consider what the parties thought or how they or reasonable men in their shoes would have dealt with the new situation if they had foreseen it. The question is whether the contract which they did make is,
on its true construction, wide enough to apply to the new situation: if it is not, then it is at an end. In my view, the proper approach to this case is to take from the arbitrator's award all facts which throw light on the nature of the contract, or which can properly be held to be extrinsic evidence relevant to assist in its construction and then, as a matter of law, to construe the contract and to determine whether the ultimate situation, as disclosed by the award, is or is not within the scope of the contract so construed.'
The evidence disclosed that before Paks submitted its tender to undertake the formwork sub-contract, ni Pask in consultation with Mr Dempster, WIQ1s chief estimator, and Mr Mason, its project co-ordinator, worked out drop panel sizes and beam sections which would conduce to the most effective use of the Paks colour-coded system of erecting formwork.
That system involved the use of formwork timbers in nine graduated modules from 1.8m to 6.6m in length, increasing at each stage by 600 mm. Each standard length of timber is painted at each end a distinctive colour signifying its length and type. Steel forms are similarly coded. The benefits of the system lie in ease of locating, in the Paks yard, the timbers and forms required and in the facility with which formwork carpenters and labourers can follow colour- coded instructions so as to erect formwork quickly with a minimum of cutting waste and unnecessary handling of materials. Mr Pask further gave evidence that, when requested to tender for the erection of formwork, he considers first whether the job is compatible with the Paks colour-coded system and, if not, whether the system can be adapted to suit the requirements of the job.
On 28 October 1985, Paks submitted a tender on a standard form of letter, apparently prepared by WIQ. The letter recited that "We, the undersigned hereby tender to carry out Formwork as defined on the following structural and architectural drawings."
Then followed a list of what have been called 'sub- contract drawings1 and this note: "The price $hall remain firm not subject to rise and fall for the duration of the contract and shall include a 40 cents an hour site allowance
inclusion. "
The second page of the letter was an abbreviated schedule of rates which Paks partly filled in by the notation "all rates set out in Bill of Quantities" and by indicating a day labour rate per hour for ordinary time, time and one half, and double time.
After the formwork sub-contract had been let to Paks, and after it had commenced work in about November 1985, revisions were issued of some of the sub-contract drawings. That prompted Paks to write to WIQ on 2 December 1985 a letter which, omitting formal parts, was in the following terms:
"It is very unfortunate that at the commencement of this project we have encountered extreme abnormalities between the tender drawings and the newly issued construction drawings handed to us on the 27th November 1985, on Section A.
We refer you to the tender drawings No. 89/1 and construction drawings issued, No. 89/1 Revision No. C, and you will immediately see the extreme difference both in layout and speed between erection of the formwork in both drawings.
As you are well aware, ours was a very keen price because of the simplicity of the drawings supplied and of the negotiations between our Managing Director Mr. Norm Pask, your company, and V.S.L. As V.S.L. have obviously taken it upon themselves to change these drawings to suit their own needs, let us say that the extreme keenness of price cannot be adhered to regarding the overall job. Because V.S.L. have completely subdued the simplicity of the job, we would have no option other than to charge a completely new negotiated rate, based on present day rakes for formwork which are in the vicinity of $27 to $30 per square metre up to propping height, not to exceed 3 to 4 metres. Any alterations to drawings to the heights that exceed 3 to 4 metres would also have to be a new negotiated rate over and above our previous rates as supplied in our rated Bill of Quantities.
We deplore having to write letters, especially at such an early stage of a contract, but we feel this is completely necessary to enforce a meeting between your company and V.S.L. to ensure that V.S.L. will refrain from re-designing future drawings to this project to anything other than was originally supplied at tender stage."
WIQ did not reply to that letter but Mr Pask made a similar complaint orally to Mr McGilvray, a senior site representative of WIQ, who assured him that if any more design changes of that kind occurred, Paks would be compensated for them during the course of the sub-contract.
On or about 6 March 1986, Mr Pask attended a site meeting at which WIQ was represented by Messrs Rickards, Dugan and McArdle. Mr Davie, of VSL Prestressing (Aust) Pty. Ltd. ("VSL"), the post-tensioning subcontractor which was also a consultant to Caboolture Park responsible for the design of suspended floor slabs, was also in attendance. At
drawing 89/14. That revision had been made on 31 January 1986 that meeting Mr Pask complained about Revision C of VSL and introduced greatly increased stepped-down areas, sloping
beams and soffits and changes in soffit heightsOn 7 March 1986 Paks wrote a further letter to WIQ
which, again omitting formal parts, was in the followingterms :
"We wish to confirm our on site discussions between your John Dugan, Roger McArdle, John Davies (V.S.L.), Hoss Heinrich, Norm Pask (Lambury) and yourself, concerning the extreme differences between the structural drawings provided to us at tender stage and the actual
, working drawings with which we now find ourselves having to comply.
we wish to stress our total concern regarding a situation that exists in the letting of certain sub-contracts on the abovementioned project. ~ i r s t l y let us categorically state never have we encountered a situation that exists on this project, that is the stressing subcontractor has been awarded the contract to also do the structural design. Normally we would find nothing wrong with this as this is supposed to be a fast track system and beneficial to everyone on the project. However, because of the dramatic changes between tender documents and those to which we are currently working, one would wonder if this was not a fast track to total disaster.
We would refer you to our letters of the 2nd and 3rd December, 1985 in which we expressed our concern regarding design changes as early as the first commenced suspended slab. We also notified your company of the extreme escalation in cost of the formwork to these areas and also to any other future areas should V.S.L. not refrain from producing drawings outside those presented to us at tender stage.
It is at this point in time we would remind you
why working drawings were continually changed
of our extreme concern during the contract as to
from the tender documents and were not available for our perusal right up until the time of the commencement of the formwork to their respective sections.
Although there were delays in documentation and variable changes to same, we had, up until the commencement of area 4A, been able to not only maintain the previously determined programme, but also to cut time off. It was at the commencement of area 4A we were at last supplied with drawings from V.S.L. as to what their actual requirements were to this area. To say that the drawings had changed from the tender documents would be a complete under-statement. These drawings have now so dramatically changed we found it necessary to employ an additional 8 men to try to maintain programme. We continued working under extreme difficulty, but to no avail, for no sooner had certain areas been completed, but they then had to be pulled up and replaced because new additional drawings had been produced. Evidence of this can be obtained when one can note 6 drawings issued for the one area.
As this disaster was going on, we found it necessary to commence area 48. Again, the extreme differences came to light, but only as documentation was produced when we were to commence to erect the formwork in this area.
~t is at this juncture we wish to submit a direct and indirect cost to our company for the completion of areas 4A and 48. 38 men have taken in excess of 4 full working weeks to do these two areas. A fair assessment of the cost can be gauged by our previously shown production rate. 30 men had always maintained better than 2000 square metres of floor area, erect and strip, in one week. If you total the area of 4A and 48, we have completed a total of 4400 square metres in 4 weeks, with an additional 8 men. It would be fair to assume that the actual labour cost to our company would be 38 men for an additional two working (6 day) weeks.
As this is a direct cost, that is 38 men by $780 per man per week - $59,280, we request this money be paid as it is a cost that we have already had to pay.
In addition to this, we would like to make mention that we currently have on site in excess of 12,000 square metres of formwork and as we have now lost two weeks of the original schedule this represents an indirect and direct cost of
material at $2.80 per square metre per week for hire and material of 12,000 square metres of two weeks; a total of $67,200. The total all up cost for design changes to areas 4A and 4B therefore is $126,480.00. We look forward to payment of at least the labour figure of $59,280 in our next progress payment and the material hire cost can only be calculated as to whether we make up the additional 2 weeks without any additional costs incurred by our company.
It is at this juncture we wish to inform you that as the drawings for the remainder of the project were issued to us this day, we intend perusing these drawings over the weekend and a fpllowing letter will be forwarded to you afttr such perusal."
In a reply to that letter, dated 25 March 1986, WIQ acknowledged that "changes have occurred in design which would have an effect on the layout of the structure and a possible claim for a change in design". However, WIQ went on after noting, in particular, Paksvs claim for extra costs associated with areas 4A and 4B, to dispute the basis on which Paks had assessed its extra costs.
Changes to drawings affecting formwork considerably disrupted the planning which Paks had undertaken before it commenced work, and made it necessary to bring more modules of different lengths of timber on to the site. When work began on the Level 4 slab, Paks had about 10,000 square metres of timber on site, which would have been adequate for the work required by the tender drawings. As a result of the revisions, the total amount of timber on site increased to approximately 14,000 square metres.
Changes required to formwork as a result of design revisions were most radical on Level 4. However, even there
the extent of the changes varied from one section of the slab
to another. In some areas more work at a height of eight metres was required and the number of towers needed increased dramatically and it became more expensive to strip formwork in areas 4G and 4F. However, Mr Pask acknowledged that Level 4 had always been the more difficult area, even before the design changes occurred. Levels 2 and 3 were also affected by
. - .
- 43 -
changes, including the introduction of new beams, columns and sloping soffits but less markedly, on the whole, than Level 4.
On 18 April 1986, a claim for $815,644 arising from design changes was submitted by Paks to wIQ under cover of the following letter:
"The attached is a submission of our claim for design change and acceleration to programme as has been currently agreed. It is with exhaustive time and detail that this claim has been mounted.
On perusal of the claim, it will reflect the conclusions of our company as set out in our letters of the 2nd and 3rd December 1985, and the 7th. 10th and 17th Narch, 1986. You will note the manner in which the claim is mounted is the only possible way in which a monetary figure can be applied. You will further note the basis of the claim surrounds a production rate which was envisaged at tender stage and has proven itself, by way of turnover and on site manpower, to be a successful tender production rate, until such time as the structural drawings greatly altered from the determined tender drawings. When one considers that of the original rate we were also pre-fabricating formwork and doing works in the ground and tunnel areas for which no claim yet has been paid to our company, we are certain that you will agree an overall rate of 40% of the turnover is a rate that in no way could have possibly been exceeded had the drawings remained the same as at tender stage.
As has been discussed at great length and looked at in close detail through various on site meetings, we are certain you are aware that all efforts have been made by our company to try to alleviate, wherever possible, the problems that have existed since the design changes. Therefore, we are certain that you will concede that the extended time to our contract of eight (8) weeks would be a conservative one. Therefore the claim pertaining to the additional eight weeks and costs associated therewith, would certainly be one of full justification.
We wish to advise that we are currently colour coding all of the working drawings as against the differences of the tender drawings and when this is completed early next week they ~ $ 1 1 be submitted as evidence to our claim. However, as examination of the differences between the drawings as at tender and working stages have been highlighted at recent meetings, we are certain that you are fully aware of these differences, even without submission of the colour coded drawings.
We feel that an harmonious working relationship has always existed between our companies and sincerely hope that because of the magnitude of our claim for loss incurred by us does not in any way impede this existing relationship."
After it received that claim, WIQ requested Paks to submit a professionally prepared claim whereupon a report was prepared in support of a claim for $970,923. That report was summarized as follows:
"The variation to the contract price claimed by Paks as a result of the variation to the structural designs and the implied acceleration of the works is as follows:
Additional labour cost 363,740 Additional material hire 430,770 Additional material costs 7,905 Overheads @ 10% Profit @ 10%
Total amount of variation $970,923
00
The principal basis on which it was contended that Paksls work after 7 March 1986 should be valued by reference to manhours actually expended and an imputed cost of the hire and consumption of additional materials was that the design changes executed after that date were so radical that they made it impossible effectively to implement the Paks colour- coded system. The assumption that the colour-coded system could be utilized effectively, was, so it was said, fundamental to the Paks tender.
However, Mr Pask conceded under cross-examination that his colour-coded system was sufficiently flexible to cope with any design modification. With specific reference to the caboolture Park project, he considered that a lot of changes to beams and slab thicknesses occasioned very little difficulty in adapting the system to accommodate them. Mr Pask also acknowledged that Paks's tender took account of the prospect that changes in relevant aspects of the design would occur in the course of a "fast-track" construction of the shopping centre. As well Mr Heinrich, another director of Paks, who was it6 site foreman during work on the Caboolture Park shopping centre, indicated that the basic system involving the use of colour-coded timbers remained in operation throughout the whole job.
Mr Sommer, a very experienced manager and administrator
of large building projects, who was called by WIQ, firmly
advanced the opinion that changes to formwork should be valued by reference primarily to the Paks schedule of rates. He did not consider that the use by Paks of its colour-coded system required that opinion to be modified at all. MC Beckwith, a quantity surveyor also called by WIQ, measured additional formwork resulting from design changes and assessed its value in accordance with the schedule of rates adjusted to take account of items of work not specifically mentioned in the schedule. After being referred to the paks colour-coded system, he expressed the opinion that "notwithstanding whatever kind of system the particular formworker may use, the schedule of rates are quite suitable to be applied to the types of changes that we have in this case".
Hr OvDonnell, the quantity surveyor called by Paks, also considered that its system allowed for considerable flexibility to cope with dimensional changes and was largely a method of stock control.
In the light of the whole of that evidence, I am led to conclude that the changes discernible in the revisions of the VSL drawings enumerated in the particulars to paragraph 14 of Paks's amended cross-claim were not so far removed from what was foreseeable when the sub-contract was entered into that Paks should be paid for them on a quantum meruit. They still required only formwork for the erection of a "Super K Mart and Speciality Shops having three levels of carparking under and mezzanine level for offices etc." Nor could it be said that the changes were not within the general scope of the
Paks sub-contract "so as to be of a character and extent
contemplated by and capable of being executed under
applicable conditions" of the sub-contract as provided by c1.6.10 of the head contract which was incorporated in the sub-contract by c.3A(i) thereof.
I am reinforced in this conclusion by the concession made by Mr Pask in cross-examination that the changes to levels 2 and 3 were appropriate to be measured by application of the schedule of rates. Thus Paks' blanket valuation on the same basis of all changes covered by its "major claim" would entail that even those changes to which the schedule of rates was concededly applicable would be valued at the actual cost of labour and an imputed cost of materials.
It follows that the changes detailed in the VSL drawings to which I have just referred are to be valued as variations in accordance with cl.lO.18 of the head contract which was also incorporated by reference in the sub-contract. The principal, but not exclusive, criteria for that valuation are the rates specified in the schedules of rates submitted by Paks in accordance with c1.7 of Appendix C to its sub- contract.
It was accepted both by Mr Pask in the course of his
evidence and by Counsel for Paks that if its "major claim"
was properly to be valued in the way which I have just
Beckwith's company in two reports, the last of which dated 1 indicated, it had been accurately measured and assessed by Mr July 1988 quantified the net value of the variations comprised in the "major claim" as $118,393. Under cross- examination by Mr Perry of Counsel for Caboolture Park, Mr Beckwith acknowledged that, in arriving at that figure, he had not made a deduction for the omission by way of variation of the edges of steps in the soffit of the slab which was thickened in the area of Level 4A, or for the omission of a 50 mm set down in the mall area of Level 4. A supplementary set of measurements and calculations prepared by Mr Beckwith to take account of those omissions valued them together at $6,539, reducing the net value of the variations comprised in Pakses "major claim" to $111,854.00.
In the same supplementary report Mr Beckwith measured deep ''T" beams over a void on Level 4 shown in a sketch prepared by VSL and forwarded to W I Q under cover of a letter dated 20 September 1985 and assessed their value at $23,999. ~ccordingly, if it were concluded that Paks had been obliged by its sub-contract to provide the formwork for those deep beams without addition to the sub-contract price, the net value of variations in the major claim would be further reduced by $23,999 to $87,855.00. However, I am satisfied that the deep beams over the loading dock were not shown on the tender drawings as reqiring to be formed. Moreover, the evidence, including the minutes of site meetings of consultants, reveals that for some time after the sub- contract had been concluded it remained unresolved whether
or should be formed in situ. In addition, even if the VSL those beams should be pre-cast (thus not requiring formwork) sketch of 20 September 1985 had been brought to the attention of the formwork tenderers they would not have been able accurately to price the formwork for each of the beams of which the sketch was said to indicate a "typical section". Accordingly, I accept Mr Paskls evidence, which was not seriously challenged, that he did not price the fiormwork for those beams in formulating Paksv tender.
It is significant that one of two other tenders for formwork, both higher than that of Paks, expressly assumed that these beams would be precast, excluding these deep beams. The second, from Gold Coast Formwork Pty Ltd, although in much the same terms as that of Paks, was apparently regarded by WIQ as framed on the same assumption. However, a comparison of the three tenders which was forwarded by WIQ to Hersfield on 31 October 1985 suggests that the Paks tender was regarded as including the formwork for the deep beams. To enable an evaluation to be made of the other two tenders, the employee of WIQ who prepared the comparison priced the formwork for the deep beams at $21,879.00. However, there is no other evidence to suggest that, had this mistaken construction of the Paks tender not been made, Paks would have been induced to erect the formwork for a price less than its value measured by reference to the schedule of rates.
CONCLUSION In accordance with the findings and reasons detailed above, Paks is entitled to recover from WIQ an amount of made up as follows:
(i) Variation Order 7/1 $ 43,120.00 (ii) Claim dated 8 July 1986 for work
below ground level (V0 7/10) 50,738.50
(iii) Claim dated 28 July 1986
V07/02 dockets 33 to 43
V07/04 dockets 21 to 32(excluding 23)
V07/06 dockets 44 to 52
V07/11 dockets 53 to 59
(iv) Claim dated 29 August 1986
(V07/26 ) 15,984.10
( V ) Variation Order 7/30 4,200.00
(vi) "Major" claim dated 16 October 1986 111,854.00
I shall hear Counsel at 9.30 a.m. on 8 August 1989 on the questions of what orders, including orders as to interest and costs, should be made in the light of these reasons.
I certify that this and the forty-
nine (49) preceding pages are a true copy of the Reasons for Judgment of His Honour Mr Justice Ryan.
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