CMA Assets Pty Ltd v John Holland Pty Ltd [No 6]

[2015] WASC 217

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   CMA ASSETS PTY LTD Formerly Known as CMA Contracting Pty Ltd -v- JOHN HOLLAND PTY LTD [No 6] [2015] WASC 217

CORAM:   ALLANSON J

HEARD:   8-12, 15-19, 22-24, 29-30 APRIL, 1, 6-8 MAY 2013

DELIVERED          :   19 JUNE 2015

FILE NO/S:   CIV 1297 of 2008

BETWEEN:   CMA ASSETS PTY LTD Formerly Known as CMA Contracting Pty Ltd

Plaintiff

AND

JOHN HOLLAND PTY LTD
Defendant

Catchwords:

Contract - Direction - Claims for delay, extension of time and variation - Counterclaim for breach - Failure to meet date for completion - Contractual set off - Misleading or deceptive conduct - Liquidated damages

Legislation:

Rules of the Supreme Court 1971 (WA), O 20 r 9

Result:

Plaintiff's claim allowed in part
Counterclaim allowed in part

Category:    B

Representation:

Counsel:

Plaintiff:     Mr D Fagan SC & Mr J C Giles

Defendant:     Mr C L Zelestis QC & Ms K F Banks-Smith

Solicitors:

Plaintiff:     Minter Ellison

Defendant:     Corrs Chambers Westgarth

Case(s) referred to in judgment(s):

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119; (2008) 66 ACSR 594

Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99

Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540

Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98

Baiyai Pty Ltd v Guy [2009] NSWCA 65

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424

British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504

Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304

Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523

Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95

Fazio v Fazio [2012] WASCA 72

Fink v Fink [1946] HCA 54; (1946) 74 CLR 127

Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1

Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551

Gould v Vaggelas [1985] HCA 75; (1985) 157 CLR 215

GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631

Grainger v Williams [2009] WASCA 60

Henville v Walker [2001] HCA 52; (2001) 206 CLR 459

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109

Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564

Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44

Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520

LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74

Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635

Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494

Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353

McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377

MGICA (1992) Ltd (formerly MGICA Ltd) v Kenny & Good Pty Ltd (1996) 140 ALR 313

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357

National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451

Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221

Pegrum v Fatharly (1996) 14 WAR 92

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

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 196 ALR 257

Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd [1968] HCA 64; (1968) 120 CLR 516

RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128

Robinson v Harman (1848) 154 ER 363; (1848) 1 Ex 850

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596

Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [No 2] [2012] WASCA 53; (2012) 287 ALR 360

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272

Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165

Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514

Watson v Foxman (1995) 49 NSWLR 315

Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454

Witcombe as Executrix of the Estate of Witcombe v Talbot and Olivier [2011] WASCA 107; (2011) 280 ALR 177

Zorom Enterprises Pty Ltd (in liq) v Zabow [2007] NSWCA 106; (2007) 71 NSWLR 354

Table of Contents

Factual overview
The issues
The evidence at trial

The non-expert witnesses
The expert witnesses
Other significant names

The Subcontract

The tender process
Terms of the Subcontract

Works Description
Schedule H - Scope of Works
Schedule I
Schedule J

The blasting of the dolphins

The use of PCF
An outline of the facts
The result of the blasting

The CMA claims

Variation 79:  the demolition of BD1, 2, and 6

The pleading
The evidence
The drawings of BD1, 2 and 6 were not accurate
Clause 7.1
Clause 9.8

The delay claims

The provisions of cl 10
The programmes
The evidence
What was the Approved Construction Programme
Relevant Milestones under the programmes
The evidence of Mr Griffith
The first delay claims
The movement of the shiploader and the transfer station
Compliance with cl 10.12
The estoppel
Access to MD4A
Variation 79:  the delay claim

Alternative pleas
The alternative bases for the delay claim
Failure to give possession or sufficient use or control of the site

The John Holland claims

The engagement of the Hippopotes
The expert evidence
The incident of 22 April and damage to the Hippopotes
The decision to cease using the Hippopotes
The return of the Hippopotes
The varied Subcontract

The counterclaim
Defence to counterclaim

The claim for restitution
Breach of contract
The claim in misleading or deceptive conduct

The conduct relied upon

The claim under cl 17.5
The engagement of the Westsea barges

Assessment of Damages

Principles
Damages for the Hippopotes
Damages for the Westsea 10
Damages for Westsea 9
The engagement of other equipment
The debris conveyance claim

Excavator
The dump truck
The dozer and grader

Supervision

The disruption claim
Liquidated Damages

The prevention principle
The meaning of completion
The proper construction of cl 13.4

John Holland's claims against BHP Billiton

The plea

John Holland's Joint Venture with Leighton
Set off

ALLANSON J: 

Factual overview

1. In about 2005, BHP Billiton Iron Ore Pty Ltd, acting on behalf of a joint venture (the MPDJV), engaged John Holland Pty Ltd to carry out an upgrade and extend a wharf at Finucane Island, on the western side of the Port Hedland harbour. 

2. There were two existing berths at Finucane Island, aligned more or less north to south, with Berth D to the north and Berth C, slightly offset, to the south.  The purpose of the project was to upgrade the Finucane Island ship loading facility to provide:

   •A reconstructed Berth C, capable of berthing and loading larger vessels than the present capacity.

   •An upgraded ship loader.

   •The ability for ship loaders to travel the full length of Berth C and D for loading vessels in either Berth.

   •A new maintenance deck and storm tie down for the existing ship loader at the south end of Berth C.

   •A new approach road to access the new maintenance deck.

3. In order to reconstruct Berth C so that it was capable of berthing and loading larger vessels, John Holland was required to demolish the existing Berth C and build a replacement wharf in line with Berth D, and also to excavate and dredge the sea floor to provide depth in a 'berthing pocket' alongside Berth C. 

4. John Holland performed some of the work itself, and subcontracted some of it.  These proceedings arise out of the subcontract between John Holland and the company then known as Moltoni Adams Group Pty Ltd (the Subcontract).  Moltoni Adams Group Pty Ltd changed its name in January 2008 to CMA Contracting Pty Ltd, and then in November 2010 to CMA Assets Pty Ltd, the present plaintiff.  In outlining the facts and evidence, there are occasions where documents refer to the plaintiff as Moltoni Adams or MAG, and John Holland as JH or JHG.  I have retained the words of the original documents when quoting from documents, but otherwise refer to the plaintiff as CMA.

5. The project required John Holland to demolish and remove several structures which formed part of Berth C.  These included: seven berthing dolphins; five mooring dolphins; a line of piers along the seaward length of the berth and another line along the landside of the berth; and the structures bridging between the pairs of piers.  Those structures were known as bents, and were numbered (in descending order from the southern end) from Bent 24 to Bent 1.  That numbering is a convenient way to identify locations along the demolition site.

6. The works contracted to CMA included the demolition of Berth C, and the demolition of the berthing dolphins and mooring dolphins.  The dredging of the berthing pocket was separately subcontracted.

7. At the same time as CMA was demolishing existing structures, John Holland was constructing the new wharf.  The existing structures included a shiploader that was to remain as part of the new wharf.  During demolition, the shiploader was to remain on the northern part of the wharf.  When John Holland had sufficiently constructed the new southern portion, the shiploader was to be moved to that new section and the northern remnant of Berth C could then be demolished. 

8. The dolphins were substantial structures, with a steel reinforced concrete cap or headstock on piles.  The berthing dolphins (as originally constructed) had headstocks approximately 10 m x 10 m x 4 m.  Three of them (BD1, 2 and 6) had an added section on top:  14 m x 10 m x 1.2 m.  The mooring dolphins were approximately 7 m x 7 m x 2 m (V3/650).  It was generally accepted in the trial that each cubic metre of concrete weighed approximately 3 tonnes.

9. In the initial programme, CMA's activity was divided into four phases. 

   1.Phase 1 was the demolition of mooring dolphin, MD2, which had to be removed first to enable access for other work. 

   2.In phase 2, CMA was to demolish half of Berth C, from Bents 24 to 11, and the seven berthing dolphins (BD1 to BD7), and four mooring dolphins (MD3, 3A, 4, and 4A).  This was scheduled to begin in September 2006 after Berth C was scheduled to be shut down.

   3.In phase 3, CMA was to remove the walkways and link between Berth C and Berth D, and demolish an existing conveyor and transfer station.  After completing phase 3, CMA was scheduled to stand down while John Holland completed the new Berth C.  The shiploader could only then be moved.

   4.In phase 4, CMA was to demolish the remainder of Berth C from Bents 11 to 1.

10. The conditions in which the work was to be carried out were demanding.  The site for the work was within an operating port.  Port Hedland is also within an area prone to cyclone activity.  Each of these matters was reflected in the contract documents, to which I will refer to in more detail below.

11. The work under the Subcontract commenced in 2006.  Completion was originally scheduled for March 2007, but extended well beyond then.  John Holland initially disputed that CMA had achieved completion.  It accepted at trial that the works are complete, although the date of completion is in issue.  

12. A major change in the course of the works, and the reason the works extended into 2008, was brought about by the need to remove quantities of concrete from the harbour floor resulting from the demolition of the dolphins.  It was within John Holland's scope of work to dredge a deeper berthing pocket, allowing larger vessels to use the berth.  That task became linked with the removal of the debris produced by the demolition of the dolphins.  The contract documents between John Holland and BHP Billiton show that it was always in contemplation that a backhoe dredge would be used 'to support the demolition work and achieve clearance of the demolished material from the seabed in conjunction with the dredging work':  Specification F112‑S‑0001 item 8.3, part of the scope of works in the Head Contract (V16/6371).  

13. By late 2007, John Holland and CMA were in dispute about John Holland's failure to pay amounts claimed by CMA.  On 10 October, CMA sent notice of dispute to John Holland under the Subcontract.  In December 2007, CMA filed an adjudication application pursuant to the Construction Contracts Act 2004 (WA). An adjudication determination was made on 16 January 2008. It relates to variations which are no longer in dispute.

14. By January 2008, the relations between CMA and John Holland were very strained.  John Holland both denied CMA's claims, and asserted a set off in an amount that exceeded those claims.  John Holland converted two bank guarantees that had been given by CMA pursuant to the Subcontract. 

15. CMA presented a final dive survey to John Holland on 17 April 2008 (V12/4922).  It claims, however, that it had achieved completion under the contract in June of 2007.

16. CMA commenced these proceedings on 27 March 2008 claiming relief including the balance of the Subcontract sum that remains unpaid and amounts for disputed variations and delay claims.  Its claim included a very large claim for lost profits and consequential losses as damages for breach of contract.

17. John Holland denied the majority of the claims, and counterclaimed.  The substance of its claim is to recover amounts it expended in recovering and conveying demolition debris, and for disruption of its own works.  John Holland claims a contractual right to set off sums due to it against the amounts claimed by CMA.

The issues

1. In the lead up to the trial, and to an extent during the course of the hearing, the issues narrowed.  A Scott Schedule had been prepared.  Of 27 variations that John Holland had denied or only partially admitted, only one remains in dispute.  The others were admitted subject to John Holland's claimed set-off.  John Holland admitted, subject to set-off, that CMA was entitled to the balance of the contract sum, and the amount of the bank guarantees.  The value of the claims admitted is $8,116,019.80.  CMA did not pursue the claim for lost profits and losses resulting from its demolition business being affected adversely by John Holland's refusal or failure to pay the sums claimed.

2. Ultimately, the matters in issue on the CMA claim were:

   1.Whether the additional work required for the demolition of three of the berthing dolphins, BD1, BD2 and BD6, was a variation under the Subcontract for which CMA was entitled to payment beyond the Subcontract sum.  The variation was claimed by CMA as 'Variation 79'.  The value of the additional work was agreed.

   2.Two delay claims.  First, for the delay caused by the additional work required to demolish the berthing dolphins, and for delays caused by John Holland failing to move the shiploader structure, failing to provide access to the transfer station (a structure to be demolished by CMA), and failing to give CMA access to MD4A.  These claims are based in the Subcontract provisions for extension of time and payment for delay.  Second, a claim for delay caused by John Holland providing only limited access to the site from October 2007 to March 2008.  This claim is based in the contractual obligation to give CMA access necessary to perform its work.

3. The value of the claims in dispute is also about $8.1 million.  

4. CMA primarily brought its claim in contract.  Although it pleaded, as an alternative, a statutory cause of action for misleading or deceptive conduct in relation to Variation 79, that claim was not pressed.

5. John Holland claimed by counterclaim:

   1.An amount for dredging blast debris from the harbour floor, using the barge Hippopotes.  A large part of this claim is for time when the Hippopotes was stood down.

   2.An amount for dredging blast debris from the harbour floor, using the barge Westsea 10 (renamed the Westsea 7, but I will refer to it throughout as the Westsea 10), the Westsea 9, and associated equipment including barges.

   3.The cost of conveying dredged concrete debris to the shore and on shore.

   4.Disruption to pile driving works carried out by John Holland and additional supervision, as a result of CMA's failure to clear debris from the demolition.

   5.Liquidated damages for failure to reach Completion within the time agreed.

6. John Holland claims were pleaded at about $11.7 million; although in submissions a more conservative estimate of loss was advanced, the reduction in the total claimed is not that significant.

7. The John Holland claims were brought under various causes of action including damages for breach of contract and misleading and deceptive conduct.

8. There are two further complicating matters which may be mentioned briefly at this point.

9. First, John Holland reached a settlement with BHP Billiton in relation to claims it made under the Head Contract, some of which overlap with claims made against John Holland by CMA.  John Holland and BHP Billiton entered into a settlement deed.  CMA pleads that to the extent that John Holland suffered loss, it has been fully or partly compensated by its settlement with BHP Billiton.

10. Second, CMA pleads that John Holland was party to a joint venture with PT Leighton Contracting Indonesia (or another subsidiary of Leighton Holdings Ltd), under which Leighton would reimburse John Holland 50% of all costs incurred, and John Holland would pay 50% of all profits to Leighton.  CMA pleads that John Holland has only incurred losses, if any, to the extent of 50% of the costs it has claimed. 

The evidence at trial

1. Twenty seven witnesses were called between 10 April and 1 May 2013.  Much of the evidence was documentary, with an initial tender of 24 volumes of documents, not including the witness statements and expert reports.  Documents were added to, and taken from, the trial bundle in the course of the hearing, and each party filed supplementary volumes of documents.

2. In these reasons, documents are referred to by the volume and page number in the trial bundle, for example, V1/7.

The non-expert witnesses

1. CMA called seven non‑expert witnesses:

   1.Luke Verne Franklin, General Manager, Alterrain Pty Ltd - the blasting contractor engaged by CMA for the demolition of the dolphins;

   The other witnesses were employees of CMA at the time of the project.

   2.Steven John Marks - Marine Co-ordinator/Marine Operations Supervisor

   3.Shaun Daniel Clarke - General Manager, CMA Contracting (Supervisor)

   4.Pascal Bernard Xavier - Project Manager

   5.Alphonse Joseph Michael (Michael AJ) - Operations Manager, Marine and Civil Division Project Manager

   6.Frederick Antoine Khalil - Project Estimator/Scheduler

   7.Daysi Claudia Lopez - Project Engineer     

2. John Holland called 15 witnesses.  First, there were nine employees or former employees of John Holland:

   1.Andrew James Nairn - Marine Supervisor 

   2.James Hugh Lear - Deputy Project Manager

   3.James Edward Bryce - Project Director

   4.Trevor Stone - Operations and Equipment Manager

   5.Kong Thai Chan - Quantity Surveyor

   6.Brendan Joseph Dick - Barge Supervisor

   7.William Crosthwaite - Commercial Manager TGP3 Marine Works Project

   8.Roger Hancock - Sub-contracts Manager

   9.Steven Craig Smith - Barge Supervisor or Marine Supervisor

3. There were two witnesses from Indianic Diving, the diving contractor engaged by CMA to carry out dive surveys: Michael James Gray, the Director and General Manager of Indianic Diving, and Nigel David Rees, a diver.

1. John Holland also called Gary Donald Edwards, a hydrographic cartographer, employed by Baggerman Associates Pty Ltd.  His evidence was a mixture of factual evidence and expert opinion.

2. John Holland called three witnesses from Van Oord Australia Pty Ltd, the dredging contractor:  Wilhelmus Nicolaas de Ridder ‑ Project Manager; Jason Mahlberg - Project Manager; and Paul Sgarbossa ‑ Dredge Operator.

3. The witness statement of a further witness, Khang Khai Tan (Programmer, John Holland), was tendered and Mr Tan was not required for cross‑examination.

The expert witnesses

1. CMA relied upon four expert witnesses.  In relation to the demolition methods adopted, CMA called Timothy Hagan and David Lees, both of whom are engineers with extensive experience in blasting.

2. On issues related to dredging, CMA called Daryl Braithwaite.  Mr Braithwaite is the director of a dredging and marine consultancy, and has more than 40 years of experience in dredging, reclamation, drilling and blasting and related ancillary activities.

3. Finally, CMA called Mark Griffith.  Mr Griffith has qualifications as both an engineer and a solicitor, with experience in project managing within the heavy engineering construction sector.  He gave evidence regarding extension of time and delay, and the application of critical path programming to the delays which occurred. 

4. John Holland called one expert witness, Ronald Hutchinson - a civil engineer with specialist expertise in marine project management, dredging, reclamation Works and ancillary activities. 

5. John Holland served other expert reports, and there was a conference between experts.  The reports of two of those experts, Stephen Bolt and George Diab, were referred to in particulars of the defence and counterclaim, but the witnesses were not called.

6. Both parties followed the practice of referring to witness statements and expert reports as particulars of their pleading.  I do not believe that this is a desirable pleading practice.  A pleading should contain, and contain only, the material facts and not the evidence upon which the party relies:  Rules of the Supreme Court 1971 (WA) O 20 r 9. Pleading in this way does not identify the material facts. The practice carries the potential risk that the party may decide not to call the particular witnesses whose reports had been pleaded.

Other significant names

1. There are some other people, primarily employees of either CMA or John Holland, who are frequently mentioned in documents but not called as witnesses.  In particular, James Doyle was the Project Director, RGP3 Marine Works Project, for John Holland during much of the period covered by these events.

The Subcontract

The tender process

1. On 4 July 2005, John Holland invited CMA to provide a quotation to undertake the demolition work for the project (V2/158).  The invitation stated that the work shall be carried out in accordance with a specified Scope of Work, SOW‑F112 G 0001 Rev E (later superseded), Specification SPEC-F112 S 0001 Rev D, tender drawings, commercial and engineering schedules, additional notes and program.

2. On 21 July 2005, CMA submitted 'a firm lump sum price of $10,397,000 for the demolition works at the above site' (V2/197).  CMA wrote that the work was to be 'in accordance with your supplied program sequence'.  The submission included the following:

   Dolphin demolition will be carried out with a seventy ton rock breaker where a crane holds skip below breaking area and the concrete is hammered above and allowed to fall into the skip.  Chutes may be required to be fitted to the dolphins in order to direct the fall of concrete into the skips more easily.  Concrete that spills to the seabed will be removed by clam bucket fitted to the tower crane.  Both EPA & Port Authority have no problem with concrete landing in the water.

3. In an exchange of emails with John Holland on 2 August 2005, John Holland asked Moltoni Adams Group to review an attached programme. 

4. Mr Adams, General Manager of Moltoni Adams Group, responded:

   We have committed resources to carry out the works within a time span.  The order of work will not affect us if we remain inside that timeframe.

5. In a letter dated the same day (perhaps an attachment to the email), Mr Adams wrote that Moltoni Adams Group agreed with the John Holland programme (V2/201). 

6. On 8 August 2005, John Holland submitted its tender for the construction of marine works for the project to BHP Billiton (V2/230).

7. BHP Billiton issued a revised scope of work on 8 November 2005.  It contained provisions in relation to the demolition work, which were included in the Subcontract between John Holland and CMA (V2/249).  

8. The agreement between BHP Billiton, as agent for the MPDJV, and John Holland Pty Ltd was executed on 13 December 2005 (V2/308).  On 22 December 2005 (V2/450), John Holland advised CMA that it intended to enter into a subcontract for the demolition works with CMA, the award of the contract being conditional upon the execution of a subcontract agreement that was being drafted.  The agreement was to mirror the conditions of the Head Contract between John Holland and BHP Billiton.  Under the heading 'Scope', the letter of intent stated:

   Moltoni Adams agrees that the scope of works shall comprise, but is not limited to, the demolition works detailed in the tender documents and in accordance with your letter of offer dated 21 July 2005 and subsequent correspondence for the Subcontract Lump Sum Price of A$10,117,000.

   The works shall be in accordance with the drawings, specifications, scope of work, contract conditions, Head Contract programme, all relevant standards and codes, and inspection to the satisfaction of the Principal, relevant consultants and JHG.

9. The misstatement of the tender price was later corrected (see V3/656).

10. CMA responded on 10 January 2006, when Mr Clarke wrote 'I look forward to progressing with the subcontract and commencing the work at your earliest convenience' (V2/454).

11. On 2 March 2006, Mr Clarke provided 'draft comments' on the proposed contract for the demolition of the dolphins (V2/532).  Mr Clarke continued negotiations on the Subcontract, during the first half of 2006.  These negotiations were primarily by email and the occasional phone call, with only one face‑to‑face meeting on 3 March 2006 (exhibit 28A [95]).

12. On 15 March 2006, John Holland's contracts administrator, Kay Jobson, responded to the draft comments provided by Mr Clarke, formatting them into a Commercial Deviation Form (V2/537). 

13. The CMA comments are quite extensive (V2/541 ‑ 557).  As a general observation, and at a considerable understatement, CMA said that the contract was 'reasonably onerous'.  In particular, it noted the time limitations where claims were to be made for extensions of time or variations, and that the entitlement to a variation was subject to a variation order issued by John Holland.  CMA stated that it would like to discuss 'more practical time frames' for lodgement of extension of time and variation claims.  CMA also referred to the absence of an independent superintendent where issues arose regarding certification of costs and time and the reasonableness of variations.  The absence of provision for an independent superintendent left John Holland with significant discretion under the Subcontract, particularly in relation to claims for extension of time.

14. John Holland consistently responded that deviations from the standard subcontract were not acceptable.  Almost none of the CMA proposals were incorporated in the executed contract (V2/548, 549, 550). 

15. This evidence is not relevant to the construction of the Subcontract.  But it is relevant context to the plea by CMA that the parties adopted a convention under which they did not 'strictly' comply with the notice provisions of the agreement

16. CMA provided the issued drawings to a demolition blasting contractor, Alterrain, in about March 2006.

17. In April 2006 (the parties agree about the month but not the day), CMA provided its Project Management Plan to John Holland.  The proposed method for removal of the dolphins was later altered, and I deal with it in more detail below.

18. By a letter dated 27 June 2006, Mr Clarke forwarded a project schedule, dated 26 May 2006, for the demolition contract, showing CMA's proposed programme, including milestone dates and dates for practical completion (V3/647).  CMA displayed some ambivalence about the status of this document.  In their chronology, they describe it as 'required under clause 10.12'.  In submissions, they denied the programme had any status under the contract.  

19. On 17 August 2006, Mr Crosthwaite, commercial manager for John Holland, forwarded two original Subcontract documents for execution by CMA (V3/725). In late August, CMA executed the Subcontract (exhibit 28A [168]). At the time of execution, CMA had already carried out some of the contracted works, including mobilisation to the site and the demolition of MD 2. It was already apparent, as a result of that demolition, that the proposed demolition method for the dolphins would be need to be changed.

Terms of the Subcontract

1. The Subcontract is, in many ways, a difficult document to read and understand.  It contains capitalised terms (for example, Commencement Date) ‑ commonly the way of signifying a defined term - which are not defined.  The drafting is at times poor:  cl 10.12(b) (set out below) is a ready example, where the clause lacks a subject.  There are incorrect internal references.  More generally, the standard form for a construction contract has been only slightly altered to adapt it to a contract for demolition.  

2. The Subcontract is constituted by:

   1.General Conditions of Subcontract,

   2.Special Conditions,

   3.Works Description,

   4.Drawings and Specification,

   in that order of precedence for the resolution of ambiguities (see Schedule A and General Conditions, cl 1.2(i)).  In referring to clauses, unless otherwise indicated, I refer to clauses in the General Conditions.

3. Clause 1.1 contains definitions.  I will deal with defined terms in the context of the relevant substantive provision of the Subcontract.  Clause 1.2 contains general rules for interpretation, including the order of precedence set out above.  Clause 1.2(g) purports to exclude the operation of the rule of construction contra proferentum (that is, if a clause is ambiguous, the ambiguity is to be read against the interests of the party putting forward the contract).

4. Clause 2 is headed 'Commencement'.  The Award Date is defined as the date on which the Subcontract comes into existence being the earlier of:

   (a)execution of the Subcontract by all parties; or

   (b)the issue of a written notice by John Holland to the Subcontractor confirming the award of the Subcontract.

5. CMA pleads that the parties entered into an interim contract to negotiate in good faith, and that, to the extent any of the Works were performed before the Subcontract was entered into, the parties' obligations in relation to those works would be governed by the Subcontract:  statement of claim par 4.  John Holland denies there was an interim contract.  Its position, however, is that, from when it came into operation, the Subcontract was intended to govern work already carried out.  The parties did, in fact, execute a Subcontract and there is no claim for breach of any duty to negotiate in good faith.  In practical terms, the difference between the parties' positions should be of no substance.

6. Clause 3 deals with personnel.  By cl 3.1, the Subcontractor is obliged to comply with any direction or variation order given or purported to be given by John Holland under a provision of the Subcontract. 

7. By cl 4 CMA is required to provide security, and John Holland to release that security within the period specified in the Particulars.  By cl 4.3, John Holland is not required to pay interest on any security.

8. Clause 5 is headed 'Risks and Insurance'.  By cl 5.1, other than for an Excepted Risk, defined as those risks described in the Head Contract which may result in loss, damage or injury and for which the Principal bears risk under the Head Contract;

   the Subcontractor will bear the risk of and indemnify John Holland against:

   (a)any loss of or damage to the Works, the Works Material and unfixed goods and materials (whether on or off Site) until a Completion notice is issued for the Works or for each and every Stage; and

   (b)after the issue of a Completion notice for the Works or for each and every Stage, any loss of or damage to the Works or a Stage arising from any act or omission of the Subcontractor during the Defects Liability Period or from an event which occurred prior to the issue of a Completion notice for the Works or for each and every Stage; and

   (c)any loss of or damage to property of John Holland (other than property referred to in clause 5.1(a)) and any liability to or claims by a third party in respect of loss of or damage to property or injury to or death of persons, caused by or arising out of or in connection with the Works.

9. Clause 6 provides for Design and Subcontractor Documentation.  The Subcontractor is obliged to prepare the documentation which the works description required it to prepare 'which when approved or not rejected within the time permitted under cl 6.1 and cl 6.2 is referred to as "Subcontractor Documentation''':  cl 6.1.  By cl 6.2, on submission or resubmission of Subcontractor Documentation, John Holland may within the period identified in the particulars, reject the Draft Subcontractor Documentation.  The Subcontractor must not commence construction of any part of the works, unless: 

   (a)the Draft Subcontractor Documentation which applies to that part has been the subject of a Submission or if rejected a Resubmission; and

   (b)John Holland has not rejected the Draft Subcontractor Documentation within 21 days of that Submission or Resubmission, as the case may be.

10. Clause 6.3 specifically denies any obligation on John Holland to review Draft Subcontractor Documentation and provides that any comments upon or rejection of Draft Subcontractor Documentation does not relieve the Subcontractor from its liabilities or responsibilities under the Subcontract or otherwise or constitute a variation.

11. By cl 6.4:

    The Subcontractor warrants that the Subcontractor Documentation and the Works will, to the extent the Works are designed by the Subcontractor, be fit for their intended purpose.

12. Part 7 contained provisions relating to the site.  Clause 7.1 provided:

    John Holland does not warrant, guarantee or make any representation about the accuracy or adequacy of any information or data made available to the Subcontractor as to the existing conditions at the Site and that information or data does not form part of the Subcontract.

13. By cl 7.2, John Holland is obliged to give the Subcontractor 'such possession, and such use and control, of sufficient of the Site as is necessary to enable the Subcontractor to execute the works under the Subcontract'.

14. Clause 7.3 obliges the Subcontractor to co‑operate and 'liaise with, carefully co‑ordinate, interface and monitor the works with all other contractors working on or about the site and permit them to execute their work and avoid interference with or disruption to or delay of their work'. 

15. Clause 8 of the Subcontract is headed 'Construction', although there were minor amendments made to have the agreement conform more closely to demolition rather than construction work.  The description of the Works in cl 8.1(as amended) is:

    The Subcontractor must perform the Works in accordance with the Works Description, any documents issued by John Holland, the Subcontractor Documentation and any direction or variation order.

16. Clause 9 provides for quality.  In particular, it authorises John Holland to instruct the Subcontractor to correct a defect, but that power is without prejudice to any other rights which John Holland may have under the Subcontract.

17. Clause 10 deals in detail with time.  I will consider its terms in detail in considering the delay claims.

18. Variations are dealt with in cl 11.  It will be necessary to discuss cl 11 in more detail in considering the claim regarding Variation 79.

19. Clause 12 is headed Payment.  The Subcontract is for a lump sum; Subcontract Sum is defined in cl 1.1 by reference to the Particulars and, by the particulars, to schedule K.  Schedule K provides for a lump sum which is 'firm and not subject to adjustment for rise and fall in the cost of labour, materials and other items'.

20. Relevantly, cl 12.14 provides a right of set off under which John Holland, acting reasonably, may deduct from money otherwise due to the Subcontractor any debt or other moneys due or any claim which John Holland may have against the Subcontractor.  John Holland's assertion of a right of set off is in issue, particularly as it affects interest.

21. Clause 12.6 and 12.9 will also be relevant in these reasons.  Clause 12.6 provides for payment claims, including form and verification.  Clause 12.9 provides conditions precedent to making a payment claim, including compliance by the subcontractor with its obligation under cl 10.2 to submit a detailed breakdown of the Construction Programme.

22. Clause 13 governs completion.  The Subcontractor must give notice of completion with John Holland to inspect and give a completion notice, or if not satisfied that completion has been achieved, to so advise.  Clause 13.4 provides for liquidated damages for failure to reach completion by the Date of Completion.  Those liquidated damages are the sole remedy available to John Holland for failure to bring the work to practical completion and shall be in full satisfaction of the Subcontractor's liability for such failure:  cl 13.4(d).  Clause 13.4 must, however, be read with cl 17.5, set out below.

23. Clause 14 provides for termination, including termination by John Holland following notice of default in the event of breach by the Subcontractor which is not remedied within seven days or such longer period as determined by John Holland:  cl 14.1, 14.3(c).

24. Clause 15 provides for disputes.  It was not engaged in this case.

25. Clause 16 describes the requirements for notices of claims other than under cl 10.5 (extension of time, although the reference to 10.5 is apparently wrong) or cl 12.6.  By cl 16.2, the Subcontractor must give notice where it believes a direction given by John Holland constitutes or involves a variation.

26. Within the general clauses in cl 17, there is an entire agreement clause:  cl 17.7.  By cl 17.9, the Subcontractor warrants certain matters, including that it did not rely in any way upon any information, data, representation, statement or document made or provided to it by or on behalf of John Holland for the purpose of entering into the Subcontract.  

27. By cl 17.5:

    John Holland may, either itself or by a third party, perform any obligation under the Subcontract which the Subcontractor was obliged to perform but which it failed to perform within the time required in accordance with the Subcontract.  The costs, expenses and damages suffered or incurred by John Holland in so performing such a Subcontract obligation will be a debt due from the Subcontractor to John Holland.

28. None of the Special Conditions of the contract are relied upon by the parties.

29. The Particulars, in sch A, include provisions giving greater content to some of the definitions.  Relevantly, the particulars specify the Date for Completion as 14 March 2007. 

Works Description

1. Works and Works Description are both defined terms in cl 1.1:

   Works means all things or tasks which it is necessary for the Subcontractor to do to comply with its Subcontract obligations including the physical works which the Subcontractor must complete and hand over to John Holland in accordance with the terms and conditions with this Subcontract such physical works being briefly described in the particulars.

   Works Description means the specification, drawings, design brief and other documents (if any) so identified in the particulars.

1. The particulars simply refer to the works as 'Demolition Works', and refer to Schedules H, I and J for the Works Description.

Schedule H - Scope of Works

1. CMA and John Holland were working on the site along with other Subcontractors.  There were marine and land based activities, including the operation of at least six marine barges, tugs, work boats and other small vessels.  The work site was comparatively small.  There were difficulties in making arrangements for access to the site caused by congestion and competing priorities:  ts 282.  The port remained a working port so there were also disruptions caused by shipping movements.  A further operational constraint was the need to allow access to the landward side of the wharf, particularly in the event of a cyclone. 

2. These constraints are reflected in the scope of works, sch H to the Subcontract.  It includes the following, under the heading 'Conditions of working on site':

   The majority of the work under this Subcontract shall be carried out in the waters of the port harbour.  The site is subject to wind, wave and current activity and water level fluctuations.  The port area is also subject to cyclone activity.  The Subcontractor shall comply with John Holland's and port authority's cyclone procedures.  The Subcontractor shall be responsible for securing its own vessels and equipment in all conditions, including cyclone activity and making arrangements to minimise the damage to partially complete works due to cyclone activity.

   The site is situated within an operating plant and port concerned with train uploading, processing, stockpiling and shipping of iron ore.  The continued operation of the plant and port shall take priority over the work under the Subcontract.  The Subcontractor must liaise closely with and take directions from the John Holland representative, where construction activities are likely to affect operation of the plant, ship loading or shipping in the port.

   A number of construction activities will be underway or will commence at the site during the period of the works.  The Subcontractor shall familiarise itself as to the extent to which other construction activities may affect its performance of the work and shall plan and execute its own activities so as to minimise the effect of construction activities by others on its own operations and the effect of its work on the operation of others.

   Port Harbour is also used for recreational boating and fishing. 

3. Specifically with regard to the demolition works, the Scope of Works provides that CMA is to demolish all existing structures associated with the original Berth C wharf and dolphins 'in accordance with the Drawings and Specifications'.  The work is to include but not be limited to specified activities. The Scope of Works requires that CMA:

   •provide properly licensed personnel for all demolition activities;

   •demolition of mooring dolphin MD2 and associated walkways after alternative access is provided to BD9;

   •progressively demolish the structure of Berth C as new structure is constructed, during Berth C shutdown;

   •demolish all berthing dolphins 1 - 7 along the front of Berth C, during the shutdown of Berth C;

   •demolish dolphin access structures at Berth C.  Note that these structures are in poor structural condition and should be assessed before loading with more than traffic;

   •demolish existing mooring dolphin MD3A and MD 4A (pile only) and dolphins MD 3 and MD 4 at the south end of Berth C, together with associated access walkways and structures;

   •remove all existing piles other than those for mooring dolphin MD 4A.  Piles within the new Berth pocket (as shown in the Drawings close bracket shall be removed to clear to below RL‑21m CD.  Those piles not in or near the dredged pocket may be cut off at seabed, except for the piles marked 'for extraction' on drawing F112-C-0142/0 which are to be either extracted or cut off at RL‑21m.

   •Other piles at the extracted nominally 0.5 m above the seabed level.

   •…

   •The Subcontractor shall ensure the demolition works are executed in such a way as to ensure that the operational access is maintained to all dolphins while the wharves are in an operational state;

   •the Demolition Subcontractor is to be responsible for assessing the existing structure prior to loading with equipment.

   •Safety management plan is to be provided three months prior to the works commencing on site;

   •safe work Method statements, environmental plans and risk assessments for all activities are to be provided two months prior to work commencing on site;

   •works are to be carried out in phases, as shown on the Subcontractor's approved Construction Programme.

4. CMA is required to provide plant, machinery and equipment, including a 1,000 tonne barge fitted with a tower crane and a 2,000 tonne self‑loading barge with a 70 tonne excavator C/W rock breaker.  This is consistent with the then proposed work methodology.

5. Any material falling to the seabed is to be retrieved 'at Subcontractor's cost'.  CMA is also required to collect and transport demolished steel material to disposal areas in accordance with the waste recycling plan and cl 3.3.4 of the (Head Contract) Scope of Works, SOW-F112-G-001.

Schedule I

1. Schedule I contains Scope of Works, SOW‑F112‑G-001 and Technical Specifications, SPEC‑F112‑S‑001.

2. Clause 3.3.4 deals with Scrap, Demolition Materials and Salvaged Equipment.  Much of it deals with salvageable material.  Demolished concrete is required to be disposed of off-site in an approved disposal area.

3. Clause 3.3.7.2 provides for demolition works.  It requires the Contractor generally to demolish all existing structures associated with the original Finucane Island Berth C wharf and dolphins 'in accordance with the Drawings and Specifications'.  Demolition works are to include removing all existing piles, other than those for MD4A (this was the subject of a later variation).  All demolition material is to be disposed of ashore, 'concrete shall be broken up for landfill or otherwise disposed of off-site in an appropriate manner'.

4. No demolition works are to take place after the completion of the dredging in the berth pocket.

5. Clause 3.3.7.3 is headed Dredging and Spoil Disposal.  It requires John Holland to dredge the berth pocket to the required depth and dispose of dredged material to a nominated spoil disposal area, and to maintain the spoil disposal areas throughout the period of the contract.  The works are to include 'clearing from the berth pocket all falling demolition materials from the demolished structures'. 

6. Clause 3.3.7.3 requires that the dredge plant be sufficient to remove hard materials as identified in the geotechnical reports.  It also specifies that the dredging is to be performed only after the demolition of the berthing and mooring dolphins to ensure clearance of all debris from the berth pocket.  The dredge may also be used to assist with removal of piles from the dredged pocket. 

7. Part 6.3, Existing Berth C and D Drawings, included drawings of the existing Berth C and D structures, issued 'for information purposes only'. 

8. Technical Specifications, SPEC‑F112‑S‑001 provide for demolition works in these terms (cl 9.1):

   All demolition works shall be scheduled and completed so as not to interfere with the operational capacity of the facility and shall not commence before the operational shutdown of Berth C on September 1, 2006.  This shall include, but not be limited to, ensuring that no demolition materials is allowed to enter into or remain in any Berth pocket, to the extent that it limits the operational draft of any vessel in the Berth.

   The existing wharf structure and dolphins, mechanical equipment, electrical systems and substations are to be completely demolished and removed from site during the course of the Works, as detailed in the Drawings.  The Contractor shall schedule the demolition of the wharf structures to suit the methodology for the construction of new works and to ensure the continued operational capacity of the facility up to the operational shutdown at the end of the Contract Period.

9. Section 9.2 requires that the demolition of berthing and mooring dolphins be undertaken only by specialist demolition subcontractor agreed to by BHP Billiton.  The scope of the specialist subcontract is to include the demolition of reinforced concrete heads, extraction of piles penetrating into the dredge area or if that was not possible, cutting those piles off at a specified level, cutting off remaining piles at sea bed level, and disposing of demolished materials onshore.  

10. Section 9.3 provides:

    The reinforced concrete headstocks and dolphins shall be broken into small sections which can be handled away from the site.  This may be by breaking, water blasting, storing or explosive methods (see Section 9.4) as the contract may propose. 

11. Section 9.3 further provides:

    All debris from the demolition works shall be captured and removed from the site.  No debris shall be allowed to fall to or remain on the seabed, where it would interfere with the pile driving works, the dredging in the berth or the operational safety of the berth.  Any material that is allowed to fall into the seabed shall be removed by whatever means, to the satisfaction of the Company Representative.

Schedule J

1. Schedule J contains drawings, including for construction drawings of structures to be demolished.

The blasting of the dolphins

1. Although it was not the only task CMA was contracted to carry out, the demolition of the dolphins, and the removal of debris produced and dolphin piles, is the source of significant dispute.

2. The blasting of the dolphins was carried out by a specialist contractor, Alterrain.  Luke Franklin was the director and general manager of Alterrain.  He has over 30 years' experience of drilling and blasting in various environments and experience in blasting reinforced concrete.

The use of PCF

1. The 'explosive' that was used is referred to as PCF, an acronym for penetrating cone fracture.  PCF is suitable for controlled blasting because it operates by expansion of gas that causes the rock or concrete to fracture, and minimises the amount of fly rock and vibration.

2. The expert evidence on the suitability of PCF for the particular task was not completely satisfactory.  CMA called two experts, each with qualifications and considerable experience as blasting engineers.

3. The first expert, Timothy Nicholls Hagan, acknowledged that his experience was with conventional or high explosives, and not PCF.  The second expert, David James Lees, was experienced in the use of PCF. 

4. On the evidence, I am satisfied that PCF was an appropriate method for the demolition of the dolphins on safety grounds as it produces less fly rock than conventional explosives (exhibit 50 [6.4] ‑ [6.9]).  In the environment in which the work was undertaken, that was an important factor.

5. Mr Hagan also expressed the opinion that PCF was capable of fracturing reinforced concrete, such as the material in the dolphins, although it may have produced fragments which remained connected by the reinforcing bar (exhibit 50 [6.22]).

6. Mr Lees said that the use of PCF should have produced pieces about half a cubic metre in size, which would not travel far from the blast site.  On the information he had been given about the Hippopotes, and on the assumption that it was capable of lifting debris up to 15 tonne (that is, approximately 5 m³), his opinion was that the pieces produced by blasting with PCF should have been able to be removed by that vessel. 

7. Mr Lees said that the likely result of the use of PCF was to break the dolphins into pieces of 0.5 m³ or less, or perhaps to fracture it to pieces that size, with the pieces remaining in position within the reinforcing cage at the top of the piles (exhibit 51 [53]).  He described the results achieved in the blasting as 'generally consistent with the results that should be obtained by the use of PCF' (exhibit 51 [40]).  He said this despite the fact that on the information provided to him, dive surveys conducted around the dolphins recorded pieces of greater than 10 m³ for four out of the 12 dolphins, with blocks of 30 m³, 50 m³ and 60 m³ recorded.  Even on the material provided to Mr Lees, fragmentation to 0.5 m³ or less was only achieved for four dolphins.  Later in these reasons, I refer to dive surveys that showed the extent of large pieces was far greater than what Mr Lees had been told.

8. It may be that PCF was the most suitable method for breaking up the dolphin headstocks, having regard in particular to safety and environmental considerations.  The suitability of PCF would have to be assessed in the context of an overall method which included retrieval of the rubble from the seabed.  PCF was not suitable for demolition which was intended to blast to destruction, in the sense of producing small or fine fragments.  It could only be used in conjunction with some process for removing finer material that fell to the seabed, and also some way of removing very large and heavy fragments.  CMA was not equipped to do either of those things itself.

An outline of the facts

1. Alterrain was approached sometime before March 2006.  In an email dated 13 March 2006, Mr Franklin, the General Manager of Alterrain, advised Mr Solomou of CMA that he had spent time with a structural design engineer going through the issued drawings with regard to the steel reinforcement on the dolphins.  He noted that BD1, 2, and 6 had been enlarged after initial construction (the email refers to mooring dolphins, but in evidence Mr Franklin accepted that he intended to refer to the berthing dolphins) (V4/999). 

2. Mr Franklin undertook a demonstration blast for Mr Solomou on 28 March 2006 at another site (exhibit 28A [83]).

3. CMA prepared a Project Management Plan, dated April 2006 (Revision B) (V4/1001).  In pt 8.2, it details the demolition methodology, with two methods to be employed for the removal of the dolphins.  Initially MD2 would be demolished by the use of PCF, with fragmented material bound by the reinforcing cage around the perimeter of the dolphin.  An excavator fitted with a hydraulic hammer would ensure the material was of suitable size, before this spoil was removed from the dolphin by a rock bucket, loaded onto a barge, and disposed of at an approved landfill site (V4/1016-1019).

4. The second method, later described as the 'heavy lift' method, was to be used on the remaining dolphins.  CMA would employ a 1,600 tonne heavy lift barge, with each dolphin being lifted in its entirety and then transported and disposed of in a designated area.  Piles that needed extraction could be pulled after the dolphin had been removed by either the heavy lift barge, or another barge.  The heavy lift method was said to significantly reduce the time for dolphin removal, avoid the safety risks involved with the use of explosives, and reduce disposal issues for concrete spoil (V4/1019). 

5. The initial drafts of the Project Management Plan and a Traffic Management Plan, each dated April 2006, were sent by email by Mr Solomou to John Holland on 24 April 2006, and a revised version of each plan was sent on 5 May 2006 (exhibit 28A [86] ‑ [87]).

6. Initially, the MPDJV requested that the Project Management Plan be changed and resubmitted (exhibit 28A [105]). On 2 June 2006, a further revision of the plan was stamped 'proceed as noted and resubmit'. It seems to be common ground that this was an approval to proceed, subject to the annotated changes. In particular, the methodology, including the heavy lift methodology, was then approved or at least not rejected within the 14 days stipulated in the Subcontract.

7. The first dolphin blasted was MD2, which was demolished on 5 July 2006.  The extent of the destruction was unexpected (V9/3465, 3468).  Mr Franklin had expected the blast to result in the entire dolphin cap being fragmented into about one by one metre sized blocks, remaining in position on the piles which held it up.  The headstock was, however, substantially demolished and the debris fell to the seabed.  Immediately after the blast, it was evident that almost all of the concrete had fallen to the seabed with only about 5% of the total concrete structure remaining attached to the piles and visible above the sea (exhibit 27A [72]).  CMA immediately assured John Holland that it planned to clear the rubble using CMA's excavator buckets at low tide, and to have divers pick up remnant pieces (V9/3465).

8. Mr Franklin reported to CMA that he considered that it was possible to duplicate that result with the other dolphins and that it was feasible to drill the headstock of those dolphins to enable blasting to be carried out before September 2006. 

9. On 10 July 2006, Mr Franklin forwarded to CMA his report on the blasting process on MD2 and his conclusion is drawn from it.  Although he described the result as '100% demolished with extremely good fragmentation', Mr Franklin also referred to a 'small mass [that] had been displaced down the pile on the north side' (V9/3469).  He recommended that consideration should be given to the integrity of the dolphins if it was intended to lift them, as the blast result had shown both the reinforcement and the concrete to be weaker than expected.  Mr Franklin proposed that it was possible to duplicate the results and 'to implode the dolphins by drilling the appropriate pattern and by using sequential firing, firing inwards to the centre rather than the perimeter'.  Material from the blast could be removed from the water at low tide using an excavator, alternatively a crane and clamshell or cactus grab.

10. On 14 July 2006, Mr Franklin, by email, asked Mr Xavier of CMA whether they had found much rubble on the seabed as 'this would form part of a final report and should be considered with the decision and planning for future blasts' (V9/3473).

11. On 17 July 2006, Mr Franklin provided CMA with a quotation for dolphin removal by PCF blasting.  He proposed a methodology, based on the 'successful results from the previous blast', with the intention 'to direct the shots into the middle of the dolphin and basically implode the mass' (V9/3519).  Spoil removal would be 'easily done' by using an excavator and bucket for shallow water, and a crane and clamshell arrangement to remove 'the majority of the material' in deeper water leaving the smaller remnants for the 'cutter suction dredge' (V9/3524).

12. The CMA document, 'Preferred Option for the Demolition of Pile Caps using PCF Explosives rev one', prepared around 21 July 2006, similarly provided for spoil to be removed with a bucket on an excavator, with 'residual concrete spoil' removed after the piles had been extracted (V9/3545).

13. In an email on 18 July 2006, Mr Franklin referred to the 'heavy reinforcing mat in [BD 6], Y 36 bars at 100 millimetre centres', and continued, 'if we continually hit rebar and have to redrill this could cause big delays' (V4/1060).  In his first witness statement (exhibit 27A [20] ‑ [25]), Mr Franklin stressed the importance of the steel drawings to gauge the amount and positioning of the reinforcing steel because it allowed him to determine the drilling method to be adopted, as well as the amount and positioning of the PCF cartridges.  Mr Franklin said that, based on his experience and discussion with a structural engineer he had engaged, he could not determine the exact level of reinforcement in the concrete blocks, but used the drawings as a guide to estimate the level of spacing of the steel bars and the number of levels of bars present in the cap (exhibit 27A [25]).  Mr Franklin explained his plan to 'maximise fragmentation' to meet CMA's intention that the dolphins should be broken into as many smaller blocks as possible without the steel reinforcement cage within the concrete breaking apart, with the result that the blocks would fall into the water (exhibit 27A [46]).

1. During July 2006, Mr Franklin also discussed with CMA a method of lifting the remaining dolphins to shore via a heavy lift crane to be blasted onshore.  The proposal to blast onshore did not proceed, in part, because of time and expense.

2. The expressed intention, at least in correspondence between Alterrain and CMA, was to increase fragmentation and blast the dolphins to complete destruction.  The possibility of larger debris left by the blasts was also recognised.  Although the blast of MD2 was described as complete destruction, a dive survey on 5 July 2006 found two large concrete blocks, one of which was estimated at 10 to 15 tonne (V9/3460).  The documents produced by Alterrain consistently recognised that there would be debris that would be removed by a bucket on an excavator, where possible, and residual spoil to be removed in some other way.  Mr Clarke said, however, that it was not the intention to have pieces that were beyond the capacity of the bucket dredge (ts 433).

3. On 22 July 2006, Mr Clarke met with John Holland representatives, including Mr Doyle, and advised them, in effect, that the risk of proceeding with the heavy lift option was unacceptable.  Mr Doyle advised Mr Clarke that he required an acceptable alternative to be developed that would meet the current programme. On 22 and 23 July 2006, Mr Clarke worked on the alternative methodology and instructed Mr Kahlil to prepare a revised construction programme (exhibit 28A [146]).  In conjunction with Alterrain, CMA developed a drill and blast methodology for the remaining dolphins, and directed Alterrain to develop a written methodology.  The method developed required that, after each of the dolphins had been blasted, an excavator mounted on a barge would remove as much as possible of the fragmented concrete which was to be captured in the 'basket' created by the reinforcing mat within the concrete top of the dolphins (exhibit 28A [146]).

4. On 23 July 2006, Mr Franklin wrote to Mr Solomou on his review of the blasting pattern for the dolphins 'in regards to Shaun's and your request to ensure utter fragmentation of each concrete mass'.  He referred to the need for testing and analysis of the remnants of the mooring dolphin already blasted so that an assessment could be made as to the structure and probable strength of the other dolphins.  Mr Franklin was concerned that an attempt to increase the fragmentation of the dolphins would be met with a corresponding risk of debris being scattered over a wider area, and greater risk of injury and damage (V4/1084). 

5. Mr Franklin specifically referred to the capping of the berthing dolphins which would require additional breaking using a hammer and excavator as the construction of those structures was superior (V4/1084).

6. On 24 July 2006, Mr Clarke wrote to Mr Doyle, regarding demolition methodology (V4/1072).  He advised that, following a detailed risk analysis of the proposed methodology, the use of a heavy lift barge to remove the dolphin caps was now not recommended and an alternative method was proposed.  He set out five reasons, some overlapping, why the heavy lift method was not being pursued.  In short, there were safety issues, including for divers engaged in the process; there were industrial relations issues involved in the Maritime Union of Australia; the timing and availability of the heavy lift barge had now become more of a risk; the use of a barge would likely infringe on normal shipping operations in the port and may produce unacceptable delay or the potential for such delays; and finally, the terms of the contract offered by the owners of the barge were not commercially sustainable.  Mr Clarke continued:

   In summary, our risk assessment of the use of the heavy lift barge is now unacceptable and we had concluded that an alternative must be pursued.  To this end, two alternatives had been further evaluated viz:

   a.Revert to the original plan to drill and fracture the dolphin tops using PCF explosives, evacuate the fractured rubble and then proceed with conventional demolition techniques to remove the steel structures.

   b.The learning from the demolition of MD2 suggest that a more time effective and lower risk option would be to increase the f[r]acture design and to entirely demolish the dolphin tops.

   In assessing the relative benefits of these options we have now become aware that the dredging of the berthing pocket will now be undertaken by an excavator dredge technique.  This is significant in assessing the relevant merits of the alternatives.

   The BHPB specification, Harbour Facilities Marine Work … section 9.1 specifies that; 'This shall include, but not be limited to, ensuring that no demolition materials is allowed to enter into, or remain in any berth pocket, to the extent that it limits the operational draft of any vessel in the berth'. For this reason we are proposing the second option, that is, to fracture to complete destruction the dolphin's tops.  In either option it is inevitable that fractured concrete will fall into the water and lodge on the seabed.  It was always intended that the spoil would be surveyed and removed.  By complete destruction of the dolphin tops the risk of larger concrete pieces entering the pocket is significantly reduced, particularly given the nature of the older concrete.  It is proposed to engage the excavator dredge to remove any spoil, as directed by survey, post removal of the piles.  Further, divers will, as part of the proposed demolition survey, locate and arrange lift of any reinforcing that may fall to the water in the course of the fracturing process.  The dredging process will also be engaged in the removal of any fractured pile stems down to Rh 20.5m.  In this way the specification that no material remains in the berthing pocket which might limit the operation drafts of any vessel in the berth is ensured.

   Our explosives contractor, Alterrain, has been requested to provide an analysis of the experience of MD2 and to propose a methodology for the complete destruction of the dolphin tops.  Those reports are attached for your consideration.  Also appended is an overview ... of the proposed method and under separate cover a program.

7. CMA asked for endorsement of the revised methodology. 

8. The Alterrain report on the blast of MD 2 (V4/1081 ‑ 1083) was part of an attachment to that letter. 

9. John Holland responded to CMA, pointing out that Mr Franklin had sought information as to concrete testing and asked for that to be done.  Mr Franklin had requested core tests (V10/3588).

10. On 25 July 2006, Mr Clarke sent Mr Doyle a revised programme for phases 1 and 2 of the works.  The revised programme was based on the new methodology that had been recommended (exhibit 28A [155]).  This is the programme later sent by CMA on 4 August 2006 (exhibit 28A).

11. By 27 July, the heavy lift option was described in an internal CMA email as 'now dead' (V4/1105).  Testing was arranged to estimate the strength of the concrete in the remaining dolphins for the explosives expert.  These tests were carried out but the results were not given to Mr Franklin.  Mr Franklin said that he was not shown any concrete test results for the purpose of his blast designs for subsequent dolphins, although that information would have been significant.  He said that information regarding concrete strength would have assisted him in the blast design if the intention was to fragment the concrete into small pieces (ts 363, 365).

12. On 8 August 2006, with Mr Clarke's approval, the Dolphins Blasting Option Revision A, dated 4 August 2006, was transmitted to John Holland.

13. Even at this stage, it was recognised by CMA that the blasting of the dolphins was taking longer than proposed, and that the removal of debris was difficult.  In an email dated 15 August 2006 Mr Xavier wrote to Mr Franklin:

    From my experience of MD2 demolition, what was supposed to take 1 week eventually took about 3 weeks to complete.  This was given that the MD2 was blasted nice and good without much rubble still intact.  I witnessed that removing the remaining concrete rubble was a difficult task for the 35t excavator operator because of the swells and tides.  This makes me very nervous.  If the other dolphins are not blasted to a similar post-blast state, we will be delayed considerably. 

    Thus, I would like to request is that you do what it takes to blast the dolphins to smithering (V10/3642).

14. Mr Franklin records the following sequence of blasts, commencing on 2 September 2006:  MD 3 on 2 September 2006 with 'additional charges set to decimate block' (exhibit 27A [171]); MD3A on 3 September 2006, recorded as 'block disintegrated' (exhibit 27A [175]); and BD7 on 7 September 2006 (exhibit 27A [188]).

15. Alterrain then experienced difficulty in drilling BD1, BD2 and BD6 to enable the PCF charges to be laid.  

16. On 7 September 2006, the shift report from Alterrain reported 'attempted to drill BD6 this day could not penetrate due to rebar' (V4/1164).  With the further comment 'reinforcing on BD 6 noted and plan reviewed requested interpretation of same'.  The shift report for 11 September reported 'Tamrock rig down ‑ cannot drill BD 6 ‑ organised excavator and hammer to break out cap BD 6.  Requested lift to relocate Tamrock' (V4/1166). 

17. In his oral evidence, Mr Franklin was referred to this record (ts 359 ‑ 360).  He said that, in his recollection, they had drilled somewhere in the order of 50 holes but could not penetrate the reinforcing steel mat, so the idea was to try to expose the top layer of reinforcing to see how densely or how closely spaced the steel was. 

18. On 12 September, Alterrain carried out work with a jack pick on BD6 to ascertain rebar spacing and 'found top and bottom layer of steel staggered ‑ drilled more probe holes ‑ continually hitting steel'.  In another report, Alterrain stated that the BD6 reinforcement mat was impenetrable by conventional drilling. 

19. On 20 September 2006 (V4/1183 ‑ 1184), Mr Franklin reported to Simon Gill of CMA.  He proposed, due to the amount of reinforcement in the dolphins, to completely remove the concrete capping that was added after the original construction using a 7 ton excavator and rock breaker, and then to drill and blast the original construction.  

20. On 27 September 2006, Mr Doyle wrote to Mr Clarke regarding the rate of progress of the Subcontract works.  The letter is not a happy one.  In particular, he referred to the proposed programme transmitted by CMA on 27 June 2006, based on the use of a heavy lift vessel.  He noted that the programme had since changed but John Holland was yet to formally receive an updated programme, taking into account the revised methodology.  He advised '[i]rrespective of the methodology changes, the requirement to achieve the various milestone dates remains unchanged and no extensions to these dates have been granted'.  John Holland directed CMA to provide a recovery programme (V4/1192). 

21. Mr Clarke responded on 26 September (V4/1200).  In particular, he said that CMA opted not to proceed with the use of the heavy lift barge principally due to threatened industrial activity and continued 'the significant change of methodology, submitted to you via email on 24 July, at  a very late stage in our mobilisation, has been the principal cause of the current programme delay as you note'.

22. On 28 September 2006, Mr Franklin reported to CMA regarding Alterrain's variation claim for work on BD6.  In particular, he said:

    With reference to drawing Number F113 S 0035/0.  The drawing was interpreted as having Y36 rebar at 100 mm centre to centre in the top layer of reinforcement of the top mat specifically around the perimeter of the structure for an approximate distance of 1 m in from the edge of the block and over the new tensioned piles and around the perimeter of the block.  A secondary layer of Y 20 rebar lateral to that at 200 mm centres and a third layer of Y 36 bar at 100 mm centre running parallel but staggered to the top layer.  The drawing indicates that in the main section of the structure the rebar is at 200 m x 200 mm spacing and is as per previously described.

    What was actually encountered was that between longitudinal bars spaced at 100 mm x 100 mm there is a cogged bar extending from the side wall of the structure and is located between the lengths of bar forming an impenetrable layer of steel for a distance of 4 metres from the side wall of the block towards the centre from both the southern and northern faces.  There is also appears to be additional bars which are lapped from the cogged side wall bar to tie in these cog bar bars so that across the top of the block there are only very few sections were [sic] the rebar is gapped to 100mm.  There is an area of the block which has hold down bolts and rebar cage which have these longitudinal bars gapped for a total width of 200 mm.  There is only a very few areas across the top layer of reinforcement that present a separation distance between the bars of the 100 mms centre to centre and none at 200 mm x 200 mm as indicated on the drawing (V4/1213).

23. Mr Franklin reported that it would be impracticable to drill for this amount of rebar and that the only way to deal with it properly was to remove the concrete capping entirely to get down to the original structure by employing a combination of a rock breaker and a cutting torch once the rebar was exposed (V4/1214).

24. On 29 September 2006, Mr Pick of CMA gave a notice of contract variation to Mr Brown of John Holland.  The variation was based on the top reinforcing mats in BD6 being substantially different from that outlined on structural drawing number 8321 22 (V4/1223).  Alterrrain had been aware of this difficulty from 7 September, and had reported to CMA on 20 September (at the latest).

25. The cap of BD6 was blasted on 29 September 2006, and again on 2 October 2006 (exhibit 27A [203] ‑ [207]).  Those blasts were intended to fracture the cap to enable an excavator or breaker to pull the cap apart.  However, this created the problem of removing large amounts of rubble (exhibit 27A [208]). 

26. BD5 was blasted on 23 September 2006.  It was done twice because the first blast was a misfire.

27. On 30 September 2006, CMA sent a notice of contract variation (V7/2482-2483; exhibit 28A [206]). Mr Clarke says that had he known about the additional reinforcing at the time that he sent the revised methodology for demolition and the revised programs in July and August 2006, he would have sought an extension of time and increase in the Subcontract sum to take into account the additional costs.  He stated:

    I would have pressed particularly hard for the additional time. The programme was I thought already tight. The extra time required to demolish the dolphins had the effect of delaying Phase 2 and I would neither have proposed or agreed to a schedule CMA Contracting could not comply with. I would also have tried to negotiate a change to the Subcontract price. BD1, 2 and 6 had a different structure to the plans CMA Contracting had when it submitted the tender and I had when negotiating the Subcontract. I would have used this fact to negotiate a higher price [209].

28. At a meeting on 25 October 2006, Mr Clarke told John Holland representatives, in effect, that the construction of BD6 was a major difference to the scope of works (exhibit 28A [217]).

29. BD4 was blasted on 30 October 2006, and Mr Franklin recorded that the mast disintegrated and only the piles remained (exhibit 27A [225]).

30. The main structure of BD6 was blasted on 28 October 2006 (exhibit 27A [214]).

31. Alterrain employees left the site on 2 November 2006 and returned on 15 November.

32. On 15 November 2006, Mr Clarke wrote to Mr Doyle, referring again to the delays due to the construction of the dolphins.  He referred both to the revised method to remove the caps, and to the blasting outcomes proving unsatisfactory for maximising concrete recovery into barges (V4/291).

33. BD3 was blasted on 18 November 2006 (exhibit 27A [236]).

34. BD2 was prepared by exposing the rebar by hammering, and was blasted on either 23 or 25 November (exhibit 27A [239]).  Hammering or drilling continued on BD2 between 11 and 14 December 2006, and on 15 December 2006 there were two blasts, the first misfiring (exhibit 27A [243]).

35. A different method was used for BD1, as Alterrain was asked by CMA not to blast the top cap (exhibit 27A [247]).  In his oral evidence, Mr Franklin said that the complete headstock slumped into the sea (ts 404).

36. MD4 was blasted on 9 December 2006 (V4/1314) and MD4A on 13 June 2007.  These later blasts had been postponed to allow for the removal of a bird nest on MD4A.

The result of the blasting

1. The success of the demolition in destroying the dolphins is not in contest.  The major area of dispute arises from the extent to which the demolition produced debris that was deposited on the seabed.  The effect of the debris on other activities, and the cost of removing it, is at the heart of John Holland's counterclaim.

2. The presence and extent of debris was not appreciated at the time of, or immediately after the blasting.  It was later revealed by dive surveys.

3. On 4 December 2006, Mr Clarke directed Mr Michael to arrange for divers to complete the dive surveys so that CMA could learn the extent of the demolition debris on the seafloor (exhibit 28A [233]).  On 7 December 2006, Mr Doyle sent a letter to Mr Pick in relation to the seabed survey (V10/3779).  Mr Clarke says around December 2006 he had a conversation with Mr Doyle in which Mr Doyle said that the survey must be a multi‑beam survey of the seabed in the area of the proposed widening of the berthing pocket (exhibit 28A [237]).

4. CMA entered into a services agreement with Fugro Survey Pty Ltd dated 21 December 2006.  Mr Clarke said that, on completion of the survey:

   I reviewed it, as did AJ Michael, and found the results to be of little use to CMA Contracting as there was a lack of detail necessary to identify relatively small debris … A hard copy of the survey results was supplied to John Holland free of charge.' (exhibit 28A [249)

5. John Holland and CMA did not agree on CMA providing the source data from the survey free of charge.  On about 8 February 2007, John Holland issued CMA with a site instruction to provide electronic data to enable the dredging contractor to plan and execute removal of the remainder of the demolished materials on the seabed (exhibit 28A [251]).  CMA complied with the instruction, but submitted a variation applying for half the cost.

6. During July 2007, Indianic Diving Services carried out dive surveys in the areas surrounding the locations of the demolished berthing dolphins, BD1 to BD7.  An inspection report was prepared for each dolphin, including a 'mud map' showing the debris found, and what had been removed.  The information included the location of material west of the fender line.  Further surveys were carried out in later months.  Dive surveys were also conducted in the area around the demolished mooring dolphins (MD2, 3, 3A, 4, and 4A), between July and December 2007.

7. The interpretation of the survey reports, in the light of other evidence, was itself a matter of some controversy in final submissions.  It was also submitted on behalf of John Holland, correctly in my opinion, that the dive survey evidence does not include some debris, including piles, pile stubs and tension wires, that was identified in other evidence.  The evidence of what was found on those surveys does, however, enable an estimate of the extent of material which was recovered, and the size of that material.

8. The parties did not differ on the following (which I take from the CMA summary of dive surveys, as amended by John Holland, handed up as part of the final submissions):

9. BD2 was surveyed on 8 and 17 August 2007, 11 and 12 October 2007, and 9 November 2007.  Nine blocks with a volume of 1 m³ or more were identified, together with numerous smaller blocks.  The largest of the blocks was 5 m x 5 m x 2 m, with an estimated weight of 125 tonne.  Another four were heavier than 18 tonne.  On an estimate of 2.5 tonne per cubic metre, the total estimated was 113.1 m³ weighing 282.75 tonne.  One block of 1.8 m³, 4.5 tonne, was removed between 12 October and 9 November 2007.  A 1 m³ block weighing 2.5 tonne was removed on 4 March 2008.  The remainder had been removed between 17 August and 12 October 2007.

1. The Westsea 10 conducted clamming from 21 June 2007 and into early September 2007 on a daily basis.  Although some other material was recovered during that time, the work was primarily directed to the recovery of debris.  Mr Dick assessed that, during clamming operations, about 90% of what was recovered was debris.

2. During the period 20 June to 9 July, the Westsea 10 was the only vessel being used.  As I have said above, the recovery of anything else was incidental.  The evidence does not show that the time the excavator was employed was in any way extended by the other material.  I am satisfied that John Holland has proved its claim for 100% of the costs of this period, that is: $93,936.00.

3. Between 10 July and 28 August 2007, the Westsea 10 and the Hippopotes were both operating.  John Holland claims 15% of the costs incurred in this period on the basis of the 'offshore' apportionment.  It is, in my opinion, a conservative estimate when the Westsea 10 was daily engaged in retrieving debris.  I will allow the claim at $34,614.00.

4. Between 29 August and 19 September 2007, the Westsea 10 was again the sole operating vessel.  I am satisfied for such periods, John Holland has proved 100% of its costs: $92,601.60. 

5. After 20 September 2007, the Westsea 9 and the Erkat were operating in the berth pocket, removing hard rock and some debris.  I have accepted a one third/two thirds apportionment for the offshore costs.  The evidence does not, however, show that the same proportions should apply to onshore handling.  In particular, I note that there are significant standby costs.  In short, I am not satisfied that John Holland has proved the extent of its loss or costs on this part of the claim.

The dump truck

1. I will not repeat the reasoning set out above, as the same apportionment (or lack of proof) applies also to this part of the claim.

2. In the period between 7 March and 21 April, John Holland has not proved the extent of its loss.   

3. For the second period, the stand down of the Hippopotes from 22 April to 19 June, I am satisfied that John Holland has proved its entitlement to the costs of the standby time, in the amount of: $283,269.25.  I have reached this figure by subtracting the amounts claimed for the water truck, for working dump truck and operator hours, and supervision from the amounts invoiced. 

4. During the period 20 June to 9 July, I am satisfied that John Holland has proved its claim for 100% of the costs of the dump trucks on the invoice 1 June to 30 June, that is: $38,315.  The invoice for 1 July to 31 July does not enable the same discrimination of different costs.  The proportion of costs recoverable on the earlier invoice was approximately 57%.  Applying that to the amount claimed for 1 to 9 July 2007, gives $42,590, for a total for this period of:  $80,905.00.

5. Between 10 July and 28 August 2007, John Holland claims 15% of the costs incurred in this period at $70,740.59.  That includes the water cart.  CMA claims a further 15% should be subtracted for the water cart.  I will allow the claim at $60,129.50.

6. Between 29 August and 19 September 2007, I am satisfied John Holland has proved 100% of its costs (again subject to the water cart): $79,916. 

7. After 20 September 2007, I am not satisfied that John Holland has proved the extent of its loss or costs on this part of the claim.

The dozer and grader

1. A similar exercise can be carried out for the costs of the dozer and grader.

2. In the period between 7 March and 21 April, John Holland has not proved the extent of its loss.   

3. For the second period, John Holland has proved its entitlement to the costs of the standby time but not working time, in the amount of:  $92,988 (dozer) and $36,067 (grader)

4. During the period 20 June to 9 July, John Holland has proved its claim for: $35,178 (dozer) and $12,399 (grader).

5. Between 10 July and 28 August 2007, John Holland claims 15% of the costs incurred.  I will allow the claim at $14,760 (dozer) and $4,623 (grader).

6. Between 29 August and 19 September 2007, I am satisfied John Holland has proved 100% of its costs: $38,622 (dozer) and $13, 563 (grader).  

7. After 20 September 2007, I am not satisfied that John Holland has proved the extent of its loss or costs on this part of the claim.

Supervision

1. As well as the equipment costs, John Holland has claimed management or supervision time for a proportion of the time of Mr Bryce and Mr Hancock.  I am not satisfied John Holland has proved its loss with regard to these staff costs.  First, there are no reliable records of actual time spent.  The estimates made by the employees involved of the proportion of their time on supervising the debris handling are essentially speculative.  Second, each of those employees was an existing employee who was also engaged in other tasks within John Holland's scope of works.  John Holland has not shown that the salary paid to them would not have been incurred had CMA met its contractual obligations.

The disruption claim

1. John Holland pleads this claim in pars 109A to 112 of its counterclaim.  In essence, it pleads that in breach of the Subcontract, or in breach of the Subcontract as varied, CMA failed to remove the concrete debris and rebar from the dredging area or the seabed.  John Holland pleads that the volume and number of large pieces of concrete was 'significantly greater than it would have been had [CMA] performed its obligations as agreed', and that a large proportion of that material lay in areas where piles were to be driven for the new wharf.  As a result, it became necessary for John Holland to mobilise the Westsea 10, and to prolong the operation of that vessel and the Hippopotes.

2. John Holland pleads that as a result its construction activities, including the driving of piles, were severely disrupted and it has suffered loss and damage.  In particular, John Holland pleads that the barges Harrier, Mari, Nuri, Wren and Buckley - which are engaged in construction activity and pile driving - were required to standby, or be moved to other areas, or to work at a lower level of productivity.

3. CMA denies the allegations in these paragraphs.  Further, it pleads that in respect of delay or disruption John Holland is confined to the remedy of liquidated damages under cl 13.4 of the Subcontract.

4. Three witnesses gave evidence on behalf of John Holland regarding the disruption.  Mr Bryce, in his witness statement, gave very general evidence that the Harrier, Wren and Nuri had to stay away from work areas where the Westsea 10 was carrying out its work due to the risk of tangling anchor lines.  He further said that divers were required to locate and remove demolition debris, and the vessels needed to stay away from work fronts to avoid risk to the divers (exhibit 43A [103] ‑ [104]). 

5. Mr Nairn also gave relatively general evidence of disruption to piling.  Mr Nairn was on the Harrier barge, supervising piling operations.  He said that there were periods between May and September 2007 when the crew on the Harrier had to wait for CMA's divers to cut piles and survey the area for objects that might prevent piling.  He could not recall when, how long, or how many times this occurred.  He also observed the Harrier have difficulty when driving piles.  From his observations, he concluded that the obstructions were concrete blocks, pile offcuts and piles stubs because, on occasions, he saw material of that nature removed from the seabed, and there were occasions when a pile appeared to glance an object, or crush it while being driven (exhibit 37 [64] ‑ [65]).  Even accepting that evidence, I can make no quantitative assessment of the alleged disruption.

6. Finally, Mr Smith addressed this issue in his witness statement and oral evidence.  Mr Smith was also on the Harrier.  In his statement, Mr Smith said that several times during the piling operation, the Harrier could not pile in the required location because of obstructions on the seabed.  He also could not recall how many times, when or in what locations this occurred.  He also concluded that the obstructions were concrete blocks or pile off-cuts, for effectively the same reasons given by Mr Nairn (exhibit 41 [22] ‑ [24]).  Mr Smith said that when the Harrier could not get on with the piling work, it had to either wait or participate in other construction work.  Mr Smith said that the problems occurred every day (ts 860).  He did not estimate the time that was lost.  Although he had kept a diary, it has been lost.

7. John Holland also relies upon the records maintained by the Hippopotes and the Westsea 10.

8. CMA relied upon an analysis of pile driving logs carried out by Mr Griffith (exhibit 60C).  The effect of this evidence is, however, restricted by the fact that he relied in part upon records included in a witness statement which was not admitted into evidence (statement of Jay Whitman).  The site diary records available to him had little information for the period from May 2007.

9. In the circumstances, I am satisfied that there was some disruption to John Holland's construction work and in particular the driving of the front piles for the construction of the new wharf. 

10. John Holland having shown a breach of CMA's obligation, it is entitled to at least nominal damages.  If John Holland were to recover other than nominal damages for this component of its claim, it must prove that it has in fact suffered loss or damage for which it is not otherwise being compensated.  It is not sufficient, in my opinion, for John Holland to prove that there was some, unquantified, disruption of its pile driving operations.

11. John Holland attempts to estimate the amount of time various employees spent in supervising, due to the presence of demolition debris, so as to calculate additional supervision costs.  John Holland also estimates it was required to undertake an additional 63 days of piling works.  While it says that is a conservative approach, it not a figure which in my opinion is supported by evidence.  The measure is crude.  Activities which were originally planned to take 46 calendars took an additional 53 calendar days, plus a 10 further days caused by the late demolition of MD 4A.  It is not, in my opinion, possible to simply look at the delay in this manner, particularly when John Holland had itself put forward a claim to BHP Billiton that piling had been delayed 116 days due to unexpected sub seabed conditions (exhibit 61 10960, 10966) which resulted in a 24.7% increase in the actual driven length over the design driven length. 

12. For reasons given earlier, I am not satisfied that it was a breach of contract to produce debris or rubble from the demolition of the dolphins that fell to the seabed.  CMA was in breach, however, in not removing the debris from the seabed within the time allowed by the Subcontract for completion of its obligations, and also for permitting it to remain on the seabed where it would interfere with the pile driving works and the dredging in the berth (sch I to the Subcontract).  It is to be compensated by an award of liquidated damages from CMA for the delay in achieving completion.  It has, apparently, been compensated, at least in part, by BHP Billiton for delay in completing the pile driving operations.  Damages otherwise awarded in this action include damages for the costs incurred in removing the debris, and the charge out of the vessels and equipment used.

13. If there was a breach in allowing the debris to fall to the seabed, and damages that extended beyond compensation for the delay, I am not satisfied that John Holland has proved any resulting loss for which it has not otherwise been compensated.  It may be entitled to nominal damages.   But I am satisfied that any amount that would be awarded as nominal damages is included in the award otherwise made, under which it will be compensated for the delay in completion, and for use of the Hippopotes, the Westsea 10, and associated equipment.    

Liquidated Damages

1. John Holland claims liquidated damages under cl 13.4 of the Subcontract on the basis that CMA failed to achieve completion of the demolition works by the specified date for completion (defence and counterclaim par 152).  The date specified in the contract (cl 10.1 and particulars) was 14 March 2007.  Subject to an extension of time for delay or variations (and on the basis that time was not agreed to be at large) that date was not varied. 

2. CMA did not deny that, on the proper construction of the Subcontract, it was liable for liquidated damages for failure to achieve completion by the Date for Completion.  Indeed, it argued that, because John Holland did not terminate the Subcontract, liquidated damages were its sole remedy.  Those damages were subject to the limits of liability provided for in cl 13.4 and sch A of the Subcontract.  In particular, CMA contended that, on its proper construction, the contract sum was $10,397,000 (excluding GST) and was not subject to adjustment to calculate the 10% limit.

3. CMA denied the claim for liquidated damages on the basis that John Holland breached the Subcontract by failing to move the shiploader to enable commencement of the phase 4 works on 29 January 2007.  It similarly pleaded that other delays were caused by John Holland failure to give access to the site, in breach of cl 7.2 of the Subcontract.  As a result of those breaches, CMA was prevented from carrying out the works under the Subcontract in accordance with the requirements of its Construction Programme.  This plea was also made in answer to response to the alleged failure by CMA to comply with the formal requirements of the Subcontract to give notice of and claim extensions of time for delay.

4. In the alternative, CMA says that the John Holland has suffered no damage, or has not suffered the damage claimed as:

   1.the delay in completion of John Holland's works was not caused or contributed to by any breach by CMA; and

   2.to the extent that John Holland suffered loss by reason of delay, it has been fully or partly compensated for that loss by BHP Billiton.

The prevention principle

1. The plea that performance was delayed or prevented by John Holland raises the principle commonly referred to as the 'prevention principle'.  In summary, a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party's non‑performance.  In Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [No 2] [2012] WASCA 53; (2012) 287 ALR 360 [47], McLure P characterised this principle 'as a particular manifestation of the obligation to cooperate implied as a matter of law in all contracts': see, for example, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607.

2. The prevention principle applies to delays in practical completion of a contract caused by acts or omissions of the principal within the scope of the contract that prevent practical completion within the time stipulated in the contract.  It is particularly relevant in response to John Holland's claim for liquidated damages.  If, in the events that have occurred, CMA has been prevented by John Holland's breach or default from achieving the stipulated date, and there is no contractual mechanism for substituting a new date, then there is no date from which liquidated damages will run, and the right to liquidated damages will be lost.  In the context of this case, CMA's obligation to achieve practical completion by 14 March 2007 is replaced by an obligation to reach practical completion within a reasonable time. 

3. The application of the prevention principle must be considered in the context of the particular contract.  The Subcontract between John Holland and CMA directly addressed this question in cl 10.13, providing that if CMA failed to comply with the notice procedures in cl 10.12 it shall have no entitlement to an extension of time and any principle of law or equity which might render the Date for Practical Completion unenforceable shall not apply.  Expressly, cl 10.13 purports to exclude the prevention principle.  In my opinion, it is effective in doing so.  CMA is precluded from the benefit of an extension of time and is liable for liquidated damages, even where the relevant delay has been caused by John Holland:  see Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 [78], referred to by McLure P in Spiers [57].

The meaning of completion

1. CMA also pleaded in its reply and argued that it had achieved completion under the Subcontract by 25 June 2007, because by then the fragments and rebar which were necessary to be removed to achieve Completion (as defined in the Subcontract) were removed.

2. The argument starts with the proper construction of 'Completion' under the Subcontract. 

   Completion means the stage when the Works are or a Stage is complete:

   (a)except for minor Defects which do not prevent the Works or the Stage from being reasonably capable or being used for the intended purpose and correction of which will not prejudice the lawful and convenient use; and

   (b)the Subcontractor has done everything which the Subcontract requires it to do prior to completion including those things described in the Particulars.

3. 'Defects' is also a defined term in cl 1.1:

   Defects means any defect, shrinkage or omission in the Works or a Stage and includes loss or damage (and if before Completion also includes Works Materials and unfixed goods and materials) or any other aspect of the Works or a Stage which is not in accordance with the Subcontract.

4. CMA argued that the definition is ambiguous.  It must be properly construed by giving content to both limbs of the definition.  Further, CMA submitted that the reading for which John Holland contends leads to circularity in the definitions of 'Completion' and 'Works'. 

   Works means all things or tasks which it is necessary for the Subcontractor to do to comply with its Subcontract obligations including the physical works which the Subcontractor must complete and hand over to John Holland in accordance with the terms and conditions of this Subcontract such physical works being briefly described in the particulars.

5. The submission that both limbs of the definition of Completion must be given content is clearly correct.  The whole of an instrument must be considered 'and the words of every clause must if possible be construed so as to render them all harmonious one with another':  Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109. The construction task is then to read the words of the definition in the substantive provisions of the Subcontract, including cl 8 and cl 13, which must then be construed.

6. With respect, I do not see any difficulty arising out of giving effect to both limbs of the definition.  The Subcontract may oblige a Subcontractor to do things which, while undone, do not prevent the works from being reasonably capable of being used for their intended purpose.  Schedules H and I both require 'clearing from the berth pocket all falling demolition materials from the demolished structures'.  In the present case, it is not a reasonable construction of the Subcontract to regard the works as complete, even if the wharf may be used, while demolition debris or pile stubs are still required to be removed within the terms of the Scope of Works.  

7. The Subcontract does not, in my opinion, intend to treat failure to complete that part of the Scope of Works as 'defects', let alone 'minor Defects' referred to in cl 13.1.  Perhaps the removal of some remaining debris missed in the removal of the demolition material might be properly regarded as a minor defect.  But the extent of debris remaining after the Date for Completion (even if extended to June 2007) was too extensive to be regarded as a minor defect.

8. Earlier in these reasons I have discussed the evidence of the dive surveys carried out between July and December 2007 in the areas surrounding the locations of the demolished berthing dolphins (BD1 to BD7) and in the area around the demolished mooring dolphins (MD2, 3, 3A, 4, and 4A).  The debris remaining in the berthing pocket from the demolition of the berthing dolphins was significant, both in the number and in the size of some of the blocks.  Blocks frequently had protruding metal reinforcement bar, sometime sticking out several metres (exhibit 42B [14]).  I have also outlined the evidence, from site diaries, of the debris, pile and pile stub removal carried out using the Westsea 10 in July, August, and September.

1. The wharf was operational by the end of October 2007.  On 29 October 2007, John Holland gave notice to the MPDJV that the berth was ready to accept a 'Panamax class vessel' as from 29 October 2007 (V4/1448).  It was not in dispute that the new wharf was operational for the larger class of vessels it was designed to accommodate from about that time.

2. Much of the demolition material was removed between August and November 2007, although material (for example, around BD6 and BD7) was still being removed in January and February 2008.  Other evidence shows the nature of the task required to remove this debris.  The debris removal included the breaking up or removal of sizeable blocks.  In cross‑examination, Mr Marks gave the following evidence (ts 288):

   The process of removing debris from about mid June 2007 till the end of March 2007 [the reference to 2007 is clearly intended to be 2008] was a sustained daily occupation, wasn't it?---Yes, it was.

   Some of the items of debris that had to be removed were extremely difficult to remove?---Yes.

   Attempts were made on several occasions to move individual pieces and initial attempts would fail until you were able to successfully get them to the shore?---Yes.

   There was one particularly large concrete block that came out of near the former berthing dolphin 7, wasn't there?---Yes, there was.

   That proved to be the most difficult of all the items of debris to get ashore?---Yes.

   And in summary attempts were made to float it.  Correct?---Yes.

3. The large block was estimated by Mr Marks at 380 tonne (although Mr Rees gave a more conservative estimate at 180 tonne).  Mr Marks records the use of Cardox (another technology for fracturing material without the use of explosives) and the attempts to float large blocks over several days in late October and early November 2007.  Similar evidence was given in cross‑examination by Mr Michael, who agreed there was a very substantial activity of removing debris from the dolphin demolition from June 2007 to about mid-March 2008 (ts 600, 601). 

4. Some of this evidence is imprecise.  But Mr Marks also maintained a diary of activities between June 2007 and March 2008 (exhibit 26).  Those diary entries show removal of rubble, rebar, piles and pile stubs throughout that period, particularly from late September 2007.  The site diaries record extensive demolition debris clearance throughout the third and fourth quarters of 2007.   The site diaries include a record of attempts to move the large block in late October (V14/5681), and early November (V26/9644-9673), before it was eventually broken into pieces and removed in mid-November (V26/9644 ‑ 9673, V14/5682 ‑ 5702).

5. Mr Marks also agreed that it was common for CMA to be required to remove rubble or debris that was interfering with John Holland's construction work (ts 301). 

6. Mr Marks attributed the duration of the debris clearance activity to problems that resulted from being denied access by John Holland to the relevant areas (ts 301).  He estimated denial of access was four to six days a fortnight (ts 316).  Even if this contributed to delay, I am satisfied that the extent and nature of the debris to be removed was also a material factor.  Further, it was always part of this Subcontract that the activities of demolition in construction by a number of different contractors, in a relatively confined area, had to be co‑ordinated.

7. On the evidence, I am satisfied that CMA did not achieve Completion in 2007.  It is unnecessary to be more precise, as the aggregate of liquidated damages was reached, even if the extensions of time claimed by CMA were allowed, by October 2007 at the latest.

The proper construction of cl 13.4

1. By cl 13.4(d):

   If GC 13.4 (a) and GC13.4(b) applies, payment of liquidated damages shall be the sole remedy available to John Holland for failure to achieve a Milestone by its Milestone Date or to bring the work under the Subcontract to Practical Completion by the Date for Completion (as the case may be) and shall be in full satisfaction of the Subcontractor's liability for such failure, provided that:

   i.such payment shall not limit the Subcontractor's obligations to perform, and remedy defects in, the work under the Subcontract or the Works in accordance with the Subcontract; and

   iiif liquidated damages are found not to be payable or if one of the provisions of this Subcontract relating to liquidated damages are found to be invalid or unenforceable for any reason, the Subcontractor shall remain liable to John Holland for any loss and damage suffered by them.

2. The specified rated of liquidated damages was $22,000 a day, for every day after the Date for Completion that the Works were not complete until the Works reached Completion or the Subcontract was terminated (cl 13.4 and particulars in sch A of the Subcontract).  Liquidated damages were limited in the aggregate to 10% of the 'contract sum'.  The Subcontract did not define 'contract sum', but cl 1.1 relevantly defined Subcontract Sum to mean the lump sum specified in the particulars 'and is subject to adjustment in accordance with this Subcontract'.  The reference to the contract sum must be read as a reference to the Subcontract Sum.  That is the only contract sum in the Subcontract, and is the only sum which the parties can have intended.  Only in that way can the limitation on the aggregate liquidated damages be given some practical operation.

3. The particulars defined 'Subcontract Sum' as 'in accordance with Schedule K'.  Schedule K provided solely for a lump sum of $10,397,000.  By cl 11.4, subject to cl 8.5 and 16.4 (neither of which is presently relevant), 'the Subcontract Sum will be adjusted for all Variations which have been the subject of a Variation Order'.  Reading those provisions together, the relevant sum for the calculation of the aggregate liquidated damages is the sum in sch K, as adjusted for agreed variations.  John Holland accepted, in final submissions, that the sum paid for iron ore spillage removal was not properly characterised as a variation of this Subcontract, and does not lead to an adjustment of the Subcontract Sum (ts 1352).  The total of the Subcontract Sum ($10,397,000) and the agreed variations ($1,430,000) is $11,827,000.

4. Accordingly, on John Holland's case, CMA is liable to a maximum of $1,182,700 in liquidated damages. 

5. John Holland further pleads that, even if CMA was entitled, as it claims, to an extension of time to 25 June 2007, it failed to achieve Completion by that date.  Initially, John Holland alleged that CMA had failed to achieve Completion at all.  It departed from that position and accepted that it had achieved completion but at some time in 2008.  Delay of 54 days is sufficient for the aggregate of 10% of the contract sum to be reached.  That delay had occurred by September 2007. 

6. The claim that John Holland is disentitled by its own breach of the Subcontract is inconsistent with the terms of the agreement between the parties.  Breach of the Subcontract by John Holland, leading to delay, is expressly provided for in cl 10.  Where delay is caused by any default or breach by John Holland, cl 10.19 and 10.14(c), read together, entitle CMA to its costs and on site overheads attributable to the delay.  That entitlement, however, is subject to the condition precedent in cl 10.13, which expressly denies the application of the prevention principle.

7. For these reasons, I accept that John Holland is entitled to the liquidated damages claimed.

John Holland's claims against BHP Billiton

The plea

1. In its defence to a range of the claims brought by John Holland, CMA denies that John Holland suffered loss or, to the extent it suffered loss, it has either been compensated for that loss by BHP Billiton, or had a right to recover the costs it incurred from BHP Billiton.  To the extent that John Holland settled its claims against BHP Billiton, CMA denies the settlement was reasonable. 

2. CMA pleads this defence to the claims for liquidated damages for delay for the costs incurred in hiring the Hippopotes, and for the costs of dredging demolition waste using the Hippopotes and the Westsea 10 and associated equipment.

3. In its reply to the defence to counterclaim, John Holland pleads that in and from November 2007, it made claims against BHP Billiton under the Head Contract.  These included claims for additional costs incurred with respect to debris removal in the dredging area, dredging and extensions of time.  Following negotiations, the claims were resolved as between BHP Billiton and John Holland under a Settlement and Release Deed dated 13 April 2008, under which BHP Billiton accepted (on a without admission of liability basis) certain of the claims.  John Holland says that:

   1.BHP Billiton denied any claim for the costs of blast debris removal, for the cost of the Hippopotes or Westsea 10 or other costs which related to debris removal, and denied any claim for an extension of time which related to debris removal; 

   2.BHP Billiton did not accept any claim or make any payment to John Holland with respect to any of the costs incurred by John Holland and which are claimed from CMA in this action; and

   3.BHP Billiton was not liable under the Head Contract to pay John Holland for any such costs or accept such claims.

4. As an alternative plea, John Holland says that CMA is not absolved from its contractual obligations to pay John Holland and John Holland is entitled to the bargain it had made with BHP Billiton.

5. The settlement deed between BHP Billiton and John Holland, dated 30 April 2008, reveals little.  It recites:

   C Subsequent to the Supplemental Agreement [an agreement between John Holland and BHP Billiton executed 13 April 2007] a number of disputes or differences have arisen between the parties in relation to the marine works under the Contract.

   D The Parties have agreed to settle all of the disputes and differences on the terms set out in this Deed, without any admission of liability in relation to the matters dealt with herein, or otherwise under or in connection with the Contract.

6. Clause 1.1 contains definitions.  It defines 'John Holland Claims' as the claims listed in sch 1 to the deed.  Clause 1.1 also defines 'Settlement Money', as 'the balance to be paid to John Holland pursuant to clause 2 to ensure the final Contract Sum is one hundred and ninety million dollars ($190,000,000) plus any GST'.  There is an additional amount of $23.5 million.

7. Clause 3 contains releases by each party to the deed. 

8. By cl 10, none of the payment of the Settlement Money, the return of bank guarantees given by John Holland, and the execution of the deed by the parties, constitutes an admission by either party of liability.

9. Schedule 1 sets out claims, including agreed variations and claims 'submitted and discussed' on 10 and 17 December 2007.  Relevantly, those claims submitted and discussed include pile driving, and rebar in BD1, 2 and 6.  Each of those claims was given nil 'agreed value in settlement'.  An additional 29 days for dredging ($3,625,000) and $2 million for Erkat works are listed as claims submitted and discussed.  There are also extension of time costs of $10,291,542.

10. CMA also put in evidence a book of the claims made by John Holland against BHP Billiton, each of them said to be pursuant to a 28 November 2007 Agreement.  There are eight claims:

    1.For variation to the design of new dolphins based upon the base plate specified for the construction, Bisalloy 80, being unsuitable (exhibit 36A 10844).  Relevantly, John Holland claimed an extension of time for a 'delay event' which commenced on 21 November 2006 and ended 10 March 2007 when replacement tile caps were delivered to the site (exhibit 36A 10859). 

    2.The Girder Erection Claim, which included a claim for delay of 92 days.  This delay is relevant to completion of the maintenance deck to allow transfer of the ship loader into the new maintenance deck and tiedown area.  This delay is claimed to have finished on to March 2007.

    3.The Conveyor Trusses Claim, under which John Holland made a further claim in relation to the ship loader, being related to the rail system designed to convey the ship loader along the top of the wharf.  The trusses, which are the basis of the claim, were said not to be delivered until 2 or 4 April 2007.

    4.An extension of time for 72 days, for what is described as the Pre‑Cast Panel Claim.

    5.For failure of the Dredge Pocket Excavation Face.  It claimed that up to a 40% increase in total dredge volume was brought about by a collapse of the excavation and material falling into the dredge pocket.  John Holland claimed a design error in a gradient of 1:3 on the excavation face.  It estimated an additional 8000 m³ of material dredged, resulting in additional work and delay.

    6.A Pile Driving Claim, based upon unexpected sub seabed conditions.  John Holland claimed an extension of time of 116 days.

    7.John Holland claimed the additional reinforcement in the berthing dolphins from that shown in the drawing issued by BHP Billiton, F 113‑S0035/0 required the subcontractor to remove the concrete cover with an excavator breaker, and remove the top mat of reinforcement with an excavator breaker and cutting equipment.  John Holland claimed an extension of time of 10 days.  This claim is obviously related to Variation 79.  It is not, however, related to any damages or loss claimed by John Holland against CMA. 

    8.For washing down decking. 

11. Claims apparently corresponding to these claims are listed among the claims in sch 1 to the Settlement Deed.

12. On the findings I have made above, John Holland is entitled to the costs it incurred in removing the demolition debris from the seabed and for conveying the debris.  It is for John Holland to prove the costs it incurred, including the amount.  But the onus rests on CMA to show that John Holland obtained money from another source that must be taken into account in diminution of the recoverable loss.  On the face of the Settlement Deed, and the book of claims, there is no settlement of any claim relating to the claims it makes in this action, with the possible exception of the claim for disruption in pile driving.  That is, the amounts received from BHP Billiton, to the extent they can be attributed to particular activities, do not result in a double payment should John Holland recover from CMA for removal of debris, or handling of debris.  It may have been different in relation to the claim for disruption of pile driving, but I have not allowed that claim.

13. John Holland also claims as liquidated damages from CMA for delay.  Those damages are an agreed sum.  CMA has not alleged that the agreed damages are a penalty.  It is not necessary for John Holland to prove its actual loss.

14. Finally, CMA denied that the settlement John Holland reached with BHP Billiton was reasonable.  It is no part of John Holland's claim that it has settled its claims with BHP Billiton, resulting in loss, and seeks to recover from CMA for that loss or balance of the loss it has suffered.  Were that so, John Holland would have the onus of proving it reached a reasonable settlement.  If CMA is to have damages reduced on the basis it has pleaded, it is for CMA to show the settlement relates to the damages John Holland now claims and was unreasonable.  Taking into account the range of claims John Holland brought under the Head Contract ‑ some of which may have been accepted, some perhaps rejected ‑ and the general terms in which the Settlement Deed is expressed, it is not surprising that CMA has not been able to show the settlement was of any particular claim and was unreasonable.  The settlement was not structured in that way.

John Holland's Joint Venture with Leighton

1. In par 90 of its reply and defence to counterclaim, CMA pleads, as a general answer to John Holland's claims for damages, that by reason of a joint venture agreement between John Holland and PT Leighton Contracting Indonesia (or another subsidiary of Leighton Holdings Limited) John Holland only incurred 50% of the losses claimed or has been reimbursed for its losses.

2. This issue was not the subject of evidence other than the tender of the joint venture agreement.

3. In its submissions, CMA accepted that the plea did not constitute a defence to the claims in contract.  But it maintained the plea against the claims in misleading and deceptive conduct, and the claims for restitution.  For the reasons I have given, John Holland is entitled to succeed in its claims in contract, either under the second pleaded variation agreement or the claim under cl 17.5 of the Subcontract, or for breach of the Subcontract.  The plea in par 90 is of no relevance to the result.

Set off

1. Although CMA disputed John Holland's right to assert a set off against amounts due to it under the Subcontract, I am satisfied that cl 12.14 entitles John Holland to set off the amounts I have found are due to it from CMA.

Conclusion

1. To the extent that CMA's claim was not conceded, it is allowed in the amount of $639,568.21, the amount agreed for Variation 79.  The other disputed claims have not been established.

2. The counterclaim is allowed.  I have set out the sums for individual components in the body of these reasons.  The damages total $5,386,612, plus $1,182,700 in liquidated damages.  The total is $6,569,312.  The crew costs for the Swissco must be added, but that amount must first be converted to Australian dollars.