Cook's Constructions Pty Ltd v Stork Food Systems Aust Pty Ltd
[2008] QSC 179
•22 August 2008
SUPREME COURT OF QUEENSLAND
CITATION:
Cook’s Constructions P/L v Stork Food Systems Aust P/L [2008] QSC 179
PARTIES:
COOK’S CONSTRUCTIONS PTY LTD
ACN 004 782 558
(plaintiff)
v
STORK FOOD SYSTEMS AUSTRALIA PTY LTD
ACN 007 298 633
(defendant)FILE NO/S:
S10993 of 2001
DIVISION:
Trial Division
PROCEEDING:
Trial
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
22 August 2008
DELIVERED AT:
Brisbane
HEARING DATES:
4, 5,6,8, 11, 12,13, 15, 16,18,19 and 22 February 2008
JUDGE:
Martin J
ORDER:
On the claim: Judgment for the plaintiff in the sum of $132,657.70 with interest.
On the counterclaim; judgment for the defendant in the sum of $9,983,796.54 with interest.CATCHWORDS:
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – OTHER MATTERS –interpretation of a clause for measuring quantities – whether quantity of work claimed had been measured in accordance with the contract.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – where a clause of the contract required a party to give notice of a claim for breach of the sub-contract within 14 days – where no notice was given – whether the provision of progress claims satisfied that clause.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – OTHER MATTERS – where Plaintiff did not hold a licence under the Queensland Building Services Authority Act 1991 – whether work completed by the plaintiff was ‘building work’ within the meaning of the Act – whether the ‘building work’ the defendant had paid for was paid by mistake.CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – where plaintiff is entitled to ‘reasonable remuneration’ under the Queensland Building Services Authority Act 1991 for work completed – appropriate methods for calculating reasonable remuneration – relevance of expert reports in determining reasonable remuneration.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – whether the contract was a lump sum or schedule of rates contract.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – AMOUNT – whether rates and quantities claimed for work were claimed in accordance with the subcontract.
EVIDENCE – miscellaneous matters – rule in Browne v Dunn – where party did not cross examine on conflicting evidence in expert reports where such reports had been provided to the opponent in advance of the trial.
EVIDENCE – miscellaneous matters – rule in Jones v Dunkel – whether adverse inferences could be drawn from a party not calling witnesses in relation to matters which only formed part of the background ‘factual matrix’ of the case.
Queensland Building Services Authority Act 1991
Queensland Building Services Authority Amendment Bill 1999
Queensland Building Services Authority Regulation 1992, s 3A s 42(4)B P Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Bartier v Kounza Investments Pty Ltd [2003] QSC 390
Browne v Dunn (1893) 6 R 67
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Cook’s Construction Pty Ltd v Stork ICM Australia Pty Ltd [2004] QSC 066
Cook’s Constructions Pty Ltd v Stork Food Systems Australia Pty Ltd [2008] QSC 186.
Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No 2) (2007) 23 BCL 347; [2005] SASC 483
Flett v Deniliquin Publishing Co Ltd [1964-5] NSWR 383
Gino D’Alessandro Constructions Pty Ltd v Powis [1987] 2 Qd R 40
Hansen v Mayfair Trading Co Pty Ltd [1962] WAR 148
Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd [1995] 2 Qd R 350
In the matter of Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849
Interline Hydrocarbon Inc v Prenzil Pty Ltd [2005] QSC 109
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Marshall v Marshall [1999] 1 Qd R. 173
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Price v John Holland (Constructions) Pty Ltd (1985) 59 ALJR 844
Re Allison, Johnson & Foster Ltd; ex parte Birkenshaw [1904] 2 KB 327
Smithv Commonwealth of Australia (2006) NSWSC 689
Trade Practices Commission vArnotts Ltd (No. 5) (1990) 21 FCR 324
West v Mead [2003] NSWSC 161
Zullo Enterprises Pty Ltd v Sutton [2000] 2 Qd R. 196COUNSEL:
D J Digby QC, with S R Grahame and J D Wilson, for the plaintiff
K E Downes, with S B Hooper, for the defendantSOLICITORS:
Clarke & Kann, as town agents for McPherson & Kelley, for the plaintiff
McCullough Robertson for the defendant
TABLE OF CONTENTS
Background
The Subcontract
CCPL’s claim
Defence and Counterclaim
Construction of the Subcontract
The rule in Browne v Dunn
The Rule in Jones v Dunkel
The Defences
The Prescribed Notice Defence
Defence relating to Alleged Errors in the Bill of Quantities
The Queensland Building Services Authority Act Defence
Quantities of footings
Pedestal Claim
Corrocem claim
Suspended slabs
Prill storage building
The Claims
(i) The Bulk Earthworks Claim
(ii) The Road Reconstruction Claim
(iii) The Contour Drains Claim
(iv) The Lime Stabilization of Site Roads Claim
(v) The Boxing Out for Roadworks Claim
(vi) The Asphalt on Site Roads Claim
(vii) The Quantities of Footings Claim
Item 6.4.45 Steam Reformer Footings
Item 6.4.64 Turbine Generator Building
Item 6.4.65 Ammonia Storage Pipe Supports and Steam Reformer Pipe Supports
Item 6.7.8 Nitric Acid Plant Building Slabs
Duplication of Claim?
(viii) The Pedestal Claim
(ix) The Pedestal Reconciliation Claim
(x) The Corrocem Claim
(xi) The Suspended Slabs Claim
(xii) The Prill Storage Building Structures Claim
Formwork to base slab
Rate for formwork to nib walls
Rate for formwork to walls
Rate for concreting base slab
Rate for concreting walls
(xiii) The Crushed Rock to Substations 1 and 2 Claim
(xiv) The Ammonia Spill Standby Claim
Recovery under s 42(4) QBSA Act
The accountants’ evidence
The Counterclaim
What is the work in Appendix B?
Is that work “building work”?
Was that work paid for by Stork?
If the work was paid for, was that payment made by mistake?
Conclusion
Schedule of Claims and Defences
Background
In June 1998 Cook’s Constructions Pty Ltd (“CCPL”) and Stork ICM Australia Pty Ltd entered into an agreement (“the Subcontract”) whereby CCPL agreed to undertake the construction of earthworks and concrete works (“the works”) in relation to the construction of an ammonium nitrate plant at Moura in central Queensland.
On 14 December 2006 Lindgren J ordered[1], among other things, that:
(a)the property of Stork ICM Australia Pty Ltd was to be transferred to and become the property of Stork Food Systems Australasia Pty Ltd (“Stork”);
(b)all liabilities of Stork ICM were to be transferred to and become the liabilities of Stork; and
(c)Stork ICM was to be deregistered without winding up pursuant to s 413(1)(c) of the Corporations Act 2001 (Cth); and
(d)All legal proceedings pending by or against Stork ICM were to be continued by or against Stork.
[1]In the matter of Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849.
The ammonium nitrate plant, the subject of this action, is a processing plant that manufactures ammonium nitrate in prill form. Prill is the pellet form which is the end product manufactured by the plant. The plant reforms natural gas to produce hydrogen which reacts with nitrogen extracted from the air and forms ammonia. The ammonia is then combined with nitric acid, which is also produced by the plant, to form the ammonium nitrate prill. That prill is then used in the manufacture of fertilisers and explosives.
The Subcontract
The Subcontract as pleaded by CCPL is admitted by Stork. The Subcontract is constituted by the following documents:
(a) Instrument of Agreement for Civil Subcontract Number QNP-001;
(b) Exhibit C: Subcontract Schedules;
(c) Exhibit D: General Conditions of Subcontract.
(d)Exhibit E: Annexures to General Conditions of Subcontract including:
(i) Annexures to the General Conditions of Subcontract Part A;
(ii)Annexures to the General Conditions of Subcontract Part B, Quality system Requirements;
(iii)Annexures to the General Conditions of Subcontract Part C, Safe System of Work Statement;
(iv) Annexures to the General Conditions of Subcontract Part D Subcontractors Consent Deed;
(e) Exhibit F: Scope of Work;
(f) Exhibit G: Engineering Specifications;
(g) Exhibit H: Drawings;
(h) Exhibit I: Environmental Management Plan;
(i) Exhibit J: Geotechnical Investigation;
(j) Exhibit K: Contract Works Insurance;
(k) Exhibit L: Health and Safety Risk Assessment;
(l) Exhibit M Project Construction Agreement.
CCPL’s claim
The plaintiff’s claim is made up of 14 separate items identifying aspects of the works undertaken by it, the plaintiff says, at the request of Stork. Those claims can, in turn, be categorised under four general headings.
(a)Claims made pursuant to identified terms of the Subcontract:
(i) the Bulk Earthworks claim, and
(ii) the Ammonia Spill Standby claim,
(b)Claims made pursuant to variations under the Subcontract:
(iii) the Road Reconstruction claim,
(iv) the Contour Drains claim,
(v) the Lime Stabilization of Site Roads claim,
(vi) the Boxing Out for Roadworks claim, and
(vii) the Asphalt on Site Roads claim;
(c)Claims made pursuant to clause 5.4 of Exhibit D of the Subcontract i.e. “Bill Error” claims:
(viii) the Quantities of Footings claim,
(ix) the Pedestal claim,
(x) the Corrocem claim,
(xi) the Suspended Slabs claim,
(xii) the Prill Store claim,
(xiii) the Crushed Rock to Substations claim; and
(d)Claims made under separate, albeit related agreements:
(xiv) the Pedestal Reconciliation Agreement.
CCPL brings further or alternative claims in respect of the Bulk Earthworks claim, the Road Reconstruction claim, the Quantity of Footings claim, the Pedestal claim, the Corrocem claim, the Suspended Slabs claim, the Prill Storage claim and the Crushed Rock to Sub Stations claim pursuant to clause 3.1 of Exhibit D of the Subcontract. Under that clause Stork was obliged to pay CCPL for the work undertaken an amount ascertained by: measurement and determination of actual quantities (determined in accordance with clause 3.2 of Exhibit D of the Subcontract), and multiplying the quantity so measured and determined by the rate accepted by Stork in accordance with clause 3.3(b) of Exhibit D of the Subcontract.
Defence and Counterclaim
Stork raises a number of issues related to the terms of the subcontract which, it pleads, demonstrate:
(a) That CCPL, not having given a prescribed notice under clause 51.1 of Exhibit D to the subcontract cannot recover any of the claims: paragraphs 6A-6D Fourth Further Amended Defence and Counterclaim (“FFADC”).
(b) That CCPL cannot rely on errors in the bill of quantities and so Stork is not liable to pay certain claims: paragraph 6E-6I FFADC.
(c) That CCPL did not lodge a final payment claim and, therefore, is barred from making a claim for work done prior to December 1999: paragraphs 7-13 FFADC.
Stork also pleads that:
(a) that, as CCPL did not hold the relevant licence under the Queensland Building Services Authority Act 1991 (“QBSA Act”), it is not entitled to any monetary or other consideration for that part of the work said by Stork to be “building work” as that term is defined in the QBSA Act;
(b) that CCPL did not measure the work performed in accordance with the subcontract and, as a result Stork has no obligation to make any payment where the claim relies upon measurement being performed in accordance with the subcontract;
(c) particular defences to each of the heads of claim; and
(d) that the proper construction of the subcontract has already been determined and that the plaintiff is estopped from arguing otherwise by the decision in Cook’s Construction Pty Ltd v Stork ICM Australia Pty Ltd. [2]
[2][2004] QSC 066.
By way of counterclaim, Stork alleges:
(a) that certain of the work performed by the plaintiff was “building work” within the meaning of the QBSA Act; and
(b) that, as the plaintiff did not comply with the QBSA Act; then
(c) CCPL was not lawfully entitled to claim or receive any payments in relation to the building work; and that
(d) Stork, having mistakenly made payments to the plaintiff, is entitled to a refund of the amounts paid by it for the building work.
Before dealing with various claims I need to determine the proper construction of that part of the Subcontract upon which some of the claims rely and, also, some of the evidentiary issues raised by CCPL.
Construction of the Subcontract
An issue which consumed a substantial part of the trial in both evidence and submissions was the proper construction of the Subcontract, in particular, clause 2 of Ex C. CCPL submitted[3] that it was “of critical importance”. That may be an understatement. Interlocutory skirmishes between the parties prior to the trial frequently involved CCPL’s pleadings (especially on this point) and Stork consistently expressed the view that those pleadings did not accord with the subcontract as properly construed.
[3]Paragraph 9 of CCPL’s Final Submissions.
The final version of the statement of claim (the Fourth Further Amended Statement of Claim “FFASC”) was not reached until about the fifth day of the trial. It will assist to understand the argument if an example of the pleading is set out.
Under the heading “Bulk Earthworks, Raw Water/Evaporator Pond, Gravel Paved Areas and Site Roads” it is pleaded, in paragraph 7:
“In accordance with the terms set out at paragraph 6 above, and clause 3.2 of Exhibit D of the construction agreement, Cook’s undertook the Bulk Earthworks, Raw Water/Evaporator Pond Gravel Paved Area and Site Roads works in the following quantities, as determined by reference to the method of measurement set out in clauses 2.0 and 2.1.3 of part A Subcontract Price Schedule and Bill of Quantities, Exhibit C to the construction agreement:
(a)12,635m3 of Engineered Fill for Plant Site Bulk Earthworks to the final surface as defined in AS 1181-1982 as shown on for-construction drawing SU-CS-00-D-0050 rev 5; SU-CS-00-D-0051 rev 4 and SU-CS-00-D-0052 rev 0 from the commencing surface as defined in AS 1181-1982 as shown in electronic format on a Digital Terrain Model based Total Station data produced by Peter Robinson & Associates.
PARTICULARS
The profiles and dimensions of the final surface as defined in AS 1181-1982 relied on to calculate the quantity of 13,635 m3 of Engineered Fill for Plant Site Bulk Earthworks are shown on SU-CS-00-D-0050(5), SU-CS-00-D-0051(4) and SU-CS-00-D-0052(0) with the northerly marked in orange, the easterly marked in yellow, the batter slopes marked in pink, the reduced levels marked in blue and the dimensions marked in purple. The profiles and dimensions of the commencing surface as defined in AS 1181-1982 are as shown in electronic format on the Digital Terrain Model based Total Station data produced by Peter Robinson & Associates and provided to Stork in the course of the works.”
The clauses which are relevant to this discussion are:
“2.0 MEASUREMENT FOR PAYMENT
The Subcontractor shall execute the work under the Subcontract and fulfil all Subcontractors obligations thereunder and Stork shall pay the Subcontractor for the measured quantity of each item of the work performed under the Subcontract as certified by Stork at the appropriate rate in the Subcontract Schedule Part A - "Subcontract Price Schedule and Bill of Quantities".
All items shall be measured nett in-situ to the profiles and dimensions shown on the Drawings or described in the Scope of Work and Specification and Subcontractor shall allow for wastage in the rates for the nett quantities given in the Subcontract Schedule Part A "Subcontract Price Schedule and Bill of Quantities".
Upon issue by Stork of the 'Approved for Construction' Drawings for the work and prior to construction of work covered by the Drawings, Stork and Subcontractor shall jointly review the Drawings and agree on the rate items applicable to the work shown on the Drawings.
Measurement of work shall be made in accordance with the conditions set out hereunder.
3.1 Performance and Payment
The Subcontractor shall execute and complete the work under the Subcontract.
Stork shall pay the Subcontractor;
(a)for work for which Stork accepted a lump sum, the lump sum;
(b)for work for which Stork accepted rates, the sum ascertained by measurement and determination of the quantities in accordance with Clause 3.2 and multiplying the quantity so measured and determined of each section or item of work carried out under the Subcontract by the rate accepted by Stork for the section or item,
Adjusted by any additions or deductions made pursuant to the Subcontract.
3.2 Quantities
Quantities in a Bill of Quantities or Schedule of Rates are estimated quantities only.
A direction shall not be required to be given by Stork's Representative by reason of the actual quantity of an item required to perform the Subcontract being greater or less than the quantity shown in the Bill of Quantities or Schedule of Rates.
Unless otherwise stated within the Contract, 'actual quantities' shall mean those quantities measured in accordance with Australian Standard 1181-1982, as amended from time to time, from the lines, dimensions and limits shown on the relevant Contract plans and drawings.
Quantities over and above the actual quantities as a result of oversupply, over excavation or any other similar reason by the Subcontractor will not be included in the actual quantities and the Subcontractor agrees that Stork is not required to pay for these quantities over and above the actual quantities.”
(emphasis added)The argument put on behalf of CCPL was that the purpose of clause 2 was to ensure that Stork only paid for the work that it contracted for; so that, if CCPL inadvertently over-excavated a particular area, then Stork would not be required to pay for that over-excavation – it would only pay “to” the dimensions and profiles on the plans. It was submitted that that was made clear from the definition of “actual quantities” contained in clause 3.2 of Ex D of the Subcontract.
The basis of CCPL’s argument on the construction point was put during Mr Digby’s opening when he said:[4]
“Now, what we say about that clause is that read just on its language, even without the context which should assist our argument, it's simply saying that you have to - leave the word "nett in situ" out for the moment - you have to measure to the profiles and dimensions shown on the drawings. Now, that is an unexceptional stipulation. What it means is that when you're working out your measurements, the end point - and the word "to" is used - the end point is what's shown on the construction drawings and that's perfectly workable and perfectly logical because defines the extent to which you are entitled to be paid.
What it does not say, and we say would be impractical and unworkable - same thing, I suppose - and repugnant to the scheme of the contract to infer is that you only measure the profiles and dimensions shown on the drawings. That is, the for-construction drawings.
In our submission this clause clearly gives scope for the operation of what one would expect to be the practical situation, that is that you draw upon a survey, or perhaps another drawing if there was a drawing setting out the precise details or sufficiently precise details of where you started or where you stripped to, and then the profiles on the for-construction drawings to work out the quantities that were relevant. It does not preclude that, and, indeed, there's no inference, we think, can reasonably - no implication can reasonably be read into clause 2 to say this somehow confines you to having reference only in terms of a measurement to the for-construction drawings. We concede, of course, that the for-construction drawings are a crucial element of the measurement because they define the extent - they define what you have got to do but they also define the extent to which you can expect to be paid for any quantities.”
[4]T19-T20.
The process of reasoning employed by CCPL then proceeds in this way:
(a) As the Australian Standard 1181-1982 is referred to in clause 3.2 one needs to look at certain definitions. Those definitions are:
(i) Original surface: the surface before any work has been carried out under the contract;
(ii) Commencing surface: (in relation to an item in a Bill of Quantities) the surface before any work covered by the item has been carried out;
(iii) Final surface: the surface indicated on the drawings to which the work described in any item of the Bill of Quantities is carried.
(b) The reference to the “profiles and dimensions shown on the drawings” in clause 2 is a reference only to the “final surface”.
(c) Clause 2 should be interpreted as meaning that the quantity is derived from measuring nett in-situ to the final surface.
(d) As a volume cannot be calculated without knowing three dimensions then one needs to measure from the “commencing surface” to the “final surface”.
The reference to measuring from the “commencing surface” was supported by CCPL by reference to the evidence of Peter Robinson whose firm was contracted in June 1998 to supply the survey management for CCPL’s work on the project. That firm was also contracted by Stork to supply survey information (but not on these points[5]) for its relevant interest in the project. Mr Robinson gave evidence that, in his experience, earthworks are measured initially from the “original surface”, referred to as the “natural surface” when the area has not been disturbed, to the “commencing surface” or the “strip surface”. The earthworks quantities, he said, are then measured from the “commencing surface” to the “final surface”.
[5]T552/20.
CCPL is, then, arguing that the act of measurement referred to in clause 2 is to be performed by reference not only to the profiles and dimensions shown on the drawings but also to a measurement obtained through the use of an accepted procedure or industry standard. In other words, CCPL argues that clause 2 operates by the drawings providing the end point of a measurement while the beginning is provided by a measurement obtained elsewhere.
The example of the pleading which is set out above shows that CCPL relies upon the profiles and dimensions of the “final surface” which is shown on identified plans, but the “commencing surface” is identified as being drawn from data produced by Mr Robinson pursuant to a method he described.
The method for measurement which he used can be summarised in the following way:
(a) He measured the irregular original surface and the commencing or strip surface by using surveying devices that measured the bearing, distance and vertical angle to a reflective target using an infrared beam. Such measurements were given unique names and stored in a computer.
(b) When all the measurements were completed they were downloaded into specialised surveying software which produced three-dimensional information for each point using the height and relative level of the total stations and combined that with the bearing, distance and vertical angle to each observed point. The software draws break lines between points with common names – break lines are lines that define changes of grade, eg, the top and bottom of a batter. Using that software the surveyor then creates a “digital terrain model” which is, apparently, better known as a “triangulated irregular network”. That digital terrain model provides the original or commencing surface for the calculation of quantities.
(c) The surveyor then uses that digital terrain model which contains the representations of both the strip surface and the final earthworks surface to determine an accurate quantity.
Mr Robinson said that the final earthworks surface was created using the dimensions and profiles shown on the drawings. The result of the calculation made by Mr Robinson, and upon which CCPL relies, was reached by the creation of virtual surfaces using the software – the beginning virtual surface created by actual measurement of the “commencing surface” and the end or “final” virtual surface created by transposing measurements from the drawings.
CCPL argued that this method was not only available, but also the only method which complied with the sub-contract. This argument proceeded on the basis that the drawings did not contain enough information to allow the calculation to be made, viz., that the drawings did not contain the details of the levels from which the quantity should be measured. This was compared with what was said to be shown in the drawings – the final surface – which was the level to which the quantity could be measured.
I do not accept that CCPL’s argument demonstrates the correct construction of clause 2.
Great weight is placed by CCPL on the use of the word “to” in clause 2 which indicates, in the plaintiff’s construction, that the “profiles and dimensions shown on the drawings” are only those which can be identified as final surfaces. The plaintiff then draws from that an implication – an implication which was not pleaded – that one should then apply an industry practice as described by Mr Robinson in order to determine the measurement from which one would commence the calculation.
Stork, on the other hand, says that one cannot draw from the use of the word “to” an entitlement to measure quantities by reference to survey data.
Whenever construction of a clause in a contract has to be undertaken it is always sensible to construe such a clause in the light of the entire agreement.
The documents which make up the Subcontract commence with the usual recitals about the nature of the contract and that the Subcontract constitutes the entire agreement. It also provides a means by which discrepancies or inconsistencies within the entire document may be resolved. Clause 2 of the formal instrument of agreement provides:
“The following Documents comprise the whole of the Subcontract between the Parties, and in the advent (sic) should there be a discrepancy or inconsistency between the Documents, the order of precedence in which they are listed may be relied upon to resolve the issue:
Formal Instrument of Agreement
Exhibit D – General Conditions of SubcontractExhibit E – Annexures to General Conditions of Subcontract …
Exhibit C – Subcontract Schedules
…”Should there be a discrepancy or inconsistency in the documentation, it is appropriate to consider other parts of the contract which have been agreed to have precedence over identified parts of the contract.
Exhibit D of the subcontract contains clause 3.2 (set out above) which provides, in part:
“Unless otherwise stated within the Contract, 'actual quantities' shall mean those quantities measured in accordance with Australian Standard 1181-1982, as amended from time to time, from the lines, dimensions and limits shown on the relevant Contract plans and drawings.”
As is obvious, there is no reference to survey measurements taken or any other measurements which do not appear on any of the drawings or plans. There is reference only to “quantities measured … from the lines…” etc. As both clause 2 and clause 3.2 are referring to measurement of the same matters there is an inconsistency between the two clauses in that clause 2 does not refer to measurement “from the lines”. Clause 3.2 is in Exhibit D which has precedence over Exhibit C, which contains clause 2.
The quantities sought to be claimed by the plaintiff are actual quantities as determined by the contract. In the light of the provisions of clause 3.2, I consider it appropriate to read clause 2 of Ex C as meaning that one has reference to the drawings and the drawings only to determine the appropriate measurement.
The plaintiff, though, says that it is not possible to assess the quantity of work undertaken by reference only to the drawings. That submission is not supported by the evidence.
In cross-examination Mr Robinson agreed that it was possible to measure volume from contour lines on drawings. He said that it was an old method and not a very accurate method but that it could provide an answer depending upon the degree of accuracy required by the person seeking a calculation of volume.[6]
[6]T 558/29-T559/50.
Rodney Alsop gave evidence for the plaintiff. In cross-examination he agreed that there were methods for measuring quantities apart from those used by Mr Robinson.[7] Gordon Worrell, a witness called by the defendant, said that one method of calculating volume was by reference to contours which appear on a drawing.[8]
[7]T 598/35-T599/14.
[8]T 686.
Gordon Leck, also called by the defendant, described the manner in which it was possible, by reference to the drawings in this case to arrive at a calculation of quantity by reference to the contour lines and other dimensions on the drawings.[9]
[9]T 701/49-T703/19; T703/55-T705/10; T706/33-58; T707/25-37; T753/5-23; T756/17-21; and T758/57-T759/21.
It is likely that the method used by Mr Robinson would afford an accurate measure of the quantities which were to be removed and which were, in fact, removed. However, that is not a test which is applied anywhere in the subcontract. If it was impossible to arrive at an acceptable means of calculating quantity by reference only to the drawings, then the plaintiff might well have a case to argue for an implication of a particular term or terms relating to such a means of calculation. The fact that a calculation which is able to be performed may result in a less accurate conclusion is not, of itself, something which would cause me to arrive at a different construction of the relevant clauses. Parties are entitled to agree that a particular method shall be used to achieve a particular result. In doing so, they may have reasons which are not expressed in the contract for doing so.
There are other factors which support the view I have reached:
(a) There is no reference in the subcontract or in the Australian Standard to any requirement for any of the surfaces the subject of a calculation to be measured by a surveyor apart from the measurements which appear on a drawing;
(b) There is nothing in the subcontract which requires that Stork is to pay in accordance with survey measurements taken by a surveyor;
(c) If it was the case that survey measurements were to be taken into account when calculating volume then one would expect to see in the contract a definition of the manner in which such survey measurements were to be taken.
The plaintiff did not plead that any industry standard or practice should be implied into the contract. Had it done so, I would not have been minded to find any such implication. Justice Mason’s observations in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales[10] are apposite in these circumstances:
“For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made. The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the question at issue. And then there is the difficulty of identifying with any degree of certainty the term which the parties would have settled upon had they considered the question.”
[10](1982) 149 CLR 337 at 346.
Further, the implication of such a term would not have satisfied the conditions expressed in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council[11] and adopted in Codelfa.[12]
[11](1977) 180 CLR 266 at 282-283.
[12]Codelfa at 347.
Stork submitted that I was bound to follow the decision of Moynihan SJA[13] on this question. I have dealt with that argument in Cook’s Constructions Pty Ltd v Stork Food Systems Australia Pty Ltd [2008] QSC 178.
[13]Cook’s Constructions Pty Ltd v Stork Food Systems Australia Pty Ltd [2004] QSC 066
The proper construction of cl 2, then, is that it requires calculations to be done by reference to the profiles and dimensions on the relevant plan and does not allow reference to some other, unstated measure or means of measuring quantities. Thus, the evidence from Mr Robinson on this point is irrelevant.
The rule in Browne v Dunn
There are a number of occasions in CCPL’s written submission where it notes that Stork did not cross-examine on matters contained in Mr Leck’s report. The effect of this, it was argued, was that the part of Stork’s case which was not put should not be accepted. The submission was based on the well known principle enunciated in Browne v Dunn.[14] The rule in Browne v Dunn is often expressed as being the requirement that a cross-examiner must put to a witness the nature of the case upon which it is proposed to rely in contradiction of the witness’ evidence. While that is a correct statement of the rule as it is often applied it is not a complete statement of the fundamental principle upon which the rule operates.
[14](1893) 6 R 67.
The basis for the rule has been expressed in the following way:
“The underlying principles are that, in view of the rule against case splitting, which prohibits a party from calling fresh evidence after that party's case has closed, it is unfair to a witness to deny the opportunity of making any explanation open to the witness if a later invitation to disbelieve or criticise the witness is to be made; that it is unfair to the party calling the witness if the opportunity for the witness to proffer an available explanation is denied.”[15]
[15]Cross on Evidence, (Butterworths, Sydney, looseleaf) at [17435].
I respectfully adopt the analysis of the principles (in a manner relevant to this case) which is provided by Campbell J in his reasons in West v Mead,[16] where he says:
[16][2003] NSWSC 161.
“[95] In Browne v Dunn at 70-71 Lord Herschell LC stated an obligation of procedural fairness which counsel has when cross-examining a witness who counsel intends to submit should not be accepted:
‘If you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity to make any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses.’
[96] However, Lord Herschell LC said that there was no obligation to raise such a matter in cross-examination where it is:
‘… perfectly clear that [the witness] has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling … All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.’
[97] In Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1 Hunt J made a thorough review of later cases applying Browne v Dunn, and concluded (at 26):
‘I remain of the opinion that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings.’
In the present case, the serving of Ms West's affidavit in chief gave notice to Ms Mead and her advisers that Ms West proposed to rely upon the matters contained in para181. Ms Mead took the opportunity, in her own affidavit in response, specifically to reply to that allegation. Documents exchanged between the parties to litigation before the commencement of the trial are able to give notice that a witness's account of events will be challenged in particular ways, so that there is no breach of Browne v Dunn if the witness' account is not challenged in cross-examination. - Marelic v Comcare (1993) 121 ALR 114 at 120 (pre trial exchange of medical reports gives adequate notice), Flower & Hart v White Industries (QLD) Pty Ltd (1999) 163 ALR 744 at [52] (statement of issues, stated case and service of documentary evidence can give adequate notice), Stern v National Australia Bank Ltd (2000) 171 ALR 192 at [44] (adequate notice given by pleadings), Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 at 236 per Mahoney JA (adequate notice given by "the nature of the defendant's case and the particulars given, and otherwise the conduct of it"), In the Marriage of LC & TC (1998) 23 Fam LR 75 at [39] (affidavits give adequate notice). Cross On Evidence, 6th Australian edition, para [17460] footnote 12 says:
‘… the rule in Browne v Dunn did not apply where all parties were on notice of the evidentiary issues, eg by reason of affidavits having been exchanged …’
[98] The consequence of these decisions is that the circumstances in which Browne v Dunn will require matter to be put to a witness in cross-examination will depend upon the nature of the pre-trial preparation there has been, and whether that pre-trial preparation has been sufficient to give notice to a witness of the submission ultimately intended to be put to the court. An aspect of this is that Browne v Dunn will require more extensive cross-examination in a case where all the evidence is given orally, than is necessary in a case where the substance of the evidence proposed to be given by each side is notified in advance by affidavit or statement.
[99] Even when there has been an exchange of affidavits or statements, the rule in Browne v Dunn will require a cross-examining counsel to put to a witness the implications which counsel proposes to submit can be drawn from the evidence, if those implications are not obvious from the evidence, or from other pre-trial procedures, or the course of the case. However, the submission which Ms Bateman seeks to put on the basis of paragraph 181 of Ms West's affidavit in chief involves no drawing together of strands of evidence to create some overall theory or inference of fact, but is a submission as to the legal consequence that should be drawn from the facts plainly asserted in para181. Nothing in the rule in Browne v Dunn prevents her from putting that submission.” (emphasis added)Mr Leck’s report (in its final form) was in CCPL’s possession from August 2007. The opinions he expresses are clear and must have been well known to CCPL as two of its witnesses – Mr Robinson and Mr Alsop – were called to give evidence which commented upon Mr Leck’s conclusions. It follows from the analysis above, that where Mr Leck expressed a view which was inconsistent with the case advanced by CCPL then the rule in Browne v Dunn did not oblige counsel for Stork to put that to the CCPL witnesses. Where the opposing side has notice of the evidence to be given, it is only those implications which are not obvious from that evidence which need to be put to the opponent’s witnesses.
Other objections were made to statements made by Mr Leck in his oral evidence which were otherwise not contained in his report. It was submitted that those statements should be disregarded where they had not been put to the plaintiff’s witnesses. This is a brave submission from a party which was so ill prepared that it was still tendering reports, not having provided them before the trial, in the second week of the trial[17]. There were a few occasions when oral evidence was given by Mr Leck which had not been put to the plaintiff’s witnesses. In most cases, it was responsive to earlier evidence which had been given without any notice or without the notice required by the Uniform Civil Procedure Rules. In any event, I have not found it necessary to base any findings on such evidence.
[17]Mr Alsop’s report, for example, was tendered on the ninth day of the trial.
CCPL criticised Mr Leck’s evidence in many respects. In particular, it pointed to the numerous occasions in his written report where he expressed his opinion on the efficacy of the plaintiff’s pleadings and where he made statements which dealt with matters outside his areas of expertise. Those criticisms are not unfounded. Mr Leck often came perilously close to partisan statements and, on occasion, strayed into areas which would more properly be regarded as the province of submissions and arguments to be made by counsel. While I accept that his evidence was not pristine so far as total impartiality was concerned, I am confident that his technical observations were not coloured and I have ignored those parts of his report which represent opinion he was not qualified to give.
The Rule in Jones v Dunkel
CCPL submits that adverse inferences should be drawn from the fact that Stork did not call Messrs Clissold, Lindner or Mazur and only called limited evidence from Mr Jewell. It places reliance on the so-called rule in Jones v Dunkel[18]. I say “so-called” because the principle enunciated in that case is subject to many exceptions and variations. Nevertheless, the principle of general application is well-defined in Cross on Evidence as follows:
“[the]unexplained failure by a party to give evidence, to call witnesses, or to tender documents or other evidence or produce particular material to an expert witness may, not must, in appropriate circumstances lead to an inference that the uncalled evidence or missing material would not have assisted that party's case. The rule can operate against parties not bearing the burden of proof and parties which do bear it as well. The appropriate circumstances exist where it was within the power of the party to tender the evidence which was not tendered …”[19]
[18](1959) 101 CLR 298
[19]At [1215]
One of the exceptions to the general rule arises where there is a reasonable explanation for the omission to call a witness. It has been put this way:
“The significance to be attributed to the fact that a witness did not give evidence will in the end depend upon whether, in the circumstances, it is to be inferred that the reason why the witness was not called was because the party expected to call him feared to do so. But there are circumstances in which it has been recognised that such an inference is not available or, if available, is of little significance. The party may not be in a position to call the witness. He may not be sufficiently aware of what the witness would say to warrant the inference that, in the relevant sense, he feared to call him. The reason why the witness is not called may have no relevant relationship with the fact in issue: it may be related to, for example, the fact that the party simply does not know what the witness will say. A party is not, under pain of a detrimental inference, required to call a witness “blind”.[20] (emphasis added)
[20]Fabre v Arenales (1992) 27 NSWLR 437 at 449-50 per Mahoney JA
Most importantly, though, is that the rule only applies where there is an issue between the parties. The matters raised by CCPL as being subject to the rule are all matters which relate to evidence of oral directions, conversations, statements and so on. They relate to matters which were not pleaded in support of the plaintiff’s cause of action. There is no need to call a witness because, for example, he is referred to in correspondence unless that correspondence is relevant to the pleaded issues. Similarly, simply because a document becomes an exhibit, it does not follow that a person referred to in it should be called unless the reference to that person is relevant to the issues as pleaded.
CCPL called a reasonable amount of evidence from its witnesses about discussions held between those witnesses and employees of Stork or about documents not otherwise pleaded. That evidence was objected to on the basis that it did not relate to the pleadings. The general response was that the evidence was part of the “factual matrix” which allowed the court to understand the real issues. Parties are frequently allowed to give such evidence. It is often helpful. But it does not follow that, just because that evidence is given, the inference referred to in Jones v Dunkel can or should be drawn.
Evidence was received from Stork’s solicitor[21] in which he explained why he had not taken statements from the witnesses the subject of CCPL’s submission on this point. He said, and it appears reasonable, that he had not thought that they could give relevant evidence because of the manner in which CCPL pleaded its case. That explanation is, in my view, strictly unnecessary as I consider that the inferences sought to be drawn cannot be so drawn as the evidence in question was not relevant to the pleaded issues.
[21]Ex 61
The Defences
Stork pleaded three defences of a general nature. Each of them applied to more than one of the claims. The findings with respect to these defences dictate the extent to which further findings and calculations need be made with respect to some of the claims. I will deal, then, with those defences first, before proceeding to consider each of the claims.
The Prescribed Notice Defence
The bulk of CCPL’s claim is in two parts: it seeks damages for breach of the Subcontract constituted by the alleged failure to pay the amount claimed, and, in the alternative, it seeks an order “pursuant to the Subcontract” (presumably cl 3.1 of Exhibit D) that those sums be paid.
Clause 51.1 of Exhibit D relevantly provides:
“Stork shall not be liable upon any claim by the Subcontractor in respect of or arising out of a breach of the Subcontract unless within 14 days after the first day upon which the Subcontractor could reasonably have been aware of the breach, the Subcontractor has given to Stork’s representative the prescribed notice.
….
The prescribed notice is a notice in writing which includes particulars of all the following;(a)the breach, act, omission, direction, approval or circumstances on which the claim is or will be based;
(b)the provision of the Subcontract or other basis for the claim or proposed claim; and
(c) the quantum or likely quantum of the claim.
This Clause 51.1 shall not have any application to;
(a)any claim for payment to the Subcontractor of any amount or amounts forming part of the Contract Sum;
(b)any claim for payment for a variation directed by Stork’s Representative …” (Emphasis added)
It is admitted that no prescribed notice alleging a breach of the subcontract was served on Stork.
Stork argued that cl 51.1 was mandatory and that a failure to observe its terms prevented CCPL from making a claim after the relevant period elapsed. CCPL countered by submitting that the non-damages claim was not affected by this clause and the claims were otherwise excluded from the provisions of cl 51.1.
The word “claim: is defined in cl 2 of Schedule D as:
“… including any claim, demand, action, proceeding or suit which subcontractor (sic) may make or bring against Stork … relating to the construction of the Subcontract or as to any fact, matter or thing arising out of or in connection with the Subcontract or the work under the Subcontract including (without limitation) any claim, demand, action, proceeding or suit seeking payment of money, or any costs, expenses, loss or damages on any ground whatsoever including (without limitation) pursuant to the Subcontract, on a quantum meruit, in quasi-contract, for unjust enrichment and insofar as is permitted by law pursuant to any other principle of law.” (emphasis added)
Clause 51.1 will apply when a claim is made which is in respect of, or arises out of, a breach of the Subcontract. To determine whether the clause applies requires the identification of the character of each of the claims. Each claim made by CCPL is premised on it having sought a progress payment and having only received a part payment from Stork. The FFASC categorises the money sought as damages for breach of contract or, alternatively, as payment in accordance with the Subcontract (or in the pedestal reconciliation claim – a separate agreement).
It follows, then, that CCPL’s claim for damages and its alternative claim for payment in accordance with the Subcontract come within that definition as the first (obviously) is a “claim … seeking … damages” and the second is a “claim … seeking payment of money”. Therefore, each claim will be barred unless the exemption applies.
It is submitted, though, by CCPL that the purpose of a provision (like cl 51.1) requiring a contractor to give notice within a reasonable time of the occurrence of events that he considers may entitle him to claim additional payment under the terms of the contract “is to enable the owner to consider the position and its financial consequences …” (Hudson’s Building and Engineering Contracts 11th ed, Sweet & Maxwell, 1995, para 4.132; see also Giles CJ, Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd & Ors (1996) 12 BCL 317 at 338)”. That is, no doubt, correct; but it is also intended to bring matters to an end should no notice be given by the appropriate date.
A similar clause was considered by Philip McMurdo J in Bartier v Kounza Investments Pty Ltd[22] where his Honour concluded:
“I favour an interpretation which does require the builder to make a final payment claim as a condition precedent to payment. Clause 27.1 is in mandatory terms and there is a good commercial purpose in holding the parties to the timely performance of the steps set out in cl. 27 and 28, because it promotes an expeditious determination of their ultimate entitlements …”[23]
[22][2003] QSC 390.
[23]At [40].
I respectfully agree with that approach. That a notice of the type required in cl. 51.1 is a prerequisite to recovery is supported by other authorities, dealing mainly with clauses which require a notice before an extension of time can be given, which were considered, and helpfully summarised, by Besanko J in Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No 2)[24]. He said:
“[66] There is no doubt that parties can, if they wish, make compliance with a certain procedure a precondition to an extension of time by reason of delay or disruption or a claim for loss and damage resulting from delay or disruption. The question whether the parties have done that is to be determined as a matter of the construction of their contract. An intention to exclude the ordinary remedies arising on a breach of contract must be expressed in clear and unmistakable terms. (Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 per Lord Diplock at 717–718; Mancorp Pty Ltd v Baulderstone Pty Ltd (t/as Baulderstone Hornibrook) (No 2) (1992) 60 SASR 120).”
[24](2007) 23 BCL 347; [2005] SASC 483. See also Jennings Construction Ltd v Q H & M Birt Pty Ltd (1986) 8 NSWLR 18; Opat Decorating Service (Aust) Pty Ltd v Hansen Yuncken (SA) Pty Ltd (1994) 11 BCL 360; Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (1995) 12 BCL 38; Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (1996) 12 BCL 317.
Does the exemption apply? Clearly, it cannot apply to the claims for damages as it only applies to a “claim for payment”.
Are any of the claims made by CCPL claims for payment to the Subcontractor of any amount or amounts forming part of the “Contract Sum”? The term “Contract Sum” is not defined in the Subcontract. CCPL submitted that “the only sensible meaning that can be given to the words “Contract Sum” is that it refers to the total sum due to the subcontractor for undertaking the subcontract including any additions or deletions thereto.”[25] No further argument was advanced to support that contention.
[25]CCPL’s Closing Submissions [235].
Stork referred to the definition (in cl 2 of Exhibit D) of “Subcontract sum” which provides that that term relevantly means:
“(a) where Stork accepted a lump sum, the lump sum;
(b)where Stork accepted rates, the sum ascertained by calculating the products of the rates and the corresponding quantities in the Bill of Quantities or Schedule of Rates;
(c)where Stork accepted a lump sum and rates, the aggregate of the sums referred to in paragraphs (a) and (b),
including provisional sums but excluding any additions or deductions which may be required to be made under the Subcontract.”
The entire document governing the relationship between the plaintiff and the defendant is the “Subcontract”. While it bears that name it is, of course, in ordinary parlance the contract between them. The Formal Instrument of Agreement (which is the first part of the document) also provides that:
“The Subcontract Sum is the lump sum of eight million seven hundred and fifty three thousand three hundred and eighty nine dollars and eighty three cents ($8,753,389.83) and excludes any additions or deductions which may be required to be made under the Subcontract.”
In the absence of a definition I think that the term “Contract sum” should be read as the sum arrived at by the calculations set out in the definition of “Subcontract sum” which is the figure referred to in the paragraph above and which is set out on page 13 of Part A of Exhibit C of the Subcontract. It follows, then, that the term excludes any additions or deductions contrary to the submission of CCPL. As CCPL is not suing for any amount contained within that sum (given that its claim is based on extra work) its claim (subject to what is said below) is not excluded from the effect of cl. 51.1.
CCPL argued that:
“Clause 51 is a notice provision only. Its purpose is to ensure that Stork has proper notice of claims or potential claims in respect of or arising out of a breach of the Subcontract within a reasonable time of such claims arising. Provision of progress claims for work undertaken under the Subcontract by Cooks satisfies that purpose; and is the very reason for the exclusion contained in clause 51 relating to claims for breaches for non-payment of amounts forming part of the contract sum.”[26]
[26][237] Plaintiff’s Written Submissions
The provision of progress claims does not satisfy clause 51 because that clause is concerned with notifications of breach of contract, not of demands made in the ordinary course of the contract.
Are any of the claims for payment based on a variation directed by Stork’s Representative and, thus, excluded from cl 51.1? Yes, the claims made by the plaintiff which are for payment for a variation are:
(a) Road Reconstruction;
(b) Contour Drains;
(c) Lime Stabilisation of Site Roads;
(d) Boxing Out for Roadworks; and
(e) Asphalt on Site Roads.
It follows, then, that the claims, other than those referred to immediately above, the pedestal reconciliation claim and the ammonia spill standby claim, are caught by clause 51.
Defence relating to Alleged Errors in the Bill of Quantities
Of the various heads under which CCPL makes claims, there are six in which the entitlement to payment is alleged to arise because of an error in the “Priced Bill of Quantities”. They are the:
(a) Footings,
(b) Pedestals,
(c) Corrocem,
(d) Suspended Slabs,
(e) Prill Storage Building Structures, and
(f) Crushed Rock to Substations 1 and 2 claims
The “Priced Bill of Quantities” is defined in cl 2 of Exhibit D as:
“… the Bill of Quantities priced and lodged by the Subcontractor with Stork’s Representative and corrected where necessary from time to time under Clause 5.3.”
The claims rely upon errors alleged to exist in the Priced Bill of Quantities within the meaning of cl. 5.4 of Exhibit D. Clause 5.4 relevantly provides:
“If the Priced Bill of Quantities is in error in that it:
(a) contains an incorrect quantity in relation to any item included therein;
(b) contains an item which should not have been included therein;
(c) omits an item which should have been included therein;
then;
(i) in the case of Clause 5.4(a) where the item is deficient in quantity or in the case of Clause 5.4(c) upon application in writing to Stork’s Representative by the Subcontractor;
(ii) in the case of Clause 5.4(a) where the item is excessive in quantity or in the case of Clause 5.4(b) upon notification in writing to the Subcontractor by Stork’s Representative,
the lump sum accepted by Stork for the execution of the whole of the work to which the Bill of Quantities relates shall except when the value of the error is less than $400, be adjusted by such amount as is required to correct the error, determined in the manner provided by Clause 45.6 for the valuation of variations as if the correction were a variation under the Clause.
The Bill of Quantities shall be deemed to be in error as aforesaid to the extent that the items and quantities included in it differ from those required for the execution of the Works in accordance with the drawings and specification referred to in the Subcontract, measured in accordance with the method of measurement evidenced by the Subcontract.”Stork submits that none of this is available to CCPL because there was not a Priced Bill of Quantities within the meaning of cl 5.4. Stork’s argument, in summary, was:
“…that the plaintiff’s claims [, which are] premised upon an alleged error in the Priced Bill of Quantities such that the lump sum accepted by the defendant for the execution of the whole of the work [should be adjusted] pursuant to clause 5.4 of Exhibit D [,] suffer from the fatal flaw that no lump sum was accepted by the defendant for the execution of the whole of the work. This was a schedule of rates contract; this means that the defendant agreed to pay for quantities of work measured from the Subcontract drawings at agreed rates. The quantities in the Bill of Quantities were only ever estimates and so it is simply wrong to say that the defendant agreed to pay an identified lump sum for the work to be performed.”[27]
[27]Stork’s Closing Submissions at [12].
In support of its argument Stork refers to some of the definitions in the Australian Encyclopaedia of Forms and Precedents.
A schedule of rates contract is described in the following way:
[1095] Schedule of prices or rates
“In this form of agreement, the contractor agrees to execute the works for a price to be calculated according to the quantity of material actually used at an agreed rate. Rather than submitting a total price for the works, the contractor indicates rates per square metre, cubic metre or some other form of quantity and is paid for the actual amount performed.
“This form of contract is commonly used in civil engineering works, particularly earth and road works where the precise volume or area is not known before the work commences. Tenders will usually be submitted on the basis of provisional quantities estimated by the principal’s quantity surveyor, giving some basis for determining the tender rates which will no doubt vary depending on the order of magnitude of the amount of work involved. The total of the provisional quantities multiplied by the tendered rates provides a figure to be used in comparing tenders.
“The skill of tendering under such a contract relies on the contractor estimating more accurately than the principal the amount of quantities involved, so that the contractor’s rates can be “manipulated” to result in a similar provisional tender amount to the other contractors, but one which when the work is actually performed will provide a greater reward.
“From the principal’s point of view, an accurate comparison of tenders relies on the provisional quantities being reasonably accurate.
“This form of contract has the advantage that the principal is to pay for the amounts required (no more and no less) whereas under a lump sum contract both the principal and the contractor take the risk that their preliminary estimates were accurate.” (emphasis added)
A lump sum contract is described thus:
“[1090] Lump sum contract
In this form of agreement, the contractor commits himself or herself to execute specified work for a stated “lump sum” or fixed amount.
The lump sum might in some circumstances be adjustable on account of a rise or fall in the cost of labour and/or materials, or on account of any variation to the works at the request of the principal, or might include provisional allowances. But generally the contractor is not entitled to claim further money over the stated amount.”
In order to determine into what category the Subcontract falls, an analysis of the relevant provisions must be undertaken.
One of the documents which makes up Exhibit C to the Subcontract is entitled “Subcontract Price Schedules and Bill of Quantities”. When CCPL refers in its pleading to the Priced Bill of Quantities it is referring to this document. It then alleges that, for example, the for-construction drawings require work beyond that contemplated by the tender process and, therefore, CCPL can have recourse to clause 5.4 for additional payment.
The problem that immediately arises is that cl 3.2 of Exhibit D of the Subcontract provides that:
“Quantities in a Bill of Quantities or Schedule of Rates are estimated quantities only”.
That provision is consistent with the definition of a schedule of rates contract set out above.
In order for CCPL to be successful in its claims for adjustment of the lump sum pursuant to cl 5.4 it must, first, show that the Subcontract is a lump sum contract. That requires further analysis of the terms of the Subcontract.
Section 2 of Part A of Exhibit C, provides:
“The Subcontractor shall execute the work under the Subcontract and fulfil all Subcontractor[‘]s obligations thereunder, and Stork shall pay the subcontractor of the measured quantity of each item of the work performed under the Subcontract as certified by Stork at the appropriate rate in the Subcontract Schedule part A — “subcontract Price Schedule and Bill of Quantities”.
All items shall be measured net in-situ to the profiles and dimensions shown on the Drawings or described in the Scope of work and Specification and Subcontractor shall allow for wastage in the rates for the net quantities given in the Subcontract Schedule Part A — “Subcontract Price Schedule and Bill of Quantities”.
Upon issue by Stork of the `Approved for Construction’ Drawings for the work and prior to construction of work covered by the Drawings, Stork and Subcontractor shall jointly review the Drawings and agree on the rate items applicable to the work shown on the Drawings.
Measurement of work shall be made in accordance with the conditions set out hereunder.” (emphasis added)The emphasis on measurement and the application of stated rates to the measured quantities is consistent with a schedule of rates contract.
Consistent with that emphasis on the application of stated rates to measured quantities is Clause 3.1 of Exhibit D which provides that the defendant must pay the plaintiff for work for which the defendant accepted rates:
“… the sum ascertained by measurement and determination of the quantities in accordance with clause 3.2 and multiplying the quantity so measured and determined of each section or item of work carried out under the Subcontract by the rate accepted by Stork for the section of item, adjusted by any additions or deductions made pursuant to the Subcontract” (emphasis added)
Similarly, cl 3.2 of Exhibit D provides, among other things, that:
“Quantities in a Bill of Quantities or Schedule of Rates are estimated quantities only.
A direction shall not be required to be given by Stork’s Representative by reason of the actual item required to perform the Subcontract being greater or less than the quantity shown in the Bill of Quantities or Schedule of Rates.
Unless otherwise stated within the contract, “actual quantities” shall mean those quantities measured in accordance with Australian Standard 1181–1982, as amended from time to time, from the lines, dimensions and limits shown on the relevant Contract plans and drawings.
Quantities over and above the actual quantities as a result of oversupply, over excavation or any other similar reason by the Subcontractor will not be included in the actual quantities and the Subcontractor agrees that Stork is not required to pay for these quantities over and above the actual quantities.” (emphasis added)Further, cl 3.3 of Exhibit D provides, among other things, that:
“Where otherwise than by reason of a direction of Stork’s Representative to vary the work under the Subcontract, the actual quantity of an item required to perform the Subcontract is greater or less than the quantity shown in the Schedule of Rates;
(a) where Stork accepted a lump sum for the item, the difference shall be valued under clause 45.5 as if it were varied work directed by Stork’s Representative as a variation;
(b) where Stork accepted a rate for the item, the rate shall apply to greater or lesser quantities provided that where limits of accuracy are stated in the Annexure the rate shall apply to the greater or lesser quantities within the limits and quantities outside the limits shall be valued under Clause 45.5 as if they were varied work directed by Stork’s Representative as a variation.
….”During the course of construction there were, as might be expected, additions and changes made to the original plan for the construction. When this occurred, the evidence demonstrated that new bill items were introduced and agreed and allocated new bill numbers. No evidence was adduced which showed that any of the extra or new work was regarded as an error in Part A of Exhibit C of the Subcontract. On the contrary, the parties appear to have agreed to treat them as a new bill item in Part A of Exhibit C. In all the correspondence which was put before the court, I have been unable to find any clear reference to an alteration of a lump sum payable to CCPL. That clause 5.4 cannot be relied upon by the plaintiff is demonstrated by other parts of the Subcontract.
There are further references to a Bill of Quantities which must be considered.
Clause 2 of Exhibit D sets out the definitions of various terms. It provides that:
“ ‘Priced Bill of Quantities’ means the Bill of Quantities priced and lodged by the Subcontractor with Stork’s Representative and corrected where necessary from time to time under Clause 5.3.”
Clause 5 of Exhibit D provides for three alternatives regarding the Bill of Quantities, namely:
Alternative 1: A Bill of Quantities forms part of the Subcontract only to the extent provided in the Subcontract.
Alternative 2: A Bill of Quantities shall not form part of the Subcontract.
Alternative 3: A Bill of Quantities forms part of the Specification.
Exhibit E provides that Alternative 1 applies. Accordingly, a Bill of Quantities forms part of the Subcontract only to the extent provided in the Subcontract.
Clause 5.2 of Exhibit D provides that, “where there is a Bill of Quantities”, then among other things:
“(a)CCPL shall lodge it with Stork’s Representative before the expiration of the time for lodgment stated in the Annexure or such further time as may be directed by Stork’s Representative from time to time;
(b)notwithstanding any other provision of the Subcontract, the CCPL shall not be entitled to payment until CCPL has lodged the Bill of Quantities.”
Given the provisions of cl 5.2, the time for lodgment in a contract that had a Bill of Quantities would be essential. But, in Exhibit E (which contains the Annexure to the General Conditions of the Subcontract it is provided that; “The time for lodgment of the priced copy of the Bill of Quantities” is “Not Applicable”.
This designation of “Not applicable” in Exhibit E demonstrates that the Subcontract does not provide for a Priced Bill of Quantities at all.
Further, CCPL adduced no evidence to show that it did lodge a Bill of Quantities with Stork’s Representative; and it is only if a Bill of Quantities is priced and lodged in accordance with the Subcontract that the application of clause 5.4 can be justified.
It follows, then, that the Subcontract is not a lump sum contract. It is a schedule of rates contract. There is, then, no basis for the claims to which this defence applies.
The Queensland Building Services Authority Act Defence
Stork raises the provisions of the Queensland Building Services Authority Act 1991 (“QBSA Act”) in two ways. First, as a complete defence to five of the claims made by CCPL on the basis that the work done was “building work” within the meaning of the QBSA Act and CCPL did not hold a relevant licence for that work. Secondly, Stork makes a counterclaim for a refund of the amounts paid by it to CCPL for that “building work”.
At the relevant times, s 42 of the QBSA Act prohibited a person from carrying out building work unless that person held a contractor’s licence of the appropriate class under the Act. If a person did carry out such work without the appropriate licence, the Act denied them any entitlement to “monetary or other consideration” for doing so. That denial was subject to a capacity to recover “reasonable remuneration” which, effectively, excluded any profit margin from such a sum. Section 42 relevantly provides:[28]
[28]Section 42 was amended by section 21 of the Queensland Building Services Authority Amendment Act 1999 which inserted, among other things, subsections 4 and 10 into section 42. The effect of that was to give s 42 (4) a retrospective effect such that it applies to the events dealt with in this action.
“(1)A person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class under this Act.
(2) For the purposes of this section –
(a)a person carries out building work whether that person carries it out personally, or directly or indirectly causes it to be carried out;
(b)a person is taken to carry out building work if that person provides advisory services, administration services, management services or supervisory services in relation to the building work; and
(c)a person undertakes to carry out building work if that person enters into a contract to carry it out or submits a tender or makes an offer to carry it out.
(3) Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
(4)A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed –
(a) is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
(b) does not include allowance for any of the following—
(i) the supply of the person's own labour;
(ii)the making of a profit by the person for carrying out the building work;
(iii)materials and labour if, in the circumstances, the costs were not reasonably incurred; and
(c) is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
(d) does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person's own direct or indirect benefit.
…
(10)Subsection (4) applies to building work carried out on or after 1 July 1992, unless the entitlement to payment for the carrying out of the building work was ….”
The definition of “building work” was contained in Schedule 2 of the QBSA Act. It provided that “building work” means:
“(a) the erection or construction of a building; or
(b)the renovation, alteration, extension, improvement or repair of a building; or
(c)the provision of lighting, heating, ventilation, air-conditioning, water supply, sewerage or drainage in connection with a building; or
(d) the demolition of a building; or
(e) any site work (including the construction of retaining structures) related to work of a kind referred to above; or
(f)the preparation of plans or specifications for the performance of building work; or
(g) any work of a prescribed kind;
but does not include work of a kind excluded by regulation from the ambit of this definition.”
The QBSA Act defined “building” as including “any fixed structure”[29]. During the times material to this action the Act did not define the meaning of the terms “drainage”, “site work”, or “retaining structures”.
[29]Schedule 2, QBSAAct.
It is contended by Stork that the following claims represent work which comes within the definition of “building work” and for which a licence was required:
(a) Quantities of Footings;
(b) Pedestal claim;
(c) Corrocem claim;
(d) Suspended slabs; and
(e) Prill storage building structures.
CCPL admits that it did not hold any relevant licence at the material times but denies that any of its claims relate to the performance of “building work”.
Quantities of footings
CCPL’s claim for quantities of footings only relates to certain footings which are set out in Attachment C to the statement of claim. The evidence which was given about those footings was to the effect that, in general, a footing is “generally considered to be a bigger arrangement, [a] more substantial arrangement” than a pedestal.[30] In order to construct the footings, the plaintiff would need to excavate some earth, create formwork, place reinforcement, pour the necessary amount of concrete and, on occasions, backfill part of the excavation in order to bring the ground surface level with the footing. Mr Eames, who gave evidence for CCPL, frequently referred to footings as “concrete structures”.[31]
[30]T 237.
[31]T 230/20-31 and T231/51-58.
A footing is a necessary and integral part of other items of construction. It is, by definition, something which is created so that something else may be built. For example, on this site, the footings which were built were to be used as the basis for other structures on the site such as buildings, pedestals and suspended slabs. As they formed the basis for other structures, the construction of the footings falls within the definition of “the erection or construction of a building”, or “any site work (including the construction of retaining structures) related to work of a kind referred to above”, or both, as those terms are used in the definition of “building work”. I do not doubt that a footing is a “fixed structure”.
There is, in the definition of “building work”, an exclusion of certain work, namely, “work of a kind excluded by regulation from the ambit of this definition”.
Section 3A of the Queensland Building Services Authority Regulation 1992 provides that the following work, among others, is excluded from the ambit of the definition of “building work”:
“…
(t)the installation of manufacturing equipment or equipment for hoisting, conveying or transporting materials or products (including primary produce), but excluding the installation of fixed structures providing shelter for the equipment;
…
(x) work consisting of earthmoving and excavating;
…”The exclusion in s 3A(1)(t) has no application under this head. Section 3A(1)(x) does not, in my view, apply to the circumstances surrounding the claim for footings in this case. The exclusion in s 3A(1)(x) is for work “consisting” of earthmoving and excavating. The work in this case, though, consisted of more than just excavating. The word which needs to be analysed is “work”. If one was to ask what work was involved in the creation of footings, the answer would not simply be: “excavating”, but would include all the other activities referred to above. For “work” to consist of “excavating”, it means that a distinct and identifiable endeavour is made up solely of excavating. That is what the word “consisting” requires in these circumstances. If it was to be construed in any other way, then it would be inconsistent with the scope of work for which a concreting licence is required pursuant to Part 5 of the Regulation. Clause 2 of Part 5 of the Regulation provides that a concreting licence includes the scope of work dealing with “excavation of footings” and the “placing and fixing of reinforcement to footings”. It would be inconsistent with the provisions of the Act and the Regulation for a licence to be required for work which was excluded from the definition of “building work”.
The work which makes up the footings claim constituted “building work” within the meaning of the QBSA Act and, in the absence of the relevant licence, CCPL is not entitled to monetary or other consideration for doing that work.
Pedestal Claim
CCPL’s claim in this area related to the construction of “columns, piers and plinths” being similar types of structures having a plan area of one square metre or less. These were distinguished from footings on the basis they were very small structures which actually became a part of the footings structures.[32]
[32]T 242/11-23 and T232/37-46.
The construction of a pedestal required the erection of a steel cage (which is the reinforcement inside the pedestal), the connection of that cage to a footing or other supporting structure, the tying off of that reinforcement and then the building of timber formwork into which the concrete would be poured.[33] Mr Eames said that plinths were “actually part of the footing structure”[34]. He also explained that: “A “plinth” is a structure, dimensions of like of a pedestal, but placed upon an existing structure, existing concrete structure. Whereas a pedestal is generally considered to be a separate independent structure. The – both the idea of pedestals - the issue of pedestals and plinths are closely related because of the likeness in the type of construction and the quantity of work involved.”[35]
[33]T 372.
[34]T 232
[35]T 245-6
The building of the pedestals involved the erection or construction of a fixed structure. Even though, relative to other parts of the work, they were small structures they, nevertheless, constituted “building work”. Those pedestals which were attached to footings would come within the scope of work of a concreting licence (“placing and fixing reinforcement to footings”) as well as coming within the general definition of “building work”.
The work which makes up the pedestals claim constituted “building work” within the meaning of the QBSA Act and, in the absence of the relevant licence, CCPL is not entitled to monetary or other consideration for doing that work.
Corrocem claim
Corrocem was an additive used in the concrete placed in the ammonium nitrate building. It acted as a means of protecting the concrete floor from the various corrosive chemicals which were to be used in that building. There was considerable evidence as to the effect of Corrocem as an additive and to the manner in which it needed to be placed in a controlled temperature and not in the heat of the day. I can see no reason why it would not be regarded as being part of the scope of work for a concreting licence as it would certainly come within clause 2(7) of Part 5 of the Regulation as it involved: “Placing, vibrating, levelling and finishing of concrete including all special finishes”.
It is pointed out by Stork that as the ammonium nitrate building was a “building” within the meaning of the QBSA Act, the Corrocem claim would also be covered because it relates to work which can be described as the erection or construction of a “building”.
The work which makes up the Corrocem claim constituted “building work” within the meaning of the QBSA Act and, in the absence of the relevant licence, CCPL is not entitled to monetary or other consideration for doing that work.
Suspended slabs
The suspended slabs were required for two buildings on the site. Originally the intention was that these slabs would be at ground level but, after the revision of for- construction drawings, the slabs were to be erected several metres in the air supported by columns. The manner in which they had to be built was described by Mr Eames in the following way:
“There had to be scaffold towers built up to the height where the suspended slab was to be placed. There was – fairly strong steel bearers had to be put through. Formwork had to be placed across those to support the suspended slab and the weight of the concrete till it was set. … All the steel reinforcement had to be craned up into that area. And additional to a slab on ground the sides were much higher and had to be formed up.”[36]
[36]T 279/10-30.
In its submissions on the counterclaim CCPL refers to Document 133 for its references to various items in the counterclaim. Stork refers to the document in Appendix B. Both of those documents are directly related to Exhibit 24. All those documents contain the same references to items of work or material. As this a claim by Stork, I will refer to the document that constitutes Appendix B. Appendix B only refers to work under the heading “Footings”. Stork abandoned any claim to the variations noted on pages 45-50 of Appendix B and it makes no claim for other work found to come within the QBSA Act such as pedestals, Corrocem and so on.
The amount claimed by Stork for the whole of what it says is “building work” is substantial – $9,983,796.54 – and a great deal more than the amount alleged by CCPL to have been paid by Stork for the claims I have found to be “building work”. The difference arises because the claims by CCPL are only for additional work it said was required (usually) by changes made by the for-construction drawings. Thus, for example, CCPL’s claim for the additional work under the heading of “Quantities of Footings” was $77,090.36 (including the amount alleged to have been paid) whereas, Stork’s counterclaim is for all of the payments made for “building work” entailed in the footings.
The issues which arise are these:
(a) What is the work in Appendix B?
(b) Is that work “building work”?
(c) Was that work paid for by Stork?
(d) If the work was paid for, was that payment made by mistake?
What is the work in Appendix B?
CCPL argues that there is no proof that, whatever the work is in Appendix B, it was work which was performed under the Subcontract. That is a submission which must fail, given that Appendix B is drawn directly from Exhibit 24 which is the final progress claim from CCPL for the work which it had performed[166]. There was no other contractual relationship between CCPL and Stork and Exhibit 24 is in the form used by CCPL for other claims under the Subcontract. Although Stork pleaded that the work was done under the Subcontract[167], that is not a necessary element of its cause of action for repayment of the sum in question. Section 42 of the QBSA Act takes effect when the work is done – the general, contractual basis for the work is irrelevant.
[166]T 368-369
[167]Para 107, FFADC
The only work to which the counterclaim attaches is work which appears under the heading “Footings”. It is work for which, according to CCPL, it has been paid by Stork. Whether any of the items appear in the various schedules of the Subcontract[168] is irrelevant to the relief available to Stork. Similar irrelevant issues raised by the Plaintiff include: when the work was done[169], what the appropriate rates were[170], and the extent of the work performed.
[168]Para 162-164, Plaintiff’s Written Submissions
[169]In any case, it can only have been done during the period of the contract and before Exhibit 24 was issued by CCPL.
[170]It is the amount paid by Stork which is relevant.
Is that work “building work”?
I have considered the meaning of the term “building work” as used in the QBSA Act above. The plaintiff attacks this part of the counterclaim on the basis that Stork has not demonstrated that each of the items under the heading “Footings” has been proved to constitute “building work”. The objection goes on to say that there is no evidence as to what work was involved in the Subcontract Footing items. That, as I have pointed out above, is not to the point. Exhibit 24 demonstrates that CCPL did the work set out in that document and Stork paid the amounts recorded in it. The point made by CCPL which Stork must answer is whether the work recorded was “building work”. It is not enough simply to assume that each item under the heading “Footings” is “building work” because of the finding that the footings work the subject of the plaintiff’s claim was “building work”. A closer analysis is needed.
Most of the items which are set out under “Footings” were the subject of evidence and were extracted in Appendix E of Stork’s Written Submissions. For example:
Footings, Pedestals and Plinths generally
Mr Eames gave the following evidence describing footings, pedestals and plinths, and the nature of the work involved in their construction.
“The first difference which immediately comes to mind is the numerous small pedestals and plinths that are shown on the drawing-----
Are they part of what you refer to as "footings"?-- Yes.
And where are they?-- Because they are actually part of the footing structure.” (T232)
…
Can I ask you to say to his Honour, if you can, what it is that is the distinguishing feature of a footing compared with a pedestal and vice versa, how does his Honour distinguish between a pedestal and a footing?-- Your Honour, a pedestal is in general terms a small square or rectangular concrete arrangement which sits above a surface to support the foot - or the leg of a structure. Whereas a footing is generally considered to be a bigger arrangement, more substantial arrangement upon which, you know, a large object would sit rather than just a single or some type of leg arrangement.” (T237)
…
MR DIGBY: ….. can you describe to his Honour what work is involved in constructing that pedestal as well as supplying the concrete?-- The work that's involved is the steel cage, the reinforcing cage inside the pedestal, even though it's only small, still has to be tied. The formwork - the formwork has to be placed - formed up and placed around the outside of the steel work. The holding down bolts which go into these pedestals had to be set up and located very accurately. There was still a requirement for the surveyor to come and survey them to make sure that everything was in exactly the correct position. And then the concrete had to be brought in and poured and vibrated into place.” (T243)
…
And what's - with the term "raised plinths", is that the same as or related to or different from the pedestals that we've been talking about?-- A "plinth" is a structure, dimensions of like of a pedestal, but placed upon an existing structure, existing concrete structure. Whereas a pedestal is generally considered to be a separate independent structure. The – both
the idea of pedestals - the issue of pedestals and plinths are closely related because of the likeness in the type of construction and the quantity of work involved.” (T245-6)….
And can you tell his Honour whether what we're looking at in those two photographs [Exhibit 25] is a footing or a pedestal?-- Your Honour, that's a pedestal.
And if you can-----
HIS HONOUR: Isn't that below ground?-- Some of it is below ground, your Honour, yes. The top of that structure, however, will be above ground. Ground level in this case will be the underside of the long timber supports which run across the - from left to right across the photograph. And if you notice, the holding down bolts in the centre are above that and the piece of white material - that white line which goes around inside the box, that's actually called a plastic fillet, and that would be above ground level too.
MR DIGBY: Mr Eames-----?-- This pedestal will be very close to ground level at - on completion.
Mr Eames, looking at the components in the photographs, the framing timbers and the plastic caps on the reinforcement one can see in the lighter of the photographs, the more distant photograph, can you tell his Honour what approximately the dimensions of this pedestal are?-- Your Honour, this pedestal appears to be somewhere in the order of 400 millimetres by 400 millimetres. Perhaps 450.
And can you take the two photographs separately? Taking, first of all, if you would, Mr Eames, the photograph which is taken from the further distance from the work involved?—
Yes.
And can you describe to his Honour - I don't want you to take long on it, you've given general descriptions already, but can you describe for his Honour generally the work involved in forming up the pedestal that we can see in the photograph [Exhibit 25], for the transcript?-- Your Honour, the work which would be involved in doing this particular pedestal, the steel cage, which is the reinforcement which goes inside, would be tied. The timber formwork would then be built. The white corners, which are evident in the photograph, and the white line around just below the piece of crossbracing template that supports the holding down bolts are called the plastic fillets. They're a 45 degree angle. They would have been placed intact into the formwork. The whole lot would have then been surveyed and located properly, and when the survey – during the survey location the whole unit would have been moved around inside that excavation until it was in the correct position. When it was in the correct position these small pieces of reinforcing that are seen holding the bracing on the timber and the supports' material for the timber are pinned down and then the whole thing is rechecked. The piece of timber with the holding down bolts in it are drilled at the right separation and then that's then placed in - into the box with the holding down bolts in it. You can see a nut above it. There will be another nut below that as well. That's then located and the surveyor will then pinpoint the two that those two - position of those two bolts. That's then nailed in, and then the formwork is then inspected ready for the concrete to be placed.
And taking the photograph which is taken closer to the feature we're looking at?-- Yes.
And looking into the void into which the concrete is to be placed, can you describe to his Honour what features we see there, for the transcript? And what's involved in putting that together from the contractor's point of view?-- From the contractor's point of view, your Honour, the things to note here are the steel reinforcement, which are the bars running left to right and up and down on the page. The white plastic fillet that I referred to can be seen fairly clearly running top to bottom on the left-hand side of the page. This piece of timber across - which runs left to right across the page is
the template which contains the holding down bolts. And the reinforcement is held away from the sides of the formwork by a plastic bar chair, which is - a bar chair is that strange-shaped grey object that you can see on the left-hand side of the photograph. ….And, finally, can you describe to his Honour what is involved in placing concrete in a small location like that?-- Your Honour, it's basically impossible to - it's very difficult, it's not impossible, but it's very difficult to get the concrete into a small area like that without spilling it everywhere unless you put it in by shovel and so it has to be generally placed by shovel and use a very small concrete vibrating tool to vibrate the concrete to compact it and get rid of the air bubbles and the voids in it.
And was the work you've just described, including the work relating to the placement of concrete, typical of what was done in relation to the pedestals that are the subject of the plaintiff's claim?-- That's correct.” (T371-373).
Photographs 3 and 7 of Exhibit 23 shows pedestals (T364/25). The photographs which are Exhibit 25 also show pedestals and formwork (T371/2)
Ableflex
Ableflex is a joint filler which is similar to silicon, the purpose of which is to waterproof joints (Mr Howard at T469/52-55)
Additional reinforcing to Piers over 100kg / m3
Mr Eames gave evidence describing the work required for the construction of a “Footing” and the use of reinforcing in the construction of footings and pedestals. Mr Eames also gave the following evidence:
“… Probably the most significant - one of the significant differences, other than what I have covered already, is that there - I cannot remember the exact clause, but there is a requirement in the contract document for the concrete footings to contain not more than 100 kilos per cubic metre of concrete. Most of the footings that we did - not all, sir, but most of them - contained significantly more than 100 kilos per cubic metre, which required additional effort to tie and place the steel reinforcing prior to placing the concrete.
….
And is the sort of reinforcement you refer to as being called up a normal or exceptional form of reinforcement?-- It's - 100 kilos per cubic metre is, industry-wise, generally accepted as a rule of thumb quantity. Some concrete structures, depending on their purpose, will contain sometimes less than 100 kilos, sometimes more and sometimes significantly more depending on their intended purpose and the loadings you would expect to have in place on them.
What I'm seeking to have you explain, Mr Eames, is that you have said to his Honour in essence that some of the footings that we had to build when the design was developed were more complicated because they had a large amount of reinforcement in them; is that what you're saying?-- A large amount of reinforcement and with odd shapes in them. There was a lot more steel tying in them. The example I gave you with the voids in it had to have steel work tied around the voids. It's not just tying straight bars, there's a lot of formwork which goes around it which has all got to be tied into place.” (T235-6)
Backfill
One of the uses for backfill was to fill a void or excavation made for the purpose of positioning the formwork required for an underground structure.(Mr Howard at T467/468)
Bearing Plates
A form of Embedded Metalwork, as described below.
Blinding Concrete
Blinding is “a mixture of sand and just straight sand and cement which is placed on the bottom of the excavation. Its purpose is to stop the steel work from being pushed through into the soil and mud underneath the excavation. It provides a stable base upon which to construct the formwork - sorry, my apologies, on which to construct the reinforcing, the reinforcing steel.” (Mr Eames at T353)
Blockouts
Blockouts can refer to formwork which is required to create a hole in the concrete at the top of a pedestal, for example, to allow drainage (Mr Howard at T466/47-53)
Cast in Ferrules
Mr Howard gave the following evidence:
“MR HOOPER … A ferrule is a piece of metal tubing that gets cast into concrete through which something such as an electrical cable can later be passed?-- Yes, but unlikely, because most of the time the ferrules were used to support the concrete formwork that was cast. On that particular project no ferrules were used to pass an electrical conduit through. (T470/14-22)
Compressible Void Former
Mr Howard gave evidence that a compressible void former is used where a slab is subject to differential loads, that is where the pressure applied to the slab is not uniform, in order to distribute the load to specific support points rather than directly to the ground at each load point. It can be placed directly under a concrete floor slab (T466/12-16)
Concrete
This refers to the concrete itself used to create the footings in question. Mr Eames’ evidence regarding Footings describes the placement of concrete in the footing structure.
Concrete screed
Mr Howard explained that screeding refers to the standard finishing of a concrete structure; “you screed the concrete with a screeding tool which is just a standard finish.” (T469/47-49)
Embedded metalwork
Mr Howard gave evidence that, in some cases, embedded metal work involved a metal plate being positioned at the top of a pedestal, the purpose of which was to prevent the wearing of the concrete at the top of the pedestal by the structure positioned above it. (T466/32-40)
Footing Excavation
The reference to “footing excavation” refers to excavation necessary to construct the footing in question. Photograph 6 of Exhibit 23 shows footing excavation (T364/36). Mr Eames gave the following evidence:
“The difference between that footing and this one here is basically
the type excavation that you need to do to get that footing in and the backfilling. This - because it has been excavated on an angle, to pour that concrete footing would require you - would require the whole thing to be placed in formwork, whereas with this type of footing arrangement here, it will be dug into the ground and poured against the surface of the ground” (T234-5)… “When - your Honour, when we actually constructed a footing, the excavations were dug or the formwork - and/or the formwork placed, the steel work was tied and placed into the footing formwork arrangement, the surveyor would then come and check the whole construction before it was filled with concrete … (T238/16-22)
… “Can I ask you to go to the last of the documents you haven't addressed in that part of the folder. It's a letter dated the 27th of October 1999 in which you write to Mr Jewell about excavation of concrete footings; do you have that document?— ...
… My question was what was the purpose of writing the letter?-- The letter details the method that will be used for excavation for major concrete footings to ensure that we - that Cook's are excavating to a layer or to a depth where the in situ material provides for varying capacities called for in the specification.” (T240-241)
Formwork
In Mr Eames’ evidence regarding the work required for the construction of a Footing, he described the use of formwork in the construction of footings and pedestals. Mr Eames also gave the following evidence regarding the nature of the formwork required in relation to footings:
“What other differences in the footings had to be built once in fact the detailed design came down compared with the footings on drawing 001 in the contract, can you describe to his Honour?-- None of these footing types on 001 have what's called blockouts or voids in the actual concrete. They all appear to be a mass concrete footing. Now, several of the footing types we did - for arguments, the ammonia synthesis unit had octagonal shaped raised arrangements on top of the slab with an octagonal void in the centre of it.
And how do you achieve that void?-- Well, it basically all has to be formed up and poured in place.
And by reference to the drawing we were looking at, 0105, am I right in assuming there's no detail of a void being put into the form?-- No, there's no voids in that one, Mr Digby, but if you can bear with me for a moment I will find the drawing that has the voids in it. The first drawing relating to that is page 77 in the book of drawings. It's drawing number SU-CS-10D-0057 and if you look at the plan view on that drawing, you will see the eight octagonal raised sections with the octagonal void actually formed up and taken out of the footing area.
And those features on that drawing 0057 that you've referred to that need to have boxed formwork placed inside them to achieve the void when you're pouring the concrete, they're footings, are they?-- Correct. I believe they are footings.” (T235)
HD Bolts
“HD” refers to “hold down”. Mr Eames’ evidence described the use of holding down bolts. Mr Eames also gave the following evidence:
“When you formed these footings up, is it in the nature of a footing that they would never have a bolt or a fixture cast into them, that was a job for pedestals and things of that nature, was it?-- No, many of those footings had bolts and fixtures cast into them. Some of the footings that had a plinth arrangement on them where the height of the plinth was insufficient to provide a proper embedment for the holding down bolts on top of it, those holding down bolts would actually have to be cast into the footing arrangement at the time of the initial pour. (T238/40-52)
Hydrostatic water relief valve
Mr Howard gave evidence that a hydrostatic water relief valve “was for the relief of water underneath a structure. … It was for the protection of the concrete.” (T470/1-10)
Piers
The piers referred to in section 6.1 of the particulars to the counterclaim related to the construction of footings for the various structures referred to in the remainder of section 6. The piers are listed separately in section 6.1 rather than by reference to the particular structure to which each related.
Piers are concrete columns which were placed into the ground for the purpose of supporting the load of structures positioned above them (see Howard’s evidence at T465/56 – 466/2). The piers differed in length and diameter depending on the size and nature of the load they were required to support.
Poly Moisture Barrier
Mr Howard gave the following evidence:
“Mr Howard, would you describe poly moisture barrier as being a polythene sheeting which is laid down before concrete is poured in order to stop ground water rising into the concrete?-- Not necessarily. The plastic can be used to stop the moisture being leached out of the ground and not sucking the moisture out of the concrete, and it can also be used for water, but not always. Most of the time it is used to stop the concrete from drying on the edge.” (T468/9-16)
Rebate formwork
This is a particular type of formwork used to create an inlet in a concrete structure for the purpose of joining that concrete structure with another section of concrete (see Howard’s evidence at T469/28-31).
Supply & Place Low Heat Concrete
Mr Howard described low heat concrete as being concrete that has been changed so that it generates less heat (T467/1-9)
Templates
A template is a typically a temporary measure used to hold something in place, such as a hold-down bolt, whilst concrete is being poured (see T470/25-30). Mr Eames’ evidence made reference to templates that supported holding down bolts (T372/27).
Waterstop
A waterstop is a means of preventing water transferring through joints, in a water bound structure. (T468/24-26)
The various items set out above are all consistent with the work described by Mr Eames with respect to the construction of footings, pedestals, plinths and the like. It is work consisting of the erection or construction of a building, or any site work (including the construction of retaining structures) related to work of that kind. It includes work for which particular licences are prescribed under the Queensland Building Services Authority Regulation 1992, such as concreting. It is all work which is closely connected to, and necessary for, the construction of fixed structures and so is “building work” within the meaning of the QBSA Act.
Was that work paid for by Stork?
Exhibit 24 (a document created by CCPL) establishes that the work set out in Appendix B was paid for by Stork in the amount of $9,983,796.54.
If the work was paid for, was that payment made by mistake?
Stork called Mr Peter Jewell on this issue. He was “Stork’s representative” for the purposes of the Subcontract but he was not an employee of Stork. He was also the person who was responsible for certifying the payments by Stork to CCPL. His evidence[171] was that:
(a) when he certified those payments, he expected the plaintiff to hold all licences it was required to hold do the contract works within Queensland[172];
(b) if he had discovered that the plaintiff did not hold the licences it was required to hold, he would have taken legal advice and acted in accordance with that advice: “I would have adjusted their payment accordingly in relation to the legal advice I was given”[173]; and
(c) during the course of the Subcontract he did not discover that the plaintiff did not hold any licence that it was supposed to hold[174].
[171]T 649-651.
[172]T 650.
[173]T 650.
[174]T 650.
Mr Jewell was cross-examined[175] on this area:
“Among the many things you might have done is it correct to say that had you discovered that one of your subcontractors was not appropriately licensed under that Act, you nevertheless would have insisted on the subcontractor continuing to perform its work under the subcontract?-- No.
Well, let's look at it from a different angle. Had you discovered that the subcontractor was unlicensed is it your evidence that you would have stopped it then and there from continuing to work under its subcontract?-- Until they were licensed, yes.”
[175]T 655-656.
Stork was, through its representative, mistaken as to its obligation to pay CCPL. It is clear from his evidence that had he discovered that CCPL was unlicensed he would have stopped it from working and taken legal advice.
The defendant has made out its counterclaim.
Conclusion
The schedule attached to these reasons sets out the results of the various findings I have made.
I give judgment on the claim for the plaintiff in the sum of $132,657.70 with interest. On some of the claims on which the plaintiff has succeeded interest will accrue in accordance with the method admitted on the pleadings. The details are:
(a) Road reconstruction $ 14,998.20
(b) Lime stabilization of site roads $ 24,846.80
(c) Asphalt on site roads $ 52,787.70
(d) Ammonia spill standby $ 40,025.00
$132,657.70
I give judgment on the counterclaim for the defendant in the sum of $9,983,796.54 with interest.
I will hear the parties on the calculation of interest and on costs.
Schedule of Claims and Defences
| Claim | Allowed/ dismissed | Does the Prescribed Notice Defence apply? | Does the Lump Sum Contract Defence apply? | Does the QBSA Act Defence apply? | |||
| Yes | No | Yes | No | Yes | No | ||
| Bulk earth works claim | Dismissed | X | X | X | |||
| Road reconstruction claim | Allowed | X | X | X | |||
| Contour Drains claim | Dismissed | X | X | X | |||
| Lime Stabilization of Site Roads claim | Allowed | X | X | X | |||
| Boxing Out for Road works claim | Dismissed | X | X | X | |||
| Asphalt on Site Roads claim | Allowed | X | X | X | |||
| Quantities of Footings Claim | Dismissed | X | X | X | |||
| Pedestal Claim | Dismissed | X | X | X | |||
| Pedestal Reconciliation Claim | Dismissed | X | X | X | |||
| Corrocem claim | Dismissed | X | X | X | |||
| Suspended Slabs claim | Allowed | X | X | X | |||
| Prill Store claim | Allowed | X | X | X | |||
| Crushed Rock to Substations claim | Dismissed | X | X | X | |||
| Ammonia spill standby claim | Allowed | X | X | X | |||
11
13
3