Futurepower Developments Pty Ltd v TJ & RF Fordham Pty Ltd t/as TRN Group

[2019] NSWSC 1554

Supreme Court

New South Wales

Medium Neutral Citation:

Futurepower Developments Pty Ltd v TJ & RF Fordham Pty Ltd t/as TRN Group [2019] NSWSC 1554

Hearing dates:

9, 10, 11, 12, 13 September 2019

Date of orders:

18 October 2019

Decision date:

18 October 2019

Jurisdiction:

Equity - Technology and Construction List

Before:

Rein J

Decision:

See [88].

Catchwords:

BUILDING AND CONSTRUCTION – Contract – Builder reported asbestos contaminated material found on site; variations for removal of the contaminated fill, as well as other variations; owner claims that the person acting as superintendent on the job was not the person contractually agreed to be the superintendent and denies the efficacy of certification and approvals given by that person – Whether owner in breach of contract for failing to ensure the named superintendent acted in that role – Whether variations had to be in writing – Effect of instructions from the owner’s representative to the builder in the presence of the superintendent.

 

BUILDING AND CONSTRUCTION ­­­– Quantum meruit – Where owner instructed builder to remove contaminated fill from the site and builder did so.

 

ESTOPPEL – Estoppel by convention – Mutual assumption – Whether owner estopped from denying that the person acting as superintendent was the superintendent for the purposes of the contract.

CONTRACT – Misleading conduct under statute — Misleading or deceptive conduct – claim under s 18 of the Australian Consumer Law – Where owner claims that the builder engaged in misleading or deceptive conduct in relation to the need to excavate and remove contaminated fill from site; the builder was instructed to remove the fill and to do so in accordance with the advice of an authorised subcontractor approved by the owner.

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999 (NSW)
Competition and Consumer Act 2010 (Cth)
Managing Land Contamination: Planning Guidelines SEPP 55 - Remediation of Land (NSW)
National Environment Protection (Assessment of Site Contamination) Measure 1999 (Cth)
State Environmental Planning Policy No 55 – Remediation of Land (NSW)

Cases Cited:

ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640
Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16; (2012) 201 FCR 173
Alghussein Establishment v Eton College [1988] 1 WLR 587
Amalgamated Investment & Property Co Ltd (in Liq) v Texas Commerce International Bank [1982] QB 84
Bragg v Alam [1981] 1 NSWLR 668
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Commonwealth v Verwayen (1990) 170 CLR 394
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
Express Newspapers plc v News (UK) Ltd [1990] 3 All ER 376; (1990) 18 IPR 201
Fitzgerald v Deloitte Services Pty Ltd [2017] NSWCA 139
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357; (1999) 43 IPR 545
Haros v Linfox [2012] FCAFC 42; (2012) 219 IR 177
Hotham v East India Co (1787) 1 TR 638 ; 99 ER 1295
Jones v Dunkel (1959) 101 CLR 298
Liebe v Molloy (1906) 4 CLR 347
Mackay v Dick (1881) 6 App Cas 251
Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211; (2008) 38 WAR 276
Melbourne Harbour Trust Commissioners v Hancock (1927) 39 CLR 570
Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Peter Turnbull & Co Pty Ltd v Mundus Trading Co (A/asia) Pty Ltd (1954) 90 CLR 235
Plaza Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2010] NSWSC 1426
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Ruthol Pty Ltd v Tricon (Australia) [2005] NSWCA 443
Ryledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603
Sprague v Booth [1909] AC 576
The “Indian Grace” (No 2) [1998] AC 878
Wegan Constructions Pty Ltd v Wadonga Sewerage Authority [1978] VR 67; (1977) 36 LGRA 147

Texts Cited:

H. G. Beale (ed), Chitty on Contract (Thomson Reuters, 33rd ed, 2018)
J. W. Carter, Contract Law in Australia (LexisNexis Butterworths, 6th ed, 2013)

Category:

Principal judgment

Parties:

Futurepower Developments Pty Ltd (Plaintiff)
TJ & RF Fordham Pty Ltd t/as TRN Group (Defendant)

Representation:

Counsel:
Mr T. Hale SC with Mr D. Robertson (Plaintiff)
Mr F. Hicks SC with Ms A. Carr (Defendant)

  Solicitors:
Vaughn Zarb & Co (Plaintiff)
Moray & Agnew Lawyers (Defendant)

File Number(s):

2016/195001

Publication restriction:

Nil

Judgment

1. These proceedings concern a building contract (“the Contract”) entered into by the Plaintiff (“Futurepower”) and the Defendant (“TRN”) on 12 June 2015, in respect of roads and drainage works to be carried out by TRN at a site in Edmondson Park NSW (“the Site”). Mr T. Hale SC with Mr D. Robertson appears for Futurepower and Mr F. Hicks SC with Ms A. Carr appears for TRN.

2. The works were completed in September 2016. The Contract specified a period of 15 weeks for the work.

3. The original contract sum was $899,000, but with variations the sum claimed expanded to $1,399,596.73: see CB A9:3580 (note that “CB” stands for Court Book and A9 refers to the Exhibit number of that volume of the CB).

4. Futurepower did not pay all of the monies claimed under the Contract and TRN issued two payment claims pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOPA”) to Futurepower in respect of which two adjudication amounts were awarded to TRN. The first adjudication determination was given on 1 June 2016 and the second determination on 4 August 2017. Following the adjudications, Futurepower paid all the monies specified in the respective adjudication amounts, a total of $922,622.12. TRN has therefore been paid all of the money to which it claimed to be entitled, save for $24,723.68 (inclusive of GST) which Futurepower has retained and which TRN seeks to recover by its Cross Claim.

5. In these proceedings, Futurepower seeks to recover from TRN the amounts paid for variations V01, V03, V09, V10, V11, V12, V13, V15 and V16. Of these, the largest and most significant is V01, which I shall refer to as the “Fill Removal Variation”. I shall refer to the other variations still in dispute as the “Miscellaneous Variations”. The Fill Removal Variation was certified at $330,735 and the Miscellaneous Variations totalled $93,131. Futurepower also advances against TRN a claim for liquidated damages based on alleged delay by TRN. The Contract provides for liquidated damages of $500 per day for delay beyond the contracted period. Futurepower claims $500 per day for 325 days, i.e. $162,500. I shall refer to this as the “Liquidated Damages Claim”. In the alternative, Futurepower claims nine days at $500, i.e. $4,500 – this being based on a certified extension of time to 26 August 2016 and a date of Practical Completion of 2 September 2016: see CB A9:3551.

6. Futurepower puts as the basis for recovery of all of its claims, including the Fill Removal Variation, the alleged failure by TRN to abide by the Contract’s terms. In relation to the Fill Removal Variation, it has a second and discrete basis, namely that it claims that TRN engaged in misleading or deceptive conduct within the meaning of s 18 of the Australian Consumer Law (sch 2 of the Competition and Consumer Act 2010 (Cth) (“ACL”). I shall defer detailing the bases of these claims until I have set out the facts.

7. I shall endeavour to summarise in this section the largely uncontested facts, most of which are taken from the Plaintiff’s Closing Submissions (“PCS”) and the Defendant’s Closing Submissions (“DCS”), both of 13 September 2019:

1. In about 2009, Mrs Angela Carbone purchased the land at Lot 33 Jardine Drive, Edmondson Park NSW. The Site was approximately 2.05 hectares (5 acres or 20,500 m2) in size. At the time of its purchase, the Site was semi-rural land upon which were constructed a fibro residential dwelling, associated outbuildings and sheds, and a market garden.

2. In about December 2014, Mrs Carbone obtained development consent from Liverpool City Council to subdivide the Site into 37 residential lots and to carry out associated road and drainage works, and to demolish the existing structures on the Site.

3. Futurepower was appointed by Mrs Carbone to manage the development of the Site. Mrs Carbone was the sole director and shareholder of Futurepower. However, at all relevant times, Mrs Carbone’s husband, Domenic Carbone (and not Mrs Carbone), acted on behalf of Futurepower. Mr Carbone is a solicitor and, indeed, he acted as solicitor for Futurepower in these proceedings until November 2017.

4. On about 14 March 2014, Futurepower engaged North Western Surveys Pty Ltd (“NWS”) to act as its surveyors and project managers on the development project: see Affidavit of Mr Carbone dated 16 May 2017 at para 45.

5. The Contract between Futurepower and NWS provided that, inter alia, NWS’s work would include “supervision of construction and contract administration, processing of claims and variations”: CB A2:531.

6. In order to obtain development consent for the residential subdivision, the Plaintiff retained Geotest Services (“Geotest”) to carry out a preliminary site investigation, as required by cl 7 of the State Environmental Planning Policy No 55 – Remediation of Land (NSW) (“SEPP 55”) and the Managing Land Contamination: Planning Guidelines SEPP 55 - Remediation of Land(NSW).

7. On about 27 March 2014, Mr David Spasojevic of Geotest prepared a Preliminary & Detailed Site Investigation Report in respect of the Site (the “Geotest Site Report”): see CB A2:422-527. The Geotest Site Report was provided to, and was apparently commissioned by, Mr Carbone (CB A2:423). The Geotest Site Report was based on, inter alia, a visual inspection of the Site and soil testing across the Site.

8. The Geotest Site Report made the following findings about possible contamination on the Site:

1. From the visual inspection, two areas of the property were identified as containing areas of fill impacted by suspected asbestos containing materials (based on field observations and test pits): see Figures 2 and 3 of the Geotest Site Report. These areas were near the centre of the Site, near the eastern boundary, and were described as:

1. Table top jump with uncontrolled fill material, “PACM” (i.e. Possible Asbestos Containing Material) observed on surface (Area 4); and

2. Earth berm PACM observed in fill (Area 4).

2. As for the soil testing across the Site, of the 32 sampling points established on the Site, only one test pit returned a positive result for the presence of asbestos (being PACM1/ASB01): see Figure 3 of the Geotest Site Report. This area was near the centre of the property, on the eastern boundary, in the area described as “Table top jump with uncontrolled fill material, PACM observed on surface” (Area 4).

9. The Geotest Site Report stated:

"asbestos was reported at a number of locations” and "remediation is required at the site prior to it being considered suitable for future residential land-uses from a contamination perspective” (CB A2:423, 448).

10. The Geotest Site Report recommended:

1. That a Remediation Action Plan (“RAP”) be prepared (CB A2:423, 444);

2. Excavation to stockpile un-controlled fill in Areas 2 and 4 (CB A2:423);

3. Excavation to stockpile fill in Area 4 - fill identified and shown to contain asbestos impacts (CB A2:424, 441);

4. The septic tank be removed and inspected by an environmental consultant (CB A2:444);

5. That any soils identified during civil construction work, including asbestos:

“should be segregated for further assessment and characterisation by an appropriately experienced environmental consultant” (CB A2:443).

11. The Geotest Site Report stated that during a Site walkover, it was observed that there were a number of stockpiles of both demolition rubble and domestic waste where the presence of asbestos could not be discounted (CB A2:431).

12. The Plaintiff contracted Affordable Demolition Excavations Pty Ltd (“Affordable Demolition”) to demolish the dwelling, outbuildings and sheds on the Site: see Affidavit of Mr Carbone dated 16 May 2017 at paras 12-14. Affordable Demolition was a licensed asbestos removalist. The principal of Affordable Demolition was Mr Charlie Boutros.

13. Affordable Demolition carried out the demolition work at the Site over approximately 3 weeks in about January and February 2015.

14. At the conclusion of the demolition works, Geotest was engaged to carry out a clearance inspection of the area of the Site where the residential dwelling and other improvements had been constructed. That area was approximately 1,100 m2 in size, in the south-eastern area of the Site. The clearance inspection involved a visual inspection of the area and soil sampling of the area.

15. Following these inspections, on about 19 March 2015 Mr Alan Halpin of Geotest prepared a Clearance Inspection Report for the area of the Site where the residential dwelling and other improvements had been constructed prior to their demolition (“Clearance Report”) (CB A3:931), which found that:

1. No asbestos containing materials were identified during the inspection on 17 March 2015 in the part of the Site where the demolition works had taken place; and

2. No asbestos was detected in any of the soil samples submitted for laboratory analysis, those samples having been taken from the part of the Site where the demolition works had taken place.

16. The Geotest Clearance Report, however, was qualified as follows:

1. On or about 10 March 2015, Alan Halpin of Geotest emailed Mr Harding advising that he had:

"attended site at 30 Jardine Drive to conduct an inspection of the demolition area. While the demolition of structures may be complete at the site, there is a significant amount of fragmented Potentially Asbestos Containing Material remaining on the soil surface across the building footprints” (CB A3:925-926).

2. Mr Halpin's email was forwarded to Mr Carbone on the same day at 4.53 pm, at which time Mr Harding stated:

"Demolition and remediation works need to be completed thoroughly to minimise any additional cost or time" (CB A3:927).

3. On or about 19 March 2015, Mr Halpin prepared a Clearance Certificate in respect of the area where the buildings were demolished. The investigation area was limited to the south-eastern boundary of the Site (CB A3:932, 935, 938). The certificate expressly stated that it did not apply to the Site in its entirety, and was “an interim-validation report for the investigated areas only.” (CB A3:935).

17. On about 7 April 2015, Liverpool Council issued a construction certificate for the Site. This was done after the Clearance Report had been submitted to Council for its review: CB A3:1030.

18. On about 31 March 2015, Mrs Carbone entered into a deed with the owner of adjoining Lot 32, King of the Nile Pty Ltd (“King of the Nile”), pursuant to which Mrs Carbone granted King of the Nile the right to enter Lot 33 to carry out works, including the construction of a sewer line and temporary drainage works on Lot 33: CB A3:1031-1068.

19. TRN was contracted to carry out the works on the Site under the terms of the deed with King of the Nile. The Defendant carried out those works in about April and May 2015 (after the demolition of the structures on the Site, as detailed above): see Affidavit of Mr Carbone dated 16 May 2017 at paras 58-59. These works were not part of the Contract presently under consideration.

20. TRN commenced excavation and clearing of the Site on about 7 July 2015: see Affidavit of Mr Comerford dated 29 June 2018 at paras 27 and 37.

21. On 8 July 2015, employees of TRN found a septic tank that required removal and Mr Comerford sent an email to Mr Harding of NWS (see CB A4:1439) in which he said:

“Dean has found an existing Septic tank which will require removal. Can you instruct us in this matter.”

22. On 9 July 2015, Mr Carbone advised Mr Harding that the Defendant was authorised to remove the septic tank: see Affidavit of Mr Carbone dated 16 May 2017 at para 81 and CB A4:1446.

23. On 9 July 2015 Mr Comerford observed demolition waste and asbestos fragments around the septic tank. He organised three to four test pits to be dug approximately five metres from the septic tank and on the following day he observed uncontrolled fill and asbestos fragments. He directed Mr O’Neill of TRN to dig three to four test pits approximately five metres from the septic tank excavation: see para 79 of Mr Comerford’s Affidavit of 29 June 2018, Exhibit 3, p 13. He arranged to meet with Mr Harding on 10 July 2015 and showed him what he thought were asbestos fragments (Exhibit 3, p.13-14). They had the following conversation:

“Mr Harding: ‘It looks like this Site is contaminated with asbestos. You should organise a meeting onsite with EMS and PEA [who are environmental and asbestos consultants I had worked with on the adjacent site with TRN].’

I said: ‘OK, I’ll contact them. You should organise to get the client down here so we can get a direction.”

Mr Harding: ‘OK.’”

24. On 10 July 2015, Mr Harding of NWS sent an email to Mr Carbone (CB A4:1452-1455), which included the following:

“As discussed yesterday, TRN have come across areas of uncontrolled fill and asbestos in your subdivision at Jardine Drive. I have attached a couple of photos for your review.

I have attached a plan which shows the area of concern which is littered with asbestos, bricks and fibre sheets…

All uncontrolled fill and fill containing asbestos will need to be removed off site. I expect this exercise to cost roughly $100,000 … TRN are going to undertake test digs to quantify the area and will stockpile for removal.”

25. Between 10 and 14 July 2015, Mr Comerford contacted Mr Jason Kennett of Enviromanage Systems Pty Ltd (“EMS”) and Mr Stephen Smith of Pacific Environmental Australia Pty Ltd (“PEA”), seeking details of their rates. PEA is an environmental consulting firm and EMS is a specialised demolition remediation and waste management contractor holding licenses to handle asbestos (see paras 8-12 of Mr Kennett’s Affidavit of 8 February 2019, Exhibit 3, p. 53). Mr Smith attended the Site on 14 July 2015. Mr Kennett attended the Site on one day around this time.

26. On 13 July 2015, Mr Comerford informed Mr Harding that TRN would organise “potholing” and that TRN would: “not progress the works further till I confirm rates from EMS and Pacific Environmental and have approval to proceed” (see CB A4:1463 – the email had the heading “asbestos”). TRN subsequently dug potholes in the region of concern: see Exhibit 2, Mr Comerford’s Affidavit of 29 June 2018 at 89 and 99, and T282.1-47.

27. On 13 July 2015 Mr Halpin of Geotest was on Site. A document appears to have been created by him which confirmed the presence of asbestos, or at least material thought to be asbestos, as at that date. I shall refer to this as the “Geotest Document”, although Futurepower objected to it remaining in the Court Book and does not accept that any weight can be placed upon it.

28. On 14 July 2015, by email sent at 8.46 am, Mr Harding advised Mr Carbone that the “contamination at Jardine Dr is substantial” (CB A4:1464).

29. On 14 July 2015 Mr Harding, Mr Comerford and Mr Smith met on Site. I will return to the details of this meeting below.

30. Later that morning at 11.36 am, Mr Harding informed Mr Comerford that he had:

“... obtained a copy of the initial contam [sic] report from Geotest, please see attached plan which clearly identifies further asbestos contamination. Although the area which we were looking at today is not shown.

Whilst the boys are pot holing, might be best to have the blue areas on the attached plan pot holed also ...” (CB A4:1488-1489).

31. The plan attached to Mr Harding's email of 11.36 am was a map prepared by Geotest which showed further details about asbestos contaminated material beyond the details shown on the map prepared on 24 March 2014 (CB A3:448, A10:3676).

32. On 14 July 2015 EMS sent a notice concerning asbestos to Workcover (“the Workcover Notice”): CB A4:1479. It contained a description of the asbestos as “About 50 Small Fragments Of Asbestos In Soil”, the location being “Right In The Middle Of The Property.”

31. On 15 July 2015, Mr Comerford provided Mr Harding with pricing from EMS and PEA for "load, dispose and validation" (CB A4:1507, 1512). Those rates were forwarded by Mr Harding to Mr Carbone on 16 July 2015 (CB A4:1520).

32. On 21 July 2015 there was a meeting on Site which Mr Harding, Mr Comerford and Mr Carbone attended. It is an important meeting about which there is a significant dispute.

33. The diary note of Mr Harding of the meeting is in evidence (CB 1525). It says:

“Meeting DC / TRN / EMS

TRN to provide rates for removal

Fill to be removed offsite (unsuitable)

Steve Smith to be appointed by TRN

TRN to manage”

The reference to “DC” appears to be to Mr Carbone, as TRN is separately mentioned: see T385.10-41.

36. On 22 July 2015, EMS recorded in its Daily Field Report the direction to proceed to stockpile and remove the asbestos contaminated material. The removal from the ground and stockpiling commenced on 22 July 2015 and was completed on 23 July 2015 (CB A4:1534, 1541).

37. On 4 August 2015, the material stockpiled was the subject of a survey which recorded that the volume of asbestos contaminated material was 718 m3 (CB A5:1650, 1653). Mr Comerford advised Mr Harding that TRN would try to “dry the material prior to disposal to reduce the weight.”

38. On 10 August 2019, Mr O'Neill, an employee of the Defendant, advised that the stockpiles needed to be moved so that the earthworks could continue at the Site and asked (CB A5:1804):

“Can you confirm we can go ahead with the asbestos removal.”

39. Mr Harding then gave written instruction for the removal of the stockpiled fill by email on 10 August 2015 (CB A5:1805):

“Please proceed with the removal. Please issue all dockets and relevant substantiation for your progress claims.”

40. On 12 August 2015, 1,191.2 tonnes of fill was removed from the Site (CB A5:1832, 1833, 1873-1874, 1875, 1876, 1877).

41. On 31 August 2015, Mr Comerford advised Mr Harding that the balance of the stockpile, which had been drying out to dispel hydrocarbons and reduce weight, was to be removed (CB A6:2278).

42. On 2 September 2015, EMS removed a further 236.24 tonnes (8 loads) of fill from the Site (CB A6:2281-2294). These works were the subject of Payment Claim No. 2 dated 31 August 2015 (CB A6:2297). A very considerable portion of the total cost of V01 was the amounts paid for haulage, i.e. $306,519 (see CB A7:2449).

43. The claim for the removal of the excavated fill was subsequently accepted and certified by Mr Harding, signing as Superintendent (CB A6:2300-2301, 2361).

44. TRN continued to carry out its work under the Contract. It advised of a number of variations (orally) and sought instructions from Mr Harding, which instructions were given.

45. Mr Harding approved all of the Miscellaneous Variations and certified that the work had been carried out by TRN for the value claimed: see CB A9:3579.

46. Mr Harding also granted extensions of time that were claimed by TRN – mainly for wet weather but also due to the excavation of the septic tank and fill, taking the Date for Completion to 24 August 2016: CB A9:3481.

47. On 6 September 2016 Mr Harding issued a Notice of Practical Completion specifying the Date for Completion as 2 September 2016: CB A9:3553.

8. The Contract contains the following clauses of relevance:

“1 Interpretation and construction of Contract

[…]

certificate of practical completion has the meaning in subclause 34.6;

[…]

date for practical completion means:

a) where Item 7(a) provides for practical completion, the date;

b) where Item 7(b) provides a period of time for practical completion, the last day of the period,

but if any EOT for practical completion is directed by the Superintendent or allowed in any arbitration or litigation, it means the date resulting therefrom;

date of practical completion means:

a) the date evidenced in a certificate of practical completion as the date upon which practical completion was reached; or

b) where another date is determined or litigation as the date upon which practical completion was reached, that other date;

[…]

final certificate has the meaning in subclause 74.4;

[…]

practical completion is that stage in the carrying out and completion of WUC when:

a) the Works are complete except for minor defects:

i) which do not prevent the Works from being reasonably capable of being used for their stated purpose;

ii) which the Superintendent determines the Contractor has reasonable grounds for not promptly rectifying; and

iii) the rectification of which will not prejudice the convenient use of the Works;

[…]

progress certificate has the meaning in subclause 37.2;

[…]

schedule of rates means any schedule included in the Contract which, in respect of any section or work to be carried out, shows the rate or respective rates of payment for the execution of the work and which may also include lump sums, provisional sums, other sums, quantities and prices;

[…]

Superintendent means the person stated in Item 5 as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent and notified as such in writing to the Contractor by the Principal and, so far as concerns the functions exercisable by a Superintendent’s Representative, includes a Superintendent’s Representative;

Superintendent’s Representative means an individual appointed in writing the Superintendent under clause 21;

[…]

20 Superintendent

The Principal shall ensure that at all times there is a Superintendent, and that the Superintendent fulfils all aspects of the role and functions reasonably and in good faith.

Except where the Contract otherwise provides, the Superintendent may give a direction orally but shall as soon as practicable confirm it in writing. If the Contractor in writing requests the Superintendent to confirm an oral direction, the Contractor shall not be bound to comply with the direction until the Superintendent does so.

21 Superintendent’s Representative

The Superintendent may from time to time appoint individuals to exercise delegated Superintendent’s functions, provided that:

[…]

c) the Superintendent forthwith gives the Contractor written notice of respectively;

i) the appointment, including the Superintendent’s Representative’s name and delegated functions; and

ii) the termination of each appointment;

[…]

25 Latent Conditions

25.1 Scope

Latent conditions are physical conditions on the site and its near surrounds, including artificial things but excluding weather conditions, which differ materially from the physical conditions which should reasonably have been anticipated by a competent Contractor at the time of the Contractor’s tender if the Contractor had inspected:

a) all written information made available by the Principal to the

Contractor for the purpose of tendering;

b) all information influencing the risk allocation in the Contractor’s tender and reasonably obtainable by the making of reasonable enquiries; and

c) the site and its near surrounds.

25.2 Notification

The Contractor, upon becoming aware of a latent condition while carrying out WUC, shall promptly, and where possible before the latent condition is disturbed, give the Superintendent written notice of the general nature thereof.

If required by the Superintendent promptly after receiving that notice, the Contractor shall, as soon as practicable, give the Superintendent a written statement of:

a) the latent condition encountered and the respects in which it differs materially;

b) the additional work, resources, time and cost which the Contractor estimates to be necessary to deal with the latent condition; and

c) other details reasonably required by the Superintendent.

25.3 Deemed variation

The effect of the latent condition shall be a deemed variation, priced having no regard to additional cost incurred more than 28 days before the date on which the Contractor gave the notice required by the first paragraph of subclause 25.2 but so as to include the Contractor’s other costs for each compliance with subclause 25.2.

34 Time and progress

34.1 Progress

The Contractor shall ensure that WUC reaches practical completion by the date for practical completion.

34.2 Notice of delay

A party becoming aware of anything which will probably cause delay to WUC shall promptly give the Superintendent and the other party written notice of that cause and the estimated delay.

34.3 Claim

The Contractor shall be entitled to such extension of time for carrying out WUC (including reaching practical completion) as the Superintendent assesses (‘EOT’), if:

a) the Contractor is or will be delayed in reaching practical completion by a qualifying cause of delay, and

b) the Contractor gives the Superintendent, within 28 days of when the Contractor should reasonably have become aware of that causation occurring, a written claim for an EOT evidencing the facts of causation and of the delay to WUC (including extent).

If further delay results from a qualifying cause of delay evidenced in a claim under paragraph (b) of this subclause, the Contractor shall claim an EOT for such delay by promptly giving the Superintendent a written claim evidencing the facts of that delay.

[…]

34.5 Extension of time

Within 28 days after receiving the Contractor’s claim for an EOT, the Superintendent shall give to the Contractor and the Principal a written direction evidencing the EOT so assessed. If the Superintendent does not do so, there shall be a deemed assessment and direction for an EOT as claimed.

Notwithstanding that the Contractor is not entitled to or has not claimed an EOT, the Superintendent may at any time and from time to time before issuing the final certificate direct an EOT.

34.6 Practical completion

The Contractor shall give the Superintendent at least 14 days written notice of the date upon which the Contractor anticipates that practical completion will be reached.

When the Contractor is of the opinion that practical completion has been reached, the Contractor shall in writing request the Superintendent to issue a Certificate of practical completion. Within 14 days after receiving the request, the Superintendent shall give the Contractor and the Principal either a certificate of practical completion evidencing the date of practical completion or written reasons for not doing so.

If the Superintendent is of the opinion that practical completion has been reached, the Superintendent may issue a certificate of practical completion even though no request has been made.

34.7 Liquidated damages

If WVC does not reach practical completion by the date for practical completion, the Superintendent shall certify, as due and payable to the Principal, liquidated damages in Item 24 for every day after the date for practical completion to and including the earliest of the date of practical completion or termination of the Contract or the Principal taking WUC out of the hands of the Contractor.

If an EOT is directed after the Contractor has paid or the Principal has set off liquidated damages, the Principal shall forthwith repay to the Contractor such of those liquidated damages as represent the days the subject of the EOT.

36 Variations

36.1 Directing variations

The Contractor shall not vary WUC except as directed in writing.

The Superintendent, before the date of practical completion, may direct the Contractor to vary WUC by any one or more of the following which is nevertheless of a character and extent contemplated by, and capable of being carried out under, the provisions of the Contract:

a) increase, decrease or omit any part;

b) change the character or quality;

c) change the levels, lines, positions or dimensions;

d) carry out additional work;

e) demolish or remove material or work no longer required by the Principal.

36.2 Proposed variations

The Superintendent may give the Contractor written notice of proposed variation.

The Contractor shall as soon as practicable after receiving such notice, notify the Superintendent whether the proposed variation can be effected, together with, if it can be effected, the Contractor’s estimate of the:

a) effect on the construction program (including the date for practical completion); and

b) cost (including all time-related costs, if any) of the proposed variation.

The Superintendent may direct the Contractor to give a detailed quotation for the proposed variation supported by measurements or other evidence of cost.

The Contractor’s costs for each compliance with this subclause shall be certified by the Superintendent as moneys due to the Contractor.

36.3 Variations for convenience of contractor

If the Contractor requests the Superintendent to direct a variation for the convenience of the Contractor, the Superintendent may do so. The direction shall be written and may be conditional. Unless the direction provides otherwise, the Contractor shall be entitled to neither extra time nor extra money.

36.4 Pricing

The Superintendent shall, as soon as possible, price each variation using the following order of precedence:

a) prior agreement;

b) applicable rates or prices in the Contract;

c) rates or prices in a priced bill of quantities, schedule of rates or schedule of prices, even though not Contract documents, to the extent that it is reasonable to use them; and

d) reasonable rates or prices, which shall include a reasonable amount for profit and overheads,

and any deductions shall include a reasonable amount for profit but not overheads.

That price shall be added to or deducted from the contract sum.

37 Payment

37.1 Progress Claims

The Contractor shall claim payment progressively in accordance with Item 28.

An early progress claim shall be deemed to have been made on the date for making that claim.

Each progress claim shall be given in writing to the Superintendent and shall include details of the value of WUC done and may include details of other moneys then due to the Contractor pursuant to provisions of the Contract.

37.2 Certificates

The Superintendent shall, within 14 days after receiving such a progress claim, issue to the Principal and the Contractor:

a) a progress certificate evidencing the Superintendent’s opinion of the moneys due from the Principal to the Contractor pursuant to the progress claim and reasons for any difference (“progress certificate”); and

b) a certificate evidencing the Superintendent’s assessment of retention moneys and moneys due from the Contractor to the Principal pursuant to the Contract.

If the Contractor does not make a progress claim in accordance with is Item 28, the Superintendent may issue the progress certificate with details of the calculations and shall issue the certificate in paragraph (b).

If the Superintendent does not issue the progress certificate within 14 days of receiving a progress claim in accordance with subclause 37.1, that progress claim shall be deemed to be the relevant progress certificate.

The Principal shall within 7 days after receiving both such certificates, or within 21 days after the Superintendent receives the progress claim, pay to the Contractor the balance of the progress certificate after deducting retention moneys and setting off such of the certificate in paragraph (b) as the Principal elects to set off. If that setting off produces a negative 25 balance, the Contractor shall pay that balance to the Principal within 7 days of receiving written notice thereof.

Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only.

[…]

41 Notification of claims

41.1 Communication of claims

The prescribed notice is a written notice of the general basis and quantum of the claim.

As soon as practicable after a party becomes aware of any claim in connection with the subject matter of the Contract, that party shall give to the other party and to the Superintendent the prescribed notice or a notice of dispute under subclause 42.1.

This subclause and subclause 41.3 shall not apply to any claim, including a claim for payment (except for claims which would, other than for this subclause, have been included in the final payment claim), the communication of which is required by another provision of the Contract.

41.2 Liability for failure to communicate

The failure of a party to comply with the provisions of subclause 41.1 or to communicate a claim in accordance with the relevant provision of the Contract shall, inter alia, entitle the other party to damages for breach of Contract but shall neither bar nor invalidate the claim.

41.3 Superintendent's decision

If within 28 days of giving the prescribed notice the party giving it does not notify the other party and the Superintendent of particulars of the claim, the prescribed notice shall be deemed to be the claim.

Within 56 days of receipt of the prescribed notice the Superintendent shall assess the claim and notify the parties in writing of the decision. Unless a party within a further 28 days of such notification gives a notice of dispute under subclause 42.1 which includes such decision, the Superintendent shall certify the amount of that assessment to be moneys then due and payable.”

9. At Item 5 of Part A (an annexure to the Contract) the Superintendent is specified as:

“North Western Surveys Pty Ltd…………………………

John Attard…………………………………………………”

10. In April 2016 Mr Carbone corresponded with Mr Harding in respect of the Fill Removal Variation. This correspondence was part of the Court Book prepared on behalf of Futurepower but then objected to by Mr Hale (see T114 – T118) on the basis that the document was written long after the removal of fill, was hearsay, self-serving and prejudicial in nature, and I indicated that I would admit the document over Futurepower’s objection and give my formal reasons for that decision at a later time. In my view, the documents are at the very least relevant to the issue of whether Mr Harding was misled by anything said or done by TRN. They are also, as it happens, relevant as to Mr Carbone’s understanding of Mr Harding’s role and indirectly on the question of whether Mr Carbone gave instructions to Mr Comerford on 21 July 2015. The idea that Futurepower could mount a case that Mr Harding was misled by TRN, not call Mr Harding and then object to evidence of what Mr Harding said eight months later is surprising to say the least.

11. Before dealing with the more contentious evidence, I shall now seek to detail Futurepower’s case, which has these elements:

1. The Contract specifies Mr John Attard as the Superintendent. Both Mr Attard and Mr Harding are employees of NWS but Mr Harding was not nominated as the Superintendent and he was never appointed by Futurepower or NWS as the Superintendent.

2. Since Mr Harding was not the Superintendent, none of his approvals, directions or certificates have any force or relevance.

3. The Contract requires variations to be communicated in writing and approved in writing – the variations in dispute were not the subject of written notice or direction.

4. In respect of the Fill Removal Variation, TRN engaged in misleading or deceptive conduct which led Mr Harding to agree to the Fill Removal Variation. In submissions Mr Hale contended that this claim must be viewed as a claim in the alternative.

12. With respect to Mr Hale’s characterisation of the misleading or deceptive conduct claim as an alternative submission, Mr Hicks contends that that is not how it was put in Futurepower’s List Statement, having regard to para 23 of the List Statement in which Futurepower asserts that:

“In reliance on the Representations, Mr Harding issued a written email instruction to TRN of 10 August 2015 to proceed with the proposed removal of soil from the Site and for the cost to be submitted as part of TRN’s progress claims under the Contract.”

I think that there is considerable force in Mr Hicks’ submission.

The Misleading or Deceptive Conduct Case

13. Asbestos can be characterised as friable or non-friable. The most common type of asbestos soil contamination in Australia is non-friable bonded forms of asbestos containing material in cement sheeting and cement building products: see sch B1 of the National Environment Protection (Assessment of Site Contamination) Measure 1999 (Cth) (“the NEPM Guidelines”) CB A1:45. Friable asbestos includes severely weathered cement sheeting, insulation products and woven asbestos material: CB A1:47.

13. Mr Hale in closing oral submissions (see T365.13 – 373.29) identified the conduct which is said to have misled Mr Harding as:

1. The email of 4 August 2015 from Mr Comerford to Mr Harding (“the Volume Email”) stating:

“There is approximately 718 m3 of asbestos contaminated material in stockpile at Lot 33” (see CB A5:1653 – Mr Hale referred to CB A5:1650 but that was the same information being sent to Mr Comerford).

2. The email of 15 July 2015 (CB A4:1507) from Mr Comerford to Mr Harding in which he set out the pricing for load, disposal and validation for Lot 33 (“the Rates Email”).

3. What Mr Comerford said at T280.13-16 in response to Mr Hale’s question:

“Q. I understand that, but as at that date it was your intention, subject to getting instructions from Mr Carbone, to strip the affected area, stockpile then load out?

A. Yes.”

The date referred to there was 15 July 2015: T279.40.

4. CB A5:1804-1805 – Mr O’Neill sought approval to: “go ahead with the asbestos removal”, which Mr Comerford sent to Mr Harding and on the same day Mr Harding replied:

“Please proceed with removal. Please issue all dockets and relevant substantiation for your progress claims. If you have any queries, please don’t hesitate to contact me at any time” (CB A5:1805).

5. CB A4:1452, which is an email sent by Mr Harding to Mr Carbone on 10 July 2015 and which is in the following terms:

“Domenic,

As discussed yesterday, TRN have come across areas of uncontrolled fill and asbestos in your subdivision at Jardine Drive. I have attached a couple of photos for your review.

I have attached a plan which shows the area of concern which is littered with asbestos, bricks and fibre sheets.

After reviewing the validation report, the area of concern is outside of the test bores identified. It appears the demolition contractor or someone else has imported the fill which was contaminated with asbestos and was uncontrolled.

All uncontrolled fill and fill containing asbestos will need to be removed off site. I expect this exercise to cost roughly $100,000 given TRN located a similar sized hot spot within the Crownland subdivision next door. TRN are going to undertake test digs to quantify the area and will stockpile for removal.

Once the area has been identified, we will meet onsite to review and confirm.

We envisage a site meeting next Wednesday next week, first thing in the morning, please pencil this in your diary.

If you have any queries, please don’t hesitate to contact me at any time.

Regards,

Shane Harding”

6. That Mr Comerford informed Mr Harding that the material on Site had to be removed (see T373.15-21):

“…by conduct and specific words that there was asbestos on the site in such concentration as necessitated the remediation action that was in fact taken. That is to say, the scraping, the excavation, the stockpiling and the removal.”

15. I have mentioned three meetings on Site – 10 July 2015 (see [7](23) above), 14 July 2015 and 21 July 2015. The 10 July meeting was attended by Mr Harding and Mr Comerford. The 14 July meeting was attended by Mr Harding, Mr Comerford and Mr Smith. The 21 July 2015 meeting was attended by Mr Carbone, Mr Harding and Mr Comerford. Both Mr Comerford and Mr Smith provided affidavits and were cross examined. Mr Harding was not called by either side. TRN draws attention to the fact that whether or not Mr Harding is to be treated as the Superintendent under the Contract (a matter to which I shall return), NWS was at all times acting as the agent of Futurepower and Mr Harding was the employee who at all relevant times was engaged in the development for Futurepower, at the very least as project manager. Mr Hicks submits that a Jones v Dunkel (1959) 101 CLR 298 inference should be drawn against Futurepower – i.e. that Mr Harding’s evidence, if he had been called, would not have assisted Futurepower’s case.

16. I accept this submission, but the failure of Futurepower to call Mr Harding is even starker in this matter and goes beyond a Jones v Dunkel issue because it is Futurepower’s case that it was Mr Harding who was misled by TRN’s conduct.

17. I thought that each of the witnesses called by TRN (namely, Mr Comerford, Mr Smith and Mr Kennett) were entirely credible. I have no hesitation in accepting them as witnesses of truth. Mr Comerford agreed that his recollection now of events occurring four years ago without the benefit of notes is far from perfect, and that he was, for example, relying on the emails that he sent or received to help him piece together the history of what occurred (see, for example, T261 – T263), which is hardly surprising. Mr Beard, an expert called by TRN in its quantum meruit claim, was not required for cross examination and there was no evidence relied on by Futurepower in answer to Mr Beard’s report.

18. Mr Boutros and Mr Wong were witnesses of Futurepower who were not required for cross examination (after Counsel for Futurepower advised that parts of their affidavits were not relied upon). Mr Boutros said that when he finished demolition of the structures on Site in April 2015 he did not observe any asbestos fragments. Mr Tran was cross examined but I have no reason to doubt his honesty either. Mr Carbone, the principal witness for Futurepower, was cross examined and I shall deal with his credibility separately. Mr Carl Strautins, a specialist in asbestos remediation was called by Futurepower and cross examined. TRN objected to receipt of his report on the basis that it was entirely irrelevant. I admitted the report notwithstanding my tentative view that it was not relevant, and I shall deal with his report later.

19. Mr Smith says of the 14 July Site visit at para 17 of his Affidavit of 2 July 2018:

“17. On 14 July 2015, I walked over the southern end of the Site for approximately 40 minutes. As I walked around the Site I observed:

a) The primary location of the most asbestos contamination was in the middle of the southern and south-eastern part of the site that were clearly visible to the naked eye.

b) The asbestos was present in grass and buried along the boundary with an adjoining house. The asbestos fragments were also clearly visible to the naked eye and present in the potholes.

c) The asbestos fragments contained fibre bundles which I observed were visible to the naked eye.”

20. Mr Comerford says of the 14 July Site visit at paras 89-99 of his Affidavit of 29 June 2018:

“Meeting on 14 July 2015

89. On or about Tuesday, 14 July 2015, I attended a meeting with TRN’s contaminated land consultant, Steve Smith (Mr Smith) of Pacific Environmental Australia Pty Ltd (PEA) and Mr Harding at the Site. The purpose of the meeting was to observe the area that had been potholed and inspect the material in the excavations. It was my intention to have Mr Smith confirm whether there was presence of asbestos material and, if so, how to deal with it. Mr Smith had been engaged by TRN on adjacent sites to the Project as we had encountered asbestos contaminated soils on those sites also.

90. While waiting for the other parties to arrive at the meeting, I walked around the Site with Mr O’Neill. I observed asbestos fragments in the topsoil stripped off the drainage line and stockpiled along the eastern boundary. The drainage line work on the south eastern boundary had been performed by TRN on about 19 May 2015, these works were a component of the adjoining subdivision constructed by TRN for Crownland Developments Pty Ltd.

91. When Mr Smith and Mr Harding arrived at Site, I brought these asbestos fragments to their attention by pointing to them as we walked around the Site. When we were in this area, words were said to the following effect.

I said: “This is the area where the buildings were demolished, it is likely these fragments have been tracked into the soil by the demolition contractor.”

Mr Smith: “Check out this fragment [he was pointing to a fragment on the ground]. It has dimpling like a golf ball. It is one of Hardie’s older asbestos products.”

I was familiar with that product based on my experience in the building industry.

92. As Mr Smith, Mr Harding and I walked in this area, Mr Smith pointed out fragments in the excavation where the building waste was buried.

93. At this time and in this area, we also observed a type of pipe and Mr Smith made a statement to the following effect:

“I haven’t seen an asbestos pipe like that for years. There is not much chance of remediating this material as it is mostly demolition waste in the excavation. There won’t be much left after you process it. There is too much building waste. It it was dry top soil, it might have been different.”

94. Mr Smith also made a statement to the following effect:

“You can smell the hydrocarbon odour. You should try and mix the material to dry it out and allow the hydrocarbons to break down before it is disposed of so that it reduces the tip fees.”

95. I understood that Mr Smith was referring to the significant odour of diesel fuels. In my experience, the cost of disposing “hydrocarbon (diesel) affected” soils can be more than double the cost of disposing “asbestos contaminated” soils.

96. In my experience, it is typical that, to reduce this cost, the material is spread out and turned over on site so that the hydrocarbons are evaporated by natural sunlight. Also, to speed up the process, fertiliser can be mixed through the soil every few days. In this way, the material can be later removed as “asbestos contaminated” instead of “hydrocarbon affected”.

97. […]

98. During the meeting, we also discussed the following:

a) notification to Workcover, that had been given;

b) Mr Harding requested a schedule of rates for the hygienist, AS2 supervision, plant, labour and disposal.

99. The pothole excavations were left open for the Superintendent and Futurepower to inspect at a later site meeting, which was organised on 21 July 2015 and is described in further detail below.”

21. In his Affidavit of 8 February 2019, Mr Kennett said of his visit to the Site in July 2015 (and see, also, T335.20-27 and T338.2-48):

“16. I could see many fragments of white material in the surface of the topsoils in the test pit that had been dug. At the time, it appeared there were about 50 pieces of asbestos fragments in the soil at the test pit.

17. As EMS progressed through the work under my supervision and established the stockpile for disposal, we encountered many more fragments of asbestos throughout the excavation. We established the stockpile under the direction and supervision of Steve Smith (Mr Smith) from Pacific Environmental Australia Pty Limited (PEA), who was appointed by TRN as the contaminated land consultant and whom I had worked with on other projects with TRN.

18. In my experience, where there is that amount of asbestos visible in a test pit, there is likely to be much more asbestos in the underlying topsoils and layers. This is what we found and I saw as EMS undertook the works for removal of these soils.

[…]

24. I recall that on or about 21 July 2018 I received a telephone call from Mr Comerford who advised me that TRN had been instructed to excavate, stockpile and dispose of the contaminated material, under the supervision of Mr Smith, the contaminated land consultant. Mr Comerford requested I organise EMS and liaise with Mr Smith to perform those works as subcontractor, because we held the appropriate license to do so. The removal of the asbestos contaminated material was undertaken by EMS under the supervision of Steve Smith on 12 August 2018 and 2 September 2018.”

22. Mr Smith explained at paras 29-30 of his Affidavit why he did not opt for a “spread and pick”, which is a possible means of dealing with asbestos fragments.

23. Leaving aside the question of whether a person could confidently assess material as containing asbestos without laboratory testing, which Mr Smith, Mr Comerford and Mr Kennett were adamant they could do, there was no challenge to the observations of Mr Smith, Mr Comerford and Mr Kennett of the extent of what they discerned to be asbestos contaminated material. No witnesses, such as Mr Harding or Mr Halpin, were called to challenge or dispute the evidence of the witnesses called by TRN.

The Geotest Note

24. The Geotest Note (CB A4:1458) was produced by Geotest on subpoena issued on behalf of TRN. There is evidence that Mr Halpin of Geotest came to the Site on 13 July 2015: T281.45-50. Given what appears to be a post-it note on the Geotest Note, its contents and provenance, and Mr Halpin’s visit to the Site, I draw the inference that the Geotest Note is Mr Halpin’s, that the diagram was created or prepared by him and that it represents what he observed on his visit to the Site. Futurepower has not explained how Geotest become involved in July 2015 and there is evidence that they were also involved in respect of this matter in August 2015: see CB A6:2031, 2036.

25. Mr Halpin and Mr Spasojevic of Geotest were both subpoenaed by Futurepower to give evidence at the hearing: see Exhibits 4 and 5. Neither was called by Futurepower. Once again, Mr Hicks submitted that a Jones v Dunkel inference should be drawn. Mr Hale contended that there was no need for Futurepower to call either of these witnesses. Given that it appears from the Geotest Note that Mr Halpin visited the Site on 13 July and observed what he considered to be fragments requiring remediation, the inference is that Mr Halpin considered there to be asbestos containing material on the Site. Also, Geotest had expressed views on the need for site remediation because of potentially asbestos containing material before TRN started work: see [7](8)-(11) and (16) above. I accept Mr Hicks’ submission and conclude that the evidence of these persons would not have assisted Futurepower’s case.

The Site Meeting of 21 July 2015

26. There is no dispute that a Site meeting was held on 21 July and that Mr Harding, Mr Comerford and Mr Carbone attended it. Mr Comerford had requested an earlier date and Mr Harding had written to Mr Carbone about it on 10 July 2015. Mr Carbone’s version of the meeting (from those portions of his affidavits that were read) has these elements:

1. The purpose of the meeting was to discuss the septic tank.

2. He was shown “the excavated hole revealing the sewer pipe/pit said to have been made of asbestos and which would require removal”: see Mr Carbone’s Affidavit of 16 May 2017 para 142.

3. He saw:

“[a] small mound of soil not exceeding 10 to 20 tonnes of soil that had been excavated as said to contain asbestos fragments as the sewer pipe/pit has been damaged” (Affidavit of Mr Carbone dated 16 May 2017 para 143 and Affidavit of Mr Carbone dated 29 March 2018 para 14).

4. That the only area he saw was the pit immediately next to the “alleged asbestos pipe/pit” (see para 7 of the Affidavit of Mr Carbone dated 15 March 2019, Exhibit B4).

5. That Mr Comerford said to him:

“- Dave Comerford: ‘This is the asbestos pipe/pit which will need to be removed it is made of asbestos. You can see that it used to run to the old house and those small asbestos fragments have been broken up as we excavated the pipe.’

- Domenic Carbone: ‘This is not a significant problem if it is asbestos.’

- Dave Comerford: ‘This will have to be removed for us to continue our works.’

- Domenic Carbone: ‘In any event, if it has to be removed provide the costings to Shane so that the contract works can proceed.’”

6. That the following conversation occurred at the meeting between Mr Harding and Mr Comerford (see Affidavit of Mr Carbone dated 29 March 2018, para 17):

“- Shane Harding: ‘Let me know what the works and costs are so that we can sort that out and move on with the contract works.’

- Dave Comerford: ‘I will get the costs over to you and we will have reports to confirm that the material is asbestos from our hygienist.’”

27. During his oral evidence (at T143.9-15), Mr Carbone deposed to having said to Mr Comerford at the meeting on 21 July 2015 (with Mr Harding also being present):

“I don’t know if that is asbestos, I have no expertise in the area, you will need to get someone to come in here and test it, take the relevant samples, confirm it’s asbestos, and then we’ll deal with it. If the septic tank has to come out because it’s interfering with works then go ahead and remove the septic tank, but as to anything else in terms of asbestos or soils, that are affected by asbestos, it will need to be tested and you will need to get an appropriate expert to deal with it.”

28. Mr Comerford’s evidence as to what occurred on 21 July is as follows (taken from his Affidavit of 29 June 2018)

1. The purpose of the meeting was to discuss removal of the asbestos contaminated soil.

2. That he, Mr Harding and Mr Carbone inspected the potholed areas and that showed the depth of contamination of the fragments in the topsoil and areas of contamination under the clay capping – the demolition material had ponded water around it.

3. That he had a conversation with Mr Carbone (see Affidavit of Mr Comerford dated 29 June 2018 para 104) to the following effect:

“I said: ‘There is a lot of demolition material in the soil. Because of that, there would be little benefit in trying to remediate it. You can generally only screen (process) the material if there is dry topsoil. But this is in clay, and the demolition waste will keep sticking to it. Also, the topsoil was saturated. If we tried to remediate it, most of it would still need to be disposed of offsite anyway.’

Carbone: ‘The geotech shows that there was no asbestos in this part of the Site.’

I said: ‘You can see the asbestos fragments in the ground where the drainage trench went through which was most likely contaminated during the demolition. I don’t have a lot of confidence in any geotech investigation for contamination because we have found contamination at numerous locations in Edmondson Park that have been investigated by geotech firms. It’s up to you if you want further investigations before we get on with the works.’

Carbone: ‘OK, we don’t have much choice, just get rid of it.’”

29. Mr Comerford says that he understood what Mr Carbone had said to him as an instruction from Mr Carbone on behalf of Futurepower to dispose of the asbestos contaminated material off-site (see para 105 of Mr Comerford’s Affidavit dated 29 June 2018 and to which he adhered in cross examination).

30. Mr Hicks put to Mr Carbone that his version of the conversation at T143.10-15 was an utter fabrication (see T143.21) and that he had said nothing of that kind in his earlier affidavits. The major difference between Mr Carbone’s two versions is that in the second version he instructs Mr Comerford to obtain samples and says that if they test positive then “we’ll deal with it” - nothing other than the septic tank is to be removed. Another divergence is that in Mr Carbone’s second affidavit he appears to be giving instructions for the sewer pipe and pit to be removed and nothing else, but even in respect of that he wants costings. No costings for removal of the septic tank were sought before Mr Carbone gave the instruction referred to at [7](22) above.

31. There are a number of reasons why I am inclined to accept Mr Comerford’s evidence over Mr Carbone’s and they are:

1. As I have already noted, I have no reason to doubt Mr Comerford’s credibility and none was suggested – he answered all questions forthrightly and directly made concessions when sought.

2. In relation to Mr Carbone’s credit:

1. I think that Mr Carbone’s version at T143 is different in a material respect to what he said in his affidavits (none of which asserted that he had given an instruction to Mr Comerford to carry out testing).

2. Mr Carbone’s assertion that the meeting of 21 July was called to deal with the septic tank does not sit comfortably with the fact that he had already given approval for removal of the septic tank on 9 July 2015 (CB A4:1446), and the email of 10 July was clearly answering the much bigger issue of asbestos which included an estimate of $100,000 for removal of asbestos material. Mr Carbone realistically could not have understood the Site meeting to be in connection with removal of the septic tank.

1. Mr Carbone told me that he did not know anything about EMS’s role until he received the dockets in April 2016 (see T135.29-44), but the email that he received (see CB A4:1520) set out precisely what work EMS was to perform. Mr Harding required dockets for the disposal and there is evidence they were supplied to him as requested (see Mr Comerford’s Affidavit of 9 November 2018 paras 38-39, as to which he was not cross examined), contrary to Mr Carbone’s emphatic assertion to the contrary at T135.40 – T136.6. The certification by Mr Harding after he had made clear what he required supports the conclusion that he had been given all that he had required.

2. Mr Carbone gave a number of unresponsive answers to questions asked of him: see, for example, T124.40, T125.30-44, T137.4, T142.26-42, T145.48, T149.37, T153.26, T154.11, T158.19 and T159.10.

3. As the husband of the proprietor of Futurepower, Mr Carbone obviously has a real interest in the outcome of this case and the fact that so many paragraphs of his affidavits were not read because TRN objected to them because they were submissions and not evidence, suggests that he was acting as an advocate in Futurepower’s cause. Indeed, for a significant period he was acting as solicitor for Futurepower in these proceedings and in his first affidavit that was how he described himself with no reference to his role in the project as Futurepower’s representative: see para 1 of his Affidavit of 16 May 2017.

3. As I have noted, the meeting on 21 July 2015 was not called in order to discuss removal of the septic tank because Mr Carbone had already instructed Mr Harding that TRN could proceed to remove it: see CB A4:1446.

4. Mr Carbone denies that he saw any evidence of asbestos other than around the septic tank, yet Mr Comerford says that he showed him the potholes that had been created on 13 or 14 July 2015 in which asbestos fragments were found. Mr Smith confirmed that on 14 July there were potholes present on the Site in the relevant area. Mr Harding, in his response to Mr Carbone’s email in June 2016 (CB A9:3343), reminded Mr Carbone when Mr Carbone queried the small number of photographs, that he (Mr Harding) had taken other photos and said to Mr Carbone that: “you were also present that very same day and witnessed the contamination.”

5. If it were true that Mr Carbone had instructed Mr Comerford to obtain testing it would be expected that when no testing was done and advised to Mr Carbone that Mr Carbone would be asking (at least Mr Harding) where those results were, and when he learnt that substantial levels of fill had been removed that he would be enquiring why that had been done in contravention of his instructions. No such email or evidence of enquiry has been produced. Not only that, but when Mr Carbone launched his investigation as to how it was that asbestos was found on the Site even though Geotest (as he would have it) had not found evidence of asbestos contamination when it investigated the Site in 2014 (or when it gave a clearance for the area of the demolished house in 2015), he did not ask Mr Harding why he had allowed the fill removal to proceed.

6. Mr Harding understood what Mr Carbone said to be an instruction to TRN to proceed with removal of the fill: see CB A7:2737.

7. Given that Mr Comerford had said in writing that he would not proceed with work until approval was given by Futurepower (see CB A4:1463), it seems highly unlikely that he would proceed on 21 July 2015 with excavation work if he had not received instructions from Mr Carbone to do so. Further, given that Mr Comerford had already involved PEA (and EMS) on the instructions of Mr Harding, there was simply no reason for him not to have asked for samples to be taken and laboratory tested if that is what Futurepower had wanted.

8. There is in Mr Carbone’s evidence a rather obvious link to the case which he now seeks to advance, namely that it is not possible to positively identify asbestos without laboratory testing.

32. In the PCS it is asserted that it is unlikely that Mr Carbone would have given TRN instructions to proceed with removal of the fill without having been given any estimate of cost - “in effect, Mr Comerford is suggesting that Mr Carbone was prepared to write a blank cheque” (PCS 40). That submission ignores the fact that Mr Harding had in his email of 10 July 2015 given Mr Carbone an estimate of $100,000 for the work. Further, it ignores that Mr Harding had, according to Mr Carbone, given him an earlier verbal estimate of $60,000: see para 120 of Mr Carbone’s Affidavit of 16 May 2017. Mr Harding made it clear that he was basing his estimate on the cost of dealing with a similar problem on an adjoining site but, in any event, it does not matter whether Mr Harding’s estimate was soundly based or whether Mr Carbone relied on that advice from Mr Harding in deciding to give the instruction that Mr Comerford says he did (and which Mr Harding asserted later in an email that Mr Carbone did: see CB A7:2737). It is clear that TRN did not provide the estimate of $60,000 or $100,000 to Mr Harding, but it is also clear that Mr Carbone had been given an estimate of $60,000 and then $100,000 to deal with the asbestos problem.

33. Futurepower, in its submissions and in questions by Mr Hale in cross examination, sought to emphasise the absence of any note of Mr Comerford as to the instructions given by Mr Carbone. As Mr Hicks pointed out, given Mr Carbone is a solicitor who himself made no note of the meeting on what he asserts now were his instructions, Futurepower’s submission on this point has a hollow ring to it.

34. I find as a fact that Mr Carbone, in the presence of Mr Harding, did instruct Mr Comerford to proceed with removal of the fill. I find that in undertaking that removal TRN was instructed to retain PEA (i.e. Mr Smith) and EMS, and, implicitly, that EMS would be thereby required to follow the instructions of Mr Smith in the excavation, stockpiling and removal of the fill, and in arranging haulage from the Site of any fill so excavated and stockpiled. I am not persuaded that TRN made any representation to Futurepower as to the level of fill that should be removed. I find that EMS (and, hence, TRN) relied on Mr Smith for the assessment of what had to be removed by EMS.

35. I turn now to consider the six elements alleged by Futurepower to constitute the misleading or deceptive conduct of TRN, identified at [14] above.

36. The Volume Email (see [14](1) above) has not been shown to have been incorrect as to quantity. It can only be the description as “asbestos contaminated material” that is said to be misleading. Since that is how PEA characterised the material and required excavation and removal as the remediation plan for that portion of the Site, Mr Harding could not have been in any doubt that TRN was advising him that 718 m3 of soil had been stockpiled following its excavation and placement, and that it was, on PEA’s characterisation, to be regarded as asbestos contaminated fill. In his email of 20 April 2016 (at CB A8:2843), Mr Harding said to Mr Carbone:

“The area of ‘remediation’ is advised by Steve Smith at the time that excavation works are in progress. As a qualified hygienist, their role is to direct the remediation works and contractors in accordance with the Remediation Action Plan.”

This makes it clear that Mr Harding did not treat TRN as advising him on the correct classification of that material.

37. I find that TRN’s representation that 718 m3 of what had become known as the asbestos contaminated fill was not misleading or deceptive in any respect. It was a statement as to the volume of what had been excavated in accordance with Mr Smith’s recommendations.

38. There was nothing misleading or deceptive about the rates that TRN passed on to Mr Harding via the Rates Email: see [14](2) above.

39. In relation to what Mr Comerford said at T280.15 (see [14](3)), the evidence is evidence of Mr Comerford’s intention not what he said to Mr Harding. In any event, Mr Comerford had formed the view that there were asbestos fragments present at various locations on Site based on his observations. There is no evidence to support the contention that he did not make those observations or form that view. There is a suggestion that his view - shared by Mr Smith, Mr Kennett, and it seems Mr Harding (as well as Mr Halpin) – was flawed and I shall deal with that below.

40. In relation to CB A5:1804-1805 (see [14](4)), again I think that the reference to “asbestos removal” was a shorthand way of referring to the excavated and now stockpiled fill. Mr Harding had been on Site when Mr Carbone had instructed removal of the fill (and appears to have himself concluded that it should be removed in accordance with the NEPM Guidelines: see CB A7:2737). I cannot accept that it is at all likely that he was influenced by the subsequent reference by TRN to the fill as asbestos material or asbestos contaminated material.

41. As for the email of 10 July 2015 from Mr Harding to Mr Carbone (see [14](5) above), it is clearly not a communication from TRN at all but, rather, from Mr Harding. It is not possible to discern from the email that what is stated therein by Mr Harding is not Mr Harding’s own opinion as opposed to what he has been told by Mr Comerford. I accept that Mr Comerford must have told Mr Harding that what he had observed was asbestos contaminated material in his opinion, but there is nothing to establish that Mr Comerford’s assessment was incorrect. Indeed, it is clear based on what Mr Harding said to Mr Comerford on 10 July on Site (see para 81 of Mr Comerford’s Affidavit of 29 June 2018, the email of 10 July to Mr Carbone, the email to Mr Comerford at CB A4:1488, CB A9:3343 Items 3 and 35, and CB A7:2737) that Mr Harding firmly agreed with that view. Mr Smith and Mr Kennett did as well, and there is no evidence to establish that the material identified by them on visual inspection as asbestos contaminated fragments were not in fact asbestos contaminated fragments.

42. Dealing now with [14](6), this is a rolled up version of what has already been identified, and it rises no higher than its individual elements, none of which, in my view, establish any conduct that amounts to misleading or deceptive conduct on the part of TRN.

43. I mentioned earlier the suggestion that Mr Comerford (and Mr Smith, Mr Kennett – and probably Mr Harding) could not assess whether or not a particular item contained asbestos or not. There is no dispute that fibres alone cannot be assessed as being asbestos fibres other than by microscopic examination, but Mr Smith says that it is possible to identify building products from an earlier period that contain asbestos. The dimpled “golf ball” like appearance of fibre cement sheeting, he says, is an example of something which would lead him to conclude that the product contains asbestos. Mr Tran agreed that there are indicators of that kind (T225.26-44), although he said he would treat the product as “potentially asbestos” and could not “determine if it is asbestos until I have tested it in the lab.” Mr Tran does not, however, have the experience of Mr Smith – 7 years compared to 18 years. It seems that there may well be circumstances where an owner of land or the Council, for example, would not be willing to accept that fragments were (or were not) asbestos contaminated without a laboratory test but it does not follow that persons with extensive experience cannot form the view that a product is asbestos contaminated, or very likely asbestos contaminated, and to recommend action on that assumption without laboratory testing. Mr Smith did carry out testing of some samples under a microscope: see para 25 of Mr Smith’s Affidavit, Exhibit 3, p. 65. The NEPM Guidelines themselves do not require testing: see 4.1-4.9, CB A1:45-49.

44. The NEPM Guidelines contain the following statements that I think bear on this question and support the position of Mr Smith:

“If visible asbestos is present and it may be disturbed during work activities, it must be removed. This includes removing visible fragments of bonded ACM from exposed trench faces and those areas of the site where intrusive works may be carried out (e.g. to install utilities). The removal of visible asbestos should be appropriately managed and full details recorded (this information is required for assessing asbestos concentration in soil – refer Section 4.10). Visible asbestos should be removed prior to excavation/construction works commencing. Consult the relevant Code of Practice for more detailed information” (see CB A1:46).

On the same page is the following:

“A competent person is defined in Safe Work Australia (2011a) as a person who has acquired through training, qualification or experience, the knowledge and skills to carry out the task. A competent person in the context of asbestos and the NEPM is a person who has acquired through training, qualification or experience, the knowledge and skills to identify, investigate and assess asbestos in the context of an environmental site assessment. This includes identifying the potential for asbestos contamination from site history information” (see CB A1:46).

45. That Mr Smith was a competent person, based on his academic qualifications and experience, was not ultimately challenged, and I think these clauses make it clear that asbestos containing material can be identified by a competent person by visual inspection.

46. There is discernible in Futurepower’s case a complaint that no testing of the fill was undertaken, either in the ground or after its excavation. Mr Strautins provided support for the view that there should have been, but there is some degree of confusion as to who it is said is responsible for that failure, and this has, it would seem, lead to the case sounding at times as if it is a claim in negligence for not having recommended testing, and one possibly directed not at TRN but PEA or EMS. There is no case of negligence advanced against TRN, and any failure by PEA, EMS or NWS to recommend testing is completely irrelevant.

47. In the PCS para 46, Futurepower submits that the Court will have to determine:

“(a) whether the investigations undertaken by the defendant and its remediation contractors and consultants were capable of identifying that any fill or soil on the site was contaminated with asbestos;

[…]

(c) if any fill or soil on the site was contaminated with asbestos, whether the only acceptable remediation strategy was for the fill and soil to be excavated and stripped from the Site and dumped off-site as ‘General Solid Waste Non-Putrescible – Special Waste Asbestos Contaminated’.”

48. I have dealt with the first point, although it does not really arise because TRN was instructed to proceed as required by PEA, and the second issue seems to reflect a case against PEA or NWS that was not brought.

49. I have endeavoured to explain why I do not think that anything said, written or done by TRN can be characterised as misleading or deceptive and I have in so doing made reference to Mr Harding. A striking feature of Futurepower’s case on the Fill Removal Variation is that it asserts that Mr Harding relied on what was said by TRN to approve the work to be done and to later certify it, but Mr Harding was not called in Futurepower’s case. Whilst in some circumstances it is possible to infer that a person relied on something said by another (see ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640; Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357; (1999) 43 IPR 545 and Haros v Linfox [2012] FCAFC 42; (2012) 219 IR 177), the absence of any evidence from Mr Harding that he relied on something said by TRN is fatal to Futurepower’s claim because it is not at all obvious from the six matters relied on that he did and, indeed, there is evidence that he did not.

50. Mr Strautins took the view that removal of 718 m3 of fill was unnecessary. In his opinion, what was found and referred to in the Workcover Notice was a relatively small amount of asbestos that could have been removed in a relatively simple manner. In his report, Mr Strautins was critical of Mr Smith and the PEA RAP (see Mr Strautins’ report, Exhibit B5, p. 3-4) and in cross examination was critical of the absence of testing of the soil that was removed and the absence of “substantiation”.

51. There are four initial problems with Mr Strautins’ report:

1. Neither his original report nor his supplementary affidavit expresses any conclusion concerning TRN - they are, instead, directed against PEA.

2. In forming his views, Mr Strautins proceeds on the basis that the only asbestos found on the Site was in one location as reported in the Workcover Notice (see T191.13-15), whereas the evidence of Mr Comerford, Mr Smith, Mr Kennett and the Geotest Note establishes that there were extensively more asbestos fragments on the Site than is referred to in the Workcover Notice. Mr Kennett explained that the reason for the notification was to “get the ball rolling”: T333.1-3, T336.32-33.

3. Mr Strautins was not informed that Mr Carbone instructed TRN to proceed to remove the contaminated fill without requiring any further testing (no doubt because Mr Carbone denied that he did so).

4. It appears that Mr Strautins did not take into account that TRN was instructed to engage EMS and PEA, and that TRN was acting on advice and instructions from PEA and EMS as to what was required.

5. Mr Strautins did not take into account the fact that the soils were “heavy clays” (see para 29 of Mr Smith’s Affidavit, Exhibit 3, p. 65), and that significant water and hydrocarbons were present in the contaminated areas.

52. The more significant problem with Mr Strautins’ report is that Futurepower’s case against TRN is not one in negligence for recommending removal of soil without testing or vicarious liability for the negligence of PEA but, rather, that TRN engaged in misleading or deceptive conduct. I accept that Mr Strautins’ view is that, based on his assumptions (noting that he never visited the Site at any time), the claim that 718 m3 of fill needed to be removed was not justified. What he is not able to say, and does not purport to say, is that in fact there was no asbestos or very little asbestos in the 718 m3. He is not able to say so because no testing of the 718 m3 was undertaken and because there was, based on the Workcover Notice which Futurepower relies on, at least some asbestos contaminated material. Mr Strautins is critical of the fact that no testing was ordered but the fact that it was not ordered means that it cannot be established that there was not an extensive quantity of asbestos contaminated material in the 718 m3 of fill. The evidence of Mr Comerford, Mr Smith and Mr Kennett as to what they observed, as well as the clayey nature of the soil and the presence of water which makes the task of removing fragments difficult, is unchallenged and no one was called from Geotest to explain the Geotest Note. Mr Smith also referred to the stringent attitude of Liverpool Council to asbestos contamination, which was not the subject of any challenge. It is important to reiterate that Mr Comerford did not recommend how much fill should be removed – that was left to Mr Smith of PEA to determine and he determined that the fill should be excavated to a depth of 200 mm (see Mr Smith’s Affidavit of 2 July 2018 para 52­) or, as Mr Kennett put it, until “we see natural earth” (T339.23); and see, also, Exhibit 1.

53. Futurepower’s claim on the Fill Removal Variation suffers from further problems.

54. Futurepower is required to establish the loss that flows from the allegedly misleading or deceptive conduct: s 18 of the ACL and Fitzgerald v Deloitte Services Pty Ltd [2017] NSWCA 139. The claimed loss, apparently, is the approximately $330,000 for the Fill Removal Variation.

55. There is evidence that, prior to the adjudications, Futurepower had paid $714,407.67 (see CB A9:3565), but there is no evidence of what precisely the payments were for and the Adjudicators’ reasons were not put into evidence by Futurepower (although submissions to the Adjudicators were). Futurepower has not established that it paid the earliest certificates (the first four had elements of the fill removal claims i.e. V01), perhaps because part of its claim (only abandoned in the course of final submissions) was that TRN had engaged in misleading or deceptive conduct at the adjudications and because by paras 17 and 36 of the Commercial List Statement, Futurepower puts its claim on the basis that the loss claimed by it is the amounts paid to TRN “pursuant to the adjudication determinations”. If it is to be inferred that all of TRN’s claims for V01 had been paid before the adjudications, then Futurepower’s payment of claims would be further evidence in support of the conclusion that Futurepower was proceeding on the basis that Mr Harding (who had certified payment on all of the claims) was the Superintendent for the purposes of the Contract. If it cannot be inferred that the claims were paid by TRN before the adjudications then it would be necessary to establish why they were paid, which Futurepower has not done.

52. If it is inferred that Futurepower paid the monies it did pay because of the certificates issued by Mr Harding, it is not established that Mr Harding issued the certificates because he relied on anything said by TRN. I have identified some of the matters by which he appears to have been influenced and there is another important one – namely, that (accepting, as I do, Mr Comerford’s version of the conversation on 21 July 2015) Mr Harding heard Mr Carbone instruct Mr Comerford to proceed to remove the fill.

53. I have referred to the fact that TRN did not itself make any assessment of how much fill needed to be removed to deal with the asbestos problem that Mr Comerford, Mr Harding, Mr Smith and Mr Halpin had identified. Mr Hale seemed at one stage during the hearing to put a case based on TRN having passed on what PEA or EMS had said concerning the asbestos fragments and how they should be dealt with. In Butcher v Lachlan ElderRealty Pty Ltd (2004) 218 CLR 592, the High Court by majority held that a real estate agent was doing no more than communicating what the seller was representing without adopting or endorsing it. In the present case TRN was instructed to use PEA (and EMS) and did not actually pass any information on from PEA or EMS prior to excavation or stockpiling. Mr Harding was at the meeting on Site on 14 July 2015 and was present when Mr Smith commented on what he observed: see paras 96 and 98 of Mr Comerford’s Affidavit of 29 June 2018. By describing the fill which had been stockpiled TRN was communicating what had been stockpiled in accordance with PEA’s requirements. Reference should also be made to CB A7:2736 in which Mr Harding said of TRN’s claim in his email to Mr Carbone:

“This needs to be paid, the contamination has been remediated, validated and signed off by a hygienist in accordance with the NEPM Guidelines. The contamination was not thoroughly investigated by Geotest and as a result the full extent of contamination was not known until excavated.”

58. Given the matters to which I have already referred, it is not strictly necessary to say any more about the loss and damage, but Futurepower’s case that it would be entitled to the full amount of the Fill Removal Variation seems to proceed on the basis that no cost would have been involved in dealing with the asbestos problem that it now seems to accept existed. It is not just the issue of the cost of testing, as there is evidence that had handpicking been utilised there would have been a cost of approximately $188,000 and the works on Site would have been held up for a period of about 30 days: see Mr Kennett’s Affidavit paras 52-53, Exhibit 3 p.59. There is also the further complication that what was identified by Mr Comerford, Mr Harding and Mr Smith was not only asbestos contaminated material but also hydrocarbons and general waste: see CB A4:1452 and 1453-1459, CB A9:3341, the Affidavit of Mr Comerford at para 92-95 and the Affidavit of Mr Smith dated 2 July 2018, para 67(b). Finally, Geotest had already advised Futurepower that because of suspected asbestos, actual asbestos found, and uncontrolled fill, a RAP would be needed for the Site.

The Superintendent Point

59. TRN contended that the Superintendent under the Contract should be viewed as NWS and not Mr Attard. Futurepower points out that the definition of “Superintendent” speaks in terms of a “person” and that it is unlikely that the corporation was intended to be the Superintendent. The schedule as completed is somewhat opaque because it names not only Mr Attard but also NWS, but I accept Futurepower’s argument that Mr Attard should be viewed as the person nominated as Superintendent under the Contract.

60. There are a number of indications that, although Mr Attard was named as Superintendent in the Contract, he did not perform that role:

1. Mr Harding told Mr Comerford before TRN commenced work that “I’ll be looking after this one”: see T309.46 – T310.5.

2. When Mr Harding went on holiday well into the works he told Mr Comerford to deal with Mr Attard whilst he, Mr Harding, was away, which Mr Comerford did.

3. Mr Harding attended all Site meetings, which were held every fortnight, and also had phone conversations with Mr Comerford – see T249.31-34.

4. Mr Harding attended meetings on 14 and 21 July 2015 for the important issue of asbestos.

5. TRN sought instructions regarding the septic tank from Mr Harding and Mr Harding sought instructions from Mr Carbone.

6. Mr Harding provided an estimate of costs to Mr Carbone for the asbestos issue.

7. Mr Harding signed all of the progress certificates.

8. Mr Harding signed the documents granting extensions of time to TRN based on rain and other reasons for delay.

9. Mr Harding signed the Certificate of Practical Completion.

10. It was to Mr Harding whom Mr Carbone addressed his questions in respect of the Contract in April 2016 and beyond.

11. There is not a single communication in evidence from Mr Attard to Mr Carbone or from Mr Carbone to Mr Attard concerning the matters the subject of this case.

12. There are three variations that Mr Attard signed off on but that was in May 2016 and Mr Comerford said that Mr Harding had directed him to deal with Mr Attard whilst Mr Harding was on leave. Apart from these variations there is no evidence that Mr Attard ever acted as Superintendent.

61. TRN puts its defence on this issue on these bases:

1. The terms of the Contract – cl 20.

2. Conventional estoppel.

3. Estoppel by representation.

62. In relation to the first point, cl 20 requires Futurepower to ensure that at all times the Superintendent fulfils all aspects of the role and functions of Superintendent reasonably and in good faith. TRN submits that if, as Futurepower contends, Mr Attard was the Superintendent then Futurepower has failed to ensure that Mr Attard fulfilled all aspects of the role and functions of the Superintendent reasonably and in good faith. For reasons which I shall explain, I am of the view that Futurepower and TRN were both proceeding on the basis that Mr Harding was the Superintendent and that Futurepower is therefore estopped from denying that he was the Superintendent, but if my conclusion on that is incorrect, then I accept TRN’s submission that Futurepower breached the Contract by failing to ensure that Mr Attard performed his functions as Superintendent. If Futurepower’s contentions are correct then TRN has received progress certificates that are of no value or benefit, and has submitted applications for variations and sought instructions that are of no value or benefit to it because Mr Harding was not the Superintendent.

63. Mr Hicks maintains that a party cannot take advantage of its own breach of contract and that to recover from TRN what was paid to it would amount to just that. The principle that a party cannot benefit from its own breach of contract is well-known in the law: Mackay v Dick (1881) 6 App Cas 251; Alghussein Establishment v Eton College [1988] 1 WLR 587; Peter Turnbull & Co Pty Ltd v Mundus Trading Co (A/asia) Pty Ltd (1954) 90 CLR 235; Bragg v Alam [1981] 1 NSWLR 668, 673-674 per Rath J; Ruthol Pty Ltd v Tricon (Australia) [2005] NSWCA 443. It has been observed that the principle that is enunciated in Mackay v Dick has been seen as a case of estoppel: J. W. Carter, Contract Law in Australia (LexisNexis Butterworths, 6th ed, 2013) at 28-09, citing Sprague v Booth [1909] AC 576 at 580.

64. In Peter Turnbull at 246, Dixon CJ said:

“it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof: Hotham v East India Co (1787) 1 TR 638 [99 ER 1295].”

(Emphasis added)

65. In Hotham (which Dixon J cites in the quote above), the owners of a ship sued charterers for short tonnage (on which freight was to be calculated). The charterers contended that the owners’ claim could not be advanced due to the absence of a load certificate upon departure to be given by the charterers or their agents. The Court, whose opinion was delivered by Ashurst J, noted that the owners had taken all proper steps to obtain the certificate but had not been able to obtain it due to the “neglect and default” of the charterers’ agent - the owners’ conduct was therefore “equal to performance”.

66. For Futurepower to be able to recover from TRN money paid to it by virtue of certification by Mr Harding because of Futurepower’s failure to ensure that Mr Attard was performing his functions would permit Futurepower to take advantage of its own breach of contract and I would refuse the relief sought for that reason.

Estoppel by Convention

67. The principles of estoppel by convention (also known as estoppel in pais) were explained in Ryledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 per Tobias JA (with whom Mason P and Campbell JA agreed). His Honour made reference to Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641, Amalgamated Investment & Property Co Ltd (in Liq) v Texas Commerce International Bank [1982] QB 84, The “Indian Grace” (No 2) [1998] AC 878 and Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713. Tobias JA explained (at [194]) that:

“estoppel by convention is a form of estoppel founded upon an assumed state of affairs by the parties whether as to a matter of fact or a matter of legal effect which both will be estopped from denying: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 244–245. That assumed state of affairs takes as a given the terms of the contract as known to and understood by the parties but from which the parties have departed for the purpose of their furtherance of their relationship under the contract.”

Tobais JA referred (at [195] of Ryledar) to the observation of Dixon J (as his Honour then was) at 676 of Grundt that:

“belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs.”

Tobias JA also cited with approval (at [198] of Ryledar) what had been said by Lord Steyn in The “Indian Grace” at 913:

“…an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared … or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption.”

68. In Moratic (in a passage cited with implicit approval in Ryledar at [100]), Brereton J (as His Honour then was) stated the matters which are required to establish conventional estoppel:

“[32] … In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff [Waterman v Gerling, [83], [96]].”

69. It should also be noted that, contrary to Futurepower’s submissions (PCS para 83), it is not necessary that it was conduct of the party against whom the conventional estoppel is asserted that led to the assumption being adopted: see Moratic at [32]-[37] and H. G. Beale (ed), Chitty on Contract (Thomson Reuters, 33rd ed, 2018) at 4-108.

70. In this case the schedule to the Contract stated that Mr Attard of NWS was the Superintendent. Mr Comerford was aware that that is what the Contract said (see T309.42) but Mr Harding, who also was employed by NWS, had told him he would be looking after the job and Mr Comerford was aware that Mr Harding was intending to, and then did, act in the role. Mr Comerford understood that Mr Harding exercised the role and powers of Superintendent (see para 36 of his Affidavit of 29 June 2018, Exhibit 3, p. 6) and Mr Comerford adopted the assumption that Mr Harding was the Superintendent, sent all his correspondence to Mr Harding and must have observed that Mr Harding was in direct contact with the principal’s representative, Mr Carbone, that Mr Carbone gave Mr Harding instructions concerning the septic tank and then joined Mr Harding on the Site visit on 21 July 2015, and gave instructions as to how the latent defect was to be dealt with.

71. The assumption adopted by TRN that Mr Harding was the Superintendent was also adopted by Mr Carbone. I say that because:

1. Mr Carbone was aware that TRN was communicating with Mr Harding from 8 July 2015.

2. Mr Carbone was communicating with Mr Harding (and not Mr Attard).

3. Mr Carbone attended a Site meeting with Mr Harding (and not Mr Attard) on 21 July 2015.

4. Mr Carbone gave instructions to TRN with Mr Harding present (and Mr Attard not present) even on Mr Carbone’s own evidence.

5. Mr Carbone knew that Mr Harding was giving instructions as to the works and dealing with TRN for the purposes of the Contract: T130.35.

6. Mr Carbone received certificates signed by Mr Harding as Superintendent throughout 2015 and 2016 (see T151.15-21). I am unable to accept Mr Hale’s contention (T457.46-50) that it cannot be inferred that Mr Carbone, having received the certificates signed by Mr Harding as Superintendent, would have appreciated that Mr Harding was purporting to act as Superintendent.

7. Mr Carbone never once raised a query with Mr Harding as to why he was receiving and dealing with notices from TRN, or attending Site meetings in place of Mr Attard or signing certificates as if he was the Superintendent.

8. When Mr Carbone sought answers in 2016 from Mr Harding concerning the Fill Removal Variation he never queried why Mr Harding signed the certificates as Superintendent or why he purported to act as Superintendent when Mr Attard was named as Superintendent in the Contract.

9. There is no evidence of any notification, orally or in writing, by Futurepower to Mr Harding that he must stop acting as Superintendent.

72. In my view, it is clear that both TRN and Mr Carbone on behalf of Futurepower were proceeding on the basis that Mr Harding was the Superintendent and both intended that the other would act on that basis. Departure from this assumption would cause TRN significant loss because it would potentially entitle Futurepower to recover payments made for work done and approved by Mr Harding and entitle Futurepower to recover damages for delay because the named Superintendent had not received the claims for extension and had not approved them. I say ‘potentially’ because, in fact, Futurepower has led no evidence from Mr Attard as to what he would have done had he received from TRN what Mr Harding received from TRN (other than the three variations he did approve which, until final submissions, Futurepower also claimed should not have been paid). I infer that Mr Attard’s evidence would not have assisted Futurepower’s case.

73. Futurepower maintained that the TRN estoppel claim could be founded only on conduct occurring between the commencement of the Contract (June 2015) and the date that all of the excavated fill was removed from Site. The first progress claim was issued on 21 August 2015 after the great bulk of fill had been removed. It was pointed out in the PCS that there was no evidence that Futurepower had told TRN to approach Mr Harding or to submit its documentation or claims to Mr Harding. I accept these submissions in relation to the claim of estoppel by representation but they do not have any force in relation to estoppel by convention. The issue which I have to determine in that context is whether TRN and Futurepower were, in their dealings under the Contract, proceeding on the assumption that Mr Harding was the Superintendent. I think it is appropriate to consider the entire period from the commencement of the Contract to such time as the work was completed, not just the first few months of the Contract. Even for that limited period, there is evidence that both TRN and Mr Carbone were proceeding on the basis that Mr Harding was the Superintendent but this is strengthened by the receipt by Mr Carbone of certificates signed by Mr Harding as Superintendent and the payment by Futurepower to TRN based on some, at least, of those certificates. It is true that Mr Harding’s email bore the description beneath his name “project manager” but I do not think that is inconsistent with him acting as Superintendent under the Contract.

74. In the PCS, Futurepower seeks to advance an argument that even if Mr Harding is to be treated as the Superintendent, TRN was not entitled to recover for the Fill Removal Variation because (see PCS para 93):

“(a) the fill and soil removed from the Site was not in fact contaminated with asbestos or was not contaminated to the extent claimed by the defendant, and (b) therefore it was not necessary or reasonable for the defendant to perform the work the subject of the Asbestos Claim and so the defendant is not entitled to recover payment for that work under the Contract, notwithstanding that Shane Harding as Superintendent approved the work.”

75. The following further submissions are made in the PCS (at paras 94-100) in relation to that point:

1. The variation power in a construction contract cannot be used to effect “a fundamental change of the works to be done under the contract”: see Melbourne Harbour Trust Commissioners v Hancock (1927) 39 CLR 570, 586 per Isaacs J.

2. The exercise of the variation power is subject to reasonableness: see, e.g. Wegan Constructions Pty Ltd v Wadonga Sewerage Authority [1978] VR 67; (1977) 36 LGRA 147 at 69.

3. The exercise of the variation power in a construction contract is subject to the implied duty of good faith: see, e.g. Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234.

4. The Final Certificate has not yet been issued – cl 37.2 is relied on.

5. TRN is only to be paid for work as a variation under cl 36 of the Contract if the work was (a) in fact carried out; and (b) if the work was “necessary and reasonable for the defendant to carry out in order to complete the work under the Contract”: see, e.g. Plaza Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [2010] NSWSC 1426.

6. The work carried out was not necessary or reasonable for TRN to carry out because the Site “was not in fact contaminated with asbestos” or “was not contaminated to the extent claimed by [TRN]”, so that the “wholesale removal and dumping” of fill was not necessary or reasonable.

76. Futurepower has not established that the fill that was removed did not contain asbestos contaminated materials or, if it did, in what levels. TRN was instructed to have EMS remove the fill as recommended by Mr Smith, i.e. in accordance with the RAP.

77. That is sufficient to deal with this aspect of Futurepower’s contentions but I should also make the following observations:

1. TRN’s email of 13 July 2015 (CB A4:1463) constitutes written notice of asbestos. The presence of asbestos contaminated material was a latent defect which triggered operation of cl 25.3, but, in any event, removal of fill that contained asbestos contaminated material or was thought to contain asbestos fragments was not a fundamental change of the works. The principle identified in Melbourne Harbour is dealing with the question of whether the principal can vary the contract in a radical fashion (in that case removal of works from the Contract). That is linked to the principle of reasonableness as in Wegan, and the implied duty of good faith. Clause 36.1 of the Contract seems to reflect a similar protection of the contractor here. The present circumstances raise none of these issues.

1. Plaza is a case of misleading or deceptive conduct and the tort of deceit. The principal was held to have relied on a number of false representations made by the contractor, including that material removed from the site was contaminated when in fact it was, to his knowledge, not contaminated. Plaza does not support the second of the two principles attributed to it in the PCS (see [75](5) above and PCS paras 98-99), namely that the work the subject of the variation must be “necessary and reasonable for the defendant to carry out in order to complete the work under the Contract,” and that if it was not necessary and reasonable, the principal would be able to sue the contractor for the money paid out for that work, even if the superintendent had already certified it and the contractor had not engaged in misleading or deceptive conduct.

2. Once Futurepower decided to deal with the existence of asbestos contaminated fill on the Site by directing its removal with the involvement of remediation specialists, the work undertaken was reasonably necessary whatever the precise concentration of asbestos fragments in the fill removed. The certification by the Superintendent confirms that that was so.

3. Whilst cl 37.2 provides that neither a progress certificate nor payment “shall be evidence that the subject work has been carried out satisfactorily”, there is no evidence that the work was not carried out satisfactorily - what is put by Futurepower is that the work was not necessary. TRN was instructed by Mr Carbone to remove the fill and, implicitly, to do so in accordance with the recommendations of Mr Smith and using EMS, which was appropriately licensed to deal with asbestos contamination material. Having carried out the excavation and stockpiling, TRN was instructed to arrange for disposal of the 718 m3 of fill, which it did.

78. Mr Hale contended that even if Mr Carbone did give instructions to TRN in the presence of Mr Harding, the instruction was not one that TRN could rely on: see T392.41 – T393.1.

79. Having regard to para 23 of Futurepower’s List Statement, to which I have referred at [12] above, I doubt that such a claim is open to be made by Futurepower but, in any event, where:

1. The principal under a building contract, in the presence of the superintendent, instructs the contractor to carry out work to deal with a latent defect following a meeting called to determine what action should be taken to deal with the latent defect;

2. The contractor acts on the instruction so given and arranges for excavation;

3. The superintendent, in writing, instructs the contractor to dispose of the fill from the site;

4. The contractor incurs liability to third parties as a result of acting on the instructions;

5. The superintendent later certifies that the work carried out by the contractor requires payment by the principal.

I do not think it is open to the principal to refuse payment (or, as here, seek to recover payment) because the superintendent did not give written instructions to excavate (but does give written instructions to remove the fill). It might be seen as another example of conventional estoppel (i.e. that the parties were proceeding on the basis that written direction was not required) or on the basis that Futurepower failed to ensure that Mr Harding (or, alternatively, Mr Attard) issued a written instruction to TRN to reflect Futurepower’s instructions as communicated by Mr Carbone.

80. Another issue raised by Mr Hale related to the extensions of time granted - he asserted that these were lodged out of time. Mr Hicks pointed out correctly that cl 41.2 makes it clear that failure to communicate a claim within the time required by the Contract might entitle the other party to damages for a breach but does not bar or invalidate the claim.

81. Yet another argument advanced was that there was no written notice given by TRN to Mr Harding for the variation. TRN did give written notice of the existence of asbestos (see CB A4:1463, with the subject line: “Asbestos”), and Mr Hicks drew attention to cl 25.3 of the Contract which provides that the effect of the latent condition shall be a deemed variation, which answers that point.

The Liquidated Damages Claim

82. For the reasons already given, Futurepower is unable to circumvent extensions given and decisions made by Mr Harding, but there is an even more fundamental problem with Futurepower’s claim. Clause 34.7, which provides for liquidated damages, requires certification by the Superintendent and no such certification by the Superintendent (Mr Harding or Mr Attard) is in evidence. Therefore, no money can be claimed, even for the period between 24 August 2016 and 2 September 2016.

The Miscellaneous Variations

83. The principal basis of Futurepower’s claim on the Miscellaneous Variations is that Mr Harding was not authorised to act as Superintendent under the Contract. I have rejected that assertion, but there were some additional aspects of these variation claims with which I shall now deal.

84. Each of these was the subject of detailed evidence from Mr Comerford, summarised in DCS paras 142-154, the evidence being from both the Court Book and oral evidence, and which I accept. It is clear that some of these variations were the subject of a written direction and some oral only. Leaving aside the point about Mr Harding’s position as Superintendent, with which I have already dealt, I do not think it can be open to the principal to resist payment of a claim certified by the superintendent because the contractual requirements for approval by the superintendent were not adhered to. Whether this is because the certificate has contractual force or because reliance on the superintendent’s failure to issue a written direction would amount to another example of relying on Futurepower’s failure to ensure that the Superintendent was performing his task adequately, or as estoppel or because the certificate must be taken to be a decision by the Superintendent on behalf of Futurepower not to require strict adherence, is probably not necessary to decide, because the absence of the “final certificate” is another example of Futurepower’s failure to ensure that the Superintendent fulfilled all aspects of his role and functions reasonably and in good faith. Mr Carbone refers to the absence of the final certificate (see para 48 of his third affidavit) but there is no reason given for the Superintendent’s failure to issue the “final certificate” under cl 37.4, with the consequences of such a certificate there set out. In accordance with the principle identified earlier, Futurepower cannot rely on the absence of a final certificate, and that precludes it from relying on any failure of the Superintendent to issue a written direction.

85. The DCS refer to Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16; (2012) 201 FCR 173 at [200], in which the principle of not being able to approbate and reprobate is discussed. The judgment refers to the expression of principle in Express Newspapers plc v News (UK) Ltd [1990] 3 All ER 376; (1990) 18 IPR 201 by Browne-Wilkinson V-C at 383-384, the comments of McClure JA in Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211; (2008) 38 WAR 276 and what was said by Brennan J (as his Honour then was) in Commonwealth v Verwayen (1990) 170 CLR 394, 421. The DCS draws attention to the fact that Futurepower’s Second Further Amended List Statement asserts that Mr Harding was misled in issuing instructions to TRN and this seems to implicitly involve an assertion that he was acting as agent of Futurepower in so doing. Whilst I think that there may well be scope for a separate doctrine rather than as just a form of election waiver or estoppel, I do not think that it is necessary to embark upon an examination of this topic here. I note too that the asserted case in the List Statement seems to be inextricably bound up with the adjudications, but allegations that TRN engaged in misleading or deceptive conduct in connection with the adjudications were expressly eschewed, along with a number of other claims, at the time of final oral submissions: see T441.10 – T442.24.

Quantum Meruit

86. In relation to the quantum meruit claim, Futurepower, through the PCS, accepts that TRN might be able to claim on a restitutionary or quantum meruit basis (see Liebe v Molloy (1906) 4 CLR 347 and Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221), but contends that TRN would have to prove the value or benefit received by Futurepower from the work the subject of the Fill Removal Variation. Futurepower contends that that would require TRN to prove that the fill and soil were in fact contaminated by asbestos and that it was therefore necessary for TRN to carry out the work to remove the soil. In circumstances where, as I have found, Mr Carbone did instruct TRN to proceed with the work, notwithstanding the absence of further investigations (which had been offered by TRN) and the instruction to TRN (using EMS and PEA) to proceed, as well as the compliance by EMS with the recommendations of Mr Smith of PEA, I do not think that TRN is required to prove anything further. Futurepower has obtained a clean Site, known to be free of asbestos contaminated material, enabling it to proceed with development of the Site, as instructed. If Futurepower wanted each area to be tested for asbestos fragments before excavation commenced, or before removal from the Site, then it was incumbent on Futurepower to so direct, which it did not do.

87. Therefore, had I found that Futurepower was not estopped from denying Mr Harding’s authority and was not in breach of the Contract by failing to ensure that Mr Attard performed his duties, I would have found TRN entitled to the amount asserted by Mr Beard, namely $467,076.18, Exhibit 3 p. 90.

Conclusion

88. On Futurepower’s claim there should be judgment for TRN. Futurepower conceded that TRN was entitled to recover the amount of $24,723.68, subject to Futurepower’s claim. There should be judgment for TRN on its cross claim in the amount of $24,723.68.

Costs

89. The parties were agreed that I should defer the issue of costs until after my decision on the matters covered in these reasons.

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Decision last updated: 11 November 2019