Mainteck Services Pty Limited v Stein Heurtey SA - [2013] NSWSC 266

Supreme Court

New South Wales

Medium Neutral Citation: Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 266
Hearing dates: 16, 17, 18, 19, 20 July 2012, further oral submissions on 29 October 2012, further written submissions 31 October 2012
Decision date: 28 March 2013
Jurisdiction: Equity Division
Before: Sackar J
Decision:
See paragraphs [307] - [308]

Catchwords:
PROCEDURE - principles regarding the adoption of a referee's report - whether referee's report should be adopted or rejected in part - whether the plaintiff should be permitted to withdraw an admission in relation to the referee's report.

CONTRACTS - construction and interpretation of contracts - whether contract void for uncertainty - courts should be astute to adopt a construction which will preserve the validity of a contract.
EVIDENCE - findings of fact - whether findings in referee's report are unreasonable or perverse.
Legislation Cited: Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005
Cases Cited: Bellevarde Constructions Pty Ltd v Cpc Energy Pty Ltd [2008] NSWCA 228
BestCare Foods v Origin Energy [2012] NSWSC 574
Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302
Calin v Greater Union Organisation Pty Ltd (1991) 173 CLR 33
Chocolate Factory Apartments v Westpoint Finance and Ors [2005] NSWSC 784
Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235
Hocking v Bell (1945) 71 CLR 430
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd's Rep 76
Meehan v Jones (1982) 149 CLR 571
New South Wales v Bovis Lend Lease Pty Limited [2007] NSWSC 1045
Sangain Pty Ltd v Italform Pty Ltd [2009] NSWSC 74
Seven Sydney v Fuji Xerox [2004] NSWSC 902
Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444
Thorby v Goldberg (1964) 112 CLR 597
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Texts Cited: K Lewison and D Hughes, The Interpretation of Contracts in Australia, (2012) Lawbook Co
Category: Principal judgment
Parties: Mainteck Services Pty Limited - plaintiff
Stein Heurtey SA and Ors - first defendant
Stein Heutey Australia Pty Ltd - second defendant
Representation: Counsel:
F Corsaro SC, F G Kalyk - plaintiff
P W Taylor SC, J T G Gibson - defendants
Solicitors:
Piper Alderman - plaintiff
Jones Day - defendants

File Number(s): 2007/266650

Judgment

The Proceedings

These proceedings involve questions concerning the adoption of various reports of the Referee, the Honourable Mr R L Hunter QC who issued three substantive reports, one in June 2011 a further report in July 2011 (described as an "Interim Report") and a final report in December 2011. He also issued a short letter on 20 October 2011 also described as an "Interim Report" and a three paragraph letter clarifying his December 2011 report, issued on 20 April 2012.

There is a dispute between the parties as to what part or parts of these reports ought to be adopted and whether notwithstanding the partial adoption of the June 2011 report by consent orders dated 26 August 2011, the plaintiff ought to be able to now contest those paragraphs of the report to which it consented.

The parties put voluminous materials and submissions before the Court for the purposes of the hearing. This I accept was due to the complexity and multiplicity of issues.

A table which I have made a Schedule to this judgment fully sets out the parties' agreed position in relation to the paragraphs of the various reports under consideration.

Background

The plaintiff Mainteck Services Pty Limited (Mainteck), made a claim for approximately $9,884,338 against the defendants (Stein Heutey SA and Stein Heutey Australia Pty Ltd, SHF and SH, which I will call SH unless the context requires greater precision) to the effect that certain compensation was due to them by reason of misrepresentations made by SH leading to the underpricing of the contractual tasks in the order of $5,075,157. Claims were also made for delay and disruption totalling $2,548,383 and certain other claims were made for variations totalling $2,260,798.

Mainteck's claims arose out of a 24 August 2004 Head Contract between Bluescope Steel (BSL) and SHF for the design and construction of a second "walking beam furnace" (WBF2) at BSL's hotstrip mill complex, at Port Kembla.

Mainteck was nominated in the Head Contract as an approved subcontractor. In Schedule 1A of the Head Contract there was identified part of the WBF2 supply and installation work as the "Mainteck Portion". The Schedule 1A price for that work was identified as $27,914,279.

On 9 September 2004, SHF and Mainteck entered into what was described as the "Second Consortial Agreement", with a related Novation and a Guarantee.

The Second Consortial Agreement expressly incorporated the Head Contract "mutatis mutandis" but did not otherwise contain a specific price. Nevertheless Mainteck alleged and it was common ground that the contract price was $27.9 million for the "Mainteck Portion", as set out in Schedule 1A of the Head Contract.

SH alleges it provided Mainteck with the detail of the WBF2 design by about late January 2005.

On 30 March 2005, SH and Mainteck entered into a formal Purchase Order specifying the work that Mainteck was to perform concerning the supply and installation involved in the "Mainteck Portion" of the Head Contract work.

Work was performed by Mainteck between about July 2005 and June 2006. The work involved the fabrication and installation of the mechanical components of SH's WBF2 design.

Mainteck commenced proceedings on 20 April 2007 and contended it had underpriced the $27.9 million Second Consortial Agreement as the result of misrepresentations by SHF about the design it proposed for the WBF2 in or about April 2004.

In July 2010, Mainteck included an alternative claim that SH had breached its fiduciary duty to it by not disclosing the proposed design before Mainteck entered into the Second Consortial Agreement in September 2004. In essence these claims involved a contention that SH never disclosed and indeed represented to the contrary that the contract and Technical Specification design proposals for WBF2 were based on the design of an existing BSL furnace, WBF1.

Mainteck claims that it had entered into a partly oral contract that did not include the Technical Specification.

The second aspect of Mainteck's claim was that the SH parties had breached the Mainteck contract in various respects. Those breaches substantially related to asserted delays in providing site access, design details and items of equipment. Mainteck claimed its timely and efficient performance of the work had been prevented by SH's alleged contractual breaches. These claims founded the "delay and disruption" claim on behalf of Mainteck.

Another major aspect of Mainteck's claims involved a number of alleged variations. Fundamental to the variation claims was Mainteck's assertion that the Technical Specification between BSL and SHF had not been agreed, and did not form part of Mainteck's contract with SHF.

Mainteck contended that its scope of work under the relevant contract only included the items identified in the Bill of Materials (BOM) annexed to the 9 September 2004 Second Consortial Agreement. In particular, Mainteck contended that its scope of work did not include any additional items described in or required by the Technical Specification. In fact Mainteck did perform some additional work that was arguably required by the Technical Specification. Mainteck claimed that this work involved contract variations for which it was entitled to additional payments.

Extensive affidavit and other materials were filed by both parties in the proceedings during 2009 and 2010.

On 30 August 2010 the court referred the whole of the proceedings for enquiry and report pursuant to Uniform Civil Procedure Rules 2005 (UCPR) 20.14. The Hon Mr R L Hunter QC was appointed Referee.

The reference hearing commenced on 5 October 2010. The hearing occupied 37 days in October, November and December 2010 and February 2011.

Following the exchange of extensive written submissions the final oral submissions were heard by the Referee on 5 and 6 April 2011.

The Referee's Reports and Procedural History

The Referee provided a number of reports.

On 22 June 2011 the Referee issued what he described as a report pursuant to Rule 20.23 of the UCPR. That report dealt with Mainteck's allegations about the nature and form of the Mainteck contract and the misrepresentation claim.

In relation to the contract the Referee found that the operative contract formation occurred on 9 September 2004 on the occasion of the execution of the Second Consortial Agreement. He also found that there were no oral terms of the contract. However when he came to construe the Second Consortial Agreement he observed it was deficient in many ways and he had serious reservations in giving expression to incorporation by reference to the terms of the Head Contract under the application of a "mutatis mutandis" provision in circumstances where he regarded what was really required of him was the rewriting of the contract for the parties: June report [573].

The learned Referee came to the view that even assuming the terms of the Head Contract were applicable including its Technical Specification and had been incorporated into the terms of the Second Consortial Agreement, such agreement was void for uncertainty in a material respect: June report [574].

The uncertainty flowed from a decision by BSL (after discussion with SH) to change its planned contracting structure and to proceed with a Turnkey basis of a "design and construct" contract with SH as the contractor and to contract on that basis with a programming provision calling for Basic and Detail Design to be provided months after execution of the Head Contract. On the basis of the evidence before the learned Referee he stated that he was simply unable to say what had relevantly occurred at a number of "Scope Meetings" which Mainteck placed heavy reliance upon and which he accepted were concerned with both price and scope of work: June report [580].

He also found that as a matter of definition the terms of the Second Consortial Agreement could not define the scope of Mainteck's services at the time of the formation of the agreement. He found that the works to be performed comprised the supply of the parts of the WBF2 itemised in the BOM: June report [575] and [580].

Further he found that the scope of services to be provided by Mainteck was that "laid down" in the Technical Specification of the Head Contract specifying the scope of supply and services to be performed by each party and the work program: June report [578]

The Referee found the Technical Specification did not fulfil its apparent intended function. The reason was that section 5 of the Technical Specification entitled "Contractors Scope of Work" imposed on SH the responsibility for the design, supply, installation, commissioning and performance of one Walking Beam Slab Re-Heat Furnace and associated equipment: June report [578].

He also found that the Technical Specification did not adequately identify (but for the electrical and control systems) the remainder of the scope of works as may have concerned Mainteck. Further he found that the inclusion in the BOM of an item described as "building modifications to accommodate stack" did not adequately or with the requisite certainty determine the Mainteck supply and installation obligations. The Referee was unable to identify any such obligations for example from Schedule 1A which he considered lacked sufficient specificity to identify the scope of services to be provided by Mainteck. Nor did the schedule of "Milestones and Payment" assist in specifying the scope of works.

The Referee found that insofar as the Second Consortial Agreement pointed to a Technical Specification which was similar to or even identical with comparable elements in the WBF1 it was again inadequate and led to uncertainty for the reason that even those elements required Basic and Detail Design to be able to determine the ambit of Mainteck's obligations.

He observed that it was implicit in his conclusion that construction of the agreement would only venture into "absurdity" if it were construed as an agreement calling for Mainteck to fabricate and install the mechanical works, "whatever the design produced by SHA" so long as that design satisfied the performance criteria of the Technical Specification.

The determination by the Referee that the relevant contract was void for uncertainty was made by him without there being any contention to that effect by either party, more importantly by Mainteck. No notice was given to the parties by the Referee that this was his view and hence he neither sought nor obtained any submissions in relation to the issue.

In the same report the Referee also determined that Mainteck had not made out any of its misrepresentation allegations.

The June report did not of course deal with any other aspect of Mainteck's claims, that is, the delay and disruption claim, the fiduciary duty claim and/or the variation claims. By reason of his views on the status of the contract the Referee formed the view that expressing views on these matters was unnecessary.

On 21 July 2011 the Referee delivered what he described as an "Interim Report". The report was five pages in length and had a number of attachments. He made some further observations about the "Design Delivery Representation" and the "Cranage Representation" and made some typographical corrections.

Following the delivery of the June report Mainteck then sought to amend its statement of claim. On 1 August 2011 McDougall J dismissed an application by Mainteck for leave to amend to include amongst other things a claim that the contract was uncertain as to scope.

In February 2012 the Court of Appeal refused Mainteck's application for leave to appeal against the 1 August 2011 decision of McDougall J refusing Mainteck leave to amend.

For completeness I should observe in passing that by notice of motion dated 16 July 2012 Mainteck sought leave before me to file a third further amended summons with an attached list statement to include amongst other things a claim that the scope of the works to be performed by it under the contract was void for uncertainty. I likewise refused Mainteck's application for leave to amend.

On 16 August 2011 the Referee held a further directions hearing. This arose out of the June 2011 report and the 1 August 2011 judgment refusing Mainteck leave to further amend. The parties provided further written submissions dealing with the interim findings in the June 2011 report and fiduciary duty claim.

The Referee delivered a report on 14 December 2011 in which he addressed the fiduciary duty claim, the delay and disruption claims and the variation claims.

In the December 2011 report the Referee made a number of findings. First, that the Mainteck contract was formed with the execution of the Second Consortial Agreement and the SHF Novation. Further, that it was appropriate to determine the contract claims on the basis on which the parties had conducted their cases and that it would facilitate the conclusion of the proceedings to determine the variation claim issues on the assumption that the SH parties' contentions about the proper construction of the Second Consortial Agreement were correct. The Referee also found that it was appropriate to determine the variation claim issues on the basis that the Technical Specification determined or prescribed Mainteck's scope of works.

The Referee also found that Mainteck had failed to establish either that there was a fiduciary relationship between it and the SH parties or that the SH parties had breached any such duty.

He found further that Mainteck had established that the SH parties had breached the terms of the Second Consortial Agreement (principally in relation to delayed site access, design and delivery of equipment), but it had failed to identify any adequate evidentiary basis for assessing the amount of any resultant damages.

The Referee also found that Mainteck had established that some of the work it performed was additional work for which it was entitled to be paid as a variation to the Second Consortial Agreement and that SHA had established variations for which it was entitled to a credit.

On 20 April 2012 in a further report the Referee confirmed that his December 2011 report had made no deliberative finding about the contractual scope of work under the Second Consortial Agreement. I agree with SH that it is tolerably clear, however, that in giving his explanation for not making that finding the Referee was satisfied or accepted that the proper interpretation of the Second Consortial Agreement led logically to two only possible alternatives, namely, that Mainteck's contractual scope of work relevantly included the items required by the Technical Specification as contended by the SH parties or the contract was "void" for uncertainty (for which neither party contended) and which the Referee had to assume was wrong.

The Legal Principles Governing Adoption

The generally expressed adoption power is to be found in UCPR 20.24 (1). Rule 20.24 is in the following terms:

20.24 Proceedings on the report

(cf SCR Part 72, rule 13)

(1) If a report is made under rule 20.23, the court may on a matter of fact or law, or both, do any of the following:

(a) it may adopt, vary or reject the report in whole or in part,

(b) it may require an explanation by way of report from the referee,

(c) it may, on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report,

(d) it may decide any matter on the evidence taken before the referee, with or without additional evidence,

and must, in any event, give such judgment or make such order as the court thinks fit.

(2) Evidence additional to the evidence taken before the referee may not be adduced before the court except by leave of the court.

The principles relating to the Court's discretion in the adoption or rejection of a report were canvassed by McDougall J in Seven Sydney v Fuji Xerox [2004] NSWSC 902 at [11] - [13]. His Honour ultimately consolidated those propositions and amplified them in Chocolate Factory Apartments v Westpoint Finance and Others [2005] NSWSC 784 at [7]. Those principles have been adopted regularly by judges of the Court for example, New South Wales v Bovis Lend Lease Pty Ltd [2007] NSWSC 1045 per Einstein J at [7]; White J in Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302 at [12]; Rein J in Sangain Pty Limited v Italform Pty Ltd [2009] NSWSC 74 at [14]; Hammerschlag J in Corbett Court Pty Ltd v Quasar Constructions(NSW) Pty Ltd [2008] NSWSC 1163 at [30] - [31].

In Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228, Spigelman CJ and Allsop P (with whom Campbell JA agreed) did not take issue with the adoption by Einstein J of what McDougall J had to say. Their Honours merely added at [47] to [48] that:

[47] No issue was taken with this expression of the approach to the task of the primary judge. That is not said with any unstated reservation or criticism of how McDougall J expressed the matter. We would only add that the approach of a judge faced with the requested adoption of a referee's report should be determined according to the nature of the issues and the circumstances of the case.

[48] Highly relevant to that general overall consideration is the historical context of the rules concerning references, the recognition of the reference as a special form of hearing or trial (though not one leading, without more, to a verdict or judgment) over which the Court has a power of review, and the recognition of the place of references within the wider modern framework of alternative dispute resolution: see the discussion of these matters in the reasons for judgment of Gleeson CJ in Super v SJP Formwork at 558-564. The history of references under an order of the Court in the disposition of justiciable controversies that is the subject of discussion by Stephen J and Jacobs J in Buckley v Bennell Design & Constructions Pty Limited (1978) 140 CLR 1 at 15-22 and 28-38, respectively, by Gleeson CJ in Super v SPJ Formwork and by Brooking J in Nicholls v Stamer [1980] VR 479 illuminates the wide general power available to the Court in the review and adoption process.

Most recently in BestCare Foods v Origin Energy [2012] NSWSC 574 McDougall J repeated those principles and I respectfully adopt what his Honour there said at [15] - [18]:

[15] The discretions conferred by r 20.24 are not subject to limitations or conditions stated in the rule itself. It follows that they are to be exercised judicially, and in accordance with the dictates of, in particular, s 56 of the Civil Procedure Act 2005 (NSW) (see s 56(2)).

[16] Nonetheless, over the years, guidelines relevant to the exercise of the r 20.24 discretions (or the equivalent discretions under SCR pt 72 r 13) have been developed in many decided cases. I sought to collect the principles emerging from those cases in my judgment in Chocolate Factory Apartments v Westpoint Finance [2005] NSWSC 784 at [6] to [8].

[17] Since what I there said has received some measure of support in subsequent decisions, I venture to repeat those paragraphs:

"6 The principles to be applied, in exercising the discretion conferred upon the Court by Pt 72 r 13 to adopt, vary or reject in whole or in part a report of a referee, are well established. There are a number of cases to which, customarily, reference is made. They include Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; the unreported proceedings in that case before Giles J (19 May 1992: the relevant considerations referred to by his Honour are sufficiently extracted in the decision of the Court of Appeal); Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60; White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193; and Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615. As to the nature and content of the referee's obligation to give reasons, the relevant authorities include Xuereb v Viola (1989) 18 NSWLR 453 and Hughes Bros Pty Ltd v Minister for Public Works (Rolfe J, 17 August 1994, unreported; BC 9402885).

7 The relevant principles, distilled from those decisions, can be stated as follows:

(1) An application under Pt 72 r 13 is not an appeal either by way of hearing de novo or by way of rehearing.

(2) The discretion to adopt, vary or reject the report is to be exercised in a manner consistent with both the object and purpose of the rules and the wider setting in which they take their place. Subject to this, and to what is said in the next two sub paragraphs, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised.

(3)The purpose of Pt 72 is to provide, where the interests of justice so require, a form of partial resolution of disputes alternative to orthodox litigation, that purpose would be frustrated if the reference were to be treated as some kind of warm up for the real contest.

(4) In so far as the subject matter of dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh.

(5) Where a report shows a thorough, analytical and scientific approach to the assessment of the subject matter of the reference, the Court would have a disposition towards acceptance of the report, for to do otherwise would be to negate both the purpose and the facility of referring complex technical issues to independent experts for enquiry and report.

(6) If the referee's report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, patent misapprehension of the evidence refers to a lack of understanding of the evidence as distinct from the according to particular aspects of it different weight; and perversity or manifest unreasonableness mean a conclusion that no reasonable tribunal of fact could have reached. The test denoted by these phrases is more stringent than "unsafe and unsatisfactory".

(7) Generally, the referee's findings of fact should not be re-agitated in the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise. Thus, the Court will not ordinarily interfere with findings of fact by a referee where the referee has based his or her findings upon a choice between conflicting evidence.

(8) The purpose of Pt 72 would be frustrated if the Court were required to reconsider disputed questions of fact in circumstances where it is conceded that there was material on which the conclusions could be based.

(9)The Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee such evidence and submissions as they desire.

(10) Even if it were shown that the Court might have reached a different conclusion in some respect from that of the referee, it would not be (in the absence of any of the matters referred to in sub para (6) above) a proper exercise of the discretion conferred by Pt 72 r 13 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report.

(11) Referees should give reasons for their opinion so as to enable the parties, the Court and the disinterested observer to know that the conclusion is not arbitrary, or influenced by improper considerations; but that it is the result of a process of logic and the application of a considered mind to the factual circumstances proved. The reasoning process must be sufficiently disclosed so that the Court can be satisfied that the conclusions are based upon such an intellectual exercise.

(12) The right to be heard does not involve the right to be heard twice.

(13) A question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come is not raised "by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it". The real question is far more limited: "to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence".

(14) Where, although the referee's reasons on their face appear adequate, the party challenging the report contends that they are not adequate because there was very significant evidence against the referee's findings with which the referee did not at all deal, examination of the evidence may be undertaken to show that the reasons were in fact inadequate because they omitted any reference to significant evidence.

(15) Where the court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the court has a choice. It may decline to adopt the report. Or it may itself look at the detail of the evidence to decide whether or not the expense of further proceedings before the referee (which would be the consequence of non adoption) is justified.

8.The twelfth point restates the aphorism of Mahoney JA in Super at 567. The thirteenth, fourteenth and fifteenth points are drawn (and include direct quotations) from the judgment of Hodgson CJ in Eq (with whom Priestley JA agreed and with whom, as to the relevant principles, Fitzgerald AJ also agreed) in Franks & Anor v Berem Constructions Pty Ltd (NSWCA 2 December 1998, unreported; BC 9806367). If I may say so with respect, I regard what his Honour said as giving content, on the facts of the particular case, to the operation of relevant principles rather than as stating any new principle."

[18] I emphasise, however, that those guidelines do not confine or restrict the discretions. Nor do they override the central significance of s 56 of Civil Procedure Act. Having said that, in general and subject to the particular circumstances of each case, I remain of the view that those guidelines are relevant when considering the exercise of the r 20.24 discretions. In this case, the parties did not suggest otherwise.

Contract Claims

In summary, the Referee as I have already observed came to the view in his June 2011 report that notwithstanding that a contract was formed between SH and SHA on the one part and Mainteck on the other on 9 September 2004 with the execution of the Second Consortial Agreement and the SHA Novation, it was, nonetheless, so far as it purported to apply to a scope of work, void for uncertainty.

In reaching that conclusion he purported to analyse in some considerable detail the various provisions of the relevant documents.

On the one hand he recorded what Mainteck asserted (having eight discrete components) was the relevant contract, describing its attempt as experiencing "considerable difficulty in coming to grips" with the construction of their asserted contract: June report [7]. On the other hand he observed that the defendants had pleaded that the contract comprised the Second Consortial Agreement, the SHA novation and the Purchase Order of 30 March 2005 together with various documents which those documents in turn incorporated. He also observed that the defendants abandoned reliance upon the Purchase Order as a contractual document. In his analysis of the contractual arrangements he rejected the notion that any of the asserted written documents alone or in combination provided sufficient certainty as to the scope of Mainteck's works. The Referee then resorted to surrounding circumstances but found little comfort in any which he identified as relevant as providing any requisite certainty as to scope of works.

It will be necessary to return to these matters in some little detail.

Nature and Content of the Contract

As I have clearly observed, the Referee's contract findings are principally contained in the June report.

In finding that the contract formation occurred on 9 September 2004 and was constituted by the Second Consortial Agreement and the SHA novation, it seems clear he rejected Mainteck's pleaded contract and accepted the alternative proposition put by the defendants once they abandoned reliance upon the Purchase Order of 30 March 2005, namely that the relevant contract comprised or was to be found in the documents identified by the June report [7], [11], [36].

He also found that the agreement was executed at the end of a long meeting at Evry in France at which the contract provisions were examined and discussed before the relevant contract documents were signed: June report [241], [242].

Further, he found that the arrangements involved a clear undertaking by Mainteck to install the WBF2 in accordance with the Technical Specification under the Head Contract: June report [243](a) and (c).

The Referee also found that it was contemplated that the Mainteck contract would be performed in accordance with the Technical Specification of the Head Contract and contemplated the general conditions of the Head Contract: June report [564].

As I have already observed he expressly rejected the existence of any oral terms including the asserted misrepresentations: June report [562], [576].

Specifically of course he found that the contract was void for uncertainty as to Mainteck's scope of work for the reason that the mechanical works were yet to be defined by any design: June report [584], [597].

Again, as I have already observed, the December 2011 report proceeded on the basis that the Referee's finding as to "void for uncertainty" was wrong or at least impermissible having regard to the way in which the parties had conducted the hearing and of course the subsequent procedural history.

The Referee was at pains repeatedly to refer to the uncommerciality and absurdity of what he saw to be a contract to "supply and install" according to what he thought was to be a future design.

Mainteck's principal contention is that the Referee merely assumed what documents constituted the Second Consortial Agreement. Whilst it is true that the Referee made findings about what constituted the contract, in my opinion in his April 2012 report he certainly was unequivocal that he had made no finding as to the actual scope of works under that contract (email from the Referee to Ms Eliadies and Mr Coleman, 20 April 2012).

Some Relevant Principles

Before dealing with the respective parties' submissions on this part of the claim I should make some comments on the approach taken by the Referee on the construction issue.

In broad terms the Referee considered in the circumstances he was entitled to have recourse to surrounding circumstances in an attempt to construe the Second Consortial Agreement, unconstrained by the need to first find some ambiguity in the words chosen by the parties. In that regard, and unsurprisingly given the time he wrote his report, he relied upon the decision of the Court of Appeal in Franklins Pty Limited v Metcash Trading Limited [2009] NSWCA 407. The High Court subsequently expressed an entirely different view in Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604.

Whilst there is clearly room for debate on the construction issue, if for no other reason than the use of the term "mutatis mutandis", the Referee perhaps a little too readily embarked upon a search for relevant surrounding circumstances. This search whilst perhaps countenanced at the time by Metcash had I think the effect of the Referee not sufficiently striving to give proper effect to a contract which has been performed by the parties.

However, although he purported to construe the Second Consortial Agreement otherwise using conventional principles (June report [564] et seq) he in my respectful view fell into error in arriving at a conclusion of voidness for uncertainty without any regard whatsoever to the traditional doctrine that courts should be astute to adopt a construction that will preserve the validity of the contract especially when it has been performed. In his solitude the Referee omitted to pay any regard to this fundamental concept.

The general statement that a court will endeavour to avoid finding a contract void for uncertainty is contained in several authorities, such as Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429. There the contract concerned the supply of bulk electricity which allowed the supplier to vary the maximum demand charge and energy charge. Barwick CJ said at 436 - 7:

But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin's words in this connexion in Hillas & Co. Ltd v Arcos Ltd ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright's words in Scammell (G.) & Nephew Ltd. V. Ouston is not "so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.

The general principle was also stated in Meehan v Jones (1982) 149 CLR 571 in the context of a clause that provided the agreement was subject to finance. There Mason J noted at 589:

To say that clauses of this kind are void for uncertainty is to ignore the traditional doctrine that courts should be astute to adopt a construction which will preserve the validity of the contract. Moreover, it is a draconian solution...

And furthermore in Thorby v Goldberg (1964) 112 CLR 597 Kitto J noted at 604-5:

...but an agreement is not void for uncertainty because it leaves one party or group of parties a latitude of choice as to the manner in which agreed stipulations shall be carried into effect, nor does it for that reason fall short of being a concluded contract.

As noted by Lewison and Hughes in The Interpretation of Contracts in Australia (2012) at 382, 'The court's reluctance to hold a provision in a contract void for uncertainty is greater in a case where the agreement is no longer executory but has been partly performed.' Lewison contains a plethora of authority that demonstrates a court will increase the struggle to overcome uncertainty when a contract has either been executed or partially executed. As noted by Templeman LJ in Sudbrook Trading Estate v Eggleton [1983] 1 AC 444 at 460 (approved on appeal):

Where an agreement which would otherwise be unenforceable for want of certainty or finality in an essential stipulation has been partly performed so that the intervention of the court is necessary in aid of a grant that has already taken effect, the court will strain to the utmost to supply the want of certainty even to the extent of providing a substitute machinery.

In Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 there was a partly performed contract for the purchase of two restaurants. The appeal concerned whether a number of matters left outstanding meant the contract failed for uncertainty or incompleteness. Young CJ in Eq (with whom Stein AJA and Hodgson JA agreed) noted numerous authorities that evidence the extent to which a court will go to give effect to a contract. His Honour cited the decision of Mamidoil - Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd's Rep 76, in which Rix LJ stated at 89:

...particularly in commercial dealings between parties who are familiar with the trade in question and particularly where the parties have acted in the belief that they had a binding contract, the Courts are willing to imply terms, where that is possible, to enable the contract to be carried out.

And at [107] Young CJ in Eq said:

There is another principle which exists both in equity and at law that where a contract is partly executed, a plea of uncertainty will rarely succeed.

The Referee made no mention of these general statements or any of the relevant authorities. In failing to do so in my opinion he fell into error. The consequence is that he failed properly to construe the contract and hence the respective parties' obligations under it.

The Parties Submissions

Mainteck submits that its contractual scope of work cannot be derived from the Second Consortial Agreement. It says this because it says the Head Contract Technical Specification is not part of the Second Consortial Agreement and it does not differentiate in any event between SH and Mainteck. Further, Schedule 1A of the Head Contract is not part of the Second Consortial Agreement.

Further, it is submitted by Mainteck that the scope of works cannot be derived from the terms of the Head Contract. In addition, it cannot be construed against the background of an agreement to supply and install the "Mainteck Portion" WBF2 components as required by the Head Contract Schedule 1A, and the Technical Specification of the Head Contract because those sources provide only a "cryptic description of the works". Further, that it would make "commercial nonsense" to have an agreement to supply and install whatever design SH prepared.

In addition, Mainteck submits that the scope of works was ambiguously expressed in the Second Consortial Agreement and must be derived from the BOM, construed however with regard to the content of the discussions at the "Scope Meetings" in March and April 2004 and the common understanding that Mainteck was intended to perform all of the relevant installation work.

Mainteck therefore submits that it was only obliged to supply and install the items listed in the BOM and depicted in the various photographs, sketches and diagrams provided at the "Scope Meetings" in March and April that described a scope of work that was more modern and modular than WBF1.

The Referee found that the "Scope Meeting" discussions of March/April were irrelevant to the interpretation of the Second Consortial Agreement. Specifically he found that none of the discussions or representations as alleged translated into oral contractual terms. Although the Referee was satisfied that the discussions at the "Scope Meetings" included both scope and price, on the state of the evidence he was simply unable to make any findings as to precisely what had been said and therefore obviously its effect: June report [576].

Mainteck accepts that Article XXIII (the entire agreement clause) of the Second Consortial Agreement precludes the incorporation of other documents but it contends that the "Scope Meeting" discussions are surrounding facts and circumstances permissibly relevant for the purposes of interpreting the Mainteck contract. Equally are its pricing and tender programme relevant surrounding circumstances. Without them Mainteck submits there simply could be no certainty as to the scope of works. There are clear problems with this submission on the findings of the Referee if they are to be sustained. More to the point, uncertainty is simply not a live issue before the Court.

SH has a number of responses. In particular it submits that the Referee was correct to have concluded that the documents that constitute the contract are the Second Consortial Agreement and the SHA Novation.

Further, they submit that the Referee was correct in his description of the various features of the Second Consortial Agreement but in particular those included in [46], [48], [49], [50], [53] and [56] of the June 2011 report. There is no doubt when one has regard to these paragraphs that they clearly indicate the various sections of the Second Consortial Agreement which sought to incorporate provisions of the Head Contract and adapt the Technical Specification accordingly. In doing so, of course, SH has to confront the difficulties identified by the Referee in those paragraphs and again in particular phrases such as "mutatis mutandis" to be found in Article 11.2 of the Second Consortial Agreement.

SH however submits that the Referee was clearly correct in observing the importance of the "entire agreement provision" in Article XXIII and finding the absence of any oral terms.

In particular SH points to the June report at [243(a)] which records the finding of a "clear undertaking" by Mainteck to install the WBF2 in accordance with the Technical Specification under the "Head Contract".

SH submits that the "mutatis mutandis" provision in Article 11.2 of the Second Consortial Agreement at least purports to incorporate relevant parts of both the Head Contract and the Technical Specification. Mainteck would appear to accept this proposition.

SH submits that the Referee may have made assumptions about the construction of the contract but he made no such assumption about what constituted it. They submit he was quite clear in his findings about what it was that constituted the agreement. I think that is correct.

Some imprecision in language identified by the Referee does not in and of itself make relevant in my view discussions which occurred months prior to the execution of the Second Consortial Agreement, for example in September 2004. It seems highly inconsistent in my mind both with principle and common sense that one would resort to such matters, being readily classified at best as negotiations, in preference to the Technical Specification or a completed design provided as it was by early 2005 and followed by the parties executing a formal Purchase Order in March 2005 confirming the terms of their agreement. This subsequent conduct is in my view of much greater assistance in determining the effect of contractual arrangements.

The fact that the design was to be completed after 9 September 2004, the date of the Second Consortial Agreement, is in my mind part of the contractual performance. I agree with SH, it does not in and of itself give rise to ambiguity. Indeed in my mind the Second Consortial Agreement and the SHA novation indicate that the parties intended to be bound immediately notwithstanding they clearly contemplated a process of refinement as to the scope of their respective obligations.

In my view, the Referee was entitled to make the findings he did about the "Scope Meetings" and the ambiguous and/or inadequate content of them. Likewise it seems to me as a matter of principle there is nothing that would oblige or encourage a Court in circumstances such as this to take them into account in order to construe the Second Consortial Agreement, for example especially when what occurred is not at all straightforward.

More specifically, I see no reason why the Referee's findings as to such meetings should not be adopted. They are findings of fact well open to him.

Mainteck clearly suffered from a not insignificant forensic disadvantage in not having Mr Atie available for the trial. Mr Atie's evidence was relevant to both the contractual and misrepresentation claims. The Referee described (correctly) his evidence as critical for the misrepresentation case: June report, [79]. Mr Atie died before he could be cross examined. He was Mainteck's Managing Director. On the materials that the Referee had before him however he nonetheless described Mr Atie's evidence (in relation to the alleged design representations) as "extremely general": June report [306]. He further described it in part as "simplistic and of little assistance, unsupported by detailed estimating evidence by him demonstrating with any clarity the impact of a changed design of that general description impacted on MTK's estimate workings": June report [309].

With a Referee especially one with the experience of the Hon Mr R L Hunter QC absent a cogent reason it would seem to me of little value to question that assessment.

Nonetheless Mainteck submits that some degree of prominence should be given for various reasons to the "Scope Meetings". Mr Atie was of course at the "Scope Meetings". But SH had Mr Hounliasso available who was also at the meetings and who the Referee accepted as generally credible: June report [246(a)]. Leaving aside the views of the Referee about those meetings they were largely unrecorded and, as I have said, are clearly to be regarded as negotiations more than anything else.

Further, whilst Mainteck submits that nothing in the Head Contract (including the Technical Specification) can be resorted to for the purpose of identifying the relevant scope of supply and services it should be observed that the agreed contract price of course only appears in Schedule 1A of the Head Contract.

It is said that Article 11.2 explicitly contemplates that the respective areas of responsibility of the contracting parties are in fact set out in the Head Contract.

It is also said Article 11.4 repeats that same notion and identifies the BOM as an essentially ancillary provision which operates only in the event of the absence of specification elsewhere and disagreement between the parties.

Mainteck also submits that the BOM is concerned only with quantities of material and in no way purports to precisely define, as distinct from providing information of potential relevance to, the scope of services involved in fabrication and installation of the material.

Mainteck also submits that there is no doubt that Mainteck's "installation obligation" may be accepted as contractual partly due to the fact that it was really never in dispute. Its existence can be implied from Mainteck's "final pricing". Mainteck makes this tolerably clear in its Outline of Submissions at [52] and [53].

However it should be noted that Schedule 1A of the Head Contract specifically described "installation" as within the content of the "Mainteck Portion". Installation was required by the Technical Specification.

There is little doubt in my mind that the Head Contract and the Technical Specification were incorporated into the Second Consortial Agreement.

Article 11.1 of the Second Consortial Agreement refers to the Parties' "respective areas of responsibility as being laid down in the technical specification of the main Contract specifying the scope of supply and services to be performed by each Party to the work program". The expression "Party" and "Parties" as used in the Second Consortial Agreement refers to SHF and Mainteck, respectively. Conversely the "Head Contract Specification" contained no reference to Mainteck.

However, within the Head Contract General Conditions of Contract as distinct from the "Specification", Mainteck was an approved sub-contractor. In addition, Schedules 1A and 4 of the Head Contract identified Mainteck as having a specific scope of work involving supply and installation of the "Mainteck Portion". Schedule 1A sets out the price for the "Mainteck Portion". It is common ground that the amount is the contract price for the Second Consortial Agreement.

It is correct in my opinion to contend as SH does that as the Head Contract "Specification" contained no reference to Mainteck but both Schedules 1A and 4 did refer to the "Mainteck Portion", Article 11.1 of the Second Consortial Agreement could not sensibly be construed as an exclusive reference to the "Specification" in the Head Contract. It would appear to be a more general reference to the parts of the Head Contract that do specify the respective scopes of supply and services to be provided by either SH or Mainteck.

The words therefore in Article 11.1, namely "in the technical specification of the main Contract" in the Second Consortial Agreement, are simply a reference to the "main Contract" where relevant. There is nothing unusual with this approach to construction.

In Articles 11.1 and 11.2 of the Second Consortial Agreement the parties acknowledged their respective areas of responsibility and that their scope of supply and services was to be specified in the Head Contract. Further they would bear "full responsibility" and the "technical and commercial risk" associated with their own "scope of supply and services". Further that "any and all" stipulations of the Head Contract applied "mutatis mutandis" to them for their "own scope of supply and services". These notions of course emerge from the express language of Articles 11.1 and 11.2.

In the June report the Referee found that "the mutatis mutandis" incorporation was not unknown and could work with a conventional subcontract and was not material to the construction of the contract advanced in the report. It seems consistent with those views in the December report the Referee appears to have found that in the contractual interpretation of the Second Consortial Agreement the specification determined at least the "method of performance" of Mainteck's contractual works: December report [33].

Importantly, in the June report the Referee found that the June 2004 draft of the Technical Specification was only superficially different from the final Head Contract version and "stipulated that particular elements of the design would be identical with the WBF1". Further, as I have already said, he found that Mainteck had given a "clear undertaking to install WBF2 in accordance with the technical specification": June report [243(a)].

The Referee characterised Articles 11.1 and 11.2 of the Second Consortial Agreement as "anachronistic" and "simplistic". I do not find these expressions very helpful. The parties' agreed language in Articles 11.1 and 11.2 identified the Head Contract as specifying their "respective scope of supply and services". Moreover they agreed on a "mutatis mutandis" method of incorporation for the purpose of ensuring that the Head Contract terms should be applied in a manner consistent with their respective obligations and entitlements. Whilst perhaps cryptic, upon careful analysis the language used by the parties in my view creates no real difficulties. SH contends, and I entirely agree, that the proper approach to the contractual meaning of that incorporation requires acceptance of the parties' mutual intention which may, if necessary for the application of a particular condition, require that words would be modified and adapted accordingly.

In their agreement that their "respective scope of supply and services" were specified in the Head Contract and their agreement to apply all of the Head Contract's provisions "mutatis mutandis", the parties to the Second Consortial Agreement in my view must necessarily have had in mind not only the basic features of the Head Contract but also the necessity for its terms to be adapted for application to their own agreement.

I agree with SH's submissions that the Head Contract and the Second Consortial Agreement had a number of critical features.

First, Schedule 1A of the Head Contract as I have already observed contained the price the parties agreed which was $27,924,279 lump sum for the whole of Mainteck's scope of works under the Second Consortial Agreement.

Schedule 1A of the Head Contract also did allocate in my view all installation responsibilities (other than electrical and automation services effectively) to the "Mainteck Portion" of work. It also allocated all structural and mechanical design responsibilities exclusively to the SH work portion.

The Head Contract on the other hand has a definition of "Work" which is defined to mean all of the Work "including... the supply and installation of the Equipment as defined in the Specification...". It also contained obligations which included compliance with the Contractor's Drawings that form part of the contract and with the Equipment Descriptions that were set out in the Technical Specification. It also recorded the approval of Mainteck by BSL as a sub-contractor to SHF in relation to the fabrication and project management for the "Work".

Importantly, as I have said, the Head Contract did not in fact differentiate in the Technical Specification between Mainteck and SH in "specifying the scope of supply and services to be performed by each Party", but Schedule 1A of the Head Contract did identify in my view the supply and installation obligations within the "Mainteck Portion" of the Head Contract.

Mainteck was a sub-contractor to SHF. This is clear enough from a number of documents, but the Second Consortial Agreement and recital to the 9 September 2004 Deed of Novation are sufficient to establish this proposition. It is also apparent from the 9 September 2004 Deed of Guarantee.

It seems to me that the parties should also be taken to have intended that the subcontract approval recognised in the Head Contract and the related "Work Portion" allocation in Schedule 1A of the Head Contract from which the Second Consortial Agreement price was derived, expressed a differentiation that when applied to the distinctions made in section 5.2, Design and Drawings and Section 5.4, Supply and Erection of the Technical Specification, was obviously intended to convey the content of the parties' respective scopes of work.

I think it is also likely, as is contended by SH, that the "mutatis mutandis" incorporation of "any and all stipulations of the Contract was intended to affect the content of the Technical Specification in its application between SH and MTK". The opening words of Section 5.4 of the Technical Specification required "the Contractor" to "execute and complete the Works under the Contract, including but not limited to... the following major components". The "mutatis mutandis" incorporation required that obligation to be regarded as describing Mainteck's "scope of supply and services", except to the extent that the "mutatis mutandis" incorporation required modification to reflect any contrary stipulation in Schedule 1A.

The error on the part of the Referee in my opinion is that he did not pay sufficient or indeed any regard to the purpose and object of the transaction against the background of the knowledge of the parties. It seems to me both sides assumed they had contractual obligations one to the other. They behaved accordingly. The Referee's condemnation of the Technical Specification in so far as he suggested that it did not fulfil the function of "specifying the scope of supply and services" to be provided by Mainteck, exposes in my opinion his failure to apply conventional principles of construction including giving due recognition to the background and purpose of the transaction, and the plain reality that the parties conducted themselves as being bound by contractual obligations.

He applied what I regard to be an overly literal construction of Article II.1 and in particular, it is clear that indeed he did not expressly take into account or apply what Barwick CJ had said in Upper Hunter County District Council for example. Nor did he take a more constructive view of what the parties clearly had intended to achieve.

I agree entirely with the submission made by SH that the approach adopted by the Referee suffered a number of significant shortcomings. It did not appropriately take into account the background reality of SH and Mainteck's common intention that Mainteck would perform all of the mechanical equipment installation for WBF2. It did not really come to terms with why section 5.4 of the Technical Specification (that section of the Technical Specification that was specifically identified in the Head Contract Schedule 4 as the "Mainteck Portion") should not be construed as referring to Mainteck for the purpose of the "subcontract" agreement contained in the Second Consortial Agreement between SH and Mainteck. If I may say, it would appear to be at least a most obvious pointer in that direction.

The Referee did not, it seems to me, acknowledge that Mainteck's Work Portion in the BSL Head Contract explicitly included "installation" of the WBF2 equipment. Schedule 1A makes that clear.

In my view the negativity which pervaded the Referee's overly literal approach to construction, instead of being consistent with an obligation to strive to give real and certain meaning to agreed contractual terms especially where the contract had been performed, fell far short of such an obligation. The Court, where it is faced in my view with a situation such as this, must do whatever is necessary to achieve business efficacy and give force to the parties' obvious intentions although there may be aspects of their communications which are uncertain or are arguably incomplete. To give effect to the parties' clear contractual intentions, in my view, does not necessarily involve the Court rewriting the contract but simply spelling out with greater precision what the parties obviously intended their obligations to be.

In summary, it seems to me that a proper construction of the Second Consortial Agreement is that section 5 of the Technical Specification is incorporated "mutatis mutandis" into the Second Consortial Agreement. So incorporated, it should not properly be construed as referring only to SH's obligations.

I agree with SH that the proper approach to the "mutatis mutandis" incorporation of the terms of the Head Contract into the Second Consortial Agreement is to regard any references in the Technical Specification to the "Contractors" installation obligations as references to Mainteck's supply and installation obligations under that Second Consortial Agreement. It does seem to me, as SH contends, that this does accord with the Second Consortial Agreement and Article II.

It is clear in my mind that Article II.2 of the Second Consortial Agreement contemplates that the Head Contract would identify the Mainteck and the SH respective portions of work. This is corroborated for example by Article VI of the Second Consortial Agreement that refers to the "sub-contractors portion of the Contract sum as defined in the contract". This is in turn corroborated in my view by Schedules 1A and 4 of the Head Contract. Schedule 1A of the Head Contract differentiates between design, SH supply items, Mainteck's installation obligations and Mainteck's "supply and install" obligations. It is plain from these materials, but especially items 7 and 8 of Schedule 1A especially when read with the more extensive description of the Work Portions in Schedule 4 of the Head Contract and the "supply" and obligations detailed in the BOM, that SH had no relevant installation obligations. Further, it is also plain that Mainteck had obligations involving "manufacture of equipment" and also had the exclusive installation obligations (other than those relating to electrical and automation systems).

In accordance with Schedule 1A and Schedule 4 Table B of the Head Contract as between itself and SH, Mainteck was the only party with "work portion" obligations to manufacture the "equipment". In addition, it seems to me the materials support the view that Mainteck had the exclusive "supply and install" obligations in Schedule 1A in relation to the furnace metal parts, slab handling equipment, and waste gas stack.

In addition, Schedule 4 Table B - the Mainteck Work Portion - attracted the application of section 5.4 of the Technical Specification. Section 5.4 of Schedule 4 Table B does not it seems to me relevantly apply to the SH Work Portion in Schedule 4 Table A. It seems to me that as a result of that, Mainteck was the contractor obliged to "execute and complete the works under the contract including but not limited to...major components". It also had to provide guarding and access platforms in accordance with clauses 5, 5.4.7 and 5.4.8 of the Technical Specification. It also had to provide building cladding for the pump house in accordance with clause 5.4.14 of the Technical Specification and provide grease and oil "first fills" in accordance with clause 5.4.15 of the Technical Specification. It also follows that it had to provide all intrinsically required building modification - in accordance with clause 5.4.3.5 and 5.20 and clause 6.1 of the Technical Specification and, in addition, to source, manufacture and supply all equipment necessary to complete the Work under the contract - in accordance with clause 5.4.18 of the Technical Specification.

Whilst in my view the Referee was correct in identifying as he did the Second Consortial Agreement and the SHA novation as the respective source of contractual obligations of the parties, he fell into error as described above in coming to the view that the contract was relevantly void for uncertainty in relation to the scope of works. For reasons articulated above it seems to me that properly construed the obligations in relation to the scope of works should properly be seen as those contended by SH. They not only make the contract workable but it seems to me they objectively reflect what the parties intended their respective obligations to be.

The Misrepresentation Issues

The misrepresentation issues have a somewhat chequered history. As will become clear shortly, Mainteck sought to argue before me that it should be entitled to withdraw certain paragraphs of the June report which were adopted with Mainteck's consent before Hammerschlag J on 26 August 2011.

Mainteck moved before me by way of notice of motion dated 22 October 2012 supported by an affidavit of Ms Emily Evangelia Eliades of the same date. The effect of the motion was to permit Mainteck to contest certain paragraphs it had previously argued should be adopted.

Ms Eliades sets out the history of the matter which is largely uncontroversial.

Following the delivery by the Referee of his June report, the defendants filed a notice of motion seeking the adoption of various paragraphs of that report. The motion was dated 20 July 2011. Briefly put, they sought the adoption of paragraphs that concerned various aspects of the misrepresentation case and certain paragraphs in relation to the fiduciary claims and other findings.

The defendants' motion, and a further motion filed by the plaintiff to amend its summons and list statement, came before McDougall J on 1 August 2011. As already noted the amendment application failed.

The defendants sought to proceed with their application for the adoption of the various paragraphs of the June report.

In the result however, McDougall J did not deal with the defendants' application for the adoption of the relevant findings but directed the parties to contact the Referee in relation to his final report and stood over the defendants' motion to 11 August 2011. McDougall J directed the plaintiff in the meantime to advise the defendants what if any of the Referee's findings and conclusions on the various matters were in dispute and the reasons why they were in dispute.

On 9 August 2011 the plaintiff wrote to the defendants setting out their respective objections to paragraphs sought to be adopted by the defendants in relation only to the misrepresentation claim. The letter referred to other matters by way of criticism of what the Referee had done in a number of other respects.

On 11 August 2011 the matter once again came before McDougall J. At the hearing the plaintiff indicated that it had only come prepared to deal with the misrepresentation claim findings and had otherwise not given consideration to other matters. The plaintiff had taken the position that as the report was only an interim one on the part of the Referee they objected to the defendants moving for adoption of the various paragraphs identified in the motion. McDougall J ordered that all (not as limited by the plaintiff) of the interim report should be adopted except for specific paragraphs identified in the plaintiff's letter of 9 August 2011. Counsel for the plaintiff again asserted before McDougall J that his client had not had a proper opportunity to address various paragraphs but his Honour nonetheless made orders reserving leave to the plaintiff to apply to discharge or vary the orders if for some reason it had misunderstood what the court had previously indicated it wished to do.

By notice of motion of 19 August 2011 the plaintiff sought to set aside the adoption of the interim report in so far as it went beyond matters relating to the misrepresentation claims. Ms Eliades in her affidavit in the matter before me indicated that for some reason unexplained the plaintiff believed that that motion would be consented by the defendants. By email of 24 August 2011 the plaintiff sought the defendants' consent to the orders in the plaintiff's motion.

By email dated 25 August 2011 the defendants set out their understanding of the matter as follows:

We are confused as to precisely what orders your client is seeking to have made in substitution for the orders made by McDougall J on 11 August 2011.

We understand from Mr Kalyk's submission to the court on 11 August 2011(T3-45) and Mr Coleman's affidavit deposed 19 August 2011 (paragraphs 10-13) that the basis upon which your client seeks to have the orders of McDougall J varied is that he ordered that the entirety of the first interim report be adopted, save for the extent to which the report is opposed as set out in Annexure TJC2. As Mr Coleman correctly states in paragraph 10 of his affidavit, on 11 August 2011, the defendants sought the adoption not of the whole report, but of the paragraphs set out in the defendants' motion dated 20 July 2011 (except those paragraphs set out in TJC2). His Honour stated (t3:8) that "absent consent, I won't make orders pursuant to the notice of motion, that goes beyond the relief [sought in the notice of motion]". Therefore, we accept that the orders made by the court on 11 August 2011 contain an error which would be cured if the adumbrated orders in paragraph 13 of Mr Coleman's affidavit were made in substitution for the orders made on 11 August 2011. We would consent to such orders being made.

The difficulty is that the orders sought in your client's motion go beyond the submission made by Mr Kalyk on 11 August 2011 and the matters set out in Mr Coleman's affidavit - clearly, if orders are made in accordance with paragraph 1 of your client's motion this will result in the non-adoption of a significant number of the paragraphs of the interim report identified in paragraphs 2 and 3 of our clients' notice of motion. In order for us to understand your client's position please let us know (by reference to our clients' motion dated 20 July 2011):

a. which paragraphs of the report does your client contend should have been adopted by the court on 11 August 2011?

b. which paragraphs of the report does your client contend should not have been adopted by the court on 11 August 2011?

If you can respond to this letter today, we will then be able to obtain instructions as to whether or not to consent to your motion prior to the hearing of it tomorrow.

The plaintiff responded on the same day as follows:

In order to simplify this and not do it by reference to previous Orders, it may be best if the previous Orders are vacated and substituted with Consent Orders as follows:

1. That the paragraphs between and including 263 - 561, excluding the following paragraphs:

278,280,281-305, 332, 342, 360, 363, 387, 408, 410, 428, 448, 454, 474, 479, 496, 506, 525, 537, 552, 553, 559 and 561

are adopted.

2. The remaining paragraphs are neither adopted or rejected.

Please let us know if you agree with the above. We are in the 9.15 list tomorrow. We will call you at 8.30am to ascertain your position.

Counsel was briefed to appear on the return of the plaintiff's motion and to prepare an order reflecting what was believed was an agreed position.

Counsel for the plaintiff sent an email to his instructing solicitor, Ms Eliades, with what he understood were to be the proposed consent short minutes of order. The short minutes reflected the emails. Counsel signed the short minutes of order as did the solicitor for the first and second defendants.

It is suggested however by Ms Eliades in her affidavit that the consent short minutes did not reflect what the plaintiff thought it was consenting to. I quite frankly do not follow the argument proposed in relation to this aspect of the matter. In any event the parties had ample opportunity to give careful consideration to what was proposed by way of consent short minutes. Ms Eliades' email of 25 August 2011 made it clear what paragraphs the plaintiff was suggesting be excluded from the consent short minutes. It is plain that careful attention indeed had to be directed at that point to precisely what it was the plaintiff was going to consent to.

None of the paragraphs the subject of the motion before me were excluded although many other paragraphs were specifically identified as those to be excluded from the consent position. Counsel who as I have also indicated clearly participated in the preparation of consent minutes either did not consider the matter an issue or did not have his attention drawn to it. In any event no evidence was provided by him at the hearing before me to indicate that he believed that he was in any way confused about what he was doing on or about 26 August 2011.

Exercise of Discretion to Grant Leave to Withdraw an Admission

The matter was first argued before me on 20 July 2012 and reagitated with additional materials I have referred to above on 29 October 2012. The preliminary view I took on 20 July 2012 was that I would not permit the plaintiff to withdraw the various paragraphs identified. Having heard further argument in October 2012 nothing has been exposed in my mind which would cause me to change the view I expressed in July.

It seems to me that although upon reflection the plaintiff may see it as forensically more desirable to oppose the adoption of the paragraphs it had previously consented to, I do not think that alone provides an appropriate basis upon which to grant leave to the plaintiff to withdraw what in my mind could only have been a fully informed decision taken in August 2011.

The Relevant Principles

The authorities and commentaries in relation to the circumstances in which a court would grant leave for a party to withdraw an admission were considered fairly comprehensively by Ward J in Le Meilleur Pty Ltd v Jin Heung Mutual Savings Bank Co Ltd [2011] NSWSC 1115 at [307] - [312]:

[307] As to the question of any withdrawal of the admission (though no such application was made as such), there are said to be two competing policies at least in relation to the withdrawal of formal admissions (first, that an admission should not be permitted easily to be withdrawn, so as to make the procedure for formal admissions meaningless, but, on the other hand, not to discourage parties from making admissions out of fear that once given they cannot be withdrawn - Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 per Rogers CJ).

[308] In McFadden v Snow (1952) 69 WN (NSW) 8, Kinsella J said:

The question of a party's right to withdraw an admission was discussed in Ell v Hunter District Water Supply & Sewerage Board (1927) 27 SR (NSW) 437; 44 WN (NSW) 140. Although in that case the court was concerned with admissions of fact made pursuant to the District Courts Act 1912, and rules thereunder, its decision was based not upon the interpretation of that Act and the rules but on general principles which are to be applied at the discretion of the tribunal according to the facts of each case in order to do substantial justice between the parties. Street CJ, after citing from a number of cases, including the following passage from Bowen LJ in Cropper v Smith (1884) 26 Ch D 700:

Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace", proceeded at 441: "We are not told how it was that this admission came to be made, or, if a mistake was made, why it was that this was not discovered sooner, but there can, of course, be no question of bad faith or anything of that kind in the matter ... Is there any reason therefore why it should not be allowed to repair the error which it made? I can see none. The mistake has not brought about any alteration in the position of the plaintiffs, which will prevent them from getting justice done, and any injury that they may have sustained by reason of it can be compensated for by costs. I think therefore that the Board should be allowed to withdraw its admissions ..."

In the present case there is no suggestion of bad faith. The admission was made by mistake, and in accordance with the principles expounded by the late Chief Justice I permitted Mr Seaton to withdraw his admission.

[309] In Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; (2003) 204 ALR 327 the Full Court of the Federal Court (Hill, Madgwick and Conti JJ) noted that the question whether to permit withdrawal of an admission was ultimately one of "the attainment of justice" (citing the observations of Dawson, Gaudron and McHugh JJ in Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 at [154]; 141 ALR 353 at [357]) involving a balancing of all relevant circumstances including the prejudice which must attach to one party or the other.

[310] Here, of course, the admission is not one made formally under the procedure contained in r 17.2 of the Uniform Civil Procedure Rules 2005 (NSW). However, some guidance may perhaps be gleaned from the cases that have considered the withdrawal of an admission in that context. In the case of formal admissions (which foreclose proof of facts to the contrary of the admission), leave for withdrawal of the admission is necessary and it is said that what constitute proper grounds for withdrawal will necessarily depend on the nature of the admission and the stage of the proceedings when the application is made. Further, it is said that ordinarily this will require explanation of the circumstances in which the admission was made and those relied on to justify the withdrawal (see Ritchie's Uniform Civil Procedure Rules commentary at [17.2.5] and the cases there cited).

[311] In Ritchie's it is said that it will not usually be appropriate to grant leave to withdraw an admission where, among other things, the admission has been made after obtaining relevant advice and is deliberate and clear (for example, Panfida Foods at 745 and 748) or the party with the benefit of the admission is likely to be prejudiced by the withdrawal, either as a result of having changed its position in reliance upon the admission (H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694; 1 All ER 934; or as a consequence of the unavailability of evidence, or likely significant deterioration in its quality, as a result of the delay (SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816 at [57]-[59]);or where the application is made at a late stage of the proceedings (Jeans v CBA; Essex Securities Pty Ltd v Lunt [2006] WASC 58; at [14], [29], and [34]). Conversely, leave to withdraw an admission may be appropriate where the admission was made inadvertently or without due consideration of material matters (Khouri v National Australia Bank Ltd [2007] NSWSC 987).

[312] It is suggested that admissions made otherwise than in the formal course of proceedings have merely an evidentiary significance and that the "admitting" party is entitled to dispute the accuracy of the admission (by evidence that it was influenced by mistake, misunderstanding or ignorance, or that it is otherwise inaccurate or unreliable - Nominal Defendant v Gabriel at [113], [144]).

As I have already said, in my view no adequate explanation has been advanced which persuades me consistent with sections 56, 57 and 58 of the Civil Procedure Act 2005 and the principles articulated in cases referred to by Ward J, that Mainteck should be permitted to withdraw its concession of 26 August 2011.

SH submits that the Referee dealt in full with all of the representation claims. It contends that all of the Referee's findings should be adopted because all of the findings were adopted by consent on 26 August 2011 as they are otherwise findings of fact which were all reasonably open to him.

As I have refused Mainteck the opportunity to relitigate those matters, it is strictly unnecessary for me to say anything further about them. But the parties have addressed them in each case in detailed written materials and as is clear from the discussion that follows, I do not consider there would have been a legitimate basis to challenge the particular paragraphs in any event.

Many of the challenges are based on a different appreciation of the evidence, where Mainteck describes the approach of the Referee as either the Referee patently misunderstanding the evidence or acting in a manifestly unreasonable way. As such this amounts to a proposition that he should have come to a different conclusion on the facts. It is clear from what follows that although I do not consider Mainteck should be permitted now to withdraw concessions it made on 26 August 2011, in the event that I am wrong about that I have in any event reviewed the position in relation to the various misrepresentation cases. Having done that I am firmly of the opinion that the position reached before the court on 25 August should not be disturbed.

A finding would be regarded as perverse if it were one no juror or judicial officer could reasonably make: Hocking v Bell (1945) 71 CLR 430 at 486 per Starke J, or a finding contrary to that which the facts of the case legally demand and against the weight of the evidence: per Dixon J at 498. In Calin v Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41, Mason CJ, Deane, Toohey and McHugh JJ said:

The correct principle is that a court on appeal may order a new trial if the jury has reached a conclusion which is against the evidence in the sense that the evidence in its totality preponderates so strongly against the conclusion favoured by the jury that it can be said the verdict is such as reasonable jurors could not reach.

A significant reason proffered by the Referee for finding against Mainteck was either the absence of Mr Atie or his rather general or inadequate assertions in his sworn testimony. The absence of Mr Atie, given his status and level of involvement, had a profound negative forensic impact on Mainteck's ability to substantiate its side of the story.

The Referee found that the price adjustment provision in condition 64 of the Head Contract entitled Mainteck to a price adjustment. This matter was otherwise described as variation 98. SH contends that the Referee's finding relevantly was ambiguous. SH contends that the Referee wrongly construed the opening words of condition 64 of the Head Contract which provided that the contract sum was based on the prevailing rates in the Mainteck Enterprise Bargaining Agreement.

SH contends that the effect of the Referee's construction of condition 64 was to permit Mainteck to claim a price increase in respect of allowances merely because it chose to pay them and irrespective of whether it was obliged to do so. SH contends that it is not an interpretation that reflects the likely and objectively intended meaning of these terms and conditions.

The Referee found that Mainteck paid its employees the travel allowance component of variation claim 98 (consistent with the project consent award) in response to threats of industrial action and not as a result of legal obligations imposed by that award. That seems to me to be a finding of fact which the Referee was entitled to make. It also seems to be entirely accurate.

The Referee also found that the Head Contract price adjustment clause (condition 64) relating to the project consent award was incorporated into the Mainteck Contract "mutatis mutandis". SH contends that this is also correct. I agree.

The Referee further found that as the price adjustment clause was incorporated "mutatis mutandis" into the Mainteck contract this entitled Mainteck to a price adjustment on the mere contingency that there was a difference between the amount of rates and allowances set out in the "Mainteck Enterprise Bargaining Agreement" on the one hand and the Project Consent Award on the other. The Referee held therefore, it is contended implicitly, that the entitlement arose irrespective of any legal obligation of Mainteck to pay the relevant comparison rate or allowance. I think that is a fair interpretation of what the Referee has done.

It would follow that the effect of the Referee's interpretation of the price adjustment clause was to entitle Mainteck to a price increase adjustment notwithstanding that it had no obligation to pay under any award.

I accept the submissions of SH in that regard and I am of the view that the Referee came to an erroneous finding on this matter as a matter of law. My view is that his findings relevantly should not be adopted and the project consent award claim should be disallowed.

Mainteck made a claim for a variation in relation to the repair of the refractory shrinkage cracks. This was identified as variation 99.

One finds the Referee's rejection of this claim at [74] of the December 2011 report. Mainteck objects to the adoption of the first two sentences of [74].

It seems to me that SH is correct in submitting that the sole question was whether the rectification of the refractory that was not in an acceptable condition was within the Mainteck contract scope.

The Referee clearly rejected the claim on the basis that Mainteck's scope of work necessarily involved it presenting a finished refractory that complied with section 5.4 of the Technical Specification. In particular the Referee expressed views in [63] to [69] of the December report, that there were probably some aspects of the design detail and method of work that should have been specified by SH rather than being left to the contractor's own judgment. SH contended that as a realistic possibility this kind of cracking was merely an unavoidable risk associated with the refractory work.

The Referee's reasoning in his December 2011 report proceeds it seems to me upon the basis that SH was in breach of its contractual obligations caused by a lack of specification on its part.

His apparent view of the evidence was that it pointed away from any defective workmanship and instead concluded defective design was justified.

Nonetheless the Referee clearly rejected the claim as an appropriate variation. He also took the view that there was an inevitable overlap with the delay and disruption claim. SH contends that the report should be adopted in so far as it rejects the variation claim.

Mainteck contends that it should be permitted to pursue this claim independently of the delay and disruption claim and that the Referee was correct to find that SH was "responsible for the defects" in the refractory. SH contends that if this is so it follows that the rectification of the work was additional to Mainteck's contractual scope of work and therefore it would involve a variation to the contract. If the claim is to be allowed it should be valued as a variation in accordance with the contractual mechanism for valuation. SH contends that the contract's Schedule 9 rates would apply in accordance with the valuation provisions of the Head Contract. It calculates the claim as requiring reduction to about $119,000.

I am not persuaded that the Referee fell into error in rejecting this claim. It seems to me it was open to him to reject this as a variation claim and his findings therefore should be relevantly adopted.

There were two variation claims which were dependent on quantity changes giving rise to alleged price adjustment. Both of the claims related to refractory quantity and the SH Variation Directions relating to the hot air main and burner offtakes. They each involve the supply of material and/or the impact of the deletion or addition on the contract price. Again these claims fall to be determined on whether Mainteck's scope of work is or is not to be governed by the BOM.

So far as the refractory quantities are concerned this involves variation 125 and variation 127. Mainteck's argument in short compass was to the effect that any changed or additional refractory quantities (from those stated in the BOM) constituted a variation.

So far as the hot air main and burner offtakes are concerned it appears that Mainteck does not oppose the adoption of the Referee's findings although it does express some reservations about quantum.

Unsurprisingly, in respect of both variations 125 and 127, SH submits that they should fall to be determined along with other matters upon the determination of the scope of works.

It is submitted by SH that the Referee found that Article II.5 of the Second Consortial Agreement precluded price adjustment for variation to weights and volumes stipulated in the annexed BOM. It is submitted by SH that Mainteck offers no real reason to resist the Referee's findings which rely upon that provision. It contends therefore that the findings ought to be adopted.

So far as variation 127 is concerned, Mainteck advances almost an identical argument to that advanced in relation to variation 125.

It seems to me that neither submission by Mainteck has any substance and I therefore propose to adopt the Referee's reasoning process and findings in relation to variations 125 and 127.

There is a submission that the variation concerning the hot air main material and burner offtakes should be seen in the context of what will soon be identified as the Andreco Hurll Settlement Deed Claim. I must confess to not quite following this argument. In any event I am by no means convinced there is an inter-relationship between the two and I would therefore propose to adopt the Referee's finding and reasons in relation to variations 125 and 127.

The Referee rejected a number of variation claims on the basis that they were either misconceived as a variation and/or were unsubstantiated. These include variation 120 (Form Work Scaffolding), variation 174 (Stud Welding) and the Andreco Hurll Settlement Deed Claim.

So far as variation 120 was concerned, the Referee found that this work was attributable to SH's delay and as such Mainteck submits that it should have been accepted as a variation.

In particular, the Referee found that the variation arose out of "delay by SH in providing information that was necessary" to verify appropriate removal of the form work.

At [80] of the December 2011 report, the Referee found that "good workmen like practice" necessitated a reasonable curing period during which the refractory for the roof would have to be supported. It was a matter for the contractor to satisfy itself as to what was the appropriate period during which the formwork was to be required. However, the Referee formed the view that although the requirements could have been effected more expeditiously, and because the matter was not addressed before the events of January/February 2006, the Referee rejected the claim.

It seems to me these findings were clearly open on the evidence before the Referee and I do not apprehend that it could otherwise be suggested. I do not think there is a legitimate basis therefore to interfere in what the Referee has said or done.

Variation 174 deals with stud welding. Again this turns upon the Mainteck scope of works argument.

The Referee also found that the contents of the BOM demonstrated that the studs would be supplied separately: December report [125]. This must have involved implicitly as least the Referee as having regarded Mainteck's obligation in this regard as part of its scope of work. It seems to me that it was open to him to come to that view and I think these relevant paragraphs which concern stud welding should be adopted.

The Andreco Hurll Deed of Settlement Claim involved lengthy submissions being made by Mainteck on what was alleged to be a variation claim. In addition to the extensive written materials, Senior Counsel for Mainteck further addressed the issue before me in the October hearing.

Mainteck asserted that although the matter had been addressed in pleadings and cross examination during the hearing itself, the Referee failed to deal with the parties' closing submissions on the issue and hence failed to properly describe it and determine it as a variation. In particular, the variation is said to arise because of changes in the design of the hot air duct.

The Referee found that the claim was misconceived as a variation claim and that it had not been pleaded but that it had simply been added as an item in Schedule 1 to the Second Further Amended List Statement in the sum of $590,303.51. It was described in the schedule as an amount owed and based upon the "Deed of Settlement with Andreco Hurll". In this regard it seems the Referee was perfectly correct in identifying where the claim was to be found.

The Referee also found at [112] of the December 2011 report that the claim was not referred to in opening submissions by Mainteck nor "was its substance identified at any stage prior to Closing Submissions, notwithstanding requests by Counsel for SHA during the hearing, calling upon Mainteck to indicate whether the claim was being pursued". Before me, Mainteck contended it had been pleaded and the Referee misconstrued the pleading. Mainteck asserts it had been in the pleading since 11 June 2010. Mainteck however conceded in argument before me that it was not specifically referred to in opening before the Referee but rejected any notion it had been abandoned. Mainteck submitted the Referee failed to have regard to any of the relevant evidence. Further, Mainteck submitted it should properly have been considered as a variation claim.

It is plain that SH objected to the claim. In its reply submission before the Referee (paragraph 6.28) it is abundantly plain that SH had submitted that the claim was not raised at least explicitly notwithstanding requests that the position be clarified, and further observed that there had been no relevant cross examination. It was also put quite explicitly by SH that the claim was misconceived. SH submitted before me, as well in their written materials that there was no factual basis for the proposition that delivery of the hot air main relevantly delayed the refractory work, and the real problem was that Mainteck changed the sequence of work which in turn delayed Andreco Hurll.

The Referee clearly thought the claim suffered from a number of defects, mainly due to the fact that his view was that the evidence never sought to explain the relationship between the lump sum payment by Mainteck of the $701,075.56 and any particular item of the claim. The Referee made this abundantly plain in his observations and indeed findings at [115] of the December report. He was also rather dismissive of the claim and described it as "half hearted" at [116].

On any view, the claim was rejected by the Referee because he regarded Mainteck as not having sufficiently and adequately identified the evidentiary basis of the claim. On its face at least he was entitled to come to that view on the evidence. In any event he was not obliged to accept the Mainteck evidence.

Mainteck of course wished to maintain that the variation resulted from changes in the design of the hot air duct. It seems to me abundantly plain that there are three items which are relevant. It is asserted that there was a change to the start date. Next, a change in methodology which led to increased labour costs and last, a change in the work period.

So far as the change in start date is concerned, Mainteck submits that the claim was based on the proposition that Mr Hurll originally expected to be granted on-site access to begin the installation of the hot air duct in July 2005.

SH contends that the suggestion that the access would be available from July 2005 is contrary to the available objective evidence. It is contended by SH that dates in August, December, October and July 2005 were at various points suggested as the relevant start dates. It seemed further that from the programme of works dated 29 June 2005 the sequence of work therein set out indicates that the labour rates were only valid in the event that work started on site before 1 October 2005. It is otherwise contended by SH that on the basis of available material there was never any prospect that Andreco Hurll would be on site commencing the installation of the refractory before 1 October 2005.

The table which is reproduced in the SH submission 19 at 8.8.12 depicts clearly what the sequence of work was so far as the furnace casing and other matters are concerned. The refractory work involving the hot air main was not programmed to commence until January 2006. This would have been (bearing in mind October 2005) approximately three months after Andreco Hurll was to commence on site work.

There does not appear in my view, on the basis of that material, to be any serious issue as to start date.

So far as change in methodology is concerned, Mainteck submits that the late provision and alteration of the design of the hot air duct required Andreco Hurll to implement additional labour shifts in January 2006. Again this would not appear to be borne out in the evidence, especially when viewed against the claims made and recited in the Adjudication Determination which relevantly covered this matter. The various matters referred to were encapsulated in an email of 21 December 2005 from Andreco Hurll. The email complains about the delay in getting access to the furnace as the result of the Mainteck "module" sequence. This is a reference to complaint that instead of being granted access to the whole of the furnace Andreco Hurll asserted it was only granted access to "four modules". This had a significant effect on the manner in which the work could proceed because of the restricted access to working areas.

Importantly, SH points out that no reference is made in that email to the hot air duct. It is therefore submitted that if the hot air duct was not mentioned in the Adjudication Proceedings it can be reasonably assumed that it was thought at least at that point by Mainteck to have nothing whatever to do with any aspect of the claim made by Andreco Hurll. There is much force in this argument. On that basis SH contends again with much force that the Mainteck submission lacks foundation.

So far as changes in work method is concerned, Mainteck submits that the change in design of the hot air duct, which caused delay in the start of the works, had an adverse impact on Andreco Hurll's ability to source labour for the work required.

Again SH points to the Adjudication Determination in which it would appear to be tolerably clear that the Andreco Hurll claim was based upon the proposition that the labour rates were only valid in the event that they start work on site before 1 October 2005. Further it is submitted by SH, again in my view with much force, that there was simply no issue for the purposes of the Adjudication Determination. Mainteck must have known from the early part of 2005 that there was never any prospect that Andreco Hurll would be on site before 1 October 2005. That would appear at least to be the basis upon which the Adjudication Determination was conducted. Again SH contends in my view appropriately that there was no realistic prospect that the hot air duct would be ready for Andreco Hurll to commence its installation work by July 2005 and therefore the change in work method had nothing whatever to do with the variation claim. In my view the Referee was on the evidence entitled to reject the claim and his findings should be adopted.

Variation Directions

In relation to certain of the guarding claims, SH submits that the Referee in a number of respects relevantly made perverse findings which should not be adopted. This is said to arise in relation to what is described as variation directions 9 and 10.

SH complains that the Referee rejected these particular claims on a basis never contended by Mainteck. In particular, that SH had improperly deleted the work from Mainteck's contract and had it performed by others. SH says this conclusion or inference is simply incapable of being drawn from the materials. SH contends that the Referee should have found that Mainteck had simply refused to recognise that it had a contractual obligation to do the work and that he should have accepted SH's claim for a downward adjustment of the contract price.

Notwithstanding that the Referee concluded that the fabrication and installation of guarding were within Mainteck's scope of work he rejected the SH parties' variation direction claims 9 and 10 which related to guarding that Mainteck did not install. He did so on the basis that the SH parties had no power to reduce Mainteck's scope of work and allocate the same work to others.

It seems to me that Mainteck accepts that it did not raise the issue and SH asserts, I think correctly, that the matter was never raised by the Referee with either of the parties.

The relevant variation directions were issued on 15 December 2006. This was long after the completion of the Mainteck work. Mainteck contended that guarding was outside its contractual scope of works and it refused to install the guarding and in particular at its own cost.

In its email of 21 May 2006, Mainteck purported to expressly refuse to fabricate the relevant guards unless there was a "commercial resolution" in relation to their dispute about the extent of the contractual scope of work. SH replied on 13 June 2006 asserting that it was within Mainteck's scope of works and insisted that the work be done by June. On 14 June 2006 Mainteck replied that it would do the work if SH accepted it as a variation but in any event it would not do so within the time specified.

The Referee otherwise found that Mainteck was required to undertake work in relation to guarding by reason of express provisions of the Technical Specification. I frankly cannot see how this aspect of the guarding could logically be excluded from the scope of works Mainteck was otherwise obliged to perform. It seems to me that there is not a cogent basis for rejecting SH's direction because they were entirely consistent with findings otherwise made by the Referee in relation to Mainteck's contractual obligations relating to guarding. I therefore accept SH's submissions that the Referee's findings relevantly in relation to variation directions 9 and 10 were perverse and they should not be adopted.

Conclusion

I would invite the parties to bring short minutes to reflect my reasons.

I would also invite the parties to approach my Associate to fix a date so the question of costs can be determined.

**********

Adoption Schedule

Decision last updated: 28 March 2013

Medium Neutral Citation:	Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 266
Hearing dates:	16, 17, 18, 19, 20 July 2012, further oral submissions on 29 October 2012, further written submissions 31 October 2012
Decision date:	28 March 2013
Jurisdiction:	Equity Division
Before:	Sackar J
Decision:	See paragraphs [307] - [308]
Catchwords:	PROCEDURE - principles regarding the adoption of a referee's report - whether referee's report should be adopted or rejected in part - whether the plaintiff should be permitted to withdraw an admission in relation to the referee's report. CONTRACTS - construction and interpretation of contracts - whether contract void for uncertainty - courts should be astute to adopt a construction which will preserve the validity of a contract. EVIDENCE - findings of fact - whether findings in referee's report are unreasonable or perverse.
Legislation Cited:	Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005
Cases Cited:	Bellevarde Constructions Pty Ltd v Cpc Energy Pty Ltd [2008] NSWCA 228 BestCare Foods v Origin Energy [2012] NSWSC 574 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302 Calin v Greater Union Organisation Pty Ltd (1991) 173 CLR 33 Chocolate Factory Apartments v Westpoint Finance and Ors [2005] NSWSC 784 Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163 Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 Hocking v Bell (1945) 71 CLR 430 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd's Rep 76 Meehan v Jones (1982) 149 CLR 571 New South Wales v Bovis Lend Lease Pty Limited [2007] NSWSC 1045 Sangain Pty Ltd v Italform Pty Ltd [2009] NSWSC 74 Seven Sydney v Fuji Xerox [2004] NSWSC 902 Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444 Thorby v Goldberg (1964) 112 CLR 597 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Texts Cited:	K Lewison and D Hughes, The Interpretation of Contracts in Australia, (2012) Lawbook Co
Category:	Principal judgment
Parties:	Mainteck Services Pty Limited - plaintiff Stein Heurtey SA and Ors - first defendant Stein Heutey Australia Pty Ltd - second defendant
Representation:	Counsel: F Corsaro SC, F G Kalyk - plaintiff P W Taylor SC, J T G Gibson - defendants Solicitors: Piper Alderman - plaintiff Jones Day - defendants
File Number(s):	2007/266650