Neumann Contractors v Wyong Shire Council - [2010] NSWSC 614

No judgment structure available for this case.

CITATION: Neumann Contractors v Wyong Shire Council [2010] NSWSC 614

HEARING DATE(S): 27/4/10, 28/04/10, 29/04/10 and 03/05/10

JUDGMENT DATE :
16 June 2010

JURISDICTION: Equity Division
Technology & Construction List

JUDGMENT OF: McDougall J at 1

DECISION: Defendant's cross-claim succeeds in part. Parties to bring in short minutes of order. Stand over for argument on costs.

CATCHWORDS: BUILDING AND ENGINEERING CONTRACTS – action by council to recover alleged overpayment from contractor – contract to rehabilitate and redevelop disused landfill – where specification required plaintiff to excavate to ‘top of waste profile’ – where council claimed that contractor over-excavated – whether contract required or permitted contractor to excavate existing fill beyond the top of waste profile if the material then at the top of waste profile met the specification requirements for cover soil – whether contract required or permitted the contractor to excavate more than 100mm below the top of waste profile if additional excavation was necessary to ensure the cover soil layer met the specification requirements – whether excavation beyond the top of waste profile required council approval – whether council gave approval – whether excavation in fact performed affected ability of site to be impact rolled – whether impact rolling should take place on 100mm cover soil – whether thickness of cover soil layer as a working surface was part of temporary works necessary for contractor to undertake as part of lump sum provided for impact rolling – whether impact rolling trial was a variation – whether importing and laying of crushed sandstone compensable under contract – appropriate rate payable – whether contract included a fixed price for piling of underground tanks – what amount was agreed to be paid for piling of underground tanks.

LEGISLATION CITED: Building and Construction Industry Security of Payment Act 1999 (NSW)

CATEGORY: Principal judgment

PARTIES: Neumann Contractors Pty Limited (Plaintiff)
Wyong Shire Council (Defendant)

FILE NUMBER(S): SC 2007/266721

COUNSEL: M G Rudge SC / F P Hicks (Plaintiff)
P H Greenwood SC / I G B Roberts (Defendant)

SOLICITORS: HWL Ebsworth Lawyers (Plaintiff)
Clarke Kann Lawyers (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

16 June 2010

2007/266721 NEUMANN CONTRACTORS PTY LTD v WYONG SHIRE COUNCIL

JUDGMENT

1 HIS HONOUR: The plaintiff (Neumann) agreed with the defendant (the council) to rehabilitate and redevelop a disused landfill at Bateau Bay (the site). Neumann received the benefit of determinations by adjudicators pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act). It commenced these proceedings to enforce one such determination. The council has paid all amounts determined in favour of Neumann. It says that Neumann has been substantially overpaid for the work done by it, and by its cross-claim (which is all that remains in issue in these proceedings) the council seeks to recover the amount of the alleged overpayment.

Broad outline of the dispute

2 The site comprises two areas of landfill, referred to in the evidence and in these reasons as “the northern landfill” and “the southern landfill”. They are divided by a drainage channel referred to in the evidence and in these reasons as “the east-west drainage channel”. The site was used for the disposal of municipal waste and other unpleasant substances until the mid 1980s. Thereafter, it was capped, contoured, graded and used for playing fields. That use ceased (at least for the southern landfill) following subsidence in the early 1990s.

3 The council decided to “remediate” the site, which was considered to pose a significant risk of harm to adjacent landowners. The rehabilitation works that, ultimately, Neumann agreed to carry out were to include, in general terms:

(1) levelling the site by reworking the existing capping and waste materials in the southern and northern landfills;

(2) compaction of the reworked material to minimise future settlement;

(3) placing a covering layer of soil;

(4) sealing off the waste by laying a geo-synthetic clay liner (known as GCL) over the cover soil;

(5) laying further material over the GCL to form a level grassed surface for sporting fields; and

4 The specification for the excavation and placement of waste required that Neumann should excavate to what was called the “top of waste profile” shown on the engineering drawings. The objective was to level out the high and low points in the northern and southern landfills, so as to achieve a level profile that could be compacted, sealed and covered.

5 The council claims that Neumann over-excavated, in particular in the southern landfill, and that because it excavated further than it was required to do, Neumann claimed and was paid too much for excavation. For the same reason, the council says, Neumann claimed and was paid too much for replacing waste and capping material, and imported fill, on the site. Five of the seven claimed heads of overpayment relate to those matters and to what are said to be over-payment for excessive impact rolling undertaken as a result of those matters.

6 The drawings and specifications also provided that underground water tanks were to be placed within the remediated area. The council claims that Neumann was overpaid for the cost of providing foundations for the water tanks and the pilings on which those foundations were to rest.

The agreed issues

7 The parties agreed that the real issues for decision were as follows:

A. Over-excavation, impact rolling and crushed sandstone

top of waste profile

cover soil?

cover soil layer

top of waste profile?

top of waste profile

6. Did the Specification provide that impact rolling was to be conducted on a 100mm layer of cover soil?

cover soil layer

8. Was the impact rolling trial a variation to the contract? If so, when was the contract so varied?

9. If the importing and laying of the crushed sandstone was compensable under the contract, what is the appropriate rate payable?

2. If not, what amount was agreed to be paid for the piling of the underground tanks?

8 The “particulars of approval” referred to in issue A 4 are as follows:

1. The work was to be supervised on a full-time basis by the Council (section 3.8.3 of the Remediation Action Plan).

2. In April 2007, a joint survey was undertaken by the parties which relevantly indicated that the actual level of the substantial part of the southern landfill was lower than the design profile or level to be achieved.

3. As at April 2007, the earthworks were the subject of a work method statement, a joint survey, a survey set-out on site (star pickets), and inspections and assessment by the Superintendent’s Representative (Wassef) and an officer of the Council (Alderson) prior to commencement. At this time, the Council was advised of Neumann’s proposed methodology for the southern landfill, being:

a. the stripping and stockpiling of all existing capping material;

b. the excavation of waste;

c. the placement of waste; and

d. the placement of a capping layer by the relocation of the stockpiled existing capping material to form the uppermost portion of the fill as a uniform, homogenous and flat strata which incorporated the cover soil layer at the “top of waste profile” (see drawings at JAG-D to affidavit of Jim Gilford sworn 15 April 2010).

The work was to undertaken in stages throughout the southern landfill. The fact that excavation and placement activities was to occur in areas actually below the ultimate design “top of waste” profile” was clear.

4. On or about 5 April 2007, the Superintendent’s Representative (Wassef) approved the performance of the earthworks as proposed by Neumann and released the contractual hold point (clause 250.06.1) so as to allow the works to commence.

5. The earthworks proceeded in stages on the southern landfill and were supervised by the Council and the Superintendent’s Representative as and from about 10 April 2007.

6. At all material times, the nature and extent of the earthworks being performed in the southern landfill was obvious to any person with any basic understanding of engineering and the provisions of the contract.

“fine”

8. The works were performed throughout April, May, June and July 2007 under the direct and close supervision of the Council and the Superintendent’s Representative (Wassef, Tennant and Pradhan).

9. The works were the subject of progress claims which were approved for payment.

10. By letter dated 24 May 2007, Neumann expressly outlined the present earthworks that it was performing and to perform, in the context of its advice that the nature of the site required a design change whereby a sandstone layer be placed. There was no reply or suggestion from the Council or the Superintendent’s Representative that the works being performed or to be performed were inconsistent with (let alone a breach) of the contract.

11. Neumann was directed to undertake a trial of the proposed sandstone layer by the Superintendent in 31 May 2007. The trial of the sandstone proposal was performed in July 2007, and the results provided to the Superintendent’s Representative.

12. The earthworks were completed in or about July 2007.

13. At no time did Mr Tennant or anyone else raise any issue, concern or comment as to the performance of the earthworks in the period that they were substantially performed (April to July 2007).

14. Throughout August and September 2007, Neumann pressed for a direction in respect of the sandstone proposal. The works substantially came to a standstill. At no stage did the Superintendent’s Representative (Pradhan) or the Council suggest that the earthworks had been undertaken in breach of contract or that they were in any way defective.

15. At a meeting on 14 September 2007 and by correspondence 14 September and 17 September 2007:

d. the Council advises that it has no objection to Neumann proceeding with the works, but that it is not directing it and the “non-objection” is not an acceptance of any liability;

16. On or about 17 September 2007, the Department of Commerce (through Pradhan) ceases to act as the Superintendent’s Representative.

17. By correspondence dated 18 and 21 September 2007, the Superintendent (Paul Wise of the Council) asserts that the earthworks performed by Neumann were in breach of contract, have caused the earthworks to be substantially defective (i.e. “destabilised”), and directs that Neumann perform the works under the sandstone proposal as “rectification works” pursuant to clause 30.3 of the general conditions of contract at Neumann’s cost.

The witnesses in the case

9 Although the parties served many statements, affidavits and expert reports, only three witnesses gave oral evidence and were cross-examined. They were (for the council) Mr John Craig Tennant and Mr Raafat (known as George) Wassef, and (for Neumann) Mr James Alan Gilford.

10 Mr Tennant is a project manager employed by the council. He was involved in the remediation project in a number of ways. Of particular interest, he was the Superintendent’s Representative under the contract from 19 April to 21 May 2007 and again from 16 September 2007 on.

11 Mr Wassef is a civil and structural engineer. He was a consultant to the council in connection with the project, and was the Superintendent’s Representative from the commencement of the project until Mr Tennant took over that responsibility on 19 April 2007.

12 Mr Gilford is a civil engineer, and a project manager employed by Neumann. He was Neumann’s project manager for the remediation of the site pursuant to the contract.

13 I pause to note that the Superintendent under the contract was Mr Paul Wise of the council. He was not called to give evidence. The Superintendent’s Representative between the times when Mr Tennant occupied that position was the Department of Commerce. Its functions in that capacity were performed by Mr Rajendra Pradhan. He was not called to give evidence.

14 I did not think that any of Messrs Tennant, Wassef or Gilford sought to give evidence that he knew to be untruthful. However, I think, each of Mr Tennant and Mr Gilford identified himself with the cause of his employer. Whilst I do not suggest, nor do I think, that this caused either of them to give evidence that was knowingly dishonest or misleading, I do think that it needs to be borne in mind when assessing their evidence. In circumstances where there is a substantial volume of contemporaneous material, I think that consistency with that material is the surest guide to reliability of testimony. Further, in Mr Gilford’s case, I have some concerns as to the reliability of his evidence, taking into account the matters referred to in the following paragraph and at [69] to [72] and [146] below.

15 To the extent that there is disagreement between Mr Tennant and Mr Gilford, my preference is for the evidence of Mr Tennant. In general, I thought, Mr Tennant’s evidence was careful and reliable. By contrast, there were aspects of Mr Gilford’s evidence, and of the detail of his recollection, that gave me some concern. Since the area of conflict between Mr Tennant and Mr Gilford is not large, I shall give brief references to three examples only of the matters to which I refer:

(1) Mr Gilford said in para 170 of his affidavit sworn 29 October 2008 that cover soil was required to come from the site. That was not correct, as ultimately, he accepted (T76.20.35).

(2) Mr Gilford asserted more than once that Neumann had not excavated below the top of waste profile in the area of the amenities building (T95.24 - .42; 110 .3 -.15; 134.25 - .34). When pressed on this, he resiled from it (T134.36 - .41; 137.40 - .45).

16 Whilst I stress that I do not think that Mr Gilford was seeking to mislead the Court, those matters (and others to which I refer below) nonetheless suggest to me that, particularly where his evidence is controversial, it needs to be assessed with some care.

17 Otherwise, the evidence consisted of expert reports that were not required to be verified or tested (and which in my view added very little to the resolution of the real issues in dispute) and the survey evidence to which I will turn to in a moment (which was of great value).

First to third issues: excavation beyond the top of waste profile

18 Since these issues all concern the proper construction of the contract, it is convenient that they be dealt with together. It is also convenient to give them some factual context by referring to the evidence (substantially unchallenged) as to the extent of the over-excavation alleged.

Relevant provisions of the contract

19 Excavation and placement of waste is dealt with by Specification 250. The scope of works is set out in cl 250.01.1:

250.01	SCOPE
1.	The work to be executed under this Specification covers works associated with the excavation, relocation, and placement of existing landfill waste material and capping soil during drainage channel construction and other excavation and profiling activities. The works are primarily associated with developing the “top of waste” profile given in the Drawings. The works shall include, but are not necessarily limited to, the following:	Scope

20 The work was to be staged, and Neumann was required to submit a staging plan and work method statement for approval of the Superintendent (cl 250.03). By cl 250.06.1, Neumann was required to “identify the extent of the required excavation for each stage by the use of star pickets and 2 strands of highly visible tape or better…”. The requirement thus to identify the extent of excavation for each stage was described as a “HOLD POINT”. As a result, the Superintendent’s inspection and approval was required, and excavation was not to start, for any stage, before the hold point was “released”.

21 Runoff was dealt with by cls 250.06.4,.5:

4. Unless indicated otherwise in the required management plans or contract documents, the Contractor shall be responsible for ensuring that no surface water runoff enters the excavation.

5. The Contractor shall be responsible for ensuring that all surface water runoff that comes into contact with waste is contained and managed in accordance with the required management plans or contract documents.

22 Clause 250.07 dealt with the extent of excavation. It reads as follows:

1. The Contractor shall excavate the proposed “top of waste” profile shown on the Drawings. Additional excavation may be required to allow for cover soil placement in areas where the material at the excavated surface does not meet the requirements for the cover soil layer (refer clause 250.08). The excavated material is expected to comprise existing capping soil of variable thickness and underlying waste. The waste has the general appearance of municipal waste within a soil matrix but other materials may be present. Refer to site investigation reports.

2. In the area of the water storage tanks, the Contractor shall excavate to the depths shown on the Drawings.

3. All excavated waste and existing capping soil shall remain on site and be placed within the “top of waste” profile unless otherwise directed by the Superintendent.

4. Where excavation exceeds the extent on the drawings or approved by the Superintendent, the Contractor shall reinstate the area. Such work shall not be considered as a justifiable basis for time or cost variation.

5. Where excavation exceeds the lateral extent approved by the Superintendent, the Contractor shall reinstate the area with GENERAL FILL, compacted to at least 95% standard compaction, to the satisfaction of the Superintendent. Such work shall not be considered as a justifiable basis for time or cost variation.

23 Material placement and compaction was dealt with by cl 250.08 and following. Clause 250.08 reads as follows:

(i) comprised predominantly of natural soil materials with less than 5% by volume of other materials such as inert waste or decomposable organic material;

(iii) capable of being compacted to form a dense and relatively smooth surface suitable for GCL placement;

3. The Contractor shall avoid mixing excavated waste and excavated existing capping soil and shall make every effort to place existing capping soil, rather than waste, to form the uppermost portion of the fill.

4. Existing capping soil, where satisfying the requirements for COVER SOIL, may be used to form the COVER SOIL layer.

24 Clause 250.09.7 permitted the importation of fill in the event that material from the site was insufficient to achieve the requisite levels:

7. Material shall be placed and compacted to the “top of waste” profile, with allowance for the thickness of the COVER SOIL as needed. In the case that there is insufficient material available to achieve the design profiles, material is to be supplemented with suitable general fill to match the design waste profiles.

25 Clause 250.10 dealt with cover soil placement. Paragraph 3 is of some significance:

3. On the relatively flat areas of the landform (i.e. non-batter areas), Cover Soil shall be placed to achieve a nominal layer thickness of 100mm after compaction and impact rolling. Compaction will be performed by track rolling, or other method, to form a working surface suitable for impact rolling.

26 Clause 250.12 dealt with impact rolling. Paragraph 1 confirmed that “impact rolling shall be performed using the Cover Soil layer as a working surface.”

The survey evidence

27 Neumann and the council each retained a surveyor to give expert evidence. The surveyors conferred, and produced a joint report. They annexed a number of drawings to that joint report. The first was a contour plan of the overall site. The second was a plan of the southern landfill showing the approximate limits of cut and fill. In general, the batter at the western side of the southern landfill was an area of cut, as was the greater part of the eastern one-third of the southern landfill. The central and northern parts of the southern landfill were, in general, areas of fill, with the exception of a small mound in the northern one-third and the battered or sloping area descending into the east-west drainage channel.

28 The surveyors also prepared a series of transverse (or east-west) cross-sections of the southern landfill at various chainages. Each cross-section showed, as at the chainage to which it referred:

(1) the level before work commenced;

(2) the top of waste profile; and

29 In general terms, those cross-sections showed that Neumann had excavated below (and in some cases substantially below) the top of waste profile throughout the southern landfill. That was so both for the areas of cut and for the areas of fill.

30 The information contained in those east-west sections was confirmed by a series of longitudinal (or north-south) sections.

31 In short, the survey evidence showed quite clearly that, as the council said was the case, Neumann had excavated below or substantially below the top of waste profile over much of the southern landfill, and had done so in areas of fill as well as in areas of cut.

The parties’ submissions

32 Mr P H Greenwood of Senior Counsel, who appeared with Mr I G B Roberts of counsel for the council, submitted that the proper construction of the relevant provisions of Specification 250 was plain. He submitted that:

(1) the obligation cast on Neumann by cl 250.7.1, read in conjunction with the relevant drawings, was to excavate to the top of waste profile;

(2) excavation beyond (i.e. below) that level would be permitted only where the material at the excavated surface did not meet the requirements for “Cover Soil” (defined in cl 250.08.2);

(3) further excavation could be carried out only to the extent required to achieve a layer of Cover Soil having a nominal thickness of 100mm after compaction and impact rolling (cl 250.10.3); and

33 Mr M G Rudge of Senior Counsel, who appeared with Mr F P Hicks of counsel for Neumann, submitted that the relevant provisions of Specification 250 (including, in particular, cl 250.07) must be construed by reference to other material forming part of the contract. That other material included reports obtained by the council based on investigations of the site, and containing references to the kinds of remedial work that might be undertaken.

34 Mr Rudge referred specifically to a Rehabilitation Construction Management Plan (RCMP) prepared for the council by URS Australia Pty Ltd (URS) and a Remediation Action Plan (RAP) also prepared by URS. The former of those documents referred to “re-profiling the landform”. Mr Rudge submitted that this referred to recommendations made by other consultants in other documents that formed part of the contract to “reworking” the surface of the site.

35 Mr Rudge submitted that, when one took the whole of the contract into account:

(1) clause 250.7 of the specification applied only where, prior to the commencement of any work, the level of the southern landfill was above the top of waste profile; and

Decision

36 I accept that, in construing provisions of a contract, it is necessary to look at the contract as a whole, and to place the provisions being construed into their context. I accept, further, that where the provisions being construed are uncertain or ambiguous, it is not only legitimate but desirable to seek to give them meaning consistent with other relevant provisions of the contract.

37 In this case, in my view, the relevant provisions of the specification are clear and unambiguous.

38 The relevant requirements of the first paragraph of cl 250.07 are found in its first two sentences:

(1) Neumann is to excavate to the top of waste profile shown on the drawings; and

39 The starting point, or the general rule, is the requirement to excavate to the top of waste profile. The exception to that general rule arises where, after excavation to the top of waste profile, it is discovered that the material exposed does not meet the requirements for Cover Soil. In those circumstances, further excavation is permitted to permit the placement of Cover Soil. The Cover Soil may be brought from another section of the site (if it is available). Otherwise, it is to be imported onto the site.

40 Further, cl 250.07 dealt with the extent of excavation required. In terms, it did not authorise any excavation in those parts of the southern landfill that were below the top of waste profile before the commencement of any work on the site. If excavation were undertaken in those areas, it could only be (with the consent or at the direction of the Superintendent) to facilitate the processes of compaction and levelling to the top of waste profile. In those areas, of course, the process of levelling would require the placement of fill, not the excavation of the capping layer. Thus, cl 250.07 is applicable to, in the sense that in effect it negatives excavation in, areas of fill.

41 In summary, cl 250.07 operates as follows:

(1) in areas of cut, it permits excavation down to the top of waste profile except where the material exposed thereby does not meet the requirements for Cover Soil;

(2) if that exception applies, cl 250.07 authorises a further 100mm of excavation; and

42 Of course, Neumann would be justified in excavating (or required to excavate) further if so directed by the Superintendent. But there is no suggestion in this case that the Superintendent gave any such direction.

43 That construction, which seems to me to be plain on the ordinary English meaning of the language in which the parties expressed this aspect of their bargain, is not inconsistent with other provisions of the contract. On the contrary, it is consistent with the commercial purpose of the contract. It was a schedule of rates contract. It was in the council’s interest to limit its obligation to pay for excavation and fill, by minimising the extent of those activities. That is why cl 250.06.1 requires the identification of the extent of excavation for each stage of the works, and the approval of the Superintendent before excavation is to commence.

44 The schedule of rates that formed part of the contract contemplated that the material to be excavated would be approximately 34,800m³. That is the approximate volume of material that lay above the top of waste profile in the southern landfill.

45 Further, the parties had available to them reports based on geotechnical investigations. Those reports showed that the capping layers were quite thick, and moderately well compacted. One group of reports, prepared by Coffey Geosciences, suggested that the capping layer had an average depth over the southern landfill of about 0.54 metres. Another, “draft”, report, prepared by Douglas Partners in 2006, suggested that the thickness of the capping layer ranged from 1 to 3 metres. The Douglas Partners report suggested, further, that if an impact roller were used, this “would negate the need for the removal of the initial capping material”.

46 The second sentence of cl 250.07.1 applies only if the capping material is unsuitable for use as Cover Soil. In this case, there is no suggestion that the capping material was not suitable for that use. On the contrary, capping soil that was removed in areas where, on any view, cut was required was redeployed as Cover Soil in areas where, on any view, fill was required. But even if (contrary to the situation that existed on site) the capping material were unsuitable for use as Cover Soil, what the second sentence contemplated was excavation to a depth sufficient to allow a layer of Cover Soil to be placed.

47 By reference to cl 250.10.3, the Cover Soil was to have a nominal thickness of 100mm after compaction and impact rolling. It follows that, if excavation below the top of waste profile were permitted or required in accordance with the second sentence of cl 250.07.1, it should only be to a depth of 100mm below the top of waste profile.

48 If excavation exceeded what was shown on the drawings or approved by the Superintendent, then Neumann was obliged to reinstate at its own cost (see cl 250.07.4). It follows that, even if the second sentence of cl 250.07.1 were engaged, Neumann required the approval of the Superintendent before excavating below the top of waste profile.

Answers to issues 1 to 3

49 For those reasons, I answer issues 1 to 3 as follows:

Issue 1: No.

Fourth issue: approval

50 Although it might be thought, from the form of issue 4 and the particulars of approval, that it was Neumann’s case that approval was to be inferred or implied from conduct, it appeared in final submissions that Neumann relied on an email of 20 April 2007 (referred to in para 7 of the particulars) as an express approval. However, I think, it is preferable to review the whole of the material relating to the particulars of approval, rather than to focus simply on that email.

51 Before dealing with the particulars of approval, I shall set out the relevant facts (by which I mean, not just the facts relevant to approval but, because of the substantial overlap between the remaining issues, the facts generally).

The relevant facts

52 On 9 November 2006, Neumann submitted a tender for the performance of the remediation works. The tender offered to perform the works described in it for a lump sum price of $11,577,820.67 inclusive of GST. Nonetheless, the contract as made was agreed to be a schedule of rates contract, under which Neumann was entitled to be paid for the work actually performed.

53 Neumann’s tender specified some departures from the details given in the request for tender issued by the council. Of significance to Section B of the agreed statement of issues, Neumann quoted for two alternatives to the “Envirotank” underground water tanks referred to in the request for tender. It offered to provide underground concrete water storage tanks, and ancillary equipment, for a specified rate per tank. The tender document stated that if Envirotanks were to be used instead of the concrete tanks, there would be an additional sum payable, of $210,298.50. Alternatively, the tender said, if “Ribloc stormwater detention tanks” were used, there would be an additional sum payable, of $184,410.00.

54 In addition, the tender included a number of “clarifications”. One of those clarifications stated:

We have allowed to for [sic] a top capping layer not exceeding 500mm thick. We have allowed the bottom 100mm to be a sacraficial [sic] layer and be[sic] used as general fill with the other excavated rubbish.

55 Mr Robert Vasey of Neumann discussed the tender with Mr Wassef. Following those discussions, on 29 November 2006, Mr Vasey forwarded a revised tender. Again, it provided for concrete water storage tanks instead of Envirotanks.

56 After some further negotiations and clarifications, the council wrote to Neumann on 20 December 2006 accepting the final revision of the tender.

57 On 8 January 2007, Neumann provided to the council a draft work method statement (WMS) covering “waste placement”. A revision, described as Revision 0A, was provided the following day. The procedure for the cut and fill operation was described, so far as it is relevant, as follows:

PROCEDURE

The work involves stripping excess fill for the full width of the site and relocating it to general fill areas (southern building & carpark areas, perimeter mounds, eastern drain zone) then reshaping the waste to the design profile and capping with 100mm of covering soil.

1. Survey the cleared site to establish the base for quantity surveys and set out the top and base of batters.

2. The work will be carried out in accordance with the Staging Plan, essentially commencing at the southern end and progressing northwards.

3. Prepare the receiving areas by benching and, in natural material, rip, recompact and proof roll the subgrade.

Do not proceed

do not proceed

6. Replace with General Fill.

…

8. Divide State I & Stage II zones (dwgs 28 & 29) transversely across the site at

a. Northern edge of new amenities building;

b. Middle section (approx 40m wide);

c. North section (approx 40m wide).

9. Strip excess fill from the middle section and

a. Fill the southern section to design subgrade level;

b. Place fill for the perimeter mounds, initially formed as the perimeter access track, later to be reshaped as a mound;

c. Fill under eastern perimeter drain to base of batter.

10. Excavate and place waste to design profile (including 100mm covering soil), winning the covering soil from the adjacent section.

…

15. Repeat the above process for the north section.

…

17. Repeat the process by dividing Stage III & IV zones transversely approximately 50m north of the division between Stages I & II and Stages III & IV.

…

21. In the northern section move the waste from north to south along the east-west drain.

58 The “Stages” referred to were identified in one of the contract drawings. The southern landfill was divided into quarters with the two southern-most quarters being Stages I and II and the two northern-most quarters being Stages III and IV (this last Stage was wrongly identified on the drawing as “Stage VI”).

59 A difference of opinion in relation to the tanks emerged at an early stage. An exchange of emails between Mr Gilford and Mr Wassef between 2 and 6 February 2007 shows that Neumann was claiming that the cost of supporting slabs for the tanks was not included in its tender, whereas Mr Wassef took the view that it was. I shall return to this in dealing with section B of the agreed statement of issues.

60 Mr Gilford’s site diary for Tuesday 13 February 2007 notes a meeting with Mr Wassef and asserts that Mr Wassef said that the council “definitely will reimburse for piles”. The relevant note reads as follows:

61 Against the left hand side of that entry, but under the initials “WSC”, Mr Gilford placed a bracket and wrote against the bracket “Wed”.

62 A subsequent entry in that page of the diary, relating to various other matters to do with the project, is likewise marked with a bracket on the left hand side against which Mr Gilford wrote “Wed”. Mr Gilford said in his affidavit that the conversation and other matters in fact occurred on Wednesday 14 February 2007. He said that he opened the wrong page of his diary when he recorded them; but that when he realised this, he annotated the note in the way that I have just set out.

63 Mr Wassef denied that he told Mr Gilford that the council would compensate Neumann for the cost of pile capping. He accepted, however, that he said that council would pay for the actual piles. Mr Wassef pointed out that when he received Neumann’s tender response in late November 2006, he realised that it did not provide for piling to support the underground water tanks. He discussed this with Mr Vasey (who was not called to give evidence) and Mr Vasey said that Neumann had just received a quote from a piling subcontractor. In due course, on 1 December 2006, Neumann quoted for piling. It will be necessary to return to the detail of this.

64 I prefer Mr Wassef’s account of the conversation of 14 February 2007. It seems to me to accord, objectively, with the probabilities. It was common ground that the Douglas Partners report had indicated that the underground water tanks should be supported on piles driven through the underlying waste material. It was also common ground that pile caps, or something equivalent, would be required as part of the design. The reason is that pile caps, or something equivalent, would be required to distribute the load evenly to prevent point load impacts on the tanks. The relevant drawing was schematic only and did not purport to be (nor could it have been understood to be) a full design of the tanks with their underlying support structures. On the contrary, the drawing specified that the tanks were to be “Envirotank fibreglass underground storage tanks (100KL) or an approved equivalent”. Further, it noted, the tanks were to be “installed in accordance with the manufactures [sic] specifications”. Mr Gilford accepted that he had not looked at the manufacturer’s specifications. I think that the reality is that when Mr Vasey was asked to quote for piling he did so, but that the need for point loads to be evenly distributed was overlooked. It is clear that, when Neumann submitted its original pricing for tanks, it had overlooked the recommendation of Douglas Partners as to the desirability of supporting the structures by piling.

65 In any event, events moved on from there. On 19 March 2007, Neumann wrote to the council. One of the statements in that letter dealt with pile capping. It said, so far as is relevant:

The addition of piles requires a pile cap, a reinforced concrete slab with beams to distribute the load from the tanks. Neumann Contractors have agreed with WSC to include in our tendered rate for the tanks, the cost of a 130mm slab, as shown on our design drawing No 2. Even though the slab was not originally costed, WSC contend that such a slab would be required irrespective of ground conditions.

66 That point was repeated on the second page of the letter and in the costing on the last page of the letter. It was also confirmed in the email under cover of which the letter was sent to Mr Wassef.

67 Although Mr Wassef’s email in reply complained about the tone of Neumann’s letter and what Mr Wassef saw as Neumann’s disregard for “the nature of the contract (Schedule of rates)”, the letter written by Mr Wassef which replied to Neumann’s letter of 19 March 2007 did not in terms deny the assertion that some agreement had been struck between Neumann and the council in relation to the deduction of the cost of 130mm slab from the cost for pile capping.

68 Neumann commenced work on site on about 5 March 2007. That work was limited to the clearing of vegetation and grubbing out of trees. The WMS Revision 0A had not been approved, and accordingly Neumann was not able to proceed with work under it.

69 Mr Gilford gave evidence that he had a number of conversations on site with Mr Wassef and Mr Michael Alderson of the council. According to Mr Gilford, in one of those conversations, he said words to the effect that Neumann proposed to excavate “to sufficient depths to allow 500mm of capping material over the waste” and that Messrs Wassef and Alderson said “agreed”. Mr Wassef denied that he had had such a conversation with Mr Gilford. So did Mr Alderson.

70 I prefer Mr Wassef’s and Mr Alderson’s denials to Mr Gilford’s evidence of the conversation. The reasons for this include the following:

(1) When cross-examined on this topic, Mr Gilford agreed that he could not recall any specific conversation as given in his affidavit (T83.50-84.2);

(2) It was not consistent with the relevant provisions of Specification 250 or with the WMS that Neumann had submitted and Mr Wassef, as Superintendent’s Representative, had approved;

(4) On no view does the WMS Revision 0A specify that this is what Neumann proposed to do. On the contrary, it stated that “[o]nce cleared, there is approximately 35,000 m³ of waste to be relocated on site to form the basic shape of the site”. That is consistent with the estimate of quantities in the tender (34,800 m³). The tender was based on excavation to the top of waste profile, not on an overall excavation to a depth of 500mm.

(5) Further, the detail of the procedure given in the WMS Revision 0A simply referred to “stripping excess fill for the full width of the site”: again, something consistent with the tender and Specification 250;

(7) The proposition appears to be inconsistent with the “QA checklist” and “inspection and test plan” (or ITP) prepared by Neumann for the purposes of the remediation of the site. Item 4 of the former document refers to, among other things, to “excavated/filled to “top of waste” levels shown on drawings or to design levels of structural footings”; and that is repeated in item 8 of the ITP. Again, that is consistent with the requirements of the specification, and not with some more generalised proposal for overall excavation to a depth of 500mm.

71 Most importantly, I note that Mr Alderson provided a statement, which was tendered without objection, in which he denied the conversation in question. Mr Alderson was not required for cross-examination, nor indeed was his statement required to be verified before it was tendered. No point was taken that it was somehow of less weight because it had not been verified. Nor could such a point have been taken, when the statement could have been verified but its tender without verification was the subject of explicit consent (T129.45).

72 I am not satisfied that Mr Gilford had a conversation with Mr Alderson and Mr Wassef in or to the effect of the terms alleged, in March or April 2007. On the contrary, I conclude that there was no such conversation.

73 After Mr Wassef approved the WMS, the cut and fill operation commenced on the southern landfill. Mr Gilford said that this work commenced on about 6 April 2007, and there is no reason to think otherwise.

74 The evidence on the point is not explicit, but it seems that Neumann set out the excavation works by the use of star pickets and tape as required in cl 250.06.1 of the specification. Certainly, it appears that there were some markers, showing the required levels of excavation, on site on 24 April 2007 when Mr Tennant first went there (T37.41). I do not think that there was evidence as to the extent of setting out, or of the significance, in terms of the proposed excavation, of what might have been shown by reference to the star pickets and tape. Specifically, I do not think that there was evidence that someone in Mr Wassef’s position, looking at the way the site was set out, should have understood that it was proposed to excavate below the top of waste profile in many parts of the southern landfill. If there were such evidence, it was not referred to in submissions.

75 Neumann’s work was halted almost immediately after it began. An adjacent landowner, Mr Darcy Smith, complained because material excavated from the western batter had spread across the boundary of his land. The council issued a stop work order until this problem was resolved.

76 Once the initial problems with Mr Smith were sorted out, work resumed on the southern landfill. It continued until heavy rain fell on 24 April 2007. According to Mr Gilford’s site diary, there was no excavation between 24 and 30 April 2007. A survey carried out as at 19 April 2007 (but sent to Neumann on 30 April 2007), showed that 14,314m³ of material had been excavated in the southern half of the southern landfill, and that a further area of 1,739m³ metres had been excavated near the south western corner of the southern landfill.

77 In the meantime, Neumann had sent its progress claim No 3 to Mr Wassef on about 16 April 2007. Mr Wassef sought clarification by email of that date. Apparently, some of the items claimed in the progress claim (which does not appear to be in evidence) were for excavation. Mr Wassef said that the quantities involved “need to be verified by site measurements approved by our surveyor”. Mr Gilford replied on 20 April 2007. As to quantities, he said the following:

78 Mr Wassef replied later on 20 April 2007. As to quantities, he said:

79 While all that was happening, Mr Wassef advised on 19 April 2007 that he would be ceasing to act as Superintendent’s Representative and that Mr Tennant would be taking over that role. As I have said, Mr Tennant fulfilled that role from 19 April until 21 May 2007.

80 The heavy rain commencing on 24 April 2007 caused significant problems of runoff and escape of “leachate”. By then, a substantial area of the southern landfill had been opened up. Water penetrated directly into the exposed waste material. It then percolated out, including over Mr Smith’s boundary. In effect, soluble waste material was leached out of the site and travelled outside the boundaries of the site.

81 Mr Tennant went to inspect the site on 24 April 2007. He said that he spoke to Mr Gilford and asked “why has so much of the site been opened up, the place looks like a war zone?” He referred to what he perceived as a lack of control, lack of attention to the set-out pegs, lack of segregation of clean cover material from waste, exposed waste material and lack of control of leachate.

82 Mr Tennant was not challenged on this aspect of his evidence. Mr Gilford was cross-examined as to the alleged conversation. He could not “recall the exact words” (T81.7) but was not prepared to deny that Mr Tennant had said that:

· the site looked a war zone;

· there did not appear to be any control over the works;

· nobody seemed to be taking any notice of the set-out pegs; and

· there seemed to be no control over leachate.

83 Mr Gilford “definitely” did not recall Mr Tennant saying that nobody seemed to be making any attempt to segregate clean cover material from waste. He denied, however, that he had said (as Mr Tennant alleged) that he was “trying to find an experienced earthworks foreman to take control of the site” and said that it was not the fact that he was seeking to do so.

84 Having regard to the absence of challenge to Mr Tennant’s account, the substantial concessions made by Mr Gilford and what I have said already as to my general preference for the evidence of Mr Tennant over that of Mr Gilford where the two are in conflict, I find (notwithstanding Mr Gilford’s denial of one point) that a conversation did take place on 24 April 2007 substantially in the terms alleged by Mr Tennant.

85 On 24 May 2007, Neumann wrote to the council about “Construction Issues”. The introductory paragraph of that letter read as follows:

Neumann Contractors formulated a work methodology based on the tender drawings and specifications. Subsequently it has become apparent that site conditions and technical issues dictate some modification to elements of the design while maintaining the original functionality of the project. These changes are related primarily to the bulk excavation and placement of the waste, the leachate collection system and site drainage.

The scope of work as presented in the documents involved reprofiling the existing waste and capping materials on site, primarily excavating waste from the western side of the site and placing it over the top and along the eastern side of the site. The batters around the landfill would be reshaped from the existing 1H:1V to 3H:1V.

86 The author (Mr Gilford) then set out the original methodology. The following paragraph is relevant:

· Remove the existing capping (approx one metre thick)

· Excavate waste from the western batter and place on the top and eastern batter

· Cover the waste with minimum 500mm of capping (we recognized that the specified 100mm of capping was manifestly inadequate to support the impact roller)

87 After dealing with a proposed revision to the excavation methodology, the letter turned to the question of compaction. It said:

C.2 Compaction of the Landfill

As a result of advice from Geoquip we have formulated the following proposal to achieve compaction of the landfill.

· Place either geotextile or geonet over the surface

· Place a layer of sandstone over the fabric, approximately 500mm thick;

· Roll the surface for one day and alternatively cease rolling for one day. This process increases pore pressure in the landfill and then allows time for the water to be forced out;

· Continue the process until the acceptance criteria are met.

The process involves the following steps:

a. Initially conduct a trial on areas already prepared to verify effectiveness of the method and thickness of the sandstone cap. Areas available include the carpark, the southern amenities building area and the southern end of the AFL field.

· The carpark has been excavated to subgrade level over 50% of the design area and is starting to expose waste. It will be necessary to remove and replace this unsuitable subgrade and therefore the trial offers a good opportunity.

· The building area is approximately 15m wide. Incorporating it into the test areas makes the area available for construction of the amenities building.

· Test an area of the playing field 40 metres wide by the width of the field. This is the minimum width required to operate the roller.

88 Geoquip was the subcontractor engaged (or to be engaged) by Neumann to carry out impact rolling. Neumann wrote again, the following day, dealing with compaction. The letter expanded on the proposal for an impact rolling trial set out in the letter of 24 May 2007.

89 It does not appear that Neumann received the approval it sought. On 29 May 2007, Mr Gilford sent an email to Mr Pradhan (by then, the Department of Commerce had been appointed as Superintendent’s Representative and Mr Pradhan was performing the work associated with that role). The email referred to “lack of direction and approvals from our client” and said that, in those circumstances, Neumann was “unable to proceed with productive work”. That email was followed up by a letter of 30 May 2007 to the Department of Commerce dealing with impact rolling and a further letter of 31 May 2007.

90 Very little work appears to have been done for some time thereafter. A survey sent to Neumann on 21 June 2007 suggested that some 5,199mm³ had been excavated since 4 May 2007.

91 Leaving aside for the moment events to do with the underground water tanks (see at [210] and following below), matters seem to have drifted (at least so far as the southern landfill is concerned) until 13 September 2007. On that date, there was a discussion at the offices of the council. The discussions appear to have considered, among other things, the importation, placement and compaction of ripped (or crushed) sandstone. On 14 September 2007, Neumann wrote to the council purporting to summarise those discussions. The council replied that day. Relevantly, the council’s letter said:

…

Since yesterday’s meeting I have held further discussions with Council’s design consultant and I need some time to adequately consider the issues raised both by yourselves and the design consultant before making a definitive decision on the matter of liability for the costs incurred to date and yet to be incurred in the importation of sandstone and its use as a preparatory bridging layer for impact rolling of the site.

Under the circumstances the only advice I can offer you at this time is that if Neumann Contractors are of the opinion that the placement of a 500mm thick sandstone bridging layer is the most cost effective method in meeting the site compaction requirements of the contract then I have no objection to you doing so on an interim basis.

I am obliged however to point out that in granting of this advice in no way constitutes a direction under Clause 40 of the General Conditions of Contract or an admission of liability on the part of the Principal to reimburse any additional costs incurred by Neumann Contractors in the execution of the works in accordance with its preferred methodology.

…

92 Neumann replied on 17 September 2007. Its letter pointed out that the lack of a decision was having an adverse impact on the progress of the work, and reiterated its position that a change to the construction methodology was necessary because “[t]he construction methodology nominated in the Specification has been demonstrated to be unworkable”.

93 The council replied on 18 September 2007. Relevantly, that letter said:

…

As advised in my letter of September 14 2007, subsequent to our discussions of September 13, I have had held discussion’s with Council’s design consultant on the difficulties that you have reported to me in complying with the requirements of the contract relating to impact rolling of the site.

As a result of those discussions I have had commissioned a set of plans detailing the excavation requirements as set out in the contract and the extent of excavation carried out by the Contractor on the southern landfill. Those drawings have, for the first time, indicated to me the extent to which the Contractor has undertaken excavation on the site that is in excess of the requirements of the contract as set out in the technical specifications and drawings.

…

In short, it appears that contrary to the requirements of the contract, the Contractor has over excavated all areas nominated under the contract as Capping Types I, II and IV to depths of up to 2.5 metres below the contract levels.

…

This over excavation of the site has resulted in the significant unnecessary disturbance to in situ material that has been in place and subject to natural consolidation for over 20 years.

205 Mr Wassef replied, stating in effect that he would be unlikely to have any concerns with the changed design “as long as no additional cost would be incurred”, and indeed that Neumann could have the benefit of any cost saving. Mr Wassef said:

I do not see any grounds for approving any additional cost.

206 At this stage, it appears, the parties shifted their attention to the possible requirement for pile caps, or some other mechanism, to spread the point loads that the piles would generate. Mr Gilford sent an email to Mr Wassef, again on 2 February 2007, in which he stated that “[t]he requirement for the supporting structure is totally independent of the size or type of tank to be used”. He claimed that slabs and piles “would be required even for Envirotanks as shown”. Thus, he claimed, the supporting structure for the tanks, whichever tank was constructed, was a variation.

207 Mr Wassef did not agree, and required a WMS to be submitted that was consistent with Neumann’s tender.

208 Neumann submitted a revised WMS by email on 5 February 2007. That email said, in effect, that there would be no cost advantage by using 150kL tanks as opposed to 100 (or 107)kL tanks.

209 There was substantial further correspondence between the parties. I do not think that much is to be gained by going to the detail of every email and every letter, since they become increasingly self-serving (in truth, a feature of much of the correspondence ammoniating from the parties – in particular, Neumann – in this case).

210 It is, however, necessary to record that on 16 April 2007, Neumann submitted a revised proposal for the tanks, and that work proceeded on the basis of this revised proposal after what Neumann said was an approval given in August 2007.

211 The revised proposal was for the design and supply of six 150kL concrete tanks with their associated fittings. The total, including piles and pile caps, was costed at $941,762.92.

212 On 3 August 2007, Neumann wrote to Mr Pradhan seeking approval of the proposal put on 16 April 2007. That request was reiterated by email sent on 6 August 2007.

213 On 7 August 2007, Mr Pradhan replied, stating, relevantly, that the work should proceed “as per the contract” but referring to cls 40.3, 40.4, 40.5(b) and 40.5(c) of the general conditions.

214 Mr Gilford replied the same day, stating that Neumann would not accept a direction under cl 40.4 (which relates to variations for the convenience of the contractor) and requiring “confirmation that the claim will be assessed on Clause 40.5(c), i.e. the Superintendent acknowledges that the claim is a valid variation”.

215 Mr Gilford said that he had a telephone conversation with Mr Pradhan on 8 August 2007. According to Mr Gilford, Mr Pradhan said:

I support your claim that piling, pile capping and associated costs detailed in Neumann’s letter dated 16 April 2007 constituted a valid variation to be assessed under Clause 40.5(c) of the Contract.

216 Mr Gilford sent an email straightaway to Mr Pradhan, copied to (among others) a Mr Michael Achelles of the council. That email stated, among other things:

Tanks – On this date you have advised us verbally that as Superintendent’s Representative you are supporting our claim that piling, pile cap and associated costs as detailed in our letter dated 16 April 07 constitute a valid variation to be assessed under Clause 40.5(c) of the Contract.

217 Mr Gilford attached a revised costing which deleted an aspect of the earlier costing.

218 On 14 August 2007, after Neumann had engaged its piling contractor and had commenced work, Mr Gilford had a conversation with Mr Achelles. Mr Achelles said, apparently, that he would “recommend that the proposed variation to the tanks with piles and pile caps not be accepted by council. Pradhan did not have the authority to approve it”. Perhaps not surprisingly, Mr Gilford queried Mr Achelles’ assertion.

219 Mr Pradhan did not reply to Mr Gilford’s email confirming (or purporting to confirm) the verbal approval and submitting a revised costing.

220 Mr Pradhan was not called to give evidence. There was no suggestion that he was unavailable. Mr Achelles was not called to give evidence, and there was no suggestion that he was unavailable to give evidence. (I note that Mr Achelles’ role is obscure.)

The parties’ submissions

221 Mr Greenwood submitted, correctly, that the full amount quoted by item 7.7 of the schedule of rates, together with the dollar amount stated in Mr Vasey’s email of 1 December 2006, had been paid. That, he submitted, was the extent of the council’s liability. If Neumann had failed to allow, in its tendered rate, for the cost of supplying and installing the slab necessary to support each tank, that was not something for which council was liable. The requirement to support the tanks on slabs always existed, and could not amount to a variation.

222 Mr Greenwood submitted further that, Neumann having chosen to supply and install six larger tanks, that was a variation for its convenience and not a variation directed by the Superintendent. He accepted that Mr Wassef had said that he would be likely to approve the installation of six larger rather than nine smaller tanks, but noted (correctly) that this was on condition that there would be no increased cost to the council.

223 As to the piling: Mr Greenwood submitted that the rate quoted in Mr Vasey’s email of 1 December 2006 was an overall rate for all of the tanks, not a rate per tank. He submitted that if it were per tank then the cost savings that had been promised through the use of in situ concrete tanks would disappear.

224 Mr Rudge submitted that the rate proposed for piles in Mr Vasey’s email of 1 December 2006 did not form part of the contract. I may say straight away that I do not accept that submission. As I have noted, the council’s letter of acceptance expressly included the email as one of the documents forming the contract.

225 Mr Rudge referred to what he characterised as evolutions in the design of the tanks and the piling. However, he did not grapple with the problem that Mr Wassef’s attitude was, consistently, that he would approve changes only at the convenience of Neumann, and would not approve them if they resulted in increased cost to the council.

226 At the heart of Mr Rudge’s approach to these issues was his submission that I should accept Mr Gilford’s evidence of the conversation said to have taken place between him and Mr Wassef on 14 April 2007. Mr Rudge relied on that conversation to show, in effect, that the council had accepted that the requirement for slabs and increased piling was a variation for which it was liable to compensate Neumann. For the reasons that I have given already, I do not accept this aspect of Mr Gilford’s evidence, and I prefer Mr Wassef’s account of the conversation (see at [60] to [64] above).

227 However, Mr Rudge pointed to the events of August 2007. He submitted that there was then an approval given under the contract, and that it was not open to the council thereafter to seek to withdraw that approval.

Decision

228 Were it not for the events of August 2007, I would conclude that:

(1) on the proper construction of the contract, including Mr Vasey’s email of 1 December 2006, the rate quoted for piling was a rate per tank; but

229 As to the first matter: the requirement of the schedule was to quote a rate per tank. That is what Neumann did in its tender, although, mistakenly, the tendered rate per tank did not include at least the cost of piling. Thus, in my view, when Mr Vasey was asked to quote a rate for piles, it is logical that he would have quoted in accordance with item 7.7: a rate per tank.

230 As I have noted, the council’s letter of acceptance specified the arithmetic total of the various rates that had been tendered, as those rates had been “clarified” and amended. It is unclear whether what was incorporated was a one-off allowance for piling. But if it was, then that is a matter for which the council is responsible.

231 As to the second matter: Mr Gilford relied on the fact that the requirement for pile capping, or some other load distribution mechanism, was not specified in the drawings. However, the drawings required the Envirotanks (assuming that they were used) to be installed in accordance with the manufacturer’s requirements, and the tender was for the design, supply and installation of tanks. To my mind, it was for Neumann to ascertain what was required to install the tanks in accordance with the manufacturer’s specification.

232 Equally, if Neumann proposed some alternative method of water storage, it was for it to provide the appropriate design and to quote for everything that was necessary for the appropriate installation. If Neumann overlooked the need for pile caps or slabs, that is something for which it must bear the responsibility.

233 But matters did not rest where they were at the time the contract was let. I conclude that Mr Gilford’s evidence of the verbal approval given by Mr Pradhan should be accepted. The unexplained failure to call Mr Pradhan leads to the inference that his evidence would have been unlikely to assist the council on this point. His failure to reply to the email of 8 August 2007 leads to the inference that he did not disagree with its contents.

234 Mr Achelles appears to have accepted, in the conversation of 15 August 2007 of which Mr Gilford gave evidence, that Mr Pradhan had given (or purported to give) an approval. Mr Achelles did not deny that an approval (or purported approval) had been given. He denied, at most, that the person who gave it had the authority to give it. What he said is consistent with there having been some act of approval, or purported approval. Again, I infer from the failure to call Mr Achelles that his evidence on this point would not have assisted the council.

235 I note that Mr Greenwood did not submit that, if Mr Pradhan had given approval as Mr Gilford said, it was beyond Mr Pradhan’s authority to do so, or that the approval was otherwise ineffective.

236 It follows that Neumann sought a variation under cl 40.5(c), and that the Superintendent, through its then Representative Mr Pradhan, approved that variation. On that analysis, it is not necessary to pursue to a conclusion what the position might have been but for the approval which I find was given by Mr Pradhan on 7 August 2007.

237 Issue 11 (more accurately Issue B1) should be answered: “no”.

238 Issue 12 (more correctly Issue B2) should be answered: “the amount agreed to be paid for the design, supply and installation of the underground water tanks, including all necessary piling, was the amount quoted in Neumann’s letter of 16 April 2007 varied by its letter of 8 August 2007: $735,154.42”.

Conclusion and orders

239 It follows that the council is entitled to be repaid some, but not all, of the amount paid by it to Neumann pursuant to the determination referred to at [1] above. The council is entitled to interest on the amount overpaid, running from the date of payment until the date of judgment.

240 I make the following orders:

(1) Stand proceedings over to 9:30am on 7 July 2010 for the making of final orders.

241 I will deal with all matters in dispute, including if necessary the question of costs, on 7 July 2010.

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Neumann Contractors v Wyong Shire Council [2010] NSWSC 614

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CITATION:	Neumann Contractors v Wyong Shire Council [2010] NSWSC 614
HEARING DATE(S):	27/4/10, 28/04/10, 29/04/10 and 03/05/10
JUDGMENT DATE :	16 June 2010
JURISDICTION:	Equity Division Technology & Construction List
JUDGMENT OF:	McDougall J at 1
DECISION:	Defendant's cross-claim succeeds in part. Parties to bring in short minutes of order. Stand over for argument on costs.
CATCHWORDS:	BUILDING AND ENGINEERING CONTRACTS – action by council to recover alleged overpayment from contractor – contract to rehabilitate and redevelop disused landfill – where specification required plaintiff to excavate to ‘top of waste profile’ – where council claimed that contractor over-excavated – whether contract required or permitted contractor to excavate existing fill beyond the top of waste profile if the material then at the top of waste profile met the specification requirements for cover soil – whether contract required or permitted the contractor to excavate more than 100mm below the top of waste profile if additional excavation was necessary to ensure the cover soil layer met the specification requirements – whether excavation beyond the top of waste profile required council approval – whether council gave approval – whether excavation in fact performed affected ability of site to be impact rolled – whether impact rolling should take place on 100mm cover soil – whether thickness of cover soil layer as a working surface was part of temporary works necessary for contractor to undertake as part of lump sum provided for impact rolling – whether impact rolling trial was a variation – whether importing and laying of crushed sandstone compensable under contract – appropriate rate payable – whether contract included a fixed price for piling of underground tanks – what amount was agreed to be paid for piling of underground tanks.
LEGISLATION CITED:	Building and Construction Industry Security of Payment Act 1999 (NSW)
CATEGORY:	Principal judgment
PARTIES:	Neumann Contractors Pty Limited (Plaintiff) Wyong Shire Council (Defendant)
FILE NUMBER(S):	SC 2007/266721
COUNSEL:	M G Rudge SC / F P Hicks (Plaintiff) P H Greenwood SC / I G B Roberts (Defendant)
SOLICITORS:	HWL Ebsworth Lawyers (Plaintiff) Clarke Kann Lawyers (Defendant)