Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd - [2004] NSWSC 1041

No judgment structure available for this case.

CITATION: Rickard Constructions & Anor v Rickard Hails Moretti & Ors [2004] NSWSC 1041

HEARING DATE(S): 5/10/04, 6/10/04, 7/10/04, 8/10/04, 11/10/04, 12/10/04, 13/10/04, 14/10/04, 15/10/04, 18/10/04, 19/10/04, 20/10/04, 21/10/04, 22/10/04, 25/10/04, 26/10/04, 29/10/04, 4/11/04, 5/11/04

JUDGMENT DATE:
17 December 2004

JUDGMENT OF: McDougall J at 1

DECISION: See paras [244] and [245] of judgment

CATCHWORDS: CONTRACT - assignment - whether cause of action for damages for breach of contract assignable - distinction between liquidated and unliquidated claims - whether cause of action for misleading and deceptive conduct assignable - whether cause of action for damages for breach of duty of care assignable - Poulton v Commonwealth (1952-1953) 89 CLR 540 considered - Trendtex Trading Corporation v Credit Suisse [1982] AC 679 considered - whether plaintiff has sufficient interest to justify assignment - TORT - duty of care - pure economic loss - whether defendant owed plaintiff duty to avoid economic loss - whether plaintiff vulnerable - breach of duty - whether duty of care breached - whether damage suffered - TRADE PRACTICES - Trade Practices Act 1974 - s 52 - whether representation misleading or deceptive - whether assignee suffers loss "by" misleading or deceptive conduct - PRACTICE AND PROCEDURE - joinder - SCR Pt 8 r 8 - whether leave should be granted further to amend summons to join third party as a plaintiff - whether third party "ought to have been joined" within SCR Pt 8 r 8(1)(b) - whether third party "necessary" within SCR Pt 8 r 8(1)(b)

LEGISLATION CITED: Trade Practices Act 1974 (Cth)
Law Reform (Miscellaneous Provisions) Act 1946

CASES CITED: Comfort v Betts [1891] 1 QB 737
Fitzroy v Cave [1905] 2 KB 364
County Hotel and Wine Company Limited v London and North Western Railway Company [1918] 2 KB 251
Re Daley; Ex parte National Australia Bank Ltd (1992) 37 FCR 390
Torkington v Magee [1902] 2 KB 427
Defries v Milne [1913] 1 Ch 98
Ellis v Torrington [1920] 1 KB 399
Re Kenneth Wright Distributors Pty Ltd (in liq); W J Vine Pty Ltd v Hall [1973] VR 161
Camdex International Ltd v Bank of Zambia [1998] QB 22
Poulton v The Commonwealth (1952-1953) 89 CLR 540
Trendtex Trading Corporation v Credit Suisse [1982] AC 679
Giles v Thompson [1994] 1 AC 142
Re Timothy's Pty Ltd and the Companies Act [1981] 2 NSWLR 706
Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148
South Australian Management Corporation v Sheahan (1995) 16 ACSR 45
Beatty v Brashs Pty Ltd [1998] 2 VR 201
Singleton v Freehill Hollingdale & Page [2000] SASC 278
Vangal Pty Ltd (in liq) v Kumagai Gumi Co Ltd [2002] QSC 137
First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710
Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105
Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (Federal Court of Australia, 7 November, 1994, unreported: BC9400129)
National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514
Chapman v Luminis (No 4) (2001) 123 FCR 62
Deloitte Touche Tohmatsu v Cridlands Pty Ltd (2003) 204 ALR 281
Brownton v Edward Moore Inbucon Ltd [1985] 3 All ER 499
Knight v McCann Erickson Pty Ltd (26 August 1991, unreported; BC-9101623)
Pralle v Scharka [1978] 2 NSWLR 450
Cambridge Credit Corporation Ltd v Parkes Developments Ltd [1974] 2 NSWLR 590
Gordian Runoff v Price & Ors [2004] NSWSC 535
Pegang Mining Company Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56
News Limited v Australian Rugby Football League (1996) 64 FCR 410
State of Victoria v Sutton (1998) 195 CLR 291
Bishopsgate Insurance Australia Ltd (In liq) v Deloitte Haskins & Sells [1999] 3 VR 863
Bryan v Maloney (1995) 182 CLR 609
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 78 ALJR 628
Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642
Heydon v NRMA Ltd (2000) 51 NSWLR 1

PARTIES :
Rickard Constructions Pty Limited (First Plaintiff)
Mayne Group Limited (Second Plaintiff)
Rickard Hails Moretti Pty Limited (First Defendant)
Jeffery & Katauskas Pty Limited (Second Defendant)
Allianz Australia Insurance Limited (Third Defendant)

FILE NUMBER(S): SC 55027/00

COUNSEL: F C Corsaro SC/T G R Parker (Plaintiff)
S R Donaldson SC/ P S Braham (First Defendant)
M Dempsey SC/J Steele (Second Defendant)
A S Martin SC/A J McInerney (Third Defendant)

SOLICITORS: Maurice Blackburn Cashman (Plaintiff)
Moray & Agnew (First Defendant)
Colin Biggers & Paisley (Second Defendant)
Moroney Betts (Third Defendant)

RICKARD CONSTRUCTIONS PTY LIMITED v RICKARD HAILS MORETTI PTY LIMITED & ORS

55027/00

INDEX TO JUDGMENT [2004] NSWSC 1041

Para

Background 2

The issues 10

The role of Rickard Partners 12

The role of Jeffery & Katauskas 17

The assignments 23

The assigned claims 39

Assignment of causes of action: the principles 42

Rickard Constructions has no sufficient interest 62

Conclusion on the assigned causes of action 72

The joinder application 73

Conclusion on the assigned claims 91

The pavement design and the criticisms of it 94

The failure of the pavement 122

Responsibility for the failure of the pavement 132

The claim against Rickard Partners 145

Duty of care 147

No breach of duty 153

Damage 160

The section 52 claim 163

The claim against Jeffery & Katauskas 166

Duty of care 167

No breach of duty 173

The proposed amended particulars 177

The further case of breach 184

The s 52 case 197

The subrogation and contribution claims 200

The claim against Allianz 204

Damage 229

Conclusions 242

Order 244

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

McDOUGALL J

17 December 2004

RICKARD HAILS MORETTI PTY LIMITED & ORS

JUDGMENT

1 HIS HONOUR: The plaintiff (“Rickard Constructions”) constructed a pavement for a container depot (“the container depot” or “Lot 1”) at Port Botany. The pavement was designed by the first defendant (“Rickard Partners”). The second defendant (“Jeffery & Katauskas”) provided geotechnical services. The third defendant (“Allianz”) issued a contract works insurance policy (“the policy”) for the project in favour of Rickard Constructions. The pavement failed shortly after it was put into service. Rickard Constructions rebuilt it. The question is, who should bear the loss?

Background

2 The container depot is located at Lot 1, 55 Friendship Road, Port Botany. Lot 1 was leased initially to Port Botany Container Park Pty Ltd (“Container Park”). Rickard Constructions and Container Park entered into a building contract, for the construction of the pavement, on 23 April 1998. Rickard Constructions’ obligation was to execute the works – namely, the construction of the pavement – in a workmanlike manner in accordance with the design shown in the drawings and specifications prepared by Rickard Partners.

3 Thereafter, Container Park sold its business to Mayne Nickless Ltd (“Mayne Nickless”) and MPG Logistics Pty Limited (“MPG Logistics”), a subsidiary of Mayne Nickless. (Unless for some reason it is necessary to distinguish between Mayne Nickless and MPG Logistics, I shall refer to them both for simplicity as Mayne.) As part of that transaction, Container Park assigned its interest in lot 1 and its interest in the building contract to Mayne Nickless.

4 Rickard Partners and Jeffery & Katauskas provided services in connection with the construction of the pavement both before and after 18 December 1998. Rickard Constructions continued, after that date, to perform its obligations under the building contract. After considerable delay (in part due to heavy rainfall in the first half of the calendar year 1999), it handed the works over to Mayne on 26 August 1999.

5 The container depot was to be used for the storage of shipping containers. That business involved the use of heavy forklift trucks, to shift and place the containers. The design of the pavement sought to take into account the loads that this usage would impose. However, the pavement failed within three days of being put into service, when substantial portions of it collapsed.

6 Not surprisingly, the failure of the pavement led to some difference of opinion between Rickard Constructions and Mayne. The former maintained that it had complied with its obligations under the building contract. (I reiterate that those obligations were to construct the pavement in accordance with the design prepared by Rickard Partners; it was not a design and construct contract.) Mayne seemed inclined to disregard the separate legal personalities of the builder and the designer, and to focus on the fact that both were effectively directed by Mr Charles Rickard, the principal of both companies at that time. In any event, on 3 May 2000, Rickard Constructions, Mayne Nickless and MPG Logistics entered into an agreement (“the 3 May agreement”) for Rickard Constructions to carry through to completion the rectification of the failed pavement.

7 Under the 3 May agreement, Rickard Constructions agreed to complete the rectification works. Mayne Nickless and MPG Logistics agreed that the rectification works would constitute a variation under the building contract. However, Mayne Nickless and MPG Logistics were not to pay Rickard Constructions in cash for that variation. Instead, they agreed to assign to Rickard Constructions any right that they might have against the designer of the pavement or the supervisors of the pavement construction “to recover … the amount payable [by them to Rickard Constructions] in connection with” the variation. Rickard Constructions agreed to accept that assignment in full satisfaction of its claim for payment.

8 There have been two subsequent assignments, purporting or attempting to perfect Rickard Constructions’ rights under the assignment in the 3 May agreement.

9 There was a substantial body of expert evidence directed to identifying the cause or causes of the failure of the pavement. It will be necessary, in due course, to turn to some of the detail of that evidence. However, it is sufficient for present purposes to note that I have concluded (in line with the majority of the experts) that the primary cause of failure of the pavement was the presence of excessive moisture in the base course material which, with the loading of the pavement through the operation of the forklift trucks, led to a build up of excessive pore pressure. That in turn diminished the stiffness of the base course and hence of the pavement, and caused it to fail under load.

The issues

10 In summary, Rickard Constructions’ case is that:

(1) It constructed the pavement in a good and workmanlike manner and in accordance with the design and specification prepared by Rickard Partners.

(2) It was, therefore, entitled to be paid for the cost of executing the rectification works.

(3) Rickard Partners owed, and breached, a duty of care to Mayne in connection with the design of the pavement and in connection with the supervision of the construction of the pavement.

(4) Jeffery & Katauskas owed, and breached, a duty of care to Mayne in connection with the geotechnical advice that it provided, and the geotechnical services that it rendered, relating to the construction of the pavement.

(5) Rickard Partners and Jeffery & Katauskas were, therefore, liable to Mayne for the cost of the variation.

(6) Rickard Constructions was entitled, under the assignment, to recover the amounts payable by them to Mayne in respect of that liability.

11 Against that summary, I set out the issues agreed by the parties (the issues reflect the fact that there were a number of cross-claims between the defendants):

“ Technical Issues

(a) any design deficiency of the pavement of the type identified in the joint expert’s report;

(b) excessive quantities of moisture in the Pavement as a result of entry of moisture during the construction of the Pavement;

(c) any other aspect of the manner of construction of the Pavement.

Technical (Insurance) Issues between the Plaintiff and the Third Defendant

1B. Was there physical loss of or damage to Insured Property and, if so, when?

1C. Was there a fault, defect, error or omission in design, plan or specification?

1D. Was there a fault, defect, error or omission in material or workmanship?

1E. What were the costs of loss or damage caused by fault, defect, error or omission in design, plan or specification?

1F. What were the costs of loss or damage caused by fault, defect, error or omission in workmanship or material?

1G. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in design or specification immediately prior to the loss or damage occurring?

1H. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring?

Claims by RC against RP

Negligence Claim of RC

2. Did RC rely upon RP to provide it with engineering, supervisory and certification services in connection with the design and construction of the pavement?

3. Did any such reliance give rise to a duty owed to RC by RP in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project?

4. Having regard to the Court’s findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS?

6. If so, what was the quantum of RC’s loss flowing from any such breach of duty?

(a) was RC’s loss caused or contributed to by negligence on RC’s part;

(b) if so, the quantum by which RC’s damages should be reduced on account of such contributory negligence.

Misleading & Deceptive Conduct Claim of RC

8. Did RP make representations to RC concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS?

9. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)?

11. If so, what was the quantum of RC’s loss (if any) flowing from such misleading & deceptive conduct.

Contract Claim of Mayne companies

12. What were the terms of any contract between PBCP and RP in connection with the design of the Container Park and the supervision or certification of the construction of the Container Park?

13. Were the rights and obligations of PBCP under any such contract assigned or novated to the Mayne companies on or after 4 January, 1999 so as to give rise to contractual obligations in the same terms as between the Mayne companies and RP?

14. Having regard to the Court’s findings on the technical issues, did RP breach its contract with the Mayne companies in the manner alleged in the particulars to paragraph 17 of the SFAS?

15. Did the Mayne companies suffer any loss as a consequence of the alleged breach and, if so, what was the quantum of that loss?

Negligence Claim of Mayne Companies

16. Did RP on or about 23 April 1998 undertake to the Mayne Companies to provide design, supervision and certification services in relation to the Pavement?

17. Did any such undertaking give rise to a duty owed by RP to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies?

18. Having regard to the Court’s findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS?

19. The quantum of the Mayne Companies’ loss (if any) flowing from any such breach of duty.

Misleading & Deceptive Conduct Claim of Mayne Companies

20. Did RP make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS?

21. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)?

22. The quantum of the Mayne Companies’ loss (if any) flowing from such misleading & deceptive conduct.

Assignment of Mayne Companies’ Claims to RC

23. Were the Mayne Companies’ claims against RP (or any of them) validly assigned to RC under the First Deed?

24. If not, were the Mayne Companies’ claims against RP (or any of them) assigned to Patrick under the Business Sale Agreement?

25. If not, were the Mayne Companies’ claims against RP (or any of them) validly assigned to RC under the Second Deed?

Subrogation to Mayne Companies’ Claims

26. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies’ claims against RP.

27. Is the present matter properly constituted to permit such a subrogated right to be pursued by RP?

Contribution in respect of Mayne Companies’ Claims

28. Having regard to the Court’s findings on the technical issues, was RC a tortfeasor liable to the Mayne Companies in respect of damage suffered by those Companies arising out of failure of the Pavement.

29. Having regard to the Court’s findings on the technical issues, was RP a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage.

30. Can RC recover, under the Law Reform (Miscellaneous Provisions) Act 1946 , the whole or any part of the cost of performing the work the subject of the Variation claims.

31. The quantum of contribution which RP should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 .

32. Alternatively is RC entitled to contribution in equity from RP towards the cost to it of performing the work the subject of the Variation claims, and if so the quantum of such contribution.

Claims against J&K

33. What were the terms and scope of Jeffery & Katauskas’ retainer with Rickard & Partners?

a. Whether J & K’s letter to the plaintiff dated 3 May 1999 (6-136 to 6-137) or any subsequent conduct of J & K in respect of the inspection or approval of proof rolling imposed any duty on J & K in respect of the adequacy of the Works as completed by the plaintiff.

b. Whether by paragraph 1 of J & K’s facsimile of 19 November 1998 to Rickard & Partners (4-189) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement.

c. Whether Jeffery & Katauskas’ fax of 5 February 1999 to Rickard & Partners (5-563 to 7, and in particular Note 1 at 5–564) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement.

Negligence Claim of RC

35. Did J&K owe a duty to RC in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project?

36. Having regard to the Court’s findings on the technical issues, did J&K breach that duty?

37. Whether any such breach caused any loss to RC?

38. The quantum of RC’s loss flowing from any such breach of duty.

(a) was RC’s loss caused or contributed to by negligence on RC’s part;

(b) if so, the quantum by which RC’s damages should be reduced on account of such contributory negligence.

Misleading & Deceptive Conduct Claim of RC

40. Did J&K make representations to RC concerning the design and construction of the Pavement in the terms alleged?

41. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)?

42. The quantum of RC’s loss (if any) flowing from such misleading & deceptive conduct.

Negligence Claim of Mayne Companies

43. [The second defendant says on any claim made by either of the Mayne Companies (in tort or otherwise), it is at issue whether and if so what cause of action accrued to either company or was assigned by either company.]

44. Did J&K owe a duty to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies?

45. Did J&K breach any duty to the Mayne Companies?

46. Whether any such breach caused any loss to the Mayne Companies?

47. The quantum of the Mayne Companies’ loss flowing from any such breach of duty.

Misleading & Deceptive Conduct Claim of Mayne Companies

48. Did J&K make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged?

49. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)?

50. The quantum of the Mayne Companies’ loss (if any) flowing from such misleading & deceptive conduct.

Assignment of Mayne Companies’ Claims to RC

51. Were the Mayne Companies’ claims against J&K validly assigned to RC under the First Deed?

52. If not, were the Mayne Companies’ claims against J&K assigned to Patrick under the Business Sale Agreement?

53. If not, were the Mayne Companies’ claims against J&K validly assigned to RC under the Second Deed?

Subrogation to Mayne Companies’ Claims

54. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies’ claims against J&K.

Contribution in respect of Mayne Companies’ Claims

55. Having regard to the Court’s findings on the technical issues, was J&K a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage.

56. The quantum of contribution which J&K should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 .

57. Alternatively is RC entitled to contribution in equity from J&K towards amounts paid or allowed in favour of the Mayne Companies under the First Deed, and if so the quantum of such contribution.

Cross-Claims between RP and J&K

Contract Claim by RP

58. Having regard to the Court’s findings on the technical issues, did J&K breach the terms of its retainer by RP?

59. Is J&K’s liability limited by the terms of its contract with RP?

60. The quantum of RP’s loss, in the form of liability to RC, (if any) flowing from that breach.

Contribution Claims between RP and J&K

61. Having regard to the Court’s findings on the technical issues, were either or both of RP and J&K tortfeasors liable to RC in respect of damage suffered by RC arising out of failure of the Pavement.

62. The quantum of contribution which RP and J&K should make to each other under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 .

63. Alternatively is either of RP or J&K entitled to contribution in equity from the other towards its liability to RC, and if so the quantum of such contribution.

Claim by RC against Allianz

64. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property and, if so, when?

65. Whether, having regard to the Court’s findings on the technical (insurance) issues, the physical loss of or damage to the Insured Property was sudden and unforseen?

66. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was a fault, defect, error or omission in the design, plan or specification.

67. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was a fault, defect, error or omission in material or workmanship.

68. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in the design, plan or specification.

69. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in material or workmanship.

Insurance Contracts Act 1984

(a) failure to take reasonable precautions to prevent loss or damage;

(b) failure to notify Allianz of material changes in risk arising from the manner in which the construction was carried out and to take such additional precautions to minimise the risk of a claim raising due to such changes in risk.

(a) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in the design, plan or specification.

(b) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in material or workmanship.

(c) costs of loss or damage caused directly by fault, defect, error or omission in the design, plan or specification.

(d) costs of loss or damage caused directly by fault, defect, error or omission in material or workmanship.

(e) costs which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in the design, plan or specification immediately prior to the loss or damage occurring.

The role of Rickard Partners

12 Rickard Partners carries on business as civil engineers. It was known at the time as Rickard & Partners Pty Limited. Since then, it has changed its name, first to Bonacci Rickard (NSW) Pty Limited, and thereafter to its present name, Rickard Hails Moretti Pty Limited. Rickard Partners had expertise in 1998 in the design of heavy duty pavements. In particular, it had designed the pavement on a container depot situated across the road from lot 1, at 60 Friendship Road, Port Botany (“60 Friendship Road”). That pavement was constructed some years before the construction of the subject pavement, and it appears to have performed satisfactorily.

13 Rickard Partners undertook the design of the pavement for lot 1. In outline, that design comprised (from the lowest level up):

(1) A sub-grade layer, namely compacted sand that was present on the site (but which, it appears, may have been imported to the site in the course of earlier reclamation works carried out by others).

(2) A sub-base layer, comprising compacted crushed sandstone.

(3) A base course layer, comprising compacted DGB20 (essentially, a gravel material meeting a particular specification of the Roads & Traffic Authority; the initials “DGB” refer to densely graded base course and the figure “20” refers to the average size, in mm, of the gravel particles).

14 The design of the pavement was undertaken by Mr Brett Hails. It will be necessary to turn later to the detail of the design and to the criticisms made of it.

15 Rickard Constructions also suggested that Rickard Partners provided some services relating to the supervision of the construction of the pavement. However, such evidence as there is (and it is very limited indeed) suggests that the extent of the “supervision” performed by Rickard Partners may have been limited to:

(1) Upon request by a representative of Rickard Constructions, arranging for Jeffery & Katauskas to inspect and test a section of a pavement layer that was said to have been completed and fully compacted.

(2) Examining the test results produced by Jeffery & Katauskas.

16 Finally, when (as it was thought) the pavement works were complete, Rickard Partners certified completion to Rickard Constructions. Rickard Constructions in turn certified practical completion to Container Park. In consequence, the relevant certifying authority under the Environmental Planning & Assessment Act 1979 (NSW), Randwick City Council, issued an occupation certificate on 27 August 1999.

The role of Jeffery & Katauskas

17 Jeffery & Katauskas carries on business as geotechnical engineers. It was retained as a geotechnical testing sub-consultant to Rickard Partners. That retainer was what is known as a “level 2” retainer: a reference to Australian Standard AS 3798-1990. The reference is to the level of certification required:

“The geotechnical testing authority carries out sampling and testing as required or specified. The geotechnical testing authority is responsible for selecting the timing and location of sampling and testing operations within each visit he/she makes to the site, but will rely upon the superintendent to advise when such visits are required and to ensure that sufficient samples and tests are taken over the project.

On completion of the earthworks, the geotechnical testing authority may be required to provide a report setting out the sampling and testing which it has carried out, and the locations and results thereof. It will not be in a position to express any opinion beyond this as to the compliance of the works with the specification or their suitability for any particular purpose.”

18 Jeffery & Katauskas had provided geotechnical testing services in connection with the 60 Friendship Road project. Those services were level 1 services. That is a higher level of certification than level 2:

“The geotechnical testing authority provides a full-time inspection and testing service on all earthworks (including stripping, test rolling and associated operations) on the project, and decides the locations and timing of sampling and testing operations.

On completion of the earthworks the geotechnical testing authority may be required to provide a report setting out the inspections, sampling and testing it has carried out, and the locations and results thereof. Unless very unusual conditions apply, the authority may also be required to express an opinion that the works, so far as it has been able to determine, comply with the requirements of the specification and drawings.”

19 It may be noted that, when Jeffery & Katauskas were asked to provide a proposal for geotechnical services on lot 1, it suggested that the services should be level 1 services. It said:

“We consider Level 1 Certification is essential since it is the fill and pavement materials’ quality and density which is so relevant to the ultimate paving performance.”

20 Nonetheless, apparently for reasons of cost (and, no doubt, because of the experience gained on 60 Friendship Road), the retainer was to provide level 2 services.

21 In addition, at a time when the project had been experiencing very heavy rainfall, Jeffery & Katauskas was asked to provide what was called “Wet Weather Procedures”. That was done initially at a meeting on 29 April 1999, with the results being confirmed in a letter from Jeffery & Katauskas to Rickard Constructions dated 3 May 1999.

22 Jeffery & Katauskas did not have any part in the formulation of the design of the pavement, nor was it asked to review or check the design. It did, however, suggest to Rickard Partners that Mr Hails should obtain an independent review of the design.

The assignments

23 The first assignment (from Mayne Nickless and MPG Logistics to Rickard Constructions) relied upon is that found in the 3 May agreement. In considering the terms of that assignment, it is necessary to bear in mind that Rickard Constructions had carried out work for Mayne Nickless and MPG Logistics in respect of other parts of the 55 Friendship Road site (known as lot 2 and lot 3) and had outstanding claims for that work. By clause 2 of the 3 May agreement, those claims were settled for $650,000 (payable to Rickard Constructions), with a release given by Rickard Constructions to Mayne Nickless and MPG Logistics for all claims other than what were called “the Variation Claims”, and a small and presently irrelevant claim for an outstanding invoice.

24 The expression “Variation Claim” was defined to mean:

“Any claim (including extension of time claims) by Constructions, MNL or MPG for payment for works done and loss suffered in consequence of the failure of the lot 1 pavement including, without limitation, the Rectification Works done or agreed to be done pursuant to this Agreement on lot 1.”

25 The “Rectification Works” were defined by reference to an annexure that is not in evidence, but they may be taken to be works agreed to be necessary for the rectification of the failed pavement. I assume that they were, at least in substance, the works described in a specification prepared by Rickard Partners in November 1999.

26 Clause 3 of the 3 May agreement dealt with the “Variation Claims”. It read, relevantly, as follows:

“3 Variation Claims

3.1 Claims made

Construction claims that under the Construction Contract the Variation Claims are recoverable from MNL and MPG as a variation or latent condition or otherwise.

3.2 Settlement of Variation Claims

MNL and MPG accept the Variation Claims by Constructions on the basis that Constructions accepts in full payment of the Variation Claims the amount (if any) recovered pursuant to any Assigned Action.

3.3 Assignment of MNL Rights

(a) In consideration for Constructions entering this Agreement and accepting the payments and rights under this Agreement in full and final settlement of any claim for the Variation Claims, MNL and MPG assign the Assigned Actions to Constructions.

(b) To the extent to which any of the Assigned Actions are not assignable, MNL and MPG hold them on trust for the benefit of Constructions.

… “

27 The “Assigned Actions” were defined as:

“Any right, claim, action or cause of action which may be brought by MNL or MPG to recover from the designers of the pavement on Lot 1 or the supervisors of the pavement construction on Lot 1 (including Jeffery & Katauskas and Rickard & Partners Pty Limited) the amount payable by MNL or MPG to Constructions in connection with a Variation Claim (other than any right, claim, action or cause of action against Constructions, its contractors, agents or employees)”.

28 Clause 3.4 dealt with “Carriage of Assigned Actions”. It made provision for the events that Rickard Constructions did not pursue an assigned action, or did not do so in a timely manner; and for the event that Rickard Constructions did pursue any assigned action. In this latter event, sub para (5) provided that:

“The amount (if any) recovered pursuant to the Assigned Action after payment of all costs incurred by Constructions in connection with the Assigned Action (including the payment of any costs paid by Constructions to MNL or MPG) may be contained by Constructions (up to the amount of the relevant Variation Claim) and any excess divided equally between MNL or MPG and Constructions”.

29 On 22 September 2003, Rickard Constructions, Mayne Nickless, MPG Logistics and others entered into an “Assignment Deed” (“the second assignment”). The purpose of that deed was expressed, by recital E, to be “to confirm the assignment of the Assigned Causes of Action and, to the extent (if any) that the Assigned Causes of Action have not been assigned to Constructions, to effect that assignment.”

30 By the time the second assignment was made:

(1) These proceedings had been commenced.

(2) Rickard Partners and Jeffery & Katauskas had raised, as issues, the limited character of the assignment under the 3 May agreement.

31 At that time, Mayne Nickless and MPG Logistics had been joined, as defendants, to these proceedings. The relief claimed against them was, in substance, declarations as to either the efficacy of the first assignment or as to their obligations if it were held to be inefficacious.

32 By cl 2(a) of the second assignment, and with a presently irrelevant exception, Mayne Nickless and MPG Logistics assigned to Rickard Constructions “the whole of the Assigned Causes of Action to the extent that all or any part of the Assigned Causes of Action have not already been assigned to Constructions.”

33 The assigned causes of action were defined to mean:

“Any right, claim, action or cause of action which MNL or MPG has or might have to recover from the designers of the pavement on Lot 1 or the supervisors of the pavement construction on Lot 1 (including Jeffery & Katauskas and Rickard & Partners Pty Ltd) which is connected with the pavement on Lot 1 (other than any right, claim, action or cause of action against Constructions, its contractors, agents or employees).”

34 In short, the second assignment purported, somewhat at odds with Recital E, to remove the restriction, in the definition of what was assigned, to a claim in connection with a “Variation Claim”.

35 By cl 4 of the second assignment, Constructions was obliged to discontinue these proceedings as against Mayne Nickless and MPG Logistics, and undertook not to “commence other proceedings or seek to join MNL or MPG to proceedings which have the same or similar relief to that sought against MNL and MPG in” these proceedings.

36 Rickard Partners and Jeffery & Katauskas suggested that the second assignment was ineffective because, at its date, Mayne Nickless and MPG Logistics had no assignable interest in any cause of action relating to the container depot. (That followed, they said, from the sale of that business.) Accordingly, on 15 October 2004 (ie, during the hearing of these proceedings), Rickard Constructions, Mayne Nickless, MPG Logistics and the purchasers (known collectively as “the Patrick Parties” and others) entered into a “Deed of Clarification and Assignment” (“the third assignment”). By cl 2 of the third assignment, Mayne Nickless, MPG Logistics and the Patrick Parties acknowledged and agreed that they did not intend that the sale of business agreement would have the effect of transferring to the Patrick Parties any part of the Assigned Causes of Action (an expression defined to have the same meaning as it had in the second assignment: see para [33] above).

37 Clause 3 was a further assignment:

“To the extent that any part of the Assigned Causes of Action has not already been assigned to Constructions pursuant to the First Assignment Deed or the Second Assignment Deed, the Patrick Parties assign that part of the Assigned Causes of Action to Constructions.”

38 Finally in this context, near the end of the hearing, Rickard Constructions sought to join Mayne Nickless as a plaintiff (it was said, with its consent; but there was no direct evidence of this), and further to amend its summons so as to include a claim for relief by Mayne Nickless in respect of any unassigned cause of action against Rickard Partners and Jeffery & Katauskas. That application was opposed.

The assigned claims

39 Rickard Constructions submitted that there were assigned to it, and it was entitled to enforce, causes of action against Rickard Partners and Jeffery & Katauskas for:

(1) Damages for breach of contract;

(2) Damages for breach of duty of care; and

40 Rickard Constructions claimed its interest as assignee pursuant to one or other of the assignments that I have described.

41 Rickard Partners and Jeffery & Katauskas submitted that the assigned claims must fail. They submitted that:

(1) Their causes of action were not assignable at law or in equity;

(2) Alternatively, Rickard Constructions had no interest sufficient to justify the assignments to it; and

Trade Practices Act

Assignment of causes of action: the principles

42 The following propositions appear to be uncontroversial:

(1) A debt arising under a contract is regarded as property, and is assignable; and this is so even if the debt is overdue for payment: Comfort v Betts [1891] 1 QB 737; Fitzroy v Cave [1905] 2 KB 364; County Hotel and Wine Company Limited v London and North Western Railway Company [1918] 2 KB 251; Re Daley; Ex parte National Australia Bank Ltd (1992) 37 FCR 390.

(2) The benefit of a contract, whether a claim to which that benefit gives rise is liquidated or unliquidated, may be assigned before breach: Torkington v Magee [1902] 2 KB 427.

Defries v Milne

Ellis v Torrington

Re Kenneth Wright Distributors Pty Ltd (in liq); W J Vine Pty Ltd v Hall

Camdex International Ltd v Bank of Zambia

43 In Poulton v The Commonwealth (1952-1953) 89 CLR 540, it was said that causes of action in tort are not assignable at law or in equity: see Fullagar J (at first instance) at 571, and Williams, Webb and Kitto JJ (on appeal) at 602. Since their Honours all considered that there had been no assignment (or purported assignment), what they said was obiter. I recognise that, as it is put in Meagher, Gummow & Lehane’s Equity Doctrines and Remedies, (4th ed by Meagher, Heydon and Leeming, Butterworths LexisNexis, 2002) at 281 [6-480]), “It is not easy for courts below the High Court legitimately to depart from the considered dicta of three [sic] High Court justices”.

44 In Trendtex Trading Corporation v Credit Suisse [1982] AC 679, the House of Lords concluded that a cause of action in contract could be assigned where the assignee has a genuine and substantial, or genuine commercial, interest in the enforcement of that cause of action. The principle established in Trendtex was applied, in the related area of champerty in connection with a cause of action in tort, in Giles v Thompson [1994] 1 AC 142.

45 The application of the Trendtex principle in Australia has been considered in a number of first instance decisions but not, so far as my own researches or those of counsel show, by any intermediate appellate court. A number of those decisions suggest that it should be followed (and that the obiter remarks of the High Court in Poulton should be distinguished or regarded as no longer applicable); and a number suggest the contrary.

46 Decisions that support the adoption of the Trendtex principle in Australia include:

Re Timothy’s Pty Ltd and the Companies Act [1981] 2 NSWLR 706 (Needham J);

Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148 (Cohen J);

South Australian Management Corporation v Sheahan (1995) 16 ACSR 45 (Debelle J);

Beatty v Brashs Pty Ltd [1998] 2 VR 201 (Smith J);

Singleton v Freehill Hollingdale & Page [2000] SASC 278 (Olsson J);

Vangal Pty Ltd (in liq) v Kumagai Gumi Co Ltd

47 Support for the application of Trendtex is also found in New Zealand in the decision of Gault J in First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710.

48 Decisions declining to apply the Trendtex principle in Australia include:

Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) ¶ 46-105 (Davies J);

Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (Federal Court of Australia, 7 November, 1994, unreported: BC9400129) (Beaumont J);

National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 (Lindgren J);

Chapman v Luminis (No 4) (2001) 123 FCR 62 (Von Doussa J);

Deloitte Touche Tohmatsu v Cridlands Pty Ltd

49 Neither list may be comprehensive.

50 The reasoning in the first category of cases may be summarised as follows:

(1) The relevant remarks by the High Court in Poulton were obiter. In any event, they do not bear on the question of assignment of a bare cause of action (ie, one not annexed to or associated with a proprietary right) for breach of contract.

(2) There is no public policy ground for distinguishing between assignment of a cause of action for unliquidated damages for breach of contract on the one hand and, on the other, a cause of action for damages in tort (at least where the tort is not of a personal nature).

(3) The obiter remarks in Poulton may be distinguished because the assignee lacked the requisite interest to support the assignment; alternatively, because the High Court said nothing about assignment to persons possessing the requisite interest, what was said may be distinguished on that basis.

(4) What was said in Poulton reflects the effect of considerably older English authority, and (self evidently) does not take into account the review of that earlier line of authority by the House of Lords in Trendtex.

Poulton

51 It will be noted that the cases against the introduction of the Trendtex principle in Australia are all decisions of the Federal Court of Australia. Those decisions are to some extent complicated because, to the extent that they involve a claim under s 82 of the Trade Practices Act 1974 (Cth) for damages for contravention of s 52, it has been held consistently that an assignee of the cause of action is not, for the purposes of s 82, a person who suffers damage “by” the contravention: see Davies J in Park at 53, 469. However, that aside, the consistent approach is that it is not open to courts of first instance to depart from a considered statement of the High Court, and that bare rights of action in tort should be regarded as incapable of assignment (whether or not the tort is of a personal kind).

52 What was said in Poulton was confined, in terms, to the assignment of bare rights of action in tort. In principle, therefore, it should not be taken to extend to the assignment of bare rights of action in contract; although, as Cohen J put it in Monk at 152, “there seems no logic in making a distinction between a cause of action in tort and one in contract if the basis of the claim is a commercial one”. (This view was shared by Gault J in First City Corporation (at 757), Debelle J in South Australian Management Corporation (at 57) and Smith J in Beatty (at 209).)

53 If it were necessary for me to reach a concluded view, it would be that I am at liberty to depart, and should depart, from the dicta of the High Court in Poulton. I have come to this view for a number of reasons:

(1) Their Honours were doing no more than identifying the law as it then stood. It was unnecessary for them to decide whether the principle that they identified should be applied to the facts of the case before them (because, as they said, there was in fact no assignment).

(2) In terms, what their Honours said applies only to an assignment of a cause of action in tort.

(3) Their Honours did not consider (because they did not need to consider) whether there were any exceptions to the rule. Trendtex does not deny the rule; it establishes that there is an exception, at least in relation to causes of action in contract, where the assignee has the requisite interest to support the assignment.

(4) The rule is at base a reflection of the policy of the common law against maintenance. The content of that policy, and its application, change from time to time. It is a likely that a re-examination of the rule, in the light of changing social, commercial and economic conditions, will indicate exceptions that had not existed, or had not been perceived, in earlier times.

Trendtex

Giles

54 In relation to contractual causes of action, I find the distinction between liquidated and unliquidated claims difficult to follow. I have already noted that a debt is assignable even if it is overdue. As is pointed out in Meagher, Gummow & Lehane at 281 [6-480], where the debt is overdue, “there has been a breach of the contract to pay and … in fact, all that is assigned is the right to sue to recover the debt. The case of an overdue debt merely points up the problem inherent in the distinctions drawn in this breach [sic] of the law: for what is a debt but a right to sue to recover a sum certain? In what other sense is a debt to be regarded as property?” I do not think that a rule based on public policy which encourages illogical distinctions of this sort should be applied unless there is no alternative. I do not regard the obiter statements in Poulton, limited as they are to assignment of bare causes of action in tort, as providing a compelling reason to accept such illogical distinctions and their consequences.

55 If then, in principle, an assignment of a cause of action in contract (to recover unliquidated damages) should be accepted where the assignee has a sufficient interest to support the assignment, what justification is there for denying the same view where the cause of action is one in tort? As Debelle J said in South Australian Mangement Corporation at 57-58, the distinction between causes of action for unliquidated damages for breach of contract and for damages in tort “has little weight in an action where … the causes of action in both contract and in tort both [sic] stem from the same facts, where the test of causation will be the same, and where, in large part, the measure of damages for the pecuniary loss which directly flows from the breach will be the same … For the purpose of determining whether an assignment is valid, it is possible to draw a valid distinction between torts of a personal nature and torts which affect the plaintiff’s commercial interests or his interests in property.“

56 My conclusion makes it necessary to consider the nature of the interest required to support an assignment of a cause of action. As Lloyd LJ (with the concurrence of Sir John Donaldson MR) said in Brownton v Edward Moore Inbucon Ltd [1985] 3 All ER 499 at 509, “[t]here is no difference between the interest required to justify maintenance of an action and the interest required to justify the taking of a share in the proceeds, or the interest required to support an out-and-out assignment.”

57 In Giles (a case of alleged champerty), Lord Mustill said at 163 that it is necessary to consider “whether the transaction … is validated by the existence of a legitimate interest in the person supporting the action distinct from the benefit which he seeks to derive from it”. That is consistent with the approach in Trendtex, where their Lordships suggested that the interest acquired was one arising other than by the terms of the assignment.

58 In Re Timothy’s, Needham J concluded at 712 that “the principle of the Trendtex case can be applied to an assignment of a right of action by a debtor to a creditor where the evidence shows that, without that assignment, the creditor is not likely to be paid his debt. In such a case the rule of public policy would be inapplicable because the assignment would not be champertous.” His Honour concluded that the debtor did not have the capacity to pay, so that, without the assignment, the creditor would remain unpaid. Thus, his Honour concluded that the creditor “had a sufficient commercial interest in the proceedings to entitle it to accept an assignment of them.” It cannot be suggested that Mayne Nickless is or was unable to pay any debt properly owing to Rickard Constructions for the rectification works. Thus, in the sense identified by Needham J, it cannot be said that, without the assignment, Rickard Constructions was not likely to be paid its debt.

59 Cohen J analysed the concept of “genuine commercial interest” in Monk. In that case, the plaintiff sought to take an assignment of a cause of action against the defendant so that he would have something to set off against a judgment debt recovered by the defendant against him. Cohen J said that this was not the requisite genuine commercial interest. He said that what was required was something beyond a mere personal interest in profiting from the outcome of the proceedings; an interest by the assignee in the assignor or its business affairs or activities which might be protected by the assignment:

Trendtex, Re Timothy’s)

Re Daley)

First City Corporation).

Trendtex

60 In Beatty, Smith J at 215 emphasised that the interest relied upon must exist prior to the assignment. He concluded that such an interest existed where, prior to the assignment, the creditors were owed money by Brashs and they were only likely to be paid if the debtor succeeded in recovering damages. That interest, his Honour held, was sufficient; and clearly it predated the assignment.

61 In National Mutual Property Services, Lindgren J held that, even if the Trendtex test applied, there was no requisite interest. He said at 540 that the interest must exist independently of the assignment:

Trendtex

Rickard Constructions has no sufficient interest

62 It is clear that the “Timothy’s” or “Beatty” interest does not exist. As I have noted, it cannot be suggested that Mayne Nickless would be unable to pay (assuming, of course, that it was liable to pay) unless it recovered damages (and the payment of those damages) in an action against Rickard Partners or Jeffery & Katauskas. In this context, it is necessary to bear in mind the position as between Rickard Constructions on the one hand and Mayne Nickless and MPG Logistics on the other. If Rickard Constructions had performed the work required by the contract in a workmanlike manner and in accordance with the drawings and specification, then it had fulfilled its contract. Rickard Constructions had no part in the design of the pavement and was not liable for any deficiencies in the design. On the assumption that the original work was properly done, Rickard Constructions was entitled to be paid for the rectification works done at the request of Mayne Nickless and MPG Logistics. If, on the other hand, Rickard Constructions had not fulfilled its obligations under the building contract, and if the failure of the pavement were a result of that, then Rickard Constructions would have been obliged to rectify the defective works at its own cost.

63 The position taken by Rickard Constructions is, and so far as I know has always been, that it fulfilled all its obligations under the building contract. Thus, its position is that it was entitled to be paid for the works as a variation. It appears from the recitals to the 3 May agreement that Mayne Nickless and MPG Logistics may have taken a different view. However, by cl 3.2, they agreed to accept Rickard Constructions’ “Variation Claims” – including its claim for the cost of the Rectifications Works: although they did so on the basis that Rickard Constructions would take in full payment any amount that it recovered pursuant to any Assigned Action.

64 In substance, it was the 3 May agreement by which Rickard Constructions undertook to carry out the Rectification Works (see cl 4) and by which the assignment was effected. In my judgment, it follows necessarily that the genuine commercial interest claimed by Rickard Constructions in the subject matter of the assignment is an interest arising under and by virtue of the instrument of assignment.

65 It does not appear that, prior to 3 May 2000, Rickard Constructions had performed any substantial work of rectification, that it had made any demand for payment, or that payment had been refused. There is no basis, in the evidence or as a matter of reasoning from what is known, for thinking that, prior to 3 May 2000, Rickard Constructions had any interest in any action that Mayne might have against Rickard Constructions or Jeffery & Katauskas.

66 There may have been commercial advantages to Rickard Constructions in reaching the agreement that it did; in particular, it may have assisted in the resolution of the other claims that was effected by cl 2 of the 3 May agreement. However, those other claims did not relate to lot 1 or to the failed pavement; and it could not be said that the existence of those claims, relating as they did to other properties and other works under other contracts, gave Rickard Constructions any interest in any action relating to work done on lot 1 under the building contract.

67 I therefore conclude, applying the Trendtex test, that Rickard Constructions had no interest sufficient to justify the assignment effected by cl 3 of the 3 May agreement.

68 If I am wrong in thinking that Trendtex applies, then the same result would be reached, at least in respect of the assigned claims in tort, by application of the dicta in Poulton.

69 Finally, to the extent that the claims purportedly assigned included claims under the Trade Practices Act for misleading or deceptive conduct, then the assignment fails, alternatively, for the reasons given by Davies J in Park: namely, that Rickard Constructions, as an assignee, is not a person who has suffered damage “by” such misleading or deceptive conduct as is proved so as to give it a claim for damages under s 82.

70 The second and third assignments were intended, in substance, to perfect or complete the assignment effected by the 3 May agreement. They are not supported by any separate interest, and in my judgment they must fail for the same reason.

71 Further, the second assignment fails because, at the time it was purportedly effected, the assignors (Mayne Nickless and MPG Logistics) had no interest in the purported subject matter of the assignment. Whatever interest they had, had passed to the Patrick Parties under the business sale agreement made on 23 November 2000.

Conclusion on the assigned causes of action

72 I therefore conclude that the assigned causes of action fail, because the assignments relied upon are ineffective for the reasons that I have given. This makes it necessary to consider the application to join Mayne Nickless as a plaintiff, and to amend consequentially.

The joinder application

73 Mayne Nickless and MPG Logistics were joined as defendants by the filing of a further amended summons on 13 July 2001. The relief claimed against them (either alone or in conjunction with other defendants) included declarations as to the efficacy of the assignment effected by the 3 May agreement and, in the alternative, a declaration that to the extent that the assignment was ineffective, they held the relevant rights and causes of action on trust for Rickard Constructions. Alternatively, Rickard Constructions sought an order that Mayne Nickless and MPG Logistics take proceedings against Rickard Partners and Jeffery & Katauskas to enforce the rights and causes of action that (it said) they held on trust for it. The proceedings were discontinued as against Mayne Nickless and MPG Logistics at some time after the making of the second assignment, whereupon they ceased to be parties.

74 At the end of the hearing before me, Rickard Constructions sought leave further to amend the summons so as to include a direct claim by Mayne Nickless against Rickard Partners and Jeffery & Katauskas to enforce, in the event that the assignments were ineffective, the causes of action that were purportedly assigned.

75 Rickard Partners and Jeffery & Katauskas submitted that Mayne Nickless should not be joined as a plaintiff and that leave to amend should not be given.

76 Rickard Partners submitted that Mayne Nickless was not a party that “ought to have been joined” within SCR Pt 8 r 8(1)(a), and was not someone “whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon” within SCR Pt 8 r 8(1)(b). It submitted that the purpose of Pt 8 r 8 was not to permit the substitution of a new plaintiff with a new cause of action for an existing plaintiff whose action is not maintainable: relying upon the decision of McClelland J in Knight v McCann Erickson Pty Ltd (26 August 1991, unreported; BC-9101623).

77 In Knight, McClelland J said (at BC 4):

“Pt 8 R 8(1)(a) applies where the party to be added ought to have been made a party in the first instance …

Pt 8 R 8(1)(b) cannot properly be construed to authorise the reconstitution of proceedings by the substitution of a new plaintiff with a new cause of action for an old plaintiff whose cause of action is no longer maintainable.

The addition of parties contemplated by Pt 8 R 8 is an addition which is ancillary to, not in substitution for, the proceedings as theretofore constituted.”

78 I do not think that the joinder of Mayne Nickless is justified under para (a). Rickard Constructions’ case is that it, as assignee, is entitled to enforce the cause of action in question. A decision on that claim (including the decision indicated in the preceding section of these reasons) will not impact in any way on such rights as Mayne Nickless may have, or retain. Compare Pralle v Scharka [1978] 2 NSWLR 450, where a person ought to have been joined because his rights in land might be affected by the outcome of the litigation; and Cambridge Credit Corporation Ltd v Parkes Developments Ltd [1974] 2 NSWLR 590, where a land owner ought to have been joined because its interests might be affected by proceedings concerning the validity of a planning approval.

79 Nor do I think that Mayne Nickless is a “necessary” party under para (b). The question of Rickard Constructions’ entitlement under the deed of assignment can be litigated effectually and completely without the joinder. Again, no commercial or other interest of Mayne Nickless will be affected by that process. See Gordian Runoff v Price & Ors [2004] NSWSC 535 at [10] and following, where I analysed the cases on SCR Pt 8 r (1)(b) and its equivalents. For the reasons that I there gave, I think that the test expressed by Lord Diplock in Pegang Mining Company Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56 is appropriate. His Lordship said, in substance, that the test required by the rule was whether the rights or liabilities of the person sought to be joined against or to any party to the action in respect of the subject matter of the action be directly affected by any order which might be made. As I noted in paras [12] and [13], his Lordship’s test was cited with approval by the Full Court of the Federal Court of Australia in News Limited v Australian Rugby Football League (1996) 64 FCR 410, and by McHugh J State of Victoria v Sutton (1998) 195 CLR 291 at 316-317, [77] to [78].

80 On that analysis, Mayne Nickless is not someone whose joinder is “necessary” within para (b). Its rights (if any) remain unaffected by any decision (including that set out in the preceding section of these reasons) on Rickard Constructions’ claims against Rickard Partners and Jeffery and Katauskas.

81 Even if, contrary to my conclusions, there were power under SCR Pt 8 r 8 to join Mayne Nickless as a plaintiff, I would have declined on discretionary grounds to do so.

82 The sole purpose of the joinder would appear to be to enable Mayne Nickless to seek to recover the rectification costs. However, in substance, it would not be doing so for its own benefit (because it incurred no rectification costs), but for the benefit of Rickard Constructions (which carried out the Rectification Works in consideration only of the assignment). Mayne Nickless had been a party but it agreed with Rickard Constructions to be let out of the proceedings following the making of the second assignment. That is the clearest indication that Mayne Nickless did not regard itself as having any interest to be protected by its continuing presence as a party in the proceedings.

83 I have not overlooked the fact that, under cl 3.4(b)(5) of the 3 May agreement, Mayne Nickless has a contingent interest in the fruits of the action: if they exceed all costs incurred by Rickard Constructions in connection with the Assigned Action and the amount of the Variation Claim. But in circumstances where Mayne Nickless did not think that its presence as a party was necessary to protect whatever the real value of that contingent interest might be, I do not think that the Court should substitute its own judgment.

84 In the absence of any explanation for the lateness of the application to join Mayne Nickless as a party, it could be inferred (as both Rickard Partners and Jeffery & Katauskas submitted) that it stood aside from the proceedings so as to avoid exposing itself to any adverse costs order. It is possible that (if the joinder were authorised by SCR Pt 8 r 8) leave to join Mayne Nickless could be on terms that it was liable for any costs ordered in favour of the defendants, including costs relating to work done or things happening before its joinder. But Mayne Nickless has not indicated that it would accept such a term; and has not been heard in opposition to the imposition of it.

85 There are two other matters that I regard as of greater – indeed dispositive – significance on the discretionary issue (assuming, as I have indicated, that one gets so far as considering discretionary issues). The first is that, because Mayne Nickless has not been a party for most of the time that these proceedings have been current, it has not been exposed to orders for discovery. The second is that Rickard Partners and Jeffery & Katauskas have not had the opportunity of considering their position as against Mayne Nickless and (for example) making an offer of compromise or otherwise seeking to reach some resolution with it.

86 In answer to these propositions, Rickard Constructions submitted that subpoenas for production had been directed to Mayne Nickless and it had produced documents; and that there was no evidence to show that Rickard Partners or Jeffery & Katauskas might have sought to make an offer of compromise, or otherwise to treat, with Mayne Nickless.

87 The first of those responses does not seem to me to deal with the problem. The effect of an order for discovery is to require the party obliged to give discovery to produce all available documents that fall within the terms of the order. It does not put upon the party seeking discovery any requirement to forecast, or more accurately guess, what documents or classes of documents might be held. However, a subpoena must be directed towards clearly defined documents or classes of documents. It is no substitute for discovery; indeed a subpoena that is cast so wide as in effect to require the party to whom it is addressed to give discovery is liable to be set aside as an abuse of process. I do not regard the ability to serve subpoenas as any substitute for the inability to require discovery; and, having regard to the issues in these proceedings, the inability to require discovery is a real, rather than a theoretical, detriment to Rickard Partners and Jeffery & Katauskas.

88 Nor do I think that the second proposition answers the submission to which it was responsive. The application to join Mayne Nickless as a party was intimated after the conclusion of the evidence. The parties were then engaged in the preparation of written submissions. It is hardly to be expected that Rickard Partners and Jeffery & Katauskas should have diverted themselves from that task (a task that, it will be seen from the written submissions that were filed, was onerous and, no doubt, time-consuming) and turned their attention to the application for leave to join Mayne Nickless. It is unrealistic to expect Rickard Partners and Jeffery & Katauskas to have dropped what they were doing and to have turned to preparing evidence in opposition to the joinder application. In some circumstances, the courts have said that prejudice (in relation to amendments) may be inferred even in the absence of direct evidence: see Bishopsgate Insurance Australia Ltd (In liq) v Deloitte Haskins & Sells [1999] 3 VR 863. Although the circumstances of this case, and the nature of the prejudice suggested by the relevant defendants, are far removed from the circumstances and suggested prejudice of that case, I think that the general principle is applicable. Some kinds of prejudice are demonstrable by argument; others may require evidence. The particular prejudice – inability to serve an offer of compromise, or otherwise to treat with Mayne Nickless - falls into the former category.

89 Further, the loss of that opportunity constitutes real and not merely hypothetical prejudice. As I have said, it is open to infer that Mayne Nickless has no real continuing interest in the outcome of this litigation. Had it been joined as a plaintiff at some earlier stage, I consider that it is quite plausible to think that the relevant defendants would have sought to compromise with it and that, if they were not able to do so, they might have sought to put pressure – legitimate pressure – on it by serving offers of compromise. I therefore think that the loss of that opportunity is, as I have indicated, a source of real prejudice.

90 Accordingly, even if, contrary to my view, there were power to join Mayne Nickless as a plaintiff, I would have exercised my discretion to do so adversely to the application.

Conclusion on the assigned claims

91 Because I have concluded that the assignments are ineffective, and because I have concluded that Mayne Nickless can not be joined (and that, even if it could be joined, it should not be), the assigned claims must fail. Because the assignments are ineffective, Rickard Constructions cannot enforce them. Because Mayne Nickless is not to be joined as a plaintiff, it cannot enforce them in these proceedings, either for the benefit of Rickard Constructions or otherwise.

92 I therefore do not propose to consider the merits of those assigned claims. This means that issues 23 to 25 and 51 to 53 should be answered adversely to Rickard Constructions and that, accordingly, it is not necessary to deal with issues 12 to 22 and 43 to 50. That having been said, at least some of the issues that remain for consideration involve questions that would also be relevant to issues 12 to 22 and 43 to 50.

93 That leaves for consideration, apart from the direct claims by Rickard Constructions against the defendants, the subrogation claims (issues 26, 27 and 54) and the contribution claims (issues 28 to 31 and 55 to 57). I will deal with the direct claims and then return to the subrogation and contribution claims. But before I turn to the detail of the direct claims, I will deal with the pavement design and the criticisms of it, and with the cause of the collapse.

The pavement design and the criticisms of it

94 The person within Rickard Partners who had principal responsibility for design was Mr Hails, then a senior associate. Mr Rickard, however, agreed that it was he who had instructed Mr Hails to prepare the design and that he “oversaw and controlled the work that was carried out” by Mr Hails pursuant to that instruction (T 133.19-.30).

95 The starting point of the design was the (apparently successful) pavement constructed at 60 Friendship Road. However, in the case of lot 1, Container Park wanted an asphalt layer 100 mm thick overall, compared to the 50 mm asphalt wearing layer at 60 Friendship Road.

96 Mr Hails was not called to give evidence, a circumstance that excited some criticism from some parties. However, his working papers, showing the evolution of the design, were proved. As I have noted, the basic design comprised an asphalt wearing layer over a DGB20 base course over a crushed sandstone sub-base over compacted sand sub-grade. Mr Hails appears to have produced a number of articulations of that scheme, with different thicknesses for the various layers. In doing so, he made certain assumptions as to the weight of the forklift machine that would be used on the pavement, so as to assess the loading that would be applied to the pavement.

97 The draft (for want of a better word) designs were analysed and tested by a computer programme known as “CIRCLY”. A number of design variables (or, in the jargon of the trade, “parameters”) are input to the programme: including the likely loading, the thickness, degree of compaction and stiffness of the layers – and the programme calculates the number of repetitions (ie, the number of times that the pavement is subjected to the design loading) before it will fail. If assumptions are made as to the number of repetitions that will occur over an average working week and year, this produces a projection of the design life of the pavement.

98 The design upon which Mr Hails settled comprised the following layers (from the sub-grade up):

Subgrade (compacted sand) having a California Bearing Ratio (a measure of stiffness or resistance to load, usually abbreviated to CBR) of 12% when soaked. The compaction specified for the sub-grade was 98% standard compaction. (I will deal with standard compaction, and its relative modified compaction, shortly.)

A crushed sandstone sub-base with an overall thickness of 750 mm, comprising three levels. The lowest and intermediate levels were each specified to be 200 mm thick and compacted to 98% standard. The highest level was specified to be 150 mm thick and compacted to 100% standard.

A base course of DGB20 105 mm thick and compacted to 100% standard.

99 The overall pavement thickness as specified was, therefore, 800 mm. However, the evidence was that this was the minimum thickness and that over most of its area the pavement was in fact thicker: this, apparently, reflecting the need for there to be a slight gradient in the pavement to enable water to drain off.

100 Mr Hails’ CIRCLY analysis of this design, making certain assumptions as to the CBR of the sub-grade, sub-base and base course, gave a design life of 3.13 x 105 repetitions, or 25 years. It was not suggested that this was an inadequate design life for a pavement of this character.

101 It was, however, suggested by Allianz that in fact the design life was substantially less, because of what it alleged were defects in the design. Allianz relied on expert evidence adduced from a consulting engineer, Mr Lyle Marshall, and a geotechnical engineer, Mr Peter Waddell.

102 The principal criticisms made of the design by Messrs Lyle and Waddell focused on the allegedly insufficient stiffness of the base course and sub-base components and on the alleged failure to design the pavement in accordance with the principle that that each layer should be stiffer than the layer beneath it. There were, however, other criticisms including:

(1) The failure to specify modified compaction for the base course and lower layers.

(2) The failure to specify constant testing of the crushed sandstone delivered to site for use in the sub-base, so as to ensure that it complied with the composition and stiffness assumptions in the design.

(3) The assumption said to underline the design, that it was appropriate to use the same design theory as had been used on prior projects, including 60 Friendship Road.

(4) The failure to specify the testing of DGB20 delivered to site for use in the base course, to ensure that it complied with the relevant specification.

(5) The failure to specify stabilisation of the sub-base by the use of cement or fly ash.

(6) The use of the Austroads Pavement Design Guide which, it was said, was not suitable for a heavy duty pavement required to carry a fully laden forklift weighing in excess of 90 tonnes.

(7) Failure to heed advice from Jeffery & Katauskas as to plate load bearing tests undertaken to establish the vertical modulus (another measure of stiffness, or bearing capacity) of the sandstone material.

103 The experts called by the other parties, Dr Brian Burman (called by Rickard Constructions), Mr Michael Thom (called by Rickard Partners) and Mr Andrew Leventhal (called by Jeffery & Katauskas), did not agree with Messrs Marshall and Waddell that the design was defective in any of the ways that I have outlined. Further, Jeffery & Katauskas called one of its then principals, Mr Rod Jeffery. He gave both evidence of fact and evidence of an expert nature. To the extent that he was able to express an opinion (and he had not reviewed all the matters raised by Messrs Marshall and Waddell), he did not agree that there were design deficiencies.

…

6. consequential loss, loss of use, penalties, fines, liquidated damages, or aggravated, punitive or exemplary damages.

…

Conditions

…

2. Precautions

2.1 take all reasonable precautions to prevent loss or damage;

205 It is clear that the pavement failed either during the construction period or during the maintenance period (cls 1 and 2 of the insuring clause). Since each looks to “sudden and unforeseen physical loss of or damage to Insured Property”, nothing turns on the precise time of the failure. It is also clear that the pavement either was, or formed part of, the Insured Property as defined.

206 As articulated in closing submissions, the questions in dispute between Rickard Constructions and Allianz were:

(1) Whether the failure was “sudden”.

(2) Whether the failure was “unforeseen”.

(3) Whether there was a “fault, defect, error or omission in material or workmanship”.

(4) Whether there was a “fault, defect, error or omission in design, plan or specification”.

(5) Whether, if either of the previous issues be answered “yes”, there was any loss over and above “the costs which would have been incurred in repairing, replacing or rectifying” the relevant faulty work or design.

(6) Whether any part of the claim was for consequential loss.

207 I have concluded that there was no defect in design, but that there was defective workmanship. That engages cl 1 of the exclusions. Because I have come to the view that cl 1 affords a complete answer to the claim under the policy, I propose to deal principally with that issue.

208 Before I turn to cl 1 of the exclusions, I will set out in summary form the views to which I have come on the other questions in dispute:

(1) The failure of the pavement was “sudden” within the meaning of the insuring clause.

(2) Likewise, it was “unforeseen”.

(3) As I have said, there was.

(4) As I have said, there was not.

(6) No part of the claim against the insurer was a claim for consequential loss; or if it was, then it must fail.

209 Allianz’ submissions on the first and second issues really depended on its case that there were design defects, and that the failure was a result of those defects (so that it could not be said to be either sudden or unforeseen). Alternatively, Allianz submitted, the failure could not be characterised as unforeseen because Rickard Constructions, or a reasonable and competent civil engineering contractor in its place, should have known or understood or foreseen that the failure was a likely consequence of the practices that I have identified as amounting to defective workmanship. I do not think that this is what “unforeseen” means in the context of the policy. To construe that word as Allianz submits would be, in effect, to limit the insuring clause in the same way that Allianz says its obligations are limited by cl 6 of the exclusions (a matter to which I refer briefly in the next paragraph). If foreseeability of loss is an essential element of liability in negligence, then Allianz’ construction of the word “unforeseen” would mean that the policy could never indemnify Rickard Constructions for the negligent performance of its obligations as a civil engineering contractor.

210 In relation to the last question (para [206(7)]), Allianz conceded that the question was answered against it, at least at first instance, by decisions such as Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 and Toikan International Insurance Broking Pty Ltd v Plasteel Windows Australia Pty Ltd (1988) 15 NSWLR 641. That concession was properly made.

211 The reason why cl 1 of the exclusions affords a complete answer to the claim is simple. Where that clause applies (ie, where its opening words “The costs … workmanship” are engaged), Allianz’ only liability is to pay the costs of loss or damage directly caused by defective workmanship (to use a compendious term) less the costs that would have been incurred in rectifying that defective workmanship immediately prior to the occurrence of loss or damage.

212 The opening words of the clause make it clear that Allianz is not liable for the cost of repairing, replacing or rectifying Insured Property in which there was defective workmanship. It is, however, liable to pay the cost of loss or damage caused directly by that defective workmanship. That liability is limited because there must be subtracted from it the cost that would have been incurred in repairing the defective workmanship immediately prior to the occurrence of the loss. Clearly, when cl 1 of the exclusions is read in conjunction with cl 6, it is apparent that no element of consequential loss is recoverable.

213 In the present case, there is no evidence of “the costs of loss or damage caused directly” by the defective workmanship. Nor is there any evidence of “the costs which would have been incurred in” rectifying that defective workmanship immediately before the occurrence of the loss. Rickard Constructions and Allianz each submitted that the onus of proof of those matters lay on the other. Further, Rickard Constructions submitted, if the onus of proof lay on it, it could be dealt with at a later stage of the hearing. (I deferred the evidence of the quantity surveyors, upon the basis that it might or might not be relevant, and that, if it proved to be relevant, it would be dealt with most effectively by a reference under Pt 72.)

214 The clause is, obviously enough, an exclusion clause. It follows that the onus of proof lies, in the first instance, with Allianz. It is therefore necessary for Allianz to show (on the assumption that the insuring clause has been engaged) that the claim is for, or includes, the cost of repairing Insured Property in which there is defective workmanship. Once that is shown, then, prima facie, Allianz is not liable. If Rickard Constructions, as the insured, contends that Allianz is liable under the following words of cl 1, it is for Rickard Constructions to show that.

215 That onus requires Rickard Constructions to prove:

(1) What is the loss or damage caused directly by the defective workmanship.

(2) What are the “costs” of that loss or damage.

(3) What would have been necessary to rectify that defective workmanship immediately prior to the collapse of the pavement.

216 Rickard Constructions submitted in reply (written submissions in reply dated 16 November 2004, paras 110, 111) that:

(1) Rectification of the defective workmanship immediately prior to the collapse of the pavement could have been done simply by permitting the moisture in the base course to dry out.

217 Rickard Constructions did not explicitly submit that the first alternative would not involve any cost, but it appears to be implicit in the submission, and I proceed upon that basis. It did submit that the second alternative was a matter that had been quantified by its quantity surveyor, Mr Clifford Ventris, and that it could in any event be dealt with by reference or otherwise if there were no agreement.

218 I do not think that the first alternative deals with the issue to which it was addressed, namely, the amount of “the costs which would have been incurred in … rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring”. The faulty workmanship that I have found included both the sealing of sections of pavement known to be wet and soft, and the sealing of other sections of pavement that had been subjected to heavy rainfall after compaction and testing and that had not been retested. If drying out of the base course were possible – and, contrary to the submission for Rickard Constructions, I do not think that the expert evidence demonstrated clearly that it was – it would not rectify the defective workmanship. It would, at most, overcome (to some greater or lesser extent) the consequences.

219 Dr Burman was the most enthusiastic advocate of “drying out”. To some extent, he was supported in this by Messrs Thom and Leventhal. Messrs Marshall and Waddell were of the view that drying out was both impractical and unlikely, in any event, to cure the problem.

220 The first difficulty with drying out is that it required the pavement to remain unused for an indeterminate period of time. The period of time would be indeterminate because, without taking up the pavement, the success of the process could only be ascertained by indirect testing such as Benkelman beam tests. (If repeated Benkelman beam testing showed no, or acceptable limits of, deflection, then, perhaps it could be inferred that the base course had dried out adequately.) This would have meant denying Mayne the use of the container depot. Rickard Constructions submitted that this was the result in any event, because it took some considerable time for the defective pavement to be repaired. That may be so. But it is not difficult to imagine that if Mayne were faced with a choice between delay occasioned by digging up, relaying and resealing the pavement (with appropriate attention paid to keeping it dry, and to testing it before it was sealed) on the one hand, and an indeterminate wait with an uncertain outcome on the other, it would have chosen the former course.

221 Another difficulty with the concept of drying out is not only that it is indeterminate in time, it is also dependent to some extent on weather conditions. Thus where (as was the case) there was prolonged heavy rain during the putative drying out period, the evidence suggests that drying out would have been at the very least delayed, and perhaps rendered impossible. It is for this reason that, at a technical level, Messrs Thom and Leventhal did not support drying out with the same enthusiasm as did Dr Burman. I think it is fair to say that Messrs Thom and Leventhal regarded drying out as a theoretical, rather than practical, solution.

222 More fundamentally, Rickard Constructions has not attempted to address the first two elements described in para [215] above. That seems to reflect what in my view is its incorrect construction of cl 1 of the exclusions. Rickard Constructions said (written submission in reply, pars 105 to 107):

“105. The intent of the exclusion clause is to provide for the possibility that an insured event may result in RC being compensated for losses that it would have suffered even if the insured event had not occurred. To put this another way, the clause makes provision against RC getting the advantage of making good defects in construction or in design which would have to be made good even if the insured event did not occur. The exclusion clauses are intended to operate to ensure that RC does not get that benefit so that the costs that would always have been incurred in making good defects in design or construction are not cast on Allianz.

106. Therefore, the exclusion clauses embody the following concepts:

(a) the cost of repairing, replacing or rectifying any fault, defect, error or omission in material workmanship or design of the Pavement;

(b) the costs of loss or damage caused directly by the fault, defect, error or omission;

107. In order to determine the costs that are excluded by (item (a)) above, it becomes necessary to determine the nature of any defect or omission that exists in the pavement. The costs in rectifying that deficiency are costs that would likely have been incurred, and are excluded.”

223 In my judgment, that construction of the clause – particularly, the proposition advanced in para 106(a) set out above – is incorrect. The clause does not “embody”, as the description or character of the excluded liability, the cost of rectifying defective workmanship or design (to summarise sub para (a)). It excludes liability for “the costs of … rectifying Insured Property in which there is a fault, defect, error or omission in material or workmanship” (emphasis supplied). The present claim is, precisely, one for the cost of rectifying Insured Property – the pavement – in which there was, or that was affected by, defective workmanship. That is clearly something greater than what Allianz will pay (namely, “the cost of loss or damage caused directly by such” defective workmanship); and that in turn is diminished further by the following words (“less the cost which would have been incurred in … rectifying the … defective … workmanship immediately prior to the loss or damage occurring”).

224 Drying out – a process that (if it worked at all) would take some months of fine weather to achieve - could not rectify the defective workmanship immediately prior to the failure of the pavement. As a matter of logic, the rectification of the defective workmanship immediately prior to the loss would have entailed the testing of the pavement by some appropriate method (such as the Benkelman beam test referred to frequently in the course of the evidence) to observe and quantify the extent to which it was defective. The Benkelman beam test does this because it measures the extent to which the pavement deflects under load. Once the defective pavement had been identified, rectification would have required the removal of the wearing layer and the underlying layers, and the placement of fresh (or dried out) fill for the sub-base and base course layers and the compacting of those layers to the appropriate specification. Finally, it would have required the replacement of the asphalt wearing course.

225 There is no reason for thinking that the costs of that (hypothetical) exercise would have been in any way significantly different to the costs actually incurred in repairing the failed pavement.

226 But it is not for this reason that the claim must fail. If that were the extent of the problem then, bearing in mind that consideration of the evidence of the quantity surveyors has been deferred, I would not think it appropriate to find against Rickard Constructions on that limited basis. The problem is a deeper one. As I have said, Rickard Constructions has not proved the matter referred to in para [215(1)] above. But it is this which is the starting point of the determination of any entitlement that Rickard Constructions may have once it is shown (as it has been shown) that the exclusion clause has been engaged. That is not a question of quantification. It is a matter of identifying what it is to be quantified. The evidence for Rickard Constructions simply does not do that, and so the question of quantification does not arise.

227 Further, if I am correct in concluding as well that Rickard Constructions has not identified the matter referred to in para [215(3)] above (see paras [216] and [217] above), then it has failed to identify the other essential component of its entitlement. The claim must fail for this reason also, and again, not as a matter of quantification only.

228 Accordingly, I conclude that the claim against Allianz must fail.

Damage

229 In view of the conclusion to which I have come, it is not necessary for me to deal with the question of damage. However, I shall set out briefly the findings that I would have made had it been necessary to do so.

230 The quantification of the cost of rectification of the pavement has been deferred, to be dealt with by an order for reference under Pt 72, should it be necessary to do so. It is not.

231 The other aspect of the claim was for the damages suffered by Mayne.

232 The components of the claim were identified and discussed by the relevant witnesses, Mr John Klepec (an employee of Mayne, called by Rickard Constructions) and Mr Alexander Penklis (an independent expert, called by Rickard Partners and Jeffery & Katauskas).

233 The first issue related to the first element of the claim: an amount claimed by Mayne to have been payable to a third party pursuant to a deed of settlement. The witnesses were agreed (and, so far as I understood it, the parties by whom they were called were agreed) that the dispute was only whether the amount was $1,200,000 (as asserted by Mr Klepec) or $982,008.70 (as asserted by Mr Penklis).

234 The amount expressed by the deed to be payable was the latter (lower) figure. Mr Klepec’s contention was that the settlement amount agreed was in fact the former (higher) figure, but that the third party was indebted to Mayne for the difference between the two figures of $217,991.35 (the difference of 5 cents is not one on which I propose to spend a deal of time). Mr Klepec reached that conclusion by reference to a without prejudice letter. The letter was tendered. I rejected the tender. The deed was tendered. The deed proves the lower amount. The deed does not show that the lower amount was reached after offsetting the amount of $217,991.35 against the higher amount. In my judgment, the amount to be allowed (should it become necessary to do so) is the lower amount, namely $982,008.70.

235 The next element of the claim was a amount of $686,592, said to be rent foregone by Mayne in respect of premises that, because it could not have access to the container depot when planned, it continued to use. Proof of liability for and quantification of this amount depended on what was called in submissions “the Truong e-mail” (an e-mail from Mr Thanh Truong of Mayne to Mr Klepec dated 19 October 2000, marked for identification 4 in the proceedings). I rejected the tender of that e-mail. It follows that this item is not proved.

236 Items 3 and 4 related to the cost of leasing alternative premises. They were in the amounts of $57,931 and $209,232 respectively. I am satisfied that they were incurred and should be allowed.

237 The fifth item was for the construction of a temporary fumigation pad. The amount claimed was $24,227. It was agreed that this amount was substantiated. However, it was shown to be a claim by MPG Logistics, not a claim by Mayne Nickless.

238 Items 6 to 14 relate to a number of additional costs said to have been incurred. They total $468,728. The evidence relied upon to prove them was the Truong e-mail. Because that document was not admitted into evidence, these claims are not made good.

239 Item 15, in the sum of $199,950, related to management costs. It was not pressed and would therefore not be allowed.

240 Item 16 relates to consultants’ fees. It was agreed in the sum of $57,980. It is another MPG Logistics’ claim.

241 Item 17 related to flights said to have been undertaken in the course of the rectification works. The amount claimed is $30,000 (said by Mr Klepec to be a conservative estimate). In my judgment, Mr Klepec’s evidence at T 320 and following – which was effectively unchallenged – is sufficient to justify this claim. I am comforted by this in Mr Penklis’ acknowledgment that he has “sighted invoices in excess of the amount claimed”. He said that the issue was “the purpose of the trips”. I am satisfied, as I have said, that Mr Klepec’s evidence demonstrates the purpose of the trips sufficiently to enable this item to be claimed. It, too, is a claim of MPG Logistics.

Conclusions

242 I return to the issues set out in para [11] above. Before I answer them, I wish to note that the resolution of the issues has been made difficult by the failure of (in particular) Rickard Constructions to address them specifically. The whole point in requiring the parties to agree upon the real issues in dispute is to focus the evidence, the submissions and the decision. Where parties do not address the issues directly and clearly, the Court’s task in resolving the dispute is rendered more difficult. I do not regard it as appropriate for a party, having participated in the process of agreeing the real issues in dispute, to formulate its submissions on a different and less readily comprehensible basis. Not only does this make the task of analysis and resolution more difficult, it leads to a risk that issues will be overlooked, and that time will be wasted in addressing issues that, although not formally conceded, are not in reality pressed. The Court should not have to struggle, at the end of four weeks of evidence, to understand the case that a party seeks to make and the evidence by which it seeks to prove that case. But that is the result of a failure to address specifically and seriatim the issues that have been articulated by agreement.

243 I answer the issues set out in para [11] above as follows:

1A. What was the cause of the failure of the Pavement and in particular was the failure of the Pavement attributable to:

(a) any design deficiency of the pavement of the type identified in the joint expert’s report;

(b) excessive quantities of moisture in the Pavement as a result of entry of moisture during the construction of the Pavement;

(c) any other aspect of the manner of construction of the Pavement.

Answer: The pavement failed because of the build-up of excessive pore pressures in the base course material. That occurred because the base course became excessively wet as the result of the entry of moisture (due to rainfall) during the construction of the pavement.

1B. Was there physical loss of or damage to Insured Property and, if so, when?

Answer: Yes. It occurred when the pavement failed immediately after it was put into service and loaded by the operation of heavy forklift vehicles.

1C. Was there a fault, defect, error or omission in design, plan or specification?

Answer: No.

1D. Was there a fault, defect, error or omission in material or workmanship?

Answer: Yes.

1E. What were the costs of loss or damage caused by fault, defect, error or omission in design, plan or specification?

Answer: Not applicable.

1F. What were the costs of loss or damage caused by fault, defect, error or omission in workmanship or material?

Answer: Not proven.

1G. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in design or specification immediately prior to the loss or damage occurring?

Answer: Not applicable.

1H. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring?

Answer: Not proven (but, if this aspect of the exclusions were engaged, it is a matter that could have been proven as part of the consideration of the quantity surveying evidence, which I ordered to be deferred – should it arise – until after the delivery of these reasons.)

2. Did RC rely upon RP to provide it with engineering, supervisory and certification services in connection with the design and construction of the pavement?

Answer: No.

3. Did any such reliance give rise to a duty owed to RC by RP in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project?

Answer: No.

4. Having regard to the Court’s findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS?

Answer: Does not arise, but no.

5. Was the performance of the rectification works and other works the subject of RC’s variation claims:

(a) caused by RP’s alleged breach; or
(b) a foreseeable consequence of RP’s alleged breach?

Answer: No.

6. If so, what was the quantum of RC’s loss flowing from any such breach of duty?

Answer: Does not arise.

7. Having regard to the Court’s findings on the technical issues:

(a) was RC’s loss caused or contributed to by negligence on RC’s part;

(b) if so, the quantum by which RC’s damages should be reduced on account of such contributory negligence.

Answer: (a) The loss, namely the failure of the pavement, was caused by defective workmanship on the part of Rickard Constructions.

(b) Not applicable.

8. Did RP make representations to RC concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS?

Answer: No.

9. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)?

Answer: Does not arise.

10. Was the performance of the rectification works and other works the subject of RC’s variation claims a loss and, if so was it:

a. undertaken in reliance upon or otherwise caused by RP’s alleged representations; or
b. a foreseeable consequence of RP’s alleged representations?

Answer: No; otherwise does not arise.

11. If so, what was the quantum of RC’s loss (if any) flowing from such misleading & deceptive conduct.

Answer: Does not arise.

12. What were the terms of any contract between PBCP and RP in connection with the design of the Container Park and the supervision or certification of the construction of the Container Park?

Answer: Not necessary to answer.

13. Were the rights and obligations of PBCP under any such contract assigned or novated to the Mayne companies on or after 4 January, 1999 so as to give rise to contractual obligations in the same terms as between the Mayne companies and RP?

Answer: Not necessary to answer.

14. Having regard to the Court’s findings on the technical issues, did RP breach its contract with the Mayne companies in the manner alleged in the particulars to paragraph 17 of the SFAS?

Answer: Not necessary to answer.

15. Did the Mayne companies suffer any loss as a consequence of the alleged breach and, if so, what was the quantum of that loss?

Answer: Not necessary to answer, but see paras [233] to [241] above.

16. Did RP on or about 23 April 1998 undertake to the Mayne Companies to provide design, supervision and certification services in relation to the Pavement?

Answer: Not necessary to answer.

17. Did any such undertaking give rise to a duty owed by RP to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies?

Answer: Not necessary to answer.

18. Having regard to the Court’s findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS?

Answer: Not necessary to answer.

19. The quantum of the Mayne Companies’ loss (if any) flowing from any such breach of duty.

Answer: Not necessary to answer, but see paras [233] to [241] above.

20. Did RP make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS?

Answer: Not necessary to answer.

21. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)?

Answer: Not necessary to answer.

22. The quantum of the Mayne Companies’ loss (if any) flowing from such misleading & deceptive conduct.

Answer: Not necessary to answer.

23. Were the Mayne Companies’ claims against RP (or any of them) validly assigned to RC under the First Deed?

Answer: No.

24. If not, were the Mayne Companies’ claims against RP (or any of them) assigned to Patrick under the Business Sale Agreement?

Answer: Yes.

25. If not, were the Mayne Companies’ claims against RP (or any of them) validly assigned to RC under the Second Deed?

Answer: Does not arise, but in any event no.

26. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies’ claims against RP.

Answer: Does not arise (for the reasons given in paras [202] and [203] above).

27. Is the present matter properly constituted to permit such a subrogated right to be pursued by RP?

Answer: Does not arise.

28. Having regard to the Court’s findings on the technical issues, was RC a tortfeasor liable to the Mayne Companies in respect of damage suffered by those Companies arising out of failure of the Pavement.

Answer: Does not arise, but see the answer to issue 7(a).

29. Having regard to the Court’s findings on the technical issues, was RP a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage.

Answer: Does not arise.

30. Can RC recover, under the Law Reform (Miscellaneous Provisions) Act 1946 , the whole or any part of the cost of performing the work the subject of the Variation claims.

Answer: Does not arise.

31. The quantum of contribution which RP should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 .

Answer: Does not arise.

32. Alternatively is RC entitled to contribution in equity from RP towards the cost to it of performing the work the subject of the Variation claims, and if so the quantum of such contribution.

Answer: Does not arise.

33. What were the terms and scope of Jeffery & Katauskas’ retainer with Rickard & Partners?

Answer: The retainer was to provide level 2 testing services of the kind described in para [17] above.

34. What, if any, responsibilities were undertaken or owed by J&K to the plaintiff or Mayne Nickless or Logistics with respect to the design or construction of the Pavement and in particular:

a. Whether J & K’s letter to the plaintiff dated 3 May 1999 (6-136 to 6-137) or any subsequent conduct of J & K in respect of the inspection or approval of proof rolling imposed any duty on J & K in respect of the adequacy of the Works as completed by the plaintiff.

b. Whether by paragraph 1 of J & K’s facsimile of 19 November 1998 to Rickard & Partners (4-189) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement.

c. Whether Jeffery & Katauskas’ fax of 5 February 1999 to Rickard & Partners (5-563 to 7, and in particular Note 1 at 5–564) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement.

d. Whether according to the evidence of Mr Rickard, as a result of his alleged discussions with Mr Jeffrey, J&K were retained to ensure that the construction work complied with the design and specification or whether the retainer was for Level 2 testing only.

Answer: The only obligation of Jeffery & Katauskas was to use appropriate professional skill in the provision of the services required under its retainer. As to the particular questions asked:

a. No.

b. No.

c. This was not addressed in submissions and I do not propose to answer it.

d. No.

35. Did J&K owe a duty to RC in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project?

Answer: No.

36. Having regard to the Court’s findings on the technical issues, did J&K breach that duty?

Answer: Does not arise.

37. Whether any such breach caused any loss to RC?

Answer: Does not arise.

38. The quantum of RC’s loss flowing from any such breach of duty.

Answer: Does not arise.

39. Having regard to the Court’s findings on the technical issues:

(a) was RC’s loss caused or contributed to by negligence on RC’s part;

(b) if so, the quantum by which RC’s damages should be reduced on account of such contributory negligence.

Answer: See the answer to issue 7(a).

40. Did J&K make representations to RC concerning the design and construction of the Pavement in the terms alleged?

Answer: No.

41. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)?

Answer: Does not arise.

42. The quantum of RC’s loss (if any) flowing from such misleading & deceptive conduct.

Answer: Does not arise.

43. [The second defendant says on any claim made by either of the Mayne Companies (in tort or otherwise), it is at issue whether and if so what cause of action accrued to either company or was assigned by either company.]

Answer: Not necessary to answer.

44. Did J&K owe a duty to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies?

Answer: Not necessary to answer.

45. Did J&K breach any duty to the Mayne Companies?

Answer: Not necessary to answer.

46. Whether any such breach caused any loss to the Mayne Companies?

Answer: Not necessary to answer.

47. The quantum of the Mayne Companies’ loss flowing from any such breach of duty.

Answer: Not necessary to answer, but see paras [233] to [241] above.

48. Did J&K make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged?

Answer: Not necessary to answer.

49. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)?

Answer: Not necessary to answer.

50. The quantum of the Mayne Companies’ loss (if any) flowing from such misleading & deceptive conduct.

Answer: Not necessary to answer.

51. Were the Mayne Companies’ claims against J&K validly assigned to RC under the First Deed?

Answer: No.

52. If not, were the Mayne Companies’ claims against J&K assigned to Patrick under the Business Sale Agreement?

Answer: Yes.

53. If not, were the Mayne Companies’ claims against J&K validly assigned to RC under the Second Deed.

Answer: Does not arise, but in any event no.

54. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies’ claims against J&K.

Answer: Does not arise, for the reasons given in paras [202] and [203] above).

55. Having regard to the Court’s findings on the technical issues, was J&K a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage.

Answer: Does not arise.

56. The quantum of contribution which J&K should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 .

Answer: Does not arise.

57. Alternatively is RC entitled to contribution in equity from J&K towards amounts paid or allowed in favour of the Mayne Companies under the First Deed, and if so the quantum of such contribution.

Answer: Does not arise.

58. Having regard to the Court’s findings on the technical issues, did J&K breach the terms of its retainer by RP?

Answer: No.

59. Is J&K’s liability limited by the terms of its contract with RP?

Answer: Does not arise.

60. The quantum of RP’s loss, in the form of liability to RC, (if any) flowing from that breach.

Answer: Does not arise.

61. Having regard to the Court’s findings on the technical issues, were either or both of RP and J&K tortfeasors liable to RC in respect of damage suffered by RC arising out of failure of the Pavement.

Answer: Does not arise.

62. The quantum of contribution which RP and J&K should make to each other under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 .

Answer: Does not arise.

63. Alternatively is either of RP or J&K entitled to contribution in equity from the other towards its liability to RC, and if so the quantum of such contribution.

Answer: Does not arise.

64. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property and, if so, when?

Answer: Yes, when the pavement collapsed.

65. Whether, having regard to the Court’s findings on the technical (insurance) issues, the physical loss of or damage to the Insured Property was sudden and unforseen?

Answer: Yes; it was both sudden and unforeseen.

66. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was a fault, defect, error or omission in the design, plan or specification.

Answer: No.

67. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was a fault, defect, error or omission in material or workmanship.

Answer: Yes.

68. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in the design, plan or specification.

Answer: No.

69. Whether, having regard to the Court’s findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in material or workmanship.

Answer: Yes.

70. Whether, having regard to the Court’s findings on the technical (insurance) issues, RC was guilty of any of the following breaches of condition and if so whether such failures may be relied upon by Allianz under section 54(2) of the Insurance Contracts Act 1984 :

(a) failure to take reasonable precautions to prevent loss or damage;

(b) failure to notify Allianz of material changes in risk arising from the manner in which the construction was carried out and to take such additional precautions to minimise the risk of a claim raising due to such changes in risk.

Answer:

(b) This was not addressed in submissions and I do not propose to answer it.

71. Having regard to the Court’s findings on the technical (insurance) issues, the:

(a) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in the design, plan or specification.

(b) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in material or workmanship.

(c) costs of loss or damage caused directly by fault, defect, error or omission in the design, plan or specification.

(d) costs of loss or damage caused directly by fault, defect, error or omission in material or workmanship.

(e) costs which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in the design, plan or specification immediately prior to the loss or damage occurring.

(f) costs which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring.

Answer: (a) Does not arise.

(b) Not proven.

(c) Does not arise.

(d) Not proven.

(f) Not proven (but, if this aspect of the exclusions were engaged, it is a matter that could have been proven as part of the consideration of the quantity surveying evidence, which I ordered to be deferred – should it arise – until after the delivery of these reasons.)

Order

244 There should be judgment for each of the defendants on Rickard Constructions’ claim against it. There should be judgment for each of the cross-defendants on the various cross-claims.

245 I will hear the parties on costs.

******

Last Modified: 12/17/2004

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Citations

Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2004] NSWSC 1041

Most Recent Citation

EWC Payments Pty Ltd v Commonwealth Bank of Australia [2014] VSC 207

Cases Citing This Decision

99

Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43

Equuscorp Pty Ltd (formerly Equus Financial Services Ltd) v Haxton [2011] HCATrans 51

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Statutory Material Cited

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Singleton v Freehill Hollingdale & Page [2000] SASC 278

FAI General Insurance Co Ltd v Tidbold [1999] QCA 524

CITATION:	Rickard Constructions & Anor v Rickard Hails Moretti & Ors [2004] NSWSC 1041
HEARING DATE(S):	5/10/04, 6/10/04, 7/10/04, 8/10/04, 11/10/04, 12/10/04, 13/10/04, 14/10/04, 15/10/04, 18/10/04, 19/10/04, 20/10/04, 21/10/04, 22/10/04, 25/10/04, 26/10/04, 29/10/04, 4/11/04, 5/11/04
JUDGMENT DATE:	17 December 2004
JUDGMENT OF:	McDougall J at 1
DECISION:	See paras [244] and [245] of judgment
CATCHWORDS:	CONTRACT - assignment - whether cause of action for damages for breach of contract assignable - distinction between liquidated and unliquidated claims - whether cause of action for misleading and deceptive conduct assignable - whether cause of action for damages for breach of duty of care assignable - Poulton v Commonwealth (1952-1953) 89 CLR 540 considered - Trendtex Trading Corporation v Credit Suisse [1982] AC 679 considered - whether plaintiff has sufficient interest to justify assignment - TORT - duty of care - pure economic loss - whether defendant owed plaintiff duty to avoid economic loss - whether plaintiff vulnerable - breach of duty - whether duty of care breached - whether damage suffered - TRADE PRACTICES - Trade Practices Act 1974 - s 52 - whether representation misleading or deceptive - whether assignee suffers loss "by" misleading or deceptive conduct - PRACTICE AND PROCEDURE - joinder - SCR Pt 8 r 8 - whether leave should be granted further to amend summons to join third party as a plaintiff - whether third party "ought to have been joined" within SCR Pt 8 r 8(1)(b) - whether third party "necessary" within SCR Pt 8 r 8(1)(b)
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) Law Reform (Miscellaneous Provisions) Act 1946
CASES CITED:	Comfort v Betts [1891] 1 QB 737 Fitzroy v Cave [1905] 2 KB 364 County Hotel and Wine Company Limited v London and North Western Railway Company [1918] 2 KB 251 Re Daley; Ex parte National Australia Bank Ltd (1992) 37 FCR 390 Torkington v Magee [1902] 2 KB 427 Defries v Milne [1913] 1 Ch 98 Ellis v Torrington [1920] 1 KB 399 Re Kenneth Wright Distributors Pty Ltd (in liq); W J Vine Pty Ltd v Hall [1973] VR 161 Camdex International Ltd v Bank of Zambia [1998] QB 22 Poulton v The Commonwealth (1952-1953) 89 CLR 540 Trendtex Trading Corporation v Credit Suisse [1982] AC 679 Giles v Thompson [1994] 1 AC 142 Re Timothy's Pty Ltd and the Companies Act [1981] 2 NSWLR 706 Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148 South Australian Management Corporation v Sheahan (1995) 16 ACSR 45 Beatty v Brashs Pty Ltd [1998] 2 VR 201 Singleton v Freehill Hollingdale & Page [2000] SASC 278 Vangal Pty Ltd (in liq) v Kumagai Gumi Co Ltd [2002] QSC 137 First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710 Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105 Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (Federal Court of Australia, 7 November, 1994, unreported: BC9400129) National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 Chapman v Luminis (No 4) (2001) 123 FCR 62 Deloitte Touche Tohmatsu v Cridlands Pty Ltd (2003) 204 ALR 281 Brownton v Edward Moore Inbucon Ltd [1985] 3 All ER 499 Knight v McCann Erickson Pty Ltd (26 August 1991, unreported; BC-9101623) Pralle v Scharka [1978] 2 NSWLR 450 Cambridge Credit Corporation Ltd v Parkes Developments Ltd [1974] 2 NSWLR 590 Gordian Runoff v Price & Ors [2004] NSWSC 535 Pegang Mining Company Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56 News Limited v Australian Rugby Football League (1996) 64 FCR 410 State of Victoria v Sutton (1998) 195 CLR 291 Bishopsgate Insurance Australia Ltd (In liq) v Deloitte Haskins & Sells [1999] 3 VR 863 Bryan v Maloney (1995) 182 CLR 609 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 78 ALJR 628 Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 Heydon v NRMA Ltd (2000) 51 NSWLR 1
PARTIES :	Rickard Constructions Pty Limited (First Plaintiff) Mayne Group Limited (Second Plaintiff) Rickard Hails Moretti Pty Limited (First Defendant) Jeffery & Katauskas Pty Limited (Second Defendant) Allianz Australia Insurance Limited (Third Defendant)
FILE NUMBER(S):	SC 55027/00
COUNSEL:	F C Corsaro SC/T G R Parker (Plaintiff) S R Donaldson SC/ P S Braham (First Defendant) M Dempsey SC/J Steele (Second Defendant) A S Martin SC/A J McInerney (Third Defendant)
SOLICITORS:	Maurice Blackburn Cashman (Plaintiff) Moray & Agnew (First Defendant) Colin Biggers & Paisley (Second Defendant) Moroney Betts (Third Defendant)

Para
Background	2
The issues	10
The role of Rickard Partners	12
The role of Jeffery & Katauskas	17
The assignments	23
The assigned claims	39
Assignment of causes of action: the principles	42
Rickard Constructions has no sufficient interest	62
Conclusion on the assigned causes of action	72
The joinder application	73
Conclusion on the assigned claims	91
The pavement design and the criticisms of it	94
The failure of the pavement	122
Responsibility for the failure of the pavement	132
The claim against Rickard Partners	145
Duty of care	147
No breach of duty	153
Damage	160
The section 52 claim	163
The claim against Jeffery & Katauskas	166
Duty of care	167
No breach of duty	173
The proposed amended particulars	177
The further case of breach	184
The s 52 case	197
The subrogation and contribution claims	200
The claim against Allianz	204
Damage	229
Conclusions	242
Order	244