State of Tasmania v Leighton Contractors Pty Ltd (No 3)
[2004] TASSC 132
•16 November 2004
[2004] TASSC 132
CITATION: State of Tasmania v Leighton Contractors Pty Ltd (No 3) [2004] TASSC 132
PARTIES: STATE OF TASMANIA
v
LEIGHTON CONTRACTORS PTY LTD
(ACN 008 893 667)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 458/2002
DELIVERED ON: 16 November 2004
DELIVERED AT: Hobart
HEARING DATES: April: 19-22, 26, 28-30
May: 3-6, 10-13, 17-20, 24, 26, 28, 31
June: 1-3, 7-10, 15-18, 24-25, 28-30
July: 1, 5-8, 26-29
August: 3-5, 9-11, 18, 19, 23, 24, 26, 30, 31
September: 1, 2, 30
October: 1, 4-8, 11-15, 18, 20, 22
JUDGMENT OF: Cox CJ
CATCHWORDS:
Contracts – General contractual principles – Construction and interpretation of contracts – Penalties and liquidated damages – General principles – Genuine pre-estimate of loss accruing from breach of contract.
Dunlop Pneumatic Tyre Company Limited v New Garage and Motor Company Limited [1915] AC 79; Robophone Facilities Ltd v Blank [1966] 1 WLR 1428; Philips Hong Kong Ltd v Attorney General for Hong Kong (1993) 61 BLR 49; Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) 33 NSWLR 504, referred to.
Aust Dig Contracts [1277]
REPRESENTATION:
Counsel:
Plaintiff: P Vickery QC, G L Sealy
Defendant: G J Digby QC, R J Manly SC
Solicitors:
Plaintiff: Director of Public Prosecutions
Defendant: Dobson Mitchell & Allport
Judgment Number: [2004] TASSC 132
Number of paragraphs: 337
CONTENTS
ABBREVIATIONS............................................................................................................................. i
BACKGROUND
General description of the works
Early history of the bypass project
The Hagley DPEMP
The Planning Permits
Environment Protection Notices
The Tender Process
The Contract
Value Management Workshop
The CEMP
The 15% Design
The 15% Design Review
The 85% Design and its Review
Submission No 9
Submission No 10
Submission No 14
The Eckersley-Maslin disclosure
The Design Verifier's Conditional Certificate
Submission No 15
Mr Minahan's complaint
A compromise reached
The Direction
WAS THE LEIGHTON DESIGN COMPLIANT?
WAS THE DESIGN DOCUMENTATION VERIFIED?
THE CONSEQUENCES OF NON-COMPLIANCE
THE EXTENSION OF TIME CLAIM
LIQUIDATED DAMAGES OR PENALTY?
ESTOPPEL
LEIGHTON'S CLAIM IN NEGLIGENCE
LEIGHTON'S FAIR TRADING ACT 1990 CLAIM
LEIGHTON'S COUNTERCLAIM FOR CHANGES
FERNLEY'S FENCE - $10,133
UPGRADE SEAL - $35,420
FRANGIBLE POSTS - $18,659
STOCKPILING MATERIAL ON SITE - $58,083
RIDE ON HEAD WALLS - $25,260
UNPAID BALANCE OF CONTRACT SUM
PAINTING BRIDGE RAILINGS - $120,000
OUTSTANDING DOCUMENTATION - $50,000
BRIDGE ABUTMENT AND PAVING DEFECTS - $40,000
OUTSTANDING DEFECTS - $25,000
TASRAIL'S LEGAL COSTS - $11,977
HOGGS LANE - $300,000
THE INDEPENDENCE OF THE PRINCIPAL'S REPRESENTATIVE
AMENDMENTS
THE OBJECTIONS TO EVIDENCE
THE ORDERS
ANNEXURE 1 - PLAN
i
ABBREVIATIONS
AHC Australian Heritage Commission.
AHD Australian Height Data.*
CEMP Construction Environmental Management Plan.
DCM Contract Design, construct and maintain contract.
DELM Department of Environment and Land Management.
DIER Department of Infrastructure Energy and Resources.
DoT Department of Transport.
DPEMP Development Proposal and Environment Management Plan.
DPIWE Department of Primary Industries, Water and Environment.
EA Environment Australia.
EMP Environmental Management Plan.
EPG Federal Environment Protection Group.
EPN Environment Protection Notice.
GHD Gutteridge, Haskins and Davey.
HH Hagley House.
HP High Priority.
Hyder Hyder Consulting (Australia) Pty Ltd.
ITT Invitation to Tender.
LCPL Leighton.
Leighton Leighton Contractors Pty Ltd.
LP Low Priority.
MP Medium Priority.
Meander Valley Council.
NSL Natural surface level.
P & S Pitt & Sherry.
The Principal The State of Tasmania
The Project Deed The contract entered into on 24 June 1999 between the State and Leighton.
Railway Route The route chosen for the construction of the Hagley Bypass.
RNE Register of the National Estate.
RTA New South Wales Road Traffic Authority.
SOWTC Scope of Works and Technical Criteria.
THC Tasmanian Heritage Council.
The State The State of Tasmania.
THR Tasmanian Heritage Register.
VM Value Management.
Serial No 132/2004
File No 458/2002
STATE OF TASMANIA v
LEIGHTON CONTRACTORS PTY LTD (ACN 008 893 667) (NO 3)
REASONS FOR JUDGMENT COX CJ
16 November 2004
BACKGROUND
These proceedings arise out of a contract entered into on 24 June 1999 ("the Project Deed") between the State of Tasmania ("the State"), by its department, the Department of Infrastructure Energy and Resources ("DIER") and Leighton Contractors Pty Ltd ("Leighton"), pursuant to which Leighton, as the contractor, was to design, construct and maintain for 10 years 13.65 kilometres of new highway to be incorporated into the Bass Highway and comprising two sections called the Westbury Bypass and the Hagley Bypass.
The Hagley Bypass section of the project required the realignment of the highway to bypass the town of Hagley. This section of the new highway passed through a sensitive area of cultural landscape known as the "Hagley Mill Cultural Landscape". Hagley House is also situated within the Hagley Cultural Landscape adjacent to the route of the new highway at chainage 20140. It is an historic homestead built in 1826.
It is the case of the State that, because of the sensitive nature of the area near Hagley House, the Project Deed paid particular attention to minimising the potentially detrimental impact of the new highway which was to bisect the landscape. The Environmental Documents which were incorporated into the Project Deed, namely the Development Proposal and Environment Management Plan (the "DPEMP"), the planning permits and the Environment Protection Notices issued under the Environmental Management and Pollution Control Act 1994, s44, together with the provisions of the Project Deed itself, required the construction of the Hagley Bypass to be "in cut" below natural surface level ("NSL") opposite Hagley House.
Leighton, however, prepared design documentation and, between January and May 2000, proceeded to construct the Hagley Bypass in front of Hagley House 1.239 metres above NSL in fill.
On 15 November 2000 the Principal, by its representative, Mr Peter Holland ("the Principal's Representative") directed Leighton to proceed with the final design and construction of the Hagley Bypass in front of Hagley House 1.5 metres below NSL in cut.
The nub of the dispute is that Leighton has claimed that the direction from the Principal's Representative dated 15 November 2000 to place the relevant portion of the Hagley Bypass in cut amounted to a Change under the provisions of the Project Deed which ought to be valued and paid for by the State in accordance with the compensation provisions of the Project Deed and further that Leighton ought to have been granted an extension of time within which to complete the project. However, the position of the State is that the direction was no more than a direction to Leighton to comply with the requirements of the Project Deed which specified that the highway in front of Hagley House was to be "in cut".
The relief sought by the State is a number of declarations to the following effect:
AA declaration that the Design Documentation submitted to the Principal's Representative by the defendant on or about 17 September 1999 which detailed the Hagley Bypass in front of Hagley House to be 1.24 metres above NSL in fill was not in accordance with the Project Deed;
BA declaration that the direction of the Principal's Representative by letters dated 13 November 2000 and 15 November 2000 did not constitute any change in design documentation pursuant to cl 4.2(a) of the Project Deed or as defined in the Project Deed;
CA declaration that Leighton is not entitled to any adjustment of the contract sum in its favour pursuant to cl 7 of the Project Deed by reason of the direction of the Principal's Representative, by letters dated 13 November 2000 and 15 November 2000;
DA declaration that Leighton is not entitled to any extension of time in respect of the date for construction completion of the project works by reason of the necessity for it to comply with the direction of the Principal's Representative, by letters dated 13 November 2000 and 15 November 2000.
General description of the works
The works consisted of two sections of the Bass Highway, being the Westbury Bypass in the west and the Hagley Bypass in the east. The limits of the contract works for construction of the Westbury and Hagley Bypasses were defined by highway chainages as follows:
·west of Beresfords Lane overpass bridge (chainage 7400m);
·east of Hagley Station Lane bridge (chainage 21050m).
The length of highway within the limits of the contract works is 13.65 kilometres.
Initially the new highway was to be designed and constructed as in part a single carriageway and in part a dual carriageway, with the facility to ultimately develop the highway into a totally dual carriageway as part of a future project. The scope of the project works included:
·approximately 3.2 kilometres of new divided dual carriageway;
·approximately 6.7 kilometres of new single carriageway (with provision for future duplication);
·completing an existing 3.7 kilometre section of part dual and part single carriageway;
·five new bridges;
·three major water course crossings;
·one full diamond and two half diamond interchanges;
·upgrading local roads and relocation of services.
Hagley House was permanently entered on the Tasmanian Heritage Register on 17 February 1999. It was also entered on the Register of the National Estate ("RNE") under the Australian Heritage Commission Act 1975 on 21 March 1978.
The intended highway was to pass through pastoral areas of great heritage and cultural significance. Hagley and Westbury were settled early in the nineteenth century and developed in such a way that they resembled rural England of that time. The pristine landscape was cleared by the early colonists and boundaries established, predominantly with hawthorn hedges. The five acre rectangular block with hedge boundaries, so common in England after the Enclosure Acts of the early eighteenth century, was introduced in the settlement of rural Tasmania and is a strong element in the Hagley area.
Originally part of the Hagley House property, but separated from it by the railway line built in about 1870, stands the Hagley Mill. The Mill's heritage significance is recorded in its entry on the Register of the Tasmanian Heritage Council as follows[1]:
"(b) Hagley Mill is comprised of an octagonal wheelhouse with adjoining barn (built c1830-1840), and is believed to be the only extant example of its type in Australia.
(c) As well as reflecting the early history and evolution of a farm complex, the place represents a potential archaeological resource which may further aid the understanding of the history of Hagley Mill and the application of horse mill technology in Australia. …(e) The Mill, which later functioned as a steam mill, is a particularly fine example of evolving technological change with early evidence of emerging technology, function and design. These attributes, together with the mill's octagonal design, combine to provide an important example of a rural industrial site."
[1] [Exhibit P7, p6]
The Mill complex is comprised of several other buildings of similar antiquity spread over an area of approximately two hectares.
Hagley House itself is described in its entry on the last mentioned Register as[2]:
"… an imposing two storey Georgian house built over an extended period by Capt William Lyittleton and Dr Richardson. Capt Lyttleton was the son of the 3rd Lord Lyttleton of Hagley Hall, England, and was granted 2,000 acres at Hagley. He began the house which was still incomplete at census time in 1848. The house has a fine setting in the level landscape."
Further on the Register it is described as being[3]:
"… of historic heritage significance because of its ability to demonstrate the principal characteristics of a two storey stuccoed Old Colonial Regency rural farm house with its associated outbuildings and landscape."
[2] [Ibid, Annexure F]
[3] [Ibid, p6]
To the north of Hagley House and standing on the brow of the hill overlooking Hagley township is St Mary's Church. It, too, dates from the early part of the nineteenth century and is crowned with a spire which was added in 1932. Slightly to the south west of the Church is located the Hagley Farm School.
Hagley House and the Mill and its immediate surrounds are not only individually entered on the RNE, but are also collectively entered on that Register (but not on the Tasmanian Heritage Register) as forming the Hagley Mill Cultural Landscape. The significance of this Landscape is described in the Register as follows[4]:
"Statement of Significance:
The Hagley Mill Cultural Landscape includes Hagley Mill, Hagley House (already registered) and part of Mill Farm. It is set in a Tasmanian rural cultural landscape of high integrity, with a strong 'English' influence reminiscent of the early development of the place. The mill itself is comprised of an octagonal wheelhouse with adjoining barn (built c1830-1840), and is believed to be the only extant example of its type in Australia. As well as reflecting the early history and evolution of a farm complex, the place represents a potential archaeological resource which may further aid the understanding of the history of Hagley Mill, the application of horse mill technology in Australia and the cultural landscape (Criterion B.2 and C.2).
The collective components of the cultural landscape and associated buildings provide integrated evidence of the history of agricultural development since early European settlement as well as the history of settlement in Tasmania. The Mill, which later functioned as a steam mill, is a particularly fine example of evolving technological change with early evidence of emerging mill technology, function and design. These attributes, together with the mill's octagonal design combine to provide an important example of a rural industrial site (Criteria A.4 and D.2).
The picturesque composition of the octagonal wheelhouse, attached barn and the assembly of other farm buildings, particularly the original dairy, cottage, etc all linked with vestiges of original split-rail fences and mature hawthorn hedging, makes a rural group of high visual quality. Views to the spire of Hagley Church and to Hagley House also contribute to the visual quality of the cultural landscape (Criterion E.1)."
[4] [Exhibit P3, Appendix 3]
The landscape embraced by the entry on the Register does not, however, include the road corridor to the north of Hagley House and extending east from the Mill to Hagley Station Lane. Roadworks on this section did not therefore involve direct interference with land on the National Register or the Tasmanian Heritage Register and in consequence did not require the approval of the Tasmanian Heritage Council for them to be carried out (see Historic Cultural Heritage Act 1995, s32(1)).
Early history of the bypass project
Planning for the re-alignment of the Bass Highway and the construction of the bypasses around Westbury and Hagley commenced in the mid-1970s when the overall route from Launceston to Deloraine was being reviewed for upgrading.
Between that time and the mid-1990s, several possible routes for the corridor were considered as part of the process of ultimately obtaining Federal Government approval for the corridor. The Department of Transport ("DoT") in 1995 released a Project Scope Report. To comply with Federal environmental and heritage legislation, the DoT was obliged to demonstrate that all prudent and feasible route alternatives had been considered in the route selection process.
Four possible route options were identified for the Hagley Bypass re-alignment from Quamby Brook east of Emu Plains Road to Hagley Station Lane. All of these options made provision for the ultimate construction of a dual carriageway road, with the first stage of each option comprising a two-lane single carriageway. The route options were:
·the Northern Route which is located to the north of Hagley;
·the Railway Route which follows the existing railway line;
·the Murfetts Creek Route which is a deviation of the Railway Route; and
· the Southern Route which runs to the south of Hagley and the railway. This route avoids the Hagley Mill Cultural Landscape area as listed on the RNE.
This Options Report was released for public comment during June and July 1995, providing individuals, interest groups and organisations with an opportunity to examine and comment on the proposed route options and to have input into the evaluation of those options. Following this consultation, the DoT determined that the Railway and Southern Routes were the only two feasible alignments that warranted further consideration. The DoT then commenced detailed investigations encompassing both the Railway and Southern Route options for the Hagley Bypass. These studies incorporated preliminary survey work, geotechnical investigations and sub-consultant assessments, including cultural heritage, noise, public consultation and social impacts. To properly evaluate the options, a Development Plan and Environmental Management Plan was prepared by Maunsell Pty Ltd and Stephenson EMF on behalf of the DoT. Although it was originally intended that a combined DPEMP would be prepared in respect of the entire project, it was subsequently decided that separate DPEMPs would be prepared in respect of the Westbury Bypass and the Hagley Bypass sections of the project.
The approvals process
The project approvals process for the Hagley Bypass involved two stages: the Federal/State Environmental and Federal Heritage approvals process and the State Planning and Heritage approvals process.
The following assessment and approvals were required for the project:
·State environmental assessment in accordance with agreed procedures between the former Department of Environment and Land Management ("DELM") and DoT for road projects and Guidelines established for the preparation of a DPEMP;
·Federal environmental assessment in accordance with the Environmental Protection (Impact of Proposals) Act 1974;
·Federal heritage assessment in accordance with the Heritage Commission Act 1975;
·Federal transport approval by the Minister for Transport following receipt of advice from the Federal Minister for the Environment on the environmental and heritage assessments;
·State planning approval in accordance with the Land Use Planning and Approvals Act 1993 involving an amendment to the Meander Valley Planning Scheme and a planning permit;
·State heritage approval in accordance with the Historic Cultural Heritage Act 1995.
The first stage involved a combined Federal and State environmental impact assessment and Federal Heritage assessment process to consider the Railway and Southern Routes for the Hagley Bypass. This joint process was co-ordinated by the former DELM. The DPEMP was prepared to satisfy the requirements of the environmental and heritage assessment at both the Federal and State levels.
The steps involved in this first stage assessment and approvals were as follows:
·DoT prepared a DPEMP for the Hagley Bypass which considered the Railway Route and an alternative Southern Route;
·DoT submitted the DPEMP to the former DELM;
·DELM reviewed the report and determined whether it was suitable for public comment;
·DoT exhibited the DPEMP and sought community comment on the project proposal and impact assessment;
·DELM considered the community comments and provided its environmental assessment on the DPEMP and project to DoT, the Federal Minister for Transport and the Federal Environment Protection Group ("EPG");
·DPEMP was referred to the Australian Heritage Commission ("AHC") for advice under the Australian Heritage Commission Act 1975, s30;
·AHC provided advice under the Australian Heritage Commission Act 1975, s30, to the Minister for Transport;
·The Federal Minister for Transport made a decision on a preferred route alignment (Railway Route);
·The preferred route alignment was referred to EPG for environmental assessment under the Environment Protection (Impact of Proposals) Act 1974;
·EPG considered DELM's assessment of DPEMP, community comments and also sought advice on heritage matters from the AHC and Biodiversity Group;
·EPG provided environmental and heritage advice on the preferred route alignment to the Federal Minister for the Environment;
·The Federal Minister for the Environment then provided advice on the environmental and heritage obligations to the Federal Minister for Transport to consider in making a decision to fund the preferred route alignment;
·The Federal Minister for Transport then advised the Tasmanian Minister for Transport on the route alignment to be funded.
On 24 July 1998, at the conclusion of this first stage, the Federal Minister for Transport announced that the Railway Route would proceed as the approved route alignment. This decision on the route was based upon the recommendations of two other agencies of the Commonwealth Government, the AHC and Environment Australia ("EA"). The letter from the Commonwealth Department of Transport and Regional Development to DoT dated 7 August 1998, which confirmed the decision, included the following[5]:
"The AHC and EA have been fully involved with the entire DPEMP since 1995 and their decision to accept the process and the ultimate route recommendation is based upon certain conditions as indicated in their letters to this Department (AHC of 17 July 1998 and EA of 23 July 1998). I understand that these two agencies have also written to your Department on this matter.
As the route selection phase is now complete and in order for the proposal to receive formal Stage 3 approval in the future, I am writing to advise you that Tasmania's compliance with the conditions stipulated by AHC and EA for the future planning and construction of the Westbury‑Hagley section of the Bass Highway, will be a condition attached to the provision of federal ALTD funds for this project. A copy of the letters from the AHC and EA are attached for your information."
[5] [CB 30/132]
The conditions indicated by AHC in its letter of 17 July 1998, referred to above, were to the following effect[6]:
[6] [CB 30/133]
"Pursuant to s30 of the Australian Heritage Commission Act 1975, the Commission considers the 'Railway Route' to have some adverse impacts on the heritage values of RNE places (Hagley Mill Cultural Landscape, Hagley House, Hagley Mill and Immediate Surrounds) and 'Woodside' (a place nominated for entry in the RNE), as presented in the DPEMP (pp 127-128, 132-140). However, alternative routes have been carefully considered and the Commission is satisfied that the measures to minimise impacts of the Railway Route have been extensively and adequately formulated in the DPEMP.
The Commission recommends that all of the minimisation measures specified for the 'Railway Route' option in the DPEMP be implemented."
In her letter of 23 July 1998, the Head of EA wrote[7]:
[7] [CB 30/134]
"I advise that any decisions made by Department of Transport and Regional Development regarding this proposal should have regard to the recommendations as detailed in the attachment to this letter. I also attach a copy of the Environment Australia's environmental review which puts my recommendations in context."
The attached recommendations are as follows[8]:
[8] [CB 30/135]
"It is recommended that the following matters are taken into account by the Department of Transport and Regional Development in any decision to proceed with this proposal.
1The proponent shall implement the proposal as described in, and in a manner consistent with the environmental protection undertakings and management strategies outlined in the Development Proposal and Environmental Management Plan (DPEMP) and supporting documents …
3The proponent notifying the Environment Assessment Branch of Environment Australia of:
(a) any changes to the proposal that result in variations to impacts identified in the DPEMP;
(b) any variations between predicted and actual impacts;
(c) the success in implementing the above recommendations with details of any problems or discrepancies; and
(d) any feedback received from the local community or other interested groups regarding the project."
The Department of Primary Industries, Water and Environment ("DPIWE") (the successor to the Department of Environment and Land Management (Tas)) subsequently endorsed the Hagley Bypass DPEMP in its letter dated 20 November 1998, which included the following[9]:
"The Department is satisfied that the DPEMP has highlighted the major impacts associated with the Department of Transport's preferred option for the Hagley Bypass, and that it describes appropriate management prescriptions to deal with these impacts.
I therefore consider that the DPEMP is suitable for the Meander Valley Council to use in support of any amendment to their planning scheme."
[9] [CB 30/123]
The Federal Minister for Transport and the Tasmanian Government then determined to proceed with the implementation of the approved Railway Route.
DoT then commenced the second stage of the approvals process and initiated the State planning and heritage processes necessary for implementation of the approved Railway Route. The planning process involved the preparation of an Amendment to the Meander Valley Planning Scheme to include the land within appropriate road zoning and subsequent application for the necessary planning permits under the scheme.
The heritage process involved approval for a Works Application to alter or disturb sites of heritage significance included on the Tasmanian Heritage Register ("THR"). Works Applications were sought and granted for works at the Hagley Mill and Woodside.
The Hagley DPEMP
This document was issued in March 1998. The Executive Summary which precedes the main text acknowledges that, in respect of both routes considered, the scale of construction and engineered landforms of the highway will change the character of the landscape[10]:
"However, the proposed stage revegetation and landscaping of the areas between the roads, ramps and railway will assist to lessen impacts along the route alignment.
Planting design will be carefully balanced to decrease the visual impact of the highway without dominating the landscape. The landscaping concept will include a mixture of both indigenous and exotic plant species located appropriately to ensure that the landscaping enhances with existing characteristics of the landscape along the highway and takes into account the cultural values of the area.
Landscape concepts for the Woodside interchange in both the Railway Route and the Southern Route have been prepared by the DoT. These concepts depict the proposed landscape management recommendations to be considered for each route."
[10] [CB 5/28]
In respect of cultural heritage effects, the Executive Summary notes that the Railway Route[11]:
"… will have an adverse effect on several places and structures of cultural significance in proximity to the alignment. The sites and areas affected are:
† 'Woodside';
† Hagley Mill complex;
† 'Hagley House';
† Hagley Mill Cultural Landscape; and
† Railway line and former Hagley Station."
[11] [CB 5/31]
The document proper commences with an introduction where, at cl 1.3, the purpose and scope of the DPEMP is described. It is said that the document has been prepared in accordance with generic guidelines for preparing a DPEMP produced by DELM in 1996 and the specific guidelines for the preparation of a DPEMP plan for major re-alignment of the Bass Highway formulated by the DELM in June 1995 in consultation with the (then) Commonwealth Environment Protection Agency. Both sets of guidelines are included as an Appendix to the DPEMP. The aim of the DPEMP is said to be[12]:
[12] [CB 5/39]
"† to provide information to justify the DoT proposal for a new road to follow a corridor known as the Hagley Bypass;
§to provide a framework in which the decision-making agencies can consider the environmental aspect of the proposed Railway Route and the alternative Southern Route for the highway;
§to provide DELM with sufficient information to conduct an environmental assessment of the proposed Hagley Bypass and consider the Railway Route and the alternative Southern Route;
§to provide a source of information from which interested individuals and groups may gain an understanding of the proposals, the need for the proposals, the environment which they will affect, the impacts which may occur and the measures taken to avoid or minimise the potential impacts;
§to provide a forum for public consultation and informed comment on the road proposals; and
§to present environmental management proposals which will minimise and mitigate any adverse environmental impacts of the road proposals."
The introduction notes that the DPEMP is comprised of two volumes, a main report and the accompanying technical appendices. The main report was structured as follows[13]:
[13] [CB 5/39-40]
"† Section 2 describes the study area and Hagley Mill.
†Section 3 presents the objectives of the project and standards for construction.
†Section 4 presents an overview of the environmental and planning legislation and the policy framework for the project.
†Section 5 presents an overview of the historical planning for the corridor undertaken up to the commencement of the DPEMP.
†Section 6 describes the consultation activities which have been undertaken for the development of the proposed alignments for the Hagley Bypass and an outline of the environmental investigations that followed.
†Section 7 describes the proposal and details the design components for the proposed alignment for the bypass.
†Sections 8 to 15 describe the existing conditions within the study area.
†Sections 16 to 22 provide an assessment of the likely environmental effects of the bypass alignment options.
†Sections 23 and 24 detail the Conservation and Management of Hagley Mill and Environmental Management Plan (EMP) for the construction and operation phases of the project which is aimed at minimising or mitigating impacts on the environment."
It can be seen from this summation of the text of the DPEMP that sections 2 - 22 are largely descriptive of the proposal, the problems associated with it, and measures for minimising adverse impacts, while sections 23 and 24 contain detailed instructions or requirements, firstly in respect of the Hagley Mill complex itself and, secondly, in respect of the actual construction and operation phases of the plan.
At cl 1.5, objectives for avoiding or mitigating environmental impacts upon the proposed routes include identifying "areas which might need particular caution to prevent environmental damage during construction or operation"[14]. In a reference to the Land Use Planning and Approvals Act 1993, cl 4.3.2 discusses the objective of ensuring that the effects on the environment are considered, and provide for explicit consideration of social and economic effects when decisions are made about the use and development of land. The clause further notes that[15]:
"The road design process also furthers this objective by having undertaken detailed discussions with farmers and residents in the area to ascertain the local, social and economic consequences of the proposal proceeding. Adjustments to the road design have been made wherever possible to incorporate this feedback."
[14] [CB 5/41]
[15] [CB 5/65]
In section 6 of the DPEMP, attention is given to consultation for Hagley Bypass options and DPEMP development. At cl 6.1, it is pointed out by way of introduction to the section that the DoT was obliged to demonstrate that all prudent and feasible route alternatives had been considered in the route selection process and that in order to achieve this, DoT had examined all previous route options and had identified two new possible scenarios.
Clause 6.1.2 describes the Railway Route as follows[16]:
"This alignment would commence from a bridge over Quamby Brook, veering towards the south east where it would join the railway alignment. It would then pass under Emu Plain Road, which would remain close to its present level on a bridge over the new highway. Drainage needs would predominantly dictate the grading of the road, falling gently in cut towards the railway at the Woodside Farm and then following the levels of the highway.
East of Mill Farm the proposed road would sink below ground level to join the existing new Bass Highway beyond Hagley Station Lane. Hagley Station Lane would be raised up 3 to 4 metres above its existing level to pass over the new road." [emphasis added]
[16] [CB 5/87]
Section 7 contains a description of the proposal. In respect of the Railway Route option, comments include[17]:
"Provision for the ultimate construction of four-lane dual carriageway in the vicinity of the Hagley Mill with a modified cross section for the ultimate development proposal consisting of a 2.8 metre median with New Jersey barrier (Refer to Figure 7.2) rather than providing the typical 15 metre median. This modified highway cross-section will enable the Hagley Mill complex to be kept intact in its present location.
The initial two-lane single carriageway construction will be approximately 8.4 metres from the modern skillion structure on the south side of the historic barn which abuts the Mill Wheelhouse. When the duplication is constructed, the dual carriageway will be approximately 3.5 metres from the skillion structure (Refer to Figure 7.2). The Mill Wheelhouse itself will be separated by a distance of approximately 19.4 metres from the edge of the carriageway in the initial construction and 14.5 metres from the ultimate dual highway."
Figure 7.2 is attached to these reasons for judgment as Annexure 1.
[17] [CB 5/97]
Under the heading in cl 7.5 "Vertical Alignment", the DPEMP provides:[18]
[18] [CB 5/100]
"The vertical alignments of each option have been developed to take into consideration the following objectives:
† provision of site distances adequate for a design speed of 110 km/h;
†compatibility with the existing terrain and constraints at existing roads and properties along the highway;
†minimising the visual impact at key locations, including heritage areas, resulting in a depressed highway where possible;
† minimising cut and fill volumes; and
†provision for the drainage of the highway and the adjacent land." [emphasis added]
It should be noted that the corridor between the railway line on the southern side of the proposed highway and the Mill and other buildings of heritage value on its northern side is extremely narrow. A dual carriageway can only be accommodated by placing both carriageways side by side, separating them by a 2.8 metre median with a New Jersey barrier until the corridor widens sufficiently to permit of a typical 15 metre median between the east and west bound lanes.
Under the heading at cl 7.15 "Environmental Management", cl 7.15.1 deals with project design, construction and post construction. The DPEMP states[19]:
"The planning for the design, construction and operation of the project has been guided by the philosophy of minimising impacts. Individual requirements proposed by DoT for environmental management during construction and operation are outlined in the EMP detailed in Section 24 of this DPEMP." [emphasis added]
The same sub-clause provides[20]:
"Prior to the commencement of any construction works, the Contractor will be required to produce a Construction Environmental Management Plan (CEMP) for all works. This CEMP will establish how the Contractor plans to achieve the environmental performance objectives and management requirements prior to, and during construction.
The Contractor's CEMP will be submitted to DoT for review prior to commencement of construction works."
[19] [CB 5/120]
[20] [CB 5/120]
Among the roles said in cl 7.15.2 to be fundamental to the implementation and continuing review of environmental management, it was noted that DoT would be responsible for "ensuring in conjunction with regulatory authorities that the features of the EMP for construction and operation are embodied in the Contractor's works contract document and are implemented by the responsible parties". The DoT was also required to be responsible for reviewing the contractor's CEMP prior to the commencement of construction works and any subsequent updates. Under cl 7.15.3 "EMP Management Issues", it is said that[21]:
[21] [CB 5/121-122]
"DoT's EMP for Construction and Operation is presented in detail in Section 24 of this DPEMP. It proposes the objectives, management requirements and commitments, and monitoring, requirements for the following discipline areas:
† cultural heritage;
† flora and fauna;
† control of exotic flora and fauna;
† visual landscape;
† erosion mitigation and sediment control;
† nature of fill material;
† hydrology and drainage;
† noise and vibration;
† traffic management and access;
†Contractor's site including storage and maintenance of machinery and dangerous goods;
† contaminated sites; and
† community consultation."
Under the heading "Visual and Landscaping" it is noted that[22]:
"The visual amenity of the Hagley Basin and specifically Hagley House and the Hagley Mill and its surrounding landscape will be maintained. Landscaping of the site, and in particular the replanting and rehabilitation works for the site and roads will be undertaken as soon as practicable with the surrounding environment from 'Woodside' to Hagley Station Lane".
[22] [CB 5/122]
In cl 15.4.2 specific items of the Hagley area were identified by Clive Lucas Stapleton and Partners in 1996 to have cultural significance. Major historic landscapes included Hagley House/Hagley Church/Woodside/Hagley School Group/Mill Farm, while major historic sites were identified as St Mary's Church/Rectory/Graveyard/Hagley School/Woodside/Hagley House and Mill Farm.
At cl 15.4.4 physical constraints arising from the statement of significance made by Clive Lucas Stapleton and Partners are suggested. Among them is the proposition that "The visual and historic relationship between Hagley House, Hagley Farm School, St Mary's Church and the Mill farm complex should be preserved"[23].
[23] [CB 5/160]
At cl 15.4.5 it is noted that several sites in the study area are on the Register of the National Estate under the Australian Heritage Commission Act 1975. Those affected by the proposed road routes included Hagley House, Hagley Mill and immediate surrounds and Hagley Mill Cultural Landscape. Section 19 deals with visual and landscape effects. Under cl 19.2.1, dealing with the Railway Route from Woodside interchange to Mill Farm, the document reads[24]:
"At the western end of the Railway Route, the new highway (from ch 15810) will be at the level of the Westbury Bypass temporary connection to the existing Bass Highway, which is approximately 2 metres above ground level rising to approximately 4 metres (approximate ch 16400). …
From ch 16400, the Railway Route progressively drops down to approximately 1 metre above ground east of the existing at-grade rail crossing (ch 17300). The Railway Route then continues at a generally constant grade on fill, elevated up to approximately 3.5 to 4 metres above ground to ch 19600 west of Mill Farm. …
In the vicinity of the 'Glenlea' property (ch 17700) which is Crown land, the highway will be elevated approximately 3 metres and the overpass located to the west at ch 17400 will be at a height of approximately 7 metres."
[24] [CB 5/181-185]
Under cl 19.2.2 "Mill Farm to Hagley Station Lane", the document reads[25]:
"Heading east from ch 19600, the highway commences in cut and continues depressed past Mill to east of Hagley Station Lane (ch 20750). In the vicinity of the Mill, the Railway Route will be approximately 1 to 2 metres below ground level.
The Railway Route will alter the landscape in the vicinity of Mill Farm and Hagley House. The highway will introduce a dynamic element to the landscape at a scale greater than the existing railway line. The highway will impact on the immediate viewshed of the Hagley Mill complex.
The nature of the relatively flat landscape and the visual dominance of the hawthorn hedges allow either the total or partial screening of the Hagley Mill Wheelhouse from the road. …
Hagley House is located approximately 200 metres from the new highway. In the vicinity of Hagley House, the new highway will be depressed by approximately 4 metres. The new highway will not be directly visible from Hagley House due to the depression of the road and the existing plantings on the property to the north, north-east and north-west of the main residential building. This vegetation will act as a significant screen to the highway.
To the west [sic] of the Hagley Station Lane, the highway continues in cut to ch 20750 and then rises close to ground level to join with the existing Bass Highway at approximately ch 22000." [emphasis added] (The author's reference to "West of the Hagley Station Lane" is clearly intended to be a reference to the east, as Hagley Station Lane is situate at chainage 20520 and chainage 20750 is to the east of it.)
[25] [CB 5/188-192]
Section 20 of the DPEMP is devoted to Noise Effects, both from construction generated noise and operation generated noise, the latter being described as "the long term noise arising from the normal operation of the highway once it is constructed. This type of noise is largely attributable to road traffic from motor vehicles and heavy vehicles, but also includes any equipment utilised for on going maintenance of the highway"[26]. The report notes that neither the DoT, nor DELM had established formal standards for the assessment of allowable noise standards or for deciding where noise attenuation measures were warranted. Reference had therefore been made to national standards and standards adopted by other States. After referring to some of the other standards, the report selected as an appropriate criterion the interim traffic noise policy developed by the New South Wales Road Traffic Authority ("RTA") in September 1992. This policy requires consideration of noise level reduction at all stages during development of the project. It also sets specific noise level objectives for day time and night time for designated assessment sites (eg, residential areas, hospitals and schools). The Noise Level Objectives are based on predicted traffic conditions ten years after the opening of a project. Clause 20.2 sets out details of the basic noise level objective in the following terms[27]:
[26] [CB 5/197]
[27] [CB 5/198]
"The basic noise level objective is Leq (24 hours) = 60 dB(A), adjusted as follows:
a)Where existing noise levels are more than Leq (24 hours) = 57 dB(A), the noise level objective is existing noise level +3 dB(A).
b)Where existing noise levels are between Leq (24 hours) = 48 and 57 dB(A), the noise level objective is Leq (24 hours) = 60 dB(A).
c)Where existing noise levels are less than Leq (24 hours) = 48 dB(A), the noise level objective is existing noise level + 12 dB(A).
The Leq measure now adopted by RTA is the equivalent continuous noise level, while L10 is the noise level exceeded 10% of the time. As a comparison, L10 (18 hour) is about 3 dB(A) higher than Leq (24 hour). RTA's base objective of Leq (24 hours) = 60 dB(A) is therefore approximately equivalent to L10 (18 hours) = 63 dB(A). As far as noise level differences are concerned, a 3 dB(A) increase would be approximately the same whether measured in terms of L10 or Leq. Hence the RTA criteria are very similar to those of VicRoads.
The RTA policy provides specific guidelines for locations where noise levels are already high and it is therefore proposed that this policy be adopted in assessing the need for noise reduction measures for future levels of traffic on the Hagley Bypass."
Clause 20.3 contains an assessment of the number of dwellings which may be affected by noise attributable to the Railway and Southern Route options. It was noted that dwellings more than 150 metres away from the route options might be aware of increased traffic noise but attenuation measures were unlikely to be required. Hagley House is shown as one of the dwellings situate between 150 metres and 300 metres from the Railway Route. As part of a noise study undertaken by acoustic consultant, Pearu Terts, in 1996, the predicted future noise levels were calculated based on forecasted traffic levels for the bypass. The existing noise levels L10 (1 hour) as measured in the table which followed were converted to L10 (18 hour) measurements and from these converted measurements the existing noise levels at the most critical sites were estimated. Predicted noise levels for the closest dwellings in 1999 and 2009 were calculated and listed in the table which, in respect of Hagley House, situate at chainage 20200, recorded that it was off-set 230m right, had an existing noise level of 41 - 46 and did not require a barrier or noise mound. The noise level at 1999 was calculated at 53.3 – 56.3, while the predicted noise level as at 2009 was 54.6 – 57.6. In a further table entitled "Summary of Noise Attenuation Requirements"[28], it was noted that Hagley House did not require any noise attenuation according to the New South Wales RTA Criteria. After dealing with noise levels at a number of other locations along the Railway Route of the Hagley Bypass, the DPEMP noted[29]:
"The predicted noise levels at 'Hagley House' have been calculated to be below the above criteria, therefore no attenuation measures have been recommended. However, as 'Hagley House' is situated in a relatively quiet surrounding and presently used for accommodation purposes, monitoring at this location will be carried out to confirm the predicted noise levels. This will be conducted both prior to and post construction of the Railway Route option."
[28] [CB 5/200]
[29] [CB 5/200]
In section 22, cultural heritage effects are considered. At cl 22.2, which deals with European heritage, it is noted that the Hagley Bypass will traverse landscape of identified cultural significance and that "Due to the scale and engineering requirements of the road it is inevitable that the landscape will be affected by its presence"[30]. The overall effects were said to include[31]:
"† visual intrusion where the road infrastructure will be incongruent with the landscape character, upsetting its aesthetic (eg picturesque) qualities;
†loss of some farming land and associated hedgerow and field patterns leading to a loss of integrity and coherence in the character of the landscape;
†disruption to visual and historic curtilages disturbing the landscape as a setting for historic features; and
†loss of some historic and other structures."
[30] [CB 5/208]
[31] [CB 5/208]
It was noted that the Railway Route would have an adverse effect on several places and structures of cultural significance in proximity to the alignment. The sites affected were recorded as Woodside, Hagley Mill Complex, Hagley House, Hagley Mill Cultural Landscape and the railway line and former Hagley station.
At cl 22.2.1 under cultural landscape impacts, it was noted[32]:
"The scale of construction and the engineered landforms of the highway will alter the character of some elements of the cultural landscape. However, the proposed staged revegetation and landscaping of the areas between the roads, ramps and railway will assist to lessen impacts along the route alignment."
[32] [CB 5/212]
Dealing specifically with Hagley Mill Cultural Landscape, cl 22.2.1.1 notes in respect of the Railway Route that[33]:
[33] [CB 5/213-214]
"The construction of a four-lane road along the railway line will form a significant physical barrier to the front of Hagley House, cutting the visual linkage to St Mary's Church, the Hagley Farm School and Hagley Mill Farm and potentially devaluing the historic and cultural associations between them. The house would effectively be isolated from these significant and related places, and the former entrance drive to the House will be further severed.
The depression of the highway in the vicinity of the Mill will assist to lessen the impact on the visual connection from the house to the church and school. It would be possible to construct a small mound on the southern side of the highway to screen the highway from Hagley House and at the same time retain the vista between the house and the church. …
To reduce the impact upon the Hagley Mill Cultural Landscape, the following minimisation measures have been considered in the alignment for the Railway Route:
†The Railway Route will follow an established line reducing the impact of introducing a new, modern element into the rural landscape. This will maintain current field patterns and reduce the need to remove existing vegetation. The visual effect of the road from surrounding vantage points will also be reduced.
†Hagley Station Lane will bridge the new road maintaining the dominance of the existing road pattern over the new and reduce the size of the required overpass.
†At Hagley House, the road will be in a depression. The road surface will not be seen from the house and the historic visual links between the house, church and school will be maintained.
Though the evidence of the former track between house and farm will be lost, the diagonal tree lines which followed this route will be maintained.
At the Mill Complex:
†The road will be in a depression reducing the visible impact and aiding the maintenance of views to Hagley House." [emphasis added]
The fourth part of the DPEMP is entitled "Conservation and Environmental Management" and it comprises sections 23 and 24. The preceding three parts were entitled "Background and Proposal", "Existing Environment" and "Environmental Effects and Safeguards" respectively. Section 23 is headed "Hagley Mill Conservation Plan" and deals in detail with a number of conservation management works for the Mill and surrounding buildings. It is not confined to the construction phase, but also addresses the long term future management arrangements for the Mill complex. Section 24 is headed "Environmental Management Plan" and states the plan's aim as being to "mitigate adverse impacts on the environment". Its objectives are stated to be to[34]:
"† Establish a framework for environmental controls to be applied to construction activities to ensure that the project will achieve satisfactory environmental performance standards.
†Provide data for assessment, mitigation and recovery from impacts on the environment caused by construction.
†Establish a framework for environmental management to be applied to operation of the Bass Highway.
†Establish a framework to ensure open lines of communication with the surrounding community."
[34] [CB 5/232]
Clause 24.2 sets out the scope of the Environmental Management Plan. It says[35]:
"This EMP sets out the management requirements proposed by DoT for the project during construction and operation which are aimed at achievement of a high level of environmental performance and minimisation of adverse impacts."
Clause 24.3.1 provides that the contractor will be required by DoT to produce a Construction Environmental Management Plan (CEMP) for all works, prior to the commencement of construction works. This CEMP must establish how the contractor plans to achieve environmental performance objectives and requirements as set out in the DoT's contract documents and in accordance with all relevant Government legislation and Local Authority regulations.
[35] [CB 5/232]
Clause 24.4 deals with the Environmental Management Plan in the construction phase. Under a heading "Cultural Heritage", the document deals with the objectives of long term conservation and management of items of archaeological or heritage value in the Mill complex area. A series of management requirements and commitments is set out under the objectives. The first is that (C1.1)[36]:
"The DoT shall ensure that the highway is constructed in a manner which is consistent with the Hagley Mill Conservation Management Plan and Plan of Management as approved by the AHC and Tasmanian Heritage Council (Railway Route)."
The remaining requirements and commitments of C1 deal specifically with the Mill complex. C2 sets out the objectives in respect of fauna, they being to minimise the disturbance of fauna to ensure that construction activities do not introduce exotic fauna and to ensure that native fauna are not impacted by unrestricted access to the carriageway. There follows a series of management requirements and commitments in respect of fauna, dealing with such matters as the location of site offices etc, management practices in respect of the storage and use of rubbish and the like, and liaison with Parks and Wildlife Service. C3 deals with flora in the same way. Objectives are set out in order to produce a landscape plan for the project which minimises disturbance to the indigenous vegetation and introduced hedgerows. Management requirements and commitments then follow, detailing measures not dissimilar to those in respect of fauna. C4 deals with the control of exotic flora and fauna in much the same way, an objective being that exotic flora, in particular declared weeds, and fauna, are not to be introduced to the construction site and management requirements and commitments are set out, including the banning of dogs from the work site and the preparation of a weed control program.
[36] [CB 5/234]
C5 deals with visual and landscape. The objectives set out are[37]:
[37] [CB 5/238]
"† To minimise visual impact of the roadworks upon the landscape of Woodside homestead, the Hagley Mill complex (Railway Route for Hagley Mill) and rural residential properties in proximity to the route.
†To provide a landscaping theme consistent with the surrounding environment for implementation of the Hagley Bypass.
The management requirements and commitments set out under these objectives are as follows[38]:
[38] [CB 5/238]
"C5.1Detailed landscape plans will be prepared for the route covering rehabilitation and landscaping prior to commencement of construction.
C5.2The aim of the landscape plan will be to reinforce the existing indigenous and exotic planting pattern though [sic] revegetation and regeneration of the existing regime in conjunction with theme plants to reflect the development pattern.
C5.3The landscape plans will include landscape management plans prepared specifically for both the Woodside property and the Hagley Mill Cultural Landscape Area (as listed on the Register of the National Estate). The landscape management concept will be formulated in consultation with the AHC and Cultural Heritage Branch of DELM. The aim of the plan will be to develop landscaping measures to minimise the impact of the highway on the Hagley Mill Cultural Landscape (Railway Route).
C5.4The treatment of cut and fill batters will be designed taking into account visual and landscape considerations.
C5.5Seed collection and propagation of appropriate indigenous native species will be undertaken for the rehabilitation and revegetation program and implementation of the landscape plan during post‑construction.
C5.6The landscape plan will include a rehabilitation program which will address:
†proposals for removal of topsoil;
†soil stockpile locations;
†rehabilitation of site office, works and storage areas; and
†methodology for soil placement and level surface preparation."
The Environmental Management Plan then deals with a number of other aspects such as erosion mitigation and sediment control, the nature of fill material, hydrology and drainage, contaminated sites, noise management, vibration management, traffic management and access, construction machinery and equipment storage, maintenance and refuelling, storage and handling of dangerous goods on site, community advice, air quality and dust control and waste management. In respect of each of these additional items, objectives are nominated and specific management requirements and commitments are tabulated under each heading.
Clause 24.5 is headed "Environmental Management Plan: Operation Phase". This section of the DPEMP deals with objectives relating to the Hagley Mill complex and its environs. The Management Requirements and Commitments deal with the implementation of the Hagley Conservation Management Plan and the Hagley Mill Plan of Management, vibration management so as to ensure that the structural integrity of the Mill and other structures within the Mill surrounds are not affected, landscaping within the road corridor and noise management, the objective of which is to ensure that noise levels from the use of the Bass Highway remain within acceptable limits at the boundary of adjacent residential properties, one of the commitments in respect of noise being 04.2, namely that DoT will ensure that noise levels at residential premises are not increased as a result of the operation of the Bass Highway and that where they are higher than acceptable standards, all feasible and practical measures are taken to reduce them.
At Appendix D of the DPEMP and headed "Design Concept" were attached progressive Layout Plans in 700 metre sections along the Hagley Bypass. These plans were prepared by Maunsell Pty Ltd. The layout plan[39] for the 700 metre section from chainage 19300 to chainage 20000, which passes Hagley Mill (at approximately chainage 19750) contains symbols from shortly east of Murphetts Creek (approximately chainage 19580) indicating a retaining wall on both sides of the dual carriageway, a clear indication that the road in this area was, in Maunsell's Design Concept, to be in cut. East of the Mill complex, the retaining wall continued on the southern side of the road adjacent to the railway line, while on the northern side a symbol variously described as a "tadpole" or "tear drop" indicated that the road was to be lower than the land adjacent to it. In the next plan[40] which covers the 700 metre section from chainage 20000 to chainage 20700 (about 200 metres east of Hagley Station Lane), the tear drop symbols continue on the northern side of the road to Hagley Station Lane and beyond, while on the southern side the retaining wall concludes at chainage 20000 and the tear drops commence at a point a little to the east of chainage 20100 and continue across the frontage of Hagley House getting progressively larger towards Hagley Station Lane which was to bridge the new highway. These symbols clearly show the road, according to Maunsell's Design Concept, to be in cut in the vicinity of Hagley House. The plans do not, however, give any detail as to the depth of the cut nor do they, or indeed any other parts of the DPEMP, contain any engineering information from which the depth of the cut could be calculated with precision.
The Planning Permits
[39] [CB 5/332]
[40] [CB 5/333]
Pursuant to the requirements of the Land Use Planning and Approvals Act 1993, DIER made application to the Meander Valley Council for a number of permits to enable the bypass to be built. Because the works passed over an Aboriginal cultural heritage site and two properties registered on the RNE and/or the Tasmanian Heritage Register, three specific permits were required for those sections of the works, whilst a fourth related to the balance of the road works and included the area in front of Hagley House.
The fourth permit which described the relevant development as "Major Road Works (Hagley Bypass)" granted permission to develop the road corridor from the west of Woodside to the east of Hagley Station Lane as major road works. This permit was issued by the Meander Valley Council to DIER on 7 January 1999 and bears the number 368/98[41]. It was made subject to the following five conditions[42]:
[41] [CB 32/3]
[42] [CB 32/3]
"1 Development shall generally be in accordance with the attached plans, as endorsed.
2 Development shall be in accordance with the Meander Valley Planning Scheme 1995.
3 Works shall be carried out in accordance with the DPEMP submitted by Maunsell McIntyre, except where an EPN issued by DPIWE takes precedence over the DPEMP.
4 A Site management Plan is to be developed that include health and safety requirements for the handling of any contaminated soil during the road works.
5 Surface water runoff into waterways is to be minimised during construction."
The plans attached to the permit were prepared by Maunsell McIntyre. They were a variation on the design concept layout plans which that company had prepared and attached to the DPEMP in that the former had shown the proposed dual carriageway, whereas the latter showed the highway as it was now intended to be constructed, that is, partly dual carriageway and partly a single carriageway. Thus the 700 metre section from chainage 20000 to chainage 20700 which passed in front of Hagley House was now shown as a single carriageway with provision for later development to a dual carriageway and in that section where there had been an absence of any symbols on the southern side of the highway between chainage 20000 and chainage 20100, the tear drop symbol had been inserted, even more clearly demonstrating the draftsman's intention that the road be in cut. Once again, however, the depth of cut could not be ascertained with precision.
The permits granted in respect of Hagley Mill and Woodside were numbered D366/98 and D367/98 and were both issued on 9 February 1999. The first condition of each of these permits differed from D368/98 in respect of the major road works in that it required that the development be in accordance with the application and plans submitted therewith rather than being "generally" in accordance with the application and plans. In each case, as with D365/98 which dealt with the Aboriginal Cultural Heritage site, the plans were identical. Other conditions common to all the permits, other than D365/98, were that requiring submission to, and approval by, the council of suitable landscape plans which demonstrated the measures to minimise the visual effect of the road works on the site in question and on surrounding properties and the development of a site management plan for the handling of contaminated soil. In respect of the Mill, the other condition was[43]:
[43] [CB 32/41]
"Preservation works and protection measures documented in the Hagley Mill – Plan of Management and formulated in accordance with the Hagley By-Pass Development Proposal and Environment Management Plan (DPEMP) March 1998 is to be undertaken at the Mill Farm complex prior to works being undertaken on the site."
In respect of Woodside, the other condition was[44]:
"Proposed works are to be undertaken to minimise the effects on 'Woodside' and as detailed in the Hagley By-Pass Development Proposal and Environmental Management Plan (DPEMP) March 1998".
Permit D365/98[45] relating to the Aboriginal Cultural Heritage site required that development "shall generally be in accordance with the attached plans, as endorsed", that it be in accordance with the Mersey Valley Planning Scheme 1995, that works should be carried out in accordance with the DPEMP except where an EPN issued by DPIWE takes precedence over the DPEMP, that a site management plan be developed to deal with contaminated soil, that surface water run off into waterways be minimised during construction, that a permit be sought and obtained from the Tasmanian National Parks and Wildlife Service in accordance with the Aboriginal Relics Act 1975, and "where a site is significance [sic] is identified during the construction of the road works any adverse impacts are to be mitigated in consultation with the Tasmanian National Parks and Wildlife Service and the Tasmanian Aboriginal Land Council"[46].
Environment Protection Notices
[44] [CB 32/54]
[45] [CB 32/24]
[46] [CB 32/24]
By virtue of the Environmental Management and Pollution Control Act 1994, s44(1)(d), the Director of Environmental Management has power, where he is satisfied that in relation to an environmentally relevant activity it is desirable to vary the conditions of the permit, he may cause an Environment Protection Notice (EPN) to be issued and served on the person who is or was responsible for the environmentally relevant activity. This Act is administered by the Minister for Primary Industries, Water and Environment. On 11 December 1998, the Manager, Environmental Operations under delegated power of the Director of Environmental Management, issued an Environment Protection Notice No 338/1 on the basis that in accordance with s41(1)(d), it was desirable to vary the conditions of the permit in respect of the realignment of the Bass Highway. The activity nominated as the subject of the EPN was described as "road construction and operation of the realignment of the Bass Highway at Westbury by-pass corridor". However, this was an error and on 1 June 1999 the Director amended EPN 338/1 so that the activity now read "Road Construction and Operation of the Realignment of the Bass Highway at Hagley Bypass road corridor". The EPN was addressed to the Secretary of DIER. The grounds upon which the notice was issued were said to be as follows[47]:
[47] [CB 2/135]
"Specific environmental requirements need to be met to avoid environmental harm due to the large areas of land to be disturbed for road construction, which has the potential for impacts on flora and fauna, air and noise emissions, groundwater and surface water contamination through contaminated runoff, and changes to the hydrological characteristics of the land, if appropriate precautions, specified in this notice, are not taken."
The recipient of the notice was required to comply with the following conditions in Schedule 2 of the EPN[48]:
[48] [CB 2/138-139]
"G1The land must be developed and used, and the activity (or activities) on the land must be carried out and monitored, in accordance with prescriptions detailed in a Construction Environmental Management Plan (CEMP), prepared in accordance with conditions G2 and G3.
G2(a) The CEMP must be prepared by the Contractor undertaking the development of the major road works by or on behalf of the DoT.
(b) The CEMP shall be prepared to the satisfaction of the Director.
(c)The CEMP must be submitted to the Director for consideration and approval.
(d)The CEMP may be modified or amended from time to time by the Contractor to the satisfaction of the Director.
G3As a minimum the CEMP must comply with the environmental management requirements as set out in the 'Hagley Bypass Development Proposal and Environmental Management Plan, March 1998', prepared by Maunsell Pty Ltd for the Department of Transport.
G4 As a minimum the CEMP must:
(a)Identify and assess the risk from, provide protection from and provide a remedy for, any adverse environmental impact which may result from the construction and performance of any component of the works;
(b)Define the environmental responsibilities of the Contractor and of each position within the Contractor's management team;
(c)Include schedules of available resources, including personnel to deal with environmental incidents; and
(d)Define the environmental safeguards and systems to be implemented for the Project Works for reporting, monitoring, corrective action, auditing and the adoption of environmentally sensitive work practices. This is to include, but not necessarily be limited to procedures for:
(i)Environmental awareness and induction;
(ii)Noise, water, air quality, vibration and groundwater, monitoring and control;
(iii)Management measures to reduce noise levels;
(iv)Dust control measures including monitoring, mitigation and remedial actions;
(v)Storage and handling of dangerous goods;
(vi)Storage, maintenance and refuelling of construction plant and equipment;
(vii)Waste management and minimisation;
(viii)Detection, treatment and disposal of contaminated materials and water;
(ix)Water quality control measures and facilities;
(x)Erosion and sediment control plans;
(xi)Flora and fauna protection;
(xii)Landscaping, revegetation and rehabilitation measures;
(xiii)Protection of cultural heritage values; and
(xiv)Incident response strategies for upset or emergency conditions.
G5 The Contractor must not commence development or works except:
(a) with the prior written approval of the Director, and
(b) with the prior written approval of the Department of Transport.
G6All development and works must be carried out in accordance with the requirements of the DPEMP and the CEMP as approved by the Director."
On 28 January 2000, after the contract had been let to Leighton, a further EPN No 420/1 in respect of the Hagley Bypass road corridor was issued, addressed, this time, to Leighton. On this occasion the Director relied upon s44(1)(a) of the Environmental Management and Pollution Control Act 1994, which empowers him to issue an EPN to the person responsible for that activity if he is satisfied that in relation to an environmentally relevant activity, environmental harm is, or is likely to be, caused. Grounds were stated as follows[49]:
"The Construction Environment Management Plan submitted by your company on 25 October 1999 does not contain sufficient environmental instructions to address the potential environmental impacts of the proposed works. Comprehensive environmental safeguards and controls are required to avoid environmental harm due to the large areas of land to be disturbed for road construction, which has the potential for impacts on cultural heritage, flora and fauna, groundwater and surface water contamination through contaminated runoff, and changes to the hydrological characteristics of the land along with impacts associated with air and noise emissions. This notice specifies appropriate safeguards and controls to avoid or minimise environmental harm." [emphasis added]
[49] [CB 38/145]
The requirements of the second notice included the following:
1 The land must be developed and used, and the activity (or activities) on the land must be carried out and monitored, in accordance with prescriptions detailed in the Construction Environmental Management Plan (CEMP).
2 All development and works must be carried out in accordance with the requirements of the DPEMP and the CEMP, unless otherwise approved in writing by the Director.
Other requirements dealt with matters such as the management of contaminated material, storage of fuels, oils and waste oils, handling of hazardous chemicals, truck movements and speeds, weed control, burning off, noise restrictions, blasting and landscaping. In respect of each of the seventeen requirements imposed by the EPN specific grounds were set out in the schedule. The grounds for imposing conditions 1 and 2 were specified as follows:
"1Condition to ensure that it is clear that the works are to be carried out in accordance with the DP & EMP and the CEMP.
2Condition to enable the Director to give approval to amend the requirements of the DP & EMP and the CEMP if necessary."
The Tender Process
Authority from DIER to proceed with the Design Construct and Maintain contract for the Westbury/Hagley Bypass was given by the Commonwealth Department of Transport and Regional Development on 18 August 1998. A number of applicants registered interest in tendering for the project and a total of five were invited to participate in the Request for Proposal stage. On 2 October 1998 an Invitation to Tender (ITT)[50] was issued seeking the submission of tenders from the Selected Tenderers, among which was Leighton.
[50] [CB 53/1]
At 1.2.1 "Status of Approvals", the ITT stated:[51]
[51] [CB 53/12]
"(a)The Project Works have been the subject of environmental impact studies. The resulting Development Proposal and Environmental Management Plans (DPEMP) are included as Exhibit B –'Environmental Documents' to the Project Deed. The Environmental Documents are summarised as follows:
(i)Bass Highway Hagley Bypass DPEMP Volume 1, 2A and 2B, March 1998; and
(ii) Bass Highway Westbury Bypass DPEMP Volume 1 & 2, November 1997.
(b)The Tenderer must base its Tender on investigating, designing, constructing and maintaining the Project in accordance with the Environmental Documents and the environmental requirements contained in the Project Deed.
(c)Appendix P3 of Exhibit A 'The Principal's Planning and Environmental Obligations' documents the current status of the Principal's obligations in relation to Environment and Planning.
(d)An Environmental Protection Notice (EPN) will be issued by the Department of Environment and Land Management (DELM) for both the Westbury and Hagley Bypass. These will be issued to Tenderers prior to close of Tenders. The Contractor will be required to comply with the DPEMP's, these EPN's and any further notices or such issued by DELM.
(e)The Tenderer must allow to obtain any other approvals, including environmental approvals associated with its design and methodology for undertaking the Project Works. The Contractor will be required to meet all conditions or obligations attached to all approvals or identified in the Environmental Documents and Notices even if stated as being the responsibility of the Principal unless specifically stated in Appendix P3 of Exhibit A or being an obligation of the Principal."
At 1.4.3 of the ITT[52], it was stated:
"(a)For the purpose of its own planning, the Principal has undertaken a concept design for both the Hagley and Westbury Bypasses, the 'Principal's Concept Design'. This is available as Information Documents to which Part 3.10 of the ITT applies.
(b)The Principal's Concept Design is not complete. The Principal does not warrant, guarantee or represent that the Principal's Concept Design complies with the requirements of the Project Deed or of any relevant design standards.
(c)Furthermore, the Principal does not warrant, guarantee or represent that the Principal's Concept Design encompasses the most effective design solution."
[52] [CB 53/17]
At 1.4.4 the ITT dealt with Tenderers Design Development, stating[53]:
[53] [CB 53/17]
"(a)The Tenderer must develop and accept full responsibility for the design upon which its Tender is based. The design must comply with the requirements of the Project Deed.
(b)In particular, Tenderers are not bound by the precise grades and alignment nominated on the Principal's Concept Design. However, to be conforming a Tenderer's design:
(i)Must comply with all the requirements of the Project Deed, in particular Exhibits A and B;
(ii)The Project Works must fall within the Property Boundaries; and
(iii)Specific requirements of this ITT Document."
Exhibits A and B were identified as the Scope of Works and Technical Criteria and the Environmental Documents respectively.
Information Documents were provided to Leighton in October 1998. They included the Principal's Concept Design Drawings, Geotechnical and Contamination Reports and drawings of the existing upgraded, but currently unused, section of the Bass Highway between Violet Banks and Dawson Hill Saddle. The Concept Design Drawings in respect of the section of the bypass between Hagley Mill and Hagley Station Lane were the same as those attached to the Mersey Valley Council permits.
A pre-tender meeting was conducted at DIER's Launceston office on 28 October 1998. This included a site inspection of the project which highlighted the Hagley Mill and Station Lane areas.[54] No specific reference was made to Hagley House, nor to any necessary amenity being provided in respect of that property. Representatives of Leighton included Tom Brock of Gutteridge Haskins and Davey ("GHD") who were Leighton's design consultants. Those attending on behalf of the Principal included the project director, Phil Cantillon. Minutes of this meeting were kept by Mr Cantillon and circulated to those attending. Tenderers were reminded that a conforming tender had to be submitted and it was stated that a conforming tender was one which met all of the requirements as currently defined by the ITT documents. Under the heading "Environmental & Cultural Heritage Requirements", the minutes recorded[55]:
[54] [CB 29/299]
[55] [CB 29/305]
"DIER is looking for a very high level of environmental performance on this project. This requirement reflects the sensitive environmental and cultural heritage issues of the locality of this project.
We will be looking for demonstrated commitment to best practice and performance in the environmental management of infrastructure development projects and a commitment to regular environmental auditing and reporting for the duration of the contract.
The Construction Environmental Management Plan (CEMP) is a key document ensuring that the required level of environmental performance is achieved. The CEMP is a document, which integrates design, construction and environmental elements into the project. Its function is to ensure that environmental mitigation measures and safeguards are designed into the project and not regarded as later add ons.
Section 3.5.4 of the Scope of Works and Technical Criteria (Tender Vol 3) outlines the requirements in relation to the CEMP."
At 12.3 of the minutes road drainage adjacent to Hagley Mill was addressed and the minutes record[56]:
[56] [CB 29/306]
"DIER noted the potential road drainage complexities in the vicinity of Hagley Mill. DIER pointed out on site local embankment damage following recent flooding. DIER commented that Tasrail could be contacted for further details on water levels in the area at the time of the flooding."
At 12.11 sites of cultural significance were addressed. The minutes record[57]:
[57] [CB 29/308]
"DIER pointed out on site the location of an Aboriginal site of cultural significance adjacent to the rail line on Don Scott's property. The site will be fenced by others prior to award of the contract.
The Hagley Mill was inspected by tenderers. DIER explained the cultural significance of the site and outlined restoration works to be carried out by others. DIER reinforced the environmental and cultural obligations of the contractor when working in the area.
DIER explained the likely complexities of road construction adjacent to the well. DIER noted that the well is currently full of water."
At 13.5 the following question and answer were recorded[58]:
"Q5What is the situation with respect to landowners and works for landowners?
A5The information regarding accommodation works for landowners as scheduled in the tender documents is complete. The works reflect current agreements with land owners. Land owners cannot expect the contractor to carry out more work than what has been agreed with DIER. DIER will not pay additional costs to the contractor for works carried out in excess of what is scheduled."
[58] [CB 29/310]
Mr Cantillon also recorded on videotape his remarks to the meeting, which included the following[59]:
"Broadly, the whole cultural heritage issues are not just the Mill but the broader precincts surrounding the Culzean property at Birralee Road, the Woodside Interchange and Hagley Mill."
Costs of $11,977 incurred by Tasrail and DIER were the subject of approval by Mr Wade in a purported Change Order dated 7 March 2002 and have been deducted from the balance owing to Leighton.
In my opinion there is no authority for this deduction. Leighton had an obligation not to encroach on to the railway reserve it is true. Given the narrowness of the road corridor, it was, to say the least, extremely difficult for Leighton to avoid some degree of encroachment, but be that as it may, Tasrail was co-operative about giving Leighton access to the site and there were advantages to Tasrail in sharing a table drain which encroached on to its reserve. It hesitated, however, about giving the Release which the Principal demanded that the Contractor obtain from it.
The right to make this demand was granted by cl 3.2(c). The requirement had to be fulfilled prior to Construction Completion as a condition precedent to Construction Completion. That was not achieved until November 2001 and Leighton had until then to provide the Release. DIER unilaterally determined to take over the negotiations with Tasrail. It unilaterally engaged the services of the Crown Solicitor and gave an undertaking to Tasrail to meet its costs. In principle agreement for the release to be given, subject to the lease boundaries being adjusted, was given by Tasrail well before Construction Completion. The Date for Construction Completion was duly notified without any insistence by the Principal's Representative upon the fulfilment of the condition precedent. DIER took it upon itself to handle the Tasrail negotiations and there is no evidence of any agreement on Leighton's part to indemnify the Department against any costs incurred in doing so. The sum deducted should be refunded.
HOGGS LANE - $300,000
This dispute concerns the design and construction of a new section of local road approximately 1 kilometre in length which runs parallel with the bypass and links the end of the pre-existing Hoggs Lane to the new bypass at the Woodside deviation. The newly constructed extension of Hoggs Lane is located on the southern side of the bypass and is depicted in Drawings 3113 and 3114[375]. The Hoggs Lane extension was opened to traffic in about May 2000. Soon afterwards, however, cracks began to appear in the seal and pavement and their magnitude and number progressively increased over the winter months.
[375] [CB 3/114 - 115]
Both parties appear to have accepted that the rectification of the pavement cracking was the responsibility of Leighton. On 27 March 2001, Leighton wrote to Pitt & Sherry advising[376]:
"Please find attached VMP - 020 for the reconstruction of the Hogg's Lane pavement and the associated Hold Point Release form.
Due to the extremely low volume of traffic on Hogg's Lane the pavement can be excavated, stabilised and re-built using the approved 'portable traffic signals' lane closure that has been adopted in the past. The re-build works will also be broken up into two lengths to minimise any unnecessary disruption to local traffic. At the western end of Hogg's Lane during the 2nd stage near to the Bass Diversion, flagman will handle the traffic control to ensure eastbound traffic entering the Lane has priority. Advance warning signs will be placed along both approach directions of the Bass Diversion.
These works are planned to occur as soon as resources become available from the main carriageway. No advertising or letter-drops are required as local traffic will be minimally disrupted. Could you please return the Hold Point as appropriate and if you have any queries please let me know."
The rectification work associated with Hoggs Lane was still being shown in Leighton's April, September and November 2001 programmes.
[376] [CB 46/251]
In April 2001, Mr Wade withheld payment of $300,000 from Progress Claim No 23. His evidence was that[377]:
[377] [Exhibit P32, p20]
"The amount of the deduction was calculated by me using subcontract rates and was based on advice from the Contactor that, due to cracking of the pavement, it intended to reconstruct the extension by 'lime stabilising' the sub-grade and replacing the pavement and seal. As further issues arose I continued to withhold (but did not increase) the sum of $300,000 from all successive Progress Payments on account of those various issues."
On 4 May 2001, Leighton queried the reason for the deduction and Pitt & Sherry responded on 22 May 2001 advising[378];
"As previously advised we confirm that the $300,000 deduction from the above claim was our estimate of costs for the rectification works associated with the Hoggs Lane cracking problem; as per the recommendations made by your consultants.
We confirm that should you consider this amount to be excessive you are invited to provide the appropriate details for review.
We note that the extent of the cracking has increased significantly during the few months and now impacts on most, if not all, of the road formation. We are also unclear as to when you intend to complete these works."
[378] [CB 46/254]
Leighton argues that the defect was due to inadequate pavement thickness which was laid down by the Principal and was not Leighton's design responsibility. SOWTC, cl 5.10.2[379] provides:
[379] [CB 2/37]
"5.10.2 Local Roads Pavements
(a)New Local Road pavements constructed as part of the Project Works must be designed in accordance with Appendix P7 of this Exhibit (A).
(b) Pavements on the Local Roads must:
(i)Incorporate drainage practices that maintain a constrained moisture regime which will prevent significant variations in the capacity of the sub-base and sub-grade to support the pavement; and
(ii)Accommodate movements of the sub-grade associated with changes in moisture content (particularly near batters)."
Table P7.3.1 of Exhibit A provides that in respect of Hoggs Lane, the Assumed Design CBR is 6 for fill with a pavement design thickness of 300mm. For a CBR of 4, the figure is 380mm. CBR is short for California Bearing Ratio. It is a standardised measure of the load bearing value or capacity of a road sub-base or sub-grade.
Hoggs Lane was constructed on fill and the sub-grade was clay to which ironstone was added. In a letter to Leighton dated 28 November 2001, BFP Consultants Pty Ltd stated[380]:
"The road formation was initially constructed with a Tertiary clay fill subgrade but, after inspection by BFP, it was concluded that a design CBR value of 6 was not achievable. The clay subgrade was subsequently tyned to a depth of approximately 250mm and ironstone gravel mixed into the clay to produce a gravelly clay subgrade material which was assessed as exhibiting a CBR value in excess of 6. This value formed the basis of the 300mm pavement thickness subsequently placed.
if we accept that the gravelly clay mateiial:is the subgrade, normal soil classification methods would confirm that the subgrade comprises gravelly clay, not clay as conventionally defined or as defined elsewhere on this site. If we accept that the clay underlying the gravelly clay is the 'subgrade', the gravelly clay effectively becomes a select fill layer.
Under both circumstances, the intent of the design has been achieved."
[380] [CB 46/379]
Leighton argues that the mixing of ironstone into the clay rendered the sub-grade no longer "only a clay" and the requirement to increase the pavement thickness to 380mm did not apply. Furthermore, it argues, that the obligation to observe P7.3.2 effectively rendered its role one of "construct only" as opposed to "design and construct".
I think there is substance in the argument that the addition of ironstone reconstituted the sub-grade to something other than "only a clay". Doing so had the result of converting the CBR from a value less than 6 to one in excess of that figure thereby significantly improving its load bearing capacity. However, in my view this did not relieve Leighton of its design responsibilities in respect of Hoggs Lane.
Clause 1.1 of Vol 1 of the Project Deed[381] defines Local Road Works to mean "the works referred to in Appendix P1 to the SOWTC". Appendix P1.3 of Vol 2a of the Project Deed[382] provides that Local Road Works are to include inter alia:
[381] [CB 1/16]
[382] [CB 2/76]
"(vi)Reconnection of Hoggs Lane south of the railway to the Diversion road with cross section dimensions as defined in Drawing No 3014[383], and cul-de-sac terminal north of the railway;
[383] [CB 3/97]
(xi) Wearing surface as outlined in Annexure B to this Appendix P1."
In addition, cl 2.4.3 of the SOWTC[384] provides that Local Road Works include:
[384] [CB 2/15]
"… all works necessary to adjust any existing roads affected by the Bypass including the scope of works contained in clause P1.3 of Appendix P1 of this Exhibit (A). This includes:
…
(iii) all earth works sub-grade and pavements."
Clause 5.10.4 of the SOWTC[385] provides:
[385] [CB 2/37]
"(a)Pavement designs must be supported by documented design calculations and must be independently verified as required by the Deed."
The term "Project Works" is defined in cl 1 of Vol 1 of the Project Deed to mean[386]:
"… the physical works which the Contractor must complete and hand over under this Deed."
I accept the State's submission that Hoggs Lane is part of the Local Road Works referred to in the Project Deed and, being physical works which Leighton must complete and hand over, forms part of the Project Works. Accordingly, the provisions of cl 4.1 of Vol 1 of the Project Deed[387] are applicable to the work. Leighton must design the Project Works, including Hoggs Lane and in respect of Hoggs Lane, give the several warranties set out in cl 4.1(b). The remaining provisions relating to the preparation review and verification of design documentation set out in cl 4.2 of the Project Deed[388] also apply to Hoggs Lane and, in fact, the design for Hoggs Lane was subjected to this process by Leighton prior to its construction.
[386] [CB 1/18]
[387] [CB 1/41]
[388] [CB 1/42]
SOWTC, cl 5.4[389] provides that the various Assets of the Project Works will have design lives as specified in Appendix T4. That, in turn[390], sets a design life for base A and sub-base 1 for flexible pavements of Local Roads of 20 years and of 10 years for Single Coat Seal 14. While Appendix P7.3.2 sets out a specification for Local Road Pavement Design Thickness, this represents only a minimum criterion, for SOWTC, cl 1.2[391] provides:
"1.2 Interpretation of Scope of Works and Technical Criteria
(a) The criteria in this document represent the minimum criteria that must be used by the Contractor to design, construct and maintain the Project Works."
In these circumstances, the specification set out in Appendix P7.3.2 is not mandatory and does not absolve Leighton from the obligation to achieve the design lives set out in Appendix T4, nor from its obligations and warranties under cl 4.1 of Volume 1 of the Deed.
[389] [CB 2/31]
[390] [CB 4/7]
[391] [CB 2/10]
On 31 August 2001, an Extraordinary Meeting was held at Hobart attended by Messrs Cantillon, Holland, Stevens, Skene and Hutchinson. Among the Schedule of 13 Issues was item 11 entitled Hoggs Lane. The discussion recorded in the Minutes drawn up by Pitt & Sherry was[392]:
[392] [CB 44/282.7]
"— DIER specified the minimum sub-grade CBR and pavement thickness for Hoggs Lane rectification works. Refer to Appendix P7.
·DIER will accept responsibility for Hoggs Lane subject to evidence from LCPL that the works have been carried out in accordance with the Deed requirements."
Under "Action", Mr Hutchinson was to:
"Provide quality records to demonstrate compliance of:
- subgrade strength
- pavement quality."
Mr Stevens (of Pitt & Sherry) was to:
"Arrange for audit testing of the pavement, materials and subgrade."
I note that in the discussion, the minimum sub-grade CBR and pavement thickness is referred to as a DIER specification, while "Action" called for more than verification that the minimum specification had been adhered to. Five "agreed outcomes" were recorded by Mr Holland. They were as follows[393]:
[393] [CB 44/282.10]
"1 Splitter Islands
• DIER will not pursue the construction of splitter islands on the prior works.
2 Violet Banks Entry Ramp
• LCPL will construct the Violet Banks entry ramp by relocating the guard fence and narrowing the width of the embankment generally in accordance with the cross section shown on Drawing No. 3013.
• DIER does not require LCPL to upgrade the guard fence on the rail crossing structure.
3 Junction of William Street and Bass Highway
• The upgrade works, at the junction will be deleted from the scope of work.
• DIER will not pursue any price reduction from LCPL.
4 William Street Widening
• LCPL will contribute $20,000 (direct costs) to widening the pavement and seal to an 8m width. (or as otherwise agreed on site).
• Pitt and Sherry will have input to the solution on site and the allocation and use of plant and labour.
• DIER will take responsibility for removal and reinstatement of guard fence adjacent to the road on the southern side of the rail crossing.
5 Hoggs Lane
• DIER will take responsibility for the performance of Hoggs Lane subject to verification of construction of Hoggs Lane in accordance with the Deed requirements."
Leighton submits that the above outcome was a commercial resolution of the five issues and that in consideration, for example, of Leighton contributing $20,000 to widening the pavement at William Street in Westbury, DIER accepted responsibility for the performance of Hoggs Lane, subject only to verification that the pavement had been constructed in accordance with the relevant specification. I am unable to accept that there was any concluded agreement to compromise the Hoggs Lane issue. There is nothing in the document to suggest that the agreed outcome on Hoggs Lane was reached in consideration of the William Street payment, or for any other valuable consideration. The William Street widening outcome appears to be completely self-contained with its own consideration for Leighton's contribution being the agreement of DIER to take responsibility for removing and reinstating a guard fence. The other outcomes likewise appear to be complete within themselves. However, even if some contractual compromise could be deduced from the Agreed Outcomes document, I am also unable to accept that DIER bound itself to take responsibility for Hoggs Lane, subject only to the verification I have mentioned. A fair reading of point 5 is that DIER required verification that Hoggs Lane had been constructed in accordance with all the requirements imposed on Leighton by the Deed, including the necessity to design so as to achieve the design lives set out in Appendix T4. Indeed, the "Action" column seems to suggest that the production of quality records and the audit testing of the pavement had that consideration as one of its objectives.
After the meeting, Pitt & Sherry in a letter dated 2 November 2001[394] referred to other matters in respect of which they sought proof that all the requirements of the Deed had been met. These included questions about the minimum road level for flood protection. Deficiencies in this respect were pointed out to Leighton by GHD, its consultant, in a letter dated 14 August 2000[395] which indicated the need for an additional culvert, and a memorandum of 20 October 2000[396] outlining the need for the diversion of water into open drains to the southern side of the railway formation. Other issues were to do with a moisture regime, box culvert and the pumping of fines through pavement. Leighton acknowledges that all of these issues had been known to Pitt & Sherry prior to the meeting of 27 August 2001. They were not afterthoughts. It would certainly be extraordinary if DIER were prepared to forego any further agitation of them merely on proof that the pavement had been constructed in accordance with the relevant specification.
[394] [CB 46/350]
[395] [CB 46/214]
[396] [CB 46/236]
In my view, there was no compromise of the Principal's right to insist upon full compliance with the Deed. It is clear that there are still substantial defects in the pavement of Hoggs Lane and Leighton does not intend to rectify them. The sum of $300,000 is a reasonable figure for Pitt & Sherry to have retained. An insurance claim was made by Leighton in November 2000 in respect of certain cracking on the Bypass and an estimate placed by it for insurance purposes on the cost of rectifiying the cracking at Hoggs Lane. That estimate, although described as preliminary, placed a figure of $555,000 on the option of removing and replacing sub-grade materials and of $468,000 on the second option of stabilising the sub-grade[397]. Leighton is not entitled to the return of the sum of $300,000 deducted in respect of Hoggs Lane.
THE INDEPENDENCE OF THE PRINCIPAL'S REPRESENTATIVE
[397] [CB 60/981]
Leighton pleads that the Principal's Representative did not act independently as required by the Deed, nor reasonably and fairly. The relevant pleadings from the Defence and Counterclaim are as follows[398]:
[398] [BOP-68/69]
"44The Principal's Representative, appointed pursuant to clause 10.1 of the Project Deed, was Pitt & Sherry ('the Principal's Representative').
45The Principal's Representative was, subject to clause 10.1(i) in Volume 1 of the Project Deed, at all material times acting as the authorised agent, and delegate of the Principal.
46 There were further terms of the Project Deed that:
(i)in exercising its functions under clauses 2.3(b), 3.1(c)(ii), 6.6(b), 6.7(b), 6.8(b), 6.8(c), 7.3(d), 8.5, 8.9(b)(i), 8.10, 9.4(d), 9.4(e), 9.5(b)(ii), 9.7(b)(ii)(A)(I), 11.2, 12.3(c), 12.4(b), 13.4(d) and 14.7(a)(i) in Volume 1 of the Project Deed the Principal's Representative will act independently of the Principal and Leighton (clause 10.1(i) in Volume 1 of the Project Deed);
(ii)the Principal's Representative will act reasonably in carrying out its responsibilities pursuant to the Project Deed (implied);
(iii)the Principal's Representative will act in good faith in carrying out its responsibilities pursuant to the Project Deed (implied);
(iv)the Principal's Representative will act honestly and fairly in carrying out its responsibilities pursuant to the Project Deed (implied);
(v)the Principal shall not interfere with the Principal's Representative in respect of the functions listed in clause 10.1(i) in Volume 1 of the Project Deed where the Principal's Representative is to act independently of the Principal and Leighton (implied); and
(vi)the Principal's Representative will co-operate with Leighton to bring about the contractual purpose of the Project Deed.
PARTICULARS
The term in subparagraph (i) is in writing.
The terms in subparagraphs (ii) to (vi) are implied by operation of law and so as to give the Project Deed business efficacy.
46AIt was a further term of the Project Deed that the Plaintiff by its agent the Principal's Representative would at all times during the operation of the Project Deed act in a fair manner and as moral exemplar in its dealing with Leighton.
PARTICULARS
The term is implied by operation of law, alternatively by the construction of the Project Deed."
Reliance for the existence of these implied terms was placed on a number of cases including Luxor (Eastbourne), Limited v Cooper [1941] AC 108, London Borough of Merton v Stanley Hugh Leach Ltd (1985) 32 BLR 51, Mona Oil Equipment & Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All ER 1014 and Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd (1979) 26 ALR 567. However, whilst such terms may frequently be held to be implicit in building or construction contracts, it must be remembered that it was an express term of this contract that, subject to (inter alia) cl 10.1(i), the Principal's Representative's discretions and powers were unlimited. Clause 1.20 of Vol 1 of the Project Deed provided[399]:
"1.20 Unlimited Discretion
(a)Subject to any contrary express provisions of this Deed (including in clause 10.1(i)), there will be no procedural or substantive limitation upon the manner in which the Principal or the Principal's Representative may exercise any discretion, power or entitlement conferred by this Deed.
(b)Without limiting clause 1.20(a), neither the Principal nor the Principal's Representative will be under any obligation to exercise any such discretion, power or entitlement in good faith or reasonably or as required by any other legal doctrine which in any way limits the express words used in the provision of this Deed conferring the discretion, power or entitlement."
The pleading that the Principal's Representative appointed under cl 10.1 was Pitt & Sherry is not accurate. In fact, the functions of the Principal's Representative were divided between and performed by three persons namely Mr Wells of DIER, Mr Holland and Mr Wade. For present purposes, Mr Holland's authority as Principal's Representative in refusing an extension of time in respect of the direction of 15 November 2000 and Mr Wade's action in determining what deductions should be made in respect of outstanding defects or deficiencies are in question.
[399] [CB 1/28]
A significant attack was made on Mr Holland in respect of his alleged lack of independence in respect of the refusal of the extension of time. It was said to have compromised his decisions in this respect. However, in my view whether or not he acted independently as required by cl 10.1(i) or reasonably and fairly, his decision was flawed by his error in not accepting that there was an Excusable Cause of Delay and in not applying his mind to a determination of the Extension of Time required by the Direction to undertake the realignment at Hagley House at a greater depth than was legitimately required. In those circumstances, it is common ground that the Court should determine that issue. There are also complaints that Mr Pilley, who acted as solicitor for the Principal, composed, edited or settled correspondence between Mr Holland and Leighton and gave general advice to him, thereby compromising Mr Holland's independence. Even if this were so, it appears that Mr Pilley's advice operated only on Mr Holland and could have affected his independence only in respect of the issue of the extension of time and the question whether or not Leighton was entitled to compensation for a change. These are matters in respect of which the Court now has to make the decision.
Mr Wade undertook the deductions for the purposes of cl 8.10. He was obliged to act independently in determining the cost of rectifying any defect the subject of an instruction under cl 8.6(b). Defects include omissions. I am satisfied that he was independent. He impressed me as a careful and honest witness who, in relation to the deduction of funds for work not done or not done properly, approached that task without bias towards the Principal and, subject to what I have said in relation to the items concerning "outstanding documentation" and "outstanding defects - $25,000", assessed reasonable sums to be withheld. I have only one reservation about his evidence and that is in respect of his assertion that he forgot about the Eckersley-Maslin email of January 2000 until it was discovered in the course of preparation for trial. I am surprised that when the Minahan crisis erupted in May 2000 his receipt of the earlier email did not come immediately to his recollection. However, I am not prepared to disbelieve him in respect of this and I have no occasion not to accept his evidence on the issue of his independence, reasonableness and fairness in relation to the deductions.
AMENDMENTS
Both parties seek leave to amend their pleadings to accord with the evidence led at the trial and with submissions in final addresses. With the exception of the proposed amendments to plead estoppel by Deed in relation to the liquidated damages or penalty issue and to plead lack of compliance with the conditions precedent to a claim for an extension of time, both of which I have declined to allow, and an amendment which was abandoned by the plaintiff in respect of the compromise of an insurance claim allegedly affecting the Hoggs Lane issue, I permit the amendments which now appear in the book of pleadings.
THE OBJECTIONS TO EVIDENCE
I received a great deal of evidence de bene esse. The parties' objections to evidence were tabulated in summary form in respect of each witness and written responses in tabulated form supplied. I rule on the plaintiff's objections as follows:
The Witness Statement of Tom Brock
Paragraph Part Ruling 26 (vii) Objection overruled 26 (viii) Objection overruled 33 Objection overruled 64 Objection allowed 90 Objection overruled 105 Objection allowed 114 Objection overruled 133 Objection allowed 135 Objection overruled 138 Objection overruled 142 Objection overruled 144 Objection overruled 146 Objection allowed 155 Objection overruled 161 "During the meeting …" Objection allowed 161 "Present at the meeting …" Objection overruled 163 Objection overruled 165 Objection overruled 168 Objection overruled 186 Objection overruled 187 Objection allowed 190 Objection overruled 191 Objection overruled 199 Objection allowed 200 Objection allowed 201 Objection overruled 202 – 207 Objection overruled
The Statement of Alexander Brownlie (March 2004)
Paragraph Part Ruling 67 Objection overruled 76 Objection overruled 81 Objection allowed 87 Objection overruled 5.1 Objection overruled
The Statement of Anthony Damiani
Paragraph Part Ruling 43 Objection allowed 46 Objection allowed 51 Objection overruled 52 Objection overruled
The Statement of John Eastoe
Paragraph Part Ruling 98 Objection allowed 99 Objection overruled
The Statement of Robert Hutchinson
Paragraph Part Ruling 15 Objection overruled 37 Objection overruled 54 Objection overruled 55 Objection overruled 56 Objection overruled 57 Objection overruled 61 Objection allowed 62 Objection allowed 64 Objection overruled 65 Objection allowed 67 Objection overruled 68 Objection allowed 69 Objection overruled 70 Objection overruled 76 (d) Objection allowed Other parts Objection overruled 77 Objection overruled 78 Objection overruled 80 Objection allowed 81 Objection overruled 82 Objection allowed 86 Objection overruled 93 Objection overruled 105 Objection overruled 107 Objection overruled 111 Objection overruled 197 Objection allowed 267 Objection overruled 268 Objection overruled 274 Objection overruled 383 Objection overruled
The Statement of Stephen Knowles
Paragraph Part Ruling 18 Objection overruled 29 Objection overruled 49 Objection allowed 51 (sic) Objection overruled 53 Objection overruled 91 Objection overruled 106 Objection overruled 109 Objection overruled 110 Objection overruled 111 Objection overruled 118 Objection overruled 123 Objection overruled 128 Objection overruled 129 Objection overruled 133 Objection overruled 136 Objection overruled The Statement of Stephen Knowles (Continued)
Paragraph Part Ruling 137 Objection overruled 148 (a) Objection allowed (b) Objection overruled 149 Objection overruled 152 Objection allowed 155 Objection overruled 156 Objection overruled 165 Objection overruled 176 Objection overruled 180 Objection overruled 203 Objection overruled 211 Objection overruled 213 Objection overruled 231 Objection allowed 241 Objection overruled
The Statement of Colin Richmond dated 15 April 2004
Paragraph Part Ruling 56 Objection allowed
The Statement of Colin Richmond dated 26 March 2004 (Re Esnouf)
Paragraph Part Ruling 30 Objection overruled 42 Objection overruled 45 Objection overruled
The Statement of Colin Richmond dated 22 March 2004
Paragraph Part Ruling 21 Objection overruled 22 Objection overruled 24 – 29 Objection overruled 30 First sentence Objection overruled 30 Second sentence Objection allowed 43 Objection overruled 44 Objection overruled 45 Objection overruled 46 Objection overruled 47 Objection overruled 48 Objection overruled 53 Objection overruled 54 Objection overruled 56 Objection overruled 59 Objection overruled 60 Objection overruled 63 Objection overruled 66 Objection overruled 68 Objection overruled 69 Objection overruled 71 Objection overruled The Statement of Colin Richmond dated 22 March 2004 (Continued)
Paragraph Part Ruling 72 Objection overruled 73 Objection overruled 74 Objection overruled 75 Objection overruled 76 Objection overruled 77 Objection overruled 79 Objection overruled 81 Objection overruled 82 Objection overruled 83 Objection overruled 84 Objection overruled 88 Objection allowed 90 Objection overruled 96 Objection overruled 97 Objection overruled 100 Objection overruled 101 Objection overruled 109 Objection overruled 114 Objection allowed 124 Objection overruled 125 Objection overruled 126 Objection overruled
The Statement of Chris Roberts
Paragraph Part Ruling 9 Objection overruled 11 Objection overruled 14 Objection overruled 17 Objection overruled
The Statement of Neil Shephard
Paragraph Part Ruling 8.11 Objection overruled 8.17 Objection overruled 11.6 Objection overruled 11.13 Objection overruled 11.23 Objection overruled 12.7 Objection overruled 12.10 Objection overruled 12.11 Objection overruled
The Statement of Neil Shephard dated 29 March 2004
Paragraph Part Ruling 1.4 Objection overruled
The Statement of Mark Westaway
Paragraph Part Ruling 9 Objection overruled 10 Objection overruled The Statement of Mark Westaway (Continued)
Paragraph Part Ruling 13 Objection overruled 14 Objection overruled 15 Objection overruled 17 Objection overruled 18 Objection overruled 19 Objection overruled 21 Objection overruled 25 Objection overruled
The Statement of Peter Skene
Paragraph Part Ruling 20 Objection overruled 33 Objection overruled 35 Objection overruled 38 Objection overruled 57 (a) Objection overruled (b) Objection overruled 103 Objection allowed 120 Objection overruled 133 Objection overruled 139 Objection allowed 140 Objection overruled 142 (a) Objection overruled (b) Objection overruled 156 Objection overruled 159 Objection overruled 186 Objection allowed 187 Objection allowed 188 Objection allowed 193 Objection allowed 205 Objection overruled 225 Objection allowed 229 Objection overruled 230 Objection overruled 253 Objection overruled 260 Objection overruled 309 Objection overruled 320 Objection overruled 322 Objection overruled 329 Not in evidence[400] 339 Objection overruled 343 Objection allowed 344 Objection allowed 350 Objection allowed 369 Objection allowed 373 Objection allowed 375 Objection allowed 378 Objection allowed [400] [This paragraph should be on p112 of Exhibit D17 but the page is missing from Exhibit and Court copy]
The Statement of Peter Skene (Continued)
Paragraph Part Ruling 379 Objection allowed 381 Objection allowed 387 (a) Objection overruled (b) Objection allowed 399 Objection overruled 403 Objection overruled 407 Objection overruled 413 Objection allowed 415 Objection allowed 417 Objection allowed 435 Objection overruled 444 Objection overruled 447 Objection overruled 461 Objection allowed 462 Objection allowed
I rule on the defendant's objections as follows:
The Statement of Garry Wade (Exhibit P32)
A great many objections were taken to the fact that the witness referred to various clauses in the contract or other documents. Objection was taken to par27 on the ground that the testimony constitutes the witness' current interpretation of the Project Deed and is a comment in the nature of a submission. It is said to be inadmissible as to the construction of the Deed or otherwise irrelevant. Paragraph 27 is typical of these references and reads:
"I now also note other relevant clauses of the Deed that include clauses 1.3 ('Project Site and Property Boundaries')[401] and 2.4.2 ('Accommodation Works')[402] of Volume 2a of the Project Deed".
[401] [CB 2/10-11]
[402] [CB 2/14-15]
The documents themselves were relevant and in evidence at least by the conclusion of the trial. Technically speaking, there may be some merit in the objection but a great many documents were drawn to my attention in this way throughout the trial without unfairness to the other side. Where the point is taken I will, without enthusiasm, uphold it.
Paragraph Part Ruling 27 Objection allowed 50 – 51 Objection allowed 55 – 61 Objection allowed 73 Objection allowed 80 Objection allowed 93 Objection overruled 97 – 101 Objection allowed 105 Objection allowed 106 – 108 Objection allowed 109 Objection allowed 112 – 114 Objection allowed
Paragraph Part Ruling 120 Objection allowed 123 – 126 Objection allowed 144 Objection overruled 146 – 147 Objection allowed 149 Objection allowed 152 Objection overruled 159 – 162 Objection allowed 163 Objection allowed 167 – 168 Objection allowed 169 Objection allowed 170 Objection allowed 176 Objection allowed 183 Objection allowed 184 Objection allowed 187 – 188 Objection overruled 190 Objection allowed 191 Objection allowed 193 – 194 Objection allowed 196 Objection allowed 197 – 198 Objection allowed 199 Objection allowed 208 Objection allowed 209 Objection allowed 211 Objection allowed 216 Objection allowed
THE ORDERS
Having regard to my findings, I am prepared to make the following declaration as sought by the State in its prayer for relief, namely:
"A declaration that the Design Documentation submitted to the Principal's Representative by the defendant on or about 17 September 1999 which detailed the Hagley Bypass in front of Hagley House to be 1.24 metres above NSL in fill was not in accordance with the Project Deed."
A second declaration sought was:
"A declaration that the Direction of the Principal's Representative by letters dated 13 November 2000 and 15 November 2000 did not constitute any Change in Design Documentation pursuant to cl 4.2(a) of the Project Deed or as defined in the Project Deed."
I am not prepared to make such a declaration. Although the Direction did not constitute a Change in Design Documentation pursuant to cl 4.2(a) of the Project Deed, it did constitute a Change as defined in the Project Deed and required the execution of a greater amount of work than the Deed required.
The third declaration sought was that Leighton was not entitled to any adjustment by reason of the Direction. In my view, Leighton is entitled to adjustments under cl 7 consequent upon the execution of the extra work.
The fourth declaration sought was that Leighton was not entitled to any extension of time by reason of the necessity for it to comply with the Direction. I am satisfied that Leighton is entitled to an extension of time, but do not have sufficient evidentiary material to determine the extent of it.
On the counterclaim there will be a declaration that the Change constituted by the Direction is to be valued pursuant to cl 7 of Volume 1 of the Project Deed and I adjourn the assessment of that amount to the trial of the issue of quantum, the value to be determined having regard to the additional work of placing the roadworks in question in cut to a depth of 1.5 metres rather than to a depth of 1 metre.
There will also be a declaration that the Change constituted by the Direction caused the defendant delay for which it is entitled to an extension of time to the Date for Construction Completion pursuant to cl 9.4 of Volume 1 of the Project Deed. I adjourn the determination of the number of days extension of time and of any delay costs payable to the defendant pursuant to cl 9.6 of Volume 1 of the Project Deed to the trial of the issue of quantum.
I order that the plaintiff repay to the defendant the sum of $1,832,000 purportedly deducted as liquidated damages and declare the same to be a penalty.
I order that the defendant recover from the plaintiff the following amounts in respect of its counterclaim:
Outstanding documentation
$40,000
Outstanding defects
25,000
Tasrail's legal costs
11,977
I adjourn the further hearing of the claim for Upgrade Seal to the trial of the issue of quantum. I will hear the parties on the question of interest and reserve leave to speak to the minutes of the order.
ANNEXURE 1 - PLAN
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