Thiess Pty Ltd and John Holland Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd - [2016] NSWSC 173

Supreme Court

New South Wales

Summary available

Medium Neutral Citation: Thiess Pty Ltd and John Holland Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd [2016] NSWSC 173
Hearing dates: 13/07/2015, 14/07/2015, 15/07/2015, 16/07/2015, 20/07/2015, 21/07/2015, 28/07/2015, 30/07/2015, 03/08/2015, 04/08/2015, 05/08/2015 and 06/08/2015
Date of orders: 04 March 2016
Decision date: 04 March 2016
Jurisdiction: Equity - Technology and Construction List
Before: McDougall J
Decision:
Plaintiffs to have judgment against third defendant for $6,983,333.00 together with interest.

Catchwords: CONTRACT – building and construction – plaintiffs’ joint venture responsible for construction of project – claims brought against four defendants – first, second and fourth defendant no longer a party to proceedings – claims against those defendants remain relevant to determination of liability of third defendant
CONTRACT – breach of contractual obligations by third defendant – where third defendant responsible for reviewing and reporting on suitability of designs of first and second defendants in conditions actually experienced– failure of third defendant to continually review and report on designs in the changing conditions of the project - breach of contractual obligations proved – causation also proved
NEGLIGENCE – s 5O of Civil Liability Act – whether widely accepted peer professional opinion available as a defence for third defendant – expert evidence fails to support this argument – defence fails
DAMAGES – apportionment of damages between first, second and third defendants – where primary responsibility allocated to first and second defendants – where all those parties caused significant, independent loss – court held third defendant liable for 1/3 of agreed damages
Legislation Cited: Civil Liability Act 2002 (NSW)
Cases Cited: Bolam v Friern Hospital Management Committee [1957] 1 WLR 582
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Dobler v Halverson (2007) 70 NSWLR 151
Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALJR 492
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Vosten v The Commonwealth [1989] 1 Qd R693
Zanner v Zanner (2010) 79 NSWLR 702
Category: Principal judgment
Parties: Thiess Pty Ltd (First Plaintiff)
John Holland Pty Ltd (Second Plaintiff)
Parsons Brinckerhoff Australia Pty Ltd (First Defendant)
ACN 006 475 056 Pty Ltd (formerly Parsons Brinckerhoff International (Australia) Pty Ltd) (Second Defendant)
ACN 061 447 621 Pty Ltd (formerly Pells Sullivan Meynink Ltd (in liq)) (Third Defendant)
URS Australia Pty Ltd (Fourth Defendant)
Representation:
Counsel:

S R Donaldson SC / T W Marskell (Plaintiffs)
R Cheney SC / H Chiu (First and Second Defendants)
D L Williams SC / L W F Chan (Third Defendants)
D T Miller SC / B C A Bradley (Fourth Defendant)
Solicitors:
Norton Rose Fulbright (Plaintiffs)
K&L Gates (First and Second Defendants)
HWL Ebsworth (Third Defendant)
CBP Limited (Fourth Defendant)

File Number(s): 2010/355406

Judgment

HIS HONOUR: The Lane Cove Tunnel Project (the project) involved the construction of road tunnels under the Pacific Highway at Artarmon. The tunnels (now constructed) were to link Epping Road and the M2 Motorway to the west with the Gore Hill Freeway to the east. The project works included, as well as the construction of the tunnels themselves, the construction of access ramps to the Pacific Highway, and of ventilation and service tunnels. The plaintiffs (TJH) undertook the design and construction of the project.
At about 1:40am on 2 November 2005, there was a serious roof collapse in a tunnel known as MCAA. That collapse occurred to the east, but near the intersection, of MCAA and a tunnel known as MC5B. Those tunnels were part of the “Marden Street Temporary Works”. Fortunately, no one was killed or injured. There was however very significant loss of property and property damage.
Who was responsible for the collapse? TJH said that those responsible were some or all of the designers of the works (the first and second defendants, referred to collectively as “PB”); the geotechnical engineers responsible, among other things, for monitoring ground conditions in the excavated tunnels (the third defendant, referred to as “PSM”); or the Independent Verifier appointed to ensure that PB’s designs were adequate and fit for their known purposes (the fourth defendant, referred to as “URS”).
Each of the defendants denied liability. Each said, in addition, that TJH themselves were wholly or substantially responsible for the collapse. To the extent that TJH were not wholly responsible for the collapse, each of the defendants said that the others caused or contributed to the collapse.
In the course of the hearing, which took place over four weeks from 13 July to 7 August 2015, TJH compromised their claims against PB and URS. Although it is only the disputes between TJH and PSM that remain to be decided, the decision of those issues will, nonetheless, require consideration of the issues that had arisen as between TJH, PB and URS. That is because PSM says (and TJH accept) that TJH’s claims against PSM are “apportionable” within s 34 of the Civil Liability Act 2002 (NSW).

The real issues in dispute

The parties prepared a consolidated statement of the real issues in dispute. Some of those issues do not require decision (for example, because they were withdrawn, or because they were seen to add nothing, one way or the other, to the case of the party propounding them). When I deal with the agreed issues, I shall indicate those falling in that category.
To give content to the issues, it is necessary to know a little bit about the location of the collapse. The collapse occurred in the downdrive of MCAA, near its intersection with MC5B. MC5B was a ventilation tunnel also known as the Marden Street ventilation tunnel. MCAA was an exit ramp from one of the motorway tunnels to the Pacific Highway. The ground at that location was of low or very low strength, and intersected by a dyke (see at [52] below).
At the point where the two tunnels intersected, MC5B, which had been driven generally from southeast to northwest, swung around so that it headed almost due north. MCAA ran (or was intended to run) generally east to west.
Locations within the tunnels were identified by reference to “chainages”. Chainages were measured from a set point, in increments of one metre. Thus, a location in a particular tunnel could be identified simply as (for example) “CH 100”. In some documents, the letters “STN” are used instead of “CH”.
One might think that the “intersection” of the two tunnels was the space enclosed by the lateral boundaries of each tunnel at the location where they met and crossed. However, the design called for the eastern and western walls of MC5B to be chamfered as that tunnel approached the point of intersection with MCAA. The parties’ conventional usage treated the area to the north of the chamfers as part of the “intersection”. The chamfers were at approximately 45 degrees to the intersecting walls of each of the tunnels. I set out (figure 1) a sketch showing the relationship of the two tunnels (the North bearing is an approximation, but sufficiently accurate for the purposes of these reasons):

Figure 1

I set out (figure 2) an enlarged version of part of figure 1. It shows in cross-hatching the area of the intersection, strictly so-called. The greater area of the intersection, as the parties and the witnesses conventionally treated it, runs from CH 470 to CH 486.4 (approximately) in MCAA, and northwards from CH 186 to CH 198 in MC5B:

Figure 2:

With that background, I set out the parties’ consolidated statement of the real issues in dispute:

1.    What documents and / or oral directions comprised the relevant designs for:
(a)   the Intersection and its surrounds, particularly the ground support to be installed at the Intersection and its surrounds?
(b)   the geotechnical monitoring system to be installed at and around the Intersection and its surrounds?
2.    Who prepared and provided the relevant designs referred to in Question 1(a) and (b) and when?
3.   Were the relevant designs referred to in Question 1(a) and (b):
(a)   used or followed by TJH without any material departure?
(b)   provided to, and verified by, URS?
Departures from design
4.    In excavating and installing support to the Intersection and its surrounds, did TJH:
(a)   fail to comply with any of the site instructions issued by TJH?
(b)   fail to comply with the “cut one bolt one” policy?
(c)   fail to comply with any of the recommendations in any of the GSDs?
(d)   fail to excavate other than by way of a full face excavation?
(e)   fail to apply, and extend to the floor, 200mm of shotcrete where required by the relevant design?
(f)   fail to complete the excavation of and installation of support to MC5B before commencing the excavation of the down drive and/or up drive of MCAA?
(g)   fail to properly install and tension rockbolts?
(h)   fail to install the number and pattern of rock bolts required by the relevant design?
5.    If so, were any of these failures a departure from:
(a)   the relevant designs?
(b)   the relevant designs as verified?
(c)   the site instructions issued by TJH?
(e)   any recommendations contained in the GSDs?
6.   If so, were any of these failures:
(a)   such that they should have been apparent to TJH?
(b)   such that they should have been apparent to any or all of PB and / or PSM?
(c)   brought to the attention of TJH by any or all of PB and / or PSM?
(d)   if so, what did TJH do, if anything, to remedy the said departure?
Contractual questions
7.    Did the PB Consultancy Agreement oblige PB to undertake such inspections, supervision or reviews of the works during the excavation of and installation of support to the Intersection and its surrounds as should have made it aware of any design departures by TJH that had occurred?
8.    Under the PB Consultancy Agreement, did PB have any power or authority to direct or instruct TJH, including to compel cessation of work?
9.    In performing the PSM Consultancy Agreement, what was PSM obliged to do during the excavation of and installation of support to MC5B and the Intersection and its surrounds?
10.    In performing the Sub Deed what was URS obliged to do in respect of verifying the relevant designs?
Breach
11.    Having regard to the known geology at the Intersection and its surrounds both prior to, and during, the excavation of and installation of support to the Intersection and its surrounds, and the surface monitoring equipment at the Intersection and its surrounds:
(a)   did PB discharge its obligations to TJH in respect of the relevant designs and PB’s construction phase services including in respect of monitoring and any departures from design by TJH?
(b)   did PSM discharge its obligations to TJH in respect of the services to be provided by PSM during the excavation of and installation of support to the Intersection and its surrounds including in respect of monitoring and any design departures by TJH?
(c)    did URS, in the period to 8 October 2005 discharge its obligations in verifying (if it did verify) drawings 0024, 0059-0, 0059-1, 0061, 0072-2, 0072-3, the Geotechnical Specification and (sketch) 43-5?
(d)   did PB and/or PSM discharge their obligations to TJH in preparing and issuing the GSDs produced during the period between 10 October 2005 and 1 November 2005?
12.    Did PB and/or PSM engage in misleading or deceptive conduct in contravention of the Trade Practices Act 1974 (Ch) in respect of the matters referred to in 11(a) and/or 11(b) and/or 11(d)?
13. Are any of the Defendants able to rely on section 5O of the Civil Liability Act 2002 (NSW) to avoid liability to TJH in negligence?
Causation
14.    If the answer to any or all of questions 11(a), 11(b), 11(c) and/or 11(d) is ‘no’, had PB, PSM and/or URS discharged its/their obligations, would the collapse have been averted?
15.    If the relevant designs were provided to URS and:
(a)   URS had required a review of those designs as at, or no later than, 8 October 2005, and
(b)   that PB had conducted a review:
precisely how and in what respects (analysing the matter as at 8 October 2005), and if so, why (and by reference to what) would the designs have likely changed?
16.    In the event any of TJH’s alleged departures from the relevant designs (referred to in Issues 4 and 5) occurred:
(a)   did they cause or contribute to the collapse?
(b)   if so, were they the sole cause of the collapse?
17.    As to monitoring:
(a)   prior to the excavation of and installation of support to the Intersection and its surrounds, what were the instrumentation monitoring requirements as regards the Intersection and its surrounds called-up by the relevant design?
(b)   during the course of the excavation and support installation works at the Intersection and its surrounds what, if any, further instrumentation monitoring relevant to the Intersection and its surrounds was called-up, and by what party?
(c)    in each case, were those instrumentation monitoring requirements adequately performed?
(d)   if not, did any such failure cause or contribute to the collapse?
Damages
18.    In the event that TJH establishes that one or more of the Defendants is liable:
(a)   is TJH entitled to replacement cost of the buried plant and equipment or some other (lesser) amount, being the buyback amount or its depreciated value (Items 1 to 10 of the Scott Schedule)?
(b)   has TJH discharged its evidentiary onus in respect of those Makegood Losses that are in dispute (Items to 12 to 54 of the Scott Schedule)?
(c)    is TJH entitled to Overhead and Profit Margin as claimed in Items 56 and 57 of the Scott Schedule?
(d)   does the issue of contributory negligence arise at all and, if so, should any reduction be made for contributory negligence?
(e)   does clause 20.1 of the PB Consultancy Agreement:
(i) limit the damages which TJH would otherwise be entitled to under section 82 of the Trade Practices Act 1974 (Cth)?
(ii)   provide a sufficient basis for the Court to decline to exercise its discretion to award pre-judgment interest to TJH under section 100(1) of the Civil Liability Act 2005 (NSW)?
(f)   does clause 6.1 of the URS Sub-Deed (limiting URS’ liability from all claims howsoever arising to $25m in aggregate) provide a sufficient basis for the Court to decline to exercise its discretion to award pre-judgment interest to TJH under section 100(1) of the Civil Liability Act 2005 (NSW)?
(g) whether TJH’s claim is apportionable as against any or all of the Defendants under Part 4 of the Civil Liability Act 2002 (NSW) and, if so, what are the relative proportions of the loss and damage to be borne by each Defendant?
(h)   whether TJH is entitled to indemnity from URS under the Sub Deed having regard to its proper construction and the circumstances?
Waiver of subrogation
19.    Is TJH precluded from recovering all or part of its loss from URS and/or PSM on the basis of any waiver of rights of subrogation by its insurers under the relevant policies and, if so, what part?
Cross-claims
20. In the event that TJH succeeds against any Defendant whose claim is not apportionable under Part 4 of the Civil Liability Act 2002 (NSW), is that Defendant entitled to succeed on its cross-claim against any other Defendant under section 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and, if so, to what extent?

I note that, in relation to issues 11(c) and 15, there was a dispute between TJH and URS as to whether the temporal limitation “in the period to 8 October 2005” was appropriate. URS said that this limitation arose on a proper reading of TJH’s pleaded case. TJH said that it did not. This somewhat arcane dispute does not require resolution as between TJH and PSM.

Overview of the contracts

The project was governed (as one might expect for a project of this nature) by a complex suite of contracts. The contracts may be described hierarchically in the following manner.
First, at the head of the hierarchy, there was an agreement made on 14 December 2003 known as the Lane Cove Tunnel Project Deed (the Project Deed). The parties to that deed were Lane Cove Tunnel Company Pty Ltd (LCTC), Lane Cove Tunnel Nominee Company Pty Ltd (the Trustee) and the Roads and Traffic Authority of New South Wales, as it was then known (RTA). Clause 2.1(a) imposed on the Trustee a number of fundamental obligations, including to “finance”, “plan” “design” and “construct” the “Project Works and the Temporary Works…”. The same clause imposed on LCTC fundamental obligations including to “operate, maintain and repair the Motorway…”.
The next document down in the hierarchy is a Design and Construction Deed made in 2003 between the Trustee, LCTC, Thiess Pty Ltd and John Holland Pty Ltd (the D&C Deed). It is sufficient for present purposes to set out the recitals to that deed:

A.   RTA, the Trustee and the Company have entered into the Project Deed and have agreed that RTA will:
(i)   grant to the Trustee the right to, and impose on the Trustee the obligation to, finance, plan, design, construct and commission the Project Works and the Temporary Works; and
(ii)   then grant to the Company the right to, and impose on the Company the obligation to, operate, maintain and repair the Motorway (except for Asset Renewal) and to maintain and repair the Third Party Works, and levy and collect tolls, and grant to the Trustee the right to, and impose on the Trustee the obligation to undertake the Asset Renewal.
B.   The Trustee wishes to engage the Contractor to plan, design, construct and commission the Project Works and to carry out the Contractor’s Works so as to ensure that the Trustee complies with its obligations in relation to the planning, design, construction and commissioning of the Project Works and in relation to the Contractor’s Works under the Project Deed.
C.   The Contractor has agreed to work exclusively with the Trustee and the Company on this Project.

As is probably self-evident, the word “Contractor” is a collective term comprising both Thiess and John Holland.
The obligations of PB, PSM and URS were the subject of separate agreements, further again down the hierarchy.
TJH entered into a Consultancy Agreement with PB on 19 January 2004. Under that agreement, PB was appointed “to perform the Services”. Those “Services” were said to be “all services [PB] is required to provide to [TJH] in accordance with this contract and as are further described in Schedule 3”.
The services described in Schedule 3 included both design phase and construction phase services. The design services were to be prepared for “Design Lots”, which were to be agreed between TJH and PB.
TJH entered into a Consultancy Agreement with PSM on 7 October 2004. That agreement was described as one “for provision of Senior Rock Mechanics Engineer and Associated Services”. Under it, PSM undertook to supply or perform “the services described in Part A of the Schedule”.
LCTC, the trustee, TJH and others entered into a “Subdeed of Appointment of Independent Verifier” with URS on 4 December 2003. By that deed, URS was appointed to that role. Again, it is sufficient for present purposes to set out the recitals:

A.   On or about the date of this Deed, the Company and the Trustee entered into the Project Deed with RTA in respect of the Project.
B.   On or about the date of this Deed, the Company, the Trustee, RTA, the Security Trustee and the Independent Verifier entered into the Deed of Appointment of Independent Verifier.
C.   Financing for the Project is being provided by the Financiers pursuant to the Debt Financing Documents.
D.   The Contractor is undertaking the design and construction of the Project under the D&C Deed.
E.   The Operator is undertaking the operation and maintenance of the Project under the O&M Agreement.
F.   The Independent Verifier is experienced generally in construction and project management and, in particular, in the construction and project management of major road and tunnel projects and offers its expertise in those fields.

G. The Project Documents and the Debt Financing Documents contemplate that the Independent Verifier will discharge those functions set out in Schedule 2, 3, 4 and 5.
H. The Independent Verifier will perform its obligations on the terms and conditions of this Deed.

The complexity (no doubt, necessary) of the contractual documentation is increased by the way in which obligations appearing in a contract at one level of the hierarchy are repeated in, so as to become terms of, a contract or contracts at a lower level. Another factor increasing the complexity (and decreasing the immediate comprehensibility) of the contract documents is their heavy reliance on a system of extensive and cross-referenced definitions. A consequence of the former characteristic is that, to understand the content of an obligation called up in one contract, it is necessary to refer to another. A consequence of the second characteristic is that to make any sense at all of the obligation thus discovered, it is often necessary to follow through a chain of cross-referenced definitions.
URS prepared a Project Verification and Monitoring Plan. The evident purpose of that plan was to describe in detail what it was that URS was required to do, in its capacity as Independent Verifier, and how it was to perform those obligations. That plan is one of those documents for which, to understand the obligations undertaken by URS so as to make sense of their intended mode of performance, it is necessary to go back to the Project Deed.
The D&C Deed required (among many other things) that TJH should comply with the obligations of the Trustee set out in the Project Deed. TJH were thereby required, in compliance with cl 5.1 of the Project Deed, to implement a quality control system for all aspects of the projects works. That was to be done in accordance with a specified section of the scope of works, exhibit A to the Project Deed.
PSM prepared for TJH, and TJH thereafter adopted and issued, a “Work Method Statement” (WMS) relating to “Geotechnical Mapping and Ground Support Determination” (the GSD WMS). The purpose of that document, as it appears from its preface, was to “[discuss] the relationship between tunnel support design and construction methods and geological classification”. It was stated to be “applicable to temporary and permanent underground works of the [project] site”.
PB prepared a “Final Design Report” for each of the various design lots. One related to “Design Lot: 2 Rock Reinforcement and Shotcrete Lining”. That document described Dr Nagendran Loganathan of PB as the “Senior Tunnel Engineer” and Dr Doug Maconochie of PB as the “Tunnel Design Manager”.
Another Final Design Report prepared by PB related to “Design Lot: 3.3 Temporary Works: Marden Street”. That document described Mr Damien Leis of PB as the “Lead Tunnel Engineer”, and again referred to Dr Maconochie as the Tunnel Design Manager.
It will be apparent from what I have said that in order properly to understand the obligations cast on PSM under its consultancy agreement, it is necessary to go to other documents. Those other documents to which reference must be made include not only (from time to time) contractual documents standing above the consultancy agreement in the hierarchy, but also detailed and prescriptive (and occasional proscriptive) documents such as the WMS to which I have referred.
Mr Williams of Senior Counsel, who appeared with Ms Chan of Counsel for PSM, went further. He submitted that it was necessary to bear in mind that the PSM consultancy agreement formed part of a complex interacting suite of contracts, each of which in various ways impacted on the others. That interrelationship, he submitted, arose not only from the terms of the documents themselves in some cases, but also, effectively by inference, because of the overarching requirements for the production and observance of a quality assurance and management system, and the requirement for reports and verifications at various stages, and the end, of construction. Mr Donaldson of Senior Counsel, who appeared with Mr Marskell of Counsel for TJH, did not accept Mr Williams’ proposition, at least in the way it was put. I shall return to this point.
The various documents that I have briefly described (and the myriad other documents that, thankfully, were not in evidence) are of a kind commonly found in large infrastructure projects. The point was made by Dr Burman, an expert called by PSM, in the following terms (report dated 25 February 2015, page i):

As is common with large civil infrastructure projects the LCT project was established under a series of contracts, deeds and undertakings that are intended to define the roles and responsibilities of the various parties at all levels together with international standards for quality assurance. At the operational level there were management plans and sub plans, communication protocols and work procedures that further defined roles and responsibilities cascading to the individual task levels.
Quality systems evolved from the defence and manufacturing industries, have been part of civil engineering construction for some considerable time. Under the terms of its contract with TJH, PB was required to operate a documented quality assurance system in accordance with ISO 9001. PB developed, with TJH approval, its Design Management Sub Plan (DMSP) for the overall control of project management, quality management for its design of the LCT. The DMSP was necessarily detailed and proscriptive; it formalised tasks, roles, responsibilities, documentation, communications and processes for both design and construction stages of the project.

Whilst Dr Burman’s observations on this topic might not represent the application of specialised knowledge to assumed facts so as to lead to the production of an opinion relevant to the existence of a fact in issue, they do nonetheless provide a useful summary of the way in which such projects commonly are documented. In repeating them, I do no more than acknowledge their aptitude for this task.

Relevant personnel engaged on the project

In what follows, I set out a brief description of the various personnel engaged on, or in respect of, the Marden Street Temporary Works, with an indication of their functions.
Work in the tunnels was undertaken by crews who had responsibility for individual faces, or “headings”. Each crew had its own leading hand. The leading hand of the crew working in the MCAA downdrive at the time of the collapse was Mr John Labruyere. He gave evidence.
The crews were organised in two shifts: the day shift and the night shift. The day shift commenced work at about 11am and worked through to about 9pm. The night shift commenced work at about 9pm and worked through to about 7am. The period between 7am and 11am was used for repair and maintenance of the machinery, among other things.
There were no day shifts on Saturdays and Sundays. However, the Friday night shift of necessity finished on Saturday morning. The next night shift would be that starting at 9pm on the following Sunday evening.
Each shift had its own shift boss. Each shift boss was responsible for a number of crews on a number of headings. The shift boss would move from crew to crew on the different headings in the course of each shift. No shift boss gave evidence.
Standing above the shift bosses was the Site Superintendent. For present purposes, Mr John Wilson (who gave evidence) was the Site Superintendent.
All of the personnel that I have described so far were TJH employees. However, TJH had other personnel working in the tunnels. They included a Site Engineer (Mr Tim Bondin) and a Senior Project Engineer (Mr Sam Jones). Mr Bondin gave evidence. Mr Jones did not. There were of course many other engineers employed by TJH in connection with the project.
PSM was required to, and did, provide the services of an engineering geologist. For the period and tunnels in question, that role was filled principally (if not entirely) by Mr Daryl Gilchrist. Mr Gilchrist’s roles included inspecting each of the excavated faces in the morning, when the night shift had finished, and mapping the observed geological conditions. Mr Gilchrist was from time to time accompanied by Dr Phil Lloyd, an employee of PB. Dr Lloyd was described as a “Senior Tunnel Engineer”.
Mr Gilchrist was required to prepare documents entitled “Ground Classification & Ground Support Determination” (generally known, and in these reasons referred to, as “GSDs”). The GSDs were prepared using a standard form which provided for descriptions of:

the particular work site, the face chainage and the time and date of inspection;

the work in progress; and

observations of the work and the geological conditions.

The GSDs also required a statement of what was, in the opinion of the person completing them, the “Ground Class” according to the classification system to which I refer at [49] and following below. They then provided for a statement of “Recommendations” as to “Support Type”. That was based upon the stated ground classification and whatever drawings might be specified.
When Dr Lloyd had accompanied Mr Gilchrist on his inspection, the GSDs noted this. They noted also, where appropriate, Dr Lloyd’s concurrence in the recommendation made by Mr Gilchrist.
From time to time, Mr Jones accompanied Mr Gilchrist on the latter’s inspections. Where this occurred, it was noted on the GSD. Again, if relevant, GSDs would note Mr Jones’ concurrence in the recommendations as to support type.
There is an issue in this case as to whether a GSD issued by Mr Gilchrist on 17 October 2005 (see at [213] to [221] below), recommending a support type and attaching a drawing amplifying and giving content to the recommendation, is a “design” for the part of the works to which it refers.
THJ kept records of various aspects of the work as it was carried out. They included records of the number of rockbolts inserted from day to day, usually with an indication of where they were inserted. They included also records of the quantities of shotcrete applied from day to day, again usually with a record of where shotcrete had been applied. Those records were summarised, along with other matters, in “Shift Summaries”. The shift summaries were supposed to be signed by the shift boss and countersigned by the site Superintendent. Usually, at least one of those functionaries did so.

The “observational approach” to design

As would be expected, the geology of the ground on and within which the project was to be constructed had been the subject of very substantial investigation before the Project Deed and D&C Deed were signed. The results of that investigation were known to all relevant participants.
PB relied on those geological investigations (and ongoing geological investigations) to prepare its designs. In relation to ground support (that is to say, support within excavated tunnels), PB prepared what has been called a “suite”, or “toolbox”, of designs. Those designs were based on, and referable to, the expected strength of the various rock masses within which the tunnels were to be excavated.
PB’s drawing TW03-0041-5 (“TW03” describes the particular design element; “0042” is the drawing number; and “5” is the revision) set out two tables of ground classification. Table 1 related to sandstone. It is of no present relevance. Table 2, which is, related to shale. It provided for four ground classifications, and for corresponding strength ratings. Each classification was explained, or defined, by reference to the defects that would affect the strength of the ground.
The four classifications, and their corresponding assessed strengths, were:

LCT G6

Medium to high

LCT G7

Low

LCT G8

Very low

LCT G9

Extremely low

The description of the defects that helped to define LCT G7 included “minor weak clayey or sandy beds, seams or joints” and “minor shear zones, faults, dykes”.
A dyke in this context is a geological intrusion of initially molten material into a parent rock mass. It is generally vertical or subvertical, and generally linear. In this case, the dyke comprised dolerite material. Where the dyke first appeared in MC5B, it consisted principally of clayey dolerite material. Where it reappeared later in the intersection, it consisted principally of weathered rock material with clayey infill.
LCT G8 ground was described by listed features of the ground mass that were very similar to those describing G7 ground. The difference between G7 and G8 ground appears to relate to another characteristic, namely the spacing of discontinuities within the rock mass. Fortunately, nothing turns on this.
The characteristics of LCT G9 ground included “weak clayey or sandy beds, seams or joints, fault zones with crushed, weathered or broken rock” and “vertical or sub-vertical features such as weathered dykes and associated clay infill”.
It will be seen that each classification contemplated that there might be dykes running through the rock mass. However, for G7 and G8 ground, the dykes were presumably to be such as could be characterised as “minor”.
It is convenient to note at this point that three of the experts, Mr Peck (called for TJH), Dr Burman and Mr Kotze (both called for PSM), considered that the classification system lacked precision, so that “[t]he conditions in the intersection could have been assessed as any of G7, G8 or G9” (the quotation comes from the joint report prepared following their conclave).
Drawing TW03-0041-5 contains further tables. Tables 4 to 7 deal with “support class notes” for various aspects of the Marden Street Works. Table 6 deals specifically with MC5B. It prescribes different “support types” for the various ground classifications. For LCT G4, G5, and G7, the prescribed support type is MAR VII (and construction details are indicated). However, and in my view significantly, for LCT G8 and G9 ground, table 6 specifies “modified MAR VIII”. By reference to drawing TW03-0043-5, MAR VIII construction involves, among other things, the installation of “steel sets”: that is to say, passive steel bracing. That requirement is confirmed in table 6 of drawing TW03-0041-5, which indicated that, for G8 and G9 ground conditions, the steel sets were to be spaced at 1200mm intervals.
On or shortly before 19 August 2004, there was a rock fall in an unrelated project, the Cross-City Tunnel, then being constructed. A worker in that tunnel was killed. As a result, Mr Steve Wille of TJH issued an email dealing with “the use of spot bolts as the tunnel support regime” (this was a reference to an earlier memorandum issued by Mr David Bamforth of TJH). Mr Wille said that the requirements in Mr Bamforth’s memo:

… are additional to those provided by any of the tunnel geologists or details contained in the design documentation, i.e. under no circumstances can these requirements be extended by advice from geologists or design documentation, they can only reduced.
1.   The use of spot bolts can only compliment [sic] pattern bolting, i.e., to pin a particular feature identified.
2.   Pattern bolts are to be installed such that the maximum clear distance between the previous round on fully installed pattern bolts and the face can not exceed three metres. Subject to the Ground Classification this distance may be reduced but never extended.
3.   Under no circumstances can more than one round of bolts be installed as part of a single excavation sequence. I.e. the excavation sequence is cut one, bolt one irrespective of span and ground conditions.

The third of those requirements was known, and referred to in the proceedings, as the “cut one bolt one policy”. It is in my view clear that this policy was a requirement of construction practice, and not a design requirement.
The suite of designs prepared by PB included, on a drawing numbered TW03-0043-5, some four “support types”. They were entitled, respectively, MAR V, MAR VI, MAR VII and MAR VIII. MAR VII is of particular relevance. It describes a support system for a tunnel that has an arched crown. The support system includes some nine rockbolts across the crown of the tunnel, and contemplates the use of additional rockbolts “as required”. The notes to that design read as follows:

FULL FACE CONSTRUCTION SEQUENCE (MAR VII)
1.   EXCAVATE 2000 ADVANCE. AT NO TIME SHALL THE UNSUPPORTED FACE ADVANCE MORE THAN 2.0m
2.   INSTALL 1 ROW OF ROCK BOLTS AND PRETENSION TO 50kN AND FULLY GROUT INSTALL SPIDER PLATES
3.   APPLY 125 THICK INITIAL FRS
4.   REPEAT STEPS 1 TO 3 AS PER GEOTECHNICAL ENGINEERS INSTRUCTION. OTHERWISE CONTINUE STEPS 5, 6 AND 7 IMMEDIATELY.
5.   APPLY 75 THICK FINAL FRS
6.   AT NO TIME SHALL THE FACE ADVANCE MORE THAN 2000 FROM FINAL FRS LAYER
7.   APPLY 35 THICK FIRE PROTECTION LAYER

Drawing TW03-0059-1 contains a note 3, which states:

For tunnel support notes refer to DRG no… TW03-0041

That is a reference back to the tunnel support notes that include the ground classification system to which I have referred already. The notes to that drawing seem to me to be consistent with the observational approach to design. They include the following:

3.    SUPPORT DESIGN BASED ON AVAILABLE GEOLOGICAL INFORMATION AND IS SUBJECT TO CONFIRMATION BASED UPON ACTUAL GROUND CONDITIONS ENCOUNTERED
…
5.    SELECTION OF SUPPORT TYPE AT ANY GIVEN CHAINAGE SHALL BE BASED UPON AN ASSESSMENT OF ACTUAL GROUND CONDITIONS ENCOUNTED [SIC] BY A SUITABLY QUALIFIED GEOTECHNICAL ENGINEER
6.    ACTUAL GROUND CONDITIONS ENCOUNTERED ARE TO BE ASSESSED BY A SUITABLE QUALIFIED ENGINEER GEOLOGIST AS PER TABLES 1 AND 2
…
8.    SPOT BOLTING LENGTH, DIRECTION AND LOCATION SHALL BE AS DIRECTED BY A SUITABLY QUALIFIED GEOTECHNICAL ENGINEER

The reference in note 6 to “Tables 1 and 2” is a reference back to the ground classification tables (in drawing TW03-0041-5), covering among other things, the classification of shale ranging from LCT G6 to LCT G9.
Drawing TW03-0059-1 also called for an arch of shotcrete 200mm thick, applied in two layers. The construction sequence was described as follows:

CONSTRUCTION SEQUENCE
1.   EXCAVATE 1500 ADVANCE. AT NO TIME SHALL THE UNSUPPORTED FACE ADVANCE MORE THAN 2.5M.
2.   INSTALL 1 ROW OF ROCKBOLTS WITH SPIDER PLATES AND PRETENSION TO 50KN AND FULLY GROUT.
3.   APPLY 100mm INITIAL LINING FRS TO CROWN AND WALLS.
4.   INSTALL 5M BOLTS (THROUGHOUT INTERSECTION) AND PRETENSION TO 50KN AND FULLY GROUT.
5.   APPLY 100mm FINAL LINING FRS TO CROWN AND WALLS.

Another drawing prepared by PB, TW03-0057-0, described the excavation sequence for MC5B and MCAA. It suggested that MC5B should be completed to its northern extremity, and the tunnel roof bolted, before the breakouts into the MCAA up and downdrives were commenced.
In summary, PB prepared a portfolio of support designs for the various categories of rock that were thought likely to be encountered. PB also recommended the support types to be used in various parts of the project works and for various ground conditions.
Part of the role of the engineering geologist was to examine the ground conditions actually encountered, to classify them in accordance with the ratings that I have set out, and to record the classification in a GSD. Based on that classification, the engineering geologist was required to recommend a support type, and to record that in the GSD. If the ground conditions proved to be substantially worse than predicted, one might expect that the recommendation would specify a more capable type of support.
As a matter of practicality, it was not desirable to have rapid changes of support type. Thus, once a support type had been recommended that was thought to be adequate to the conditions, good practice would require that it continue to be used until such time as the engineering geologist was satisfied that any strengthening in ground conditions was likely to persist for some time. It would be inefficient to chop and change between support types.

Thus (among other things), it might be desirable to continue using a support type appropriate to a classification of G8 notwithstanding that the ground conditions improved to G6. If it were thought that the ground conditions would continue as G6 for some time, it might be appropriate to change the support type when the change was encountered. (In this respect, it should be noted that information obtained from within the tunnels were supplemented, as I understand it, by information obtained from an above-ground drilling program). Of course, if ground conditions became worse, there should be an immediate change to more capable support.
There were other procedures in place for requesting clarification of or changes to designs, where conditions in the ground changed. There were also other procedures in place for directing the crews as to how it was that work should proceed.
As is common in construction projects, the engineering geologists or (more usually) the TJH engineers could issue a “Request For Information” (RFI). Typically, an RFI was issued by TJH and directed to PB. It would refer to conditions encountered in the ground, or to a stage of the works about to be reached, and ask PB to advise accordingly (for example, as to some construction detail or sequence, or as to the type of support to be adopted).
Site instructions (SIs) were, as their name suggests, instructions issued to personnel on site. Typically, they were issued by one of the TJH project or tunnel engineers, and directed to the Superintendent and the shift bosses. One of the questions in this case is whether SIs issued from time to time, describing the support type to be used and (in some cases) the construction sequence to be adopted, formed part of the “designs” for the MC5B tunnel, the intersection and the MCAA tunnel. That debate focuses specifically on SIs 150, 166, 169 and 174. SIs 150, 169 and 174 were issued by Mr Bondin. SI 166 was issued by Mr Jones.
SI 169 (see at [222] to [226] below) picked up on Mr Gilchrist’s GSD of 14 October 2005, (see at [213] to [221] below). SI 169 attached a revised version of the coloured drawing that Mr Gilchrist had attached to his GSD.

Method of construction of the tunnels

To assist in an understanding of what follows, I shall give a brief and (I hope) non-contentious description of the method by which MC5B and MCAA tunnels were constructed.
The experts agreed (in their joint report) that the rock mass at and around the intersection of the two tunnels comprised very low to low strength shale bedrock known as Ashfield shale. That was intersected by an extremely to highly weathered dolerite dyke. That dyke had earlier intersected MC5B. Its “strike” was approximately southeast / northwest.
The tunnels were excavated by machines known as headers. Material removed by the headers from the face of the excavation was carried away by trucks. The speed at which the headers could advance would depend on a number of factors, including the resistance of the excavated rock face.
The experts agreed (in the concurrent evidence session) that the intended primary function of the rockbolts was, in effect, to stabilise the rock mass in the roof, so as to enable the rock mass to function as a self-supporting arch. Generally, once bolting was complete, fibre reinforced shotcrete (often called FRS) would be placed in layers up to a specified depth. The shotcrete functioned both to guard against rock particles falling out of the crown of the excavation and as an arch. For the shotcrete to function as an arch, it was of course necessary that it should continue across the crown and down to the floor level of the excavation on each side.
The rockbolts were to be installed in “arrays”, at intervals dictated by analysis of the prevailing geology. The designs specified the number and length of rockbolts to be installed in particular conditions, and also catered for additional spot bolts to be installed where necessary.
The cut one bolt one policy required that the excavation of a face proceed only far enough to enable an array of rockbolts to be installed across the crown of the excavated tunnel, at the correct interval from the previous array. Once this had been done, the header could continue with the next cut. That sequence was to be repeated throughout the tunnels.
In tunnels of relatively small width such as MC5B, the headers that were used could excavate the entire face in one cut. Thus, once the header had advanced the requisite distance from the previous array of rockbolts, it could be pulled back to enable the next array of bolts to be installed.
In wider tunnels such as MCAA, however, the headers were not large enough to excavate the entire width of the tunnel in one cut. It was thus necessary for the header to make two passes at the rock face. It would excavate a certain distance on (say) the right hand side of the tunnel. Generally, once that was done, the header was pulled back so that it could excavate the same distance on the left hand side of the tunnel. Again, once that excavation had been completed, the sequence of bolting could take place.
In the MCAA updrive (that is to say, the drive to the right, or east, of the intersection), excavation appears to have proceeded by way of a “full face” advance: that is to say, an advance in two passes, as just described. However, in the MCAA downdrive (to the left, or west, of the intersection), the excavation proceeded by way of a “partial face” advance. Specifically, the advance proceeded some metres further down the right hand, or northern, side of the tunnel than it did relative to the left hand, or southern, side.
The defendants all asserted that the construction method (including, in particular, the cut one bolt one policy) implicitly required construction by way of a full face advance. TJH’s position on this was not always clear, but in final submissions, it became apparent that TJH did contend that construction by a partial face advance was permissible.
On 26 October 2004, a dyke was exposed in a tunnel known as MC5A. That tunnel also formed part of the Marden Street Temporary Works. The ground was classified as G9: the lowest of the strength classifications devised for the project. Mr McGhie, the senior project engineer employed by TJH, sought advice from PB as to the support method that should be utilised. Dr Maconochie recommended a support system utilising rockbolts and 200mm thick shotcrete: i.e., support type MAR VII.
Mr Gilchrist predicted that the dyke would appear in MC5B on its right hand or eastern side at about CH 70, and would continue to CH 100. That prediction was from time to time revised, to update the chainage at which the dyke was first expected to appear in the tunnel.
On 15 December 2004, Mr Gilchrist noted that the dyke was about to appear in MC5B, and thus that MAR VII support should be adopted. TJH stopped work in MC5B so that the support drawings could be revised and verified.
Work resumed in MC5B on 25 August 2005. By then, Mr Leis of PB had directed the use of “revised” MAR VII support. That was superseded on 29 September 2005 (see at [198] and following below).
There were in fact two dykes that transected MC5B. One (see at [84] above) appeared at about CH 67.3 and exited the tunnel at about CH 100. It plays no further part in this story. The second dyke is more significant. It appeared in the tunnel, nearer to the left hand side, at about CH 128. It transected the tunnel, exiting on its right hand side, at about CH 155. That dyke then re-entered the tunnel, nearer the right hand side, at about CH 180. It continued in a generally north-westerly direction into the intersection. It was observed in the cut face of the MCAA downdrive at about CH 470.
Excavation in MC5B continued up to and through the intersection with MCAA, until the north wall of MCAA was reached. The crews then “broke out” into the updrive. The northern wall, or stopend, of MC5B, appears to have been reached on about 16 October 2005. Thereafter, excavation proceeded along the updrive (to the east) for some days. On 28 October, excavation broke out into the downdrive.
On 21 October 2005 there was a substantial rock fall from the crown of the excavation in the MCAA updrive. That was attributed to a “wedge failure” of the rock mass in the crown.

The roof collapse in the downdrive

At about 1:40am on 2 November 2005, the crew working in the MCAA down-drive observed a mass of rock falling from the crown of the tunnel, from a point close to the face of the excavation near the northern wall. The falling rock mass moved rapidly towards the workers (that is to say, rocks fell sequentially along a path towards the workers). They fled.
The experts agreed (and I quote from paragraph 1(a) of the joint report):

… that the collapse was a chimney-like progressive unravelling failure. Chimneying occurs when a stable arch does not form in the roof of an excavation, and the conditions exist for that failure to propagate. It occurs primarily because of low ground quality, adverse geological discontinuities and geometry.

The experts agreed, further, that the collapse initiated at about CH 470, in the area (at or near the northern wall of the tunnel) of the partial face advance, and that it propagated rapidly to the southeast.
The chimneying nature of the collapse meant that it propagated not only horizontally, within the excavation, but also vertically, to the ground surface. There was a block of home units adjacent to the collapse. The stability of that structure, and the safety of its habitants, were very gravely imperilled. The occupants were evacuated. Many tonnes of mass concrete were poured into the area of the collapse, to stabilise the structure (and the ground generally).
Very expensive plant was irretrievably buried as a result of the collapse and the subsequent stabilisation work.

Competing contentions as to causation

It is convenient to give a brief outline of the competing cases advanced by the parties as to the reasons for the collapse.
TJH said that the collapse occurred principally because the support design prepared by PB and utilised in the MCAA downdrive was inadequate, having regard to the known geological conditions. They relied on computer analysis undertaken by an expert, Dr Beck. Dr Beck’s analysis was said to show, among other things, that the collapse was likely to have occurred regardless of the precise details of the construction method actually employed (that is to say, regardless of the fact that the advance proceeded on a partial face basis) and regardless of what might have been (and the defendants said were) significant deficiencies in the rockbolting and shotcreting that had been carried out in the course of that excavation.
TJH contended that the other defendants also bore some responsibility for the collapse. They said, in brief, that PSM was contractually obliged to review the designs submitted by PB and to satisfy itself that the support for which they provided was adequate given the geology that was from time to time encountered. (TJH had also asserted that PSM had, and breached, contractual obligations in relation to the monitoring of ground stability. That issue was abandoned in the course of final submissions.)
TJH said that if PSM had carried out its contractual duties properly, it should have realised that PB’s support design for the MCAA downdrive was inadequate, given the known geology that was encountered. Thus, TJH said, PSM bore some responsibility for the collapse that in fact occurred.
The case against URS was based on its role as Independent Verifier. TJH said that, had URS properly performed its responsibilities in that role, it too would have realised that the support designs prepared by PB were inadequate. That applied in particular, according to TJH, when URS was called upon to verify the revised support designs that were prepared in the period leading up to 25 August 2005, when excavation in MC5B was resumed, and thereafter.
As I have said, the allegations made by TJH against PB and URS remain relevant because of PSM’s case on proportionate liability.
The defendants submitted that the sole, or at least primary, cause of the failure was what they said were manifest deficiencies in the construction procedures adopted by TJH. PSM, which had assumed the carriage of this issue in an evidentiary sense, said that the evidence of TJH’s witnesses who were working in the tunnels at the relevant time made it clear beyond doubt that TJH had failed conspicuously to adhere to the cut one bolt one policy. That failure was manifested, PSM said, by significant advances without any bolting or shotcreting, in both the updrive and the downdrive of MCAA. In the proved circumstances, PSM said, the immediate or primary cause of the failure was those construction deficiencies.
PSM contended that it had not been shown that PB’s design was inadequate. To put it another way, PSM contended that it had not been shown that even if PB’s design had been adhered to faithfully, the collapse nonetheless was more likely than not to have occurred.
TJH responded by referring to Dr Beck’s modelling. They said that the modelling showed, on the balance of probabilities, that the collapse was likely to have occurred where it did even if the support design had been strictly implemented (and TJH, relying on some analysis undertaken by Dr Beck of the facts of the case, submitted that it had not been shown that the design had not been implemented at least substantially).

PSM’s contractual obligations

Although PSM’s contractual obligations are the subject of issue 9, it is difficult to deal with some of the preceding issues without an understanding of what those obligations were. Accordingly, I shall deal separately at this point with the identification and content of those obligations at this point.

Relevant terms of PSM’s consultancy agreement

The agreement consisted of a one page document to which there were attached what were described as “conditions of agreement”. Those conditions included a “Schedule” which dealt, among other things, with the services to be provided by PSM.
Clause 3 of the conditions dealt with the engagement of PSM. By cl 3.1, PSM was engaged to provide, and agreed to provide, “the Services” (which had been defined as “the services described in Part A of the Schedule”).
The parties referred also to clauses 3.2, 3.9 and 3.10. I set out cls 3.1, 3.2, 3.9 and 3.10:

3   ENGAGEMENT OF CONSULTANT
3.1   TJH engages the Consultant to provide the Services, which the Consultant must carry out and complete in accordance with this Agreement.
3.2   The Consultant must take all necessary steps to clarify, define and confirm TJH’s requirements for the Services and the purposes for which the Services are required.
…
3.9   TJH’s client has appointed a representative known as the “Independent Verifier” to carry out certain duties. At TJH’s direction, the Consultant will allow the Independent Verifier to inspect the Consultant’s work at any stage of performance of the Services. The Consultant will not accept any direction or instruction from the Independent Verifier.
3.10   The Consultant, as may be required by TJH, shall co-operate with TJH’s other Consultants, and do everything necessary to integrate its services with the services of TJH’s other consultants.

By clause 5.1, TJH was empowered to direct changes to the Services:

5.1 TJH can instruct the Consultant to make changes to or vary the Services. No change or variation to the Services will invalidate this Agreement. The Consultant must comply with TJH’s instructions.

Clause 6 dealt with PSM’s obligations of “due care”:

6   DUE CARE
6.1   The Consultant acknowledges that TJH has entered into this Agreement in full reliance upon the particular skill, experience and ability of the Consultant to provide the Services. The Consultant must ensure that the Services when provided are fit for the purposes stated in the Schedule (but if not so stated, the purposes to be reasonably inferred from this Agreement.).
6.2   The Consultant must exercise all the skill, care and diligence of a professional Consultant experienced in providing the Services and must carry out all responsibilities in a thorough, skilful and professional manner.
6.3   The Consultant shall ensure that the Services, including all design, drawings and other documentation produced by the Consultant, shall comply with the requirements of the Agreement, all relevant Authorities, legislation, regulations, ordinances, codes, Australian Standards, TJH’s standards, as set out in this Agreement and or the D&C Deed documents and any other standards established by the Client or TJH for the works, where such standards are not in conflict with Australian Standards and Authority requirements. The Consultant shall refer any conflict between a requirement of this Agreement, the relevant standards and/or any regulatory requirement to TJH for its resolution.
6.4   The Consultant is solely responsible for the performance of the Services, notwithstanding any instructions or approval given by TJH pursuant to this Agreement. Any approval by TJH shall be in principle only and not in any way relieve the Consultant of its responsibility under this Agreement.
6.5   Without limiting the generality of the foregoing, it shall be the Consultant’s responsibility to provide effective, efficient and economical solutions to satisfy the specified performance objectives and design requirements.
6.6   The Consultant indemnifies TJH against all claims, losses, actions, damages, costs and expenses arising out of or in connection with the failure of the Consultant to comply with any of its obligations under this Agreement.

Part A of the Schedule set out the services to be rendered:

PART A – THE “SERVICES”
Period of Engagement: 02/06/04 until completion of the Project
Date of Commencement of provision of Services: 2nd June 2004
General description of the Services to be provided by the Consultant:-
Provision of Senior Rock Mechanics Engineer Services to overview the construction of the Project with regard to the following points:

Interpretation of data received from tunnel & surface mounted instrumentation.

Analyse tunnel mapping and compare that to conditions described in design reports to ensure that support regimes nominated are appropriate and efficient.

Liaise with the Project designers to facilitate changes to the design to tailor it to conditions experienced based on the results of instrumentation and performance of previously installed support.

Liaison with construction engineers and supervisors regarding the design requirements.

Manage TJH’s monitoring activities (specified by others) connected with the Project.

Co-ordinate geologists and engineers seconded to the monitoring team by Parsons Brinckerhoff, Coffey Geosciences and the Consultant.

Hire specialists to TJH for the monitoring activity and for other specified purposes.

Ensure that adequate records of monitoring activities are kept in an agreed format for use and consultation by TJH staff and designers.

Co-ordinate the TJH survey teams inputs into the monitoring activities. TJH survey team will provide monitoring of surface settlement, tunnel roof sag and other activities necessary or required by the D&C Deed or stakeholders.

Manage and co-ordinate the installation of monitoring equipment whether installed by TJH or subcontractors.

Provide geotechnical technicians to read all instruments installed as part of the construction of the works.

It will be noted that the services to be provided by PSM to TJH were described in very general terms.
One of the documents that was used to give particularity to those services was the GSD WMS. That was a document issued (as revision 1) by TJH on 16 February 2005. However, preceding drafts of that WMS had been prepared by employees of PSM, Mr Fowler and Ms Chan.

The scope of the WMS was set out:

SCOPE
This procedure discusses the relationship between tunnel support design and construction methods and geological classification. This procedure is applicable to temporary and permanent underground works of the Lane Cove Tunnel Project site.

The WMS contained a number of definitions. Although not all of them are relevant, I set them out:

DEFINITIONS

JSEA      - Job Safety and Environmental Assessment

TJHJV      - Thiess John Holland Joint Venture

Designer    - Design sub consultant – Parsons Brinkerhoff [sic] (PB)

IV      - Independent verifier URS

Geologist   - Engineering geologists

Senior tunnel engineer - Designer’s senior geotechnical engineer as specified in PB-SP-TU-DT00-0058 – Geotechnical Instrumentation Specification.

Senior Rock Mechanics Engineer - Specialist geotechnical engineer supplied to TJHJV by sub-consultant Pells Sullivan Meynink Pty Ltd (PSM) nominated as the monitoring co-ordinator.

Project Engineer – TJHJV Engineer responsible for site works.

Geotechnical team - The geologists, senior tunnel engineer and Senior Rock Mechanics Engineer are part of the geotechnical team.

Ground Support Determination (GSD) – A two part process which a) involves the classification of ground types in accordance with design categories and b) selection of corresponding support class.

Ground Support Class (GSC) – Support ascribed to various ground types in the design.

It is convenient to note at this point that, at least for the Marden Street Temporary Works, the role of Senior Tunnel Engineer (STE) was filled by Dr Lloyd of PB, and the role of Senior Rock Mechanics Engineer (SRME) was filled by Mr Phil Clark of PSM. It is convenient to note also that Mr Gilchrist was the relevant geologist for the Marden Street Temporary Works.
The WMS then turned its attention to the responsibilities of the “Geotechnical Department”. It is I think safe to proceed on the basis that this expression, although undefined, is to be read as referring to the “Geotechnical team” that had been defined a few lines earlier. The WMS stated, on the topic of responsibilities:

RESPONSIBILITIES
Responsibilities of the Geotechnical Department are described in Table 1 and to a lesser extent Table 2. A summary of responsibilities are presented below.

Senior Tunnel Engineer

Role: Direct geologists to undertake mapping and support determinations. Ensure geologist undertake work in accordance with this WMS and JSEA’s. Confirm construction meets the design intent and assess design queries at site level.

Senior Rock Mechanics Engineer

Role: Review mapping, ground classification and support types recommended by geologists.
Engineering Geologists
Role: Answerable to the Senior Tunnel Engineer and Senior Rock Mechanics Engineer, the geologists’ prime responsibilities are to map rock exposures, select ground types and provide support determinations. Works are to be undertaken in accordance with this WMS and JSEA’s.

After dealing with matters relevant to safety, the environment, community issues, and “risk and opportunity”, the WMS turned to the question of procedure. I set out the introductory material:

PROCEDURE
Introduction
It is generally not possible to anticipate in sufficient detail prior to construction, all the geological conditions that will occur and the locations of such conditions. Upon exposure of the actual ground conditions, and quantification of the rock conditions, the appropriate design solution is identified for implementation, and its performance is monitored to confirm its adequacy and identify potential improvements.
To ensure safe and cost effective tunnel design and construction the following must be undertaken.
1.   During the investigation phase, identify and characterise the ground and groundwater conditions (or a variety of such conditions), which are expected to exist.
2.   Design a suite of support arrangements and excavation procedures to suit the identified variety of ground conditions.
3.   Examine the ground as it is encountered during tunnelling.
4.   Confirm whether or not the encountered ground conforms to the expected conditions.
5.   If it does conform, confirm whether or not the GSC and excavation procedures specified should indeed be implemented in the particular circumstances encountered.
6.   Assess and evaluate the performance of the installed support and excavation procedure, by means of appropriate observations and/or instrumentation. These tasks are the responsibility of the geotechnical team and of the survey team.
7.   If the ground encountered is not suitably addressed by the existing design, then the designers shall be notified and prepare a new design. It is expected that the geological team will assist the designers with this preparation where required.
8.   Any modification of an existing design or preparation of a new design is to be instructed by/authorised by TJH Design Director or his delegated Design Manager allowing for appropriate review times for approval by the IV, LCTC and RTA.
9.   If the installed support in any part of the tunnel does not conform, inform the area’s project manager and witness rework for conformity.
10.   In modifying existing designs or preparing new designs, and in assessing the application of the specified support and satisfactory performance of the installed support, interaction with the designers will be required (refer to the attached flowchart, Table 1).

The WMS continued by laying down the way in which the Geotechnical Department, or team, should carry out its work. Although the parties referred to various passages, I do not propose to set them all out. I do however note that the document made it clear that “to facilitate efficient tunnelling, it is envisaged that the GSC [ground support classification] would be maintained over an appreciable length of tunnel, rather than at short intervals”.
That position was then explained on the basis that “the frequent changing back and forth between support arrangements can be very disruptive to tunnelling progress and can cause confusion”. Accordingly, “when more stable ground conditions are initially encountered an immediate change is not hastily implemented. A significant amount of better ground may be required before reducing the support.”
The document made it clear that this was aimed at better conditions rather than worse:

Where ground conditions worsen additional support would be installed immediately, as required.

Other matters covered by the WMS included the duties of the geologist. Those duties were to assess the ground conditions, the GSC and safety requirements; to record the geology at the faces; and to map “forward headings particularly adjacent to intersections and rock pillars”, so as to “allow the Senior Tunnel Engineer to predict the rock support requirements for the full headings… to a high degree of certainty”.
The document also made it clear that the SRME was required to audit and “calibrate” the geologist’s GSCs and GSDs, and that the geologist was required to ensure that the support installed corresponded to his recommendation. If the installed support did not correspond, changes were to be noted and passed onto the STE.
Returning to the allocation of responsibilities: it will be noted that the summary in the WMS referred to (more detailed) prescriptions in Tables 1 and 2. Those tables were in the form of flowcharts and, like many such documents, not easy to follow. However, Table 1 seems to make it clear that the SRME (Mr Clark) and the STE (Dr Lloyd) were coordinate in authority, and that the geologists (relevantly, Mr Gilchrist) were under the direction of the STE. The duties of the geologists appear to include the following:

-   Reviewing existing geol. data
-   Mapping
-   As constructed geological models
-   GSC/GSD
-   Organise and assist underground monitoring
-   Endoscope readings with monitoring technician

The responsibilities of the SRME were defined as follows:

-   Calibrate geologists’ GSC, ensure geological records are up to date
-   Review GSD
-   Monitoring, interpretation and weekly reporting
-   Day-to-day management of monitoring team
-   Implement WMS & JSEA’s for monitoring

The first two of those points related to the work of the geologists. The last three related to monitoring: something that was, but no longer is, part of TJH’s case against PSM.
The responsibilities of the STE were:

-   Direct mapping & GSD
-   Review interpretation of monitoring & mapping
-   Confirmation works are proceeding to design intent
-   Addressing design queries at the site level
-   Implement WMS & JSEA’s for mapping

Table 2 made it clear that the responsibilities of the SRME and the STE included, among other things, review of the work of the shift geologist (including in relation to GSCs and GSDs).

The parties’ submissions

Mr Donaldson submitted that the WMS ought be regarded as a “standard established by… TJH”, within the meaning of cl 6.3 of the consultancy agreement. Mr Williams did not in terms contest this proposition. I think it must be correct. What was the point of preparing the WMS, if it were not intended to help define the content of the obligations undertaken by (among others) PSM, and the services required of (among others) PSM?
Mr Williams submitted that not all the obligations set out in the WMS were obligations of PSM. He noted, correctly, that the “Geotechnical team” (or “Geotechnical Department”) included persons not in the employ or under the control of PSM: significantly (in Mr Williams’ submission), Dr Lloyd.
Mr Donaldson appeared to accept that the only obligations imposed on PSM by the WMS were those that were, of their nature, or by their express description or allocation, assignable (or assigned) to PSM.
Again, I think, this apparently non-contentious position must be correct. The reason why it is correct is exemplified most clearly in Table 1, where the duties broadly described in the WMS are broken down in more detail, and assigned to specific personnel (by job description). Where an obligation is assigned to a PSM employee (relevantly, Mr Clark as SRME or Mr Gilchrist as engineering geologist), the obligation must be taken to be one of PSM. Where it is assigned to someone else (relevantly, Dr Lloyd, an employee of PB, as STE), then, equally it must be an obligation of PB.
Mr Williams submitted that the agreement had to be construed objectively, so as to be given a businesslike interpretation, and taking into account the relevant surrounding circumstances. Those circumstances included, in Mr Williams’ submission, the overall contractual scheme (embodying the Project Deed, the D&C Deed, and the other contracts that I have described already).
Mr Donaldson did not appear to contest those propositions, although he did submit that “the extent which interlocking contracts inform each other in terms of their construction must be limited to those interlocking contracts known as objective facts to both TJH and PSM”. Mr Donaldson noted, further, that the PSM consultancy agreement was executed some time after the other documents and not contemporaneously with or shortly after their execution.
To jump ahead for a moment: I do not think that this aspect of the submissions required detailed analysis. Mr Williams’ general approach to construction may be accepted. It may be accepted, also, that it is likely that TJH and PSM would have been well aware of the existence of the various contracts setting out the obligations of each of the parties to them, and thereby documenting, overall, the way in which the project was to be realised and the roles of the various parties in achieving that. At the end of the day, however, it seems to me that construction of the consultancy agreement and the GSD WMS really requires attention to the terms of those documents, considered, specifically, in the context of the assignment of responsibilities set out in Table 1 to the WMS, and the work flowchart set out in Table 2.
A key, and highly contentious, aspect of Mr Williams’ submissions was that following Mr Leis’ email of 29 September 2005 with its attached drawing, setting out the design for the intersection (and, Mr Williams submitted, “the Dyke affected areas”), the design was effectively “frozen”. In those circumstances, Mr Williams submitted, the SRME had no function to assess the GSDs and design, to see whether the design should be implemented in specific circumstances that had become apparent.
Mr Williams relied on the evidence of three of the experts, Dr Burman, Mr Peck and Mr Kotze. Dr Burman said that in his view the design was frozen, because it was a design specifically catering for G9 conditions – “the worst possible set of conditions” – so that “it would have been impossible for… [the SRME]… to have found that the conditions did not conform”. Mr Peck and Mr Kotze appeared to agree with this opinion.
Mr Donaldson submitted that the observational approach was an essential feature of the design philosophy utilised. He submitted, further, that the work of Messrs Gilchrist and Clark was an integral and indeed essential part of the observational approach. In those circumstances, Mr Donaldson submitted, any conclusion that the design had been “frozen”, so as effectively to suspend some of the relevant obligations, would require far more than the opinion of an expert to substantiate it. In essence, Mr Donaldson submitted, Mr Williams was arguing that there had been a variation of PSM’s obligations under its consultancy agreement. Mr Donaldson submitted that one would require very clear evidence to support this proposition, and that speculative inferences from contestable facts were insufficient.

Decision

The starting point, in relation to PSM’s contractual obligations, is found in cl 3 of the consultancy agreement (see at [108] above), read in conjunction with the description of the “Services” set out in Part A of the Schedule (see at [111] above. In my view, the consultancy agreement required PSM to provide the services of the SRME for the purposes set out in Part A of the schedule. The first five bullet points are of present relevance.
As I said at [129] above, it does not appear to be in dispute, between TJH and PSM, that the GSD WMS had contractual effect, in the sense that it helped to define the nature and content of the Services to be provided by PSM. Specifically, although the consultancy agreement itself said nothing about the provision of the services of an engineering geologist, the WMS did. Mr Williams accepted that, at the level of fact, the engineering geologist’s services were provided by PSM. Relevantly for present purposes, they were the services of Mr Gilchrist.
The GSD WMS stated, both in summary form and in some detail, the roles of the members of the Geotechnical team (or “Department”). I have set out the summary of those roles at [117] above. In my view, insofar as that summary refers to services to be performed by the SRME and the engineering geologist, those services were to be provided by PSM. I accept, as Mr Williams submitted, that insofar as the summary refers to the STE, those services were to be provided by PB.
The ten numbered activities (for want of a better word) described under the heading “Procedure” (see at [118] above) were, in my view, activities to be undertaken or performed by the Geotechnical team. It follows that, in deciding who was to do what, it is necessary to have regard to the more detailed allocation of functions set out in Table 1 and, to a lesser extent, Table 2. However, neither the WMS in general, nor the allocations of functions in those tables, should be taken to override the provisions of the consultancy agreement.
Reading the documents together in this way, it is apparent that, of the ten numbered activities specified under the heading “Procedure” in the GSD WMS (see at [118] above), items 1, 3 to 5 and 9 were obligations of PSM. Items 1, 3 and 4 were self-evidently obligations to be performed by PSM. Item 5 could be thought to fall within the province of either PSM or PB. However, when read in conjunction with the definition of “Services” in Part A of the Schedule to the consultancy agreement (specifically, the second bullet point set out at [111] above), that activity too seems to me to be one to be performed by PSM.
The sixth activity, in my view, was one to be performed by both PSM and PB. That follows as a matter of construction, and also in my view by reference (so far as PSM is concerned) to the first three bullet points described as part of the “Services” (see at [111] above). As a matter of construction, it is the responsibility of both PSM and PB because it is explicitly said (in the WMS) to be an activity which is “the responsibility of the Geotechnical team…”. That seems to me to indicate that all the team are to contribute, according to their respective areas of expertise.
The seventh activity, insofar as it may require the preparation of a new design, is specifically directed to PB. However, the Geotechnical team (including PSM) have obligations, including (if appropriate) to notify PB that the existing design does not suitably address the ground conditions encountered, and to assist in redesign if required.
Again, the ninth activity seems to me one specifically for PSM, since it is PSM’s engineering geologist who is required to make recommendations as to support, and who checks on a daily basis what is happening in the tunnels. PSM’s engineering geologist must have been seen by TJH and PSM as someone uniquely suitable to perform this activity. That conclusion does not seem to me to be affected, in any adverse way, because, from time to time, Mr Gilchrist was accompanied on his inspections by Dr Lloyd (or, for that matter, by employees of TJH).
As to the tenth activity, it may be said that the primary responsibility for modifying existing designs or preparing new designs fell on PB. However, the activity specifically required the Geotechnical team to “interact” with the designers in their performance of that activity. That specifically calls up, or relates back to, the third of the bullet points (in Part A of the Schedule to the consultancy agreement) describing the services to be provided by the SRME.
PSM’s pleaded case (in para 15 of its List Response to the Further Amended List Statement), asserted, among other things, that there was an implied term of its consultancy agreement:

… that the general description of the Services, the personnel to be provided and the responsibilities of those personnel would be more precisely delineated and defined in documents to be disseminated by TJH which would describe the role and responsibilities of the PSM Consultants and their interrelationship with the responsibilities and roles of other employees, subcontractors and consultants working on the construction of the Lane Cove Tunnel.

The implication was said to arise “in fact”: that is to say, in accordance with the principles stated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283.
Consistent with that articulation of the basis on which, PSM contended, the terms should be implied, the list response set out detailed particulars.
PSM’s submissions did not deal with this except to say, as a matter of conclusion rather than reasoning, that the term “is implied in fact and is necessary to ensure business efficacy”. The submissions did not articulate reasons why this was so.
TJH’s submissions said, with equally unhelpful brevity, that “there is no warrant for the implication of [that term]”. TJH noted that there was “no explanation as to how the requirements [for implication] have been met”.
One of PSM’s obligations under the consultancy agreement was to cooperate with other consultants and to do what was necessary to integrate its services with the services of those other consultants (cl 3.10; see at [108] above). PSM was also obliged to do what was necessary “to clarify, define and confirm TJH’s requirements for the services…” (cl 3.2; see at [108] above). Further, TJH was empowered to make changes to or vary the services to be provided by PSM (cl 5.1; see at [109] above). Finally, it was PSM’s obligation to ensure that its services conformed, among other things, to the standards of TJH and other standards established either by the ultimate “Client” or TJH (cl 6.3; see at [110] above).

60. In this sense, s 5O provides a defence. The plaintiff will usually call his expert evidence to the effect that the defendant’s conduct fell short of acceptable professional practice, and will invite the Court to determine the standard of care in accordance with that evidence. He will not be concerned to identify and negate a different professional practice favourable to the defendant, and s 5O does not require that he do so. The defendant has the interest in calling expert evidence to establish that he acted according to professional practice widely accepted by peer professional opinion, which if accepted will (subject to rationality) mean that he escapes liability.
61. It follows that I do not accept the appellant’s submission that s 5O did not provide a defence but defined the content of the duty of care owed by the appellant to Kurt, with the onus on the respondents to prove that the manner in which he acted was not widely accepted by peer professional opinion as competent professional practice. Section 5O may end up operating so as to determine the defendant’s standard of care, but the standard of care will be that determined by the Court with guidance from evidence of acceptable professional practice unless it is established (in practice, by the defendant) that the defendant acted according to professional practice widely accepted by (rational) peer professional opinion. To require the plaintiff to establish the negative would significantly distort the language of s 5O(1), and would not be consistent with the reference in s 5O(2) to reliance on peer professional opinion for the purposes of the section — the plaintiff does not rely on it in order to negate a liability in negligence.

The parties’ submissions

This is one of the many issues, the resolution of which is made difficult by the failure of PSM’s counsel to structure their written submissions by reference to the agreed issues. Although PSM did provide a statement of the answers that it said should be given to each issue, it did not cross-reference that summary to the detailed written submissions nor structured its written submissions by reference to each issue. In my view, that is an extraordinarily unhelpful approach to take in a case where it is inevitable that judgment will be reserved, and where it is obvious that the Court will be heavily reliant on counsel’s written submissions.
Mr Donaldson submitted that the evidence on which PSM relied – specifically, the opinion of Dr Burman in section 7 of his report dated 25 February 2015 – did not provide any relevant evidence of widely accepted peer professional opinion. In Mr Donaldson’s submission, Dr Burman addressed the question at large, and failed to take proper account of the “bespoke procedures designed to meet the demands of the overall project”.

Decision

Dr Burman said merely that, on the basis of the documentation given to him, PSM did act “in the professional manner expected of ordinarily competent professionals providing the services for which they were contracted”. However, as Dr Burman made clear, that view was inextricably linked to his view of the “limited and closely defined involvement” that, he thought, PSM had in the project. Further, and as Mr Donaldson submitted, Dr Burman did not address the specific requirements of the relevant contracts.
Mr Kotze also touched on this topic, but only in relation to the GSDs. Since I have concluded that PSM did provide its services appropriately in respect of ground classification, it is not necessary to look at Mr Kotze’s evidence.
Dr Burman’s expression of opinion on this point is, to put it mildly, conclusory. To the extent that he descends into detail, he does so more by seeking to rebut the view that Dr Beck and Mr Peck had of PSM’s contractual obligations.
In my view, the question raised by s 5O cannot be considered in a vacuum. It can only be considered, and the widely accepted peer professional opinion can only be assessed, by reference to the specific obligations that the professional undertakes pursuant to the contract of retainer. I accept that there will be circumstances where the s 5O question arises otherwise than in the context of a contract of retainer, but since I am dealing with a very specific contract for very clearly defined services, the more general situation of obligations imposed by the common law may be put to one side.
It is easy to see how s 5O operates where the professional undertakes no more than the usual and proper obligation to exercise due care and skill in the performance of duties of design, inspection, supervision, or whatever else is the subject of the particular retainer. In the present case, the obligations that PSM undertook were very carefully designed to reflect the particular demands of this complex project. It may be that peer professional opinion could be relevant in the context with which I am concerned. It is not necessary to decide that point, because in my view, Dr Burman’s opinion is not capable of demonstrating what might be competent professional practice, widely accepted by peer professional opinion in Australia, relevant to the performance of the specific and detailed obligations undertaken by PSM.
As I have noted, Dr Burman addresses the matter at a high level of abstraction. His analysis (to the extent that any is provided) depends critically on his view that the design for the intersection was frozen in September or October 2005. For the reasons I have given, I do not accept that analysis.
In those circumstances, it seems to me, Dr Burman’s evidence goes nowhere near making good the s 5O defence.
As I have noted, s 5O is relevant to PB as well. There is no evidence that suggests that PB, in the relevant respects, did act in a manner that would be widely accepted as competent by peer professional practice in Australia. On the contrary, the common view of the experts who gave evidence (that is to say, those who were called by TJH or PSM) was to the effect that PB did not perform its obligations with appropriate professional care and skill.
Issue 13 should be answered “no”, to the extent that it arises in respect of PB and PSM.

Issues 14 and 15: causation

Introduction

PSM argued that the primary cause of the collapse was the alleged construction deficiencies, specifically in relation to rockbolting and shotcreting. For the reasons I have given, I conclude that PSM has not demonstrated that there were such construction deficiencies in the MCAA downdrive, to the point where the collapse occurred.
In any event, there was a disagreement between the experts as to whether those construction deficiencies (to the extent that they occurred) had any causal significance.

The expert evidence

Question 15, considered by the experts, asked:

If the design of the intersection had been implemented, would the failure have occurred?

The answers given, in so far as they refer to those of the experts who ended up being called and who gave evidence in the concurrent session, were as follows:

15.   The experts do not agree.
(a)   David Beck says the collapse would have occurred had the design been implemented for the reasons set out in answer to question above other than question 9 as well as the following:
(i)   In the actual conditions (G9, or possibly G8), a failure would have still occurred and at around the same time and to the same extent. This is based on the mechanism of failure, the known conditions which included a number of risk factors for chimneying as described above and the poor fit of the ground support to the conditions as well as David Beck’s own numerical analysis.
(ii)   In better conditions (G7 or better) the design and or as installed support may or may not have prevented the failure but the FOS and durability would have been too low for the design intent.
(b)   Brian Burman says:
(i)   it is likely that the collapse wold [sic] have occurred had the design been implemented; and
(ii)   agrees with (a) (ii) from David Beck:
…
(d)   Warren Peck says that the collapse would have occurred had the design been implemented because the faulted roof was unsupportable with rock bolts and shotcrete. Steel arches were needed to support the intersection’s roof.
(e)   Greg Kotze does not offer an opinion in answer this question as he was not involved with the design and has not been involved in the computer modelling of the intersection.

Dr Beck carried out computer modelling intended to simulate excavation in the MCAA downdrive. His modelling assumed that the relevant design was that specified in drawing TW03-0059-1 (Mr Leis’ design of 28 September 2005). Dr Beck modelled, in the alternative, a half face advance in the MCAA downdrive and a full face advance. He concluded, in substance, that it was more likely than not that the failure that did in fact occur would have occurred, at about the same place and in the same manner as it actually occurred, regardless of the suggested construction deficiencies.
Neither Dr Burman nor Mr Kotze carried out any modelling. They did not in terms criticize the modelling undertaken by Dr Beck, although of course the thrust of their evidence was, as I have said, that the alleged construction deficiencies were causally significant.
Mr Williams submitted that Dr Burman’s agreement that “it is likely that the collapse would have occurred had the design been implemented” should not be taken as an acceptance of the proposition that the particular collapse would have happened, in the way that it did, had the design been followed. It might be thought that this proposition would have carried more weight had it come from Dr Burman. Regardless, because Dr Burman’s view was founded on the asserted construction deficiencies in the MCAA downdrive, and because I have concluded that those deficiencies have not been proved, Mr Williams’ reinterpretation of Dr Burman’s apparent assent (as recorded in 15(b)(i) of the joint report) goes nowhere.

Causation – PB

There can be no doubt that there was a causal relationship between PB’s breach of its design duties and the collapse. There is no explanation for PB’s decision to recommend a support design based on the use of rockbolts and shotcrete only, particularly when its design philosophy required passive support such as steel sets. There is no evidence that such a design, if complied with, would have been inadequate.

Causation – PSM

Mr Williams submitted that any hypothetical breach of duty on the part of PSM would have had no causal effect. That was so, he submitted, because Dr Lloyd (of PB) was a member of the Geotechnical team. Mr Williams submitted, in substance, that if Mr Clark or Mr Gilchrist had realised that the design was inadequate for the conditions being encountered, they would have taken this up with Dr Lloyd. Dr Lloyd in turn would have taken the matter up with Mr Leis. Mr Leis, presumably, would have confirmed the sufficiency of his design.
That argument falls down at a number of points. First, there was no evidence from Mr Clark or Mr Gilchrist. Thus, there is no evidence of what their actions might have been had they turned their mind to the apparent incompatibility of Mr Leis’ design with the conditions actually being encountered in the intersection.
Second, although Dr Lloyd was an employee of PB, he was on secondment to the Geotechnical team. So far as the evidence goes, he was not a member of PB’s Design team.
Third, there is simply no reason for assuming that Mr Leis, or Dr Maconochie, or some other responsible employee of PM, would have merely confirmed the adequacy of the design had concerns been raised. After all, the whole point of the observational approach to design was that there should be constant feedback, from those observing the ground conditions as work progressed to those responsible for those producing the design.
Fourth (and this really flows from the third point), the argument seems to me to overlook the essential commercial purpose underlying this aspect of PSM’s obligations. That purpose was to ensure that the suitability of the designs was monitored continuously, so as to ensure (to the extent that proper professional performance of the parties’ contractual obligations could do) that the project met its design requirements, including the one hundred year life span.
I add that Messrs Wilson and Wille gave evidence that if PSM had raised concerns as to the continuing suitability of Mr Leis’ design, and recommended changing (for example, to steel sets), they would have followed that advice. That evidence was not challenged. I accept it.

Causation – URS

URS verified drawing TW03-0059-1. There is nothing in the evidence to suggest that URS was asked to review that drawing, in the light of conditions actually experienced in the MCAA downdrive. And for the reasons I have given, the evidence does not make good the proposition that the review that URS did carry out, in the circumstances in which it was carried out and at the time it was carried out, was inadequate.
If, for some reason that is unexplained in the evidence, URS had been asked to review the design, or its application to conditions actually experienced in the intersection, and if URS had recommended as a result that PB should consider revising the design, it is more likely than not that PB would have done so. And in that doubly hypothetical situation, PB would have revised the design with knowledge gained from Mr Gilchrist of actual conditions in the intersection.

Issue 16: causation and TJH

Since I have concluded that it has not been shown that TJH departed from the design in the MCAA downdrive, it follows that there is no question of causation (sole or partial).

Issue 17: monitoring

This issue is not pressed.

Issue 18: damages; apportionment

As between TJH and PSM, damages are agreed at $20.95m, before interest. TJH claims interest. It is difficult to see why it should not have interest on its loss. Mr Williams did not address this point.
As to apportionment, those between whom the loss ought be apportioned are PB and PSM (bearing in mind my conclusion that TJH did not cause or contribute to the loss).
As the High Court pointed out in Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALJR 492 at 494, the exercise of apportioning responsibility for loss between two or more wrongdoers has two elements. The first is a comparison of the culpability of each wrongdoer – the extent to which it departed from the requisite standard of care. The other element looks at the relative importance of each party’s acts in causing the damage complained of; their “causal potency” (Zanner v Zanner (2010) 79 NSWLR 702 at [102]). The exercise of apportionment involves a consideration of the whole of the relevant conduct of each party.
In the present case, it seems to me, each of PB and PSM departed in a very significant way from the standard imposed upon it by its contract with TJH. In PB’s case, the support design that it produced for the intersection and surrounding areas did not reflect the design philosophy that PB itself had propounded. As to PSM, there has been a wholesale failure to assess the ongoing suitability of that design in the light of ground conditions actually reported, and to communicate the outcome of that assessment to PB.
In terms of causal potency, each failure seems to me to be an independent and effective cause of the loss that followed. Had PB adhered to its design philosophy and produced a design utilising passive support such as steel sets, then (so far as the evidence goes) the collapse would not have occurred. Had PSM assessed the design in the light of the ground conditions encountered, it should have raised with PB the adequacy of the design. Had PSM done so, it is likely that PB would have revised the support design to ensure that it was adequate.
However, even if each breach of duty were an effective cause, it does not follow that their contributions were equally potent. Assessment of causal potency requires more than an analysis of causation: see at [511] above.
In my view, looking at each breach in its full context, primary responsibility should be attributed to PB. PB had the responsibility of producing designs that were appropriate to the circumstances. The design that it produced was not appropriate, even at the time it was produced, having regard to:

PB’s own design philosophy;

the known ground conditions in MC5B when the design was produced, and the likelihood that those ground conditions were, at best, unlikely to improve; and

the inherent unsuitability of rockbolts in the ground conditions that were known, and expected to continue (see at [350] to [352] above).

However, the causal potency of PSM’s breach of its obligations was not minimal. It was obliged to monitor the design in the light of ground conditions. It was obliged to consider whether the design was appropriate. If PSM, having done those things, considered that the design might not be appropriate, it was obliged to communicate with PB. There is no evidence that PSM ever considered the ongoing suitability of the design, having regard to ground conditions that were encountered.
The observational approach to design was an essential feature of the project. It was intended to ensure that the support design chosen at any given point was and remained suitable having regard to the ground conditions actually encountered. It was, in a very real sense, intended to guard against what happened in this case: namely, the ongoing utilisation of a support design that was inappropriate to the conditions in which it was applied.
In my view, accepting the primary responsibility of PB, the failure of PSM to perform its contractual obligations was, nonetheless, significant.
It is difficult to convert impressionistic views of comparative responsibility (in the broad sense) to precise figures. Any attempt to do so gives a misleading semblance of certainty and precision to what is very much a matter of judgment and balance. The outcome is unlikely to be capable of detailed rational explanation. Acknowledging as I have just done the inherent frailty of the process, my conclusion is that responsibility should be assigned 2/3 to PB and 1/3 to PSM.

Other issues

Issue 18 as stated raised questions as to cl 20.1 of PB’s consultancy agreement and as to cl 6.1 of the deed between, among others, TJH and URS. The parties did not address submissions to those questions. Accordingly, I shall give them the same attention.

Issue 19: waiver of subrogation

There are two relevant insurance policies. One is a Construction Risks Policy. The other is a Legal Liability Policy. (There may in fact be two Construction Risk Policies; at least, there seemed to be two policy numbers. Nothing turns on this.)
It is common ground that TJH have been indemnified:

in respect of some part of the losses for which, in these proceedings, they seek recovery, by the insurers under the Construction Risks Policy; and

for another part of those losses, by the insurers under the Legal Liability Policy.

It is also common ground that some of the losses in respect of which TJH seek recovery have not been the subject of indemnity under either policy. As I understand it, there is no disagreement as to the dollar value of each of those three components of the overall loss.
In brief, PSM says that it is an “Insured” under each of those policies, and thus is entitled to the benefit of the waiver of subrogation clause in each. In any event, PSM says, because it is an insured, enforcement of the right of subrogation would be pointless.

Relevant terms of the Construction Risks Policy

The “Insured” under this policy are defined as anyone or more of LCTC and the trustee; the RTA; TJH; and:

4.   All sub-contractors of any tier but not:
4.1   suppliers (other than in relation to their on site work)
4.2   architects and consultants as regards their activities performed off-site and design work performed on site

Clause 15 of the policy deals with “Multiple Insured”. So far as it is relevant, it reads:

…
iv) It is further understood and agreed that the Insurers shall be entitled to avoid liability to or (as may be appropriate) claim damages from any of the Insureds in circumstances of fraud, misrepresentation, material non-disclosure or breach of any warranty or condition of this Policy committed by that Insured each referred to in this General Condition as a “Vitiating Act”.
…
vi) The Insurers hereby agree to waive all rights of subrogation which they may have or acquire against any Insured except where the rights of subrogation or recourse are acquired in consequence or otherwise following a Vitiating Act in which circumstances the Insurers may enforce such rights notwithstanding the continuing or former status of the vitiating party as an Insured.

Submissions – the Construction Risks Policy

Mr Williams submitted that PSM was a “sub-contractor”, and not excluded by cl 4.2 of the definition of “Insured”. He submitted that it was a corollary of cl 4.2 that PSM, being a consultant, was an insured as regards its activities performed on site and design work if performed off site. In the circumstances of this case, Mr Williams submitted, PSM provided no design services; indeed, he said, it was the essence of TJH’s complaint that PSM should have, but did not, provide such services.
Mr Donaldson submitted, in the first instance, that PSM was not a subcontractor. It was not, he submitted, someone to whom TJH had subcontracted the performance of a specified portion of the work to be done by TJH under the Project Deed or the D&C Deed.
Alternatively, Mr Donaldson submitted, if PSM were a subcontractor, the relevant obligations, in respect of which it was sued, were obligations to perform design work on site. He submitted that PSM’s obligation to consider whether a specified support design was fit for use in the conditions actually encountered, and to specify the support to be adopted in those conditions, was part of the process of design.
Mr Donaldson relied on the decision of the Full Court of the Supreme Court of Queensland in Vosten v The Commonwealth [1989] 1 Qd R 693 at 708.

Decision – the Construction Risks Policy

I do not agree that PSM was not a subcontractor. Clearly, in my view, it was. Both the derivative obligations of TJH under the Project Deed and their direct obligations under the D&C Deed included design obligations. If, as Mr Donaldson submitted, PSM’s obligations under its Consultancy Agreement were, or included, design obligations then, to that extent at least, TJH must be taken to have subcontracted part of their design obligations to PSM.
In my view, the definition of “Insured” in the Construction Risks Policy makes it clear that consultants such as PSM may be “sub-contractors”. That follows necessarily from the words of cl 4.2. Cleary enough, architects and consultants will be insured as “sub-contractors”, so long as their non-design activities are performed on site, or their design obligations (if any) are performed off site. There can be no doubt that PSM would fall within the generic description of “consultant”.
However, I do agree that the relevant obligations of PSM were design obligations. That seems to me to follow inevitably from the observational approach to design. The design was not something fixed immutably at the commencement of the project. It was something to be assessed and, if necessary, modified, as the project progressed. PSM’s obligations under its Consultancy Agreement, as I have identified them earlier, gave it a role in that ongoing process of design.
First, PSM was required to assess the suitability of the support system specified in the light of conditions actually encountered. And second, PSM was required to specify the support system to be adopted, in the light of ground conditions actually encountered. Of necessity, part at least of those obligations had to be performed on site.
In Vosten, Ryan J (who gave the judgment of the Full Court) considered whether the specification of the method of anchorage of the luffing rope of a crane constituted “design”. The evidence was that the decision, how to anchor the luffing rope, was one made on site once the crane had been rigged. His Honour held that the selection of a particular method of anchorage was “a decision on the design of the method of anchorage”.
In my view, that analysis applies in the present case. An obligation to decide whether a specified support design is appropriate, and should continue to be used, is an integral part of the design of the support to be used. Inded, that is so a fortiori bearing in mind the observational approach to design. And likewise, the specification of a support system to be used is an integral element of the design of that support system.
Had PSM made some attempt to comply with its obligations, and negligently specified an inadequate method of support, it would not be entitled to indemnity under the policy. I do not understand how it can be placed in a better position, simply because it made no attempt to perform those duties. The duties, for breach of which it is being sued, are properly characterised as design duties. From the perspective of the definition of “Insured”, it matters not whether the complaint is that the duties were performed negligently, or that they were not performed at all.
Thus, in my view, PSM is not an “Insured” under the Construction Risks Policy. Clause 15 has no application. There is no bar to recovery, insofar as the losses claimed have been the subject of indemnity under the Construction Risks Policy.

Relevant terms of the Legal Liability Policy

The definition of “Insured” reads as follows:

Insured Any one or more of the following;
1. Leighton Holdings Limited;

2.   All subsidiary companies, controlled, companies and joint ventures of 1 and 2.;
3.   All sub-contractors of 1, and 2, of any tier;
4.   All principals of 1 and 2.;
5.   Other parties required to be an Insured by contractor or agreement;
all for their respective rights, interests and liabilities.

However, that definition is limited by cl 5:

5. SUBCONTRACTORS
A subcontractor to Insureds #1 or #2 shall only be a party entitled to the benefit of this Policy where the terms of the contract between Insured #1 or 2# and the subcontractor require Insured #1 or #2 to effect insurance coverage of this type on behalf of the subcontractor. In such circumstances and only in such circumstances the Insurers agree to waive any right of subrogation against such subcontractor.

Clause 14 deals with, among other things, waiver of subrogation:

14. CROSS LIABILITY
Each of the parties comprising the Insured shall for the purposes of this Policy be considered as a separate and distinct unit and the words “the Insured” shall be considered as applying to each of such parties in the same manner as if a separate Policy had been issued to each of them in their name alone and the Insurers waive all rights of subrogation or action which they may have or acquire against any of such persons. Provided that nothing in this Condition shall be deemed to increase the Limit of Liability under this Policy in respect of any one Occurrence.

Submissions – the Legal Liability Policy

Mr Williams submitted that TJH had been obliged to put the Legal Liability Policy in place for itself and, among others, PSM. That obligation arose, Mr Williams submitted, under cl 22.4 of the Project Deed and under cl 22.4 of the D&C deed.
Mr Donaldson submitted that neither the Project Deed nor the D&C Deed was relevant. PSM was not a party to either of those deeds, and cl 5 of the Legal Liability Policy focused attention on the contract between the relevant insured (in this case, TJH) and the subcontractor (in this case, PSM). It followed, Mr Donaldson submitted, that even if PSM were to be regarded as a subcontractor, it was not a subcontractor in respect of whom, by the subcontract between it and TJH, the latter were required to effect insurance.
Mr Williams relied, in particular, on the D&C Deed. He noted, correctly, that cl 22.4 imposed on TJH an obligation to effect third party liability insurance, and submitted, again correctly, that the Legal Liability Policy had been effected in pursuance of that obligation. Mr Williams submitted that by cl 22.5 of the D&C Deed, the policy was required to insure, among others, anyone having “an insurable interest under the Project Documents…” and was required to include a cross-liability / waiver of subrogation clause.
Mr Williams submitted that PSM had an insurable interest under a Project Document because it had been “retained by TJH in connection with the obligations of TJH pursuant to the D&C Deed and the Project Deed”, both of which were “Project Documents”. Mr Williams’ submissions did not identify his client’s Consultancy Agreement as a “Project Document”. It would constitute a Project Document if the parties to the Project Deed (i.e., the RTA, LCTC and the Trustee) had agreed it to be one. Mr Williams did not point to any such agreement.
In any event, Mr Donaldson submitted, the Project Deed did not directly impose any obligation of any kind on TJH, because TJH was not a party to it. Mr Donaldson noted, correctly, that cl 22.4 of the Project Deed imposed obligations on the Trustee and LCTC (who, with the RTA, were the only parties to that deed).

Decision – the Legal Liability Policy

The starting point must be that as TJH was not a party to the Project Deed, cl 22.4 of that deed could impose no obligations on TJH. Thus, whatever relevance the Project Deed may have in the process of construction, it is not a relevant source of TJH’s insurance obligations.
TJH was of course a party to the D&C Deed. Clause 22.4(a)(i) of that deed required TJH to effect and maintain third party liability insurance. And cl 22.5(vii) required that policy to include a cross liability and waiver of subrogation clause. However, that obligation only applied to those who were insured under the policy taken out in pursuance of cl 22.4(a)(i).
In my view, when cl 22.5(a)(iv) refers to those who “have an insurable interest under the Project Document”, it is to be read as referring to those who are parties to, and accept obligations under, one or more of those Project Documents. Thus, in my view, cl 22.5(a)(iv) of the D&C Deed imposed no obligation on TJH to effect third party liability insurance for the benefit of its consultants, including PSM, unless their contracts with TJH were agreed to be “Project Documents”.
If that conclusion were wrong, TJH would be in breach of its obligations owed to the other parties to the D&C Deed. That breach would sound in damages at the suit of one or more of those parties. But would not be a breach actionable at the suit of PSM, because PSM was not a party to the D&C Deed. Mr Williams did not submit that any of the other parties to the D&C Deed held the benefit of cl 22.4 on trust for PSM, or that PSM was entitled to sue on cl 22.4 by application of the principles explained in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107.
In any event, the question is not what the position of PSM might have been under some hypothetical policy that, on its view, should have been effected. It is, rather, what is the position of PSM under the policy that was effected. And that policy is clear. By cl 5, which qualifies the general definition of the “Insured”, a subcontractor will only have the benefit of the policy where the terms of the contract made between that subcontractor and (in this case) TJH required the latter to effect such insurance for the benefit of the former. Mr Williams pointed to no provision of the Consultancy Agreement between TJH and PSM which required TJH to effect such insurance for the benefit of PSM.
I conclude that PSM is not an insured under the Legal Liability Policy. It is not entitled to be indemnified under that policy, and cl 14 has no operation.

Issue 20: cross-claims

This issue does not arise.

Conclusion and orders

TJH should have judgment against PSM for $6,983,333.00 (1/3 of the agreed amount of damages), together with interest. I will leave it to the parties to prepare an agreed calculation of interest. In the ordinary way, costs should follow the event. However, the parties should have an opportunity to be heard on the question of costs.
I make the following orders:

direct the parties to prepare and submit to my Associate, by 15 March 2016, an agreed calculation of interest on the sum of $6,983,333.00.

Direct the parties, by the same date, to submit to my Associate the draft orders for which each contends.

Stand proceedings over to 9:30am on 17 March 2016 for entry of judgment and for directions as to submissions on costs, if the parties cannot agree on the appropriate costs orders to be made.

Direct that the exhibits are to be returned once judgment has been entered.

**********

Decision last updated: 04 March 2016

Medium Neutral Citation:	Thiess Pty Ltd and John Holland Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd [2016] NSWSC 173
Hearing dates:	13/07/2015, 14/07/2015, 15/07/2015, 16/07/2015, 20/07/2015, 21/07/2015, 28/07/2015, 30/07/2015, 03/08/2015, 04/08/2015, 05/08/2015 and 06/08/2015
Date of orders:	04 March 2016
Decision date:	04 March 2016
Jurisdiction:	Equity - Technology and Construction List
Before:	McDougall J
Decision:	Plaintiffs to have judgment against third defendant for $6,983,333.00 together with interest.
Catchwords:	CONTRACT – building and construction – plaintiffs’ joint venture responsible for construction of project – claims brought against four defendants – first, second and fourth defendant no longer a party to proceedings – claims against those defendants remain relevant to determination of liability of third defendant CONTRACT – breach of contractual obligations by third defendant – where third defendant responsible for reviewing and reporting on suitability of designs of first and second defendants in conditions actually experienced– failure of third defendant to continually review and report on designs in the changing conditions of the project - breach of contractual obligations proved – causation also proved NEGLIGENCE – s 5O of Civil Liability Act – whether widely accepted peer professional opinion available as a defence for third defendant – expert evidence fails to support this argument – defence fails DAMAGES – apportionment of damages between first, second and third defendants – where primary responsibility allocated to first and second defendants – where all those parties caused significant, independent loss – court held third defendant liable for 1/3 of agreed damages
Legislation Cited:	Civil Liability Act 2002 (NSW)
Cases Cited:	Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Dobler v Halverson (2007) 70 NSWLR 151 Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALJR 492 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 Vosten v The Commonwealth [1989] 1 Qd R693 Zanner v Zanner (2010) 79 NSWLR 702
Category:	Principal judgment
Parties:	Thiess Pty Ltd (First Plaintiff) John Holland Pty Ltd (Second Plaintiff) Parsons Brinckerhoff Australia Pty Ltd (First Defendant) ACN 006 475 056 Pty Ltd (formerly Parsons Brinckerhoff International (Australia) Pty Ltd) (Second Defendant) ACN 061 447 621 Pty Ltd (formerly Pells Sullivan Meynink Ltd (in liq)) (Third Defendant) URS Australia Pty Ltd (Fourth Defendant)
Representation:	Counsel: S R Donaldson SC / T W Marskell (Plaintiffs) R Cheney SC / H Chiu (First and Second Defendants) D L Williams SC / L W F Chan (Third Defendants) D T Miller SC / B C A Bradley (Fourth Defendant) Solicitors: Norton Rose Fulbright (Plaintiffs) K&L Gates (First and Second Defendants) HWL Ebsworth (Third Defendant) CBP Limited (Fourth Defendant)
File Number(s):	2010/355406

LCT G6	Medium to high
LCT G7	Low
LCT G8	Very low
LCT G9	Extremely low