UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd

[2014] NSWSC 1959

Supreme Court

New South Wales

Medium Neutral Citation:	UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd [2014] NSWSC 1959
Hearing dates:	20 to 24, 27, 28, 30, 31 October 2014, 3 to 5, 7, 10 to 12, 20 and 21 November 2014
Decision date:	15 December 2014
Jurisdiction:	Equity Division - Technology and Construction List
Before:	Ball J
Decision:	Judgment for the plaintiff in the sum of $5,059,026.17
Catchwords:	TORTS – negligence – whether acoustic engineering advice provided by defendant negligent – whether plaintiff contractor relied on advice when installing insufficient material in breach of head contract – where reliance required contractor to prove what non-negligent advice would have been and what it would have done had it received non-negligent advice – whether claim apportionable under Civil Liability Act 2002 (NSW), Pt 4 – plaintiff who contributes to its own loss not a “concurrent wrongdoer” – whether plaintiff contributorily negligent TRADE PRACTICES – claim for damages under Trade Practices Act 1974 (Cth), s82 for breach of s 52 – whether advice given by defendant misleading or deceptive – whether plaintiff contractor relied on advice when installing insufficient material in breach of head contract – whether claim apportionable under Trade Practices Act 1974 (Cth), Pt VIA – plaintiff who contributes to its own loss not a “concurrent wrongdoer” – whether plaintiff contributorily negligent DAMAGES – where plaintiff settled claim brought against it by head contractor for breach of head contract – where plaintiff claims cost of settlement against defendant under contractual indemnities – causation – whether negligent or misleading or deceptive advice caused plaintiff to enter into settlement agreement – Civil Liability Act 2002 (NSW), s 5D – s 5D not applicable to claims under Trade Practices Act 1974 (Cth), s 82 but words “by conduct of another” require a causal connection – whether s 5D applies to claim under contractual indemnity not clear and depends on construction of indemnity provisions – causation in this case dependent on reasonableness of settlement whichever test of causation applied DAMAGES – where plaintiff settled claim brought against it by head contractor for breach of head contract – where plaintiff claims cost of settlement against defendant under contractual indemnities – whether settlement reasonable – whether amount paid pursuant to settlement reasonable in the circumstances – whether appropriate that defendant be liable for the full extent of the settlement where only causally responsible for part of it – Civil Liability Act 2002 (NSW), s 5D(1)(b) – court to determine what would be a reasonable settlement when actual settlement unreasonable CONTRACT – where negligent advice in breach of agreement between plaintiff and defendant – whether plaintiff estopped from asserting breach of contract based on common assumption – whether plaintiff breached implied term that parties cooperate – claim statute barred by Limitation Act 1969 (NSW), s 14 where breach occurred in 2003 and proceedings commenced in 2011
Legislation Cited:	Civil Liability Act 2002 (NSW), Pt 1A, ss 5A, 5B, 5D, 5O, Pt 4, ss 34, 35 Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9 Limitation Act 1969 (NSW), s 14 Trade Practices Act 1974 (Cth), ss 52, 82, Pt VIA
Cases Cited:	AI Mclean Pty Ltd v Hayson [2008] NSWSC 927 Adeels Palace v Moubarak [2009] HCA 48; (2009) 239 CLR 420 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568 BHP Billiton (Olympic Dam) Corporation Pty Ltd v Steuler Industriewerke GmbH (No 2) [2011] VSC 659 Biggin & Co Ltd v Permanite Ltd [1951] 2 KB 314 BNP Paribas v Pacific Carriers Ltd [2005] NSWCA 72 Bovis Lend Lease Limited v RT Fire Protection Limited [2003] EWHC 939 (TCC); (2003) 89 ConLR 169 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Commonwealth v Cornwell [2007] HCA 16; (2007) 229 CLR 519 Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 Drayton v Martin (1996) 67 FCR 1 Edwards v Insurance Office of Australia Ltd (1933) 34 SR (NSW) 88 General Feeds Inc Panama v Slobodna Plovidba Yugoslavia [1999] 1 Lloyd’s Rep 688 Gibbs v Guild (1881) 8 QBD 296 Hadley v Baxendale (1854) 9 Ex 341; (1854) 156 ER 145 Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 Henville v Walker [2001] HCA 51; (2001) 206 CLR 459 Howe v Teefy (1927) 27 SR (NSW) 301 Hudson Investment Group Ltd v Atanaskovic [2014] NSWCA 255; (2014) 311 ALR 290 I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 King v Western Sydney Local Health Network [2013] NSWCA 162 Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd [2008] NSWSC 144; (2008) 66 ACSR 1 March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377 Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305 Paul v Cooke [2013] NSWCA 311; (2013) 85 NSWLR 167 QBE Insurance (Australia) Ltd v Wesfarmers General Insurance Ltd [2010] NSWSC 855 Rail Corporation NSW v Fluor Australia Pty Ltd [2009] NSWCA 344 Raphael Shin Enterprises Pty Ltd v Waterpoint Shepherds Bay Pty Ltd [2014] NSWSC 743 Rennie Golledge Pty Ltd v Ballard [2012] NSWCA 376; (2012) 82 NSWLR 231 Roe v Minister for Health [1954] 2 QB 66 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 Strong v Woolworths [2012] HCA 5; (2012) 246 CLR 182 Tanna v Deutsche Bank (Asia) AG [1996] NSWSC 408 Tanna v Deutsche Bank (Asia) AG (Court of Appeal (NSW), 15 September 1998, unrep) Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 Zanner v Zanner [2010] NSWCA 343; (2010) 79 NSWLR 702
Texts Cited:	DA Bies and CH Hansen, Engineering Noise Control: Theory and Practice (2nd ed, 1996, E & FN Spon) D Villa, Annotated Civil Liability Act 2002 (NSW) (2nd ed, 2013, Lawbook Co) JD Heydon, Cross on Evidence (8th Aust ed, 2010, LexisNexis) The Negligence Review Panel, Review of the Law of Negligence: Final Report (2002) W Courtney, “Settlements Following Breach of Contract” (2013) LMCLQ 157
Category:	Principal judgment
Parties:	UGL Rail Pty Ltd (Plaintiff) Wilkinson Murray Pty Ltd (Defendant)
Representation:	Counsel: MA Jones SC with Ms JA Steele and Ms CO Gleeson (Plaintiff) RA Cavanagh SC with SJ Walsh (Defendant)   Solicitors: DLA Piper (Plaintiff) Thompson Cooper Lawyers (Defendant)
File Number(s):	2011/123652

Judgment

Introduction

1. In these proceedings, the plaintiff, UGL Rail (formerly known as United Group Rail Pty Ltd), alleges that the defendant, Wilkinson Murray, gave negligent or misleading advice in relation to the steps that should be taken to comply with contractual specifications concerning reverberation control in the Epping to Chatswood Rail Link (ECRL) causing UGL Rail losses said to total $26,429,541.15 plus interest and costs.

2. The ECRL comprises two adjacent cylindrical rail tunnels each approximately 13 km long connecting Chatswood and Epping stations, together with three intermediate stations at Macquarie Park, Macquarie University and North Ryde.

3. Originally, on 6 July 2002, the Director General of the New South Wales Department of Transport entered into a contract (the CIVSYS Deed) with a joint venture between Thiess Pty Ltd and Hochtief Aktiengesellschaft (THJV) for the design and construction of what was then the Parramatta Rail Link. In 2003, the scope of the project was modified to become the ECRL and, on 1 January 2004, the CIVSYS Deed was assigned from the Director General to the Rail Infrastructure Development Corporation, later known as the Transport Infrastructure Development Corporation (TIDC). Under arrangements that are not in evidence, TIDC would make the ECRL available to RailCorp to operate train services between Epping and Chatswood once the link was complete.

4. On 20 December 2002, THJV entered into a subcontract with Alstom Australia Limited (Alstom) for the systems installation component of the ECRL (the Systems Subcontract) for a total price of approximately $179 million. The work subcontracted to Alstom included work associated with the design, construction and testing of sound absorbent panels to be installed in the tunnels to meet the reverberation times specified in the Works Brief, which set out the scope of work to be undertaken by THJV pursuant to the CIVSYS Deed.

5. On 10 June 2003, Alstom entered into a consultancy agreement with Wilkinson Murray (the Consultancy Agreement) under which Wilkinson Murray agreed to provide acoustic consulting services in connection with Alstom’s obligations under the Systems Subcontract. It will be necessary to say more about the nature of those services shortly. For present purposes, it is sufficient to observe that the services included advice on the nature and extent of the sound absorbent panels that should be installed in the tunnels to meet the reverberation times specified in the Works Brief and compliance testing of the installed panels.

6. Wilkinson Murray provided advice to Alstom in May 2003. There are issues concerning whether the advice was intended to be final advice, whether it was qualified and whether Alstom relied on it.

7. On 2 June 2005, United Group Limited, UGL Rail’s parent company, and UGL Rail entered into a sale and purchase agreement with Alstom by which UGL Rail acquired the transport business of Alstom and became responsible for the Systems Subcontract. The Systems Subcontract was novated to UGL Rail by a deed of novation dated 16 September 2005. On the same day, Alstom and UGL Rail entered into a deed of assignment of contracts by which Alstom assigned to UGL Rail various contracts, including the Consultancy Agreement.

8. The work under the Systems Subcontract was actually performed by UGL Infrastructure Pty Ltd, another subsidiary of United Group Limited. The arrangements by which UGL Infrastructure performed the work are not clear from the evidence. Frequently, the parties did not distinguish between UGL Rail and UGL Infrastructure, referring to them interchangeably as “United”. This judgment adopts that practice where it is not important to distinguish between the two companies.

9. In about April or May 2007, United installed a single row of acoustic panels in a test section of the ECRL between Macquarie Park and Macquarie University stations and, on 21 May 2007, Wilkinson Murray undertook reverberation time testing in that section of the tunnel. It advised United on 25 May 2007 that the measurements significantly exceeded the specifications contained in the Works Brief. It will be necessary to say more about the nature of the advice given by Wilkinson Murray and the steps taken to solve the problem. It is sufficient by way of introduction to observe that an additional row of panels was installed in the test section of the tunnel and further testing was done, which revealed that the tunnels still did not satisfy the reverberation specification. As a result, United increased the size of the second row of panels and the two rows of panels were installed throughout the tunnels. Following their installation, the acoustic engineers engaged by TIDC, Heggies, conducted further tests and concluded that the tunnels did not meet the reverberation specification. Wilkinson Murray disputed Heggies’s conclusions. However, on 10 October 2008, TIDC issued a defect notice to THJV in relation to the non-compliance with the reverberation specification and, on 30 October 2008, it issued a defect notice to THJV in relation to excessive in-car noise. It is accepted between the parties that, although the failure to meet the reverberation specification contributed to in-car noise, there were other causes of the failure to meet the contractual requirements relating to in-car noise.

10. Following service of the defect notices, TIDC and THJV formed a working group to investigate possible solutions to the problem of in-car noise, which was TIDC’s principal concern. Various proposals were developed in conjunction with United. Between 11 March 2009 and 20 March 2009, there was a mediation between TIDC and THJV, which was attended by United, concerning the disputes that had arisen. At that mediation, the parties agreed in principle to undertake certain noise mitigation works and that completion of that work would be treated as discharging THJV’s and UGL Rail’s obligations to meet the contractual specifications concerning noise, including the contractual specifications concerned with in-tunnel reverberation.

11. Terms of settlement were agreed and, in connection with the settlement, UGL Rail and THJV entered into a deed on 23 June 2009 entitled “Deed Concerning Clause 8.2(b) Direction for Variation” (the Settlement Deed) under which UGL Rail agreed to perform certain work at no cost to THJV that TIDC had sought to be done in order to ameliorate the problems with in-car noise. A corresponding deed was entered into between TIDC and THJV.

12. UGL Rail was insured in respect of the claim that was made against it. Its insurance claim was settled for the sum of $25,027,000. That sum was paid directly by the insurers to UGL Infrastructure, which undertook the work in discharge of UGL Rail’s obligations under the Settlement Deed. It is UGL Rail’s position that the cost of undertaking the work in accordance with the Settlement Deed was less than the cost of undertaking the work necessary to meet the reverberation specification and that entry into the Settlement Deed had the added advantage of capping its liability, whereas there could be no guarantee that any rectification work it undertook would achieve the specification for in-tunnel reverberation. It contends, in those circumstances, that entry into the Settlement Deed was a reasonable basis on which to settle the claim against it in respect of the defect notice relating to reverberation. It also contends that it did not itself have the resources to undertake the work it had agreed to undertake under the Settlement Deed and that, in those circumstances, it was reasonable to engage UGL Infrastructure to do that work. It submits that the amount it paid UGL Infrastructure to perform that work (in effect by causing the insurers to pay UGL Infrastructure directly) was reasonable, even though it has emerged that UGL Infrastructure was able to do the necessary work for substantially less than UGL Rail recovered from its insurers and paid (by direction) to UGL Infrastructure.

13. UGL Rail’s claim raises a number of issues. The principal ones are:

• whether the advice given by Wilkinson Murray in 2003 and 2007 was negligent;

• whether the advice given by Wilkinson Murray in 2003 and 2007 was misleading or deceptive and in contravention of what was then s 52 of the Trade Practices Act 1974 (Cth) (TPA);

• whether UGL Rail relied on the advice;

• whether the settlement embodied in the Settlement Deed was a reasonable settlement of UGL Rail’s liability in respect of the failure to meet the reverberation specification;

• whether the amount paid by UGL Rail (by direction) to UGL Infrastructure for the work that UGL Infrastructure did was reasonable.

14. Wilkinson Murray also raises a number of specific defences to UGL Rail’s claim that need to be dealt with. Those defences raise the following additional issues:

• whether UGL Rail is estopped from asserting that Wilkinson Murray failed to comply with its contractual duty to provide its services with due care and skill in 2003 because, following the provision of the May 2003 advice, it was a common assumption of the parties that Alstom would install half the level of recommended acoustic panels and conduct further testing to determine whether that was sufficient before proceeding to install further panelling if necessary;

• whether the claim in respect of advice given in 2003 is statute barred;

• whether it was an implied term of the Consultancy Agreement that the parties would cooperate in the performance of the agreement and UGL Rail breached that implied term in various respects;

• whether UGL Rail’s claim is an apportionable claim within the meaning of Pt 4 of the Civil Liability Act 2002 (NSW) (CLA) and Pt VIA of the TPA and, if so, whether UGL Rail is a concurrent wrongdoer by reference to whose conduct any liability of Wilkinson Murray must be reduced;

• alternatively, whether UGL Rail was guilty of contributory negligence;

• whether Wilkinson Murray acted in a manner that was widely accepted in Australia by peer professional opinion as competent professional practice and, for that reason, is not liable by reason of s 5O of the CLA.

Some concepts of acoustics

15. Reverberation is caused by the reflection of sound waves off surfaces – most significantly, the surfaces that contain the space in which the original sound was produced. Reverberation affects both the intensity, measured in decibels (dB), and the quality of the sound in the space.

16. A distinction is drawn between early reflections and later ones. It is the later reflections that constitute reverberation and the measurement of reverberation is concerned with those later reflections.

17. Reverberation is measured by reference to the time taken for the level of sound to reduce a specified number of decibels from the time the sound source stops. The time taken for that reduction is called the reverberation time (RT). The standard measure of reverberation time is the time taken for a sound to decay 60 dB after the sound source is stopped. It is approximately the time taken for a relatively loud sound to become inaudible. That standard measure is referred to as RT60. It is possible to plot the reduction in decibels against time. The resulting graph is called a decay curve. The measurement of RT60 is usually taken from a particular time or decibel reading after the sound source stops – for example, from a point on the decay curve that is 5 dB below the initial level to a point that is 65 dB below that level.

18. Although RT60 is used as the standard measure of reverberation, the decline in decibels is usually measured over shorter intervals and the decay curve for the measured interval is extrapolated to obtain RT60. That is particularly so where it is not practical to measure the time taken for the sound to decay by 60 dB. Two measures, which took on particular significance in this case, are RT30 – the time taken for the sound to decline in intensity by 30 dB – and RT20 – the time for the sound to decline in intensity by 20 dB.

19. When the rate of decline of the intensity of a particular sound in a space after the source of the sound is stopped is linear, it is simple to derive RT60 from RT30 and RT20. RT60 is twice RT30 and three times RT20. However, the calculation of RT60 using a simple straight line extrapolation of the decay curve obtained for RT30 and RT20 can produce substantially different results where the rate of decay of the intensity of the relevant sound is non‑linear.

20. The reverberation time is affected by the frequency of the sound (perceived as pitch), which is measured in hertz (Hz), and the acoustic properties of the relevant surfaces and, in particular, the extent to which those surfaces transmit, absorb and reflect sound waves of particular frequencies.

21. Frequencies in the audible range of sound range from approximately 20 Hz to 20,000 Hz. Most single sources generate sound in a number of frequencies. Consequently, it is usual to measure the reverberation time at different frequencies. Frequencies can be divided into bands. Octaves (and fractional octaves) are the most commonly used bands. An octave is a band where the upper limiting frequency is twice the lower limiting frequency. The centre frequency is the geometric mean of the upper level limit and the lower level limit. The centre frequencies in the audible range are 31.5, 63, 125, 250, 500, 1k, 2k, 4k, 8k and 16k Hz. It is common to measure the reverberation time of each of those frequencies, or a subset of them, when determining the reverberation characteristics of a particular space.

15. Various formulas have been developed to calculate the reverberation time of a particular space depending on the acoustic properties of the surfaces that contain it. The classical formulas were originally developed early last century by Sabine, and improved by Eyring, to deal with spaces with relatively high absorption. Those formulas recognise that the reverberation time is a function of the volume of the space and the sound absorbent characteristics of the surfaces that contain it. Consequently, the formulas can be used to calculate the amount of sound absorbent material of particular characteristics that need to be introduced to the boundaries of a space of known volume to achieve a particular reverberation time. The formulas assume an idealised space in which the reverberant soundwaves are evenly diffused in the space and the sound propagation is uniform in all directions. However, the formulas provide reasonably accurate results for rooms of typical size and shape under usual conditions. The formulas have been improved in various ways by other acoustic engineers, including Fitzroy, who developed a formula designed to deal with non‑uniform distribution of absorption. However, those improvements have generally been concerned with regular shaped enclosures. Professor Kang, who gave expert evidence for UGL Rail, and Dr Burgemeister, who gave expert evidence for Wilkinson Murray, agree that the available formulas do not produce reliable results for tunnels, which are both unusual in shape and not completely enclosed. Significantly, the reverberation in a tunnel is not diffuse, so that the determination of the reverberation time depends on the point at which it is measured, and the decay curve is not linear, so that determination of RT60 by extrapolation from RT30 and RT20 may yield substantially different results. Similarly, there is no direct relationship between the absorption levels of particular surfaces and the reverberation time. The placement of the same amount of sound absorbent material in different positions may affect the reverberation time measured at particular points.

16. The placement of sound absorbent material may also affect reverberation where the space in question is not particularly large when compared to the wavelength of the sound being considered. The wavelength is the distance over which the wave’s shape repeats. If a sound wave is moving with constant speed, the wavelength is inversely proportional to the frequency of the sound: the higher the frequency, the shorter the wavelength. In simple terms, in a space which is very large compared to the wavelength of the sound being considered, most sound waves which make up the reverberant sound will have been reflected off all bounding surfaces that contain the space. Consequently, the precise placement of the sound absorbent material has less effect on which sound waves are absorbed. On the other hand, where the size of the room is not large compared to the wavelength of the reverberant sound, the precise placement of the sound absorbent material may have a significant effect on reverberation.

17. There are limits on the extent to which the level of sound in a space can be reduced by the introduction of sound absorbent material. According to DA Bies and CH Hansen, Engineering Noise Control: Theory and Practice (2nd ed, 1996, E & FN Spon), a leading textbook in the field:

Experience shows that it is extremely unusual to achieve noise reductions in excess of 3 or 4 dB(a) using this form of control [ie, the introduction of sound absorbent material to the space], which can be exorbitantly expensive when large spaces or factories are involved. (p 6)

The reason for that is that the introduction of sound absorbent material can only affect the reverberant sound field. It cannot affect the intensity of direct sound waves.

AS2460

25. At the time of the events giving rise to these proceedings, the measurement of reverberation time in rooms was governed by a joint Australian/New Zealand Standard known as AS2460. The standard is expressed to cover the measurement of reverberation time in all types of room.

26. Clause 5.1.2 of AS2460 relevantly provides:

The test sound source shall produce a sound pressure level sufficient to provide decay curves with the required minimum dynamic range without contamination by background noise.

Under normal circumstances the reverberation time is evaluated from the averaged slope of the decay curve beginning from a sound pressure level of 1 dB to 5 dB below the start of the reverberant decay, or beginning 0.1 seconds to 0.2 seconds after the sound source has been switched off, for a level interval of not less than 30 dB.

In the event that insufficient signal is available, it may be necessary to evaluate the reverberation time over a smaller range of the decay of sound pressure level. It is permissible to evaluate the reverberation time for a level interval of less than 30 dB, but not less than 20 dB. However, in such cases the report shall note the level interval over which the reverberation time was determined.

27. Clause 6.2.1 of AS2460 provides:

Measurements of reverberation time may be required for a variety of purposes, such as assessment of the amount of room absorption for noise control purposes, assessment of the reverberation time for sound system calculations or verification of building performance against a design brief. The number of measurement positions used to characterize the reverberation time shall be chosen to achieve an appropriate coverage in the room.

Clause 6.2.2 deals with measurement spacing. It relevantly provides:

No microphone position shall be too close to any source position in order to avoid excessive influence from the direct sound.

28. Section 8 sets out how the reverberation time is to be evaluated from decay curves. Clause 8.1(a) largely repeats cl 5.1.2. It states:

The level interval is selected by commencing 2 dB to 5 dB below the start of the reverberant decay, and ending 6 dB to 9 dB above the noise floor. The resulting level interval shall be not less than 20 dB. If the level interval is less than 30 dB, but not less than 20 dB, an appropriate statement shall be included in the test report …

29. Clause 8.1(b) sets out various means of determining the reverberant decay rate of the level interval selected. Clause 8.2 deals with non-linear decay curves. It states:

In cases where the decay curve is not a straight line, a unique reverberation time cannot be determined. The following procedure shall be followed:

(a)   Where the decay curve takes the form of two straight lines, establish a single break point appropriate to all traces at that frequency, in terms of level relative to the initial level.

(b)   Measure the slope of the upper section and the slope of the lower section of the curve and the appropriate level intervals reported. The minimum acceptable level interval for measurement of each slope shall be 10 dB.

…

The Consultancy Agreement

30. Wilkinson Murray was retained to provide consultancy services in relation to two issues. One was achieving the reverberation times specified in the Works Brief. The other concerned advice in relation to ventilation and train breakout noise control. This case only concerns Wilkinson Murray’s advice in relation to tunnel reverberation times. The Consultancy Agreement provides a separate fee for those services, which was $16,000. As will become apparent, Wilkinson Murray did a substantial amount of work in relation to tunnel reverberation times before the Consultancy Agreement was signed.

31. Clause 2.1 of the Consultancy Agreement provides:

The Consultant acknowledges that the Principal relies on the Consultant to perform the Services with all due skill, care and diligence and that the Principal has entered into this Agreement relying on the representations given by the Consultant set out in clause 3.2.

32. Clause 3.1 relevantly provides:

The Consultant must:

(1)   commence and proceed to perform the Services promptly;

…

(6)   perform the Services:

(a)   with all due skill, care and diligence;

(b)   in accordance with the requirements of the Principal’s Preliminary Requirements, the Authorities, the Law, Standards and this Agreement;

(c)   so as to permit the Principal to comply with its obligations under the Contract;

(d)   by the completion date or dates and milestone dates referred to in Item 10 of the Annexure or such other dates as are directed by the Principal from time to time or contained in the program approved by the Principal under Clause 4.1;

33. Clause 3.2(1) states that Wilkinson Murray “represents and acknowledges that it has the skill, competence, resources and experienced personnel available to perform the Services”.

34. “Services” is defined to mean:

[A]ll services which the Consultant is required to perform in accordance with the Agreement that are further described or particularised in the Annexure and Schedule 1, together with such other services as would ordinarily be provided by a professional consultant exercising all due skill and expertise in the performance of services such as or similar to the Services in connection with a project such as or similar to the Project.

35. The Annexure states that the Services are those set out in Schedule 1. Schedule 1 states that the Services are those defined in Specification PRL-CSA207400 Rev A. Schedule 1 also states:

The Specification PRL-CSA207400 Rev A refers the Project Works Brief [sic], which is included in the Agreement. The Consultant acknowledges that it has received a copy of the Project Works Brief electronically as a PDF file.

36. Clause 3.0 of the Specification provides:

All works performed under this specification shall comply with the requirements of the Parramatta Rail Link Project Works Brief …

All works performed and equipment supplied under this specification shall conform in material, construction, workmanship and performance to the latest edition of the appropriate Australian Standards. If there is no Australian Standard applicable, the works shall comply with the current relevant International Standards, British Standards and relevant Codes. …

In the event of lack of clarity or conflict of requirements, the contractor shall seek the ALSTOM Engineers’ clarifications and approvals in writing.

37. Clause 4.2 of the Specification sets out the scope of work in relation to the control of tunnel reverberation times. Clause 4.2.1 provides:

The Contractor shall perform the following works associated with the design aspect for the control of tunnel reverberation times.

a)   Determine tunnel sound absorbent panel requirements for control of tunnel reverberation times to meet the requirements of the Project Works Brief.

b)   Co-ordination of design works with ALSTOM and THJV & their consultants as necessary; including attending meetings as necessary; to establish a cost effective means for control of the tunnel reverberation times.

c)   Provide report(s) (including sketches/drawings) detailing the technical requirements for the sound absorbent panels, that will enable compliance with the required Tunnel Reverberation Times. This report must satisfy the the [sic] MUAP requirements for the Project and be accepted by all stakeholders.

d)   Review of the ALSTOM preferred tenderer’s technical tender submission to ensure compliance with the technical requirements of the Wilkinson Murray Report and Project Works Brief, prior to the placing of an order by ALSTOM.

38. Clause 4.2.2 provides that Wilkinson Murray would make two inspections of the sound absorbent panels during the process of manufacture to ensure that the panels were constructed to meet any technical requirements identified by Wilkinson Murray and would provide two inspections during the process of the installation.

39. Clause 4.2.3 deals with compliance testing. It provides:

The Contractor shall perform the following works associated with the compliance testing aspect for the control of tunnel reverberation times.

a)   Provision of a testing proposal that meets the requirements of the Project Deed; developed in conjunction with ALSTOM’s other performance testing requirements; for the compliance testing of the sound absorbent panels against the tunnel reverberation time requirements.

b)   Testing of the tunnel reverberation time; including provision of testing equipment; to verify sound absorbent panel’s compliance.

c)   Provision of a report demonstrating the compliance of the sound absorbent panels against the tunnel reverberation time requirements.

d)   Attendance at meetings as required, to satisfy Parramatta Rail Link and stakeholder expectations that tunnel reverberation time requirements have been complied with.

40. Clause 3.14.10 of the Works Brief sets out the reverberation times that had to be met. It provides:

Design Criteria

The reverberation times (RT60) in the tunnels must not exceed the values listed in the following table, evaluated in the absence of trains.

Frequency Band	250Hz	500Hz	1kHz	2kHz	4kHz
Reverberation Time RT60 (seconds)	2.5	2.2	1.8	1.5	1.2

Reference must be made to AS2640 [sic] for definitions and measurement methods for reverberation times.

The dimensions, materials and locations of the acoustic panels in tunnels must be determined by the Contractor. They must be durable during the design life, and must not be prone to damage during normal maintenance activities, or susceptible to corrosion and fatigue failure. Wind generated by train operations must not cause fibreglass particles, or the like, to be released from the panels.

The table in cl 3.14.10 was repeated in cl 5.1 of the Specification. The reference to “AS2640” is clearly an error. The correct reference is to AS2460.

41. The Consultancy Agreement contains two indemnities in favour of Alstom. Clause 6 provides:

6.1   The Consultant indemnifies the Principal against any loss, damage, liability, cost or expense of any kind including (without limitation) any indirect or consequential loss or damage (“Loss”) incurred, or suffered by the Principal in connection with the Consultant’s performance of the Agreement, any negligence of the Consultant, its employees, servants, agents or sub‑contractors or any breach of the Agreement by the Consultant.

6.2   Without limiting Clause 6.1, if the Consultant’s performance of the Agreement or any negligence of the Consultant, its servants, agents and sub‑contractors or any omission or default of the Consultant causes the Principal to, or contributes to the Principal becoming, liable for the allowance or payment of any Loss or other penalties or liquidated damages under the Contract, then the Consultant shall indemnify the Principal against any and all such Loss or other penalties or liquidated damages.

6.3   The Consultant acknowledges that:

(1)   the provisions of the Contract under which Loss or other penalties or liquidated damages may be imposed upon the Principal are available for inspection at the offices of the Principal during normal business hours; and

(2)   prior to entering into the Agreement, it was given an opportunity to inspect such provisions.

42. Clause 18.1 provides:

The Consultant indemnifies the Principal against:

(1)   any costs and expenses incurred, and losses and damages suffered by the Principal; and

(2)   any legal costs (on a solicitor and own client or full indemnity basis, which ever is greater) and other costs and expenses incurred by the Principal in connection with a demand, action, arbitration or other proceeding (including mediation, compromise, out of court settlement or appeal);

arising directly or indirectly as a result of or in connection with any breach or non‑performance of any of the obligations of the Consultant or any negligent act or omission of the Consultant under this Agreement whether express or implied.

43. Clause 21.2(2) of the agreement provides:

The Principal may at any time transfer, assign or novate or otherwise deal with the whole or any part of this Agreement. The Consultant hereby irrevocably consents to any novation of this Agreement to the Principal or its nominee and agrees to do all things (including executing the Deed of Novation) necessary or desirable to give effect to a novation of this Agreement.

44. It is also noteworthy that cl 5.1 of the Systems Subcontract also contained an obligation to design and construct the works the subject of the subcontract in accordance with the Works Brief. Under cl 16.18 of the Systems Subcontract, Alstom agreed to indemnify THJV against:

(a)   any liability to or claim by any other person; and

(b)   all costs, losses and damages suffered or incurred by the THJV,

arising out of, or in any way in connection with, the Subcontractor’s breach of a term of this Deed.

It follows that, if the tunnel failed to satisfy the reverberation times specified in the Works Brief, Alstom, and UGL Rail as its assignee, were liable to indemnify THJV for any costs, losses and damages THJV suffered as a consequence of that failure in accordance with cl 16.18. TIDC had similar rights against THJV under the CIVSYS Deed.

Background facts

Events prior to May 2003

45. Alstom was involved with THJV’s tender for the Parramatta Rail Project (as the ECRL Project was then known) and, in connection with the tender, it and THJV obtained preliminary advice in March 2002 from Wilkinson Murray on various noise-related issues affecting the project, including in-tunnel reverberation. Wilkinson Murray’s preliminary advice was prepared largely by Mr Gross, although, according to the report, it was prepared by Mr Murray, one of its directors, and checked by Mr Bridge, who at the time was a senior engineer at Wilkinson Murray. The report appears to have been based on some calculations performed by Mr Lawrence, which used the classic Sabine formula and assumed a tunnel length of 50 m. Both Mr Murray and Mr Bridge gave evidence. Mr Gross and Mr Lawrence did not. The preliminary report was addressed to Gutteridge Haskins & Davey Pty Ltd, consulting engineers, who had been engaged by THJV in connection with its tender. In that report, Wilkinson Murray made the following recommendation in relation to reverberation control:

To meet the reverberation time limits in dual track tunnels, it is recommended that sound absorbent panels be fixed to the walls of the tunnel. A strip of depth 550mm is to be applied to each side of the tunnel at a height of approximately 1m and this strip is to be continuous along the tunnel.

Each panel should be constructed using an infill of 50mm thick glasswool faced with a perforated metal of open area at least 20%. The overall panel may be fixed directly to the tunnel wall. …

The report went on to attach a diagram of the proposed panels and to give specifications of the sound absorption coefficients of the glasswool to be included in the panels. It was against that background that Alstom approached Wilkinson Murray to provide acoustic consulting services following THJV’s successful tender and Alstom’s appointment as the subcontractor responsible for the systems installation component of what became the ECRL Project.

46. Mr Murray was approached by Mr Jeremy Mortier at the beginning of October 2002 about providing consulting services in connection with the project. Mr Mortier was the engineer at Alstom who had primary responsibility for the reverberation control aspect of the project. There was correspondence between Mr Murray and Mr Mortier on the terms on which Wilkinson Murray would provide its services and Wilkinson Murray commenced work on the project well before the Consultancy Agreement was signed, although at a time when the drafting of the Consultancy Agreement was well advanced. The parties agree that Wilkinson Murray performed that work on the terms contained in the signed Consultancy Agreement.

Advice in May 2003

47. In May 2003, Wilkinson Murray provided Alstom with a report concerning the quantity and type of acoustic panels to be placed in the ECRL in order to meet the contractual specifications in respect of reverberation time set out in the Works Brief. The report was prepared by Mr Bridge and reviewed by Mr Murray. It was sent to Mr Mortier on 15 May 2003.

47. The report observed:

A circular tunnel is not a simple environment in which to predict reverberation time. The mode of reflections within a cylinder are significantly different from those in a more conventional rectangular room. The prediction methodologies are therefore limited in their accuracy within such an environment.

The report went on to explain that, in those circumstances, Wilkinson Murray had undertaken reverberation time measurements in a section of the Eastern Suburbs railway tunnel west of Kings Cross station, which had three bands of acoustic panelling each approximately 660 mm across. The report recorded Wilkinson Murray’s findings and stated:

It was also found that the spread of measurement results was relatively smooth for the range of noise source and measurement locations. These findings provide a high level of confidence that the reverberation time in the Parramatta Rail Link tunnel can be consistently and accurately measured. The results also allow validation of the reverberation time prediction model.

That model was explained in these terms in the report:

Various adaptations were made to the [Fitzroy/Eyring] model to establish the best model configuration to predict the measured results. The best fit appears to be the use of the model without consideration of the three modes [a reference to different types of relection], but combining the three modes in a way equivalent to the original Eyring model. Taking a representative tunnel length of 30m with tunnel ends being totally sound absorbent (or open to the atmosphere) also resulted in good agreement.

49. On that basis, Wilkinson Murray recommended various options based on different types of sound absorbent material. In the case of glasswool, it recommended 1.2 m per metre of tunnel length on the basis that the glasswool was enclosed in perforated metal sheeting but was not wrapped in mylar. Wilkinson Murray also stated:

In order to comply with the reverberation time requirements in the Works Brief, the acoustic absorption can be located in a single band at any position in the tunnel. However, to best meet the intended purpose it should be located in two bands one on each side of the tunnel and at a height approximately midway between the wheels and the carriage windows.

50. In reaching the conclusions expressed in the report, Mr Bridge performed various calculations using computer programs that incorporated the classical formulas, including the Eyring and Sabine formulas or variants of them. His first set of calculations was based on the calculations performed by Mr Lawrence for the preliminary report prepared in 2002 with some minor changes to the assumptions that had been made by Mr Lawrence. Those calculations used a computer program that had been used by Mr Lawrence known as NoiseWorks. Mr Bridge then prepared a second set of calculations using an excel spreadsheet, which included various formulas based on different combinations of the classic formulas. He assumed rooms of various lengths (representing the length of the tunnel) and assumed that the end walls (corresponding to the beginning and end of the tunnel) were lined with fully absorbent material. The formulas based on the Fitzroy equation produced radically different results from those that were not.

51. Mr Bridge then arranged for Mr Lawrence to carry out tests in the Eastern Suburbs railway tunnel. Mr Bridge was not present when the tests were carried out. As I have said, Mr Lawrence did not give evidence, although he was available to do so. The report states that Mr Lawrence conducted his tests in that part of the tunnel which was west of Kings Cross station. That part of the tunnel was approximately 70 m in length. Mr Lawrence carried out tests with the sound receiver at various distances, ranging from 5 m to 20 m from the sound source, and included in his calculations a mean result. The results showed that reverberation time increased with the distance between the sound source and receiver, which is something that Mr Murray says that he noted at the time, although it appears that Mr Bridge did not. Mr Bridge says that he then compared the mean results with his predictions. He adjusted some of his assumptions to obtain results that most closely corresponded to the mean results obtained by Mr Lawrence and concluded that the best fit was the model that he had created based on the Eyring formula and assuming a room of 30 m in length. He made no adjustments to that model to take account of the differences between the Eastern Suburbs rail tunnel (which is not cylindrical) and the ECRL. He then used that model to calculate the amount of sound absorbent material to be included in the ECRL to achieve the specifications set out in the Works Brief. Those calculations showed that minimal sound absorbent panelling was required. He discussed his opinion and calculations with Mr Murray and did some further calculations before finalising the report. It is apparent that the recommendations made in the report were based on the calculations using the original NoiseWorks program and an assumed tunnel length of 50 m, not on the formula that Mr Bridge says he identified as the best fit for the Eastern Suburbs rail tunnel. Mr Bridge said in cross-examination that the final recommendations were based on the NoiseWorks model because Wilkinson Murray had “decided to be more conservative in our advice”.

52. Up until the time when Mr Murray gave evidence, UGL Rail had assumed, on the basis of what was stated in the report, that Mr Lawrence conducted his tests in that part of the Kings Cross tunnel which was west of Kings Cross station. However, during cross‑examination, Mr Murray gave evidence that, in fact, Mr Lawrence had conducted his tests in that part of the tunnel which is east of Kings Cross station and that the report is mistaken when it says otherwise. There is no evidence of the length of that part of the tunnel. However, it is substantially longer than 70 m.

53. I am not prepared to accept Mr Murray’s evidence. It is inconsistent with what is stated in the report. He could not give a satisfactory explanation for why he had not picked up the error in the report earlier even though he knew the length of the test tunnel was an important issue in the case. No explanation was given for why Mr Lawrence was not called to give evidence. He is someone who could be expected to know the true position and Wilkinson Murray’s failure to call him supports the conclusion that the report is accurate when it says that testing occurred in the tunnel west of Kings Cross station: see Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 and the discussion of the rule derived from that case in JD Heydon, Cross on Evidence (8th Aust ed, 2010, LexisNexis).

54. Mr Mortier discussed Wilkinson Murray’s report with Mr Johnson, who at the time was the engineer at Alstom responsible for the management of the project. Following receipt of the report, Mr Mortier and Mr Bridge also had a number of conversations about it. There is a dispute about what was said. Mr Mortier says that, during one of the conversations, Mr Bridge said words to the effect that “we may be able to get away with a lesser amount of material”. Mr Mortier first gave evidence to that effect orally. In his original affidavit, he said that, during one of the conversations he had with Mr Johnson, he suggested that they test one row of panels and see what result they got before installing two rows. Mr Johnson agreed and Mr Mortier then raised the matter with Mr Bridge who replied “Okay”. Mr Bridge accepts the version of the conversation given in Mr Mortier’s affidavit. Subsequently, on 28 May 2003, Mr Mortier sent Mr Bridge a fax raising the question of what sound absorbent material was best to use from a costs point of view and whether it would best to bag the material in mylar. The fax also said:

Please note that in relation to qualifying/verifying the recommendations of the report, we will intend on fitting out a section of tunnel (say 50m) and performing reverberation time measurements to determine if the second row of tunnel acoustic panels fitted to the other side of the tunnel are required.

55. I accept Mr Mortier’s evidence. It is apparent that Mr Mortier was the person to first raise the possibility of testing one row of panels. It is unlikely that he would have done so unless Mr Bridge had said something to cause him to believe that it may be possible to get away with a single row of panels. It is not surprising that Mr Bridge would have said something to that effect. Mr Bridge’s own analysis suggested that the recommendation in the report was a conservative one and that one row of panelling was likely to be sufficient. I do not think Mr Bridge’s response (“Okay”) meant that he was resiling from the recommendations made in the report. However, I think that by saying “okay” Mr Bridge intended to convey the opinion that he thought that the approach proposed by Mr Mortier was a reasonable one.

56. There was further correspondence between Mr Mortier and Mr Bridge concerning the type of material that should be used. In that correspondence, Mr Bridge advised against bagging the material in mylar. No criticism is made of that advice or of Mr Bridge’s advice in relation to the sound absorbent material that should be used.

57. As I have said, the Consultancy Agreement was signed on 10 June 2003.

Events following May 2003 advice

58. Following receipt of Mr Bridge’s advice, Mr Mortier prepared a number of drawings showing the dimensions of the acoustic panels and their proposed location in the tunnels. The drawings allowed for one row of acoustic panels, each 0.6 m2, on the right hand side of the tunnel as shown on the drawing (opposite the safety walkway). Mr Mortier says that he allowed sufficient space for a second row of panels immediately above the first. The drawing for the panels showed perforated panels with a minimum 15 per cent open area and a maximum of 30 per cent open area. That specification was consistent with Wilkinson Murray’s advice; and again, there is no criticism of that aspect of the advice.

59. It is not clear from the evidence what happened then. Mr Mortier prepared a specification for the sound absorbent panels without further assistance from Wilkinson Murray. The final version of the specification was dated 5 October 2004 and Alstom used that specification and the drawings prepared by Mr Mortier to obtain quotes from material suppliers, although Mr Mortier was not involved in that process. Mr Mortier says that he ceased to work on the project in June 2005, although it appears that he continued to have a peripheral involvement after that time. Before Mr Mortier left the project, he prepared an email stating that the design work in relation to reverberation control to be performed by Wilkinson Murray was complete and that Wilkinson Murray had yet to provide test procedures for measuring reverberation times. The email also states:

In terms of tunnel sound panels, we were to fit out a section of the tunnel, perform reverberation measurements and then determine final sound panel requirements with respect to the necessity or otherwise for panels on both sides of the tunnel.

60. Following United’s acquisition of Alstom’s transport business in June 2005 and the novation of the Systems Subcontract to UGL Rail in September 2005, UGL Rail appointed Sound Control Pty Ltd to manufacture the acoustic panels from components obtained from other suppliers.

61. In December 2005, Wilkinson Murray provided a report addressed to Alstom setting out the procedures that Wilkinson Murray proposed to adopt for measuring noise associated with the project, including tunnel reverberation times. In relation to reverberation times, the report stated that all measurements would be performed in accordance with AS2460.

62. In about March 2006, Mr Skantha Rajendra took over responsibility at United for the reverberation control aspect of the project. On 15 March 2006, Mr Yallamas of Sound Control sent to Mr Rajendra revised drawings for the acoustic panels. The revised drawings showed panels of the size specified by Mr Mortier but with significant unperforated borders. Mr Rajendra made some comments on those drawings and the final “as built” drawings were issued on 28 March 2006. Mr Rajendra approved sample panels on 18 July 2006 and, in an email dated 13 September 2006, confirmed that United would like Sound Control to proceed with the manufacture of the panels.

Advice in 2007

63. Following installation of a sample row of panels, Mr Sebastian Giglio of Wilkinson Murray conducted reverberation time tests on 21 May 2007. By that stage, most of the services had been installed in the tunnel. There were approximately 200 m of test panelling. According to Mr Giglio, the panels were 1100 x 620 mm and installed with a 100 mm overlap. The faces of the panels were perforated but with a 50 mm border on the long edges (top and bottom) and 100 mm border on the short edges, giving an effective absorptive area for each panel of 0.47 m2. In performing the tests, Mr Giglio placed the microphone approximately 70 m in from the start of the panelling and conducted various tests with the sound source ranging from 5 m to 160 m from the microphone. Mr Giglio sent a summary of the results to Mr Murray, who was working in Hong Kong at the time. They had a number of discussions concerning the results of the tests.

64. On 25 May 2007, Mr Murray sent Mr Rajendra a fax reporting on the results of the test. After observing that the test revealed reverberation times significantly in excess of those specified, Mr Murray said:

The existing amount of acoustic panel in the trial section is insufficient to meet the specified reverberation time limits. It will therefore be necessary to add additional acoustic panel, and at least the second panel on the opposite side of the tunnel will be required. However, our current modeling, validated by the latest measurements, indicates that even more acoustic panel will be required. A third acoustic panel identical to the existing one is likely to be required, and this panel would need to be located at a position which is not adjacent to one of the other two panels. For example, the third panel would best be located at a high location towards the top of the tunnel.

Our modeling indicates that three panels along the full length of the tunnels would result in compliance with the reverberation time limits at most frequencies, but with a small exceedance of the limits at 250 Hz. The small exceedance may not eventuate, or may be small enough to be considered acceptable.

To meet the limits, we therefore recommend three acoustic panels separated around the tunnel perimeter. It may be a reasonable strategy to fit two panels for further testing, before the decision is made to incorporate the third panel.

65. Although the fax refers to modelling, there is no evidence that Wilkinson Murray had done any additional modelling that formed the basis of this opinion.

66. By this stage, Mr Ben Stelzer had taken over from Mr Johnson as the project manager, although Mr Johnson continued to maintain an overview of the project and remained responsible for resolving any major problems that arose.

67. Mr Rajendra, after considering Mr Murray’s fax and discussing it with Mr Stelzer, discussed the fax with Mr Giglio. It was agreed that, as a first step, a second row of test panels would be installed immediately above the first row because of the difficulties of installing panels on the opposite side of the tunnel.

68. There was other correspondence within UGL Rail concerning the results. In particular, on 28 May 2007, Mr Stelzer sent Mr Johnson an email in which he said:

I've spoken to Jeremy [Mr Mortier] about this too and he recalls that there was significant unknowns regarding how much acoustic material was required and that the decision was made to proceed with one row of panels and to do testing later on to check. If this is so, then it looks like we forgot to plan for this to be done in terms of design, time and money.

See below in Skantha's email that it looks like W+M determined that they thought two rows would be required for the panel size we have chosen.

It seems to me now that we will need to work out a location in the tunnel section to install another row and do additional testing to see if one row is enough

69. Following the installation of the second row of test panels, Mr Giglio conducted further tests on 4 June 2007. This time, Mr Giglio performed tests where the distance between the sound source and receiver ranged from 0.6 m to 10 m. The test revealed that reverberation time increased as the distance between the sound source and receiver increased and that, for most frequencies at all distances, the measured results were greater than the contractual specification.

70. Mr Giglio sent Mr Rajendra an email setting out the results obtained where the sound source and receiver were 1 m apart. Commenting on those results, Mr Giglio said:

These are still about 20% higher than the specification. (A tolerance of 5-10% would usually be considered acceptable for a reverberation time measurement). So, either this item is negotiated with the Client or a third row of absorption panels is added.

Given the current configuration I don't think a third row of panels will fit above the existing two rows. However, for new work I think it would be possible to have three rows, one atop the other, all on the one side of the tunnel.

71. Mr Rajendra responded on 5 June 2007 saying:

Thankyou for your prompt response. Obviously this isn’t what we wanted to hear. I have spoken to Ben (our Project Manager) and at this stage we would like to explore the following:

Have two rows of panels.

As we have already purchased all the material for the first row of panels I would like to keep this the same and modify the second row of panels so we can get the reverberation time to what is required by the specification.

With the second row, are there changes to the panel design we can do such that we meet the requirements, eg make the panel wider (increasing the face area), use a different absorbent material, change the thickness etc.

As mentioned to yourself on Monday, a third row is not really an option for us as there is hardly anywhere in the tunnel that will let us have a continuous run of panels. Even with the second row we are having to move survey marks, we clash with signalling platforms, compressed air pipework etc.

Could you please explore what changes need to be made to the second row of panels such that we can meet the reverberation requirements in the spec.

Mr Rajendra said that the matter was urgent.

72. Mr Giglio replied on 6 June 2007. He referred to the possibility of increasing the size of the second panel. In that context, he said:

Our original calculations for the tunnel were based on 1.2m2 but the recent testing has shown that even this may be insufficient to meet the specified reverberation times, for reasons outlined by Barry Murray in his correspondence of 25 May 2007. We are confident that with 1.5m2 of absorption per m of tunnel length that the specified reverberation times will be complied with or very nearly so.

73. There is internal correspondence within United at the time that suggests that a third row of panels would not fit into the tunnel. That is certainly what Mr Stelzer said in an email dated 6 July 2007 to Mr Garry Ewen, one of THJV’s employees.

74. In accordance with Mr Rajendra’s email, Mr Giglio prepared a rough diagram for a larger panel. Mr Rajendra modified that drawing in consultation with Sound Control and a row of the larger panels was installed in the test section of the tunnel. Those panels were manufactured with a non-perforated border contrary to the drawings submitted by Mr Rajendra.

75. On 9 July 2007, Mr Rajendra placed an order with Sound Control for the second row of panels for the whole tunnel because the delivery of the material had a long lead time.

73. Mr Giglio conducted further tests on 9 August 2007. On this occasion, Mr Giglio took readings at distances of 0.6 m, 1 m and 2 m from the noise source. He reported on those results to Mr Murray by email shortly afterwards. The email said in part:

The border was a mistake by the fabricator and the actual final panels will be perforated edge-to-edge.

I think that the reverb time will come down when the whole tunnel is lined because even at 100m length of lining (50m each side of the mircrophone [sic]), sound can travel 343m in one second (yes, I am brilliant I know).

I think the last time I quoted the results at 0.6m. A tunnel is not a classical Sabine space and so where is the ‘reverberant field’ vis-à-vis the relative measurement location source-microphone?

Average T20 results		250	500	1kHz	2kHz	4kHz
0.6m	2.6	2.1	1.8	1.4	1.1
1m	2.7	2.2	1.9	1.6	1.2
2m	3.0	2.2	2.1	1.7	1.2
Goal	2.5	2.2	1.8	1.5	1.2

The Client is sweating on the results as they must get started on the other 26km in order to finish on time. Obviosuly [sic] they are hoping for no more increases in absorption

77. Mr Murray replied on the same day saying “I say that we should go with this, but with perf to the edge”.

78. On 13 August 2007, Mr Giglio reported the results for the 0.6 m test to Mr Rajendra. He said:

We think the results will be acceptable, based on the following:

* Currently there is only 50m of absoprtion [sic] panels each side of the test location along the tunnel. Having more absorption along a greater length of tunnel will improve the result;

* The final panels will be perforated edge-to-edge whereas the prototype panels still have the non-perforated border; therefore in the final result there will be more effective absorption material in the tunnel;

* There is usually a tolerance in compliance assessment for reverberation time. If some frequencies are 10% higher than spec then this would be considered acceptable

79. Mr Rajendra replied that there would still be a 20 mm border for structural reasons, but that the test panels had a 50 mm border top and bottom and a 100 mm border on the sides. He asked whether Mr Giglio still believed that that would be acceptable.

80. Mr Giglio replied on 14 August 2007 in the following terms:

On 8 June our recommendation was for a minimum of 1.5m^2 of ‘effective’ perforated panel area per 1m length of tunnel, including having perforated sides on the wider panel. Based on your advice below I understand that now there will be approximately only 1.35m^2 of effective perforated panel per m length of tunnel. The test last week was with approximately 1.3m^2.

I was hoping for the additional 15% perforated area, based on our June 8 advice. This, together with a greater length of lined tunnel, was expected to provide reverberation time compliance. Based on the testing carried out I cannot be satisfied that the current proposal as it stands (as described by you below) will unequivocally achieve compliance at project completion. I think we have no other choice, but I am not comfortable and feel I cannot guarantee compliance (even though the chances are good).

It appears that, in preparing this email, Mr Giglio had miscalculated the effective area of the perforated panels and, in particular, the size of the panels tested the previous week.

81. Following receipt of that email, Mr Rajendra placed a variation order for the second row of panels with Sound Control.

82. Mr Rajendra replied to Mr Giglio’s email on 15 August 2007. He set out his understanding of the test results that had been achieved to date and observed that he understood Wilkinson Murray would be comfortable that the required specifications would be met if the perforated area was increased by an additional 15 per cent. The email continued:

As I mentioned to you on the phone, this is not possible as there are now spatial constraints in the tunnel that are prohibiting us from increasing the height of the panels.

From the table above, you will notice that with a 20mm border an extra 9% of perforated area/metre will be gained.

In light of the above, could you please advise UNITED of the reverberation times expected once the panels are installed with a 20mm border.

83. Mr Giglio responded on 12 September 2007 in the following terms:

It is not really possible to calculate that accurately without doing a detailed acoustical model of the tunnel. All we can really do is try to maximise the effective acoustical absorption area within the constraints available, including the non-ideal location of the panels (distributed would be better than adjacent) and the non-perforated border.

At the end of the day, to satisfy the Client I would think that if the targets are met at most frequencies and are within say 5-10% of the target at other frequencies then I think that that would be sufficient. WM’s last test showed that the result was just about there, the final proposed construction will have slightly more absorption area as well as the full length of tunnel being treated. WM can’t guarantee the final result but based on the evidence collected and calculations that have been carried out it will just scrape in. If you want a guaranteed result then that would probably require a row of absorption on the opposite side of the tunnel.

84. Following receipt of that email, Mr Rajendra finalised the design of the second row of panels with Sound Control and issued full construction drawings on 28 September 2007. It is not clear from the evidence precisely what area of acoustic panelling was actually installed after allowance is made for the non-perforated borders and the overlap in the panels. It was less than 1.5 m2 per metre of tunnel. Mr Challis, an expert subsequently retained by United, appears to have assumed that it was 1.445 m2 per metre of tunnel. In final written submissions, the parties agreed that the total effective area of sound absorbent material that was installed at that time was approximately 1.36 m2 per metre of tunnel.

Test results in 2008

85. Installation of the two rows of panels was completed on 17 January 2008, following which Mr Giglio was asked by United to conduct further testing. Mr Giglio conducted those tests on 29 January 2008. Mr Giglio reported to United on those tests on 4 February 2008. It appears from the report that the tests were carried out with distances between the source and receiver ranging from 1 m to 5 m at five different locations along the tunnel. According to Mr Giglio, the test revealed that the reverberation times were within specification at two of the five test locations and exceeded the specification at certain frequencies at three of the five test locations.

86. On 3 July 2008, Mr Giglio was informed by United that it was TIDC’s view that the reverberation times in the tunnel did not comply with the specifications. Mr Giglio carried out further tests on 9 July 2008 at 39 locations in the tunnel. He reported on those results on 10 July 2008 to Mr Ian Turnbull. Mr Turnbull’s precise role is not clear from the evidence. However, he was one of the United engineers responsible for managing the project. Again, the tests were carried out at various locations in the tunnel and using various distances between source and receiver, ranging from 1 m to 5 m. According to Mr Giglio’s results, the reverberation times exceeded specification in a number of locations at a number of frequencies.

87. Mr Johnson returned full time to the project in June or July 2008.

88. It appears that, at some stage, Wilkinson Murray became aware that TIDC had engaged Heggies to advise it on compliance with the reverberation specification and that Heggies had conducted tests showing that the specification had not been met. In response, Mr Giglio prepared a formal report to be sent to United dealing with the issue, which he discussed with Mr Murray. The report took some time to prepare. A version of it was sent by Mr Murray to Mr Turnbull on 2 September 2008 and the final report was sent by Mr Giglio to Mr Turnbull on 3 September 2008. The report summarised results obtained from the 29 January 2008 tests and further tests that Mr Giglio had carried out on 21 July 2008. Based on the results recorded in the report, the report asserted:

Reverberation time tests are considered to have met the project goals. Variations between tests can be explained by considering the fact that the reverberation time reported by the instrument is very sensitive in this particular space to where the software determines the start of the sound level decay with time.

The report also stated:

In the ECRL tunnel, the average absorption coefficient is around 0.1 (β=0.9) as there is approximately 1.5m of the tunnel perimeter that is treated with acoustic absorption material. If the amount of absorption material was doubled to achieve β=0.8 then the reduction in sound level in the tunnel would be of the order of 2decibels. In general, a doubling of absorption represents almost a halving of the reverberation time. Therefore, it can be seen that small differences in the reverberation time of 10%, 20% or even 50% will not have a significant effect on the resultant sound level in the tunnel.

89. On 5 September 2008, Mr Heggie sent to Mr Murray a sample of the Heggies test results and, in a subsequent telephone conversation, told Mr Murray that he (Mr Heggie) was clearly of the view that the reverberation times did not comply with specification. It appears from a note of the conversation prepared by Mr Murray that Heggies had installed additional absorption panels on the opposite side of the tunnel, which had produced compliance, and that they intended to conduct further tests with reduced panelling to determine the amount of panelling necessary to ensure compliance.

90. By this time, TIDC had also identified a problem with the in-car noise. Commenting on the situation in an email dated 10 September 2008 to Mr Johnson and others, Mr Stelzer said:

Clearly this could be a serious issue. Given the problems TIDC / RailCorp are having with in train noise, I doubt we are going to wriggle out of this without some work to do. Sounds like we are not going to be able to convince Richard Heggie our results are adequate without further testing and that could easily generate some areas of non‑compliance.

I’d suggest that we hold our line with TIDC for the moment

91. Heggies conducted further tests on 2 October 2008, which were attended by Mr Giglio. Mr Giglio sent Mr Turnbull a summary of the results of those tests the following day. Heggies prepared a detailed report dated 10 October 2008 on the tests. A copy of that report was provided to Mr Johnson. It is apparent from Mr Giglio’s summary and the Heggies report that Heggies conducted tests at 0 m, 5 m, 10 m and 20 m from the cross‑sectional plane containing the sound source. They derived RT60 from RT30 and performed various tests using different quantities of additional sound absorbent material, ranging from no additional panelling up to three additional polyester panels, each 1200 mm high. Their tests showed that the reverberation time exceeded the specification for all distances and frequencies by a substantial margin with the existing panelling and exceeded the specification for some frequencies and distances even with three additional polyester panels.

TIDC serves defect notices

92. On 10 October 2008, TIDC sent THJV a letter giving notice that the principal’s representative had identified the following defect:

[T]he reverberation times in the tunnels exceed the values listed in the table in Section 3.14.10 – Acoustic Panels of the Works Brief. …

The letter required that the defect be rectified by 1 May 2009. It also included a copy of a report prepared by Heggies. THJV passed a copy of the letter and report on to United.

93. Mr Johnson responded to that letter and report on 15 October 2008 taking issue with the report.

94. Wilkinson Murray prepared a detailed response dated 23 October 2008 to Heggies’s report. Wilkinson Murray’s report explained the difficulties in applying AS2460 to tunnels. Wilkinson Murray provided United with amended versions of that report on 27 October 2008 and 3 November 2008.

95. In the meantime, on 30 October 2008, TIDC served a notice on THJV alleging various breaches of the CIVSYS Deed arising from excessive in-car noise.

96. In November 2008, UGL Rail retained Challis Consulting Pty Limited to provide a second opinion in relation to compliance with the reverberation specification.

97. On 12 November 2008, THJV sent United a copy of TIDC’s defect notice in relation to in-car noise. The covering letter stated that, to the extent that THJV had any liability for the defect, THJV would look to UGL Rail.

98. In November 2008, Heggies began to investigate the effect on in-car noise of adding additional volumes of absorptive material in the tunnel, its placement in different locations, the benefit of high speed polished rail grinding techniques and the use of rail dampers. It appears from an email dated 16 October 2008 sent by Mr Johnson that TIDC was seeking to reduce in-car noise by approximately 15 dB and that it was seeking to obtain a reduction of 4 to 7 dB through the introduction of additional panelling, a reduction of 4 to 5 dB through rail dampers and a reduction of 4 to 5 dB through additional rail grinding.

Establishment of working group to resolve problems with in-car noise and Mr Challis’s reports

99. On 2 December 2008, TIDC wrote to THJV accepting in principle a without prejudice proposal that they and RailCorp together form a working group to proceed expeditiously to seek to agree on a technical solution to the matters the subject of the defect notice served on 30 October 2008 relating to in-car noise and to refer the dispute to mediation. In the meantime, TIDC agreed to fund the direct cost of materials and 50 per cent of the direct costs of installation with the balance of the direct costs being funded by THJV.

100. Following that agreement, Mr Johnson attended meetings of the working group as a representative of United. The working group consisted of representatives from TIDC, including its technical adviser, Heggies; RailCorp, including its technical adviser, Sinclair Knight Merz; THJV, including its technical adviser, Mr Renzo Tonin; and United and its technical adviser, Mr Louis Challis. The focus of the working group was on the reduction of in-car noise. The target set by TIDC was to achieve a sound level of 80 dB for 80 per cent of the journey time in the vestibule of a K-set train. For the remaining 20 per cent of the journey, the in‑train noise levels were not to exceed 85 dB. The working group considered various options for achieving the goals set by TIDC and investigations were conducted by members of the working group into the merits of each option and an estimate of their costs.

101. Independently of that work, Mr Challis conducted reverberation testing in early December 2008 and provided United with a draft report on 8 December 2008 setting out the results of his tests. The draft reported the following results using RT30 to derive RT60:

Specified Frequency Hz	Specified Contract Requirement RT60	Average of 10 decays @ one position on 2/12/08
(125 Hz – not specified	Not specified	8.13 (at 160Hz)
250	2.5	4.62
500	2.2	2.63
1k	1.8	2.25
2k	1.5	2.16
4k	1.2	1.68
8k	Not specified	1.12

102. After observing that the measurements were particularly high for low frequencies, the report observed that “the achievement of the conforming reverberation time at 250Hz will dominate the scope of the amelioration program required to achieve conformance of the five specified frequencies”. Mr Challis expressed doubt that that specification could be achieved using the existing panels and suggested utilising a supplementary panel configuration that was thicker than the one that had been installed.

103. On 23 December 2008, United received advice from Mallesons Stephen Jaques to the effect that, if there was a failure to meet the specified reverberation times, United would be liable for the cost of work to rectify that breach but that it was more likely than not that United would not be liable in relation to the allegations set out in the defect notice in respect of in-car noise.

104. Mr Challis prepared a further draft report for United dated 8 January 2009. That draft, like the previous one, concluded that the tunnels did not meet the reverberation specification. It also stated that it was not possible at that stage to express a view of how much additional acoustic panelling would need to be added to meet the specification.

105. Mr Challis produced his final report on 29 January 2009. That report included a section setting out Mr Challis’s opinion on the amount of additional acoustic panelling that was required in order to meet the specification. Mr Challis’s recommendation was summarised in the following table:

Frequency Parameter	250Hz	500Hz	1kHz	2kHz	4kHz
Height of unity absorption wall lining required for RT30 compliance	4750mm	2400mm	3600mm	3600mm	3600mm
Height of unity absorption wall lining required for RT20 compliance	2500mm	1445mm	2645mm	3000mm	2800mm

106. In expressing that opinion, Mr Challis relied on the results of the tests conducted by Heggies, which were set out in their report dated 10 October 2008. It is not easy to follow what Mr Challis did. It appears that he obtained from tests conducted by RMIT the precise absorption coefficients for the panels that were already installed and the material used by Heggies at each test frequency so that he could calculate the effective height of the panels. So, to take a simple example, if the height of the panel was 1200 mm and its absorption coefficient for a particular frequency was 0.5, Mr Challis treated the effective height of the panel for that frequency as being 600 mm. Mr Challis calculated the effective heights for the existing panels and for the additional one, two and three panels tested by Heggies for each frequency. He then plotted the effective heights against the reverberation time to reach a conclusion concerning the effective height of panelling required for each frequency. In the case of the 250 Hz frequency, Mr Challis calculated the effective height of the existing panels and three tests panels as 3496 mm. With that amount of panelling, RT60 (based on RT30) was 3.3 seconds. In that case, Mr Challis appears to have projected his graph to conclude that, in order to reach a reverberation time of 2.5 seconds (the amount specified in the Works Brief), it would be necessary to install panelling with an effective height of 4750 mm, although Mr Challis’s calculations appear to contain an arithmetic error. That error aside, assuming that the same panelling was used, that equated to additional panelling of 6765 mm. According to Mr Challis’s calculations, substantially less panelling was required to meet the specifications for other frequencies, as is apparent from the table set out above.

107. On the same day Mr Challis produced his final report, Mr David Anderson of RailCorp distributed an email to members of the working group, including Mr Johnson, purporting to summarise the various options, their relative advantages and disadvantages and their estimated costs. The email included a table substantially in the following form:

Option	Scenario	Total Pre- tender Cost Estimate ($M)	Av % of Trip over Target	Rank (in terms of cost & target compliance)
A	No Dampers – All Absorption	22.4	41%	6
B	All Absorption w Dampers at Selected Locations	23.4	21%	5
C	Dampers at Selected Locations – no Lower Walls Abs.	20.8	22%	3
D	All Dampers with Optimised Absorption	20.1	20%	1
E	All Absorption Except 4ft – Dampers at Selected Locations	20.8	20%	2
F	Dampers – All 4ft, No Lower Wall & Min Under WW Abs (3.1km)	21.6	21%	4

238. As to the first type of costs, neither party sought to lead evidence of what those costs might be. However, I am satisfied that UGL Rail would have incurred some costs of that type. It seems clear that the costs of installing acoustic panels would be greater in conditions where UGL Rail had limited access to the tunnels and was required to remove all its equipment each day compared to the position where it had unlimited access and could leave its equipment in place and would have been in a position where it could have installed all the required panelling at one time. In those circumstances, the Court must do the best it can to assess damages on the evidence it has, even if that involves a degree of guess-work: Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J, at 125 per Deane J; McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377 at 411-2 per Dixon and Fullagar JJ; Howe v Teefy (1927) 27 SR (NSW) 301 at 306 per Street CJ.

239. The task of the Court, then, is to estimate the additional costs of installing the additional panelling to meet the reverberation specification. The evidence from Professor Kang, which I accept, is that it would have been necessary to install 3000 mm of effective acoustic panelling per metre or tunnel length to meet the specification. The parties accept that approximately 1360 mm were installed. Consequently, the task is to estimate the additional costs of installing 1640 mm of acoustic panelling. There is evidence of the costs of installing the original two rows of panels. It is possible from that evidence to calculate the costs per metre of installing panelling at the time United had unrestricted access to the tunnels. There is also evidence of the costs of installing the panelling that formed part of the TIDC solution. Consequently, it is possible to calculate the costs per metre of installing panelling at the time United did not have unrestricted access to the tunnels. The difference between the two gives the additional costs per metre of installing panelling where access was restricted. On the findings I have made, it is those additional costs that could have been avoided if Wilkinson Murray had given non-negligent advice.

240. In a joint report, Mr Makin and Mr Young, the quantum experts retained by the parties, agreed that the labour costs of installing the first two rows of panels was $1,863,000. That agreement was reached on the basis of the actual labour costs of installation set out in an affidavit of Mr Kamil Erbel, who was, at the relevant time, the General Manager Finance of UGL Infrastructure. Mr Erbel was not cross-examined and I accept his evidence. Mr Young concluded that the plant costs were $125,000. Mr Makin concluded that they were $205,000. The difference of $80,000 reflected differences of opinion on the amount of rubbish that had to be removed and different assumptions made about the use of small tools, such as drills and drill bits. For the purpose of determining the installation costs of the two rows of panels, I think that it is reasonable to split the difference and assume that the plant costs were $165,000. Both experts agreed that the on-site overheads were $49,604 and that an allowance of 2.2 per cent should be made for off-site overheads. On that basis, the total costs of installing the first two rows of panels was $2,123,311.29, calculated as follows:

Labour costs	1,863,000.00
Plant and equipment	165,000.00
On-site overheads	49,604.00
Total	2,077,604.00
Off-site overheads	45,707.29	(2.2% of above total)
Total	$2,123,311.29

243. The total length of the tunnels is 25,397 m. Excluding stations, the total length is 24,037 m. Assuming that panelling was installed throughout the tunnels other than in the stations, and assuming that 1.36 m2 of acoustic material was installed per metre of tunnel, the total amount of acoustic material that was installed as part of the installation of the first two rows was 24,037 x 1.36, making 32,690.32 m2. Consequently, the cost per square metre of installing the panelling was $2,123,311.29/32,690.32, making $64.95 per square metre.

244. Tendered during the course of the hearing was a spreadsheet setting out the actual costs incurred by UGL Infrastructure of installing the acoustic panelling that comprised the TIDC solution. The following items in that spreadsheet appear to be relevant to the costs of installing that panelling:

Labour costs:
Project management and supervision	$882,708.81
Labour crew supervision	46,804.43
Engineering and drafting	47,996.19
Finance and administration	183,033.50
Open side wall panels	769,021.98
Behind tray wall panels	487,072.27
Below cable tray cladding	391,078.18
Above walkway panels	139,763.58
Consultants	2,790.00
$2,950,268.94
Plant costs:
Small tools	170,924.32
PPE and medicals	39,037.18
Office consumables	18,091.79
Plant and equipment hire	78,134.94
Equipment enhancements for installation	68,632.29
Site vehicles and fuel	790,435.48
Telecommunications and IT	15,617.15
Site cleaning and security	46,356.42
$1,227,229.57

245. Allowing an amount of 2.2 per cent for off-site costs, the off-site costs were $91,904.97 (that is, ($2,950,268.94 + $1,227,229.57) X 0.022) and the total costs of installing the wall panels was $4,269,403.48 (that is, $2,950,268.94 + $1,227,229.57 + $91,904.97).

246. According to the Settlement Deed, UGL Rail was required to install the following amount of acoustic panelling:

Zone	Location	Panel Height	DN Tunnel Extent [m]	UP Tunnel Extent [m]	Panel Type
A	(Existing Panels)
B	Below Existing Panels	0.6m (2off)	7,318	4,505	Perforated metal-clad glasswool
C	Below Walkway	0.6m (1 off)	7,276	7,989	Perforated metal-clad glasswool
		0.3m (2 off)	9,701	10,652	Fibreglass fabric-clad glasswool
D	Above Walkway	0.6m (2off)	2,205	117	Perforated metal-clad glasswool

On that basis, UGL Rail was required to install the following amount of acoustic panelling in the tunnels:

Zone B (7,318 + 4,505) x 0.6 x 2	=	14,187.6
Zone C(1) (7,276 + 7,989) x 0.6	=	9,159.0
Zone C(2) (9,701 + 10,652) x 0.3 x 2	=	12,211.8
Zone D (2,205 + 117) x 0.6 x 2	=	2,786.4
Total	38,344.8

247. Consequently, the costs of installing one square metre of effective panelling in 2009 as part of the TIDC solution was $4,269,403.48/38,344.8, which comes to $111.34 per square metre. On that basis, the additional cost of installing panelling in 2009 was $46.39 per square metre (that is, $111.34 - $64.95).

248. As I have said, according to Professor Kang, it was necessary to install 3000 mm per metre of acoustic material throughout the length of the two tunnels in order to meet the reverberation specification. Approximately 1360 mm had been installed. Consequently, it was necessary to install a further 1640 mm. Using the calculations set out above, the additional costs of installing that panelling would have been 1.64 x 24,037 x $46.39, making $1,828,725.35.

249. Although the figures I have used are very precise, the calculations necessarily involve an approximation. In particular, they make no allowance for the different costs of installing panelling in different parts of the tunnel. They also make no allowance for the efficiencies that might have been achieved if all the panelling had been installed at the same time. There is, however, no means of knowing what allowance, if any, should be made for considerations such as those. In those circumstances, in my opinion, the most reasonable approach is not to try to adjust the figure I have arrived at to take account of those factors.

250. The second type of costs are the costs that UGL Rail became liable to pay TIDC and THJV in connection with the dispute and its own legal costs of resolving the dispute. Those costs comprise the following:

TIDC’s costs of the dispute	$1,000,000.00
THJV’s costs of the dispute	$867,390.84
THJV’s supervision costs	$1,251,048.33
UGL Rail’s legal costs	$358,717.85

251. It is not in dispute that UGL Rail incurred those costs. It became liable to pay the first three types of costs under the Settlement Deed. It is not disputed that its own legal costs in connection with the dispute were $358,717.85. The question is whether UGL Rail’s liability for those costs can be said to be caused by Wilkinson Murray’s breach of duty.

252. In my opinion, it is appropriate in principle to hold Wilkinson Murray liable for each category of these costs. Wilkinson Murray was responsible for giving UGL Rail advice to ensure that UGL Rail knew what amount of acoustic panelling it had to install in the tunnels to meet the reverberation specification. If it gave negligent advice with the consequence that UGL Rail installed the incorrect amount of panelling, it was to be expected that TIDC would serve a defect notice on THJV and that THJV would make a claim against UGL Rail, which is what happened. It is to be expected that each would incur costs in connection with that dispute and that TIDC would seek to recover its costs under the indemnity given to it by THJV and that THJV would seek to recover those costs and its own from UGL Rail. It is also to be expected that, if rectification work had to be done, that would require THJV to supervise that rectification work and it is to be expected in those circumstances that THJV would seek to recover the costs of supervision from UGL Rail. The relationship between TIDC, THJV and UGL Rail was known to Wilkinson Murray and it must have been within Wilkinson Murray’s reasonable contemplation that claims of that type would be made if it gave negligent advice.

253. If the tunnels had complied with the reverberation specification, the likelihood is that no claim would have been brought against UGL Rail. I have already found that UGL Rail would have taken steps to comply with the reverberation specification if it had been given the correct advice by Wilkinson Murray. Consequently, UGL Rail would not have incurred the legal costs it did but for Wilkinson Murray’s negligence. It is true that the resolution of the claim against UGL Rail became bound up with issues concerning in-car noise. However, from UGL Rail’s point of view, the resolution of issues concerning in-car noise was the mechanism by which it resolved its liability for beach of the reverberation specification. There is no reason to think that the costs of resolving that dispute in some other way would have been less expensive. Consequently, in my opinion, it is appropriate to hold Wilkinson Murray responsible for all the legal costs incurred by UGL Rail in resolving the dispute.

254. The other three types of costs fall into a different category. In each case, it can be said that UGL Rail would not have agreed to bear those costs but for Wilkinson Murray’s negligence. However, in each case, the costs also related to work that was unconnected to defects which arose from Wilkinson Murray’s negligence. Even if Wilkinson Murray had not been negligent and the tunnels had complied with the reverberation specification, there would still have been a problem with in-car noise. TIDC would have investigated that problem. It would have made a claim against THJV and both TIDC and THJV would have incurred legal costs in connection with that dispute.

255. According to an email dated 17 March 2009 sent by Mr Burt to various employees of United, TIDC’s costs included past and future management and supervision costs, together with external costs of lawyers and acoustic consultants. TIDC is said to have estimated those costs as being in excess of $3 million, which TIDC was seeking to recover from THJV. That estimate appears excessive. There is no evidence to suggest that TIDC was required to employ additional staff to deal with the dispute. Consequently, it is not at all clear whether it would have incurred additional management and supervision costs in connection with the dispute. There is no evidence of how the $3 million, or the $1 million for which TIDC settled, was made up. The likelihood is that part of it comprised a claim for past and future management and supervision costs. Without more information about the nature of those costs, I am not satisfied that they were properly recoverable. On the other hand, I accept that TIDC would have incurred substantial legal and consulting costs and it is likely that they would have been at least as much as the costs incurred by THJV. On that basis, I am prepared to accept that it was reasonable for THJV and UGL Rail to settle TIDC’s claim on the basis that TIDC’s costs were in the order of $800,000. However, I am not satisfied that it was reasonable to attribute all those costs to the failure to meet the reverberation specification. It is apparent that TIDC was principally concerned with in-car noise. The failure to meet the reverberation specification was an important contributing factor to in-car noise but it was not the only factor. Even if the tunnels had met the reverberation specification, there would have been a problem with in-car noise. The likelihood is that TIDC would still have served a defect notice on THJV and a settlement of that claim would have involved THJV agreeing to pay part of TIDC’s costs. It is unclear whether THJV would have sought to recover those costs from UGL Rail. However, it is clear that UGL Rail would not, in those circumstances, have had a claim against Wilkinson Murray.

256. There is no obvious means of apportioning the amount payable to TIDC between the loss for which Wilkinson Murray was responsible and the loss for which it was not. The evidence is that TIDC was principally concerned with in-car noise. However, as I have said, a major contributing factor to in-car noise was the failure to meet the reverberation specification. There is no evidence to suggest that the work done by TIDC was concerned more with the investigation of the effect of rail dampers and grinding rather than the installation of additional acoustic panelling in the tunnel. In those circumstances, it seems reasonable to apportion TIDC’s costs equally between the failure to meet the reverberation specification and other factors that contributed to in-car noise. On that basis, Wilkinson Murray is liable for half of $800,000 – that is, $400,000.

257. Applying similar principles, it seems to me reasonable that Wilkinson Murray should be held responsible for half of THJV’s reasonable costs of the dispute. The total amount claimed by THJV is $867,390.84. That amount comprises $761,265.84 in legal and consultants’ costs. There are invoices that support that amount; and I am satisfied that those amounts were reasonable and that, subject to what I say below, it was reasonable, as part of an overall compromise, for UGL Rail to agree to pay those costs.

258. The balance of the costs claimed by THJV consists of staff costs of $105,225 and miscellaneous costs of $900. In order for those costs to be recoverable, it would be necessary for UGL Rail to establish that those costs would not have been incurred but for Wilkinson Murray’s breach of duty. It is not sufficient to establish that certain employees of THJV did work in connection with the resolution of the dispute. It would be necessary to establish that THJV incurred an additional liability to those employees because of that work or that those employees were prevented from engaging in other activities that would have earned THJV income. There is no evidence that that was the case. In the absence of that evidence, I am not satisfied that those costs were reasonable.

259. Again, it seems to me that THJV’s costs related both to the failure to comply with the reverberation specification and the problems with in-car noise that were unconnected to that failure. It is not clear why, in those circumstances, UGL Rail agreed to bear all those costs. But whether it acted reasonably or not in doing so, not all those costs can be attributed to the breach for which Wilkinson Murray is responsible. Again, there is no basis for separating the costs between issues concerned with the failure to meet the reverberation specification and other issues. Accordingly, in my opinion, it is reasonable to hold Wilkinson Murray responsible for half those costs. On that basis, UGL Rail is entitled to recover $380,632.92 in respect of THJV’s costs.

260. According to Mr Johnson, THJV originally claimed $2,159,637.47 in respect of its ongoing supervision of the TIDC solution and provided UGL Rail with a breakdown of how those costs were calculated. Mr Johnson reviewed those costs and concluded that they were excessive and, eventually, those costs were compromised at $1,251,048.33. Mr Johnson was in the best position to assess the reasonableness of those costs. It is apparent that he went through them with some care. In those circumstances, I am prepared to accept that the amount on which UGL Rail eventually agreed was reasonable. Again, however, those costs related to all the work of implementing the TIDC solution. For the reasons I have given, Wilkinson Murray should only be liable for half those costs.

261. On that basis, Wilkinson Murray’s liability is calculated as follows:

Costs of installing panels	$1,828,725.35
TIDC’s costs of the dispute (50%)	$400,000.00
THJV’s costs of the dispute (50%)	$380,632.92
THJV’s supervision costs (50%)	$625,524.17
UGL Rail’s legal costs	$358,717.85
Total	$3,593,600.29

Other defences

262. Wilkinson Murray raises three other defences to UGL Rail’s claim. First, it relies on a limitation defence in respect of the 2003 advice. Second, it submits that UGL Rail’s claim is an apportionable claim and should be reduced to take account of UGL Rail’s responsibility for the loss in accordance with Pt 4 of the CLA or Pt VIA of the TPA. Third, it submits that UGL Rail was guilty of contributory negligence.

Limitation defence

263. Having regard to the conclusions I have reached, Wilkinson Murray’s limitation defence does not arise. However, in case those conclusions are wrong, I should say something about it.

264. The proceedings were commenced on 14 April 2011. It is not in dispute that the limitation period in respect of a cause of action for breach of contract and for negligence is six years from the time that the relevant cause of action first accrued: see Limitation Act 1969 (NSW), s 14. It was not alleged that a claim under the TPA was statute barred. A cause of action for breach of contract first accrues when the breach occurs: Gibbs v Guild (1881) 8 QBD 296 at 302 per Field J; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 583 per Deane J; Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305 at 308 per Nicholls LJ. In the present case, the breach must have occurred no later than the end of May 2003 when Wilkinson Murray gave its advice. The proceedings were not commenced until 14 April 2011, well outside the six year limitation period. For that reason, the claimed based on breach of contract is statute barred. On the other hand, a cause of action based on a contractual indemnity first accrues on the date when the costs and expenses in respect of which the indemnity is given were first ascertainable: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 532-3. And a cause of action in negligence first accrues when the plaintiff suffers actionable damage: Hawkins v Clayton; Commonwealth v Cornwell [2007] HCA 16; (2007) 229 CLR 519 at [36]. The costs and expenses in respect of which the indemnity was given were not ascertainable before the Settlement Deed was entered into. UGL Rail did not suffer actionable damage at least until it relied on Wilkinson Murray’s advice in 2007. In both cases, it is clear that the limitation period had not expired.

Apportionment

265. Part 4 of the CLA relevantly provides:

34   Application of Part

(1)   This Part applies to the following claims (apportionable claims):

(a)   a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury,

(b)   a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law.

…

(2)   In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.

…

35   Proportionate liability for apportionable claims

(1)   In any proceedings involving an apportionable claim:

(a)   the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss, and

(b)   the court may give judgment against the defendant for not more than that amount.

(2)   If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:

(a)   liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and

(b)   liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

(3)   In apportioning responsibility between defendants in the proceedings:

(a)   the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and

(b)   the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4)   This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.

266. Similar provisions are contained in Pt VIA of the TPA.

267. In its List Response to Amended Technology and Construction List Statement, Wilkinson Murray pleads that UGL Rail’s claim is an apportionable claim and that UGL Rail is a concurrent wrongdoer within the meaning of s 34(2) with the result that its claim should be reduced to an amount reflecting that proportion of the damage or loss claimed that the Court considers just having regard to the extent of Wilkinson Murray’s responsibility for the damage or loss.

268. In Rennie Golledge Pty Ltd v Ballard [2012] NSWCA 376; (2012) 82 NSWLR 231, the Court of Appeal held that, on the proper construction of Pt 4 of the CLA as a whole, a plaintiff whose own acts or omissions have been a cause of his own loss or damage is not a “concurrent wrongdoer”: at [15] per Basten JA, at [128]-[143] per Campbell JA (Barrett JA not deciding). That decision is binding on me. It is a complete answer to Wilkinson Murray’s defence based on Pt 4 of the CLA and Pt VIA of the TPA.

Contributory negligence

269. In the alternative, Wilkinson Murray contends that the damages claimed by UGL Rail should be reduced on the ground that UGL Rail was guilty of contributory negligence, relying on s 9 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) or, in the case of the claim based on the TPA, s 82(1B) of the TPA. In its List Response to Amended Technology and Construction List Statement, Wilkinson Murray pleads that UGL Rail was guilty of contributory negligence for various reasons, including the following:

1)   It failed to have regard to the advice and recommendations set out in the 2003 report;

2)   It failed to provide TIDC or its acoustic advisors with Wilkinson Murray’s reports;

3)   It failed to verify the advice it was given;

4)   It failed to ascertain whether TIDC and THJV would be satisfied if targets were met at most frequencies and were within 5 to 10 per cent of the specification at other frequencies;

5)   It failed to arrange testing at a time when additional panelling could be installed in the tunnels and failed to configure the services in the tunnel so that additional panelling could be installed;

6)   It failed to ensure that testing of the panelling was carried out in a way that was suitable for a tunnel rather than a room;

7)   It installed panelling when it knew that that panelling may not be sufficient to meet specification.

270. In my opinion, none of these matters establish that UGL Rail was guilty of contributory negligence. As to the third and sixth points, UGL Rail did not have expertise in acoustic engineering. It is for that reason that it engaged Wilkinson Murray. It was entitled to rely on the advice it received from Wilkinson Murray concerning the amount of panelling that should be installed and how the testing should be carried out. Accordingly, it had no obligation to verify the advice that it received or to take steps to ensure that the testing was carried out properly. It relied, and was entitled to rely, on Wilkinson Murray to do those things.

271. As to the first and seventh points, UGL Rail’s failure to rely on advice given by Wilkinson Murray, if there was such a failure, did not amount to contributory negligence. Either UGL Rail relied on the advice it received or it did not. If it did, then it has a claim. If it did not, then it does not; and the question of contributory negligence does not arise.

272. As to the second point, no reason was advanced by Wilkinson Murray for why UGL Rail should have passed its reports on to TIDC. UGL Rail’s obligations were to THJV. Those obligations were to install sufficient panelling to meet the reverberation specification in the Works Brief. It was not part of that obligation to pass advice it received in order to comply with that obligation on to TIDC.

273. As to the fourth point, it appears to assume that the targets were met at most frequencies and were within 5 to 10 per cent of the specification at other frequencies. That was not the case. In addition, the complaint appears to be a complaint that UGL Rail failed to follow Wilkinson Murray’s advice. For the reasons I have given, that does not amount to contributory negligence.

274. As to the fifth point, I have found that there was room to install additional panelling in the tunnel.

275. It follows that the defence of contributory negligence must fail.

Orders

276. There should be judgment in favour of UGL Rail in the sum of $3,593,600.29.

277. It was not suggested that GST was payable on any amount that UGL Rail might be entitled to recover and no claim for GST was made on the amount claimed by UGL Rail. Consequently, I can see no reason to allow GST on the amount of the judgment.

278. UGL Rail claims interest from the date it entered into the Settlement Deed to the date of judgment. In my opinion, interest should run from the date it paid the amounts payable by it in respect of the settlement. That date or those dates do not appear to be clear from the evidence, although it seems that all payments had been made by the end of July 2009. Consequently, in my opinion, it is reasonable to allow interest from 31 July 2009 to the date of judgment. On that basis, UGL Rail is entitled to interest in the amount of $1,465,425.88.

279. I will hear the parties in relation to costs.

280. Consequently, the orders of the Court are:

1. Judgment for the plaintiff in the sum of $5,059,026.17;

2. Stand the matter over to a date to be fixed with my Associate for the hearing of any argument concerning costs.

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Decision last updated: 27 March 2015