Walter Construction Group Ltd v Walker Corporation Ltd

[2001] NSWSC 283

Reported Decision: (2001) 47 ATR 48
[2001] NSWSC 283
[2001] ACL Rep 110 NSW 30
[2001] ACL Rep 65 NSW 4

New South Wales

Supreme Court

CITATION:	Walter Construction -v- Walker Corporation [2001] NSWSC 283
CURRENT JURISDICTION:	Equity Division Construction List
FILE NUMBER(S):	SC 55028/98
HEARING DATE(S):	31.7.01, 1.8.00, 2.8.00, 3.8.00, 7.8.00, 8.8.00, 9.8.00, 25.8.00
JUDGMENT DATE:	20 April 2001
PARTIES :	Walter Construction Group Ltd -v- Walker Corporation Ltd & Ors
JUDGMENT OF:	Hunter J

COUNSEL :	Plaintiff: M A Pembroke SC, P F Liney, S Goldstein Defendant: G A Palmer QC, M G Rudge SC, N Manoursaridis
SOLICITORS:	Plaintiff: Corrs Chambers Westgarth Defendant: Baker McKenzie
CATCHWORDS:	Construction contract - reference of all issues under Pt 72 - report of referee - referee's findings of fact and law disputed - principles applicable - construction deed varied orally - waiver of common law and contractual limitations on oral variation of deed - deed varied to waive liquidated damages - repudiation of varied deed by principal - interference in certification - insistence on impossible standard of practical completion - no bona fide belief in that standard - rescinding for repudiation without recourse to termination provisions of deed - contractor entitled to quantum meruit - incidence of GST on judgment.
CASES CITED:	Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Chloride Batteries Australia Ltd v Glendale Chemical Products (1988) 17 NSWLR 60 Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615 Leighton Contractors Pty Ltd v C E Heath Underwriting Services & Others; Leighton Contractors Pty Ltd v Kinhill Engineers (1995) 8 ANZ Insurance Cases 61-231 Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 Freeman & Lockyer (A Firm) v Buckhurst Park Properties (Mangal) Ltd (1964) 2 QB 480 Breen v Williams (1996) 186 CLR 71 Maguire v Makaronis (1996-7) 188 CLR 449 Beach Petroleum NL v Abbott Tout (1999) 33 ACSR 1 Bray v Ford [1896] AC 44 Re Goldcorp Exchange Ltd (In Receivership) [1995] 1 AC 74 Keogh v Dalgety & Co Ltd (1916) 22 CLR 402 Panama & South Pacific Telegraph Company v India Rubber, Gutta Percha & Telegraph Works Co (1875) LR 10 Ch App 515 Parker v McKenna [1874] LR 10 Ch App 96 Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 CH D 339 Commonwealth v Verwayen (1990) 170 CLR 394 Waltons Stores (Interstate) Ltd v Maher (1987-99) 164 CLR 387 Amann Aviation Pty Ltd v Commonwealth of Australia (1990) 22 FCR 527 Roadshow Entertainment Pty Ltd v ACN 053006269 Pty Ltd (1997) 42 NSWLR 462 Switz Pty Ltd v Globind Pty Ltd (2000) 33 ACSR 723 Huskisson RSL Sub-branch Club Ltd v Sullivan (1990) 20 NSWLR 332 R v Wallis; ex parte Employers Association of Wool Selling brokers (1949) 78 CLR 529 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Turner Corporation Limited (Receiver and Manager appointed) v Austotel Pty Ltd (1994) 13 BCL 378 Duke Group Ltd (In Liq) v Pilmer (1999) 73 SASR 64
DECISION:	Judgment for the Plaintiff and orders in terms of par 492 of these reasons.

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

HUNTER J

FRIDAY 20 APRIL 2001

55028/98 WALTER CONSTRUCTION GROUP LIMITED -v- WALKER CORPORATION LIMITED & ORS

REASONS FOR JUDGMENT

1    These proceedings arose out of disputes between parties to a design and construct contract for a commercial project situated on the site of what was known as the old Grace Bros Broadway site. The project consisted of specialty shops (divided into ‘food’ and ‘non-food’ categories with different hand-over dates under the contract), cinemas, retail stores (divided into ‘majors’ and ‘mini-majors’) and a tavern. The specialty shops, the retail stores, the cinemas and the tavern had different hand-over dates under the contract.

2    The project was undertaken under a deed of agreement dated 29 February 1997 (the contract) between the first defendant, Walker Corporation Limited (WCL), as principal, and the plaintiff, Concrete Construction Group Limited (CCG) (as it was formerly known), as contractor. By its Fifth Further Re-Amended Summons (the summons) CCG sought the following relief against WCL:

“1 A declaration that the First Defendant repudiated the contract (“ Contract ” ) between the First Defendant and
the Plaintiff dated 29 February 1997 in respect of the design and construction of the Broadway Shopping Centre (“
the Project ”).
2 A declaration that the Plaintiff was entitled to and did terminate the Contract by Notice dated 23 June 1998.
3 A declaration that it was agreed between the Plaintiff and the First Defendant in or about February 1998 that,
in consideration of the Plaintiff bringing the Project to the stage that the shopping centre could open for trading on
31 March 1998, and letting the First Defendant and others into possession for the purpose of trading, liquidated
damages would not be imposed by or on behalf of the First Defendant (“ the February Agreement ”).
4 A declaration that the Contract was varied by the February Agreement.
5 Alternatively a declaration that the First Defendant is estopped from:

(a) denying that the Contract was varied by the February Agreement; and

(b) imposing liquidated damages.
6 An order for payment for the work performed on the Project on a quantum meruit.
7 In the alternative to paragraph 6, damages in the sum of $22,130,398 or such other sum as the Court may order.

8 A declaration that the Plaintiff is entitled to further payment of variations in the sum of $6,019,999.00 or such
other sum as the Court may order.

9 A declaration that the Plaintiff is entitled to extensions of time.
10 A declaration that the Plaintiff is entitled to time related costs in respect of extensions of time.
11 A declaration that the conduct of the Defendants, in representing to the Plaintiff that if the Plaintiff brought the
project to the stage where the shopping centre could open for trading on 31 March 1998 liquidated damages would
not be imposed by or on behalf of the First Defendant, breached section 52 of the Trade Practices Act 1974, and
section 42 of the Fair Trading Act 1987.
12 Alternatively, a declaration that the Second to Fifth Defendants were involved in the said contravention by
the First Defendant within the meaning of section 75B of the Trade Practices Act.
13 An order pursuant to section 87 of the Trade Practices Act 1974 and/or section 72 of the Fair Trading Act
varying the Contract as may be appropriate including so that liquidated damages are unenforceable
against the Plaintiff.
14 Damages pursuant to sections 82 & 87 of the Trade Practices Act 1974, and sections 68 & 72 of the Fair Trading Act 1987, in the sum of $22,130,348 or such other sum as the Court may order.

14A A declaration that the First Defendant is liable to indemnify the Plaintiff in respect of the Goods and Services
Tax, if any, which may be payable by the Plaintiff on any amount paid to it by the First Defendant pursuant to the
orders of the Court herein pursuant to A New Tax System (Goods and Services Tax) Act 1999.”

3 On 4 June 1999 all issues in these proceedings were referred to The Hon. T R W Cole QC RFD (the referee) for report thereon pursuant to Pt 72 of the Supreme Court Rules. On 24 March 2000 the referee presented his report after a sitting lasting seventy two days, which commenced on 11 October 1999 and concluded on 9 March 2000. The report is a closely reasoned, referenced, detailed analysis of a mass of evidentiary material and comprises two volumes running into 694 pages. The referee was appointed for his legal expertise and considerable experience in litigation of this kind.

4    CCG seeks adoption of the report which is opposed by WCL. The referee summarised his principal findings and opinions as follows:

“ SUMMARY OF FINDINGS AND RECOMMENDATION

1. On the 2nd March 1998, WCL and CCG agreed that if the Broadway Shopping Centre could be opened for trading on 31 March 1998, WCL would not impose liquidated damages under the Agreement between them (“the February Agreement”). This varied the Agreement between them.
2. The Broadway Shopping Centre was opened for trading on 31 March 1998.
3. WCL repudiated the Agreement between it and CCG by:

(a) acting contrary to the February agreement by provisionally withholding liquidated damages;

(b) requiring “defect free practical completion” contrary to the Agreement;

(c) interfering with the role of the Administration Manager in his role as certifier;

(d) interfering with the role of Buchans (Architects) and Floth (Engineers) in their role as certifiers.
4. CCG accepted that repudiation, and terminated the Agreement on 23 June 1998.
5. CCG are entitled to be paid on a quantum meruit. The balance so payable, after deducting the cost of
rectification of defects but including interest, is $16,310,468.
6. WCL’s cross claim against CCG in relation to water damage succeeds as to $347,534, including interest.
7. The net amount payable by WCL to CCG is $15,962,934.
8. Neither Mr McGilvery, nor CCG, acted in breach of fiduciary duty.
9. WCL should pay CCG’s costs of the claim, cross claim and the Reference.”

5    The correctness of each of those findings and opinions is challenged by WCL. A set of findings and opinions in relation to lesser issues are also challenged by WCL. Where convenient I have adopted the terminology of the report in these reasons.

6    In opposing adoption of the report, WCL attributed to the referee numerous errors of fact and of law. In support of that case it had recourse to a considerable volume of the evidence which was before the referee.

7 That aspect of WCL’s case has brought into focus the nature of the judicial discretion involved in exercising the Court’s power under Pt 72 r 13 which is in the following terms:

“ 13 (1) Where a report is made, the Court may, of its own motion, after notice to the parties, or on application by any party, on a matter of fact or law or both -

(a) adopt, vary or reject the report in whole or in part;

(b) require an explanation by way of report from the referee;

(c) on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report;

(d) decide any matter on the evidence taken before the referee, with or without additional evidence,
and shall give such judgment or make such order as the Court thinks fit.”
(2) Evidence additional to the evidence taken before the referee may not be adduced before the Court except with the leave of the Court.

8    I do not understand the principles applicable to the exercise of such discretion to be in dispute in this case. The difficulty lies in the application of those principles. A number of guiding principles may be taken from the observations of Gleeson CJ in Super Pty Ltd -v- SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549:

(a) The hearing of a reference should not be equated with a hearing at first instance in this Court. So much may be extracted from (i) the fact that a referee may be appointed by reason of his or her technical expertise - not necessarily in legal matters, and (ii) from the provisions of Pt 72 r 8 which includes the following terms:

“ 8 (1) Where the court makes an order under rule 2, the Court may give directions with respect to the conduct of proceedings under the reference.
(2) Subject to any direction under subrule (1)-


(a) the referee may conduct the proceedings under the reference in such manner as the referee thinks fit;

(b) the referee, in conducting proceedings under the reference, is not bound by rules of evidence but may inform himself or herself in relation to any matter in such manner as the referee thinks fit…”

9    Those considerations have particular moment in this case. The referee was appointed for his outstanding qualifications as a lawyer with considerable experience in construction litigation. Further, it is apparent from the report and the affidavit of Peter Thomas Pether, sworn 29 March 2000 (the Pether affidavit) that the referee exploited the powers conferred under r 8.

10    The transcript in the case ran to 4,077 pages. In addition there were 153 witness statements admitted into evidence and some 47 witnesses were called. The Pether affidavit gave the following description of the reference:

“28 Complex technical issues necessitated numerous and substantial expert reports. A joint expert report on programming was produced by Messrs Hammond and Luikens. A joint expert report on quantum was produced by Messrs Byford and Tozer. For WALTER, expert evidence was given in the hearing or in conclaves by Evans & Peck Management, Tracey Brunstrom and Hammond (programming), Rider Hunt (cinema variation) George Ilias Design Pty Limited (hydraulic design), Taylor Thomson & Whitting (cinema ceiling tests), Synergetic Management Pty Limited (fire services design) and Eswood (commercial kitchen appliances), Ross Drinkwater (Wattyl products) and Barry Webb and Associates. For Walker, expert evidence was given by Barry Tozer, Vos Partnership Pty Limited, Ralph Beattie Bosworth, Jan Luikens, Paint Consultants, George Floth and Associates (hydraulic engineers) Robert Bird and Associates, T.A. Taylor, St Hilliers and The Buchan Group (architects).
29 Many technical issues, in particular variations, defective/incomplete work, programming, and cost/ valuation issues, were addressed by conclaves and convocations of experts and parties’ representatives. These were held throughout the period of the Reference and a large number of issues were resolved or narrowed by these processes. For example, defects were divided into “Top Value” defects and the “rump” of defects. There was agreement on a number of these Top Value defects with the balance determined by a process agreed between the parties, save for three resolved by private treaty between the parties. The rump of defects, electrical variations and other variations were resolved by agreement following expert and parties’ representatives’ conclaves.”

11    (b) It is untenable to construe the power of the Court under r 13 as falling within the umbrella of a proposition that “all litigants are entitled to have a judge decide all issues of fact and law that arise in any litigation” (Super at 558). The procedure that r 13 “establishes is not that of an appeal from a referee to a judge…the concept of “a re-hearing” which is itself ambiguous, at best provides an imperfect analogy”(Super at 558).

12    (c) R 13 does not require a judge to “reconsider and determine afresh all issues, whether of fact or law which [a] party desires to contest before the judge (Super at 562)….. it would be a radical departure from the history of the [Pt 72] rules to treat them as giving a dissatisfied party an automatic right to a hearing de novo (Super at 563)….What is involved in an application under Pt 72 r 13 is not an appeal, whether by way of a hearing de novo, or a more limited re -hearing” (Super at 563).

13    (d) “In so far as the subject matter of dissatisfaction with a referee’s report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine that matter afresh” (Super at 563).

14    (e) If the “…referee’s report reveals some error of principle, some absence or excess of jurisdiction, or some patent misapprehension of the evidence, that would ordinarily be a reason for rejecting it … So also would perversity or manifest unreasonableness” (Super at 563-564).

15    (f) In the case of findings of fact by the referee, where there is evidence to support such findings and the court is satisfied that those issues have been carefully considered by the referee it will not normally engage in a re-examination of the referee’s findings (Super at 563, agreeing with the observations of the trial judge and of Cole J in Chloride Batteries Australia Ltd -v- Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60).

16    In Super Mahoney JA expressed the nature of the Court’s discretion in relation to disputed findings of the referee as follows:

“What is required by the obligation to allow a party, for example, to be heard in support of or in opposition to a proposed course under Pt 72 must be determined according to the nature of the issue and the circumstances of the case. In determining what is so required, the court is, in my opinion, entitled to take into account the extent to which the party’s case has been presented to and dealt with by the referee. The extent to which, for example, matters dealt with in detail before the referee should be permitted to be dealt with at length before the judge is to be determined by the exercise of a discretionary judgment by the judge. The right to be heard does not involve the right to be heard twice. I am conscious that, in order that the judge may exercise a discretionary judgment of this kind, it may be necessary that the parties have the opportunity to refer to the relevant issues of fact and law and the evidence relevant to them. But the extent to which it is necessary for this to be done depends upon the circumstances of the case and the judgment of the judge. The judge has, I think, a broad discretion and may determine what is necessary to enable him to conclude that he has a sufficient understanding of the matters in question and when the argument has been sufficiently presented.”
(at 566-567).

See also Foxman Holdings Pty Ltd -v- NMBE Pty Ltd (1994) 38 NSWLR 615 at 620-621 and Leighton Contractors Pty Ltd -v- C E Heath Underwriting Services & Others; Leighton Contractors Pty Ltd v Kinhill Engineers (1995) 8 ANZ Insurances Cases ¶61-231.

17    In Leighton Contractors, Giles J, as he then was, described the exercise of the discretion as follows:

“The Approach to the report
The principles which should guide me in considering the report have been discussed in a number of cases culminating in the decision of the Court of Appeal in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549. A comprehensive summation can be found in Peabody Resources Ltd v Allco Constructions Pty Ltd (O’Keefe CJ Comm D, 14 March 1994, unreported). More shortly, a party dissatisfied with a referee’s report is not entitled to have the judge before whom it comes reconsider and determine afresh all issues whether of facts or law which it would wish to contest. Nor does the consideration of the report involve an appeal. Rather, the judge has a judicial discretion to exercise, a discretion which would normally be exercised by reconsidering a question of law or the application of legal standards to established facts, but otherwise may fall to be exercised having regard to matters such as the nature of the complaints, the type of litigation involved, and the length and complexity of the proceedings before the referee. Patent misapprehension of the evidence, or perversity or manifest unreasonableness in fact finding, would ordinarily preclude relevant adoption of or action upon the report, but a report may be adopted or acted upon even if upon reconsideration of the evidence the judge might have reached a conclusion different from that of the referee. In general, where there is shown to be evidence available to support a referee’s findings of fact, or where the issue involves a choice between conflicting evidence, in the exercise of the discretion the judge will not reconsider disputed questions of fact. But it is always a question of judicial discretion, exercised in a manner consistent with the object and purpose of the Rules and the place which they play in the administration of justice according to law.”

(at 75,533 - 75,534)

18    The issues arising out of the report have been identified by the parties in carefully structured and referenced written submissions, elaborated upon in oral submissions. One of the principal issues raised by WCL is whether it repudiated its agreement with CCG, whatever that agreement is found to have been. The central findings of the referee on this issue were as follows:

“ Conclusion Regarding Repudiation And Termination
565. I have found that:

(i) The February agreement amended the Agreement so as to deny the right to impose liquidated damages
beyond 17 March 1998.

(ii) That in provisionally withholding liquidated damages, WCL breached the Agreement as amended by the
February Agreement.

(iii) That in insisting upon defect free Practical Completion, WCL required a standard of performance
greater than that required by the Agreement. It did not adopt that position pursuant to any bona fide belief
of the correctness of the position it maintained.

(iv) That WCL interferred (sic) with the role of the Administration Manager as certifier so as to deny to the
contractor independent certification.

(v) That WCL improperly interferred (sic)) with the independent certification process by the consultants
Buchans and George Floth Pty Ltd.

566. In my view each of the (ii), (iii), (iv) and (v) alone, and especially in conjunction with each other, constitute
repudiatory conduct on the part of WCL indicating an intention no longer to be bound by the terms of the agreement
entitling CCG to terminate the Agreement. Each went to the heart of the contract.

19    Consequently, it will be necessary for WCL to establish that each of those findings in pars (ii) to (v) should not be adopted, or if adopted, do not amount to a repudiation of any agreement between WCL and CCG, whether viewed in isolation, or in conjunction with the other findings. That presents WCL with a considerable task where one is concerned with a finding of contractual repudiation of a technical construction contract which requires an understanding of the materiality of the alleged breach.

20    That task would involve, in most cases, an insight into the commercial and technical context in which the breach is said to have occurred. It is here, I think, that the considerable expertise of the referee has an important, valuable role: particularly where, as in this case, the referee has found, not one, but several repudiatory breaches.

21    I think it is axiomatic that where several contractual breaches have been found to have occurred, the combined materiality of those breaches may be dramatically greater than the materiality of each breach looked at as a discrete breach. If one needed authority for that proposition it may be found in Carr v J A Berriman Pty Ltd (1953) 89 CLR 327 at 351.

Repudiation Issues

22   Referee’s finding of repudiation in WCL acting contrary to the February agreement by provisionally withholding liquidated damages

Challenged finding

“224. I find that on the 2nd March a proposal was put by Mr McGilvery with the prior concurrence of Mr Walker and Mr Dransfield, and after discussion with Mr Lawes who thought the proposal had merit, that if CCG could bring the premises to a state of completion so as to permit an opening of the shopping centre on the 24th March, that being the date then known to Mr McGilvery as the opening date, liquidated damages would not be imposed. When Mr Walker and Mr Dransfield made known to him that the true opening date was 31 March, not 24 March, Mr McGilvery communicated the date to CCG. He obviously understood that the substance of the February agreement related to ‘opening’ by WCL’s nominated date, as I have found, because he said “You’ve got another week”. The discussion constituting the agreement was intended by all those present to be a variation of the obligations under the Agreement, and thus a variation of that Agreement. The agreement did not relate to the achievement of Practical Completion. The agreement was that no liquidated damages would be imposed if CCG met WCL’s nominated opening date. Mr McGilvery advanced the opening date of 24 March because he believed that to be the date. Mr Walker and Mr Dransfield knew, and had known since at least mid February that the opening date was 31 March. When they told Mr McGilvery of the true opening date immediately after the 2 March meeting, Mr McGilvery communicated the true opening date to Mr Delahunty and Mr Ambler.”

23    To better understand the issues raised under this heading it will be of assistance to identify the persons principally involved in the dispute, as follows:

Gary McGilvery (McGilvery), a principal of McGilvery & Associates Pty Ltd, which was a building consultant to WCL and its associated companies on a full-time basis from March 1996 to April 1997 when the consultancy was reduced to a part-time one. McGilvery & Associates was also a consultant to CCG between May 1997 and August 1998.
Peter Dransfield (Dransfield), a director of companies within the WCL Group.
Lang Walker (Walker), the managing director, chief executive and major shareholder of WCL.
Kirk Lawes (Lawes) , Administration Manager of the project for WCL.
Terrence Delahunty (Delahunty) a director of CCG and general manager of its building division.
Timothy Ambler (Ambler), State Branch manager of CCG with involvement in the project at executive level.
Ian Irving (Irving), Construction manager for CCG who attended senior executive meetings with WCL representatives in relation to the project.
James Joseph Mitchell (Mitchell), Project manager of the project for CCG.

Whether the February agreement related to Practical Completion

24    A central issue on the reference was whether an agreement between the parties of 2 March 1998, referred to in the hearing as the February Agreement, related to practical completion, or to the opening of the shopping centre portion of it.

25    The finding in par 224 of the report in relation to that issue was identified in WCL’s written submissions as follows:

“21.1 the finding that on 2 March 1998 an agreement (called in the Report and hereafter “the February
Agreement”) was made that if CCG could bring the Shopping Centre to a state of completion so as to permit an
Opening on 24 March 1998, liquidated damages would not be imposed: Report, para.224.
See Submissions paras. 22,23.

26    Of that finding, WCL contended as follows:

“23. The Referee should have found that it was agreed that if Practical Completion was achieved by 24 March no liquidated damages would be imposed, but if Practical Completion was not achieved by that date, liquidated damages would be imposed as from 17 March 1998, for the following reasons:
23.1 The Referee rightly found that the February Agreement was made when a proposal was put to the meeting by Mr McGilvery and accepted by CCG.
23.2. The Referee rightly found that proposal was the proposal “initially advanced by Mr McGilvery to Mr Walker”. It was the same proposal which had been discussed between Mr McGilvery and Mr Lawes, prior to the 2 March meeting. That finding must be right because Mr McGilvery would have known that he could not have put forward in the 2 March meeting, in Mr Walker’s presence, a proposal different in any material respect from the one he had previously discussed with Mr Walker.
23.3 The evidence about the proposal initially discussed between Mr McGilvery, and Mr Walker was that of Mr Dransfield, who said that Mr McGilvery proposed to him and Mr Walker “that at next Monday night’s meeting we put forward a proposition to extend the contract date for practical completion from 17 March to the 24th. That evidence was not contradicted, rejected nor otherwise adversely commented upon by the Referee.
23.4 The uncontradicted evidence about the proposal discussed between Mr McGilvery and Mr Lawes prior to the meeting is that of Mr Lawes who said that Mr McGilvery told him: “It’s too tight. I don’t believe they’ll get there by the 17th” and “I’m going to put a proposal to Lang to give them extra gratia [sic] another week” and that Mr McGilvery later told him before the 2 March meeting: “I’ve spoken to Lang. We’re going to give them another week and not charge them LDs for that time. But if they don’t make it, all bets are off.” Mr Lawes took that to mean that if CCG “did not achieve practical completion on 24 March then liquidated damages would run from the 17th”.
23.5 The Referee accepted that the proposal as explained to Mr Lawes and Messrs Walker and Dransfield in the above terms was the proposal as explained to Messrs Delahunty and Ambler and accepted by them before the 2 March Meeting.
23.6 This evidence as to the terms of the proposal put to Messrs Delahunty and Ambler prior to the 2 March meeting is exactly consistent with the proposal which Mr McGilvery said he put again to the meeting on 2 March, as recalled by Mr McGilvery, Mr Lawes, Mr Dransfield, Mr Mitchell and Mr Walker, i.e. “…that [WCL] consider extending the 17th date to the 24th … We would forego LDs for that week. If Concretes should fail then LDs will apply from 17 March. It would be in the nature of an extra [sic] gratia extension of time for a week.”
23.7 Having identified the terms of the proposal put to the meeting, the Referee had no basis for construing those terms as meaning anything other than what they literally conveyed, namely, that what was being agreed was an extension of time for one week from 17th to 24th March of the only event relevant to the imposition of liquidated damages which was required to occur on 17th March, i.e. Practical Completion under the Building Contract, and if that extended time for Practical Completion was not achieved, liquidated damages would be imposed in accordance with the Contract.
23.8 The reasoning of the Referee seems to have been that opening of the Centre, rather than Practical Completion, must have been the subject of the proposal because “had anyone directed their attention to the definition of Practical Completion in the [Building Contract] it must have been apparent that Practical Completion under the [Building Contract] could not have been achieved by the 17th March, or indeed the 24th March or the 31st March.” There was no evidence that at or prior to the 2 March meeting any of the participants, let alone all participants, had actually directed their attention to the definition of Practical Completion under the Contract. There would be no basis for concluding that this consideration gave meaning and content to what was actually said.
23.9 Further, in making this observation, the Referee disregarded the uncontested evidence from CCG’s witnesses that the whole discussion between the parties about liquidated damages, both prior to and at the 2 March meeting, commenced with the assertion by CCG that it was still aiming for Practical Completion under the Contract on 17 March but that, because of the industrial stoppage, that date may well slip back to 24 March. That was the context in which an extension of time of one week from 17 March to 24 March came about.”

27    WCL accepted that an agreement was made between the parties on 2 March 1998. Its primary contention was that it was an agreement about practical completion within the meaning of the contract and not, simply, an agreement for the opening of the shopping centre portion of the project.

28    It was a central proposition in WCL’s submissions that what was discussed privately between McGilvery, Dransfield and Walker and between McGilvery, Delahunty, Ambler and Lawes prior to the meeting of 2 March 1998 was identical with the proposal that WCL brought to that meeting. What had been discussed within WCL prior to the meeting, it was submitted, concerned practical completion within the meaning of the contract, not a proposal for the opening of the shopping centre. It was an issue that was strenuously contested before the referee and it was an issue that WCL lost.

29    The ultimate findings on this issue in pars 565 and 566 of the report were reached after a careful weighing of the evidence, some of which was not in dispute, some of which was in conflict with other evidence, and some of which was contested by WCL on the basis that the subject matter had never occurred. It seems to me that the submissions of WCL on this point rest upon an argument that, I think, is fallacious, and represents an oversimplification and a misunderstanding of particular primary findings of the referee.

30    The approach adopted by the referee to this issue was expressed in the report as follows:

“100. In view of the importance of this issue I will set out in some detail the evidence concerning the February agreement as given firstly by the witnesses for the plaintiff, then by Mr. McGilvery who whilst called by WCL is in fact being sued by both the plaintiff and the other defendants, and then consider the evidence from the defendant’s witnesses.”

31    That paragraph may be found at page 51 of the report. The referee’s ultimate findings in paragraph 224 are located at page 117. The intervening pages contain a careful evaluation of the evidence.

32    It was Delahunty’s evidence that in pre-2 March 1998 discussions with McGilvery and Ambler the matter under consideration was the opening of the shopping centre (report pars 101-109).

33    It was Ambler’s evidence that the proposal put to him by McGilvery prior to the 2 March 1998 meeting related to the opening of the shopping centre (report pars 112, 113): that at the “Monday night” meeting, which the referee found was held on 2 March, not 9 February as Ambler thought, the proposal concerned the opening of the shopping centre (report par 114): that he knew that practical completion of the project within the meaning of the agreement could not be achieved in the month of March 1998 (par 116 of the report): that he understood references to “Practical Completion” in his first conversation with McGilvery referred to completion of the shopping centre to a stage ready for opening (report pars 112-116); that he understood the discussion of the “Monday night” meeting to relate to the opening of the shopping centre (report pars 119-121).

34    Irving also thought that the February agreement was made at the meeting of 9 February, and not on 2 March 1998 as the referee found. Some aspects of his evidence were challenged in cross-examination as fabrication. The referee did not accept that Irving’s evidence was fabricated and accepted that, while his evidence “was not always consistent in his use of language” the discussion at executive meetings and on 2 March 1998 “centred around “the opening”” of the shopping centre and that the “technical concept of Practical Completion in strict accordance with the terms of the Agreement was not addressed” (pars 133,134).

35    Mitchell’s evidence was that the meeting at which the February agreement was made took place on 9 February and that Delahunty was not present. He identified those present as Walker, Dransfield, Lawes and McGilvery on behalf of WCL and Ambler, Irving and himself on behalf of CCG. It was his evidence that the conversation concerned the opening of the shopping centre. The referee commented on that evidence adduced on behalf of CCG as follows:

“144. The evidence adduced by the plaintiff in relation to the February agreement was thus not entirely consistent. Each of Messieurs Ambler, Irving and Mitchell asserted the absence of Mr. Delahunty at the meeting where the agreement was made. Mr. Delahunty confirmed this. Each of Messieurs Ambler, Irving and Mitchell were clear in their evidence that the discussion related to opening, not to Practical Completion under the Agreement. Mr. Delahunty is confirmatory of that. Mr Ambler and Mr. Irving’s recollection was of a meeting at which the date discussed was the 31st March, rather than the 24th March. That is in conflict with the evidence of Mr Mitchell who recalled that the date discussed was the 24th March but that Mr. McGilvery subsequently varied that date to the 31st March. Mr. Delahunty’s evidence is confirmatory of the recollection of Mr Mitchell in this respect, and of Mr Ambler in other respects.”

36    McGilvery was described by the referee as “a very experienced contractor, particularly in relation to the construction of shopping centres” (report par 145). It was at his suggestion that CCG and WCL held weekly executive meetings to consider progress of the project (report par 145). McGilvery placed the meeting at which agreement on liquidated damages was reached as occurring in late February, early March. The referee set out considerable portions of his evidence, which included the following:

“150. ….
Q: You see, wasn’t it the case that after the ceiling collapsed on 28 January you had a conversation with Mr. Delahunty in which it was discussed that a proposal should be put that if the centre could be opened by a certain date, rather than practical completion being achieved, by the contract date, then liquidated damages should be waived by Walkers?
A: Similar to that; exactly what I said in my statement.”

37    Another portion of McGilvery’s evidence was quoted and commented upon by the referee as follows:

“155. Mr McGilvery was clear in his evidence that the expression used was “opening”, not practical completion or
completion. He was asked:
“Q: Are you certain that the words used at the meeting at which Mr. Walker attended was not “practical completion” or “completion”- “practical completion” under the contract but “opened”?
A: We all used the word “opened” but as I said to you before, we probably envisaged certain things
being done for opening to be achieved.”

38    The referee summarised McGilvery’s evidence as follows:

“157. Mr. McGilvery’s oral evidence is strongly confirmatory of material portions of the evidence of Messrs Delahunty, Ambler, Irving and Mitchell. It supports the position that there was, either in February or in early March a meeting at which it was agreed by those present, excluding Mr. Delahunty, that liquidated damages would not be imposed if the centre was in a position to be opened on the 24th March. It confirms that Mr McGilvery had a conversation with Mr Delahunty to that affect. It confirms that subsequent to that arrangement, there was a second telephone conversation with Mr Delahunty advising him of deferment of opening until 31 March. It confirms that Mr. McGilvery did advise Mr Ambler that the opening was deferred to 31 March, although his evidence in chief that he had reserved that week as “our week” was not challenged in cross examination. His confirmation of having said to Mr. Delahunty “You’ve got another week” suggests the contrary. It confirms that the discussions were about “opening” not Practical Completion.”
158. Of importance is Mr McGilvery’s evidence that it was apparent to him, and he made plain to Mr Walker and Mr Dransfield if it was not otherwise apparent to them, that by late January or early February there was no prospect of the centre being opened on the 17th March, and that the suggestion of an arrangement to trade liquidated damages for a certain opening date came from him, and was advanced for good commercial reasons, in particular, the certainty necessary to plan an opening date for the shopping centre. The only conflict of substance between Mr McGilvery’s evidence and that of Messrs Delahunty, Ambler and Mitchell is whether Mr McGilvery extended the date for opening from the 24th to the 31st of March. Both he and Mr Delahunty agreed that he said “You’ve got another week. We’re not opening until the 31st.” If that be accepted, it is difficult to interpret that as a communication that whilst opening is delayed for one week, and another week is available to prepare the centre for opening, nonetheless the arrangement previously made shortly before regarding non imposition of liquidated damages no longer applied. If accepted, it constituted the conveying of a variation to the February agreement if the agreement waived liquidated damages if either the centre could be opened by 24 March, or Practical Completion could be achieved by 24 March by extending the date to 31 March. Mr McGilvery conveyed the changed date for opening because he was told by Mr Walker and Mr Dransfield within minutes of the meeting that the opening date was 31 March not 24 March as had been discussed.

39    The evidence of Dransfield put the February agreement as occurring on either 2 or 9 March 1998. He was in error in recalling that Mr Delahunty was at the meeting. It was his evidence in chief that, prior to 2 March 1998, he had a discussion with Walker and McGilvery concerning the extension of the date for practical completion from 17 March to 24 March 1998 and in which Walker and Dransfield acceded to McGilvery’s suggestion that he would “put forward a proposition [to CCG] to extend the contract date for practical completion from 17 March to the 24th”. The referee commented on the evidence of Dransfield as follows:

“167… However, importantly, he supplemented this evidence in his second affidavit by the following statements:
“In no conversation at any of the Monday night meetings I attended did any representative of CCG or Walker refer to the 24th of March proposal in the context of “the majority of its works” being completed by that date. The words I remember being used were “you being finished on the 24th to allow us to open” or “complete the works” or “you finish the works by the 24th so that we can open the centre”
and later he said:
“My recollection is that all of these expressions “getting the centre opened”, “achieving practical completion”, “completing the works” and “finishing the contract” were used in the discussions at the Monday night meetings in March. At the time of those discussions, it was always my understanding that the centre could not be opened unless it had reached practical completion..”
168. In cross examination Mr Dransfield adopted the passages just quoted as being his recollection. This gives strong support to the evidence of the plaintiff’s witnesses, and Mr McGilvery, that the discussions centred around the centre being in a state to be opened, rather than achievement of Practical Completion under the contract.
169. Mr Dransfield made plain that at the meeting, whenever it was held, an agreement was reached. He gave the following evidence:

“Q: You accept, do you, at this meeting an agreement was reached?
A: My recollection is a proposal was put and a proposal - and the proposal was accepted.
Q. And did you regard that as an agreement?
A. Yes, verbal.”
170. It is thus plain from Mr Dransfield’s evidence, and consistent with the evidence of the plaintiff’s witnesses and Mr McGilvery, that an agreement was reached at a Monday night meeting. His evidence supports the view that the discussion giving rise to that agreement related to the opening of the centre, not the achievement of Practical Completion under the contract. His evidence conflicts with that of Mr Ambler and Mr Irving regarding the date discussed being the 24th rather than the 31st March but accords in that respect with the evidence of Mr Mitchell and Mr McGilvery. His evidence supports Mr McGilvery’s evidence that he was informed of the opening date of 31 March immediately after the meeting at which the agreement with CCG was made and that the 31 March date was agreed by Mr Walker.

40    Par 170 of the report, I think, demonstrates the reasoning of the referee in resolving the conflict of evidence concerning the February agreement. It also demonstrates the manner in which Dransfield’s evidence was treated by the referee. It is noteworthy that in par 170 the referee excluded Lawes’ evidence from the analysis. I think the reason was that he did not accept Lawes’ evidence that the 2 March meeting addressed practical completion of the project.

41    I think that it is useful to keep in mind, in reading this section of the report, that the referee was concerned with more than one issue. An issue of significance was the nature of that agreement. However, a further issue of significance was the role played by McGilvery in the making of the agreement. It is clear from the report of the referee that WCL presented a case that it was Delahunty who put forward a proposal to McGilvery, not the reverse, and that McGilvery had acted in breach of his fiduciary duty to WCL in the role he thereafter played in the formulation of the agreement (see report pars 151-153).

42    It was in that context that in several portions of the report the referee referred to the “proposal” as emanating from McGilvery in discussions with Dransfield, Walker and Lawes and with representatives of CCG prior to the 2 March meeting (see for example pars 176, 216, 217 and 250 of the report)

43    The evidence of Lawes was that the agreement in relation to liquidated damages occurred at a meeting on 2 March 1998. His evidence was that discussions with McGilvery prior to the 2 March meeting centred on practical completion. He understood the proposal put forward at that meeting was the waiver of liquidated damages if practical completion was achieved by 24 March. Of Lawes’ evidence the referee found as follows:

“176 . This evidence is confirmatory of the evidence of Mr Delahunty, Mr Ambler and Mr McGilvery regarding the genesis of the February agreement, and in particular, that Mr McGilvery had raised the proposal put both with Mr Walker and Mr Lawes in advance of putting the proposal, and also had raised it with Mr Delahunty and Mr Ambler on behalf of CCG. All persons had accepted the proposal, as had Mr Dransfield, in advance of it being raised.”

44    That finding is relied upon by WCL as evidencing some inconsistency in the referee’s reasoning. I think that is, clearly, not the case. It is obvious from the evidence quoted by the referee preceding par 176 and in subsequent paragraphs of the report that the referee recognised that the evidence of Lawes was that the pre-2 March discussions and the proposal at the meeting of 2 March 1998 concerned the extension of the time for practical completion. That the referee was under no misapprehension about that is reflected in the referee’s finding at par 184 of the report, as follows:

“184. The evidence of Mr Lawes supports the defendants’ case. His evidence makes plain that there was an agreement regarded by all who attended as binding on both parties, and as operating as a variation to the Agreement. Mr Lawes recollection of the discussion was that it centred around Practical Completion, not opening. That recollection is to be assessed with the evidence of the other witnesses, and assessed against the background that Mr Lawes knew, and as must all others on site have known if they considered the matter, that Practical Completion under the Agreement could not be achieved by the 24th March, or indeed the 31st March.”

45    In my view, all that the referee was seeking to do in par 176 of the report was to identify areas of agreement as to the means by which agreement was reached at the 2 March 1998 meeting: namely, by matters being raised by McGilvery with representatives of CCG and with representatives of WCL prior to the 2 March 1998 meeting and obtaining some measure of agreement in advance of that meeting. In saying that “all persons had accepted the proposal… in advance of it being raised” the referee should not be understood to have lost sight of the two competing versions of the proposal.

46    I am satisfied that the referee was fully aware of and commented upon the evidence (of Lawes in particular) which was inconsistent with the evidence of the CCG witnesses on the nature of the proposal under discussion.

47    There is some logic in WCL’s submission that, if it is accepted that the WCL discussions prior to the 2 March 1998 meeting concerned extension of practical completion, it was likely that the proposal advanced at that meeting was to waive liquidated damages for an extension of the date for practical completion. However, it does not necessarily follow and the task that confronted the referee was to evaluate all of the evidence and, in particular, the evidence of what, in fact, was said at the 2 March 1998 meeting.

48    On that score, I think it was open to the referee, on the evidence cited by him, to find that the 2 March meeting discussion centred upon the opening of the shopping centre and not upon practical completion.

49    In assessing the reasoning of the referee in reaching that finding, it is necessary to have regard to the referee’s finding in par 213 of the report in which the referee found that he was unable to accept the evidence of Walker unless it was “independently corroborated or contrary to interest”. That finding was made after a very extensive analysis of the evidence of Walker which is to be found between pars 185 and 213 of the report. I think it is unnecessary to examine the particular criticisms of Walker’s evidence as found by the referee.

50    The whole of the evidence of the February agreement was then analysed by the referee between pars 214 and 223 of the report. The referee found that agreement was reached between the parties on 2 March 1998. There was no dispute that an agreement of some kind was reached between the parties.

51    The referee accepted the evidence of McGilvery that the reason for advancing the proposal concerning liquidated damages centred upon the importance to WCL of reaching agreement on a date for the opening of the shopping centre (par 216).

52    The referee found that a proposal was raised by McGilvery, in advance of the 2 March meeting, with representatives of CCG and also with representatives of WCL. The reason for its acceptance by Walker was to get the centre finished on time for opening by 31 March 1998, consistently with WCL’s promotion program for the opening of the shopping centre.

53    These discussions took place at a time when it was generally known that elements of the complex could not reach practical completion by the end of March 1998 (par 217). The referee found that:

“The emphasis of both parties was … on getting the centre finished so it could open … because it was important to WCL “ to get the centre finished on time.” ”
(pars 218-219)

54    In my view, the submission of WCL in par 23.2 of its submissions proceeds on a misunderstanding of the findings of the referee referred to in that submission, namely pars 216, 217 and 250. I am satisfied from the sections of the report referred to earlier in these reasons, that the referee well understood there was evidence of pre 2-March discussions amongst McGilvery, Lawes, Dransfield and Walker which involved submission of a proposal to CCG to extend the date for practical completion by one week and to waive liquidated damages if practical completion was achieved within that time.

55    It is equally clear, I think, that the referee, in weighing up the evidence of all witnesses to the February agreement, found that the opening of the shopping centre was the subject of the agreement and not an extension of the date for practical completion. In my view, there was ample evidence as accepted by the referee to support that finding.

56    To illustrate that point, in par 147 the referee considered evidence of McGilvery of the 2 March meeting, which, standing alone, was consistent with the matter under discussion being an extension of the date for practical completion. However, there was an abundance of evidence, which the referee accepted, which established that the subject matter of discussion prior to the 2 March meeting, at the meeting and subsequent to it, was the opening of the shopping centre portion of the complex (report pars 148, 149, 150, 151, 152, 154, 155, 156, 157, 158, 159, 163, 167, 168, 170).

57    The referee recognised that the evidence of Lawes was that the pre-2 March discussions and the discussion at the 2 March meeting concerned an extension of time for practical completion (report pars 173, 174, 177-179, 184). It is also clear from the report (pars 184, 216 - 224) that the referee did not accept Lawes’ evidence that the 2 March agreement “centred around practical completion not opening”.

58    In the light of those findings, I think it is simplistic and erroneous to treat the referee’s statements in pars 217 and 250 of the report, namely, that the “proposal was discussed by Mr McGilvery with Mr Lawes who thought it had merit”(par 217), and that “Mr McGilvery advanced the proposition which became the February agreement after discussing it with Mr Lawes, who thought it had merit” (par 250), as evidencing an acceptance of Lawes’ evidence that the agreement reached at the 2 March meeting related to an extension of the time for Practical Completion of the project.

59    As I read the report, the referee resolved the conflict of evidence as to what was agreed upon at the 2 March meeting, principally, by recourse to the evidence of McGilvery and Dransfield. In the case of McGilvery’s evidence (report pars 145-158) the referee relied heavily on his oral evidence to show that what was discussed in pre-2 March meeting discussions with Delahunty (pars 150,152,154,157,158), Walker (pars 150, 156), and Dransfield (pars 150, 156, 158), was the opening of the shopping centre and not practical completion of the project.

60    It is clear from par 155 of the report that the referee accepted McGilvery’s evidence that what was discussed in the 2 March meeting was the “opening” and not practical completion. Clearly, he preferred that evidence to the evidence of Lawes as summarised by the referee in par 184 of the report.

61    When the referee refers to the genesis of the February agreement as being found in the matters raised by McGilvery with representatives of CCG and with Walker, Dransfield and Lawes prior to the 2 March meeting (see, for example, par 176), it needs to be read in the context of the findings referred to above in which the referee resolved the issue against WCL.

62    Further, it is in that context that the statement in par 216 of the report, that the proposal accepted at the 2 March meeting “was initially advanced by Mr McGilvery to Mr Walker”, should be understood. It is erroneous in my view to treat the finding in par 216 as a statement that the referee accepted evidence that the agreement related to an extension of time for practical completion of the works, as submitted in par 23.2 of the WCL’s submissions.

63    The submission in par 23.3 of WCL’s submissions relied upon pars 147, 166 and 167 of the report. The submission was that the evidence of Dransfield to the effect that McGilvery had suggested to him and Walker that a proposal to extend the contract date for Practical Completion should be advanced by WCL to CCG representatives at the 2 March meeting was evidence that “was not contradicted, rejected nor otherwise adversely commented upon by the referee.”

64    In my view, that submission ignored the referee’s findings in relation to Dransfield’s evidence as set out in pars 167 to 170, which relied heavily upon concessions made by Dransfield in his supplementary affidavit of 26 July 1999, and in cross examination. Of that evidence, the referee found that it gave “strong support to the evidence of the plaintiff’s witnesses and Mr McGilvery that the discussions centred around the centre being in a state to be opened, rather than achievement of Practical Completion under the contract” (par 168).

65    I think the submission further overlooked the reliance by the referee upon the evidence of McGilvery in the way I have earlier examined as establishing the order of events which culminated in the February agreement.

66    The submission in par 23.4 of WCL’s submissions, which relied upon the evidence of Lawes, in my view, failed to accommodate the way in which Lawes’ evidence was viewed by the referee, particularly in the light of the evidence of McGilvery.

67    For the same reasons the submissions in pars 23.5 - 23.7, in my view are unsustainable.

68    The submission in par 23.8 mis-states, I think, the manner in which the state of completion of the project was used by the referee. As I read the report the referee legitimately had regard to the incomplete state of the works as the commercial background in which the discussions relevant to the February agreement took place.

69    Par 23.9 of WCL’s submissions is really a submission going to the weight of evidence and one that, I think, has been sufficiently addressed in the preceding reasons.

70    It will be apparent from the preceding reasons that I am satisfied that the referee did not suffer from “some patent misapprehension of the evidence” and his findings did not reflect some “perversity or manifest unreasonableness” in relation to the evidence.

71    I think a good illustration of the way WCL has challenged the findings of the referee may be found in WCL’s submissions in relation to Mitchell’s evidence. In the course of senior counsel’s oral submissions, he relied upon the evidence of Mitchell in the reference hearing as proving that the subject matter of the February agreement was practical completion of the project. The portion of Mitchell’s evidence relied upon is to be found at pages 732-734 of the evidence before the referee (exhibit 2 (3 of 3)) (tab 4).

72    Although not free of ambiguity, that evidence, in isolation, could bear the description as evidence, if accepted, of the fact that the subject matter of the February agreement was practical completion of the project.

73    According to Mitchell, after the arrival of Walker at the 2 March meeting, McGilvery stated:

“Lang has approved that proposal. There’ll be no liquidated damages if you finish by 24th of March. Otherwise they’ll run from the 17th of March.”

74    After that was said, according to Mitchell, Walker added:

“I don’t want to be silly about this but I want a commitment from you so that I can open.”

75    The ambiguity in that exchange was emphasised in cross- examination of Mitchell as follows :

“Q. At the end of that meeting you understood that the date required by Walkers for this deal for practical completion was 24 March, didn’t you?
A. I understood that the date required for the opening was 24 March.”

76    That evidence may be examined alongside pars 135 -144 of the report in which the referee analysed the evidence of Mitchell, some of which I have referred to earlier in these reasons. From pars 137 -142 the referee quoted and cited passages from the evidence of Mitchell which supported a finding that the subject matter of the February agreement was the opening of the centre (see particularly pars 141 and 142 and also the summarising observations of the referee in pars 143 and 144).

77    When regard is had to the evidence relied upon by the referee in relation to his findings in pars 135 to 144 of the report and to the evidence relied upon by WCL in its submissions before me, in my view the referee had ample evidence before him to support the findings made in relation to the evidence of Mitchell and reveals the nature of WCL’s challenge as one going to the weight of evidence and not demonstrating manifest unreasonableness, perversity or mistake on the part of the referee.

78    The referee’s findings in relation to the nature of the February agreement as one concerned with the opening of the shopping centre should, in my view, be adopted.

Referee’s finding as to the “true opening date” of the shopping centre

79    The disputed findings in par 224 of the report in relation to this subject matter were identified in WCL’s written submissions as follows:

21.2 The finding that the February Agreement was “that no liquidated damages would [be] imposed if CCG met WCL’s nominated opening date”: Report, para.224. See Submissions paras 24-26.
21.3 The finding that Mr McGilvery “ communicated the true opening date”; being 31 March rather than 24 March 1998, to Messrs Delahunty and Ambler, thereby (presumably) inserting “31 March” into the February Agreement as “WCL’s nominated opening date”: Report paras.224,1371,1420(f). See submissions paras.24-26.

80    WCL’s written submissions on those findings were as follows:

“24. The Referee found that:

24.1 the February Agreement was “that no liquidated damages would imposed (sic) if CCG met WCL’s nominated opening date”: Report, para.224;

24.2 Mr McGilvery “communicated the true opening date”, being 31 March rather than 24 March 1998, to Messrs Delahunty and Ambler, thereby (presumably) inserting “31 March” into the February Agreement as “WCL’s nominated opening date”: Report paras.224, 1371.
25. The finding referred to in paragraph 24.1 should not be adopted because:
25.1 there was no evidence at all from any witness that anyone at the 2 March meeting, or in any prior proposal put by Mr McGilvery, said anything to the effect that liquidated damages would not be imposed “if CCG met WCL’s nominated opening date”;
25.2 a finding of such an agreement is contrary to the findings of the Referee referred to in paragraphs 22, 23.1 and 23.2 above;
25.3 CCG never pleaded such an agreement;
25.4 Not even Mr McGilvery thought he was extending the agreement made on 2 March by nominating the true opening date; he thought he was just advising CCG of the opening date which he had just learned about before they heard it in the media. The Referee said that “Mr McGilvery took (what he had been told about the opening date) to be a variation to the agreement publicly reached, for he rang Mr Delahunty and said ‘You’ve got another week’ ”. But there was no evidence at all that Mr McGilvery interpreted what he had been told in that way.
26. If the finding referred to in paragraph 24.1 above is not adopted, the finding referred to in paragraph 24.2 cannot be adopted.”

81    It is evident from the report that the referee regarded the commercial sub-stratum of the February agreement as being the objective of WCL to open the shopping centre in accordance with its launch program formulated in February 1998 (pars 52-99 of the report).

82    It is plain from that section of the report that there was ample evidence to warrant the conclusion that a major concern of WCL, in entering the February agreement, was to fulfil a commitment to open the shopping centre in March 1998 in accordance with its launch program (see, in particular, pars 65, 66, 67, 73-85).

83    The findings of fact set out in pars 100 to 223 of the report, I think, were open to be made by the referee in his analysis of the evidence in relation to the February agreement.

84    The referee accepted that the essential element in the February agreement was completion of the centre to enable it to be opened for trading as planned by WCL, it having the strongest commercial interest to ensure that the centre opened in accordance with its advertising campaign announcing the opening. That is my understanding of the referee’s construction of the February agreement as relating to the “true opening date” of the centre.

85    It was found by the referee that, as at the date of the February agreement, the date under discussion was 24 March 1998. However, the evidence, which the referee accepted, established that, immediately after the 2 March meeting, it was disclosed that the planned opening date was 31 March 1998. I do not understand there to be any dispute that the parties thereafter worked towards opening the centre on that date and, as found by the referee, the centre opened on that date and continued trading thereafter: a finding itself that is challenged as examined later in these reasons.

86    Upon that approach to construction, treating the February agreement as one to complete the centre to enable it to be opened in accordance with WCL’s planned opening (ie the true opening date), then the substitution of the 31 March date for 24 March shortly after the 2 March 1998 meeting should, in my view be regarded as a machinery provision not involving a variation of the February agreement.

87    That this is the true construction of the February agreement as found by the referee is confirmed in par 1420(f) of the report as follows:

“(f) The February agreement, made on 2 March 1998, was not made by Mr McGilvery. It was advanced by him as a proposal in the interests of WCL. Mr Lawes thought it had merit. Mr Dransfield and Mr Walker approved it. The agreement was, in essence, that liquidated damages would not be imposed if CCG brought the project to a state where the shopping centre complex could be opened by WCL’s planned date. At the time when that agreement was made, WCL knew that that date was 31 March, but Mr McGilvery and CCG did not. When Mr McGilvery learned that the opening date was 31 March he communicated that information to CCG before it became public. That did not constitute the making of a new agreement but rather a communication to CCG that the opening date which under the February agreement it was obliged to meet to avoid the imposition of liquidated damages was 31 March rather than 24 March.”

88    To like effect is the referee’s finding in 1371 of the report as follows:

“1371. The third aspect is his communication to CCG that the opening date was 24 March, which was the basis on which the February agreement was made that liquidated damages would not be applied if the works could reach a stage sufficient to open the shopping centre, but rather 31 March. This was simply a communication of the revised opening date once it became known to Mr McGilvery, and was not the making of any separate agreement by him with CCG.”

89    Whether the substitution by McGilvery, shortly after the 2 March meeting, of 31 March for 24 March as the opening date, was an implementation of the February agreement to complete the centre by the planned opening date or was a variation of the February agreement is, in my view, of little practical consequence, having regard to my findings later in these reasons, as to the authority of McGilvery to substitute the 31 March date for 24 March.

90    WCL’s submission that the February agreement as found by the referee had not been pleaded has little substance having regard to the form of the pleading and contention c (11) of the summons and the particulars furnished in contention c (13).

91    In my view the referee’s findings on this issue should be adopted.

McGilvery’s Authority

92    The nature of the issue raised by WCL in relation to this aspect of par 224 of the report was presented in WCL’s written submissions as follows:

“41. The Referee found that Mr McGilvery had ostensible authority to vary the February Agreement by nominating
the actual opening date: Report paras. 224, 1371, 258.
42. This finding should not be adopted because the Referee erred as to the basis in law upon which he found
ostensible authority, for the following reasons:
42.1 the Referee found that Mr McGilvery had no actual authority to extend the time of the February
Agreement from 24th March to 31st March. This must clearly have been so because the uncontradicted
and unanimous evidence of all witnesses was that Mr McGilvery had expressly stated to CCG, prior to the 2
March meeting and in Mr Walker’s presence at that meeting, that only Mr Walker had the authority to
make agreements affecting liquidated damages;
42.2 Mr McGilvery did not regard himself as having any authority to vary the agreement reached on 2 March as to what was required to happen on the 24th March. There is no evidence at all that at the conclusion of the 2 March meeting he regarded “both Mr Walker and Mr Dransfield as having agreed to further extend the agreement made with CCG that if the shopping centre would be opened by 31 March, rather than 24 March, no liquidated damages would apply.” That finding by the Referee is unsupportable.
42.3 It is axiomatic that if an agent without actual authority is to bind his principal by reason of apparent or ostensible authority, the principal, not the agent, must have made a representation, intended to be and in fact acted upon, that the agent has authority to enter on behalf of the principal a contract of the kind within the scope of the apparent authority.
42.4 There is no evidence at all that Mr Walker or Mr Dransfield had any discussion with any officer of
CCG after the 2 March meeting which could in any way have represented that Mr McGilvery had authority
to vary what was agreed on 2 March. No such allegation was pleaded by CCG. The only evidence as to Mr
McGilvery’s authority, actual or ostensible, was that referred to in paragraph 42.1.
42.5 The Referee did not make any finding that WCL had represented in any way that Mr McGilvery was
authorised to vary the agreement of 2 March.
42.6 The Referee’s finding of ostensible authority was apparently based on the unchallenged evidence of
Messrs Delahunty, Ambler and Irving that they had relied on Mr McGilvery’s statements about WCL not
imposing liquidated damages if opening was achieved on the 31st March. But all of the statements of Mr
McGilvery relied on were the statement (sic) made prior to the 2 March meeting in which Mr McGilvery
made it clear that everything that he was proposing was subject to Mr Walker’s express agreement and
that he could agree nothing on his own authority: see paragraph 42.1.
42.7 The Referee found that “there was nothing to suggest [to CCG] that, when [Mr McGilvery] was told
of the true opening date, he did not have authority to either extend the agreement… or convey a supposed
decision of WCL that as the opening date had been deferred from the 24th to the 31st March so too was the
date by which CCG had to achieve a state to permit opening…” On the contrary, there was evidence of a
disclosed lack of authority: see paragraph 42.1.
42.8 Further, the Referee addressed himself to the wrong question. He should have asked himself whether
there had been anything done or said by Messrs Walker or Dransfield as at the time Mr McGilvery said
you’ve got another week” which could have suggested to CCG that the authority which CCG knew Mr
McGilvery previously lacked had now been conferred on him.

42.9 There is no reason why WCL is not able to raise Mr McGilvery’s lack of authority. The February
Agreement (with the date of 31st March) as pleaded and particularised by CCG at all times was said to
have been agreed at the meeting which Mr Walker attended. WCL denied the terms of that alleged
agreement and its evidence was that the only date agreed by Mr Walker was the 24th March. No issue of
authority arose at that stage because the February Agreement was alleged to have been made by Mr
Walker himself.

42.10 During the hearing it became apparent from the evidence that there had been no discussion of 31st
March at the meeting attended by Mr Walker. In Written Submissions on the February Agreement filed by
WCL during the course of evidence, in accordance with the Referee’s direction, WCL raised the issue that if
the February Agreement containing the 31st rather than the 24th March was relied on, that agreement
could not have been made subsequently by Mr McGilvery because he had no authority. The parties
addressed the Referee on the February Agreement during the course of evidence. CCG filed Written
Submissions on Fiduciary Obligation in which it raised for the first time the contention that “the date for
the purposes of the [February Agreement] was always the date of opening, said initially to be 24 March
then revealed to be 31 March.”

42.11 Neither party objected to the submissions of the other on the issue of Mr McGilvery’s authority on
the basis that further evidence would be required and that irremediable prejudice would be suffered if the
submission were entertained. The Referee has not made such a finding. He dealt with the submissions of
both parties on that issue. There is no basis for holding that WCL should not be allowed to rely on the
submission.
42.12 The Referee should have found that, whatever CCG had to achieve under the February Agreement,
it had to achieve by 24th March, because Mr McGilvery had no authority to vary that date.”

93    As stated in these reasons, I think that the referee was correct in finding that McGilvery’s communication to CCG of the 31 March date, shortly after the meeting of 2 March, was done in furtherance of the February agreement (see pars 224 and 252 of the report).

94    On that view of the February agreement there was nothing exceptional in McGilvery conveying to CCG the “true” date of the planned opening of the shopping centre. The question of ostensible authority only arises, I think, if McGilvery’s communication of the 31 March date to CCG is characterised as a variation of the February agreement. The referee has found that, although he did not regard that communication as such a variation, McGilvery had no actual authority to vary the February agreement.

95    However, the referee also found that it was not open to WCL to raise the issue of McGilvery’s authority to vary the February agreement (see pars 252 and 253 of the report). In my view, those paragraphs reflect a proper exercise of the referee’s discretion in precluding WCL from raising the issue of McGilvery’s authority.

96    In any event, the referee found that McGilvery had ostensible authority to vary the February agreement (par 258). The matters relied upon by the referee in pars 256 and 257 of the report, in my view, fully support the finding in accordance with long standing authority. See Freeman & Lockyer (A Firm) v Buckhurst Park Properties (Mangal) Ltd (1964) 2 QB 480 at 503-505, noting that, in the view of Diplock LJ, the “commonest form of representation by a principal creating an “apparent” authority of any agent is by conduct, namely, by permitting the agent to act in the management or conduct of the principal’s business” (at 505).

97    Pars 256 to 258 of the report are set out for ease of reference:

“256. Mr Walker said that “certainly McGilvery had no authority, after all the work leading up to getting one week’s extension, to extend that of his own volition for another week”. However he accepted that there was never any discussion upon the authority nor any limitation placed upon it.”
257. Mr McGilvery had been the spokesman for WCL who had negotiated the Hoyts variation at a cost of $2.25
million, including substituting a monetary sum for a significant time claim. He had also been the person who, prior to the 2nd March, had raised with Mr Delahunty and Mr Ambler, the proposal which became the February agreement and which centred around assurance of a date for opening. That proposal was publicly put and agreed to by Mr Walker. It is true that in the discussions Mr McGilvery made clear that the proposal was subject to Mr Walker’s agreement, but once that was achieved, it was he who communicated the agreement. There was thus nothing to suggest that, when he was told of the true opening date, he did not have authority to either extend the agreement which he proposed and Mr Walker had agreed to, or to convey a supposed decision of WCL that as the opening date had been deferred from the 24th to 31st March so to (sic) was the date by which CCG had to achieve a state to permit opening. In fact
that is what he did. The essence of the February agreement was related to opening; when the date for
opening changed, communication of that change with the statement “you’ve got another week” was
consistent with the authority which Mr McGilvery had previously exercised. There was nothing to suggest
that he was not communicating the decision of WCL. That is the manner in which his communication is to
be characterised, not as a variation to the February agreement.
258. In my view it is not open to WCL to raise in submissions the issue of Mr McGilvery’s authority. However if a contrary view be taken, I am of the view that he had ostensible authority. Further, properly characterised, his communication was not a variation to the February agreement.”

98    While the referee accepted that McGilvery in discussions with CCG representatives, disclosed that the proposal under consideration was “subject to Mr Walker’s agreement,” it does not follow that this represented a “disclosed lack of authority”, as submitted on behalf of WCL, having regard to the matters referred to in pars 256 and 257 of the report.

99    In my view, WCL’s written submissions (pars 42.3 - 42.8) fail to meet the findings of the referee in pars 256 and 257 and confused the question of reliance with the matter of representation. For ostensible authority to be established there must be:

“a representation, made by the principal … intended to be and in fact acted upon … that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the “apparent” authority, so as to render the principal liable to perform any obligations imposed upon him by such contract.”
( Freeman at 503)

100    WCL’s submission in par 42.6 referred to pars 253, 254 and 255 of the report. Those paragraphs are concerned with the findings of the referee on evidence of reliance by CCG on WCL’s representation of McGilvery’s authority.

101    In my view, the referee’s findings as to the authority of McGilvery should be adopted.

February Agreement in breach of McGilvery’s fiduciary duty to WCL

102    WCL challenged the following findings of the referee:

“1367. In my view there is no evidence at all that Mr McGilvery acted contrary to the interests of WCL and in the interests of CCG. Indeed, such evidence as exists makes clear that at all times Mr McGilvery acted in WCL’s best interests. The evidence discloses five instances when Mr McGilvery acted in circumstances involving CCG. Those circumstances are the resolution of the Hoyts variation problem, the proposing of the February agreement, the communicating of the new opening date being 31 March rather than 24 March, interfering with certification by George Floth Pty Ltd, and instructing the architects, Buchans, not to issue their certificate until WCL said so.
…
1417. Mr McGilvery had a contractual duty pursuant to his company’s consultancy agreement with WCL not to act contrary to the interests of WCL. I do not think it necessary to decide whether that constitutes a fiduciary relationship. Assuming that it does, I have found that his obtaining of the consultancy agreement with CCG was not related to his position with WCL, nor was it related to his position as a consultant to WCL having some influence in relation to the Broadway Shopping Centre Project. I have also found that he did not place himself in a position in which his interests would or might conflict with his duty to WCL because his consultancy agreement with CCG was on the specific basis that he would not act contrary to the interests of WCL, and thus the Broadway Project was quarantined or excluded from that consultancy. Once Mr Walker agreed to him becoming a part time consultant to WCL, he was entitled to enter into other consultancies provided they were not in conflict with his continuing duty to act in the interests of WCL, relevantly in relation to the Broadway Project. Accordingly I reject the submissions in paragraph 1 and paragraph 3 of the Defendant’s closing submissions.
…
1419. By excluding or “quarantining” the Broadway Project from the CCG consultancy, the parties to it negated what otherwise would have been a conflict of interest. That is because the agreement did not apply to the Broadway Project. It follows that in entering into the CCG consultancy agreement, Mr McGilvery was not in breach of any duty he owed to WCL. Further, as a matter of fact, I find that Mr McGilvery did not act otherwise than in the best interests of WCL. There was thus neither a conflict of interest and duty, nor any breach of duty.
1420. …
(b) The obligations under the consultancy agreement with WCL required Mr McGilvery to act in the interests of WCL against CCG. The CCG consultancy agreement did not conflict with those obligations because the CCG agreement was on the basis that no obligations pursuant to the CCG agreement attached to Mr McGilvery when he was acting on behalf of WCL, it being specifically accepted that in those circumstances he should act in the best interests of WCL. The two consultancies thus did not conflict.

422    The ‘fitout’ of the cinemas was not part of the contract so that the referee’s finding of delay is, at least, in part, dependent upon there being uncompleted contract works at the time of the fitout, which, in turn, were dependent upon completion of the fitout.

423    On 2 May 1997, CCG made a claim for an extension of time arising out of the Hoyts variation, claiming an extension to 2 June 1998 (par 845 of the report).

424    On 24 January 1998, substantial completion of the cinema complex was certified under the contract and hand-over for fitout was given to Hoyts on 25 February 1998 (par 850). I do not understand there to be any dispute that substantial completion was achieved by CCG’s acceleration of the works to combat delay associated with the Hoyt’s Variation.

425    Under the contract, time for fitout was allowed at forty working days. Under the agreement in fact entered into between WCL and Hoyts, sixty calendar days were allowed which meant that fitout would not be completed until 26 April 1998. In fact, the agreement between Hoyts and the fitout contractors provided for completion by 28 April 1998 (par 852).

426    The essential findings by the referee as to the fitout delay that ensued were in the following terms:

“853. Whilst the base building work was Substantially Complete prior to the 17th March 1998, the work the subject of the Hoyts variation was not entirely complete because there remained work which CCG was obliged to do under the Agreement to obtain Practical Completion of the Project (including Hoyts theatres), which work could not be performed until after completion of the fitout by Hoyts’ fitout contractor. The evidence is, in my view, overwhelming that there remained work to be done under the variation. The work of CCG included the installation of services including electrical, airconditioning, plumbing, and fire fighting services involving smoke alarms, fans, sprinklers, and emergency lights. Many of these services required modification as a consequence of the Hoyts fitout. Further, after fitout it was necessary for the base installations, as modified as a result of the fitout, to be integrated with monitoring systems, tested and certified by the appropriate engineers. Warranties in respect of the final installation were to be provided by the subcontractors. It was only after this that, formally, could the Certificate of Classification allowing occupation of the whole of the Project be obtained, and compliance with the conditions of building and development approval be achieved. This was made plain to WCL by CCG in its letter of 10 June 1998 when it wrote:

“Please be advised that we have not yet been able to conduct final “BCA Compliance” inspections throughout the cinema area as a result of the cinema fitout impacting on the base building works.

We take this opportunity to inform you that we will require a reasonable period of time once the cinema fitout works are complete so we may ensure the base building works are complete and ready for certification, sign-off and inspection to achieve BCA compliance certification.

We await your advice as to when the cinema fitout works are complete so we can make the necessary arrangements.”
There was no response to this letter prior to the 23rd June 1998. The theatre variation work was on the critical path on the July programme. Thus the contractor had an entitlement to an extension of time pursuant to clause 9.05.02. It had claimed an extension of time but no extension had been agreed.
…
864. As discussed elsewhere, in my view the evidence is overwhelming that there were adjustments to be made to services in the nature of sprinklers, fire fighting equipment, exit lights and other emergency services which could not be attended to until after the Hoyts fitout was complete. Only after such adjustments would there be proper testing of all services sufficient to enable the obtaining of the certificates necessary for Practical Completion. The work was work which CCG was obliged to do under the terms of the Agreement, being work after Substantial Completion, and after fitout. The delay necessarily resulting from the Hoyts fitout contract not being let until 3 March, and operative from 25 February, and with a period of 60 days contract time, necessarily meant that the Project, which included the Hoyts cinema, could not be practically complete until that work was done post fitout.
…
866. If the Hoyts Variation be regarded as a variation extension of time matter attracting clause 9.05, an extension of time could be granted because the Hoyts Variation work was on the critical path of the contract construction programme. It was applied for (10 weeks), but not determined by the Administration Manager. As the work under the variation could not be completed until after the fitout work was complete, the extension of time must be until a time after that date. That means the contractor was entitled to an extension of time until at least 23 June 1998.”

427    If those findings by the referee were sound, then, in my view they only add to the seriousness of WCL’s conduct in resorting to the liquidated damages provisions of the contract and what that entailed, while imposing impossible and unjustified requirements upon CCG in its efforts to achieve practical completion.

428    WCL does not challenge the finding of the referee that the Hoyts Variation was on the critical path of CCG’s Construction Program.

429    The argument advanced on behalf of WCL is not the most meritorious case advanced in these proceedings.

430    It is acknowledged by WCL that the original scope of works, so far as they included the cinema area, provided for construction of a building to house eight cinema areas to be substantially completed by 24 January 1998 and to reach practical completion by 17 March 1998.

431    It is common ground that those works were varied by requiring the construction of a building to encompass twelve cinemas. The works being on the critical path, it could not be seriously suggested that such a variation would not delay “the construction of [a] critical activity noted on the critical path of the Construction Programme”. It is not disputed that CCG, in effect, responded to WCL’s ‘request’ to accelerate the works in achieving substantial completion of the Hoyts Centre by the time stipulated in the contract.

432    WCL challenges the referee’s finding that CCG was entitled to an extension of time for practical completion “until at least 23 June 1998”, on the basis that CCG had failed to comply with the contractual provisions entitling it to an extension of time.

433    WCL also contended that the referee was in error in finding that CCG was entitled to delay costs related to this variation on the basis that CCG had failed to comply with the contractual provisions entitling it to delay costs.

434    These contractual provisions required CCG to give prescribed notices of claims for extension of time and delay costs. The rationale for those provisions lies in affording the Administration Manager the opportunity of considering the effect of a claimed variation on contract time and costs at the time of performance of the subject work and to give such instructions as are deemed appropriate to avoid or minimise those impacts.

435    In this case the parties entered into an agreement in relation to the variation which provided for payment to CCG of $2,225,000. That sum included the amount of $400,000 as acceleration costs.

436    Although the agreement was subject to a condition subsequent which was unfulfilled, namely, reaching agreement in relation to an unrelated variation, it could not be said that the Administration Manager and WCL were not fully informed of the nature of the variation and as to its related effect on time and costs of performance. In fact the referee found as follows:

“852. The work to be performed by CCG with respect to the Hoyts theatres involved base building works excluding fitout. The base building work was Substantially Complete before 17 March 1998, namely on 24 January 1998. No question of non-compliance with the contractual provisions for application for an extension of time arises because WCL accepted that there was an entitlement to a time extension and agreed to pay the sum of $400,000 in lieu of granting that extension of time. CCG agreed to accept that sum in lieu of time.”

437    I think that reasoning is correct. Even if WCL’s challenge to that paragraph, based on legal arguments was a valid one, the paragraph is beyond criticism.

438    It was argued on behalf of WCL that the notice provisions of the contract could not be waived or “dispensed with”, relying upon cl 1.09 of the contract, a provision against modification of the contract other than by deed and “except with the prior written consent of [WCL]”…. WCL could not and did not waive the requirement in the case of the clause 9.05.02 notice because CCG had immediately started work on the [Hoyts] variation”. Cl 9.05.02 required the giving of notice of a variation that was likely to cause delay “prior to commencing the execution of that Variation”.

439    As stated, I think the referee was correct in finding waiver of notice in respect of time and delay costs related to the Hoyts variation. Further, I would strain to avoid the consequence inherent in applying WCL’s construction of the contract to the facts of this case, in the face of the undisputed facts relating to the Hoyts variation. I would not regard that task as a particularly difficult one on the evidence before the referee tendered by CCG in the proceedings before me.

440    It was further argued on behalf of WCL that the referee, in finding CCG to be entitled to an extension of time to “at least 23 June 1998”, had failed to distinguish between the effect of the Hoyts variation, which related to the increase in theatre areas from eight to twelve, and the effect of the fitout on achieving practical completion of the Hoyts centre under the contract.

441    That submission is based primarily upon par 839 of the report which identified one of five matters to be considered in relation to CCG’s claims for extensions of time as being “Hoyts Cinema Variation, including fit-out”. In my view, that argument is simplistic and mis-states the reasoning of the referee at pars 840 et seq of the report (see in particular pars 852, 853, 864 and 866).

442    The remainder of the submissions advanced on behalf of WCL in challenging the referee’s finding that CCG was entitled to an extension of time under the contract are, essentially, weight of evidence contentions that do not justify a finding that the referee misunderstood the evidence or was manifestly wrong in evaluating the evidence.

443    One starts with the referee’s finding that the evidence was “overwhelming that there remained work to be done under the [Hoyts] variation” which could not be performed until after completion of the fitout by Hoyt’s fitout contractor”. The referee’s findings as to the time of performance of the fitout are not in dispute, in particular, that the fitout contractors did not complete that work prior to 23 June 1998, the theatres being opened on 2 July 1998 (pars 863 and 865 of the report).

444    The submissions on behalf of WCL are summarised in the written submissions as follows:

“51. The only available conclusion is that, until late March 1998, the fact was, as the parties well knew, that had CCG performed its obligations under the Contract its works would not have included any follow-on works in the Hoyts Premises. That is reinforced by a consideration of the letter from CCG to WCL of 11 May 1998. In it CCG asserts (in the third paragraph) that the Hoyts Variation involved removing the tenancy fit-out for the cinemas from the scope of its works. That was false and a reflection of the fact that in writing the letter which terminated the Hoyts Variation agreement CCG was searching for a basis (which did not exist in fact) to assert the Hoyts Variation had involved a change which necessitated for the first time follow-on works.”

445    The reference to the letter of CCG of 11 May 1998, is a reference to the letter set out in par 855 of the report.

446    The submissions on behalf of WCL are, in substance, a repetition of the arguments and a reliance upon the same evidence as was the subject of WCL’s submissions which failed before the referee (see Ex 1, vol 1, tab 7). That case was met by CCG in the submissions presented to the referee on its behalf (see Ex 1 vol 2, tab 4 particularly pars 15-22).

447    I think it is sufficient to note, from the findings of the referee that he accepted the evidence relied upon by CCG in those submissions in reaching the conclusion that the Hoyts variation could not be completed until the fitout was completed (see in particular par 853 of the report and the evidence noted in foot note 591). It was that evidence that the referee referred to as “overwhelming” (par 864 of the report).

448    It follows that the referee’s findings as to delay occasioned to CCG by the Hoyts variation should be adopted, in particular that CCG was delayed in the performance of critical activities until “at least 23 June 1998”.

449    There was advanced an argument before me on behalf of WCL that CCG’s case in repudiation should be approached on the basis that the contract was a losing contract for CCG and that its conduct leading up to its purported termination of the contract was contrived.

450    This aspect of the case did not receive any particular attention by WCL until a series of supplementary submissions with related evidentiary material was presented between 29 August and 14 September 2000.

451    In WCL’s principal submissions of 19 August, reliance was placed upon Ex 8 of the evidence before the referee which included CCG’s project reports for the months of March to June 1998 which referred to projected losses increasing from $4,826,476 in March to $15,432,578 in May and slipping back to $13,772,095 in June 1998.

452    There was evidence of Irving that there was a “considerable cost overrun”, although not of the magnitude of ‘projected’ losses referred to in the monthly reports.

453    It was submitted that CCG’s motivation in “engineering” a case of repudiation was to enable it to recover on a quantum meruit basis and so avoid the consequences of a losing contract.

454    While not discounting that factor as one which could be taken into account in assessing conduct of a principal said, by a contractor to be repudiatory, it is far from a significant factor and one frequently, in my view, associated with disputes involving termination of a contract for repudiation.

455    Ultimately, the judicial exercise is one of evaluating the conduct alleged to be repudiatory, regardless of the motivation of the party rescinding for repudiation. It is difficult to envisage a case where a party rescinding elects to claim on a quantum meruit basis where prospects of a losing contract are not hovering around.

456    Further, one of the difficulties in paying too much attention to such a factor as projected losses by a contractor during the course of performance of a contract, is that such projections usually do not take into account the damages occasioned by breaches of the principal.

457    It is apparent from the projected income in CCG’s monthly reports that CCG had not taken into account the full measure of income represented by the referee’s finding in relation to CCG’s contractual claim in these proceedings.

458    Further, the difference between the sums found to be due to CCG, respectively, on a quantum meruit basis and under the contract, was not that significant. Before interest, the referee found that, in quantum meruit, CCG was entitled to $13,970,177, while, in contract, he found the entitlement to be $11,017,591.

459    In WCL’s further submissions of 14 September 2000 the “motivation” issue was expressed as follows:

“3. The question of the plaintiff’s motive for its actions in the critical period leading up to the termination of the contract was therefore an issue before the referee, yet he has failed to deal with it. This circumstance can only reinforce that the Court would not have the required degree of comfortable satisfaction in adopting the report at least in relation to the repudiation issues. A failure to deal with an important issue is a circumstance which must be taken into account in deciding whether to adopt or reject the report.”

460    I would have considerable hesitation in attributing to the referee, with his experience in the field, an oversight such as that ascribed to the referee’s reasons on the issue of repudiation.

461    It was submitted on behalf of CCG that:

“Nowhere (in WCL’s submissions before the referee) did [WCL] submit that the Broadway contract’s profitability motivated [CCG’s] actions up to 23 June 1998, nor was any submission made as to how such a fact would affect a finding that the contract was repudiated by [WCL]”.

462    It was further submitted that the “motive point had dropped off [WCL’s] agenda by the end of the reference and the referee was not asked by [WCL] to make any finding about it.”

463    In reviewing WCL’s submissions before the referee, I think, it is sufficient to observe that those submissions do not justify WCL in now attributing to CCG’s financial position under the contract the characteristic of an “important issue” before the referee.

464    In any event, in the face of the findings of the referee on repudiation which should be adopted, I would place such an issue in a very low level of relevance to the ultimate findings of the referee on repudiation.

465    Accordingly, in relation to the quantum meruit case of CCG and its claim of delay in relation to the Hoyts variation, I am of the view that the referee’s report should be adopted save where I have expressly refrained from adopting particular findings or reasoning.

466    Where I have not directly addressed particular paragraphs in the quantum meruit case comprised within the report, those paragraphs have been, nevertheless, adopted by me in assessing CCG’s quantum meruit case.

467    In relation to the alternative contract case, I have limited any express consideration of the report to findings that I regarded as having some bearing on the quantum meruit case. Those findings of the referee are adopted.

468    It has been unnecessary to consider further findings of the referee on CCG’s alternative contract case. However, I think it may be of assistance to observe that I have examined that section of the report and agree with its reasoning and conclusions, on the assumption that the evidence cited by the referee has been correctly stated.

469    The dispute between the parties as to the valuation of the Hoyts variation (pars 691-723) rests in contentions by WCL that the referee misunderstood the outcome of joint conferences involving the parties’ respective experts and wrongly favoured CCG’s expert over the opinion expressed by WCL’s expert.

470    Even if one accepted that the referee misunderstood that outcome, what is plain from a reading of the report is that the referee (a) favoured a principle of quantification which had actually been employed on site during performance of the work, (b) rejected the opinion of WCL’s expert that such an approach was “impossible”, (c) did not favour the approach of WCL’s expert.

471    The referee regarded the assessment of WCL’s expert as disproportionate to the likely value of the variation and preferred the opinion evidence advanced on behalf of CCG.

472    When regard is had to the expertise of the referee in this field, I think his conclusions in this section of the report should be adopted: viewing the submissions on behalf of WCL when reduced to essentials, as amounting to a weight of evidence argument.

473    By a further amendment to the summons, CCG sought an additional form of relief, namely:

“A declaration that the First Defendant is liable to indemnify the Plaintiff in respect of the Goods and Services Tax, if any, which may be payable by the Plaintiff on any amount paid to it by the First Defendant pursuant to the orders of the Court herein.”

474 The relief relates to the provisions of the legislation referred to as A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the Act) which took effect from 1 July 2000. The tax (GST) is payable on a “supply” within the meaning of s 9.10(2) of the Act which includes the following:

“(2) Without limiting subsection (1), supply includes any of these:
(a) a supply of goods;
(b) a supply of services;
(c) a supply of advice or information;
(d) a grant, assignment or surrender of real property;
(e) a creation, grant, transfer, assignment or surrender of any right;
(f) a financial supply;
(g) an entry into, or release from, an obligation:
(i) to do anything; or
(ii) to refrain from any act; or
(ii) to tolerate an act or situation;
(h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g).’”

475    CCG bases its claim for this relief on the “real possibility” that GST will be payable upon a judgment of the Court delivered after 1 July 2000. For this contention, reliance has been placed upon the affidavit of Alison Chappell sworn 22 August 2000 in which she deposes to the expectation that a draft and final ruling on this matter will be published by the Australian Taxation Office and evidences some views expressed within the Taxation Office on the subject. The test of there being a ‘real possibility’ of the imposition of the GST comes from the approach of the South Australian Supreme Court in Duke Group Ltd (In Liq.) v Pilmer (1999) 73 SASR 64.

476    I am not prepared to approach consideration of the relief sought on that basis. The Court is seized of the relevant facts. I regard the task as one requiring me to decide whether GST is payable in respect of the judgment given in these proceedings.

477    In my view, it is not.

478    Section 9-5 of the Act defines a taxable supply as follows:

“You make a taxable supply if:
(a) you make the supply for consideration ; and
(b) the supply is made in the course or furtherance of an enterprise that you carry on; and
(c) the supply is connected with Australia ; and
(d) you are registered, or required to be registered
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed .”

479    In my view, the imposition by the Court upon WCL to pay the judgment debt as ordered in these proceedings does not constitute a supply by CCG in the form of a supply of goods or services, of advice or information, of a grant, assignment, surrender or release of any kind, nor is it a financial supply.

480    Further, in order to make the supply a “taxable supply”, it must be one which “you make….for consideration”. I have been unable to see any room for ‘consideration’ in the supply said to be, or arise out of, the judgment in these proceedings.

481    To the extent that there has been a merger in the judgment of CCG’s causes of action relating to the project, that does not involve any release grant, assignment, surrender, transfer or creation of a right by CCG. It is a merger by operation of law. Payment of the judgment debt is in no different category. It operates to satisfy the Court’s judgment, without creation of a right, release, assignment or the like by CCG.

482    For those reasons, I decline to make the declaration sought.

483    In summary, save where I have expressly refrained from doing so, I have adopted the report of the referee in the substantive sections indicated in the report as follows:

The February Agreement
Estoppel
Contractual Provisions
The Plaintiff’s Repudiation Case
Quantum Meruit Claims
Interest
Plaintiff’s Claim Against Individual Defendants
Hoyts Variation
Extension of Time - Hoyts Cinema Variations
Unliquidated Damages
Defects and Incomplete Works
Misrepresentation and Damages Pursuant to Trade Practices Act 1974
Breach of Fiduciary Duties
Costs

484    Since the hearing of these proceedings, a draft ruling has issued from the Australian Taxation Office relating to the possible application of GST to judgments. I have not had regard to that ruling, nor have the parties applied to address me further on the issue as a consequence of that publication.

485    Accordingly, the entitlement of CCG to be paid as on a quantum meruit is calculated as set out in the following paragraphs:

486    As calculated by the referee, the total reasonable cost of the work performed by CCG was $88,927,621 of which it had been paid $74,957,444 leaving a balance of $13,970,177 (pars 675, 676 and preceding pars).

487 The parties agreed before the referee that interest payable under the schedules published pursuant to the Supreme Court Act 1970 was 10% from 23 June 1998 to 30 August 1998 and 9.5% to 24 March 2000 (in fact, for the latter part of March it was 10%).

488    Interest, accordingly, was calculated by the referee up to and including 24 March in the sum of $2,340,291.82 (par 678). I have calculated interest from 25 March 2000 to 31 August 2000 at 10% and then at 11% from 1 September 2000 to 19 April 2001 in accordance with the schedule rates for those periods.

489    So calculated, the further interest payable amounts to $1,584,945 making the total sum payable by way of quantum meruit, including interest, $17,895,413.

490    Against that sum must be allowed $294,034 as payable to WCL by way of unliquidated damages (pars 1186-1188). Those findings are not in dispute. The referee calculated interest on that sum to and including 24 March 2000 in the same manner as interest was calculated on CCG’s quantum meruit. Interest on those damages amounted to $53,500. I have calculated interest from 25 March to 19 April 2001 at Supreme Court schedule rates as in the case of the quantum meruit amount. That additional interest amounts to $33,358 so that the total of unliquidated damages and interest that is to be allowed against the quantum meruit claim is $380,892.

491    The amount payable to CCG after allowing for that unliquidated damages claim is $17,514,521.

492    Accordingly, I give judgment and make the orders and declarations as follows:

1. Judgment for the Plaintiff against the First Defendant in the sum of $17,514,521 inclusive of interest up to and including 19 April 2001.

2.Declare that:

(a) The deed between the Plaintiff and the First Defendant of 29 February 1997 (the deed) was varied by oral agreement of the parties of 2 March 1998.

(b) The deed as varied was repudiated by the First Defendant and lawfully rescinded by the Plaintiff on 23 June 1998

(c) The Plaintiff is entitled to an extension of time for practical completion under the deed as varied to 23 June 1998.

(d) The Plaintiff is entitled to be paid on a quantum meruit basis for work done for the First Defendant.

3. The First Defendant’s Further Amended First Cross-Claim be dismissed with costs.

4. The First Defendant’s Second Cross-Claim be dismissed with costs.

5. The Fifth Further Re-Amended Summons be dismissed against the Second, Third, Fourth and Fifth defendants with no order as to costs.

6. The First Defendant pay the Plaintiff’s costs of the proceedings.

7. The First Defendant to pay the costs of the reference.

8. Otherwise, the summons is dismissed.

Wherever costs of the proceedings or the cross claims are referred to in these orders, those expressions include the parties’ costs of the litigation of those issues in the reference.

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Last Modified: 05/10/2001