620 Collins Street Pty Ltd v Abigroup Contractors Pty Ltd

620 Collins Street Pty Ltd v Abigroup Contractors Pty Ltd - [2006] VSC 490 - VSC 2006 case summary — Zoe

[41]

With any claim for an extension of time for Practical Completion, or as soon as practicable thereafter, the Contractor shall give the Superintendent written notice of the period of extension claimed.

If the Contractor is entitled to an extension of time for Practical Completion the Superintendent shall, within 7 days of receipt of the notice of the number of days extension claimed, either request further reasonable particulars, refuse an extension of time if it is not reasonable that any extension of time be granted or, grant a reasonable extension of time. If within the 7 days, the Superintendent does not grant the full extension of time claimed, the Superintendent shall before the expiration of the 7 days give the Contractor notice in writing of the reason. If the Superintendent requests further reasonable particulars, the Contractor must provide all the reasonable particulars requested within 7 days of the Superintendent's request and this paragraph shall apply again as if receipt of the particulars was receipt of the notice of the number of days extension claimed except that the Superintendent may not then again request further particulars.

In determining a reasonable extension of time for an event causing delay, the Superintendent shall have regard to whether the Contractor has taken all reasonable steps to preclude the occurrence of the cause and minimise the consequences of the delay.

Notwithstanding that the Contractor is not entitled to or has not claimed an extension of time, the Superintendent may at any time and from time to time before the issue of the Final Certificate by notice in writing to the Contractor extend the time for Practical Completion for any reason.

A delay by the Principal or the failure of the Superintendent to grant a reasonable extension of time or to grant an extension of time within 7 days, shall not cause the Date for Practical Completion to be set at large but nothing in this paragraph shall prejudice any right of the Contractor to damages."

[51]

(a) The parties agreed upon a strict mandatory regime for the making of EOT claims. The parties reduced the 28 day period under the standard form AS4300-1995 contract to a period of 7 days for submitting EOT claims to the Superintendent.

(b) There is an evidential onus upon Abigroup to demonstrate why the mandatory provisions concerning the making of EOT claims should not be applied.

(c) Abigroup has not provided any reasons or explanations as to why it failed to comply with such provisions.

(d) In relation to each of the EOT claims (the subject of this submission), Abigroup acknowledges that it was aware of the delay a very substantial period of time prior to an EOT claim being submitted. Periods ranging between 14 and 22 months elapsed between the date of Abigroup becoming aware of the alleged delay and the date upon which it made the relevant EOT claim.

(e) The Superintendent, the Principal's Representative and the Principal itself were all denied the opportunity of investigating these claims at a time proximate to the occurrence of the alleged delays. Had they been advised of the claims at the time agreed upon by the parties under the Contract, they could have fully investigated the claims, both in relation to the relevant facts and circumstances surrounding them and programming issues, including criticality. Had they been advised within the agreed contractual period, they may have been able to put in place measures to minimise or avoid the delay or to institute measures which may have resulted in re-capturing time lost.

(f) Instead, the Principal was bombarded with substantial and potentially very costly delay claims, which were being raised for the first time a long time after the alleged events occurred. In a somewhat arrogant manner, Abigroup has sought to pursue such claims without even an explanation as to why it did not submit the EOT claims for periods between 14 and 22 months after it became aware of the alleged delays. It has proceeded as if the residual discretion vested in the Superintendent is a ready alternative in the event of its conscious and flagrant breach of its contractual obligation to notify the Superintendent of its EOT claim in accordance with the third paragraph of Cl.35.5.

(g) Worse still, Abigroup adduced almost no factual evidence of a contemporaneous nature concerning these delay claims. Mr Kiskiris and Mr Stavrou were not called as witnesses. Similarly, Mr Porter was not called. Abigroup's contractors and/or sub-contractors were not called. Some very brief and very general evidence regarding some of the subject EOT claims was adduced from Messrs Dollas, Soso, Picking, Sleeman and Longmire. However, their evidence was so generalised as to be of little or no probative value in relation to these EOT claims. Further, it was apparent during cross-examination of these witnesses that they had little or no actual knowledge of the matters relating to these delay claims. Further, little or no contemporaneous documentation was produced evidencing delay or claimed delay in respect of these EOT claims.

[I understand that Mr Steve Stavrou was the initial Site Manager and his services were terminated by Abigroup in about early August 2002. Mr Nick Porter was Abigroup's programmer.]

170. Based upon the above matters, the Principal further submits that the discretion granted to the Superintendent under the penultimate paragraph of Cl.35.5 should not be exercised in favour of Abigroup with respect to EOT claims 10, 41, 42, 44, 64 and 66 as the Superintendent was unable to determine that a critical delay had occurred. Accordingly, it contends that these claims are barred by reason of non-compliance with the third paragraph of Cl.35.5.

171. I have found that Peninsula Balmain should be followed in this arbitration, and, in my view, all of the above submissions by the Principal are not directly to point. In considering the Superintendent's discretion under the penultimate paragraph of cl 35.5, the Court of Appeal said:

[71]

"[31] It is the duty of an Arbitrator to consider and deal with all matters the subject of the reference.[14] Commonly, the arbitrating parties will present contentions of fact and law in support of their own case in opposition to that of the opponent. Often there will be multiple contentions put forward, sometimes in the alternative to those which have preceded them. The Arbitrators must have regard to them all. When it comes to preparing the award pursuant to s.29(1), and to 'a statement of reasons for making the award', the obligation is not identical. The statutory requirement that the reasons be 'reasons for making the award', means that the Arbitrators are not required to provide reasons which did not lead to the determination of the disputes referred to arbitration. Accordingly, it is not necessary for them to deal with an alternative basis of claim or defence when the primary claim or defence has been accepted.

[32] The requirement for reasons in s.29 means that the Arbitrators must set out the facts which they have found and the legal principles which they have relied upon as the foundation for the award and that this should be in terms sufficient for the parties to understand why they have won and lost and for them to decide whether to make and for the Court to determine an application for leave to appeal or enforcement.[15]

[33] I have mentioned the purposes which the statement of reasons is to serve. The statement of reasons, at a minimum, must be sufficient to achieve these purposes. I say 'at a minimum', because I am concerned with the point at which the Court will take an active interest in the insufficiency of reasons; the prudent Arbitrator will not be tempted to stray close to this cliff edge. The question may arise whether a particular contention must be dealt with in the statement of reasons. Judges, mindful of their own judgment-writing experience, have been careful not to impose upon Arbitrators a burden greater than their own. And so, there is no need to deal with contentions which are frivolous, irrelevant or even peripheral to the matters in issue.

[34] This has led the Court to stipulate that Arbitrators must deal with every "submission worthy of serious consideration"[16]. In Fletcher Construction Australia Ltd v Lines MacFarlane and Marshall Pty Ltd[17] the Court of Appeal in this State said that a reasoned judgment of a court must 'deal with the central contentions advanced by the parties'. However the test is expressed, the minimum requirement is not that the Arbitrators deal with every contention. Precisely where the line is to be drawn in a given case will depend upon the circumstances, including the relevance of the contention to the Arbitrators' conclusions. The decision to deal in the reasons with a particular rejected submission may also depend upon an assessment of its weight, particularly in a case where the arbitrating parties are not legally represented. Putting it bluntly, some points are so obviously bad that no good purpose is served by dealing with them in any detail. I need hardly add that the prudent Arbitrator will prefer to err on the side of comprehensiveness in order that the award should be of benefit to the parties."

[76]

74 Abigroup's first answer to these submissions, is that it was not necessary for the Arbitrator in exercising the reserve discretion provided for in cl.35, to find that the works were done in accordance with a contractor's program, proved to be implemented in compliance with the contract. As my analysis of ground 1 indicates, I am of the view the Arbitrator was not guilty of misconduct in accepting this submission. The consequence is that he rejected the framework of reasoning put forward by 620, and that it cannot be said that a failure to deal with subsidiary submissions made within that framework necessarily constituted misconduct.

75 The question is rather whether, accepting the framework of reasoning adopted by the Arbitrator, there was sufficient evidence to justify his conclusions, and whether his reasons adequately address 620's criticism of that evidence?

76 Abigroup submits that there was sufficient evidence to justify the Arbitrator's conclusions and that he substantially addressed the plaintiffs' submissions. Abigroup first points to the ambit of the ultimate dispute as to EOT's. Of the 16 extension of time claims in dispute in the arbitration, only five remain the focus of 620's submissions.

77 Abigroup submits that in relation to these EOT's, the Arbitrator did rely upon and address contemporaneous documents and site records which were exhibited to witness statements relied on by both Abigroup and 620.

78 In addition to such documentation, Abigroup submits the Arbitrator had before him evidence from the Superintendent, who was on site at the relevant time. He assessed and determined EOT's 9/65, 41, 42 and 44. His assessments of these EOTs were similar to those ultimately made by the Arbitrator. Conversely, the Superintendent rejected EOT 10 on the basis of the information provided and the adequacy of this information was further addressed before the Arbitrator.

79 In his award the Arbitrator sets out his assessment of the EOT claims and the basis on which he determined them. EOT 42 related to a claim for delay resulting from the enlargement of the basement floor area. The Arbitrator's approach is illustrated by the following matters.

[84]

80 The Arbitrator in turn exercised the reserve discretion and allowed an 11 working day EOT as assessed by Mr Lynas.

81 I do not accept that this reasoning evidences misconduct. In my view it deals with the facts in issue in a logical and relatively detailed way, taking account where relevant of the submissions of the parties.

82 EOT 41 related to the construction of an additional suspended apartment slab along the Collins Street side of the building. As the Arbitrator records, the claim arose out of a variation submitted on 5 April 2000 and approved on 16 August 2001. The EOT claim was not submitted until 5 September 2002.

83 Having formed the view that the works did not form part of the contract scope, the Arbitrator identified the next issue as whether the works resulted in critical delay. In so doing he identified the underlying issue which 620 submits was the critical issue.

84 The Arbitrator considered the evidence of Mr Lynas for Abigroup and Mr Wagstaff for 620. He ultimately accepted the assessment of Mr Lynas having regard to the evidence of the Superintendent. Once again I do not accept this process of reasoning evidences misconduct.

85 EOT 44 comprised a 5.1 day EOT relating to the removal of contaminated soil from the basement excavation. As the Arbitrator records, a variation was approved on 8 March 2001, following a variation claim made in November 2000. The EOT claim was not, however, made until 2002.

86 The Arbitrator recorded that it was common ground that part of the excavation works were on the critical path.

87 The Arbitrator sets out the history of the EOT claim and a summary of the relevant evidence.

88 This included evidence of typical delay factors for the removal of contaminated soil of the type in issue, and the calculation by Mr Lynas of that portion of the excavation time attributable to contamination complications.

89 The Arbitrator accepted 620's submission that the Lynas calculations did not take account of a series of relevant factors.

90 He then had regard to the Superintendent's assessment of a two day EOT and ultimately allowed 3.8 working days.

91 In my view his process of reasoning does not disclose misconduct.

92 EOT 9/65 comprised a three day EOT relating to a failure by 620 to advise Abigroup of the outcome of purchasers' choices as to colour schemes and upgrades, by 28 March 2001.

93 The Superintendent assessed this EOT at 4 days on 11 March 2003 (and left this amount unchanged on review on 30 April 2003).

94 The Arbitrator summarised the evidence of Mr Isihos, Abigroup's site co-ordinator, from June 2001, as to subsequent advices concerning purchaser options and upgrades.

95 The Arbitrator recorded and accepted the evidence of Mr Rodgers for 620 as to intended programming.

96 He further recorded the evidence of Mr Isihos that partial advice of the purchasers' options and upgrades, occurring in the latter half of 2001, was not sufficient for Abigroup's purposes.

97 The process in issue led to variation of the contract sum by way of an adjustment of $251,963 for purchaser options/upgrades approved by the Superintendent in January 2002.

98 The Arbitrator identified a strong potential for delay in these circumstances and gave significant weight to the view of the Superintendent, whom he found to be an experienced building works administrator, who gave direct and truthful evidence.

99 The Arbitrator then set out the evidence of Mr Lynas as to the question of critical path.

100 At [290] the Arbitrator sets out a summary of detailed submissions on the facts made by 620. He then responds to each of them.

101 Part of the reasoning accepted by the Arbitrator turns on his acceptance of the proposition that it was reasonable for Mr Lynas to demonstrate criticality by his adjusted Go Mode program (a view based ultimately on the Arbitrator's perception of the evidence as a whole going to this issue).

102 The Arbitrator then allowed 3 days by way of EOT.

103 In my view there is no misconduct demonstrated by the Arbitrator's reasoning.

104 EOT 10 relates to the fit-out and finish of the five Soho Apartments, including the additional apartment provided for by the variation to which I have already referred.

105 Abigroup claims 5.2 working days as a consequence of variation 37. The Arbitrator set out the relevant chronology including the fact that the claim related to 21-28 February 2002 and was submitted on 5 September 2002, and the fact of further correspondence with the Superintendent concerning proof that the critical path of the project was affected.

106 The Arbitrator accepted the underlying logic of the claim:

[112]

"514. As I have referred to earlier, the Superintendent 'accepted that the Soho Apartments were being built for the owner and that Abigroup were advised that they should concentrate on tenanted areas as a priority.' This statement by the Superintendent was not challenged. In my opinion, in circumstances where the Soho works were deferred as a consequence of a direction, it would be unfair and unreasonable to impose LD's on Abigroup for the late completion of the Soho Apartments.

515. In relation to the Principal's claimed entitlement to LD's for SP1, Abigroup submits that, in the circumstances, the Principal's direction prevented Abigroup from completing the Soho Apartments such that the Principal is not entitled to insist upon strict compliance by Abigroup with the contractual date for Practical Completion. Abigroup went on to contend that, as the contractual date for Practical Completion is unenforceable, then the Principal has no entitlement to LD's which are calculated by reference to the Date for Practical Completion (refer Peak Construction (Liverpool) Ltd v McKinney Foundation Ltd (1971) BLR 111).

516. Apart from its earlier submissions against the application of Peninsula Balmain in Abigroup's favour, the Principal did not directly address Abigroup's submission that I should apply the Peak principle to the whole of SP1. In Peninsula Balmain Hodgson JA, referring to the reserve power to extend time in the penultimate paragraph of clause 35.5 said that it 'is one capable of being exercised in the interests both of the owner and the builder ...' In my view, the exercise of the reserve power is appropriate in these circumstances.

517. Contrary to my finding that further separable portions were created within SP1, the Principal's submission was that, in effect, SP1 remained intact. It seems to me that Abigroup's submission that 'the contractual date for Practical Completion is unenforceable' may have been directed to cover a finding favouring the Principal in respect of an intact SP1. However, it is arguable that it puts the date for Practical Completion of each new separable portion within SP1 at large. Such a situation would nullify the Principal's contractual entitlement to LD's. In my view, such an outcome would be an unfair and unreasonable result to the Principal.

518. Abigroup has successfully claimed that new separable portions were created within SP1. It has not applied for an EOT in respect of SP1 generally or specifically for the direction which resulted in the deferral of the Soho Apartments. This is a situation where the reserve power of the penultimate paragraph of clause 35.5 ought fairly to be exercised by extending time in respect of the completion of the Soho Apartments, which was the remaining work in SP1. Appropriately, this protects Abigroup from LD's in relation to the Soho Apartments and the Principal from the contention that the contractual date for Practical Completion for SP1 and the new separable portions within SP1 are unenforceable pursuant to the Peak principle. Accordingly, I proceed on this basis and, as a matter of convenience, add this quite unrelated extension to EOT 10."

[113]

138 It can be seen that these findings were responsive to Abigroup's closing submissions insofar as the Arbitrator accepted that it would be unfair and unreasonable to allow a claim for LD's arising out of the late completion of the Soho Apartments and the Arbitrator further accepted that 620's direction prevented Abigroup from completing the Soho Apartments in accordance with the contract. However, as the Arbitrator expressly acknowledges, Abigroup had not applied for an EOT in respect of SP1, generally or specifically, for the direction which resulted in the deferral of the Soho Apartments.

139 620 had made no direct response in reply to Abigroup's closing submission concerning the direction given relating to the Soho Apartments. In particular 620 had not submitted to the Arbitrator that this line of reasoning was not open to him.

140 Nevertheless, it seems to me that the Arbitrator's findings did both go beyond the terms of the claims pleaded before him and the terms of the parties' submissions.

141 The question of whether a direction as to the order in which work was to be performed resulted in delay in the completion of SP1, was not one raised by the pleadings with respect to what was a substantial claim.

142 The issues arising on the arbitration as a whole were sufficiently complex to give rise to the necessity, that the Arbitrator ensure that the development of the issues as he saw them, was fairly communicated to a party potentially adversely affected by such process.

143 I am satisfied that 620 was not given a sufficient opportunity to meet the issue ultimately identified by the Arbitrator. The issue was not pleaded and no claim was made for the EOT allowed by the Arbitrator.

144 Before the Arbitrator could properly allow an EOT as the resolution of the issues urged before him, he was required to ensure that 620 was given a proper opportunity to meet and contest the proposition that an EOT was the appropriate mechanism for resolution of the aspect of the dispute in issue.

145 Accordingly, this is a case which falls within the principle stated in The Vimeira.[23] In that case the owners of a ship claimed against the charterers for damage sustained by the ship when the sub-charterer discharged it at an allegedly unsafe port. The Arbitrator found that the port was unsafe because the turning area at the entrance to the dock was insufficient for a ship of that size to be safely manoeuvred. The charterers sought to set aside the award on the ground of misconduct. The charterers argued that it had not been pleaded that the dock was unsafe due to a restricted turning area at a particular point. They argued they had been deprived of an opportunity to deal with the Arbitrator's finding that the dock was insufficiently wide at a particular point for a safe turning manoeuvre.

146 In the Court of Appeal Goff J held that the relevant point was not pleaded in the owner's points of claim. The owner's case had been pleaded and put on the basis of alleged insufficient depth of water not inadequate width for turning.

147 Goff J stated:

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