A1 Quality Concrete Tanks Pty Ltd v Civil and Allied Technical Constructions Pty Ltd

Judgment: Damages awarded to the Plaintiff in the sum of $176,342.13

1 On 14 August 2014, I published reasons in this proceeding ([2014] VCC 1239), determining that the defendant, known as CATCON, had entered into a sub-contract arrangement with the plaintiff, A1, in July 2010 relative to certain works as part of an upgrade to the Aldinga Sewage Facility. An appeal to the Court of Appeal by CATCON against my judgment was unsuccessful ([2015] VSCA 75).

2 The dispute returned to this Court for assessment of the damages to which the plaintiff, A1, was entitled. The trial as to liability extended over some five hearing days in July 2014 with judgment published on 14 August that year. Perhaps, surprisingly, the trial for the assessment of damages extended over some 15 days, commencing 29 August 2016 and concluding 18 August 2017.

3 At the conclusion of the evidence, Mr Clarke, counsel for A1, advanced two options for the assessment of his client's damages. The first described as "Option A" in its revised form in light of the evidence which emerged at trial, was as follows:

"Contract price $740,000.

Cost to perform contract as assessed by quantity surveyor, Mr Rubira, Third report (Court Book ("CB") 3189) $457,100

$282,900 minus allowance for increased cost based on revision to drawings of $6,557.87.

Profit lost: $276,342.13."

"Original contract price $740,000.

Cost to perform in accordance with Report No. 2 by quantity surveyor, Mr Rubira. (CB 405) $480,400.

$259,600 minus allowance for revision to drawings of $6,557.87.

Result: $253,042.13."

5 Mr Fenwick-Elliott, counsel for CATCON, said that for a variety of reasons, principally pertaining to issues of time and illegality, the contract found to be established between the parties would have yielded a loss for A1. Accordingly, the damages assessed should be zero dollars.

6 "Option A" represents a costing made by Mr Rubira based upon a series of assumptions set out at CB 3145, which describe the mode of operation and remuneration of labour which, according to the evidence of A1's principal, Mr Geaboc, A1 would have employed in carrying out the work at Aldinga had it proceeded to performance.

7 "Option B" represents Mr Rubira's costing of the work based upon a market assessment. It represents a costing which Mr Rubira might have provided to a hypothetical tenderer for the work and is not guided by the specific features of performance which, according to A1's case, it would have employed in this instance.

8 An initial question arises as to the scope of the works which A1 would have been obliged to carry out. According to CATCON, the scope of works for A1 entailed not merely the construction of two clarifier tanks but also the construction of a concrete apron surrounding the tanks. A1 denies that this was part of its contractual responsibility.

9 The construction of the apron was costed by the parties' quantity surveyors as follows: Mr Lampard for the defendant - $12,243 (CB 702, paragraph 41). A1's quantity surveyor, Mr Rubira, costed the apron pavement at $13,305 (CB 426). Mr Fenwick-Elliott, for CATCON, submitted in the circumstances that the median figure of $12,774 should be adopted.

10 CATCON's case was that the apron pavement was depicted on the plans which formed the basis of the agreement between the parties and, accordingly, formed part of the scope of works for A1.

11 A1 said that the relevant plan, in particular UW 09-60639, Revision 2 (Defendant's Supplementary Court Book 6.7), did not disclose dimensions for the thickness of the slab. Whilst the drawings are to scale and it would be possible to "scale" the dimensions, the notes to this set of plans include General Note G2 "dimensions shall not be obtained by scaling the drawings". (Defendant's Supplementary Court Book 6.4)

12 The dimensions could be inferred from the plans in other ways. The evidence did not clearly establish that the sheet of the plan with the general notes was provided to A1.

13 Nevertheless, it was common ground that the apron could not be constructed until the tanks were completed and backfilling had taken place, and there would also be a delay for tank testing. In the result, therefore, the 12 week construction period nominated by CATCON in its acceptance ([2014] VCC 1239 [21]), could not be achieved in relation to the concrete apron. (Transcript ("T") 1111, Lines ("L") 14-18)

14 In the circumstances, and having regard to these factors, I conclude that the apron was not within A1's scope of work. The lack of a nominated dimension on the relevant plans points in this direction but, in my view, the more significant factors leading to the conclusion are that the apron is not part of the tanks and the price quoted by A1, which was accepted by CATCON, was a price of $370,000 plus GST per tank. ([2014] VCC 1239, [20]-[21])

15 Further, because of the break for backfilling, which no one suggested was part of A1's responsibility, the construction of the apron would necessarily be separated in time from the construction of the tanks.

16 Mr Fenwick-Elliott submitted that this consideration ought not weigh to exclude the apron from the scope of works. He said it was like a host of responsibilities which building contractors and sub-contractors undertook which were necessarily performed after the end of the construction period, such as obligations to rectify and maintain structures for a period of time, obligations to clean up and return to site at a later stage to remove the protection from other structures and so on.

17 None of these is a proper analogy with the apron. The apron is not an appurtenance to the construction, it is a further item of construction. In my view, the apron formed no part of A1's scope of works and therefore no allowance should be made for the cost of its construction in determining A1's cost of performance of the contract.

Principles for assessment of damages for loss of bargain

18 Mr Clarke, on behalf of A1, made the following submissions as to the assessment of damages in this case.

19 The onus of establishing both the fact of loss and the amount of the loss lies with A1. He referred to Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80, 99, 118, 137-8. The court must assess the damages even where the evidence cannot establish the loss with exactness and certainty [1991] HCA 54; (1991) 174 CLR 64, 83, 102, 125, 153. Damages must be assessed objectively rather than subjectively. The assessment seeks to place the innocent party, insofar as money can do it, in the same situation as he would have been if the contract had been performed [1991] HCA 54; (1991) 174 CLR 64, 80.

20 Since the object of a party entering into a contract to supply goods or services is to make a profit, damages for repudiation of such a contract are damages for the loss of the profit [1991] HCA 54; (1991) 174 CLR 64, 81.

"Loss of bargain damages are diminished by the value of any benefits received by A1 as a result of the contract. So a lessor who justifiably terminates a lease is entitled to damages for loss of rent which would have been received over the remainder of the term, diminished only by any rent received from new tenants of the demised premises -

Buchanan v Byrnes [1906] HCA 21; (1906) 3 CLR 704

Similarly, a television production company is entitled to loss of profits which would have been earned under a contract which has been wrongfully terminated, diminished only by profits from other enterprises made possible by termination of the contract -

Goldburg v Shell Oil Co of Australia Limited (1990) 95 ALR 711." (CB 1494-5)

22 Mr Fenwick-Elliott accepted these principles as being correct.

23 I therefore accept these principles for the purposes of my determination.

24 The issue of illegality loomed large in the assessment trial. On this point, according to CATCON, the evidence showed that A1's mode of performance involved illegality and the employment of a process described as "sham contracting". Whilst I rejected an application in the course of the assessment trial from the defendant to amend its defence to allege illegality, according to Mr Fenwick-Elliott, once the evidence raised the issue of illegality, it was incumbent upon this Court to refuse to assess damages based upon a contract which would have been illegally performed.

26 According to Mr Fenwick-Elliott, for the court to accept A1's case:

"it would be necessary to enforce what were plainly sham arrangements as to the intended mode of performance, and I say that it would be a black day for this State that the court should [award the damages claimed] support that hundredfold increase by supporting the black economy." (T1492, L5-9)

27 The principal of A1, Mr Peter Geaboc, said that had A1 performed its contract with CATCON, it would have drawn principally on labour supplied by a South Australian company, Central Concreters Pty Ltd (ABN 72 132 994 426), whose principal was Mr Daryl Willoughby. In 2010, Mr Geaboc said he had an arrangement with Central Concreters and Mr Willoughby for it to supply workers to A1 for $2,500 per week plus GST. This would entail 40 hours' work per week per worker. Mr Geaboc said he did not work on Saturdays, but Central Concreters "provided flexibility in catch up hours". A1 would pay Central Concreters extra for meals and accommodation with flexibility on catch-up hours. The Central Concreters' workers which he said he would have used, were Mr Steven Claydon, Ioan Magurean, Ron, Adam Haines, Robert McCracken, Grayham Hill and Simon Alexander.

28 According to Mr Geaboc, Mr McCracken was a concreter and steel fixer who had been employed by A1 in 2010 for amounts of $1,700-$1,950 per week. He intended that Central Concreters would engage Mr McCracken and charge A1 for his services. The same arrangement was to apply to Mr Haines, who was a concreter and steel fixer. Likewise, a concreter and steel fixer known only as "Ron". Mr Claydon was an unskilled labourer. He would likewise be engaged by Central Concreters to work on the Aldinga site for A1. Mr Hill, steel fixer, Mr Magurean, skilled labourer in steel fixing and Mr Alexander, concreter and steel fixer, would likewise be engaged. Messrs Claydon, Hill, Magurean and Alexander would have been engaged directly by A1. (CB 827-829)

29 The premise for these engagements is that as regards A1, each of these individuals would be an independent contractor and not a permanent or casual employee. The enterprise bargaining agreement in existence between A1 and the building union, the CFMEU, would not be applicable. As a result, with respect to these individuals, A1 would not be liable to make any superannuation contributions or pay any payroll tax. No PAYG instalments under the Income Tax Assessment Act 1997 would be withheld from the payments made to Central Concreters or individual workers. It was in these features that, according to Mr Fenwick-Elliott, the illegality resided.

30 Insofar as Mr Fenwick-Elliott's submissions on behalf of CATCON raised questions as to the legality of the manner in which the workers engaged by Central Concreters were proposed to be employed, he did not submit that any illegality ought be attributed to A1 in this regard. The illegality which he said A1 planned to commit related to those workers whom it proposed to engage directly without the intervention of Central Concreters. Insofar as his submissions necessarily raised questions as to the propriety of what it seemed Central Concreters intended to do, this was relevant only to giving a general flavour of illegality to the entire arrangement. (T1244) CATCON relied on an expert report from Chartered Accountant, Mr Hugh McPharlin, who carried out a costing of the outlays necessary, in Mr Fenwick-Elliott's language, to "field" A1's proposed team at Aldinga. These calculations accepted the $2,500 per worker costings for the four individuals to be provided to A1 by Central Concreters Pty Ltd but made provisions in accordance with the relevant Enterprise Bargaining Agreement, according to Mr McPharlin, for the proper and legal remuneration for the other workers. According to Mr McPharlin's revised calculations, the weekly cost of "fielding the team" would have been $33,666.76. (CB 3398 as amended) Mr Rubira, A1's quantity surveyor expert witness, did not analyse the costing of the project by reference to a weekly cost for "fielding the team" as Mr McPharlin did. However, he did accept as proper the proposed labour outlays described by Mr Geaboc and summarised above. Mr McPharlin's weekly costing for the non-Central Concreters' workers was $3,051.24. (CB 3398 as amended) Mr Fenwick-Elliott submitted that, once it appeared that A1 proposed what he contended was an illegal mode of performance of the contract, "nothing is recoverable. It's as simple as that." (T1246, L11-13) He continued, "... the pleading is irrelevant, it's a public policy matter, and there is really precious little room for this Court to do other than saying, 'I'm not going to allow anything.'" (Ibid, L15-18) In any event, according to Mr Fenwick-Elliott, "... the plaintiff would have made a thumping loss." (Ibid, L23-24) Once it was established that a loss would have been sustained, he said no further investigation was required because that finding would necessarily negate any profit which might have been lost which could form the basis for an award of damages. (Ibid, L25-29) Mr Fenwick-Elliott then remarked:

"Your Honour, I should say in passing and it's worth just as a matter of context, that since this case has started, which is really quite a long time ago now, I've personally been involved in three cases where parties have either suffered or are on their way to losses to be measured in hundreds of millions of dollars. I've also spent quite a lot of time dealing with potential reform of security for payment legislation, from which it has become extraordinarily evident that the majority of construction companies in this country fail, they go bust. The majority go bust because they enter into contracts that fail to make a profit. (T1247, L21 - T1248, L2)

31 Asked if CATCON must have been aware of the alleged illegality which must have been entailed in the proposal to carry out this work for $740,000 based upon its knowledge and experience in the construction industry, Mr Fenwick-Elliott replied:

"No, Your Honour, with respect, that's not right, and at risk of giving evidence from the Bar table what we see over and over and over again in construction, it's common in the construction business, that those procuring work will get their best price even if they know that that best price is below cost, and they do so because they're then in the box seat and they're then in a position to take a paternalistic approach to the running of the job. They say, I will see you right but you need to do what I ask, jump through the hoops I ask and cooperate in every way. It's a perfectly legitimate approach to procurement and one which is practised by all successful construction companies if they possibly can. I think there's nothing that stigmatises that approach to doing business, it's extremely common." (T1280, L11-26)

32 As I understood this approach, it entailed a head contractor first negotiating a position where a proposed sub-contractor agreed to do work at below cost and then using the parlous position of the sub-contractor to exercise total control. The sub-contractor would be dependent on an act of mercy from the head contractor to avoid being driven into insolvency. Minds may differ as to whether this is "a perfectly legitimate approach" as Mr Fenwick-Elliott contended. I wonder if some future court may authoritatively determine that proceeding in this matter constitutes a contravention of the Australian Consumer Law's prohibition of unconscionable conduct in trade and commerce. There is no such plea here and this is an issue for another day. Mr Fenwick-Elliott correctly observed that, even if it could successfully be contended that CATCON was somehow an accomplice in the proposed illegal performance, if all other elements of the defence of illegality or the doctrine which required a court to intervene and refuse to enforce a contract on the grounds of illegality were made out, any involvement in the illegality by CATCON would make no difference. (T1295, L20 - T1296, L1)

33 Mr Fenwick-Elliott took me first to a decision of the Federal Circuit Court of Australia (Judge O'Sullivan), The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No 7) [2013] FCCA 1097. This case, he submitted, drew together the authority on the question of "sham contracting" and bore a significant resemblance to the present case. In reaching his conclusion, Judge O'Sullivan was guided principally by the authority of a decision of the Full Court of the Federal Court in ACE Insurance Ltd v Trifunovski [2013] FCAFC 3 in which the principal judgment was delivered by Buchanan J with whom Lander and Robertson JJ concurred. Mr Fenwick-Elliott submitted that these authorities established that the characterisation which parties to a contract saw fit to give their arrangement was by no means conclusive of its true character. That character had to be judged by the substance of the arrangement, not by the label or labels which the parties might choose potentially to gain advantage on issues such as taxation, insurance cover or superannuation. He referred to paragraphs [36] and [37] of Trifunovski's case in the judgment of Buchanan J.

34 Next, Mr Fenwick-Elliott took me to paragraph [235] of Linkhill where Judge O'Sullivan, referring to Trifunovski's case, said:

**"**As Buchanan J stated (at [31]), it is `necessary to examine the various facets and circumstances of the relationship to discern its true character.' His Honour made the point (at [102]) that the cases did not yield a `single or unifying test to determine whether an employment relationship exists.' Similarly, Lander J observed (at [9]) that `[t]here is no one single criterion that will necessarily be determinative of the issue. The issue will be decided by weighing all the relevant factors.'"

35 Mr Fenwick-Elliott submitted that despite the emphasis placed on control in the earlier authorities as marking out the distinction between employees on the one hand and independent contractors on the other hand, contemporary authority applied a multi-factorial analysis to make the distinction. He referred to paragraph [204] of the judgment of Bromberg J in On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 quoted by Judge O'Sullivan in Linkhill. Next, he referred to paragraph [208] of Bromberg J's judgment where his Honour stated:

"[208] Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:

'Viewed as a "practical matter":

(i) is the person performing the work an entrepreneur who owns and operates a business; and,

(ii) in performing the work, is that person working in and for that person's business as a representative of that business and not of the business receiving the work?'

If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee."

36 As to the position of counsel, a group who axiomatically are regarded as independent contractors and not employees of their clients or instructing solicitors, Mr Fenwick-Elliott said that counsel could be regarded as "working in his own business", though he did not favour the word "business" to describe the work of a professional. (T1258, L30 - T1259, L2) Mr Fenwick-Elliott said that what could be regarded as a business was described by Bromberg J, adopted by Judge O'Sullivan as follows:

"[210] As to the first element, to carry on a business is to conduct a commercial enterprise as a going concern: Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9; (2005) 222 CLR 194 at [83]. It will usually involve the acquisition and use of both tangible and intangible assets in the pursuit of profit: Gribbles Radiology at [39]. The desire to make profit is an important element and generally a business will enter into transactions on a continuous and repetitive basis in the pursuit of profit: Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 8-9. A business typically has (or at least aspires to have) value (goodwill or saleable assets) beyond its physical assets: Steven v Brodribb at 37. A common intangible asset of a business is its name, brand, reputation or goodwill. Typically, the activities of a business will be organised in a business-like manner, including by the use of systems: Ferguson v FCT [1979] FCA 29; (1979) 37 FLR 310 at 314-315. The word 'business' imports the notion of system, repetition and continuity: Hungier v Grace [1972] HCA 42; (1972) 127 CLR 210 at 216-217. A business will normally operate in a business-like way; Puzey v Cmr of Taxation [2003] FCAFC 197 at [48]."

"[212] A personal services business is a business which is likely to involve system, repetition and continuity in the pursuit of profit. A genuine personal services business will aspire to make profits and not simply be paid remuneration, as is an employee. Such a business will seek to be remunerated not simply for the provision of the labour of the self-employed entrepreneur that provides the personal services, but also for the risks involved in that person being an entrepreneur."

"[213] The risk profile of a personal services business is very different to that of an employee. By its very nature, a genuine commercial enterprise is an undertaking which involves risk. Business risk is a product of a need for a business to invest (either in physical assets, time or effort) at a cost and without any certainty or assurance of that cost being recovered and any profit being made. Unlike an employee who generally seeks security, and is not risk-tolerant, a personal services business is prepared to invest time, money and effort with little or no certainty that such investment will be rewarded with a financial return. All of that is done in the hope of making a profit. It is in that sense, that an entrepreneur operating a personal services business seeks profit and not simply remuneration, for the personal services provided.

[214] A genuine independent contractor providing personal services will typically be: autonomous rather than subservient in its decision-making; financially self-reliant rather than economically dependent upon the business of another; and, (as I have said), chasing profit (that is a return on risk) rather than simply a payment for the time, skill and effort provided.

[215] In an employment relationship, there will typically be an entrepreneur, but that will be the employer, it will never be the employee. The employer will take the risk of profit or loss. The employee seeks the security of fixed and certain remuneration. Unlike the independent contractor, the employee has no business, and typically will have no interest or desire, in exposure to the risk of loss in return for the chance of profit."

39 Mr Fenwick-Elliott referred to and adopted the indicia set out in bullet point form at paragraph [217] of the judgment of Bromberg J in On Call Interpreters, stating as follows:

"• Do the economic activities of the putative business involve the taking of risk in the pursuit of profits?: Gribbles at [39]; Hope v Bathurst at 9; Roy Morgan Research (2010) at [47]; Yaraka Holdings at [41] and [49]; Montreal v Montreal Locomotive Works Ltd [1947] 1 DLR 161 at 169; Market Investigations v Minister of Social Security [1968] 2 QB 173 at 184; Lee Ting Sang v Chung Chi-Keung (1990) 2 AC 374 at 382.

• • Does the putative business engage in a repetitive and continuous manner with purchasers of its services?: Hope v Bathurst City Council at 9; Hungier v Grace at 216-217; Puzey at [48]; Commissioner of Taxation v Sleight [2004] FCAFC 94; (2004) 136 FCR 211 at [48];
• • Does the putative business employ or engage persons other than the owner/operator to carry out its economic activities?: Stevens v Brodribb at 26 and 38;
• • Is goodwill (name, brand and reputation) being created by the economic activities of the putative business?: Hollis at [48]; Steven v Brodribb at 37_; Roy Morgan_ (2010) at [46]; Re Porter; Re Transport Workers Union at 186;
• • Is the putative business promoted as a business to the public through advertising or other promotional means?: Hope v Bathurst City Council at 9; Abdalla v Viewdaze at [35]; Yaraka Holdings at [35];
• • Does the putative business have tangible assets such as buildings and equipment which are utilised to support its economic activities?: Steven v Brodribb at 37; Gribbles Radiology at [39];
• • Does the putative business have the basic transactional systems that are common of a business of that kind? For instance: invoicing systems; standard rates and terms and conditions of trade; insurance coverage; payment and debt collection systems; appropriate financial records; budgeting or forecasting systems; business based arrangements with a bank or other financial institution: Hollis at [54]; Sweeney at [31]; Hope v Bathurst City Council at 9; Wesfarmers Federation Insurance Ltd v Stephen Wells t/as Wells Plumbing [2008] NSWCA 186 at [42]; Ferguson at 311;
• • Do the services provided by the putative business involve the provision of labour of sufficient skill to be suggestive of the pursuance of a profession or trade through a business: Hollis at [48]; Stevens v Brodribb at 36-37; Yaraka Holdings at [51];
• • Are the regulatory requirements of a business (including business name registration, taxation, GST and ABN registration and compliance) being met by the putative business?: Wesfarmers at [39]-[42];"

40 In the following paragraph, Bromberg J considered the question, whose business was involved in a particular fact situation? His Honour said at paragraph [218]:

"[218] The second element - "Whose business is the economic activity being performed in and for?", raises the following indicia for consideration:

• • Does the provision of the economic activity provide an opportunity for profit and involve the risk of loss: Roy Morgan (2010) at [47]; Market Investigations at 185; Lee Ting Sang at 382; or is the payment made largely consistent with the remuneration that an employee would have received for providing the activity?: Hollis at [54]; Commissioner of Taxation v Barrett [1973] HCA 49; (1973) 129 CLR 395 at 405-407; Yaraka Holdings at [41] and [49];
• • In that respect and in relation to profit:
• • to what extent is the reward for the provision of the activity negotiable and negotiated commercially?: Hollis at [54];
• • to what extent does the putative owner/entrepreneur have the capacity to manage the activity so as to maximise the potential for profit?: Hollis at [58]; Roy Morgan (2010) at [47]; Market Investigations at 185; Lee Ting Sang at 382;
• • In that respect and in relation to risk:
• • to what extent is the agreed payment contingent upon the person providing a satisfactory result (ie are there financial consequences for poor performance)?: Roy Morgan (2010) at [47]; Yaraka Holdings at [49];
• • who bears the risks associated with providing any equipment or assets required for the performance of the economic activity?: Hollis at [56].
• • Does the putative business or the putative employer's business control and direct or have the capacity to control and direct the manner in which the economic activity is carried out?: Hollis at [43]-[45], [49] and [57]; Stevens v Brodribb at 24 and 35-36; Roy Morgan (2010) at [49].
• • Is the economic activity represented or portrayed as the activity of the putative business or that of the putative employer's business?: Hollis at [50]-[52] and [57]; Yaraka Holdings at [43];
• • To what extent is the person providing the economic activity integrated with the business receiving the activity?: Stevens v Brodribb at 26-27 and 35-36; Hollis at [57];
• • To what extent is the person providing the economic activity financially self-reliant from, as opposed to, economically dependent upon or organisationally tied to, the business receiving the activity?: Re Porter: Re Transport Workers Union at 184-185. Exclusivity is suggestive of an employment relationship: Commissioner of Taxation v Barrett at 407. However, it does not follow that a person who provides casual or part-time work to multiple purchasers is not an employee: Yaraka Holdings at [34] and [36]; Sgobino v South Australia (1987) 46 SASR 292 at 308;
• • Is the person providing the economic activity free to employ his or her own means (employees or contracted agents) to produce the activity or must that person personally perform the work?: Stevens v Brodribb at 24-26 and 38; Neale v Atlas Products (Vic) Pty Ltd [1955] HCA 18; (1955) 94 CLR 419 at 425 and 428; Yaraka Holdings at [41]; and see [285] below;
• • To whose business does any goodwill created by the economic activity enure?: Hollis at [48]; Stevens v Brodribb at 37; Roy Morgan (2010) at [46]; Yaraka Holdings at [52];
• • In contracting to provide the economic activity has the person agreed to provide an outcome or result?: Neale v Atlas Products at 425; Roy Morgan (2010) at [42];
• • To what extent is the person providing the economic activity doing so with his or her own tools and equipment?: Hollis at [56]; Sweeney at [32]; Roy Morgan (2010) at [41]; Yaraka Holdings at [37]-[40]; Market Investigations at 185; Lee Ting Sang at 382;
• • If the person is providing their own equipment, to what extent can the person be directed in the management and control of that equipment?: Stevens v Brodribb at 26;
• • Have the parties involved characterised the economic activity as that of the owner/entrepreneur being performed in and for that person's business, or alternatively as part of the receiving business, and to what extent does that characterisation reflect the reality?: See [188] to [200] above."

41 Mr Fenwick-Elliott submitted that these passages adopted by Judge O'Sullivan in Linkhill were an up to date statement of the law on this difficult issue.

42 As to what constituted a "sham" Mr Fenwick-Elliott referred to the statement in the Federal Court in Sharrment Pty Ltd v Official Trustee in Bankruptcy [1988] FCA 179; (1988) 18 FCR 449:

"A 'sham' is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive."

43 Sham contracting, he said, was an arrangement where an employer disguises an employment relationship as an independent contracting relationship. He referred to Australian Building and Construction Commission v Inner Strength Steel Fixing Pty Ltd [2012] FCA 499 [13] per Gilmour J.

44 Mr Fenwick-Elliott submitted that the evidence here would make out the contention which Judge O'Sullivan accepted on the facts of Linkhill, that people described as independent contractors were, in truth, employees who were not receiving the proper employment benefits due to employees. Hence, the arrangement was a sham and illegal. This, submitted Mr Fenwick-Elliott, engaged the principles stated by Vickery J in Sami v Roads Corporation [2008] VSC 377 [143] where his Honour stated:

"Damages are not recoverable in circumstances where the compensable losses claimed are in respect of profits that the plaintiff made by operating a business illegally or are in respect of future profits which would be made by conducting a business illegally."

45 Mr Fenwick-Elliott then turned to a decision of the Queensland Court of Appeal in Holdcroft v Market Garden Produce Pty Ltd [2000] QCA 396; [2001] 2 Qd R 381, a case in which the Court of Appeal determined that what appeared on its face to be an employment arrangement was a sham which the Court ought not to enforce. The Court took this stand despite the fact that neither party relied on illegality or contended that the arrangement was, in truth, a sham. Mr Fenwick-Elliott submitted the same approach should be adopted here. Mr Fenwick-Elliott handed up a summary identifying what he submitted were the relevant factors in characterising the relationship of engagement relative to the various workers in question to which I will return in due course. He noted in particular that, whilst the workers in question did have Australian Business Numbers (which might be thought to support a contention that they operated independent enterprises or "businesses"), Mr Magurean and Mr McCracken were instructed by Geaboc to obtain them. (T99 and T104) Mr Fenwick-Elliott also noted that one of the workers, Mr McCracken, gave evidence that his ABN has been cancelled "for tax evasion, or at any rate non-payment of tax", (T103). He had not paid tax for six years. (T1284, L9-11) Mr Fenwick-Elliott concluded on this subject,

"I will just say this before leaving the question of illegality, it is not, as I think is sometimes assume[d], a victimless crime. It's difficult to identify precisely who the victims are because the victims are widely spread, but when there is widespread tax evasion, we all know what happens, it means that the government has to borrow money - - -

...

... it's a burden which is essentially passed on to our children and our grandchildren. It's not without consequence." (T1284, L18-24, 28-30).

46 Mr Clarke, on behalf of A1, submitted that Mr Fenwick-Elliott's reliance on the concept of "sham" was misdirected. He submitted that the decision in Holdcroft v Market Garden Produce Pty Ltd relied on by Mr Fenwick-Elliott was plainly distinguishable. There, both parties committed to an agreement which was to provide for the payment of the price of shares which had been sold, which agreement was dressed up as an employment contract. This clearly met the criteria for a sham as such was described in Linkhill. Both parties were pretending to enter into a contract which in substance they had no intention of performing. The so-called employee was not going to render any employment services and the employer was not going to accept any such services. Here, according to CATCON's case, it entered into its arrangement with A1 in good faith and became aware of the alleged illegality only following the disclosure of A1's case on damages for this second trial. (T1383 - T1386)

47 Mr Clarke submitted that the proper analysis to determine whether the proposed sub-contracting arrangements were legal was to take into account various indicia. In the present case, he submitted, this analysis would come down in favour of a finding that the proposed arrangement was one of independent contractor. (T1388) He referred to the decision of the Australian Industrial Relations Commission in Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215. The question whether the proposed arrangements with the four individuals were to be characterised as employment arrangements or arrangements by way of contracts for services by independent contractors was a matter of fact rather than law. He referred to Green v Victorian WorkCover Authority [1997] 1 VR 364, 373-4 per Tadgell JA.

48 Mr Clarke referred to a well-known passage from the decision of the High Court in Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16, 24 which was applied by the Full Court of the Federal Court, Wilcox, Burchett and Ryan JJ in Building Workers' Industrial Union of Australia v Odco Pty Ltd (1991) 99 ALR 735//29 FCR 104 where Mason J said:

"But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question: Queensland Stations Pty Ltd v FC of T [1945] HCA 13; (1945) 70 CLR 539 at 552; Zuijs' case; FC of T v Barrett at p 401; Marshall v Whittaker's Building Supply Co [1963] HCA 26; (1963) 109 CLR 210at 218. Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee."

49 Mr Clarke also referred to a passage from the trial judge, whose decision was upheld by the Full Federal Court in Odco where his Honour said, as to the situation before him in that case:

"So far as control is concerned, the workers are free to work when they please. The only requirement is that they keep Trouble Shooters informed of their availability if they want to work, or if they are ceasing to work at a site where Trouble Shooters' labour is still required. The elements of stability and continuity, which are such a central part of every contract of service extending over a period of time are not present." [Odco Pty Ltd v Building Workers' Industrial Union of Australia (1988) ATPR (Digest) 46-042 per Woodward J]

50 Mr Clarke submitted that the decision of Judge O'Sullivan in Linkhill was not, as contended by Mr Fenwick-Elliott, extraordinarily similar to the present situation. He said there were: "... five matters which were significant in Linkhill which make this case clearly distinguishable ..." (T1394, L18-19) First, he said, the individuals involved were engaged for lengthy periods of time [in contrast to the proposed 12 week periods here]. He said the court found in Linkhill that each of the employees was required to give notice of time off which was subject to approval. The second point of distinction, he said, was that they were precluded from working for anybody else. The third distinction was that if they did work for anybody else, they were required to obtain approval. The fourth point, he said, was that there was a threat of dismissal, a matter which Judge O'Sullivan regarded as significant in Linkhill according to paragraph [262] of his judgment. The final point of distinction was that the tax invoices which were issued on behalf of the individuals in Linkhill were recipient-generated; that is, issued by Linkhill, not by the workers. Mr Clarke submitted the short term engagement for 12 weeks was more akin to the situation of counsel being briefed to argue a particular case, rather than an employee engaged for a lengthier or indefinite period. Mr Clarke noted at paragraph [256] of the judgment in Linkhill, Judge O'Sullivan regarded it as significant to find whether the workers performed work for others or had a genuine practical entitlement to do so.

51 Mr Clarke then turned to what he said the evidence disclosed as to the individuals who were said to be the subject of the "sham" arrangement. He referred to the evidence of Mr Geaboc which I have summarised above. As to the evidence which they gave at this trial, Mr Claydon had worked as a motor mechanic and, according to Mr Clarke, gave evidence that he supplied his own boots. He had worked in the motor industry as a sole trader and held an Australian Business Number. He had done that as a result of advice from his father, who had worked as an accountant. He accepted he was responsible for his own superannuation as a sub-contractor and was not entitled to WorkCover. He was responsible for his own taxes and rendered tax invoices. He received no holiday pay and was registered with the Australian Taxation Office as a sole trader. He said that he negotiated his own fee for labour with A1. In relation to Mr Claydon's situation, Mr Clarke said: "So he provided his own tools, he said, and he paid his own tax for money received from A1 and [money] received from others." (T1411, L25-27)

52 Mr Clarke observed that Mr Geaboc had never threatened to dispense with anybody's services and that constituted a point of distinction from the decision in Linkhill.

53 In his work Carter on Contract, Professor Carter states the following general principles relative to the unenforceability of contracts prohibited by statute:

"General principles:

(1) A contract is illegal under statute if expressly or impliedly prohibited by statute.

(2) A contract is expressly prohibited by statute if the contract or the conduct which is necessary to the formation of the contract is expressly prohibited.

(3) Whether a contract is impliedly prohibited by statute is a matter of legislative intention on which the following factors may in particular cases be relevant:

(a) the objects of the statute;

(b) whether a penalty is imposed;

(c) the circumstances in which any penalty is payable;

(d) the nature of the conduct which is prohibited; and

(e) whether, in all the circumstances, to conclude that the contract was prohibited would lead to an unreasonable result."[1]

54 The contract in question here is a contract between A1 and CATCON. I was not taken in detail to the Commonwealth industrial legislation or enterprise bargains which were said to form the basis of the illegality relied on by Mr Fenwick-Elliott. The enterprise bargaining agreement itself was put into evidence but was not the subject of any detailed analysis in the course of the hearing. The agreement and the Commonwealth statute pursuant to which it was made may be thought to have the objectives of obtaining "peace" on the industrial front between the employers and employees involved in the relevant industry; here, the building industry. Another objective is the maintenance of appropriate conditions of employment for the employees. Other statutes which might be thought to be incidentally implicated relate to superannuation and to the payment of State imposts such as payroll tax. It need hardly be doubted that nothing in any of these statutes or statutory instruments if the enterprise bargaining agreement is to be so regarded prohibits or renders illegal per se a contract such as the one found to exist here between a head contractor, CATCON, and a sub-contractor, A1, for the carrying out of building construction work.

55 While a contract to commit an illegal act may be unenforceable, there is nothing in the present contract between A1 and CATCON which requires the commission of an illegal act. Whatever intention is to be attributed to A1, the intention of CATCON was, according to Mr Fenwick-Elliott, to put itself in the box seat by having A1 committed to a contract for a price below its own cost of performance.

56 The matters urged by Mr Fenwick-Elliott as to illegality pertain not to the contract which is sought to be enforced as an illegal contract but rather to an illegal mode of performance.

57 The doctrine rendering illegal contracts unenforceable extends not merely to those contracts expressly prohibited by statute but to those prohibited by implication. As was said by Devlin J (as he then was) in St John Shipping Corporation v Joseph Rank Ltd [1957] 1 QB 267, 287:

"Two questions are involved. The first - and the one which hitherto has usually settled the matter - is: does the statute mean to prohibit contracts at all? If this be answered in the affirmative, then one must ask: does this contract belong to the class which the statute intends to prohibit? For example, a person is forbidden by statute from using an unlicensed vehicle on the highway. If one asks oneself whether there is in such an enactment and implied prohibition of all contracts for the use of unlicensed vehicles, the answer may well be that there is, and that contracts of hire would be unenforceable. But if one asks oneself whether there is an implied prohibition of contracts for the carriage of goods by unlicensed vehicles or for the repairing of unlicensed vehicles or for the garaging of unlicensed vehicles, the answer may well be different. The answer may be that collateral contracts of this sort are not within the ambit of the statute."

58 For the reasons already given, the contract between these parties is, with respect to the prohibitions relied on by Mr Fenwick-Elliott, a collateral contract and not within the prohibitions at all.

59 The result, then, is that we have a contract not, in itself, illegal but which, if Mr Fenwick-Elliott's submissions are correct, was intended by one party to be performed in an illegal manner. This situation may be thought to resemble in some respects the facts in the St John Shipping Corporation case itself, rather than the various cases relied on by Mr Fenwick-Elliott. In the St John Shipping Corporation case, the shipping company had overloaded its vessel for a voyage carrying grain from Mobile, Alabama to Birkenhead in England. On arrival at Birkenhead the ship sat some 11 inches in the water below the "load line" prescribed by statute. This is presumably what is popularly known as the `Plimsoll line'. A statute of 1932 prescribed a penalty which, in the view of one of the owners of cargo loaded on the ship, was an inadequate deterrent. It decided to withhold payment of some £2,000. The defendants argued in the circumstances that the contract of carriage was illegal and therefore unenforceable against them. Devlin J, (as he then was) rejected this defence. His Lordship said that the illegality defence did not apply to contracts "which depend for their performance upon the use of an instrument which has been treated in a forbidden way ..." [1957] 1 QB 267, 289

60 This contract is not a sham in the sense that the Court of Appeal found the contract in question in Holdcroft's case was. Thomas JA, who delivered the principal judgment, reviewed the evidence and concluded that it was:

"...impossible to conclude from the material actually before the court otherwise than that the plaintiffs and the company agreed to enter into the contract in its present form for an illegal purpose, namely to defraud the revenue." [2000] QCA 396; [2001] 2 Qd R 381, 388

61 It was in that sense that in the words of Pincus JA:

"The written agreements were fakes." [2000] QCA 396; [2001] 2 Qd R 381, 382

63 The judicial dictum which apparently put Mr Fenwick-Elliott's contentions on this point in a nutshell and validated them was from Vickery J in Sami v Roads Corporation [2008] VSC 377 where his Honour said:

"[143] Damages are not recoverable in circumstances where the compensable losses claimed are in respect of profits that the plaintiff made by operating a business illegally or are in respect of future profits which would be made by conducting a business illegally."

64 This statement must be read in context. The nature of the claim by the plaintiffs which Vickery J rejected is explained in paragraphs [3] to [5] of his Honour's judgment as follows:

"[3] The plaintiffs, Bob Sami (Mr Sami) and Roshni Sami (Mrs Sami) developed an enterprise in the motor vehicle industry in Victoria which operated under the business name "JAPS Imports". In about 1996, the business commenced operations as a motor vehicle wrecker and importer of car parts used for the "re-shelling" of accident damaged vehicles for sale in Australia. The practice of re-shelling involved rebuilding damaged motor vehicles by applying a new or used body shell, which was either imported or sourced locally, to a wreck and supplying the rebuilt vehicle to customers with the object of making a profit.

[4] The defendant, Roads Corporation, is a statutory corporation established pursuant to s 15 of the Transport Act 1983 (Vic). Pursuant to s 15A of that Act, the Roads Corporation is entitled to and does carry on business under the name "VicRoads" (VicRoads or the Corporation).

[5] The plaintiffs claim that they successfully conducted their motor car re-shelling business until early 2003 within the regulatory system administered by VicRoads. They say that they were able to re-shell vehicles for customers, have the re-shelled vehicles registered by VicRoads for use on public roads and derive a profit from the enterprise. They claim, however, that on 28 March 2003, because of a change in procedure in the registration process of re-shelled vehicles introduced on that date by VicRoads, their business became unviable and could no longer continue to operate. Mr and Mrs Sami contend that the procedure for the registration of re-shelled motor vehicles, including the change introduced on 28 March 2003, was ultra vires (beyond its power) and seek a declaration to that effect. They also claim damages for negligence against VicRoads arising from its administration of the procedure for the registration of re-shelled motor vehicles."

65 It will be seen that the plaintiff alleged loss and damage resulting from a change of administrative processes adopted by the defendant, Vic Roads, "on 28 March 2003". Mr Clarke drew attention to paragraph [151] of his Honour's judgment where he noted that from 3 October 2002, the Melbourne Magistrates' Court had granted injunctions restraining the plaintiffs from trading in motor cars without a licence under the Motor Car Traders Act. The losses claimed by the Samis occurred whilst the injunctions were in force. His Honour said:

"It was the grant of the injunctions, rather than the introduction of the new business rule, which ruined the Sami business." [151]

66 It is in that context that his Honour's statement at paragraph [143] must be understood. The conduct in question occurred in the face of a direct statutory prohibition on the entirety of the business which the plaintiffs were conducting which statutory prohibition was backed up by court injunctions. In those circumstances, in my view, Sami's case provides no proper guide to the present situation.

67 To sum up, the contract between A1 and CATCON was not prohibited by statute either expressly or by implication. Even if A1 intended to commit an illegality in performance of an otherwise legal contract, CATCON had no such intention. Therefore, the contract was neither a sham nor a contract to commit an illegal act. The contract is no more rendered unenforceable than the contract for the carriage of cargo in the St John Shipping Corporation case.

68 Even were that analysis incorrect, I am not persuaded upon the facts that the mode of performance proposed by A1 would amount to "sham contracting" as alleged by Mr Fenwick-Elliott.

69 Mr Fenwick-Elliott placed primary reliance on the Linkhill case. There is a major distinction between A1's proposed arrangements and what were found by Judge O'Sullivan of the Federal Circuit Court to be "sham contracting" in Linkhill. The individuals found by his Honour to be employees seem to have worked for Linkhill on long-term retainer arrangements, in some cases for over three years. This stands in stark contrast to the arrangement which A1 says it would have entered into with the individuals, here, for work on a single project for some 12 weeks. Mr Fenwick-Elliott said that one of the 10 workers in Linkhill, a Mr Cabrera, whose engagement was for a relatively short period; namely, 18 March 2010 to 28 July 2010. Nevertheless, the findings in relation to this worker must be seen in the context of the lengthy periods of retainer for all of the other individuals involved. All of the claims considered by the Court terminated in 2010, presumably as a result of the intervention of the Director of the Fair Work Building Industry Inspectorate. The Director commenced the proceeding on 20 October 2011. Accordingly, the marked distinction between Linkhill and the present proposed arrangement still stands.

70 As previously noted, the determination in a particular case as to whether an individual is or is not an employee, rather than an independent contractor, is multifactorial. Many factors and criteria have been considered by the courts over the years as pointing in the one direction or the other. None has been found individually to be conclusive. It is the accumulation of matters pointing in the one direction or the other and no doubt a relative weighting as to their significance which has led courts and tribunals in particular cases to reach their determination. The process is made more difficult by the fact that for every factor which is regarded as pointing in a particular direction, it is usually possible to find a counter example where a determination of the other type would inevitably be made despite the particular factor or criteria. The ability to exercise detailed control was, to the extent that any single factor was regarded of paramount importance, regarded as the closest to a single point of discrimination between employees and independent contractors. But in Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21, 40-41 the High Court considered that it was only one factor to be taken into account. (Macken's Law of Employment 8th Ed. 2016 p.42. The learned editors of Macken state on the same page in Linkhill, workers were held to be employees based on a range of factors: particularly, because the company exercised control over workers by directing them where they were to work; they specified the tasks to be undertaken; required particular invoice and timesheet procedures and set work times; and workers reported to, and were monitored by, company's representatives. But significant detailed control over the work does not automatically create an employment relationship. So, in Elazac Pty Ltd v Shirreff [2011] VSCA 405] the worker, "Shirreff", was held not to be an employee despite being given instructions (sometimes hourly) about what was to be done and when with the expectation that the instructions would be carried out immediately. Control was outweighed by the circumstance that Shirreff had engaged his own employees to perform the contracted work. Again, a capacity to sub-delegate or send a substitute to perform work may be regarded as indicative of a relationship of independent contractor and principal and its absence indicative of an employment relationship. But, a popular entertainer or concert performer engaged for a single performance or series of performances would not have any entitlement unilaterally to tender performance by a substitute or understudy in the absence of some excuse such as illness, et cetera. Control of the hours of work by the worker would appear to indicate or favour a status of independent contractor but controlled by the principal would favour an employment relationship. But counsel, who are quintessentially to be regarded as independent contractors and not employees, have court commitments which they are not at liberty to vary unilaterally. A contractor on a building site who in all other respects would, according to established tests, meet the criteria for an independent contractor would not cease to be such because his or her work crucially required attendance at particular times controlled by the head contractor with reference to events such as concrete pours and so on.

71 As Fox LJ remarked in O'Kelly v Trusthouse Forte plc [1984] QB 90, 120-1, the question whether an employee or independent contractor is not "susceptible of the analysis that there is a right and a wrong answer to be determined as a matter of pure law." Quoted with approval by Tadgell JA in Green v Victorian WorkCover Authority. [1997] 1 VR 364, 373-4

72 Mr Fenwick-Elliott pointed out that the proposed workers here would have been travelling far from their families and to an area, namely the Fleurieu Peninsula, hundreds of miles from their principal residences. Their inability to engage in alternative employment and being parted from their families and home lives weighed in favour of their being regarded as independent contractors. But, if counsel were to accept a brief to argue a long migration case in a remote outback settlement, he or she would likewise be cut off from family and the opportunity to undertake other work. This would not change his or her status from that of independent contractor to employee. Mr Fenwick-Elliott said analogies drawn from the role of counsel were unhelpful given that the individuals in question here were working in the building industry. It was not obvious to me why that would make a difference. I therefore substituted the example of a person engaged by an overseas tourist on a particular trip to Australia to provide services as guide and driver in outback Australia over a period of weeks.

73 Turning to the facts of the present case, Mr Fenwick-Elliott handed up a summary sheet of factors which he said favoured the view that these individuals were employees and the attempt to characterise them as independent contractors was a "sham". Amongst the matters urged as showing that the individuals were employees, it was noted that Mr Magurean said at T96 that Mr Geaboc decided the work that he did and it was not possible for him to work on any other jobs whilst working for A1. As to the latter point, one might as easily say that whilst Mr Fenwick-Elliott was appearing before me, as a matter of practicality he could not take a brief to appear on the same day in the Supreme Court of South Australia. A singer who enters into a contract to give a number of performances on an ocean cruise is precluded from doing work in the recording studio or performing for concert promoters or making television appearances during the period of the cruise. This would not convert him or her into an employee of the cruise line. It was said that Mr Magurean agreed that he was not free to accept offers of work or reject offers of work that were put to him. (T100) The relevant passage in cross-examination by Mr Clarke (the witness had been called on behalf of CATCON) is at L14-31. It is difficult to know what to make of these answers and whether they are to be regarded as responsive to the questions. Taken literally, they would appear to have the witness in a state of servitude, not only to A1 but to anybody else who might offer him work. In the context of the evidence given by other workers, I do not believe that these answers can be taken literally and so I put this transcript passage to one side.

74 As to Mr McCracken and Mr Claydon, it was noted that Mr Geaboc decided the specific work that they did and that A1 had priority with respect to other jobs. A1 had priority, according to Mr McCracken, because it "Paid more, it was good money". (T107, L19-20) In other words, he did not regard himself as under a contractual retainer to A1. Rather, he was accustomed to take work from A1 because he found their offers of work more lucrative. I do not regard this as a strong consideration favouring a relationship of employee. He said that in 2010 he did work for other companies in the building industry. "The main one would be Bendigo Concrete Specialists ..." (Ibid, L24-27) As to Mr Claydon's hours being set by Mr Geaboc, the evidence given in chief by Mr Claydon was, "The hours were set, so the hours would be set by the site, when the site opened. The earlier we could get in, the earlier we could leave, so it would be determined by Peter, Daniel and also the site we were working on." (T111, L4-9) That answer, it will be seen, is not to the effect that Mr Geaboc set the hours of work. Rather, the primary controller was "the site", in this case CATCON, or perhaps Leighton. This control of hours of work on-site was a matter specifically urged by Mr Fenwick-Elliott in the course of his submissions in support of another defence based on the time that would be taken to perform the relevant contract.

75 Next, according to the summary of factors, "A1 provided employees personal protection equipment and tools". Reference was made to the evidence of Mr Geaboc, Mr Magurean and Mr McCracken and Mr Claydon. Mr Magurean's evidence at T96, L29-31.

"Q: For tools you said you used belts and nibs, I think you said?---

A: Yes, that's it.

Q: Who provides those tools?---

A: I provide that tool."

76 This is hardly supportive of the contention in the summary submitted by Mr Fenwick-Elliott, although at the top of T97, Mr Magurean conceded that A1, "Peter", provided personal protection equipment. Mr Claydon, at T111, agreed that tools and personal protective equipment, with the exception of steel capped boots, were provided by A1. These matters were said to be in support of a criterion favouring employee status where "the worker wears the livery of the putative employer". Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at [50].

77 The summary next drew attention to the criterion: "The worker is remunerated by periodic wage or salary (ie salary as time based, not task based)." It was noted that, according to the evidence of Mssrs Geaboc, Magurean and Claydon, payment was sometimes made before the workers submitted their tax invoices and related to time. It should be noted, however, that the evidence did not disclose, as appeared to be the case in Linkhill, that the tax invoices for remuneration were recipient-generated. Like so many discriminating factors, this criterion is equivocal. A householder or, for that matter, a trading corporation could engage a tradesman or labourer to work at his, her or its premises at an hourly rate. That in itself would not constitute the worker as an employee. Counsel frequently appear on daily rates, and even when the traditional remuneration by brief fee and refresher is used, the remuneration is time-based. This does not render counsel an employee. The next criterion referred to was "The putative employer superintends the finances of the worker." The summary refers again to the provision of personal protective equipment and tools and payment for workers' meals and accommodation.

78 The next criterion is that "The worker is obliged to accept work". This criterion is said to derive from Filsell v Topnotch Fashions [1994] SASC 5171; (1994) 63 SASR 513. The evidence on this point has already been referred to. It must be conceded that, whilst a worker is undertaking work for A1, he is necessarily precluded from taking work from anybody else, just as counsel in accepting one brief is necessarily excluded from undertaking work for another instructing solicitor or client in another court. Mr Magurean's evidence about being able to reject offers of work, should, as explained above, be put aside.

79 Mr Fenwick-Elliott's summary also dealt with the factors which might be thought to be supportive of the view that these individuals were to be independent contractors. One matter which is relevant to this is that, according to the evidence of these individuals, they considered themselves independent contractors and accepted the responsibilities of independent contractors for tax, superannuation and so forth. Plainly, these matters are not in any way conclusive of the status of individuals one way or the other, but I do not understand any of the authorities to say that they are wholly irrelevant and should be given no weight. The evidence on this point was, as far as I can see, all one way; that is, in favour of individuals being independent contractors.

80 The first criterion on the summary was, "Viewed as a practical matter, the worker could be said to be conducting a business of his or her own?" This criterion derives from Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 [40], [47], and [58]. The summary noted the evidence of the individuals that they did not advertise, could not send a substitute if ill, did not have business expenses and would not remedy defects without being paid. All of these factors tell against a finding of independent contractor.

81 The next criterion was, "The worker has a corporate entity?". To make one fairly obvious point, the reference to "corporate entities" which is said to derive from ACE Insurance Ltd v Trifunovski, as a general proposition cannot be regarded as significant. It would exclude from the status of independent contractors members of any profession which must be carried on by individual practitioners rather than through corporations. That consideration in itself would point against this being a terribly significant factor in making the determination. The summary concedes that the individuals did have Australian Business Numbers but notes that Mr McCracken had his cancelled by the Australian Taxation Office for revenue non-compliance. It is difficult to see how this cancellation, which is an administrative act by the Commissioner of Taxation, can bear upon the relationship between Mr McCracken and A1.

82 The next criterion referred to was, "The worker advertises his or her services to the world at large?". None of these workers advertised. This is a consideration which points away from their being independent contractors.

83 The next criterion, "The worker provides and maintains significant tools or equipment?" Mr Fenwick-Elliott's summary refers to Mr Geaboc's evidence that he provided the tools and personal protective equipment. The workers, themselves, gave evidence that they did provide tools. On balance, this is a consideration which does point against independent contracting.

84 The next criterion is, "The worker spends a significant portion of his remuneration on business expenses?". Again, the evidence shows that these workers did not make any such expenditure.

85 The next criterion was, "The worker has a specific profession, trade or distinct calling?". According to the summary, this should be answered in the negative, though each of the workers did describe a particular occupation and specialty. It is difficult, therefore, to accept the contention by Mr Fenwick-Elliott, "this question must be answered in the negative".

86 The next consideration related to delegation of work. The evidence did not disclose the existence of any power to delegate. On the other hand, as previously explained, many independent contractors have no unilateral right to delegate; entertainers, at least solo performers, being an example. Again, if a private patient engaged a surgeon to carry out a particular surgical procedure, I would not understand the surgeon to have a unilateral right to delegate the procedure to somebody else. It is plainly otherwise where the surgeon operates as an officer at a public hospital treating public patients. In my decades in the legal profession, I never encountered a member of counsel who purported to exercise a unilateral power of delegation in a court appearance. Needless to say, where paperwork is delegated to a "devil" and provided under counsel's name, the extent of delegation there is unknown to the client or the instructing solicitor.

87 "The worker is paid on a task-by-task basis or by reference to the outcome or result of the work" is the next criterion mentioned. Here, the evidence was that these workers would be engaged to work for a particular period of time on a particular project. Their remuneration was to be time-based, again, in the same way as if counsel were briefed to appear at a particular trial with a particular daily rate. I reject the contention that this criterion points away from there being a relationship of independent contractor.

88 The penultimate criterion referred to was: "The worker creates good will or saleable assets?" This question is answered in the negative and is therefore not a point in support of there being an independent contractor relationship.

89 The final reference was compliance with statutory requirements, and reference is made to Mr McCracken's situation. As previously explained, I am unable to see that this is relevant to the question at all.

90 I accept the contentions of Mr Fenwick-Elliott that, analysed in this way, the balance of relevant criteria would favour a finding that these individuals were to be regarded as employees rather than independent contractors.

91 Many of the indicia analysed in Mr Fenwick-Elliott's document are equivocal. Reliance was placed on the fact that none of these workers advertised, yet in most of the traditional professions until the very recent past, there was an absolute prohibition on advertising. The practitioners in these professions were regarded as having independent practices and not as being employees, except to the extent that they were employed by other members of the profession. Yet, they relied entirely, as it would seem these workers did, upon a word-of-mouth reputation in the community to attract work.

92 There is a major consideration which, to my mind, outweighs the matters thrown in the balance by Mr Fenwick-Elliott and that is the evanescent connection between these individuals and A1. What was proposed here was a single 12 week engagement. The evidence showed that these workers frequently accepted work from A1. Counsel may frequently accept work on behalf of a client or from a particular firm of solicitors without thereby becoming an employee. I have already referred to the stark contrast that this consideration makes with Linkhill; the contrast with other recent or leading authorities, even more marked. In the decision of the Full Federal Court of ACE Insurance Ltd v Trifunovski [2013] FCAFC 3; (2013) 209 FCR 146, the Court found that some five insurance sales agents were employees of the insurance company and not, as the insurer had sought to deal with them, independent contractors. Of the five, one had been engaged by the insurer from 26 October 1981 to 15 December 2005, a period of almost a quarter of a century. A second commenced work in October 1990 and was dismissed on 12 October 2006. Mr Trifunovski commenced work in 1992 and continued until his resignation on 18 September 2005. What is lacking here is the stability and continuity and relationship that characterises the contact of employment. Throwing this consideration into the balance, I incline with some hesitation to the view that the relationship between these workers and A1 would have been one of independent contract, rather than employment.

93 To raise the issue of illegality on its own motion, despite its not having been raised by the parties, the Queensland Court of Appeal was guided by the statement of Kirby P (as he then was) in Staniland v Kentucky Homes Pty Ltd NSWCA 625 of 1986, 2 December 1987, BC8700903 at pages 10 to 11. His Honour there said:

"The right of judges to step in to defend a public interest in the due enforcement of the criminal law is, as Jordan CJ stressed in Knowles [(1947) [1947] NSWStRp 72; 48 SR (NSW) 243] exceptional. It should be confined to cases where the whole of the facts make plain the illegality which the parties do not allege and which the documents, on their face, do not reveal. Were it otherwise judges would be assuming a more vigorous role in the detection and prosecution of criminal conduct than the law of this State [viz New South Wales] presently assigns to them."

94 Even were I wrong in the analysis which I have given as to the proposed arrangement between A1 and the nominated worker, I would not regard this as a matter clear enough to justify the Court raising illegality on its own motion. Since I rejected an application by the defendant to amend its defence, illegality is not raised on the pleadings.

95 I am fortified in that view by the consideration that, if these workers were to be characterised as employees and to have the advantages of the enterprise bargaining agreement, it would be possible to "package" their entitlements as employees under the agreement within the $2,500 per week package agreed to. Mr Rubira, the quantity surveyor giving evidence for A1, made this calculation at CB 3567. He calculated an annual outlay "based solely on enterprise agreement" at $2,206.79". I did not understand that calculation to be challenged as a matter of arithmetic. Mr McPharlin, an accountant expert giving evidence for CATCON, denied that such packaging could take place. He said that he had excluded from the "package" and added as additional items onto a base of $2,500, sums that were payable to third parties. (T921, L16-30, T928, L11-20). It would not be legal to put an amount for superannuation simply into the pocket of a worker; but this does not appear to be an objection to including an employer's superannuation contribution as part of a worker's "package". In one of my previous employments by government, this was the manner in which my remuneration package was dealt with. It had the paradoxical consequence that when the percentage rate of the employer's contribution was raised by Federal law, with my package remaining unchanged, my salary was reduced.

96 The reliance placed by the defendant on illegality, therefore, fails.

97 Mr Fenwick-Elliott for CATCON submitted, based on the findings made at the Liability trial, that the contract relevant to this proceeding was made between 3.36 on 12 July and 10.27 on 23 July. (T1286, L20-21) He continued: "It follows that anything that was said on 26 July at the meeting [held on that date] cannot of itself affect the contract." (T1287, L1-3). He said, "the contractual die had been cast by 23 July." (T1286, L29)

98 Mr Fenwick-Elliott took me to the email at Liability CB C28, which provided in the fourth bullet point: "Construction period is 12 weeks in total from 26/07/10". (T1315, L28-30) Mr Fenwick-Elliott continued: "The plaintiff would like to put that back to either 4 or 9 August ... " (T1316, L17-18) [As Mr Clarke pointed out, the second further amended statement of claim dated 30 July 2014 (CB1851, paragraph 5A at 1853) alleges: "On or about 26 July 2010 at a meeting on site the agreement was varied by agreement that the commencement date of the site works be delayed until 9 August 2010"]. Mr Fenwick-Elliott said this contention was not made out by the evidence, "... the meeting on 26 July broke up in acrimony with no agreement having been reached about anything." (T1317, L21-22) Mr Fenwick-Elliott took me to Liability CB C52, Item 9, which he said: "... spells out that the completion date is 12 weeks from the commencement date of 26 July, that is to say 18 October. So that was the expectation of my clients at that time." (T1318, L3-7) Mr Fenwick-Elliott said that whilst the email at Liability CB C29 allowed for an extension of time for bad weather, no compensation was payable. A1, he submitted, would have finished after 18 October, thereby attracting a liability to pay compensation to CATCON, "Just shy of $100,000 a week." (T1319, L26 - T1320, L3) This represented, he said, "The weekly cost of all the supervision, the safety officers, the fencing, the huts, the cranes, all of the things which are required to maintain the construction site." (T1320, L7-10) These tanks were, he submitted, "on the critical path" for the Aldinga project. He submitted that, as part of the development plan, Leighton was going to install mechanical equipment in the clarifiers which installation could not be done until the completion of those clarifiers. Mr Fenwick-Elliott said that the evidence of Mr Peter Geaboc was that the work would be complete in "12 weeks, easy". (T1330, L6-20) Mr Fenwick-Elliott said that this evidence should be contrasted with the resource schedule prepared by Mr Ben Geaboc to be found in Liability CB C109 which calculated how long the process would have taken. (T1331) According to Mr Fenwick-Elliott, this should be the preferable evidence on the time for performance by A1 because it was a contemporaneous document. (T1333, L9-12) He said evidence given by Mr Peter Geaboc at trial was potentially self-serving and in any event:

"In support of his untrue assertion that that Smithweld invoice also referred to a sump that he had ordered for this work, he relied upon a key which that is property and Your Honour will recall in the liability trial the representative of my client went to the property, photographs were taken of what Mr Geaboc said was the key from that comb, and we were able to demonstrate convincingly as Mr Geaboc would have well known, that was not the key relative - could not have been the key relative to this contract. He would have known that but he stood in the witness box and lied through his teeth hoping that he would not be caught out. So from the point of view of credibility, we say that his evidence on this point, not only is it self-serving but it has to be treated with extreme suspicion.". (T1333, L25 - T1334, L8)

99 He said Mr Geaboc's estimate gave no consideration to "actual site reality". He submitted it would not be possible to make up time as Mr Geaboc supposed it would be (T1334, L21-23) particularly, he said "... if you take account of the safety meetings which would have been required." (Ibid, L26-27) Mr Fenwick-Elliott noted that for religious reasons, Mr Geaboc's company would not work on Saturdays so any catch-up on weekends would have to be done on Sunday, except, he said the site was closed on Sundays. (T1335) Mr Fenwick-Elliott said that under cross-examination, Mr Peter Geaboc said that A1 completed the Batemans Bay job on 2 August and returning to home base unloaded his trucks on 9 August. (T1339, L24 - T1340, L10) He said the evidence at the Liability trial showed that the panels being used by A1 needed to be "cleaned and oiled". (T1340, L18) He submitted that this work would take two or three days. (T1342, L1115)

100 Next, submitted Mr Fenwick-Elliott, I should find that a vital piece of steelwork to be obtained from Smithweld would not have been available for an early start. (T1343-4) There would also have been delays in obtaining the second item on the Smithweld invoice, a sump, "One piece of formwork, it's three millimetres thick, it's a metre high, it's got an arch length of 7540, with a two and half metre diameter and it's supplied in five sections including a key." (T1344, L9-12) This item was, he said, required as part of the revision two drawings. (Ibid, L19-20) Allowing for these items, Mr Fenwick-Elliott said the start date would be 23 August. (T1346, L10) Mr Fenwick-Elliott made a calculation allowing for days off for bad weather and every second Friday as a rostered day off, in accordance with the enterprise bargaining agreement. (T1346, L20-29) He said he made the allowances for bad weather based on records from Sellicks Beach "being the closest station." (T1347, L17) Allowing for the Christmas close down, he said the work would not be finished till 14 January the following year. (T1353, L7) Even on Mr Geaboc's evidence, said Mr Fenwick-Elliott, "He doesn't finish until 2 December, which compares with the contractual completion date of 18 October. So even on his own evidence, he would've been significantly late." (T1355, L14-17)

101 He referred to Mr McPharlin's calculation as the cost of fielding a team of 10, at $33,667 per week. (CB 3398 as amended) Based on the evidence of Mr Rubira, according to Mr Fenwick-Elliott, there would be in addition a living away from home allowance payable at the rate of $4,850 per week. (T1357, L6) According to Mr Fenwick-Elliott's calculation, there would be damages for delay payable to CATCON for some 10.6 weeks. (T1358, L2) He worked a weekly outlay for "preliminaries", that is for operating the site at $87,000 on average (T1358, L15) for the month of October. The same calculation he said for November was $85,000 and the delay damages therefore were $908,029. (T1358, L18)

102 Mr Clarke submitted that the workers which A1 would field would be able to make up for any time lost by way of weather delays. He said this despite the fact, for religious reasons Saturdays were ruled out, as "catch up" times and Sundays were ruled out because the site would be closed on Sundays. (T1404, L24 - T1405, L4) This could be done by dispensing with rostered days off (T1405, L9) and working through breaks. (Ibid, L11-14) In a three month period, there would be six rostered days off. (T1434, L1-2)

103 Mr Clarke referred to a document produced by CATCON on discovery which he said showed some 12 weeks allocated to the subject works exclusive of back filling. (Defendant's Supplementary CB Tab 1b, T1437, L5-14) Accordingly, he submitted, there was nothing unreasonable in a 12 week construction period. Mr Clarke submitted that his client would normally use six workers on-site but would have lifted the team to ten. (Ibid, L16-22)

104 Mr Clarke noted that the documents produced on discovery showed some 19 days lost in the critical path on this project in August 2010. He referred to Exhibit 9 page 2. (T1439, L19 - T1440, L23) He submitted that the records produced were "clearly incomplete". (T1441, L2) Mr Clarke said, "...the fact there's rain isn't going to impact on the critical path because you've got 19 days being lost to the critical path due to that problem, so ... CATCON says." (T1442, L15-17)

105 As to the proposed starting date for the contract, there was a dispute as to what occurred at the meeting on 26 July 2010 but that meeting was the subject of findings at the Liability trial which were not disturbed by the Court of Appeal. Despite rejecting Mr Peter Geaboc's evidence that his company signed the sub-contract document at that meeting, I generally accepted his account of what transpired. [2014] VCC 1239 [178] One of the elements of his evidence that I therefore accepted was that the start date for work by A1 was put off by agreement to 9 August or possibly 4 August. [2014] VCC 1239 [37] This finding was noted by the Court of Appeal [2015] VSCA 75 [31] and remains undisturbed. This matter is therefore the subject of an issue estoppel. Mr Clarke referred me to Spencer Bower and Handley, Res Judicata 4th Ed 5.28, page 82, where the learned editor states:

"Issue estoppels operate in later stages of the same suit, whenever the trial is split. Where questions of liability in common law proceedings are separately determined and the claimant succeeds, the court enters interlocutory judgment for damages to be assessed. The judgment is final for purposes of res judicata and binding on the parties in the assessment ..."

106 Accordingly, Mr Fenwick-Elliott's submission that the meeting of 26 July 2010 did not entail the parties agreeing to extending the start date for A1's work until as late as 9 August must be rejected.

107 The findings which I have made as to the nature of the proposed relationship between A1 and its workers means that I must reject the contentions on behalf of CATCON and by its witnesses that these matters must be judged by reference to A1's enterprise bargaining agreement with the CFMEU. A1 would have had flexibility based on dispensing with rostered days, working through breaks and so forth. Nevertheless, nothing has been urged which would have relieved A1 from the constraints on weekend work deriving from the sites being closed on Sundays and Mr Geaboc's religious principles precluding A1 from working on Saturdays.

108 I turn next to the issue of days lost for bad weather. Leighton and CATCON were involved in a joint venture or some such relationship for the execution of the Aldinga work. At the Assessment trial, a senior executive of CATCON, Mr Stanmeyre, gave evidence as to the site arrangements and contractual structures. The purport of that evidence was that, since this project was being undertaken for a Government Authority of the State of South Australia by prominent and highly respected entities in the construction industry, namely Leighton and CATCON, the highest standards were required as to all procedural and safety matters. Mr Stanmeyre produced an array of elaborate contractual documents laying down procedures as to safety and other matters. The general thrust of the evidence and CATCON's reliance upon it was that this administrative and safety structure on-site would render it impossible for A1 to adopt the sort of expedients which it contended could have enabled it to complete its work in a timely manner as it had been able to do on perhaps less high profile and less highly regulated sites in the past.

109 In the face of all this, it was surprising, to say the least, that there seemed to be no very clear evidence on behalf of CATCON on the issue of days lost for bad weather in this period. As things turned out, with the breakdown of negotiations between these parties, CATCON performed the work itself, emphasis was made on the elaborate administrative structure and the extent of the necessary meetings, all of which would lead one to suppose that matters such as days lost for bad weather would have been clearly documented. Ultimately, there is no reason to doubt that they were. Mr Stanmeyre, however, produced documents such as applications on behalf of Leighton for extensions based on bad weather, but no determinations from the superintendent as to whether these extensions were allowed under the head contract. Quantity surveyor, Mr Lampard, giving evidence for CATCON, initially produced meteorological material based on readings taken at Adelaide Airport, a location apparently 50 minutes' drive from the Aldinga site. Later, records were produced from a nearer location, namely, Sellicks Beach. There was material which documented what happened on-site but CATCON has not taken the trouble to put that material into evidence. Failure to produce a document or documents which a party might reasonably be expected to produce gives the same entitlement to draw adverse inference as failure to call a witness whom that party might be expected to call in according with the rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298. Challenger Property Asset Management Pty Ltd v Stonnington City Council [2011] VSC 184; (2011) 34 VR 445.

110 Despite the above observation, the defendant's case is that 10 days, that is, two working weeks, would have been lost to bad weather. (T200, L4-5) This represents the same loss which Mr Geaboc agreed was reasonable to allow for. In his witness statement he said: "I had allowed 10 weeks for the work to be done, and an extra two weeks for delays, including days for inclement weather." (CB 833, paragraph 40) In light of this rare accord between the parties, I will proceed on that basis.

111 Mr Rubira, a quantity surveyor, gave expert evidence on behalf of A1 and provided a number of reports. In his first report he accepted as reasonable the allowance of 12 weeks to complete the work. (CB 84-114) Mr Rowland Lampard, quantity surveyor, gave expert evidence on behalf of CATCON. In his first report responding to Mr Rubira he noted that, amongst other factors which would tend to extend the necessary construction period, the formwork which A1 proposed using would require multiple concrete pours for the tanks rather than the single pour which the PERI system would entail. This led Mr Lampard to state in his first report that he allowed "for the provision of 14 men to complete the contract in 12 weeks". He continued, "...should A1 have not increased their labour to 14 men ... and kept to 10 men as quoted, then A1 would construct the tanks in 16 weeks and 3 days." (CB 121)

112 Mr Rubira provided a second report in response to the first Lampard report. At paragraph 206 of that report (CB 423), Mr Rubira said that he believed a workforce of 10 men was sufficient to complete the project in 12 weeks despite Mr Lampard's opinion to the contrary. According to Mr Rubira, Mr Lampard's view that extra men were required to complete the work within the allocated time depended upon the view that the apron slab was included (which I have found it was not). He said it was also dependent in part on the need to carry out extra works as shown in the Revision 2 drawings (CB 420, paragraph 180). The summary of plaintiff's claim for damages, which appears at the beginning of these reasons, indicates that A1 now concedes that its contractual obligation extended to the Revision 2 drawings. Therefore, Mr Rubira's exclusion of those extra works cannot now be sustained. This represents some 718 hours (CB 421).

113 Mr Lampard then furnished a further report which is at CB 697. He generally maintained his opinion as to Mr Rubira's view that time losses could be made up as required. He said:

"Not only would the full day delay be required to be made up [as a result of loss of a full day to bad weather] but productivity would be affected by delay. Usually as morale drops by not being able to work the day after a rain day will also include for but not limited to, extra time requirement to get motivation back, clearing up time due to any mess/damage that may have occurred due to the rain, and rescheduling of deliveries that may have been scheduled to be delivered on the rain day (there may be a further delay as a result as delivery may not be able to take place the next day and may have to be scheduled for another day pending the supplier's workload.)" (CB 705)

114 In response to a suggestion from CATCON's solicitors, he remarked:

"If productivity is halved the day following a heavy rain event, then the 5 days' extension of time granted which do not include costs, the following day after the heavy rain event, would indicate a further 2.5 days of delay for all men as result. If there are 10 men on site then this equates to an extra 7.5 hours per man per day, therefore a total of 187.5 extra hours would be required to finish the works." (Ibid)

115 The next report in the series was from Mr Rubira at CB 3123. Mr Rubira had been providing his costings based on what he regarded as market rate; that is, the amount which a sub-contractor might tender to carry out the work. In this report he was asked to provide a costing based upon the proposed labour arrangements described by Mr Peter Geaboc in his evidence summarised above. Mr Rubira said that Mr Lampard had made double deductions for induction and tool box meetings. This report by Mr Rubira is the basis for the current formulation of the plaintiff's claim.

116 In his third report, Mr Lampard maintained his opinion on time generally. (CB 3339) He said:

"The cost to A1 for wet weather would be the Preliminaries and Living away costs, overheads etc. however this doesn't take into account the loss to the worker or recovery of the payment to the worker for loss of productivity. An allowance is to be made for the average number of days lost per year recovered through the hourly charge rate to reimburse the worker for the worker's pay for the days when the worker is unproductive through wet weather." (CB 3346, paragraph 28)

117 Mr Lampard said that he had received further information as to wet days. (This appears to be information from Sellicks Beach.) He said this revised information showed that there were six days of heavy rain; that is, of more than 10 millimetres in the period from August to November. He continued:

"With a 50 per cent productivity following a heavy rain event. Annexure 1 shows water retained the following day after weather event. Allowing for the six days the amount to be deducted from A1 Tanks' profit for 50 per cent productivity on the following days equals $13,596." (CB 3347, paragraph 32)

118 Mr Daniel Geaboc, one of Peter Geaboc's sons and one of the workforce which A1 would have deployed on this contract, was taken in cross-examination to a document which he prepared assessing the time necessary to complete the work upon the assumption that the 10 man team were deployed. I do not recollect the evidence descending to a final calculation of the total number of days which this document, which appears at Liability CB C109, would require for completion of the work, but it plainly substantially exceeded the 12 week estimate given by Mr Daniel Geaboc's father. Cross-examined on this, Mr Daniel Geaboc said:

"Q: Is it an accurate reflection of how you would have built these tanks?---

A: It's a very conservative one, I would have thought. It caters for some very, very, very conservative timeframes and time estimates of what, in the worst case scenario it would take resource and time-wise to build this job.

Q: I just wonder what you mean by conservative?---

A: Conservative, so if I thought it would take a day to put up some formwork and I allow for two days, that means I think it's going to take a day but I allow for two days as a worst case scenario of things not happening correctly, deliveries not coming in on time, any sort of contingent that can occur on a construction site and can hinder progress, but it's very much a worst case scenario.

Q: You will see the list of resources at the top?---

A: Yes.

Q: Is that conservative or was that your view at the time as to what resources would be used?---I would say it's actually conservative. Building a job in 12 weeks, given potential weather constraints and things like that, we discussed having a couple more guys on the job than we would otherwise have, so yes, I would say it's a very conservative number of men on site." (T273, L31 - T274, L22)

119 Mr Geaboc said that the allowance of 10 men was a very generous one and typically A1 had done this sort of work with fewer workers. (T274, L23 - T275, L1).

120 As it turned out, A1 did not complete the work until January of 2011, greatly exceeding the 12 week estimate.

121 Mr Clarke submitted that I should generally prefer the evidence of quantity surveyor, Mr Rubira, to the evidence of Mr Lampard. He submitted that Mr Lampard had allowed himself to fall into the role of advocate rather than disinterested expert. He observed that in the reports which he had provided to the court he had generally made no concessions and in the progression of the reports made them more favourable to CATCON's case. He instanced the issue of weather delays; in the first report, delay was mentioned only relative to days where rainfall was 10 millimetres or more, whereas in the final report, he introduced references to other days of lesser rainfall and the stated declines in labour productivity on days following rain days. Mr Clarke submitted, and this appeared to be borne out by admissions in cross-examination, that Mr Lampard's reports in some places included opinions and propositions which did not appear to be called for in his written instructions. In cross-examination Mr Lampard agreed that these matters were brought to his attention in the course of conferences attended by the defendant's solicitors, counsel and corporate executives. I believe Mr Lampard approached his task conscientiously. When he was cross-examined on the points urged against his reliability, he readily made concessions. Unconsciously, however, I think he allowed himself to become a member of the CATCON team rather than standing apart as an independent expert. Further, he reached his conclusions based upon a view as to legal and industrial obligations resting upon A1, which is inconsistent with the conclusions which I have reached in the section on "Illegality".

122 Mr Rubira's opinions, at least in the third report, were based upon the contracting arrangements proposed by Mr Geaboc and accepted by me as being a proper basis for the assessment of damages. Accordingly, I accept Mr Rubira's report and its conclusions as to time generally in preference to Mr Lampard's views.

123 It was urged on behalf of CATCON that there would have been considerable additional time taken up with matters such as "tool box meetings". Mr Rubira was inclined to the view that these meetings would be relatively short. It was within the power of CATCON by production of minutes and so forth to establish convincingly the length of these tool box meetings as they actually occurred when CATCON was undertaking the work itself. As explained above, this material was not produced. Mr Stanmeyre expressed views about tool box meetings but he was operating from head office and was only an occasional visitor to site. In my view, "tool box meetings" and related matters would not materially have extended the construction period.

124 Nevertheless, the 12 week period proposed by Mr Geaboc and accepted by Mr Rubira is, in my view, an underestimate. First, Mr Rubira gave his estimate on the basis of the exclusion of the Revision 2 drawings. This was reflective of the case being made by A1 but in his closing submissions, Mr Clarke conceded that the Revision 2 drawings were to be regarded as part of A1's work. According to Mr Rubira's second report, the Revision 2 drawings would add some 718 additional hours of work for A1's team. (CB 421) Granted that Mr Ben Geaboc described his own preliminary analysis of time resources as being excessively conservative, it indicated an additional period of time required for the construction to be completed.

125 Doing the best I can, I would conclude that the construction period to be allowed should be 12 weeks. I am conscious that this is a much speedier result that CATCON itself achieved. As Mr Clarke observed, A1 specialises in this sort of work. Moreover, A1 proposed undertaking the work using a far more flexible contracting regime with sub-contractors rather than workers under the terms of the Enterprise Bargaining Agreement than did CATCON.

126 According to Mr Fenwick-Elliott, A1's proposal to use its own formwork rendered it unable to carry out the work with a single concrete pour as would have been possible using PERI formwork. Therefore it would either have been unable to perform the work at all or able to perform it only with the more expensive proprietary PERI formwork (or some equivalent as appears to have been used by CATCON) leading to a cost of performance which would either equal or exceed the contract price.

127 When the issue of construction joints was raised, Mr Clarke invariably drew attention to the fact that the plans which were produced to A1 and formed the basis for its quotation and the contract price, included no fewer than three construction joints; one at the base of the tank wall and two others in the launders.

128 According to Mr Fenwick-Elliott, the obvious expedient which A1 would seek to resort to using its own formwork would be to introduce a construction joint in the tank wall at the 2.2 metre level.

129 Mr Tuokko, a project engineer for construction projects for CATCON, who worked on the Aldinga project, said at the Liability trial: "To my recollection, um, A1 ... wanted to introduce additional horizontal joins [viz construction joints] on the tank." He said this, "would mean multiple construction joins on the tank horizontally, and that to us was a major concern with time and integrity of the structure, um, and we would never been allowed to do additional joins by our - by our client, nor would we have allowed it." (Liability T214, L11-18).

130 An immediate difficulty for Mr Fenwick-Elliott's reliance on this construction joint issue is that it was an express term of the offer made by A1 which was accepted by CATCON dated 9 July 2010 (see [2014] VCC 1239 [19]) that A1 would supply "formwork (being our own, not PERI or any other)". This was modified in an email of 12 July. (Ibid, [20]) The acceptance is quoted in my Liability judgment at [21] which quotes a bullet point communication from CATCON.

• "Proceed with formwork manufacturing/modification and mobilisation to site."

131 This might be thought to indicate an acceptance on the part of CATCON that the work would involve whatever construction joints were required by the use of A1's formwork. Later in the Liability judgment I said:

"... even if the issue of construction joints remained a matter of debate ... that debate was not of sufficient significance to prevent the parties having reached a contractual commitment in accordance with either the first or the fourth category of Masters v Cameron if other important matters were resolved." (Ibid, [181])

"It was not necessary for the parties to agree where the construction joints would be in the tank walls before a binding agreement could be made." [2015] VSCA 75 [48]

133 For the purposes of determining whether there was an enforceable contract or not and therefore whether there was a liability for any damages sustained by A1 as a result of the repudiation of the contract found to exist, it was not necessary to make a finding as to whether the parties had indeed agreed upon the issue of construction joints.

134 The defendant presses this issue a second time on the issue of damages. At paragraph [181] of the Liability judgment, I said:

"I believe that the discussions between Mr Tuokko and Mr Geaboc must have made clear to Mr Tuokko that there would be multiple pours and at least one intermediate construction joint."

135 There is much to be said for the view that the effect of Mr Tuokko's 12 July email was a direction to A1 to proceed with its own formwork, therefore, with whatever construction joints might be necessitated. (Liability T215, L15-24) Mr Tuokko had seen a document which disclosed that A1's formwork was 0.9 metres and 2.2 metres tall. (Liability T216, L2-17). If that produced a disconformity between the sub-contract made with A1 and the head contract between CATCON and the proprietor, it would be at CATCON's risk. Construction joints could be added or the construction joints shown in the drawings could be moved with the superintendent's approval under the head contract, and, in the circumstances, obtaining consent to such matters from the superintendent or his or her representative would be for CATCON rather than A1. (Liability judgment [183], [189]) Whether such approval was forthcoming or not would be at CATCON's risk.

136 In any event, according to Mr Clarke, it would have been possible for A1 to carry out this construction with no more than the three construction joints which were depicted on the relevant drawing. Mr Aaron Cichello, structural engineer, gave expert evidence for A1. Referring to the relevant drawing Revisions 1 and 2, Mr Cichello said: "we can clearly see that there is a construction joint at 3.72m above the tank slab (at underside of launder slab). The 5.2m vertical bars would have to protrude through the construction joint." (CB 377) He said: "Using both the Australian Standard for Formwork (AS3610-1995), and as a guide the EWPAA, 'Plywood In Formwork' Manual, the spacing of circular rings (N12 bar tensioned exterior, 50 x 3.0 SHS interior) at 180mm centres for the first 1000mm and 350mm centres thereafter, would be sufficient to resist forces implied by placing concrete at acceptable rates (0.5m/hr to 1m/hr, depending on the concrete temperature)". (CB 378) He said A1's formwork "was adequate and could be certified to pour 3.7m of tank wall (as detailed in drawings, both revisions 1 and 2), in one pour on one day. Alternatively, other tank wall construction joint placements could be used without utilising more than three wall construction joints." (CB 379)

137 In my view, the issue of construction joints is not an obstacle to A1's success in obtaining a substantial assessment of damages in its favour.

138 Mr Fenwick-Elliott submitted that A1 was unprepared to proceed to construction because of a failure to take prompt action to obtain appropriate formwork. He drew attention to the change in the form of the sump from cone to cylinder in Revision 2. He submitted the evidence at the Liability trial showed that A1 had not taken appropriately prompt action to order the specially fabricated material from its chosen contractor, "Smithweld". He said, in cross-examination Mr Peter Geaboc had been caught out in a lie as to this issue.

139 I accept that the formwork issue had the potential to create delay for A1 in carrying out the contracted work. The cross-examination issue was dealt with in the Liability trial at [72] - [81]. My findings on this point are supportive of Mr Fenwick-Elliott's submissions. I found that what was produced and purported to be a tax invoice from Smithweld for specially fabricated formwork "must have been in the nature of a quotation rather than an actual demand for money" (Liability judgment [27).

140 I therefore accept that lack of preparation by A1 as to this and related matters would have constituted an embarrassment to its performance of the work at Aldinga. I do not accept, however, that these issues would have constituted an absolute bar to performance or created such delay as to destroy any profitability in the contract for A1.

141 It was common ground that in the face of the repudiation of the contract, A1, in accepting the repudiation, came under an obligation to mitigate its damages. To the extent it did mitigate its damage by finding alternative profitable work, the profit so derived would go in reduction or even extinction of any damages which might otherwise have been awarded in its favour.

142 Mr Fenwick-Elliott submitted that, in accordance with those principles, whatever damages, if any, would otherwise have been recoverable by A1 ought be reduced by $58,728 representing profit derived from two projects which A1 undertook around the same time; one known as the "Tycon job...profit... $43,746", with the rest representing profit derived from a project at Glenrowan. (T1329). Mr Clarke, however, submitted that no allowance should be made for mitigation or failure to mitigate. (T1430) He submitted that the Tycon job which was carried out at Altona could have been pushed back and not started until 6 December. It had, in effect, been brought forward when the Aldinga job fell through. The work at Glenrowan for North East Water could also have been put back so that A1 would have derived the profit from all three projects. The one would not go in diminution of the others. I accept that submission.

143 Mr Fenwick-Elliott did not submit that there was other work which in the circumstances A1 could and ought to have taken when a gap appeared in its calendar as a result of CATCON's repudiation.

144 There should be no reduction in damages for failure to mitigate.

145 Mr Fenwick-Elliott also contended that, had A1 sought to perform the work at Aldinga, it would for all the reasons which he urged as to whether lack of preparation of formwork, additional time taken in multiple pours and so forth, have found itself late in performance. This would have led not only to prolongation costs for A1, therefore a reduction in profit which it might otherwise have derived, but more pertinently, it would have been exposed to damages claimed by CATCON.

146 No written sub-contract was executed. Accordingly there was no liquidated damages claimed. According to Mr Fenwick-Elliott, the cost to CATCON of maintaining the site should be found at $70,431 per week in accordance with the evidence of Mr Stanmeyre. (T1358, L6-7) He submitted, therefore, that for every week of delay any damages entitlement to A1 would be reduced by this amount.

147 As a matter of law, Mr Fenwick-Elliott would appear to be generally correct. The rule as to the award of damages in contract allows the victim of a breach of contract to claim from the contract breaker the loss which flows in the ordinary course from the loss together with any additional unusual costs which the contract breaker was aware of when making the contract. Hadley v Baxendale [1854] EngR 296; (1854) 9 Ex 341, 156 ER 145; Clark v Macourt [2013] HCA 56; (2013) 253 CLR 1 Mr Rubira correctly observed that the figures for these damages were not demonstrated to have been known to A1. Accepting that Mr Stanmeyre's evidence makes out that these would be the costs incurred by CATCON in the circumstances, it was not clear to me that it was proven that there would be shown to be losses which would flow in the ordinary course. At any rate, I have not been persuaded that any particular delay would necessarily be incurred.

148 I have generally accepted the evidence and the case advanced by A1. The appropriate option to adopt from the two advanced by A1 is Option A representing a profit based on A1's cost to perform in accordance with its own system.

149 I have explained why the various matters urged by Mr Fenwick-Elliott, on the balance of probabilities, ought not be accepted as barring the recovery of damages based upon this calculation. Nevertheless, many of these considerations did represent significant risks to A1's profitable performance. Even if I have not accepted any one of them in itself as being more probable than not, it must be accepted that the chances of matters proceeding exactly according to plan without any of the risks manifesting themselves in whole or in part as obstacles or delays, is in its totality less than probable. Without being able to make a specific finding as to precisely what matters would have arisen to create delay and possible counter-damages liabilities to CATCON or increases in costs to make deadlines and so forth, I believe it probable that at least some such matters would arise. Doing the best I can, I believe there should be an additional allowance by way of reduction in A1's likely profit, based on the contingency described in the sum of $100,000.

150 As a result, I assess A1's damages in the sum of $176,342.13 based on Mr Rubira's third report at CB 3189 with the $100,000 contingency reduction.