ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited

"In one sense, if there was a consensus, there would be no reason for a letter in the terms which was written…seems to be fatal to there being an agreement on 19 February."

103 The Referee certainly appears to have formed the view that albeit having pleaded what I have called "the situations 1 and 3 cases" in the alternative, the situation 3 case appeared to have been abandoned during submissions and the situation 1 case had been departed from when Abigroup advanced as its ultimate case, a situation 2 case. This was a new and further contract claim "for an essential terms or "Baulkham Hills" agreement made on 19th February 1998, the terms of which are set out in the SPTI minutes of 19th February 1998, reflected and formalised by the provision of the letter of intent and confirmed by the commencement of works by ABB the next day. [Report 544.2][Referees emphasis] 104 The view was most clearly expressed at Report 523 and 543. However there are clear indications that the Referee had some hesitation in this regard, as where he said:

"it seems ( although it is not certain on my reading of the whole of the defendant's submissions) that commencement of work by ABB ultimately is relied upon by the defendant as an evidentiary act rather than one creating a contract, ie an act which supports a contract case advancing an essential terms agreement reached on 19 February 1998" Report 541 [emphasis added]

[see also his use of the words " Abigroup's reply to reply submissions seem to abandon the case that the letter of intent was an offer which was accepted by commencement " [Report 523] 105 Nevertheless he proceeded: · by first dealing with and rejecting what he had described [Report 544.2] as the "new and further contract claim made on 19 February 1998… confirmed by commencement of works.." · notwithstanding what he had said in relation to the apparent abandonment of the situation 3 case, to deal with that case apropos the commencement of works occurring on 20 February 1998 with the uplifting of the drawings. Importantly he here focused upon and dealt with the Abigroup contention that it was the event this day, of Mr Smith attending the site to collect the drawings then available, which was "tantamount to 'ABB immediately (commencing) work on 20 February 1998'". [Report 536] · by rejecting that case [Report 540 and 543]. And doing so for the following reasons:

• finding that the letter of intent was not an offer capable of acceptance by ABB to form a binding agreement;

• finding that even if the letter of intent was an offer capable of acceptance by ABB to form a binding agreement, the matters relied upon by Abigroup as particulars of "commencement", did not amount to commencement within the meaning of the letter of intent. [Report 540] - finding that Mr Glanville's letter was a rejection of the offer and constituted a counter offer by ABB to Abigroup. 106 The Referee did not deal with any submission put by Abigroup to the effect that the uplifting of other drawings on 25 February 1998 constituted a contractual acceptance by ABB of an extant offer still capable of being accepted. That was because no such submission had been put by Abigroup. And this Court by reference to the Referee's reasoning, is able to conclude without any doubt at all, that on the factual findings reached [and in the absence of some different facts emerging for examination], even if such a submission had been put by Abigroup, it would require to be rejected. Such a rejection was mandated by the finding that even if the letter of intent had been an offer capable of being accepted, Mr Glanville's letter had constituted a rejection of the offer. That finding put paid to any possibility of success in any case [as now sought to be pursued], relying upon the uplifting of drawings on 25 February being the event from which a binding agreement sprang into life. That this was the case appears to have been recognised by Mr Bathurst in his submissions to this Court [Transcript 15]:

"We stand or fall in this regard on the proposition that on a proper contractual analysis the Referee erred, in effect, in saying that the writing of the letter of 20 February put an end to any contractual force which the letter of 19 February might have as a result of the plaintiff subsequently commencing work." 107 If any situation 3 case had been litigated by Abigroup grounded upon a 25 February 1998 acceptance by commencement of works, it is, it seems to me, inconceivable that the Referee would have failed both to identify it and to deal with it in terms. If ever there was a report from a Referee which conscientiously and scrupulously examined every aspect of the pleaded cases, the litigated cases and the facts, this is such a report. The absence of any treatment of the 25 February 1998 contract case by the Referee is a powerful indicator that, whether or not the pleading might have permitted such a case to be run, no such case was litigated. 108 The conclusion which I reach is confirmed by the fact that Abigroup was not, before this Court, able to point to any submissions in support of the situation 3 case, apropos the 25 February 1998 date.

109 It is very important to appreciate that when a party such as Abigroup might seek to propound a particular contract, the date when the contract is alleged to have been entered into is all important [the more so particularly in a case where that date is said not to be a date when a contract was signed, but to be a date which is discerned from a particular form of conduct (25 February 1998 or any other date of suggested commencement of works by ABB)]. 110 That this level of significance attaches to the date when the contract is alleged to have been entered into is seen in the present case by reference to the importance in assessing the case, of an intensive examination of the communications which had passed between the parties by that particular point in time on the date in question. As will have been seen from the report, the Referee required to examine in very great detail: · each of the matters in respect of which, on his findings, both parties had reached a particular consensus in the negotiations, that consensus being that there was an absolute necessity that agreement be reached upon these matters before either party would be bound in contract; · the exact position which objectively could be seen to have been reached as between the parties, with respect to these matters as at the exact point in time ["the critical moment"] when Abigroup claimed the contract to have been entered into; · whether and if so why, and in what respects, the communications between the parties anterior to the critical moment, could be said to show an objective intent to be bound in contract, as at the critical moment. 111 None of these matters were the subject of examination in the report in relation to the 25 February uplifting of the drawings. These matters turn upon questions of fact which then underpin the ultimate decision which is one of judgment, in terms of the discerning of objective intent. This Court cannot on the occasion of the claim to have the report adopted or rejected, allow to be agitated a matter which was simply, in the way in which Abigroup ultimately elected to run its case at the reference, simply not litigated. 112 It may be convenient to simply add the following: · there was no evidence at all before the Referee as to the precise timing of the 25 February 1998 collection by ABB of the further drawings and of when, if at all, on 25 February 1998, those drawings and their departures or changes from previous drawings inspected by ABB, were examined or noticed by ABB, nor as to what would have been a reasonable time which Abigroup ought to have realised would have been necessary in order for the new drawings to be examined for the purpose of ABB being on notice of the departures; · this was a matter of high significance in any suggestion that the parties could be seen to have objectively intended that they commenced to be bound by an enforceable contract as and from the point in time when ABB did anything at all on 25 February 1998.

113 As pointed out above, Abigroup could never, in any event, have succeeded before the Referee, even on the situation 3 case, and even if it had put such a case in terms of the contract springing up on 25 February 1998, for the reason that such a case faced [and still faces], an insurmountable obstacle, namely the fact that as the Referee found that, even if the 19 February 1998 letter could be regarded as an offer capable of acceptance, that offer was roundly rejected by the 20 February 1998 response. On the authorities already referred to, the 20 February 1998 response in my view put an end to the 19 February 1998 letter regarded [for present purposes only], as an offer capable until rejected, of being accepted. 114 The only argument put forward by Abigroup in an attempt to outflank, what I have referred to as the insurmountable obstacle comprised by the 20 February 1998 letter of rejection, has no substance whatever. This submission was that if the offer remained open notwithstanding the rejection of the offer, the offeree could still later and notwithstanding its initial rejection of the offer, determine to accept it, and that this was precisely what had happened on the facts before the Referee [cf Brambles Holdings at paragraph 84. One only needs to state the submission to see the difficulties which inhere in it. Against the matrix of fact found by the Referee, it is inconceivable that the Referee could or would have drawn an inference that the parties could be seen to have objectively intended that they would be bound by any contract at all upon ABB's act of uplifting the drawings which were uplifted on the 25th February 1998. Any such inference flew to such an extent in the face of the numerous findings by the Referee earlier referred to in this judgment, as to make the submission one of no weight at all. 115 Such a finding could only be consonant with the parties being held to have objectively intended to bind themselves to a contract, which would involve a radical change in the position which ABB had adopted up to that point in time. 116 The burden of the submission was that the Court should infer from all relevant facts, matters and circumstances [including the events of 19, 20, 24 and 25 February] that the parties objectively intended that for ABB to commence the works: · on 25 February 1998; or · on any later date could only be consonant with its accepting the 19 February 1998 offer still regarded as being open. 117 In my view no such inference was appropriate in the light of the relevant facts, matters and circumstances. Such an inference: · would fly in the face of the findings of fact in terms of the explicit and reasonable and communicated insistence by ABB of its need to sight and on an informed basis determine to be acceptable to it, the sundry documents referred to by the Referee including the sections of the Head Contract document that may be applicable to the subcontract works; · would fly in the face of the findings of fact in terms of the explicit and reasonable and communicated insistence by ABB that the clauses covering the non-negotiable exclusion of consequential losses and a cap on total liability set out in terms in paragraph 2 of the 20 February 1998 response from Mr Glanville, be included as an amendment to clause 8 of the proposed Subcontract; · would fly in the face of the findings of fact in terms of the explicit and reasonable and communicated insistence by ABB that it have clarification of clauses 9.03.02 and 10.11 [cf paragraph 3 of the 20 February 1998 response]; · would mean that the parties must be seen to have objectively intended that ABB, having stipulated for its only agreement qua liquidated damages being to actual costs incurred by Abigroup, subject to a maximum daily rate of damages inclusive of both clauses 10.15 and 10.16, combined at $40,000 per day and capped to a maximum of 10 percent of the subcontract sum [cf paragraph 4 of the 20 February 1998 response] was sub silentio content not to press such a crucial matter; · would mean that the parties must be seen to have objectively intended that ABB [sub silentio] was content not to press a payment schedule including payments linked to milestone achievements. 118 The background context provided powerful indicators against the propriety of the drawing of such an inference. 119 Further problems standing in the way of the drawing of such an inference concern: · the paragraph in the 19 February 1998 letter providing that where work commenced prior to the execution of the subcontract agreement, no moneys would become due and payable until the subcontract agreement had been executed. [see clause 10]. [I note in this regard that Mr Bathurst accepted that these words were "difficult" in the letter [transcript 78]. This provision is indeed one which requires to be carefully weighed against the Abigroup submission placing such significance upon the mere fact of commencement of work. · the difficulty of accepting the Abigroup submission that the net effect of its case in this regard was that time was at large, meaning that the parties must be taken to have accepted that the time for completion would be a reasonable time- a rather extraordinary assumption in the circumstances of the subject, internationally high profile contract being sought to be negotiated. 120 My own view is further that a close examination of the subsequent conduct of the parties confirms that the parties cannot be said to have objectively intended to have entered into a binding contract upon the commencement by ABB of work. The matter is generally dealt with in great detail by the Referee [report 622 et seq]. 121 ABB wrote in a letter to Abigroup of 20 April 1998 that "Abigroup have themselves proposed well over 200 amendments to the standard form"-the Referee making the point that there did not seem to be any issue about that. The Referee found [Report 630] that:

"[t]he differences were extensive and of potential, if not actual, importance so far as the terms of the contract which Abigroup was proposing were concerned. Differences related to matters such as definitions; access; the important matter of site conditions; variations; extensions of time; progress payments; liquidated damages; matters going to the important question of liability for consequential loss (a non negotiable matter from ABB's position); construction programme [and other matters]". 122 Notwithstanding that one can of course find indications to the contrary as for example the procuring by ABB of bank guarantees in favour of Abigroup, and an e-mail of 27 February 1998 internal to ABB referring to ABB having been awarded the fabrication and erection of the subject structure, to my mind the overwhelming burden of the subsequent conduct of both parties is against any inference confirmatory of their having entered into a binding contract of the type and that the time for which Abigroup contends or at any time. That the case is unusual for reasons I have earlier outlined [essentially concerning findings as to the communicated and accepted inhibitions of ABB on entering into any contract in the absence of clarification of the matters to which I have referred] is clear. 123 In what follows I set out and adopt a section of ABB's written submissions identifying facts in support of the proposition that the subsequent conduct of both parties is inconsistent with the drawing of an inference confirmatory of the parties having entered into a binding contract of the type and at the time for which Abigroup contends or at any time:

· ABB's facsimile of 20 February 1998 referred to Abigroup's letter of intent (in the first paragraph) and stated, in Item 6, that: "Due to Abigroup's very tight schedule for this work, Abigroup will need to provide the Approved For Construction drawings (correct, complete and with no "holds") within two weeks of 20 February 1998. Obviously, the sooner this occurs, the better, because our period of 26 (sic) [The Referee found this was a mistake and should be thirty six weeks] weeks cannot commence until we have received such drawings". · Owen's 23 February 1998 draft reply to ABB's facsimile (Exh. 370) recorded Abigroup's actual state of knowledge - vis. "We are aware of this and anticipate issuing AFC drawings on the 24.02.98". · Abigroup's minutes of the start-up meeting on 24 February 1998 (incorrectly dated 25 February 1998) recorded in Item G.1.2: "AEC committed program, is to be established on-site by 1st May 1998, have the centre section of the roof installed by ??? 1998 and be completed by the 2nd November 1998. All parties are to ensure that these dates do not change". (Abigroup Bundle, Tab 25, page 275). ABB's minutes of the same meeting recorded a discussion in the following terms: "7. Program - 26 weeks on-site (10 weeks prelims) following receipt of AFC drawings". (Abigroup Bundle, Tab 24, page 270). · ABB's notice of delay dated 20 March 1998 (Abigroup Bundle, Tab 35, page 294) stated expressly that the "notification is issued in accordance with the requirements proposed to be incorporated in a formalised Contract Agreement between AEC and Abigroup for these Works". The notice was given because "the information issued to AEC "Approved For Construction" is not sufficient for our originally planned progress …". The reference to "our originally planned progress" could only be a reference to ABB's timeframe for completion based on the receipt of a full set of AFC drawings that were correct, complete and had no holds on them, and not the timeframe stipulated in the letter of intent. Other statements in the letter to the effect that "AEC's tender offer is based upon …" specific characteristics of the AFC drawings and the failure of the drawings provided to ABB to achieve "a character, format, nature and state of completeness that concurs with the basis of AEC's offer" support that construction, as does ABB's statement that "as a direct consequence of the above items AEC has not yet been allowed to progress the works as originally programmed in the offer". The words "in the offer" plainly was a reference to ABB's conditional offer and not to any offer by Abigroup that might be read into the letter of intent. · Abigroup's minutes of various roof co-ordination meetings held subsequently, contain numerous references that show that the parties were proceeding on the basis that there should be a construction period of thirty six weeks commencing from the issue of AFC drawings with a target completion date in early November 1998 (see Item 2.1 in the minutes of roof co-ordination meeting no. 4 held 25 March 1998 in Abigroup Bundle. See Tab 38, page 303 and similar references in minutes of subsequent roof co-ordination meetings in Abigroup Bundle, Tab 44, page 334 ("36 week total duration from issue of AFC drawings"). See also Tab 78, page 452 which states additionally "Abi to advise the start of the 36 week period, not completed at 14/05/98, extended to: … 18/05/98" referring to the ongoing disagreement between the parties as to whether ABB's thirty six week period had commenced to run having regard to the unsatisfactory state of the AFC drawings. See also minutes of the roof co-ordination meeting no. 16 held 11 June 1998 at Abigroup Bundle, Tab 92, page 489, which stated that "Start of the 36 week period, not resolved at site meeting on 02/06/98. However settlement to be the subject to (sic) agreement on a revised fabrication, assembly and erection reprogramming"). These references show that Abigroup never conducted itself on the basis that ABB was bound to complete by the date stipulated in the letter of intent (i.e. "the middle of October 1998") or that the commencement of the construction period was independent of the date of receipt of AFC drawings. · In a facsimile from Owen (for Abigroup) to McDonnell (for ABB) dated 20 April 1998 on the subject of "monthly cash flow" (Abigroup Bundle, Tab 52, page 355) Owen wrote that "We require a copy of your projected monthly cash flow based on your contracted timeframe that is noted in your post tender interview minutes". Reference to Item 7 of the SPTI minutes of 19 February 1998 (at Abigroup Bundle, Tab 16, page 208) shows that the construction period was intended to be thirty six weeks from the issue of AFC drawings. To similar effect, Owen wrote to McDonnell on the same subject on 27 April 1998 (Abigroup Bundle, Tab 57, pages 364-365) that "Your cash flow should reflect all your tendered documentation i.e. $14M contract sum with completion by the 2nd November 1998". Again this was completely inconsistent with the completion date stipulated in the letter of intent. The nine suggested errors 124 Having carefully examined Abigroup's submissions in respect of the so-called nine suggested errors, I have a comfortable feeling of satisfaction not only that the factual issues have been properly explored and considered but also that none of the matters relied upon by Abigroup is seen to vitiate any of the findings of the Referee. 125 It is possible to deal with the suggested errors fairly shortly. The meaning of the acceptance Clause 126 There was no error in the approach taken by the Referee to the words of the Acceptance Clause. That the Referee approached the whole of the 19 February 1998 letter in context as opposed to focusing on and only on the words of the Acceptance Clause, is not a matter for complaint and demonstrates that the Referee was alive to the task at hand - the task of ascertaining the intention of the parties objectively when considered in the light of all the relevant circumstances including this letter, the point in time at which this letter was passed across, the response to the letter and the subsequent conduct. Failing to take account of subsequent conduct 127 It is incorrect to submit that the Referee failed to take any, or any proper, account of the subsequent conduct of the parties in assessing the significance of unresolved contractual issues at the time of ABB's commencement. Subsequent conduct of both parties in these particular circumstances involves so many dealings that both parties are able to point to disparate events consistent with their respective cases. Ultimately the finding is based on all of the evidence. Reasons for concluding that the 19 February letter had no [or insufficient] contractual consequence 128 The Referee did far more than base his finding that Abigroup's letter of 19 February 1998 did not, in the circumstances of the commencement of work by ABB, mean that the parties were bound by a preliminary contract which was enforceable, upon the narrow ground that Abigroup had handed over without comment [and that ABB did not immediately read] the clause concerning acceptance by commencement of work or understand that there was a clause to that effect. There is no substance in this alleged error. Failing to have regard to surrounding circumstances 129 Nor is there any substance at all in this alleged error. The Referee has provided a weighty tome with innumerable references to surrounding circumstances supporting his finding that the parties could not be said to have objectively intended to conclude a binding contract at or by the time the work commenced. Misconstruing words in the Acceptance Clause 130 There is no substance in the submission that the Referee misconstrued the words in the Acceptance Clause referring to acceptance of the terms of "this subcontract" as referring to a formal subcontract to be prepared based upon the amended SC JCC-D 1994 conditions and concluded that the parties could not have intended ABB by commencement to become bound to a subcontract not yet prepared and seen by it. This is a very narrow submission taking no account of the far broader approach taken by the Referee to the context in which the 19 February 1998 letter was handed over and to the parties objective intention seen in the light of all of the relevant facts, matters and circumstances. That the Referee was not forced into the straitjacket of determining the issue by reference only to the Acceptance Clause and/or by reference only to the use in this letter of the words "this subcontract" or "a subcontract" simply demonstrates that he avoided error and not that he erred. Construction influenced by consideration of subjective intent 131 Having carefully scrutinised the report I am comfortably satisfied that the construction by the Referee of the letter of 19th February 1998 is not vitiated by the suggested consideration by the Referee of the subjective intent of the parties. Together with a number of the other causes of complaint, this cause of complaint suffers from the problem that it addresses the wrong question. The matter does not stand or fall on the proper construction of the letter of 19th February 1998, although that construction is of course extremely significant in the scheme of things. What the Referee was about was an endeavour to objectively ascertain the intention of the parties ascertained not only from the terms of the 19 February 1998 letter but ascertained from the whole of the relevant surrounding facts matters and circumstances, importantly in this case requiring that letter to be read in the light of those circumstances. He said as much, from time to time, expressly referring to the need to objectively ascertain the parties' intention. The examination of subjective states of mind was necessary for a variety of other exercises, including determination of the question of credit and the estoppel case, as well of course as the need to reach findings of fact. [See for example the comment by the Referee at 518 that a particular fact concerning a belief issue - put in terms of an inference from a failure to assert a particular belief - "probably goes only to Abigroup's estoppel cases"] It is a delicate task to sift through the reasons in order to examine the substance or lack thereof in the submission that the Referee was influenced in the construction exercise, by the subjective intent of the parties. The carrying out of the task throws up the many occasions when the Referee refers to matters which to use his words were "expressly communicated" between the parties [cf as one only example - Report 317, sub paragraph (f)]. Having carried out that task I am comfortably satisfied that the submission is of no substance. Attaching undue significance to existence of unresolved matters 132 It is incorrect to say that the Referee attached undue significance to the existence of unresolved matters as at 19 February 1998 concerning the terms of a formal subcontract. He is not shown to have erred in his assessment of which matters were and which matters were not objectively speaking, essential to the existence of a binding contract. I am comfortably satisfied that his assessment in this regard has not shown to have been in error, whether in relation to facts or in relation to proper application of principle. Conclusion that 20 February 1998 letter amounted to rejection of offer 133 No error in reaching this conclusion has been demonstrated. Commencement of works date 134 For the reasons given in the report no error has been demonstrated in relation to the finding that ABB did not commence the works on 20 February 1998. The limited terms case 135 I have left until last the need to deal with a matter in respect of which the parties were violently at issue before this Court. It has already been mentioned and concerns ABB's submission that:

· Abigroup's 19 February 1998 contract case, as eventually run, is summarised at Report pages 559.5 to 560.3. That case was based on all of the documents referred to in clause 32 of the SPTI minutes which included SCJCC-D and project-related conditions being part of the terms of the contract; · Abigroup did not plead or run any case based upon an offer on some, but not all of the terms of the letter of intent; ie excluding SCJCC-D and project-related conditions; · either variant of the terms of the offer or the contract set out in paragraph 30 of Abigroup's written submissions before this Court is a limited terms case; ie one which does not include all of the terms in the letter of intent; · specifically that case now sought to be put to the Court was:

• not dealt with in Abigroup's oral submissions before the Court in terms of an attack upon anything the Referee was either said or not to have said to have done in that regard. 136 The matter harks back to paragraph 30 of Abigroup's submissions to this Court and the manner in which Mr Bathurst presented Abigroup's submissions from the bar table during this hearing. 137 The core of the issue relates to whether or not the only case put by Abigroup to the Referee was that the terms of the contract for which it contended: · included as part and parcel of the suggested acceptance of the 19 February 1998 letter of intent, the terms of the " amended SCJCC-D 1994 subcontract" and "the Project Related Conditions of Contract" ["the inclusive terms case"]; or · did not include as part and parcel of such alleged acceptance of the 19 February 1998 letter of intent, the terms of any sub contract so described and of such Project Related Conditions of contract ["the limited terms case"]. 138 It will be seen that paragraph 30 of Abigroup's submissions contends for the limited terms case. 139 A resolution of the issue requires careful attention not only to the pleadings, but also to the submissions put by both parties to the Referee as well as to sections of the report. 140 A particular problem in this regard concerns the many tentacled approach to alternative versions of the contract pursued by Abigroup. The extremely detailed and extremely voluminous submissions from both parties to the Referee required to deal with these sundry versions of the contract and it is possible to find any number of references in those submissions which it may be difficult to thumbnail sketch in terms of which particular version of the contract may there be being addressed. 141 Ultimately I am satisfied that no limited case, at least of the type now sought to be pursued by Abigroup to this Court, was prosecuted before the Referee. 142 There are numerous indicators in this regard: The Pleadings · Paragraph 3.5 of the Report reads as follows:

"The fourth pleaded contract variation in the defendant's case appears first in the amended defence to the second further amended summons where it is pleaded - "(a) ... (the letter of intent) constituted an offer to the Plaintiff to carry out the Roof Works for the MUA Project on the terms and conditions thereof; and (b) the Plaintiff accepted that offer by commencing the Roof Works on the MUA Project." (my underlining)" "This case is advanced in almost identical words in the further amended cross claim and I proceed on the basis that there is only one such contract pleaded. Paragraph C1AA of the further amended cross claim pleads in the alternative that -

"(a) The Cross Claimant's letter dated 19 February 1998 constituted an offer to the Cross Defendant to carry out the Works on the terms and conditions thereof; and

(b) The Cross Defendant accepted the offer by commencing the Works." (my underlining)" The Referee's noting the lack of articulation · Later in the report the Referee makes the point more than once, that Abigroup had not articulated what were the terms of the agreement said to have been made: - he notes that no such articulation has been made " other than to point in the pleading to the terms and conditions of the letter and in the submissions to the terms discussed at the meeting " [Report 518] - he notes that the circumstances are such that " the submissions of the parties did not offer particular assistance as to why, or why not, the letter of intent constituted an offer by Abigroup to ABB it [being therefore] necessary to consider the words of the document itself and to construe them in the context of the surrounding circumstances, including, in particular, what occurred at the meeting of 19 February 1998 [Report 524] - he says [Report 532] :

There is a further level of difficulty with the letter of intent being characterised as an offer containing the terms of a contract which would be made if that offer was accepted. The terms, on this view of things, must be found in the letter. But, on this part of Abigroup's case, what are the terms ? Those contained in the December 1997 version of the SC-JCC document - the only version which ABB had seen and considered (leaving aside ABB's express requirement to discuss those terms)? The revised version which Abigroup probably was finalising at the very time of the meeting, and which was not sent to ABB until 18 March 1998? What were the relevant contract drawings and specifications which defined the scope of work in this contract ? The drawings referred to in the letter of intent "as per Abigroup transmittal No.164 dated 19/1/98" were not the current tender set and certainly they did not depict the design which was to be found in the AFC drawings issued on 25 February 1998. The three specifications referred to, quite specifically by number and date, in the letter of intent, were superseded versions of those specifications ; was Abigroup truly offering to contract on the basis of these documents? It seems hardly likely. Were these difficulties with drawings and specifications capable of resolution, in a contractual sense, by the description in the opening paragraph of the letter of intent of the work to be done as "all as per the contract drawings, specification and construction schedule as amended from time to time by Abigroup "? (Referee's underlining). Is it suggested that the offer said to be contained in the letter of intent, which was capable of acceptance by commencement, was an offer which, if accepted, would bind ABB to perform varied or amended work for the fixed price? What was the "construction schedule " which the letter of intent offer presumably contemplated binding ABB to, if it started work? The rather crude schedule in Abigroup's original invitation of November 1997? The MUA9TARG programme? The "tendered Programme" referred to at the bottom of page 2 of the letter of intent? It is not possible, in my view, to analyse and resolve such difficulties, especially without the assistance of submissions from the defendant which address them. [emphasis added] · The difficulties before the Referee can be better understood by looking directly at the Contentions Section of the Further Amended Cross Claim where: - paragraph 1 where it pleads an agreement having been entered into on 19th February 1998 which is given an internal dictionary as "the First Agreement"

• paragraph 1A which gives further adjectival information in relation to the First Agreement [and importantly gives particulars making clear that insofar as the First Agreement was in writing it was contained in and evidenced by a number of documents including General Conditions of Contract SC JCC-D 1994 as Amended and Project Related Conditions].

• paragraph 1AA which is very short and reads: "In the alternative, the Cross Claimant says that: (a) the Cross Claimant's letter dated 19 February 1998 constituted an offer to the Cross Defendant to carry out the Works on the terms and conditions thereof; and (b) the Cross Defendant accepted the offer by commencing the Works." · It is very important to note that no particulars at all of paragraph 1AA are given. · This has led to the parties strenuously put cross contentions to this Court; Abigroup seeking to take refuge in its submission that: "[It] did not expressly allege that the terms of the commencement of work case included the SC JCC-D conditions or the Project Related Conditions…Nor did ABB seek particulars that they were so included" [Submissions to this Court MFI 2 of 22 July 2003 paragraph 8] · ABB on the other end has strenuously submitted that:

• The further amended cross claim did not allege a breach of the offer and acceptance claim advanced in paragraph 1AA of the further amended cross claim, nor did it allege any repudiation of any contract formed as a consequence of ABB commencing work. If it is said that the agreement referred to in paragraph 1AA of the further amended cross claim is one of the alternatives to paragraph 1 and is therefore within the definition of the "first agreement" (a construction which is against the plain words of the pleading), it does not matter because the "first" agreement so defined includes the Project Related Conditions and the SC-JCC-D conditions of subcontract in any event, see paragraphs 1A(a) and 1A(b) and paragraph 2 where once again the Project Related Conditions, the SC-JCC conditions, specific provisions of the SC-JCC conditions and the "date for substantial completion" were all relied upon as terms of the "first agreement".

• In other words, if the defendant contends that its further amended cross claim should be read as if the offer and acceptance agreement referred to in paragraph 1AA, is part of the "first agreement" then such agreement is specifically alleged to include the terms of the Project Related Conditions and the SC-JCC conditions and in particular the obligation to complete the works by the date for substantial completion as may be extended "in accordance with the terms of the first agreement".

• Alternatively, if it is contended that the offer and acceptance agreement referred to in paragraph 1AA of the further amended cross claim does not include the terms and conditions of the SC-JCC and Project Related Conditions documents, then the defendant has: - not alleged any breach of any alleged terms of that other and more limited agreement;

• not sought damages as a result of an alleged breach of any of the terms of that other and more limited agreement; and

• could not do so in any event because the act of repudiation relied upon is said to be ABB's statement that it would not meet the extended date for substantial completion which is a date and an obligation which does not exist in respect of the agreement in paragraph 1AA and the agreement now contended for by Abigroup;

• conceded that time is at large in respect of the argument now relied upon. [T.285 lines 21-28]. 143 In my view these submissions of ABB are of substance, albeit that the question of time being at large: · is sought to be answered by Abigroup [and may arguably be answerable] in its proposition that the reasonableness of the time period for ABB to complete the Works was not predicated on the existence of either the amended SCJCC-D 1994 subcontract or the Project Related Conditions of Contract. · to which proposition ABB submits that Abigroup never conducted before the Referee any case which alleged a breach of a reasonable time term by ABB. The submission is that: "In fact Abigroup at all times referred to a 36 week case from the provision of AFC drawings. This case was based upon the entry in those terms in Abigroup's SPTI minutes, not upon anything contained in the contract now sought to be propounded by Abigroup. [cf also paragraph 29 of Abigroup's defence to the second further amended summons relying upon clause 6 of the Project Related Conditions and Clause 10.12 of the General Conditions of Contract]. 144 If Abigroup had in fact made explicit to the Referee that under cover of Paragraph C1AA of the further amended cross claim, it was contending for the limited terms contract case, it would certainly seem surprising, to say the least, that such a case would simply never have been treated with or dealt with by the Referee, nor by ABB in its written submissions. As ABB submitted before this Court, any such limited terms contract case as that contended for under cover of paragraph 30 of the Abigroup submissions ultimately amounts to:

"some undefined contract agreement referred to in the letter [of intent] which excises the heart and soul of the letter which was the predominant qualification or condition set by Abigroup, namely: "You have to sign the SCJCC-D conditions and you have to be bound up [by] the Project Related Conditions." [Transcript 148] 145 In amplification of this submission ABB made the point by addressing what would have to be blue penciled out of the 19 February 1998 letter of intent, if the limited terms contract case had been before the Referee: · Firstly it would be necessary to notionally delete the section from page 1 commencing with the second paragraph of the letter and to excise also the paragraphs enumerated 1 and 2 [One could not include the reference to acceptance being conditional upon the parties entering into a formal subcontract based upon Amended SCJCC-D 1994 and Project Related Conditions of Contract because they are not referred to in paragraph 30. The paragraph enumerated 1 would also have to go out as would the paragraph enumerated 2, because one could not include the letter of acceptance in the putative contract [to do so, would be to again insert the SCJCC-D 1994 and Project Related Conditions of Contract, which had just been written out]. · Next, one could not include the whole of the paragraph enumerated 9, because the first sub-paragraph uses the words "in accordance with this letter of intent", which could not be read as "in accordance with the whole of the letter of intent". · The next matter requires one to focus upon paragraph 30 of Abigroup's submissions, which raises some difficulties of precision where, as it will be recalled, it includes an allegation that the subcontract made by ABB's commencement was on:

(e) terms as to retention, defect liability period, liquidated damages, insurance and other general clauses as described in Clauses 5, 6, 7, 8 and 10 of the letter · Next the reference in Clause 2 of the letter to "the terms of this subcontract agreement" could not possibly mean the whole of the letter of intent, because of the excised sections earlier referred to. 146 One does not need to have to accept every one of these submissions of ABB, in order to see the type of semantic gymnastics which would require to have to be undertaken in even understanding a case put as Abigroup now seeks to do, in terms of its paragraph 30. 147 My conclusion is that no such case was put to the Referee. And to blithely submit, as Abigroup does:

" Abigroup did not, and was never required to, identify the terms and conditions of contract arising from the letter of intent, and in particular it did not expressly include or exclude the [SCJCC-D 1994 and Project Related Conditions of Contract]" [MFI D2 paragraph 7 (a)] simply does not treat with the fact that the case was never litigated by Abigroup nor defended by ABB nor treated by the Referee as one pursuing the terms now put forward in Abigroup's paragraph 30. 148 It is appropriate to add that there are a number of references in the written submissions addressed by Abigroup to the Referee which may arguably support this finding. Hence one may find Abigroup submitting: · "in simple terms, Abigroup submits that there is no evidence to suggest that there was any contract agreed that did not include the [Project Related Conditions]" [Submissions paragraph 80 referred to in transcript before this Court at 334]; · "Abigroup subsequently acknowledged to ABB that the GCS sent to ABB at the time of tender were different from those sent at the stage and when the parties were trying to negotiate further in connection with the machinery provisions relevant to the agreement they had made on 19 February 1998" [submissions paragraph 181 referred to in transcript before this Court at 109]; · "The agreement made on 19th February 1998 provided for a payment regime of claim and certificate (items 1,4, 15 and 17 of the Minutes]"[I interpolate consistent with the SCJCC-D] [submissions paragraph 155 referred to in transcript before this Court at 336]. 149 Whilst I accept that these references may have in fact been supportive of Abigroup's responses to ABB written submissions in chief to the Referee dealing with the question of whether or not any agreements were formed on 19 February 1998, and whilst they are not the reason for the above finding, it is fair to say that one cannot find any explicit submission anywhere to the Referee in terms of the contentious paragraph 30. When it is said that a party is bound by the manner in which it litigated its case, this does not permit such a party to hide behind the many possibilities which might, on some view, be said to be able to be extracted from a particularly wide mode of pleading without particulars. Ambush litigation must be very carefully examined and is not conventionally permitted. The matter is regulated not only by the principles earlier set out concerning both the proper approach with respect to Part 72 references sought to be adopted before the Court but also by the elementary principle that parties are bound by the conduct of that case. [I note that in cases to which the overriding purpose Rule, to be found in part 1 of the Supreme Court Rules; would apply, the facilitation of the just, quick and cheap resolution of the real issues in civil proceedings would not permit such ambush litigation]. When not a single submission was put to the Referee in support of the limited contract case, the Court has a reasonable basis for the finding that no such case was litigated. And all of this against a background in which, as the transcript before the Referee discloses, the Referee put the following matter to Abigroup on the second day of the hearing:

"Leaving aside the submission that you will make, the other matters, whatever date it was , remains to be negotiated, were in fact negotiated to a conclusion, but you still have to point to whatever the terms were of that core contract. " [Transcript 180.24-.20] [emphasis added] Quantum Meruit Quantum meruit finding of the Referee 150 Having determined that Abigroup and ABB did not enter into a subcontract for the performance of the steel roofworks project in February 1998 or thereafter, the Referee determined: · that the work performed by ABB between 20 February 1998 and 15 October 1998 (when Abigroup terminated ABB's services) was done pursuant to a request by Abigroup; · that in the circumstances, ABB was entitled to be paid on a quantum meruit basis. [Report 853.5]

151 The Referee valued the total amount to which ABB is entitled on a quantum meruit basis as $5,701,742.70, which included the amount of $1,855,971 already paid to ABB by Abigroup in progress payments. He stated in his final conclusion that there should be an order made requiring Abigroup to pay ABB the amount of $3,215,771.70 (together with interest). [See R898-R890] Abigroup's submissions 152 Abigroup submits that errors made by the Referee require that his assessment of the quantum meruit be rejected and that a fresh assessment of that claim is required having regard to all of what are submitted as the relevant circumstances. The suggested errors identified in the overview written submissions are: · in fact the value of the work performed by ABB in Abigroup's hands was only $1,823,670.10 [the submission is that notwithstanding this evidence, the Referee concluded that Abigroup should pay all of the reasonable costs incurred by ABB together with an allowance for profit] · the Referee erred by finding as a matter of law, that the only relevant consideration in valuing a quantum meruit claim, was what were the reasonable costs incurred by ABB in performing the work. ABB's submissions 153 ABB submits that Abigroup now seeks to advance a totally new case not advanced before the Referee and which, in significant respects, contradicts the case which Abigroup did advance to the Referee. In this regard the submission is that it is essential to follow the context within which the Referee determined the quantum meruit claim in order to discern that the matter was litigated in fashion such that Abigroup is presently out-of-Court by the way it conducted its case before the Referee. 154 Further ABB advances a number of particular suggested answers to Abigroup's submissions. The Way Forward 155 It seems convenient to: · first deal with the appropriate principles; · secondly examine the principles as found by the Referee; · thirdly treat with the respective stances taken by each party in its submissions to this Court - an exercise which must of necessity examine the complaints made by ABB to the effect that Abigroup is bound by the way in which it litigated the issue before the Referee. The principles Renard Constructions v Minister for Public Works 156 The Referee regarded himself as bound by the decision of the Court of Appeal in Renard Constructions [ME] Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234. In that case Meagher JA [with whom Priestley JA at 271 and Handley JA at 283 agreed on this issue] said at page 276:

'The cross-appellant really raised two distinct points. The first is that the arbitrator (and his Honour) was wrong to calculate the quantum meruit claim on the basis of what would be a reasonable remuneration for the contractor ; he should have essayed that task of inquiring what was the value to the principal of the work performed. Quantum meruit was now perceived, so the argument ran, to be based on concepts of unjust enrichment; it followed, according to this argument, that since the principal should not be unjustly enriched, he should pay to the contractor the value to him of the works performed as distinct from the reasonable cost to the contractor of performing the works . His Honour had already rejected such an argument in Jennings Construction Ltd v Q H and M Birt Ltd (Cole J, 16 December 1988, Unreported). That decision is precisely in point and, in my view, entirely correct. His Honour was therefore justified in applying it.' [emphasis added] Council of the City of Sydney v Woodward 157 In Council of the City of Sydney v Woodward [2000] NSWCA 201, reference was made by Heydon JA [with whom Priestley and Meagher JJA agreed] without exception to the following proposition as to principle put by the trial judge [cf Woodward v Sydney City Council, unreported Supreme Court of New South Wales, 27 October 1998, Einstein J]:

"The position which obtains when a Court is asked to determine a reasonable remuneration payable to a plaintiff, on a quantum meruit basis, is as Renard makes quite plain, that it is the task of the Court to stand back from the evidence and to weigh up, in general terms from all of the evidence before it , what is a fair and reasonable amount to be paid to a plaintiff." [at paragraph 12] [emphasis added] Pavey & Matthews Pty Ltd v Paul 158 In Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 the matter was put as follows by Deane J:

"What the concept of monetary restitution involves is the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or "enrichment" actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided (eg remuneration calculated at a reasonable rate for work actually done or the fair market value of materials supplied). In some categories of case, however, it would be to affront rather than satisfy the requirements of good conscience and justice which inspire the concept or principle of restitution or unjust enrichment to determine what constitutes fair and just compensation for a benefit accepted by reference only to what would represent a fair remuneration for the work involved or a fair market value of materials supplied.' [at page 263] [emphasis added]

Contracts which do not materialise 159 The particular principles which require to be applied in the present case concern contracts which do not materialise. The matter is dealt with in Mason & Carter, Restitution Law in Australia, Butterworths 1995 at [1033] et seq. 160 It is plain enough as the learned authors point out [1033] that "in all cases in order to rely on restitution, a plaintiff must establish both enrichment and injustice [it being] insufficient merely for a plaintiff to assert that a request to do work was relied upon, or that there was a legitimate expectation that contract would be agreed". The authors go on to add "[t]herefore, work done in preparing to perform a contract, such as in preparing a tender, generally cannot be made the subject of a claim for reasonable remuneration. Such expenditure is an overhead expense to be recouped, if at all, from payments under the contract". 161 Abigroup particularly relies upon this last passage but, as will be seen from the discussion which follows, the matter must always be governed by the particular facts, matters and circumstances. 162 Mason & Carter also make the point that:

"It is perhaps correct to say that the courts were less willing, when applying the implied contract rationale, to regard work done in anticipation of a contract which fails to materialise as liable to be remunerated in a restitutionary claim, than are the courts today in applying the unjust enrichment rationale. In part this is a response to a not uncommon feature of modern contracting. This is that the contracting process often lags behind performance. Documents such as heads of agreement and letters of intent are executed as agreements preliminary to contracts which are, in fact, never signed" [1033]

The risk element 163 The authors discuss the incidence of the risk element making the point that risk concept is elusive although in some situations there is scope for a conclusion that the other party is implicated in the risk that no contract will materialise:

"Thus, if the work in question is actual performance of the contemplated contract, begun simply because the contracting process is complex, it may be quite unrealistic to say that the risk of the negotiations coming to nothing falls only on the plaintiff. It may be plausible to say that the plaintiff has taken the risk that there will be no remuneration under the contemplated contract, and that the defendant has borne the risk that if the contract does not materialise there will be an obligation to pay a reasonable sum for work actually done. Although unjust enrichment assumes that there was no express agreement on risk, its application may help to displace an inference which would normally be drawn, namely, that because no contract was agreed there is no obligation to pay ." [1033] [emphasis added] Work partly executed 164 The authors deal with alternate situations: the first being where complete execution of the work contemplated by the parties has materialised and the second being "the more difficult case" where there is not only a failure to conclude an agreement, but the work done does not amount to full execution of what was contemplated as being done under the contract. The case presently before the Court is of course in this second-class. As part of the treatment given by the learned authors to this second-class, they comment on the decision by Sheppard J in Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880. Mason & Carter make the point that in its dealings with Sabemo, a point was reached where the Council was requesting work for which it knew Sabemo expected payment, and the Council came under a duty to say that it would not pay. The authors express the view that "in failing to advise Sabemo that it had no intention of paying, it accepted the benefit of the work and came under an obligation, imposed by the law of restitution, to pay for the work done" [1035] 165 In Brenner v First Artists' Management Pty Limited [1993] 2 VR 221, Byrne J made the following observations: "This will involve proof that the services were not provided as a gift: Pavey's Case, at 227 to 228. Furthermore, it will be necessary for the plaintiff to establish, where a certain event has not occurred, that the services were not provided on the basis that they were not to be paid for unless that event came to pass. In this category will fall cases where a tenderer carries out estimating or other work in response to an invitation to tender for a contract. It is understood in such cases that, in general, the tenderer takes the risk that the tender will be unsuccessful and that, as a consequence, the work will be unrewarded. It may be, however, that, even in such a case, an obligation to pay the tenderer will arise where the contract is not entered into by reason of a change of heart on the part of the proprietor: Sabemo's Case; or where the work done falls outside that normally expected of tenderers : William Lacey's Case; or where the work performed is of particular benefit to the proprietor: British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504." (at page 259) 166 William Lacey (Hounslow) Ltd v Davis [1957] 2 All ER 712 involved generally the following facts: · premises which had been damaged during the Second World War and which the owner was intending to reconstruct. The building scheme proposed that the premises be rebuilt as a shop, with an office floor and residential flats above. · A firm of surveyors was employed by Mr Davis (the defendant) and 3 tenders were obtained (including one from the plaintiff). · Lacey's first tender (9,114 pounds) was based on properly prepared drawings and bills of quantities and was considerably lower than other bids. · Lacey was told that their bid was the lowest and was led to believe that they would receive the contract. · Lacey was asked to calculate the timber and steel requirements (to help obtain necessary licences) - which they did. · Lacey was asked to submit their estimates for the notional reconstruction of the building (ie cost of reconstructing the building to what it was before the war damage) and its pricing schedule on which the tender was based - this was used by the surveyors to negotiate a "permissible amount" (the amount to be obtained from the War Damage Commission to help fund the repair). · Lacey gave an estimate of 7,650 pounds. · The Licence for the scheme was not obtained, upon which Davis proposed to rebuild the premises as a shop with 3 flats above. · War Damage Commission offered a "permissible amount" of 4,970 pounds. · Davis then asked Lacey to submit a revised estimate in accordance with specifications given - the aim being to increase the "permissible amount". · Lacey then undertook a considerable amount of work - and produced a revised estimate of 6,996 pounds. · The War Damage Commission approved the plaintiff's revised tender and increased the "prescribed amount" to 5,776 pounds. · Greer LJ found that the substantial increase was "partly, at least, as a result of the estimates and information provided by the plaintiffs" (at 714). · Later, Davis suggested numerous amendments to the plans and Lacey submitted further estimates. · In a letter, the surveyors informed Lacey that they were hoping to be "able to prepare contracts, etc., for the works really to commence". · After ordering bricks for the reconstruction the builders were told that someone else was to be employed to do the job (in fact, the work was never done, and the building was sold). 167 The holding was that a promise should be implied on the part of the defendant to pay a reasonable sum to the plaintiffs for the services rendered to them in respect of which they claimed remuneration (namely in respect of their work - excluding the work done on their initial tender), because: · the whole of the work fell outside the normal work which a builder, by custom and usage, normally performed gratuitously when invited to tender for the erection of a building; and · the proper inference from the facts was that the work was done under a mutual belief and understanding that the building was being reconstructed and that the plaintiffs were obtaining the contract. 168 Greer LJ distinguished the facts from a situation of providing gratuitous work in the hope of obtaining the contract. His Lordship expressed the following view:

"I am unable to see any valid distinction between work done which was to be paid for under the terms of a contract erroneously believed to be in existence, and work done which was to be paid for out of the proceeds of a contract which both parties erroneously believed was about to be made. In neither case was the work to be done gratuitously, and in both cases the party from whom payment was sought requested the work and obtained the benefit of it. In neither case did the parties actually intend to pay for the work otherwise than under the supposed contract, or as part of the total price which would become payable when the expected contract was made. In both cases, when the beliefs of the parties were falsified, the law implied an obligation - and in this case I think the law should imply an obligation - to pay a reasonable price for the services which had been obtained. I am, of course, fully aware that in different circumstances it might be held that work was done gratuitously merely in the hope that the building scheme would be carried out and that the person who did the work would obtain the contract. That, I am satisfied, is not the position here . In my judgment, the proper inference from the facts proved in this case is not that the work was done in the hope that the building might possibly be reconstructed and that the plaintiffs might obtain the contract, but that it was done under a mutual belief and understanding that the building was being reconstructed and that the plaintiffs were obtaining the contract." (at 719) [emphasis added] The principles as found by the Referee 169 The Referee sets out the "proper basis for valuing a quantum meruit" as follows [Report 853.7 - 854.10]:

"Paragraph 10(a) [of the Amended Defence] ... raises the issue of the proper basis for valuing the claim [namely a quantum meruit claim]. That is, whether it is to be considered in light of what might loosely be called 'the reasonable cost of the Plaintiff,' or [my emphasis] whether it is to be valued also by having regard to some benefit conferred on the Defendant. ...

This point is governed by the decision of the Court of Appeal in Renard Constructions (ME) v Minister for Public Works (1992) 26 NSWLR 234. The basis of this assessment is to be those costs incurred by the Plaintiff which were reasonable and which were properly incurred in performing the work.

As part of its submissions on this point, the defendant submitted that I should have regard to all of the circumstances. It nominated a number of circumstances as relevant:

(a) whether the principal requested the work; (b) whether the principal accepted the work; (c) whether there was any real benefit to the principal; (d) whether the work performed had a sufficient nexus with the substance of the request to perform; (e) how the provider, in its estimation, came to be entitled to the claim.

Without commenting on the validity or otherwise of this list, it can be said generally that in this case items (a) and (b) can be answered in the affirmative while item [(e)] is subsumed within item (a) and (b).

Item (d) is partly a restatement of the requirement that any cost be shown to be properly incurred .. A cost cannot be properly incurred if it did not have a sufficient nexus to the word which was requested.

To the extent that item (c) is a submission that the work should be valued on a 'benefit to principal' basis, it is wrong." 170 Abigroup submits that Renard is not authority for the basis of assessing the costs recoverable by ABB. In that regard Abigroup cites as the proper test:

"The tendency in some past cases to see the rationale of the right to recover remuneration for a benefit provided and accepted under an unenforceable contract as contract or promise rather than restitution has tended to distract attention from the importance of identifying the basis upon which the quantum of the amount recoverable should be ascertained. What the concept of monetary restitution involves is the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or 'enrichment' actually or constructively accepted" . (Emphasis added by Abigroup). [per Deane J in Pavey & at 263] 171 Abigroup further submits as follows:

"Cole J's reasoning in Jennings Construction Limited v QH & M Birt Pty Ltd (unreported, Supreme Court of New South Wales, Cole J, 16 December 1998) (and upon which Meagher J was commenting in Renard ) accepts "all the circumstances" are relevant (consistent with Pavey ) when in that case he stated (at paragraph 20): "There is authority binding upon me, including Bolot v Capper (1957) 75 WN 316 at 317 which makes clear that on a quantum meruit the task is to determine a reasonable price or charge in all the circumstances ...".

It is submitted that Renard is not authority for the proposition that a quantum meruit claim can only be determined by reference to "the reasonable cost to the contractor of performing the works" [Vol 4] [As submitted by ABB at paragraph 35 tab 11 of its submissions in chief]. The Court in Renard simply said that it is not correct to value a quantum meruit solely on the basis of the value to the principal or recipient of the works or services. It is proper to have regard to all of the relevant circumstances, which may include having regard to the value of the services in the recipient's hands.

Brenner In the case of Brenner v. First Artists' Management Pty Ltd [1993] 2 VR 221 (" Brenner "), the Supreme Court of Victoria considered a quantum meruit claim in circumstances where there had been no binding contract entered into between the parties [Whilst not a construction case it is submitted that this case is more relevant to the current case, the Renard and Jennings cases being concerned with circumstances where a contract existed and there was a claim that it had been wrongfully repudiated. The main issue for consideration was whether the contract price represented a ceiling on recovery of a quantum meruit]. In Brenner , Byrne J set out, comprehensively, we submit the circumstances which should be taken into account in assessing fair and reasonable compensation. He held that (at 262-263) as the focus of an unjust enrichment claim was the enrichment of the recipient, the 'benefit' necessary for a restitutionary quantum meruit action must be assessed from the point of view of a recipient of the services acting reasonably.

The applicable principles include: The "fundamental yardstick" is to assess a fair and reasonable compensation for the benefit accepted actually or constructively by the defendant; The fair value of requested services will ordinarily be remuneration calculated at a reasonable rate for the "work actually done" regardless of whether this produced an "enormous profit" or none at all. However, services which produce no profit at all because they are performed defectively are not likely to lead to a significant assessment of compensation ;

Therefore, the assessment must have regard to what the recipient would have had to pay to obtain the services under a normal commercial arrangement;

The cost incurred by the plaintiff in performing the services is not determinative of what is fair and reasonable although it will be evidence;

Where the services are performed pursuant to a contract which is unenforceable - or for some reason no longer binding on the parties, the agreed price in that contract is evidence, but not determinative, of reasonable remuneration;

Where the Court has regard to either an agreed price or agreed method of calculating remuneration, it is entitled to modify this to determine a fair recompense in all the circumstances: for example, where the services under the ineffective contract have not been completely performed;

Most recently, Byrne J's reasoning in Brenner has been approved by the full Court of the South Australian Supreme Court in Angelopoulos v Sabatino (1995) 65 SASR 1 and in the Federal Court in GEC Marconi Systems Pty Limited V BHP Information Technology Pty Ltd [2003] FCA 50 Finn J (at para 1415)." Assessing the approach taken by the Referee 172 It is to be noted that ABB submitted before the Referee:

"It is not controversial that in determining what amount may be recovered "representing the reasonable cost of the work he has done and the money he has expended" [Renard at pages 277E-F] all relevant circumstances must be considered. However, the Court of Appeal clearly rejected the submission that this amount should be determined on the basis of the value to the principal of the work performed". [Paragraph 91 of ABB's reply submissions to the Referee reproduced in Appendix N] [emphasis added] 173 It seems to me that, as ABB has submitted, it is clear from the Referee's statements [at Report 854] that the Referee accepted that he had to take into account, as a matter of principle, all relevant circumstances. 174 It cannot be suggested that the Referee was not bound by the statements of principle in Renard. He was so bound. This Court is so bound. The suggested problem inheres in the fact that the Referee was not prepared to accept the proposition that on the authorities it was a correct statement of principle to say that work should [in some mandatory fashion] be valued on a 'benefit to principal' basis. To my mind there was no error in the Referee so approaching the matter. However this is simply not the same as regarding the Referee as closing his mind to the obvious need to take into account all relevant circumstances. He is not seen to have closed his mind in this way. [See in particular the disjunctive 'or' used by the Referee when he first poses the question for decision - making clear that he was regarding Renard as authority, in that way of putting the question, for accepting the first leg of the disjunctive, namely "the reasonable cost of the plaintiff"]. 175 In essence the question may involve two possible, approaches to how one reads the last two lines at Report 854. Those two lines read:

"To the extent that item (c) is a submission that the work should be valued on a 'benefit to principal ' basis, it is wrong". 176 One reading of those lines is as follows:

"To the extent that item (c) is a submission that the work should be valued on a 'benefit to principal ' basis, it is wrong. Subject to that proviso, I accept (c) which is apparent as (a) and (b) are satisfied" 177 Another reading of those lines is as follows: "Item (c) is incorrect and irrelevant" 178 Ultimately and even if I be incorrect in my construction of those lines, it will be seen from what follows that the Referee is not shown to have been relevantly in error where failing to have valued on a "benefit to principal" basis. 179 Ultimately and as ABB submitted to the Referee, the inquiry is as to what is "reasonable remuneration" in all the circumstances:

"Ordinarily that will correspond to the fair market value of the benefit provided (e.g. remuneration calculated at a reasonable rate for work actually done or the fair market value of materials supplied") [See proposition 12 of Einstein J judgment in Woodward set out at paragraph 51 of ABB's quantum meruit submissions in chief, derived from Pavey ] 180 Importantly and as ABB has submitted to this Court, that is what the experts assessed in this case [See ABB's submissions in reply at paragraphs 3-15; ABB's quantum meruit submissions in chief at paragraphs 28-34] and the Referee so found [Report 855-856]. The Referee specifically referred to evidence given by Mr Radcliffe, ABB's quantum expert, explaining his methodology, which made clear that Mr Radcliffe had taken into account the question whether the rates and salaries used to value the costs were "reasonably in accord with the market for this type of work" and were "in the order of magnitude of what I would have expected to see as industry standards". [Report 856, subparagraphs (a) and (b)] 181 The Referees findings were expressed as follows:

There is ample evidence in the transcript and the experts' reports that the experts (Mr Radcliffe for the plaintiff and Mr Blunden for the defendant) based their assessments on the correct legal principles. A few examples will suffice.

In his report of 21 December 1999, Radcliffe said " I have carried out an audit ... in order to establish whether the costs incurred were properly incurred ..., and secondly whether the costs incurred were reasonable ." [Para 1.06] That is a correct statement of principle.

Radcliffe also took steps to ensure that costs were reasonable. For example, he calculated the claimed overtime labour penalty rate from the total claim and the overtime hours recorded. He then concluded that the rate was reasonable. [Paras 3.01.05, 3.01.06] Similarly, he formed an opinion as to the reasonableness of labour on-costs [Para 3.01.07] and salary rates. [Para 3.02.02]

In his report of 9 March 2000, Blunden said, criticising Mr Radcliffe's methodology, that " The report [that is, Mr Radcliffe's] is basically an audit report of costs 'properly incurred' by ABB and does not investigate whether the costs incurred are "'reasonable' for the amount of work performed by ABB . " [Para 3.4.3]

That passage shows that Blunden understood the correct legal principles on which he was to base his work.

Radcliffe's methodology specifically was considered as one of the items upon which the parties did not initially agree. It appeared as such at item 1 on a Supplementary List of Issues prepared by Radcliffe, which was resolved in conclave, as the following passages indicate [T311 - T314]:

In explaining his methodology, Radcliffe said that " In auditing the costs and reaching a monetary conclusion, I had regard to whether the costs are costs properly incurred in executing the work. In other words, there are no costs in there that belong to other jobs, and they are properly for the work carried out. I have had regard to whether [ABB] worked diligently . There are no duplications. The hours of work performed properly relate to and are accounted to the job, and the rate for labour and salaries are reasonably in accord with the market for this type of work ... ... it is my opinion that the method I have adopted represents a reasonable remuneration.. "

When I asked him whether the matters he had mentioned were matters with which he was professionally familiar, he replied, "They are, sir, yes. I deal with a number of mechanical projects and civil engineering, and the rates of pay, the all-in rates of pay, and salaries are in the order of magnitude of what I would expect to see as industry standards ."

Blunden heard that passage. I then asked him a question concerning the Tomago facility and Blunden replied, " ... So the point stands as we have made it, tested as a reasonable costs test ... "

As will be seen, the experts arrived at the same conclusion in respect of the great majority of the evidence that they considered. Blunden confirmed they had done so in his report [Part 9.1].

That could not have occurred had the experts been proceeding on fundamentally different legal principles." The context within which the Referee determined the quantum meruit issue 182 It is convenient to return to the submissions put by ABB in terms of the context this issue was determined. Those submissions were as follows:

"1. Early in the reference, the Referee put in place a mechanism, to which both parties agreed, whereby the value of ABB's quantum meruit claim could be assessed by a conclave of the parties' respective experts. The conclave process in relation to this claim is described in detail in ABB's submissions in chief to the Referee. [See paragraphs 84-97 of chapter 11, reproduced in Appendix L]

2. As well, separate conclaves, set up and supervised by the Referee, were held to assess the value of ABB's entitlement to payment for variations and other contractual claims on the assumption that there was a contract and to assess the value of Abigroup's claim for the costs it incurred in completing the construction of the roof after ABB left the job and consequential costs it incurred as a result of delays to other parts of the project. 3. The parties were represented in the conclaves by their respective quantum experts, Mr Radcliffe for ABB and Mr Blunden for Abigroup, under the supervision of the Referee. Agendas were developed and agreed identifying matters to be discussed and resolved and the parties co-operated in the process so as to facilitate the prompt exchange of information on an informal basis to enable the experts to carry out their respective tasks and to enable them to bring forward any matter that either party required to be resolved in connection with the assessment of the claims.

4. The Referee chaired the initial meetings of the experts. Subsequently, a dialogue was established between the experts, which was conducted orally in meetings and by telephone and by the exchange of detailed written material, over a period of many months, during which they sought to identify areas of agreement and to narrow and define the specific matters upon which they disagreed and the reasons for disagreement. The Referee closely followed and overviewed this process.

5. Each of the experts produced extensive individual reports dealing with each of the separate claims and counter claims of the parties. As well, the experts produced a series of joint reports and spreadsheets summarising the results of their dialogue and identifying the areas of agreement and disagreement in relation to the topics dealt with in all three conclaves. In total there were more than a dozen lever arch folders of expert evidence dealing with all of the various aspects of quantification and assessment arising out of the respective claims and counter claims of both parties. The conclave process took more than a year to finalise .

Both parties were willing and active participants in the process.

In its submissions to the Referee in relation to the valuation of ABB's quantum meruit claim, Abigroup submitted: "Mr Radcliffe and Mr Blunden embarked upon a fruitful exercise of conclaving to deal with the quantum of the claims made by both ABB and Abigroup in these proceedings. Abigroup submits that Mr Blunden's assessment in respect of the claims of ABB should be accepted." [Paragraph 516 of Abigroup's submissions in chief reproduced in Appendix M]

The experts reached a substantial measure of agreement in relation to their assessment of the value of ABB's quantum meruit claim. The Referee noted that "both parties' submissions impliedly accept that those components which were agreed do not fall to me for determination or final validation, at least provided that I am satisfied as to the legal principles underlying the agreement". [Report 857.8] ABB's submissions to the Referee summarised the position as follows [Paragraph 15 of ABB's submissions reproduced in Appendix L]: The ABB (Radcliffe) position $3,290,255.64 The Abigroup (Blunden) position $2,921,819.00 Amount in dispute $ 368,436.64

The difference between the experts related to five discrete items [See paragraphs 16 and 17 of the submissions in Appendix L] totalling $341,144.93 plus a further amount of approximately $27,000 arising from the consequential need to adjust the value of certain margins depending on the value of the final base figure.

The parties addressed detailed submissions to the Referee in relation to the applicable legal principles and in relation to the valuation of the claim. [See the submissions reproduced in Appendix L, M and N] Abigroup in its submissions to the Referee [See Appendix M paragraphs 516-538], responded to certain particular submissions ABB had made in relation to the matters upon which the experts had disagreed. As well, Abigroup made submissions in relation to certain parts of ABB's claim, in respect of which the experts had reached a substantial measure of agreement, where Abigroup considered that there were grounds to depart from the consensus position agreed by the experts. In particular, although the experts had reached a substantial measure of agreement in relation to the costs of the shop drawing process, Abigroup submitted that "ABB has failed to establish that any amount for Baigents (the shop drawing subcontractor) was reasonably incurred". [Paragraph 518 of the submissions in Appendix M].

It will be necessary for the Court to read closely Abigroup's submissions in paragraphs 516-538 of its submissions to the Referee [These are reproduced in Appendix M] in light of the challenges that Abigroup has made to the Report. As will be seen, Abigroup has advanced a totally new case in its submissions to the Court, one that it did not advance in its submissions to the Referee. When the submissions that Abigroup made to the Referee are read, it can be seen that: (a) Abigroup submitted that Blunden's assessment should be accepted [Paragraph 516 in Appendix M] (as noted earlier, Blunden's valuation of the claim was $2,921,819) [See paragraph 9 above]

(b) Abigroup submitted that ABB had failed to establish that any amount paid to ABB's shop drawing subcontractor was reasonably incurred [Paragraphs 517, 518 and 532 of the submissions in Appendix M];

(c) Abigroup submitted that the need to have regard to " all of the circumstances is demonstrated plainly by reference to the items which are identified in the submissions in chief of Abigroup as being matters of difference between Mr Blunden and Mr Radcliffe", apart from claims relating to the shop drawing process in relation to which Abigroup made separate submissions [Paragraph 519 of the submissions in Appendix M]; (d) Abigroup submitted that the claims which were unresolved in the conclave process between Mr Blunden and Mr Radcliife substantially related to costs claimed by ABB for work performed after 14 October 1998 [Paragraph 520 of the submissions in Appendix M]; (e) Abigroup submitted that there was a dispute [See paragraph 522 of Abigroup's submissions reproduced in Appendix M] in relation to the expert's agenda item 1.18 (which related to an item of $15,930.66 for interest incurred after 14 October 1998) [See the table set out in paragraph 174 on page 57 of Abigroup's submissions to the Referee reproduced in Appendix N]; (f) Abigroup submitted that costs incurred by Abigroup after 14 October 1998 in connection with the Lampson crane, was not a cost for which it should have to pay because ABB 'took the risk' in relation to such costs [Paragraph 523 of Abigroup's submissions in Appendix M];

(g) Abigroup submitted that there was a dispute in relation to McDonnell's and Hardy's salary costs in respect of the running down of the job in November and December 1998 [See paragraphs 524-525 of Abigroup's submissions reproduced in Appendix M];

(h) Abigroup disputed certain costs in relation to QA and safety loading on the basis that there was duplication of cost recover [Paragraphs 526-531 of Abigroup's submissions reproduced in Appendix M];

(i) Abigroup submitted that there was a dispute in relation to the recovery of Glanville's salary costs for the period from July to the start of October 1998 on the basis that his salary was recovered in the allowance for head office overhead [Paragraphs 533-534 of Abigroup's submissions reproduced in Appendix M];

(j) Abigroup then submitted that, in the case of the Lampson crane, although no benefit was ultimately conferred on Abigroup for the mobilisation costs of the crane nevertheless "Abigroup, by Mr Blunden, have accepted some costs as a reasonable cost to ABB" [Paragraph 536 of the submissions in Appendix M]. The further submission was made that "the valuation made by Mr Blunden included costs for items that ultimately were of no benefit to Abigroup at all. However, at the time the costs were incurred they would have provided a benefit to the project had ABB not been terminated" [Submissions paragraph 538 reproduced in Appendix M].

Each of those submissions was answered in detail in ABB's reply submissions to the Referee [See the submissions reproduced in Annexure N, paragraphs 16-73 in relation to the shop-drawing costs, paragraphs 74-79 in relation to the Lampson crane issue and paragraphs 80-94 in relation to the other remaining disputed items].

As well, there was extensive evidence and the parties made lengthy and detailed submissions to the Referee in relation to the course of the work in the period after 19 February 1998 up to the time that Abigroup terminated ABB on 14 October 1998. As noted at paragraphs 38-42 below, the evidence had multiple relevance including to quantum issues and to Abigroup's contention on the one hand, that the state of the job in the period from August to October 1998 proved ABB's lack of capacity to do the job as it represented it could and, on the other hand, ABB's contention that there was a complex and interrelated set of factual circumstance that explained the delays to progress, and which related to eighteen identified circumstances in respect of which the conditions and qualifications upon which ABB had based its tender were not fulfilled [See particular ABB's submissions to the Referee reproduced in Appendix I and J].

The Referee accepted ABB's submissions in relation to the causes of delay and made findings to which reference has been made earlier in paragraph 24 of chapter 4. These findings included that it was not until Abigroup issued a direction to ABB on 12 October 1998 for ABB to proceed with the works on the basis of a set of AFC drawings issued on 24 September 1998, that ABB was at the point where it expected to be at the start of the job [Report 821]. Those findings were relevant also to ABB's claim for payment on a quantum meruit.

In coming to those conclusions the Referee referred to the party's submissions in relation to the RFIs (requests for information) that had been issued by ABB's shop detailing subcontractor, in the following terms: "I have had regard to ABB's detailed analysis of RFIs in Section S of its submissions in reply [Reproduced in Appendix K] and to Abigroup's submissions on the RFI topic [Abigroup's submissions are reproduced in the exhibit to Mr Pudig's affidavit]. The whole topic involved a substantial engagement and I do not intend to analyse it in any detail. While it seems to me that the parties have just about fought each other to standstill on the issue, at least in so far as it was joined (here the Referee noted in a footnote that Abigroup did not comment in relation to many of the RFIs in its submissions), I think that it should be concluded that a level of defects in the drawings was an ingredient in the mix which helps to explain elements of the history of the job leading to its overall circumstances in October 1998, a conclusion detracting from Abigroup's primary submission in this regard" [Report 832.9-833.1].

The Referee found further that: "The shop detailing performed by Baigent was an integral part of the work which the defendant had requested the plaintiff to perform. The original scope of that work corresponded with the original state of the design. The final scope was different. It was different because the design changed, often at the defendant's instigation, and always with its approval and because the original drawings, issued by the defendant were in a state such that they could not be used unchanged as the basis for shop detailing .

Regardless of the precise nature of the plaintiff's original requirements as to the quality and timing of drawings, the defendant did what it did. In doing so, it requested the plaintiff to perform the work accordingly, and inevitably, that involved the plaintiff and Baigent in a welter of variations and RFIs . Responding to those events was as integral a part of performing the shop detailing work as requested from time to time by the defendant as was the original scope of that work" [Report 896.6].

Having considered many engineering drawings and shop drawings, thousands of pages of other evidence and more than a thousand pages of submissions dealing with the history of the job and the assessment of the quantum of ABB's quantum meruit claim, and having meticulously recorded his conclusions and reasoning process over some forty six pages in the Report, the Referee assessed the value of ABB's quantum meruit claim in the sum of $3,215,771.10 [Report 898 ] plus an amount of interest yet to be determined .

Abigroup now, in its submissions to the Court, seeks to advance a totally new case which it did not advance to the Referee and, in significant respects, contradicts the case that it did advance to the Referee. The submission is premised on Abigroup's assertion that the Referee misapprehended the relevant legal principles governing the assessment of a quantum meruit, in particular that the Referee should have taken into account all relevant circumstances, including the value of services in Abigroup's hand. Building from that premise, Abigroup submits that this "misapprehension of the legal principles" [Paragraph 109 of Abigroup's submissions] led the Referee into error. The error, so it is submitted, is that the Referee had regard only to the joint report of the experts assessing the value of the quantum meruit claim and that the Referee confined his "only additional analysis" to "differences in opinion of the experts within the report dealing with "quantum meruit" without regard to any of the evidence contained in the other reports" [ Paragraph 110 of Abigroup's submissions]. (It should be noted that it is hardly surprising that the Referee should do so in light of Abigroup's submissions to the Referee, to which reference has been made earlier in paragraph 11 above). Even more startling is Abigroup's submission, made for the first time, that in considering the value of the work and services received in Abigroup's hands, the Referee should have had regard to certain specific pieces of evidence, to be found in another joint report recording the experts' joint assessment of Abigroup's costs of completion of the project, the effect of which, so Abigroup submits, is that the net value to Abigroup of the work performed by ABB was only $1,823,670.10 [Abigroup's submissions paragraphs 113-116]. It takes but a moment to compare the submissions in those paragraphs of Abigroup's submissions to the Court with the submissions Abigroup made to the Referee, to which reference has been made earlier in paragraph 11 above, to see that there is no correspondence whatever between the case now put to the Court and the case Abigroup put to the Referee . Even Abigroup's present submission to the Court, that the value to it of the shop detailing work carried out by Baigent was $193,482, contradicts the submission that Abigroup made to the Referee, which was to the effect that ABB had failed to demonstrate that any part of the costs paid to Baigent had been reasonably incurred and, implicitly, that ABB should not receive anything for that work [ See e.g. Abigroup's submissions in paragraph 517-518 of Abigroup's submissions reproduced in Appendix M].

In similar vein, Abigroup now submits to the Court that the Referee was in error in failing to have regard to "the amount the parties had actually agreed for that work to be performed" [See paragraph 117 of Abigroup's submissions to the Court]. The submission continues to the effect that Abigroup had led evidence as to the amount that ABB would have been entitled to be paid under the contract, on the assumption that there was a contract, which Abigroup now submits was relevant to the assessment of a quantum meruit calculated on the basis that there was no contract. Implicit in Abigroup's submission that the Referee should have taken that evidence into account, is the unstated submission that the Referee should have accepted the evidence of Abigroup's expert on that question in preference to the evidence of ABB's expert, in circumstances where there was a very wide divergence of opinions as to the amount that may be due to ABB on the assumptions upon which that valuation exercise was undertaken. Again, it takes but a moment to compare Abigroup's submissions to the Court on this issue with the submissions that Abigroup made to the Referee, for it to be apparent that no such submission was made to the Referee . Nor did Abigroup submit to the Referee, and nor does it submit to the Court, that the experts had regard to any of those matters in carrying out their assessment of the value of ABB's quantum meruit claim during the extensive conclave process that had been put in place specifically to enable that issue to be determined." 183 In my view there is substance in the following written submissions put to this Court by ABB: · it was incumbent upon Abigroup to identify in its submissions to the Referee any matters which Abigroup considered should result in the 'ordinary situation' not applying and to identify any evidence that it wished the Referee to take into account in carrying out his assessment. A fortiori, if Abigroup considered that the Referee should disregard the consensus reached by the parties' respective experts following the lengthy conclave process and the basis upon which it was conducted (which the Referee described at Report 857-858). · Abigroup is bound by the way it conducted its case before the Referee, which was as follows: · it submitted that Blunden's assessment should be accepted; · it submitted that ABB had not established that any amount paid to Baigent (the shop drawing subcontractor) was reasonable; · it submitted that the Referee should not allow the items representing the difference between the Radcliffe and Blunden assessments. · Abigroup now, for the first time, submits that the Referee should have taken into account the value of work in Abigroup's hands, assessed at $1,823,670.10, and the 'contract' value of ABB's work assessed at $2,175,869.48, plus $165,434.87 for variations [See paragraph 119 of Abigroup adoption submissions] and, implicitly, that the Referee should have disregarded Radcliffe's assessment, which was substantially higher, although no reasons for doing so have been given. · Abigroup now, for the first time, submits that the Referee should have taken into account unspecified parts of other reports that were specifically directed to different quantification issues raised by other claims and counter claims made by the parties in the proceedings, in circumstances where the experts made no reference to the need to do so and Abigroup did not submit to the Referee that he needed to do so. · although Abigroup's attack on the Referee's report masquerades as an 'error of principle', in fact, no issue of principle is involved. The Referee carefully considered every specific matter that the parties, and Abigroup in particular, submitted was relevant. The Referee carried out the appropriate enquiries and was not misguided in the way he approached the task. 184 ABB further submissions also of substance and adopted are as follows:

20. The evidence which Abigroup now says, for the first time, the Referee should have taken into account comprises amounts extracted from a spreadsheet included in Exhibit 307, a three volume joint report entitled "Assessment of Abigroup's costs incurred in the completion of the MUA as a consequence of ABB's termination and assessment of the contract sum ABB would have been paid had they complete the works". There was no reason for the Referee to commence to search for evidence that might be relevant to the assessment of ABB's quantum meruit claim in that location, particularly when Abigroup had made no mention of it in its submissions and nor had the experts done so in their joint consideration of the question .

The spreadsheet includes a long list of items, extending over many pages, including items referred to generically as "Transfield subcontract account". Abigroup now says that two items listed under "Transfield subcontract account" are relevant and should have been taken into account by the Referee. One item, representing an amount of $1,182,932.06, is described obscurely as "less items fabricated by ABB". That was an agreed amount. However, there is no evidence to be found anywhere in the joint report or in the experts' other reports explaining what was included or excluded from the amount and how it was arrived at. The second amount to which Abigroup now points is an amount of $407,086.90 which is described in the spreadsheet as "dayworks - receipt, checking, rework of ABB defects, and completion of components where partially finished by ABB". Again, there is no evidence to be found anywhere in the joint report or in the other reports which sheds light on how that figure is to be apportioned between, for example, rework of ABB defects on the one hand and, on the other, completion of partially finished work.

Another figure that Abigroup says that the Referee should have taken into account is an amount of $26,104.44 for the lower half roof columns. This figure, as appears from paragraph 114 of Abigroup's submissions, has been plucked from a different joint report concerned with the "assessment of amount due to ABB in the event that a contract is in force". No submissions are provided to the Court ( nor were they provided to the Referee ) why that item, for example, and no other, should be taken into account. Nor are there (or were there) any submissions explaining how values determined on the assumption that a contract was concluded should be related to the actual reasonable cost of the work, valued at market rates (which is what the experts did) in circumstances where the Referee found that no contract was concluded, with the result that the assumptions upon which any such valuation may have been made were unproven.

Moreover, apart from the fact that Abigroup's submissions now assert, for the first time, that the net value to Abigroup of the work performed by ABB was $1,823,670.10, it remains unclear how Abigroup says that figure should be related to the figure agreed by Abigroup's expert as the reasonable cost of the work carried out by ABB at Abigroup's request, which was $2,921,819 . It is unclear, for example, whether Abigroup now submits that the only amount to which ABB should be entitled to be paid is that figure of $1,823,670.10. Apart from there being no rational basis for that approach set out in Abigroup's submissions to the Court (which would in any event, be an approach which was specifically rejected in Renard) it is directly contrary to Abigroup's submissions to the Referee . For example, taking the 'net value' approach that Abigroup now submits should be taken, would involve excluding from the amount payable to ABB, any amount that ABB incurred in connection with the mobilisation of the Lampson crane, which was a substantial amount. As noted earlier, in paragraph [11] above, in its submissions to the Referee Abigroup expressly accepted that it was liable for those costs subject only to its submission that it should not be liable for the costs incurred after 14 October 1998 because, so it was submitted, ABB 'took the risk' of such costs.

Another basis upon which Abigroup says that the Referee should have had regard to the value of the work and services to Abigroup is in reducing the amount payable in respect of the work done by Baigent, the shop detailing subcontractor. The inconsistency between the approach Abigroup took in its submissions to the Referee and the approach that it now takes has been referred to earlier in paragraph 19 above. The substantive issues raised by Abigroup's challenge to the Referee's inclusion of an amount of $572,582 for the Baigent work, focussing particularly on Martin's evidence, is considered later in these submissions. Abigroup's submissions in relation to the relevance of the agreed price :

There are two limbs to this part of Abigroup's submissions. The first involves the proposition that the Referee should have accepted Blunden's assessment in preference to Radcliffe's assessment of the 'contract' value of the work. No submissions were addressed to the Referee in relation to that matter and none have been addressed to the Court. Given that the difference between the experts on that issue represented some $3.2M, the submission, if it had been made to the Referee (and indeed, now in Abigroup's submissions to the Court) would be expected to be supported by detailed evidentiary references and analysis. An essential part of the task of resolving the extensive differences between the experts would involve determining the relevant terms of the contract governing the assessment of the value of the work , a difficult task in circumstances where the Referee found that no contract had been agreed and where the price of $14M for the work ABB was required to perform related to a structure that Abigroup ultimately did not require ABB to build and was based on qualifications and conditions that were not fulfilled. In its submissions to the Referee Abigroup agreed that Blunden should be accepted generally, in relation to all matters where he differed from Radcliffe. The Referee correctly rejected the submission [Report 858-859 and see also paragraph 2 of ABB's submissions in Annexure N].

The second limb of the Abigroup argument is that the figure for the 'contract value' of the work is relevant and should have been taken into account, together with an amount of $405,087.90 which Abigroup, quite misleadingly, describes as being "on account of defective work which would have to be rectified under any contract". As noted earlier in paragraph 31 above, the evidence does not support that characterisation of the amount in question . However, fundamentally what Abigroup should have done if it considered that it was relevant for the Referee to take these matters into account, is to make submissions to the Referee as to how these disparate amounts (calculated on a 'value of the works to Abigroup' basis and 'contract value' basis) should be related to the different, and higher, figure that the experts agreed was the reasonable cost of ABB's performance of the work that it was required to undertake. Neither in its submissions to the Referee , nor in its submissions to the Court, has Abigroup sought to undertake that task.

Abigroup had every opportunity, through its participation in the conclave process, to have the experts consider and report upon all matters which should be taken into account in relation to the valuation of ABB's quantum meruit claim. Moreover, Abigroup had every opportunity in making submissions to the Referee, to draw to the Referee's attention the particular evidentiary matters that the Referee should take into account, consistent with the principles that Abigroup submitted should guide the Referee's approach. It should not be permitted now to depart from the way it put its case to the Referee. Abigroup's submissions in relation to Martin's evidence

There was a considerable amount of evidence in relation to the reasons for delay in the progress of the works, particularly affecting the preparation of shop drawings. The evidence was relevant to multiple issues including Abigroup's argument that the lack of excuse for ABB's delays and the lack of progress achieved by October 1998 proved that ABB lacked the capacity to do the work in the way and within the time that it said it could. The evidence was relevant also to the valuation of ABB's quantum meruit claim, the valuation of ABB's alternative contract claims and the valuation of Abigroup's cross-claim which was quantified at all times by its own expert on the basis that due allowance should be made for amounts that Abigroup would have to pay to ABB in any event for the work done.

Themes that ran through Abigroup's case included that the shop drawing process was inefficient; that changes that had to be made were not changes for which Abigroup should bear responsibility, among other reasons, because they were related to re-designing the structure to enable it to withstand construction loads and residual stresses due to ABB's modular method of construction, for which Abigroup said ABB was responsible at all times; that other changes were initiated by ABB and accordingly were changes for which Abigroup was not responsible; that the AFC drawings did not have the deficiencies that ABB said they did and that even if they did have such deficiencies, the drawings were in any event 'meaningful', such that ABB had no basis for complaint that the AFC drawings were not correct, complete and had no holds on them.

ABB, on the other hand, contended that contrary to its express stipulation to Abigroup, ABB had never received a full set of architectural and AFC drawings that were correct, complete and had no holds on them and that the delays that occurred were related directly to circumstances intimately interwoven with Abigroup's failure to fulfil various important conditions and qualifications of ABB's tender.

The scope of some of the issues emerge from a reading of ABB's submissions to the Referee reproduced in Appendix I and J and the Referee's findings set out at Report 826-832.

There was a great deal of evidence that established, objectively, for example, that ABB had been inundated with waves of drawings between February and October 1998 and that there were extensive deficiencies in the drawings which became the subject of hundreds of RFIs (see paragraphs 1797-1801 of Appendix J and Appendix K). As noted earlier, the Referee observed that the parties had "just about fought each other to a standstill on the issue" of RFIs "at least in so far as it was joined" [See paragraph 15 above], bearing in mind that Abigroup failed to comment in relation to many of the RFIs which had been issued. The particular evidence that Mr Martin gave, which the defendant has singled out for criticism, was but a small part of a much larger body of objective evidence relevant to the matters affecting the preparation of shop drawings and had to be viewed within the context of that larger body of evidence , as ABB's submissions to the Referee at paragraphs 1802-1810 of Appendix J illustrate.

The specific issues that Abigroup now seeks to re-agitate in its submissions to the Court were answered in detail in paragraphs 16-73 of ABB's submissions to the Referee, reproduced in Appendix M. ABB invites the Court to read those submissions as part of ABB's submissions to the Court. Neither in its submissions to the Referee, nor in its submissions to the Court, has Abigroup attempted to answer the matters raised by ABB's submissions, which the Referee ultimately accepted.

Those submissions and the extensive evidence to which they refer show that it was open to the Referee to conclude, as he did on the basis of all of the evidence, that ABB was entitled to recover the full amount it had paid to Baigent in settlement of its claims . The Referee set out his reasoning process for that conclusion in meticulous detail at pages 887-898 of the Report. The conclusion clearly was open to him on the evidence. Abigroup has not demonstrated any reviewable error in the Referee's findings or conclusions.

Moreover, the Referee's findings in relation to the course that the job took and the respects in which the circumstances of performance were fundamentally different to those that ABB envisaged in its tender and upon which it had based its original price of $14M, show that the appropriate approach to valuing ABB's claim was to determine the reasonable cost of the work done and the material supplied by ABB having regard to market rates for such work, consistent with what ABB has termed the 'ordinary situation' in paragraph 24 above. That is precisely how the experts approached the task and the basis upon which the Referee, correctly, determined the amount due to ABB. Conclusion on Quantum Meruit 185 At the end of the day Abigroup has failed to establish error vitiating the findings on the quantum meruit claim. Once the Court has, as in the present case, been satisfied that there was no error of principle made by the Referee which can be seen to vitiate his approach, the attempt to involve the Court in a re-agitation of the determination of the disputed questions of fact fails at threshold. 186 I have however been prepared to follow the submissions of both parties into the areas of fact, particularly by reason of the need to do this in order to assess the substance or lack thereof, in the submission by ABB that what Abigroup is seeking to do before this Court is to depart from the way in which it put its case to the Referee. Those ABB submissions are seen to be of substance. It is entirely inappropriate to permit Abigroup which had: · every opportunity, through its participation in the conclave process, to have the experts consider and report upon all matters which should be taken into account in relation to the valuation of ABB's quantum meruit claim; · had every opportunity in making submissions to the Referee, to draw to the Referee's attention the particular evidentiary matters that the Referee should take into account, consistent with the principles that Abigroup submitted should guide the Referee's approach, to now revisit the manner in which it was content to litigate these issues before the Referee. 187 Authorities have already been referred to underpinning the principle which leads not only to the maintenance of fair play, but also to the repression of unnecessary litigation, which principle requires that parties must be bound by the course they deliberately adopt at the trial. In an area not only of a Part 72 reference, but more particularly of the narrow type of issues where very great assistance is received from experts, and where the Referee, with the consensus of the parties, has set in place a regime whereby conclaves of experts take place, all ultimately supervised or regulated by the Referee, the party seeking to revisit the matter and particularly to put submissions, either inconsistent with submissions put to the Referee by that party or worse, never put by that party to the Referee, has in my view a hopeless task in seeking to persuade this Court to now enter that arena. 188 Mr Corsaro SC who addressed the Court on behalf of Abigroup in relation to the quantum claim issue, conceded that no submissions had been addressed by Abigroup to the Referee identifying the several disparate amounts for which Abigroup now contends before the Court, ought to have been the subject of findings by the Referee by way of the "fair market value of the benefit to Abigroup" of particular works. That circumstance speaks volumes in terms of what was and was not on the table being litigated before the Referee. 189 The attempt to sidestep this problem makes the point that the Referee [Report 857] said:

"On what principle should the Referee treat amounts which have been agreed between the parties.

As will be seen, the experts agreed on almost every component of the costs which the plaintiff claimed…

Both parties' submissions impliedly accept that those components which were agreed to not fall to me for determination or final validation, at least provided that I am satisfied as to the legal principles underlying the agreement" 190 The proposition for which Abigroup contended before this Court was that this excerpt made plain that the Referee posed for himself the task of identifying the legal principles to be applied on the assessment of the quantum meruit claim. 191 This is not exceptional. But what is exceptional is to find at the end of the years of reference including conclaves of experts, not a single word is advanced by Abigroup in the form of a submission that a particular amount and no more should be accepted as proving the value to Abigroup of particular works. To my mind this is a strong indicator that the parties determined through the conclave process to reach and did reach an agreement in accordance with the principle stated in Renard - and the Referee says as much at the foot of Report 856. 192 The submission by Abigroup to this Court was that the Court should remit to the Referee, the question of only now receiving from Abigroup, all the close submissions which it failed to put to him, and which by reference to the mountain of evidence before the Referee and the experts reports, it is suggested may now permit the Referee to apply, what is suggested to have been the "proper" approach to the quantum meruit claim by reference to 'fair value to Abigroup'. Even if the Referee had erred in his approach to principle, the Court would not have acceded to this application, simply on the basis that there must be an end to litigation and that Abigroup, having once had an opportunity to make the submissions which it now seeks to make, has forgone that opportunity. The principles have been set out above. I do not see that Abigroup's approach to the litigation could be said to have been uninformed or naïve - indeed the whole of the approach taken by both parties to this mammoth litigation where they have fought each other to a standstill on every point, appears to be the antithesis of any 'babe in the woods' notion. 193 Finally, to my mind, a refusal to apply the 'fair value to Abigroup' approach was not incorrect in the particular circumstances which here obtained. On the findings of the Referee, the work carried out during the period from 19 February 1998 up until October 1998 involved a complex and interrelated set of factual circumstances explaining the delays to progress and where eighteen circumstances were identified in respect of which the conditions and qualifications upon which ABB had based its tender, were seen not to have been fulfilled. It was clearly open to the Referee to find that the work which had been carried out fell outside that normally expected of tenderers. It was clearly open to the Referee to find that Abigroup bore the risk that if the contract did not materialise, it would be obliged to pay a reasonable sum for work actually done. The application of the principle of unjust enrichment assists in displacing an inference which might normally be drawn, namely, that because no contract was agreed, there was no obligation to pay. All the more so when Abigroup, in the face of the 'no monies will become due…until the subcontract has been executed' clause, proceeded to make payments to ABB. Disparate matters 194 It is possible in conclusion to deal with a number of disparate matters. Profit 195 The Referee did not allow a margin for profit on work not carried out by ABB. 196 It is simply an incorrect statement of principle to put, as Abigroup appears to have, that Renard is authority for the proposition that on a claim for quantum meruit a claimant can only receive costs bare of profit. 197 In my view the following submission by ABB is of substance:

"What these findings and these circumstances show also is that while there are undoubtedly many ways in which one can, at an evidentiary level, tackle the question of what is reasonable remuneration or a reasonable price for work - and the cases contain a number of examples of it - in the circumstances of this case [where the circumstances of performance really were quite unique, and they were unique because ABB went through it and nobody else did, and they were unique in the sense that the Referee found that anyone else doing that work would have encountered the same problems] whatever other approaches might have been available at an evidentiary level to support a finding of reasonable remuneration, the appropriate approach was to look at the costs that ABB had actually incurred in doing that work and then to apply an appropriate margin for overhead and profit." [Transcript 442] 198 As Mr Orlov of counsel who addressed on the quantum meruit issue submitted: · The figure of 10.8 per cent, which the experts agreed was a reasonable margin, or was part of the reasonable margin, was comprised of a 2.8 per cent allowance which was to recover the overhead cost associated with tendering and winning the work; 5 per cent of which was the administration cost associated with the project, being an overhead cost; and then a 3 per cent margin for profit.

· The principles upon which the defendant founded its submissions are really quite remote from the circumstances of this case. Those principles are concerned with a situation where it is the disappointed tenderer who does not enter upon the work who sues to recover the costs of tendering. · ABB worked on this job for eight months, a period which reflected what was originally contemplated would be the contract period. During that time they performed substantial work, and the question is whether an overhead cost incurred in connection with obtaining that work should be recovered as part of the reasonable remuneration or price payable for the work done.

· Paragraphs 8.1 and 8.2 of Mr Blunden's report [exhibit P5] [referred to and incorporated by reference in footnote 150 of the Referee's report at page 867], shows that the experts were examining this overhead cost - that is, the cost of tendering was $350,995, an overhead cost. It was an overhead cost which was, in the way in which they calculated it, recovered partially as a component of the 10.8 per cent mark-up for overheads and profit which was applied to the value or the cost of the work done up to the time that ABB was terminated. · What it shows, and what the Referee's report shows, is that the experts agreed, in working out what was a reasonable price for the work done, that it was reasonable for the plaintiff to recover in full the overhead costs associated with tendering. No doubt there are various ways in which an appropriate margin for overhead cost and profit can be calculated. What the experts did here, and what the parties did here, was to agree that the total amount of margin should comprise in part a percentage factor and in part a lump sum amount. The lump sum amount was the amount of that incurred overhead cost which was not able to be recovered through the application of the percentage. · In essence, the effect of what the experts concluded in their approach to the matter and which the Referee accepted, was that a contractor in the position of the plaintiff, eight months down the track, would expect to recover that cost in his price. Ultimately whether that is achieved by a higher percentage for profit or what the mix is probably does not matter. But what they were really doing was saying that when you take the costs incurred by ABB in performing the work, ABB is entitled to a margin for overhead and profit and the overhead margin should include as part of it full compensation for the tender costs plus some small uplift for profit. The course of the work 199 The Referee at page 797 found that ABB's requirements were for a set of drawings which were approved by Abigroup and its consultants for construction and had such a level of correctness, completeness, detail and finality that, effectively, the design was complete and fully depicted in the drawings which could be used not only to begin building the structure, but also quickly to order the majority of the steel and also to finish the structure within the tight time frame using those drawings. 200 As Mr Orlov submitted:

"That provides the template against which the Referee had to compare what occurred, and what your Honour needs to take into account. An issue before the Referee related to the course of work and the reasons why, as at the period between August and October 1998, ABB had made less progress than Abigroup said it should have. The way in which that was put was that, having regard to the lack of progress during that period, that was an indication - indeed, it was positive proof - that ABB did not have the capacity to carry out the work using its construction sequence and method within the period it had represented. And so the case was fought out, or that part of the case was fought out, by a meticulous examination of what happened and why.

That evidence and the Referee's findings in relation to it was also relevant to the question of the quantification of the claim, because it identified the work that was done and the circumstances under which that work was performed, so that it was a matter that had more than one relevance [Transcript 435-436]

[T]he Referee made detailed findings about the course of work and the reasons for it and the respects in which any other contractor doing the work would have encountered the same impediments to performance as ABB encountered. That is directly relevant to the question of valuation. The Referee's findings establish that as at 25 February 1998, when the first wave of AFC drawings was issued to ABB, Abigroup had a design of a roof that was unfinished and could not be built without extensive redesign by any sensibly anticipated method of construction.

As at 14 October 1998, by virtue of the work that ABB did, Abigroup obtained a design of the roof that was finished and that could be built in accordance with Abigroup's preference, and indeed requirement, for a modular method of construction. That roof was able to be built by Transfield with a minimal further changes to the design. Now, while the Referee's findings establish also that while an iterative process of completing the design was proceeding, ABB was also endeavouring simultaneously to detail and fabricate the steelwork for the roof. Abigroup obtained the benefit of that work in the sense of the design work, the shop drawings and fabrication work and it used it to complete the roof.

When those findings are examined in detail, they establish objectively that in the circumstances of this case it was appropriate to determine the reasonable remuneration payable to ABB for the work actually done by reference to ABB's actual proper and reasonable costs calculated in the way the experts agreed should be done plus a reasonable margin for overheads and profit.

If I can just digress for a moment and deal with this notion that there is some tension between the value to the principal, the value to Abigroup of the steelwork and the cost that ABB incurred in building that steelwork. There are a number of problems with that particular piece of evidence… To price some steelwork on the basis of a completed design is one thing; to fabricate steelwork when you have an incomplete design and the design is being completed while you are detailing and endeavouring to fabricate that steelwork is an entirely different matter. The former takes the advantage of all of the efficiencies that are associated with a completed design. The latter does not. But the fact that there is a difference does not entitle the principal to pay only what would have been payable if the design had been complete right from the start. It was not. So that what the experts agreed was that ABB incurred certain costs which were proper and reasonable and were consistent with market rates for that work in actually carrying out the work in the circumstances in which that work had to be carried out, or in the circumstances under which that work had to be performed. That is a very different situation to a situation where a contractor comes along nine months into the job and he was asked to take over a fully designed job which has been designed, mostly detailed and partly." [Transcript 414-415] 201 At pages 820 to 830 the Referee dealt with the course of the job in relation to the evolution and completion of its design, and there were two strands to that analysis. There was a process of completion of the design which Abigroup's structural engineer, TTW, was undertaking, and that simply involved completing something that it had not completed before either 19 February or 25 February. It involved the iteration of the design between TTW and its peer reviewer in the UK, Buro Happold, who was considering the design and signing off on it and in that process requiring further changes to be made to the design. 202 The Referee at 821 put the matter thus:

"The process that took place between February 1998 and late September 1998 was one of continuing design development to accommodate:

(a) initially, Abigroup's instruction to radically redesign the structure to save weight;

(b) then Abigroup's instruction to "revert to tender";

(c) the gradual convergence upon a design solution resulting from Buro Happold's and TTW's continuing analysis of the structure;

(d) the effects of construction loads and residual stresses on member capacity and sizing;

(e) the effects of increased loads resulting from the finalisation of the design of fans and catwalks, something that Abigroup and TTW always knew had to be completed; and

(f) the effect of increased loads due to a variety of causes on the design of connections." 203 The position was summarised this way in ABB's submission which the Referee accepted:

"Another way of looking at what happened is that it took until late September 1998, with the combined efforts of TTW, Buro Happold and ABB, to reach a point at which it might be said that the conditions of ABB's tender had been fulfilled. Thus, when Abigroup instructed on 12 October 1998 that ABB should proceed on the basis of the 24 September 1998 AFC drawings, for the first time since ABB commenced work many months earlier, ABB was at the point where it had expected it would be right from the start." 204 Mr Orlov made the following points:

"If your Honour then just links that finding with the finding at the bottom of page 840. This is where the Referee dealt with a submission which raised the question whether ABB had in fact ever received AFC drawings of the appropriate standard: ... I have made findings as to the inapplicability of those criteria and, given the factual findings I have made about the drawings which were provided on 20 February 1998, 25 February 1998, 15 April 1998 and in the September AFC set, it is clear that ABB did not receive a full, complete and proper set of AFC drawings in the state of completeness and finality encapsulated by the phrase "correct, complete and with no holds". [A]t pages 826 to 829 the Referee made detailed findings in relation to the circumstance that the structure was incapable of withstanding construction by any sensibly anticipated method of construction, and the development of that - in fact, your Honour will see in subparagraph (b) on page 826: The design of the structure assumed the roof would get into its final position under zero-gravity conditions. In other words, it was assumed that you could put this structure into space with gravity switched off, and then in its fully erected condition, you switch gravity back on. In that condition the structure was structurally adequate. This was a very complicated space frame type of structure which depended on the interrelationship of various members." [Transcript 438] Plug and unplug 205 I accept as of substance the submission put by Mr Orlov that a careful examination of what Abigroup has been about during a deal of the quantum meruit submissions may be properly described as engaging in the process of plugging and unplugging figures, all of which it is said were before the Referee, in order to arrive at sundry results. This exercise is neither a matter of simple assembly nor for my part, a matter of simplicity in terms of disassembling the same. The problem inheres in the complexity underlying the sundry assessments and reasons therefore in the experts reports. This simply further confirms that Abigroup having been content to accede to the bases underpinning the approaches taken by the respective experts, cannot only now be entitled to move away from this position. Albeit that the Court requested a short schedule thumbnail sketching Abigroup's claims, the Court was not impressed with the document which came forward at last minute [and in a number of ways unexplained, and unparticularised] in the form of schedules, part of MFI D5, but at least it can be said that these submissions were not before the Referee. Steel fabrication 206 A good example of the plug and unplug exercise sought to be undertaken by Abigroup concerns its claim in respect of steel fabrication. In MFI D5 the claim is put as the difference between "Cost [$1,404,341.43]" and" Value [$1,182,932]"-that is to say a difference of $221,409.43. 207 The matter may be examined by reference to exhibit D2 and in particular the first page, which was the first page of a very long spreadsheet which the experts had prepared. This was part of a report which was prepared called "Assessment of Abigroup's costs incurred in the completion of the MUA as a consequence of ABB' termination". The page in question includes the following: Transfield subcontract account

Lump sum price based on Baigent detail drawings issued to Transfield $4,425,000.00

Less items fabricated by ABB $(1,182, 932.06)

Component where work was not previously detailed calculated at agreed rates. $2,087,681.00

Free issue materials $(974,268.22)

Dayworks - receipt, checking, rework of ABB defects, and completion of components where partially finished by ABB $407,086.90

208 The submissions which Mr Orlov made to this Court which are of substance in relation to this matter were as follows: · The first thing to say about this is that material has not been placed before your Honour, but one can search high and low in the reports and one will not find any reference to these items, or any explanation of these items which would shed further light on what they actually are or how they have been arrived at or what they represent. The experts got together, they worked certain things out, known best to themselves, which was consistent with the conclave process … and then, having reached agreement in relation to these matters, they simply recorded that agreement on this and many other items in this way. So your Honour has in front of you all the material that is available on the subject. · [I]t should be as immediately obvious to your Honour, as it no doubt should have been to the Referee, that one simply takes out a figure which obviously was the value to Abigroup and substitute that figure for another figure which was in another report. That seems to be the burden of the defendant's submission. · This all appears under a heading "Transfield subcontract account". The first entry is a lump sum price based on Baigent detailed drawings issued to Transfield of $4.425. What it appears that Transfield did was to give a lump sum price for all of the steelwork in the then completed shop drawings. · The next item "Less items fabricated by ABB" appears to be a credit back by Transfield for the work which had already been done by ABB, because it appears that the figure of $4.425m included steel which was depicted in the Baigent detailed drawings but which ABB had already fabricated. · The next item is a component where work was not previously detailed, calculated at agreed rates, and that is an item which is then added to the amount payable to Transfield. · There is then a deduction for free issue materials. · Then there is this item - it is a day works item. So that lying behind it, though not tendered, would have been a whole lot of invoices and daily time records and detailed records of the kind that are generated when work is done on a day works basis, which related to this: receipt, checking, rework of ABB defects, and completion of components where partially finished by ABB. · Just going to the last item first, by hypothesis, where ABB had not done the work, it plainly had not incurred a cost in doing it and it plainly had not been paid for it. There cannot possibly be any suggestion that it had been. So that that figure of $407,086, which it is said should be simply deducted and the Referee should simply have credited against ABB, in fact contains a component unstated and unidentified for work which ABB would be entitled to be paid for if it had done it. · It also contains a component relating to the receipt and checking of the steel. That is a cost incurred also in this undifferentiated sum of $407,000 which has nothing to do with anything ABB did but has everything to do with the fact that at a particular point in time Abigroup changed its mind and decided to have Transfield do the work, and it incurred a cost in Transfield looking over that steelwork, receiving it and checking it. Obviously not in its submissions to the Referee, but certainly not in its submissions to your Honour, either in writing or orally, has it been explained why it would be against conscience for ABB to recover compensation for the work that it did without giving credit to Abigroup for a cost that it incurred as a result of its decision to have someone else take over the work. · There is no doubt that, to the extent that this figure of $407,000 includes the rework of ABB's defects, that is a matter which would be relevant to take into account. But whether that figure was $5,000 or $105,000 simply doesn't emerge. What is absolutely clear on the face of this document is that it is not $407,086.90. · If Abigroup considered that the issue had not been taken properly into account by the experts in working out what were the proper and reasonable costs incurred by ABB in carrying out the work at its Tomago fabrication facility, then no doubt they would have tendered the day works records, or the relevant day works records, and no doubt they would have made submissions to the Referee about it. That is, "There was work done on these days and these were the defects, and that cost, whatever it is, hasn't been taken into account in discounting the reasonable cost of performance of the work." Well, they did not do that. · By hypothesis, what the experts did was to consider what are the proper and reasonable costs of carrying out the fabrication work. All of this material was before them. It is quite clear that the material was before both of them because they dealt with it in the context of this report, so that one would expect that the experts would have taken into account, the cost associated with rectifying any defects in assessing what were the proper and reasonable costs incurred by ABB in doing the work. · The Referees report at 864 in the "Summary of Differences" deals with the Tomago Fabrication Facility Costs by identifying the proposition contended for by the plaintiff as $1,404,341.43 and the adjustment or difference contended for by the defendant as "-66,383" · In ABB's submission to the Referee [Appendix L to exhibit MAH 1 of Mr Harrowells Affidavit] is set out the make up of the $1.4 million at page 27. One of the components was: Radcliffe Par No. Blunden Para No. Item Radcliffe Blunden Difference

3.06.02 4.6 Subcontractors - Detailing (Baigents) $572,582.00 $467,656.87 -$104,925.13

· Hence the true comparison, according to the defendant, when you take that figure out, is that the cost of the steelwork was $831,759. That was ABB's cost of the steelwork for which Transfield gave a credit of $1.182m. Your Honour would be forgiven for thinking that that was not a bad deal from Abigroup's point of view, because the figure of $1.182m, which the defendant urges upon your Honour as being a plug-and-play figure that you can simply substitute for the $1.4m, does not include shop detailing expenses. · Now, even if your Honour was to add in the 10.8 per cent margin, that leads to a comparison of $921,589 charged by ABB as the reasonable remuneration for that work and $1.183m which was the credit back by Transfield. If one tries to plug and play with different figures from different reports prepared for different purposes, they are liable to produce an entirely unexpected and wrong result. The suggestion that the Referee should have been left to do so without guidance from the defendant in submissions should simply be rejected out of hand. Submissions as to matters of difference 209 Paragraph 519 of Abigroup's submissions to the Referee drew specific attention to the items which were identified in the submissions of ABB as being matters of difference between these experts. The following paragraph further makes a reference to claims, "which were unresolved in the conclave process". Lampson Crane 210 One of the areas in respect of which Abigroup has contended that the Referee erred concerns this particular crane, apparently the largest such crane in the southern hemisphere. After ABB was required to leave the site it became necessary for the dismantling and removal from the site of the crane. The disagreement between the experts was simply whether the cost of hiring the crane during the period which it took to dismantle it was properly incurred. The matter was dealt with by the Referee at 168 and following. No material error is shown by the Referee. Interestingly it was Abigroup which put the following to the Referee: "The valuation made by Mr Blunden included costs for items that ultimately were of no benefit to Abigroup at all. However, at the time the costs were incurred they would have provided a benefit to the project had, ABB not been terminated" [submissions paragraph 538]

Shop drawings 211 Abigroup submitted before the Referee that ABB had failed to establish that any amount for shop drawings as invoiced by Baigent was reasonably incurred. The submission was that the experts had agreed that Baigent had completed $193,482 worth of shop detailing work as the cost of the work against the design contract value. The proposition was that the cost of carrying out the work had been $572,582 which had been agreed between the experts. The submission was that the work was so defective in quality that it should have been discounted. The Referee having allowed the cost, Abigroup claimed the difference of $379,100. [Transcript 394 and written submissions of Abigroup, paragraph 114] 212 The full amount of $572,582 was found by the Referee as being a reasonable amount paid to Baigent for the work that was done, the full benefit of which Abigroup ultimately received. No error has been shown in the approach taken by the Referee to this item. 213 Mr Orlov submitted:

"[T]he work that was done was not simply producing 500 shop drawings or X tonnes of steel. It was producing 500 shop drawings and X tonnes of steel under those circumstances where there were three steps forward and two steps back, so that in valuing the work it is necessary to have regard to that circumstance because that is an integral part of the work that was done…

[I]f I can pose the question this way - if one was to value - and approach it from the point of view of valuing the work in the defendant's hands, upon what basis would it be conscionable for the defendant to come along and say, "Well, now that you have struggled and laboured mightily for eight months under these adverse circumstances and produced these results, I could have got this work done for half the price without taking into account the circumstances under which that work would have to have been performed." [Transcript 441] Glanville/ Lim salary costs 214 No error is shown in the approach taken by the Referee on the claim concerning a salary issued dealing with salaries of Mr Glanville and Mr Lim. The report deals with this matter at 877 and following. 215 In the result, both as a matter of correct application of relevant principle and as a matter of assessment of the respective claims, as well as by reference to the obvious need to hold Abigroup to the way in which the matter was litigated at the reference, the attack seeking to vitiate the report fails. Other matters 216 None of the other matters of detail, the subject of complaint in Abigroup's submissions, were of substance. Claim to Judgment for matters abandoned by ABB 217 Overview submissions in writing were addressed by the parties to the claim by Abigroup that by reason of matters abandoned by ABB in the Third Further Amended Summons on 4 December 2001 [and identified in a letter dated 4 December 2001] the Court should order that there be Judgment for Abigroup. That Judgment is sought in relation to the claim set out in Annexure "A" to the Notice of Motion. 218 During the hearing the Court made plain that this was a matter more appropriate to be addressed following the delivery of the principal judgment and at the same time as submissions will be taken concerning costs. Leave is granted to the parties to treat with this issue on that occasion. Short Minutes of Order 219 The parties are to bring in short minutes of order providing for the adoption of the Report and ancillary relief.

I certify that paragraphs 1 - 219 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 30 July 2003

              Susan Piggott
              Associate
      30 July 2003

Corrigendum 1. Replace the word" dissemble" with the word "disassemble" on page 35 paragraph 51 line 2; 2. Replace the word "Abigroup" with the word "ABB" on page 55 paragraph 76 line 3; 3. Replace the word "tomb" with the word "tome" on page 123 paragraph 129 line 2; 4. Replace the word "ABB" with the word "Abigroup" on page 136 line 10; 5. In paragraph 205 on page 175 line 1 replace the word "the" after "Mr Orlov" with the words "that a", Line 2 add the word "a" after the word "during", line 7 replace the word "dissembling" with the word" disassembling" 6. Page 180 second bullet point add the word "In" before the words "ABB's submission" and "to" before the words " the Referee".

              Susan Piggott
              Associate
      7 August 2003

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