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[2003] NSWSC 634
Supreme Court of NSW
2003-07-23
Nicholas J
Original judgment source is linked above.
CITATION : Abigroup Contractors Pty Ltd v Sydney Catchment Authority [2003] NSWSC 634 HEARING DATE(S) : 24.02.03; 25.02.03; 26.02.03; 28.02.03 JUDGMENT DATE : 23 July 2003
JURISDICTION: Equity Division Technology & Construction List JUDGMENT OF : Nicholas J DECISION : Order Plaintiff's Notice of Motion dismissed. Order that Referee's Report be adopted and Defendant entitled to orders sought in its Notice of Motion.
CATCHWORDS : PRACTICE AND PROCEDURE - CONTRACT - TENDER - REFERENCE - Whether Defendant's conduct in non-disclosure of additional information in its possession was misleading and/or deceptive - Whether Referee erred in decision - Whether Referee's Report should be adopted HELD: Referee's Report should be adopted - Plaintiff's Notice of Motion for rejection of Report dismissed - Defendant entitled to orders sought in its Notice of Motion that Report be adopted LEGISLATION CITED : Fair Trading Act 1987 (NSW) s 42 Trade Practices Act 1974 (Cth) s 52 Abigroup v Peninsula Balmain [2001] NSWSC 752 Chloride Batteries of Australia Pty Ltd v Glendale Chemical Products (1988) 17 NSWLR 60 Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615 Franks v Berem Constructions Pty Ltd (NSWCA, 2 December 1998, Unreported) Jarvan Pty Ltd (in liq) formerly John R. Carr & Associates Pty Ltd v Seery (NSWCA ,1 December 1998, Unreported) CASES CITED : Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49 Miba Pty Ltd & Ors v Nescor Industries Group Pty Ltd & Anor (1996) 141 ALR 525 Peabody Resources Ltd v Allco Constructions Pty Ltd (NSWSC, 14 March 1994, Unreported) Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 The Saints Gallery Pty Ltd v Plummer (1988) 80 ALR 525 Yorke v Lucas (1985) 158 CLR 661 PARTIES : Abigroup Contractors Pty Ltd - Plaintiff Sydney Catchment Authority - Defendant FILE NUMBER(S) : SC 55045/01 COUNSEL : C G Gee SC/F C Corsaro QC/R Rana - Plaintiff S R Donaldson SC/M Dempsey - Defendant SOLICITORS : Clayton Utz - Plaintiff Phillips Fox - Defendant
IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST
55045/01 Abigroup Contractors Pty Ltd v Sydney Catchment Authority JUDGMENT Abigroup 1 HIS HONOUR: These proceedings arise from disputes between the Plaintiff (Abigroup) and the Defendant (SCA) which were parties to an agreement made on 24 December 1998 pursuant to which Abigroup undertook the design, development and the construction of an auxiliary spillway at the Warragamba Dam for SCA for the sum of $85,709,094.55 consisting of a lump sum price of $73,358,980.04 and provisional sums of $10,350,114.50.
2 In its Amended Summons Abigroup stated the dispute in these terms: "The Plaintiff is carrying out the design development and construction of an auxiliary spillway for the Warragamba Dam.
The Plaintiff alleges that in its Invitation to Tender Sydney Water Corporation Limited ('SWC') provided information and made representations relating to the location of rock levels in the Folly Creek area of the Works. In doing so, SWC did not disclose information in its possession showing ground surface levels in the area prior to the original dam construction. These levels were substantially lower than the rock levels described in the information provided to tenderers.
The Plaintiff alleges contraventions of the Fair Trading Act 1987 (NSW), contraventions of the Trade Practices Act 1974 (Cth) and breach of contract by SWC.
By virtue of the Sydney Water Catchment Management Act 1998, the defendant is responsible for liability arising out of these contraventions and breaches by SWC." 3 In its Amended Summons, Abigroup claimed:- (1) Damages pursuant to s 68 or, alternatively, s 82 of the Fair Trading Act 1987 (NSW), ("the FTA"), or the Trade Practices Act 1974 (Cth), ("TPA"), respectively. (2) Further, or in the alternative, such other order or orders under s 72 of the FTA or, alternatively, s 87 of the TPA, as the Court deems appropriate to compensate the plaintiff or to prevent the loss or damage suffered by it. (3) Further, or in the alternative, damages for breach of contract. (4) Further, or in the alternative, an extension of time of the Date for Practical Completion of the Works. (5) Ancillary relief by way of interest, costs and interest on costs. 4 Specifically Abigroup sought the following orders: "1. Damages pursuant to s.82 of the Act in the amount of $14,558,344. 2. In the alternative to 1, damages for breach of the warranty alleged at paragraphs 24 and 25A of the Amended Summons in the amount of $14,558,344. 3. In the alternative to 1 and 2, an order pursuant to s.87 of the Act amending the Contract Sum by adding the amount of $14,558,344 to it. 4. A finding that the Plaintiff is entitled to an extension to the Date for Practical Completion of 183 days." 5 By an order for reference made in April 2002 the Court referred to the Honourable Morton Rolfe QC, pursuant to Pt 72, r 2 (1) SCR, the whole of the proceedings for enquiry and report. 6 The hearing commenced before the Referee on 17 June 2002 and concluded on 12 July 2002. There was a substantial body of evidence, both oral and written, and there were conclaves between the experts retained by the parties on issues of delay, quantities and costs. It was agreed that what was said at the conclaves was to be treated as evidence. 7 The transcript consisted of 1,242 pages. The evidence comprised a 14 volume tender bundle of approximately 4,090 pages, a supplementary tender bundle in one volume of approximately 262 pages, 34 witness statements, 12 experts reports and 58 exhibits. The parties availed themselves of their full opportunity to advance such matters as they wished to the Referee. 8 The Referee delivered his report to the Court on 8 August 2002. It was his opinion that there should be judgment for SCA. 9 The questions for determination are raised by the motion of each party pursuant to SCR Pt 72, r 13 (1). Abigroup seeks orders that the report of the Referee be rejected in whole, that SCA pay to it damages in the amount of $14,558,344, and that SCA pay its costs including those of the reference. SCA seeks an order that the report be adopted. Background 10 The Referee in his report gave the following description of the work. "3. Warragamba Dam, the construction of which was completed in 1960 in accordance with best international engineering practice at that time, is the defendant's largest dam and stores about eighty per cent of Sydney's water supply. It dams the Warragamba River, which flows basically from west to east, the dam wall being in an essentially north/south line. 4. Since its construction, developments in rainfall and flood estimation have shown that it could encounter floods much larger than originally anticipated, such that it was possible that a flood with a 1 in 1.500 chance of concurrence (sic) per year could overtop it and cause it to fail. Any such failure would cause significant damage to natural and man-made features and place many lives in the Hawkesbury-Nepean Valley at risk. In an attempt to avoid such a catastrophe, the defendant decided to have an auxiliary spillway constructed. 5 …. The auxiliary spillway was sited to the south of the main dam and allowed for any excess of water in it, before it overtopped the main dam wall, to run into the auxiliary spillway dam. The excess water would then build up in the spillway dam behind the spillway wall which was, in effect, an extension of the main dam wall running further south…. 6. The spillway wall differed significantly from the main wall. It comprised a series of five adjoining "fuse plugs", which are rectangles surrounded by concrete and filled with gravel type material capable of withstanding varying water pressures. The concept is that as water builds up in the spillway dam and places pressure on its wall the gravel type material will give way sequentially, commencing with the weakest and continuing to the strongest fuse plug, until the pressure is relieved, thus allowing the excess water to escape from the spillway dam onto the concrete spillway. This is probably why they are referred to as fuse plug embankments. It will then run down the spillway, in a generally easterly direction, to its end, at which point the spillway is somewhat raised so that the water has to run uphill a little before escaping into the Warragamba River downstream, or to the east, of the main dam. The purpose of this raised area, which is called the "flip bucket", is to steady the downhill flow before the water enters the River, thus helping to minimise undue erosion and wash.
(b) a plan dated 1950 entitled "General Layout of Works Area as Projected at SEP1950 No WL-1-1-15, which depicted ground contours for the Folly Creek area" (this being an amendment to the amended sub-paragraph (b));
(c) a plan entitled "Folly Creek Disposal Area Fill Over 30' Pipe" and stamped "apparently work as executed 11.11.63", which depicted a cross-section of Folly Creek pipe and level of fill above the original surface level;
(d) a plan entitled "Folly Creek - Eighteen Ton Disposal Area" and stamped "apparently work as executed 11.11.63" depicting contours of the area to be used as fill in Folly Creek; and
(e) a plan prepared in or about 1946 numbered TS-1-1-13, which depicted ground contours in the Folly Creek area". 16 In paragraph 19 of the Amended Summons it was alleged that: "The Additional Information purported to show ground surface levels on the right hand side of the spillway alignment in the Folly Creek before or at the time of the original Warragamba Dam construction area which were substantially lower than the rock surface levels depicted, described or defined in the Concept Design Documents so that if the Additional Information had been provided to the Plaintiff at any time prior to the Contract the Plaintiff would have known that the rock surface levels depicted, described or defined in the Concept Design Documents were incorrect or likely to be incorrect". 17 In his Report the Referee stated: "44. The defendant admitted that the first mentioned plan was one entitled "Proposed Township Site" and was marked TS1-1-16 and purported to depict the natural ground contours in the Folly Creek area prior to the commencement of the original Warragamba Dam, which was held at the Production Office at Warragamba Dam then occupied by Sydney Water Corporation; that the second, third and fourth mentioned plans were held in its central plan room; and that the fifth mentioned plan was held at the Production Office. 45. It is, in my opinion, relevant to note the admissions as to what the various plans showed. The first plan was admitted to depict the natural ground contours in the way to which I have referred. The second plan was admitted, in part purportedly, "to depict ground contours in the Folly Creek area". The third plan was admitted in part purportedly to depict a cross-section within Folly Creek including a 30" pipe upstream of a horseshoe bend sump and the level of fill as at 25 November 1951 and an interpreted original surface level. The fourth plan was admitted to purportedly depict contours within Folly Creek. The fifth plan was admitted to depict purportedly ground contours at fifty feet intervals in the Folly Creek area prior to the commencement of the original Warragamba Dam construction. However, all these plans appear have pre-dated 1960 by a number of years". 18 There was no issue that at the time the tender documents were provided, SCA had the additional information in its possession. It admitted that it did not disclose the additional information to tenderers at any time between 23 February 1998 and 24 December 1998. The plans which were said to relate to an embankment and pipe are of particular relevance to the challenge to the Report. SCA's response 19 As referred to earlier, in paragraph 21 of the Amended Summons Abigroup alleged that by issuing the Concept Design Documents as part of the Invitation to Tender, in circumstances where it had the additional information which it did not disclose, SCA engaged in conduct which was in trade in commerce, and misleading or deceptive or likely to mislead or deceive within the meaning of s 42 of the Fair Trading Act 1987 (NSW) and s 52 of the Trade Practices Act 1974 (Cth). SCA's response in para 17 of its Amended Defence asserted that neither its personnel involved in the Tender, nor consultants engaged by it for the purpose of preparing the Tender, were aware of or had copies of those plans at that time. It admitted that the issue of the Invitation to Tender was conduct in trade and commerce, and denied that the Tender Documents were misleading or deceptive. 20 The Referee noted: "52. Thus, it is not in issue that the Additional Information was in existence and available, but the Amended Defence asserted that those involved in the Invitation to Tender were unaware of its existence. This was in answer to an allegation of proscribed conduct resulting from a failure to disclose or, as it may be put, silence". The Tender and Contract documents 21 The relevant tender and contract documents were the subject of detailed analysis by the Referee. He reported as follows: " The Concept Design Report of August 1998 67. The Concept Design Report was concluded in August 1998 and it presented, inter alia, the background concept design of the auxiliary spillway and stated that it would be further developed by the Design Development and Construct (DD&C) Contractor's detail designer and was to be read in conjunction with the design requirements set down in the specification for the DD&C Contract Documentation. It covered three broad aspects of the work being the concept design of the Auxiliary Spillway, the modifications required to the existing dam, and miscellaneous aspects such as the continuation of services at the dam, environmental issues and constructability of the works. It continued:- "Investigations for the Auxiliary Spillway have been going on over a number of years and in the process, a collection of reports has been produced. Information from these reports has been drawn upon to produce the concept design and some, if not all of that information, will be pertinent to the DD&C Contractor. It was not thought appropriate to reproduce all of that information in this report. However, some information has been reproduced and an extensive reference list has been provided. It is emphasised that while the extent of the investigations and design/analysis presented in this report is in the most case adequate for developing a concept design and showing its constructability, it will not necessarily be adequate for detail design. It will be the responsibility of the DD&C Contractor to determine where further investigation and design/analysis are required. In the case of the fuse plug embankments however, the design presented should be considered as the final, detail design."
Mr Knight, another person involved in preparation of the Concept Design Report, also gave evidence as to the information considered for the purpose of its production. He was unaware of the existence of any of the additional information. It was his view that the work carried out by DPWS was adequate for the production of the concept design and was sufficient to enable the work to be put to tender. He understood his task to be the preparation of a report which the contractor could use for bidding purposes. 25 The Referee found that DPWS attempted to obtain as much information as possible to assist both the tenderers and SCA in producing as realistic figures for the carrying out of the work as possible. He also found that the concept design was prepared by DPWS and its agents pursuant to the contract with SCA and that SCA had nothing to do with its preparation. It was his opinion that insofar as the DPWS documents were passed on to Abigroup, that was done by SCA in circumstances where it had no input into the documents, nor was it shown to have taken any responsibility for them. 26 Abigroup's group engineering manager was Mr Havercroft who gave evidence as to his involvement in the tendering process. After a pre-tender forum on 4 September 1998 at the dam, on 28 September 1998 Abigroup received an invitation to tender, and other documents, which required submission of tenders by 12 November 1998. He had a supervisory role in relation to the tender, and before its earthworks component was finalised he reviewed it. He signed the contract for Abigroup. 27 Abigroup retained Snowy Mountains Engineering Corporation Australia Pty Ltd (SMEC) to determine the design development required, prepare the design component of the tender, determine the quantities and volumes of components of the works for the tender documents, to assist it in the preparation of its tender estimate and thus to assist in estimating the tender price for the works.
The Referee found that Abigroup relied on SMEC to assess the degree of uncertainty in the geotechnical investigations and the requirement for any further investigations. He found that Abigroup was not under any misunderstanding about these matters. He also found that Abigroup relied on SMEC rather than SCA to assess the stripping depths, which was consistent with the tender qualifications. 28 Mr Coffey was an estimator employed by Abigroup who also gave evidence. He worked on the preparation of the earthworks components of the tender estimate with regard to material prepared by SMEC. It was found that he costed the amount of material to be removed and replaced, and otherwise relied on SMEC. 29 Mr J S Gray gave evidence as to his work for SMEC. In August 1998 he became its design manager for the preparation of the tender, and for the estimation of the volume and type of material to be excavated and removed from the proposed location of the auxiliary spillway as shown in the concept design. In about October 1998 copies of the concept design drawings and other material as to the proposed spillway location were provided to SMEC. 30 Mr David Jordan gave evidence of his involvement as a geologist employed by SMEC whose task was to determine the extent of unsuitable material to be excavated from the Folly Creek area. In particular, he was to review documentation and the type of material to be excavated and estimate the stripping quantities in that area. Those quantities were the amount of material other than rock (OTR) to be removed to reveal a satisfactory foundation for the cement stabilised fill (CSF) conformably with the concept design.
After his field inspection, he wrote a geological overview dated September 1998, and the report from SMEC to Abigroup dated October 1998 was based on it. He did not have any of the additional information. 31 Mr van Breda gave evidence of the pre-tender meeting on 4 September 1998, attended by Mr Havercroft and others. The Referee accepted Mr van Breda's evidence that he made the following statement to the meeting: "The geological material provided covers a wide area of the site. A lot of geotechnical investigations have been conducted over the years for the whole Warragamba Dam project but they are not specific to the spillway. However, the material will not form part of the contract documents because Sydney Water cannot guarantee the information. The Public Works Department has carried out some recent investigations but these were inconclusive and I highly recommend that you carry out your own investigations in order to reduce your risk exposure." 32 As to what transpired at this meeting the Referee found that the tenderers were made aware that they were required to undertake the risks for latent conditions and, in so doing, to carry out any further geological or geotechnical investigations, which they thought necessary to assess them. Principles 33 Relief by way of adoption or rejection of a report pursuant to Pt 72 r 13(1)(a) requires the Court to take into account matters which include those summarised by Barrett J in Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd [2001] NSWSC 752 as follows: "19. …The guiding principles for the Court in such a matter emerge, in large measure, from the observations of Gleeson CJ in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549. A convenient list of relevant considerations extracted from that source is provided in the judgment of Hunter J in Walter Construction Group Ltd v Walker Corporation Ltd (2001) 47 ATR 48. The substance of that list is as follows: 1. The hearing of a reference should not be equated with a hearing at first instance in this Court. So much may be extracted from the fact that a referee may be appointed by reason of his or her technical expertise (not necessarily in legal matters) and from the provisions of Part 72 rule 8. 2. It is untenable to construe the power of the Court under Part 72 rule 13 as falling within the umbrella of a proposition that all litigants are entitled to have a judge decide all issues of fact and law that arise in any litigation. The procedure that Part 72 rule 13 establishes is not that of an appeal from a referee to a judge. The concept of "a re-hearing" which is itself ambiguous, at best provides an imperfect analogy. 3. Part 72 rule 13 does not require a judge to reconsider and determine afresh all issues, whether of fact or law which a party desires to contest before the judge. It would be a radical departure from the history of the rules to treat them as giving a dissatisfied party an automatic right to a hearing de novo . What is involved in an application under Part 72 rule 13 is not an appeal, whether by way of a hearing de novo , or a more limited re-hearing. 4. In so far as the subject matter of dissatisfaction with a referee's report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine the matter afresh. 5. If the referee's report reveals some error of principle, some absence or excess of jurisdiction, or some patent misapprehension of the evidence, that would ordinarily be a reason for rejecting it. So also would perversity or manifest unreasonableness. 6. In the case of findings of fact by the referee, where there is evidence to support such findings and the court is satisfied that those issues have been carefully considered by the referee it will not normally engage in a re-examination of the referee's findings. 20. The matter was dealt with as follows by Giles J (as he then was) in Leighton Contractors Pty Ltd v C E Heath Underwriting Services (1995) 8 ANZ Insurance Cases 61-123: "The principles which should guide me in considering the report have been discussed in a number of cases culminating in the decision of the Court of Appeal in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549. A comprehensive summation can be found in Peabody Resources Ltd v Allco Constructions Pty Ltd (O'Keefe CJ Comm D, 14 March 1994, unreported). More shortly, a party dissatisfied with a referee's report is not entitled to have the judge before whom it comes reconsider and determine afresh all issues whether of facts or law which it would wish to contest. Nor does the consideration of the report involve an appeal. Rather, the judge has a judicial discretion to exercise, a discretion which would normally be exercised by reconsidering a question of law or the application of legal standards to established facts, but otherwise may fall to be exercised having regard to matters such as the nature of the complaints, the type of litigation involved, and the length and complexity of the proceedings before the referee. Patent misapprehension of the evidence, or perversity or manifest unreasonableness in fact finding, would ordinarily preclude relevant adoption of or action upon the report, but a report may be adopted or acted upon even if upon reconsideration of the evidence the judge might have reached a conclusion different from that of the referee. In general, where there is shown to be evidence available to support a referee's findings of fact, or where the issue involves a choice between conflicting evidence, in the exercise of the discretion the judge will not reconsider disputed questions of fact. But it is always a question of judicial discretion, exercised in a manner consistent with the object and purpose of the Rules and the place which they play in the administration of justice according to law." 21. These observations (aspects of which were confirmed by the Court of Appeal in Jarvan Pty Ltd v John R Carr & Associates Pty Ltd , unreported, 1 December 1998 and Franks v Berem Constructions Pty Ltd , unreported, 2 December 1998) emphasise the limited role of the Court in a case such as the present. It would substantially defeat the purposes underlying Part 72 if the report of a referee was effectively overtaken by a detailed re-assessment of all matters when the Court came to consider the question of adoption. The counter-productive nature of any such detailed re-assessment is emphasised in a case such as this where the vast majority of the issues go to matters of a technical and practical kind, including discretionary matters, lying squarely within the province of a specialised and experienced practitioner of the kind to whom these proceedings were referred. The Court's main function is to review general cogency. And where, as here, the referee has taken a particular issue to a point short of definitive legal conclusion, the Court may, of course, complete the task". 34 In Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 563-564 Gleeson CJ said: "What is involved in an application under Pt 72, r 13 is not an appeal, whether by way of a hearing de novo or a more limited re-hearing. This is consistent with the right of the referee to conduct the reference as the referee thinks fit and unconstrained by the rules of evidence. Rather, the judge, in reviewing the report and deciding whether to adopt, vary or reject it, has a judicial discretion to exercise in a manner that is consistent both with the object and purpose of the rules and with the wider setting in which they take their place. … Subject to what has just been said, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised … The nature of the complaints made about the report, the type of litigation involved, and the length and complexity of the proceedings before the referee, may all be relevant consideration. The purpose of Pt 72 is to provide, where the interests of justice so dictate, a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as some kind of warm-up for the real contest. On the other hand, if the referee's report reveals some error of principle, some absence or excess of jurisdiction, or some patent misapprehension of the evidence, that would ordinarily be a reason for rejecting it …. So also would perversity or manifest unreasonableness in fact-finding". 35 In Peabody Resources Ltd V Allco Constructions Pty Ltd (14 March 1994) O'Keefe J said: "9. Where there is evidence available to support the findings and they involve a choice between conflicting evidence, the court will not reconsider questions of disputed fact particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise (Super at 553, 564). 10. If on examination the report presents as a thorough analytic and (where appropriate) scientific approach to the assessment of the subject matter of the inquiry, the court will have a disposition towards acceptance of the report. This disposition may be enhanced in circumstances where the parties as a consequence of the operation of Pt72 R8 have had an opportunity to place before the referee such evidence and technical reports as they may wish (Chloride at 67; Super at 564). 11. Where the court, having closely scrutinised the referee's report, has a comfortable feeling of satisfaction that the factual issues have been properly explored and considered, the court should adopt the referee's report on findings of fact. 12. Even if the court might well reach a conclusion different in some respects to that of the referee, it would not ordinarily be proper to allow territory to be re explored in order to qualify the adoption of a referee's report (Chloride at 68)".
("Chloride" is Chloride Batteries of Australia Pty Ltd v Glendale Chemical Products (1988) 17 NSWLR 60). 36 In Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615 Cole J said at p 620: "By "patent misapprehension of the evidence", I understand the Chief Justice (Super Pty Ltd (supra) page 563-564) to be referring to a lack of understanding of the evidence as distinct from the according to particular aspects of the evidence different weights. The reference to "perversity or manifest unreasonableness in fact finding" I understand to relate to the exceptional case where it can be clearly demonstrated that no reasonable tribunal of fact could have reached the decision achieved. It is true that may involve a consideration of evidence. However, it is dealing with a state of evidence regarding material facts different to and more unreliable than a state of evidence said to be "unsafe and unsatisfactory" to support such findings of fact". Abigroup's case 37 In its submissions Abigroup summarised its case as follows:
(a) the proposed work was the design development and construction of a new auxiliary spillway for Warragamba Dam, to deal with potential catastrophic flooding, which required the excavation of a quantity of old fill dumped adjacent to the original dam site at the approximate alignment of the proposed spillway;
(b) the concept design on which Abigroup priced showed rock levels in the area of the fill;
(c) the tender documents as a whole engendered a sense or conveyed the impression of completeness and accuracy;
(d) the approximate quantity of fill to be removed could be calculated by reference to the inferred or actual rock levels shown on the concept design drawings;
(e) in fact, the rock levels were much lower so the fill to be removed was much greater than estimated;
(f) SCA represented that it had no plans showing the embankment nor, crucially, any outlet pipe;
(h) in fact, SCA did have some plans or drawings, being the Additional Information referred to below and in particular a cross section which showed the level of an outlet pipe;
(i) if the drawings or plans referred to above had been made available they would have revealed that the concept design rock levels were wrong;
(j) because the representation was made as a positive, but wrong, assertion, and because it was relied on, Abigroup concluded that there was no further information available and estimated on the basis of the concept design;
(k) thus there was a combination of: (i) representation as to the inferred or actual rock levels in the concept design, (which was wrong); (ii) representation that there was no extrinsic information to test that (also wrong); and (iii) an apparently complete and accurate body of information;
(l) that resulted in Abigroup not only pricing on an erroneous basis but also being induced into entering into a contract for that price;
(m) damages flowing from that misrepresentation are to be assessed on an actual loss basis;
(n) Abigroup experienced consequential delay once the Folly Creek problem became known which also had cost consequences;
(o) in the circumstances, SCA is not entitled to rely on any disclaimers. Error 1: The embankment and outlet pipe 38 The first error complained of related to statements contained in the tender documentation that there were no plans showing the Folly Creek embankment or the/any outlet pipe. 39 As earlier noted (para 11) the statements relied upon by Abigroup as conveying the representation pleaded in para C16 of the Amended Summons were clause DS-59.2.14(c) of the Specification and Concept Design Report para 2.10.2.3. 40 The subject of DS-59.2.14 was water management and drainage. Under the heading "Surface Water" in para 2.14(c) it was stated: "The Contractor is to design and construct surface water drainage systems as follows:
… (ii) Folly Creek Drainage During the closing phases of the original Warragamba Dam construction Folly Creek was filled in just upstream of the right side of the auxiliary spillway alignment forming an embankment of some 20m height. No plans are available of this embankment or of the outlet pipe. Folly Creek was also filled in near the river and Access Shaft and runoff is charged into the river via a concrete box culvert. No plans are available of the extent of fill or the nature of the revetment wall. Detailed design development will include the following main issues…". 41 The Concept Design Report at para 2.10 dealt with drainage. Clause 2.10.2 was concerned with Surface Water.
Clause 2.10.2.3 stated: "Folly Creek Drainage During the closing phases of the original Warragamba Dam construction Folly Creek was filled in just upstream of the now proposed auxiliary spillway forming an embankment of some 20m height. No plans are available of this embankment or of any outlet pipe but allegedly local runoff from the surrounding areas is piped away from this detention basis (see AWT memorandum dated 9th June 1998 attached at Appendix B). The catchment area is about 40 hectares. Folly Creek was also filled in near the river and Access Shaft and runoff is charged into the river via a concrete box culvert. No plans are available of the extent of fill or the nature of the revetment wall." 42 The representations conveyed by these statements were pleaded in para 21A of the Amended Summons as follows: "(vi) SWC had no plans other than those in the Invitation to Tender; (vii) there were no plans of the embankment or the outlet pipe referred to in paragraph C16". 43 The embankment referred to in the statements and the pleaded representation was an embankment of some 20m height formed during the closing phases of the original Warragamba Dam construction when Folly Creek was filled in just upstream of the auxiliary spillway alignment. This was the position as it existed during the closing phases of the original Warragamba Dam construction, which occurred in 1960. 44 Abigroup submitted before the Referee and the court that the statements represented firstly, that no plan existed showing the embankment, and secondly, that no plan existed showing the outlet pipe. 45 The critical item of the additional information in this regard was the plan referred to as the "cross-section" being the plan entitled "Folly Creek Disposal Area Fill Over 30" Pipe" (para 15). On Abigroup's case, this was a plan of the embankment, partially constructed, and depicted the outlet pipe. 46 SCA admitted that the cross-section, in part, depicted a cross-section within Folly Creek including a 30" pipe upstream of a horseshoe bend sump and the level of fill as at 25 November 1951, and an interpreted original surface level (para 17, R 45). 47 Abigroup contended that there was ample evidence before the Referee to have enabled him to find that this plan was one of the partially constructed embankment, and that the pipe depicted thereon was the same pipe that remained after the Folly Creek area was filled, that is, the outlet pipe or any outlet pipe, and he should have done so. Thus, it was claimed that the Referee erred in finding that the representation that SCA did not have in its possession any plans depicting the Folly Creek embankment and/or the outlet pipe was not false or misleading. 48 This submission is put against some factual findings of the Referee. He found that there was no evidence that any plans brought into existence in about 1960 showed the embankment and/or the associated outlet pipe identified in the representation and, in particular, that those matters were not depicted in the plans included in the additional information (R 435). His conclusion was given emphasis when he said (R 463): "As I have said, there was an express representation as to the absence of certain plans, but there was not a skerrick of evidence that any such plans existed". 49 Further, he accepted the submission on behalf of SCA that there was no evidence to support a finding that a statement that no plans were available of the fill embankment in Upper Folly Creek was inaccurate. He accepted the further submission that each of the plans described as the additional information was created before the fill embankment was constructed, and they are not and do not purport to be plans of something which did not yet exist (R 462). 50 The Referee went on to state (R 464): "Mr Donaldson submitted that it had not been shown that the drainage pipe placed beneath the fill depicted in the 1951 cross-section was the outlet pipe referred to in the Concept Design Report and Detailed Specification, and that those observations also applied in connection with the references to fill placed near the river and the associated revetment wall. He concluded his submissions on the factual portion of this matter by stating that no suggestion had been made that the 1951 cross-section purported to depict the fill near the river and that it followed that the suggestion that the representation alleged was false or misleading "is baseless"."
He accepted these submissions (R 465). 51 As to the first issue, the finding that the cross-section pre-dated the construction of the fill embankment at the right hand section of the Folly Creek area and was not a plan of that embankment was open on the evidence and, as I understand the thrust of Abigroup's submission, is not strongly challenged. Indeed, it is difficult to see how it could be given his acceptance of the evidence of Mr Lehmann that it was not (R 257, 261) and that the extended location of the 1951 section shown thereon was at quite a different angle to the right hand side of the spillway. 52 Mr Gray's evidence, which he accepted, was to the same effect (R 300). He also had the evidence of Mr Havercroft that no engineer would sensibly draw the conclusion that a contour plan created some years prior to the construction of the fill embankment could be described as a plan of that embankment. Furthermore, acceptance of Mr Gray's evidence that the cross-section was not one of the fill embankment constructed in the early 1960s leads reasonably and consistently to the conclusion that the relevant outlet pipe was not depicted thereon also. 53 As to whether the associated outlet pipe was depicted on the cross-section, the Referee's conclusion is apparent from his acceptance of SCA's submissions quoted above (para 50). 54 Abigroup submitted, in effect, that the Referee failed to deal expressly with specified evidence of various witnesses, including Messrs Lehmann and Gray, thereby indicating a failure to sufficiently consider that evidence which, in turn, rendered his conclusion erroneous. It was put that he had misdirected himself in respect of the representation in that the only reasonable finding to be made on the evidence was that the cross-section in fact depicted an outlet pipe which established that it was false and misleading. 55 In my opinion, for the following reasons, these submissions are not substantiated. 56 In short, it is plain that the Referee was firmly of the view that there was no evidence that the plans, in particular the cross-section, showed the embankment and/or outlet pipe (R 435, 462, 463). Put another way, the Referee was simply saying that Abigroup had failed to prove the essential fact which it undertook to prove. 57 Furthermore, in light of his findings there is no basis for contending that the cross-section was in fact a plan of the embankment as partially constructed, which the Referee erroneously ignored. He makes it plain that he was not persuaded that the cross-section was a plan of the embankment, partially constructed or not. (In passing, it may be observed that the pleaded representation does not describe the embankment as partially constructed). 58 In my opinion it cannot be said that the Referee's conclusion is the result of any misapprehension of the evidence, patent or otherwise. It is to be kept in mind that the ultimate finding as to whether or not the plans, in particular the cross-section, depicted the embankment and outlet pipe was for him. He was obliged to make a judgment or qualitative assessment as to what was conveyed with regard, no doubt, to the weight he gave to various parts of the evidence before him including, for example, that the embankment did not exist at the time the cross-section was drawn, and to the various plans included in Exhibit A. In a matter such as this which was the subject of much technical evidence he is afforded a wide discretion in his decision-making process. 59 I have also taken into account the oral submissions in reply for Abigroup in which it was emphasised that it would be irrational not to find that the cross-section depicted the embankment and outlet pipe. They are recorded in the transcript at pp 185-193. As is apparent, the Court was taken to a body of evidence which included plans, diagrams and that of witnesses, regard to which, it was argued, would render inevitable the interpretation of the cross-section as a plan which depicted the embankment and outlet pipe. However, reference to this material does no more than direct attention to part only of the evidence before the Referee. As I have said, the weight to be given to that material, as well as to the other evidence relevant to the issue, (for example the plans and diagrams relied upon by SCA in its submissions recorded in the transcript at pp 163-166) was entirely a matter for him. In the circumstances it is simply wrong to argue that the evidence relied upon by Abigroup was sufficient to compel the outcome for which it contended. Acceptance of the possibility that this evidence may have supported such an interpretation is not sufficient for a finding by the Court that his rejection of it was perverse, or the result of patent misapprehension of it. This was not a case in which it could be said that the preponderance of the evidence relied upon by Abigroup was such as to demonstrate that the Referee's conclusion was manifestly unreasonable. 60 In any event, when the cross-section itself is examined it seems to me far from self-evident that, on its face, it depicts the relevant embankment and outlet pipe. If it is studied with regard to the passages in the Detailed Specification and Concept Design Report which contain the statements which convey the representation sued upon, it seems to me entirely reasonable to fail to be persuaded that the words and markings thereon describe an embankment of some 20m in height formed during the closing phases of the original Warragamba Dam construction when Folly Creek was filled in just upstream of the proposed auxiliary spillway or to conclude that they do not. In any event, even if I came to a different view (which I do not), that would not be a basis for rejecting the report. 61 Furthermore, having closely scrutinised the Report, and with the assistance of the oral and written submissions put to me, I am well and comfortably satisfied that, with respect to him, the Referee properly explored and considered the factual issues relevant to the challenge on this ground, and therefore his findings of fact should be adopted. (Peabody (supra) para 11). In deference to the Referee's careful examination of the evidence I add that I have found it to be wholly persuasive. 62 In summary, Abigroup failed to persuade the Referee that the cross-section in fact depicted the embankment and outlet pipe. It cannot be said that he ignored evidence which may have tended the other way, or that his rejection of Abigroup's case is indicative of perversity. The challenge should properly be seen as based on the proposition that his finding was against the weight of the evidence which, of course, included consideration of the cross-section on its face. In my opinion, the Referee's conclusion that the evidence did not prove the falsity of the representation alleged by Abigroup was properly open to him, and has not been shown to be erroneous. 63 There were further submissions under this ground of challenge as to what would have happened if the additional information, including the cross-section, had been discovered and available during the tender process. It was contended that the Referee wrongly found that had Abigroup been provided with the additional information (or any of it) then it would have submitted a non-conforming tender which on the evidence would not have been accepted by SCA or at least would have been weighted very low in the scale by SCA and thus Abigroup would not have won the contract. It was put that the evidence showed that the situation of a non-conforming tender would not have arisen because SCA would not have proceeded in such a way, and all tenderers, including Abigroup, would have proceeded on different information. Therefore, had the additional information been provided to Abigroup at the time of tender there would not have been any issue of a non-conforming tender.
The Referee's findings were relevant to damages issues and their context is that part of the report which is concerned with damages. With regard to the final conclusion to which I have come, it is unnecessary to deal with them. Error 3: Reliance on Concept Design Documents 64 Before dealing with the submissions under this head it is appropriate to be reminded that Abigroup was found to have failed to establish a case of misleading and deceptive conduct in breach of either s 52 Trade Practices Act or s 42 Fair Trading Act (R 475). 65 This followed from the Referee's finding, inter alia, that Abigroup had not established that SCA had made any representations alleged in para 21A(i) to (vi) Amended Summons (para 11), or that any of them, in all the circumstances, was false or misleading (R 454, 461).
As to the representation alleged in para 21A(vii) he found that there was an express representation as to the absence of plans of the embankment or outlet pipe, but that it was not false or misleading (R 463-465). 66 Abigroup does not challenge the findings concerning the representations alleged in para 21A(i) to (v) as a ground for rejection of the Report. The representation pleaded in para 21A(vi) was that "SWC had no plans other than those in the Invitation to Tender". During oral submissions in chief on behalf of Abigroup, Mr Gee of Queen's Counsel, made reference to what he said was an error by the Referee in treating the allegation as one of a failure to provide information, and not as a misrepresentation that further information did not exist. However, as was pointed out by Mr Donaldson, Senior Counsel for SCA (T p 147) it was not submitted that this approach by the Referee was a ground for rejection of the Report, and in those circumstances it is unnecessary to say more about it. 67 It is the representation alleged in para 21A(vii) that there were no plans of the embankment or outlet pipe, and to the statements which conveyed it (being those in the Detailed Specification and the Concept Design Report set out in paras 40 and 41 above) which are central to the consideration of Abigroup's contention that the Referee wrongly rejected its case on reliance. Before him, of course, its case was that the false and misleading conduct of SCA was the making of that representation in reliance upon which, and induced thereby, it prepared and submitted its tender, and entered into the contract. 68 Of the relevant findings of the Referee the following should be noted: "405 …. In this case the defendant made it abundantly clear, and this was understood by the tenderers, that the tenderers were to not only take responsibility for the latent conditions, but that also the information provided may be incomplete, misleading or inaccurate and that the tenderers had to rely on their investigations. Far from being confronted with a disclaimer clause, the tenderers, before entering into the tender process and the Contract, were put on clear notice of these matters. The plaintiff was not lured into a tender process and the contract by misleading and deceptive conduct. It proceeded with the knowledge to which I have referred, which had been conveyed to it by the defendant. Accordingly, it not only took the commercial risk in relation to latent conditions, a matter made clear to it, before undertaking any obligations, but it did so in circumstances where prior to the issue of the tender documents there was no misleading or deceptive conduct alleged and where, on this issue, it was made abundantly clear that the information may be incomplete, inaccurate or misleading and that the tenderers would have to rely on their own investigations. The full implications of the commercial risk were laid bare and I have no doubt that the defendant and its advisors recognised the risk. The fact that they made insufficient investigations was entirely their fault. The alternative, of course, was not to become involved at all because of the risk. The plaintiff decided not to take this course. 406 In my opinion, in these circumstances, a finding that the provisions amounted to misleading and deceptive conduct would be nonsensical. Rather the defendant was advising the tenderers, before any loss was suffered, of the risk they were taking and requiring them to assess it, and, having done so, to tender if they wished on those terms. This was underscored at the pre-tender forum. … 419 A central submission by Mr Donaldson was that the plaintiff embarked upon the arrangements in the full knowledge that:- (a) the defendant was not prepared to take any responsibility for latent conditions; (b) the defendant was not warranting, guaranteeing or promising in any way that the information furnished to the plaintiff or the conclusions to be drawn from it were complete, accurate or correct; and (c) the defendant stated that the information may be misleading. In these circumstances, he submitted correctly in my view, that the plaintiff could not assert that there had been misleading or deceptive conduct when the very commercial risk it had undertaken, with the knowledge of the matters to which I have just referred, came to fruition." 69 In rejecting Abigroup's case on reliance upon the representation alleged in para 21A(vi) that SWC had no plans other than those in the Invitation to Tender, the Referee made findings which obviously relate also to the case on the representation in sub-para (vii). For example at R 429 he said: "Once again, it seems to me, that this allegation runs into the difficulty created by the terms of the Invitation to Tender, which made it clear, inter alia, that the information furnished was not necessarily complete and that the obligation was on the tenderer to make its own investigations. Further, there was no evidence that, as a matter of practice, all plans would be made available, nor that the plaintiff made any request for any further plans. The cross-checking exercise carried out by Mr Lehmann was not suggested to be a usual exercise carried out in the industry".
This should be read with the findings stated in R 455-461. 70 In short, he accepted SCA's submission that it was fatal to Abigroup's case on reliance that no one involved in Abigroup's tender had suggested, whether by reason of the surrounding circumstances, or the statements made in the Concept Design Report, or otherwise, that it was assumed "that all plans" had been provided with the tender documents, and further, no one involved in the tender suggested that it was assumed that no pre-construction contour plans, or cross-sections showing the fill associated with a road construction adjacent to Folly Creek in 1951 existed, by reason of any such circumstances or at all (R 459). 71 Indeed, I understand that it was the lack of evidence which might reasonably have been expected to have been adduced in Abigroup's case which prompted the Referee to state "This analysis of the Plaintiff's case points up, in my view, that the present complaints are the product of hindsight" (R 458, cf 400). 72 Directly relevant to the issue of reliance upon the representation in sub-para (vii) are the matters stated in R 466: "In the alternative, Mr Donaldson submitted that no evidence had been led to suggest that the statements in the Concept Design Report and Detailed Specification were subject to complaint or treated as material by anyone involved in any relevant aspect of the tender. Mr Jordan did not suggest that he was misled and there was no evidence from anyone associated with the plaintiff's tender to the effect that the statements were interpreted as indicating that no pre-construction contour plans showing natural surface levels in Folly Creek existed or may be available for consideration; or that the statements were read and interpreted as indicating that cross-sections of fill embankments showing surface levels and assumed natural surface levels as they existed in 1951 just downstream from the fill embankment did not exist or were not available." 73 At R 474 the Referee stated, inter alia, that Abigroup had failed to satisfy him that it was induced by any of the alleged representations to prepare and submit its tender for contract. Further, he stated that he was not satisfied that, in reliance upon those representations and that in para 21B, Abigroup was induced thereby to enter into the contract. 74 Abigroup's challenge is expressed to be directed at the manner in which the Referee dealt with the issue of reliance based on the reasonableness of the Concept Design Documents on which it was asked to tender. It is put that he found that Abigroup did not rely upon these documents, a finding which is inconsistent with its incontrovertible evidence that it did so. 75 It was put that he misunderstood Abigroup's case that it was reasonable to rely upon these documents because of the impression conveyed by them that SCA and its agents had conducted thorough geotechnical investigations on the site, and it was reasonable for Abigroup to believe and assume that SCA had looked at all relevant material in order to prepare these documents. 76 It was submitted that the evidence demonstrated that the tender material conveyed to Abigroup the impression that the concept design itself, and the geological conditions on which it was based and represented in the concept drawings, were the product of all geological knowledge in SCA's possession concerning the site. It was put that, in all of the circumstances, Abigroup was not in a position itself, and did not have the opportunity, to obtain further geotechnical information or to query the concept design provided. It had no option but to rely on the accuracy of the tender information and to take the concept design and concept documents as accurate. 77 It was also put that Abigroup conducted its case on the basis that the reasonableness of the Concept Design Documents militated against doubt in the minds of its servants and agents as to the accuracy of the information provided so that enquiry or expectation did not arise. It argued that its reliance on the accuracy and completeness of the geotechnical information must be assessed in the context of Abigroup having been informed that it would not be possible to verify the accuracy of that material or to supplement it prior to contract. It was put that this was the only finding available to the Referee on the evidence before him. 78 Finally, it was submitted that the only findings reasonably available to the Referee in relation to the Concept Design Documents are that Abigroup in fact relied on them, such reliance was reasonable in the circumstances, and that the information contained in the documents was misleading or deceptive. His failure to so find was said to be against the weight of the evidence. 79 As the extracts from the Report (R 405, 406, 419, 466) quoted in paras 68 and 72 above show, Abigroup lacked the evidence to establish to the satisfaction of the Referee its reliance upon the relevant representation. Simply, on the evidence before him it is clear that he was not persuaded that there was the necessary link between the representation and the preparation and submission of the tender and/or entry into the contract. 80 Recovery under s 52 Trade Practices Act or s 42 Fair Trading Act is founded by the Plaintiff's/Applicant's actual reliance upon the misleading or deceptive conduct of the Defendant/Respondent. For the reasons which follow, in my opinion Abigroup's challenge on the issue of reliance fails to establish any basis for rejection of the Report. 81 Obviously, prior to his analysis of the competing submissions, the Referee extensively reported on the evidence of the witnesses (R 116-400), and his final conclusion should be taken to have been made in light of the weight he accorded to various aspects of it. 82 For example:
(a) Mr Havercroft did not suggest that any cross-check of the information furnished should be made by reference to contour or other plans, or that he assumed that Abigroup or DPWS had done so (R 185). As the risk of latent conditions was to be borne by Abigroup, had it thought previous plans were significant it would be expected enquiry would have been made as to whether any existed, and whether any check of them had been made (R 187). He established that Abigroup relied on SMEC to assess any uncertainty in the geotechnical investigations, and to require further investigations. His evidence showed that he took nothing more than a passing interest in the geotechnical requirements although he understood the risks involved (R 206, 210).
(b) Mr Coffey relied upon SMEC to do the design and quantities for Abigroup, and did no more than cost the material to be removed and replaced (R 220-221). It was not suggested that he turned his mind to the representation or gave evidence indicative of reliance upon it. The same may be said of the evidence of Mr Lehmann.
(c) The evidence of the SMEC employees, Mr Gray and Mr Jordan, did not suggest reliance or inducement as alleged. Had either of them, in fact, relied upon, or been induced, or misled by the representation evidence to that effect would be expected. 83 It was the Referee's expectation (reasonable, in my view) that if, in fact, Abigroup attached any significance to the representation that there were no plans of the embankment or outlet pipe in deciding whether or not to proceed with the tender or enter into the contract it would have adduced evidence which proved it. Its failure to prove this aspect of its case was the consequence of there being no evidence, inter alia, that anyone in Abigroup involved with the tender, whether by reason of the surrounding circumstances, or the statements in the Detailed Specification and Concept Design Report or otherwise:
(a) made the assumption that all plans had been provided with the tender documents, and/or made the assumptions that pre-construction contour plans, or cross-sections showing the fill associated with a road construction adjacent to Folly Creek in 1951 did not exist, or were not available (R 457, 459, 466);
(b) identified the significance, or potential significance of such plans or considered that the concept design investigations should be extended through the analysis of them (R 457);
(c) complained of, or treated as material, these statements (R 466). 84 It is clear that the rejection of this element of the case was foreshadowed in the significant statements at R 400, 401, for which there was much support on the evidence: "400 Those who attended the pre-tender meeting on 4 September 1998 were, generally speaking, reliant on their contemporaneous notes as to what was said and, in some cases, those notes were incomplete and/or ambiguous. However, I am satisfied that at that meeting the tenderers were made aware that they were required to undertake the risks for latent conditions and, in doing so, to carry out any further geological or geotechnical investigations, which they thought necessary to assess them. Although emphasis was placed on the need for further investigation on site, there was no request for contour plans to cross-check the interpretations made by DPWS. This, in my opinion, further supports the view that these were not at the time regarded as a necessary cross-check nor that the tenderers expected them to be provided for that purpose, notwithstanding that they were taking the risk and the Concept Design Documents made it clear that the information provided may be incomplete or inaccurate or misleading. In my opinion, the failure to seek any such plans shows that the tenderers were not concerned about them notwithstanding the difficulty in carrying out further investigations on site brought about by:- (a) the difficult terrain in which the work would have to be done over a short period; (b) the shortness of the time for doing the work and obtaining an interpretation of the investigations; and (c) the additional difficulties of a number of prospective tenderers trying to carry out work at the same time. In my opinion, those matters further support the view that the complaint about the failure to provide plans was the product of hindsight, rather than a matter stemming from any expectation at the time that this would occur. 401 The importance of the meeting, in all these circumstances, was the tenderers' appreciation of the risk they were undertaking in relation to latent conditions, and their failure to call for pre-construction contour plans or drawings to cross-check the DPWS work. In addition to the matters to which I have referred it is strongly indicative of the evidence I accept that a consideration of the DPWS investigations and interpretations was, and was regarded as being, adequate. Finally, I am satisfied that although various documents were provided to the plaintiff in August 1998, it would not be expected to commence work on the preparation of a tender until it was accepted as a tenderer later in September 1998. This allowed only a short period with little if any chance of on-site investigations. In these circumstances if a cross-check could have been made off-site by reference to plans, it is extraordinary that this was not done. The stated non-existence of the plans of the embankment and outlet pipe did not affect this exercise. As Mr Lehmann demonstrated he did not need them." 85 The warnings and qualifications contained in the Concept Design Documents are conveniently summarised thus (R 415(h)): "(h) … Concept Design Documents contained a number of qualifications, including the requirements that the tenderer was obliged to review the Concept Design and undertake further investigations as necessary, including undertaking additional geotechnical investigations; that the documents may contain incomplete, inaccurate or misleading information for which the defendant was not to be liable; that the defendant did not warrant the accuracy of the information nor any interpretation or representation made in the documents; that selected drawings only of the Existing Facility were provided; and that the tenderer was to make its own deductions and conclusions as to the nature of the material to be excavated, the difficulties of making and maintaining the required excavations and of doing other work affected by the geology and other conditions of the site and accepted full responsibility therefor. Further, there was a requirement for the contractor to undertake investigations to determine the appropriate stripping depth to rock and subsequent detailed design development and documentation based on and according to various requirements."
The detail of this information is to be found in para 21 above. 86 For my part, the lack of evidence of the kind referred to by the Referee is explicable once the findings are accepted that Abigroup proceeded with the tender and contract with responsibility for latent conditions, and with knowledge and understanding of these warnings and qualifications. In such circumstances, if it was ever the fact that those involved had attached any relevant significance to the representation, it is difficult to imagine why evidence to prove it was not led. When assessing the effect of the whole of the evidence on this issue the Referee was entitled to give great weight to the lack of evidence referred to, and obviously he did so. 87 Thus in circumstances where the risks to which the warnings and qualifications referred to were accepted it was reasonable to have expected clear evidence in proof of any operative or influential effect of the statements and representation. Reinforcement for such expectation lies also in the circumstances of the making of the statements, the contexts of which do not readily suggest that they were calculated to operate upon the minds of tenderers so as to induce them to proceed to tender and enter the contract. 88 It seems to me that Abigroup's submissions, taken as a whole, are directed to considerations in support of the proposition that it was reasonable in all the circumstances to rely upon the totality of the Concept Design Documents in proceeding with the tender and contract. However, the crucial issue for the Referee was one less wide and general, namely reliance upon the representation in sub-para (vii) conveyed by the particular statements in the Detailed Specification and Concept Design Report. 89 The finding that Abigroup failed to prove its reliance upon this representation was not unreasonable with regard to the evidence identified in the submissions, and there is no basis for a suggestion that he failed to take that evidence into account. 90 I am entirely satisfied that the finding that Abigroup failed to prove its reliance upon the representation was reasonable, open and proper in the circumstances. I am also so satisfied that this finding was not attributable to any lack of understanding of the evidence, perversity or manifest unreasonableness on the part of the Referee (Foxman Holdings Pty Ltd v NMBE Pty Ltd (supra) p 620). 91 In addition to the above, in my view it is appropriate in the exercise of the Court's discretion under Pt 72 r 13 that the orders sought by Abigroup on this issue be rejected. Consideration of the wide range of matters raised in its submissions on this issue necessarily requires the sort of review and reassessment which is inappropriate for the Court to undertake in a case such as this in which the critical decisions are ones of fact made after assessment of witnesses (Abigroup Contractors Pty Ltd v Peninsula Balmain Pty Ltd (supra) paras 20-21). Error 5: Passing on information "for what it is worth" 92 Under this head, Abigroup calls for rejection of the Report on the ground that the Referee's findings that SCA did not adopt the Concept Design Documents prepared by DPWS, and merely passed the information therein on for what it was worth, were contrary to the weight of the evidence, and perverse. (The Concept Design Documents comprise those referred to in paras 9A, 11 and 12 of the Amended Summons, and include a concept design report, concept design drawings, a detailed specification, the geological investigation, and a concept design). 93 It submitted that the evidence led only to one conclusion, that is that the representation made in the documents were made by SCA. It was put that the Referee should have found that SCA adopted the material prepared by DPWS on its behalf, and presented it as its own as part of the tender documents which it asked and expected tenderers to use for the purpose of tendering for the works. 94 Relevant to this issue is the analysis of the evidence as to the work undertaken by DPWS for SCA. That is to be found at R 91-163, some of which is referred to in paras 23-25 above. 95 Also relevant to this issue are the following extracts from the Report: "164 However, what the evidence does establish is that the Concept Design was prepared by officers of DPWS and their agents pursuant to the contract with the defendant. The defendant had nothing to do with its preparation and, in these circumstances, I am of the opinion that the proper conclusion is that in so far as the DPWS documents were passed on to the plaintiff, that was done by the defendant in circumstances where it had no input into the documents, nor can be shown to have taken any responsibility for them. Nor, in my opinion, is there any basis on which the defendant could believe that the work performed by DPWS was not done properly. Therefore, in so far as the defendant passed on the information, it was conveying information from an expert which both in itself and in the circumstances of the terms of the Invitation to Tender was done "for what it was worth". … 420 On the issue of "inadvertence", I am satisfied that the defendant only directed its mind to the sufficiency of the information for the purpose of deciding that it was sufficient to enable the tenderers to fulfil their tasks, but on the express basis that it would be transparently clear that the information may be inaccurate, incomplete, in error and/or misleading, such that the defendant would not be liable if any reliance was placed on it and that no reliance should be placed on it, but the tenderer should make its own enquiries and carry out its own investigations. Therefore, in so far as it refrained from providing information, I am satisfied that it did so inadvertently. 421 In his written submissions, Mr Corsaro submitted that the defendant adopted the information received by it from DPWS as accurate and caused it to be published to the plaintiff as part of the tender for the works. 422 He relied in this context upon the decision in Miba Pty Limited & Ors v Nescor Industries Group Pty Limited & Anor (1996) 141 ALR 525. In that case it was accepted that Yorke v Lucas is the leading case considering the circumstances in which the passing on of misleading or untrue information supplied by another can constitute misleading conduct. The well known passage from Yorke at p.666 was cited and its application by the Full Court of the Federal Court in John G. Glass Real Estate Pty Limited v Karawi Constructions Pty Limited (1993) ATPR (Digest) 41-249 was noted. His Honour quoted from portion of the judgment in that case, in which it was said:- "In the present case the appellant adopted the information in question and incorporated it as a central and prominent feature of their selling effort on behalf of the defendant. There was certainly no express disclaimer of the appellant's belief in the truth of the information in the brochure - indeed there was an express assertion of such belief . As part of its ordinary business the agent was providing information in a persuasive form with a view to achieving a sale of its principal's property and of course earning commission. It was this conduct which the learned trial judge, correctly in my opinion, held to be misleading and deceptive. Once the falsity of the figure was demonstrated, it seems to us that no other conclusion could follow." (My emphasis.) 423 In the present case it may be said that the defendant adopted the information provided to it by DPWS, although it seems to me that the meaning to be attributed to the word "adopted" in this context must be considered carefully. In my opinion, one can receive a piece of information and "adopt" it by showing that one has not only received and passed on the information from a person with the expertise to give it, but has also made it clear that the person passing on the information believes in its truth. That, so it seems to me, is a true adoption. In my opinion, the defendant did not adopt the information in that sense. That form of adoption is to be distinguished from the receipt of information from an expert, commissioned to provide it, and passing it on in the circumstances referred to in Yorke v Lucas . The defendant was non-committal. It passed on the information subject to all the qualifications, including the responsibilities accepted by the plaintiff, and, in the end, I consider that those qualifications and acceptances made it clear that far from the defendant taking responsibility for the information, it was stating not only that it was not, but it was also warning that it may be inaccurate, incomplete or misleading. Further, it was made clear that notwithstanding the furnishing of this information the obligation was on the plaintiff, which was taking the commercial risk in relation to latent conditions, to makes it own inquiries. There was no obligation on the plaintiff to tender and, if it took the view, for the various reasons submitted by Mr Corsaro and pleaded in paragraph 21A as the "circumstances", that it could not make an informed judgment on the matter, then it was at liberty to refrain from doing so. 424 In the result, I am of the opinion that the proper construction of the facts in this case is that the defendant was merely passing on the information from DPWS for what it was worth. … 444 It was in this context that Mr Donaldson relied upon the fact that the reader of the documents could not reasonably conclude that the defendant was expressing any view of its own as to the accuracy or reliability of the DPWS opinions and he referred to Yorke v Lucas ; Argy & Anor v Blunts & Ors (1990) ATPR 41-015 and The Saints Gallery Pty Limited v Plummer (1988) 80 ALR 525. 445 Mr Donaldson also relied upon Lake Koala Pty Limited v Walker [1991] 2 QdR 49 where, at p.58, Connolly J said:- "It was argued for the plaintiff that a vendor cannot, without incurring liability, furnish the reports of experts to prospective purchasers unless they are in fact free of all taint of error and incapable of being misleading in any respect. The representation which is made in the case of a mere furnishing of a report, such as that prepared by Peat Marwick, is that the document is what it purports to be namely the opinion of an expert, and that the vendor believes it to be honestly made and made in the exercise of professional competence or, which amounts to the same thing, that he had no reason to believe to the contrary." 446 As I have said, I consider that this is the appropriate factual finding to be made in the present case. It was clear that the report had been prepared by DPWS and purported to be its opinion. It was never suggested to any representative of the defendant that he did not believe that it was made honestly in the exercise of DPWS's professional competence, nor that he had any reason to believe to the contrary." 96 Abigroup submitted that the finding was contrary to the weight of the evidence found in the Concept Design Documents said to show that SCA presented them to tenderers as its own. That material included the cover pages of volume 1, Detailed Specification, on which appeared the logo of Sydney Water Corporation, and volume 9, Concept Design Report on which appeared the words "Sydney Water". Also referred to was the statement in para DS-3.3 of volume 2, Detailed Specification, that "The Principal has prepared a concept design for the works which is documented in the following documents:".
As to this aspect of the submission it may be said at once that when the documents are actually read it is apparent on their face that they are the work of DPWS and convey no representation otherwise. In my view, it would be quite unrealistic for a reader to conclude from their contents other than that they had been prepared by DPWS pursuant to a brief or retainer from SCA, and were in fact provided to tenderers as the work of DPWS. (See, for example, volume 1, para DS-3.3 in which the concept design is described as documented in the Concept Design Report which is identified as the DPWS Report, and the Concept Design Drawings which are stated to be prepared by DPWS, and pp 1-118 of volume 9, at the foot of each of which appears the words "NSW Department of Public Works and Services, Dams & Civil Section, report No. DC98058"). 97 Reference was also made to a memorandum of 3 July 1998 in which DPWS sought instructions from SCA in respect of a proposal for investigation, and to cl 4.1 of the contract between SCA and DPWS whereby SCA agreed to make available to DPWS information relating to its requirements in connection with the contract. It was also put that evidence of Mr Neville and Mr Knight of their understanding of the intended use by SCA of the documents were somehow relevant to proof of adoption. In my opinion, the Referee could not be criticised had it been shown that he attached nil or minimal weight to these matters. 98 Abigroup's submissions suggest to me that it has ignored the fact that the Referee had the evidence of those witnesses from SCA and DPWS who told of the engagement of DPWS, and of the preparation, purpose, and use of the Concept Design Documents. His detailed analysis of that evidence is in the Report (R 91-163), following which he stated his findings at R 164, quoted in para 93 above. I am satisfied that these findings were clearly open on the evidence. 99 At R 446, also quoted in para 93 above, he found that it was never suggested to any representative of SCA that he did not believe that this material was made honestly in the exercise of DPWS's professional competence, nor that he had any reason to believe to the contrary. That observation, the validity of which is unchallenged, is fatal to Abigroup's complaint on this issue. 100 As to the qualifications and warnings contained in the documents, the summary of which is quoted in para 85 above, in my view they operate as well for SCA as for DPWS. The mere passing on by SCA of the documents to the tenderers did not take place in circumstances which militated in any way against their effect. Indeed, the evidence of Mr van Breda as to the statement he made at the pre-tender information workshop on 4 September 1998 as to SCA's position and the investigations (R 380 quoted para 31 above), which was accepted by the Referee, is significant. The Referee found it to be totally consistent with the warnings in the Concept Design Documents and the stated requirements for the tenderers to carry out their own investigations (R 380). In my view this evidence and the finding puts the issue of disclaimer beyond doubt. 101 I have had regard to the analysis of the relevant evidence by the Referee contained in the Report, and to the evidence to which Abigroup referred in its submissions. In my opinion his finding that in the circumstances the conduct of SCA in passing on the DPWS information to tenderers was not such as to attract the application of s 52 Trade Practices Act or s 42 Fair Trading Act is well founded and correct. 102 With respect to him, in my opinion the Referee reached his conclusion in accordance with the principles discussed in Yorke v Lucas (1985) 158 CLR 661 at 666; The Saints Gallery Pty Ltd v Plummer (1988) 80 ALR 525 and Lake Koala Pty Ltd v Walker [1991] 2 QdR 49. The circumstances of this case are far removed from those in Miba Pty Ltd & Ors v Nescor Industries Group Pty Ltd & Anor (1996) 141 ALR 525. 103 It is apparent from these reasons that Abigroup's submissions should be rejected as they establish no ground for rejection of the Report under this head. Conclusion 104 I am satisfied that no error was made by the Referee in holding that:
(i) Abigroup had not proved that the representation in para 21A(vii) Amended Summons was false and misleading; and
(ii) Abigroup had not proved that in reliance upon the representation, and induced thereby, it prepared and submitted the tender, and entered into the contract. 105 I am also satisfied that no error was made by the Referee in holding that by providing the Concept Design Documents to Abigroup and other tenderers, SCA had not engaged in conduct that was misleading or deceptive in breach of s 52 Trade Practices Act or s 42 Fair Trading Act. 106 It follows that I am satisfied that no basis for rejection of the Report has been established as a consequence of the Referee's conclusion (R 475) that, in all the circumstances, he was not satisfied that Abigroup had established a case of misleading or deceptive conduct in breach of either s 52 Trade Practices Act or s 42 Fair Trading Act. 107 It is apparent from these reasons that it has not been demonstrated that the Report on the particular issues which I have considered reveals some error of principle, some patent misapprehension of the evidence, or perversity or manifest unreasonableness in fact finding (Super Pty Ltd (supra) p 564). On those grounds the proper exercise of the Court's discretion would require adoption of the Report. 108 I therefore hold that the Referee's opinion (R 584) that there should be judgment for SCA is fully justified and, in the circumstances, the Report should be adopted. 109 I should also add that in this case there are other sound grounds which justify the exercise of discretion to adopt the Report. The Report plainly presents as a thorough and analytic approach to the subject matter of the reference, and the parties had the opportunity to place before the Referee such evidence and technical material as they wished. Having regard to the scope of the reference as outlined in paras 6 and 7 above, any failure to refer in his reasons to some aspect of the evidence should not be taken as a failure by the Referee to have properly considered it. These criteria for acceptance are amply satisfied in this case, as is manifest from the Report itself (Peabody Resources Ltd (supra) paras 9-12). 110 Abigroup challenged the Report on a number of grounds in addition to those that I have dealt with. Those grounds are referred to in its written submissions as Errors 2, 4, 6, 7, 8, 9 and 10. As I have found that the challenges to the Report concerning issues of liability under s 52 Trade Practices Act or s 42 Fair Trading Act have not been successful, it is unnecessary to decide the questions raised on these additional grounds. However, I have given limited consideration to the oral and written submissions concerning them. For what it is worth, my preliminary view is that the Referee's reported reasons in respect of his findings as to these issues are generally cogent and persuasive. It seems to me that if these proceedings are taken further so as to require determination of those additional grounds a real question will arise as to whether what is sought by Abigroup involves a fresh consideration and determination of those issues which it seeks to contest. Inevitably, it will be necessary to have regard to the observations in Jarvan Pty Ltd (in liq) formerly John R. Carr & Associates Pty Ltd v Seery (NSWCA , 1 December 1998, Unreported) and Franks v Berem Constructions Pty Ltd (NSWCA, 2 December 1998, Unreported). Result 111 Abigroup has failed to establish its claim that the Report should be rejected and, accordingly, its Notice of Motion should be dismissed. SCA has satisfied the Court that the Report should be adopted and, accordingly, it is entitled to the orders sought in its Notice of Motion. 112 It is appropriate that I direct SCA to bring in short minutes of orders. The parties may also address me in relation to costs. Arrangements should be made with my Associate by 12 August 2003 for the re-listing of this matter. **********
Last Modified: 08/15/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Abigroup Contractors Pty Ltd
Sydney Catchment Authority
(1988) 17 NSWLR 60
(1994) 38 NSWLR 615
(1996) 141 ALR 525
(1992) 29 NSWLR 549
(1988) 80 ALR 525
(1985) 158 CLR 661