ADH Plumbing Pty Ltd v Glenashka Pty Ltd as Trustee of the Colin Henry Wilson Trading Trust trading as Wilsons Betamix Goonumbla Quarry & Wilsons Betamix Concrete and Another

ADH Plumbing Pty Ltd v Glenashka Pty Ltd as Trustee of the Colin Henry Wilson Trading Trust trading as Wilsons Betamix Goonumbla Quarry & Wilsons Betamix Concrete and Another - [2020] NSWDC 593 - NSWDC 2020 case summary — Zoe

[4]

Judgment

These proceedings relate to the construction of roads and parking areas by the plaintiff at the Parkes District Hospital site ("the Site") at Parkes in western New South Wales in 2014-2015. The head contractor for the construction at the Site was Richard Crookes Constructions Pty Ltd ("RCC"). The plaintiff, which was a company which provided earthworks and road construction services, in 2014 tendered for and was awarded a contract by RCC to carry out road construction civil works at the Site commencing in about August 2014. The contract between RCC and the plaintiff required the plaintiff to provide and use road base material in the construction of roads at the Site which complied with a standard known as DGB 20 for part of the road base. The defendant, K & H Geotechnical Services Pty Ltd ("KH"), previously the second defendant, was at all material times a company providing expert geotechnical and soil testing services. It was an approved testing authority known as a GITA (Geotechnical Inspection and Testing Authority). KH provided geotechnical services to the plaintiff during the performance by the plaintiff of its contract with RCC.
The previous first defendant in the proceedings was Glenashka Pty Ltd as Trustee of the Colin Henry Wilson Trading Trust trading as Wilsons Betamix Goonumbla Quarry and Wilsons Betamix Concrete ("Glenashka"). Glenashka provided road base material to the plaintiff for road works construction at the Site. Although proceedings between the plaintiff and Glenashka were resolved prior to the final hearing, what material was provided by Glenashka to the plaintiff and in what circumstances, remained relevant to the proceedings between the plaintiff and KH.
At issue between the parties in the proceedings was the precise contract for professional services entered into between the plaintiff and the defendant KH and, in particular, the terms of that contract and whether the defendant agreed to provide Level 1 inspection and testing services or only ad hoc geotechnical inspection and testing services. The plaintiff asserts that the contract was to provide Level 1 inspection and testing services with particular terms. The defendant KH, in substance, asserts that the contract entered into was only to provide ad hoc geotechnical inspection and testing services, as and when requested by the plaintiff.
A further issue in the proceedings is whether the defendant breached a duty of care which it owed to the plaintiff in relation to the provision of geotechnical inspection and testing services including in relation to the base material used by the plaintiff in road making. It was asserted by the plaintiff that certain testing undertaken by the defendant was negligently performed.
The defendant submits that if it is liable, the company which provided the road base material used by the plaintiff, Glenashka, breached its duty of care to the plaintiff and is a concurrent wrongdoer. Contributory negligence and a failure to mitigate are also alleged by the defendant against the plaintiff.

[5]

The pleadings

Proceedings were commenced by the plaintiff by a Statement of Claim filed on 15 July 2016. The defendants to that Statement of Claim are no longer parties to the proceedings.
The version of the pleading relied upon by the plaintiff at the final hearing was a Further Amended Statement of Claim filed on 18 December 2019. The Further Amended Statement of Claim, although it has formally deleted the previous first defendant, Glenashka, has not removed the pleadings against that defendant. This is a clear defect in the Further Amended Statement of Claim. Despite this, the case which is made by the plaintiff against KH is reasonably clear from the pleading.
The Further Amended Statement of Claim pleads, in summary, as follows: 1. In 2014, the plaintiff tendered for and was awarded a contract by RCC to carry out civil works at the Site commencing in around August 2014; 2. The contract required the plaintiff to provide and use road base material compliant with DGB 20 in the top 115mm base layer "under buildings and footpaths" in carrying out the works. DGB 20 is a recognised industry standard, used for base course and sub-base materials for roadway and pavement construction; 3. In about August 2014, the plaintiff and Glenashka entered into a contract for Glenashka to provide road base compliant with the DGB 20 industry standard to the plaintiff to be used by the plaintiff to fulfil the plaintiff's obligations under the contract between it and RCC; 4. From about August 2014 to July 2015, Glenashka provided road base product to the plaintiff for use in the works required under its contract with RCC; 5. The defendant was a company which provided inspection and testing services including Level 1 inspection and testing services as provided by AS3798 "Guidelines on Earthworks for Commercial and Residential Developments" as an approved testing authority; 6. To meet its requirements under the contract with RCC, the plaintiff was required to contract with an organisation to provide Level 1 inspection and testing services to the plaintiff throughout the contract; 7. The defendant was aware of the plaintiff's contractual obligation to require Level 1 inspection and testing services; 8. In or about August 2014, the plaintiff and the defendant entered into a contract for the defendant KH to provide to the plaintiff Level 1 inspection and testing services as an authorised testing authority and "to oversee all aspects of the Plaintiff's works in the construction phases" of the contract with RCC (paragraph 14); 9. There were express terms in the contract between the plaintiff and the defendant KH for the defendant to provide to the plaintiff Level 1 inspection and testing services in order to certify the works and materials provided by the plaintiff under its contract with RCC conformed to the requirements of that contract. The defendant owed the plaintiff a duty of care to exercise due care and skill in providing Level 1 inspection and testing services under its contract with the defendant; 10. The defendant provided services to the plaintiff; 11. The defendant neglected and failed to properly test the road base supplied by Glenashka to the plaintiff and used by the plaintiff with the result that the road base supplied by Glenashka was non-compliant with DGB 20; 12. The testing which the defendant carried out incorrectly found that the road base supplied by Glenashka as used in the construction by the plaintiff did not comply with the specifications for DGB 20; 13. The defendant breached the terms of its contract with the plaintiff by failing to inspect properly, by failing to provide material quality verification services and by failing to advise on material suitability; 14. The defendant breached the duty of care which it owed to the plaintiff to exercise due care and skill in the provision of services under its contract with the plaintiff; 15. Further in situ testing by the defendant was carried out negligently and in breach of duty of care. Reports from the defendant incorrectly found that the works carried out by the plaintiff failed to comply with the plans and specifications under the contract with RCC; 16. As a result of the breaches of contract and duty of care, the plaintiff suffered loss and damage including the cost to the plaintiff of rectification works and a loss of profits due to RCC terminating the services of the plaintiff to provide asphalt surfacing to the roadworks.
The defendant KH filed a Defence to Further Amended Statement of Claim on 21 January 2020. In summary, the Defence: 1. Admits that it carried on a business which included undertaking Level 1 inspection and testing; 2. Admits that it offered to provide to the plaintiff Level 1 testing; 3. Says that the services offered by the defendant to provide Level 1 testing were not accepted by the plaintiff and that the defendant was only retained by the plaintiff to provide inspection and testing services on an ad hoc basis; 4. Says that it provided numerous ad hoc testing services to the plaintiff in the course of the project at the Site; 5. Denies that any testing undertaken by it was negligently performed; 6. Denies that there was any breach of contract or duty of care by it; 7. Pleads, in the alternative, that if it is established that the defendant breached any duty of care owed to the plaintiff, the claim is an apportionable claim within the meaning of s 34 of the Civil Liability Act 2002 (NSW) and Glenashka is a concurrent wrongdoer which caused the loss or damage the subject of the claims made by the plaintiff against the defendant. It is pleaded that any liability of the defendant KH should be nil in the assessment of proportional liability; 8. Pleads contributory negligence. It is asserted that the plaintiff has been guilty of contributory negligence by failing to engage anyone including the defendant to conduct Level 1 supervision, by failing to ensure that the material was properly tested and adequately certified to a DGB 20 standard and by failing to obtain a second opinion in relation to the outcome of the defendant's testing.

[7]

Factual background

It is necessary to set out the factual background to the matter. There are a number of disputed factual matters which the court is required to determine. These will be considered further below. However, a number of factual matters can be set out in relation to which there is not significant disputation. To avoid any ambiguity, the following matters constitute my factual findings, unless there is an indication to the contrary.
As stated above, RCC was the head contractor at the Parkes District Hospital project Site. The plaintiff was a company which provided earthworks and roadworks services. The defendant KH was a company which provided expert geotechnical services particularly in relation to soil and material testing.
In the first half of 2014, the plaintiff ("ADH") became aware of a tender by RCC for civil works in connection with construction at the Site. Mr Hewes, the director of ADH, with some outside assistance, prepared a tender response in respect of certain works at the Site and lodged the tender response. This occurred in mid-2014.
Mr Hewes attended the office of KH and briefly discussed with Mr Colin Miller of KH the provision by KH of Level 1 geotechnical services ("Level 1 Services") to the plaintiff. The precise form of the conversation is considered further below. It is clear that Level 1 Services were required to be utilised by the plaintiff ADH under the proposed contract for the works to be carried out by ADH for RCC at the Site.
On 30 May 2014, there was sent from KH (Mr Kennedy) to ADH a quote for KH to provide Level 1 Services to the plaintiff at the Site. The letter is incorrectly dated 25 July 2013. The documentation in evidence shows it was emailed on 30 May 2014. The letter, sent under the name of Mr Mead of KH, has within it the following: "Your Reference: Telephone Call - Dated 27th May 2014".
The letter inter alia provides: "In order for this, or any other NATA Accredited Testing Authority to Certify a project as conforming to Level 1 Supervision under AS 3798 - 2007, it is essential that ALL aspects of the construction phase are overseen. This includes but is not limited to:- ▪ Approval of topsoil stripping, ▪ Identification, removal and measurement of unsuitable materials. ▪ Proof Rolling of prepared natural surfaces. ▪ Compaction testing and certification to levels nominated in the above Standard or Project Specification. ▪ Material Quality Verification. ▪ Documentation and Records of Daily Construction. ▪ Full Time Supervision by a suitably qualified Technician. ▪ Reporting and Certification In order for you to fully understand the requirements of the above, I have attached an electronic copy of AS3798 - 2007 for your perusal."
Mr Hewes in paragraph 35 of his first affidavit claims that he had a conversation with Mr Kennedy of KH in which he accepted the quote dated 30 May 2014 for the provision of Level 1 Services. That is disputed by Mr Kennedy and KH. I will consider that matter further below. Mr Kennedy, the director of KH, states that he approved the quote before it was issued by Mr Mead. I accept that evidence.
On 28 July 2014, Mr Mead of KH sent an email to Mr Hewes of ADH attaching the Australian Standard Guidelines on Earthworks for Commercial and Residential Developments (AS3798-2007) which is referred to in, and attached to, the quote document sent on 30 May 2014.
In July 2014, RCC advised ADH that it was the successful tenderer in relation to the roadworks for the Site.
On 30 July 2014, ADH commenced site clearing at the Site and the stripping of topsoil for the purposes of the necessary works. No one from ADH was initially in attendance during this work.
On around 12 August 2014, Mr Berry, a geotechnician employed at KH, attended the Site, as KH had received a request from the plaintiff for an inspection of the topsoil stripping. When Mr Berry arrived at the Site, he noticed that the plaintiff had already undertaken part of the topsoil stripping works throughout the entire Site. Mr Berry thought this was unusual, as it was his understanding (from Mr Kennedy) that KH was retained to undertake Level 1 Services and he believed he would need to supervise the entirety of the stripping works and that they should not have commenced until he was on Site. Mr Berry undertook an inspection of the works and began to set himself up for fulltime supervision. I accept his evidence on this issue although it was unclear where he commenced to set himself up. Mr Hewes came to Mr Berry and said words to the effect that he would give Mr Berry a call when the next task for checking by KH was ready. Mr Berry from that point onwards only attended the Site as and when requested by Mr Hewes directly or through the KH office.
Mr Mead claimed that on or about 13 August 2014, Mr Hewes attended the KH office and had a conversation with him in which Mr Hewes asked Mr Mead where he could get road base for the specification requiring DGB 20 road base material. Mr Mead claims he informed Mr Hewes that the only local sources of certified DGB 20 material of which he was aware, were the Westlime Quarry in Parkes and the Millers Metals Quarry in West Wyalong. Mr Hewes disputes this conversation.
At about and before this time, Mr Hewes had discussions with Mr Colin Wilson of Wilsons Quarry (owned by Glenashka) about the quarry supplying road base in connection with the construction required by ADH. Mr Wilson indicated to Mr Hewes that Wilsons Quarry could supply the road base to DGB 20 standard. The discussions between Mr Hewes and Mr Wilson are set out in detail in Mr Hewes' first affidavit. Mr Hewes informed Mr Wilson that he would need some independent certification that the road base to be supplied was DGB 20 compliant and Mr Wilson indicated that he would arrange for a test certificate.
At some time in August 2014, on or before 13 August 2014, Mr Wilson delivered to Mr Hewes a road base sample test report which Mr Hewes scanned into ADH's computer system on 13 August 2014.
The test certificate report supplied by Mr Wilson to Mr Hewes (which Mr Hewes thereafter supplied to RCC) has on it the logo of the Roads and Traffic Authority ("RTA") and is headed "Roads and Traffic Authority, New South Wales Parkes Regional Laboratory". It is addressed to "Wilsons Betamix Concrete" and the project description is "Miscellaneous Private Testing". The work details are described as "private testing on Wilson's: Check testing on DGB 20". The materials tested are indicated to have been received on 20 July 2012, more than two years before the certificate was apparently supplied by Mr Wilson to Mr Hewes. The certificate is signed by a Mr Simon Ellis on 8 August 2012. It is three pages in length and does not expressly and precisely indicate where the sample came from or expressly in summary what the result of the test was.
There were no records in evidence to indicate that KH was asked by Mr Hewes or anyone from the plaintiff to verify that any road base held by Mr Wilson was DGB 20 compliant before it was brought to the Site for use.
On 25 August 2014, an employee of the plaintiff (Ms Rebecca Martyn, the Office Manager) sent an email to Mr Berry of KH. This email stated as follows: "Col, Attached is geotech report for material to use onsite at Parkes Hospital. A copy of this has already been forwarded to Richard Crookes Constructions. Please email copies of the test results & findings from todays onsite visit to this email address. Do we have copies from previous tests? Also please ensure we are cc into all email correspondence from yourself to Richard Crookes. Thank you Bec".
Attached to the email were two documents, one of which was the three page RTA test certificate dated 8 August 2012 which was provided by Mr Wilson to Mr Hewes.
Mr Kennedy of KH received a copy of the email to Mr Berry from Mr Berry. Mr Kennedy read the email and understood that the plaintiff intended to rely on the RTA certificate to establish that the stock pile material from Wilsons Quarry was DGB 20 compliant. Mr Kennedy states in his affidavit that this concerned him because based on his industry experience, the only supplier of DGB 20 compliant road base locally was Westlime Quarry. This was one of the suppliers referred to by Mr Mead in his alleged conversation with Mr Hewes on about 13 August 2014.
The plaintiff asserts that the contract between the plaintiff and the defendant was for the defendant KH to provide Level 1 Services and that this should be objectively determined to be the contract by a combination of the quote, the conduct of the parties in the proceedings and the conversation in paragraph 35 of Mr Hewes' first affidavit. In particular, it is said that KH continued to provide services without indicating anything to the contrary.
There is a disputed conversation between Mr Kennedy and Mr Hewes in mid-August 2014 where Mr Hewes is said to have stated to Mr Kennedy that he did not want to pay for a technician to be on site fulltime as he did not need it and Mr Kennedy indicated that that would no longer be a Level 1 Service but it would be on a "do and charge basis" to which Mr Hewes agreed. Mr Kennedy states that KH then proceeded to undertake inspection and testing at the Site as and when specifically requested by Mr Hewes and that, accordingly, ADH did not accept the quote sent on 30 May 2014 and did not engage KH to provide Level 1 Services in respect of the project at the Site: see paragraphs 32-34 of Mr Kennedy's 26 July 2019 affidavit. This is generally consistent with paragraphs 14-16 of Mr Berry's 27 July 2019 affidavit.
Further, Mr Kennedy states that in late August 2014 he had a conversation with Mr Hewes in which he informed him that the RTA certificate forwarded to KH was not adequate to verify that the Wilsons Quarry stockpile was DGB 20 compliant because "it is outdated and not specific to the stockpile being used for the Hospital Project". Mr Kennedy asserts in his first affidavit that he informed Mr Hewes that the only supplier of certified road base material that he knew of in the Parkes region was Westlime Quarry and if Mr Hewes wanted the DGB 20 compliant product he should use the product from Westlime. Mr Kennedy claims that Mr Hewes stated that he "created the job on Wilson's material", that he forwarded the RTA certificate to RCC, they had accepted it and that was the material which the plaintiff would be using. Mr Kennedy states that from the conversation, Mr Hewes did not follow his recommendation and proceeded to use the material from Wilsons Quarry: paragraphs 49-50 of Mr Kennedy's 26 July 2019 affidavit.
The plaintiff and Mr Wilson, on behalf of Wilsons Quarry (Glenashka), entered into an agreement for the supply by Wilsons of 10,000 tonnes of road base said to be DGB 20 compliant to the plaintiff for use on the works at the Site. From 4 August 2014, Wilsons Quarry delivered loads of the road base to the Site.
Between August 2014 to July 2015, ADH carried out base and sub-base construction of roadworks at the Site using the road base material supplied by Wilsons Quarry. In the same period, KH carried out density and compaction sampling testing of the work undertaken by the plaintiff.
On 21 August 2014, Mr Hewes of ADH sent an email to RCC proposing a variation to the plans of the thickness of the sub-base by using 200mm of DBG 20 material instead of 265mm of DGS 40 material, a lesser quality material. In due course, in 2015 RCC agreed that the sub-base may be provided to 200mm using DBG 20 in the sub-base. The plaintiff intended to use DBG 20 compliant material supplied by Wilsons Quarry for both the base and sub-base. On 20 March 2015, RCC approved the amendment to provide for a sub-base layer of 200mm constructed with road base compliant DGB 20 material.
Mr Hewes replied to the RCC approval in an email: "[The plaintiff] will proceed with 200mm sub-base layer and comply with all other contract requirements as specified". A plan revision was issued by Mott MacDonald, engineers, on behalf of RCC.
In relation to various geotechnical testing work undertaken by KH for the plaintiff ADH, Mr Miller, who was responsible at KH for invoicing and related matters, issued various invoices to the plaintiff directed to "Hewes Earthmoving". A number of these invoices had as a description "Level One Testing Parkes Hospital Site". This was used on invoicing from the defendant to the plaintiff from 18 August 2014 until 16 January 2015. Thereafter, the invoices did not have this description on them. Mr Miller states in his 26 July 2019 affidavit as follows: 1. He was not involved in the detail of the quotation process. In accordance with the ordinary practice adopted at KH, once a quote had been issued, Mr Miller would have been provided with a copy to be placed on the file and which would be used for the purpose of generating invoices; 2. As office manager at KH, he was responsible for preparing and issuing invoices to clients on behalf of KH; 3. No invoice was ever issued by KH to the plaintiff for a Level 1 Testing Report; 4. He remembered other jobs where invoices started out as being charged on a Level 1 basis but were changed by the customer to a lower level. In those cases, he would simply delete the reference to "Level 1 Supervision" from the job description as he did in the later invoices to the plaintiff.
As stated, between August 2014 and June 2015, KH provided various inspection and testing services to the plaintiff. These are summarised in paragraph 23 of Mr Mead's 26 July 2019 affidavit. The reports prepared and issued to the plaintiff by KH in relation to those services are exhibited to Mr Mead's affidavit. The various inspections and services were provided by Mr Mead and Mr Berry. KH did not have a technician on the Site fulltime when work was completed as was required for Level 1 Services under the quote sent on 30 May 2014.
In relation to the inspections and testing undertaken by KH, the evidence establishes that prior to June 2015 all the testing of materials undertaken by KH did not involve any assessment of the materials' conformance with DGB 20 and any testing of the road base material undertaken by KH was in relation to the density to which the material had been compacted. All testing was undertaken in situ and not at the Wilson Quarry site: paragraph 33 of Mr Mead's affidavit. Mr Mead states that the plaintiff did not directly inform him of the source of the stockpile it chose to use and never requested that he test it for compliance with DGB 20. There is no evidence that any other officers such as Mr Berry or Mr Kennedy from KH were requested to undertake testing of the material for compliance with DGB 20 prior to June 2015.
On 18 June 2015, there was a conversation between Mr Hewes and Mr Mead in which Mr Hewes requested KH to undertake a material evaluation report to confirm DGB 20 product conformance. Mr Hewes directed Mr Mead to stockpiles in the bottom northern car park at the Site. Mr Mead indicated to Mr Hewes that in his opinion the product would not meet DGB 20 specification. Mr Hewes appeared to be surprised by that and wanted a speedy test. Mr Mead stated that this was the first time Mr Hewes had asked him, or as far as he was aware, anyone at KH, to test the quality of the road base material that the plaintiff had used in the project. Mr Mead states in his affidavit that he made the comment that the road base would not meet the DGB 20 specification on the basis of his visual appraisal of the Site observed during attendances and his prior experience: paragraph 37 of his affidavit.
On 18 June 2015, Mr Hewes sent an email to Mr Mead attaching documents which included the three page RTA test certificate dated 8 August 2012 supplied to Mr Hewes by Mr Wilson.
On 18 or 20 June 2015, Mr Bullock of KH took a sample of material from the stockpile at the Site. A report number ASM:W15/2787 was prepared and signed by Mr Mead. It was addressed to Mr Hewes of the plaintiff. The source of the material was said to be "Wilsons Quarry" and the description was said to be "Proposed Road base". The document stated that the material was sampled from "Stockpile" and the location was "Material Evaluation - Wilson's". The sample method was "Hand". Mr Mead says he informed Mr Hewes of the results of the test. Mr Hewes disputes that.
On 20 July 2015, RCC requested KH to conduct the testing of stockpiled material at the Site to check for compliance with DGB 20. As a result of this request, Mr Berry of KH attended the Site on 20 July 2015. A report numbered MAT:S15/1770 was produced by KH and signed by Mr Berry. The date sampled was 20 July 2015. The source was said to be "Wilsons Quarry" and the sampling method was "Hand". The comments part of the report provides as follows: "Material was sampled from onsite stockpile at Parkes Hospital site. Testing on Material was done prior to Repeated Compaction (T102)". Whether there was material present to be sampled as KH asserts is disputed by the plaintiff.
A written report from KH to RCC dated 28 July 2015 found that the stockpile sampled was non-conforming to DGB 20. See the penultimate paragraph of the 28 July 2015 letter signed by Mr Berry from KH to RCC.
On 30 July 2015, RCC requested KH to conduct in situ testing of the road base used by the plaintiff to check for compliance with the DGB 20 standard. Mr Bullock of KH, supervised by Mr Kennedy, undertook testing in situ of the road constructed by the plaintiff at seven locations. A report dated 7 August 2015 from KH to RCC, indicated that the samples in the material delivered and placed at the Site failed to meet the criteria set down for DGB 20 material and was not of a quality fit for use as the base course material on the project. As a result, on 7 August 2015, RCC sent a letter to ADH containing a contractor's direction requiring necessary rectification work to the currently installed material.
Following this direction, rectification work was undertaken by the plaintiff involving in situ stabilisation comprising the addition of a stabilising agent which was blended and mixed through the base course layer before being levelled and re-compacted to form a modified base course layer suitable for traffic use. The stabilisation involved the introduction of lime as a stabilising agent. An independent engineer, GDK Keighran Geotechnics, provided a report to RCC saying that the lime stabilisation was suitable. By report dated 10 September 2015, GDK found that there was adequate stabilisation by the work. Thus this report confirmed that the remediation work was completed in accordance with GDK's earlier report.
On 16 September 2015, RCC advised Mr Hewes that asphalting works were to be removed from the ADH contract with RCC. On 21 September 2015, RCC purported to terminate the works contract with the plaintiff. A deed of release was entered into between the plaintiff and RCC. As a result of the purported termination of the contract by RCC, the plaintiff did not carry out the asphalting works and did not receive any payment for that work. The agreed cost of the asphalt works was $355,861 including GST. Mr Hewes gave evidence that his understanding was that the profit after the cost of materials and the cost to carry out the works was $152,695.40. This evidence was not admitted as evidence of the plaintiff's damages. Mr Hewes states that prior to the termination of the contract, the plaintiff had commenced purchasing the materials necessary for it to fulfil its contractual obligations in relation to the asphalting works including the purchase of materials for the primer seal to the roadworks costing $22,000.

[8]

Contractual documents between the plaintiff and RCC

The contract between the plaintiff, ADH, and the head contractor, RCC, is of relevance to the obligations of the plaintiff in relation to its roadworks which it agreed to undertake. The Subcontract Deed between RCC and the plaintiff was in evidence. It is dated 30 July 2014. Under the Subcontract, the plaintiff was to execute the works under the contract in accordance with the Subcontract Deed and the appendices and attachments to it and the general conditions of subcontract. See Clause 2 of the general conditions of subcontract. The subcontract sum for the works to be performed by the plaintiff including GST was over $1.490 million.
Attachment 17 to the Subcontract Deed was a Schedule of drawings and specifications pursuant to which the works were to be conducted. One of those listed was a document entitled "4828-MM-CV-DWG-PM-5011 Pavement Details A". This plan was later revised by agreement.
Attachment D to the Subcontract Deed was the trade conditions of subcontract. The plaintiff was obliged to provide all labour, materials, plant and equipment required to complete the works in accordance with the subcontract documents as set out in the attached specification and documentation. This included excavation, earthworks and civil works including roads, kerbs and gutters.
In evidence were the pavement details drawings including that referred to above ending with "5011 Pavement Details A". These drawings showed a requirement for a sub-base course in road construction at the Site of 265mm of material classified as DGS 40 with a base course of 115mm of material classified as DGB 20. Both materials had to be compacted to certain percentage requirements. There were also requirements for sealant on top of the roadworks and then asphalt. The diagram showed that the sub-base had to be placed and compacted before the concrete kerb near the road was constructed.
As stated above, the pavement requirements were later varied in 2015 at the request of the plaintiff with the agreement of RCC. This is shown in another diagram in evidence with the number "4828-MM-CV-DWG-PM-5011 E". This diagram showed that the plaintiff had an option of paving the road either in the method in the previous diagram or paving the road with a sub-base course of 200mm of material classified DGB 20, with a base course of 115mm also with material classified as DGB 20. The evidence of Mr Hewes on behalf of the plaintiff is that all the sub-base course and base course material was paved with DGB 20 compliant material: see paragraphs 42 to 45 of Mr Hewes' first affidavit. As far as the plaintiff was concerned, all of its construction for the sub-base course and the base course of roadworks at the Site was completed with DGB 20 compliant material in accordance with the "Pavement Type I" on the drawing ending with "5011 E". The defendant submits that this strictly was a breach of the contract with RCC by the plaintiff which was obliged to construct the roads in accordance with either Pavement Type 1 or Pavement Type 1A in the drawing ending with "5011 E", but not Pavement Type 1 all with DGB 20 compliant material. However, it is conceded by the defendant that this did not impact its position. Ultimate approval was given to the plaintiff by Mott MacDonald engineers on behalf of RCC in an email dated 24 March 2015 which was in evidence.
One of the Subcontract Deed documents was a document entitled "Civil Specification" with the document number "4828-MM-SPC-PM-0010 Civil Specification". This is dated 19 March 2014. This document sets out the specifications for the works to be undertaken by the plaintiff.
Also in evidence was a plan approved for construction showing an overall view of the Site with the roadways to be constructed by the plaintiff. The defendant asserts that stockpiles of the material used by the plaintiff for the roadworks were placed in the car parks being constructed in the top right and bottom left of the construction map. The map is incorporated by reference into the Subcontract Deed between the plaintiff and RCC.
The Civil Specification which has been referred to was also incorporated as a relevant contractual document: Exhibit A Court Book pages 341 and 400.
The Civil Specification is a lengthy and detailed document. Section 3.1 related to "Earthworks", which were the initial works to be undertaken by the plaintiff in relation to the Site. This section refers to the standards to be used and the requirement for a geotechnical consultant including that the plaintiff was to "engage at [its] own cost a geotechnical consultant to monitor any excavation works" with a stated minimum role to be undertaken. Clauses 3.1.1-3.1.3 of the Civil Specification state the following in relation to earthworks: "3.1.1 SCOPE The works covered by this Section of the Specification comprise the formation by excavation or filling of the earthworks in all types of material for roadways, paths, building platforms, and all incidental works other than underground services. Requirements are also laid down for the final trimming and finishing of surfaces for various purposes. Ancillary works, such as temporary drainage and soil conservation measures are also specified for the protection of permanent works during construction and the prevention of damage to the site and adjacent areas as a result of soil erosion. 3.1.2 STANDARDS Work carried out under this Section of the Specification shall comply with the requirements of all current Australian and industry accepted Standards to the extent that they are relevant and that they are not exceeded by this Specification. This will include but is not necessarily limited to: ▪ AS 1289 Methods of Testing Soils for Engineering Purposes ▪ AS 1348 Road & Traffic Engineering-Glossary of Terms ▪ AS 3798 Guidelines on earthworks for commercial and residential development A Testing Authority shall be employed by the Contractor to carry out all testing. Compaction control testing shall be carried out to conform to Level 1 testing as defined in AS 3798. The Authority shall hold a current NATA (National Association of Testing Authorities) Registration for the relevant tests, and a copy of results shall be forwarded to the Superintendent without delay. 3.1.3 GEOTECHNICAL CONSULTANT The contractor shall engage at his own cost a geotechnical consultant to monitor any excavation works. The consultant's role is to include, as a minimum, the following: ▪ Inspect excavation batters, provide guidance to the Contractor and the Superintendent on any modifications deemed necessary to maintain stability. Submit a written report to the Superintendent within 24 hours of inspection either confirming the suitability of the proposed batters or the modifications deemed necessary to maintain stability. ▪ Oversee compaction testing by the Testing Authority stated in clause 3.1.2 above. Review and confirm in writing to the Superintendent the suitability of test results within 24 hours of receipt. ▪ Supervise backfilling, CBR testing and proof rolling of any excavations and confirm that these have been undertaken in accordance with the requirements of this Specification. Also confirm that all filling material utilised conforms to the Specification. Submit a written report to the Superintendent within 24 hours of each inspection confirming his findings. Details of the proposed consultant are to be submitted in the Contractor's Tender."
It should be noted that AS 3798 relating to "Guidelines on earthworks for commercial and residential development" is specifically referred to in clause 3.1.2 of the Civil Specification.
Section 3.3 of the Civil Specification (Exhibit A page 423) relates to the sub-base and base courses of roadworks. This is relevant to the use of DGB 20 compliant material by the plaintiff in its construction works at the Site.
Clauses 3.3.1-3.3.3.2 of the Civil Specification relating to the sub-base and base courses are as follows: "3.3.1 SCOPE The works covered by this Section of the Specification comprise the construction of fine crushed rock, gravel and suitable pavement layers 3.3.2 STANDARDS Work carried out under this Section of the Specification shall comply with the requirements of all Australian and industry accepted standards to the extent that they are relevant and that they are not exceeded by this Specification A Testing Authority shall be employed by the Contractor to carry out all testing The Authority shall hold a current NATA (National Association of Testing Authorities) Registration for the relevant tests, and a copy of results shall be forwarded to the Superintendent 3.3.3 BASE. SUB-BASE AND SELECT MATERIAL 3.3.3.1 GENERAL Pavement "Base course" is defined as the highest course of any pavement below the final surfacing layer or concrete pavement or footing. Base course shall be constructed of fine crushed rock equal to the performance and characteristics of quarry product DGB20 unless shown otherwise on the drawings. Pavement "Sub-Base" is defined as the second highest course of any pavement below the surfacing layer or as the highest course below the Base course layer. Sub-Base shall be constructed of fine crushed rock equal to the performance and characteristics of quarry product DGS20 or DGS40 unless shown otherwise on the drawings. 3.3.3.2 MATERIALS Prior to the delivery of any material to the site, the sources of all materials and certificates that the material satisfies the specified requirements shall be provided for approval HOLD POINT: Submit documents verifying the conformance of the material at least 2 weeks prior to the material being delivered to site. When requested, testing of pavement materials shall also be performed on samples taken at the site and in their final conditions after placement and compaction in the pavement. Properties specified and acceptance for inclusion in the works remains subject to the materials in their final condition in the pavement. Acceptance for inclusion in the works will be conditional compliance with the specified performance and geotechnical characteristics. i) Fine Crushed Rock Base Material Fine crushed rock shall conform to the requirements of Class DGB20 material and shall be hard, durable stone free of clay lumps, organic matter and objectionable quantities of deleterious substances. The material may be crusher run or screened and recombined. All the material requirements apply both prior to and after placement in the pavement. ii) Sub-Base Materials Sub-base materials shall be crushed rock sub-base or suitable natural gravels and conform to the requirements of Class DGS40 or DGS20 materials. Stone shall be hard, durable and the materials shall be free of clay lumps, organic matter and objectionable quantities of deleterious substances. All material requirements will apply both prior to and after placement in the pavement."
Accordingly: 1. Work carried out under Section 3.3 of the Civil Specification was required to comply with the requirements of all Australian and industry accepted standards to the extent that they are relevant and they are not exceeded by the Specification; 2. A testing authority was obliged to be employed by the plaintiff to carry out all testing. The testing authority was required to hold proper registration for relevant tests and a copy of the results were to be forwarded to the Superintendent in charge of the Site; 3. Base course was obliged to be constructed of fine crushed rock equal to the performance and characteristics of quarry product DGB 20; 4. Prior to the delivery of any material to the Site, the sources of all materials and certificates that the material satisfies the specified requirements shall be provided for approval. These were to be provided at least two weeks prior to the material being delivered to site; 5. When requested, testing of pavement material was also to be performed on samples taken at the Site and in their final conditions after placement and compaction in the pavement; 6. Acceptance for inclusion in the works will be conditional compliance with the specified performance and geotechnical characteristics.
These contractual provisions are important as testing was to occur prior to the delivery of any material to the Site. Further, there does not appear to be any requirement for testing on the base or sub-base unless requested under clause 3.3.3.2. These requirements are of course subject to the agreed variation in March 2015 providing the plaintiff with two options as to the material to be used in the sub-base and base course layers.
Clause 3.9.1 related to site inspections during construction.
Clause 3.9.1.2 related to inspections of underground services including "Proposed material samples and test certificates submitted and approved" (Exhibit A page 486). These appear to be the certificates submitted before the material arrives at the Site. This is one of the items to be checked off by the head contractor.
The clauses in the Civil Specification do not appear to require the testing authority to confirm that the materials delivered comply with the DGB 20 specification. As stated, there is also no reference to testing of the sub-base and base layers in situ unless that is requested pursuant to clause 3.3.3.2 of the Civil Specification.

[9]

Relevant Australian Standards

Clause 3.1.2 of the Civil Specification refers to "AS3798 - Guidelines on earthworks for commercial and residential development". Work carried out for earthworks by the plaintiff at the Site was to comply with the requirements including AS3798. AS3798-2007, which is the Standard applicable at the relevant time, was in evidence: Exhibit 4 Tab 5 page 93. Section 8 of AS3798-2007 deals with inspection and testing. Sections 8.1-8.3 relate to the levels of inspecting and testing and provide as follows: "8.1 GENERAL To assess whether the quality of materials and workmanship provided on a project are consistent with the design requirements, the earthworks for a project should be inspected and tested at regular and appropriate intervals, having regard to the nature of the work, its required function and the specification. The specification should detail the level of inspection and testing required as detailed in Clauses 8.2 and 8.3. Adequate control of earthworks will require appropriate inspection and should not rely on test results alone. These inspection measures may include visual assessment of fill or foundation materials, test rolling, surveillance of compaction procedures and compaction trials. Relative compaction testing may be supplemented by other testing. 8.2 LEVEL 1 INSPECTION AND TESTING The primary objective of Level 1 Inspection and Testing is for the geotechnical inspection and testing authority (GITA) to be able to express an opinion on the compliance of the work. The GITA is responsible for ensuring that the inspection and testing is sufficient for this purpose. The GITA needs to have competent personnel on site at all times while earthwork operations are undertaken. Such operations include the following: (a) Completion of removal of topsoil. (b) Placing of imported or cut material. (c) Compaction and adding/removal of moisture. (d) Trenching and backfilling, where applicable. (e) Test rolling. (f) Testing. The superintendent should agree on a suitable inspection and testing plan prior to the commencement of the works. On completion of the earthworks, the GITA will usually be required to provide a report setting out the inspections, sampling and testing it has carried out, and the locations and results thereof. Unless very unusual conditions apply, the GITA should also be able to express an opinion that the works (as far as it has been able to determine) comply with the specification and drawings. 8.3 LEVEL 2 INSPECTION AND TESTING A geotechnical testing authority (GTA) will be appointed to carry out sampling and testing as required or specified. The GTA is responsible for selecting the location of sampling and testing operations within each visit made to the site. The superintendent is responsible for advice as to when such visits are required and is responsible for ensuring that sufficient samples and tests are taken over the project. On completion of the earthworks, the GTA may be required to provide a report, setting out the sampling and testing it has carried out, and the locations and results thereof. The GTA will not be in a position to express any opinion beyond this as to the compliance of the works with the specification or their suitability for any particular purpose."
Importantly, Section 8.2 relates to Level 1 inspection and testing. The section requires the testing authority "to have competent personnel on site at all times while earthwork operations are undertaken". Section 8.3 relates to Level 2 inspection and testing and requires the testing authority "to carry out sampling and testing as required or specified".
The wording of Sections 8.2 and 8.3 of AS3798-2007 indicates that the obligation of the testing authority is for testing at the Site not of materials before they arrive at the Site. Accordingly, the defendant submits, correctly, that Level 1 inspection and testing did not require the defendant to test off-site the proposed material to be used even if it was contracted to provide Level 1 inspection and services. Further, Section 8.2 relates to the earthworks including completion of removal of topsoil and compaction.
The submission of the defendant is that it was only contracted with the plaintiff to provide Level 2 inspection and testing which in substance is ad hoc testing services. In other words, the defendant was required to do specific testing only when requested by the plaintiff.

[10]

RTA specifications

It was not disputed that certain specifications of the former Roads and Traffic Authority of New South Wales applied to the construction of surfaced roads including relating to the requirements for base and sub-base materials. The relevant specification was RTA QA Specification 3051 relating to "granular base and sub-base materials for surfaced road pavements" dated October 2010. The material specifications which were relevant in the proceedings, particularly DGB 20, are set out in Section 3.2 of RTA Specification 3051. In relation to DGB 20, the specification provides: "Unbound base and sub-base materials are designated as follows: … DGB 20 20mm nominal size Densely Graded Base". The specification provides the basis for acceptance of materials and the requirements for assessment of materials (see Sections 5.2 and 8). In particular, Section 8.1 sets out the requirements for assessment of particle size distribution in materials with percentage ranges where used in the base and sub-base. There are also specific requirements for plasticity and permeability of the graded materials proposed to be used. In addition, there are requirements for cohesion, soundness and strength for dense graded materials. Accordingly, the sections of the specification set out a series of tests to be met in determining whether materials are compliant. Section 11 of the RTA Specification 3051 sets out the details of requirements for sampling and testing for certification.
In paragraph 42 of his first affidavit, Mr Kennedy states that in order to certify that road base materials conform with DGB 20, project specific stockpiles "must be created and undergo an extensive sampling/testing regime, to ensure that the entire stockpile conforms to the requirements of RMS Specification 3051. Stockpiles are usually sampled and certified at the quarry they are prepared at, ahead of a specific job or specification. Further testing occurs after the stockpile has been transported to the site in order to confirm that it continues to meet the required standard." The importance of the RTA standard is that it sets out the requirements before material can be certified as DGB 20 compliant. The relationship between RTA QA Specification 3051 and other more detailed specifications is set out on page 2 of QA Specification 3051 in a diagram in Section 1.2 (Exhibit 4 page 228).
Specification R71 which is referred to relates to the construction of unbound and modified pavement courses and covers the transport, delivery, sampling and testing, placement, compaction and acceptance of unbound and modified materials in the pavement course.
A form of Specification R71 was in evidence: Exhibit 4 page 173. However, the form in evidence was Edition 5 and dated 23 August 2018, after the relevant period in issue. Clause 2 related to unbound material or material to be modified and clause 2.2 related to "Certified Stockpiles". Section 2.2 in the version provided (which appears not to have been relevantly amended) stated: "Stockpiles that have been tested, and shown to conform to the requirements of RMS 3051, are classified as Certified Stockpiles". It continues: "Prior to the release of material from a Certified Stockpile, provide the Principal with a statement signed by you, verifying that the material from the Certified Stockpile meets the requirements of this Specification and the relevant properties stated in RMS 3051. Attach NATA endorsed test results to the statement. Indicate clearly in the statement the quantity of material represented by the test results".
The stockpiles of material used by the plaintiff in the present case came from Wilsons Quarry. As indicated above, the certificate provided by Mr Wilson relates to testing in 2012, some two years before, but it is unclear what were the stockpiles referred to in the certificate. There was no apparent testing which showed Certified Stockpiles within specification R 71, Section 2.2.

[11]

Evidence of Adam Hewes

As indicated above, Mr Adam Hewes is the sole director of the plaintiff, ADH. For the purposes of the proceedings, Mr Hewes swore two affidavits dated 16 August 2018 and 28 April 2020.
Mr Hewes' first affidavit had exhibited to it voluminous documentation relating to the contract between the plaintiff and RCC and other relevant documents. Mr Hewes provides much background detail in relation to the contract and the works undertaken by the plaintiff at the Site.
In paragraph 8 of his first affidavit, Mr Hewes states that in preparing the bill of quantities for the tender response to RCC, he made enquiries about the materials and services that the plaintiff needed to purchase from third party providers to complete the works. This included pricing of road base, asphalt and primer seal to be laid on the road base.
In paragraph 11 of his first affidavit, Mr Hewes states that DGB 20 is a recognised standard for road base used by RMS New South Wales and used and accepted in the construction industry.
In paragraph 21 of his first affidavit, Mr Hewes states that an important part of the tender costings was the road base. He sets out in his affidavit that he approached Mr Wilson of Wilsons Quarry. He said he was of the view that Wilsons Quarry could be a possible source for the road base as it was relatively conveniently located to the Site. He had had previous business dealings with Wilsons Quarry. In paragraphs 22 to 23 of his affidavit, Mr Hewes sets out conversations he had with Mr Wilson about the tender and the fact that the specifications stated that part of the road base had to be DGB 20 compliant. Mr Wilson is stated to have informed Mr Hewes that Wilsons Quarry could provide DGB 20 compliant road base. After informing Mr Wilson in about August 2014 that he needed independent certification that the road base was DGB 20 compliant, Mr Hewes sets out in paragraph 25 of his first affidavit that Mr Wilson informed him that he would arrange for a test certificate. Soon after, Mr Wilson delivered the RTA test report on about 13 August 2014. This is the test report dated August 2012 which has been referred to above. Mr Hewes states that he emailed the Wilson's test certificate to RCC on 21 August 2014 and to KH on 25 August 2014.
Mr Hewes agreed on behalf of the plaintiff to enter into an agreement with Mr Wilson to purchase from Wilsons Quarry the DGB 20 road base at $11 a tonne collected by the plaintiff from the quarry. It was indicated by Mr Hewes that 10,000 tonnes were needed.
Mr Hewes sets out in his first affidavit that as a result of numerous requests made by him, invoices issued from February 2015 by Mr Wilson identified the material supplied as DGB 20.
In paragraph 34 of his first affidavit, Mr Hewes gives evidence about attending the offices of KH in May 2014 and speaking to Mr Colin Miller, the Office Manager of KH, in relation to KH providing "Level 1 geotech supervision and reporting".
In paragraph 35 of his first affidavit, Mr Hewes sets out a conversation which he says he had with Mr Kennedy in the following terms: "35. On or about 30 May 2014, John Kennedy emailed to me the rates for Level 1 supervision and testing. I had a conversation with him after receiving the rates and said to him words in or to the effect of: "I will use K&H's services for the Level 1 supervision for the Hospital bulk earthworks and road works as per your rates on a do and charge basis". He said words in or to the effect of: "That will be fine"."
In paragraph 37 of his first affidavit, Mr Hewes states that he emailed all the plans for the works to be completed by the plaintiff, noting the requirement for DGB 20 road base, to Mr Mead of KH on 13 August 2014.
Mr Hewes then sets out the details of testing undertaken by KH at the Site. He notes that the first pickup of DGB 20 road base material from Wilson's by the plaintiff was on or about 4 August 2014 and that on 25 August 2014 he emailed the Wilson's DGB 20 test report to Mr Berry of KH.
In paragraph 42 of his first affidavit, Mr Hewes states that the plaintiff constructed all building bases, pathway bases and roadways and car parks using only the DGB 20 road base provided by Wilson's Quarry. Mr Hewes states that he decided to use the higher quality DGB 20 material throughout "as this would save surveying costs to survey the sub-base and base separately" and he believed that it would provide a stronger pavement and reduce the risk of non-conformance due to clay contamination.
In paragraphs 45 to 46 of his first affidavit, Mr Hewes gives evidence of proposals between the plaintiff and RCC to alter the sub-base layer from 265mm to 200mm on the basis that DGB 20 material would be used throughout.
From paragraphs 49 of his first affidavit, Mr Hewes refers to the placement of the final road base stockpile of DGB 20 material from Wilsons Quarry in the lower northern car park and a smaller stockpile at the rear southern side of the hospital site with a final footpath base layer construction. He also refers to disputes which had arisen with RCC in relation to variations.
In paragraph 51 of his first affidavit, Mr Hewes refers to a conversation with Mr Mead of KH on 18 June 2015 about a final DGB 20 road base material evaluation which he requested. He states that Mr Mead informed him that the road base would not meet DGB 20 specification. This gave rise to concerns in Mr Hewes that Mr Mead had immediately indicated that the stockpile would not comply with DGB 20 even before the required testing had been carried out.
In paragraphs 53 and following of his first affidavit, Mr Hewes gives evidence about the three tests which were undertaken by KH in June and July 2015. In relation to the first stockpile test, Mr Hewes states that he was not contacted by anyone from KH and did not see where the KH representative took road base sampling from or who supplied the sample to KH. He states that he was later advised that the DGB 20 stockpile test was carried out on 20 June 2015 when he was not present. In paragraph 55 of his first affidavit, Mr Hewes states that this was the only time out of all tests taken by KH where he was not present and did not witness the carrying out of samples requested by him to be taken. He exhibits email correspondence about the various testing: Exhibit ADH 15.
In relation to the second stockpile test, Mr Hewes states at paragraph 57 of his first affidavit that he did not witness the sampling nor was he informed that sampling had taken place. Mr Hewes later gave evidence that there was no stockpile available at the time the second test samples were taken.
In paragraph 59 of his affidavit, Mr Hewes refers to a conversation with Mr Wilson in which Mr Wilson said that the material supplied by him was DGB 20 compliant.
Also in paragraph 59 of his first affidavit, Mr Hewes gives detail of his observations of Mr Kennedy, Mr Mead and Mr Bullock of KH undertaking in situ road samples on 30 July 2015. He states that he noted the samples were taken to a depth of 400mm and included a mixture of both layers including layers that had to be DGB 20 and layers that had to be only DGS 20. He notes that the results of this test stated that the road base was non-conforming in relation to DGB 20 material. Mr Hewes expresses the opinion in paragraph 61 that he did not believe the report was accurate as it did not test the top 115mm of road base separately from the sub-base layer below. In substance, he states that the testing could not adequately identify the relevant material to state whether the top 115mm base complied with the contractual requirements: paragraph 62.
Mr Hewes then goes into considerable detail from paragraph 63 of his first affidavit concerning orders from RCC to rectify the road base based on the KH sampling and tests undertaken on 30 July 2015. He notes that in order to remedy the roadways in accordance with the remediation report prepared by GDK, he undertook the mixing into all of the roadways of a slime lag blend to a depth of 250mm. After the remediation works were undertaken, there was a certification that the roads were remediated satisfactorily. In due course, there were disputes between the plaintiff and RCC which involved a settlement by way of deed of release and a claimed termination of the contract between RCC and the plaintiff. Mr Hewes states that at the time of termination of the contract works by RCC he was not aware that the testing of the completed road base works carried out by KH had not been done in a manner to show compliance with the Pavement Type 1 in "MM Plan 5011": paragraph 80.
Mr Hewes gives evidence that as a result of the termination of the contract works, the plaintiff did not carry out the asphalting works. The plaintiff had previously bought some materials to undertake these tasks.
In his second affidavit sworn 28 April 2020, Mr Hewes expresses the opinion that the Wilsons Quarry test report dated August 2012 is the "only conclusive test result that shows a DGB 20 test result": paragraph 4. In paragraph 12 of his affidavit, Mr Hewes asserts that KH failed to test the stockpile as requested on 18 June 2015 but rather used contaminated samples. It is asserted that the first test involved an in situ material test and not a stockpile test. He was not present when the samples were apparently taken by Mr Bullock of KH.
In his oral evidence in chief, Mr Hewes was taken to the photographs which were annexed to his second affidavit. He gave evidence that all of the photographs were taken by him at the Site and had been downloaded from his phone which showed the date when the photographs were taken. Mr Hewes marked on a map, which became Exhibit B in the proceedings, where the photographs were taken and the direction where they were taken from at the Site. Mr Hewes gave evidence about contamination of the road from red material as shown in the photograph at page 8 of the photographs in the Court Book and of stockpiles of material at the Site. The evidence was to establish that there was no stockpile remaining when the second test was purportedly undertaken by Mr Berry of KH.
In cross-examination, Mr Hewes agreed that following preparing his first affidavit he had received the affidavits prepared by the defendant's witnesses and had considered them prior to preparing his second affidavit: T72.6.
Mr Hewes confirmed that the plaintiff had been undertaking earthworks including the construction of roads and pavements for local councils in the central west of New South Wales for 15 years. He said he was a qualified plumber by trade and he had been so for 26 years. He stated that the plaintiff's businesses included plumbing, gas fitting and transportation as well as earthworks. In August 2014 he stated that the plaintiff had approximately nine employees with approximately three employees being employed in earthworks and road construction. Mr Hewes agreed that he had no formal qualifications in relation to road construction and that he had learnt on the job and through experience. As at August 2014, Mr Hewes stated that the plaintiff had undertaken at least two road construction jobs and not more than four or five of such jobs: T74.36. He accepted that he had limited experience in the construction of roads at the time, although he had employees with experience in these areas.
In relation to road specifications and standards, Mr Hewes said that as at August 2014 he had read RTA Specification QA 3051 carefully and also drew on his prior construction knowledge which he had in undertaking previous work with the plaintiff. He did not recall reviewing Specification R 71 as at August 2014 and did not consider that it applied to this project as this project involved internal roads. He agreed that he was familiar with AS3798-2007 as at August 2014.
Mr Hewes accepted that he had executed on behalf of the plaintiff the Sub-contract Deed with RCC: T80.22. He also agreed that he had reviewed carefully the contract and the plans and specifications which were attached to the contract. This included the Civil Specification which is attached to the Sub-contract Deed: T81.7.
Initially, Mr Hewes gave evidence that the roads as built by the plaintiff at the Site were built in accordance with Pavement Type 1 in the drawing ending "5011 Issue A": T81.50; T82.7; Exhibit 4 pages 1-2. This was inconsistent with his affidavit evidence where he states that all roadways were built by the plaintiff using DGB 20 road base provided by Wilsons: first affidavit paragraph 42. He confirmed that as far as he was aware, the plaintiff was obliged to carry out the works under the contract in accordance with the sub-contract documents which included the plan "5011 Issue A" and the Civil Specification annexed to the Sub-contract Deed. This was the relevant drawing for the roadway construction at the time the contract between the plaintiff and RCC was executed on behalf of the plaintiff: see T84.34-.40; T85.15-.30.
Mr Hewes then agreed that the drawing ending "5011 Issue A" was later revised at his request and a new issue E was issued in March 2015: see Exhibit 4 page 2; T85.32-.36. He accepted that was the document at page 2 of the defendant's tender bundle (Exhibit 4) and was issued by Mott MacDonald on behalf of RCC at his request: T85.44. He said that the new issue E gave an option for the construction of the roadways: T85.48; T89.12.
There was then detailed cross-examination of Mr Hewes in relation to the difference between Pavement Type 1 and Pavement Type 1A in issue E of the approved pavement drawings: T86.11-T88. Mr Hewes agreed that the only difference between Pavement Type 1 and Pavement Type 1A in issue E was the difference in the thickness of the sub-base course and the materials to be used: T88.12-.30. Issue E reduced the thickness of the sub-base course from 265mm to 200mm and the materials to be used in the sub-base course from DGS 40 materials to 200mm of DGB 20 materials. Mr Hewes gave evidence that despite the two options available under issue E, the plaintiff constructed the roadways using DGB 20 materials but to the sub-base course depth of 265mm: T89.25; T90.3; T90.43. Whilst not conceding that he did not comply with Pavement Type 1 as in issue E (T91.2 cf T91.6), Mr Hewes accepted that the sub-base materials used in his opinion were of DGB 20 standard rather than DGS 40 standard: T91.13.
Mr Hewes gave evidence that he went to Wilsons Quarry and met with Mr Wilson in relation to the supply of base material by Wilsons Quarry. He believed he attended after the contract was executed by the plaintiff when he was aware of the plans and specifications: T92.15. At this time, Mr Hewes conceded that he was aware that he had to obtain DGB 20 compliant material for the base course and to provide a compliance certificate to the head contractor RCC before the material was moved onto the Site: T92.23-.33. Mr Hewes agreed that he asked Mr Wilson for a complying certificate (T92.37) but rejected the proposition that he only asked to purchase 20mm standard material and did not ask Mr Wilson that the material be DGB 20 compliant: T92.42. He agreed that he was careful to ensure that he purchased DGB 20 compliant material for the roadway construction: T93.40. He accepted that he had reservations in relation to the Wilson Quarry road base without a certificate and asked for the certificate to meet the plaintiff's contractual obligations. He agreed that he relied on the certificate provided by Wilson's but only for the obligation to provide certification under the contract of the road base material's compliance: T93.42-T94.50.
Mr Hewes believed he received the certificate from Mr Wilson on or about 13 August 2014 when he scanned it into his company records: T94.20. He said he was satisfied with the certificate and forwarded it to RCC on 25 August 2014: T94.37. He said that RCC indicated no objection to the certificate: T94.46. Significantly, he agreed that following receipt of the certificate, he entered into a contract with Mr Wilson to purchase 10,000 tonnes of DGB 20 road base to be used at the Site from Wilsons Quarry: T95.1-.9.
Mr Hewes agreed that in May 2014 he called at the office of KH: T95.12. He believed he attended in person: T95.19. He agreed he had a short interaction with Mr Miller of KH in which he gave instructions to Mr Miller that the plaintiff required testing services at the Parkes Hospital contract site. He accepted that this was in substance the extent of the conversation: T95.33. Mr Hewes accepted that on 30 May 2014 he received an email from Mr Kennedy providing a quote which was under the name of Mr Mead: T95.37.
It was put to Mr Hewes that he had a conversation with Mr Kennedy relating to the quote on 15 August 2014. He said he did not recall a conversation on that date and initially said that he never spoke with Mr Kennedy in relation to the quote: T96.1-.4. This is inconsistent with paragraph 35 of his first affidavit in which he refers to having a conversation with Mr Kennedy on or about 30 May 2014. Mr Hewes then stated that he was informed that KH could not provide a fixed quote but only a quote on a do and charge basis: T100.48; T102.48. Mr Hewes conceded that he only had a vague recollection of the conversation with Mr Kennedy as it was a long time ago: T102.40. He could not confirm that the conversation occurred on 15 August 2014 but agreed that it was possible: T101.38. Mr Hewes said that he could not remember the precise words used but only that an engagement was only possible on a do and charge basis as KH could not provide a fixed quote for the provision of services: T102.44.
Mr Hewes was cross-examined in relation to the progress of the works from 30 July 2014 and agreed that Mr Berry of KH was at the Site when testing was undertaken including in relation to compaction: T96.26. He agreed that he called KH to undertake the testing: T97.29. It was put to Mr Hewes that in relation to the earthworks component of the contract that a representative from KH was not on site every day. He agreed that an employee of KH was not on site from 9am to 5pm: T97.45. He said that an employee of KH was present every day in the two to four week earthworks period undertaking testing but accepted that they were only there for testing if Mr Hewes called them to undertake the testing: T98.25-.35.
Mr Hewes was taken to paragraphs 51-52 of Mr Kennedy's first affidavit and agreed that that was an accurate summary of the work performed by KH in testing with the possible exception of the tests undertaken in 2015 in relation to the stockpile tests and in situ test: T103-T104.
In relation to the first stockpile test dated 18 June 2015 Mr Hewes agreed that this was taken at his request because RCC was raising concerns in relation to the base and sub-base at around that time: T103.40-.49. Mr Hewes also agreed that he did not request the second stockpile test or the 30 July 2015 in situ test: T104.1-.10. He agreed that the latter was requested by RCC.
Mr Hewes was then cross-examined in relation to the email correspondence he had with representatives of RCC in relation to the variation to the pavement requirements. He agreed that the first request from him to vary the plans was in August 2014 and that he pursued the proposed variation. He said this request was referred to Mr Robert Deep, an engineer, who approved the variation of the sub-base course from 265mm of DGS 40 material to the alternative option of Pavement Type 1A of a sub-base course of 200mm of DGB 20 material. See the emails dated 17 March 2015. Mr Hewes accepted that notwithstanding the approval on behalf of RCC of the option with a 200mm DGB 20 sub-base course that he laid 265mm of DGB 20 materials on the sub-base layer: T106.35. He agreed that he elected to thicken the sub-base layer by 65mm without approval and said that there was no need for approval: T106.41-T107.6. He understood at that time that all of the product which was obtained from Wilsons Quarry complied with DGB 20 because of the certificate provided by Mr Wilson in August 2014: T107.17.
In relation to the first stockpile test dated 18 June 2015, Mr Hewes conceded that he did not see Mr Perry Bullock of KS take the sample as he did not see him on site. He agreed that as at 18 June 2015 there was a stockpile of the material on the Site which was sufficient to finish the roadworks and the car park: T107.24. He stated that to his knowledge, as at 20 July 2015 there was no stockpile left as all the roadworks had been finished: T107.28. He said it was "impossible" that as at 20 July 2015 there was still a small stockpile present of the material in the car park: T107.49.
Mr Hewes gave evidence that he was present on site on 30 July 2015 when the in situ road material testing was undertaken by KH and that the testing took the majority of the day: T108.15. He said he was only briefly present with Mr Kennedy and Mr Bullock for about half an hour initially but he was monitoring the testing by them at a distance of between 20m and 100m: T108.18-40. He agreed that he could not see up close what they were doing: T108.33. Mr Hewes gave evidence that he measured the depth of the holes drilled using a tape measure but did not have any photographs of the measurements. He said the holes were 400mm deep but he did not raise this as being a problem with anyone at the time. This was despite the fact that he knew the in situ testing was for RCC to determine whether the sub-base and the base were DGB 20 compliant: T109-T110.7; T112.18; T113.21-.47.
Mr Hewes accepted that RCC was entitled under the contract with the plaintiff to test the in situ roadworks for conformance: T112.19.
Mr Hewes accepted that in relation to the 30 July 2015 tests prepared by KH for RCC that he on behalf of the plaintiff could have obtained his own geotechnical expert report. He said this was an option and he did not at the time challenge KH's report results due to the prior results: T113.29-T114.17.
Mr Hewes confirmed that he had a number of disputes with RCC in relation to variations and that RCC disputed their liability for these: T114. He agreed that on 21 September 2015 a deed of release was executed between the plaintiff and RCC pursuant to which he was paid money and the parties to the deed released each from their obligations and liabilities including in relation to the laying of the asphalt level on the road: T114.46-T115.10.
Mr Hewes accepted that there was a dispute with RCC also in relation to laying the asphalt as to whether there should be one single 40mm layer of Class AC 10 or two 25mm layers.
Mr Hewes was asked a number of questions about an invoice number 7459 which he forwarded to Wilsons Betamix Goonumbla Quarry which became Exhibit C in the proceedings. Mr Hewes agreed that he issued this to Mr Wilson's company as he had been informed that the road based used by the plaintiff was not DGB 20 compliant. He said at that time he believed that Wilsons was liable for the rectification work which had to be undertaken by the plaintiff: T129.13-.27.
Mr Hewes was asked a number of questions about the workers referred to in the invoice and the ownership of the various pieces of equipment used for the work mentioned. He stated that the equipment referred to was used in the remediation of the roads constructed by the plaintiff. When asked about the comparison between the rates charged and the salary/contractor rates of the various workers, Mr Hewes said that the difference related to running costs and the costs of purchase of the vehicle: T131.36. He accepted that all works undertaken by the plaintiff had a small profit margin: T132.19. He said that at that time whilst no other job was lined up there was always other work: T132.46; T133.10. He said the usual profit component for this type of construction work undertaken by the plaintiff was 5%-10%: T133.13.
The various important conversations in the defendant's affidavits were then put to Mr Hewes: T133 and following.
It was put to Mr Hewes that he had a conversation with Mr Kennedy on about 15 August 2014 as set out in paragraph 32 of Mr Kennedy's first affidavit where Mr Kennedy informed him that the services required by the plaintiff were not Level 1 services. Mr Hewes denied this and confirmed that a conversation occurred as in paragraph 35 of his first affidavit. He said the reference to "do and charge" was in reply to Mr Kennedy saying that KH was not able to provide a fixed charge or quote for the task: T133.49-T134.13. He denied that he told Mr Kennedy that he did not want to pay for a technician to be on site fulltime as set out in paragraph 32 of Mr Kennedy's first affidavit: T134.20. He denied that Mr Kennedy said that the services provided by KH would therefore not be Level 1 services but services provided on a do and charge basis: T134.25.
Mr Hewes was then taken to paragraph 49 of Mr Kennedy's first affidavit in relation to a conversation that Mr Kennedy alleges was had with Mr Hewes on or about 25 August 2014 in relation to the Wilson's test certificate. Mr Hewes denied that the conversation in the terms set out in Mr Kennedy's affidavit occurred: T135.9. He denied that Mr Kennedy told him that the RTA certificate provided by Mr Wilson was not adequate to verify the material as DGB 20 compliant: T135.14. He also denied that Mr Kennedy said the only supplier he knew was Westlime. When it was put to him that he could not remember the conversation he said it did not take place in the terms suggested. He denied that as a result of the conversation suggested by Mr Kennedy that he knew that the RTA test certificate was not sufficient: T135.35. Mr Hewes said he regarded the certificate as showing that the material was DGB 20 compliant.
When a question was put to him by the court that the stockpile appeared to have been present for two years based on the date of the RTA Wilson's certificate, Mr Hewes accepted that and said he was told by Mr Wilson that he had been going to sell the material to another client and that it had been sitting at Mr Wilson's premises for two years: T136.17; T136.32. He said he had no concerns at all at that time in relation to the material as he relied on the certificate provided by Mr Wilson: T136.42. He said that was the reason he gave the certificate to KH. When he was asked whether he expected KH pursuant to Level 1 services to test the stockpile when it arrived at the Site, Mr Hewes said he gave specific instructions to KH to test the stockpile on or about 18 June 2015, which gave rise to the first test. He accepted that this was the only time he had asked KH to specifically test the stockpile: T137.1-.27.
Mr Hewes was taken to paragraph 16 of Mr Mead's affidavit in relation to a conversation about which quarries could provide DGB 20 compliant material. Mr Hewes denied that a conversation to that effect occurred with Mr Mead on or about 13 August 2014. He said at this time he knew where all the local quarries were and where he could get road base from: T137.36-.48.
However, Mr Hewes accepted that DGB 20 material from the other quarries was more expensive than the material for Wilsons as at mid-2014: T138.32. Although apparently denying that the cost of the other quarries was significantly more expensive than at Wilsons Quarry (T138.48), Mr Hewes accepted that it was more expensive at Westlime Quarry by about $4 or $5 per tonne: T139.20. He accepted that for 10,000 tonnes as was involved this made roughly a $50,000 difference: T139.25. He agreed that he tendered based on the pricing from Wilson's for the DGB 20 material and that the pricing in accordance with paragraph 19 of his affidavit was very competitive and there was little to no margin for profit: T140.8. He rejected the proposition that as a result of the conversations with Mr Mead and Mr Kennedy he was aware that the certificate from Wilson's was not sufficient to verify that the material was DGB 20 compliant: T140.14.
Mr Hewes was then taken to paragraphs 12 to 16 of Mr Berry's affidavit in relation to events which occurred in August 2014. Mr Hewes disagreed that this conversation occurred and said that at that time RCC did not have a site office and his office was across the road from the Site. He denied that Mr Berry asked for space in his office but accepted that he told Mr Berry in accordance with paragraph 16 of his affidavit that he would contact KH during the earthworks stage when KH was required for testing and inspection. He agreed that this was on an as required basis: T144.50-T145.43.
In re-examination, Mr Hewes stated that in relation to the base works there was no profit for the plaintiff in the contract: T146.46. The largest profit came from the laying of the asphalt which had about a 30% plus profit margin: T147.2. This is relevant to the damages claim.

[12]

Evidence of Colin Miller

An affidavit of Mr Colin Miller sworn 26 July 2019 was read by the defendant. Mr Miller was employed by the defendant KH in the role of Office Manager from October 2005 to around 31 January 2018, when he retired. In his role as Office Manager, Mr Miller was responsible for a wide range of administrative and office tasks associated with KH including jobs such as invoicing. Mr Miller would sometimes prepare quotes for the smaller or simple testing jobs but quotations for bigger or more complex jobs involving specific requirements in relation to the levels of testing for a project would be prepared by either the director of KH, Mr Kennedy, or KH's Quality Manager, Mr Mead.
In paragraph 4 of his affidavit, Mr Miller states that he has read paragraph 34 of Mr Hewes' first affidavit which deals with a discussion between Mr Hewes and Mr Miller in about May 2014 in relation to the defendant providing testing services to the plaintiff.
In paragraph 34 of his first affidavit, Mr Hewes claims that he informed Mr Miller that he hoped to get the contract for the earthworks and roadworks at the Site with RCC and that he said to him words the effect: "I need to have Level 1 geotech supervision and reporting done. Is that something you can help me with?" Mr Hewes claims that he said to Mr Miller words to the following effect: "The estimates need to cover all the works including bulk earthworks, detailed works including footings and roads and pavements including asphalt". In paragraphs 7-9 of his affidavit, Mr Miller gives a more limited version of the conversation, with Mr Hewes saying that he wanted a quote for testing without a reference to Level 1 geotechnical supervision and reporting. Mr Miller asserts that he informed Mr Hewes that he would need to speak to either Mr Kennedy or Mr Mead but cannot recall which of the two gentlemen he mentioned. Specifically, Mr Miller in paragraph 9 of his affidavit denied that Mr Hewes gave him any further detail about the testing that he required in respect of the project at the Site other than the limited conversation which he sets out.
Mr Miller states in paragraph 10 of his affidavit that based on his experience working at KH, he knew that the testing Mr Hewes was requesting a quotation for would likely involve "rigid requirements", given that it was a government job and "would likely require Level 1 supervision". It was for this reason that he told Mr Hewes he would need to speak with Mr Kennedy or Mr Mead. Mr Miller noted that for bigger or more complex jobs such as government jobs, or those involving the provision of Level 1 supervision, it was ordinary practice at KH for Mr Kennedy and Mr Mead to meet with the client at KH's offices during the quotation process "to explain to the client what sort of testing was required and what was being quoted". Mr Miller states that he was not otherwise involved in the quotation process. He states that once the quote had been issued he would have been provided with a copy to be placed on the file which he would use for the purpose of generating invoices. Mr Miller noted that thereafter Mr Hewes came into the KH office a number of times but he was not involved in any further discussions with him and did not observe Mr Hewes having a "sit-down meeting" with Mr Kennedy or Mr Mead as was usual with larger or more complex jobs.
Mr Miller then sets out in his affidavit detail in relation to invoicing at KH and that he was responsible for preparing and issuing invoices to clients on behalf of KH in his role as Office Manager. KH used the MYOB system to generate its invoices and to do so, Mr Miller would obtain a copy of the quote to the client to place the information into MYOB following the collating of worksheets from the technicians. Mr Miller said he would check the invoice and then send it to the client without asking Mr Kennedy or Mr Mead to review or check the invoice unless he was of the view there was a problem of some kind. Mr Miller exhibits the invoices sent to the plaintiff by KH during August 2014 to June 2015 to his affidavit. He notes that certain of the earlier invoices included a reference to "Level 1 Supervision". While not recalling specifically setting the plaintiff's job up in MYOB, Mr Miller gives evidence that he did remember jobs where invoices started out as being charged on a Level 1 basis but were changed by the customer to a lower level and in those cases he would simply delete the reference to "Level 1 Supervision" from the job description, as he did for the plaintiff when he became aware of the altered services: paragraphs 18 and 22 of his affidavit.
Mr Miller states that when Level 1 supervision and testing was provided by KH, all results would generally be checked by Mr Mead following which a Level 1 testing report would be issued by KH and the client invoiced for this. Mr Miller's recollection, consistent with the invoices exhibited, is that no invoice was ever issued to the plaintiff for a Level 1 testing report. Mr Miller says he was not privy to any conversation with Mr Hewes concerning any acceptance of KH's quote.
In relation to the exhibit to Mr Miller's affidavit which attaches various KH invoices to the plaintiff, it is noted that the invoices dated 18 August 2014 to 16 January 2015 refer to "Level One Testing Parkes Hospital Site". This description is omitted from the invoices dated 11 February 2015 and thereafter. Later invoices merely refer to inspection and testing. It is noted that the change occurred to the invoices before any issue arose as to whether the plaintiff had complied with its contract with RCC or as to the use of DGB 20 compliant material at the Site.
In cross-examination, Mr Miller confirmed that he set up documentation for invoices to the plaintiff in KH's MYOB system for the provision of Level 1 services by KH. Mr Miller appeared to have only a general knowledge of what was involved with Level 1 services testing. He said that the level of testing was more stringent than at a lower level. He agreed that the testing was done the same and did not vary according to the work that was done but a lot more time was involved in Level 1 testing.
Mr Miller agreed that he continued issuing invoices on behalf of KH for Level 1 services for some time: T124.37. He said the invoices were stored and regenerated and were used until he was told otherwise. He accepted that Level 1 invoices were used until January 2015 (T124.29) but that the contract started in August 2014 when the first invoice was sent. He accepted the day worksheets indicated how much time was spent on a job. He agreed that in accordance with his normal practice, he started out providing invoices referring to Level 1 services and then altered these if someone told him to do so where there was a different standard applied. He could not remember someone indicating this to him in relation to the plaintiff but accepted that it may or may not have been mentioned: T125.33.
Mr Miller was then asked questions about the alleged May 2014 conversation referred to in paragraph 34 of Mr Hewes' affidavit. He agreed that Mr Hewes came to the office to obtain a quote. When that part of the conversation set out in Mr Hewes affidavit referring to Level 1 services was put to Mr Miller, he said that it sounded "correct": T126.2. However, he disagreed with the latter part of the conversation referred to in Mr Hewes' first affidavit as something which he did not believe occurred. In particular, he very much doubted whether anything was said about an estimate being provided for all the works. He said the conversation was very brief and a long time ago but he did not believe that this part of the conversation occurred: T126.16-.31.

[13]

Evidence of Francis John Kennedy

Mr Francis John Kennedy, who is a director of the defendant company, swore two affidavits in the proceedings dated 26 July 2019 and 27 March 2020.
The first affidavit sets out Mr Kennedy's recollections in relation to the more significant conversations with Mr Hewes of the plaintiff. He indicated that as the General Manager of KH his role was "quite hands-on", in the sense that he still undertook some testing and review and signed-off on a lot of the testing that is carried out by employees of KH.
Mr Kennedy states in paragraph 21 of his first affidavit that on or around 27 May 2014, Mr Miller informed him that Mr Hewes had called KH and requested that KH provide a quotation for geotechnical services in relation to the earthworks to be undertaken by the plaintiff at the Site. In paragraph 22 Mr Kennedy refers to the quote sent under the name of Mr Mead to the plaintiff which in his oral evidence he stated was sent on 30 May 2014. He gave evidence that a letter in similar terms was sent to the other earthworks contractors who had tendered for the project. Mr Kennedy states that he had seen the quotes which he approved before they were issued. In paragraph 24 of his affidavit, he states that the quote was for Level 1 services which required a senior geotechnician of KH to be present on the Site at all times when the relevant earthworks were undertaken.
Mr Kennedy gives evidence in paragraph 27 of his affidavit that on or around 12 August 2014 Mr Hewes telephoned him and sought for KH to provide a technician to inspect the stripping works on site. Mr Kennedy said he directed Mr Berry who had been assigned to the project to attend the Site to undertake the requested inspection. Mr Kennedy states that when he attended to carry out the first inspection Mr Hewes told him that he did not want anyone from KH on-site fulltime and that Mr Hewes would call KH when a technician was required.
In paragraph 32 of his affidavit Mr Kennedy said he had a specific conversation with Mr Hewes in relation to the provision of a technician. Paragraph 32 provides as follows: "32. In the few days following this, Adam Hewes called the K&H office and spoke with me and requested a further inspection of the works at the Hospital Project site. I cannot recall the exact date of this conversation. In this conversation, we discussed K&H's services to be provided in relation to the Hospital Project and we had a conversation as follows: Adam I do not want to pay for a technician to be on site full-time. I don't need it. John Ok well that will no longer be a Level 1 service, it will be on a do and charge basis. Adam Ok."
Mr Kennedy says that KH then proceeded to undertake inspections and testing at the Site as and when specifically requested by Mr Hewes and he understood that Mr Hewes requested ad hoc testing and did not accept the quote provided on 30 May 2014 and did not engage KH to provide Level 1 supervision. In particular, Mr Kennedy denied that Mr Hewes said to him the words set out in paragraph 35 of Mr Hewes' first affidavit. Mr Kennedy says in paragraph 37 of his affidavit that Level 1 supervision requires that the technical nominee be on site at all times whilst earthwork operations are being performed.
In relation to the stockpiles supplied by Wilsons Quarry to the plaintiff, Mr Kennedy noted that the plans required specification that all road base material must comply with Specification 3051 with which he was very familiar. He notes that there is no record of KH ever being asked by Mr Hewes or any other representative of the plaintiff to verify that the stockpile at Wilson's was DGB 20 compliant: paragraph 44. In relation to the RTA certification provided by Mr Wilson to the plaintiff, which was sent to Mr Berry, Mr Kennedy states that Mr Berry forwarded him the email with the certificate.
In paragraph 49 of his first affidavit Mr Kennedy states as follows in relation to the certificate and a conversation with Mr Hewes: "49. A few days after I received the email that Colin Berry forwarded to me, I called Adam Hewes and said words to the following effect: John The RTA Certificate you have sent is not adequate to verify that the Stockpile was DGB20 compliant, because it is outdated and not specific to the stockpile being used for the Hospital Project. The only supplier of certified road base material that I know of in the Parkes region was the "Westlime" Quarry. If you want a DGB20 product that will meet the required specification, you should use product from Westlime. Adam I created the job on Wilsons material, and I forwarded the RTA certificate to Richard Crookes and they have accepted it. That is the material I will be using."
Mr Hewes denies that this conversation occurred.
Mr Kennedy in his first affidavit then provides details of the work undertaken by KH for the plaintiff. In paragraph 54, Mr Kennedy says that it was not until 18 June 2015 that a request was made to test the stockpile on site for compliance with DGB 20. Mr Kennedy states that he understood that the request for the testing as a material evaluation was made at the request of RCC but he accepted in oral evidence that it was made at the request of the plaintiff. He also could not identify in his oral evidence any day work reports for this test.
In paragraph 61 and following of his first affidavit, Mr Kennedy sets out the very detailed testing that would be required on a Level 1 supervision basis and says that the services were never requested by Mr Hewes or any other representative of the plaintiff at any point through the project. One aspect referred to in paragraph 62 of his first affidavit is fulltime supervision by a suitably qualified technician. The different testing required for work on an ad hoc or as required basis which is less is referred to in paragraph 64 of his first affidavit. Later in his first affidavit, Mr Kennedy refers to the testing undertaken on 18 June 2015 and on 20 July 2015.
In his second affidavit, Mr Kennedy provides detailed comments on the two stockpile tests undertaken by KH and dated 18 June 2015 and 20 July 2015 and the in situ third test which was completed at the request of RCC by KH on 30 July 2015. Mr Kennedy gives detailed evidence in his second affidavit of him being present when Mr Perry Bullock of KH undertook the sampling of the road base material that had been laid by the plaintiff in roadways and car parks at the Site at seven different locations using an electric jackhammer. Mr Kennedy says that he attended to supervise the sampling process and to verify that the different areas from which Mr Bullock took samples constituted an accurate representation of the Site: paragraphs 36-39 of his second affidavit. Importantly, Mr Kennedy states that from his observation of the sampling process the depth of the seven test pits from which samples were taken range from between 180mm to 220mm, being the full depth to which the road base material had been laid. He exhibits photographs of the sampling process to his second affidavit. In paragraphs 42 and following, Mr Kennedy excludes that the first two tests in 2015 involve contamination as they were obtained from the stockpile. In relation to the third test on 30 July 2015 he states that the testing was taken from areas free of obvious contamination: paragraph 44. He also notes that contamination was excluded from the third test by the very consistent sample results. In his oral evidence in chief, Mr Kennedy corrected paragraph 22 of his first affidavit to state that the quote under the name of Mr Mead was emailed by him to the plaintiff on 30 May 2014.
In relation to paragraph 42 of his first affidavit, Mr Kennedy stated that the assembly and certification of stockpiles was provided for in RTA Specification 3051. In relation to the final sentence in paragraph 42 of his first affidavit which provides that "further testing occurs after the stockpile has been transported to the Site in order to confirm that it continues to meet the required standard", Mr Kennedy said he was referring to Specification 3051 and that the client can request further verification if required.
In paragraph 62 of his first affidavit, Mr Kennedy states that if KH had been engaged to provide Level 1 supervision it would have provided particular services including "material quality verification". Mr Kennedy said that this refers to materials already naturally existing on the Site which could be used for fill or other purposes in the roadworks. It thus does not refer to materials brought onto a site for road works.
Mr Kennedy confirmed that Specification 3051 was an industry accepted standard which was prevailing in New South Wales.
Mr Kennedy accepted that he had prior dealings with the plaintiff on four minor projects since 2006.
Mr Kennedy was cross-examined in relation to the quotation which he had sent to Mr Hewes by email on 30 May 2014. He accepted that he was aware that the plaintiff was one of the entities tendering for the earthworks and pavement works. After giving some evidence of the Level 1 services required in the earthworks stage, he accepted that once the earthworks were completed that Level 1 services were no longer applicable. Mr Kennedy accepted that the quote letter could be seen as applying to the whole project and not just the earthworks stage. He accepted that the rates referred to in the quote applied to all stages for testing but that there was a requirement for a Level 1 report in relation to earthworks and the presence of fulltime supervision during the earthworks stage. He accepted that no services provided in relation to the earthworks stage were in dispute and that KH had provided the relevant testing as required and this had revealed no problems with the earthworks undertaken by the plaintiff. He agreed that at the time he regarded it as likely that KH would obtain the testing contract irrespective of who won the tender having regard to their pre-eminent role with geotechnical services in Parkes.
Mr Kennedy said that the dot points in the quote dated 25 July 2013 sent on 30 May 2014 came from best practice and from extracts from AS 3798: T160.44. In relation to the dot point "Material Quality Verification" in the quote letter, Mr Kennedy said that this came from AS 3798 at page 40: T161.22. He accepted that imported material to the Site was as important as material used at the Site.
Mr Kennedy accepted that there were risks which still applied to the supply of materials used in the project after the earthworks stage and that if the correct material was not used there would be no certification. He said KH only provided testing and not a guarantee of the construction: T163.7.
It was put to Mr Kennedy that KH's role was to help the plaintiff through the whole project and provide consulting services. Mr Kennedy said that KH provided testing services as required. When it was put to him that the services included the provision of appropriate advice, Mr Kennedy said that it depended on what advice was asked for by the client: T164.21. When it was suggested that it would be wrong to stand aside and allow a poor result to be produced by a client, he said it depended on the capacity that KH was present on the Site: T164.25. He said KH had been retained by the plaintiff on an ad hoc basis to test when requested: T164.31. He agreed that it was unusual for KH to fix a lump sum price for services particularly in a large project. He also agreed that the quote contemplated ongoing advice by KH to the plaintiff but only if the client accepted the contract and the full price for services. He said the contract agreed was done on a "do and call" basis: T165.20.
Mr Hewes' version of the conversation said to have occurred on 30 May 2014 with Mr Kennedy set out in paragraph 35 of Mr Hewes' first affidavit was put to Mr Kennedy as being correct and he denied it. He agreed that he was not involved in any hands on testing at the Site before 30 July 2015.
Mr Kennedy said he first became aware that the plaintiff had sourced the stockpile from Wilsons Quarry when the email was forwarded to him as to what the plaintiff proposed to use. He could not recall the exact date of this. He denied that the certificate from Wilsons Quarry showed that the material was compliant with DGB 20: T168.9. While he accepted that a stockpile could be kept for a considerable period this was generally not the case with a Certified Stockpile under the relevant specification: T168.13. When it was suggested to him that a stockpile did not deteriorate he said it depended on the material and the quality of it: T168.20.
Mr Kennedy denied that his version set out in paragraph 49 of his first affidavit of his conversation with Mr Hewes in relation to the certificate for the Wilson's Quarry material did not occur. He said he was of the view that the material from the certificate did not meet the specification and what he said to Mr Hewes was adequate warning of this: T169.31. He agreed that he did not say that Mr Hewes could not use the material: T169.37. He stated that he told Mr Hewes that he was only aware of Westlime and Millers Quarry providing DGB 20 compliant material (although he accepted that Westlime was the only quarry mentioned in paragraph 49 of his affidavit).
Mr Kennedy accepted that KH had provided various certificates in relation to testing such as compaction testing and also in relation to the quality of the subgrade which was the level before any pavement layers were laid.
In relation to the first KH test dated 18 June 2015, Mr Kennedy said he accepted that this test was requested by Mr Hewes of the plaintiff despite the contents of paragraphs 54 and 68 of his first affidavit where he states that he was told by Mr Bullock that it was at the request of RCC. While Mr Kennedy could not locate a worksheet for the test dated 18 June 2015 he noted the sample sheet dated 18 June 2015 which was in the defendant's tender bundle Exhibit 4 at page 4 behind tab 16.
Mr Kennedy rejected the suggestion that using only one sample was inappropriate having regard to the size of the stockpile tested and the fact it was a material evaluation as opposed to a detailed compliance test: T178.2. However, he accepted that he was not on site for the purposes of the 18 June 2015 testing. He said that Mr Hewes of the plaintiff had never asked for a certificate of compliance at all. He agreed that he only relied on the word of Mr Bullock that limited testing was requested by Mr Hewes. Mr Bullock did not give evidence in the proceedings. Mr Kennedy denied that the test was for the purpose of it being provided to RCC to show that the material was DGB 20 compliant: T178.41.
In relation to the second stockpile test, Mr Kennedy said that he understood that it was requested by RCC.
In relation to the third test, Mr Kennedy said that it was an in situ test and he was involved in the testing. He said he was present at that testing as an observer due to the nature of the testing requested.
In relation to the third test report numbered 3498 dated 30 July 2015, Mr Kennedy denied that there were any signs of clay contamination where KH was testing on the day. He said that if there was a large contamination he would have noted it and there was not: T185.44. He agreed that a jackhammer was used but denied that testing was beyond 180mm-220mm and was up to 400mm. Mr Kennedy said that at 400mm the testing would have been into the sub-grade materials and there was only testing up to 180mm to 220mm in depth: T186.38. He stated that he assumed the purpose of the testing was to assess the base and sub-base used. He agreed that the findings led to a requirement for rectification as recommended by the site geotechnical engineer: T186.33.
It was put to Mr Kennedy that the first and second tests involved sampling which was not compliant with Specification 3051 due to there being only one sample. Mr Kennedy emphasised again that there was only a request for a material evaluation and not a full test which would have required more time and expense. Mr Kennedy denied that in undertaking the tests he was putting the interests of the plaintiff behind those of RCC: T189.20. He also denied that the first and second stockpile tests if undertaken comprehensively may have produced a different outcome and were in fact not done properly: T189.24. He rejected the suggestion that there was no stockpile available for the second test although he conceded that he was not present. Mr Kennedy said the third test at the request of RCC was a comprehensive test in relation to the pavement layers of the sub-base and base: T190.8. He agreed that he had not consulted Mr Hewes that the third tests were required by RCC: T191.1; T192.10.
It was put to Mr Kennedy that he should have provided advice to Mr Hewes that something should have been done to verify the compliance of the material used for the base and sub-base with the DGB 20 standard. Mr Kennedy said that Mr Hewes ran his own contract with RCC and KH did the testing at his request: T194.26-.33. When it was suggested that KH's obligations went well beyond testing, Mr Kennedy said that KH's role was to undertake work as requested by the plaintiff: T194.47. Mr Kennedy in answer to a question from the court said that he advised Mr Hewes that the material supplied by Wilsons Quarry was not compliant and he had told Mr Hewes from where to get compliant material: T195.10.
In re-examination, Mr Kennedy confirmed that the 18 June 2015 test was a material evaluation test as the words "Material Evaluation - Wilson's" are used on the test report next to the word "Location". He stated that this was a much more limited test. This test indicated that the material examined failed the liquid limit percentage and the plasticity index percentage.
In his evidence in re-examination Mr Kennedy confirmed that although only one sample was apparently used in the 18 June 2015 test, as it was a material evaluation test it was sufficient to use a blended sample. He stated that under Specification 3051 it was permissible to combine a set of samples into a single sample and that was his understanding as to what had occurred with the 18 June 2015 test.
In relation to the second stockpile test, Mr Kennedy said that further samples were not required as the sample analysed had failed the earlier tests undertaken and therefore the sample could not comply with DGB 20. More detailed testing was stated by Mr Kennedy to be considerably more time consuming and expensive.
In relation to the third in situ test, Mr Kennedy said that each of the seven samples was treated separately and tested as well as the combined test. He said that the seven samples tested were divided into three parts including one for the plaintiff and one for RCC. The part for the plaintiff was available if the plaintiff wished to challenge KH's test: T203.45-T204.14. Mr Kennedy said that he told Mr Hewes that samples were available. Mr Kennedy accepted that this was not set out in his affidavit: T204.42. Mr Kennedy stated that there was general consistency across all the samples taken: T205.36.

[14]

Evidence of Edward Mead

The defendant read an affidavit of Mr Edward Mead affirmed 26 July 2019. Mr Mead was employed in the role of Quality Manager of KH at the relevant time. In his role as Quality Manager, Mr Mead is responsible for quality control of the various geotechnical testing that KH provides which includes providing training to KH employees. Mr Mead has accreditation, training and qualifications as an approved tester: affidavit paragraphs 6-8.
In paragraph 9 of his affidavit, Mr Mead states that in around May 2014 Mr Miller told him that KH was approached by Mr Hewes of the plaintiff to provide geotechnical services in relation to the development of the new Parkes District Hospital. Mr Miller asked Mr Mead to prepare a schedule of rates for the testing and supervision. Mr Mead prepared a quote but at the time was not provided with any information about the project or the level of service required by the plaintiff: affidavit paragraph 9.
In paragraph 10 of his affidavit, Mr Mead states that on or around 27 May 2014 he prepared and sent a letter to the plaintiff with the quoted rates. He said he did not have any conversation with Mr Hewes prior to sending the quote. Other identical letters were sent to other earthworks contractors who had also tendered for the project and had requested a quote from KH. Other evidence showed that while the letter was under the name of Mr Mead, it was sent by Mr Kennedy to Mr Hewes by email on 30 May 2014.
Mr Mead states that "Level 1" supervision is mandatory for all earthworks under the relevant Australian Standard AS 3798-2007 and that he prepared the quote to the plaintiff on the basis of Level 1 supervision because, given the size of the project, he considered it "very likely" that the head contractor would specify a requirement for Level 1 supervision in relation to the earthworks to be carried out. Mr Mead states that having searched the records of KH, he never received a written response to the quote nor any other communication from Mr Hewes or any employee of the plaintiff in relation to the quote. Mr Mead said that the quote attaches a copy of the standard rates charged by KH in respect of its services.
On 28 July 2014, Mr Mead sent an email to Mr Hewes attaching AS 3798-2007 which is the applicable Standard for earthworks. Although Mr Mead cannot now recall why he sent the email, he believes it may have been because he had formed the view that Mr Hewes was not familiar with the Australian Standard and it was a common practice of his at the time to send the Standard to clients that he was not familiar with or clients of whom he had formed a view that they were not aware of its requirements: affidavit paragraph 15.
Mr Mead gives evidence that on around 13 August 2014 he had a conversation with Mr Hewes about the source of road base material to the following effect: "16. On or around 13 August 2014, Adam Hewes attended the K&H office out of the blue and spoke with me. We had a conversation which included words to the following effect: Adam "Where can I get roadbase? The specification calls for DGB20." Eddy "If the drawings require that you use DGB20 compliant base course material it will need to be certified in accordance with RMS Specification 3051." Adam "Where can I source a roadbase material that will meet the DGB20 specification?" Eddy "The only local sources of certified DGB20 material I am aware of are the Westlime Quarry in Parkes, and the Millers Metals Quarry in West Wyalong.""
Mr Mead states that Mr Hewes did not request that KH inspect, verify or certify any road base material it used on the project for compliance with Specification 3051 during this conversation or at any other time: affidavit paragraph 17.
Mr Mead sets out in his affidavit the steps required under Specification 3051 to certify road base material as conforming to the DGB 20 standard, particularly in relation to project-specific stockpiles. Mr Mead states that he requested Mr Hewes in the 13 August 2014 conversation to send him a copy of the plans for the project works as he knew the plans would contain details relevant to the bulk earthworks operations which were required if KH was to provide Level 1 supervision. These were received from the plaintiff's employee Rebecca: affidavit paragraph 21.
Mr Mead gives evidence in his affidavit of the testing undertaken by KH between 12 August 2014 and 17 June 2015. He exhibits the reports prepared and issued to the plaintiff by KH in relation to the services provided. He states that he attended the Site on a few of the occasions KH provided the services. He said that Mr Berry undertook the majority of the inspections and testings at the Site for KH prior to him moving to Sydney in about November 2014: paragraph 26.
Mr Mead states that as far as he was aware, KH was never asked by Mr Hewes or another representative of the plaintiff to provide a Level 1 report which would have confirmed the testing was undertaken in accordance with the Level 1 supervision regime and which would have required a fulltime presence by a technician: paragraph 31.
Mr Mead states in paragraph 34 of his affidavit that the plaintiff never directly informed him of the source of the stockpile he chose to use and never requested that he test it for compliance with DGB 20. Instead, KH only undertook density testing of the compaction of the road base in situ.
Mr Mead confirms in paragraphs 35-37 of his affidavit that he was requested by Mr Hewes to undertake a final material evaluation report to confirm compliance with DGB 20 by Mr Hewes on 18 June 2015 in a conversation to the effect set out in Mr Hewes' affidavit. He said that as far as he was aware, this was the first time Mr Hewes had asked him or anyone else at KH to test the quality of the road base material the plaintiff had used in the project. Mr Mead agreed that his comments suggesting that the road base would not meet the DGB 20 specification to Mr Hewes were made on the basis of his visual appraisal of the Site, observed during his attendances for compaction testing and based on his previous experience in the field.
On 18 June 2015, Mr Hewes sent Mr Mead a copy of the RTA Wilsons' 8 August 2012 certificate. In paragraph 42 of his affidavit, Mr Mead states that around 18 June 2015 Mr Hewes requested him for KH to undertake testing of compliance of the road base with Specification 3051. Mr Mead states that a material evaluation testing was undertaken on 18 June 2015 and this demonstrated non-compliance with specification 3051. He does not suggest that he undertook the sampling himself but rather it appears the sampling was undertaken by Mr Perry Bullock of KH: paragraph 45(b). Mr Mead said that this lead to further testing at the request of RCC by KH of the quality of the asserted DGB 20 material that had been placed by the plaintiff within the internal roadways and car parks at the Site leading to the report from KH issued on 29 July 2015.
In his oral evidence in chief, Mr Mead noted in relation to paragraph 20 of his affidavit that Specification RMS 3051 required an extensive sampling and testing regime in order for there to be a certified stockpile. In relation to the second sentence of paragraph 20 of his affidavit, he said that further testing may be undertaken if the superintendent at the Site had concerns in relation to the material.
Mr Mead was cross-examined in relation to the quote he prepared which was forwarded to the plaintiff by Mr Kennedy on 30 May 2014. He said he sent a schedule of rates as he could not give a lump sum quotation for the work as he did not know the scope of testing that was required: T212.8. Mr Mead asserted that the quote did not cover for any material evaluation of the road base materials to be used and it was only a quote for earthworks: T213.17. He said there were different rates for pavement work: T213.28. Mr Mead stated that the words "material suitability and workability" in the quote letter referred to the material to be used for the bulk earthworks. This was consistent with Mr Kennedy's evidence. Mr Miller said this was due to the reference to Level 1 supervision which was only relevant for bulk earthworks: T213.41-.48. He said at this stage he had never met Mr Hewes or had any experience of him and had not heard of his company: T214.20. He said the reason that he forwarded AS 3798-2007 to Mr Hewes (Mead affidavit paragraph 14), was he had not heard of him previously and he wanted to let him know what was involved in Level 1 testing: T214.20.
Mr Mead agreed that Mr Berry had been allocated from KH to be KH's representative in dealing with the plaintiff: T216.5. He said the superintendent for the Site was Mr Paul Alsop at RCC. It was put to Mr Mead that a meeting should have occurred with Mr Alsop in relation to testing before the work commenced. He initially said that the contractor (the plaintiff) should have attended to that and KH had to work under his direction. He said the meeting should have been set up under the applicable Standard AS 3798: T217.18.
It was put to Mr Mead that the conversation set out in paragraph 16 of his affidavit where Mr Hewes sought his advice on obtaining road base did not occur. Mr Mead stood by his evidence (T217.34; T218.31) and said that he remembered the conversation (T218.35).
Mr Mead said that he only became aware of the RTA Wilson certificate in June 2015 when it was sent to him by Mr Hewes (Mead affidavit paragraph 39; T220.6). Upon review of the certificate, Mr Mead said he was of the view that it was "not worth the paper it's written on": T219.35. However, Mr Mead said that the plaintiff could have had approval from the superintendent at the Site for use of the material before actual delivery of the material: T220.34.
In relation to the conversation with Mr Hewes referred to in paragraph 51 of Mr Hewes' first affidavit and paragraph 35 of Mr Mead's affidavit, Mr Mead said that he believed this was in a telephone conversation and not on Site: T222.7.
When it was put to Mr Mead that he should have thought that it was appropriate to tell Mr Hewes that the road base in his view would not be DGB 20 compliant, Mr Mead said that Mr Hewes was told after the first test verbally that the material was not going to conform (T222.47; T223.5; T227.15). He said Mr Hewes was told as soon as the results were obtained. He said that the material should have been tested prior to delivery and KH was only performing ad hoc services when requested by Mr Hewes in June 2015. Level 1 services required more testing: T222.45-T223.48; T230.44.
Mr Mead said that when he was first asked to undertake testing by Mr Hewes on 18 June 2015 (Mead affidavit paragraph 35) he asked Perry Bullock of KH to do the sample testing: T225.37; T226.6. He said he informed Mr Hewes of the results of the testing but did not give him the report as other invoices had not been paid: T227.11.
In relation to paragraph 45(c) of his affidavit, Mr Mead agreed that the third report occurred because of the earlier two stockpile tests although the second stockpile test is not mentioned in his affidavit in paragraph 45: T228.33.
Mr Mead confirmed that prior to 18 June 2015, KH had not tested the material for DGB 20 compliance but was aware that the plans and specifications under the contract between the plaintiff and RCC required the use of DGB 20 compliant material: T231.9. When it was put to Mr Mead that he should have told Mr Hewes earlier about his doubts about the material complying with the DGB 20 standard, Mr Mead said it was not his responsibility and the material should have been certified as compliant before it was delivered. He said that a test would not be undertaken by KH unless it was requested: T231.14; T231.43; T242.19; T243.12; T244.13. In relation to the suggestion that he had not told Mr Hewes of the need to get certification of the material before delivery, Mr Mead said that he sent him AS 3798-2007 and told him where he could get the material locally: T232.1-.30. See paragraph 16 Mr Mead's affidavit.
In relation to the first two stockpile reports undertaken in 2015, it was put to Mr Mead that they did not comply with the minimum number of bulk samples per lot set out in Table 3051.7 in Specification 3051 as only one sample was taken. Mr Mead said that those requirements related to certifying a stockpile and that was not the task in the first two stockpile reports in 2015: T237.41; T238.13; T239.38; T240.24. However, he agreed that it appeared Mr Bullock had only taken one sample and further samples were required for a full test: T240.15; .24.
Mr Mead accepted that the first report undertaken dated 18 June 2020 was not a full DGB 20 compliance test but a lesser form of test: T240.15. Mr Mead said that KH was never asked to certify that the material was DGB 20 compliant until 2015.
Mr Mead was taken to paragraph 3.3.5.1 of the Civil Specification between the plaintiff and RCC relating to construction of the subbase and base course and in particular to the statement: "WITNESS POINT: provide adequate notification that the sub-base has achieved full conformance and specified thickness of overlaying layers can be achieved" (Exhibit A volume 2 page 424). Mr Mead said this requirement was not discussed with Mr Hewes as KH was only consulted when asked for advice which was on an ad hoc basis. He said that under the testing performed by KH it only related to compaction testing: T241.48.

[15]

Evidence of Colin Berry

The defendant read an affidavit of Mr Colin Berry sworn 27 July 2019. Mr Berry is a Geotechnician and Laboratory Manager at KH. He has been employed by KH since around 2003 and has an accreditation for testing of construction materials. As at 2014, he was employed in the position of Laboratory Manager for KH. In November 2014, he moved to Sydney to manage KH's operations in Sydney.
Mr Berry states that in about May 2014, Mr Mead told him that KH had provided Mr Hewes with a quote for the provision of Level 1 supervision for the earthworks involved at the Parkes District Hospital site. Mr Berry said he was not involved in the quotation process and was not privy to any conversation with Mr Hewes in relation to the quote that was provided. Mr Berry states that from his previous experience, he knew that Level 1 supervision in accordance with AS 3798-2007 was "almost always required" for major projects. Mr Berry states that in around early August 2014 Mr Kennedy told him that he would be the geotechnician from KH who would provide Level 1 supervision of the plaintiff's works at the hospital Site.
Mr Berry states that on around 12 August 2014, he attended the Site as KH had received a request from the plaintiff for an inspection of the topsoil stripping. He states that when he arrived, the work had already been partly undertaken and he thought it was unusual as his understanding was that KH was retained to undertake Level 1 supervision and he would need to supervise the entirety of the stripping works. He said that as he was setting up to provide fulltime supervision after his inspection, Mr Hewes said to him words to the effect that that was all that was required at present and that he would give Mr Berry a call when the next stage was ready for testing. Mr Berry told Mr Mead and Mr Kennedy of this conversation and from that point onwards, Mr Berry only attended the Site as and when requested by Mr Hewes following testing being booked in at KH's office.
Mr Berry states in paragraph 17 of his affidavit that from around August 2014 and throughout the project, KH provided ad hoc geotechnical testing services when they were requested by Mr Hewes. He states that KH did not have a technician such as himself on the Site fulltime as it would have been the case if KH was engaged on a Level 1 supervision basis. Mr Berry expresses the opinion that the services provided by KH were "more attuned" to what is known as Level 2 supervision and where services are provided as requested. In paragraphs 19 to 22 of his affidavit Mr Berry sets out the services that were provided by KH up to November 2014 when he went to Sydney which included stripping inspections and proof rolling testing.
Mr Berry states in his first affidavit that he was not privy to any conversation with Mr Hewes about the use of DGB 20 compliant road base material at the Site and was not asked by Mr Hewes or any other representative of the plaintiff on Site to inspect, verify or certify the material it intended to use on the Site for compliance with Specification 3051.
Mr Berry states he received on 25 August 2014 from Rebecca from the plaintiff's office, a copy of the test certificate on the Wilsons' material dated 8 August 2012. Mr Berry states that from the email he received, he understood that the plaintiff intended to rely on the Wilson's certificate to establish that the stockpile being used was DGB 20 compliant. Mr Berry states in paragraph 28 of his affidavit that he knew that the certificate did not constitute adequate certification of the specific stockpile being used by the plaintiff for the project so he forwarded the email to Mr Kennedy for his consideration. He states that Mr Kennedy told him that he had some discussion with Mr Hewes about the certificate relating to the Wilson's Quarry material.
Mr Berry also swore an affidavit dated 26 June 2020 in relation to his sampling undertaken on 20 July 2015 for the purposes of the second test. Mr Berry states that whilst he cannot remember the exact size of the stockpile from which he took the samples, it was his "general recollection" that it was somewhere between three to five cubic metres of uncompacted material which is approximately six to eight tonnes. This was confirmed in cross-examination. He indicated, in answer to a question from the court, that he had an actual recollection of undertaking the sampling. Mr Berry gave evidence that he tested the samples and issued a report dated 20 July 2015. He states in his affidavit that as the stockpile material failed certain tests he did not proceed to undertake further testing: paragraph 14. In paragraph 7 of his second affidavit he said he took 5 sub-samples for the purposes of the testing.
Mr Berry confirmed that he understood that KH had been retained to provide Level 1 services (T250.40; T252.35) but only, as far as he was aware, in relation to the bulk earthworks. Initially, he said he did not become aware that the plaintiff had tendered for the pavement works until 2015 as he had not seen the plans and specifications or asked Mr Hewes what the contract covered: T251.4; T251.28. Later, he agreed that he had performed testing in relation to the pavement layers in September 2014: T255. He agreed that as at 12 August 2014 he had no specific plan in place in relation to the testing required but had merely understood from Mr Kennedy that Level 1 testing was needed: T252.35. Mr Berry said that fulltime presence of a technician meant fulltime when the plaintiff was undertaking the works: T253.3.
Whilst Mr Berry conceded that he was there to help the client comply with its contract (T255.26) and that he knew that DGB 20 compliant material was to be used (T255.30), he said it was not the normal procedure to discuss whether the material was DGB 20 compliant because this was usually done before the material came to the Site. The usual practice was that there was to be prior certification: T255.37-.48. KH's role was to give advice in relation to compaction not in relation to the suitability of the material: T256.3. Mr Berry disagreed that it was appropriate for him to discuss with Mr Hewes whether the material was suitable for use: T256.6; T256.19.
Mr Berry was taken to a number of day worksheets which referred to Level 1 services (Exhibit A page 147 Volume 1). Although Mr Berry said that this was not changed on the sheets, it appears that it was. See the references on the day work reports in Exhibit A Volume 1 page 154 and following.
When asked whether he formed any view from observing the material used by the plaintiff as to whether it was likely to be DGB 20 compliant, Mr Berry said he had only vaguely observed the stockpiles: T260.34. When he received the certificate in August 2014 provided by Mr Wilson he said that he immediately forwarded it through to Mr Kennedy, as it was something which he regarded appropriate for Mr Kennedy to deal with: T261.26. He said it was above his level to deal with and it he did not see it as his role to discuss it with the plaintiff: T261.44.
Mr Berry could not assist as to who requested the stockpile test to be performed by him, being the second test in 2015: T262.12. He said it was someone in the KH office. He said he was not aware then that a similar test had been carried out for Mr Hewes prior to that: T262.5. He rejected the suggestion that there was no stockpile present and he said that the stockpile was about eight tonnes: T262.26. He gave evidence as to how he obtained the samples for the purposes of his report: T263.
When taken to the RTA QA Specification 3051 (Exhibit 4 page 244), he said he took five samples. When asked about the Civil Specification paragraph 3.3.5.1, Mr Berry agreed that he understood the requirements to mean that the sub-base conformed with the plans and specifications: T265.9; T266.2.
In re-examination, the court asked Mr Berry why he stopped putting "Level 1" on his day work reports. Mr Berry said this was because he was no longer providing Level 1 services: T267.4.

[17]

Contractual principles applicable

It is necessary for the court to determine the contract for professional services which was entered into between the plaintiff and the defendant in 2014. It is also necessary for the court to make factual findings in relation to disputed conversations in the light of the cross-examination of the witnesses and the objective circumstances including by considering relevant contemporaneous documents and conduct, including post-contractual conduct.
The following general principles apply to the task of contractual construction and determination which the court must perform.
In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, the majority of the High Court stated the following at paragraph [35]: "[35] Both Verve and the Sellers recognised that this court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience"."
In Caringbah Investments Pty Ltd v Caringbah Business & Sports Club Ltd (in liquidation) [2016] NSWCA 165, Bathurst CJ (with whom McColl and Macfarlan JJA agreed) stated as follows at [93]: "[93] The relevant principles of construction are well established. In Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640, the plurality reaffirmed that the meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood them to mean. It requires consideration of the language used, the surrounding circumstances known to the parties and the commercial purposes or objects to be secured by the contract: at [35]; see also Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 89 ALJR 990 at [46]-[52]."
In Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 the majority of the High Court stated as follows at paragraphs [16]-[17]: "[16] It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it. [17] Clause 4 is to be construed by reference to the commercial purpose sought to be achieved by the terms of the lease. It follows, as was pointed out in the joint judgment in Electricity Generation Corporation v Woodside Energy Ltd, that the court is entitled to approach the task of construction of the clause on the basis that the parties intended to produce a commercial result, one which makes commercial sense. It goes without saying that this requires that the construction placed upon cl 4 be consistent with the commercial object of the agreement."
See also Management Services Australia Pty Ltd t/as Peak Performance PM v PM Works Pty Ltd [2019] NSWCA 107 at [59] per Sackville AJA (with whom Bathurst CJ and Gleeson JA agreed).
In Lawrence v Ciantar [2020] NSWCA 89 Bathurst CJ stated as follows at [98]-[99]: "The principles surrounding the construction of commercial contracts in this country are well established. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35], the plurality (French CJ, Hayne, Crennan and Kiefel JJ) stated that "[t]he meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean" in context. The Court stated that "it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract": see also Mount Bruce Mining at [46]-[49]; Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16]; Victoria v Tatts Group Ltd (2016) 90 ALJR 392; [2016] HCA 5 at [51]. In Mount Bruce Mining it was pointed out at [46] that context includes "the entire text of the contract as well as any contract, document or statutory provision referred in the text of the contract"."
In that case, it was submitted on appeal that there was some ambiguity in the contract. Bathurst CJ stated as follows at paragraph 101 in Lawrence: "101. In those circumstances, regard can be had to the surrounding circumstances objectively known to the parties consistent with the so-called "true rule" in Codelfa Constructions Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 352; [1982] HCA 24. It is not necessary to consider in the present case whether and to what extent the use of surrounding circumstances as an aid to construction is limited to cases of ambiguity: see, for example, Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [79]; Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [80] - [82]."
In relation to determining what the contract was which was entered into, in Jefferis v Gells Pty Ltd [2018] NSWDC 288 I stated as follows in paragraph 124: "The court must consider the whole of the evidence, including the conduct and communications of the parties, in determining objectively the contract reached between the parties: Bryson JA (with whom Spigelman CJ agreed) in Redowood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 at [130]. Some cases are not easily analysed in classic offer/acceptance terms: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 176-7."
Redowood was followed by Brereton J in APT SEA Gas Holdings Pty Ltd v ANP SEA Gas Holdings Pty Ltd [2010] NSWSC 1221 at [21].
Any relevant post-contractual conduct of the parties is admissible and must be taken into account on the question of whether a contract has been formed and the content and terms of the contract: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at 163-164; Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 at [124]-[125]; Australian Medico-Legal Group Pty Ltd v Clareleigh Mosman Pty Ltd [2017] NSWCA 218 at [70].

[18]

Submissions of the parties

Detailed written submissions were provided by the parties. In addition, there were oral submissions made.
The plaintiff submitted, in general summary, as follows: 1. Mr Hewes' versions of significant conversations with persons from KH should be preferred. This included the Hewes' conversation where the quote from KH for Level 1 services was allegedly accepted by him on behalf of the plaintiff: written submissions dated 31 July 2020 paragraphs 28-33; 2. There is no evidence the plaintiff's acceptance of the 30 May 2014 offer was limited in any way. It included "material quality verification" and advice on "construction issues" and "material suitability" as set out in the letter. The use of the words "do and charge" in the acceptance conversation, did not alter the substance of the acceptance. Mr Hewes' version of the acceptance conversation should be preferred. The quote related to earthworks and roadworks: written submissions paragraphs 34-42; 3. The conversation alleged by Mr Kennedy with Mr Hewes about the adequacy of the RTA Wilson's certificate should be rejected. Similarly, Mr Mead's evidence about a conversation with Mr Hewes about sources of DGB 20 compliant material is unlikely having regard to the state of Mr Hewes discussions with Mr Wilson at the time: written submissions paragraphs 43-53; 4. In relation to the first stockpile test, this was requested by Mr Hewes. The results were not sent to him until 29 July 2015 but RCC appeared to have them earlier. There should have been more than one sample taken for testing. If the test results had been provided to the plaintiff earlier it would have taken steps to source material for the base layer earlier which complied with the contract: paragraphs 54-60. Any suggestion that Mr Mead told Mr Hewes orally the results of the test should be rejected; 5. In relation to the second stockpile test, despite Mr Berry's evidence, there is "significant doubt" as to whether there was a sufficient stockpile on which to conduct adequate sampling: written submissions paragraphs 61-67; 6. In relation to the third in situ test, the wrong depth was tested. The base and sub base needed to be tested separately to get a valid result even though the plaintiff believed all DGB 20 compliant material was needed: written submissions paragraphs 68-77; 7. There was a contract between the plaintiff and the defendant for the defendant to provide Level 1 inspection and testing services "and to oversee all aspects of the Plaintiff's work in the construction phase of the contract between the Plaintiff and RCC." This included "material quality verification" and reporting and certification of works for the plaintiff to enable the plaintiff to meet its contractual obligations. The defendant was aware of the terms of the contract between the plaintiff and the defendant. The contract was breached as proper material quality verification was not provided including as to the material supplied by Wilson's and proper certification and testing was not provided including as to the 18 June 2015 testing: written submissions paragraphs 82-85; oral submissions; 8. In the alternative, the terms are implied as a matter of law and/or fact into the contract as found by the court. The plaintiff lost its opportunity to ensure that it obtained road base which was DGB 20 compliant so as to comply with the RCC contract: written submissions paragraphs 86-93; 9. The defendant owed a duty of care to the plaintiff to exercise due care and skill in the provision of services under the contract to assist the plaintiff in compliance with its contractual obligations. It breached that duty as alleged in the contract cause of action and by its negligent testing and sampling of the in situ road base. As a result, the roads were not constructed with compliant road base material under the RCC contract and the contract was terminated resulting in the plaintiff losing the asphalting work under the contract: written submissions paragraphs 94-99; 10. The damages which should be awarded include the costs of the rectification works, the loss of profits in the asphalting works and the unnecessary materials purchased: written submissions paragraphs 100-103.
The defendant submitted, in general summary, as follows: 1. The defendant's witnesses should be preferred to Mr Hewes in relation to the important disputed conversations, including the conversations as to what was agreed between the parties; 2. The plaintiff and KH entered into a contract for the provision of ad hoc testing and inspection services, not the contract as asserted by the plaintiff. Under the agreement that was entered into between the parties, KH carried out various testing and inspection services between 12 August 2014 and 17 June 2015 as and when requested by the plaintiff. The evidence of Mr Kennedy as to his conversations with Mr Hewes should be accepted. This conclusion is supported by the parties' subsequent conduct and constitutes the contract between the parties. The quote forwarded on 30 May 2014 to the plaintiff was not accepted and does not amount to a contractual document; 3. Even if the quote forwarded on 30 May 2014 to the plaintiff formed part of the contract that was entered into between the parties, the phrase "Material Testing and verification services" in the quote document, objectively construed, was in respect of the sub-grade layer not the sub and base courses. It related to the earthworks part of the work to be performed by the plaintiff not the subsequent work to be performed: written submissions paragraphs 6, 50-54. This is confirmed by the heading reference to Level One testing services, the reference to AS 3798-2007 which relates only to earthworks and the specific attachment of AS 3798-2007 to the quote document by the defendant. The words "ALL aspects of the construction phase" must therefore only be a reference to the construction of the earthworks: oral submissions; 4. The submission of the plaintiff that the terms of the contract entered into between the parties included that KH would provide Level 1 inspection and testing services and KH would oversee all aspects of the plaintiff's work in the construction phase of the contract between the plaintiff and RCC should be rejected. In relation to the first alleged term of the contract, if it is found, Level 1 inspection and testing services relate to the earthworks part of the contract and do not require testing of the road base at either Wilson's Quarry or following delivery of the material to the project Site. Level 1 testing and inspection services as understood objectively do not relate to the construction phase of the roadworks. In relation to the second term submitted, that KH would oversee all aspects of the plaintiff's work in the construction phase of the contract, no such term was pleaded and the submission cannot be made by the plaintiff. If it was a term, no such testing was required by the plaintiff; 5. In relation to the submission of the plaintiff that there was an implied term of the contract in the alternative, that KH would provide Level 1 inspection and testing services and would oversee all aspects of the plaintiff's work in the construction phase of the contract between the plaintiff and RCC, no implied terms to that effect were pleaded and the submission cannot be made. No application was made to amend to include the implied term alleged; 6. In relation to the first stockpile test, the second stockpile test and the third in situ test, the plaintiff does not adduce any evidence which establishes that the stockpile material and the material actually used tested in the in situ test, in fact complied with the requirements of DGB 20. The RTA Wilson's certificate establishes that the material was non-compliant or does not establish that it was compliant. Accordingly, the plaintiff's case fails on causation even if breach of contract is established. Further, it is clear on the evidence that the second stockpile test and the third in situ test were undertaken on behalf of RCC, not the plaintiff, and therefore there can be no breach of contract as to the two latter tests on which the plaintiff can sue; 7. The wide duty of care alleged in the plaintiff's written submissions (see paragraph 94 of the plaintiff's written submissions) cannot be relied upon. No such case was pleaded against KH and therefore the submission cannot be made. The plaintiff's pleaded case was confined to an allegation that KH owed a duty to provide services to the standard of a reasonably competent engineering company providing Level 1 inspection and testing services in the course of the construction works. Level 1 inspection and testing services relate to the earthworks and did not require testing of the road base at any time. It is also not pleaded that in undertaking the second stockpile test and the third in situ test for RCC, that KH owed a duty of care to third parties such as the plaintiff; 8. Mr Hewes was aware from his conversation with Mr Kennedy that the material sourced from Wilson's Quarry may not be DGB 20 compliant because of Mr Kennedy's comments on the RTA Wilson's certificate. There was no request from Mr Hewes to KH to test the road base material prior to 18 June 2015; 9. Mr Hewes at all times was aware he had to purchase DGB 20 compliant road base for at least part of the road base layers. He relied on the representations made to him by Mr Wilson and the RTA Wilson's certificate; 10. There is no admissible evidence as to loss which can substantiate the plaintiff's damages claims; 11. Even if KH is liable, any liability should be reduced on account of the plaintiff's contributory negligence and Wilson's (Glenashka's) role as a concurrent wrongdoer under the CLA.

[19]

Credit and reliability issues

The court has set out above its background factual findings in relation to the matter. There are a number of disputed factual matters which need to be determined. Relevant to those determinations are the questions of the credit and reliability of the various witnesses who gave evidence.
Overall, in my view matters of credit are not particularly significant in determining the factual questions in dispute. No submission was made to the contrary. All of the witnesses who gave oral evidence appeared to me to give their evidence honestly and made concessions when appropriate. The events in relation to the proceedings occurred five to six years ago. It is expected that there would be differences in the recollections of the parties on relevant matters particularly in relation to disputed conversations. The first affidavit of Mr Hewes was sworn on 16 August 2018 about three to four years after the more important events. I saw no indication that any of the witnesses was being dishonest or was intentionally exaggerating in relation to their evidence. Each appeared to be doing their best to recollect what occurred and to give truthful evidence. It is clear, however, that Mr Hewes is of the firm opinion that KH did not act with due care in relation to the geotechnical services which it provided to the plaintiff. Mr Kennedy and Mr Mead equally were of the firm view that KH had provided the services it had been requested to provide and it was not up to KH to ensure the plaintiff complied with its contract with RCC.
In relation to the issue of the reliability of the witnesses' evidence, many of the important disputed facts turn on conversations. As stated, these conversations occurred a long time ago. Memories may well be influenced by perceptions as to what should have occurred. In my view, it is important to consider the different versions of the conversations in the light of any independent evidence or any contemporaneous documentary evidence which renders one version more likely than the other. The entire surrounding circumstances need to be considered.
In Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [31], the majority of the High Court stated as follows: "31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical."
In relation to conversations occurring many years ago, the comments made by McLelland J in Watson v Foxman (1995) 49 NSWLR 315 at 319 are, and remain, instructive.

[21]

Hewes/Miller conversation

The next factual issue to be determined is the content and effect of the conversation between Mr Hewes and Mr Miller in about May 2014. Both agree a conversation occurred. In paragraph 34 of his first affidavit, Mr Hewes said that he attended the offices of KH and spoke with Mr Miller and sets out his recollection of the conversation. In paragraph 8 of his affidavit, Mr Miller gives a more limited version of this conversation and denies the conversation set out in Mr Hewes' first affidavit. He also states that Mr Hewes came into the office. Although the quote actually sent refers to a telephone call on 27 May 2014, I accept the evidence of Mr Hewes and Mr Miller that Mr Hewes came into the KH office. Nothing turns on the distinction.
Despite paragraphs 7-9 of Mr Miller's affidavit, he accepted in cross-examination that the first quote in paragraph 34 of Mr Hewes' first affidavit where he refers to a need to have "Level 1 geotech supervision and reporting done", sounded correct: T126.2. He disputed the third quote in paragraph 34 of Mr Hewes' affidavit as to what the estimates needed to cover.
In the light of this evidence, I accept Mr Hewes' evidence in paragraph 34 of his first affidavit that the first quoted part referring to "Level 1 geotech supervision and reporting" was referred to in the conversation with Mr Miller. This is in my view likely, having regard to the contractual requirements with RCC.
I accept Mr Miller's evidence that in relation to the second part of the conversation set out in paragraph 34 of Mr Hewes' first affidavit, it is likely that Mr Miller would have referred to Mr Kennedy or Mr Mead having regard to the latter's position in KH: see T126.7.
In relation to the third quote in paragraph 34 of Mr Hewes' first affidavit, I prefer Mr Miller's evidence: T126.13-.16. I think it unlikely that Mr Hewes would have stated this as it was not necessary for the conversation in question. At that time, the contract with RCC was not finalised and it is likely that any request of this nature would have been left for any discussion with Mr Kennedy or Mr Mead. Mr Kennedy also gave evidence that generally bulk estimates were not given by KH except in large projects. If Mr Hewes had said words to the effect as to what the estimates needed to cover, in my view it is likely that Mr Miller would have said something to the effect that a fixed quote was not generally given by KH for this type of service on a significant project. Overall, the timing of the conversation makes the third quoted part of Mr Hewes' first affidavit unlikely.
The defendant also relied on Mr Hewes' very limited recollection of the conversation given in cross-examination: T95.25-.33. Certainly, this suggests a limited recollection by Mr Hewes of the conversation. However, he was cross-examined without reference to his affidavit. I accept the submission of counsel for the plaintiff that the answer at T95.33 is not decisive. It is however relevant to a determination of the issue and must be taken into account.

[22]

Hewes/Kennedy alleged acceptance of quote conversation

The next conversation in issue is the alleged conversation between Mr Hewes and Mr Kennedy set out in paragraph 35 of Mr Hewes' first affidavit which is said to have occurred after receiving the quote sent by Mr Kennedy to Mr Hewes on 30 May 2014. Mr Hewes states that he said to Mr Kennedy that he would use KH's services for the Level 1 supervision for the hospital "bulk earthworks and road works as per your rates on a do and charge basis" and that Mr Kennedy agreed to this. A quite different conversation is set out in paragraph 32 of Mr Kennedy's first affidavit in which Mr Kennedy states that he informed Mr Hewes that as the latter did not want to pay for a technician to be on site fulltime, it would no longer be a Level 1 service but would be on a do and charge basis.
In my view, having given careful consideration to the competing versions, Mr Kennedy's version should be preferred. First, the timing of the conversation in Mr Kennedy's affidavit is more likely having regard to Mr Berry's evidence about the conversation he had with Mr Hewes when Mr Hewes told Mr Berry that the plaintiff would call him when he was needed for further testing: first Berry affidavit paragraph 14; see also T145.34-.43. This is itself consistent with Mr Kennedy's first affidavit account as to what he was told by Mr Berry: paragraph 30. Mr Berry impressed me as an honest and overall reliable witness. I reject the submission in paragraph 31 of the plaintiff's written submissions to the contrary. The Kennedy version is consistent with the Berry evidence.
Secondly, Mr Hewes accepted in his oral evidence that there was no geotechnical person from KH present on the Site fulltime from 9am to 5pm each day: see also T145.43. This was also the evidence of Mr Berry. Fulltime supervision by a suitably qualified technician was referred to in the quote sent on 30 May 2014 to the plaintiff from KH. I read this requirement in the manner submitted by the plaintiff, as meaning fulltime supervision when works are being done by the plaintiff. Further, it appears on all the evidence that Level 1 services in relation to the earthworks stage were not provided by the defendant to the plaintiff. Certainly it seems that stripping of the topsoil layer had started by the plaintiff at the Site before Mr Berry had arrived on or about 12 August 2014: Berry first affidavit paragraph 12; Hewes first affidavit paragraph 38.
In his oral evidence, Mr Hewes agreed that it was possible that the conversation with Mr Kennedy occurred after 30 May 2014 and possibly on 15 August 2014: T101.38. This shows a potential wide variation in timing of the alleged conversation. Mr Hewes also conceded that he had a "vague" recollection of the conversation and said that it was "a long time ago": T102.40. He said he could not remember the precise words that were spoken and "only" that "we will undertake the engagement on the only way possible on a do-and-charge basis": T102.43. Mr Hewes appeared to be somewhat vague in his evidence and recollection as to the crucial conversation. This is significant.
Although Mr Hewes later maintained the conversation occurred as set out in his first affidavit and denied Mr Kennedy's version, in my view Mr Kennedy's version is more likely having regard to the services that were actually provided by KH during the earthworks stage, the quote and Mr Berry's evidence. It is true that in the first invoices sent out by KH until January 2015, Mr Miller referred to Level 1 services but he explained in his affidavit that this would have been based on the quote that was given. The references to Level 1 services were deleted in KH invoices from January 2015. At that time, no issue had arisen in relation to the level of services provided and accordingly the deletion is likely to be because Mr Miller was told or became aware that Level 1 services were in fact not provided by the defendant to the plaintiff.
The quote also refers to Level 1 services for the "road works" where the evidence establishes that Level 1 services under the relevant Standard related to the earthworks stage.
Mr Mead also noted in his affidavit that KH was never asked for a Level 1 report by the plaintiff which would have confirmed the testing standard which was undertaken: paragraph 31.
In the end, Mr Kennedy's version of the conversation is objectively more likely for the reasons given and I accept it. I do not accept the plaintiff's submissions to the contrary: written submissions paragraphs 28-33. There is thus no conversation established by the plaintiff in which Mr Hewes accepted the KH quote sent on 30 May 2014.
For similar reasons, in my opinion there was no conduct of the plaintiff which constituted an acceptance of the quote sent by KH on 30 May 2014. Fulltime services at the Site from KH were not required. Mr Berry was told by Mr Hewes that he would be contacted when his testing services were required. The plaintiff had commenced its earthworks activities without a KH geotechnician being present. There is thus no clear conduct by the plaintiff consistent with acceptance of the quote.

[23]

Mead/Hewes conversation relating to the source of material

The next disputed factual conversation is that set out in paragraph 16 of Mr Mead's affidavit relating to an allegation that Mr Hewes asked him where he could get compliant road base. The alleged timing of the conversation is generally consistent with Mr Hewes' evidence of his negotiations with Mr Wilson and his request to Mr Wilson in August 2014 prior to final agreement, for independent certification that the road base Mr Wilson had was DGB 20 compliant: see paragraph 25 of Mr Hewes' first affidavit where he states that the certificate was delivered in August 2014 which he agreed in cross-examination was likely received on or about 13 August 2014. Until that time, the use of the Wilson's Quarry material by the plaintiff was not decided (although apparently some material had already been delivered). No agreement to purchase the material had been entered into by the plaintiff: T95.3; Hewes first affidavit paragraph 25 (first line).
However, in my view any conversation was likely to have occurred some time shortly before 13 August 2014 when Mr Hewes was still making his enquiries. Mr Hewes said that he did not need to ask about quarries and road base as he was familiar with the quarries in the area: T137.43. There is a difference between knowing about quarries and knowing about quarries which could supply road base satisfying the specification requirement for DGB 20 material. Mr Mead was a technical expert and would likely know where good compliant material could be sourced. That is a reason why it is likely he would be contacted by Mr Hewes. Mr Mead was the name at the end of the KH quote sent on 30 May 2014. Further, until about 13 August 2014 Mr Hewes had not received the RTA certificate from Mr Wilson. He would likely have made enquiries in relation to alternative sources of compliant material if certification was not received from Mr Wilson.
Having heard Mr Mead being cross-examined on this point, I found his evidence to be carefully given and convincing and I accept his evidence. However, as indicated, I think the conversation more likely occurred some time (perhaps a few weeks) shortly before 13 August 2014, after the plaintiff was the successful tenderer but before the negotiations with Mr Wilson had been completed and the supply of the certificate had been made. In my view, Mr Hewes would have been likely making enquiries about sourcing DGB 20 compliant material in the light of uncertainty as to the certification of Mr Wilson's material. The conversation is generally consistent with Mr Hewes undertaking steps to ensure that he had compliant material which is consistent with his contractual obligation with RCC.

[24]

The alleged Kennedy/Hewes conversation about the RTA Wilson's certificate

The next conversation which is significant is that alleged in paragraph 49 of Mr Kennedy's first affidavit, said to be a conversation which occurred in late August 2014 between him and Mr Hewes about the adequacy of the test certificate provided by Mr Wilson to the plaintiff. Mr Hewes denies that the conversation occurred.
In his oral evidence, Mr Kennedy also stated that he mentioned Millers Quarry as another source of relevant compliant material: T168.40. Millers Metals is not mentioned in Mr Kennedy's version of the conversation in paragraph 49 of his first affidavit.
In my view, it is likely that this conversation occurred and I accept Mr Kennedy's evidence as to it. I think, however, he is somewhat inaccurate in his affidavit version and that he probably mentioned Millers Metals as Mr Mead did. However, I would still have accepted his affidavit version if I had rejected this part of his oral evidence.
The RTA certificate from Mr Wilson provided to Mr Hewes was about two years old. It did not specify the particular material tested or identify precisely where it was located. There would be likely concerns in any reasonable geotechnical expert who received the certificate in relation to the compliance of the material tested with DGB 20 in the light of the date of the certificate, its lack of specificity and the fact that 10,000 tonnes (or at least a very large amount) of road base were to be supplied based on it. In my view, it is very likely that Mr Kennedy would have provided his views to Mr Hewes on the certificate once he saw the certificate and reviewed it after it had been forwarded to him.
That raises the question why Mr Hewes would have proceeded using the Wilsons' supplied material on the project if this conversation had occurred as Mr Kennedy asserts. In my view, this was partly because Mr Hewes had forwarded the RTA certificate to RCC and they had accepted it (or at least not disputed it). In addition, Mr Hewes had based his performance of the project contract on using Wilsons' material at $11 per tonne which was less than his evidence as to the price at other quarries. Obtaining the material from other quarries after the conversation with Mr Kennedy would therefore have cost the plaintiff substantially more money and thus impacted on the overall profitability of the contract. The road works part of the contract already involved little or no profit: T146.46. Further, Mr Hewes honestly believed that the RTA Wilson's certificate was accurate and reliable. He had entered into the agreement with Glenashka through Mr Wilson based on it.
For all of these reasons, on balance I prefer the evidence of Mr Kennedy on this point. Mr Hewes, from his cross-examination, appeared firmly to have been of the view that the Wilsons' RTA certificate could be relied upon. This was reinforced by the fact that he had not had any negative reaction by RCC to it.

[27]

The 18 June 2015 report

In relation to the first test, it is clear from paragraph 51 of Mr Hewes' first affidavit and paragraph 35 of Mr Mead's affidavit that Mr Hewes asked for a final material evaluation report to confirm DGB 20 product conformance. Despite Mr Mead's oral evidence, this was in my view a clear request by Mr Hewes for a test from KH to confirm DGB 20 compliance. Although there is some evidence in Mr Mead's affidavit that Mr Bullock of KH may also have been asked by RCC to undertake the test (see paragraph 41), the test report dated 18 June 2015 was addressed to Mr Hewes of the plaintiff. It was thus very likely produced as a response to the request from Mr Hewes.
The report prepared was a more limited material evaluation report and not a detailed DGB 20 compliance report as Mr Hewes had requested: T195.41. Further, it seems that only one sample of soil from the material stockpile may have been taken. However, Mr Kennedy gave evidence that the particle property requirements, the liquid limit results and the plastic limit results showed that the material tested did not conform to DGB 20 compliance and therefore it would have been a waste of time and money to check for compliance with other requirements: T197.26-T198.2. I accept that evidence in the light of the absence of any contrary expert evidence. See paragraph 71 of the defendant's written submissions. Although Mr Hewes was not present when the sample was taken and there is no day work report sheet for the first test, the sample report number 117 (part of Exhibit ADH 25 - Exhibit A volume 3 page 99), satisfies me that the sample was taken by Mr Bullock even though it is only initialled. The client on the sheet is noted as Hewes Construction. No evidence was given by Mr Bullock on the issue and it is assumed that any evidence from him would not have assisted the defendant. However, the sample report is persuasive contemporary evidence in support of the test as is the certificate ultimately produced signed by Mr Mead. There is also no evidence to establish or permit an inference that if two or more samples had been taken by Mr Bullock that the result of the test would have been materially different.
Mr Hewes claims he was not given the results of the test until late July 2015. The plaintiff submits that it lost the opportunity to obtain DGB 20 compliant material to satisfy its contract with RCC. Mr Mead says he informed Mr Hewes of the results verbally but did not supply the report as the plaintiff was behind in paying its accounts: T227.9-.16. Consistent with the defendant's oral submission, I think it is likely Mr Hewes was informed of the results of the testing orally in June 2015. First, Mr Hewes asked Mr Mead to get the testing done "ASAP" and "pronto": paragraph 51 of Hewes first affidavit. Secondly, Mr Hewes accepts he was told by Mr Mead words to the effect that in Mr Mead's opinion the "road base won't meet DGB 20 spec." Thirdly, Mr Hewes expressed great consternation at this opinion and wanted prompt testing: Hewes first affidavit paragraphs 51-53. It seems inconceivable that Mr Hewes would not follow up on his request for several weeks, contact Mr Mead about the matter and proceed with the use of the Wilson's material for other road work. If Mr Hewes is to be believed on this issue he took no further proactive steps to get prompt test results from KH despite there being a real risk as conveyed to him that the roadworks were not compliant: Hewes first affidavit paragraph 53. In my view, that is very unlikely. The lack of follow up suggests the testing was completed and he was aware of the results through being told of them. I reject paragraphs 45 and 60 of the plaintiff's submissions. The email correspondence in Exhibit ADH 15 does not appear to be inconsistent with my view on this issue.
If I am wrong on this issue, the plaintiff proceeded with some road laying work knowing that there was an issue in relation to compliance of the material with DGB20. Why that is so is unclear. If it did so, it seems unclear why the defendant has any responsibility for it. Perhaps it is because the plaintiff hoped there would be no request from RCC for a formal compliance report relating to the material.

[29]

The third in situ test

In relation to the third report, this was an in situ report requested by RCC. The results of the testing were reflected in a letter from Mr Mead of KH to RCC dated 7 August 2015. The report concluded that the sampling taken on 30 July 2015 confirmed that the material placed as a base course layer failed to meet the criteria set down for DGB 20 material in accordance with Specification 3051 and was "not of a quality fit for use as a Base course Material" on the project: Exhibit A volume 3 Tab 21.
There is an issue between the parties as to whether this sampling by KH was taken properly. Mr Hewes argues that it was not, whereas Mr Kennedy says that it was both in his oral evidence and in his detailed second affidavit. There are a number of relevant photographs of the testing attached to Mr Kennedy's second affidavit. Mr Kennedy stated that the samples were only taken by Mr Bullock of KH to a depth of 180mm-220mm: paragraphs 38-39. Although he extended this to a depth of 230mm in his oral evidence (T205.32), I am satisfied from his oral evidence in the light of his affidavit evidence and the photographs that the samples were taken to the appropriate depth and not to a lower depth of 400mm. At T205.36 Mr Kennedy stated that there was general consistency across the samples. The two men undertaking the sampling were experts and would have been likely aware from the drilling where the road base layer finished: second Kennedy affidavit paragraph 38. There was no expert evidence to the contrary on the issue. The testing was at a depth to check compliance with the plaintiff's purported use of DGB 20 material for both the sub-base course and base course layers.
The plaintiff submits that despite the intended use of DGB 20 compliant material for both base and sub-base layers, the plaintiff was contractually not obliged to use DGB 20 material for the sub-base and thus the testing was not to the right depth of 115mm: written submissions paragraphs 72-75. See Exhibit 4 pages 1-2 option Type A. If that is the case (which seems to be correct), then the plaintiff would need to establish that proper testing of the first 115mm by KH would find that it was in fact DGB 20 compliant. As the same material was used by the plaintiff in both layers it seems the point has no substance as the material should have been the same in the base and sub-base and thus testing to a 180-220mm depth would make no difference.
It seems clear from the contractor's direction letter dated 7 August 2015 from RCC to the plaintiff that the first two reports were not relied upon by RCC for the direction but only the testing on 30 July 2015 which gave rise to the KH report letter dated 7 August 2015. See paragraph 4 of the 7 August 2015 direction letter. While the second report may have had some influence in leading to the third testing it was only when the detailed 7 August 2015 report letter was received following the 30 July 2015 sampling that RCC acted. Accordingly, I find that the first two reports prepared for the plaintiff and RCC respectively, were not a cause of the contractor's 7 August 2015 letter directing rectification works.
There is an issue whether the sub-base and base as placed by the plaintiff at the Site complied with the specifications under the Subcontract Deed. On Mr Hewes' own evidence, the plaintiff did not construct the roadway pavement in accordance with either Type 1 or Type 1A: Exhibit 4 page 2. Instead, the plaintiff according to Mr Hewes used the measurements for the sub-base and base layers in Type 1 but used DGB 20 material throughout the layers. On the face of it, this did not conform to either of the options ultimately agreed between the plaintiff and RCC in March 2015: cf plaintiff's written submissions paragraphs 76-77.
There is also a question as to whether the material tested was contaminated by clay. Mr Kennedy was present during the soil extractions and rejects there being any contamination. In the absence of any expert evidence to the contrary, I accept his evidence on this issue.

[31]

The contract claim of the plaintiff

In its Further Amended Statement of Claim, the plaintiff pleads in paragraph 14 that in or about August 2014, the plaintiff and KH entered into a partly written and partly oral contract for KH to provide to the plaintiff Level 1 inspection and testing services as a NATA Accredited Testing Authority and "to oversee all aspects of the plaintiff's works in the construction phases" under the contract between the plaintiff and RCC. In paragraph 15 of the Further Amended Statement of Claim, it is pleaded by the plaintiff that the express terms of the contract were that KH was to provide to the plaintiff Level 1 inspection and testing services "in order to certify the works and materials provided by the Plaintiff under the [RCC contract] conformed to the requirements" of the RCC contract. The services were said to include "material quality verification."
Having regard to my factual findings set out above, I am not satisfied that any contract was entered into between the plaintiff and KH for KH to provide Level 1 inspection and testing services to the plaintiff, including on the basis of the quote letter sent on 30 May 2014. In the light of my acceptance of paragraphs 32-33 of Mr Kennedy's first affidavit, I accept the defendant's case that the contract of retainer entered into between the plaintiff and KH was for KH to provide ad hoc inspection and testing geotechnical services as and when required by the plaintiff and not Level 1 inspection and testing services. In my view, this is what a reasonable businessperson in the position of the parties in all the circumstances would objectively conclude to be the contract between the parties based on the evidence of Mr Kennedy which I have accepted.
The quote from KH wrongly dated 25 July 2013 and signed by Mr Mead as forwarded by Mr Kennedy to Mr Hewes on 30 May 2014, was a quote from KH to the plaintiff for the provision by KH of Level 1 testing services. However, I have rejected Mr Hewes' evidence that there was a conversation between him and Mr Kennedy in which the quote for Level 1 testing services was accepted by the plaintiff. I prefer Mr Kennedy's evidence on this issue (first affidavit paragraphs 32-33 and 36-40). The services agreed to be provided were not agreed to be on a Level 1 basis but only on a "do and charge" basis as and when required: Kennedy first affidavit paragraph 32.
I have set out above my reasons for that conclusion including accepting Mr Berry's evidence in his first affidavit and Mr Hewes' statement that he would call KH to undertake the relevant inspection testing as and when it was required (T145.43), the lack of full-time attendance by Mr Berry during the earthworks stage works and the relevant invoice documentation. Accordingly, KH was retained by the plaintiff to provide inspection and testing services on a "do and charge" or ad hoc basis as and when requested by the plaintiff. There was therefore no contract between the parties as alleged in paragraph 14 of the Further Amended Statement of Claim for KH "to oversee all aspects of the Plaintiff's works in the construction phases". This is particularly the case if the "construction phases" in the paragraph refer to a period after the earthworks stages. Mr Hewes accepted in his oral evidence that the only time he asked KH to test the stockpile of material to be used was on 18 June 2015: T137.27.
Whilst KH provided extensive inspection and testing services to the plaintiff before June 2015, this was in relation to the earthworks stage including aspects of the stripping and compaction as set out in the affidavits of Mr Kennedy and Mr Hewes, and in relation to compaction and related testing after the earthworks stage. As stated above, post-contractual conduct can be taken into account by the court in determining the contract that was entered into. From January 2015 the invoices forwarded by KH to the plaintiff no longer referred to Level 1 services. Although it is true that KH began to provide services to the plaintiff from on or about 12 August 2014, they were not consistent on the evidence of Mr Berry, Mr Kennedy and Mr Mead, which I accept on the issue, with Level 1 services.
I accept that KH through Mr Kennedy and Mr Mead probably were aware that there was likely a requirement for the plaintiff to use DGB 20 compliant material as part of the roadworks construction. However, there is no evidence that KH was privy to all aspects of the negotiation and discussions between the plaintiff and RCC including after the original Subcontract Deed was executed by those parties. The obligations of the plaintiff under the Subcontract Deed were primarily a matter for it (the plaintiff) to ascertain and comply with.
Further, I reject the pleading in paragraph 24 of the Further Amended Statement of Claim that KH breached the terms of its contract as pleaded in paragraph 14. First, I have found that the contract pleaded in paragraph 14 has not been established by the plaintiff. Secondly, there was no express contractual obligation on KH to inspect the road base supplied by Glenashka through Mr Wilson to ensure that it complied with the necessary DGB 20 standard or to provide material quality verification services as to the road base supplied and advise on material suitability as to it. I reject paragraphs 82-85 of the plaintiff's written submissions to the contrary.
Mr Hewes had obtained the RTA certificate from Mr Wilson and relied on it as being an accurate test concerning the road base material to be supplied by Mr Wilson. I have accepted Mr Mead's evidence in paragraph 16 of his affidavit that he had a conversation to the effect outlined with Mr Hewes although I consider it likely happened some time shortly before 13 August 2014. I have accepted Mr Kennedy's evidence in paragraph 49 of his first affidavit that he had a telephone conversation with Mr Hewes in which he raised issues as to the adequacy of the RTA Wilson certificate to verify that the stockpile was DGB 20 compliant because the certificate was outdated and not specific on its face to the stockpile proposed to be used. In the light of that evidence, Mr Hewes was aware of KH's doubts and concerns as to the certificate. However, he chose to rely on the Wilsons certificate for compliance purposes.
Further, as stated, Mr Hewes conceded in his evidence that the only time he asked KH to test the stockpile that was being used was in June 2015 and that was the stockpile at the site: T137.27. Therefore, he never asked KH to test the stockpile to be used which was at Wilson's quarry. In the light of these matters, I find that objectively there was no express obligation in the terms of the contract entered into by the parties for KH to inspect the road base supplied by Mr Wilson to the plaintiff to ensure that it complied with the necessary DGB 20 standard or to provide other material quality verification services as to the road base as alleged.
Similarly, I find that there was no express obligation on KH as asserted in particular (c) to paragraph 24 of the Further Amended Statement of Claim, to test the road base between August 2014 and June 2015 to ensure that the road base supplied by the plaintiff complied with the DGB 20 standard. KH was not asked to do so until June 2015 in the light of its limited contract.
The particular of breach in (d) of paragraph 24 of the Further Amended Statement of Claim, asserts that KH failed to advise the plaintiff of its opinion as to the non-compliance of the road base with the DGB 20 standard until 28 July 2015. First, in my view the conversation in paragraph 49 of Mr Kennedy's first affidavit, which I accept, expressly raised the adequacy of the RTA Wilson's certificate with Mr Hewes. Secondly, while it seems clear from paragraph 35 of Mr Mead's affidavit that he believed the road base would not meet the DGB 20 specification, this seems to have been an opinion formed without any formal inspection and testing as none had been requested by Mr Hewes to that date: T137.27. The view was formed on the basis that the material used had been viewed by Mr Mead for other testing: T230.37 cf T230.8. There was objectively no express term in the contract requiring Mr Mead to volunteer this opinion (or any other employee of KH) having regard to the limited retainer of KH which I have found and the risk that the opinion may be wrong and relied upon by the plaintiff without proper formal testing. Thirdly, I have found that Mr Mead likely told Mr Hewes of the results in the 18 June 2015 test report at some time in June 2015. This would explain why Mr Hewes did not follow Mr Mead up on the issue which is otherwise inexplicable.
It seems clear from the evidence that KH was retained by the plaintiff on about 18 June 2015 to conduct testing to test the compliance of the DGB 20 alleged material provided by Mr Wilson: see paragraph 18 of the Further Amended Statement of Claim; Mead affidavit paragraph 35; T240.9. There was thus an express contract of retainer between the plaintiff and KH to undertake this testing. Although it is somewhat unclear, paragraph 22 of the Further Amended Statement of Claim seems to amount to an allegation of breach of contract by KH as to the first testing in June 2015.
The report prepared dated 18 June 2015 was a more limited material evaluation report and not a detailed DGB 20 compliance report as Mr Hughes had requested: T195.41. This was conceded by Mr Kennedy in his evidence. However, while that was therefore not a strict compliance by KH with the contract of engagement between the plaintiff and KH, I have accepted Mr Kennedy's evidence that the limited testing undertaken by KH showed that the material tested did not conform to DGB 20 compliance. Mr Kennedy states that it would have been a waste of time and money to check for compliance with other requirements and I have accepted that evidence in the light of the absence of any contrary expert opinion. I accordingly do not find that there was a breach of the contract of engagement relating to the 18 June 2015 testing. It seems clear that KH would not be expected to undertake additional costly tests for the plaintiff if it was clear the tested material was not compliant on the initial tests undertaken.
If I am in error on that point and there was a breach of the June 2015 contract by KH not completing a full detailed testing of the stockpile for DGB 20 compliance, as requested by Mr Hewes, this would only result in an award of nominal damages as actual damage does not need to be established for a breach of contract action. Further damages would not be established for the breach as the initial testing was said to establish a lack of DGB 20 compliance with the stockpile tested.
There was no contract between the plaintiff and KH in relation to the second and third tests as these were performed at the request of RCC and therefore the contract of engagement for the testing was between KH and RCC.

[32]

Implied terms in fact

In opening, counsel for the plaintiff stated that the plaintiff was asserting that there was an implied term in the contract between the plaintiff and KH for the provision of Level 1 services: T3.50-T4.43. Although it was not clear, it seemed to be submitted that the obligation to be implied may have extended to providing advice about the suitability of the road base material and the testing of it. From the opening, it seemed that the implied term relied upon was as a matter of fact in accordance with the principles stated by the majority of the Privy Council in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1977) 52 ALJR 20 at page 26: T4.31-.39. This was confirmed in the plaintiff's written submissions at paragraphs 87-90. It was submitted that there were implied terms in the contract between the plaintiff and the defendant entered into in or about August 2014, for the defendant to provide Level 1 inspection and testing services and "to oversee all aspects of the Plaintiff's work in the construction phase of the contract between the Plaintiff and RCC": written submissions paragraphs 78 and 87.
In BP Refinery, the conditions necessary to ground the implication of a term in a contract were summarised as: "(1) It must be reasonable and equitable; (2) It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) It must be so obvious that it "goes without saying"; (4) It must be capable of clear expression; (5) It must not contradict any express term of the contract".
This passage was quoted with approval by Justice Mason (with whom Justice Stephen agreed) in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347. It has been followed in later cases.
First, an implied term as a matter of fact as alleged is not pleaded in the Further Amended Statement of Claim as was pointed out by counsel for KH: T4.45; see also the defendant's written submissions at paragraphs 9; 45. In my view, therefore it cannot be relied upon. However, in any case, in my view the conditions necessary for the implication of the term have not been established. Having regard to the limited retainer which I have found, the obligations to provide Level 1 services and to undertake advice and testing in relation to the material through testing services do not appear to be established. They are in my view not reasonable and equitable, are not necessary to give business efficacy to the contract as the contract would be effective without them, are not so obvious that "it goes without saying" and they contradict the express retainer which was agreed between Mr Kennedy on behalf of KH and Mr Hewes on behalf of the plaintiff which I have found as set out in paragraph 32 of Mr Kennedy's first affidavit. The retainer agreed was a limited one and the implied terms sought are fundamentally at odds with the retainer. It does not appear reasonable to expect KH to undertake testing when it was not requested to do so by the plaintiff. These additional services proposed would, I infer, also appear to be quite expensive to provide and be time consuming.
For the above reasons, I reject the submission that there was a breach of implied terms in fact in the contract of retainer as entered into between the plaintiff and KH as submitted.
However, the contract was entered into between KH and the plaintiff for the provision of professional geotechnical services by KH as and when requested. In any contract for the provision of professional services, unless there is some express limitation or exclusion, there is a general implied term that the professional will exercise reasonable care and skill in the provision of those services which arises by operation of law rather than through a specific breach of some specific duty expressed in the retainer: Astley v Austrust Ltd (1999) 197 CLR 1 at 22; see also Winnote Pty Ltd & Anor v Page & Ors [2006] NSWCA 287 at [77]; (2006) 68 NSWLR 531. The obligation implied in contract as a matter of law requires the professional person retained to exercise reasonable care and skill in the provision of the contracted services: Heydon v NRMA Ltd (2000) 51 NSWLR 1 at [146]-[147].
Having regard to the limited contract which I have found, there is no evidence which establishes to my satisfaction having regard to my factual findings above, that there was any failure by KH to exercise reasonable care and skill in the provision of the contracted services or services incidental to those services. The contract of retainer was a limited one. As to paragraphs 92-93 of the plaintiff's written submissions, Mr Kennedy in the conversation in paragraph 49 of the Kennedy first affidavit, expressly raised his concerns as to the adequacy of the RTA Wilson's certificate as to verification of the Wilson's stockpile material.
Accordingly, the claim in contract by the plaintiff against KH is rejected.

[33]

The claim in negligence by the plaintiff

The Further Amended Statement of Claim pleads that the defendant KH owed a duty of care to the plaintiff and breached that duty of care causing loss to the plaintiff.
In paragraph 13, it is pleaded that KH held itself out as having skills and expertise in providing services including Level 1 inspection and testing services. This is established by the evidence and effectively admitted in paragraph 9 (a) of the Defence. It is also pleaded in paragraph 13 of the Further Amended Statement of Claim that the defendant was aware that the plaintiff was relying on the skill and expertise of the defendant in providing services including Level 1 inspection and testing services. As I have found above, KH was not retained to provide Level 1 inspection and testing services generally but only ad hoc inspection and testing services as and when requested by the plaintiff. In paragraph 16 of the Further Amended Statement of Claim, it is pleaded that KH owed the plaintiff a duty of care to exercise due care and skill in providing the Level 1 inspection and testing services under the alleged contract between the plaintiff and KH. The contract alleged by the plaintiff between itself and KH has been rejected by me. The contract was only to provide ad hoc testing and inspection services as requested by the plaintiff.
It is clear that in relation to the services that were provided pursuant to the contract of retainer found, KH owed a duty to exercise reasonable care and skill in providing those services. There is a concurrent liability in tort and contract of a professional person in providing services to their client. This is based on the fact that a duty of care in tort arises from the professional retainer obliging the professional to exercise reasonable care and skill in the provision of the professional services: Heydon v NRMA Ltd (2000) 51 NSWLR 1 at [146]-[147]. In Trajkovski v Simpson [2019] NSWCA 52, Basten JA and Sackville AJA stated at paragraphs 15 and 16 in relation to a legal practitioner as follows: "The general principle is that a legal practitioner is bound to exercise due care and diligence in performing the tasks he or she is retained by the client to perform. Subject to statute, the standard of care and skill is that which is reasonably to be expected of practitioners practising in the relevant area. The scope of a solicitor's duty of care to a client depends on the terms of and limits imposed by the retainer. As has been noted, in the present case the respondents did not prepare a written retainer or costs disclosure document. There is therefore nothing in writing to suggest that the respondents' retainer on behalf of the vendors of the Dural property was subject to express limitations. In the absence of any such limitations, the respondents were obliged to exercise the level of skill and care reasonably to be expected of a legal practitioner retained by a vendor to act on the sale of real property."
In my view, similar principles apply in the present case to KH. Accordingly, KH was bound to exercise due care and diligence in performing the tasks it was retained by the plaintiff to perform and the standard of care and skill which applied was that which is reasonably to be expected of geotechnicians practising in the relevant area. Usually, the scope of a professional's duty of care to a client depends on the terms of and limits imposed by the retainer. These principles must be applied in the context that the claim is one made under the Civil Liability Act 2002 (NSW) ("CLA").
The claim in paragraph 16 of the Further Amended Statement of Claim that KH owed the plaintiff a duty of care to exercise due care and skill in providing the Level 1 inspection and testing services under the contract of retainer alleged therefore must be rejected. I have found that there was no contract to provide Level 1 inspection and testing services between the plaintiff and KH but only a contract to provide ad hoc services when requested. I equally reject for the same reasons the slightly different formulation of the duty of care in paragraph 94 of the plaintiff's written submissions. This also seems to be inconsistent with the plaintiff's claim as limited in the particulars: Exhibit 5 page 35 paragraph 9a).
In paragraph 22 of the Further Amended Statement of Claim, it is alleged that KH neglected and failed to test properly or at all the road base supplied by Wilson's to the plaintiff and used by the plaintiff on 18 June 2015 and as a result, found without a proper basis that the road base supplied by Wilson's was non-compliant with DGB 20. In my factual findings above, I have found that the first stockpile test was conducted by Mr Bullock on behalf of KH. As to the allegation that KH found without a proper basis that the road base supplied by Wilson's was non-compliant with DGB 20, there is no satisfactory evidence, particularly expert evidence, to establish this.
It is true that the RTA Wilson's certificate dated 8 August 2012 was relied on by the plaintiff through Mr Hewes in establishing that the road base was compliant with the DGB 20 specification. However, the certificate was about two years old and did not clearly state on its face what material it related to. Alone, it is not sufficient to establish that the road base supplied by Mr Wilson to the plaintiff and used by it which was tested by KH on 18 June 2015, was compliant with DGB 20 or that KH breached any duty of care in coming to the opposite view. There was no expert evidence tendered to establish that KH found without a proper basis that the road base supplied by Mr Wilson as tested on 18 June 2015 was non-compliant with DGB 20. In the absence of expert evidence, I am not satisfied that the RTA Wilson's certificate can be used for this purpose.
Similarly, the allegation in paragraph 23 of the Further Amended Statement of Claim that the further testing of the road base on 20 July 2015 incorrectly found that the road base supplied by Mr Wilson did not comply with the specifications for DGB 20 and the plans and specifications under the contract with RCC is not established on the evidence. The particulars in (d) of paragraph 23 of the Further Amended Statement of Claim assert that the testing carried out was of 200mm deep road samples which mixed the DGB 20 base layer and an underlying DGS 20 compliant sub-base layer. However, this testing on 20 July 2015 was of a stockpile at the Site according to Mr Berry (which I have accepted), not of the compacted road bases. It is accordingly difficult to see how the particular of negligence can be established. There was also no satisfactory evidence that the top layer of the road base was DGB 20 compliant.
The limited retainer which I have found also negates the allegation of a breach of duty of care pleaded in paragraph 25 of the Further Amended Statement of Claim.
In relation to the allegation in paragraph 25A of the Statement of Claim, it is alleged that KH negligently carried out the in situ road base sampling in seven locations completed on 30 July 2015 and found incorrectly that the road base was not constructed in accordance with the plans and specifications under the RCC contract. It is said that the testing took samples to a depth of 400mm and mixed material and was not capable of testing the compliance. I have rejected this suggestion in my factual findings. There was no expert evidence before me which established that the testing undertaken by Mr Kennedy and Mr Bullock when extracting the sampling, involved a breach of the standard of care and skill which would reasonably be expected of professional geotechnicians undertaking the testing. I accept Mr Kennedy's evidence in relation to the manner in which the testing occurred. There is no satisfactory evidence before me that if the testing had been limited to the top 115mm layer that KH would have found that it was DGB 20 compliant. If, as Mr Hewes asserts, both layers were compacted of the same material it seems unlikely that the top layer would be different to the sub-base layer.
I approach the allegations of negligence having regard to the provisions in the CLA. Section 5 of the CLA makes clear that what is negligence is a failure to exercise reasonable care and skill. In negligence, what precautions against the relevant risk of harm were reasonable in the circumstances for a defendant to take is to be determined taking into account s 5B of the CLA: Lloyd v Thornbury [2019] NSWCA 154 at [44].
It is important to identify correctly the risk of harm in the present case.
In my opinion, the relevant risk of harm in the present case was that if KH did not exercise reasonable care and skill in undertaking the testing as requested that it may give rise to incorrect results which could cause the plaintiff to be obliged to undertake unnecessary and expensive replacement or remediation works.
Whether there has been negligence in the present case by the defendant KH must be determined in considering ss 5B and 5C of the CLA. These sections provide as follows: "5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless - (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things) - (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm. 5C Other principles In proceedings relating to liability for negligence - (a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and (b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and (c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk."
I consider the elements in s 5B of the CLA in the light of s 5C as applied to the facts of the present case: 1. The risk was foreseeable, that is, it is a risk of which the defendant knew or ought to have known - in my view, it was foreseeable, in the sense of being a risk of which the defendant KH ought to have known, that if it did not exercise reasonable care and skill in undertaking the retainer that it could give rise to an incorrect test result which may cause loss to the plaintiff; 2. The risk was not insignificant - the retainer was only to provide testing on an ad hoc basis when requested. The risk was insignificant in the present case if the defendant KH exercised reasonable care and skill in conducting the tests which it was requested to undertake. 3. Whether a reasonable person in the position of the defendant would have taken the steps pleaded - in my view, a reasonable person in the position of KH would not have undertaken more extensive testing including proactive testing of the material to be used by the plaintiff and supplied by Wilson's Quarry having regard to the limited retainer. KH was a professional testing company. Mr Hewes had indicated to Mr Berry and Mr Kennedy that KH would be contacted when their services were required. A warning had been given by Mr Kennedy to Mr Hewes in relation to the adequacy of the RTA Wilson's certificate. 4. The probability that the harm would have occurred if care were not taken - clearly if care was not taken in the testing there was a real probability that harm would have occurred. However, there is no satisfactory evidence in the present case that due care and skill was not exercised by the defendant in undertaking the testing it did; 5. The likely seriousness of the harm - testing without proper care may involve serious financial loss to the plaintiff; 6. The burden of taking precautions to avoid the risk of harm - there was not an extensive burden on the defendant in the present case in exercising reasonable care and skill in undertaking the professional services; 7. Taking into account all of the matters I have indicated, I confirm my view from the analysis further above that having regard to the limited retainer between the plaintiff and the defendant there was no breach of the duty of care owed as alleged in the Further Amended Statement of Claim. There was also no breach established in relation to the three tests in 2015. Accordingly, the action in negligence as pleaded is rejected.
In his opening, counsel for the plaintiff asserted that it was submitted that the defendant KH owed a penumbral duty of care, being a duty to exercise reasonable care and skill wider than in relation to the contracted retainer: T2.36-T3.4. This was rejected by the defendant. It was submitted that no penumbral duty of care was pleaded: T7.47.
No express penumbral duty of care is pleaded by the plaintiff. The duties pleaded all appear to be related to the allegation of Level 1 services and the tests undertaken in 2015. However, a much wider duty of care is set out in paragraph 94 of the plaintiff's written submissions which was a duty of care to provide services under the contract with the plaintiff "to assist the Plaintiff to confirm compliance with its obligations under the Plaintiff's contract with RCC." It should be noted at the outset that this duty of care is framed in wide terms. The defendant submits that this duty of care cannot be allowed on the present pleading. See paragraph 11 of the defendant's written submissions.
It seems clear that in some cases a penumbral duty of care may be owed: David v David [2009] NSWCA 8 at [76] and Hanna v Raoul [2018] NSWCA 201 at [114]-[117]. Those cases involved a solicitor giving independent legal advice. In my view, quite apart from the pleading point which has some force, no penumbral duty of care was owed which obliged KH to advise the plaintiff not to use the Wilson's material without further independent testing or to independently undertake that testing of the stockpiles (including after the earthworks were completed) without instructions: 1. The contract of retainer was a limited one as set out above. There was no general retainer to provide advice as to contractual obligations of the plaintiff under the RCC contract; 2. The RTA Wilson's certificate was two years old and not specific on its face as to the stockpile tested; 3. Mr Mead informed Mr Hewes of the quarries where DGB 20 material was available locally to his knowledge; 4. Mr Kennedy raised with Mr Hewes his concerns as to the adequacy of the RTA certificate yet Mr Hewes continued to rely on it and did not require further testing as he could have done; 5. For KH to have independently tested the material would have potentially undermined the RTA certificate. It also would have involved actions inconsistent with the retainer. Costs would have been incurred in the further testing; 6. While Mr Mead had doubts as to the compliance of the material, these doubts were formed without formal testing.

[34]

Causation

The principles in relation to causation which are applicable under the Civil Liability Act are set out in ss 5D and 5E which are as follows: "5D General principles (1) A determination that negligence caused particular harm comprises the following elements - (a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and (b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability). (2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. (3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent - (a) the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and (b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest. (4) For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. 5E Onus of proof In proceedings relating to liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation."
As effectively negligent conduct is relied upon under both the contract (through the implied term as a matter of law and as a matter of fact) and negligence counts, these provisions are applicable.
The plaintiff in the present case has the legal onus of proving on the balance of probabilities any fact relevant to the issue of causation in the proceedings: Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 186 at [18]. The determination of factual causation under s 5D of the CLA involves the application by the court of the "but for" test of causation. This involves a determination that in accordance with s 5D, negligence was a necessary condition of the occurrence of the harm. That involves a determination on the balance of probabilities that the harm in fact occurred to the plaintiff and would not have occurred absent the negligence: Strong v Woolworths Ltd, above, at [18]. In the present case, that involves a determination whether but for any breach of duty of care as pleaded, any loss or damage suffered by the plaintiff would not have occurred. There was no suggestion that s 5D(2) applied in the present case: see Lloyd v Thornbury, above at [82].
Even if the plaintiff establishes that the defendant breached any duty of care owed to it in undertaking the three tests which occurred in 2015, it is not established by the plaintiff that any different result would have been obtained even if in the third test the road base had been tested only to the level of 115mm. That is, it has not been established by the plaintiff that proper testing of the first 115mm of the road base would have established that the road base was DGB 20 compliant. See the first sentence in paragraph 10 of the defendant's written submissions. Further, Mr Hewes asserts that both layers were compacted of the same material. It seems unlikely therefore that the top layer would be different to the sub-base layer.
The legal onus rests on the plaintiff to prove that the harm which in fact occurred to the plaintiff (the remediation costs and the additional expenses incurred) would not have occurred absent the negligence. To do this, the plaintiff in my view would need to establish that if proper testing had been undertaken in 2015 as it claims was not undertaken by KH, that a different result would have been obtained. The plaintiff called no expert evidence on this issue. I am not satisfied that causation has been established by the plaintiff on this aspect.
There is also a real question whether Mr Hewes would have accepted any recommendation by KH to undertake further testing of the Wilson's stockpile material in August 2014 to May 2015. Mr Hewes firmly believed the RTA Wilson's certificate was reliable. He had entered into a contract with Glenashka to purchase the material and RCC had indicated no opposition to the certificate. He took no action when Mr Kennedy expressed doubts as to the adequacy of the certificate.
The plaintiff claims it lost the opportunity to obtain alternative compliant material if it had been told of the results of the 18 June 2015 test. First, I have found Mr Mead did verbally tell Mr Hewes the results of the test. Secondly, even if I am in error as to that, what would Mr Hewes have done? He had a contract with Glenashka and had been supplied much road base material already. Further, he would have had to obtain alternative compliant material. There was no evidence whether it was obtainable in late June 2015 and what the cost of it would have been. Also he was aware of Mr Mead's view of the material. Mr Hewes chose to go ahead with the work despite Mr Mead's view.

[35]

Concurrent wrongdoer pleading

In paragraph 21 of the Defence to the Further Amended Statement of Claim the defendant pleads proportionate liability. It states that if it is established that KH owed and breached a duty of care to the plaintiff (which is denied), any liability found on the part of the defendant as a result of the breaches was a claim for economic loss or damage (whether in contract, tort or otherwise) arising from a failure to take reasonable care. It was therefore an "apportionable claim" within the meaning of s 34 of the CLA, and Glenashka, as the supplier of the road base material, was a "concurrent wrongdoer" within s 34.
Mr Hewes and the plaintiff on the evidence clearly relied heavily on the RTA Wilson's certificate. The circumstances in which the certificate was provided, as established in the affidavit evidence of Mr Hewes, clearly constituted a statement by Mr Wilson on behalf of Glenashka that the material he intended to supply was DGB 20 compliant. Mr Wilson was aware that the certificate was provided on a serious occasion, was supplied on a commercial basis and that Mr Hewes and the plaintiff were relying upon it for the purposes of acquiring the road base material. In my view, therefore, Mr Wilson and his company Glenashka owed the plaintiff a duty of care in relation to the provision of the certificate: Shaddock & Associates Pty Ltd v Parramatta City Council [1981] HCA 59; (1981) 150 CLR 225 at 251. The duty of care can arise in the provision of advice or information and is not confined to those who carry on a professional business.
However, it is not clear to me that the defendant has established that there was any breach of duty of care by Glenashka. To do so, considerably more information would be necessary in relation to the circumstances in which Mr Wilson on behalf of Glenashka received the RTA certificate and what material it related to. This was not explored sufficiently in the evidence as it would have been if Glenashka had remained a party to the proceedings. In my view, considerably more evidence would have been necessary to establish a breach of duty of care by Mr Wilson on behalf of Glenashka. I reject paragraph 101 of the defendant's written submissions for this reason.
I accordingly am not satisfied on the evidence that Glenashka is a "concurrent wrongdoer" for the purposes of s 34 of the CLA. This finding is in some ways irrelevant as no breach has been established by the plaintiff.

[37]

Contributory negligence

Contributory negligence is pleaded in paragraph 22 of the Defence to the Further Amended Statement of Claim. The particulars of contributory negligence include a failure by the plaintiff to employ anyone (including the defendant) to conduct Level 1 supervision, which requires a fulltime supervisor, a failure to ensure that the material used at the project had been tested prior to its use and/or installation and a failure to obtain adequate certification from Wilsons or otherwise as to the conformance of the road base material with the DGB 20 specification. The failure to employ anyone including the defendant to conduct Level 1 supervision, which requires a fulltime supervisor, would appear to be irrelevant as I am satisfied on the evidence that Level 1 supervision only relates to the earthworks part of the works and not to the road construction part of the works.
Sections 5R and 5S of the CLA provides as follows: "5R Standard of contributory negligence (1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm. (2) For that purpose - (a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and (b) the matter is to be determined on the basis of what that person knew or ought to have known at the time. 5S Contributory negligence can defeat claim In determining the extent of a reduction in damages by reason of contributory negligence, a court may determine a reduction of 100% if the court thinks it just and equitable to do so, with the result that the claim for damages is defeated.
In Lloyd v Thornbury, above, Gleeson JA stated as follows at paragraphs 92-94: 92. The question of whether a person has been guilty of contributory negligence is to be determined objectively - whether the plaintiff has taken that degree of care for his or her own safety that an ordinary reasonable person would take: Boral Bricks Pty Ltd v Cosmidis (No 2) (2014) 86 NSWLR 393; [2014] NSWCA 139 at [54] (McColl JA); see also at [94] (Basten JA, Emmett JA agreeing). 93. Section 5S provides that, when apportioning responsibility, a court may determine a reduction of 100 per cent in the claimant's damages by reason of contributory negligence. The principles applicable in determining whether a person has been negligent, which include those in s 5B, also apply in determining whether the person who has suffered harm has been contributorily negligent in failing to take precautions against a risk of harm which materialised and resulted in injury: s 5R. Accordingly, the existence and extent of a claimant's contributory negligence is to be assessed by reference to the risk of harm which is the subject of his or her claim for damages, and the precautions that a reasonable person in the claimant's position would have taken against that risk: Gordon v Truong; Truong v Gordon [2014] NSWCA 97; (2014) 66 MVR 241 at [14]- [15] (Basten JA)."
The sections and the analysis in Lloyd v Thornbury require an assessment to be made objectively whether the plaintiff has taken that degree of care for its safety that an ordinary reasonable person would take in all the circumstances in the light of the requirements in ss 5B and 5C of the CLA. As Gleeson JA states in Lloyd v Thornbury, the existence and extent of a plaintiff's contributory negligence is to be assessed by reference to the risk of harm which is the subject of the plaintiff's claim for damages in the light of the precautions that a reasonable person in the plaintiff's position would have taken against that risk.
The RTA certificate obtained by Mr Hewes was dated 8 August 2012 and did not specifically refer in detail to the material that was tested. Mr Hewes relied on Mr Wilson's assertion that it accurately tested the material which he was proposing to sell to the plaintiff for use in the roadworks. On the face of the certificate, no reasonable satisfaction could be reached by Mr Hewes as to this matter or that the material was DGB 20 compliant. The certificate does not say that on its face. I accept the defendant's submission on that issue: defendant's written submissions paragraph 103.
I have also found that Mr Kennedy warned Mr Hewes in relation to the adequacy of the certificate. In the light of that, Mr Hewes and the plaintiff were clearly on notice that there were issues in relation to the certificate having regard to its date: see T135.45-T136.38.
If, contrary to my findings, there was a breach of duty of care or the implied terms as a matter of law of the contract by the defendant, in my view the defendant has established contributory negligence in the present case. Mr Hewes was aware that the RTA certificate was from 2012 (T136.2), he used it to order up to 10,000 tonnes of road base material (T136.5), he considered that the stockpile had been sitting at the Wilson's Quarry for over two years (T136.9) and he was willing to take the risk of using the certificate for that amount of material in the light of Mr Kennedy's comments. In my view, applying s 5B of the CLA, the risk that the material was non-compliant was foreseeable, the risk was not insignificant having regard to the nature of the certificate, the volume of the material and the date of the certificate, a reasonable person in the position of Mr Hewes for the plaintiff would have been seeking a more precise certificate including the clear specification of the stockpile, there was likely serious harm which would result if the certificate was not accurate and there was a minimal burden in requiring further testing from a geotechnician. In my view, a reasonable person in the position of the plaintiff in the circumstances would have obtained further professional geotechnical testing in relation to the material before using it. Contributory negligence is therefore established. Taking into account all the circumstances including the details and date of the certificate and the quantum of material involved, I would reduce any damages awarded by 30% to take account of the contributory negligence.

[38]

Damages

In paragraph 27 of the Further Amended Statement of Claim the plaintiff claims as damages the cost of the rectification works, the sum paid to Glenashka for the road base which was not compliant and the loss of profits in relation to the asphalt works. See also paragraphs 100-103 of the plaintiff's written submissions.
Liability for these amounts is denied in the Defence to the Further Amended Statement of Claim: paragraph 20. If I am in error in relation to my findings that there were no breaches of contract or duty of care, I proceed to consider the question of damages.
In relation to the alleged loss of profit concerning the asphalt works, the amount claimed in the Amended Statement of Claim is $171,165: paragraph 27. In his oral evidence, Mr Hewes stated that the margin of profit on the asphalt works was "30 plus percent": T147.2. The amount of $97,053 is claimed in the plaintiff's written submissions: paragraph 100 (ii). This is based on the amount tendered for the asphalting works and Mr Hewes' assessment of the profit margin: Hewes first affidavit Exhibit ADH 2 page 384, of $323,510 x 30%. See also T146.49. Although the evidence is slight on this issue, I am prepared to allow the amount claimed as established. I reject the defendant's submission that this evidence only constitutes "inadmissible opinion evidence": written submissions paragraph 100. Mr Hewes was in my view able to give reliable evidence on this issue. He was the person in charge of the contract from the plaintiff. Further, I accept the plaintiff's submission that the problems with the alleged DGB20 material appeared to be part of RCC's decision to terminate the contract with the plaintiff. The decision to terminate was very close in time to the remediation works and the issue of the GDK certification: Hewes first affidavit paragraph 69. See also the statement of Mr Crookes of RCC in paragraph 74 of Mr Hewes' first affidavit where he referred to the further costs caused to the plaintiff by the road base supplier. There was no evidence before the court as to the contents of the deed of release referred to in paragraph 82 of Mr Hewes' first affidavit.
In relation to the claim for the sum of $52,063 for road base paid to Glenashka which was non-compliant with the DGB 20 standard, it is unclear how this was caused by any claimed breach of contract of retainer or breach of duty of care by KH. Any action of the plaintiff for this sum was against Glenashka not KH. The amount is not claimed in the plaintiff's written submissions.
That leaves the costs of the plaintiff of the rectification works. Exhibit C in the proceedings was an invoice from the plaintiff to Wilsons Betamix Goonumbla Quarry dated 7 October 2015 in the sum of $128,800.54. There was considerable cross-examination of Mr Hewes by counsel for the defendant in relation to the invoice: T129 and following. This was in the context that the invoice related to the remediation works: T129.27; T131.18. Despite the difference between the hourly rates charged in the invoice and the amounts paid to the workers involved, Mr Hewes gave evidence that the balance was for running costs and payments on the expensive equipment: T131.36. I accept that evidence. The equipment referred to is extensive. At T133.13, Mr Hewes gave evidence that the usual profit component for work of that type was between 5% to 10% and he had other paying work available. It is clear that the remediation work was done as a result of the testing by KH which found that the material was not DGB 20 compliant. I reject the defendant's submission that Exhibit C does not contain a sufficient description of the tasks undertaken in the light of Mr Hewes' oral evidence.
Accordingly, if there was a breach as alleged, the expenses set out in the invoice which is Exhibit C would appear to be caused by the alleged breach. However, there should be a reduction having regard to the usual profit component as indicated by Mr Hewes. In my view, that reduction should be at the higher rate of 10%. I would accordingly allow $115,820.49 (90% of $128,800.54).
In paragraph 85 of his first affidavit, Mr Hewes also refers to the fact the plaintiff had purchased various materials necessary for it to fulfil its contractual obligations in relation to the asphalting works prior to the termination of the RCC contract. Primer seal was purchased costing $22,000. It seems that this money was wasted due to RCC terminating the contract. However, there were other issues in dispute between RCC and the plaintiff relating to alleged variations. Despite these, in my view this amount should be allowed as it was clearly an amount sought despite not being referred to in particulars to the Further Amended Statement of Claim. The defendant was aware of it as an amount claimed due to Mr Hewes' first affidavit.
Accordingly, the amount allowed for damages is $234,873.49. Due to liability not being established this amount is not recoverable. Further, if liability was established it would need to be reduced by 30% for the contributory negligence found.

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