BMD Major Projects Pty Ltd v Victorian Urban Development Authority [2009] VSCA 221 (7 October 2009)

[2009] VSCA 221

Amended orders pursuant to Rule 36.07 of the Supreme Court Rules.

[2008] VSC 566 (Pagone J)

CONTRACT - Excavation, filling and rehabilitation of a quarry - Lump sum contract - Contractor entitled to recover extra payment for work to deal with latent conditions different from those which the contractor should reasonably have contemplated - Documents prepared by the operators of the quarry should not have caused the contractor to anticipate levels of excavation differing from those shown in tender documents - Objective test - Notification of latent conditions - Notices complied with the terms of contract - Notice given 'forthwith'- Need to excavate a greater volume of material capable of being a latent condition - Notice of delay to be given within 28 days after the delay occurs - Notices compliant with the contract - Calculation of additional costs - Costs recoverable only if the costs could not reasonably have been anticipated - Whether additional costs were caused by latent conditions - Reasonable rates or prices - Criteria for the calculation of additional costs - Claim for extra costs caused by delay - Contract required claim to be made when delay first occurred - Instruction by superintendent to contractor relaxed the requirements of the contract and did not entitle the contractor to recover extra costs - Instruction by superintendent was for the convenience of the contractor - Claims for extension of time - Effect of amendment of date for practical completion on calculation of costs occasioned by delay - Costs attributable to delay caused by latent conditions were recoverable - Adjustment of amount allowed for additional excavation

ESTOPPEL - Whether estoppel pleaded or argued - Principal estopped by representation that strict observance of the terms of the contract was not required.

S 52 of the Trade Practices Act 1974 (Cth) - Claim for damages pursuant to s 52 of the Act -Contractor not misled or deceived - No reliance upon any representations by principal - Disclaimers - Effect of qualifications and reservations in the supply of information - Calculation of damages - Contractor failed to establish that it suffered a loss by entering into contract.

INTEREST - Supreme Court Act 1985 - Interest recoverable in respect of damages, not a debt or sum certain.

COSTS - Calderbank letter - Amount recovered exceeded sum stated in letter.

Rigby Cook, Lawyers as agents for Carter Newell, Lawyers

1 This appeal arises from a contract in writing dated 22 March 2002 whereby the respondent ('the Authority') engaged the appellant ('BMD') to excavate, fill and rehabilitate a quarry at Niddrie so that a residential development could be built on the reclaimed land.

2 The site was a disused basalt rock quarry covering an area of a little more than 48 hectares. The quarry operated from the 1920s until 1976. The quarry became overgrown with weeds, small trees and shrubs. There were a number of unstable cliff faces. At the bottom of the quarry was a lake some 11 metres deep. A creek ran through part of the site.

3 Approximately 12 million cubic metres of rock were excavated from the quarry. The overlying material removed to get at the basalt was piled on site. Some of the stockpiles were placed on natural, unquarried ground; others were placed on the quarry floor.

4 Essentially, the contract required BMD to sort and blend the overburden and place it in the quarry pit. The site was surrounded by houses and schools. It was thought that materials should not be removed from or carried to the site by heavy vehicles. Accordingly, the contract provided that the source of the material to fill the quarry was to be the overburden stockpiles. BMD was required to excavate the overburden stockpiles to the floor of the quarry or the unquarried natural ground, process the overburden and place it in the quarry as compacted fill.

5 The contract differentiated between different types of fill material. Type A was the first capping layer and was required to be comprised of particles with a dimension of no more than 100 millimetres. Type B, the bulk of the fill material, was to be placed between the exposed excavation surface and the underside of the Type A capping layer and was to comprise material up to a maximum dimension of 600 millimetres. Type C was to consist of particles to a maximum dimension of 200 millimetres and highly reactive clay soils. The material was to be placed where medium and high density buildings were to be constructed, with piers down to the natural ground to negate the swelling and shrinking characteristics of the highly reactive material. Type D material was to be large rocks and materials deemed unsuitable for use as engineered fill and was to be deposited in the proposed lake of the project. Type E, another fill which was not engineered, was to be placed in the proposed wetlands area. Finally, Types F and G were small volumes of non-engineered fill required for use in retaining walls and a retention pond clay liner.

6 The price set in the contract was a lump sum, not cost plus. In order to enable tenderers to accurately assess the conditions they would encounter in excavating the quarry and treating the stockpiles, the firm of engineers, who designed the works, supplied the tenderers with reports of geotechnical investigations and bore logs prepared by Golder Associates, a firm of prominent geotechnical engineers, an existing surface contour plan, which showed the existing surface contours of the site, including the stockpiles, a finished surface contours plan, which showed the proposed finish to surface levels of the completed works, a plan of maximum extended excavation, a survey plan which identified the natural ground levels underneath the stockpiles and a bulk earthworks plan, which identified the location of stockpiles and showed the height difference between the two surfaces appearing in the existing surface contours plan and the plan of maximum extended excavation.

7 After the completion of the works, BMD brought proceedings against the Authority to recover amounts in addition to the lump sum price.

8 BMD's principal claims were made pursuant to a term of contract, called a Latent Conditions clause, which entitled it to recover extra payment for the work required to deal with physical conditions on the site which differed materially from those which BMD should reasonably have anticipated when it tendered for the contract.

9 BMD alleged that the natural surface levels which it encountered in excavating the stockpiles were lower than the levels described in the drawings provided to it, such as the plan of maximum extent of excavation and the bulk earthworks plan. As a consequence, BMD alleged that it was required to excavate, process and place 329,082 cubic metres of material more than it should reasonably have anticipated. BMD also claimed that at least 105,000 cubic metres of additional material was excavated after the Type B material had been completed, surveyed and approved, and thus the material could only be processed and placed as Type A material, requiring crushing to make the material suitable as Type A material. BMD had originally estimated, on the basis of the Golder Associates' reports, that 70 per cent of the material in the stockpiles was less than 100 millimetres in size and could be placed as Type A material. BMD alleged that on excavation it found that 51 per cent of the material was larger than 100 millimetres and claimed that it was required to crush it in order to reduce its size, for there was only room for Type A material.

10 BMD claimed additional amounts for variations of contract, interest on late payment of progress payment claims and repayment of the amount deducted by the Authority from progress payments for liquidated damages. BMD also brought a claim against the Authority pursuant to the provisions of s 52 of the Trade Practices Act 1974 (Cth), alleging that the Authority was liable in respect of its silence about known inaccuracies in the information provided to BMD and a failure to provide all relevant information to BMD.

11 At the conclusion of the trial, the trial judge accepted some of the claims made by BMD. He gave judgment for BMD in an amount of $1,935,986.20 and ordered repayment of a sum of $672,000 which the Authority had deducted as liquidated damages. His Honour awarded additional amounts by way of interest and GST and ordered the delivery up of a bank guarantee. After hearing argument about a Calderbank letter and the consequences of BMD advancing claims which failed, the judge ordered that the Authority pay 80 per centum of BMD's costs of the proceeding.

12 Both parties have appealed against the judgment and orders of the trial judge.

13 In its appeal BMD challenged many of the judge's findings which led to the rejection or reduction of its claims for extra payments.

14 The Authority's cross-appeal for the most part comprised three major complaints. The first was that the information contained in a file of documents of the operators of the quarry, called 'the Boral file', should have prevented BMD from recovering any additional amount for excavating material below the levels shown on documents supplied by the Authority to the tenderers, for the Boral file revealed the conditions it should reasonably have anticipated. The second was that BMD had failed to give notice 'forthwith' pursuant to cl 12.2 of the contract of certain Latent Conditions and had failed to comply with other contractual requirements as to notice. The third was that the Calderbank offer made by the Authority exceeded the amount recovered by BMD and should have been reflected in an order for costs in favour of the Authority.

15 At the outset we turn to the first two major complaints raised by the cross-appeal. We will then deal with BMD's claims for extra payments, which were disallowed by the judge, and finally, the costs of the trial.

16 Under cover of grounds 1 and 2 of the cross-appeal, the Authority contended that the judge had erred in the interpretation of cl 12.1 of the contract and thus or in any event in finding that it was not established that BMD ought reasonably to have anticipated the existence of the additional quantities of overburden which it encountered.

17 Clause 12.1(a) of the contract defined 'Latent Conditions' in terms, inter alia, of :

physical conditions on the Site or its surroundings, including artificial things but excluding weather conditions, which differ materially from the physical conditions which should reasonably have been anticipated by [BMD] at the time of [BMD's] tender ...

The conditions upon which clause 12.1 operates are to be determined objectively; that is, that what should reasonably have been anticipated by the contractor at the time of tender is to be determined by an objective assessment of the facts rather than by what the particular contractor may have done or not have done: see Glenorchy City Council v Tacon Civil Construction.[1] The enquiry occasioned by clause 12.1 requires a determination of questions of fact: namely, what conditions had been encountered, whether they were physical conditions, whether they differed materially from those ascertainable, and what could have reasonably been anticipated: see Atlantic Civil Pty Ltd v Water Administration Ministerial Corporation;[2] Hawker Noyes Pty Ltd v New South Wales Egg Corporation.[3] It is not surprising that the parties would make the operation of a latent condition depend upon objective circumstances rather than the actual or particular knowledge or lack of knowledge of the contractor. The effect of the latent condition clause is to shift to the principal the economic burden of a risk which had been contractually assumed by the contractor. It is fundamental to the shifting of that risk that the occasion for the shift be, as much as possible, beyond the control or fault of the parties but be determined by, and be dependant upon, objective criteria and measures. In that way the parties agree to change which of them will bear the economic burden of a risk, and agree to make that change by reference to a neutral standard or measure which depends upon independently verifiable factors beyond the reasonable diligence or control of the party that will otherwise be relieved of the burden.[4]

19 The nub of the Authority's complaint was that, given that construction, the judge should have held that the variation in levels on the quarry floor was not a Latent Condition within the meaning of cl 12.1.

20 In order to deal with that contention, it is necessary to say something about the evidence. As was revealed at the trial, the Boral file contained among other things several large A1 sized contour plans of the quarry, drawn at a scale of 1 inch to 200 feet, as follows:

1. A contour plan of the quarry, entitled 'Locality Plan, drawn October 1969[5] showing surveyed existing conditions as revealed by a 'face survey' carried out on 21 October 1969. It revealed that, at that time, there were two benches in the south west corner of the major quarry, one at a reduced level relative to datum ('RL') of RL 100 feet and the other of RL 133 feet. The plan also revealed the overburden dump faces as they were at that time and that, while the major section of the quarry was still being worked, the area of the quarry called the cul de sac area had not yet been opened.
2. A contour plan of the quarry, entitled 'Working Plan', drawn April 1970.[6] Like the Locality Plan of October 1969, it showed the surveyed existing conditions as revealed by the 'face survey' carried out on 21 October 1969 but in addition also showed estimated 'ultimate conditions' (scil. intended further excavation) revealing that the intention was that the main quarry area would have the two benches of RL 133 feet and RL 100 feet removed and the quarry would be excavated to its full extent against the southern boundary as far as the statutory buffer zone.
3. A contour plan of the quarry, entitled 'Working Plan - Revision 1', drawn 9 May 1972'[7] representing the surveyed faces updated to 5 November 1971 'when operations were temporarily suspended' and also 'Proposed excavation revised a/c permit 55611- 200ft buffer zone southern boundary'. It showed that the proposed excavation of the benches at the south western corner of the quarry was to be decreased so as to leave a 200 foot buffer zone (as opposed to the 100 foot buffer zone previously proposed) but also that a portion of the two benches in the major quarry had been excavated and thus wholly removed apart from the southwest corner.
4. A contour plan of the quarry, entitled 'Working Plan - Revision 2', drawn 13 September 1973,[8] representing the surveyed faces updated to 26 July 1973. It showed that, by that stage, a large proportion of the two benches at the south western corner of the quarry had been excavated down from RL 100 feet and RL 130 feet to between RL 70 feet and RL 73 feet; that most of the main quarry had been fully excavated to depths centring around RL 66 feet; that excavation work had begun on the cul de sac area; and that large dumps or stock piles of crushed stone had been dumped back onto the floor of the main quarry.

21 The Authority contended that it would have been plain from an examination of those documents that the two shelves shown in the Maximum Extent of Excavation Plan in the south western corner of the Southern Stockpile had been excavated and filled over and, therefore, that the true level of ground at that point was significantly below the level shown in the Maximum Extent of Excavation Plan. The Authority also called two expert witnesses, Jason Abadee Clark and Don Raisbeck, to give evidence in support of that contention and relied upon what the Authority said were concessions made by witnesses called on behalf of BMD.

22 Mr Clark was a chartered construction engineer, former managing director of Dillingham Australian Ltd and former general manager of Jennings Construction Ltd, who described his occupation at the time of giving evidence as being to provide services to principals, contractors, solicitors, insurers and others involved in building and civil engineering construction in project assessment, pre-tender and during performance and in project wind up. His evidence in chief on the point was as follows:

The Maximum Extent of Excavation Plan did not appear to show the additional excavation of the benches at the southwest corner of the quarry carried out subsequent to the stage of development shown on the Working Plan revised to 9 May 1972.

I consider that a reasonable contractor would have been alerted to possible differences in the natural surface level to those shown on the Maximum Extent of Excavation Plan if it had made enquiries of Boral and carried out an examination of all of the material in the Boral file.

...

Because of the importance of the levels of the natural surface to this Tender I consider that a reasonable contractor would have carried out a detailed review of the Boral documents in the Boral file. I do not consider that such a review would have been onerous or overly time consuming or outside the knowledge and skill of a reasonable contractor.[11]

23 In cross-examination, however, his stance was in some ways different. He adhered in terms to the view that the drawings in the Boral file conveyed a picture of work done which was inconsistent with the Maximum Extent of Excavation Plan. But he said that the only specific thing which he had been able to identify from the drawings was that between 3,000 and 4,000 cubic metres of the bench in the south west corner of the quarry had been excavated beyond the extent of excavation shown in the Maximum Extent of Excavation[12] and that the only other thing of significance which he had observed in the file was a note in 'one of the reports' that excavation of the floor was carried out after a certain date:[13]

And I suggest to you that the only thing that you found was that there was a bench of some 3,000 to 4,000 m³ of additional excavation that appears to have been excavated, if you have got the benefit of hindsight and looked at the Boral file that doesn't seem to have been indicated in the maximum extent of excavation plans? - - - Benches excavated, yes.

And it is a bench of some 3,000 to 4,000 m³? - - - That could be correct, I haven't worked that out.

You have assumed that because there is some anomaly indicating that some bench of 3,000 or 4,000 m³ has been excavated, it doesn't appear on the maximum extent of excavation plans, that a reasonable contractor should have allowed for something in excess of 100,000 m³ of additional excavation area, that is the assumption you have made? - - - No, I didn't make that assumption at all.

Well, the area that you have disallowed, something like 196,000 m³ of excavated material, is over 100 m of additional excavation area [sic]? - - - I didn't make the assumption you say I made.

Do you agree that the area [sic] of additional excavation in the quarry floor is something like 100,000 m³ of additional excavation? - - - 100,000 m³?

Yes? - - - I have not worked that out, it would be of that order.

Something in that order? - - - Yes.

And what you say is that what you identified in the Boral file is the missing bench of something like 3,000 to 4,000 m³ of additional excavation? - - - It wasn't all identified.

I suggest to you apart from that bench there is nothing else on the Boral file at all? - - - I suggest you are wrong.

What is there? - - - There was a note in one of the reports that excavation of the floor was carried out after a certain date.

Yes, that's it? - - - Yes.

24 Mr Raisbeck was a geotechnical engineer whose evidence in chief on this point was that:

The Contractor (BMD) had access to both documents included in [the Boral file] and, apparently, staff from Boral with some knowledge of the quarrying operations, from about the time of interest dated 22 June 2001.

[The Boral file] contained correspondence and plans submitted to the Mines Department on an annual basis up to the close of operations in or about 1976. Within the [Boral file] are some documents of particular note, namely two letters from Albion Reid Pty Ltd to The Secretary for Mines entitled:

• 'Application for Extractive Industry Licence No. 245, Fowler Quarry' dated 14 June 1972, the attached table of estimates of stone reserves and the Working Plan (Rev. 1) dated 9 May 1972. (Face survey 5 November 1971, work suspended until October 1972.)
• 'Extractive Industry Licence No. 245, Fowler Quarry' dated 28 September 2973 and the Working Plan (Rev 2) dated 13 September 1973 (face survey 26 July 1973.)

In the first letter dated 14 June 1972 Albion Reid acknowledged that a permit had been, in principle, granted to reopen the quarry after work was suspended in November 1971. In fact the licence was not issued until 12 October 1972. The new License allowed the removal of 250,000 tons (approximately 90,000 m³) of residual basalt rock in the South West Corner of the quarry and 2.63 Million tons of basalt, salamander and overburden from a Proposed New Pit on the southern boundary of the quarry. The extent of these proposed excavations is shown on Figure 3.1, Extract of Working Plan (Rev 1). It should be noted that the floor of the pit is shown in the period November 1971 to October 1972 as 67 ft MMBW datum (RL 20 m AHD). AHD is Australian Height Datum. This reflects the contours shown on the Plan of Maximum Extent of Excavation (Figure 2.3) provided as tender information which was developed from aerial photographs.

The removal of the residual basalt in the South West Corner completed the maximum southerly extension of the quarry under the old permit which allowed a Statutory Buffer zone of 100 ft (30m) to the fence line. The Proposed New Pit to the east required a new MMBW planning permit (No 5561) with 200 ft (60m) Statutory Buffer zone to the southern fence line. The proposed new pit has been referred to on site during the Project as the Cul-de-sac area.

The second letter dated 28 September 1973 refers to the excavation of the rock in the South West Corner as being completed in the required time (that is, between October 1972 and July 1973) and that it included additional rock in the base of the quarry that was not included in the original estimate (June 1972 letter & table). The extent of works at July 1973 is shown on the Working Plan (Rev 2) from which a portion has been extracted for this report as Figure 3.2, Extract of Working Plan (Rev 2). It should be noted on the drawing that the floor of the pit was being excavated down to RL 56 ft (RL 16.5m AHD) while the southern and eastern faces of the South West Corner excavation had been backfilled with stockpiled material. The extent of the basalt recovery is clearly shown in the east-west Section C-C and the north-south Section B-B presented on Figures 3.1 and 3.2.

... My best interpretation of the section derived from the quarry drawings is that excavation could have been taken down to RL 16 m over the floor in the southern stockpile area ...

25 As will later be seen, however, Mr Raisbeck's evidence in cross-examination was also different from what he said in chief.

26 The principal concession on which the Authority relied was made by Allan Tuttiett, who was the estimating manager with BMD and, prior to becoming an estimator with that company, had spent some 16 years in various on-site roles for a number of contractors involved in the construction of large civil projects in Australia and the United Kingdom with hands on control of earthworks operations and materials management. In his evidence in chief, Mr Tuttiett said that he was provided with the Boral file in the course of preparing BMD's tender but that he did not gain any valuable insights from his examination of the file for tender purposes. He identified as reasons for his failure to derive anything of assistance from the file that he could not see the datum used, that the measurements on the drawings were marked in imperial units, that there was no scale, and that in effect the drawings were merely sketch drawings more in the nature of explanatory diagrams than 'proper drawings which might typically have been used for construction purposes'.[14] But Mr Tuttiett was apparently mistaken in his recollection that the drawings were unscaled sketch drawings in the nature of explanatory diagrams. As counsel for BMD fairly conceded, one can see that the drawings were not mere sketch diagrams but rather carefully drafted, scaled engineering renderings. Furthermore, although they were scaled in imperial measurements, it may be doubted that that should have been a problem for a competent engineer. And the drawings did have a datum, as Mr Raisbeck explained.

27 The aspect of Mr Tuttiett's evidence on which the Authority placed principal reliance, however, was a section of his cross-examination in which counsel for the Authority led him through some of the documents in the Boral file and obtained his agreement to the significance which counsel attributed to each document, as follows:

We had tendered this morning, perhaps earlier this afternoon, a copy of the so-called Boral file? - - - Yes, that's true.

Who gave that document to you? - - - I would have to say that I cannot clearly remember who gave that document to me, It was either Paul Fogarty or Terry Lynch.

And you understood that that was a document that had been obtained from the internal resources of BMD and was not common to other tenderers? - - - That's true, BMD's involvement in this particular job, as I said before that Mr Tim McMahon brought this job to BMD, I believe it was because of or through BMD's relationship with Boral, particularly in the subdivision side of our work, and that file was offered up by Boral to us to see if it was any help in our tender preparations ...

Can I take you to ... the letter dated 28 September 1973 [in the Boral file]? - - - Yes.

Second paragraph, did you read that paragraph at the time of tendering? - - - I don't recall definitely reading that paragraph, no.

Well, it talks about there being removal of the last remnants of stone in the old quarry which includes that in the southwest corner which was removed within the stipulated time? - - - Yes, it does.

So it is clear that there was continuing work going on on the work faces in this quarry referred to in correspondence and as we will see in a moment shown in the drawings, is that right, disclosed by this correspondence? - - - It talks about - yes, this one talks about work that has been done, yes.

Now, I want to take you to the drawings, Mr Tuttiett. You said that you had examined the drawings during the tender period, or was it overviewed them? - - - I overviewed the drawings during the tender period.

Did you take them out of the file and open them up on your desk? - - - Yes, I did.

...

Now, this drawing [the 'Locality Plan, drawn October 1969][15] is dated October 1969? - - - Yes, it is.

It is just simply headed, locality plan? - - - Yes, it is.

...

And the scale of the drawing is one inch in 200 feet? - - - That is correct, yes.

You are familiar with Imperial measurements, I take it? - - - I am familiar with, I haven't used them in engineering terms, but I am familiar with them, I know what a foot is, yes.

28 Counsel for the Authority contended that Mr Tuttiett's answers, and particularly the last answer set out above, made clear that a reasonable contractor was well able with reasonable care to have ascertained from the Boral file that the conditions in the south west corner of the quarry were not as represented, and so should have reasonably anticipated the presence at the south west corner of the Southern Stockpile of levels materially below the levels shown on the Maximum Extent of Excavation Plan.

29 To begin with, we were inclined to think that there was some force in that contention. If one is taken through the documents in the file in the way Mr Tuttiett was taken through them in cross-examination, it is possible to see the features which counsel identified in cross-examination and thus the probability of the conclusion that the levels at the south west corner of the Southern Stockpile may have been different to the levels shown in the Maximum Extent of Excavation Plan

30 On reflection, however, it appears to us that there are several factors which militate against that conclusion. First, as counsel for BMD submitted, it is necessary to read Mr Tuttiett's answers in conjunction with a passage from his re-examination in which he explained that, although it was not difficult for him to follow the significance of the drawings in the Boral file as he was led through them by counsel for the Authority, it would have been otherwise if he had not known what to look for:

And you were asked by [counsel for the respondent] that - it was suggested to you when you went through this process of going through the drawing, that it wasn't too difficult an exercise for an engineer to divine from those drawings that some additional excavation had been done, and your response to that was 'No, that's quite true.' What did you mean by that? - - - I meant it wasn't very difficult for me to follow what [counsel for the respondent] was showing through drawings knowing what to look for in the first place to come, if you like, the other way around from what we would be doing at the tender. If you knew something was there then you could use those drawings to show that.

What if you didn't know something was there? - - - You wouldn't know to look for it in the first place.[20]

31 Secondly, although one may ordinarily be inclined to prefer the apparent effect of concessions made in cross-examination to qualifications introduced in re-examination, in this case the answers given by Mr Tuttiett in re-examination were supported by concessions made by Mr Raisbeck in the course of his cross-examination to the effect that, unless one had expertise in geotechnical engineering or hired a geotechnical engineer to look at the Boral file, one would not have been able to determine the geotechnical significance of its contents:

So your evidence is that you are not suggesting that a contractor looking at this file would have been able to find something of geotechnical significance, you are saying that a contractor who engaged a geotechnical engineer to look through the file may have found something of geotechnical significance, is that fair? - - - That's correct.[21]

32 The Authority contended below and again before us on appeal that Mr Raisbeck's concession went only to matters of 'geotechnical significance' and that, in context, it should be seen that matters of 'geotechnical significance' were limited to volume and composition of overburden, as opposed to its depth above the natural level of the ground. But it does not seem to us that the concession was so limited. To the contrary, it was made in the course of questioning specifically directed to the utility of the Boral file plans for the purposes of determining the depth of overburden and thus the level of natural ground. The passage of Mr Raisbeck's cross-examination which we have set out above was immediately preceded by questions directed to the opinion Mr Raisbeck had expressed in chief that a reasonable contractor would have taken the Boral file as a prized source of data:

So when you make reference to what a reasonable contractor should have ascertained from the Boral file, it is fair to say that you have done that with the benefit of hindsight, you had known at the time that you had the Boral file exactly what it is that the contractor was saying constituted the additional excavation works? - - - Yes.

Yes, can I ask you to look at volume 31. And if I could ask you to go to paragraph 341 on page 279. That constitutes part of Mr Watersons' response to your expert report? - - - Yes.

And you have read it I take it? - - - Yes, I have.

And do you see that Mr Waterson states that both he and Mr Hawkins reviewed the file during that early stage in the project, and couldn't find anything in it of significance? - - - Yes, that's what he has said.

Yes. And that's not inconsistent with your knowledge? - - - Of this paragraph?

...

If that's the evidence of what occurred, I want you to take that as a hypothesis because you weren't there, obviously? - - - Yes.

Then the situation would be that you had two experienced engineers with knowledge of earthworks projects, correct? - - - Yes.

And particular knowledge of this project, but without the benefit of hindsight, who couldn't find anything in the file, couldn't find anything of significance in the file? - - - Are you talking about geotechnical significance?

I am talking about, yes, nothing in the Boral file that indicated anything of relevance to the way the project - - -? - - - Both of them could not fined [sic] anything of geotechnical significance in the file. There is a reason for that.

... Can I suggest to you that that's inconsistent with your proposition that some reasonable contractor having access to the file would find something of geotechnical significance to this project? - - - If he had expertise in geotechnical engineering, or he had hired a geotechnical engineer to look at this file.[22]

33 Thirdly, as appears from that section of Mr Raisbeck's cross-examination, Terrence James Waterson, who was the BMD construction manager for New South Wales and Victoria, and John Hawkins, who was the project superintendent engaged by the Authority, both looked at the Boral file after it emerged in May or June 2002 that there may be a significant discrepancy between the Maximum Extent of Excavation Plan and the conditions in fact. Even then, neither of them considered the Boral file to be of any assistance.

34 Mr Waterson held a Bachelor of Civil Engineering degree, was a member of the Institution of Engineers of Australia and of the Australian Institute of Quarrying and amongst other qualifications held a Current First Class Mine Managers Certificate - Open Cut and Metalliferous Mines. His evidence in chief on the point was as follows:

I showed John Hawkins the file that BMD had obtained from Boral in relation to the quarry after the Project commenced in late 2002, when there was some discussion about a possible short fall in material. We both examined the file and Hawkins stated to me that no useful information could be obtained from the Boral file to work out the levels of natural ground. I agreed. The Boral file was not referred to again throughout the Project. Certainly, Hawkins never asserted to me that the Boral file contained relevant information concerning the depths of natural ground ...[23]

Mr Waterson was not cross-examined on that aspect of his evidence.

35 Mr Hawkins gave evidence in chief that, after the Project commenced, Mr Waterson told him that the information from the Boral file provided BMD with a further indication as to the amount of quarrying work that had been undertaken and the depths involved.[24] But when he was cross-examined on the matter, Mr Hawkins accepted that what Mr Waterson had said in his evidence about it was in substance accurate:

Look, after the works commenced on site, Terry Waterson showed you a file of plans and documents which BMD had obtained from Boral? - - - Yes.

Do you recall that?- - - Yes.

And when do you recall that occurred? - - - I recall it was in the first six months of the project.

Can you put a month on it? - - - May, June.

May, June? - - - 2002.

...

Thank you. And I suggest to you that when Mr Waterson produced that file with documents, and historic documents, both Mr Waterson, Chris Leonard from VicUrban and yourself sat down and read the file? - - - Yes, we looked at the plans in that file, yes.

And you all agreed that it was of no assistance? - - - I am not sure that's correct, the first time as I recall we were looking at the eastern stockpile base, then there was little difference there, it was then used some time later regarding the southwest corner bench.

Well, when you looked at that file with Mr Leonard and Mr Waterson in May of 2002 you didn't see anything in the file that was of any benefit, is that so? - - - Not at that stage.

And the three of you were all experienced in civil construction works? - - - Yes.

...

And I suggest to you that what happened then is that Mr Waterson offered you the file to take away? - - - Correct.

And you did take the file away, and kept it for a matter of weeks? - - - I don't recall how long we kept it. Certainly days.

And did you look at the file again? - - - I don't believe I was given it at that time, it was when we were discussing the southwest bench that I took the file and copied the pages.

But when you say you were given the file by Mr Waterson to take away, did you look at the file? - - - I looked at the file at the time.

Yes. And you gave it back to Mr Waterson? - - - Yes.

And you made no comment to Mr Waterson that it contained anything of any use? - - - I don't recall saying it had nothing of any use and I don't recall making any comment when I gave it back to him.[25]

36 Fourthly, despite the fact that the Authority had the Boral file from May or June 2002, and BMD made claims for compensation for the Latent Conditions constituted by the extent to which the depths of overburden at the south west corner of the Southern Stockpile exceeded depths shown in the Maximum Extent of Excavation Plan, the Authority never suggested during the course of the contract that BMD should reasonably have anticipated from the Boral file that the conditions were as they were found to be in fact. It appears that it was only after litigation was contemplated, and Mr Clark had been engaged, that the idea first emerged that the Boral file was sufficient to alert BMD to the changed conditions. We are reminded of Gleeson CJ's observation in Rosenberg v Percival,[26] that:

In the way in which litigation proceeds, the conduct of the parties is seen through the prism of hindsight. A foreseeable risk has eventuated, and harm has resulted. The particular risk becomes the focus of attention. But at the time of the allegedly tortious conduct, there may have been no reason to single it out from a number of adverse contingencies, or to attach to it the significance it later assumed. Recent judgments in this Court have drawn attention to the danger of failure, after the event, to take account of the context, before or at the time of the event, in which a contingency was to be evaluated.

37 Fifthly, BMD called expert evidence from Mr Garry Mostyn, a geotechnical engineer and an adjunct professor in the School of Civil Engineering, University of New South Wales. He held Bachelor of Engineering and Master of Engineering Science degrees and had considerable experience in working with contractors. He explained that it was only with the benefit of hindsight, which is to say having been briefed on the extent to which the conditions in fact diverged from the conditions depicted in the Maximum Extent of Excavation Plan, that he detected the significance of the Boral file drawings. His evidence in chief, which was not contradicted in cross-examination, was as follows:

My initial assessment, formed in approximately half an hour, was that [the Boral file] was of no real use. My reasons for forming this opinion were that:

1. The scale was too small and unknown.
2. The level datum was unknown and could be out by a few metres.

1. Many of the details appeared crudely drafted on some plans and the reliability/ purpose of the drawings was unknown.

1. It was often difficult to tell cut batters from fill batters, ie. natural ground from stockpile fill.

...

Late in preparing this report and to provide sworn evidence, I returned to [the Boral file] with a view to confirming my initial assessment at a forensic level.

To do so I completed the following tasks [including assembling the drawings in order and establishing a datum by locating several fixed points on several plans and comparing the levels with those on the Exiting Surface Contours Plan].

...

With the benefit of hindsight, I understood from Schedule 3 of the Further Amended Statement of Claim that nearly 200,000 m³ of additional fill had been excavated from the Quarry floor.

Using the above knowledge, I found that Rev 2 of the above plans, and Rev 2 alone, indicates that the bench shown at approximately RL 30m AHD in the south west corner of the Maximum Extent of Excavation Plan had been removed sometime between 5 November 1971 and 26 July 1973. The bench is shown on Rev 1 of the plans and apparently buried beneath fill on Rev 3 of the plans.

...

The level information and plan position control on the Boral documents were not accurate enough for me to be able to assess differences elsewhere.

Based on my experience and my assessment that:

1. An estimator is unlikely to have experience in quarrying or mine regulation.
2. Many engineering staff today have not worked in an imperial measurement system nor are they familiar with imperial level datum.

1. Aerial photography from 1968, 1972 and 1976 had evidently been used by [Vic Urbans'] team.

1. An initial assessment of the Boral documents was that they were unlikely to be of assistance.
2. There was already considerable reliable information on the matter provided by the [Vic Urban's] project team.

It is my opinion that a reasonable and competent contractor tendering on this project would not have undertaken the level of investigation of the Boral documents that was necessary to establish that the Maximum Extent of Excavation Plan was incorrect in the south west corner of the Quarry.[27]

38 Sixthly, the significance which a reasonable contractor might be expected to attribute to the Boral file stands to be assessed in the context that BMD had supplied all tenderers with an extensive range of documentation to enable tenderers to assess the scope of the project and pitch their tender accordingly. The point was made by the judge as follows:[28]

The test to determine what BMD should reasonably have anticipated is to be judged by what a competent and suitably qualified contractor would expect to encounter by way of physical conditions in the execution of the works: Ryde City Council v Transfield Pty Ltd.[29] Mr Clark's opinion was that a reasonable contractor would (after examining the Boral file) have been alerted to the possible differences in the natural surface level from those shown on the maximum extent of excavation plan. Mr Raisbeck, on the other hand, an experienced geotechnical engineer also called by VicUrban, said in cross-examination that a contractor would need to have had reasonable expertise in geotechnical engineering or to have hired a technical engineer to analyse the contents of the Boral file, to have found something of geotechnical significance. He said that a contractor looking at the Boral file would have been unable to find something of geotechnical significance but that a contractor who engaged a geotechnical engineer to look through the file may have found something of geotechnical significance. He accepted that the reason that two engineers with knowledge of earthworks projects (namely, Messrs Waterson and Hawkins) would not be expected to find anything of geotechnical significance in the file was because they were not geotechnical experts. The material in the Boral file itself does not contain information in a form that, without more, would make a reader realise or apprehend that the information on the plan of maximum extent of excavation was wrong or needed to be re-examined. The evidence of Mr Raisbeck is, in my view, significant as an expert in the relevant field of expertise and knowledge giving evidence to the effect that a reader of the information in the Boral file would need to have that expertise and knowledge to realise the potential significance for an earthworks contractor of the information in the Boral file. It is telling that a person with specialised knowledge (Mr Raisbeck) believed that it is necessary to have that expert knowledge to appreciate and evaluate the significance for an earthworks contractor of the information in the Boral file. VicUrban was not able to point to any particular fact or matter on the face of the Boral file which would cause a non-expert in the position of a contractor to seek the assistance of a geotechnical engineer. As against this BMD had information which pointed to different natural surface levels from those actually encountered. With all the caveats and qualifications which that information may have had, it is information which had probative value to an earthworks contractor: it was detailed, professionally prepared and honestly proffered by VicUrban as being of assistance. Accordingly I do not consider that BMD should reasonably have anticipated the information which might be found in, or deduced from, the Boral file after expert investigation. More particularly, I do not consider that BMD should reasonably have anticipated that the natural surface levels were different from those shown on the maximum extent of excavation plan even allowing for the qualifications of accuracy and cautions in the materials and reports conveyed to them to assist them in their tender.

39 Counsel for the Authority argued that the judge was wrong to conclude that the matter was to be decided by reference only to what a competent and suitably qualified contractor would expect to encounter by way of physical conditions in the execution of the works. In counsel's submission, although that was the starting point, it was necessary then to consider what would have been reasonably apparent to BMD if it had examined all information relevant to risks, contingencies and other circumstances obtainable by making reasonable enquiries. And for the purposes of that enquiry, he submitted, the point was not what a geotechnical engineer like Mr Raisbeck or Mr Mostyn might think of the significance of the Boral file but what a prudent contractor would have made of it after examination of its contents. Nor was it to the point, he contended, to have regard to the other information provided by the Authority. In counsel's submission, it was plain from Mr Clark's evidence that any reasonable contractor who examined the Boral file would have been alerted to the changed conditions and the judge had erred in excusing BMD from examination of the Boral file by reason of the other information provided by the Authority.

40 We are not persuaded by those submissions either. The judge did not err in his comprehension of the correct test. It is plain from what his Honour said in context, in particular from the passage of his Honour's reasons earlier set out at [18] that he understood that the test was objective in the sense of what a reasonable contractor in BMD's position would have done, and it is clear from the following passage of his Honour's reasons that he did not 'excuse' BMD from examination of the Boral file or from the obligation to make any other reasonable inquiries such as would be made by a reasonable contractor in its position:

BMD contends that a consequence of the standard under clause 12 being an objective one is that it is irrelevant to consider whether or not it had the Boral file. I do not agree with that contention because it is contrary to what is an important purpose of the clause; namely, to encourage and require the making of enquiries by the contractor: VicUrban, as principal, agreed to accept an additional risk of a latent condition but only if the contractor has done all that it reasonably could or should. BMD personnel did make enquiries of others about the condition of the site and by those enquiries came into possession of a file. In my view the reasonable enquiries which a contractor would, and should, make include those enquiries which may be prompted by any previous enquiry it has reasonably undertaken and which it ought reasonably to have undertaken; indeed, the reasonable enquiries which a contractor should make extend to making reasonable enquiries about things known or discovered even if those matters had been known or discovered other than by having made reasonable enquiries or the result of reasonable enquiries (knowing something - however it came to be known - may carry the consequence of an obligation to make enquiries about it). Mr Tuttiett was the senior estimator of the project for BMD and said that he was given the Boral file by either Mr Fogarty or Mr Lynch of BMD. Mr Tuttiett explained that his purpose in reading the file was to ascertain whether it provided any further insight to assist BMD in the preparation of its tender. He then passed it on to Mr Miroshnikoff to see whether it might assist him in the detailed planning and programming of the job. It is, therefore, relevant that BMD had the Boral file to what reasonable enquiries it should have made for the purposes of clause 12.1. The contrary view urged upon me by BMD would discourage the making of enquiries which the clause has made a condition of entitlement to a claim.[30]

41 Nor did the judge decide the issue according to what a geotechnical engineer might think as opposed to a reasonable contractor in BMD's position. The point of his Honour's reference to Mr Raisbeck's evidence, which it should be noted was tendered by the Authority in support of its contentions, was that, if someone as skilled in the examination and assessment of geophysical plans as a geotechnical engineer is of the view that one would need geotechnical expertise to derive anything of significance from the Boral file, it is a fair indicator that the ordinary reasonable earthworks contractor would not reasonably anticipate as a result of examining the file that the conditions were otherwise than as represented in the documents provided by the Authority.

42 Nor was the judge in error in coming to a view different to the opinion expressed by Mr Clark. For, as counsel for BMD submitted, the question of what a reasonable contractor in BMD's position should reasonably have anticipated as a result of examining the file was not foreclosed by expert opinion. It was a question of fact to be decided by the judge according to his assessment of the evidence; and, although Mr Clark's opinion was part of that evidence, it was certainly not the only expert opinion on the subject. There was also the opinion of Professor Mostyn who, although a geotechnical engineer, was experienced in contracting, and there was the evidence concerning the failure of Mr Waterson and of Mr Hawkins to perceive the significance of the file even when it was perceived that conditions might be different to what had been represented in the Authority's documents.

43 Finally, there was nothing amiss in the judge assessing the matter in the context of the documents with which BMD had been provided by the Authority. The reaction of a reasonable contractor to the contents of the BMD file would properly be informed or conditioned by the contents of the Authority's documents. As Professor Mostyn pointed out, the Authority's documents were manifestly based on photogrammetrical surveys taken over the whole of the period covered by the drawings in the Boral file. That was reason to be moderately confident that any apparent anomalies that might have appeared from the drawings had been taken into account in the construction of the Authority's documents.

44 Admittedly, the Authority made clear that it gave no warranties as to the accuracy of its documents.[31] Even so, the fact that it gave out the documents as the basis for a fixed-price tender was something significant to weigh in the balance in determining how far a reasonable contractor should be expected to go in comprehending the effects of any other possibly relevant material in its possession or which it might obtain on reasonable inquiry.

45 In our view, when all the evidence opposed to Mr Clark's opinion is weighed against it, it may be seen that it was not only open but, with respect, plainly right for his Honour to reject it in favour of that other evidence.

Cross-appeal grounds 3 - 8: Notification of Latent Conditions

46 Clause 12.2 of the contract was in the following terms:

Notification

If during the execution of the work under the Contract, the Contractor becomes aware of a Latent Condition, the Contractor shall forthwith and where possible before the Latent Condition is disturbed, give written notice thereof to the Superintendent.

If required by the Superintendent, the Contractor shall provide to the Superintendent a statement in writing specifying -

1. the Latent Condition encountered and in what respects it differs materially;
2. the additional work and additional resources which the Contractor estimates to be necessary to deal with the Latent Condition;

1. the time the Contractor anticipates will be required to deal with the Latent Condition and the expected delay in achieving Practical Completion;

1. the Contractor's estimate of the cost of the measures necessary to deal with the Latent Condition; and
2. other details reasonably required by the Superintendent.

47 Clause 12.3 relevantly provided that delay caused by a 'Latent Condition' might justify an extension of time under cl 35.5.

48 That clause dealt with delay in reaching Practical Completion as a result of, inter alia, 'Latent Conditions'. Provided that 'within 28 days after the delay occurs' the Contractor gave the Superintendent a written claim setting out the facts on which the claim was based, the Contractor would be entitled to an extension of time for Practical Completion.

49 Clause 36 provided that where the Contractor had been granted an extension of time under cl 35.5 for any delay caused by any of the events referred to in cl 35.5(b)(i), the Principal was obliged to pay to the Contractor such extra costs as were 'necessarily incurred' by reason of the delay. Importantly, 'Latent Conditions' fell within cl 35.5(b)(ii), and not cl 35.5(b)(i). Accordingly, cl 36 made no provision for delay costs arising out of 'Latent Conditions'.

50 Clause 40.5 was expressed in general terms, and dealt with questions of valuation, in particular arising out of variations to the Contract. However, it extended beyond that subject. It commenced by stating that the procedure set out therein would apply wherever 'the Contract provides that a valuation shall be made under cl 40.5'.

51 Clause 12.3 provided the link to cl 40.5. It was in the following terms:

Extension of Time and Cost

Delay caused by a Latent Condition may justify an extension of time under Clause 35.5. If a Latent Condition causes the Contractor to -

1. carry out additional work;
2. use additional Constructional Plant; or

1. incur extra cost (including but not limited to the cost of delay or disruption), which the Contractor could not reasonably have anticipated at the time of tendering, a valuation shall be made under Clause 40.5.

52 Clause 40.5 required the Superintendent to undertake the valuation prescribed. It also set out the basis upon which that valuation would be carried out. If the contract provided for specific rates or prices to be applied in determining the value, those rates or prices would be used. Alternatively, reasonable rates or prices would be fixed if the valuation related to extra costs incurred by the Contractor for delay. The valuation would include a reasonable amount for overheads, but not profit or loss of profit.

53 In order to understand how the judge came to his decision that BMD had given compliant notice, it is necessary to set out in detail at least some of the documents that were said to constitute the relevant notification. We propose to do so by focussing upon each of the four sites separately designated in dealings between the parties as variously named 'stockpiles'.

54 BMD submitted that it gave effective written notice to Mr Hawkins, the project superintendent engaged on behalf of the Authority (described hereafter as 'the Superintendent'), of a Latent Condition, pursuant to cls 12.2 and 35.5, by letter dated 2 August 2002, but faxed some four days later.

55 The letter in question was in the following terms:

Dear Sir,

RE: VALLEY LAKE - NIDDRIE

NOTIFICATION OF LATENT CONDITION

We herewith confirm verbal advice that the extent of earthworks required in the area defined as the 'Southern Stockpile' differs materially from that anticipated at tender. Accordingly, we submit our notification of a Latent Condition under Clause 12 of the General Conditions of Contract as follows:-

1. Latent Condition

The extent of excavation required to expose natural surface in this area has been shown to be significantly lower than the levels anticipated at time of tender based on all information available to the contractor. This has been demonstrated by exposure of the natural surface some 10 metres below the anticipated level in one area and further confirmed by test pits excavated and surveyed showing the area affected is significant.

2. Additional Work Required

The lower excavation surface requires additional excavation of overburden material, additional placement of structural fill, additional base and possibly wet-based preparation and additional fill platform interfacing. The extent of all these items is unable to be accurately quantified until excavation is complete, however the volume of material is estimated to be approximately 35,000m3.

3. Delay

The location of the material (below the Southern Stockpile) is on the critical path for the project and will cause delay and disruption to the project. Acceleration to alleviate this delay is difficult due to the non-availability of additional fill areas to place this material concurrently with the planned operations. We estimate this delay to be a maximum of 4 weeks, longer if significant areas of wet base is encountered.

4. Cost Estimate

Costs associated with the claim would include the excavation, haulage and placement of the additional material, additional base preparation, fill platform interfacing and delay and disruption costs.

These costs are not able to be accurately quantified until excavation is completed and the extent of additional earthworks including the condition of the base is defined.

If you have any queries regarding the above please do not hesitate to contact the undersigned.

Yours Faithfully

BMD CONSTRUCTIONS - MAJOR PROJECTS PTY LTD

TERRY WATERSON

Project Manager

56 The Authority submitted that notification was not given 'forthwith' as required by cl 12.2, upon BMD having become aware of the Latent Condition. The judge considered that submission at [10] and [11] of his judgment, and rejected it.

57 The Authority also submitted that the letter of 2 August 2002 did not constitute compliant notification because it made no mention of the 'Quarry Floor Stockpile', but referred instead to an area described as 'the Southern Stockpile'.

58 The first reference to the Latent Condition extending beyond the area described as 'the Southern Stockpile' was in a letter from BMD to the Superintendent dated 5 March 2003. That letter referred to earlier correspondence and, in particular, to the letter dated 2 August 2002.

59 The letter of 5 March 2003 advised that the quarry base surface had by that stage been fully exposed 'in the main quarry pit floor' with the exception of the 'retention pond area'. The floor levels had been surveyed and shown to be at a lower level than those anticipated at the time of tender. The extent of additional excavation of overburden material had been quantified at 157,177 cubic metres net. Associated additional works other than excavation included wet base preparation where the lower levels placed the floor below ground water levels, additional fill platform interfacing due to increased depth of fill platforms and differing site topography, placement of structural fill back up to design excavation levels, delay and disruption costs.

60 It was clear from this letter of 5 March 2003 that the Latent Condition that had previously been identified in August 2002 extended well beyond the Southern Stockpile. The Authority submitted that the initial notification should be read as confined to a much smaller area than the Quarry Floor Stockpile now said to have been encompassed within the letter of 2 August 2002. The judge considered the Authority's submission, and rejected it.

61 His Honour found that the letter dated 2 August 2002 would not have been read in the way for which the Authority contended as being limited to the Southern Stockpile. Rather, it would have been understood as encompassing at least those areas proximate to the Southern Stockpile, namely, the Central and Lake Base Stockpiles which together with the Southern Stockpile made up what was later described as the Quarry Floor Stockpile.

62 However, his Honour rejected BMD's argument that the letter dated 2 August 2002 was a sufficient notification of Latent Conditions in three other sites, namely, the Northern, Avenue, and Eastern Stockpiles. His reasoning was that those three sites were 'not as close to the Southern Stockpile' as were the Central Stockpile and the Lake Base Stockpile. He added that BMD's contention regarding the sufficiency of the 2 August 2002 letter to amount to notification of the Northern, Avenue, and Eastern Stockpiles was 'not open on the pleadings'.

63 Thus, while his Honour was prepared to treat the reference to the 'Southern Stockpile' in the letter of 2 August 2002 as amounting to a reference to 'the quarry floor', and therefore to the 'Quarry Floor Stockpile', he was not prepared to go further as BMD invited him to do. He noted, in that regard, that BMD itself appeared to have treated the August letter as insufficient to amount to notification of Latent Condition in respect of other sites. It had, through its project manager, Mr Waterson, given separate notification, on 4 June 2003, 17 June 2003, and 17 November 2003 of Latent Conditions in the Northern, Avenue and Eastern Stockpiles respectively.

64 None of this mattered so far as his Honour was concerned. He said that, if necessary, he would have found that the Authority was estopped from relying upon any defect in the notification process, at least in respect of the width of the description given in the letter of 2 August 2002. That observation by his Honour, though plainly dicta, is the subject of challenge by the Authority in this appeal.

65 As regards the Northern, Avenue and Eastern Stockpiles, his Honour found that notification had been given 'forthwith', after BMD became aware of the Latent Conditions regarding those sites. The only significant point of contention regarding the notifications given in relation to these three sites was the Authority's claim that the last of them had been given well out of time. The Authority submitted that, on the evidence, BMD must have been fully aware of the Latent Condition associated with the Eastern Stockpile by June or July 2003 at the latest, long before notice purported to be given in November 2003.

66 It is necessary, therefore, to consider whether his Honour was correct in reaching the following conclusions:

• the letter dated 2 August 2002 was sufficient notification, pursuant to cl 12.2, of the Latent Condition in respect of the Quarry Floor Stockpile;

• if that letter were not sufficient notification of the Latent Condition in respect of the Quarry Floor Stockpile, the Authority was, in any event, estopped from relying upon a failure on the part of BMD to comply with cl 12.2;

• the letter dated 17 November 2003 was sufficient notification, pursuant to cl 12.2, of the Latent Condition in respect of the Eastern Stockpile; and

• if that letter were not sufficient notification of the Latent Condition, the Authority was, in any event, estopped from relying upon a failure on the part of BMD to comply with cl 12.2.

Whether notice of a Latent Condition in the Southern stockpile was given forthwith

67 The Authority argued, in support of ground 3 of its cross-appeal, that the written notice contained in the letter of 2 August 2002 was not given 'forthwith' in accordance with cl 12.2. It submitted that the contract was a modified form of the Australian Standard General Conditions of Contract AS2124-1992. As such, there was a good deal of relevant case law upon the construction of many of its important terms.

68 A condition precedent to relief for a Latent Condition was the giving of a written notice 'forthwith' of the adverse conditions encountered. The Authority submitted that the judge erred in his construction of cl 12.2 in finding that the previous oral advice given, together with the written notification contained in the letter of 2 August 2002, satisfied that requirement.

69 It was submitted that the word 'forthwith' meant 'as soon as possible' in the circumstances, the nature of the act to be done being taken into account.[32] It was acknowledged that this was not a limitation that carried with it a precise time, but it was submitted nonetheless that it imposed a clear and intelligible restriction on the time which might be taken to perform the acts in question. It was further submitted that in the circumstances of this case, that time was short.

70 According to the Authority, the evidence showed that the alleged Latent Condition in the Southern Stockpile was first encountered by Mr Waterson on 24 July 2002, which happened to be a Wednesday. At that time, BMD was conducting exploratory work in the area of the missing Southwest Corner Bench. Some discussion then took place between BMD and the Superintendent regarding the natural surface being lower than anticipated in that area. It was submitted that any such discussions could not constitute, or take the place of, the required written notice of Latent Condition. The letter dated 2 August 2002 was not sent to the Superintendent until 6 August 2006, some ten working days after the alleged discovery.

71 The Authority submitted that a letter sent almost two weeks after the discovery of a Latent Condition could not properly be described as having been sent 'without delay and as soon as reasonably practicable'. BMD led no evidence to explain why written notice had not been given earlier, and the reason was plain. There was no possible justification for the delay.

72 BMD replied by challenging this last submission. The Latent Condition was first discovered under an area known as the Southern Stockpile. Mr Waterson gave evidence that on 24 July 2002, BMD was digging test holes in that area to locate the natural surface beneath it. The test holes did not expose the natural surface as expected. Mr Waterson told both Mr Leonard of the Authority, and Mr Hawkins, the Superintendent, on either the first or second day of the test hole excavations of BMD's failure to expose the quarry floor where it was represented to be in the plans, and they attended to observe the excavations. Mr Hawkins told Mr Waterson that BMD should undertake further test exploration to determine the extent of the additional excavation.

73 In accordance with Mr Hawkins' instruction, BMD dug further and deeper exploratory holes. On 26 July, and again on 30 July, heavier equipment was brought in for that purpose. Over the course of the following week, the larger machinery kept removing overburden, but the natural surface was still not revealed. It was only then that Mr Waterson realised that the level of natural surface was materially different from that which was expected.

74 BMD gave notification in writing to the Superintendent in the letter dated 2 August 2002. While there was no explanation as to why it was not faxed to the Superintendent until 6 August 2002, that four-day delay did not prevent the notification from having been given 'forthwith'.

75 BMD submitted that the Authority's contention that the judge had had regard to the oral advice provided to the Superintendent on or about 24 July 2002 was without foundation. His Honour simply reviewed the circumstances in which the written notice had been given, and found as a fact that it was given 'without delay'. That finding of fact was open.

76 In addition, the judge noted in his reasons that:

... provisions like clause 12.2 must be construed with business common sense ... A stricter construction would encourage, if not compel, contractors to be more concerned with anxiously satisfying a formal temporal requirement of notification rather than to explore the underlying needs and circumstances of the situation.

77 BMD argued that the letter made it plain that it was a notice of Latent Condition in consequence of the natural surface being significantly lower than the levels anticipated as at tender. The figure of 35,000 cubic metres of material referred to in the letter was an estimate only, and did not purport to state the full extent of the Latent Condition. Until a material difference was encountered, there was nothing to notify the Superintendent about. Merely flagging the possibility that there might be a material difference, before any such difference had been detected, would not have been appropriate, and could not have satisfied the requirements of cl 12.2.

78 In our view, the judge was correct in rejecting the Authority's temporal submission that written notice had not been given 'forthwith'. The delay of four days, from 2 to 6 August 2002, though unexplained, does not signify a failure to comply with the requirements of the notification clause.

79 It is unnecessary to deal with BMD's alternative submission (para 31 of its outline of submissions in reply and in opposition to the cross-appeal) that the giving of a written notice forthwith is not a condition precedent to relief for a Latent Condition, but is merely relevant to the valuation of extra cost.

Whether excavation below levels depicted on MEEP plan was a Latent Condition

80 The next challenge to the notification ostensibly given pursuant to cl 12.2 was that the excavation below the levels depicted on the Maximum Extent of Excavation Plan ('MEEP') could not relevantly amount to a Latent Condition. The argument was that the contract was a lump sum contract for the excavation of approximately 2,400,000 cubic metres of stockpiled material and the placement of an estimated volume of 2,218,500 cubic metres of compacted fill. The risk in a lump-sum contract of that type was the risk that a greater volume of material would have to be excavated. BMD had acknowledged assuming that risk when it entered the contract.

81 Beyond the lump-sum risk, the contract included provision for Latent Conditions. As has been noted, a Latent Condition, relevantly, was constituted by physical conditions being encountered that differed materially from those that should reasonably have been anticipated at the time of tender. A 'material difference' connoted a difference of 'serious or substantial import'.[33] The material difference first notified was the missing Southwest Corner Bench in the Southern Stockpile. The evidence was that the Southern Stockpile was estimated to contain a volume of 109,000 cubic metres over an area of 26,500 square metres. The excavation depths were estimated to be up to 25 to 30 metres. In the event, the missing Southwest Corner Bench added a depth of approximately 10 metres to certain sections of the Southern Stockpile and a volume of additional material of between 35,000 and 50,000 cubic metres. The Authority accepted that this constituted a material difference in physical conditions in that stockpile, but submitted that it was not claimable by BMD as a 'Latent Condition' within the terms of the contract.

82 By contrast, the Eastern Stockpile was estimated to contain by far the greatest volume of overburden (1,499,000 cubic metres) over the largest area (178,000 square metres). In the event, only 43,412 cubic metres of additional material was excavated in that stockpile. This was less than three per cent more than the estimated volume, and could not, on any view, constitute a material difference.

83 The Authority further submitted that the Northern Stockpile also contained no Latent Condition. BMD claimed 64,679 cubic metres of additional excavated material based upon excavation below the levels shown on the MEEP. However, that claim was based upon an incomplete identification of the true scope of work in this stockpile. The contract work included the work necessary to provide the finished surface levels depicted on what was known as the Finished Surface Contours plan. That meant that there were always a number of areas where the anticipated natural surface was to be excavated. This was necessary so that gentle contours could be prepared for proposed housing allotments within this particular site. Accordingly, so it was submitted, the supposedly additional excavation work in the Northern Stockpile constituted part of the original scope of work under the contract, and was in no sense 'additional'. It could not therefore amount to a Latent Condition.

84 The Authority submitted that the total overall increase in volume excavated over the estimate was only 13.7 per cent (329,082 over 2,400,000 cubic metres). Indeed, there was only an increase of about 3.5 per cent (75,500 over 2,218,500 cubic metres) in the volume of processed and placed material compared with the estimated volume.

85 It followed, so it was submitted, that the judge ought not to have accepted that there was in any relevant sense a Latent Condition, except in relation to the Avenue Stockpile. The Authority accepted that BMD had given timely notification of a latent defect in relation to that stockpile and that it was entitled to retain the amount awarded by the judge in respect of that Latent Condition. All other claims were either not for Latent Conditions, or were otherwise barred.

86 BMD responded by submitting that the Authority had fundamentally misstated the nature of the contract. It was not a lump-sum contract for the excavation of 2,400,000 cubic metres of stockpiled material and the placement of 2,218,500 cubic metres of compacted file, with a risk that a greater volume would have to be excavated. The scope of the works involved excavation of materials from all existing stockpiles of overburden material to the natural surface of the site, sorting and blending of those materials to create the requisite structural fill, and placing and compacting it in various fill areas around the site.

87 The Authority had estimated that the works would involve the excavation of about 2,400,000 cubic metres from existing stockpiles and the placement of about 2,218,500 cubic metres of compacted fill. That estimate was based on calculations prepared by its engineering consultant from the natural surface levels which it arrived at, and provided to tenderers. The contract did not however require excavation and placement of the amounts designated, but rather excavation to the natural surface, and placement of the excavated material as engineered fill.

88 As some of the stockpiles were thought to be up to 25 to 30 metres above the natural surface levels, it was not possible for tenderers to determine the natural surface levels themselves. BMD was entitled to rely upon the information provided to it by the Authority as reflecting the scope of the works to be undertaken.

89 According to BMD, it had accepted the risk that the estimated volumes of materials to be excavated were approximate. It did its own calculations of the volume of earthworks required in reliance on the natural surface levels provided by the Authority. However, BMD did not, and was not required to, accept the risk that those natural surface levels were erroneous in preparing its lump-sum tender based on the extent of the earthworks required.

90 Any significant difference between the natural surface levels indicated in the MEEP, and those that ultimately emerged, would be covered by the Latent Condition clauses of the contract.

91 BMD submitted that the judge concluded, as he was entitled to do, that the natural surface levels were lower than those described by the drawings produced by the Authority. As a consequence, BMD was required to excavate and place 329,082 cubic metres of material more than could reasonably have been anticipated. That figure plainly represented a material difference in the physical conditions on site. BMD rejected the Authority's assertion that any additional excavation work carried out in relation to the Northern Stockpile constituted part of the original scope of work under the contract. The suggestion that this was so had not been put to its witnesses in cross-examination, nor had it been pleaded. It had never been suggested by the Superintendent, or by the Authority, that there had been a 'double payment' to BMD in this regard.

92 BMD also challenged the Authority's assertion that the overall increase of material excavated should be regarded as only 13.7 per cent over the estimate (329,082 cubic metres over 2,400,000 cubic metres), or 3.5 per cent over the volume of estimated material to be processed and placed. Whatever volume calculations the Authority might have made were entirely irrelevant. The fact was that the judge found that in consequence of a Latent Condition, or Latent Conditions, BMD was required to excavate, process, and place 329,082 cubic metres of material more than had been anticipated. This was clearly a material difference from the site conditions which ought reasonably to have been anticipated by BMD at the time of tender, based upon the contour levels provided through the MEEP.

93 In our view, the judge's findings regarding the existence of a Latent Condition are unassailable. His Honour was entitled to focus upon the greater amount of material to be excavated and placed than had been anticipated, and to regard that amount as a 'material difference'. No error that warrants the interference of this Court has been demonstrated. Ground 4 of the cross-appeal must fail.

The area covered by the Latent Condition referred to in BMD's letter of 2 August 2002

94 Ground 5 of the cross-appeal complained of the judge's decision to treat the letter of 2 August 2002 as adequate notification of a Latent Condition in the Quarry Floor Stockpile, rather than as confined to the smaller area designated as the Southern Stockpile. The Authority submitted that his Honour erred in treating the notification more broadly than was warranted by including at least the Central and Lake Base Stockpiles, both areas that were proximate, or contiguous to the Southern Stockpile.

95 The Authority argued that where the notifying party, BMD, chose to identify the Latent Condition as having been encountered in a particular area, the Southern Stockpile, and with a specific characteristic, namely, 'exposure of the natural surface some 10 metres below the anticipated level in one area with the volume of material estimated to be approximately 35,000m3' that notification could not be construed as notification of Latent Conditions in the Central and Lake Base Stockpiles. The notified extent, location and characteristics were not the same, and the physical condition identified was encountered earlier than at those latter two sites.

96 The judge concluded that the parties' conduct after the letter of 2 August 2002 was received was consistent with their having seen the notification as broader than strictly formal notification regarding the Southern Stockpile. The Authority argued that his Honour erred in this regard. Any such conduct was beside the point.

97 The evidence regarding the conduct to which his Honour referred was as follows:

• Mr Waterson said that as excavation was undertaken and areas became exposed, joint surveys were carried out and the Supervisor was made aware that the Latent Conditions notified on 6 August 2002 were extending outwards beyond the Southern Stockpile;

• such conduct was precisely what one would expect upon the discovery of a Latent Condition of this kind;

• the Superintendent, when first notified of this Latent Condition, required that there be further investigation; and

• the reference to the Southern Stockpile 'was not, nor was understood to be, nor should have been understood to have been, the locational limits of the Latent Conditions being notified'.

98 The Authority submitted that his Honour's reliance upon this evidence was unfounded. The joint surveys to which he referred had begun in about July 2002, and were brought about because BMD was not complying with its obligations in relation to quality control. Moreover, the letter dated 2 August 2002 expressly referred to 'the area defined as the Southern Stockpile'. It made no mention of any location such as the 'Quarry Floor', a concept BMD introduced much later on, on 5 March 2003. Any notification pursuant to cl 12.2 had to be couched in specific language, and to be expressed with precision. As regards the notification dated 5 March 2003, that plainly was not given 'forthwith'.

99 In addition, the Authority argued that the notice given in the letter dated 2 August 2002 referred to a condition in the Southern Stockpile where the 'extent of earthworks required [was] materially different from that anticipated at tender [comprising] exposure of the natural surface some 10 metres below the anticipated level' with the volume of material estimated to be approximately 35,000 cubic metres. This was later described as the missing Southwest Corner Bench. The areas proximate or contiguous to the Southern Stockpile contained only minor discrepancies between the natural surface level and the estimated surface levels shown on the MEEP. These discrepancies differed significantly from the gross differences revealed by reason of the missing Southwest Corner Bench.

100 Finally, the Authority relied upon the fact that BMD consistently notified Latent Condition claims by express reference to nominated stockpiles. It did so in its notifications, in its pleadings, and in its project manager's principal witness statement.

101 BMD disputed the Authority's contention that it was a requirement of the contract that it give a separate written notice of Latent Condition each time that condition happened to extend under one or other of the identified stockpile areas. The evidence showed that these stockpile areas were merely arbitrary lines on the Bulk Earthworks Plan dividing the one huge contiguous stockpile on site into different stockpile areas. These artificial divisions meant nothing to those working on site.

102 BMD also filed a notice of contention, submitting that the judge erred in failing to hold that cl 12.2 required only one notice of Latent Condition, and not separate notices in relation to separate sites. Indeed, BMD argued that cl 12.2 did not require it to give any further information concerning the Latent Condition, apart perhaps from describing it in broad terms. It was for the Superintendent to specify what, if any, further information he required, pursuant to items (a) to (e) of that clause. It was significant that the Superintendent did not require BMD to provide any further details of the Latent Condition throughout the entire course of the works.

103 BMD submitted that this case could be readily distinguished from JW Armstrong Constructions Pty Ltd v Shire of Cook,[34] which also dealt with the operation of cl 12.2. There, the contractor was aware that the Latent Condition that it encountered (wide and deep zone of alluvium) extended to the upstream coffer dam area some distance away, which was not part of the main structure. However, for whatever reason, it chose not to include that area in the notice.

104 White J held that since the contractor chose to refer to specific places where the Latent Condition had been encountered, and omitted reference to the coffer dam area, the notice did not cover that area. BMD noted, however, that her Honour had stated: 'I am not to be taken as concluding that in order to satisfy the requirements of cl 12.2 identification of the location of the Latent Condition is necessary.'

105 BMD pointed out that the MEEP, produced under the Authority's own auspices, made no reference to individual stockpile areas, which were entirely irrelevant to the scope of the excavation works required to be undertaken. The fact that the area of additional excavation turned out to be considerably larger than originally anticipated when the Latent Condition was first encountered went to the extent of that condition, but did not create a series of new Latent Conditions each requiring separate notification. It submitted that the judge's finding that it was in the very nature of what was being notified that its extent should be regarded as unknown, and hidden until excavated and revealed, was unassailable.

106 As previously indicated, BMD went much further. It submitted that there was no reason why the notification should be confined to the Southern Stockpile, as claimed by the Authority, or even to areas proximate thereto, as found by the judge. It argued that the notification given by the letter of 2 August 2002 was sufficient notification of the Latent Condition over the entire site where earthworks were required to be undertaken. It was only subsequently, and after considerable work had been done, that it was discovered that the natural surface levels were lower than anticipated, and extended over a much larger area of the site. BMD had continually kept the Superintendent informed of the extent of the Latent Condition by reference to the stockpile areas identified on the Bulk Excavation Plan. This was not required pursuant to cl 12.2, however, and was not a precondition to an entitlement to claim in respect of the Latent Condition.

107 It is unnecessary for us to resolve the issue raised on BMD's notice of contention. The judge concluded, as a finding of fact, that if separate notification was required to be given in relation to each stockpile area, in addition to the written notice dated 2 August 2002, all subsequent written notifications were given by BMD to the Superintendent 'forthwith'. In other words, the notice given on 4 June 2003 regarding the Northern Stockpile, that given on 17 June 2003 regarding the Avenue Stockpile, and that given on 17 November 2003 regarding the Eastern Stockpile, were all given in a timely and compliant manner.

108 The judge's conclusion regarding these later notices seems to us to be unquestionably correct. Of course, there were special circumstances regarding the Eastern Stockpile. It was not until the natural surface was exposed, and the area surveyed on 17 November 2003, that Mr Waterson became aware that the Latent Condition extended to that area. Before that time the natural ground had been left covered in overburden so that trucks could haul material over the area, and machinery could safely operate. The underlying natural clay was unsuitable for machinery to work on, particularly in wet weather conditions. It was not until the layer of capping was removed, and the haulage roads themselves removed, towards completion of earthworks, that the area could be properly surveyed. The evidence showed that it was that survey that alerted BMD to the existence of the Latent Condition claim in that area. The Superintendent was notified in writing that same day.

109 The next point taken on behalf of the Authority was that the judge erred in finding that there were compliant written claims for extensions of time to the Date for Practical Completion made by BMD in respect of the alleged Latent Conditions. His Honour found that BMD had complied with the requirements of cl 35.5 of the contract by giving timely notice to the Superintendent of the delays in question. That notice was said to have been given within 28 days after the delay had occurred, as required. The four notifications that were said to meet the requirements of the clause were those previously discussed, namely, those of 6 August 2002, 4 June 2003, 17 June 2003 and 17 November 2003.

110 Relevantly, the second paragraph of cl 35.5 was in the following terms:

If the Contractor is or will be delayed in reaching Practical Completion by a [Latent Condition] and within 28 days after the delay occurs the Contractor gives the Superintendent a written claim for an extension of time for Practical Completion setting out the facts on which the claim is based, the Contractor shall be entitled to an extension of time for Practical Completion.

111 The Authority relied upon Queensland v Multiplex Constructions Pty Ltd,[35] in which it was held that the expression '28 days after the delay occurs' in cl 35.5 should be understood as meaning 28 days from the time that the delay first occurs. That was so notwithstanding that the delay might be continuing.

112 The Authority submitted that compliance with cl 35.5 was a condition precedent to BMD proceeding with a claim for extension of time. Accordingly, if BMD failed to give notice within the 28-day period specified, its right to claim any extension of time was lost.[36] It further submitted that the fact that the clause did not state, in terms, that a failure to comply with the time limit would destroy the right to make a claim for an extension of time did not mean that compliance was not mandatory. That was because the notice of delay, which pursuant to the first paragraph of the clause had to be given 'promptly', and the claim for an extension of time, which had to be made within 28 days, were intended to be given, or made, within such time as would enable the Superintendent to investigate matters while they were still current, and to give alternative instructions, if necessary.

113 The judge found that the letter of 2 August 2002 not only satisfied the requirements of cl 12.2, but also discharged the onus under cl 12.3 and the first two paragraphs of cl 35.5. His Honour thus concluded that the letter dated 2 August 2002 did constitute a written claim for an extension of time in relation to the Quarry Floor Stockpile. He also came to the same view with regard to the letter dated 4 June 2003 and the Northern Stockpile, the letter dated 17 June 2003 and the Avenue Stockpile, and the letter dated 17 November 2003 and the Eastern Stockpile.

114 The Authority challenged that finding. It submitted that on no fair reading of that letter could it be regarded as making a written claim for an extension of time for practical completion 'setting out the facts on which the claim' was based. A bare statement that delay was being suffered was not sufficient for that purpose.

115 In our view, the judge was correct. Each letter put the Superintendent on notice of delay. The letter of 2 August 2002 spoke of the additional work that would be required, noting that the extent of all the items identified was unable to be accurately quantified until excavation was complete. It went on to say that the location of the additional material that would have to be excavated was on the 'critical path' for the project, and would cause 'delay and disruption'. It even went on to estimate the delay to be a maximum of four weeks, longer if significant areas of wet base were encountered. Broadly speaking, the same was true of the letters of 4 June 2003, 17 June 2003 and 17 November 2003.

116 It is difficult, in these circumstances, to see how the Authority can seriously maintain that none of these letters constituted a claim for extension of the time for practical completion, and that in relation to the Southern Stockpile, or the Quarry Floor Stockpile, no such claim was made before, at the earliest, 7 May 2003.

117 The Authority also argued that the letter dated 17 November 2003 regarding the delay caused by the Latent Condition in the Eastern Stockpile could not satisfy the requirements of cl 35.5. That was because the period of delay nominated was said to be 20 days, brought about as a result of excavation and placement of an additional 43,412 cubic metres of Type A material over a period that extended from January to November 2003. It was submitted that additional excavation below the levels depicted on the MEEP in the Eastern Stockpile had been surveyed on 21 August 2003, or earlier. Critically, so it was said, the judge failed to determine when the delay caused by the alleged Latent Condition in the Eastern Stockpile first occurred.

118 We are unable to accept any of these submissions. The fact that there was no claim, in terms, for an extension of time to practical completion can hardly matter. The claim may have been implicit, but it was, in our view, unambiguous. To hold, as the Authority would have us do, that any failure to use the precise words embodied in the contract is fatal to the validity of a notice under cl 35.5 would be to elevate form above substance. It would defy common sense, and fly in the face of the legitimate expectations of ordinary business people. We agree with his Honour that each of the four letters identified constituted compliant notice under cl 35.5.

119 BMD invited us to conclude that none of this mattered. It submitted that cl 12.3 provided for an entitlement to the contractor to claim extension of time and costs caused by the Latent Condition, and that the entitlement to an extension of time was not conditional upon notice, in accordance with cl 35.5, having been given. Indeed, BMD submitted that the clause allowed the Superintendent to extend time for practical completion even without any application by the contractor. The only time bar in relation to recovery of costs incurred as a result of the Latent Condition, including delay costs, was that set out in cl 12.4. That clause provided that in making the valuation under cl 12.3, regard should not be had to the value of additional work carried out, or additional cost incurred, more than seven days before the date on which the contractor gave notice of Latent Condition under cl 12.2. The evaluation of cost under cl 12.3 was made under cl 40.5, as if the claim was a variation.

120 In addition, BMD submitted that on a proper construction of cl 35.5 it was not obliged to give the Superintendent a written claim for extension of time arising from the Latent Condition until 28 days after the full extent of that condition had been ascertained. Only then could the amount of the extension of time claimed, and the delay costs incurred, be ascertained. Otherwise, cl 35.5 would require a fresh claim for an extension of time to be made each time additional work was done, and delay occurred. This would be neither commercially sensible, nor reasonable.

121 To the extent that Queensland v Multiplex Constructions Pty Ltd stood in the way of this construction, BMD submitted that the case was either distinguishable, or should not be followed. The case did not involve a Latent Condition where notification was required to be given under a separate Latent Condition clause, and the Superintendent had the ability to require the contractor to provide further details. Unlike the present case, Queensland v Multiplex Constructions did not involve a delay in which the contractor was still carrying out additional work on the Latent Condition such that its extent could not be ascertained until the excavation was complete.

122 Another factor upon which BMD relied in distinguishing Queensland v Multiplex Constructions was the Superintendent's awareness, in the present case, of the continuing delay because areas of natural ground that were exposed were subject to joint survey on a regular basis. The Superintendent was on site throughout the excavation, and was well aware of the problems. He had ample opportunity to investigate the claim.

123 Finally, BMD relied upon an estoppel, pointing out that the Authority had not, at any stage, raised any time bar issue regarding notices. The question of a time bar had arisen for the first time during the course of the litigation. It was a lawyers' point, and not one that affected the dealings between the parties.

124 It is unnecessary to consider any of BMD's alternative submissions with regard to this issue. We regard his Honour's finding that compliant notice was given pursuant to cl 35.5 in respect of each of the four sites in question as soundly based, and correct. Accordingly, ground 6 fails.

125 Ground 7, argued on behalf of the Authority, involved the construction of cl 35.5 of the contract which relevantly provided as follows:

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

126 The Authority challenged the judge's finding that written notice of the number of days extension of time had been provided by BMD 'as soon as practicable' after the written claim for extension of time to the date for practical completion for each of the four sites identified. It submitted that there was no evidence to support that finding.

127 The written notices of the number of days extension claimed that BMD relied upon were as follows:

128 The Authority argued that these notifications could be compared with the dates of purported notification of the respective Latent Conditions in these stockpiles. Thus, for example, there was almost a year's delay between the letter dated 6 August 2002, and the written notice of the number of days extension claimed in relation to the Quarry Floor Stockpile. Assuming (contrary to the Authority's primary submission) that there had been proper notification of delay, there was still no applicable notice stating the number of days extension claimed in respect of that stockpile delivered within time.

129 It was submitted that, even if one focused upon two letters sent by BMD on 5 March and 7 May 2003 respectively, advising that the quarry floor had been fully exposed in the main quarry pit area (which included the missing Southwest Corner Bench), and that there remained further excavation to be done in relation to the northern haul road, the delay until 16 June 2003 was excessive. The notice required pursuant to cl 35.5 was not provided 'as soon as practicable' after the claim for an extension of time.

130 With regard to the Eastern Stockpile, it was submitted that even assuming that the claim for an extension of time for practical completion was contained within the letter dated 7 May 2003, the time that passed thereafter, more than six months, was excessive.

131 Clause 35.5A was said to be relevant. That clause was in the following terms:

1. the Contractor shall not be entitled to an extension of time for Practical Completion unless it has given all the notices required by Clause 35.5 within the time periods specified in clause 35.5;
2. no act of prevention shall cause the Date for Practical Completion to be set at large, but this paragraph shall not prejudice any right of the Contractor to damages.

132 It followed, so it was submitted, that time limits with regard to the provision of notices were to be complied with strictly. Accordingly, BMD's claims for extension of time should have been barred both in relation to the Quarry Floor Stockpile, and the Eastern Stockpile.

133 BMD submitted that cl 35.5 should not be interpreted as barring any claim for an extension of time for practical completion unless the contractor gave notice of the number of days claimed at or about the time the extension of time was sought. Ordinary common sense would dictate that one could not provide such information where delays were ongoing, and it had not yet been ascertained how many days extension would be required. Once the final calculations had been done, BMD provided that information to the Superintendent. It would be pointless to expect a constant flow of communications regarding the number of days lost, adjusted daily, weekly, or perhaps monthly. Properly construed, the words 'as soon as practicable' in cl 35.5 meant as soon as practicable after all relevant information had been gathered.

134 In our view, the judge interpreted cl 35.5 correctly, and did not err in finding that the relevant notification had been made within the period contemplated therein. Ground 7 should be rejected.

135 BMD relied upon estoppel as a fallback should the judge reject its submission as to timely notification of Latent Condition, and claim for an extension of time for practical completion.

136 The judge dealt with that estoppel claim at [21] of his reasons for judgment. His Honour stated:

It is not necessary for me to consider whether, in any event, VicUrban is now estopped from relying upon strict compliance with the contract. However, if it were necessary for me to do so, I would find that it was estopped in respect of the description of the extent of the latent condition. A meeting occurred on 6 August 2002 between Mr Waterson, representing BMD, and Messrs Taber and Leonard, representing VicUrban. Mr Taber was VicUrban's General Manager and General Manager of Business Operations, and Mr Leonard was VicUrban's Constructions Operations Manager. Mr Waterson made notes of the meeting and recorded Mr Taber as assuring BMD, in effect, that the strict terms of the contract were to be put aside (at least in respect to the issues then under consideration). Mr Waterson's notes were prepared to report to, and to inform, others within BMD and I accept the notes to have been a faithful statement of his recollection of the meeting. The notes were contemporaneously made and were not undermined by the evidence of the other participants at the meeting or by the cross-examination of Mr Waterson. Mr Taber said that he had called the meeting and that one of the reasons why he had done so was to invite a renewed spirit of co-operation after some complaints had been made by BMD senior management and hopefully to get improved co-operation throughout the site. Another reason given by Mr Taber was to emphasise to BMD that the quality criteria in the specification was absolute and would not be compromised. His evidence concerning Mr Waterson's contemporaneous notes was certainly not that of rejection of accuracy or such as to cause me to doubt that Mr Waterson's was a faithful account of the matters recorded and conveyed. I am confident that Mr Waterson would, in an internal BMD memorandum, have been more forthright and blunt if the meeting had gone less favourably than he recorded. I am also satisfied that the outcome of the meeting, and the assurances given to BMD through Mr Waterson in the context of the meeting, were relied upon by him and by BMD. It would be wrong in such circumstances for VicUrban to rely upon strict compliance with the notification provisions if I had not found that notification had been given beyond any strict boundary of the Southern Stockpile.[37]

137 His Honour referred to Legione v Hately[38] and Commonwealth of Australia v Verwayen[39] in support of these observations.

138 The Authority submitted that it was wrong for the judge to invoke estoppel when that doctrine had either not been pleaded, or not been pleaded sufficiently widely, and had not been addressed in argument. We reject all aspects of that submission.

139 Estoppel was pleaded by BMD in its reply to the Authority's second further amended defence (filed on 22 December 2006). Paragraphs 242 to 244 of that reply were in the following terms:

Further, in or about August, 2002, the Defendant advised and represented to the Plaintiff that the Defendant would not deduct liquidated damages in relation to the Contract and would not strictly seek to enforce the Contractual provisions in relation to time, and requested the Plaintiff to focus its activities upon the quality of the works being performed.

Particulars

On 6 August, 2002, at a Site Meeting between Rob Taber (of VicUrban) and Chris Leonard (VicUrban's Operations Manager) on behalf of the Defendant and Terry Waterson on behalf of the Plaintiff, Taber told Waterson that 'all we (VicUrban) are interested in is quality, quality is of the essence and that we (VicUrban) cannot afford to fail on this project. VicUrban will put the Contract in the bottom drawer. Time and cost issues for BMD can and will be sorted out. VicUrban has never imposed liquidated damages and never will. Let's get together with Chris Leonard and work through the project.' Taber further told Waterson that the spirit of the administration of the Contract and the performance of the works was to be that if an issue arose BMD would promptly raise it with the Superintendent who would then be presented with BMD's alternative solutions.

In consequence of the statements and representations by VicUrban, BMD focused its activities on completing a quality project, whilst endeavouring to resolve outstanding issues with the Superintendent in a reasonable manner, and was not concerned to submit formal delay notifications in accordance with the Contract to avoid being time-barred from later claiming delay costs and/or being subject to the deduction of liquidated damages.

In the circumstances, if (which is not admitted but is expressly denied) the Plaintiff failed to comply with Clauses 35.5, 35.5A and/or alternatively 46.1 of the Contract in relation to the giving of Notices for extension of time, the Defendant is precluded and estopped from relying upon the Plaintiff's failure to comply with any of the times for the giving of Notices required by Clauses 35.5, 35.5A and/or alternatively 46.1 of the General Conditions of Contract in respect of claiming extensions of time for the purpose of delay claims and/or deduction of liquidated damages.

140 The estoppel pleaded above was broad enough, in our view, to overcome any difficulties that might have arisen as a result of a failure on the part of BMD to give notice of Latent Condition 'forthwith'. It was also broad enough to overcome any problems associated with the language used in the letter of 2 August 2002, which spoke only of the Southern Stockpile.

141 The particulars provided made it plain that BMD's contention was that the Authority had agreed, at the meeting on 6 August 2002, to 'put the Contract in the bottom drawer'. It was open to the judge to find that BMD reasonably understood that statement to mean, at least, that time limits with regard to the various notifications required under the contract would not be strictly enforced.

142 Contrary to the Authority's submission before this Court, it is clear from BMD's written argument below (designated as its 'Roadmap Submissions') that it specifically invoked estoppel in answer to all of the Authority's various notice contentions.

143 Paragraph 18 of that document was in the following terms:

In any event, whatever the proper construction of the time bar clauses, VicUrban should be regarded as estopped from now raising the time bars against BMD. The estoppel is raised in the reply at paras 242 to 244 [CB 01 203-204]. Reliance upon time bars were never applied by the Superintendent, or raised as a requirement during the project by VicUrban [Dempsey T 2059 l 2 to 9].

144 Moreover, paragraphs 19 to 23 of the closing submission dealt with the evidence regarding the meeting on 6 August 2002, and discussed the various authorities governing estoppel by representation. These included a number of cases to which his Honour referred, including Verwayen and Legione, and others as well.

145 In these circumstances, it is difficult to understand how the Authority could submit, as it did, that estoppel was not invoked by BMD as an answer to the various notice points.

146 If, as his Honour found, BMD's allegations regarding what was said at the meeting of 6 August 2002 were proved, it was plainly open to find that the Authority was estopped from relying upon lack of timely compliance with the various notice requirements under the contract. Indeed, the estoppel pleaded was sufficiently broad, in our view, to cover not merely the compliance issues raised in relation to notification of Latent Condition, but also those raised in relation to BMD's claim, pursuant to cl 35.5, for an extension of time for practical completion.

147 The Authority did not challenge the judge's findings of fact regarding what took place on 6 August 2002. It did not challenge his Honour's acceptance of Mr Waterson's account of what was said on that day. In these circumstances, we would be prepared, if necessary, to uphold the finding of estoppel as an answer to each of the Authority's notice grounds (grounds 3 to 7) in its cross-appeal. However, that would be necessary only if we accepted the Authority's contention that some, at least, of the notifications given were non-compliant. As already indicated, we are not persuaded by that submission.

148 We now turn to BMD's appeal against the manner in which the judge dealt with its claims for extra payments.

The rate to be applied to the excavation, processing and placement of additional material from the areas of the Eastern, Avenue and Northern Stockpiles

149 As part of its claim for additional costs, BMD asked for $350,333 for the costs of treating and placing over-excavation material as Type A material. The claim was based on a rate of $8.07 per cubic metre for 43,412 cubic metres estimated as the over-excavated amount referable to the Eastern Stockpile. The way it was put was to say that, by the time it came to process and place that extra material, the placement of all of the Type B and C materials had been completed and, therefore, the extra material had to be processed and placed as Type A material. It followed, it was said, that the impact of the Latent Condition was necessarily to increase the quantity of Type A material which had to be processed and placed and, therefore, that BMD should be compensated at Type A rates.

150 The Authority contended to the contrary. Its position was that, whatever the order in which material was processed and laid, the only increase in volumes processed and laid was in the volumes of Type B and Type C materials and, therefore, that compensation should be calculated at those rates.

VicUrban contends that the applicable rate, if any, should be that for the material that was being placed at the time of any over-excavation. In this respect VicUrban adopted the analysis of its expert, Mr Clark, to the effect that the material type that was actually being placed should be used to value the amount of additional excavation. As against that, counsel for BMD contended that such an approach is wrong because it does not link the claim with the causal impact of the latent condition. BMD's contention is that the causal impact of the latent condition was necessarily to increase the quantity of Type A material that had to be placed 'because all of the Type B and Type C were placed to the original levels required'.[40]

152 As counsel for BMD observed, his Honour's description of the Authority's contention was not completely accurate. Mr Clark did not suggest that the rate to be applied was to be determined according to the time at which the additional material was excavated. His opinion was simply that, although there had been an increase in the volume of material required to be excavated and laid, there had been no increase in the volume of material laid as Type A material. The only increase was in the volume of material laid as Type B material and, therefore, such additional costs as were incurred as a result of having to excavate and lay the extra material should be compensated at Type B rates. As Mr Clark put it:

The additional excavation provided both additional material and a void of equal volume which had to be filled as the first layer before the fill above it could be placed. It had no effect on the area or quantity of Type A material other than if areas excavated below the design Finished Surface Levels were required to be refilled with Type A material or in areas which may have originally only required a thickness of Type A less than 5 metres that thickness had to be increased because of the lowering of the level of the natural surface.[41]

153 It is clear enough, however, that the judge understood both sides' contentions and preferred the Authority's approach as more accurately reflecting the additional costs incurred by BMD in processing and laying the extra material. As his Honour said:

There was, so the argument went, no actual adjustment of the Type B and Type C levels on the site. That may be accepted as common between the parties (as was contended) but it does not follow that there is thereby demonstrated a causal link between the latent condition and the placement of Type A material. Indeed, it is pertinent to recall that the Type A material placed overall was less than had been contemplated at the outset. The logic relied upon by BMD would equally support a conclusion that the maintenance of the Type B and Type C levels were also made possible by a reduction in the Type A material consequent upon the latent condition: that is, that a causal link between the latent condition and the Type B material can be seen from the fact that the level of Type B was able to be maintained.[42]

BMD's contention was put, perhaps differently, in part of Mr Waterson's written witness statement when explaining the impact of the Superintendent's directions concerning maintenance of the Types B and C layers and the reduction of the Type A level. His conclusion was expressed by saying:

As all other types of material could be sourced from the over burden within the drawings, the effect of any additional excavated material in the Eastern Stockpile would be to directly increase the volume of material to be processed and placed as Type A capping material. That is, if the material won from the additional excavation had not existed, then the Type A material actually processed and placed by BMD on site would have been reduced by that volume. If the material did not exist, BMD would not have needed to place it as Type A.

These assertions by Mr Waterson of consequences and conclusions (assuming them to be admissible) do not detract from the proposition that the lowering of the capping layer permitted the excavated material to be used as Type B or Type C material and, therefore, of establishing a sufficient causal link between any over excavation and the laying of the material as either Type B or Type C material. In my view the temporal connection for which VicUrban contends is certain and is a more reliable guide for the determination of the value of any over excavation. Accordingly I accept VicUrban's contention that the rate to be applied to this claim is that referable to the Type B material, namely $4.41 per cubic metre, producing a figure of $191,446.92.

154 Pursuant to grounds 1 to 3 of its notice of appeal, BMD argued that the judge's reasoning was illogical. Counsel for BMD submitted that, once it was accepted (as the judge appears to have accepted) that all of the Type B and Type C materials had been placed to design levels and completed before BMD began to process and lay the additional material, it necessarily followed that all of the additional material was processed and placed as Type A material. So, it was said, in order to put BMD in the position in which it would have been but for the requirement to excavate and lay the additional material, BMD had to be compensated at Type A rates.

155 In our view the judge was correct. The entitlement to compensation for the extra work caused by the Latent Condition was governed by cl 12.3 of the contract, which provided, inter alia, that:

1. carry out additional work;
2. use additional Constructional Plant; or

1. incur extra cost, ... which [BMD] could not reasonably have anticipated at the time of tendering,

a valuation shall be made under Clause 40.5.[44]

156 As can be seen, the effect of the clause was to limit the entitlement to compensation to costs which, because of the Latent Condition, could not reasonably have been anticipated at the time of tendering. Consequently, it was not enough simply to ask whether the cost of processing and laying the extra material as Type A material was a cost which, but for the Latent Condition, BMD would not have had to incurred. In order to engage the right to compensation, the costs of processing and laying that material needed also to be a cost which BMD could not reasonably have anticipated at the time of tendering.

157 In this case, BMD could and did anticipate the costs of processing and laying the expected volume of A Type material (namely, 564,000 cubic metres) and the expected volume of B Type material (namely, 1,207,000 cubic metres). But, after carrying out all the works, including the additional work caused by the Latent Condition, BMD had in fact processed and laid less Type A material than had been anticipated at the time of tendering, namely, only 426,000 of the anticipated 564,000. The only amounts of material processed and laid which exceeded the estimate were Type B and Type C materials.

158 Accordingly, looking at the matter as a legal question of causation and, therefore, in terms of common sense criteria as opposed to philosophical or scientific conceptions of cause and effect,[45] the only extra costs caused by the Latent Condition were the extra costs of processing and laying the additional Type B material.

159 Counsel for BMD submitted that the High Court's decision in Murphy v Overton Investments Pty Ltd[46] and the decision of the New South Wales Court of Appeal in Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3)[47] prohibited one from looking at the question of causation globally (in the sense of looking at the effect of the Latent Condition upon BMD's contractual burden and costs as a whole) and required instead one to focus on the event in question (in the sense of the Latent Condition and such immediate effect upon contractual burden and costs as, but for existence of that event, would not have been incurred).

160 We do not accept that submission. In Murphy v Overton Investments Pty Ltd the High Court held that claimants who had entered into a lease because of misleading and deceptive conduct which induced them to conclude that outgoings would be less than they were likely to be in fact might be able to recover the difference as damages pursuant to s 82 of the Trade Practices Act 1974. In Abigroup, the New South Wales Court of Appeal was concerned with a claim for damages pursuant to s 82 of the Trade Practices Act by a contractor who was induced to enter into a contract by misleading and deceptive conduct relating to one aspect of the contract. In each case the question was whether the claimant had suffered loss and damage by reason of the misleading and deceptive conduct within the meaning of s 82 of the Act. Contrastingly, the claim under consideration here was for payment of an amount to be calculated pursuant to cl 12.3 of the contract and, as has been seen, the amount so calculated is the amount of such extra costs incurred as could not reasonably have been anticipated at the time of the tender.

Rate to be applied for additional wet base treatment

162 The judge allowed BMD's claim for additional wet base preparation costs to an area of 10,252 square metres as a consequence of a Latent Condition. His Honour concluded that there were no relevant rates or prices in the Bill of Quantities and turned to cl 40.5 of the contract, which provided that reasonable rates or prices were to be used. Under grounds 4 to 6 of its notice of appeal, BMD claims the judge erred in finding the price in an amount less than the costs incurred by BMD.

163 Before addressing BMD's claim, it is necessary to deal with the ground of a cross appeal that the judge erred in determining that there was a Latent Condition which entitled BMD to extra payment in respect of additional wet base preparation.

164 The specification provided that where structural fill was to be placed over a wet natural sub grade below the natural ground water level or existing lake level, wet base preparation was to be carried out by BMD in the prescribed manner. The Bulk Earthworks plan showed the Lake Base stockpile covering an area described as the 'approximate area of the existing lake'. The Authority contended that where a structural fill was to be placed within the area of the existing lake, BMD should reasonably have anticipated that a wet based treatment would be required. The existing lake level was at RL 25 Australian Height Datum and all the areas the subject of the additional wet base claim were below RL 25 Australian Height Datum.

165 BMD replied that the water table level when it commenced the works was irrelevant, because BMD was able to pump out much of the water, thereby reducing the level of the groundwater. The areas covered by BMD's claim were areas where, if the levels anticipated by the plans supplied to BMD were unchanged, the base preparation would have been able to be done in a dry base environment, but because the levels were lower, additional wet based treatment was required.

166 In our opinion, the levels shown on the plans do not determine the question whether BMD should have anticipated the need for wet based treatment. Not only was BMD able to reduce the water level, but also the floor levels differed from those shown on the plans. We consider his Honour did not err in finding the Latent Condition existed.

167 Turning to the question of quantum, BMD's claim was for a rate of $40.48 per square metre based upon the actual cost of the works and relied upon calculations performed by Mr Waterson. Although the judge said that Mr Waterson was 'careful and professional', he applied a reduced rate of $29.17 per square metre relying upon calculations performed by Mr Clark, which his Honour described as 'based upon the Contract rates'.

168 BMD submitted that the judge erred in thinking that the rates used by Mr Clark were contract rates. The rates were said to have been derived from BMD's tender estimate, an internal document acquired by the Authority in the course of discovery in the proceeding. It was submitted that in any event the rates in the document were not the rates for wet base treatment.

169 His Honour did treat the rate advanced by Mr Clark as a contract rate. He said of Mr Clark's calculation:

The amounts derived from the Contract were amounts agreed between the parties prior to encountering circumstances likely to give rise to dispute. The Contract rates provide a more reasonable measure as between these parties in relation to this project, at what may be regarded as agreement between them and lessens disputes about whether particular amounts which may actually have been incurred had been incurred unreasonably or without sufficient regards to the interests of the principal.

170 In treating the rate used by Mr Clark as a rate agreed upon by the parties, his Honour mistook the evidence. Further, Mr Clark was unable to use a rate identified in the document he relied upon as the rate for wet base treatment, but rather had regard to 'plant and labour rates used in calculating the contract amount for similar items of plant and labour'. In the absence of any agreed rates, and in the absence of any suggestion in cross-examination of Mr Waterson that his calculations were excessive, we consider that the judge should have used the actual cost of wet base treatment calculated by Mr Waterson. On this basis, his Honour should have allowed $415,000 rather than $299,634.24.

171 Grounds 7 to 12 of the notice of appeal are a concomitant of the contention advanced under grounds 1 to 3 that the additional costs incurred because of the extra material were to be calculated at A Type material rates.

172 In brief substance, what is said here is that because 105,000 cubic metres of extra material had to be processed and laid after completion of the processing and laying of all the B and C Type material, BMD was entitled to claim as additional costs of processing the extra material at A Type material rates.

173 As was conceded, however, that contention stands or falls with the contentions advance under grounds 1 to 3 and, since we have rejected grounds 1 to 3, grounds 7 to 12 go with them.

174 BMD claimed that it encountered Latent Conditions which caused it to carry out additional works, to use additional and different constructional plant, and to incur additional cost in the performance of the works. The amount claimed was just short of $7 million. This additional work was said to involve the excavation, processing, and placement of additional quantities of overburden, and the need to apply different techniques by reason of the need to engage in crushing of oversized rock.

175 The additional quantities were said to be located in areas on the site referred to as:

176 The additional crushing was said to be necessary because all other options involving the unprocessed disposal of oversized rock contained in the additional quantities had been exhausted.

177 BMD claimed that it gave written notice of the Latent Conditions, in compliance with cls 12.2, and 35.5 of the contract. It also claimed to have given written notice of the number of days extension required as soon as practicable following the claims for an extension of time for practical completion in respect of each of the four stockpiles. The Superintendent allowed some, but not the bulk of those claims. The amount in dispute in this proceeding was $6,301,816.

178 As has been indicated, the Authority challenged BMD's contention that compliant notice had been given. The judge found in favour of BMD on that issue. The Authority, in its cross-appeal, challenged that finding. We have earlier set out our reasons for rejecting that challenge.

Value of delay claim caused by Latent Conditions

179 The judge held that BMD was entitled to recover additional costs caused by the Latent Conditions in relation to the quarry floor, the Eastern Stockpile, the Northern Stockpile and the Avenue Stockpile areas and additional wet base treatment in the quarry floor area. He valued those costs pursuant to cl 40.5 at a reasonable price based upon a calendar day rate calculated by Mr Clark. That calculation was derived from a tender estimate discovered by BMD in the proceeding.

180 Pursuant to ground 13 of the notice of appeal, counsel for BMD submitted that his Honour erred in accepting Mr Clark's rate in preference to the actual delay costs incurred by BMD advanced by Mr Waterson. His Honour said:

I consider the methodology employed by Mr Clark to be more reliable and a better method for quantifying the claim.

His Honour did not say why Mr Clark's methodology was more reliable and better. The judge apparently accepted the accuracy of the amount of actual costs incurred by BMD calculated by the expert witness Mr Tozer. In the absence of any basis for concluding that BMD unreasonably increased the costs, we think that his Honour erred in preferring a theoretical analysis based upon a document brought into existence in the course of BMD's fixing on a tender price, which was not reflected in any agreed rate.

181 BMD also contended that the judge erred in disallowing BMD's claim for off site overheads. His Honour said that it had not been shown that the costs were affected by a contract over-run. Citing Thiess Watkins White Construction Ltd v The Commonwealth,[48] he said:

Off site overheads are not necessarily specific to any one project and not necessarily included because of a delay in any one project.

The judge concluded that the entitlement to the low cost was to be valued under cl 36 as costs 'necessarily incurred by BMD'.

182 Counsel for BMD submitted that the calculation was to be made pursuant to cl 40.5(c), not cl 36 and the former clause required calculation according to 'reasonable rates or prices'. That appears to us to be so: cl 12.3 provides that if a Latent Condition causes BMD to incur extra cost, a valuation is to be made under cl 40.5. Nevertheless, in our opinion, it is material to consider whether there was a connection between delay and increased cost in determining whether a rate is reasonable.

183 The judge was criticised for failing to consider the issue of loss of opportunity to earn money during the period of delay out of which to pay off site overheads. In our opinion BMD was required first to establish that there was a lost opportunity. The nearest the evidence came was the following statement by Mr Fogarty:

BMD's business, by its nature, obliges it to carefully manage and allocate its resources to enable each of its jobs to be performed to their completion. This approach requires careful preparation and management and allocation of human resources. BMD's resources at the time were already being utilised in connection with the performance of existing work, including the Niddrie quarry project.

In our view BMD failed to prove that the effect of the delay was that other work could not be undertaken and BMD's income was thereby reduced.

184 For the foregoing reasons, we are of the opinion that BMD is entitled to recover the actual costs calculated by BMD without an allowance for off site overheads. Mr Waterson gave evidence of the costs incurred by BMD based upon project cost ledgers. Those figures were modified by Mr Tozer, who calculated a daily rate of $4,570. The period of delay was 130.6 days. Accordingly, the amount that should have been allowed was $596,842 instead of $476,298.20.

185 BMD also made a claim under the Trade Practices Act 1974 (Cth) independently of its reliance upon the contractual provisions so far discussed. The claim was that the Authority had engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, contrary to s 52 of that Act.

186 The representations relied upon in its pleadings were affirmative statements made in the tender documents, answers to questions posed by tenderers, and statements made by or on behalf of the Authority at various meetings.

187 The judge disposed of the last of these categories of representation by noting that there were two oral representations affirmatively pleaded and relied upon by BMD. His Honour was not persuaded that the first of these was made, and concluded that the second could not be regarded as misleading or deceptive. BMD did not seek to challenge those findings. Accordingly, nothing need be said about the oral representations originally relied upon.

188 Turning then to the written representations, the first point to be noted is that the case as pleaded made no allegation of misleading or deceptive conduct arising from the Authority's silence about known inaccuracies, or uncertainties.

189 The judge noted that despite this failure to plead silence, BMD had sought, in its final submissions, to extend the conduct relied upon to what was said to be the Authority's failure to correct known inaccuracies or uncertainties in particular information provided to tenderers, and to what was alleged to be the Authority's failure to provide all relevant information to BMD. The Authority objected to these matters being raised, contending that, had they been pleaded, it would have conducted its case differently.

190 After emphasising the importance of having claims fully pleaded, and referring to various authorities dealing with s 52, his Honour concluded that the factual contentions about 'silence' had not been properly raised on the pleadings, and could not therefore be relied upon. The judge accepted and relied upon the statement by counsel for the Authority that its case would have been conducted differently had silence been raised as an issue on the pleadings.

191 BMD contended that at trial it did not seek to rely upon silence as a species of misleading and deceptive conduct. Rather, its case depended upon the statements made by or on behalf of the Authority and it only relied upon information withheld by the Authority to prove that the information provided by the Authority was inaccurate and consequently misleading or deceptive.

192 In our opinion his Honour was justified in confining BMD to the case which it pleaded.[49] It is true that the question whether conduct is misleading or deceptive depends upon the whole of the conduct of the representor, which may include silence as well as words and actions,[50] but the part which silence plays in rendering conduct misleading and deceptive should be pleaded.

193 The judge went on to say that even if the pleading point had not been dispositive, the claim under s 52 could not succeed. The problem for BMD was, in his Honour's words:

... that it is unable to establish conduct by VicUrban which is contrary to s 52 of the Trade Practices Act on all of the facts, and also that it has not satisfied me that any conduct which might have been in breach of s 52 or [sic] was in fact relied upon by BMD.

194 It may be useful to set out his Honour's reasons for arriving at this conclusion. Dealing firstly with the finding as to breach, he said at [140] to [142]:

The written representations relied upon by BMD do not justify the conclusions it wishes to draw from them. A fair reading of all of the documents contain ample warnings about the limited nature of the information supplied and indications about the value to prospective tenderers of the information provided to the effect that volumes and levels depicted were 'approximate' and 'estimates'. BPD's letter seeking expressions of interest referred to the bulk earthworks plan which showed the 'approximate' stockpiled material and an 'estimate' of the volume of material in each of the zones. It referred to the existing conditions plan which showed the extent of the quarry at the 'termination of works in mid 1970'. It referred to the finished surface contours plan which showed the 'approximate finished surface level'. The draft contract provided to BMD on 22 May 2001 contained an express and clear notice from VicUrban that the particulars set out in the brief were for the 'guidance' 'only' of intending registrants and, more importantly, that '[a]ll descriptions, quantities, references to condition and other details are given in good faith and believed to be correct' and immediately went on to state that '[n]o intending registrant should rely on anything contained in this brief without satisfying themselves by inspection or otherwise as to the correctness and completeness of the information provided, and, if appropriate, seeking other advice.' Pre-tender documentation contained clear statements that VicUrban did not warrant the accuracy of the information and that BMD should make 'any enquiries and investigations necessary to satisfy themselves of the accuracy of the information'.

Part of the material on the disk initially supplied to BMD revealed that much of the information relied upon by BMD was sourced by means that may not have been entirely reliable. Thus, for example, the statement on plan 6330 that the topographical features had been derived by the means of aerial photography and that the data was 'suitable for overall planning only, and should not be used for any other purposes'. The plan also stated that critical dimensions measured from digital data must be confirmed by BPD, that some of the surface areas had been derived from 1989 aerial photography data and lake depth soundings each supplied by others that the surface area demarcated in a particular way on the ground sections was a preliminary design surface for the south-west corner of the site and was 'subject to change'.

195 His Honour then turned to the question of reliance. He said at [144]:

I also accept VicUrban's submission that BMD has not established reliance upon the alleged representations about estimated quantities of fill or the information provided concerning the makeup of the stockpiles by VicUrban during the tender process. BMD's facsimile dated 10 December 2001 stated that it had measured higher volumes than the estimated quantities stated in the tender schedule for Types A, B and C fill and a lesser quantity for Type D fill. BMD said in the correspondence that it had used the measure resulting from its own calculations in its tender which had caused the tender price to be $1,020,000 above that which would have resulted by using the estimated quantities stated in the tender schedules. Both Mr Tuttiett and Mr Miroshnikoff agreed in cross-examination that BMD had not relied on the quantities as provided and that they had performed their own calculations. In facsimiles dated 18 January 2002 and 22 January 2002 BMD confirmed that the tender schedule items for material Types A, B, C and D, were lump sums and that it assumed all risk on material quantities with any quantity of Type A material above the quantity of 564,000 cubic metres to be measured in the provisional sum schedule for Separable Portion 2. Mr Miroshnikoff had been given the task by BMD to undertake the calculations for the tender and his statement records that the stated approximate volume of stockpile material was checked and that there was reasonable agreement. Evidently, however, BMD adopted its own measure of the stockpile volume being Mr Miroshnikoff's measure of 2,513,000 cubic metres.

196 Having then ruled upon the admissibility of certain contentious evidence, his Honour continued by rejecting the assertion that BMD would not have tendered but for the Authority having made the various representations upon which reliance was placed.

197 Finally, the judge considered the question of loss and damage sought by BMD under its Trade Practices Act claim. He noted that the statement of claim pleaded, simply, that by reason of the alleged misleading or deceptive conduct, BMD had suffered loss and damage in the amount of $6,301,816 or, alternatively, $5,565,787. The particulars relied upon provided details only of the first of those two amounts. This had been supplemented by a belated communication made by counsel on behalf of BMD to his Honour's associate via a letter sent to chambers. His Honour was critical of that course having been adopted. The matter was essentially left in that state.

198 It was submitted on behalf of the Authority that the judge erred in concluding that even if the Authority's conduct could be characterised as misleading or deceptive, BMD could not succeed under s 52 because the information supplied to it was qualified or approximate. BMD submitted that information concerning the location or the natural surface levels below the stockpiles should not have been characterised in that way. The critical drawings, namely the Bulk Earthworks Plan, the MEEP, and the Existing Surface Contours Plan were all unqualified. Each purported to provide accurate information of the maximum extent of excavation which BMD would be required to undertake in order to enable it to provide the Authority with a competitive lump sum tender price.

199 As regards reliance, BMD submitted that it had never contended that it relied upon representations concerning quantities that were provided by the Authority, but rather that it had relied upon the accuracy of the levels of the natural surface below the stockpiles in order to calculate the depth to which it would be required to excavate. BMD then carried out its own calculations as to quantities. All reference in correspondence, or other documentation to 'approximate' and 'estimates' of volumes of stockpiled material were irrelevant when considering its claim that there had been unqualified references made by the Authority to the levels of the natural surface below the stockpiles.

200 BMD also challenged his Honour's use, in [140] of the reasons for judgment, of qualifying terms in the original Expression of Interest letter dated 22 May 2001. That letter had been provided to intended registrants of interest at a pre-tender stage. His Honour ought not to have described that letter as a 'draft contract', as he did. In any event, it was the tender documents that were critical, not pre-tender material such as this particular letter. At the tender phase, some months later, the Authority had provided BMD with a full set of drawings, and a disk with no qualification whatsoever regarding the information provided, and no relevant disclaimers.

201 The next point made was that 'disclaimers', though plainly relevant when considering whether there has been a contravention of s 52, cannot operate unless, in the words of Burchett J:

... the clause actually has the effect [of] erasing whatever is misleading in the conduct, the clause will be effective, not be independent force of its own, but by actually modifying the conduct. However, I should think it would only be rare cases that a formal disclaimer would have that effect.[51]

202 The disclaimers did not have that effect in this case. Accordingly, so it was submitted, his Honour's reliance upon those disclaimers was erroneous.

203 Finally, and returning to the issue of reliance, BMD submitted that the Bulk Earthworks Plan and the MEEP both provided information as to natural surface levels to which stockpiles would have to be excavated that was critical in enabling tenderers to assess for themselves the volume of materials to be excavated, processed and placed. BMD was entitled to assume that even if there might be some uncertainty regarding the overall accuracy of photogrammetry, any potential inaccuracy had been taken in to account in the information contained in the plans. If the levels set out in the plans were based on information which was less than wholly reliable, that should have been made abundantly clear.

204 We are not satisfied that his Honour erred. It is not to the point that particular statements can be characterised as unqualified and that other statements were not part of the contract. In order to determine whether conduct is misleading or deceptive, it is necessary to look at the entirety of a transaction and assess the particular conduct said to be misleading or deceptive in the context of everything else the representor said and did which is relevant to that conduct. In the present case, his Honour was clearly influenced by the elements of approximation and uncertainty that attended so many aspects of what lay below the surface of the site.

205 The very nature of the contract stood in the path of the Trade Practices Act claim. BMD knew, for it was a term of the contract, that if it encountered physical conditions which differed materially from those which should reasonably have been anticipated by BMD when it tendered for the contract, the contract price would be adjusted. The contract specified the information which was to be taken into account in determining whether BMD should reasonably have anticipated the conditions it encountered. The information included that supplied by the Authority, but also extended to other information to be gathered by BMD. In our opinion, those circumstances precluded the finding of misleading and deceptive conduct based upon one only of the specified sources of information. BMD knew that if it acted reasonably in relying upon the information proffered by the Authority, that is, it took that information into account together with other information available to it, and later encountered altered conditions, the contract price would be adjusted.

206 Moreover, even if the Trade Practices Act claim were made out, it does not follow that BMD would receive by way of additional damages an amount based on the price which it would have tendered if it knew of the true conditions at the time of tender. It is not to be assumed that it would have won the tender if it knew of the true conditions at the time of tender. BMD would only be entitled to damages sufficient to put it in the position in which it would have been if it had not been misled.[52] All it could seek to show would be that, but for being misled, it would not have entered into the contract at the price which it tendered, or would not have entered into the contract at all, and that by reason of entering into the contract at the tendered price it has suffered a loss which it would not otherwise have incurred.

207 As it was BMD failed to satisfy the judge that, but for the impugned conduct of the Authority, it would not have entered into a contract in the terms to which it agreed. Although Mr Fogarty gave evidence that, but for the impugned conduct, BMD would not have tendered at all, the judge rejected that evidence, saying

There is nothing in the way in which ... Mr Fogarty's statement was couched which gives me confidence that it was more than what he had convinced himself might have been the case if events had been other than as they were. There is, for example, no objective fact, matter or circumstance which gives confidence in adopting the view that his subjective belief is likely to be what would have occurred had events been different. The assertion that BMD would not have tendered at all is not given weight or substance by reference to facts which may enable me to valuate independently of his subjective statement whether the conclusion he asserts is one which I should accept as likely, probable or independently supported by objective facts. Indeed, the hypothetical assertion that BMD might have submitted a 'conditional tender' to the effect that it would have had a right to 'further payment should the natural ground levels provided by VicUrban prove to be inaccurate' is inconsistent with the evidence that such a tender would not have been a valid tender.

208 BMD claimed the sum of $837,929 pursuant to the Latent Conditions clause as the cost of crushing oversized rock. BMD contended that the amount of oversized rock in the stockpiles differed materially from that which BMD should reasonably have anticipated. The amount claimed was the cost of crushing the oversized rock.

209 BMD maintained that a reasonable expectation was that about 35 per cent of the stockpiled material would comprise particles greater than 60mm in size and, by extrapolation, that about 29 per cent of the material would comprise particles greater than 100mm. In fact, 51.7 per cent of the material in the stockpiles comprised particles greater than 100mm. The expectation was based upon a table in a Golders report dated 2 November 1998 containing an estimate that, in general terms, 'about 35% of fill material' in stockpiles was likely to comprise particles greater than 60mm. His Honour noted that the report contained other estimates ranging from 35 per cent to 40 per cent.

In a facsimile from Mr Alan Tuttiett to Mr Breese, BMD candidly acknowledged that the $320,000 which had been allowed in its bid to compensate 'for the risks involved in the changing character of stockpiled material which has been placed over many years by different quarry operators with possibly different quarrying procedures and outcomes', might 'well be insufficient to meet' BMD's commitments under the contract. Mr Tuttiett was 'genuinely concerned that what [was] represented in testing to date may not be fully representative of the material deposited at lower levels.' Furthermore, there were as I have indicated above, many cautions in the reports themselves.

This evidence leads me to conclude that a reasonable contractor in BMD's position should not reasonably expect that about 35% of the stockpiled material would comprise particles greater than 60mm in size and about 29% of the material greater than 100mm in size. Nor, however, does the evidence establish actual reliance upon such an expectation from representations in the Golders reports.

211 His Honour also relied upon expert evidence given by two witnesses, who said that in their opinion a reasonable contractor would not simply accept the estimate in the Golders report as reliably describing all of the material in the stockpiles and the distribution of materials throughout the stockpiles. The judge concluded that a reasonable contractor in BMD's position could not reasonably have anticipated, and, as it happened, did not reasonably anticipate, the precision which the Golders report was said by BMD to possess.

212 In support of grounds 15 and 16 of the notice of appeal, counsel for BMD submitted that the judge erred in relying upon the facsimile sent by Mr Tuttiett to Mr Breese, for the sum of $320,000 'was simply an internal assessment of risk allowance' and the only concern expressed in the facsimile was the risk that what was represented in testing by Golders might not be fully representative of a material deposited at lower levels. It was pointed out that the facsimile was part of pre-tender negotiations in which BMD proposed that, if the risk for the quality of material below the level investigated was removed, BMD would be willing to reduce its price by $320,000.

213 In our opinion, the circumstances in which the facsimile was sent do not deprive it of the significance ascribed to it by the judge. Whether the particles being discussed were above or below the level to which Golders investigated and whether or not BMD was asserting a position for the purpose of negotiations, the facsimile did constitute evidence that BMD did not rely upon the accuracy of the estimate of 35 per cent. In addition, his Honour was entitled to rely upon the expert evidence which supported the conclusion that a reasonable contractor in the position of BMD would not have accepted Golders' estimate without further investigation.

214 On 7 March 2003, the Superintendent directed BMD to stockpile Type A material in an area known as the cul de sac. BMD claimed $214,317 as a direct cost and delay costs of $301,286. The judge allowed the first claim but rejected the second claim. The Authority contended that the claim for delay could not succeed because it was not made 'within 28 days after the delay occurred' as required by cls 35.5 and 35.5A of the contract. The judge rejected that claim, applying the decision of the Queensland Court of Appeal in Queensland Re Multiplex Constructions Pty Ltd,[53] in which it was held that time began to run under such a clause when the contractor could see that it had been delayed, notwithstanding that the delay might be continuing. His Honour rejected BMD's contention that the delay occurred only when the full extent of the delay was ascertained. The judge held that when notice was given on 18 August 2003 that was long after BMD knew that there was delay.

215 BMD now contends pursuant to grounds 17 to 19 of its notice of appeal that the Authority was estopped from relying upon the terms of the contract requiring timeous notice of delay and sought to use the evidence which led the judge to hold that the Authority was estopped from relying upon the terms of the contract relating to Latent Conditions.

216 The difficulty with this contention is that it does appear to have been made to the judge. His Honour did not consider estoppel in this context and we will not entertain the claim without the benefit of appropriate findings of fact.

Extra layers and tolerances in placing Type B material

217 BMD claimed that an instruction by the Superintendent that the surface tolerances on the placement of Type B material were required to be plus or minus 100mm, that 3-B digital terrain modelling was to be undertaken at each nominal Type B layer and that each layer was to be fully surveyed and approved before subsequent layers were placed, constituted an instruction within the meaning of cl 40.1 of the contract, which changed the character or quality of the work required to be performed by BMD and entitled BMD to additional amounts by way of direct costs and additional costs for the delay and disruption.

218 Clause 40.1 provides, as far as is presently relevant:

The Superintendent may direct the Contractor to -

a) increase, decrease or omit any part of the work under the Contract;

b) change the character or quality of any material or work;

1. change the levels, lines, positions or dimensions of any part of the work under the Contract;

1. execute additional work; and/or
2. demolish or remove material or work no longer required by the Principal.

219 The trial judge rejected the claim. He held that the specification, which provided that each lift of Type B fill for compaction was to be placed in not less than two layers of equal thickness so that the compacted fill 'does not exceed 1.0m thickness' meant that the thickness could not exceed one metre. His Honour said:

The natural meaning of the phrase 'does not exceed 1.0m thickness' in the clause is that each layer must come within that limit: it may be less, but it may not be more.

220 His Honour considered that the specification was clear, but if there were any ambiguity, BMD should have followed the provisions of the contract dealing with the resolution of ambiguities and discrepancies.

221 BMD submitted to the trial judge that the contract provided that, in the absence of any requirement to the contrary, BMD was to use 'best industry practice'. As the specification was silent as to tolerances, BMD submitted that it was entitled to assume a reasonable tolerance based on best industry practice. This contention was rejected by the trial judge. He accepted the evidence of experts and held that the site presented a specific set of standards and requirements for achieving a higher quality of fill than might normally be achieved by reason of the particular features of the site and its intended purpose of residential development. Accordingly, he did not regard BMD's recourse to best industry practice as being appropriate. Further, the judge did not regard the requirement of 3-B digital terrain modelling as being a relevant variation. He said that the Superintendent was able to choose the method he would accept as verification. Finally, his Honour said that the claim for delay and extra costs was some 15 months after the direction said to have been given by Superintendent and 28 days notice was required.

222 Under ground 20 of its notice of appeal, BMD contended that the judge should have acted upon the evidence of a number of witnesses, who said that best industry practice permitted a tolerance of plus or minus 300mm when placing and compacting material containing particles up to 600mm in size.

223 In our opinion, the judge was entitled to accept the evidence of those witnesses who, relying upon the nature of the site and the use to be made of the compacted ground, gave evidence that best industry practice was not appropriate. In any event the words of the specification were clear. The phrase 'does not exceed' appearing before the words '1.0m thickness' clearly meant that the thickness was not to exceed 1 metre.

224 On 26 May 2003 the Superintendent issued a site instruction to the effect that for all areas where type A filling would be placed at greater than or equal to five metres in depth, the required tolerance on top of the type B layer would be plus or minus 100 mm and that in all the areas where the type A layer was less than five metres in depth, the type B layer was to be finished with a '0+tolerance' within the 0-100 mm range.

225 BMD claimed that the instruction changed the nature or quantity of the work and founded an entitlement to extra payment for increased costs and delay. On the other hand, the Authority contended that the effect of the instruction was to relax the contract tolerance requirements and accordingly, did not warrant the extra payment. Clause 2.30 of Appendix 8 of the General Description of Work provided:

Finished surface levels shall be within +- 050 mm for those shown on the approved plans or to such levels as the Superintendent may approve in writing.

The Authority contended that a consequence of the clause referring to the finished surface levels of the plans was that the depth of type A fill must necessarily have determined the levels of the type A/B interface, which could simply be ascertained by deducting the depth from the finished surface level.

226 The judge agreed with the Authority's interpretation of the contract and disallowed the claim.

227 It was submitted on behalf of BMD pursuant to ground 21 of the notice of appeal that the construction preferred by the judge was unrealistic and incorrect. According to counsel for BMD, there was a finished surface level contemplated by the contract being the level of the surface when placement was finished but that no other levels, including the top type B layers, were provided for in the contract drawings.

228 In our opinion it has not been demonstrated that the judge erred. The contract did not in terms provide for a tolerance level in respect of the type B material layers. His Honour's view gained support from the evidence of Mr Clarke, who said that in his experience, levels of layers of construction which were lower than the finished surface level were commonly determined by deducting a specified layer thickness from the finished surface level.

229 In about May 2003, significant volumes of large rocks generated by BMD from operations on site could not be managed without crushing, an operation which BMD wished to avoid. Mr Waterson requested the Superintendent to approve the placement of large rocks to a depth of three metres in an area called the 'bath tub-area'. On 27 May 2003 the Superintendent issued a site instruction that a coarse rock layer could be placed in the bath tub area. The site instruction stated that a G3 geofabric was to placed over the coarse rock fill.

230 The question for determination by the Court was whether the variation contained in the site instruction was one for the convenience of BMD. If it was, contract provided that the Superintendent was not obliged to approve the variation, which, if approved, entitled BMD to an extension of time and extra payment. The judge said:

The evidence satisfies me that the variations requested by BMD and the variation itself was for BMD's convenience notwithstanding that the variation was producing work which might also ultimately benefit VicUrban.

231 Under grounds 22 and 23 of its notice of appeal, BMD contended that the variation was for the benefit of the Authority for, as a consequence of the variation, it would not have to pay the cost of crushing material and was able to use the available fill material in other areas of the site.

232 In our opinion the fact that the performance of the work might be characterised as being for the convenience of and for the benefit of the principal does not decide the matter. The critical question remained whether the work was being conducted for the convenience of BMD and in our opinion his Honour was entitled to conclude from the evidence that this was so.

Interest on repayment of the sum deducted as liquidated damages

233 The judge held that an amount of $672,000 was wrongfully deducted by the Authority as liquidated damages and ordered that it be repaid. His Honour also ordered that interest on the amount was to be calculated pursuant to s 60(1) of the Supreme Court Act 1986 since the commencement of the proceeding to the date of judgment.

234 This conclusion was attacked under ground 24 of the notice of appeal. BMD claimed that interest was payable pursuant to s 58(1) of the Act, contending that it had recovered a debt or sum certain, and accordingly interest was to be calculated from the time the amounts making up the sum of $672,000 were deducted.

235 In our opinion the amount claimed by BMD was properly characterised as damages and not as 'a debt or sum certain'. BMD pleaded that the amount was wrongfully deducted and claimed the sum as damages.

236 It is convenient now to deal with the remaining grounds of the Authority's cross-appeal.

In making a valuation pursuant to Clause 12.3, regard shall not be had to the value of additional work carried out, additional Constructional Plant used or extra cost incurred more than seven days before the date on which the Contractor gives the written notice required by the first paragraph of Clause 12.2.

The written notice required by the first paragraph of cl 12.2 was the notice to be given forthwith upon BMD becoming aware of a Latent Condition.

238 Pursuant to ground 11 of its notice of cross-appeal, the Authority complained that the judge failed to address the point, which was said to be a substantial bar. For example, the additional excavation in the Eastern Stockpile was claimed to have taken place in the period from January 2003 to November 2003, yet the notification of a Latent Condition was not given until 11 November 2003.

239 The effect of the construction of cl 12.4 advanced by the Authority, is that BMD cannot recover any costs for extra work performed while it was ignorant of the existence of a Latent Condition. We do not consider that result was intended by the parties.

240 In our opinion, the clause is to be construed as excluding extra costs incurred by reason of a Latent Condition of which BMD was aware. As the contract required that notice be given of a Latent Condition forthwith upon BMD becoming aware of a condition, the clause will not rule out a great deal of extra costs, but we are of the view that that was the intended scope of the clause.

241 Pursuant to ground 8 of its notice of cross-appeal, the Authority contended that the judge erred in finding that BMD was entitled to any more than the 18 days extension of time for the date for practical completion granted by the Superintendent.

242 It was submitted on behalf of the Authority that in assessing any claim for an extension of time, it was first necessary to determine the date sought to be extended. By an agreement made on 15 August 2002, the date for practical completion of Separable Portion figure 2[54] from 22 March 20003 to 30 June 2003. The amendment was the product of an agreement and not an extension of time granted pursuant to cl 35.5 or a variation directed by the Superintendent pursuant to cl 40.1 of the contract. The date for practical completion, therefore, became 30 June 2003.

243 In our view the Authority correctly identified 30 June 2003 as the agreed date for practical completion. The extension was not one granted by the Superintendent. By letter dated 15 August 2002, Mr Whinfield, the property services manager of the Authority, stated that the Authority agreed to modify the payment milestones published under the contract. The letter also set out what was described as a 'non production milestone', being the date for practical completion, saying;

An amended Date for Practical Conclusion for Separable Portion 2 is to be agreed by the Principal provided the date is no later than 30 June 2003. The Date for Practical Completion for Separable Portion 1 is to be the same as for Separable Portion 2.

The letter was countersigned by Mr Waterson on behalf of BMD. In our opinion, it is clear that the date for practical completion was altered by an amendment, not by the Superintendent.

244 The judge determined that BMD was entitled to 130.6 working days' extensions of time. Practical completion was certified to have actually occurred on 5 December 2003. There were only 113 working days between 30 June 2003 and the date of practical completion on 5 December 2003. Accordingly, so the Authority submitted, the maximum number of days extension of time that could properly have been awarded was 113 working days and the maximum delay costs amounted to $412,111, not the sum of $476,298.20 awarded by the judge.

245 In our opinion, the amended date for practical completion did not necessarily circumscribe the calculation of extra costs occasioned by the delay. The critical question was whether BMD was delayed by a Latent Condition. Without an identified delay, BMD could have completed its work earlier and would not have incurred costs during the period of delay.

246 Under ground 12 of its notice of cross-appeal, the Authority contended that the judge was required to find the duration of the delay caused by each of the factors that produced delay. The judge's calculation of the delay was derived from Mr Tozer's assessment of extensions of time. Mr Tozer's analysis took into account concurrency between delay and appropriately deducted a period for concurrency. In our view it was not necessary to assign a specific period to each of the causes of delay. Mr Tozer proffered a detailed explanation for his measurements of the delay caused by each of the Latent Conditions. We think his Honour was entitled to act upon Mr Tozer's calculations.

247 As we have held that this ground and ground 8 of the Authority's cross-appeal have not been made out, it is unnecessary to deal with the Authority's contention in ground 15 that the judge erred in requiring the Authority to return to BMD an amount deducted in liquidated damages for delay. The ground depends upon establishing that BMD was not entitled to the extensions of time found by his Honour.

Whether costs attributable to delay caused by Latent Conditions were recoverable

Where the Contractor has been granted an extension of time under Clause 35.5 for any delay caused by any of the events referred to Clause 35.5(b)(i), the Principal shall pay to the Contractor such extra costs as are necessarily incurred by the Contractor by reason of the delay except for variations under Clause 40.

Nothing in Clause 36 shall oblige the Principal to pay extra costs for delay or disruption which have already been included in the value of a variation or any other payment under the Contract; or

The sums payable under this Clause 36 shall be the Contractor's sole entitlement to compensation for delay or disruption, including without limitation, delay or disruption caused by the Principal, whether in breach of contract or otherwise and shall be in substitution for and shall exclude the Contractor's rights and remedies of common law (including the right to recover damages from breach of contract or otherwise).

249 Pursuant to ground 13 of its notice of cross-appeal, the Authority contended that BMD was not entitled to recover delay costs occasioned by Latent Conditions. Clause 36 only applied when BMD was granted an extension of time for delay caused by an event referred to in cl 35.5(b)(i), that is, delays caused by the Authority, the Superintendent or the Authority's employees, consultants, other contractors or agents. Entitlement to extensions of time caused by Latent Conditions arose under sub-cls (b)(ii) and (b)(iii). The clause was based upon the standard form AS 2124-1992, but omitted the second paragraph of the standard form's cl 36, which provided:

Where the Contractor has been granted an extension of time under Clause 35.5 for any delay caused by any other event for which payment of extra costs for delay or disruption is provided for in the Annexure or elsewhere in this Contract, the Principal shall pay to the Contractor such extra costs as are necessarily incurred by the Contractor by reason of the delay.

It was submitted on behalf of the Authority that the deletion of that paragraph disclosed an agreement to deny BMD any entitlement to delay and disruption costs for Latent Conditions.

250 The result that BMD must bear delay costs caused by Latent Conditions is surprising. While cl 35.5, which provided for extensions of time granted by the Superintendent, did not apply to a delay attributable to a Latent Condition, in our view cl 12.3 met the case. The latter clause provided for evaluation to be made under cl 40.5 where a Latent Condition 'causes the Contractor to ... incur extra costs (including but not limited to the cost of delay or disruption), which the Contractor could not reasonably have anticipated at the time of tendering'. We think that cls 12 and 36 are compatible and that each has its own area of operation. Accordingly, BMD was not denied the ability to recover costs due to delay and disruption the result of Latent Conditions.

Adjustment of amount allowed for additional excavation

251 The judge found that BMD was required to excavate an additional 329,082 cubic metres of stockpiled material and then process and place it. The contract required that stockpiled material was to be excavated, stockpiled, sorted, blended, carted and filled, including screening, crushing, sorting and blending, to form the required structural fill and non-structural fill compositions for placement. His Honour decided that BMD was to be compensated at rates for structural fills found in Appendix 4 to the contract, rates per cubic metre on an 'estimated in place volume'.

252 Pursuant to ground 14 in its cross-appeal, the Authority contended that the judge failed to take into account three matters which ought to have reduced the sum awarded to BMD.

253 The first was that the correct volume was the volume in place after compaction, which the judge found was on average 23 per cent less than the stock pile volume. The second was that the work under the contract included an item for the excavation, forming and trimming of existing surface with an estimated volume in place of 50,000 cubic metres of material. The claim of 329,082 cubic metres thereby counted as additional work an item of work for which payment was already included in the contract sum. The third matter was that the applicable rate for placement of Type B and Type C structural fills under Appendix 4 already included the applicable rate payment for overheads and profit. Accordingly, the further allowance for overheads and profit in the judgment had the effect of double payment.

254 The judge dealt with a compaction factor in the course of determining an allegation by the Authority that BMD had failed to manage the materials to ensure that a five metre layer of Type A fill was available for the finished capping level. His Honour said that the need to redesign the finished surfaces arose from a shortfall in available materials, which in turn was largely due to compaction. We see no reason why compaction should be applied to reduce the compensation payable to BMD in respect of its additional excavation of quantities in each of the stockpile types. The compaction factor referred to by the judge was based upon gross volumes for the entire project, and it has not been demonstrated that it should be applied to the excavation, processing and placement of the identified additional excavated quantities. It appears that the parties accepted during the course of the project that additional excavation due to the Latent Condition was to be allowed at the rates applied by the judge.

255 As to the second matter, 50,000 cubic metres referred to in the appendix to the contract was for excavation in natural ground. The amount was not claimed by BMD as part of its over-excavation quantities claimed. There was no evidence led to suggest that was so. The figure of 329,082 cubic metres was based upon progressive joint surveys by surveyors engaged by both BMD and the Superintendent. The 50,000 cubic metres of excavation into natural material was work which was not surveyed or claimed by BMD as additional excavation.

256 The allegation that the derived rates for Type A and Type B materials also included allowance for overhead and profit is based upon assumptions made by the Authority's expert, Mr Clark, who in turn based his opinion upon an internal document used by BMD in the course of preparing its tender. Mr Clark assumed that the rates for Type A and Type B materials excavation and placement included an allowance for overheads and margin uniformly spread over the direct cost items. In fact, the distribution of overheads and margin was not uniformly distributed. So much is clear from the evidence of Mr Tozer. There was no fixed relationship between the overheads and margin and the tender price although Mr Clark assumed there was.

257 In our opinion this ground has not been established.

258 In its defence and counter-claim, the Authority advanced claims by way of set-off and counter-claim for an amount paid to obtain releases from land owners said to have been affected by the works and an amount paid for a dilapidation survey and report. Pursuant to ground 16 in its cross-appeal, the Authority has complained that the judge failed to deal with either claim.

259 It appears that counsel for the Authority did not mention the issues raised by the ground in either written or oral submissions to the trial judge and did not ask any questions as to the issues in cross-examining the witnesses called by BMD. His Honour gave judgment on 19 October 2007. On 8 November 2007 the parties made further submissions with respect to what were said to be errors or miscalculations in the judgment. No complaint was made by the Authority that the judge had not dealt with ground 16 of its cross-appeal. The judge apparently assumed that the ground had been abandoned. We think that the Authority is bound by the manner in which it conducted the trial and is not entitled to raise the issues on appeal.

260 In any event, it appears from the evidence led at the trial that BMD and its insurer dealt with the claims of all the neighbouring land owners. The Authority could not identify any outstanding claims.

261 For the foregoing reasons, we would allow the appeal in respect of the grounds of appeal dealing with the rate to be applied for additional wet based treatment and the value of delay caused by latent conditions. Accordingly, we would set aside the judgment made on 14 November 2007, and in lieu thereof order:

1. The defendant pay to the plaintiff the sum of $4,263,373.70 (inclusive of GST) being an amount comprised of the following sums:

(i) $2,171,896.76 on the nett claims under the contact, plus repayment of the sum of $672,000 which had been deducted as liquidated damages, a total of $2,843,896.76.

(ii) Plus interest in the sum of $1,135,088.10 calculated pursuant to s 60(1) of the Supreme Court Act 1986 on the amount of $2,843,896.76 since the date of commencement of proceedings to the date of judgment on 14 November 2007.

(iii) Plus the amount $284,389 being the GST payable on the amount of $2,843,896.76 referred to in sub-paragraph (i).

1. The defendant deliver to the plaintiff the bank guarantee it continues to hold in the sum of $762,615.80.
2. The plaintiff's claim otherwise is dismissed.
3. The defendant's claim otherwise is dismissed.
4. The cross-appeal is dismissed.

262 The final issue concerns the costs of the proceeding.

263 The judge ordered that the Authority pay 80 per cent of BMD's costs of the proceeding. The order was made to reflect the judge's impression of the time consumed by claims made by BMD which were separate from those upon which it succeeded and which, in his Honour's view, ought not to be rewarded by a favourable costs order.

264 Neither party objects to this deduction. The Authority, however, has appealed against the order for costs on the ground that the judge erred in finding that a Calderbank offer made by the Authority was for a sum less than that obtained by BMD pursuant to the judgment and accordingly contends that his Honour should have ordered that BMD pay the Authority's cost of the proceeding.

265 The Authority submits that, if its offer is read in the context of the circumstances existing at the time it was made, including amounts paid under the contract and liquidated damages to which the Authority was entitled, the Authority effectively offered $2,721,114 in settlement of all claims by BMD. That sum exceeded the amount recovered by BMD in the judgment in the proceeding, an amount of $2,607,986.20.

266 For present purposes it may be accepted that the Authority's estimate of the value of its offer is correct. As we have decided that, as a result of this appeal, BMD is entitled to judgment in an amount that exceeds the Authority's estimate, we will not make a special order as to costs.

267 Accordingly, we will add to the orders set out in paragraph [261] above, and order that the defendant pay to the plaintiff 80 per cent of the plaintiff's costs of the proceeding.

[1] [2000] TASSC 51 (Unreported, 26 May 2000), [8].

[2] (1992) 39 NSWLR 468, 483.

[3] Library No 14077 of 1988 (Unreported, 11 November 1988).

[11] Witness statement of Clark AB7, 36055.

[12] Which is to be contrasted with the over 100,000 cubic metres of additional excavation in fact carried out but not shown as such in the drawings.

[14] AB 2, 30,049; B 1307 [21]-[23].

[26] [2001] HCA 18; (2001) 205 CLR 434, 441 [16].

[29] [2002] NSWSC 1037; (2003) 19 BCL 225, 229-230.

[32] Re Levy [1980] FCA 129; (1980) 50 FLR 99, 114 and JW Armstrong Constructions Pty Ltd v Council of the Shire of Cook (1995) 14 ACLR 165, 171.

[33] Oxford English Dictionary (2nd ed, 1989).

[34] (1995) 14 ACLR 165.

[35] [1999] 1 Qd R 287.

[36] See generally Wormald Engineering Ltd v Resources Conservation IMT (1988) 8 BCL 158; Opat Decorating Service (Aust) Pty Ltd v Hansen & Yuncken (SA) Pty Ltd (1995) 11 BCL 360; and Australian Development Corp v White Constructions (ACT) (1996) 12 BCL 317.

[38] [1983] HCA 11; (1983) 152 CLR 406, 434-8 (Mason and Deane JJ).

[39] (1990) 170 CLR 394, 412 (Mason CJ).

1. [44] At the relevant contract rate or, if there be none applicable to the work in question, according to what is reasonable: see Clause 40.5.

[45] Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603, 612 [22] (McHugh J), citing March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506, and 651 [122], (Hayne J).

[46] [2004] HCA 3; (2004) 216 CLR 388.

[47] [2006] NSWCA 282; (2006) 67 NSWLR 341.

[49] Aon Risk Services Australia Ltd v ANU [2009] HCA 27; (2009) 258 ALR 14, 28 [35] and 43 [98].

[50] Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 [109] (McHugh J).

[51] Benlist Pty Ltd v Olivetti Australia [1990] ATPR 41-043 at 51,590. See also Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592, 623 [103]; Campbell v Backoffice Investments Pty Ltd [2009] HCA 25, [102].

[53] [1999] 1 Qd R 287.

[54] All work other than the rehabilitation of Steele's Creek.