Civil and Allied Technical Construction Pty Ltd v A1 Quality Concrete Tanks Pty Ltd [2018] VSCA 157

CONTRACT - Assessment of damages for loss of bargain - Where critical issue was time period required for contractual performance - Conclusions required findings of fact and judgment - No basis for interfering with trial judge's findings - Leave to appeal granted - Appeal dismissed - Davison v Kempson [2018] VSCA 51 applied.

1 The applicant, Civil & Allied Technical Construction Pty Ltd ('CATCON'), is a construction contractor. The respondent, A1 Quality Concrete Tanks Pty Ltd ('A1'), is a company which specialises in the construction of concrete tanks. A1's principal is Mr Peter Geaboc.

2 In mid-2010 CATCON was one of two head contractors in a government project at Aldinga in South Australia. One of the tasks required to be carried out by CATCON was the construction of two clarifier tanks.

3 CATCON entered into negotiations with A1 with a view to engaging A1 as a subcontractor to construct the two clarifier tanks. A1 never undertook that work because CATCON determined not to proceed with A1. There was then a dispute between CATCON and A1 as to whether a contract had been made which CATCON had repudiated. Proceedings were issued in the County Court and were heard and determined by Judge Macnamara in July and August 2014. He found that a concluded contract had been made, which CATCON had repudiated.[1] An appeal from that judgment to this Court was dismissed.[2] The proceeding then returned to Judge Macnamara for the assessment of damages.

4 The liability trial had occupied five hearing days. The hearing on the assessment of damages was protracted, and greatly exceeded the estimates of duration which had been given. In all, the damages hearing occupied 15 sitting days between 29 August 2016 and 18 August 2017. Judge Macnamara delivered reasons for judgment assessing A1's damages at $176,342.13 on 20 September 2017.[3] On 25 October 2017 Judge Macnamara entered judgment in favour of A1 against CATCON for the sum of $266,863.36 inclusive of interest and made orders as to costs in A1's favour. CATCON now seeks leave to appeal from that judgment. The application was argued on the basis that if leave were granted the appeal would be determined forthwith.

5 There are two proposed grounds of appeal, each of which have a number of what are described as 'sub-grounds'.

6 The first proposed ground concerns illegality. It is as follows:

The learned judge erred in not finding that the contract between the parties was unenforceable at the suit of [A1], the intended mode of performance by [A1] being sham contracting (treating its employees as if they were independent contractors).

7 The second proposed ground of appeal concerns the judge's finding that A1 would have made a profit had the contract not been repudiated. This proposed ground is headed 'Time' because the issue of whether A1 would have made a profit or not was critically dependent upon the time which it would have taken A1 to complete the work. The proposed ground reads:

The learned judge erred in finding that but for the cancellation of the contract, [A1] would have been able to execute the contract works within the contract period of 12 weeks.

8 The two proposed grounds raise discrete issues and we will accordingly deal with them separately.

9 A1 proposed to carry out the work under the agreement using a 10-man workforce comprising:

• Mr Peter Geaboc;
• One of Mr Geaboc's sons, Mr Ben Geaboc;
• Four workers engaged through a company named Central Concreters Pty Ltd ('Central Concreters'); and
• Four additional workers who would purportedly be engaged by A1 as independent contractors.

10 The illegality which is the subject of the first proposed ground of appeal concerning 'sham contracting' relates to the four additional workers. Whilst initially there was also an issue in relation to the Central Concreters workers, counsel for CATCON accepted in the course of submissions to the trial judge that they were employees of Central Concreters, not A1, although it was said that the arrangement with Central Concreters did give 'general flavour and colour' to what CATCON contends were the sham arrangements made with the four workers who were purportedly independent contractors.

11 There are three 'sub-grounds' to the proposed illegality ground. They are:

(a) The learned judge erred in approaching the issue of illegality under the second principle identified in St John Shipping Corporation v Joseph Rank Ltd[4] instead of the first principle.

(b) The learned judge erred in failing to have regard to the relevant indicia as to whether the intended workers would have been employees or independent contractors, but instead in applying a test which should have been irrelevant, namely whether the employment of those workers was short term.

(c) The learned judge erred in refusing the applicant leave to plead illegality, and then declining to address the issue of his own motion.

12 Because the issue of the refusal of leave to amend raised by sub-ground (c) potentially affects the analysis on the other sub-grounds it is necessary to consider that issue first.

13 In the liability judgment the trial judge had dealt with an illegality defence. That defence was that the contract had been entered into in contravention of s 6 of the Building Work Contractors Act 1995 (SA) as A1 did not hold a licence to carry on business as a building work contractor. The defence was rejected by the trial judge in the liability judgment.[5] A ground of appeal concerning this rejection was abandoned on the appeal.[6]

14 On the sixth day of the assessment trial (23 January 2017) CATCON applied to amend its defence to plead a new illegality defence. That was that the contract which had been entered into was unenforceable because of the proposed 'sham contracting' arrangements.

15 At the outset of the application to amend the judge raised the issue of Anshun[7] estoppel. When it was put to counsel for CATCON by the trial judge that A1 would presumably contend that the amendment was too late and was a matter that ought to have been dealt with in the liability trial, counsel for CATCON gave two answers. The first was that the allegation sought to be introduced was an allegation that the contract was unenforceable, not that it was void or did not come into existence. The second was that the illegality allegation was one that could not be made lightly and that it had been appropriate to make the allegation only after evidence had been heard from witnesses in the course of the assessment trial.

16 Counsel for A1 opposed the amendment submitting that the issue did not go to quantum but went to liability and that it ought to have been raised in the liability trial if it were to be raised at all. Counsel for A1 submitted that the explanation for raising the issue late was inadequate. Counsel went on:

But, your Honour, we don't even have an affidavit, which Aon[8] calls upon when you do have a late amendment, for an explanation as to why they couldn't have raised things before. We don't have an affidavit explanation.

17 A little later counsel for A1 continued: 'the circumstances call very much for an explanation as to why it couldn't be done earlier.'

18 In response to these submissions counsel for CATCON said, amongst other things:

My learned friend complained about the lack of an affidavit. Your Honour, an affidavit would have been completely pointless. All the material that's relevant to this case was already before the court. It is not a case where something has come late because the solicitor's clerk dropped a briefcase or something like that.

There are no extrinsic factors in here; it's all before the court. No purpose in burdening the court with matters which are already before the court.

19 The trial judge pressed counsel for CATCON on the issue of the absence of an explanation for the lateness of the amendment, and in particular the absence of an explanation as to why the issue had not been raised at the liability trial. Counsel for CATCON responded:

Your Honour, because at the liability trial we were concerned with the question of whether or not a contract had been formed. It was not - it didn't fit in that trial to bring subpoena witnesses and bring witnesses to court in order to give evidence as to how the work would have been done, how the contract would have been performed. It just would not have fitted in that trial.

It did fit, absolutely, in the first tranche of this [quantum] trial, and that was the moment, that was the time at which it became proper to raise this plea. To suggest that at a liability trial it would have been appropriate for us to have subpoenaed a string of workers as to how the work would have been performed at that stage does not, I would submit, fit with what is essentially a common sense approach in Anshun.

20 The trial judge ruled against the application to amend. Relevantly, he expressed his reasons as follows:

In my view, [counsel for A1's] contention that the liability trial was intended to determine not only whether there was in existence a contract between the parties, but whether that contract was enforceable, is correct. It is only if the contract is enforceable that it would be proper to enter judgment for damages to be assessed.

Again, the point is reinforced by the fact that a different illegality point was argued and adjudicated upon as part of the liability trial. I do not think it appropriate for me to express any view as to whether the rule that issues of fraud and moral turpitude should not be alleged in pleadings [without] a proper basis has the consequence that a matter such as the one now sought to be raised can only be raised after extensive evidence has been heard at trial on the one hand, as [counsel for CATCON] contends, or implicitly, as [counsel for A1] contends, are properly pleaded, based on issues of discovery and the knowledge of the parties.

Given my acceptance of the view that the liability trial was concerned not only with the existence of the contract but also its enforceability, then, by whatever means, be it discovery or by adducing evidence along the lines of what has been adduced in the assessment trial, it would have been possible for those matters to be dealt with at the liability trial.

In my view, this illegality defence is one which, if it is [to] be brought forward, should have been brought forward at the liability trial. The fact that the defendant, in terms of knowledge, has now brought itself to the position where it is satisfied that ethically it may bring forward these matters, indicates that by use of the same processes at the liability trial, it could have brought itself to a position where it could ethically raise those issues.

Therefore, exercising reasonable diligence, it could, and should have raised these matters at the liability trial. The Anshun principle, therefore, stands in the way of my acceding to the application, which must be rejected on that ground.

21 The trial judge went on to express doubt as to a submission made on behalf of CATCON that it would not be necessary to recall any witnesses if the amendment were allowed. He concluded that it would be prudent for A1 to recall at least one witness and that that was also a factor telling against acceptance of the application on the basis of the principles in Aon.

22 In its written case in support of the application for leave to appeal CATCON asserts that at the time of the liability trial it 'had no means of knowing how the respondent intended to carry out the work'. The written case also asserts that as a 'practical or ethical matter' it was not 'possible or appropriate' for the applicant to have raised this illegality issue at the liability trial.

23 CATCON's contentions on this issue must be rejected. As the trial judge observed, the processes whereby CATCON contends that it became aware of the contracting arrangements in the course of the assessment trial had been equally available to it at the liability trial. It is significant that there was no affidavit explaining why the matter had not been raised in the liability trial. The submissions made by counsel for CATCON to the trial judge to the effect that the allegations would not have 'fitted' into the liability trial were unfounded. The illegality defence was obviously a matter relevant to liability.

24 In our view, the decision made by the trial judge was correct. If there had been evidence by CATCON that it had not been possible for it to raise the issue at the liability trial then the position may have been different.

25 Insofar as leave to appeal is sought relying upon this issue, we would not grant leave.

Consequence of the refusal to allow the amendment

26 Notwithstanding the refusal to allow the amendment counsel for CATCON submitted that the trial judge still had to address the issue of whether A1 should be precluded from recovery because of what were contended to be the proposed 'sham' arrangements with the four additional employees. In that respect counsel relied upon a decision of the Court of Appeal in Queensland in Holdcroft v Market Garden Produce Pty Ltd.[9] In that case the Court of Appeal was being asked to enforce an agreement which it found was a 'pure sham',[10] 'deliberately framed'[11] so as to avoid taxation liabilities. The deception embodied in the sham arrangement was, in the Court's view, 'integral to the structure of the agreement'[12] and was not a matter which the Court could 'overlook'.[13] No illegality issue had been raised by the parties, or by the trial judge. Thomas JA addressed the question of whether the Court of Appeal should of its own motion act on the perceived illegality. He said:

That a court may do so in appropriate circumstances is beyond question. However, the court does not do so on mere speculation or possibility. The instances in which the court of its own motion will raise illegality were summarised by Jordan CJ in Knowles v Fuller as those where contracts are on their face illegal, where the plaintiff cannot prove the case without proving illegality, or where an incurable illegality comes to light during the trial.[14]

27 A little later Thomas JA referred to observations of Kirby P (as he then was) in Staniland v Kentucky Homes where he stressed, also relying on Knowles v Fuller,[15] that the circumstances where the court would intervene of its own motion were exceptional and were to be confined to cases where 'the whole of the facts make plain the illegality'.[16]

28 Knowles v Fuller was a decision of the Full Court of the New South Wales Supreme Court. The particular illegality at issue there was the construction of a cool room without the necessary council approval. The Full Court rejected a contention that there was a basis for the court to interfere with the jury's verdict in favour of a builder on the basis of illegality which had not been pleaded. Jordan CJ said:

it is well settled that a Court will not entertain a defence of illegality which has not been pleaded, unless (1) the transaction sued upon is ex facie illegal, or (2) the plaintiff cannot prove his case without proving also that he is claiming under an illegal transaction, or (3) exceptionally, where a fact comes to light in the course of the trial which of itself shows that the transaction sued on is illegal on grounds which nothing could cure.[17]

29 Jordan CJ pointed out that in the last type of situation it was important that the court be 'satisfied that it has before it the whole of the facts relating to the transaction ...'.[18]

30 Finally, reference should be made to a decision of the English Court of Appeal in Bank of India v Trans Continental Commodity Merchants Ltd.[19] In that case an appellant who had been refused leave by the trial judge to plead illegality (a refusal which had been affirmed by the Court of Appeal) sought to raise illegality on the substantive appeal. Lord Justice Robert Goff, with whom Stephenson and O'Connor LJJ agreed, found it unnecessary to go into the evidence on the issue as the point could only succeed if there was ex facie illegality established by 'persuasive and comprehensive evidence'.[20]

31 The trial judge referred to the issue of illegality early in his reasons, observing that it had 'loomed large' in the assessment trial.[21] The judge referred to the evidence of Mr Peter Geaboc as to his intentions in relation to labour on the site.[22] He referred to the concession which counsel for CATCON had eventually made that the alleged illegality did not extend to the workers provided by Central Contractors.[23]

32 The judge then referred to a number of authorities, relied upon by counsel for CATCON, concerning the issue of whether workers were properly to be regarded as independent contractors or employees, and to the submissions made on behalf of CATCON in reliance upon those authorities.[24]

33 Counsel on behalf of A1 also made submissions on the issue of whether the four workers were employees or independent contractors, which the judge set out.[25]

34 The judge observed that the matters relied upon by counsel for CATCON in contending for illegality did not 'pertain ... to the contract which is sought to be enforced as an illegal contract but rather to an illegal mode of performance'.[26] In that context the judge quoted a passage from the judgment of Devlin J (as he then was) in St John Shipping.[27] The judge observed that in his view what was contended for by CATCON in this case resembled the facts in St John Shipping in that the contract was not itself illegal but it was intended by one party to be performed in an illegal manner, assuming that CATCON's submissions in relation to the existence of illegality were accepted.[28]

35 The judge pointed out that the contract between CATCON and A1 was not a sham in the way which the contract in Holdcroft was.[29]

36 The judge referred to a decision of Vickery J in Sami v Roads Corporation,[30] upon which counsel for CATCON had relied, and distinguished that decision.[31]

To sum up, the contract between A1 and CATCON was not prohibited by statute either expressly or by implication. Even if A1 intended to commit an illegality in performance of an otherwise legal contract, CATCON had no such intention. Therefore, the contract was neither a sham nor a contract to commit an illegal act. The contract is no more rendered unenforceable than the contract for the carriage of cargo in the St John Shipping Corporation case.[32]

38 The judge then went on to consider in detail the issues raised concerning the status of the four relevant employees.[33] The judge was not persuaded that the mode of performance proposed by A1 would amount to sham contracting as CATCON contended.[34]

39 The judge's conclusion that he was unpersuaded that what A1 proposed would amount to sham contracting was a particular focus of CATCON's submissions on the application for leave to appeal. Given the attention directed to the issue by counsel for CATCON, it is necessary to address the evidence, CATCON's submissions made to the trial judge, and the trial judge's detailed conclusions on that evidence and those submissions, which we do below.

40 The judge referred to the circumstances in which a court might intervene on its own motion when the issue of illegality is not pleaded,[35] and then said:

Even were I wrong in the analysis which I have given as to the proposed arrangement between A1 and the nominated worker, I would not regard this as a matter clear enough to justify the Court raising illegality on its own motion. Since I rejected an application by the defendant to amend its defence, illegality is not raised on the pleadings.[36]

41 Finally, the judge observed that he was fortified in his conclusion that the court should not intervene on its own motion by evidence given by Mr Rubira, which he accepted, that the wages and entitlements of the four workers concerned, if treated as employees, could have been met within the amount provided for to pay the workers as independent contractors.[37]

42 Before turning to the submissions of CATCON on the application for leave to appeal, we return to a consideration of the submissions, the evidence, and the judge's detailed conclusions on the issue of whether the four relevant employees would have been properly characterised as independent contractors rather than employees.

The applicant's submissions before the trial judge on the workers' status

43 Evidence was given at the trial concerning the status and activities of A1's relevant four workers by Mr Peter Geaboc; by two of the workers, Mr Ioan Magurean and Mr Stephen Claydon; and by another worker, Mr Robert McCracken. The submissions made to the trial judge on CATCON's behalf were based upon this evidence.

44 Before the trial judge, CATCON submitted that there was no one criterion or factor which was determinative of the issue of whether a relationship was one of employment or independent contract. Rather, the issue required a multifactorial analysis and the weighing of all relevant factors.[38] CATCON relied on Bromberg J's judgment in On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3),[39] and in particular, on the indicia identified in that judgment as being relevant to the determination of whether a worker is an employee or an independent contractor.[40] CATCON submitted to the trial judge that Bromberg J's judgment was 'an up to date statement of the law on this difficult issue'.[41]

45 CATCON provided a summary in the form of a table to the trial judge which identified factors and evidence which it said were relevant to determining what would have been the status of the workers in this case.[42] This summary addressed separately factors relevant to a relationship of employment and factors relevant to a relationship of independent contract. It set out the evidence of Mr Geaboc and the relevant workers which was said to relate to each factor.

46 The applicant identified the following factors as relevant to the characterisation of an employment relationship:

• Whether the principal has the power to control the worker.
• Whether the worker wears the livery of the putative employer.
• Whether the worker is remunerated by periodic wage or salary (ie salary is time based, not task based).
• Whether the putative employer superintends the finances of the worker.
• Whether the worker is obliged to accept work.

47 The applicant identified the following factors as being relevant to the identification of a relationship of independent contract:

• Whether viewed as a practical matter, the worker could be said to be conducting a business of his or her own.
• Whether the worker has a corporate entity.
• Whether the worker advertises his or her services to the world at large.
• Whether the worker provides and maintains significant tools or equipment.
• Whether the worker spends a significant portion of his remuneration on business expenses.
• Whether the worker has a specific profession, trade or distinct calling.
• Whether the worker can delegate work to a third party.
• Whether the worker is paid on a task by task basis or by reference to the outcome or result of the work.
• Whether the worker creates goodwill or saleable assets.
• Compliance with statutory requirements.

Trial judge's analysis of the workers' status

48 The trial judge accepted CATCON's submission that the determination in a particular case of whether an individual is or is not an employee, as opposed to an independent contractor, is multifactorial and that no one factor is conclusive.[43] He observed that it is 'the accumulation of matters pointing in the one direction or the other and no doubt a relative weighting as to their significance which has led courts and tribunals in particular cases to reach their determination.'[44] The trial judge said that the question of whether a person is an employee or an independent contractor is not 'susceptible of the analysis that there is a right and a wrong answer to be determined as a matter of pure law'.[45]

49 The trial judge then analysed each of the factors identified in CATCON's summary. He commenced by analysing the factors said to be relevant to a relationship of employment.

50 The first factor considered by the trial judge was whether the principal had the power to control the worker.[46] The judge assessed the evidence relied upon by CATCON. Mr Magurean had given evidence that it was not possible for him to work on any other jobs whilst working for A1. The judge considered that he was in an analogous position to a singer who agrees to perform on a cruise ship or a member of counsel who accepts a brief to appear in a particular court on a certain day. The judge reasoned that the fact that the singer and counsel are necessarily prevented from doing work in another location during the period of the cruise or court engagement does not convert those individuals into 'employees'.[47] The trial judge disregarded certain answers given by Mr Magurean in cross examination which were characterised by CATCON as amounting to an agreement with the proposition that Mr Magurean 'was not free to accept offers of work or reject offers of work that were put to him'. The judge found that it was difficult to determine from the relevant passages whether Mr Magurean's answers were responsive to the questions being put to him. He also observed that the answers taken literally would have the worker in a 'state of servitude' to A1 and anyone else who may offer him work, and that in the context of evidence given by the other workers those answers should not be taken literally.[48]

51 Mr McCracken had given evidence that A1 had priority with respect to other jobs. The judge observed that Mr McCracken's evidence was that the respondent's work was given priority because it paid more. He concluded that that was not a strong consideration favouring an employment relationship.[49]

52 CATCON submitted Mr Claydon had given evidence that 'the hours were set by the Geabocs'. The trial judge concluded that, properly analysed, his evidence was not to that effect. Rather, Mr Claydon's evidence was that 'the site' (ie CATCON or Leighton) was the 'primary controller'.[50]

53 Next, the judge turned to the issue of whether the worker wore the livery of the putative employer. CATCON submitted that A1 provided the workers with personal protection equipment and tools.[51] On the issue of tools, the trial judge referred to evidence of Mr Magurean to the effect that he provided certain tools, and the judge observed that this evidence was 'hardly supportive' of CATCON's contention regarding tools.[52]

54 The next factor addressed by the trial judge was whether the worker was remunerated by periodic wage or salary (ie salary as time based, not task based). The judge referred specifically to the evidence of Messrs Geaboc, Magurean and Claydon that payment was sometimes made before the workers submitted their tax invoices. The judge observed that, in contrast to the position in Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No 7),[53] the evidence did not disclose that the tax invoices for remuneration were recipient generated.[54]

55 CATCON relied upon time based calculations in previous tax invoices. The judge observed that time based remuneration did not, in itself, render a worker an employee. In that regard, the judge gave the example of counsel, tradesmen and labourers who work on the basis of an hourly rate. The judge concluded that this factor was 'equivocal'.[55]

56 The judge then turned to the issue of whether the putative employer superintended the finances of the worker. He referred to evidence about the provision of personal protective equipment and tools and to the payment by A1 for the workers' meals and accommodation.[56]

57 As to the issue of whether the worker was obliged to accept work, the judge concluded that whilst a worker was undertaking work for A1 the worker was necessarily prevented from undertaking work for anybody else. Again, the judge relied on an analogy with a member of counsel, who in accepting one brief is excluded from accepting work from another instructing solicitor or client in another court.[57]

58 The trial judge then turned to consider the factors said by CATCON to be relevant to a relationship of independent contract.

59 The judge commenced by observing that on the evidence of the relevant workers they 'considered themselves independent contractors and accepted the responsibilities of independent contractors for tax, superannuation and so forth'.[58] The trial judge said that although that evidence was not conclusive of the workers' status it was a factor in favour of the individuals being independent contractors.[59]

60 The judge addressed the issue of whether, viewed as a practical matter, the worker could be said to be conducting a business of his or her own. The trial judge concluded that the evidence identified by CATCON as relevant to that factor did 'tell against a finding of independent contractor'.[60]

61 The judge turned to the issue of whether the worker had a corporate entity. The judge observed that this criteria 'would exclude from the status of independent contractors members of any profession which must be carried on by individual practitioners rather than through corporations'.[61] The judge reasoned that this pointed against this factor being significant.[62]

62 With respect to evidence relied upon by CATCON that Mr McCracken had had his ABN cancelled by the Australian Taxation Office, the trial judge found that it was 'difficult to see how this cancellation ... can bear upon the relationship between Mr McCracken and A1'.[63]

63 The trial judge addressed the issue of whether the worker advertised his or her services to the world at large. The judge observed that the workers did not advertise and concluded that this consideration pointed away from them being independent contractors.[64]

64 The judge addressed the issue of whether the worker provided and maintained significant tools or equipment. The judge referred to the evidence of Mr Geaboc to the effect that A1 provided the tools and personal protective equipment. The judge also referred to evidence of the workers that they did provide tools. The judge concluded that, on balance, this factor pointed away from the workers being independent contractors.[65]

65 The judge addressed the issue of whether the worker spends a significant portion of his remuneration on business expenses. The judge observed that the evidence showed the workers made no such expenditure.[66]

66 The judge turned to the issue of whether the worker had a specific profession, trade or distinct calling. The judge said that CATCON had submitted that the question of profession, trade or distinct calling should be answered in the negative despite the fact that Mr Magurean and Mr Claydon had in fact described themselves as having a particular occupation and speciality. The judge concluded that it was therefore 'difficult to accept' CATCON's contention that the question should be resolved in the negative.[67]

67 The next matter that the trial judge addressed was whether the worker could delegate work to a third party. The judge observed that the evidence did not disclose the existence of any power to delegate. The judge accepted that many independent contractors have no unilateral right to delegate. The judge referred to solo performers, surgeons engaged by private patients and members of counsel as examples of independent contractors who would not be taken to have a unilateral right to delegate.[68]

68 The judge then addressed the issue of whether the worker was paid on a task by task basis or by reference to the outcome or result of the work. The judge found that the evidence was that the workers would be engaged to work for a particular period of time on a particular project and that the remuneration was time based. The judge rejected CATCON's submission that this factor pointed away from the existence of a relationship of independent contractor.[69]

69 As to the issue of whether the worker created good will or saleable assets, the judge said that this was not a point in support of the existence of an independent contractor relationship.[70]

70 The judge then addressed the final factor identified by CATCON being the compliance with statutory requirements. CATCON relied upon evidence that Mr McCracken had not paid tax for six years. The judge said that it was difficult to see how this was relevant to the determination of whether Mr McCracken was an independent contractor.[71]

71 The judge accepted that 'the balance of relevant criteria would favour a finding that these individuals were to be regarded as employees rather than independent contractors'.[72] However, he observed that many of the relevant indicia were 'equivocal'.[73]

72 Ultimately the trial judge concluded 'with some hesitation' that the relationship between the workers in question and A1 would have been one of independent contract rather than employment.[74] In reaching that conclusion, the judge relied particularly on the duration of the proposed engagement (ie 12 weeks). The trial judge concluded that this was a 'major consideration' which '[outweighed] the matters thrown in the balance by [CATCON].'[75] The trial judge observed that the duration of the engagement in this case was in stark contrast to the circumstances in Linkhill and ACE Insurance Ltd v Trifunovski.[76]

73 The judge did not address the possibility of a deliberate breach of any applicable statute by A1, in the sense that A1 not only intended to make the contractual arrangements proposed but knew that to do so would breach an applicable statute and determined to proceed anyway. It was put to Mr Peter Geaboc in cross-examination that he knew the four relevant workers were employees and that this was a case of 'sham contracting'. Mr Geaboc denied that saying they were not employees they were subcontractors. The matter was not pursued further. It was not put to Mr Geaboc that he deliberately planned to breach any applicable statute.

74 CATCON submitted in its written case that the trial judge had misunderstood where the relevant 'sham' lay and had misidentified the applicable principle in St John Shipping. CATCON referred to the passage from St John Shipping which the judge had quoted. In that passage Devlin J had distinguished two situations, the first being where a contract is entered into with the object of committing an illegal act and the second being where a contract is expressly or impliedly prohibited by statute. The applicant's written case asserted that it was only the first principle that was relevant to this case but that the judge had erroneously focused on the second principle. The written case reads:

There is no suggestion here that the contract between the applicant and the respondent was itself prohibited by statute (the second principle). Rather, the evidence was that the respondent intended from the outset to perform the work in a manner that was illegal ...

75 The written case relied on Sami and contended that that decision set out the applicable principles which should have been applied.

76 The written case then addressed the evidence in relation to the four workers, the submission being that the judge had wrongly concluded that they were independent contractors rather than employees.

77 In oral submissions counsel for CATCON submitted that there was 'no one piece of legislation' that was relevant to the alleged illegality. An aide memoire was handed up containing a list of statutory provisions which it was said would have been contravened 'had this contract been performed'.[77] The Court questioned counsel for CATCON as to whether it was necessary to address the various statutes in order to determine whether Parliament intended the consequence of prohibiting recovery if those statutory provisions were breached in the course of performing a contract. Counsel for CATCON submitted that such an analysis was not appropriate because there was no one legislative provision which was said to be infringed. The submission was that the principles of public policy were engaged and that the intended illegal mode of performance was so serious that the Court was required to denounce the conduct.

78 In oral submissions counsel for CATCON distinguished the decision in St John Shipping on two bases. The first was that the contract in issue there had been fully performed. The second was that in that case neither party had intended to perform an illegal act at the time the contract was formed.

79 On behalf of A1 it was submitted that the judge had not misapplied St John Shipping and that he had correctly distinguished Sami. The judge's conclusion that the respondent had not intended to engage in 'sham contracting' was submitted to be a conclusion that had been 'plainly open'.

80 There are a great number of authorities addressing the consequences of illegality in relation to civil claims in many different contexts. Here, it is necessary to focus on those authorities dealing with the position where recovery under a contract is said to be precluded on public policy grounds. It is convenient to review the relevant authorities chronologically beginning with the High Court decision in Payne v McDonald.[78]

81 Payne concerned a transfer of land said to have been carried out with the intention of defeating the transferor's creditors. There was no evidence that the illegal intention had been achieved. The High Court held that the defence could not succeed unless it was proved that the illegal object had been wholly or partly carried into effect. Griffith CJ said: 'It is not sufficient to allege the illegal intention without showing that the intention has been carried out'.[79]

82 O'Connor J agreed with Griffith CJ. Higgins J's judgment was to the same effect. He said: 'She intended to defeat her creditors, but there is no proof that she did defeat her creditors in the slightest degree'.[80]

83 A1 did not rely on a contention that any illegal proposal had never been carried out.

84 The High Court again considered the issue of illegality in a relevant context in Neal v Ayers.[81] In that case a plaintiff sued the defendant for deceit. The plaintiff alleged she had been induced to purchase a hotel on a false representation about the takings. The representation made about the takings included a representation about the takings derived from illegal after hours trading. The plaintiff had intended to continue that illegal trading. The trial judge had entered judgment for the defendant on the basis that the action was based on illegality. The High Court overturned that decision. Starke J said:

But was the purpose or object of the agreement in this case to violate the law? Its real purpose and object was the sale and purchase of a hotel in the ordinary way of business. The disposition of the property was not made to enable the plaintiff to violate the law nor was the purpose of the plaintiff herself to acquire a hotel so that she might violate the law.[82]

85 Dixon and Evatt JJ referred to the fact that the plaintiff had intended to continue, at least for some time, the practice of after hours trading, and then said:

It is after all a contract for the sale and purchase of the lease, licence and furniture of a hotel. These are assets of an ordinary character, and the fact that the vendor during her period of possession did break the licensing law and the purchaser intended during her period of possession to follow her example could not make the subject matter of the contract an unlawful one.[83]

86 A little later they observed that the 'substantial purpose' of the contract was the transfer of property.[84] Referring to the purchaser, they said: 'Her intention to continue for a time the practice of unlawful trading does not go to the substance of the transaction'.[85]

87 St John Shipping concerned an overloaded cargo ship. The overloading constituted a contravention of s 57 of the Merchant Shipping (Safety and Load Line Conventions) Act 1932 (UK). The master was convicted of an offence for overloading the vessel and the defendant, who was the holder of a bill of lading in respect of some of the cargo, withheld a portion of the freight which was due contending, when sued for the balance, that relief ought to be refused because the charter had been performed in an illegal manner.

88 In a passage quoted by the trial judge in the Reasons and by CATCON in its written case Devlin J said that there were two general principles:

The first is that a contract which is entered into with the object of committing an illegal act is unenforceable. The application of this principle depends upon proof of the intent, at the time the contract was made, to break the law; if the intent was mutual the contract is not enforceable at all, and, if unilateral, it is unenforceable at the suit of the party who is proved to have it. This principle is not involved here. Whether or not the overloading was deliberate when it was done, there is no proof that it was contemplated when the contract of carriage was made. The second principle is that the court will not enforce a contract which is expressly or impliedly prohibited by statute. If the contract is of this class it does not matter what the intent of the parties is; if the statute prohibits the contract, it is unenforceable whether the party meant to break the law or not.[86]

89 It is important to observe that, as Devlin J explained, an applicable statute is potentially relevant to the first principle. This is because when the first principle applies it is necessary to look to the acts which the law prohibits. When the second principle applies Devlin J said that you do not consider what acts the statute prohibits but rather what contracts it prohibits.[87]

90 In St John Shipping, Devlin J said that he was only applying the second principle. CATCON disavows reliance on the second principle. But what Devlin J said about the application of the second principle in the case before him seems to describe the position as CATCON contends it to be. Devlin J described the case before him as follows:

The plaintiff does an illegal act, being one prohibited by the statute, but he does it in performance of a legal contract, since the statute is construed as prohibiting the act merely and not prohibiting the contract under which it is done.[88]

91 As to that situation Devlin J quoted a passage from Tenterden CJ in Wetherell v Jones[89] which concluded:

But where the consideration and the matter to be performed are both legal, we are not aware that a plaintiff has ever been precluded from recovering by an infringement of the law, not contemplated by the contract, in the performance of something to be done on his part.[90]

92 Devlin J said that this sentence was a clear and decisive statement of the law.[91]

93 Devlin J went on to observe that if the parties had 'knowingly' agreed to ship the goods by an overloaded vessel the first principle would apply because there would have been 'intent to break the law'.[92]

94 Devlin J said that courts should be very slow to hold that a statute intends to interfere with contractual rights. He went on:

Caution in this respect is, I think, especially necessary in these times when so much of commercial life is governed by regulations of one sort or another, which may easily be broken without wicked intent. Persons who deliberately set out to break the law cannot expect to be aided in a court of justice, but it is a different matter when the law is unwittingly broken. To nullify a bargain in such circumstances frequently means that in a case - perhaps of such triviality that no authority would have felt it worthwhile to prosecute - a seller, because he cannot enforce his civil rights, may forfeit a sum vastly in excess of any penalty that a criminal court would impose; and the sum forfeited will not go into the public purse but into the pockets of someone who is lucky enough to pick up the windfall or astute enough to have contrived to get it.[93]

95 In Fire and All Risks Insurance Co Ltd v Powell,[94] the Full Court of this Court considered an insurance claim made by a road carrier who had deliberately carried goods loaded to a height prohibited by the Motor Car Act 1958, and had damaged the goods when they struck a bridge. The insurer of the carrier sought to resist the claim on the basis that the insured's conduct had been illegal. The Full Court accepted that the insured's conduct which led to the damage was a direct consequence of his breach of the Motor Car Act. The Court nevertheless held that he was not precluded from recovery. O'Bryan and Pape JJ said that this was because 'that act was not of such a grave character or so anti-social that the Court should decline to assist the defendant to recover under the contract of indemnity'.[95] Smith J said that the crime in question was 'a breach of a mere regulatory provision'.[96]

96 The High Court returned to the issue of illegality in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd.[97] The case concerned the enforceability of security documents securing a loan advanced by a company illegally carrying on banking business in Australia. Gibbs ACJ (as he then was) said the following:

There are four main ways in which the enforceability of a contract may be affected by a statutory provision which renders particular conduct unlawful: (1) The contract may be to do something which the statute forbids; (2) The contract may be one which the statute expressly or impliedly prohibits; (3) The contract, although lawful on its face, may be made in order to effect a purpose which the statute renders unlawful; or (4) The contract, although lawful according to its own terms, may be performed in a manner which the statute prohibits.[98]

97 The High Court held in that case the relevant statute properly construed did not render the security documents unenforceable.

98 The High Court again considered the issue of illegality in Nelson v Nelson.[99]

99 The decisions in Yango and in Nelson are important in the context of illegality generally, but for present purposes we can move directly to the High Court decision in Fitzgerald v FJ Leonhardt Pty Ltd.[100] That case concerned a driller who had drilled bores in contravention of a provision of the Water Act 1992 (NT) which required that bores not be drilled unless authorised in accordance with the provisions of the Act. Authorisation had unwittingly not been obtained by the landowner, who then contended that the driller could not recover against him because the bores had been drilled illegally.

100 In their joint judgment Dawson and Toohey JJ set out what Gibbs ACJ had said in Yango about the four ways in which the enforceability of a contract may be affected by a statutory provision. They said that the contract in issue there was potentially affected by the fourth circumstance to which Gibbs ACJ had referred, namely the contract was lawful according to its own terms but was performed in a manner which the statute prohibited. Dawson and Toohey JJ observed:

That category, however, does not stand for the proposition that a contract, which is itself legal, will be unenforceable if something illegal is done in the course of its performance. The cases provide no authority for such a proposition.[101]

101 They then referred to Devlin J's decision in St John Shipping and went on:

In this case, the performance of the drilling contract resulted in the commission of an offence by the owner, but the manner of performance by the driller did not turn it into a contract which was forbidden by the Act.[102]

102 Dawson and Toohey JJ held that the driller was not precluded from recovering from the owner, observing, as Devlin J had done in St John Shipping, that: 'whilst persons who deliberately set out to break the law cannot expect to be aided by a court, it is a different matter when the law is unwittingly broken'.[103]

103 McHugh and Gummow JJ reached a similar conclusion. Having concluded that the relevant statute did not expressly or impliedly prohibit the contract, they said:

The question then becomes whether, as a matter of public policy, the court should decline to enforce the contract because of its association with the illegal activity of the owner in, if not causing, then at least suffering or permitting the construction and drilling of bores, within the meaning of s 56(1), without the grant to the owner of permits pursuant to s 57. The refusal of the courts in such a case to regard the contract as enforceable stems not from express or implied legislative prohibition but from the policy of the law, commonly called public policy. Regard is to be had primarily to the scope and purpose of the statute to consider whether the legislative purpose will be fulfilled without regarding the contract as void and unenforceable.[104]

104 After referring to Nelson, and to cases where the courts would not refuse relief as referred to by McHugh J in that decision, they continued:

Even if the case does not come within one of those exceptions, the courts should not refuse to enforce contractual rights arising under a contract, merely because the contract is associated with or in furtherance of an illegal purpose, where the contract was not made in breach of a statutory prohibition upon its formation or upon the doing of a particular act essential to the performance of the contract or otherwise making unlawful the manner in which the contract is performed.[105]

McHugh and Gummow JJ went on to quote the following passage from the judgment of McHugh J in Nelson:

[C]ourts should not refuse to enforce legal or equitable rights simply because they arose out of or were associated with an unlawful purpose unless: (a) the statute discloses an intention that those rights should be unenforceable in all circumstances; or (b)(i) the sanction of refusing to enforce those rights is not disproportionate to the seriousness of the unlawful conduct; (ii) the imposition of the sanction is necessary, having regard to the terms of the statute, to protect its objects or policies; and (iii) the statute does not disclose an intention that the sanctions and remedies contained in the statute are to be the only legal consequences of a breach of the statute or the frustration of its policies.[106]

105 Kirby J in Fitzgerald confronted directly the overlap between what he referred to as 'the construction point', being whether the relevant Act properly construed rendered the contract unenforceable; and the 'public policy point', being whether public policy would stand in the way of attempted enforcement.[107] He observed that 'obviously' issues raised by a consideration of whether the legislation by implication rendered the contract unenforceable overlapped with issues relevant to the resolution of the question whether the contract is unenforceable on public policy grounds.[108]

106 Addressing the public policy point, Kirby J said:

But behind the notion is something quite different from the foundation upon which the statutory construction objection rests. There, a court is simply giving effect to the expressed or imputed will of Parliament. When it comes to public policy, the court may inform itself by reference to what Parliament has declared to be illegal. However the fundamental rationale for withholding relief is one essentially of the court's self-regard. It will not (unless required to) lend its authority and assistance to a party seeking to invoke its processes in connection with illegal or otherwise seriously reprehensible conduct.[109]

107 Kirby J observed that the Court in Yango had rejected the proposition that any prohibited conduct would deny the parties' recourse to the courts. He went on:

It would be absurd if a trivial breach of a statutory provision constituting illegality, connected in some way with a contract or contracting parties, could be held to justify the total withdrawal of the facilities of the courts. It would be doubly absurd if the courts closed their doors to a party seeking to enforce its contractual rights without having regard to the degree of that party's transgression, the deliberateness or otherwise of its breach of the law and its state of mind generally relevant to the illegality. Similarly, it would be absurd if a court were permitted, or required, to consider the refusal of relief without careful regard to the relationship between the prohibited conduct and the impugned contract. Thus, different considerations may exist where the contractual rights being enforced arise directly from the illegality as distinct from those which arise only incidentally or peripherally. It is one thing for courts to respond with understandable disfavour and reluctance to attempts to involve them and their processes in an inappropriate and unseemly way effectively in the advancement of illegality and wrong-doing. It is another to invoke a broad rule of so-called 'public policy' which slams the doors of the court in the face of a person whose illegality may be minor, technical, innocent, lacking in seriousness and wholly incidental or peripheral to a contract which that person is seeking to enforce.[110]

108 Kirby J then quoted the passage from the judgment of McHugh J in Nelson which McHugh and Gummow JJ had also quoted and endorsed, and which we quoted earlier.[111]

109 Kirby J observed, as Devlin J and others had also, that the position would be different if there were a specific agreement to deliberately breach an Act.[112]

110 In conclusion, Kirby J referred to circumstances which might have led to a different result in the case of the driller, including performance of the contract in a way damaging to scarce resources of groundwater. He said:

To grant relief, in such circumstances, could affront the 'public conscience'. In such a case, to involve a court in the enforcement of the rights of the parties could be to involve it in upholding a seriously anti-social act which was illegal or at least gravely reprehensible.[113]

111 Finally, it is necessary to specifically refer to the two cases relied upon by CATCON before the trial judge and before us, being Holdcroft and Sami.

112 As indicated previously, Holdcroft concerned an attempt to enforce an agreement which was, in the words of the Court, 'fake',[114] 'a pure sham',[115] 'bogus',[116] and in a form designed to 'defraud the revenue'.[117] The Court found that the deception embodied in the 'fake' agreement sought to be enforced was 'integral to the structure of the agreement'.[118] Given these findings, it is hardly surprising that the Court refused to lend its aid to the claimants by granting relief. It is also noteworthy that one factor which was considered to be relevant in applying public policy so as to preclude recovery was that the consequences were 'not particularly disturbing' in that they did not involve significant loss to the claimants, who had already received more than 80% of what they had contracted for, or any 'gross windfall' for the other contracting party.[119]

113 Sami was a case where the plaintiffs sought declaratory and other relief against the Roads Corporation alleging that actions of the Roads Corporation which were alleged to be ultra vires, or in breach of a duty of care owed to the plaintiffs, had, in effect, destroyed their business. The claims made failed for other reasons, but at the conclusion of his judgment Vickery J briefly addressed a further reason why the plaintiffs could not succeed, being that the business they had conducted was not only illegal because the plaintiffs were conducting the business without a motor car traders licence which was required by s 7 of the Motor Car Traders Act 1986, but was also a business which they had been enjoined from continuing to operate. Vickery J said:

It follows from my findings that no part of the lost future earnings claimed by Mr and Mrs Sami are recoverable as damages by reason of the illegality of their conduct in operating their business, and their intention to continue to operate that business in the future in this manner, if they had not been enjoined from doing so and if the re-shelled motor vehicles could still be registered in this state.[120]

114 Devlin J in St John Shipping set out two principles. By the first, a contract entered into with the object of committing an unlawful act is unenforceable. By the second, a contract is unenforceable, irrespective of the intention of the parties, if it is prohibited by statute. CATCON disavows reliance upon the second principle, submitting that the first principle is to be applied without demonstrating that unenforceability of the contract is achieved by virtue of the statute.

115 There is support in the judgment of Devlin J for the position advanced by CATCON, in the following passage:

A significant distinction between the two classes is this. In the former class you have only to look and see what acts the statute prohibits; it does not matter whether or not it prohibits a contract; if a contract is deliberately made to do a prohibited act, that contract will be unenforceable. In the latter class, you have to consider not what acts the statute prohibits, but what contracts it prohibits; but you are not concerned at all with the intent of the parties; if the parties enter into a prohibited contract, that contract is unenforceable.[121]

116 However, it is clear from the principles set out by McHugh J in Nelson, which McHugh and Gummow JJ in Fitzgerald endorsed and which Kirby J also applied in that case, that it does matter in the first class of case whether the statute prohibits the contract. At the risk of repetition, McHugh J stated that there were two situations in which (leaving aside presently irrelevant exceptions) a court may refuse to enforce legal or equitable rights simply because they arose out of or were associated with an unlawful purpose:

(a) where the statute discloses an intention that those rights should be unenforceable; or

(b) where three conditions are met:

(i) refusing to enforce the rights is not disproportionate to the seriousness of the unlawful conduct; and

(ii) it is necessary, having regard to the terms of the statute, to refuse to enforce the rights in order to protect the statute's objects or policies; and

(iii) the statute does not disclose an intention that the sanctions and remedies it contains are to be the only legal consequences of breaching the statute or frustrating its policies.

117 Both alternative bases for refusing to enforce rights involve consideration of the terms of the statute and the question whether it intends that the rights not be enforceable.

118 The authorities canvassed also indicate that, while the principles enunciated by McHugh J have strong acceptance, they are not necessarily exhaustive. Kirby J in Fitzgerald countenanced cases where it would affront the public conscience to involve a court in enforcement of the rights, or involve it in upholding seriously anti-social conduct which was either illegal or gravely reprehensible. CATCON's argument in this case was of this public policy kind.

119 In that context, it seems to us that the authorities reviewed relevantly stand for the following propositions:

(1) A contract does not become unenforceable merely because something illegal is done in the course of its performance.

(2) Where enforcement is said to be precluded on grounds of public policy, the illegality contended for must be of real significance in relation to the subject matter of the contract which is sought to be enforced. It cannot be a matter which is incidental or peripheral to the real purpose or object of the transaction. The illegal purpose must go to the substance of the transaction.

(3) The principle which precludes recovery on the basis of public policy is directed at preventing an affront to the public conscience or involving the court in upholding seriously anti-social conduct which is illegal or gravely reprehensible.

(4) In the modern context, courts should be slow to nullify a bargain on the basis of what may be properly characterised as regulatory non-compliance.

St John Shipping, Fire and All Risks, Fitzgerald.

Application of the applicable principles here

120 CATCON's case here is that A1's proposed contractual arrangements with four of the 10 workers which it proposed to use on the site would have contravened statutes regulating taxation, superannuation and employment conditions, and that consequently A1 should not be permitted to recover the damages which it suffered as a result of CATCON's wrongful repudiation of its contract with A1, which contract was itself lawful. As the illegality issue was not pleaded, the judge could only visit this consequence on A1 if the asserted illegality was apparent 'on its face' or had been clearly and persuasively established. CATCON made no attempt to show that the principles enunciated by McHugh J in Nelson were satisfied, or that any particular statutory intention would require that the contractual arrangements be unenforceable. Instead, as noted, it based its argument entirely on public policy.

121 We have had to address the illegality issue at length because of the way in which CATCON argued the matter both at trial and on this application. Notwithstanding the length of the treatment, in our opinion CATCON's submissions in relation to illegality are entirely unfounded. We have reached this conclusion for the following reasons:

(1) The judge's conclusion that the four workers were independent contractors was open on the evidence, and was reached after a careful and detailed analysis of the relevant considerations. This is not a case where the asserted illegality, or more correctly the asserted proposed illegality, was apparent 'on its face' or was clearly and persuasively established. The foundation for the contention that there was illegality was a determination of what would have been the proper characterisation of the status of the four relevant workers. This was an issue which was arguable, on any view.

(2) The asserted proposed illegality was incidental or peripheral to the contract sought to be enforced. The relevant contract was for the construction of the tanks. It had no illegal object and it required no illegal act in its performance. The fact that A1 planned to perform the contract in a way which was said to breach tax, superannuation, and employment laws was incidental or peripheral to the contract, in the same way as a myriad of decisions on a commercial building project might breach relevant regulatory requirements.

(3) The judge's decision to permit enforcement is not capable of being characterised as involving the court in upholding any illegal act. As in Neal, in enforcing the contractual rights of A1 the Court is not upholding the lawfulness of A1's proposed arrangements with its workforce. There is no affront to the public conscience in enforcing the contract.

(4) Whilst CATCON distinguished St John Shipping and disavowed reliance on Devlin J's second principle, the principles overlap, and, in our view, the judge correctly characterised CATCON's contentions here as relevantly the same as those rejected in St John Shipping.

122 This case is quite unlike both Holdcroft and Sami. Unlike here, in Holdcroft the Court was asked to enforce an agreement which itself constituted a calculated and deliberate attempt to defraud the revenue. Unlike here, in Holdcroft precluding enforcement did not subject the claimant to an unacceptable loss or give the other party an unacceptable windfall. Unlike here, in Sami the plaintiffs sought to recover damages for loss of a business which they could not legally conduct, both because it was illegal to do so under the Motor Car Traders Act and because they had been enjoined from doing so.

123 In our opinion, leave to appeal on this proposed ground should be refused.

124 The liability judgment, which was upheld in the Court of Appeal liability judgment, found that a contract had been entered into in July 2010 whereby A1 agreed to construct two clarifier tanks at a cost of $370,000 plus GST per tank. It was a term of the agreement that the construction period was 12 weeks, and that the construction period would be extended for delays caused by inclement weather, although costs associated with such weather delays would not be claimable.

125 At the conclusion of the assessment trial A1 advanced its claim to damages on two alternative bases. They were as follows:

Cost to perform contract as assessed by Quantity Surveyor, Mr Rubira, Third Report $457,100

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

Cost to perform in accordance with Report No 2 by Quantity Surveyor, Mr Rubira $480,400

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

126 Option A represented a costing by the quantity surveyor engaged by A1 as an expert witness for the purpose of the proceeding, Mr Rubira, calculated in accordance with the mode of operation and remuneration of labour described in the evidence of Mr Peter Geaboc. Option B was a similar calculation by Mr Rubira but using figures based upon the usual costs in the relevant market, rather than Mr Geaboc's evidence of what he would have done.

127 CATCON's position in the assessment trial, leaving illegality to one side, was that A1 could not have performed the contract within the 12 weeks allowed, that it would inevitably have made a loss on the project, and that accordingly damages should be assessed at zero.

128 After setting out A1's claim and the substance of CATCON's response, the judge turned to the first issue in contention between the parties which was the scope of the works which A1 would have been obliged to carry out. There were two controversial issues in this regard. The first was whether A1 was required to construct a concrete apron, and the second was whether the work required by A1 was as set out on the plans initially provided to it or was as set out on what were described as the 'Revision 2 drawings' which were later given to it.

129 By the end of the hearing, counsel for A1 had conceded on the issue of the Revision 2 drawings. The proper allowance which ought to have been made for that matter was one of the issues addressed in the application for leave to appeal.

130 The judge found that the concrete apron was not part of A1's scope of works.[123] There was no contest before us in relation to that finding.

131 CATCON contended before the trial judge that the commencement date for the work ought to be 26 July 2010. The trial judge rejected this contention on the basis of his earlier finding in the liability judgment and the Court of Appeal liability judgment.[124] His Honour observed:

Accordingly, [counsel for CATCON's] submission that the meeting of 26 July 2010 did not entail the parties agreeing to extending the start date for A1's work until as late as 9 August must be rejected.[125]

132 As indicated, the focus of the dispute before the trial judge in relation to the assessment of damages was the time it would have taken A1 to complete the work. A great variety of circumstances were relied upon by CATCON before the trial judge in support of a contention that A1 would have been delayed well beyond the 12 week contract period. Among the matters relied upon in that regard were a contention that A1's capacity to make up time would be limited by the terms of what was said to be the applicable enterprise bargaining agreement, the fact that the site was closed on Sundays, and the fact that Mr Peter Geaboc's religious principles would preclude him working on Saturdays. In relation to those matters, the judge found:

The findings which I have made as to the nature of the proposed relationship between A1 and its workers means that I must reject the contentions on behalf of CATCON and by its witnesses that these matters must be judged by reference to A1's enterprise bargaining agreement with the CFMEU. A1 would have had flexibility based on dispensing with rostered days, working through breaks and so forth. Nevertheless, nothing has been urged which would have relieved A1 from the constraints on weekend work deriving from the sites being closed on Sundays and Mr Geaboc's religious principles precluding A1 from working on Saturdays.[126]

133 The trial judge then turned to the issue of days lost for bad weather. He firstly observed that CATCON ought to have been in an excellent position to produce detailed evidence as to the days lost on the site during the relevant period due to bad weather, but, for reasons which it had not explained, it had failed to do so.[127]

Despite the above observation, the defendant's case is that 10 days, that is, two working weeks, would have been lost to bad weather. (T200, L4-5). This represents the same loss which Mr Geaboc agreed was reasonable to allow for. In his witness statement he said: 'I had allowed 10 weeks for the work to be done, and an extra two weeks for delays, including days for inclement weather'. (CB 833, paragraph 40). In light of this rare accord between the parties, I will proceed on that basis.[128]

135 The judge then turned to the expert evidence which had been led. As indicated, A1 had engaged a quantity surveyor, Mr Rubira, for the purpose of giving expert evidence on the assessment of damages. CATCON had also engaged an expert quantity surveyor, Mr Lampard. The two experts had each written initial reports and had then written further reports responding to matters raised by the other expert. They each gave evidence. The judge addressed the evidence given by the two experts.[129] In the course of that treatment the judge referred to Mr Rubira's second report in which he had excluded the extra work involved in the Revision 2 drawings. The judge said that this 'represents some 718 hours'.[130] The judge also specifically referred to Mr Rubira's third report which, he observed, was 'the basis for the current formulation of [A1's] claim'.[131]

136 In referring to Mr Lampard's reports the judge observed that the meteorological information upon which Mr Lampard relied showed that there had been 'six days of heavy rain' during the relevant period.[132]

137 The judge preferred the evidence of Mr Rubira to that of Mr Lampard. In that context he made specific reference to Mr Rubira's third report. The judge said:

Mr Rubira's opinions, at least in the third report, were based upon the contracting arrangements proposed by Mr Geaboc and accepted by me as being a proper basis for the assessment of damages. Accordingly, I accept Mr Rubira's report and its conclusions as to time generally in preference to Mr Lampard's views.[133]

138 It will be necessary to refer in some detail to Mr Rubira's third report when addressing the issues raised on the application for leave to appeal on this proposed ground.

139 One of Mr Geaboc's sons had given evidence in the assessment trial about a document he had prepared in 2010 assessing the time and resources necessary to complete the proposed work. The judge observed that that document indicated that the required time 'plainly substantially exceeded the 12 week estimate' given by his father. The judge quoted a passage from Mr Geaboc's son's cross-examination on this issue where he had said that his document had been prepared on 'very, very, very conservative time frames'.[134] Mr Geaboc's son's document was one of the matters relied upon before us.

140 One matter which was relied upon by CATCON as being a cause of delay was what was described as 'tool box meetings'. The judge rejected that.[135] No complaint in relation to that was made before us.

141 The judge's eventual conclusion on the issue of the period which should be allowed for construction was expressed as follows:

1. Nevertheless, the 12 week period proposed by Mr Geaboc and accepted by Mr Rubira is, in my view, an underestimate. First, Mr Rubira gave his estimate on the basis of the exclusion of the Revision 2 drawings. This was reflective of the case being made by A1 but in his closing submissions, Mr Clarke conceded that the Revision 2 drawings were to be regarded as part of A1's work. According to Mr Rubira's second report, the Revision 2 drawings would add some 718 additional hours of work for A1's team. (CB 421). Granted that Mr Ben Geaboc described his own preliminary analysis of time resources as being excessively conservative, it indicated an additional period of time required for the construction to be completed.
2. Doing the best I can, I would conclude that the construction period to be allowed should be 12 weeks. I am conscious that this is a much speedier result [than] CATCON itself achieved. As Mr Clarke observed, A1 specialises in this sort of work. Moreover, A1 proposed undertaking the work using a far more flexible contracting regime with sub-contractors rather than workers under the terms of the Enterprise Bargaining Agreement than did CATCON.[136]

142 Paragraphs [124] and [125] were central to the submissions made to us on behalf of CATCON. First, it was submitted that the judge had contradicted himself in the two paragraphs in that he found that the 12 week period proposed by Mr Geaboc and accepted by Mr Rubira was an underestimate, and then concluded that the construction period to be allowed should be 12 weeks. Secondly, particular reliance was placed upon the judge's reference to Mr Rubira's second report which the judge said indicated that the Revision 2 drawings would add some 718 hours of additional work.

143 A significant issue in the assessment trial concerned the construction joints in the two tanks. The judge addressed that issue and concluded that the issue of construction joints was 'not an obstacle to A1's success in obtaining a substantial assessment of damages in its favour'.[137] Only passing reference was made to this issue before us.

144 The judge then turned to another matter relied upon by CATCON as being an inevitable cause of delay which was the fact that A1 had not promptly ordered the necessary formwork, and, in particular, the formwork which would have been required by reason of the Revision 2 drawings. The judge accepted that this issue 'had the potential to create delay'.[138] He concluded:

I therefore accept that lack of preparation by A1 as to this and related matters would have constituted an embarrassment to its performance of the work at Aldinga. I do not accept, however, that these issues would have constituted an absolute bar to performance or created such delay as to destroy any profitability in the contract for A1.[139]

The lack of a quantified allowance for this factor was the subject of submissions before us.

145 Before the trial judge it was contended by CATCON that any damages suffered by A1 ought to be reduced by profit derived on other projects which A1 had undertaken at around the same time. The judge rejected that contention.[140] It was not submitted before us that he had made any error in that regard.

146 The judge finally turned to a contention put on behalf of CATCON that delays experienced by A1 would not only have increased A1's costs and thereby reduced its profit, but (with the exception of delays for inclement weather) would also have rendered A1 liable to CATCON for damages.

147 The judge first observed that there was no contractual entitlement to liquidated damages.[141]

148 CATCON had contended that it would have been contractually entitled to the loss which would have flowed in the ordinary course as a result of A1's contractual breach constituted by its failure to complete within 12 weeks (extended by delays due to weather). CATCON had called evidence of its weekly costs in maintaining the entire site. The judge's conclusion was that CATCON had failed to prove that the project as a whole would have been delayed by any delay on A1's part and had failed to prove that the additional costs claimed would have been losses flowing in the ordinary course from any such delay by A1.[142] This was an issue of contention before us.

149 The judge's conclusions on the assessment of damages were as follows:

1. I have generally accepted the evidence and the case advanced by A1. The appropriate option to adopt from the two advanced by A1 is Option A representing a profit based on A1's cost to perform in accordance with its own system.
2. I have explained why the various matters urged by [counsel for CATCON], on the balance of probabilities, ought not be accepted as barring the recovery of damages based upon this calculation. Nevertheless, many of these considerations did represent significant risks to A1's profitable performance. Even if I have not accepted any one of them in itself as being more probable than not, it must be accepted that the chances of matters proceeding exactly according to plan without any of the risks manifesting themselves in whole or in part as obstacles or delays, is in its totality less than probable. Without being able to make a specific finding as to precisely what matters would have arisen to create delay and possible counter-damages liabilities to CATCON or increases in costs to make deadlines and so forth, I believe it probable that at least some such matters would arise. Doing the best I can, I believe there should be an additional allowance by way of reduction in A1's likely profit, based on the contingency described in the sum of $100,000.
3. As a result, I assess A1's damages in the sum of $176,342.13 based on Mr Rubira's third report at CB 3189 with the $100,000 contingency reduction.[143]

150 The 'sub-grounds' set out in CATCON's application for leave to appeal in relation to this proposed ground are as follows:

(a) The learned judge erred in disregarding his own finding that 12 weeks was an underestimate.

(b) The learned judge erred in disregarding his own finding that bad weather would have delayed the work by two weeks.

(c) The learned judge erred in disregarding his own finding that A1 would have been obliged to execute the work shown on the Revision 2 drawings, which would have required an additional 718 man hours work.

(d) The learned judge erred in failing to pay any or any sufficient regard to A1's time analysis of A1's own evidence as to how long it would have taken A1 to perform all the tasks identified on its own resource schedule.

151 In the applicant's written case the apparent inconsistency between paragraphs [124] and [125], quoted earlier, was relied upon. It was submitted that the conclusion in paragraph [125] that the construction period to be allowed should be 12 weeks could not stand in the face of what was said to be the 'correct conclusion' in [124] that 12 weeks was an underestimate.

152 In relation to weather, in the applicant's written case CATCON submitted that Mr Rubira had acknowledged that his 12 week estimate had not included an allowance for bad weather. It was then submitted that the judge had determined to proceed on the basis that there would have been two weeks delay by reason of inclement weather. It was submitted that notwithstanding that conclusion the judge had failed to take any or any sufficient account of the two weeks delay for inclement weather.

153 In relation to the Revision 2 drawings it was submitted that the judge had found that the extra work involved in the Revision 2 drawings was 718 hours. It was submitted that the judge had taken that course by accepting Mr Rubira's conclusions on that issue. It was then submitted that using Mr Rubira's estimate of A1's weekly costs, being $30,516, the additional 718 hours (representing 1.8 weeks) would have resulted in extra costs to A1 of $54,928, to which should be added damages which CATCON would have recovered for 'culpable delay' of $70,431 per week, being $126,775 for 1.8 weeks.

154 CATCON in its written case relied upon a document which it had prepared using the software 'Microsoft Project Gantt' which constituted, so it was submitted, a detailed analysis of how long the work would have taken assuming the accuracy of the evidence of Mr Peter Geaboc. It was submitted that on the basis of that analysis the judge ought to have concluded that A1 would have been 4.4 weeks late in completing the contract. In this context it was also submitted that the judge had not had regard, or proper regard, to the evidence given by Mr Geaboc's son of the analysis which he had performed.

155 CATCON submitted that what the judge had done, namely accepting Option A of the claim as eventually articulated by A1's counsel and then deducting a sum of $100,000, was erroneous in two respects.

156 The first respect in which that approach was said to be erroneous was that the judge had made specific findings concerning delay and yet he had not quantified those findings by calculating the additional cost that would have been incurred. In the written case the two specific matters relied upon in this regard were what were said to be the findings concerning inclement weather and the Revision 2 drawings.

157 The second error contended for was that the contingency of $100,000 was in any event 'manifestly inadequate'. The applicant's written case states:

1. Secondly, the contingency of $100,000 is manifestly inadequate. The judge was constrained by the evidence to find, and should have found:

1. per the applicant's analysis of the respondent's own evidence, that the respondent would have been 4.4 weeks late even on its own estimates; 2. that that delay would have cost the respondent $30,156 x 4.4 = $132,686 to field its own team during that delay;

1. 2.4 weeks of that delay would have been culpable (4.4 wk delay minus 2 wks for inclement weather), such that the respondent would have been liable to the applicant for $70,431 x 2.4 = $169,034.40 by way of damages;

1. that the respondent's own estimates were based on the Revision 1 work, and that the additionally required Revision 2 work would have cost the respondent an additional $181,703; and 2. those factors alone would have added $132,686 + $169,034.40 + $181,703 = $483,423.40 to the respondent's expert's estimate.

158 In oral submissions counsel for CATCON submitted that CATCON did not say the judge was wrong to accept the evidence of Mr Rubira. CATCON's complaint was said to be that the judge had failed to 'intellectually engage with' the consequences of his own findings and with the uncontested or clearly established facts. In that context the 'Microsoft Project Gantt' document was particularly relied upon and an A3 copy of that chart was handed up. Upon being questioned, counsel for CATCON informed the Court that the document had not been put to either of the expert witnesses or to any of the other witnesses at the trial, and that it had been produced for the first time in the course of final submissions.

159 In oral submissions counsel for CATCON emphasised what was said to be the inconsistency between paragraphs [124] and [125], what was said to be the trial judge's finding that 718 hours of extra work were required by the Revision 2 drawings, what was said to be the trial judge's finding that there would have been two weeks delay for weather, and what was said to be the trial judge's wrongful rejection of CATCON's claim that it would have been entitled to recover damages for delays unrelated to weather.

160 In the course of oral submissions a further new submission was made. It does not appear in the written case, and is not referred to in the Reasons.

161 Delay referable to preparation of formwork had been referred to at trial, and the judge dealt with that in the Reasons. Before us it was submitted that a further provision for delay should be made. It was submitted that this arose out of the fact that Mr Peter Geaboc had maintained that the scope of A1's work did not include the Revision 2 drawings. It was submitted that the likelihood is that it would have taken until the middle of August 2010 for that error to be identified and corrected, and that that would have caused delay.

162 A1 in its written case initially emphasised that the assessment of damages in this case involved a substantial element of discretionary judgment and that an appellate court should be particularly reluctant to interfere with such a finding. Lord Wright's judgment in Davies v Powell Duffryn Associated Colleries Ltd[144] was among the authorities cited in that respect.

163 A1 submitted that the key to the trial judge's analysis is to be found in paragraph [149]. The judge found that it had not been proved that any particular issue would have caused delay beyond the 12 weeks. He had identified a number of potential causes of delay, and he had concluded that it was probable that some circumstance or circumstances would have arisen and would have caused delay. It was submitted that the allowance the judge made of $100,000 was more than adequate to cover this contingency.

164 A1 in its written case emphasised that it was not appropriate to identify a particular potential cause of delay and then simply add time on to the contract period. In this regard A1 particularly relied upon the finding of the trial judge that A1 had 'flexibility', beyond that which would have existed if it had had to comply with the enterprise bargaining agreement with the relevant union (CFMEU) which would have enabled A1 to make up time by working rostered days off and by working through breaks. It was submitted that there was no clear evidence of the days which would have been lost for bad weather, in circumstances where it seemed likely that CATCON would have documented that matter.

165 In relation to CATCON's claim that it would have recovered damages for delay other than delay caused by inclement weather, in its written case A1 submitted that CATCON had failed to produce any determinations from the superintendent on the site granting extensions of time, or to otherwise explain precisely what had happened on the site, so as to justify a conclusion that relevant delays would have been incurred to the project as a whole if A1 had been delayed in its work. It was submitted that the judge's conclusion that he had not been persuaded that any particular delay would necessarily have been incurred was correct. The applicant referred to evidence which had been given that there had been extensions of time granted to the head contractors of 19 days, 60 days and 59 days, for reasons unrelated to the work which A1 would have undertaken.

166 In oral submissions counsel for A1 submitted that what was said to be an inconsistency between paragraphs [124] and [125] was not an inconsistency when read in the context of the full judgment, and particularly paragraph [149]. The trial judge had accepted Mr Rubira's 'construction period' of 12 weeks. But, as he makes clear throughout the Reasons, and particularly in paragraph [149], there were a number of risks to A1's timely performance, and, whilst the judge had not concluded that any particular one was more probable than not, the probability was that the project would not have been completed without any of these risks manifesting themselves. Thus, 12 weeks was the appropriate starting point and the $100,000 reduction for contingencies represented the judge's analysis of a proper allowance for these risks.

167 In relation to the Revision 2 drawings it was submitted that Mr Rubira had not adopted 718 hours as the time required for the additional work. Rather, Mr Rubira's third report, which the judge had accepted, made a different allowance in relation to the Revision 2 drawings which had been reflected in the damages awarded.

168 In relation to the contention that CATCON would have recovered damages for delay, it was submitted that there was simply no evidence that delay to the project as a whole would have occurred even if the sub-contractor had been delayed, and reliance was placed upon the evidence that CATCON had experienced significant unrelated delays.

169 Finally, in relation to the new contention that there should have been an allowance for a further delay because of Mr Peter Geaboc's erroneous view that the scope of works did not include the Revision 2 drawings, it was submitted that there had been no evidence on this issue, and that, in any event, the error for as long as it persisted would not have prevented other work being done, as was graphically demonstrated by the Microsoft Project Gantt document which CATCON itself had produced.

170 In Davison v Kempson[145] this Court considered the nature of the review that an appellate court is to undertake where the relevant issue required the trial judge to find facts and to then exercise a value judgment. In deciding whether a finding of fact is erroneous, the appellate court conducts a 'real review' of the evidence and of the trial judge's reasons. When an appellate court addresses the value judgment, being a matter upon which reasonable minds may differ, the principles which apply to appellate review of discretionary decisions are engaged. A decision on the assessment of damages potentially involves findings of fact and the exercise of judgment in this way, as Lord Wright explained in Davies in the passage relied upon by A1. Lord Wright's analysis is entirely consistent, in our view, with this Court in Davison.

171 In this case there were elements of the damages assessment which required factual findings. Largely, those matters were dealt with by the judge by his acceptance of Mr Rubira's evidence. No issue is raised on this application concerning that acceptance. CATCON itself relies on Mr Rubira's evidence and the judge's finding in relation to that evidence. No submission was made to us that Mr Lampard's evidence should have been accepted. His reports were not included in the application book.

172 Beyond that, A1 contended the relevant issues were matters of judgment. CATCON contended the relevant issues were issues of fact and quantification.

173 It is necessary to consider separately each of the relevant issues raised to determine how that issue is to be appropriately dealt with on appeal, and what should be the consequent outcome.

174 The relevant issues are: the asserted contradiction between paragraphs [124] and [125] of the Reasons, weather, the Revision 2 drawings, the Microsoft Project Gantt document, the analysis by Mr Geaboc's son, and the issues of construction joints, formwork, and contractual damages.

175 It is difficult to understand how paragraphs [124] and [125] of the Reasons are consistent with each other.

176 Counsel for A1 submitted, by reference to the Reasons as a whole and to paragraph [149] in particular, that the judge considered 12 weeks to be the appropriate starting point, but that he found allowance would then have to be made for a variety of circumstances which, in aggregate, meant there would inevitably have been some delay, rendering 12 weeks an underestimate in that sense.

177 But, the judge does not say that at paragraphs [124] and [125], although he does explain his approach in that way at paragraph [149].

178 CATCON did not submit that 12 weeks was not the appropriate starting point. It was the agreed contractual construction period. CATCON's submission was that the judge had not properly analysed and quantified the causes of delay which he had identified, or which he ought to have identified, which would have extended the construction period beyond 12 weeks, by at least 4.4 weeks. We turn then to those causes of delay.

179 It is necessary to reiterate what the judge said about the basis upon which he would 'proceed' in relation to weather. He said that CATCON's case was that 10 days would have been lost to bad weather. He then observed that Mr Geaboc in his witness statement had said that in planning the work for a construction period of 12 weeks he had 'allowed ten weeks for the work to be done, and an extra two weeks for delays, including delays for inclement weather'.

180 Mr Geaboc's evidence, to which the judge referred, about his allowance for delays including weather would not mean simply adding two weeks to the 12 weeks. Mr Geaboc said his two week allowance was already in the 12 weeks.

181 A matter of significance in this and other relevant contexts is the judge's finding that A1 had the 'flexibility' to make up time lost by dispensing with rostered days off, working through breaks, and by other means which would not have been available had the enterprise bargaining agreement applied.

182 The judge referred to CATCON's 'case'. While CATCON's case may have been that 10 days would have been lost to bad weather, its expert, Mr Lampard, said that the information he had showed that there had been six days of heavy rain during the relevant period. Mr Lampard did also say that there can be consequential delay beyond the days of rain themselves as a result of dislocation. There was an unexplained failure by CATCON to produce records of the weather delays actually experienced on the site.

183 The assumption made in CATCON's submissions that what the judge said required him to simply add two weeks to the 12 weeks provided for in the contract that was repudiated cannot be accepted. Some allowance had to be made for delay caused by weather. The extent of that allowance involved an exercise of judgment. In isolation, the allowance would have to be something less than two weeks because Mr Geaboc's evidence was that the entire two weeks was already in his 12 week estimate, and because of the capacity which the judge found A1 did have to make up time.

184 In relation to this matter CATCON relied upon what were said to be the judge's own findings, and upon the evidence of Mr Rubira, A1's expert. It is necessary first to analyse Mr Rubira's evidence in relation to the Revision 2 drawings.

185 As indicated, there was an issue between the parties as to whether two aspects of the project, the concrete apron and the Revision 2 drawings, were within the scope of work which A1 had contracted to perform.

186 When Mr Rubira prepared his second report, which was dated 11 December 2015, he identified differences between his own first report and that of CATCON's expert, Mr Lampard. In the course of that process Mr Rubira made calculations removing the apron, which Mr Lampard had included and costed on the basis that it would have required 180 hours work, and also removing the Revision 2 drawings, which Mr Lampard had costed on the basis that it would have required 718 hours work. When Mr Rubira was cross-examined about these issues he said that the figures he had used for the apron and the Revision 2 drawings as set out in his second report were Mr Lampard's figures. He said: 'I'm not adopting them'.

187 Mr Rubira returned to the issue in his third report, dated 19 December 2016. In this report he revised some of his earlier cost estimates. Of particular relevance in this context is section 7 of that report headed 'Cylinder vs Cone'. The question which Mr Rubira records that he was asked to address was the following:

If the cylinder (as set out in the Revision 2 drawings) rather than the cone (as set out in the Revision 1 drawings) was held to be appropriate drawing, what impact would that have (if any) on your assessment of the cost?

188 Mr Rubira attached to his third report an appendix in which he tabulated the results of his analysis in relation to the question asked. He concluded the relevant section in the body of his report as follows:

Assuming Mr Lampard's quantities are correct and are based on Revision 2 drawings and by calculating the difference between Mr Lampard's quantities and my quantities, I estimate the additional cost for the Revision 2 drawings excluding the Apron Slab would be in the order of $8,000.

189 When one goes to the appendix, the relevant calculation is set out. The document is marked up so as to show the alterations which Mr Rubira had made to Mr Lampard's estimate. One of the alterations is that the 718 hours is crossed out. The appendix calculates a total cost of $8,020.60 for the Revision 2 drawings.

190 Mr Rubira was asked about his treatment of this issue in his third report in the course of his cross-examination. When asked to specifically identify the differences between his estimate of the cost and Mr Lampard's estimate, he said that whilst he had assumed that Mr Lampard's quantities were correct, the rates he would use would be lower, and that he would have to go away and re-do the calculation to produce a precise figure for the difference between his estimate and Mr Lampard's.[146] The matter was stood down so that Mr Rubira could go back to his office and produce the comparison which he said he was able to do. When the hearing resumed Mr Rubira produced a revised version of the relevant appendix to his third report. Under the revised version the cost of both the Revision 2 drawings and the apron is estimated by Mr Rubira at $18,800. The component of that figure referable to the Revision 2 drawings is $6,557.[147] Counsel for CATCON confirmed that that was the case:

So you're saying that the additional cost of the Rev 2 drawings is $6,557? - - - Yes.

The precise figure set out on the revised appendix was $6,557.87.[148]

191 He was then asked about the additional time that his estimate would equate to, and the following interchange occurred:

[Mr Rubira]: If I make the assumption of $6,558 divided by my composite rate of $58.64 an hour, it would equal 111 hours.

[Counsel for CATCON]: 111 hours. I was going to say it's something like that, yes. So for a gang of 10 men, we're talking about a day, a day and a half maybe, something like that?

[Mr Rubira]: Yeah, probably. It would be under a day and a half.

[Counsel for CATCON]: It is about a day and a quarter, roughly isn't it, something like that?

[Mr Rubira]: Yes.[149]

192 The significance of the $6,557.87 is revealed when one refers back to A1's Option A and Option B claims. Both Option A and Option B included a reduction of $6,557.87 for 'revision to drawings'. Obviously, this is a reduction for the additional cost of the Revision 2 drawings in accordance with Mr Rubira's third report, his evidence in cross-examination, and with the revised appendix which he produced after the matter had been stood down. That additional cost represented 111 hours of work, or approximately a day and a quarter for A1's gang of 10 men.

193 On the basis of Mr Rubira's evidence the correct allowance for the Revision 2 drawings was $6,557.87.

194 The judge accepted Mr Rubira's conclusions, as set out in his third report.[150] Further, in adopting Option A and assessing damages at $176,342.13 the judge made the allowance of $6,557.87 for the Revision 2 drawings which Mr Rubira in his evidence had said was the appropriate allowance to be made.

195 However, the judge also made reference to, and apparently relied upon, the reference made by Mr Rubira in his second report to Mr Lampard's estimate of the work required in the Revision 2 drawings, being 718 hours.[151] CATCON bases its submissions in relation to the Revision 2 drawings on these passages in the Reasons. But as the above analysis shows, the evidence on this issue was clear, and the allowance for the Revision 2 drawings was made in the damages assessment. The apparent inconsistency in the Reasons cannot lead to a different outcome. Once Mr Rubira's evidence is accepted, the correct allowance is the one the judge made.

196 The application book contained a document at tab 10 (and it was referred to as the 'tab 10 document' in oral submissions) which set out a computer generated construction program commencing on 16 August 2010 and concluding on 2 December 2010. We were told the document had been produced using software called 'Microsoft Project Gantt'.

197 An enlarged version of the tab 10 document was handed up during the course of the hearing before us. Counsel for CATCON also handed up a similar document which set out a construction program beginning on Monday 23 August 2010 and ending on Friday 14 January 2011. It was said that these documents were based upon evidence given in the assessment trial.

198 The documents each contain over 60 items. Each item has a 'task name', a duration, start and finish dates, and a time line. The time lines are set out in a sequence implying dependencies on what is sometimes called the 'critical path'.

199 There are clearly a large number of facts and assumptions which underpin the documents, but they are unexpressed. The documents make no reference to any evidence given in the assessment trial. They are documents of the kind produced by construction programmers.

200 Counsel for CATCON informed us that neither version of the Microsoft Project Gantt document had been put to either of the experts or to any of the other witnesses during the trial. The tab 10 document had been relied on in the course of final submissions but the trial judge made no reference to it in his Reasons other than a reference to a conclusion which counsel for CATCON had submitted ought to be drawn based upon that document.[152]

201 The submission that the judge ought to have acted upon, and that this Court ought to now act upon, the computer generated tab 10 document should be rejected. The tab 10 document itself gives no indication of the evidentiary basis of the matters which it sets out. In a case where expert evidence was given in relation to the issue of what period was required for the construction, and where evidence was given on that issue by other witnesses, it is, in our view, simply untenable to produce a document of this kind in final submissions, or on appeal, and submit it forms a proper basis for any conclusion.

202 CATCON submits that the judge failed to pay proper regard to the evidence of Mr Peter Geaboc's son and the analysis which he performed in 2010 of the time and resources required for the contract work.

203 The trial judge referred to the evidence of the analysis in his Reasons and he quoted the relevant cross-examination. That evidence was one of the reasons why the judge concluded that Mr Geaboc's 12 week estimate (which included two weeks of delay for weather and other reasons) was an underestimate. But the judge also described the son's analysis as 'excessively conservative'. This was clearly an acceptance of what the son had said in cross-examination ('very, very, very conservative'). Unless the evidence in cross-examination were rejected, the son's estimate had to be treated as conservative, as the judge did. There is no proper basis upon which this Court should reject the trial judge's conclusion on that issue.

204 The judge recognised that there were other issues which could have caused delay, including the question of the construction joints and the issue of possible delays in the formwork. Further, whilst he found that CATCON had not proved it would have been entitled to contractual damages against A1 for delays unrelated to weather, the judge did recognise in his eventual conclusion that there remained a risk in that regard. In our view the judge found that these matters represented risks, rather than established facts. We consider that he was correct to do so. Allowance for these risks required the exercise of judgment.

205 The suggestion made to us that provision ought to have been made for a further delay as a result of Mr Peter Geaboc's wrongful view that the Revision 2 drawings were not included should be rejected. That proposition was not put to any of the witnesses at the trial or to the trial judge.

206 The trial judge adopted A1's 'Option A' calculation and took $100,000 off the claimed figure for contingencies. The claimed figure included Mr Rubira's reduction for the Revision 2 drawings. Thus, a reduction for the Revision 2 drawings was made before the further reduction of $100,000.

207 Allowance had to be made for delays as a result of inclement weather. This allowance had to be less than two weeks.

208 In addition to the weather allowance, some allowance had to be made for other risks including the construction joints, the possibility of formwork delays, and the possibility of contractual damages for delays unrelated to weather.

209 The allowance of $100,000 represents approximately 3.3 weeks of A1 costs. As the Revision 2 drawings allowance ($6,557.87) represents approximately 1.25 days, the total delay implicit in the judge's assessment, solely in terms of A1's costs, is approximately 3.5 weeks. In total, this allowance is not greatly less than the 4.4 weeks which CATCON submitted was the delay the judge was 'constrained by the evidence to find'. CATCON relies in that respect upon an allowance of 718 hours (1.8 weeks) additional work in relation to the Revision 2 drawings based upon Mr Rubira's evidence. But Mr Rubira's evidence, upon analysis, does not support the 718 hour (1.8 weeks) figure which CATCON uses. His evidence was that 111 hours (1.25 days) was what was required.

210 CATCON submitted that 2.4 weeks of the 4.4 weeks would have been 'culpable delay' as to which A1 would have been liable for damages. The trial judge's analysis of the position concerning the risk of a liability for contractual damages involved a matter of judgment, with which we would not interfere. He has included it within his $100,000 reduction.

211 Upon analysis, CATCON's complaints as to the damages assessment concern matters which call for the exercise of judgment on issues as to which reasonable minds might differ. No error of the kind warranting intervention by this Court has been demonstrated. In our opinion, the judge's assessment was reasonable and we would not interfere with it.

212 The proposed ground concerning time was arguable and leave to appeal should be granted. For the reasons given the appeal should be dismissed.

[1] A1 Quality Concrete Tanks Pty Ltd v Civil and Allied Technical Constructions Pty Ltd [2014] VCC 1239 ('the liability judgment').

[2] Civil and Allied Technical Constructions Pty Ltd v A1 Quality Concrete Tanks Pty Ltd [2015] VSCA 75 ('the Court of Appeal liability judgment').

[3] A1 Quality Concrete Tanks Pty Ltd v Civil and Allied Technical Constructions Pty Ltd [2017] VCC 1320 ('Reasons').

[4] [1957] 1 QB 267 ('St John Shipping').

[5] The liability judgment [84]-[125].

[6] The Court of Appeal liability judgment [38] n 27.

[7] A reference to the principles dealt with by the High Court in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 ('Anshun').

[8] A reference to the principles dealt with by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 ('Aon').

[9] [2000] QCA 396; [2001] 2 Qd R 381 ('Holdcroft').

[15] [1947] NSWStRp 72; (1947) 48 SR (NSW) 243.

[16] Holdcroft [2000] QCA 396; [2001] 2 Qd R 381, 387, quoting Staniland v Kentucky Homes (Unreported, New South Wales Court of Appeal, Kirby P, McHugh and Clarke JJA, 2 December 1987) 12.

[17] Knowles v Fuller [1947] NSWStRp 72; (1947) 48 SR (NSW) 243, 245 (citations omitted).

[20] Ibid, quoting Edler v Auerbach [1950] 1 KB 359, 371 (Devlin J).

[30] [2008] VSC 377; (2008) 51 MVR 118 ('Sami').

[39] [2011] FCA 366; (2011) 214 FCR 82.

[40] The indicia were set out by the trial judge at [39] and [40] of the Reasons.

[42] The summary is referred to at Reasons [45] and [73].

[45] Ibid [71], quoting O'Kelly v Trusthouse Forte plc [1984] QB 90, 120-1 (Fox LJ).

[53] [2013] FCCA 1097 ('Linkhill').

[76] [2013] FCAFC 3; (2013) 209 FCR 146.

[77] The legislation said to have been contravened was the Taxation Administration Act 1953 (Cth) - requiring employers to withhold tax from wages, the Superannuation Guarantee (Administration) Act 1992 (Cth) - imposing the superannuation guarantee charge, the Fair Work Act 2009 (Cth) - providing for awards and enterprise agreements and prohibiting representations to the effect that employees are independent contractors, and the Workplace Injury Rehabilitation and Compensation Act 2013 - requiring employers to pay premiums.

[78] [1908] HCA 40; (1908) 6 CLR 208 ('Payne').

[81] [1940] HCA 21; (1940) 63 CLR 524 ('Neal').

[86] [1957] 1 QB 267, 283.

[89] [1832] EngR 405; (1832) 3 B&Ad 221.

[90] St John Shipping [1957] 1 QB 267, 286, quoting Wetherell v Jones [1832] EngR 405; (1832) 3 B&Ad 221, 225.

[94] [1966] VicRp 73; [1966] VR 513 ('Fire and All Risks').

[97] [1978] HCA 42; (1978) 139 CLR 410 ('Yango').

[99] (1995) 184 CLR 538 ('Nelson').

[100] [1997] HCA 17; (1997) 189 CLR 215 ('Fitzgerald').

[106] Ibid 230, quoting Nelson (1995) 184 CLR 538, 613.

[107] Fitzgerald [1997] HCA 17; (1997) 189 CLR 215, 236.

[114] Holdcroft [2000] QCA 396; [2001] 2 Qd R 381, 382.

[120] Sami [2008] VSC 377; (2008) 51 MVR 118, 154 [146].

[121] St John Shipping [1957] 1 QB 267, 283 (emphasis added).

[122] The two Options set out substantially reproduce the trial judge's description of the claim as finally put by counsel on behalf of A1 at Reasons [3] and [4].

[144] [1942] AC 601, 616 ('Davies').

[145] [2018] VSCA 51 [61]-[73] ('Davison').

[146] Transcript of Proceedings (8 August 2017) 720-4.

[148] The documents the witness was addressing at Transcript of Proceedings (8 August 2017) 727-8 were forwarded to the Court after the hearing. The relevant revised appendix contains the $6,557.87 figure.

[149] Transcript of Proceedings (8 August 2017) 728-9.

[150] Reasons [122], [148], [150].

[152] Ibid [100]. The final sentence refers to a submission that on Mr Geaboc's own evidence he would not have finished until 2 December. The judge gives a transcript reference of T 1355. At that point the document which was being discussed between counsel for CATCON and the judge was, we were told, the tab 10 document.