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[2015] WASC 217
Supreme Court of WA
2015-06-19
Allanson J
Original judgment source is linked above.
1 In about 2005, BHP Billiton Iron Ore Pty Ltd, acting on behalf of a joint venture (the MPDJV), engaged John Holland Pty Ltd to carry out an upgrade and extend a wharf at Finucane Island, on the western side of the Port Hedland harbour.
2 There were two existing berths at Finucane Island, aligned more or less north to south, with Berth D to the north and Berth C, slightly offset, to the south. The purpose of the project was to upgrade the Finucane Island ship loading facility to provide:
3 In order to reconstruct Berth C so that it was capable of berthing and loading larger vessels, John Holland was required to demolish the existing Berth C and build a replacement wharf in line with Berth D, and also to excavate and dredge the sea floor to provide depth in a 'berthing pocket' alongside Berth C.
4 John Holland performed some of the work itself, and subcontracted some of it. These proceedings arise out of the subcontract between John Holland and the company then known as Moltoni Adams Group Pty Ltd (the Subcontract). Moltoni Adams Group Pty Ltd changed its name in January 2008 to CMA Contracting Pty Ltd, and then in November 2010 to CMA Assets Pty Ltd, the present plaintiff. In outlining the facts and evidence, there are occasions where documents refer to the plaintiff as Moltoni Adams or MAG, and John Holland as JH or JHG. I have retained the words of the original documents when quoting from documents, but otherwise refer to the plaintiff as CMA.
5 The project required John Holland to demolish and remove several structures which formed part of Berth C. These included: seven berthing dolphins; five mooring dolphins; a line of piers along the seaward length of the berth and another line along the landside of the berth; and the structures bridging between the pairs of piers. Those structures were known as bents, and were numbered (in descending order from the southern end) from Bent 24 to Bent 1. That numbering is a convenient way to identify locations along the demolition site.
6 The works contracted to CMA included the demolition of Berth C, and the demolition of the berthing dolphins and mooring dolphins. The dredging of the berthing pocket was separately subcontracted.
7 At the same time as CMA was demolishing existing structures, John Holland was constructing the new wharf. The existing structures included a shiploader that was to remain as part of the new wharf. During demolition, the shiploader was to remain on the northern part of the wharf. When John Holland had sufficiently constructed the new southern portion, the shiploader was to be moved to that new section and the northern remnant of Berth C could then be demolished.
8 The dolphins were substantial structures, with a steel reinforced concrete cap or headstock on piles. The berthing dolphins (as originally constructed) had headstocks approximately 10 m x 10 m x 4 m. Three of them (BD1, 2 and 6) had an added section on top: 14 m x 10 m x 1.2 m. The mooring dolphins were approximately 7 m x 7 m x 2 m (V3/650). It was generally accepted in the trial that each cubic metre of concrete weighed approximately 3 tonnes.
9 In the initial programme, CMA's activity was divided into four phases.
10 The conditions in which the work was to be carried out were demanding. The site for the work was within an operating port. Port Hedland is also within an area prone to cyclone activity. Each of these matters was reflected in the contract documents, to which I will refer to in more detail below.
11 The work under the Subcontract commenced in 2006. Completion was originally scheduled for March 2007, but extended well beyond then. John Holland initially disputed that CMA had achieved completion. It accepted at trial that the works are complete, although the date of completion is in issue.
12 A major change in the course of the works, and the reason the works extended into 2008, was brought about by the need to remove quantities of concrete from the harbour floor resulting from the demolition of the dolphins. It was within John Holland's scope of work to dredge a deeper berthing pocket, allowing larger vessels to use the berth. That task became linked with the removal of the debris produced by the demolition of the dolphins. The contract documents between John Holland and BHP Billiton show that it was always in contemplation that a backhoe dredge would be used 'to support the demolition work and achieve clearance of the demolished material from the seabed in conjunction with the dredging work': Specification F112S0001 item 8.3, part of the scope of works in the Head Contract (V16/6371).
13 By late 2007, John Holland and CMA were in dispute about John Holland's failure to pay amounts claimed by CMA. On 10 October, CMA sent notice of dispute to John Holland under the Subcontract. In December 2007, CMA filed an adjudication application pursuant to the Construction Contracts Act 2004 (WA). An adjudication determination was made on 16 January 2008. It relates to variations which are no longer in dispute.
14 By January 2008, the relations between CMA and John Holland were very strained. John Holland both denied CMA's claims, and asserted a set off in an amount that exceeded those claims. John Holland converted two bank guarantees that had been given by CMA pursuant to the Subcontract.
15 CMA presented a final dive survey to John Holland on 17 April 2008 (V12/4922). It claims, however, that it had achieved completion under the contract in June of 2007.
16 CMA commenced these proceedings on 27 March 2008 claiming relief including the balance of the Subcontract sum that remains unpaid and amounts for disputed variations and delay claims. Its claim included a very large claim for lost profits and consequential losses as damages for breach of contract.
17 John Holland denied the majority of the claims, and counterclaimed. The substance of its claim is to recover amounts it expended in recovering and conveying demolition debris, and for disruption of its own works. John Holland claims a contractual right to set off sums due to it against the amounts claimed by CMA.
18 In the lead up to the trial, and to an extent during the course of the hearing, the issues narrowed. A Scott Schedule had been prepared. Of 27 variations that John Holland had denied or only partially admitted, only one remains in dispute. The others were admitted subject to John Holland's claimed set-off. John Holland admitted, subject to set-off, that CMA was entitled to the balance of the contract sum, and the amount of the bank guarantees. The value of the claims admitted is $8,116,019.80. CMA did not pursue the claim for lost profits and losses resulting from its demolition business being affected adversely by John Holland's refusal or failure to pay the sums claimed.
19 Ultimately, the matters in issue on the CMA claim were:
20 The value of the claims in dispute is also about $8.1 million.
21 CMA primarily brought its claim in contract. Although it pleaded, as an alternative, a statutory cause of action for misleading or deceptive conduct in relation to Variation 79, that claim was not pressed.
23 John Holland claims were pleaded at about $11.7 million; although in submissions a more conservative estimate of loss was advanced, the reduction in the total claimed is not that significant.
24 The John Holland claims were brought under various causes of action including damages for breach of contract and misleading and deceptive conduct.
25 There are two further complicating matters which may be mentioned briefly at this point.
26 First, John Holland reached a settlement with BHP Billiton in relation to claims it made under the Head Contract, some of which overlap with claims made against John Holland by CMA. John Holland and BHP Billiton entered into a settlement deed. CMA pleads that to the extent that John Holland suffered loss, it has been fully or partly compensated by its settlement with BHP Billiton.
27 Second, CMA pleads that John Holland was party to a joint venture with PT Leighton Contracting Indonesia (or another subsidiary of Leighton Holdings Ltd), under which Leighton would reimburse John Holland 50% of all costs incurred, and John Holland would pay 50% of all profits to Leighton. CMA pleads that John Holland has only incurred losses, if any, to the extent of 50% of the costs it has claimed.
28 Twenty seven witnesses were called between 10 April and 1 May 2013. Much of the evidence was documentary, with an initial tender of 24 volumes of documents, not including the witness statements and expert reports. Documents were added to, and taken from, the trial bundle in the course of the hearing, and each party filed supplementary volumes of documents.
29 In these reasons, documents are referred to by the volume and page number in the trial bundle, for example, V1/7.
The other witnesses were employees of CMA at the time of the project.
31 John Holland called 15 witnesses. First, there were nine employees or former employees of John Holland:
32 There were two witnesses from Indianic Diving, the diving contractor engaged by CMA to carry out dive surveys: Michael James Gray, the Director and General Manager of Indianic Diving, and Nigel David Rees, a diver.
33 John Holland also called Gary Donald Edwards, a hydrographic cartographer, employed by Baggerman Associates Pty Ltd. His evidence was a mixture of factual evidence and expert opinion.
34 John Holland called three witnesses from Van Oord Australia Pty Ltd, the dredging contractor: Wilhelmus Nicolaas de Ridder Project Manager; Jason Mahlberg - Project Manager; and Paul Sgarbossa Dredge Operator.
35 The witness statement of a further witness, Khang Khai Tan (Programmer, John Holland), was tendered and Mr Tan was not required for crossexamination.
36 CMA relied upon four expert witnesses. In relation to the demolition methods adopted, CMA called Timothy Hagan and David Lees, both of whom are engineers with extensive experience in blasting.
37 On issues related to dredging, CMA called Daryl Braithwaite. Mr Braithwaite is the director of a dredging and marine consultancy, and has more than 40 years of experience in dredging, reclamation, drilling and blasting and related ancillary activities.
38 Finally, CMA called Mark Griffith. Mr Griffith has qualifications as both an engineer and a solicitor, with experience in project managing within the heavy engineering construction sector. He gave evidence regarding extension of time and delay, and the application of critical path programming to the delays which occurred.
39 John Holland called one expert witness, Ronald Hutchinson - a civil engineer with specialist expertise in marine project management, dredging, reclamation Works and ancillary activities.
40 John Holland served other expert reports, and there was a conference between experts. The reports of two of those experts, Stephen Bolt and George Diab, were referred to in particulars of the defence and counterclaim, but the witnesses were not called.
41 Both parties followed the practice of referring to witness statements and expert reports as particulars of their pleading. I do not believe that this is a desirable pleading practice. A pleading should contain, and contain only, the material facts and not the evidence upon which the party relies: Rules of the Supreme Court 1971 (WA) O 20 r 9. Pleading in this way does not identify the material facts. The practice carries the potential risk that the party may decide not to call the particular witnesses whose reports had been pleaded.
42 There are some other people, primarily employees of either CMA or John Holland, who are frequently mentioned in documents but not called as witnesses. In particular, James Doyle was the Project Director, RGP3 Marine Works Project, for John Holland during much of the period covered by these events.
43 On 4 July 2005, John Holland invited CMA to provide a quotation to undertake the demolition work for the project (V2/158). The invitation stated that the work shall be carried out in accordance with a specified Scope of Work, SOWF112 G 0001 Rev E (later superseded), Specification SPEC-F112 S 0001 Rev D, tender drawings, commercial and engineering schedules, additional notes and program.
44 On 21 July 2005, CMA submitted 'a firm lump sum price of $10,397,000 for the demolition works at the above site' (V2/197). CMA wrote that the work was to be 'in accordance with your supplied program sequence'. The submission included the following:
Dolphin demolition will be carried out with a seventy ton rock breaker where a crane holds skip below breaking area and the concrete is hammered above and allowed to fall into the skip. Chutes may be required to be fitted to the dolphins in order to direct the fall of concrete into the skips more easily. Concrete that spills to the seabed will be removed by clam bucket fitted to the tower crane. Both EPA & Port Authority have no problem with concrete landing in the water.
45 In an exchange of emails with John Holland on 2 August 2005, John Holland asked Moltoni Adams Group to review an attached programme.
46 Mr Adams, General Manager of Moltoni Adams Group, responded:
We have committed resources to carry out the works within a time span. The order of work will not affect us if we remain inside that timeframe.
47 In a letter dated the same day (perhaps an attachment to the email), Mr Adams wrote that Moltoni Adams Group agreed with the John Holland programme (V2/201).
48 On 8 August 2005, John Holland submitted its tender for the construction of marine works for the project to BHP Billiton (V2/230).
49 BHP Billiton issued a revised scope of work on 8 November 2005. It contained provisions in relation to the demolition work, which were included in the Subcontract between John Holland and CMA (V2/249).
50 The agreement between BHP Billiton, as agent for the MPDJV, and John Holland Pty Ltd was executed on 13 December 2005 (V2/308). On 22 December 2005 (V2/450), John Holland advised CMA that it intended to enter into a subcontract for the demolition works with CMA, the award of the contract being conditional upon the execution of a subcontract agreement that was being drafted. The agreement was to mirror the conditions of the Head Contract between John Holland and BHP Billiton. Under the heading 'Scope', the letter of intent stated:
Moltoni Adams agrees that the scope of works shall comprise, but is not limited to, the demolition works detailed in the tender documents and in accordance with your letter of offer dated 21 July 2005 and subsequent correspondence for the Subcontract Lump Sum Price of A$10,117,000.
The works shall be in accordance with the drawings, specifications, scope of work, contract conditions, Head Contract programme, all relevant standards and codes, and inspection to the satisfaction of the Principal, relevant consultants and JHG.
51 The misstatement of the tender price was later corrected (see V3/656).
52 CMA responded on 10 January 2006, when Mr Clarke wrote 'I look forward to progressing with the subcontract and commencing the work at your earliest convenience' (V2/454).
53 On 2 March 2006, Mr Clarke provided 'draft comments' on the proposed contract for the demolition of the dolphins (V2/532). Mr Clarke continued negotiations on the Subcontract, during the first half of 2006. These negotiations were primarily by email and the occasional phone call, with only one facetoface meeting on 3 March 2006 (exhibit 28A [95]).
54 On 15 March 2006, John Holland's contracts administrator, Kay Jobson, responded to the draft comments provided by Mr Clarke, formatting them into a Commercial Deviation Form (V2/537).
55 The CMA comments are quite extensive (V2/541 557). As a general observation, and at a considerable understatement, CMA said that the contract was 'reasonably onerous'. In particular, it noted the time limitations where claims were to be made for extensions of time or variations, and that the entitlement to a variation was subject to a variation order issued by John Holland. CMA stated that it would like to discuss 'more practical time frames' for lodgement of extension of time and variation claims. CMA also referred to the absence of an independent superintendent where issues arose regarding certification of costs and time and the reasonableness of variations. The absence of provision for an independent superintendent left John Holland with significant discretion under the Subcontract, particularly in relation to claims for extension of time.
56 John Holland consistently responded that deviations from the standard subcontract were not acceptable. Almost none of the CMA proposals were incorporated in the executed contract (V2/548, 549, 550).
57 This evidence is not relevant to the construction of the Subcontract. But it is relevant context to the plea by CMA that the parties adopted a convention under which they did not 'strictly' comply with the notice provisions of the agreement
58 CMA provided the issued drawings to a demolition blasting contractor, Alterrain, in about March 2006.
59 In April 2006 (the parties agree about the month but not the day), CMA provided its Project Management Plan to John Holland. The proposed method for removal of the dolphins was later altered, and I deal with it in more detail below.
60 By a letter dated 27 June 2006, Mr Clarke forwarded a project schedule, dated 26 May 2006, for the demolition contract, showing CMA's proposed programme, including milestone dates and dates for practical completion (V3/647). CMA displayed some ambivalence about the status of this document. In their chronology, they describe it as 'required under clause 10.12'. In submissions, they denied the programme had any status under the contract.
61 On 17 August 2006, Mr Crosthwaite, commercial manager for John Holland, forwarded two original Subcontract documents for execution by CMA (V3/725). In late August, CMA executed the Subcontract (exhibit 28A [168]). At the time of execution, CMA had already carried out some of the contracted works, including mobilisation to the site and the demolition of MD 2. It was already apparent, as a result of that demolition, that the proposed demolition method for the dolphins would be need to be changed.
62 The Subcontract is, in many ways, a difficult document to read and understand. It contains capitalised terms (for example, Commencement Date) commonly the way of signifying a defined term - which are not defined. The drafting is at times poor: cl 10.12(b) (set out below) is a ready example, where the clause lacks a subject. There are incorrect internal references. More generally, the standard form for a construction contract has been only slightly altered to adapt it to a contract for demolition.
in that order of precedence for the resolution of ambiguities (see Schedule A and General Conditions, cl 1.2(i)). In referring to clauses, unless otherwise indicated, I refer to clauses in the General Conditions.
64 Clause 1.1 contains definitions. I will deal with defined terms in the context of the relevant substantive provision of the Subcontract. Clause 1.2 contains general rules for interpretation, including the order of precedence set out above. Clause 1.2(g) purports to exclude the operation of the rule of construction contra proferentum (that is, if a clause is ambiguous, the ambiguity is to be read against the interests of the party putting forward the contract).
65 Clause 2 is headed 'Commencement'. The Award Date is defined as the date on which the Subcontract comes into existence being the earlier of:
(a) execution of the Subcontract by all parties; or
(b) the issue of a written notice by John Holland to the Subcontractor confirming the award of the Subcontract.
66 CMA pleads that the parties entered into an interim contract to negotiate in good faith, and that, to the extent any of the Works were performed before the Subcontract was entered into, the parties' obligations in relation to those works would be governed by the Subcontract: statement of claim par 4. John Holland denies there was an interim contract. Its position, however, is that, from when it came into operation, the Subcontract was intended to govern work already carried out. The parties did, in fact, execute a Subcontract and there is no claim for breach of any duty to negotiate in good faith. In practical terms, the difference between the parties' positions should be of no substance.
67 Clause 3 deals with personnel. By cl 3.1, the Subcontractor is obliged to comply with any direction or variation order given or purported to be given by John Holland under a provision of the Subcontract.
68 By cl 4 CMA is required to provide security, and John Holland to release that security within the period specified in the Particulars. By cl 4.3, John Holland is not required to pay interest on any security.
69 Clause 5 is headed 'Risks and Insurance'. By cl 5.1, other than for an Excepted Risk, defined as those risks described in the Head Contract which may result in loss, damage or injury and for which the Principal bears risk under the Head Contract;
the Subcontractor will bear the risk of and indemnify John Holland against:
(a) any loss of or damage to the Works, the Works Material and unfixed goods and materials (whether on or off Site) until a Completion notice is issued for the Works or for each and every Stage; and
(b) after the issue of a Completion notice for the Works or for each and every Stage, any loss of or damage to the Works or a Stage arising from any act or omission of the Subcontractor during the Defects Liability Period or from an event which occurred prior to the issue of a Completion notice for the Works or for each and every Stage; and
(c) any loss of or damage to property of John Holland (other than property referred to in clause 5.1(a)) and any liability to or claims by a third party in respect of loss of or damage to property or injury to or death of persons, caused by or arising out of or in connection with the Works.
70 Clause 6 provides for Design and Subcontractor Documentation. The Subcontractor is obliged to prepare the documentation which the works description required it to prepare 'which when approved or not rejected within the time permitted under cl 6.1 and cl 6.2 is referred to as "Subcontractor Documentation''': cl 6.1. By cl 6.2, on submission or resubmission of Subcontractor Documentation, John Holland may within the period identified in the particulars, reject the Draft Subcontractor Documentation. The Subcontractor must not commence construction of any part of the works, unless:
(a) the Draft Subcontractor Documentation which applies to that part has been the subject of a Submission or if rejected a Resubmission; and
(b) John Holland has not rejected the Draft Subcontractor Documentation within 21 days of that Submission or Resubmission, as the case may be.
71 Clause 6.3 specifically denies any obligation on John Holland to review Draft Subcontractor Documentation and provides that any comments upon or rejection of Draft Subcontractor Documentation does not relieve the Subcontractor from its liabilities or responsibilities under the Subcontract or otherwise or constitute a variation.
The Subcontractor warrants that the Subcontractor Documentation and the Works will, to the extent the Works are designed by the Subcontractor, be fit for their intended purpose.
73 Part 7 contained provisions relating to the site. Clause 7.1 provided:
John Holland does not warrant, guarantee or make any representation about the accuracy or adequacy of any information or data made available to the Subcontractor as to the existing conditions at the Site and that information or data does not form part of the Subcontract.
74 By cl 7.2, John Holland is obliged to give the Subcontractor 'such possession, and such use and control, of sufficient of the Site as is necessary to enable the Subcontractor to execute the works under the Subcontract'.
75 Clause 7.3 obliges the Subcontractor to cooperate and 'liaise with, carefully coordinate, interface and monitor the works with all other contractors working on or about the site and permit them to execute their work and avoid interference with or disruption to or delay of their work'.
76 Clause 8 of the Subcontract is headed 'Construction', although there were minor amendments made to have the agreement conform more closely to demolition rather than construction work. The description of the Works in cl 8.1(as amended) is:
The Subcontractor must perform the Works in accordance with the Works Description, any documents issued by John Holland, the Subcontractor Documentation and any direction or variation order.
77 Clause 9 provides for quality. In particular, it authorises John Holland to instruct the Subcontractor to correct a defect, but that power is without prejudice to any other rights which John Holland may have under the Subcontract.
78 Clause 10 deals in detail with time. I will consider its terms in detail in considering the delay claims.
79 Variations are dealt with in cl 11. It will be necessary to discuss cl 11 in more detail in considering the claim regarding Variation 79.
80 Clause 12 is headed Payment. The Subcontract is for a lump sum; Subcontract Sum is defined in cl 1.1 by reference to the Particulars and, by the particulars, to schedule K. Schedule K provides for a lump sum which is 'firm and not subject to adjustment for rise and fall in the cost of labour, materials and other items'.
81 Relevantly, cl 12.14 provides a right of set off under which John Holland, acting reasonably, may deduct from money otherwise due to the Subcontractor any debt or other moneys due or any claim which John Holland may have against the Subcontractor. John Holland's assertion of a right of set off is in issue, particularly as it affects interest.
82 Clause 12.6 and 12.9 will also be relevant in these reasons. Clause 12.6 provides for payment claims, including form and verification. Clause 12.9 provides conditions precedent to making a payment claim, including compliance by the subcontractor with its obligation under cl 10.2 to submit a detailed breakdown of the Construction Programme.
83 Clause 13 governs completion. The Subcontractor must give notice of completion with John Holland to inspect and give a completion notice, or if not satisfied that completion has been achieved, to so advise. Clause 13.4 provides for liquidated damages for failure to reach completion by the Date of Completion. Those liquidated damages are the sole remedy available to John Holland for failure to bring the work to practical completion and shall be in full satisfaction of the Subcontractor's liability for such failure: cl 13.4(d). Clause 13.4 must, however, be read with cl 17.5, set out below.
84 Clause 14 provides for termination, including termination by John Holland following notice of default in the event of breach by the Subcontractor which is not remedied within seven days or such longer period as determined by John Holland: cl 14.1, 14.3(c).
85 Clause 15 provides for disputes. It was not engaged in this case.
86 Clause 16 describes the requirements for notices of claims other than under cl 10.5 (extension of time, although the reference to 10.5 is apparently wrong) or cl 12.6. By cl 16.2, the Subcontractor must give notice where it believes a direction given by John Holland constitutes or involves a variation.
87 Within the general clauses in cl 17, there is an entire agreement clause: cl 17.7. By cl 17.9, the Subcontractor warrants certain matters, including that it did not rely in any way upon any information, data, representation, statement or document made or provided to it by or on behalf of John Holland for the purpose of entering into the Subcontract.
John Holland may, either itself or by a third party, perform any obligation under the Subcontract which the Subcontractor was obliged to perform but which it failed to perform within the time required in accordance with the Subcontract. The costs, expenses and damages suffered or incurred by John Holland in so performing such a Subcontract obligation will be a debt due from the Subcontractor to John Holland.
89 None of the Special Conditions of the contract are relied upon by the parties.
90 The Particulars, in sch A, include provisions giving greater content to some of the definitions. Relevantly, the particulars specify the Date for Completion as 14 March 2007.
91 Works and Works Description are both defined terms in cl 1.1:
Works means all things or tasks which it is necessary for the Subcontractor to do to comply with its Subcontract obligations including the physical works which the Subcontractor must complete and hand over to John Holland in accordance with the terms and conditions with this Subcontract such physical works being briefly described in the particulars.
Works Description means the specification, drawings, design brief and other documents (if any) so identified in the particulars.
92 The particulars simply refer to the works as 'Demolition Works', and refer to Schedules H, I and J for the Works Description.
93 CMA and John Holland were working on the site along with other Subcontractors. There were marine and land based activities, including the operation of at least six marine barges, tugs, work boats and other small vessels. The work site was comparatively small. There were difficulties in making arrangements for access to the site caused by congestion and competing priorities: ts 282. The port remained a working port so there were also disruptions caused by shipping movements. A further operational constraint was the need to allow access to the landward side of the wharf, particularly in the event of a cyclone.
94 These constraints are reflected in the scope of works, sch H to the Subcontract. It includes the following, under the heading 'Conditions of working on site':
The majority of the work under this Subcontract shall be carried out in the waters of the port harbour. The site is subject to wind, wave and current activity and water level fluctuations. The port area is also subject to cyclone activity. The Subcontractor shall comply with John Holland's and port authority's cyclone procedures. The Subcontractor shall be responsible for securing its own vessels and equipment in all conditions, including cyclone activity and making arrangements to minimise the damage to partially complete works due to cyclone activity.
The site is situated within an operating plant and port concerned with train uploading, processing, stockpiling and shipping of iron ore. The continued operation of the plant and port shall take priority over the work under the Subcontract. The Subcontractor must liaise closely with and take directions from the John Holland representative, where construction activities are likely to affect operation of the plant, ship loading or shipping in the port.
A number of construction activities will be underway or will commence at the site during the period of the works. The Subcontractor shall familiarise itself as to the extent to which other construction activities may affect its performance of the work and shall plan and execute its own activities so as to minimise the effect of construction activities by others on its own operations and the effect of its work on the operation of others.
Port Harbour is also used for recreational boating and fishing.
95 Specifically with regard to the demolition works, the Scope of Works provides that CMA is to demolish all existing structures associated with the original Berth C wharf and dolphins 'in accordance with the Drawings and Specifications'. The work is to include but not be limited to specified activities. The Scope of Works requires that CMA:
96 CMA is required to provide plant, machinery and equipment, including a 1,000 tonne barge fitted with a tower crane and a 2,000 tonne selfloading barge with a 70 tonne excavator C/W rock breaker. This is consistent with the then proposed work methodology.
97 Any material falling to the seabed is to be retrieved 'at Subcontractor's cost'. CMA is also required to collect and transport demolished steel material to disposal areas in accordance with the waste recycling plan and cl 3.3.4 of the (Head Contract) Scope of Works, SOW-F112-G-001.
98 Schedule I contains Scope of Works, SOWF112G-001 and Technical Specifications, SPECF112S001.
99 Clause 3.3.4 deals with Scrap, Demolition Materials and Salvaged Equipment. Much of it deals with salvageable material. Demolished concrete is required to be disposed of off-site in an approved disposal area.
100 Clause 3.3.7.2 provides for demolition works. It requires the Contractor generally to demolish all existing structures associated with the original Finucane Island Berth C wharf and dolphins 'in accordance with the Drawings and Specifications'. Demolition works are to include removing all existing piles, other than those for MD4A (this was the subject of a later variation). All demolition material is to be disposed of ashore, 'concrete shall be broken up for landfill or otherwise disposed of off-site in an appropriate manner'.
101 No demolition works are to take place after the completion of the dredging in the berth pocket.
102 Clause 3.3.7.3 is headed Dredging and Spoil Disposal. It requires John Holland to dredge the berth pocket to the required depth and dispose of dredged material to a nominated spoil disposal area, and to maintain the spoil disposal areas throughout the period of the contract. The works are to include 'clearing from the berth pocket all falling demolition materials from the demolished structures'.
103 Clause 3.3.7.3 requires that the dredge plant be sufficient to remove hard materials as identified in the geotechnical reports. It also specifies that the dredging is to be performed only after the demolition of the berthing and mooring dolphins to ensure clearance of all debris from the berth pocket. The dredge may also be used to assist with removal of piles from the dredged pocket.
104 Part 6.3, Existing Berth C and D Drawings, included drawings of the existing Berth C and D structures, issued 'for information purposes only'.
105 Technical Specifications, SPECF112S001 provide for demolition works in these terms (cl 9.1):
All demolition works shall be scheduled and completed so as not to interfere with the operational capacity of the facility and shall not commence before the operational shutdown of Berth C on September 1, 2006. This shall include, but not be limited to, ensuring that no demolition materials is allowed to enter into or remain in any Berth pocket, to the extent that it limits the operational draft of any vessel in the Berth.
The existing wharf structure and dolphins, mechanical equipment, electrical systems and substations are to be completely demolished and removed from site during the course of the Works, as detailed in the Drawings. The Contractor shall schedule the demolition of the wharf structures to suit the methodology for the construction of new works and to ensure the continued operational capacity of the facility up to the operational shutdown at the end of the Contract Period.
106 Section 9.2 requires that the demolition of berthing and mooring dolphins be undertaken only by specialist demolition subcontractor agreed to by BHP Billiton. The scope of the specialist subcontract is to include the demolition of reinforced concrete heads, extraction of piles penetrating into the dredge area or if that was not possible, cutting those piles off at a specified level, cutting off remaining piles at sea bed level, and disposing of demolished materials onshore.
The reinforced concrete headstocks and dolphins shall be broken into small sections which can be handled away from the site. This may be by breaking, water blasting, storing or explosive methods (see Section 9.4) as the contract may propose.
All debris from the demolition works shall be captured and removed from the site. No debris shall be allowed to fall to or remain on the seabed, where it would interfere with the pile driving works, the dredging in the berth or the operational safety of the berth. Any material that is allowed to fall into the seabed shall be removed by whatever means, to the satisfaction of the Company Representative.
109 Schedule J contains drawings, including for construction drawings of structures to be demolished.
110 Although it was not the only task CMA was contracted to carry out, the demolition of the dolphins, and the removal of debris produced and dolphin piles, is the source of significant dispute.
111 The blasting of the dolphins was carried out by a specialist contractor, Alterrain. Luke Franklin was the director and general manager of Alterrain. He has over 30 years' experience of drilling and blasting in various environments and experience in blasting reinforced concrete.
112 The 'explosive' that was used is referred to as PCF, an acronym for penetrating cone fracture. PCF is suitable for controlled blasting because it operates by expansion of gas that causes the rock or concrete to fracture, and minimises the amount of fly rock and vibration.
113 The expert evidence on the suitability of PCF for the particular task was not completely satisfactory. CMA called two experts, each with qualifications and considerable experience as blasting engineers.
114 The first expert, Timothy Nicholls Hagan, acknowledged that his experience was with conventional or high explosives, and not PCF. The second expert, David James Lees, was experienced in the use of PCF.
115 On the evidence, I am satisfied that PCF was an appropriate method for the demolition of the dolphins on safety grounds as it produces less fly rock than conventional explosives (exhibit 50 [6.4] [6.9]). In the environment in which the work was undertaken, that was an important factor.
116 Mr Hagan also expressed the opinion that PCF was capable of fracturing reinforced concrete, such as the material in the dolphins, although it may have produced fragments which remained connected by the reinforcing bar (exhibit 50 [6.22]).
117 Mr Lees said that the use of PCF should have produced pieces about half a cubic metre in size, which would not travel far from the blast site. On the information he had been given about the Hippopotes, and on the assumption that it was capable of lifting debris up to 15 tonne (that is, approximately 5 m³), his opinion was that the pieces produced by blasting with PCF should have been able to be removed by that vessel.
118 Mr Lees said that the likely result of the use of PCF was to break the dolphins into pieces of 0.5 m³ or less, or perhaps to fracture it to pieces that size, with the pieces remaining in position within the reinforcing cage at the top of the piles (exhibit 51 [53]). He described the results achieved in the blasting as 'generally consistent with the results that should be obtained by the use of PCF' (exhibit 51 [40]). He said this despite the fact that on the information provided to him, dive surveys conducted around the dolphins recorded pieces of greater than 10 m³ for four out of the 12 dolphins, with blocks of 30 m³, 50 m³ and 60 m³ recorded. Even on the material provided to Mr Lees, fragmentation to 0.5 m³ or less was only achieved for four dolphins. Later in these reasons, I refer to dive surveys that showed the extent of large pieces was far greater than what Mr Lees had been told.
119 It may be that PCF was the most suitable method for breaking up the dolphin headstocks, having regard in particular to safety and environmental considerations. The suitability of PCF would have to be assessed in the context of an overall method which included retrieval of the rubble from the seabed. PCF was not suitable for demolition which was intended to blast to destruction, in the sense of producing small or fine fragments. It could only be used in conjunction with some process for removing finer material that fell to the seabed, and also some way of removing very large and heavy fragments. CMA was not equipped to do either of those things itself.
120 Alterrain was approached sometime before March 2006. In an email dated 13 March 2006, Mr Franklin, the General Manager of Alterrain, advised Mr Solomou of CMA that he had spent time with a structural design engineer going through the issued drawings with regard to the steel reinforcement on the dolphins. He noted that BD1, 2, and 6 had been enlarged after initial construction (the email refers to mooring dolphins, but in evidence Mr Franklin accepted that he intended to refer to the berthing dolphins) (V4/999).
121 Mr Franklin undertook a demonstration blast for Mr Solomou on 28 March 2006 at another site (exhibit 28A [83]).
122 CMA prepared a Project Management Plan, dated April 2006 (Revision B) (V4/1001). In pt 8.2, it details the demolition methodology, with two methods to be employed for the removal of the dolphins. Initially MD2 would be demolished by the use of PCF, with fragmented material bound by the reinforcing cage around the perimeter of the dolphin. An excavator fitted with a hydraulic hammer would ensure the material was of suitable size, before this spoil was removed from the dolphin by a rock bucket, loaded onto a barge, and disposed of at an approved landfill site (V4/1016-1019).
123 The second method, later described as the 'heavy lift' method, was to be used on the remaining dolphins. CMA would employ a 1,600 tonne heavy lift barge, with each dolphin being lifted in its entirety and then transported and disposed of in a designated area. Piles that needed extraction could be pulled after the dolphin had been removed by either the heavy lift barge, or another barge. The heavy lift method was said to significantly reduce the time for dolphin removal, avoid the safety risks involved with the use of explosives, and reduce disposal issues for concrete spoil (V4/1019).
124 The initial drafts of the Project Management Plan and a Traffic Management Plan, each dated April 2006, were sent by email by Mr Solomou to John Holland on 24 April 2006, and a revised version of each plan was sent on 5 May 2006 (exhibit 28A [86] [87]).
125 Initially, the MPDJV requested that the Project Management Plan be changed and resubmitted (exhibit 28A [105]). On 2 June 2006, a further revision of the plan was stamped 'proceed as noted and resubmit'. It seems to be common ground that this was an approval to proceed, subject to the annotated changes. In particular, the methodology, including the heavy lift methodology, was then approved or at least not rejected within the 14 days stipulated in the Subcontract.
126 The first dolphin blasted was MD2, which was demolished on 5 July 2006. The extent of the destruction was unexpected (V9/3465, 3468). Mr Franklin had expected the blast to result in the entire dolphin cap being fragmented into about one by one metre sized blocks, remaining in position on the piles which held it up. The headstock was, however, substantially demolished and the debris fell to the seabed. Immediately after the blast, it was evident that almost all of the concrete had fallen to the seabed with only about 5% of the total concrete structure remaining attached to the piles and visible above the sea (exhibit 27A [72]). CMA immediately assured John Holland that it planned to clear the rubble using CMA's excavator buckets at low tide, and to have divers pick up remnant pieces (V9/3465).
127 Mr Franklin reported to CMA that he considered that it was possible to duplicate that result with the other dolphins and that it was feasible to drill the headstock of those dolphins to enable blasting to be carried out before September 2006.
128 On 10 July 2006, Mr Franklin forwarded to CMA his report on the blasting process on MD2 and his conclusion is drawn from it. Although he described the result as '100% demolished with extremely good fragmentation', Mr Franklin also referred to a 'small mass [that] had been displaced down the pile on the north side' (V9/3469). He recommended that consideration should be given to the integrity of the dolphins if it was intended to lift them, as the blast result had shown both the reinforcement and the concrete to be weaker than expected. Mr Franklin proposed that it was possible to duplicate the results and 'to implode the dolphins by drilling the appropriate pattern and by using sequential firing, firing inwards to the centre rather than the perimeter'. Material from the blast could be removed from the water at low tide using an excavator, alternatively a crane and clamshell or cactus grab.
129 On 14 July 2006, Mr Franklin, by email, asked Mr Xavier of CMA whether they had found much rubble on the seabed as 'this would form part of a final report and should be considered with the decision and planning for future blasts' (V9/3473).
130 On 17 July 2006, Mr Franklin provided CMA with a quotation for dolphin removal by PCF blasting. He proposed a methodology, based on the 'successful results from the previous blast', with the intention 'to direct the shots into the middle of the dolphin and basically implode the mass' (V9/3519). Spoil removal would be 'easily done' by using an excavator and bucket for shallow water, and a crane and clamshell arrangement to remove 'the majority of the material' in deeper water leaving the smaller remnants for the 'cutter suction dredge' (V9/3524).
131 The CMA document, 'Preferred Option for the Demolition of Pile Caps using PCF Explosives rev one', prepared around 21 July 2006, similarly provided for spoil to be removed with a bucket on an excavator, with 'residual concrete spoil' removed after the piles had been extracted (V9/3545).
132 In an email on 18 July 2006, Mr Franklin referred to the 'heavy reinforcing mat in [BD 6], Y 36 bars at 100 millimetre centres', and continued, 'if we continually hit rebar and have to redrill this could cause big delays' (V4/1060). In his first witness statement (exhibit 27A [20] [25]), Mr Franklin stressed the importance of the steel drawings to gauge the amount and positioning of the reinforcing steel because it allowed him to determine the drilling method to be adopted, as well as the amount and positioning of the PCF cartridges. Mr Franklin said that, based on his experience and discussion with a structural engineer he had engaged, he could not determine the exact level of reinforcement in the concrete blocks, but used the drawings as a guide to estimate the level of spacing of the steel bars and the number of levels of bars present in the cap (exhibit 27A [25]). Mr Franklin explained his plan to 'maximise fragmentation' to meet CMA's intention that the dolphins should be broken into as many smaller blocks as possible without the steel reinforcement cage within the concrete breaking apart, with the result that the blocks would fall into the water (exhibit 27A [46]).
133 During July 2006, Mr Franklin also discussed with CMA a method of lifting the remaining dolphins to shore via a heavy lift crane to be blasted onshore. The proposal to blast onshore did not proceed, in part, because of time and expense.
134 The expressed intention, at least in correspondence between Alterrain and CMA, was to increase fragmentation and blast the dolphins to complete destruction. The possibility of larger debris left by the blasts was also recognised. Although the blast of MD2 was described as complete destruction, a dive survey on 5 July 2006 found two large concrete blocks, one of which was estimated at 10 to 15 tonne (V9/3460). The documents produced by Alterrain consistently recognised that there would be debris that would be removed by a bucket on an excavator, where possible, and residual spoil to be removed in some other way. Mr Clarke said, however, that it was not the intention to have pieces that were beyond the capacity of the bucket dredge (ts 433).
135 On 22 July 2006, Mr Clarke met with John Holland representatives, including Mr Doyle, and advised them, in effect, that the risk of proceeding with the heavy lift option was unacceptable. Mr Doyle advised Mr Clarke that he required an acceptable alternative to be developed that would meet the current programme. On 22 and 23 July 2006, Mr Clarke worked on the alternative methodology and instructed Mr Kahlil to prepare a revised construction programme (exhibit 28A [146]). In conjunction with Alterrain, CMA developed a drill and blast methodology for the remaining dolphins, and directed Alterrain to develop a written methodology. The method developed required that, after each of the dolphins had been blasted, an excavator mounted on a barge would remove as much as possible of the fragmented concrete which was to be captured in the 'basket' created by the reinforcing mat within the concrete top of the dolphins (exhibit 28A [146]).
136 On 23 July 2006, Mr Franklin wrote to Mr Solomou on his review of the blasting pattern for the dolphins 'in regards to Shaun's and your request to ensure utter fragmentation of each concrete mass'. He referred to the need for testing and analysis of the remnants of the mooring dolphin already blasted so that an assessment could be made as to the structure and probable strength of the other dolphins. Mr Franklin was concerned that an attempt to increase the fragmentation of the dolphins would be met with a corresponding risk of debris being scattered over a wider area, and greater risk of injury and damage (V4/1084).
137 Mr Franklin specifically referred to the capping of the berthing dolphins which would require additional breaking using a hammer and excavator as the construction of those structures was superior (V4/1084).
138 On 24 July 2006, Mr Clarke wrote to Mr Doyle, regarding demolition methodology (V4/1072). He advised that, following a detailed risk analysis of the proposed methodology, the use of a heavy lift barge to remove the dolphin caps was now not recommended and an alternative method was proposed. He set out five reasons, some overlapping, why the heavy lift method was not being pursued. In short, there were safety issues, including for divers engaged in the process; there were industrial relations issues involved in the Maritime Union of Australia; the timing and availability of the heavy lift barge had now become more of a risk; the use of a barge would likely infringe on normal shipping operations in the port and may produce unacceptable delay or the potential for such delays; and finally, the terms of the contract offered by the owners of the barge were not commercially sustainable. Mr Clarke continued:
In summary, our risk assessment of the use of the heavy lift barge is now unacceptable and we had concluded that an alternative must be pursued. To this end, two alternatives had been further evaluated viz:
In assessing the relative benefits of these options we have now become aware that the dredging of the berthing pocket will now be undertaken by an excavator dredge technique. This is significant in assessing the relevant merits of the alternatives.
The BHPB specification, Harbour Facilities Marine Work ... section 9.1 specifies that; 'This shall include, but not be limited to, ensuring that no demolition materials is allowed to enter into, or remain in any berth pocket, to the extent that it limits the operational draft of any vessel in the berth'. For this reason we are proposing the second option, that is, to fracture to complete destruction the dolphin's tops. In either option it is inevitable that fractured concrete will fall into the water and lodge on the seabed. It was always intended that the spoil would be surveyed and removed. By complete destruction of the dolphin tops the risk of larger concrete pieces entering the pocket is significantly reduced, particularly given the nature of the older concrete. It is proposed to engage the excavator dredge to remove any spoil, as directed by survey, post removal of the piles. Further, divers will, as part of the proposed demolition survey, locate and arrange lift of any reinforcing that may fall to the water in the course of the fracturing process. The dredging process will also be engaged in the removal of any fractured pile stems down to Rh 20.5m. In this way the specification that no material remains in the berthing pocket which might limit the operation drafts of any vessel in the berth is ensured.
Our explosives contractor, Alterrain, has been requested to provide an analysis of the experience of MD2 and to propose a methodology for the complete destruction of the dolphin tops. Those reports are attached for your consideration. Also appended is an overview ... of the proposed method and under separate cover a program.
139 CMA asked for endorsement of the revised methodology.
140 The Alterrain report on the blast of MD 2 (V4/1081 1083) was part of an attachment to that letter.
141 John Holland responded to CMA, pointing out that Mr Franklin had sought information as to concrete testing and asked for that to be done. Mr Franklin had requested core tests (V10/3588).
142 On 25 July 2006, Mr Clarke sent Mr Doyle a revised programme for phases 1 and 2 of the works. The revised programme was based on the new methodology that had been recommended (exhibit 28A [155]). This is the programme later sent by CMA on 4 August 2006 (exhibit 28A).
143 By 27 July, the heavy lift option was described in an internal CMA email as 'now dead' (V4/1105). Testing was arranged to estimate the strength of the concrete in the remaining dolphins for the explosives expert. These tests were carried out but the results were not given to Mr Franklin. Mr Franklin said that he was not shown any concrete test results for the purpose of his blast designs for subsequent dolphins, although that information would have been significant. He said that information regarding concrete strength would have assisted him in the blast design if the intention was to fragment the concrete into small pieces (ts 363, 365).
144 On 8 August 2006, with Mr Clarke's approval, the Dolphins Blasting Option Revision A, dated 4 August 2006, was transmitted to John Holland.
145 Even at this stage, it was recognised by CMA that the blasting of the dolphins was taking longer than proposed, and that the removal of debris was difficult. In an email dated 15 August 2006 Mr Xavier wrote to Mr Franklin:
From my experience of MD2 demolition, what was supposed to take 1 week eventually took about 3 weeks to complete. This was given that the MD2 was blasted nice and good without much rubble still intact. I witnessed that removing the remaining concrete rubble was a difficult task for the 35t excavator operator because of the swells and tides. This makes me very nervous. If the other dolphins are not blasted to a similar post-blast state, we will be delayed considerably.
Thus, I would like to request is that you do what it takes to blast the dolphins to smithering (V10/3642).
146 Mr Franklin records the following sequence of blasts, commencing on 2 September 2006: MD 3 on 2 September 2006 with 'additional charges set to decimate block' (exhibit 27A [171]); MD3A on 3 September 2006, recorded as 'block disintegrated' (exhibit 27A [175]); and BD7 on 7 September 2006 (exhibit 27A [188]).
147 Alterrain then experienced difficulty in drilling BD1, BD2 and BD6 to enable the PCF charges to be laid.
148 On 7 September 2006, the shift report from Alterrain reported 'attempted to drill BD6 this day could not penetrate due to rebar' (V4/1164). With the further comment 'reinforcing on BD 6 noted and plan reviewed requested interpretation of same'. The shift report for 11 September reported 'Tamrock rig down cannot drill BD 6 organised excavator and hammer to break out cap BD 6. Requested lift to relocate Tamrock' (V4/1166).
149 In his oral evidence, Mr Franklin was referred to this record (ts 359 360). He said that, in his recollection, they had drilled somewhere in the order of 50 holes but could not penetrate the reinforcing steel mat, so the idea was to try to expose the top layer of reinforcing to see how densely or how closely spaced the steel was.
150 On 12 September, Alterrain carried out work with a jack pick on BD6 to ascertain rebar spacing and 'found top and bottom layer of steel staggered drilled more probe holes continually hitting steel'. In another report, Alterrain stated that the BD6 reinforcement mat was impenetrable by conventional drilling.
151 On 20 September 2006 (V4/1183 1184), Mr Franklin reported to Simon Gill of CMA. He proposed, due to the amount of reinforcement in the dolphins, to completely remove the concrete capping that was added after the original construction using a 7 ton excavator and rock breaker, and then to drill and blast the original construction.
152 On 27 September 2006, Mr Doyle wrote to Mr Clarke regarding the rate of progress of the Subcontract works. The letter is not a happy one. In particular, he referred to the proposed programme transmitted by CMA on 27 June 2006, based on the use of a heavy lift vessel. He noted that the programme had since changed but John Holland was yet to formally receive an updated programme, taking into account the revised methodology. He advised '[i]rrespective of the methodology changes, the requirement to achieve the various milestone dates remains unchanged and no extensions to these dates have been granted'. John Holland directed CMA to provide a recovery programme (V4/1192).
153 Mr Clarke responded on 26 September (V4/1200). In particular, he said that CMA opted not to proceed with the use of the heavy lift barge principally due to threatened industrial activity and continued 'the significant change of methodology, submitted to you via email on 24 July, at a very late stage in our mobilisation, has been the principal cause of the current programme delay as you note'.
154 On 28 September 2006, Mr Franklin reported to CMA regarding Alterrain's variation claim for work on BD6. In particular, he said:
With reference to drawing Number F113 S 0035/0. The drawing was interpreted as having Y36 rebar at 100 mm centre to centre in the top layer of reinforcement of the top mat specifically around the perimeter of the structure for an approximate distance of 1 m in from the edge of the block and over the new tensioned piles and around the perimeter of the block. A secondary layer of Y 20 rebar lateral to that at 200 mm centres and a third layer of Y 36 bar at 100 mm centre running parallel but staggered to the top layer. The drawing indicates that in the main section of the structure the rebar is at 200 m x 200 mm spacing and is as per previously described.
What was actually encountered was that between longitudinal bars spaced at 100 mm x 100 mm there is a cogged bar extending from the side wall of the structure and is located between the lengths of bar forming an impenetrable layer of steel for a distance of 4 metres from the side wall of the block towards the centre from both the southern and northern faces. There is also appears to be additional bars which are lapped from the cogged side wall bar to tie in these cog bar bars so that across the top of the block there are only very few sections were [sic] the rebar is gapped to 100mm. There is an area of the block which has hold down bolts and rebar cage which have these longitudinal bars gapped for a total width of 200 mm. There is only a very few areas across the top layer of reinforcement that present a separation distance between the bars of the 100 mms centre to centre and none at 200 mm x 200 mm as indicated on the drawing (V4/1213).
155 Mr Franklin reported that it would be impracticable to drill for this amount of rebar and that the only way to deal with it properly was to remove the concrete capping entirely to get down to the original structure by employing a combination of a rock breaker and a cutting torch once the rebar was exposed (V4/1214).
156 On 29 September 2006, Mr Pick of CMA gave a notice of contract variation to Mr Brown of John Holland. The variation was based on the top reinforcing mats in BD6 being substantially different from that outlined on structural drawing number 8321 22 (V4/1223). Alterrrain had been aware of this difficulty from 7 September, and had reported to CMA on 20 September (at the latest).
157 The cap of BD6 was blasted on 29 September 2006, and again on 2 October 2006 (exhibit 27A [203] [207]). Those blasts were intended to fracture the cap to enable an excavator or breaker to pull the cap apart. However, this created the problem of removing large amounts of rubble (exhibit 27A [208]).
158 BD5 was blasted on 23 September 2006. It was done twice because the first blast was a misfire.
159 On 30 September 2006, CMA sent a notice of contract variation (V7/2482-2483; exhibit 28A [206]). Mr Clarke says that had he known about the additional reinforcing at the time that he sent the revised methodology for demolition and the revised programs in July and August 2006, he would have sought an extension of time and increase in the Subcontract sum to take into account the additional costs. He stated:
I would have pressed particularly hard for the additional time. The programme was I thought already tight. The extra time required to demolish the dolphins had the effect of delaying Phase 2 and I would neither have proposed or agreed to a schedule CMA Contracting could not comply with. I would also have tried to negotiate a change to the Subcontract price. BD1, 2 and 6 had a different structure to the plans CMA Contracting had when it submitted the tender and I had when negotiating the Subcontract. I would have used this fact to negotiate a higher price [209].
160 At a meeting on 25 October 2006, Mr Clarke told John Holland representatives, in effect, that the construction of BD6 was a major difference to the scope of works (exhibit 28A [217]).
161 BD4 was blasted on 30 October 2006, and Mr Franklin recorded that the mast disintegrated and only the piles remained (exhibit 27A [225]).
162 The main structure of BD6 was blasted on 28 October 2006 (exhibit 27A [214]).
163 Alterrain employees left the site on 2 November 2006 and returned on 15 November.
164 On 15 November 2006, Mr Clarke wrote to Mr Doyle, referring again to the delays due to the construction of the dolphins. He referred both to the revised method to remove the caps, and to the blasting outcomes proving unsatisfactory for maximising concrete recovery into barges (V4/291).
165 BD3 was blasted on 18 November 2006 (exhibit 27A [236]).
166 BD2 was prepared by exposing the rebar by hammering, and was blasted on either 23 or 25 November (exhibit 27A [239]). Hammering or drilling continued on BD2 between 11 and 14 December 2006, and on 15 December 2006 there were two blasts, the first misfiring (exhibit 27A [243]).
167 A different method was used for BD1, as Alterrain was asked by CMA not to blast the top cap (exhibit 27A [247]). In his oral evidence, Mr Franklin said that the complete headstock slumped into the sea (ts 404).
168 MD4 was blasted on 9 December 2006 (V4/1314) and MD4A on 13 June 2007. These later blasts had been postponed to allow for the removal of a bird nest on MD4A.
169 The success of the demolition in destroying the dolphins is not in contest. The major area of dispute arises from the extent to which the demolition produced debris that was deposited on the seabed. The effect of the debris on other activities, and the cost of removing it, is at the heart of John Holland's counterclaim.
170 The presence and extent of debris was not appreciated at the time of, or immediately after the blasting. It was later revealed by dive surveys.
171 On 4 December 2006, Mr Clarke directed Mr Michael to arrange for divers to complete the dive surveys so that CMA could learn the extent of the demolition debris on the seafloor (exhibit 28A [233]). On 7 December 2006, Mr Doyle sent a letter to Mr Pick in relation to the seabed survey (V10/3779). Mr Clarke says around December 2006 he had a conversation with Mr Doyle in which Mr Doyle said that the survey must be a multibeam survey of the seabed in the area of the proposed widening of the berthing pocket (exhibit 28A [237]).
172 CMA entered into a services agreement with Fugro Survey Pty Ltd dated 21 December 2006. Mr Clarke said that, on completion of the survey:
I reviewed it, as did AJ Michael, and found the results to be of little use to CMA Contracting as there was a lack of detail necessary to identify relatively small debris ... A hard copy of the survey results was supplied to John Holland free of charge.' (exhibit 28A [249)
173 John Holland and CMA did not agree on CMA providing the source data from the survey free of charge. On about 8 February 2007, John Holland issued CMA with a site instruction to provide electronic data to enable the dredging contractor to plan and execute removal of the remainder of the demolished materials on the seabed (exhibit 28A [251]). CMA complied with the instruction, but submitted a variation applying for half the cost.
174 During July 2007, Indianic Diving Services carried out dive surveys in the areas surrounding the locations of the demolished berthing dolphins, BD1 to BD7. An inspection report was prepared for each dolphin, including a 'mud map' showing the debris found, and what had been removed. The information included the location of material west of the fender line. Further surveys were carried out in later months. Dive surveys were also conducted in the area around the demolished mooring dolphins (MD2, 3, 3A, 4, and 4A), between July and December 2007.
175 The interpretation of the survey reports, in the light of other evidence, was itself a matter of some controversy in final submissions. It was also submitted on behalf of John Holland, correctly in my opinion, that the dive survey evidence does not include some debris, including piles, pile stubs and tension wires, that was identified in other evidence. The evidence of what was found on those surveys does, however, enable an estimate of the extent of material which was recovered, and the size of that material.
176 The parties did not differ on the following (which I take from the CMA summary of dive surveys, as amended by John Holland, handed up as part of the final submissions):
177 BD2 was surveyed on 8 and 17 August 2007, 11 and 12 October 2007, and 9 November 2007. Nine blocks with a volume of 1 m³ or more were identified, together with numerous smaller blocks. The largest of the blocks was 5 m x 5 m x 2 m, with an estimated weight of 125 tonne. Another four were heavier than 18 tonne. On an estimate of 2.5 tonne per cubic metre, the total estimated was 113.1 m³ weighing 282.75 tonne. One block of 1.8 m³, 4.5 tonne, was removed between 12 October and 9 November 2007. A 1 m³ block weighing 2.5 tonne was removed on 4 March 2008. The remainder had been removed between 17 August and 12 October 2007.
178 BD3 was surveyed on 21 July and 15 August 2007. The parties estimated total of 400 m³ of material, weighing 1,000 tonne, with the largest block 6.3 m³ in the berthing pocket. The largest block is believed to have been removed on 25 August 2007. All other blocks were 0.5 m³ or less.
179 BD4 was surveyed in July, September, and November 2007. Again the estimated total was 400 m³, 1,000 tonne. There was one very large block, 75 m³, east of the fender line in the berthing pocket, and nine other blocks with a volume of 1.5 m³ or greater. All were removed between 1 September and 11 November 2007.
180 MD2 the survey date for this dolphin is not recorded. The diver records the presence of piles and two high points 'a 10 -15 tonne concrete block (boondy) which has been buoyed at 4 m above height of block'; and a 'pyramid shaped concrete block that also has a buoy tied off at 4 m above the highest point of the block'. No further estimate of dimensions given.
181 MD3 was surveyed on 6 December 2007 and no concrete blocks of substantial size were recorded. The total material was estimated at 155 m³, 387.5 tonne.
182 MD3A was surveyed on 5 December 2007 and again no blocks of substantial size were recorded. The estimate is of rubble totalling 80 m³ and 200 tonne.
183 MD4 was surveyed on 4 July and 4 September 2007. Two blocks, each of approximately 10.8 m³ in volume were found. The estimated total of debris was 155 m³, 387.5 tonne.
184 MD4A was surveyed on 28 July and 8 November 2007. No large blocks of substantial size were recorded. The estimated volume of rubble was 80 m³, 200 tonne.
185 On the matters in dispute, the evidence, in my opinion, establishes the following:
186 BD1 - in its summary of the surveys, John Holland records that BD1 was surveyed on 27 July, 21 August, 23 August, 28 August, 11 October, 12 October, and 9 November 2007. CMA refers to the dive surveys on 23 and 28 August, 11 and 12 October, and 9 November 2007.
187 The diaries kept by Indianic do not record a dive on 27 July, but record a dive on 30 July. The inspection report following the dive survey (V14/5771) records the date and time conducted as 30 July 2007, although the 'mud map' is dated 27 July 2007 (V14/5773). The mud map records six blocks of significant size in the area east of the fender line. The report states:
188 The survey on 21 August 2007 (V14/5775) describes five blocks removed that day as:
189 In effect, John Holland argues that these five blocks are in addition to the six blocks recorded in the map dated 27 July 2007. CMA submits that, on the evidence, they are the same blocks that were differently described once they could be more accurately measured.
190 The evidence is inconclusive. The dive report of 21 August states: 'WS 10 has to date removed 6+plus good-sized blocks from the BD 1 area'. It then lists the five blocks 'removed today'. John Holland also points to a diary record of Mr Dick, the barge supervisor on the Westsea 10, in which he recorded that on 29 July the Westsea 10 'started to clam at [BD1], found a lot of steel and concrete rubble'.
191 There does not, however, appear to be any record of a 75 ton block, with dimensions 5 m x 3 m x 2 m, being removed between 27 July and 21 August. From the records that are available, I think it is unlikely that large blocks were removed on 27 July. I agree with the submission on behalf of CMA that the records (including Mr Dick's diaries) distinguish between rubble and blocks. Mr Dick, for example, records on 2 August 2007, 'Told CMA to audit in anchors and air bags for the removal of the smaller concrete blocks'. On 16 August 2007, he records the making up of 'lifting lugs' for the lifting of concrete blocks. On 20 August 2007, at BD10 (the old BD1) Mr Dick records, 'we lifted a large block but it fell out of the clam' (exhibit 36B 10702). His progress report for 21 August 2007 states:
Started clamming at the old BD 1 as the divers had buoyed off 3 large blocks of concrete, we clammed out the 3 large blocks and moved 1 piece that would not lift out of the water os [so?] It was moved out of the dredge pocket and marked with the GPS for the drivers to retrieve at a later date.
Continued clamming at the old BD 1 lifting out large sections of concrete, most of these pieces where too big for the land excavator to lift off, so we sailed the Westsea 10 into the load out and lifted them on to the load out with the clam (10703).
192 On 22 August, Mr Dick records that the divers found another large piece of concrete and nothing else at the old BD1.
193 In summary, the blocks found at the site of this berthing dolphin were:
194 The total is about 76.4 tonne (the weights are all estimates). There was no estimate of the material described as rubble, but on the evidence of Mr Dick's diaries there was rubble removed and reinforcing bar cut from the concrete.
195 BD5 this is another instance where there are discrepancies in the evidence. The area was surveyed on 16 and 22 July, 1 September and 9 November 2007. The 'mud map' prepared by the divers (V15/5838) on 22 July 2007 shows two blocks of 2 m x 1.5 m x 1.5 m that are not listed in the narrative of the survey. CMA accepts that the contention put forward by John Holland is correct, on the basis that the sketch of 22 July is a detailed list of the size and position of the 'extra' blocks. On that basis, which I accept is correct, the survey of BD5 on 16 and 22 July 2007, 1 September 2007 and 9 November 2007 discloses those two blocks, believed to have been removed between 1 September and 9 November 2007, three blocks of 1.5 m x 1.5 m x 1 m, otherwise no block larger than 1.5 m³. The blocks were removed between 1 September and 9 November 2007. The parties' estimate of the material is 400 m³ and 1,000 tonne.
196 BD6 - the area of BD6 was surveyed on 21 July 2007, 21 and 24 August 2007, 4 September 2007, and 6 December 2007. The inspection reports record the following:
4 m swing - blocks 8 mL by 4 mW by 1.5 mH of seabed, the biggest block 1.2 m L, 1 m H, 1 m W. 8-10 individual blocks in area joined with reo. Really muddy area.
197 John Holland submits this should be interpreted as describing a block 8 m x 4 m x 1.5 m (that is, 48 m³) together with 10 smaller blocks of 1.2 m x 1 m x 1 m, joined with reinforcing bar. CMA submits that the report describes an area in which a number of blocks occupy the space of 8 m x 4 m x 1.5 m, the biggest of which was 1.2 m x 1 m x 1 m. The interpretation suggested by CMA is, in my opinion, both more consistent with the terms of the report and more consistent with the earlier surveys. No block 8 m long was identified in the earlier surveys. If it is, in fact, the concrete previously described as the concrete shelf, the earlier surveys did not identify the 10 smaller blocks.
198 That is, in my opinion, the surveys at BD6 identified concrete totalling 8 m x 4 m x 1.5 m, joined with reinforcing bar, the largest of which was 1.2 m x 1 m x 1 m. The total is approximately 48 m³, 120 tonne, and it was removed between 25 January and 7 February 2008. It is not possible to estimate the weight or volume of smaller debris.
199 BD7 was surveyed on 12, 13, and 27 July, 13 and 14 August, 4 September, and 3 and 21 December 2007.
200 Reading the dive survey reports in sequence, they do not, in my opinion, show that the two large blocks described in the report of 4 September 2007 were in addition to the four blocks found on the first survey. It is more likely that they describe the same blocks following the 'landslide' described in the report of 27 July.
201 John Holland also refer to a further block, with dimensions 2 m x 1.5 m x 2 m (6 m³, 15 tonne) removed on or after 20 January 2008 (V15/5979), and a block of dimensions 3 m x 1.8 m x 1.3 m (7 m³, 17.55 tonne) removed between 26 January and 8 February 2008 (V15/5981). CMA submitted that these are the same block, described twice. The documents, in my opinion, show two different blocks.
202 CMA also submitted that the dive survey of 20 January 2008 describes the block as an 'old block'. I am not sure that is what the note says. It is not clearly legible and the author did not give evidence.
203 Finally, CMA referred to the opinion expressed by Mr Marks, in his evidence, that a lot of the concrete was already there and 'may not actually be from the dolphins at this stage of the project' (ts 314). There was no other evidence to support this, and I believe this testimony involves a high degree of speculation.
204 In summary, I find that there were four blocks totalling 90 m³ in volume found, the largest being 60 m³. The parties estimated a total of 270 m³ of material weighing 675 tonne. There were also two additional blocks, with a total of 32.55 tonne, removed in January 2008. On balance, I believe these were from the demolished dolphin at BD7.
205 CMA claims additional payment for a variation under the subcontract relating to the demolition of BD1, 2 and 6 (Variation 79).
206 There are also four matters (including Variation 79) which CMA claims entitle it to extensions of time for completion, and payment for the period of delay.
207 After the demolition of MD2, and the abandoning of the 'heavy lift' methodology, CMA engaged Alterrain to drill and blast the remaining dolphins. Three of the berthing dolphins had been modified since they were initially constructed, with an additional concrete cap or headstock added. Alterrain experienced difficulty in drilling these three dolphins, BD1, BD2 and BD6, to enable the PCF charges to be laid.
208 In summary, CMA claims a variation for the additional work required in demolishing BD1, BD2 and BD6 because:
209 CMA claims that the additional work caused by the construction of BD1, 2 and 6, was a variation. It also claims the additional work delayed its performance of the works pursuant to the Construction Programme from 25 October 2006 to 13 December 2006 (46 days) and also required it to perform additional work in January 2007. The delay claim is dealt with separately.
210 Variation 79 is one of several variations pleaded by CMA. The others have been agreed. CMA pleads Variation 79 was neither a day work variation nor an approved variation (par 30). This compares with other variations (for example, variations 28 and 54) which CMA pleads 'were claimed by the Plaintiff in accordance with the Subcontract and approved by the Defendant': par 21. CMA pleads that Variation 79 was performed following a written direction from John Holland, and that it complied with cl 11.2(e) of the Subcontract.
211 CMA claims that John Holland is indebted to it for $639,568.21, alternatively John Holland has failed or refused to pay that sum and has breached the Subcontract agreement and caused loss and damage in that sum: par 30(e) and Schedule B to the statement of claim. The value of the variation has been agreed.
212 An alternative plea, in statement of claim pars 100 to 103, that John Holland engaged in misleading or deceptive conduct by representing that the drawings accurately depicted BD 1, BD 2 and BD 6, and the work that CMA would be required to undertake to demolish them, was not pursued.
213 John Holland pleads that CMA is not entitled to payment for Variation 79 because the alleged additional works were within the Scope of Works under the Subcontract.
214 It further pleads that CMA failed to notify it of the claim as required by cl 9.8 of the Subcontract.
215 CMA does not plead that John Holland issued a Subcontract Variation Order in relation to this work, and there is no evidence that it did. CMA submitted, in effect, that John Holland relied on its 'scope of works' argument and not on any failure to issue a Variation Order, as required by cl 11.1. While John Holland specifically pleaded non-compliance with contractual requirements in response to the delay claim, it did not plead non-compliance in its defence to the variation claim. That submission, in my view, correctly states the pleadings.
216 The issue, on this part of the case as it was argued, is whether there was a change in the character or quantity of any material or work from that specified in the contract.
217 Under cl 8.1, CMA was obliged to perform the Works 'in accordance with the Works Description, any documents issued by John Holland, the Subcontractor Documentation and any Direction of Variation Order'.
218 'Works' and 'Works Description' are both defined:
Works means all things or tasks which it is necessary for the Subcontractor to do to comply with its Subcontract obligations including the physical works which the Subcontractor must complete and hand over to John Holland in accordance with the terms and conditions with this Subcontract such physical works being briefly described in the particulars.
Works Description means the specification, drawings, design brief and other documents (if any) so identified in the particulars.
219 The brief description of Works in the particulars is Demolition Works. The particulars for Works Description state, 'Refer to Schedule H, Schedule I and Schedule J of the Subcontract Agreement'.
220 The particular thus tie in the sections on demolition works in cl 3.3.7.2 of the Scope of Works, SOW-F112-G-001, and section 9 of the Technical Specifications, SPEC-F112-S-001, both found in Sch I (and summarised above).
221 Schedule H, Scope of Works, includes a section with the heading 'Work Included' which begins:
Unless otherwise stated, the subcontractor shall be responsible for the performance of the demolition works including such work as may be necessary and required, but not specifically described herein, in order to achieve practical completion in accordance with the subcontract. The works include, but shall not necessarily be limited to, the construction of the extent of works shown on the drawings, the standards and the technical specifications.
222 Under the subheading 'Demolition Works' it continues:
The Subcontractor shall demolish all existing structures associated with the original Finucane berth island berth sea wharf and dolphins in accordance with the drawings and specifications.
223 This is followed by a list of works which includes 'demolish all berthing dolphins 1 to 7 along the front of Berth C, during the shutdown of Berth C'.
224 The description of the works in Sch I does not specify method.
225 The Scope of Works in cl 3.3.7.2 provides that the contractor shall generally demolish all existing structures associated with the original Berth C wharf and dolphins. Specifically it provides:
It is expected that specialist demolition expertise will be required, as a minimum, in respect of the demolition of the berthing dolphins 1 to 7, mooring dolphin MD4 and removal of piles. The technical specifications in schedule I deal with demolition works in part 9.
226 The Technical Specification, pt 9.2, is headed 'Specialist Demolition Subcontract Works' and provides:
The demolition of the existing berthing dolphins BD1 to BD7 and mooring dolphins MD4 and MD4A concrete heads shall only be undertaken by a specialist demolition subcontractor agreed by the company. The scope of this specialist subcontract shall include:
The removal of fenders and deck furniture from these dolphins is not required to be executed by the specialist demolition subcontractor.
The execution of other demolition works under the contract may be by the specialist demolition subcontractor outside the scope of the nominated specialist subcontract scope.
227 Part 9.3 deals with demolition methods and simply requires that the reinforced concrete head stocks and dolphins shall be broken into small sections 'which can be handled away from the site. This may be by breaking, water blasting, sawing or explosive methods as the contractor may propose'.
228 I have set out the sequence of events above. I am satisfied that the method initially adopted for the demolition of BD1, 2 and 6 had to be changed. On 7 September, Alterrain reported that it could not penetrate the cap of BD6 by drill due to rebar. The cause was the close spacing of reinforcing steel mat under the surface of the concrete so that the drill was continually hitting steel.
229 On 20 and 28 September 2006 (V4/223, 242), Mr Franklin proposed, due to the amount of reinforcement in the dolphins, to completely remove the concrete capping that was added after the original construction, using a 7 tonne excavator and rock breaker, to cut away the rebar once it was exposed, and then to drill and blast the original construction.
230 I accept Mr Franklin's evidence that the method had to be changed. There was no evidence to suggest that the method then adopted was either inappropriate or unreasonable.
231 Alterrain used that method for BD 2 and 6, but was asked by CMA not to blast the top cap of BD1 (exhibit 27A [247]).
232 There was a significant dispute at trial about whether the drawings provided to CMA, and in turn to Alterrain, were accurate in showing the extent of reinforcement in the concrete. The focus was on one drawing, F113 S 0035/0. The drawing is listed in sch J to the Subcontract. I cannot determine whether it is one of the drawings referred to in s 6 of the Scope of Works in Sch I.
233 Mr Franklin was crossexamined in some detail about his reading of the drawings. Mr Franklin said that he 'still cannot make head nor tail of this drawing' (ts 367). Crucially, however, his evidence was that there should be actual gaps in the reinforcement in the order or 100 mm by 100 mm (or 64 mm allowing for the radius of the steel) but that what they discovered was the steel was 'skin to skin, with only very, very few gaps in it', a 'sheet of steel' (ts 372, 375, 376, 382).
234 I accept that the spacing of the rebar determined whether the dolphin caps could be drilled and blasted in the manner proposed by Alterrain, and the methodology developed by Alterrain was guided by the drawings (exhibit 27A [25]).
235 I also find that Mr Franklin was not misreading the drawing in the manner put to him in crossexamination. It was suggested to him that, properly interpreted, the drawings showed two layers of S36 bar, one above the other, but staggered. Mr Franklin did not accept that. His reading was supported by one of the John Holland witnesses, James Hugh Lear, the deputy project manager and an engineer. Mr Lear had provided witness statements with regard to other issues, but was briefly examined by counsel for John Holland on his reading of the engineering drawings of the dolphin caps. Mr Lear said (ts 770-772, 774) that, on the drawings, the reinforcing mat at the top of the concrete cap consisted of a layer of S36 reinforcing bar at 100 mm centres (that is, with the centres 100 mm apart); below that at right angles a layer of S20; and below that again another layer of S36. Allowing for tolerance of about 10 mm, the spacing between S36 bars should have been approximately 64 mm. In particular, Mr Lear did not agree that the drawing showed the two layers of S36 bar were staggered (ts 770).
236 I am satisfied that the dolphin caps did not conform to the 'for construction' drawing, and that the steel reinforcing was not spaced sufficiently far apart to enable the cap to be drilled. It required a change in both the amount and type of work that had been described in the methodology put up by CMA for endorsement on 24 July 2006, and that was the basis of the programmes sent by Mr Clarke on 25 July and later sent (and accepted by John Holland) on 4 August 2006.
237 The additional reinforcement required Alterrain to hammer off the concrete to expose the rebar mat, before the dolphin caps could be charged with explosives. As a result, the amount of work required to demolish the cap on each dolphin was more than CMA and Alterrain anticipated, and more than would have been required had the additional reinforcing bar not been present. This was not only more work, but work different in kind from what would have been required had the rebar been spaced as shown in the drawings.
238 Clause 11.2(b) sets out matters which may be the subject of a Variation Order, including deviation from an Approved Construction Program, changing the character or quantity of any material or work, or executing additional work.
239 The Subcontract is difficult to construe in the context of a demolition much of it is apparently designed for construction. But, reading it as a whole, the intention of the parties was that CMA undertook to demolish the existing structures described in the scope of works. The Subcontract did not prescribe the work that was to be done to achieve that result. It described the dolphins only very generally as having reinforced concrete headstocks. The only detailed information about their construction is in the drawings. Those drawings are expressly part of the Works Description. In my opinion, the parties intended them to be part of the delineation of what CMA was required to do.
240 The drawings did not accurately describe the structures to be demolished, in a manner that directly affected the demolition methodology proposed by CMA and not rejected by John Holland.
242 CMA also relies on the fact that John Holland asserted a variation in the same terms against BHP Billiton. That may show a degree of hypocrisy in the approach adopted by John Holland (although I note that the value of the variation was agreed at 'nil' in the deed of settlement between John Holland and BHP Billiton, discussed below) but cannot alter the proper construction of the contract.
John Holland does not warrant, guarantee or make any representation about the accuracy or adequacy of any information or data made available to the subcontractor as to the existing conditions at the site and that information or data does not form part of the Subcontract.
244 It is true, as John Holland submits, that the drawings are not 'contract drawings' in the sense in which that expression is commonly used. But they are not accurately described simply as information or data made available to the Subcontractor. By cl 1.1, the Subcontract is defined to be constituted by the documents described in the particulars. That includes the Works Description which, in turn, includes Sch J.
245 If it is necessary to resolve any potential inconsistency between cl 1.1 and cl 7.1, it is by reading cl 7.1 as not referring to information or data in documents which are expressly included in the contract.
246 John Holland pleaded and relied upon cl 9.8, which, in its relevant parts, provides:
The Subcontractor must inspect any work that has been carried out by any other person (Prior Work) as soon as is practicable and in any event within seven days after John Holland gives the Subcontractor access to the Site under clause 7.2. If the proper execution of the Works is dependent upon or appreciably affected by the quality or completeness of the Prior Work, the subcontractor must:
(a) promptly notify John Holland in writing providing full particulars of the defects or matters identified in the reasons for its opinion; and
(b) not commence or continue with the execution of any part of the Works dependent upon or appreciably affected by that Prior Work until it receives a Direction from John Holland as to whether John Holland considers the Prior Work defective and, if so, how to proceed.
247 That clause must be read in context. It appears in General Condition 9, headed Quality. It is preceded by clauses dealing with the quality assurance and testing. In particular, cl 9.4 and cl 9.5 deal with Defects, and the allocation of the commercial risk for the correction of any Defect.
248 General Condition 9 does not itself set out a consequence of failure to comply with cl 9.8.
249 In this context, in my opinion, cl 9.8 does not relate to scope of work, but is part of the regime for dealing with defects. Failure to comply with the obligation in cl 9.8 does not affect CMA's entitlement to a variation.
250 In the circumstances, I would allow the claim for Variation 79, as a variation that required CMA to carry out something outside the Scope of Works described in the Subcontract. The value of the variation is agreed but, like the other variations which have been agreed, must be considered subject to any set off.
251 CMA pleaded an alternative claim for quantum meruit. In my opinion, the contractual framework in this case does not leave room for the claim based in restitution. If I am wrong, and CMA is not entitled to a variation under the contract because the work was within the scope of works it contracted to carry out, the law of restitution should not be called upon to 'redistribute the risks' by dispensing with matters for which the parties have made express provision: see Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635 [78] [79].
252 CMA also pleaded a claim in misleading and deceptive conduct which it did not press.
253 CMA's most significant remaining claims are for extensions of time and delay. CMA pleads (statement of claim par 43) that;
254 CMA pleads that it was entitled to an extension of time of 169 days, or 162 days, or 94 days to the Date for Completion, extending that date to not earlier than 25 June 2007.
255 By cl 10.1, CMA is required to progress the Works in a manner and at a rate that is satisfactory to John Holland so as to achieve Completion by the Date for Completion specified in the Particulars (14 March 2007).
256 CMA is obliged, prior to commencing mobilisation to the site, to submit a detailed breakdown of the Construction Programme for approval: cl 10.2. The detailed breakdown, unless otherwise agreed by John Holland, is to conform with requirements set out in Appendix 6 to the Head Contract General Conditions, and to include:
(a) all Milestone Dates and Dates for Practical Completion;
(b) an estimate of the percentage of the work under the Subcontract which will be completed at the end of each week during the Subcontract;
(c) estimated monthly payments by John Holland to the Subcontractor;
(d) estimated monthly direct, indirect and staff personnel that will be engaged at the Site;
(e) full details of the Subcontractor's engineering and drawing programme;
(f) full details of the Subcontractor's procurement programme;
(g) weekly man hours scheduled to be worked for each activity, and weekly total labour scheduled that each trade or labour category; and
(h) periods of use of major items of Constructional Plant.
257 Appendix 6 to the Head Contract General Conditions include such matters as specification of software, format, and content. In particular, the Construction Programme is required to clearly show dates for Practical Completion and clearly indicate critical paths (V2/138 146).
258 Before the breakdown is approved, the Subcontractor is required to adhere to the Construction Programme: cl 10.5(a). Construction Programme is a defined term in cl 1.1:
Construction Programme is the programme prepared by John Holland for the Head Contract Works and provided to the Subcontractor by John Holland.
259 By cl 10.5(b), once the breakdown is approved in writing, the programme:
[S]hall become and thereafter be referred to as the Approved Construction Programme. The Approved Construction Programme or any approved revision thereof pursuant to the General Conditions Clause 10.6 shall supersede the Construction Programme and previously approved revised Approved Construction Programs. The Subcontractor shall comply with and perform the Works in accordance with the Approved Construction Programme or any approved revision thereof. The Subcontractor acknowledges that John Holland will rely upon the Approved Construction Programme or any approved revision thereof in coordinating other work at the Site and off the Site.
260 Clause 10.6 provides for John Holland to approve a revision to the Approved Construction Programme.
261 By cl 10.7, CMA is required to report actual progress against the Approved Construction Program at least monthly, including:
(b) remaining duration to complete activities and progress;
(c) physical progress as a percentage of the work to be done.
262 Progress claims made by CMA were adduced in evidence (see V23). They are set out in table form, with columns headed: Description of Work; Total Amount; Previously Claimed; This Claim; and Claimed to Date. The last three of these contain further columns for Unit Quantity, expressed as a percentage, and Amount. The column headed Description of Work has sections for site establishment, the four phases of the project, and 'Destablishment'.
263 The payment advices in evidence (see, for example, V23/8763, dated 13 October 2006) have corresponding columns.
264 By cl 10.9, failure to comply with any of the clauses of cl 10 'will amount to a substantial breach' entitling John Holland to terminate pursuant to cl 14.
265 CMA is entitled to claim an extension of time to the Date for Completion if it was, or would be, delayed by a Cause for Delay 'in a manner which will prevent it from achieving Completion of the Works': cl 10.10. 'Cause for Delay' is defined in cl 1.1 as, in effect, a breach by John Holland (no additional causes are set out in the particulars).
266 Clauses 10.11 to 10.15 prescribe in detail the procedure for CMA to claim an extension of time:
10.11 Claim
To claim an extension of time the Subcontractor must every 5 days after the first occurrence of the delay until the effects of the delay cease submit and update a written claim to John Holland for an extension to the date for Completion which:
(i) gives detailed particulars of the delay and the events or circumstances giving rise to the delay;
(ii) states the number of days extension of time claimed together with the basis of calculating that period, including evidence that the delay will prevent it from achieving completion by the Date for Completion; and
(iii) any other information John Holland reasonably requires or is specified in the Particulars.
10.12 Condition Precedent to Extension of Time
(a) The Subcontractor shall not be entitled to any extension of time pursuant to this General Conditions Clause 10.12 unless:
(i) the delay for which extension of time is claimed has affected the critical path of execution of work under the Subcontract as set out in the Approved Construction Program or any approved revision thereof; and
(ii) John Holland is satisfied that the work under the Subcontract was, but for the event giving rise to the claimed extension of time, on schedule (that is, complete to the required extent at the date of comparison in accordance with the Approved Construction Program or any approved revision thereof).
(b) Notwithstanding the succeeding provisions of this General Conditions Clause 10 be entitled to an extension of time for Practical Completion or Milestone Date unless the Subcontractor has satisfied John Holland in accordance with General Conditions Clause 10.12(a) and:
(i) notified John Holland in writing of the likelihood of delay, as soon as becoming aware of the likelihood of the delay;
(ii) taken all reasonable steps possible to preclude the occurrence of the cause of the delay;
(iii) taken all reasonable steps possible to minimise the extent and consequences of the delay;
(iv) notified John Holland, in writing, of the Subcontractor's intention to apply for an extension of time, within 7 days after the occurrence of the cause of any delay; specifying the cause of the delay, an estimate of the length of delay and the steps the Subcontractor will take to keep the delay as minimal as possible.
Each such notice submitted by the Subcontractor shall be consecutively numbered in the manner specified by John Holland and shall conform with any requirements of John Holland as to format and like matters; and
(v) within 14 days after the commencement of the delay, given John Holland a written claim bearing the same number as the notice given under General Conditions Clause 10.12 (b)(iv) for an extension of time for practical Completion. The Subcontractor's claim shall set out all the facts upon which the claim is based and shall state the number of days extension claimed; show and justify any effect on the Approved Construction Program or any approved revision thereof, and identify the Separable Portion of Portions or the whole of the Works for which the claim was made.
The claim shall also be accompanied by a copy of the Approved Construction Program or any approved revision thereof (or in the event that the Construction Programme has not been approved then a copy of the detailed breakdown of the Construction Programme submitted under the provisions of General Conditions Clause 10.2 and 10.4) which has been marked-up to show the direct effects of the delay on the Date for Practical Completion.
10.13 Failure to Comply with Condition Precedent
If the subcontractor fails to comply with General Conditions Clause 10.12 then:
(a) the Subcontractor shall have no entitlement to an extension of time;
(b) the Subcontractor shall comply with the requirements to carry out the work under the Subcontract by:
(i) any Milestone Date;
(ii) the Date for Practical Completion; and
(c) any principle of law or equity (including those which might otherwise entitle the Subcontractor to relief and the ('prevention principal') which might otherwise render:
(i) any Milestone Date;
(ii) the Date for Practical Completion;
unenforceable and render liquidated damages penal shall not apply.
267 Clause 10.14, Extension of Time, sets out the causes of delay for which the Subcontractor shall be entitled to an extension of time, but is expressed to be '[s]ubject to the Subcontractor having complied with GC 10.12'. The causes include:
(a) industrial disputes of general application which are not particular to the Subcontractor and which are not limited to the Site or to the Subcontractor's premises or work place;
(b) a variation directed under General Conditions Clause 11;
(c) any default or breach by John Holland, the Owners, or their respective employees, agents or other contractors;
(d) the following events [seven subparagraphs follow, none of which is relevant]
In determining whether the Subcontractor is entitled to an extension of time, John Holland shall have regard to the critical path of execution of work under the Subcontract as set out in the Approved Construction Program or any approved revision thereof in ascertaining whether or not the Subcontractor has been or will be delayed in reaching Practical Completion.
As soon as practicable, John Holland shall notify the Subcontractor in writing of the number of days' extension of time granted and, if the claim, or part of the claim, is rejected, shall notify the Subcontractor in writing of the reasons therefore.
Notwithstanding that the subcontractor has not complied with General Conditions Clause 10.12, John Holland may at any time, and for any reason whatever, by notice in writing to the Subcontractor extend the time for Practical Completion and then, to the extent of any such extension of time granted, GC 10.13 shall not apply.
"The exercise of the power to grant extensions of time in the preceding paragraph of GC 10.14 has no effect on the Subcontractor's entitlements under GC 10.19. If the Subcontractor is entitled to an extension of time under GC 10.14(b) or (c), then John Holland's exercise of this power will not preclude the Subcontractor from enforcing its rights under GC 10.14 (b) or (c)."
[The quotation marks appear in the original]
269 Clause 10.15 provides for John Holland at any time in its absolute discretion, by written notice to the Subcontractor, to unilaterally extend the date for completion. That power may be exercised whether or not the Subcontractor has made or is entitled to make a claim for an extension of time.
270 The entitlements of the Subcontractor, assuming compliance with the preconditions for making a claim, vary according to the cause of the delay:
271 One issue of construction may be dealt with immediately. CMA submitted that the word 'default' in cl 10.14 (c) must be given meaning, and extends the causes for which John Holland is liable to reimburse the Subcontractor under the first paragraph of cl 10.19 of the Subcontract. The general principle is that all words of the contract should be given meaning, where that is possible, so that none may be redundant. There are, however, composite expressions where the two words should be read together. In my opinion, 'default or breach' is such an expression. The paragraph shows an intention to include breach by act or by omission to do what the contractor is legally required to do. It is not intended, by the inclusion of 'default', to extend to unspecified causes which involve no failure by John Holland to comply with its obligations under the Subcontract. The category of 'any other cause whatever' in cl 10.14 would include causes not arising out of non-compliance, and the consequences of such a delay differ.
272 There is no doubt that the provisions of cl 10 are weighed heavily in favour of John Holland. In particular, they make it a precondition to the entitlement of a Subcontractor to an extension of time that it satisfy John Holland of the matters specified in cl 10.12(a). They are, however, the terms in which the parties chose to contract. In construing the agreement, I take into account that the contract was prepared by John Holland, and few deviations from the standard form were permitted. The implications of that fact, however, must be considered against cl 1.2(g) if the application of a construction contra proferentem would disadvantage John Holland.
273 CMA pleads three alternatives with regard to the construction programme under cl 10.5(a) of the Subcontract (statement of claim par 43(c)):
274 In its final submissions, CMA pressed the third alternative that there was no construction programme.
275 John Holland pleads that the construction programme dated 26 May 2006 had been approved on or about 22 September 2006 and from then was the Approved Construction Programme: defence and counterclaim par 83D. In particulars, it pleads the approval 'is inferred from the letter of that date from Jim Doyle of John Holland to Shaun Clarke of CMA'. Alternatively, John Holland pleads that it had approved the construction programme dated 4 August 2006 on 10 November 2006, or that programme had been adopted by agreement between the parties: defence and counterclaim par 83E. John Holland pleads that the 4 August programme amended the 26 May programme with respect to phases 1, 2 and 3, and, by implication, adopted the programme with respect to phase 4: defence and counterclaim par 45.
276 In November 2005, BHP Billiton had developed a programme, BAS2, dated 29 November 2005 (V2/98 295). BAS2 was the basis of the programme prepared by CMA.
277 On 22 December 2005, John Holland sent to CMA a 'Letter of Intent to Enter into Subcontract' (V2/450). The letter provided, relevantly, that the works shall be in accordance with the Head Contract programme.
278 During the period February 2006 to August 2006 (when the Subcontract was executed), CMA and John Holland negotiated regarding the terms of the Subcontract, although the evidence does not suggest that the programme for the works (set out in the Construction Programme) was the subject of any negotiation or qualification.
279 On 15 March 2006, Ms Jobson wrote to Mr Clarke, by email, with the response to Mr Clarke's comments on the Subcontract agreement. She referred also to the construction programme as 'another outstanding issue that must be addressed', adding that her understanding was that CMA would work in with John Holland's construction programme 'but this still requires [CMA] to submit a construction programme for our approval' (V2/537).
280 Mr Khalil prepared the CMA initial programme on or about 26 May 2006. Because the programmes were maintained on software and constantly updated it is difficult to be certain what the details of the programme were at a particular time. Mr Khalil said that the programme he prepared was based on a programme dated 8 February 2006 which had been provided by John Holland with the first draft of the Subcontract (exhibit 32 [9]). He could not remember whether that programme was BAS2, but I believe it that it was. There is no more likely alternative.
281 Mr Khalil prepared successive revisions of the initial programme between May 2006 and November 2006.
282 CMA mobilised to the site in June 2006 (V3/656). The Subcontract had not then been executed.
283 By letter dated 27 June 2006, addressed to Mr Doyle as project director, Mr Clarke provided CMA's project schedule 'showing our proposed program as required under clause 10.2 of our agreement, including milestone dates and dates for practical completion' (V3/647). A copy of this letter and the attached programme was sent on 21 July 2006 and received by John Holland on 26 July 2006 (V4/1054).
284 In his witness statement, Mr Clark said he sent this letter on 27 June 2006 (exhibit 28A [119]), and the programme was entitled 'BHP Dolphins Rev C'. The letter of Mr Doyle of John Holland, dated 22 September 2006, refers to this programme having been transmitted on 27 June.
285 Undisputed evidence at trial, in the witness statement of Mr Tan which was admitted without Mr Tan being required for crossexamination, is that 'Look Ahead' demolition programmes submitted by CMA were 'based on an outdated demolition program (submitted in early 2006) and the sequence logic links in them did not reflect what was actually happening on site' (exhibit 47 [24]). Mr Tan said that he requested CMA to update its demolition program but after some time CMA stopped providing its demolition programmes to him, and he did not continue to ask for updated versions.
286 Mr Tan also referred to the 'Look Ahead' construction programmes issued by John Holland from time to time (there is some evidence that it was weekly) for the purpose of enabling CMA to plan its activities to fit in with John Holland's construction activities (exhibit 47 [30]). Mr Tan said that CMA was also provided with copies of the Construction Programme to which John Holland was working: on 3 October 2006 he provided to Mr Xavier copies of BAS5 and BS5U (exhibit 47 [37]). He describes each of those programmes in this way: BAS5 was a working baseline programme that was used to plan John Holland's attempts to recover from delays that had affected the project to date; BS5U was based on BAS5, was updated at least weekly, and was used to measure the project progress against BAS5. Neither BAS5 nor BS5U, on that evidence, was the Approved Construction Programme for CMA, or the Construction Programme.
287 On 18 July 2006, Sheena House of John Holland sent an email to Mr Xavier of CMA in these terms:
Please find attached an extract copy of the demolition section of the approved construction programme as requested.
Note that this is the same programme as issued previously to [CMA]. (V4/1062)
288 On 24 July 2006, CMA requested that John Holland approve the change in methodology for the demolition of the remaining dolphins from heavy lift to blasting (V4/1072). This was described by CMA as a reversion to the original plan, with the heavy lift option described as 'an acceleration of the demolition programme to meet your required schedule'. The letter said that a programme (in Primavera format) was under separate cover.
289 The evidence does not disclose any formal response by John Holland. That was still the position when the contract was executed in August 2006.
290 On 25 July 2006, Mr Clarke sent by email a revised programme for phases 1 and 2, although still entitled 'BHP Dolphins Rev C'. The programme used the new methodology.
291 On 31 July 2006, Mr Doyle wrote to Mr Clarke regarding failure by CMA to respond to four earlier emails, sent on 26 July, and requesting without delay a 'detailed daily mobilisation programme outlining all activities from the 26th July to the resumption of the demolition works on 23rd Aug' (V4/1110).
292 On 8 August 2006, Mr Xavier of CMA provided a further programme to John Holland. The document is dated 4 August and is described as 'Blasting Option. Revision A'. Mr Clarke said that he approved this programme before it was sent. It had the same programming logic and methodology as the programme Mr Clarke had sent on 25 July, but the timing was slightly different and it was more refined. On 11 August, Mr Khalil sent to John Holland, by email, a soft copy of the programme. A meeting to review the demolition schedule was called for 14 August 2006 (V4/1117). On 16 August, Mr Brown of John Holland wrote to Mr Xavier of CMA regarding a meeting for the following morning. Matters to be addressed included that the demolition programme 'needs to reflect revised methodology and be broken down into a blow by blow detail' (V4/1119).
294 In September 2006, John Holland negotiated with BHP Billiton regarding revision of the current programme works under the Head Contract (V4/1152-1153).
295 On 22 September 2006, John Holland (by Mr Doyle) advised CMA that the rate of progress achieved by CMA was not satisfactory, and agreed programme milestones were not being met (V4/1192). The letter says that since CMA had changed its methodology from heavy lift, John Holland had not formally received an updated programme for the works, certain activities had not progressed in accordance with the submitted programme, and the rate of progress was unsatisfactory. It continued: 'Irrespective of the methodology changes, the requirement to achieve the various milestone dates remains unchanged and no extensions to these dates have been granted'. John Holland directed CMA to provide a recovery programme in accordance with cl 10.8.
296 On 26 September 2006, Mr Clarke replied, stating that CMA's belief was that the programme sent in an email on July 25 'was adequate formal advice of the revised schedule' (V4/1200).
297 On 29 September 2006, CMA notified John Holland of a proposed revised programme which would recover time lost 'dependent on resolution of the loadout issues' (V4/1218). The letter gave notice of two facts likely to cause delay: the tension anchors on BD7, and the capping on BD6.
298 On 29 September 2006, CMA gave notice of a contract variation regarding the reinforcing in BD6 (V4/1223). The variation was based upon additional time required to remove the cap of the dolphin.
299 On 3 October 2006, John Holland sent to CMA the files for Revised Construction Programme BAS5 'being the baseline programme' (V3/852).
300 On 16 October, CMA provided detailed costings for the BD6 works delay (V4/1246).
301 On 17 October 2006, John Holland gave a further notice that the rate of progress was unsatisfactory, referring to specific milestones for the demolition of dolphins and structural steel, and the removal of spoil from Bents 24 to 151 (V4/1248). John Holland sent further notice on 8 November (V4/1264).
302 On 9 November 2006, CMA requested John Holland to 'confirm the date/revision of the approved construction programme' since there had been a number of programs submitted (V4/1266).
303 On 10 November 2006, Janusz Matusiak of John Holland wrote to Daysi Lopez and Simon Pick of CMA, including the following: 'Please refer to GCC Clause 10.2. Accepted by JH Construction Programme Rev A is dated 4 August 06' (V4/1268).
304 On 15 November 2006, CMA wrote again, to the John Holland project director, referring to matters which had caused difficulties including access to the Utah Point landing facility being limited, delays arising from the 'as built construction' of the dolphins which had necessitated a revised method to remove the caps. The letter contained a revised programme, while requesting confirmation about what programme to date was the approved construction programme (V4/1281).
305 On 16 November, CMA gave notice of a variation for the demolition of BD2 (V4/1286). The demolition of BD2 was on the critical path.
306 John Holland apparently did not respond, at least not in writing, to CMA's request of 15 November to confirm what was then the approved construction programme. There was a meeting on 17 November at which CMA was advised 'to follow commercial process' with regard to claims for delay (V4/1291). The issue of programming was to be discussed in a separate meeting, then planned for 18 November. As far as I can tell, that meeting did not occur.
307 Despite its pleading, at trial CMA put forward three reasons why the programme comprising the programme dated 26 May 2006 and the revised programme for phases 1 and 2 (dated 4 August 2006) cannot be accepted as a programme intended to comply with cl 10.2. First, by the time the contract was entered, CMA had changed methodologies. Second, BAS2 - the programme John Holland was then working to - was subsequently changed, and by the time the contract was entered into, John Holland was behind in that programme. Third, the document does not formally comply with the requirements for an Approved Construction Programme in the Subcontract.
308 CMA also argued that the practice on site, including the use of the Look Ahead programs, and the provision by John Holland of BAS5 and BS5U, was a departure from the terms of the Subcontract under which CMA was directed to carry out its activities other than in accordance with its own construction program.
309 In my opinion, the evidence shows that the programme dated 26 May, and subsequently revised, was the Approved Construction Programme at the time of the relevant delays. Although the programme was required to be approved in writing, the Subcontract did not specify any formality for how that was to be done. John Holland relies on the letter from Mr Doyle on 22 September 2006 as evidencing approval. It does, inferentially, 'approve' the programme. Ms House's email of 18 July is evidence that the programme was approved earlier - either by that email or perhaps earlier (the programme having been sent in software by Mr Clarke on 27 June) (V4/1062).
310 The programme dated 4 August 2006 was not a complete programme. Mr Griffith described it, accurately in my opinion, as an interim programme. It is, on its face, a partial revision of the 26 May programme, and to be read with it. That is the way CMA pleaded the first of its alternatives. There is an express approval of the revision on 10 November 2006.
311 The timing issue on which CMA relies does not, in my opinion, prevent a construction programme from becoming an Approved Construction Programme. For example, failure to comply with cl 10.2 would be a breach entitling John Holland to give notice of default under cl 14. On the giving of notice of default, a Subcontractor may remedy the breach. It could not have been intended that a breakdown of the Construction Programme that is provided following a notice of default cannot become an Approved Construction Programme - that is, that the breach could not be remedied.
312 Whether John Holland was behind in its own construction may affect how the programme is implemented, and may result in claims for extension of time should that affect CMA's scheduled activities, but it is not a reason to find that the programme submitted by CMA and approved by John Holland is not within the terms of the Subcontract.
313 CMA also argued that the breakdown of the Construction Program could not be the Approved Construction Program because of changes in its work method. I find no support for that contention in the terms of the Subcontract. The fact that a program requires revision or is inaccurate does not, within the terms of this agreement, mean that it is not a programme. Further, the alternative pleaded by CMA, which I accept, is that the 26 May and 4 August programmes together are the Approved Construction Programme. The 4 August revision takes account of the changed work method.
314 Without an express abandonment of the need for a programme, I doubt that the Subcontract permits the third alternative pleaded by CMA that there was no Construction Programme. The Approved Construction Programme is not something separate from the Construction Programme, but a detailed breakdown of it. Until there was an Approved Programme, that is, until the breakdown was approved, cl 10.5 required CMA to adhere to the Construction Programme (as defined), and any claim for an extension of time to be accompanied by a copy of the detailed breakdown of the Construction Programme, submitted under cl 10.2 and 10.4: cl 10.12(b).
315 I also take into account that the Subcontract was executed in August 2006, following the changed demolition methodology and the 4 August revision being transmitted to John Holland.
316 I have already referred to the work of CMA being in four phases.
317 Under the Approved Construction Programme (and its variation by the revision on 4 August 2006):
318 The date for Practical Completion was 14 March 2007 and was unchanged with the revision of the programme.
319 CMA called Mark Joseph Griffith, and tendered four reports which he had prepared concerning analysis of delay: dated 27 March 2012, attaching three alternative cases of delay; 26 October 2012; a supplementary report concerning delay dated 12 February 2013; and a report dated 30 April 2013. Parts of the reports were not relied upon. Mr Griffith's second report was largely in reply to evidence which had been exchanged by John Holland but on which it did not rely at trial. John Holland did not call any expert evidence on the delay claim.
320 While he was crossexamined regarding particular assumptions he had been asked to make and about some of his conclusions, Mr Griffith's expertise was not in question.
321 It was not in contest that it is proper to apply critical path analysis to the consideration of the claims under the Subcontract for extension of time for delay. On the proper construction of the Subcontract, I accept that it shows an intention that the critical path method was to be used in programming and in analysing delays.
322 I also accept, as submitted on behalf of CMA, that the application of the critical path method is properly a matter for expert evidence. The conclusions expressed by the expert were, at times, apparently contrary to an intuitive approach. But I am satisfied that Mr Griffith demonstrated why those conclusions follow from the logic of the programme.
323 A second question of construction was in contest: whether the contract called for a prospective or a retrospective analysis of delay. Mr Griffith proceeded on the basis of his preferred construction of the contract, which in his view required a prospective analysis. That is not a matter of engineering expertise. But, in my opinion, the construction on which Mr Griffith proceeded was correct.
324 There are many factors in cl 10 which lead to this construction:
325 In the light of these provisions, it would be incongruous for the determination of whether delay entitles the Subcontractor to an extension of time to be determined at some later point and retrospectively.
326 The use of a prospective analysis is significant. John Holland contended that the removal of debris had to be completed for CMA to achieve practical completion, and whether that activity had in fact been completed at the specified Date for Completion must affect the analysis of earlier delays. But on a prospective construction, whether CMA had in fact completed all tasks at the extended date for practical completion does not affect the analysis which is concerned with what was the extent of the delay at the time of the cause of delay (ts 1318). That some other activity proved to take longer than expected, so that practical completion is further delayed, does not retrospectively change what was the critical path at the time of a delaying event (ts 1319). To the extent that contractual entitlements arise (either extension of time or entitlement to additional contract sums), those matters are to be determined from the time of the delay event. Where a subsequent delay event begins to operate concurrently, it is only taken to affect the critical path from when the event earlier in time ceases to be effective. It is the delay which first becomes critical which causes a delay in reaching practical completion (exhibit 60A pt 4.4).
327 John Holland argued against the extension of time claims on the basis that none of the delay events did delay or was likely to have delayed CMA in reaching completion, as a matter of fact, because CMA's obligation to remove demolition debris from the seabed, from July or September 2006, became in fact the actual critical path to completion. That was an activity which was never properly programmed. Further, it became in fact the most difficult and time consuming of all of the activities within CMA's work. The removal of debris was not completed until about March 2008. John Holland consistently contended that, as a matter of objective fact, it was debris removal which prevented CMA from achieving completion of its work on time.
328 Were a retrospective analysis appropriate, the delay in removal of debris may have the effect contended for. But, on the construction which I have accepted, the entitlements to an extension of time for delay and the costs of that delay are analysed prospectively. The additional delay to completion which occurred subsequently, although to some extent it operated concurrently, did not become critical until each of the earlier events and delays had ceased. The subsequent delay did not, on my understanding of the Subcontract, remove an entitlement that had already accrued.
329 John Holland also questioned some of the assumptions on which Mr Griffith proceeded. Relevantly, Mr Griffith relied on certain assumptions, from his instructions, which included (ts 1315 1317):
330 While these matters might affect CMA's contractual entitlements for delay, I did not understand Mr Griffith's analysis to rely on any of them for the purpose of determining the effect of particular delay events within the logic of the programme.
331 The other significant issue was in the identification of the relevant programme for the analysis. Mr Griffith, as he was asked to do, proceeded on alternatives, including that there was no Approved Construction Programme. For the reasons which I have given, I believe that the programme of 26 May 2006 read with the August revision was the relevant programme for the events on which CMA relies for its claimed extension of time.
332 There is, however, one issue which prevents complete acceptance of Mr Griffith's evidence.
333 Mr Griffith evaluated the effect of delay events using, as the baseline for his assessment, the most recent program revision prior to the commencement of the delay in question but updated or 'statused' to account for actual progress up to that time (ts 1321). That updating disregarded whether, at the time of the delay event, CMA was responsible for any prior delay. As a result, his analysis did not take into account whether, but for the event giving rise to the claimed extension of time, CMA was on schedule 'in accordance with the Approved Construction Program or any approved revision thereof', as required by cl 10.12(a)(ii) (ts 1320).
334 The delay analysis says nothing about other contractual requirements, including the conditions precedent for the making of a claim in cl 10.12 and cl 10.13.
335 CMA relies on the following causes and periods of delay (in chronological order):
336 The most significant of these claims is in relation to the shiploader.
337 There is an overlap of evidence and issues with regard to these two claims, and it is convenient to initially consider them together.
338 CMA pleads that John Holland prevented it from commencing and carrying out the phase 4 works in the period between 29 January 2007 and 10 May 2007 (a period of 101 days), due to the John Holland's failure to move the shiploader structure which caused a delay of 94 days to practical completion: statement of claim par 43. The period claimed extends beyond the date specified in the Subcontract for practical completion.
339 CMA pleads that it is also entitled to an extension of time as a result of delay caused by delay in access to the transfer station. It pleads the delay was the result of a breach by John Holland of cl 2.3 and cl 7.2 of the Subcontract, and caused delay from 13 February to 10 April 2007 (52 days): statement of claim par 43(e), par 44.43(e).
340 The relevant term of the contract is cl 7.2, under John Holland must give CMA 'such possession, and such use and control, of sufficient of the Site as is necessary to enable [CMA] to execute the work under the Subcontract'. If there is a relevant breach in providing access, it must be brought under cl 7.2. Clause 2.3 obliged John Holland to give sufficient access to the site to allow CMA to commence its work. It is not relevant to the obligation to provide access after the works were underway.
341 John Holland admits that CMA was unable to carry out phase 4 'in the period between 29 January 2007 and 10 May 2007 due to the late movement of the shiploader': defence and counterclaim par 45. The shiploader was not relocated until 9 May 2007.
342 John Holland denies that it delayed giving CMA access to the transfer station (defence and counterclaim par 45(i)). It pleads that CMA caused the delay by failing to demolish Bents 24 to 11 in accordance with the Approved Construction Programme. John Holland further pleads that CMA caused disruption and delay to John Holland's piling operation, and failed to remove all concrete debris and rebar from the seabed. As a result of these matters, John Holland was not able and not obliged to provide access to the transfer station at the times pleaded by CMA.
343 The parties agree that the scheduled date for the movement of the shiploader was 29 January 2007, and it was not moved until 9 May a delay of 101 days. Until the shiploader was moved, CMA could not complete the demolition of Bents 3 to 11. In the light of that agreement, the major issue in relation to the shiploader is whether CMA complied with the requirements of cl 10.12 in notifying John Holland of the delay and claiming an extension of time.
344 John Holland argued a number of other defences, none of which I would uphold.
345 It submitted, as an over-riding fact that defeats all delay claims, that the event which caused CMA to be delayed in reaching completion by the date specified in the Subcontract was its own breach of the Subcontract. John Holland argued that it was the presence of large debris from the demolition of the dolphins, which CMA had neither plans nor resources to remove, and not the delay in the movement of the shiploader or delay in access to the transfer station, which in fact prevented CMA from achieving Completion (as defined) by the required time. John Holland further submitted that, while the movement of the shiploader was initially on the critical path of the works, by April 2007 that was no longer the case because the task of removing debris had changed the critical path.
346 I do not accept that argument. First, for the reasons I have given above, on its proper construction, the Subcontract provides that the entitlement to an extension of time for delay arises at the time of the delay event, and the effect of that event is analysed prospectively. That is, the effect of a cause of delay is considered relative to the state of the works at the time that cause begins to delay the Subcontractor. A subsequent change in the critical path does not affect the entitlement. Second, on its proper construction, the Subcontract did not require CMA to blast the dolphins so as to produce only highly fragmented debris. That may have been the aim, but it was not a contractual term. This issue is discussed in more detail below in relation to John Holland's breach of contract case. Third, the removal of large debris and rebar was not a programmed activity. It had to be done before Completion (that is, by the specified Date for Completion of 14 March 2007 or any extension to that date), and CMA had an ongoing obligation to remove material that might interfere with other works, including dredging. But CMA was not behind schedule by reference to the Approved Construction Programme in January 2007, by reason only of its failure to remove all debris from the seabed.
347 John Holland also submitted that CMA was partially responsible for the delay, due its own delay in demolition of Bents 24 to 11 by 28 days. Completion was programmed for 12 October 2006, but did not occur until 15 November 2006. Demolition of that part of the wharf was a predecessor to John Holland's construction of the replacement wharf. The replacement wharf had to be in place for the movement of the shiploader. John Holland claims it was delayed by nine days.
348 John Holland also claimed that CMA did not have sufficient resources to enable both the demolition of the remainder of the wharf and the demolition of the transfer station to be carried out at the same time. It submits that the time occupied in demolition of the transfer station must be subtracted from the delay caused by late movement of the shiploader.
349 It is true that CMA was engaged in demolition of the transfer station during part of the time of the delay caused by the late movement of the shiploader. But John Holland's argument fails because, on the proper construction of the contract, CMA's entitlement to an extension of time for the delay caused by late movement of the shiploader arose first. A later occurring delay would not affect CMA's entitlement to an extension of time until the delay from that cause was exhausted.
350 Further, the evidence does not show that CMA would not have been able to demolish the remainder of the wharf and the transfer station with its existing resources. The opportunity to do so just did not arise.
351 CMA pleads (statement of claim par 44) that it notified John Holland in writing of the likelihood of delay caused by the failure to move the shiploader on 21 February 2007, continued to notify John Holland every five days as required, and submitted claims for extensions of time pursuant to cl 10.11 and cl 10.12 of the Subcontract for each of the months February to May 2007 (inclusive). On its own case, this is approximately three weeks after the first occurrence of the delay.
352 The document sent on 21 February 2007 (V4/1349) is headed 'Notice of Delay and Claim for Costs and Extension of Time'. It states:
Pursuant to clause 10 of the referenced contract we give notice of a delay of unspecified period commencing on January 29th 2007 as a result of not being granted possession of the site to commence phase 4 of the contract works. The circumstances giving rise to the claim are as follows;
The delay period cannot be determined as the date of movement of the shiploader, advised verbally to the writer on February 21st to be April 1st has not yet been confirmed. This notice of delay will therefore be in effect until the actual date of the shiploader movement.
The costs of the delay are being compiled at present and will be advised within the required time.
353 The notice then outlines steps that CMA have undertaken to mitigate the cost of the delay.
354 On 26 February, CMA sent a five day notice update pursuant to cl 10.11 of the contract, again giving notice of an ongoing delay of unspecified period commencing on 29 January 2007. Again the notice said the costs of delay were being compiled and would be advised within the required time. The notice stated that the notice of delay would be in effect until the actual date of the shiploader movement (V4/1351).
355 Notice to the same effect was given on 3 March (V4/1358). On 7 March, CMA gave notice of its quantified claim covering the period from 30 January to 25 February. The letter continued:
At the time of writing we are still in delay and our current understanding is that the site will be made available to us on or about April 1st at which time delay will cease and project works will resume. A claim covering the period from 25th February through to date of our next scheduled progress claim will be forwarded at that time. (V4/1360)
356 CMA continued to give five day updates from 8 March (V4/1362) to 9 May 2007.
357 On 27 March, CMA submitted a progress claim, which included a delay claim for both February and March in the sum of $3,226,518 (V4/1373). John Holland replied on the same day, in the following terms:
We note this claim has not been made in accordance with General Conditions of Contract (GCC) Clauses 10.11, 10.12(a)(i) and (ii), (b)(ii), (iii), and (v). Therefore, in accordance with GCC Clause 10.13 the Subcontractor's claims are hereby rejected in full. Further your attention is drawn to GCC clause 10.13 (b) and (c). You are required to comply with the requirements to complete the works under the Subcontract by the Date for Practical Completion.
Please note that you have failed to meet the requirements of GCC Clause 10.13(b) and accordingly we reserve all of our rights under the Subcontract. (V4/1374)
358 On 28 March 2007, Mr Clarke wrote to Mr Bryce by email regarding resolution of outstanding issues. In particular he referred to CMA's disappointment with John Holland's failure to address the delay claim submitted on 27 March, and suggested an alternative proposition to resolution of all issues (V4/1375 1376).
359 On 30 March 2007, John Holland gave notice that the 'target shiploader relocation date' was now 19 April, and asked CMA to make its arrangements accordingly and advise of any impacts (V4/1381).
360 On 4 April 2007, Mr Clarke responded to John Holland's letter of 27 March, and in particular the refusal of the delay claim. CMA pressed its case, and in particular that it had given notice on 21 February, after being unable to establish a date for the scheduled movement of the shiploader. CMA said that while its notice of delay was given 21 days after the date when the shiploader should originally have been moved, 'our correspondence was submitted after 21 days when it became apparent that JHG would not meet the schedule it advised to us, in either the dredge work or the movement of the shiploader' (V4/1385). CMA maintained that in all other respects its notice corresponded to the requirements of the Subcontract, and called upon John Holland to honour its obligations.
361 CMA gave a further five day update on 7 April 2007, that the delay would continue until the date of movement of the shiploader, then advised to be 19 April (V4/1392). CMA gave further notice on 12 April (V4/1397), 19 April and 24 April, on which occasions it referred to advice that the movement was to be 'no earlier than April 26th' (V4/1399, 1402). On 25 April, CMA made its next progress claim, including a delay claim for April of $1,136,007 (V4/1405). On 29 April it gave another five day notice.
362 It appears that, at this stage, other issues were intruding and complicating the response to the delay claim. John Holland, for example, was not looking at the delay in isolation, but having regard also to the demolition of MD4A, the failure to remove demolition debris left on the seabed, the downtime on the Hippopotes, and the effect of the oil spills which had occurred (V4/1413).
363 CMA gave its last five day update on 9 May, the day before the shiploader was in fact moved (V4/1415 1416).
364 On 12 May 2007, CMA gave notice of a further variation and delay, regarding excessive amounts of iron ore located under the shiploader which impeded its work (V4/1417). Although this variation is not in dispute, the process followed is relevant to CMA's pleaded claim and submissions that the parties had adopted a convention under which compliance with the Subcontract was not required.
365 On 20 July 2007, CMA gave notice that it had achieved practical completion on 25 June 2007 and from that date 'has been attending to Defects, principally clearance of demolition materials from the seabed, as directed and agreed' (V4/1425). CMA gave Notice of Completion pursuant to cl 13.1, with completion expected to occur on or before 17 August 2007 (V4/1426).
366 On 3 August 2007, CMA sent a notice formally claiming an extension to the Date for Completion and claiming costs in accordance with cl 10.19 for the delay in movement of the shiploader. The claim was based upon John Holland's breach of contract in failing to give sufficient possession of the site as required by cl 7.2. CMA claimed an extension of time for a total of 101 days, from 29 January to 10 May 2007. It claimed delay costs of $4,428,459 (V4/1427 1429).
367 The competing pleadings make it necessary to deal with some issues of construction.
368 John Holland pleaded that CMA was first made aware there would be a delay in or around October 2006, but was first given notice on 21 February 2007. John Holland relies upon the fact that each of BAS3, BAS5 and BAS5U (programmes provided by John Holland to CMA) showed a delay to the planned movement of the shiploader from the original date of 29 January 2007 to 22 February and 16 February. And 'Look Ahead' programme updates, which were issued every four weeks, foreshadowed the delay and further delay beyond 22 February 2007.
369 CMA pleads that, on its proper construction, the condition precedent in cl 10.12 is not the formal giving of notice, but that John Holland is informed of the likelihood of delay. To the extent John Holland knows the relevant facts, no further notice is required. If that is the correct construction, there is no doubt that John Holland was aware of the delay. This argument, however, seems to stem from a very limited view of the requirements of cl 10.12(a) and (b).
370 Although there is a degree of overlap, cl 10.12 must be read with cl 10.11 and the notice requirements set out in that clause. Also, cl 10.12 (a)(ii), read with the opening words of cl 10.12 (b), shows that the relevant conditions include that CMA 'has satisfied John Holland' in accordance with par (a), and has given notice and taken steps as required by par (b). The requirements in par (b) are not limited to notifying John Holland of the likelihood of delay, or even the cause of the delay. There are, at least, six other matters of which CMA was required to give notice:
(1) its intention to apply for an extension of time;
(6) the effect on the approved construction programme.
371 While John Holland may be reasonably assumed to know of the cause of a delay, where that cause is due to its own breach or delay, and where it may possibly know the probable effect of the delay, those matters do not exhaust the requirements of notice under cl 10.12.
372 CMA also argued that it did not know, and could not know, the likely length of the delay. John Holland itself did not know (ts 885, 481). That argument does not have regard to either the nature of the information required (which includes an estimate of the length of the delay), and the continuing nature of the obligation on the Subcontractor. CMA's argument attached no importance to the obligations under cl 10.11, on the basis that they are promissory and not expressed to be a condition precedent to a claim under cl 10.12. But the requirement under cl 10.11 for the Subcontractor to update the claim for an extension is part of the contractual scheme.
373 Next, CMA argued that, on the proper construction of cl 10.12, failure to give notice does not defeat a claim once and for all. By giving late notice, it may lose an entitlement to costs incurred before the period to which the notice applies, but its entitlement is triggered in relation to costs from then.
374 This construction is inconsistent with the language of cl 10.11 and cl 10.12, which impose obligations on the Subcontractor on the first occurrence of the delay (cl 10.11), as soon as becoming aware of the likelihood of the delay (cl 10.12(b)(i)), and within a specified time after the occurrence of the cause of any delay (cl 10.12(b)(iv)).
375 CMA also argued against a construction that would result in absurdity. There is no doubt that the strict application of cl 10.12 and cl 10.13 is harsh. But I am not satisfied that it is without purpose and absurd, so that an alternative construction must be given, notwithstanding apparently clear words. In approaching cl 10, I believe it is appropriate to have regard to the fact that it is part of a Subcontract, designed to mirror obligations in the Head Contract. The nature of the information required to be given by the Subcontractor may be relevant to John Holland meeting its own obligations to its principal.
376 On CMA's own case, the first notice it gave of its intention to apply for an extension of time due to the movement of the shiploader was on 21 February 2007. That was well outside the time prescribed in cl 10.11 and cl 10.12. In my opinion, John Holland were entitled to insist on the strict contractual position and deny liability for the delay.
377 With regard to the transfer station, CMA pleads that the delay was the subject of separate notice given from time to time during the course of the delay 'in circumstances where ... the parties had dispensed with or adopted a convention of not requiring compliance with the formal notice provisions under the Subcontract'. CMA pleads written notices were given on 30 September 2006, 16 November 2006 and 28 April 2007.
378 None of the notices which CMA pleaded comply with the requirements of cl 10.12, either as to the time it was given or as to content. In particular, CMA did not give notice of its intention to claim an extension of time until October 2012, in its second further amended statement of claim.
379 CMA pleads that, by a course of conduct, the parties adopted a convention by which they did not strictly comply with notice provisions in the Subcontract, including in relation to extensions of time. CMA pleads a common assumption, reliance by CMA, and that it would be unconscionable for John Holland to rely on CMA's failure to comply. The plea is made initially in relation to the variation claims, but extended to all notice provisions in the contract (statement of claim par 35(b)).
380 To establish a conventional estoppel as pleaded, CMA must establish that:
See National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548, 550 as applied by GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1 [426]; Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119; (2008) 66 ACSR 594 [164].
381 The evidence does not support the claim that there was any common assumption between the parties.
382 First, on the evidence which I have outlined above, I am satisfied that there was no common assumption that the parties had dispensed with the need for a Construction Programme. John Holland requested one. Mr Khalil prepared successive revisions of the initial programme between May 2006 and November 2006. In particular, Mr Clarke, in providing the programme dated 26 May 2006, referred to it as a program 'as required under clause 10.2 of our agreement'. And on 26 September 2006, Mr Clarke referred to the programme he had sent in an email on July 25 as 'adequate formal advice of the revised schedule' (V4/1200). Following the change in methodology from heavy lift to blasting, the parties discussed the need for the programme to 'reflect revised methodology and be broken down into a blow by blow detail' (V4/1119).
383 Second, John Holland on several occasions wrote to CMA regarding progress measure against program milestones. In particular, John Holland gave notices of unsatisfactory progress, referring to specific milestones, in October and again in November 2006. In November 2006, CMA requested John Holland to 'confirm the date/revision of the approved construction programme' since there had been a number of programs submitted (V4/1266). John Holland replied identifying the program of 4 August.
384 Third, the process followed by both parties in relation to CMA's claim for an extension of time as a result of delay in movement of the shiploader is entirely inconsistent with the shared assumption alleged.
385 For these reasons, I do not accept the claim in estoppel.
386 CMA pleads that John Holland directed it to delay the demolition of MD4A from 21 March 2007 to 2 June 2007 (68 days) (statement of claim par 43(f)). It pleads that John Holland had notice of the delay by reason that it directed it. CMA says 22 days (of the 68 day delay) were on the critical path (in addition to the delay caused by failure to move the shiploader until 10 May 2007). Its case on the extent of the delay is supported by the evidence of Mr Griffith, which I accept.
387 CMA pleads that John Holland was in breach of cl 2.3 and cl 7.2 of the Subcontract. For the reasons I have given above, the reference to cl 2.3 is misconceived.
388 John Holland denies that it delayed CMA by reason of the deferral of access to MD4A. It pleads a range of defences, including CMA's failure to claim an extension of time under the Subcontract.
389 The blasting of MD4 and MD4A was carried out substantially later than originally programmed. John Holland does not dispute that it directed CMA not to demolish MD4A in the programmed sequence, although it did not issue a Variation Order. John Holland pleads that, at site meetings, it 'in effect' directed a variation to the Approved Construction Programme by which demolition of the headstock to MD4A was deferred: defence and counterclaim par 45(j). It is not in dispute that there was no written variation order. On John Holland's pleaded case, that it 'in effect' directed the deferral of the demolition as a variation, it is not open to it to argue that there was no written order, and it did not seek to do so.
390 The evidence was consistent that the demolition of each of MD4 and MD4A had to be deferred because of a bird nest on top of one of them the parties' pleaded cases are that it was on MD4A, although the evidence was not consistent (compare: exhibit 27A [249], [253] and exhibit 28A [238] [239]).
391 MD4 was blasted on 9 December 2006. By that time, CMA was required to put in place protective measures as the new wharf had been constructed near to MD4. On 12 December 2006, CMA gave notice of delay, and a request for an extension of time with regard to access to MD4. Relevantly, it said that it had been prevented from entering the area around MD4 for concrete removal and pile extraction from the dredging pocket due to John Holland's lifting operations. CMA claimed delay costs as a consequence of that event, and continued:
CMA will be unable to complete the removal of MD4 this year because of current works on BD1 and BD2. We will forward a delay claim and request an extension of time to the contract once we have been granted access to MD4 in the new year. (V4/1324)
392 CMA did not, however, give written notice of a claim for an extension of time for the demolition of MD4A. CMA, in its submissions, refers to a letter from Mr Clarke to John Holland on 6 December 2006. The letter itself does not appear to be in evidence. In his witness statement, Mr Clarke describes it as 'in relation to the demolition of MD4 and the protective measures that would be implemented' (exhibit 28A [239]). The letter from Mr Clarke and the notice given in December 2006 do not relate to the period (21 March to 3 June 2007) for which an extension is claimed.
393 More generally, CMA relies upon its pleaded case (statement of claim par 44(d)) that the parties had dispensed with or adopted a convention of not requiring compliance with the notice provisions. That convention has not been established.
394 The failure by CMA to comply with the requirements of cl 10.12 entitled John Holland to reject its claim.
395 The second aspect of Variation 79 is whether it entitles CMA to an extension of time and payment for delay under cl 10.
396 CMA pleads that the additional works caused by the construction of BD1, 2 and 6 not only entitled it to a variation, but delayed its performance of the works pursuant to the Construction Programme from 25 October 2006 to 13 December 2006 (46 days).
397 In response to the delay claim, John Holland pleads (defence and counterclaim par 45(h)) that:
(i) [CMA] caused the delay with respect to the demolition of berthing dolphins 1, 2 and 6 by implementing an ineffective blasting methodology which did not accord with the revised work method and was in breach of the Subcontract ...;
(ii) under the Subcontract, the risk associated with the accuracy or adequacy of information as to berthing dolphins 1, 2 and 6 was at all times allocated to [CMA] under the Subcontract (clause 7.1).
398 John Holland further pleads that CMA failed to comply with the Subcontract by failing to notify it in writing of the likelihood of delay; failing to give notice or make any claim in accordance with the terms of the Subcontract; and failing to take all reasonable steps to minimise the consequences of the alleged delay by failing to engage Alterrain to remain on site and continue performing the works in October and November 2006.
399 I have set out the relevant evidence in considering the claim for the variation. I deal with the delay claim on the basis that CMA has established that the demolition of the dolphins was a variation under the contract.
400 Alterrain first discovered the extent of the rebar reinforcement on BD6 on 12 September 2006. It advised CMA on that day. On 20 September 2006, Mr Franklin proposed the varied methodology, due to the amount of reinforcement in the dolphins (V4/1183). He reported on Alterrain's variation claim on 28 September (V4/1213 1217). At that stage he anticipated a delay of 12 to 14 days for each dolphin (V4/1214). The steel reinforcement was not the only cause of delay. The Alterrain shift reports during this period show, in particular, that work was delayed because there were no bins or skips for the rubble (V4/1243 1251).
401 CMA first gave notice to John Holland on 29 September 2006. The notice was specifically in regard to BD6 and said only that 'reinforcing spacing on the BD6 capping does not conform to the drawings resulting in a significantly prolonged drilling program. These issues are impacting on the efficient deployment of our resources' (V4/1218 1219). The letter concluded by stating that CMA proposed to 'reevaluate progress again in seven days and provide a further recovery program'. That is, at this stage, CMA was contemplating a recovery programme rather than an extension of time for completion.
402 On 29 September 2006, CMA gave a notice to John Holland of a contract variation, regarding reinforcing in dolphin BD6 (V4/1223). It did not give notice of delay in accordance with cl 10.12, but stated that CMA intended to 'get back on schedule by deploying additional manpower and equipment'.
403 Work on BD2 was started after BD6. On 16 October 2006, the hammering of the top cap of BD2 was assessed as half done (V4/1245). On that day, Mr Crosthwaite requested CMA to submit a claim for variation. CMA gave a notice of contract variation with 'detail costing for the BD6 works delay' (V4/1246).
404 The hammering of the top cap of BD2 was completed on 19 October (V4/1252).
405 The hammering of BD6 was completed on 23 October, the material was still to be loaded out, and BD6 was to be drilled (V4/1253B). The drilling continued to 25 October when it was noted as completed (V4/1254A). The main structure of BD6 was blasted on 28 October 2006 (V4/1260; exhibit 27A [214]).
406 Alterrain employees left the site on either 30 October or 2 November 2006, and returned on 15 November.
407 On 8 November 2006, John Holland again gave notice to CMA of its failure to meet agreed milestones and its unsatisfactory rate of progress (V4/1264). Specifically, John Holland referred to the delay to its works from BD6, 'which continues to inhibit our ability to progress the Head Contract Works'.
408 On 15 November 2006, Mr Clarke wrote to Mr Doyle on a range of issues regarding the rate of progress. He said (V4/1280):
As has been reported in some detail, the as built construction of the dolphins continues to delay their demolition. The quantum and placement of dolphin reinforcing is significantly different to the drawings provided and on which we relied on for our blasting contractor to quote. The difference has necessitated a revised method to remove the caps and hand drill for explosives placement. The resultant blasting outcome has proven unsatisfactory for maximising the concrete recovery into barges.
409 Formally, on 16 November, CMA gave notice of a claim for variation to the demolition of BD2, 'as a consequence of the contract drawings ... being different to the actual concrete structure ... CMA have had to change our original demolition method, which will now incur extra over costs' (V4/1286).
410 BD2 was prepared by exposing the rebar by hammering. On 23 November, the top cap of BD2 was charged and fired (V4/1294). This did not, however, complete the demolition. Further drilling and hammering was recorded up to 14 December 2006, while work on removing the top cap of BD1 was concurrently in progress (V4/1300 1316). On 15 December 2006, BD2 was blasted.
411 On the evidence of Mr Griffith, I am satisfied that the delay caused by the change in the scope of works to demolish BD1, 2 and 6 (BD2 being on the critical path) would entitle CMA to the claimed delay of 46 days.
412 The plea by John Holland that CMA caused the delay by implementing an ineffective blasting methodology is not sustained. The delay was not caused in the blasting, but by the need to remove the reinforced cap by other methods before blasting could be done.
413 The alternative plea that the planned methodology was to use a heavy lift barge also must fail, because the heavy lift option had been abandoned, and the new methodology adopted as the basis of the programme of 4 August 2006. This was before the Subcontract was executed, and well before the work on BD2.
414 The critical issue, however, is the failure of CMA to comply with the requirements of the Subcontract which are stipulated as conditions precedent to such a claim.
415 On 4 September 2007, CMA gave notice of a variation claim for additional works carried out on BD1, 2 and 6 (V4/1430). While the letter contains a detailed statement of the basis of the claim for additional demolition and clean-up costs, even at this late stage (and in the context of the claims for extension of time as a result of delay in access to the shiploader, which CMA was making at the same time) there was no claim for an extension of time for this costs for delay.
416 Again, I am satisfied that John Holland was entitled to reject the claim for failure to comply with cl 10.12.
417 CMA seeks to avoid the consequence of failure to comply with the formal requirements of cl 10.12 by pleading a range of issues in pars 35 and 44 of the statement of claim. I have already considered the estoppel argument. Some of the others may be dealt with quite shortly.
418 First, CMA pleaded that on each occasion the parties agreed to vary the Subcontract, and neither party required the formal requirements of the Subcontract to be complied with. There is no evidence of any agreement to vary. While an agreement may be inferred from conduct, some caution is called for. A contract will only be inferred if it can be stated with some confidence that the parties made an agreement which must, in the circumstances, have been intended to be binding. In these circumstances, where the parties relations were governed by a detailed written contract, and where John Holland was repeatedly giving notice of CMA's failure to meet milestones, I can find no basis for inferring an agreement to vary on each occasion.
419 Second, CMA pleads that cl 10.12 applies only to an Approved Construction Programme. For the reasons I have given, I am satisfied there was an approved programme.
420 Third, CMA pleads that it complied with cl 10.12(b) to the extent that it could be complied with. It is not clear whether the plea is that CMA complied to the extent that it could, even if that fell short of the requirements of cl 10.12, or that it complied with cl 10.12 on its proper construction. On the findings I have set out above, CMA did not comply with regard to any of the claimed extensions of time.
421 Fourth, CMA pleads that, on the proper construction of the Subcontract, cl 10.12 only operated in relation to tasks on the critical path of the Approved Construction Program. I remain unsure what is intended by this plea. CMA has claimed extensions of time only for delays that affected the critical path, and that is the substance of its expert evidence. The plea adds nothing.
422 Fifth, CMA pleads that cl 10.12 had no application to delays caused by John Holland which were known to, or the responsibility of, John Holland. I have dealt with this argument above.
423 Sixth, CMA pleads that John Holland had abandoned any Approved Construction Programme and/or any time requirement in the Subcontract by December 2006. The evidence does not establish that claim. It is inconsistent with the findings that I have set out in relation to the plea of an estoppel.
424 Seventh, CMA pleads that performance of the Subcontract in accordance with the Approved Construction Program was prevented by John Holland. I deal with the question of the 'prevention principle' below, in the section of these reasons relating to liquidated damages. For the reasons I give there, I am not satisfied that CMA can rely on that principle in the face of cl 10.13.
425 Apart from the construction arguments, CMA relied on other matters which affected its ability to achieve completion on time:
(i) John Holland gave CMA directions which could not be complied with while also meeting the Approved Construction Programme;
(ii) John Holland interfered with CMA's performance of the Subcontract in a timely way by directing it to perform tasks which interfered with its timely performance;
(iii) John Holland failed to provide an operational or adequate load out facilities;
(iv) John Holland failed to meet its construction schedule;
(v) John Holland gave CMA directions in accordance with a rolling Three Week Look Ahead Program instead of permitting CMA to perform the Subcontract works in accordance with the schedule it submitted; and
(vi) John Holland refused or failed to approve schedules submitted from time to time or to communicate the status of those schedules.
426 CMA has not shown why the mechanism in the contract for dealing with extension of time and costs for delay could not have been engaged.
427 CMA also pleaded that John Holland did not cause the Hippopotes to be on site until about March 2007, when the dredging work should have commenced in November or December 2006. As I have said above, the removal of demolition debris by the dredge was not a programmed activity. Further, even in March 2007, the efficient engagement of the Hippopotes was prevented by the failure of CMA to remove demolition debris from the seabed where it would interfere with the dredging process, in breach of its obligations under the Scope of Works.
428 In par 16 of the statement of claim, CMA pleads that John Holland's power under cl 10.14 and cl 10.15 of the Subcontract:
(a) could only be exercised for the purpose for which it was conferred namely ... to fix a reasonable period for performance of the Works as varied from time to time; and, or
(b) (other than the term in clause 10.15) subject to an implied term of the Subcontract that the Defendant would act fairly, reasonably and in good faith.
429 The discretionary power in cl 10.14 is in these terms:
Notwithstanding that the Subcontractor has not complied with General Conditions Clause 10.12, John Holland may at any time, and for any reason whatever, by notice in writing to the Subcontractor extend the time for Practical Completion and then, to the extent of any such extension of time granted, GC 10.13 shall not apply.
430 Clause 10.15 empowers John Holland, 'in its absolute discretion and without affecting any rights or attracting any obligations' to extend the Date for Completion.
431 I am not satisfied that cl 10.14 imposed any obligation upon John Holland to exercise its discretion at all. The discretion in cl 10.14 is not fettered. It may be exercised for the benefit of John Holland or the Subcontractor. Were John Holland to exercise its discretion, it may be necessary to consider the purpose for which the power has been exercised. I do not need to decide that.
432 It is also not necessary to consider generally the question of implied obligations to act reasonably and in good faith. The question must be considered in the context of the particular contract, and the particular contractual power which is being exercised. In the context of the detailed provisions in cl 10, and in particular cl 10.13 under which compliance with the notice requirements of cl 10.12 is a condition precedent to any entitlement to an extension of time, I can see no basis within the terms of the contract to limit John Holland's discretion in the manner sought. The court is being asked to dispense with specific and detailed provisions to which the parties agreed. While John Holland may choose to exercise its discretion, notwithstanding failure by the Subcontractor to comply with cl 10.12, the court does not have that discretion.
433 To the extent that CMA relies upon the exercise of the power in cl 10.14 or cl 10.15 to extend the date for practical completion and defeat John Holland's claim for liquidated damages, it may be a barren argument. I deal with this below, in relation to John Holland's claim for liquidated damages. But, in summary, were time extended for each of the pleaded delay events, on CMA's case, the date for practical completion would extend to the end of June 2007. John Holland claims CMA did not achieve Completion before 2008. If that is so, CMA would remain liable for the full amount of liquidated damages, as limited by the Subcontract.
434 Finally, while the exercise of the power under cl 10.15 might extend the date for completion, and thus might affect John Holland's right to liquidated damages, it would not give rise to any entitlement to delay costs.
Failure to give possession or sufficient use or control of the site
435 In pars 75 to 81 of the statement of claim, CMA pleads an alternative case based on failure of John Holland to give possession, use and control of sufficient of the site as is necessary to enable CMA to execute the works. This is alleged to be a breach of cl 2.3 and cl 7.2 of the Subcontract. CMA also pleads an implied term that John Holland would not hinder or prevent it from performing the Subcontract, executing the Works or obtaining the benefit of the Subcontract, and would do all things reasonably necessary to permit CMA to perform its obligations, execute the Works and obtain the benefits of the Subcontract (statement of claim par 77).
436 CMA pleads a breach by John Holland of these obligations, preventing CMA from complying with its obligations under the Subcontract.
437 CMA pleads that as a result of these breaches it has suffered loss and damage, the particulars of which are pleaded by reference to pars 155 to 196 of the expert report of Mr Griffith dated 27 March 2012. In summary, Mr Griffith has performed a delay cost calculation, which includes costs incurred after 25 June 2007, on the assumption that CMA achieved practical completion on that date.
438 It is unnecessary to deal with that calculation in detail. First, in my opinion, cl 10, and in particular cl 10.14(c) and cl 10.19 (first par) provide the remedy where the Subcontractor is or will be delayed in reaching practical completion by reason of any default or breach by John Holland. If CMA is not entitled to an extension of time for practical completion because of its failure to comply with the conditions set out in cl 10.12, or for some other reason in the terms of the Subcontract, it cannot bypass those express terms by relying on such a breach. Accordingly, I would not allow CMA's claim as pleaded.
439 Second, to the extent that CMA relies upon costs incurred after 25 June 2007, contrary to the assumption Mr Griffith was instructed to make, I am satisfied that it had not achieved practical completion by that date. I give reasons for that conclusion elsewhere in this judgment.
440 If I am wrong, and John Holland is liable on this basis, the parties agreed that, due to the complexity of the calculation, and in particular that the loss is not the same on each day of the alleged delay, the court should determine CMA's entitlement to delay costs and the days to which that entitlement applies. The parties can then calculate the relevant amounts (CMA's written submissions par 98).
441 John Holland pleads that CMA took over work contracted to another subcontractor (removal of the 'tripper'). The purpose and effect of this variation was to give CMA an opportunity to mitigate any costs or delays resulting from the late movement of the shiploader. The effect of that mitigation has been allowed for by the parties.
442 CMA advanced a further claim that, after it had achieved completion but was required to remain on site to complete the removal of demolition debris, John Holland further delayed it in finishing its work by denying or limiting access to the site. The pleaded case, in pars 75 to 79 of the statement of claim, was more extensive than the case put in final submissions. There CMA submitted that:
443 In pleading the claim, CMA relies also upon the term implied in law that John Holland would do all things reasonably necessary on its part to enable CMA to perform its obligations under the Subcontract, execute the Works, and obtain the benefit of the agreement.
444 CMA advances this claim to damages for breach of cl 7.2, and not as a claim under cl 10.19. It relies upon the allegation that there was a 'relevantly unconditioned obligation' to give CMA possession, use, and control of the site.
445 In its defence, John Holland pleads that any failure to provide access to parts of this site was for work that CMA was carrying out otherwise than in accordance with the Approved Construction Program and in breach of the Subcontract. In particular it pleads that the removal of the demolition debris was an activity that resulted from CMA's breach. The removal of the debris was something that could only be carried out when the berth pocket was not being used for other works or by shipping. John Holland says that the Subcontract did not oblige it to provide CMA with access to parts of the site at times chosen by CMA.
446 In my opinion, the claim by CMA for a 'relatively unconditioned obligation' on John Holland to give access to the site is not supported by the terms of the Subcontract. CMA argues that as a contract prepared by John Holland, it should be construed contra proferentem. If that rule applies, in the face of cl 1.2(g), it is not necessary to invoke it, as any ambiguity or uncertainty in the Subcontract can be resolved by the standard methods of construction.
447 Clause 7.2, in its second paragraph, required CMA to cooperate with John Holland and coordinate its work with John Holland's work. By cl 7.3, CMA was obliged to fully cooperate, liaise with and carefully coordinate, interface and monitor the works with all other contractors working on or about the sight, and to avoid interference with or disruption to or delay of their work.
448 The scope of works, sch H to the Subcontract, provided for conditions of working on site. Specifically, it provided that the site is situated within an operating port, and the continued operation of the port 'shall take priority over the work under the Subcontract'. CMA was required to liaise closely with and take directions from John Holland where its activities were likely to affect the operation of plant, shiploading, or shipping in the port. CMA was required to prepare a schedule of access requirements for approval.
449 CMA does not point to a schedule of access requirements that had been approved, or any Approved Construction Programme under which it was required to have access to those particular parts of the site at those particular times. Its argument is untenable. CMA was carrying out the debris removal activities outside the time specified in the Subcontract, and to remedy its own breach.
451 John Holland's claims as pleaded total about $11.7 million. In submissions, John Holland formulated its quantification of several claims on a more conservative basis, resulting in a significantly lower total.
452 The claims for amounts related to the dredging were based on causes of action pleaded in the alternative. John Holland pleaded:
453 John Holland also claimed damages for misleading and deceptive conduct.
454 John Holland pleads two variations to the Subcontract. The first, a written agreement made about 13 March 2007; the second, made about 5 June 2007. Each relates to the removal of concrete debris and spoil by subcontractors, Van Oord and Westsea Marine, engaged by John Holland. John Holland claims the work was agreed to be done at CMA's cost.
455 The contract variations need to be put in context. It is convenient to start with the letter from CMA of 24 July 2006 in which CMA explained its reasons for departing from the 'heavy lift' method of removing the dolphins (V10/1292).
456 I have set this evidence out in more detail above. In summary:
Drilling and blasting can still meet the programmed time frame with additional equipment such as crane and clam shell or a digger dredge working from a large barge being employed to remove the spoil from the berth.
The spoil from the Mooring Dolphins will be easily accessible with a bucket on an excavator and can be loaded onto an accompanying barge along with piles that will be cut at seabed level by divers or the excavator and shears.
Piles that require pulling from the berth pocket can be removed with a crane and vibrapile extraction system and the remaining piles can be cut at seabed level by divers.
After the piles have been removed any residual concrete spoil shall be removed from the batter to the satisfaction of the client.
Divers will assist in insuring that all spoil material is removed from the bottom. Fine material that settles in the berth pocket will be easily removed by the bucket dredge that will be employed to widen the berth pocket (V10/3609).
457 The programme noted that a risk assessment and work method statement was yet to be performed and signed off in consultation with the principal.
458 On 3 September 2006, Mr Xavier wrote to Mr Brown of John Holland with the heading 'Dredging Works' (V10/3714). He referred to a recent meeting and that:
our understanding of the verbal agreement between MAG and JHG pertaining to removal of concrete from the seabed as a result of dolphin demolition works;
459 Mr Xavier requested that day hire rates for the dredge be forwarded so that rates and timeframes could be agreed.
460 Blasting of the dolphins had already begun on 2 September 2006, with three dolphins blasted between 2 and 7 September, before the delays met in drilling and blasting the reinforced caps on BD1, 2 and 6. Blasting continued into December 2006, with MD4A deferred until the following year.
461 In both its chronology and final submissions, John Holland referred to evidence that, in September 2006, the MPDJV approved a revised CMA Project Risk Assessment, and in that way approved the revised work method. Those documents, however, were not included in the final trial bundle.
462 On 14 October 2006, Mr Doyle wrote to Mr Clarke regarding removal of piles from the berthing pocket. He referred to ongoing discussions regarding the removal of piles and concrete spoil from the demolition of dolphins contained in CMA's scope of works. He continued:
It is our current understanding that CMA wish to utilise the services of our dredging subcontractor, Van Oord, for this portion of CMA's Scope of Work.
John Holland has for some time been negotiating its own scope and terms with Van Oord and these negotiations have included the possibility of utilising Van Oord's equipment to carry out the pile and concrete removal notwithstanding that these activities are within CMA's scope of works. In that regard, technical discussions have also taken place between representatives of Van Oord, CMA and JH regarding how the works are to be carried out. (V10/3756)
463 Mr Doyle proposed that the pile and spoil removal be included in Van Oord's scope of works, so as not to overly complicate contractual arrangements, with the costs associated with pile and spoil removal to be solely to CMA's account. The dredge was to be chartered on a day rate basis and accurate logs were needed to be kept by Van Oord so as to properly and fairly allocate time spent on respective scopes of work. Mr Doyle concluded:
JH now wishes to conclude its negotiations with Van Oord. However, in order to do so JH requests that CMA confirm, as a matter of urgency, whether it wishes to continue with this arrangement so that the contractual arrangements between JH and CMA can be finalized.
464 Mr Clarke responded by email on 1 November confirming that CMA would participate in the use of the dredge when it was brought in for the berth pocket dredging (V10/3765). He said:
While the price quoted in your letter of September is alarming we accept that you have negotiated a best available rate and accept it. I will however be looking to have some further discussions with you on the commercial terms and in particular the cost sharing mechanism, and we would look to execute an agreement in some form once terms are settled.
465 Mr Clarke raised further issues, including the need for clarity on the required degree of separation of the spoil and concrete. CMA estimated the likely total concrete spoil to be removed as in the order of 7,000 tonne or 2,500 m3. On that basis, CMA expected it to be around 10% to 15% of the volume planned to be dredged.
466 On 7 December 2006, Mr Doyle wrote to Simon Pick, then project manager for CMA, regarding demolition works and in particular demolition of 'dolphins 1 and 2' (V10/3779). He stressed the need for removal of these dolphins prior to commencement of dredging works on 3 January 2007. Mr Doyle also required CMA to obtain a detailed survey of the seabed showing the location of the dolphin spoil heaps and remaining piles. Mr Doyle asserted that the cost of any delay caused by failure to complete the demolition or to carry out the survey would be for the account of CMA.
467 On 2 February 2007, Van Oord forwarded a work method plan, risk assessment and other plans to John Holland for approval. Included in that plan was a section on pre crushing, on the basis that 'the material to be dredged is of a strength far greater than what is able to be dredged by the Hippopotes' (V10/3801).
468 On 16 February 2007, Mr Clarke wrote to James Lear of John Holland by email with the heading 'Confirmation of Dredge Usage / Costs' (V10/3942). He wrote:
Further to our discussions earlier this week I would like to confirm the matters we worked through and the next steps agreed. The issues under discussion were:
In respect of the forthcoming dredging activity, I have appended below, as promised, correspondence I sent to Jim Doyle when we agreed in principle to participate in the dredging process. The note is, I believe, clear in setting out our intent. Unfortunately Jim did not respond to the note so we will need to resolve in detail the cost sharing mechanism next week. In particular, it was always our understanding that we would be incurring the incremental cost of clearing the demolition spoil only. We will not consider any sharing of the mobilisation, setup or demobilization cost. We will need to resolve JHG's contribution to the cost of the survey.
470 Mr Clarke included his email to Mr Doyle of 1 November 2006.
471 On 25 February 2007, Mr Bryce, then project manager for John Holland, wrote to Mr Clarke regarding dredging operations, removing of piles and rubble (V11/4026). He expressed the letter as an attempt to clarify various discussions with respect to the dredging operations and its interaction with the existing demolition subcontract. Mr Bryce wrote:
The effect of the use of blasting was to deposit a significant quantity of material on the seafloor which is not permitted to be left in place (refer subcontract scope of work). It is required that the material on the seafloor must now be removed.
It has been previously agreed that this work will take place using the 'Hippopotes' Dredge already secured for other works on the Contract.
The proposal is as follows:
472 The letter set out the current cost of equipment supplied by John Holland on either a daily or an hourly rate. This included the hourly rate for two supervisors (now claimed by John Holland in the counterclaim). It also provided mobilisation/demobilisation would be split according to the percentage of time that the dredge worked on John Holland/CMA materials scope. The letter set out the mobilisation and demobilisation costs of the dredge and associated equipment.
473 Mr Bryce referred to items on the seabed, other than in the berth pocket. The letter concluded:
We request that if CMA wish to have the dredge remove any of these items then it should be clearly scoped and communicated in writing back to John Holland so that we can make the necessary arrangements. We note that CMA remains liable for the removal of all items in the sea as part of the Subcontractor Works. (V11/4027)
474 The mooring dolphins were not located in or near the berthing pocket, so concrete piles from those structures were not relevant to the dredging of the berth. I infer the reference to other items on the seabed is to debris from these dolphins.
475 Van Oord, CMA and John Holland met on 7 October 2006, 25 October 2006, and 6 November 2006.
476 On 7 November 2006, Mr de Ridder prepared an internal email regarding the meeting of the previous day. He records being told by John Holland that the size of the rubble varied from very small to 15 tonne. John Holland had estimated that the dredge would have to remove approximately 2500 m³ of concrete (V10/3768).
477 On 11 November 2006, Mr Pronk of Van Oord wrote to John Holland. He referred, in particular, to lumps of concrete up to 15 tonne (V10/3770). Mr Pronk advised John Holland that a multi-beam echo sounder survey was required.
478 On 2 February 2007, Van Oord provided to John Holland a Work Method Plan, CRAW (construction risk assessment workshop), Environmental Management Plan, Emergency Response Plan, and a draft Cyclone Management Plan (V10/3796). The Work Method Plan, included in the Scope of Work:
479 In the same document there is a sequence of works, which relevantly shows:
480 As part of the process, Van Oord requested a survey of the seabed before dredging started (the Fugro survey). John Holland requested CMA to obtain that survey. It was conducted between 12 and 14 January 2007 (ts 777).
481 On 16 January 2007, Mr Lear (John Holland) met with Mr Matusiak and Mr de Ridder of Van Oord (V10/3794). Van Oord wanted a software copy of the Fugro survey to put the data into its on board computers. Mr Lear requested the data from CMA. He said that he would issue a site instruction and commercial issues could be determined later (exhibit 38A [29]). CMA provided the data on 8 February, after Mr Lear issued a formal site instruction to obtain it (exhibit 38A [32] [34]).
482 In February, Mr Lear met again with Mr Clarke to discuss the approach to dredging, including whether debris removing and dredging should be carried out together or separately. No agreement was reached (exhibit 38A [45] [47]).
483 The Hippopotes had arrived in Port Hedland in late February. The charter hire agreement for the dredging works was executed on 19 February 2007 (V10/3949).
484 There was a meeting on 1 March 2007. Mr Lear and Mr Hancock from John Holland attended, with Mr Lear chairing. CMA was represented by Mr Pick, Ms Lopez, Mr Clarke and Mr Michael. Mr de Ridder and Mr P J van Effron attended from Van Oord (ts 990). Mr de Ridder described the meeting as a 'pre-direction meeting. That was the meeting that we were discussing that we were going to start the dredging works' (ts 991).
485 CMA had provided a Scope of Work for Dredge and a rough drawing or 'mud map' showing the locations and nature of demolition debris on the seabed (V11/4048 4051). It described debris for each of the seven berthing dolphins:
BD 7 4 No tension to piles Stubbs located in the dredge pocket (new). Approx 6 m above sea bed level. Lightly reinforced concrete rubble from the dolphin.
BD 6 Lightly reinforced concrete rubble and hex pile stubs.
BD 5 Lightly reinforced concrete rubble and hex pile stubs.
BD 4 Lightly reinforced concrete rubble and hex pile stubs. 1 No. approx. 12 m hex pile.
BD 3 Lightly reinforced concrete rubble and hex pile stubs.
BD 2 Lightly reinforced concrete rubble and hex pile stubs. 5 No. vertical tension piles to be cleaned around (75% way around to allow divers to cut around) 2 Horizontal piles laying on sea bed. Require moving and breaking free by dredge bucket.
Removal of pile stubs.
BD 1 Lightly reinforced concrete rubble and hex pile stubs. 6 No. vertical tension piles to be cleaned around (75% way around to allow divers to cut around)
1 pile stub laying on sea bed. Require moving and breaking free by dredge bucket.
Removal of pile stubs.
486 On 13 March 2007, Mr Clarke wrote to Mr Bryce, responding to his letter of 25 February (V11/4055). In relation to the material on the seabed, outside the berthing channel, Mr Clarke responded that the scope of works required that no debris remain 'where it would interfere with the pile driving works, the dredging or the operational safety of the berth'. He stated CMA's intention to remove 'such debris' with the assistance of the dredge, and to seek the assistance of the dredge to remove pile stubs penetrating the berthing pocket. Mr Clarke referred to cl 8.3 of the works specification under which the dredging contractor was to support the demolition work and 'achieve clearance of the demolished material from the seabed in conjunction with the dredging work' (sch I to the Subcontract).
In terms of your proposed methodology, we are generally in agreement with the proposal with the following modifications suggested:
In terms of cost sharing we have agreed in principle to the quoted costs for the dredge in operation, subject to agreement on the allocation of time and the means for recording same. We assume JHG will demonstrate that the hourly costs quoted for the excavator, trucks, dozer and supervisor are on an at cost basis. We do not see a role for the dozer as materials handling for our spoil laydown area will be undertaken by our own excavator and operator.
We do not agree that MAG should share the mobilization/demolition costs of the equipment. The dredging contract is between JHG and BHPB and the mobilization/demolition costs are being recovered in that agreement. The scope of works and specification directs that the dredge assists in recovery of demolition spoil and it is reasonable that incremental costs only be recovered from the demolition contractor. JHG has already advised that 'an administration levy' is to be applied.
488 On 28 March 2007 (V11/4071), Mr Clarke emailed Mr Bryce with the heading 'Resolution of outstanding issues', referring to a meeting on Thursday, 22 March. As one of the dot points in that email Mr Clarke wrote:
We are not yet agreed on an appropriate method of sharing costs on the dredging activity. As requested we have developed a scope of works and responded (13/3) to your email (2/3) on the subject. We await a further response from you formally but we were advised late last week that the agreed method has proven inefficient and a different dredging plan is now being pursued. At a meeting last Thursday between myself, Michael AJ, James and Roger an alternate cost sharing proposal was explored and it was agreed that the dredging logs would be made available to us. This matter should be resolved quickly given the substantial sums involved. We look forward to your revised proposal.
489 The Hippopotes had arrived in Port Hedland, from Dampier, on 2 March 2007.
490 CMA had inspected the Hippopotes at Dampier in October of the previous year (exhibit 28A [210]). CMA personnel had also discussed the capabilities of the dredge with people from Van Oord. This had probably occurred before the meeting on 1 March 2007, and there was further discussion at that meeting. CMA had prepared the scope of works, and commissioned the Fugro survey.
491 Some material was removed from the seabed before the Hippopotes began its dredging (see exhibit 55A [14] -[16]). Mr Hancock was asked whether the Hippopotes could remove the remaining material in the areas where CMA had finished the removal of the major debris (exhibit 55A [16]). Mr Clarke or Mr Pick told him the areas were 'clear enough' and what remained should be small debris (exhibit 55A [17]; V11/4022).
492 The representatives of CMA had not, however, turned their minds to the size of the debris that the Hippopotes would be likely to encounter. While later, in mid-2007, CMA conducted diver surveys to identify debris for removal (for example, by crane), this was not done in the later part of 2006 or early 2007. In crossexamination, Mr Clarke accepted that he was reluctant at that time to undertake a comprehensive survey of the berthing pocket (ts 446, 447). And, as Mr Clarke agreed, the surveys they did carry out before March 2007 did not reveal the extent of the debris that was later found. CMA had divers present on the site, but they were involved in cutting piles (ts 447).
493 There was nothing in any of the material provided by CMA, either before or at the meeting on 1 March, to show the presence of large debris either in the berth pocket or in the batter slope. Nor had CMA at that stage conducted the sort of investigation that was required, as events later showed, to identify the presence of that material. Nevertheless, CMA did have some information from divers which should have alerted it to the presence of larger blocks. The divers' diaries maintained in the period between September 2006 and January 2007 record the presence of both large blocks and piles of concrete (V14/5400, 5407, 5421, 5445, 5492). One of the divers, Mr Gray, estimated blocks up to 15 tonne. Although Mr Gray was unable to recall where he had seen a block that size, he said there were large blocks everywhere (ts 843). Mr Rees gave evidence to the same effect (exhibit 42B [11]), including that there were blocks with protruding reinforcement.
494 The Hippopotes commenced dredging operations on 7 March, attempting to remove debris and dredge in a single sweep. There was substantial debris in the berthing pocket, and perhaps in the batter slope, beyond that shown in the scope of work and the 'mud map' that CMA had provided on 1 March. The full extent of the debris was probably only shown in the later divers' surveys.
495 On 8 March, Van Oord was instructed to move to the cyclone mooring locations (V13/4935). Dredging recommenced on either 14 or 15 March.
496 On 14 and 15 March, the Hippopotes worked in the area of the load out facility. This was not an area where demolition had been conducted by CMA.
497 On 16 March, the Hippopotes was on standby (V13/4997). John Holland has not shown that the standby was the result of the presence of debris. It appears to have been caused by ship movement (ts 996).
498 On 17 March, the Hippopotes was dredging in the area around the old MD 2 (V13/4998). It suffered damage to a rock guard due to impact with an obstruction on the seabed (V13/4999). The incident resulted in a hydraulic oil leakage (V13/5000).
499 There is no direct evidence about what the obstruction was. I am satisfied from the nature of the damage that it was, more probably than not, demolition debris.
500 Between 17 and 19 March, the Hippopotes was stood down as a result of the damage (exhibit 44A [79] [80]; V13/4998, 5001).
501 A shift report on 20 March (V13/5006) recorded 'material very hard, teeth broken off from bucket'. The Hippopotes continued to operate. On 30 March, a leaking Oring in a hydraulic line on the top boom excavator resulted in a loss of oil (V13/5016).
502 There was a further stand down 3 April, and again on 6 and 7 April (V13/5023, 5026 5027).
503 On 7 April, the dredge suffered structural damage, with cracks and lost or broken teeth on the bucket, and a missing shroud. The cause recorded was hardness of soil and debris (V13/5028).
504 On 8 April, there was another leak in the hydraulic system from a blown Oring that resulted in an oil spill (V13/5035). The Hippopotes was again stood down for repairs.
505 It is likely that the stand down on 3 April, and on 6, 7 and 8 April were contributed to by the presence of the debris, and also by the hardness of the seabed conditions.
506 On 9 April, the Hippopotes suffered damage to its boom from hitting an obstruction and required repair (V13/5037). The damage was about 2 m above the part of the bucket which was in contact with the seabed. The repair included repair to the hydraulics and the engine and occupied most of the day. Mr de Ridder reported that 'it is just a matter of time before the next damage to the equipment occurs by trying to dredge the demolition debris' (V13/5039). On 10 April, the Van Oord Project Manager Report recorded, following the first fully operational week, that the material to be dredged was very hard and the Hippopotes was 'suffering from the hard material and breakdown after breakdown is the result' (V13/4941). The project manager, Mr Malhlberg, repeated that complaint of hard material in subsequent reports, and daily and weekly logs record hard material on several occasions in March and April (V13/5022, 5026).
507 Around this time, Mr Hancock and Mr Crosthwaite assessed the efficiency of the Hippopotes (based on the production of dredged material) at around 25% due to the presence of hard rock (Crosthwaite ts 1082), resulting in John Holland preparing a variation claim under its contract with BHP Billiton (ts 1084). Mr Crosthwaite recalled the problem was in the area around MD4. But, that is not to say that there was not hard rock in other areas where the same issue would arise.
508 On 10 April, the Hippopotes suffered a blown hydraulic hose (V13/5044). Again, there was a period of stand down for repair.
509 There was a significant oil spill on 11 April, with a leak from a cracked weld in a hydraulic pipe, and perhaps again a blown Oring (V13/5047, 5050). The Hippopotes was stood down for a full inspection of the boom (V13/5052).
510 The Hippopotes was stood down from 11 April to 21 April 2007.
511 On 16 April, Mr Mahlberg reported that large quantities of demolition debris were being recovered, and piles from the old berthing dolphins were still in place. Production had been limited due to both the hard material and the large amount of debris. Production had also been hampered on occasion by the absence of an excavator to empty the barges (V13/5010).
512 CMA led expert evidence from Darryl Victor Braithwaite on a number of questions in relation to the dredging works undertaken. Mr Braithwaite has more than 40 years' experience in various forms of dredging, reclamation, drilling and blasting, and related activities. He is currently the chief consultant and a director of a dredging and marine consultancy and has held this position since 1987. I accept his expertise to give an opinion on particular questions put to him.
513 Mr Braithwaite prepared a written report dated 10 October 2012. In his oral evidence at trial, he was cross examined primarily in relation to his opinion regarding the events of 21 and 22 April 2007, which I deal with in the next section of those reasons. That was not, however, the limit of his report. In particular, Mr Braithwaite had been asked to address the capability of the Hippopotes to carry out the work specified in the scope of works, appendix C of the Charter Hire Agreement between John Holland and Van Oord. In order to carry out those works, the dredge was required (among other things) to dredge a strip 15 m wide and 350 m long, to a depth of -19.2 m CD to realign the berth pocket, including dredging of batter slopes; ensure the complete removal of all demolition materials from the berth pocket; remove material which intruded into the works area; and assist with the removal of piles.
514 While expressing the opinion that the Hippopotes was generally suitable to undertake the scope of works, Mr Braithwaite stated that, in his opinion, it was not capable of removing hard material identified in the geotechnical reports (exhibit 52 [7.4] - [7.5]). In particular, the Hippopotes was not suitable for dredging material of over 10 MPa. The material in the berth pocket included areas of hard rock layer of a hardness many times greater than that (20 to 45 MPa). Nor was the Hippopotes suitable for removing large concrete blocks.
515 Mr Braithwaite also expressed the view that the methodology adopted was unsuitable. In part, his opinion was directed to the lack of detail in the Work Method Plan and the CRAW. In particular, it did not address the steps in the event hard rock was encountered, in circumstances where John Holland had a report (the Coffey Report) which noted that it was probable hard rock would be found (exhibit 52 [9.9]). The CRAW also did not refer to demolition debris and it was not recorded as a possible hazard.
516 John Holland called Ronald William Hutchinson (reports dated 20 July 2012, 15 February 2013, and 4 March 2013). Mr Hutchinson is a civil engineer with specialist expertise in Marine project management, dredging, reclamation works and ancillary activities. He also has over 40 years of experience. I accept that he was well qualified to testify on the matters which he addressed.
517 In his oral evidence, the focus again was largely on the major event on 22 April. Mr Hutchinson also, however, gave significant evidence regarding the dredging more generally.
518 First, Mr Hutchinson stated that, in his opinion, the Hippopotes was an appropriate vessel for dredging a berthing pocket. In light of the geotechnical conditions the Hippopotes was likely to encounter, which included information that there were layers of rock up to around 20 MPa, and the strength could be locally in thin layers up to around 45 MPa (exhibit 58A 14), Mr Hutchinson said:
519 Mr Hutchinson also said that the Hippopotes was capable of removing demolition debris and could remove the larger debris up to approximately 8 tonne. If the debris was, however, in pieces connected by reinforcing bar, then removing it by the bucket dredge may not have been viable (exhibit 58A [88]). On the material he had been provided regarding the debris that was in fact encountered, Mr Hutchinson said that it was larger than material which could be removed by the Hippopotes.
520 In his second report, Mr Hutchinson commented on several of the opinions expressed by Mr Braithwaite in his report. In several respects, he did not accept Mr Braithwaite's conclusions. In particular, Mr Hutchinson had experience with the Hippopotes itself and was aware that it had dredged material stronger than 10 MPa on other occasions. Generally, Mr Hutchinson refers to the MPa as a commercial limit, rather than the physical limit of the dredge.
521 Mr Hutchinson believed that the damage suffered by the Hippopotes in the incidents before 22 April 2007 was likely to have been caused by either strong rock in the subgrade or debris comprising concrete reinforcing bars (exhibit 58B 5). Specifically, he did not discount the damage to the bucket being done by hard rock. Mr Hutchinson believed that the damage to the hydraulics was more likely caused by debris.
522 From his consideration of the time lost to bucket inspections, bucket changes and repairs to teeth, Mr Hutchinson's view was that he would have expected more delay due to bucket damage if the dredging was of rock stronger than 10 MPa, and the Hippopotes was operating at its limiting conditions.
523 It was an element of Mr Hutchinson's opinion that the operator of the dredge on the Hippopotes would have adjusted the 'bite' the height and angle of the bucket - such that the settings in pressure levels which would cause damage to the Orings were not exceeded (ts 1291). The evidence does not show whether this was done.
524 In the way in which the evidence proceeded, it is difficult to resolve the points of difference between Mr Braithwaite and Mr Hutchinson. Crossexamination focused largely on the major incident of 22 April 2007. The differences between the experts in their reports about other matters were largely unexplored. Taking those matters into account, I make the following findings:
525 CMA pressed a case that the protracted stand down of the Hippopotes in March and April, as a result of hydraulic failures, was due to the hardness of the seabed, leading to excessive pressure on the Orings. This was put to Mr de Ridder in crossexamination. He responded that there should be a pressure release valve to avoid excess pressure (ts 1000). Later, however, he agreed that there was damage to the Orings from the peaks in pressure 'From nothing to a high pressure again, from nothing to a high pressure again' consistent with the dredge recurrently snagging on something while it was moving along the bottom (ts 1006).
526 Counsel for CMA put the same matters to Mr Mahlberg, who said that pressure spikes caused by the bucket engaging with hard material had caused the hydraulic seals and hoses to burst and leak (ts 1230). It was apparent in his evidence, however, that he was repeating what had been reported to him by the chief engineer, and not something within his own knowledge. Although there was no objection to the evidence being led, I am not confident that it can be given much weight. The chief engineer was not called.
527 Mr Mahlberg could, from his own knowledge, testify that the dredge bucket suffered scratch marks on its side, as well as damage to the teeth of the bucket and to protective covers known as 'sacrificial shrouds'. The damage to the teeth might well be from engaging with hard material, either hard rock or concrete debris. The scratching, in my opinion, is more likely to result from contact with debris - particularly reinforcing bar.
528 Counsel for CMA also sought to rely on the opinions expressed by Mr Edwards regarding the damage to the backhoe (ts 821). Mr Edwards had experience that included operating backhoe dredges. His area of expertise, as proved in evidence, was as a hydrographic cartographer. His expertise to give an opinion on the cause of hydraulic failures was not established.
529 On the evidence, it is not possible to say with any certainty whether the damage to the hydraulics, including the bursting of seals, was caused by attempting to dredge in the presence of the hard subsea rock or whether, or to what extent, it was caused by the hard material in the extensive debris. Each could cause it, and both in combination. Whichever material caused the damage, the Hippopotes was not the right vessel for the task, and, with hindsight, it was not an appropriate methodology to attempt dredging the channel and removing debris at the same time in a single sweep. Later experience showed that there should have been an initial collection of larger debris by other means than a backhoe dredge before the Hippopotes could properly remove silt and dredge the berthing channel.
The incident of 22 April and damage to the Hippopotes
530 On 21 April the Hippopotes resumed operations. A significant incident occurred on 22 April. This, in combination with what had occurred before, led to the Hippopotes being removed from the dredging task.
531 At the time, the vessel was being operated by Mr Sgarbossa. Mr Sgarbossa largely worked night shifts, and the incident occurred near to midnight on one of those shifts. It was not possible to see what was under the water by the naked eye.
532 Mr Sgarbossa said that he understood that the Hippopotes was to excavate demolition debris on the seabed at the same time as dredging the area of the berthing pockets (exhibit 57 [17]). When operating the Hippopotes, he relied upon two computer monitors installed in the operator's cabin to check the depth of the seabed where the bucket was digging. He was, however, aware that not everything that was on the seabed appeared on the computer monitor. During the course of his work there had been occasions when he had been able to locate large obstructions on the seabed, including large pieces of concrete and perhaps piles stubs, which were not shown on the survey data (ts 1246). He would slowly manoeuvre around such an obstruction.
533 From late on the night of 21 April 2007 until early morning of 22 April, Mr Sgarbossa was operating the excavator. He was digging in a fan between two points that he knew to be immovable obstructions. Mr Sgarbossa could not now remember whether they were marked on the screen or whether they were something that he had found. It is not now possible to determine what they were. They do not appear on the bathymetric charts.
534 During this operation, the excavator alarm went off to signal low oil. More oil was pumped into the system, but shortly afterwards the oil alarm indicated a critical oil alarm. The excavator then automatically shut down completely. It was lifted from the water the next day with the assistance of divers. Mr Sgarbossa was then able to see damage to the rock guard, and that the hydraulic oil line along the excavator arm had been sheared off.
535 The bathymetric traces recording this incident show that, at about 23.29.53 (on a 24 hour clock) the excavator arm was extended and the bucket was about 14.5 m below water level. Between then and 23.30.13 (that is, 20 seconds), the bucket moved to the right about 4 m (ts 1249 -1251). Counsel for CMA attempted to cross-examine Mr Sgarbossa, based upon these traces, about the location and movement of the bucket immediately before the oil alarms. But, with respect, it was a relatively pointless exercise. Mr Sgarbossa had no actual recollection of the night. As he said, he was being asked about something that had happened six years before, and a few seconds out of a lot of years. He did, however, agree that the operator would generally try to avoid 'slewing' underwater in an area where there may be obstructions. He also said, 'they want you to be efficient. So generally you are slewing across and you are going down underwater all in one hit' (ts 1254). The term 'slew' is imprecise. What Mr Sgarbossa was describing, slewing as the bucket entered the water, was quite different from the motion being described by counsel in his questions.
536 Mr Hutchinson expressed an opinion on what had happened, on the basis of his reading of the bathymetric traces. As I understood his oral evidence, Mr Hutchinson suggested that the operator of the dredge had hit a particular concrete block, tried to move around it and gone to a deeper depth (ts 1268). His opinion was that the damage was caused by a block, or blocks, or by reinforcing bar, or bundles of reinforcing bar, on the blocks. The nature of the damage supported that conclusion. But no block was found in the position where it would have caused the damage. Mr Hutchinson assumed it had been moved since then - possibly dragged by the dredge. There is no other evidence to support that assumption.
537 In his second report Mr Hutchinson suggested that the raising of the boom impacted on a fixed steel item sufficiently heavy and rigid not to be pushed aside. In his opinion it was likely to be an angled pile stub, some part of the jetty, or debris collapsing down the slope (exhibit 58B [69]).
538 With respect to Mr Hutchinson, I thought his evidence about the incident was largely speculative. It shows the difficulty of identifying what it was that caused the damage to the dredge. Mr Hutchinson maintained his view that the arm of the excavator moved to the right because it had engaged with something. This interpretation was elaborated:
the interpretation that I have put on here is that somewhere at that point it has intersected with something and it has moved to try and get around it, and then it has moved further towards the jetty and then it has finally got free and moved back once it has got over to 2330 thereabouts and then moved back (ts 1286)
539 Counsel put to him that there was absolutely nothing in any of the material to indicate a physical item was located at that point: 14.6 m below water level, about 10 m above the seabed, and about 4 m from the batter slope. Mr Hutchinson agreed that there was nothing on the debris register to match those coordinates (ts 1284 - 1287).
540 Further evidence on this event was given by Mr Edwards. Mr Edwards, as mentioned earlier, is a Hydrographic Cartographer. He has considerable experience in the dredging industry which included working on occasion on the Hippopotes (then, more poetically, named Obscured by Clouds), and had observed dredging operations on that vessel. Mr Edwards had also operated an excavator himself, although not on the Hippopotes.
541 Mr Edwards' evidence (within his field of proven expertise) concerned his analysis and modelling of the data (record in time data) retrieved from the data logger on the Hippopotes. Mr Edwards represented that data graphically and explained that representation and his conclusions based on it.
542 The information plotted was in several dimensions for both the Hippopotes, and the bucket at the end of the excavator arm. That is:
543 The data also showed the tide gauge elevation for Port Hedland at the relevant time, enabling calculation of the depth of the bucket below, or its height above water.
544 The data stream logged by the Hippopotes recorded the location of the vessel and the bucket every five seconds. Mr Edwards was also able to represent multi beam data, which displays the surface of the seabed including any protrusions from the surface.
545 Putting this evidence into a narrative form, without the accompanying charts, necessarily diminishes it. The effect of Mr Edwards' evidence is that on 22 April 2007, the Hippopotes began a dredging cycle (Cycle 2) at about 23.29.27. This dredging was near where BD4 had been located. The bucket was descending in the water when it stopped its descent and slewed to the right, before descending further (ts 806). At the bottom of its descent, the bucket moved backwards and forwards as though the operator was attempting to draw something towards the barge, presumably to pick it up. Between 23.29.53 and 23.30.13, the excavator moved to the right about 4 m while underwater (remembering that the data represents five second intervals, this is a plotting over five points). The place where this occurred was about 15 m underwater and close to the batter slope. The depth of the berthing pocket away from the batter was about 25 m.
546 In my opinion, at a depth of 15 m, it is unlikely that the movement to the right was caused by contact with any debris or other object on the seabed within the berthing channel. None of the later dive surveys identified anything large enough to affect the bucket at that point, and there is nothing on the charts used by Mr Edwards that show an object that the operator needed to avoid. Although there can be no certainty as to how the damage was suffered, I am satisfied that the most likely cause was a collision with something protruding from the batter that the arm encountered when it slewed to the right, rather than something the bucket encountered at 23.29.53 (that is, at the beginning of the manoeuvre). It may have been either metal from a pile, or reinforcing bar from the concrete of a demolished dolphin. The scope of works prepared by CMA for the meeting of 1 March had identified hex pile stubs and one 12 m hex pile in the area around BD4.
547 Slewing to the side was not good practice and was contrary to the CRAW. Moving sideways while under water put a lot of lateral load on the weakest point in the excavator, although the speed at which Mr Sgarbossa moved the arm to the right was not great and there is no suggestion that the damage was caused in this way. In water where there was known to be debris, sideways movement also ran a high risk of slewing the arm into something that may damage the hydraulics (ts 831).
548 Based on reconstructions by the various witnesses, I am satisfied that the most likely cause of the damage to the Hippopotes on 22 April is that it hit something protruding from the batter while the operator was moving the arm towards the batter. I cannot determine why the operator performed that manoeuvre at that depth. It was not, as he described, slewing to the right while descending. Nor does it seem likely that there was some obstruction, 10 m off the seabed, that could be avoided by moving towards the batter slope; nothing approaching that size was later found at the site.
549 Following the oil spill on 22 April 2007, an ICAM (Incident Cause Analysis Method) investigation and analysis team was put together to investigate and collate all relevant information about the incident. John Holland had four representatives on the team and Van Oord was represented by Mr Mahlberg, with statements taken from two of the crew on the Hippopotes: Mr Blanche and Mr Sgarbossa. CMA was not represented on the ICAM team.
550 The investigation was conducted between 23 April and 30 April 2007. It reported the primary cause of the oil spill as 'the hydraulic connection between the hose and the cylinder was sheared off'. Eight factors were listed as contributing factors:
o There is no protection for the hose connections on the upper boom (9 m away for the bucket).
551 In discussing the background to the incident, the ICAM Report referred to the decision to blast the dolphins which had led to large amounts of debris and large pieces being dropped on to the harbour floor. It referred also to the original expectation that the dredge was to dig silt and sand from the harbour to increase the depth of the berthing pocket, but had encountered harder material (V11/4156). It stated:
The material being dug has been far harder than expected and as a result the contractor had increased the oil pressure in the hydraulic systems to give more power whilst digging.
This resulted in several leaks from blown 'O' rings and seals due to the additional pressure and when a leak did occur, larger amounts of oil were lost than at lower pressures. In addition the digger operators were required to push the machine harder to get through the material on the harbour floor.
552 Findings included that the excavator was not the correct item of equipment to remove the debris from the harbour floor, and was underrated to break out the hard material for the berthing pocket. The attempt to achieve this had been at the expense of equipment damage and wear. The excavator was, however, found to be sufficient for the original scope of work, which had not required the dredging contractor to remove large pieces of concrete and steel from the harbour floor.
553 The investigation determined that the excavator dredge was not the most appropriate equipment to be used for that work in that environment. It made three recommendations:
554 On 2 May 2007, Van Oord gave notice to John Holland that it would not continue with the dredging works while demolition debris remained in the dredge area (V11/4212).
555 An issue arose at trial whether CMA might lead evidence that, following the incident on 21 April the Hippopotes could have continued rather than standing down by adopting an alternative work methodology, which involved the buoying of debris in the harbour and, in effect, working around the rubble or the debris. For reasons which I gave at the time, I did not allow that line of questions. In short, I considered the questions to go to an issue that had not been pleaded by CMA, and of which it had not otherwise given notice.
556 It is also, in my opinion, a false issue. John Holland's case is that, following the ICAM report and the notice by Van Oord that it would not continue while debris remained, it decided to stand down the Hippopotes to enable the area to be cleared, either on the recommendation or at the direction of BHP Billiton. If that is so, the period of standby is relevantly caused by the presence of the demolition debris. If that debris was there due to failure by CMA to perform its obligations under the Subcontract within the required time, and it prevented the Hippopotes from carrying out the task it was scheduled to do, the breach of contract has caused the equipment to be stood down. It is, in terms of cause, no different from if the Hippopotes had been unable to commence operations because of the presence of the debris. Even if an alternative methodology could have been employed, that does not mean the decision to stand the Hippopotes down, in the light of the ICAM report and the response by both Van Oord and BHP Billiton, was unreasonable.
557 On 4 May 2007, John Holland advised Van Oord that it was placing the Hippopotes dredge spread on standby until 17 May 2007 to allow an area to be cleared of debris to enable dredging to continue (V11/4218).
558 On 19 May 2007, however, John Holland requested the MPDJV to approve the release of Van Oord from its current obligations on the project, to perform a short-term dredging contract at Dampier. On 23 May 2007, Mr Thomson of the MPDJV responded that any decision to release the dredge to work at Dampier 'remains that of John Holland's, after due consideration that such release will not in any way impact the Construction Programme and cause further delays to the completion of the Contract milestones or result in any additional costs to the Company' (V11/4245).
559 On 27 May 2007, John Holland and Hamersley Iron Ltd made an agreement under which John Holland agreed to the release of the Hippopotes for use at Dampier Port by Hamersley Iron for the period from 27 May to 25 June 2007 (V11/4256). The result was that the charter hire agreement remained in place but was, in effect, suspended while the dredge was absent from Port Hedland.
560 On 5 June 2007, Mr Bryce wrote to the MPDJV advising that three samples of dredged material had been tested. Based on those results, Van Oord had advised that it was physically impossible for the Hippopotes to dredge material of the strength found on testing, without continuing to incur damage to the bucket and without continuing to blow hydraulic hoses due to the necessity of working at hydraulic pressures exceeding the normal and safe range (V11/4261). Mr Bryce referred to the need to change working methods, with the possibility of using a barge fitted with a crane, a vibro hammer and a chisel to break up hard material and facilitate subsequent dredging. The letter requested a variation order under the Head Contract. In effect, even if the demolition debris had been within the capacity of the Hippopotes, the dredge would not have been able to continue the dredging to completion.
561 On 3 July 2007, Van Oord advised John Holland that it was scheduling the mobilisation of the Hippopotes for return to Port Hedland on 9 July, but that, in order to avoid further damage to the dredging spread, it required confirmation that the areas to be dredged and surrounding areas 'are cleared and free from concrete rubble, reinforcement and piles' (V11/4319).
562 On 5 July 2007, Mr Michael advised Mr Hancock that an underwater survey had been completed and two large concrete blocks has been found 'outside the berthing pocket on the shore side', and that the survey was continuing (V11/4320).
563 On 14 July 2007, Mr Bryce wrote to Mr Mahlberg, the project manager for Van Oord, copied to Mr Clarke, with regard to the Hippopotes recommencing dredging work on 13 July. He referred to a meeting that had been held with Mr Mahlberg, and representatives of John Holland and CMA to enable the dredging activities to recommence (V11/4325).
564 The Hippopotes returned to Port Hedland and recommenced dredging on 13 July 2007 (V11/4332 4333). It continued until 28 August 2007, when it was demobilised.
565 In pars 92(c) and (d) of its defence and counterclaim, John Holland pleads that, by an agreement in writing made between CMA and John Holland on or about 13 March 2007, the Subcontract was varied with respect to CMA's obligation to carry out the demolition, removal and disposal works relating to the dolphins. It pleads an agreement, in effect, that (par 92(b)-(l)):
566 John Holland pleads that, pursuant to the terms of this varied Subcontract, it engaged Van Oord to carry out removal of the other debris from the demolished concrete dolphins and loosening of piles, using the equipment pleaded. The numerous large concrete pieces which had been produced by the blasting precluded reasonably efficient removal of other debris by bucket dredge, and disrupted subsequent dredging and other works to be carried out by the bucket dredge (par 94).
567 From 7 March 2007, Van Oord used the dredge Hippopotes to remove and attempt to remove the other debris and loosen piles. During the process of removing the other debris, a hydraulic oil line on the Hippopotes ruptured because of contact with debris or a pile stub which CMA had failed to remove: par 96. In consequence, either at the direction of BHP Billiton, or on the recommendation of an investigation team assembled by BHP Billiton, the use of the Hippopotes ceased. The dredging of areas where there was debris was postponed (par 97).
568 John Holland claims that it incurred costs in accordance with the terms of the varied Subcontract, which CMA is liable to pay under the Subcontract, as varied.
569 In final submissions, John Holland accepted that the evidence did not support the plea that the parties had agreed that CMA would meet a share of the mobilisation and demobilisation costs of the Hippopotes. It still sought to recover those costs, or a proportion of them, by its claim for restitution.
570 In its defence to counterclaim, CMA denied the variation of Subcontract pleaded by John Holland. Alternatively, it pleaded that, if there was such an agreement, it was on different terms from those pleaded by John Holland. In particular, CMA pleaded that its obligation to pay the costs of the Hippopotes was subject to agreement being reached on the allocation of time and means of recording that time; that it was not responsible for mobilisation and demobilisation costs; and that the Hippopotes would perform the task of collecting the demolition debris by an agreed methodology.
571 CMA pleaded that John Holland did not follow the agreed methodology, but used the Hippopotes to perform works, or to perform them in a manner, that it was not capable of doing.
572 Further, or alternatively, CMA pleaded that John Holland covenanted that the Hippopotes was reasonably fit for the purpose the parties wished it to be used for, and the Hippopotes was not fit for the purpose as claimed by John Holland because it was unable to dredge material that required a force of between 20 and 45 MPa. CMA pleaded that the Hippopotes suffered hydraulic system failures because it was not capable of dredging material of that strength, and it was not suitable for the task it was performing.
573 CMA pleaded that it is not liable to reimburse John Holland for the costs of the hire of the Hippopotes, and, further, that the costs claimed were wholly or substantially incurred in relation to performing dredging works for which John Holland was responsible under its contract with BHP Billiton, and that John Holland has been reimbursed or compensated by BHP Billiton, or had a right to recover its costs in hiring the Hippopotes from BHP Billiton.
574 Essentially two issues arise, although they are interconnected. First, did the parties intend to create a binding contract? Second, what terms were agreed? The questions are necessarily connected because, there must, objectively, be agreement upon those terms as are legally necessary to form a contract: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548 (Gleeson CJ, Hope & Mahoney JJA agreeing). If the parties have not reached an agreement on the essential terms of the contract, there will be no binding contract, even where one of the parties has commenced work referable to the agreement: British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504, 510. Noncontractual remedies, for example on restitutionary principles, may be available (as claimed by John Holland in their alternative claim) but the contract itself is incomplete and unenforceable.
575 The question of whether the parties had an intention to create a legally binding contract is determined objectively by drawing inferences from what they said and did in the course of their dealings. What would each party, by its words and conduct, have led a reasonable person in the position of the other party to believe: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 [40] [41]. To resolve this dispute the court does not search for uncommunicated motives or intentions: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [25].
576 The parties being at odds on whether there was a legally binding contract formed, John Holland, as the party asserting the contract, bears the onus of proof: see Ermogenous [26].
577 The fact that the parties intended to later embody their agreement in a formal contract does not deny the existence of an agreement, with the intention to be immediately bound. It is not necessary to repeat the classes identified by Dixon CJ, McTiernan & Kitto JJ in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360 362. It is sufficient to refer to the statement of principle in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634 (McHugh JA):
[T]he decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.
578 The critical issue in the present case is whether CMA evinced an intention to be contractually bound without the parties having resolved certain parts of the commercial arrangements. Most importantly, did CMA show it intended to contract without resolution of the method of allocating time and cost, and CMA's liability for other than 'incremental' costs. If those matters were not agreed, and in the context of the purported agreement they are essential terms, the contract is incomplete.
579 The letter of 13 March 2007, in the context of earlier correspondence, shows that CMA agreed that it was required to remove material outside the berthing channel 'where it would interfere with pile driving works, dredging of the operational safety of the wharf'. It had always accepted its obligation to remove the debris within the berthing channel.
580 CMA also agreed that it intended to remove that debris with the assistance of the dredge to be engaged by John Holland, and the removal of debris which CMA was required to remove was to be at CMA's cost: that had been agreed in CMA's letters of 3 September and 1 November 2006, and Mr Clarke's letter of 16 February 2007. CMA had no alternative means of removing the debris, at least not within the time allowed by the Subcontract.
581 In Mr Bryce's letter of 25 February 2007, John Holland had proposed (or said that it was its understanding) that the spoil removal would be in two runs separated as much as feasible from the final dredging run from Bent 37 northwards, and a second run to remove blasted and demolished material to the depth of the original wharf from the southern end of Berth D to Bent 37. Material that was not related to the demolition needed to be documented for a variation claim under the Head Contract. Recovered material would be handed over to CMA for processing at a separate area at the back of the spoil disposal area. The dredger would also remove piles 'on behalf of CMA'.
582 In the letter of 13 March, CMA agreed with the proposed methodology of two sweeps, the first to remove debris, the second to dredge. In my opinion, this method was, at least at this stage, not intended to be a contractual stipulation. It was, however, bound up with the matter, still in negotiation, of allocation of time and cost.
583 CMA expressed significant commercial reservations when time and cost were in issue. As early as the letter from Mr Xavier on 3 September 2006, CMA had agreed that it would pay the cost of removing the concrete debris resulting from the demolition of the dolphins from the seabed. Rates had not yet been agreed.
584 On 14 October, John Holland requested that CMA confirm, as a matter of urgency, whether it wished to continue with the arrangement of using Van Oord for the concrete and pile removal, so that the contractual arrangements could be finalised.
585 Mr Clarke's response on 1 November confirmed that CMA would participate in the use of the dredge and accepted the rate negotiated with Van Oord (V10/3765). He did, however, anticipate further discussions on the commercial terms and in particular the cost sharing mechanism, as well as the execution of a formal agreement. Despite the extent of agreement already reached, Mr Clarke's reference to discussion of commercial terms was not an empty statement: where Van Oord was to perform both the berth pocket dredging and the debris removal, agreement on the cost sharing mechanism was essential to the functioning of the agreement. As at 1 November 2006, berthing dolphins located in the berthing pocket had been blasted and the process of excavating the concrete that was above water level was ongoing (exhibit 28A [222]). There had not yet been a diver's survey of the concrete on the seabed. The need for clarity on the required degree of separation of the spoil and concrete was clearly an issue to be resolved.
586 Mr Clarke's letter of 16 February 2007 emphasised the need to resolve the cost sharing mechanism. This was part of a more fundamental lack of consensus regarding whether CMA was obliged to meet some or all of the mobilisation, set up and demobilisation costs.
587 The correspondence also shows that the costs issues spilt over into the issue of the handling of the recovered spoil on shore. CMA proposed that spoil should be delivered directly to its landing area to avoid potential contamination and double handling. The cost recovery sought by John Holland (and claimed to be part of the written agreement) included the daily cost of Moxy trucks and operators, a dozer and operator at an hourly rate, and two supervisors. The evidence does not reveal agreement on those matters.
588 I am not satisfied that John Holland has proved that the parties did agree to enter an enforceable contract in the terms pleaded. There was an agreement that CMA would meet the cost of removal of the spoil. How the total costs incurred by John Holland to Van Oord were to be allocated remained unresolved. A binding agreement awaited agreement on that issue. The extent to which John Holland would handle the spoil on land, and its cost recovery, was also not settled. Finally, John Holland accepted (although only at trial) that there was no agreement for the sharing of mobilisation, set up, and demobilisation costs.
589 It is not possible, in these circumstances, to identify an agreement to be binding as to some terms, with further terms to be resolved. The commercial aspects of the agreement were essential to its operation. I am not satisfied there was a contract without agreement about those terms.
590 John Holland claimed for the cost of using the Hippopotes on alternative bases: in restitution on the basis of quantum meruit, as damages for CMA's breach of contract, and under cl 17.5. I deal with those alternative cases below.
591 As an alternative (and in some instances a supplement) to the claims based on a varied subcontract, John Holland pleads (defence and counterclaim par 106A) that its works to remove and attempt to remove the blast debris and loosen piles with the Hippopotes and Westsea 10 and other equipment was work for which John Holland was entitled to be paid on a quantum meruit basis by reason of:
(i) [CMA] agreed to pay for the costs incurred by [John Holland] in engaging the Marine Resources to remove the blast debris and loosen piles;
(ii) [CMA] knew these works were being undertaken by [John Holland], using the Marine Resources;
(iii) [CMA] had and accepted the benefit of these works; and
(iv) [CMA] knew that [John Holland] expected to be paid for undertaking these works;
592 John Holland claims the actual operating and standby costs in relation to the Hippopotes and the Westsea 10, less the costs it would have incurred in using those resources to carry out the dredging work under the Head Contract but for the presence of blast debris and the loosening of piles.
593 In a separate debris conveyance claim (defence and counterclaim par 108A) John Holland claims, on a quantum meruit basis, the costs it incurred in conveying blast debris to shore and transferring it to trucks. John Holland claims its actual operational and standby costs incurred by John Holland for the use of various plant, equipment and labour, less the reasonable operational and standby costs which John Holland would have incurred in using those resources but for the presence of the blast debris and loosening of piles.
594 CMA denies that John Holland has a right to recover on quantum meruit, and pleads that the Subcontract was valid and enforceable and John Holland's right to recover costs incurred arose only if CMA failed to perform its obligations within the time required by the Subcontract.
595 The law may impose an obligation to make restitution on a quantum meruit basis, where the plaintiff proves:
See Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221.
596 In my opinion, however, the contractual framework in this case does not leave room for the claim based in restitution. It is an essential step in considering such a claim to see whether and how it fits with the particular contract the parties have made. John Holland's claim is for work which CMA was required to carry out under the Subcontract. The parties have expressly agreed, in the terms of cl 17.5, the circumstances in which John Holland may perform an obligation that CMA was obliged to perform under the Subcontract, and its entitlement in debt for the costs, expenses and damages it has incurred in doing so. Reliance on restitution is unnecessary. Further, the law of restitution should not be called upon to 'redistribute the risks' where the parties have made express provision: see Lumbers v W Cook Builders Pty Ltd (in liquidation) [78] [79].
597 John Holland pleads an alternative claim in breach of contract, as follows.
598 First, John Holland pleads that there were terms of the Subcontract, on its proper construction, in effect, that (defence and counterclaim par 83):
599 In par 108B, John Holland then pleads that it was also a term of the Subcontract, on its proper construction, that the works to be carried out by CMA, for the agreed consideration, included retrieving, conveying to shore and disposing of any material that fell to the seabed from the demolition and removal works (cl 2.1, cl 8.1 and sch H of the Subcontract).
600 John Holland pleads as separate breaches, the failure to demolish the concrete dolphins in the manner described in its method statement, that is:
(a) so as to fragment the MD2 in situ and remove the fragments from the headstock; and
(b) with respect to all other dolphins, so as to produce fragmentation of the concrete so that all concrete spoil was capable of removal by [CMA] by the proposed dredge (defence and counterclaim par 109).
601 John Holland alleges that, as a result of the demolition works performed by CMA, debris fell to the seabed and, in breach of that term, CMA:
(a) failed to retrieve the debris which fell to the seabed;
602 This plea is in addition to, or in the alternative to, the plea under cl 17.5 under which John Holland could recover as a debt due, the cost of, by itself or by a third party, performing an obligation CMA failed to perform within the time required under the Subcontract.
603 The primary obligation of CMA under the Subcontract is found in cl 8 headed 'Construction'. Under cl 8.1 'the Subcontractor must perform the Works in accordance with the Works Description, any documents issued by John Holland, the Subcontractor Documentation and any Direction or Variation Order'. The Subcontract was silent as to how the demolition was to be done. This was in the context (express in the contractual documents) where the task undertaken by CMA was to demolish reinforced concrete structures by methods which could be employed in an operating harbour, and in the midst of construction and other activity.
604 Clause 6 of the Subcontract provides for 'Subcontractor Documentation' the documentation which the works description required CMA to prepare. CMA's Project Management Plan, dated April 2006 (Revision B) detailed two methods. First, MD2 would be demolished by the use of PCF, with fragmented material bound by the reinforcing cage around the perimeter of the dolphin. An excavator fitted with a hydraulic hammer would ensure the material was of suitable size, before this spoil was removed from the dolphin by a rock bucket, loaded onto a barge, and disposed of at an approved landfill site (V4/1016 1019).
605 For the remaining dolphins, CMA would use a heavy lift barge, to lift each dolphin in its entirety and then transport it and dispose of it in a designated area. Piles that needed extraction could then be pulled.
606 This method was revised on two occasions and, following resubmission on 2 June 2006, was approved by not being rejected within the time stipulated in cl 6.
607 The demolition of MD2 on 5 July 2006, and the unexpected degree to which the concrete was fragmented, resulted in CMA proposing that the heavy lift option be abandoned.
608 John Holland submitted that the detailed method statement prepared by CMA and accepted (or not rejected) by John Holland is picked up by cl 6 and cl 8.1 and required CMA to blast the dolphin tops to complete destruction so that no large fragments remained.
609 Accepting that the method statement presented by CMA was part of the Subcontractor Documentation, the method statement did not specify that no larger concrete pieces would be produced and enter the berthing pocket. It referred only to reduction of the risk of that occurring:
... we are proposing the second option, that is, to fracture to complete destruction of the dolphin's tops. In either option, it is inevitable that fractured concrete will fall into the water and lodge on the seabed. It was always intended that the spoil would be surveyed and removed. By a complete destruction of the dolphin tops, the risk of larger concrete pieces entering the pocket is significantly reduced, particularly given the nature of the older concrete. It is proposed to engage the excavator dredge to remove any spoil, as directed by a survey, post removal of the piles. Further, divers will, as part of proposed demolition survey, locate and arrange lift of any reinforcing that may fall to the water in the course of fracturing process.
610 It is true that none of the documents referred to the extent of the debris which would be produced, and the work that would be required to remove it. But that was an omission in the works method statement, and does not create a positive obligation.
611 I do not accept that a reasonable person in the position of John Holland would read the documents provided by CMA as warranting that larger fragments would not be produced or would not enter the berth pocket. Nor do I believe that references to 'fine material' can be given too much emphasis, when the material referred to is reinforced concrete.
612 The reference to complete destruction must also be read in context. The Works Description allowed for a range of methods for demolition of the dolphins, not all of which involved the destruction of the dolphins' tops. Before the abandonment of the heavy lift option, only MD2 was to be destroyed, with the tops of the other dolphins removed without fragmentation.
613 The second limb of the argument is that CMA warranted the works would be carried out in a manner that was fit for their intended purpose.
614 John Holland submits, in effect, that to be fit for purpose, the works performed by CMA were required to produce (and only produce) fine material capable of removal by a dredge. For essentially the reasons given above, I do not regard this as a reasonable reading of the contract and the Subcontractor documentation.
615 PCF has been shown to be an appropriate method for the demolition of the dolphins on safety grounds as it produces less fly rock than conventional explosives (see exhibit 50 [6.4] - [6.9]). In the environment in which the work was undertaken, that was an important factor. PCF was also capable of fracturing reinforced concrete, such as the material in the dolphins, although it may have produced fragments which remained connected by the reinforcing bar (see exhibit 50 [6.22]). The blasting produced smaller debris, which was not contained with the reinforcing bar 'cage', and larger debris which was outside the capabilities of the dredge. But the production of that debris was not a failure to use a method fit for purpose.
616 Even if there was no breach in the method of blasting, John Holland has shown a failure to meet the contractual obligation to retrieve the debris produced.
617 The third limb of John Holland's claim in contract is that CMA was obliged to retrieve all debris from the seabed, convey it ashore and dispose of it.
618 The Works Description in Sch H required, relevantly, that any material falling to the seabed was to be retrieved 'at Subcontractor's cost'.
619 Schedule I provided that the works were to include 'clearing from the berth pocket all falling demolition materials from the demolished structures'. That obligation fell on CMA. The dredging of the berth was to be performed only after the demolition of the berthing and mooring dolphins to ensure clearance of all debris from that demolition from the berth pocket.
620 The project specification, also part of Sch I, provided for demolition works in these terms:
All demolition works shall be scheduled and completed so as not to interfere with the operational capacity of the facility and shall not commence before the operational shutdown of Berth C on September 1 2006. This shall include, but not be limited to, ensuring that no demolition materials is allowed to enter into or remain in any Berth pocket, to the extent that it limits the operational draft of any vessel in the berth pocket ...
The existing wharf structure and dolphins, mechanical equipment, electrical systems and substations are to be completely demolished and removed from site during the course of the Works, as detailed in the Drawings. The Contractor shall schedule the demolition of the wharf structures to suit the methodology for the construction of new works and to ensure the continued operational capacity of the facility up to the operational shutdown at the end of the Contract period [cl 9.1].
621 Schedule I, cl 9.2, required that the demolition of berthing and mooring dolphins be undertaken only by a specialist demolition subcontractor agreed to by John Holland. The scope of the specialist subcontract was to include the demolition of reinforced concrete heads, extraction or cutting of piles penetrating into the dredge area, and disposing of demolished materials onshore.
622 Clause 9.3 provided that the reinforced concrete headstocks and dolphins 'shall be broken into small sections which can be handled away from the site. This may be by breaking, water blasting, storing or explosive methods as the contract may propose'. It further provided that all debris from the demolition work was to be captured and removed from the site:
No debris shall be allowed to fall to or remain on the seabed, where it would interfere with the pile driving works, the dredging in the berth or the operational safety of the berth. Any material that is allowed to fall into the seabed shall be removed by whatever means, to the satisfaction of the Company Representative.
623 The requirements of cl 9.3 are particularly significant because CMA proceeded with a demolition method which was designed to deposit demolition debris in the harbour. It adopted that method when it had arranged no means for removing that debris. It is of no consequence whether this was primarily debris that was manageable by a dredge or was to a greater extent in large blocks. Its obligation was to capture and remove that material.
624 Once it was apparent that CMA was unable to carry out that part of the demolition works, John Holland might have proceeded under cl 14, by notice of breach and termination. It did not do so, but arranged for the removal of spoil by other subcontractors. But, on this failure by CMA, it was entitled both as a remedy for breach, and under the express terms of cl 17.5 to remedy the failure.
625 John Holland pleads an alternative claim in misleading and deceptive conduct: defence and counterclaim pars 133 136.
626 John Holland alleges that, by its conduct, CMA represented that, apart from some larger fragments which had been identified and were to be removed by CMA prior to dredging, the complete destruction of the concrete dolphins had produced fragmentation of the concrete into sufficiently small pieces to enable that debris to be removed reasonably efficiently by bucket dredge.
(1) The proposal and statements made by CMA in the letter dated 24 July 2006 from CMA to John Holland;
(2) CMA included the report by Alterrain in its letter of 24 July 2006;
(4) Statements made by CMA at a meeting on or about 1 March 2007, before John Holland commenced the dredging operation.
628 CMA denies these allegations (defence to counterclaim par 77) and pleads that Mr de Ridder of Van Oord, in substance, informed John Holland that the Van Oord dredger could handle the demolition materials on the seabed, including the reinforcement in it; that Van Oord was the contractor for the dredging works; and any representation was made by Van Oord. CMA also pleads that:
(1) it was only reasonable for John Holland to rely on representations made by Van Oord; and
(2) any statement made by CMA as to the debris on the harbour floor was a statement of opinion for which it had reasonable grounds, including its observations, the Fugro survey, and the trial blasts and proposals prepared by Alterrain.
629 The letter from CMA to John Holland of 24 July 2006 was primarily directed to a demolition methodology to replace the heavy lift option. I have set it and the Alterrain report out in detail above.
630 For the present, I note that CMA proposed the option, 'to fracture to complete destruction the dolphin's tops'. The letter stated that it was inevitable that fractured concrete would fall into the water and lodge on the seabed, but that the risk of larger concrete pieces entering the pocket 'is significantly reduced'.
631 The report from Alterrain referred to duplicating the results of the blast on MD2, and blasting to complete destruction.
632 The evidence about the meeting is quite inconsistent. Importantly, however, CMA had already represented that there was a reduced risk, from the method adopted, of larger concrete pieces being present.
633 Mr Lear said that one of CMA's representatives said, in effect, that the Hippopotes could handle the demolition material on the seabed, and that one of the CMA representatives told him the material was 'lightly reinforced' and would break up when the bucket started to remove it. Mr Lear says his impression, from what was said, was that the concrete structure from the dolphins had broken into small segments and there were some larger segments. Either Mr Pick or Mr Clarke told him the bucket of the Hippopotes would be big enough to collect all of the material that had fallen into the berthing pocket (exhibit 38A [52] - [53]).
634 In crossexamination, Mr Lear agreed that he understood, or now assumes, that CMA was limited in that the information CMA had was the Fugro survey and divers' reports, and that the divers would have been affected by the poor visibility underwater. He said that CMA would also have had the blast pattern and the result it was designed to achieve in terms of segregation of the concrete in the dolphin's (ts 786). He agreed that there can be a difference between what is sought and what is achieved.
635 Mr Lear also agreed that it was the Van Oord representatives who could say what the Hippopotes was able to achieve. It was put to him that the CMA representations could only 'convey the best of their understanding of what was down there'. Mr Lear agreed, adding 'and the size of the material et cetera' from their understanding of the information available (ts 792).
636 Mr Hancock prepared and circulated minutes of the meeting. He gave evidence about it in the first of his witness statements dated 29 May 2012 (Exhibit 55A). Mr Hancock said he had no detailed recollection of the exact words said, but recalled one of CMA's representatives 'indicated all major demolition debris had been removed except about 9 pieces of large concrete blocks, and most of the dredge area should be clear enough for Van Oord to start its work' (emphasis added) (exhibit 55A [29]). Mr Hancock also said that one of CMA's representatives said the nature of the demolition debris to be removed by Van Oord was recorded on the Scope of Works document.
637 Mr Hancock could not recall if the size of the concrete rubble was discussed. He did recall that Mr de Ridder said that Van Oord should be able to carry out its work if the debris were small, and one of CMA's representatives said that the debris consisted of lightly reinforced concrete rubble (exhibit 55A [29] [31]).
638 In the minutes Mr Hancock prepared, he recorded: 'CMA tabled scope of works for Van Oord's dredger to carry out. (Attached). CMA estimate that the Van Oord dredger can handle all the demolition materials on the seabed, as the concrete is only lightly reinforced' (V11/4048). It is not clear whether this is a reference only to what was said at a meeting, or also to the Scope of Works prepared by CMA.
639 In crossexamination, Mr Hancock agreed that it was his understanding of the meeting that CMA relied upon the Fugro survey for their information regarding the nature and extent of debris on the seafloor (ts 1213).
640 Mr Clarke gave evidence about the meeting. In his witness statement, he said that Mr Michael did most of the talking on behalf of CMA as to what the divers had estimated was on the seafloor. Mr Clarke said there was some concern about concrete laced together with the rebar. He did not recall the size of the blocks being raised or discussed at the meeting, or that the representatives of Van Oord said much, except to the effect that there was not a problem.
641 Mr Clarke also recalled that Mr Hancock said that the first pass of the dredger would collect demolition debris, and then the berthing channel would be dredged in the next pass (exhibit 28A [286]). That proposed method is recorded in minutes of the meeting prepared by Mr Hancock (see V11/4048 4050). Mr Clarke does not otherwise agree with the minutes of the meeting, and in particular that anyone from CMA gave an opinion on the capabilities of the dredge to handle the debris from the dolphins.
642 Mr Michael's recollection of the meeting is that he said that he thought the concrete blocks on the seabed would have been in the region of 5 tonne, with perhaps the largest being closer to 10 tonne. He said that he also recalled mentioning that the dredger would need to be cautious because the blocks contained steel reinforcement. He also agreed, however, that CMA representatives at the meeting said that, apart from larger items represented in a mud map produced at the meeting, what remained was lightly reinforced concrete rubble and hex pile stubs, and that the rubble was described as 'small' and well within the capacity of the Hippopotes (ts 590).
643 Mr Michael's recollection is that Mr Hancock said that the Hippopotes would be used and the method would be: first, an initial run for the purpose of picking up concrete material with perhaps a minor dredging, the concrete would be scooped up on deposited on a barge. On land, a long arm excavator would grab the concrete from the barge, and John Holland would then transport the concrete to the site dumping area, after which CMA would take over and transport the concrete to the tip. This is consistent with the letter of Mr Bryce of 25 February 2007 (see V11/4026 4028).
644 Ms Lopez took some notes during the meeting, but they are scant and cryptic. In her witness statement Ms Lopez said she had no detailed recollection of the words spoken at the meeting. She did not recall the Van Oord representatives saying much at the meeting, and did not recall anyone discussing the size, shape, or quantity of the concrete rubble on the seabed. She could recall no discussion about the capabilities of the Hippopotes (exhibit 34C [12] [16]).
645 The other CMA attendee, Mr Pick, did not give evidence at trial.
646 Mr de Ridder said, in his witness statement, that he could not recall exactly the words used at the meeting. He did, however, recall saying that Van Oord should not have any problem lifting debris so long as it was not too big. He said that, either at that meeting or an earlier meeting, he had discussed the lifting capacity of the dredge and the strength and capacity of the bucket with representatives of CMA. He recalled being told (it is not clear whether at the meeting of 1 March or on the earlier occasion) that the seabed was clear of all large demolition debris, and the remaining debris 'was made up of rubble and should all be in fine material, all exploded in small sizes, and that the Hippopotes should be able to proceed with its work without its production rate being hampered by the remaining debris' (exhibit 44A [43]). Mr de Ridder did not specifically recall discussing the size of the concrete rubble at the meeting but 'understood' that the pieces should be approximately the size of a football, and to be only lightly reinforced 'so that pieces of rubble were not joined by steel reinforcement' (exhibit 44A [44]).
647 In a responsive witness statement, Mr de Ridder said that he could not recall the exact words regarding the expression 'lightly reinforced', when he was told that the concrete rubble was lightly reinforced. He did not expect that there would be more than a minimal amount of steel protruding out of the rubble (exhibit 44B [16]).
648 The nature of the representation conveyed by words or conduct is a question of fact to be determined having regard to what was said or done considered against the background of all the surrounding circumstances: Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177, 202. A representation will be false or misleading if it induces, or is capable of inducing, error: Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564 [63]; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 [15].
649 Where John Holland is relying on misleading and deceptive conduct arising from the representations conveyed by what was said at the meeting, it needs to prove the words were spoken with a degree of precision sufficient to enable the court to be satisfied that what was said would reasonably give rise to the representation claimed: see, for example, Watson v Foxman (1995) 49 NSWLR 315, 318 319. It does not have to prove the precise words spoken at the meeting. But the court needs to be satisfied that it is more probable than not that words were spoken that would reasonably convey the representation asserted.
650 In determining whether the statements by CMA representatives reasonably give rise to the pleaded representation, I have had regard to the circumstances in which the words were said and the whole of the course of conduct of the parties. The question of fact should not be decided by examining the evidence about the meeting in isolation: compare Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304; and Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592.
651 I have also had regard to the fact that the representations were made to qualified people - generally engineers - and that the John Holland people had been on site and had observed at least some of the blasts. They also had access to the Fugro survey, although its limitations were apparent. The statements were made at a meeting to discuss scope of work and could reasonably be expected to be the basis of decisions regarding the deployment of the Hippopotes.
652 There are other matters that, in my opinion, are particularly relevant. First, in preceding correspondence, CMA and John Holland had agreed, at least in principle, that CMA would remove all large/accessible concrete using the excavator on the Purnell barge, with remaining concrete to be removed using a John Holland dredge. Second, CMA representatives had earlier met with Mr de Ridder and discussed the lifting capacity of the dredge. Third, the dredge was the only method in contemplation, to the knowledge of all parties, for removal of the bulk of the concrete spoil. Fourth, and importantly, CMA produced the Scope of Works document for the purpose of the meeting with Van Oord.
653 While the use of words like 'rubble' and 'lightly reinforced' are imprecise, in this context I am satisfied that they would be reasonably understood as conveying that, except for the larger blocks that had been identified, the concrete had been fragmented into pieces that could be removed efficiently by the dredge in the course of dredging operations. Whether the words suggested pieces were the size of a football, or bigger, is not to the point. While it is not possible to determine precisely what was said, I am satisfied, on the balance of probabilities, that words were said to the effect that the debris was capable of being handled by the dredge.
654 That was also the import of the Scope of Works document, and the minutes prepared by Mr Hancock and circulated soon afterwards. And it is consistent with what the parties then did.
655 I have had regard also to the purpose of the meeting. Van Oord had already been engaged before 1 March: the charter hire agreement had been executed about two weeks earlier (V10/3949). The purpose of the meeting, as described by Mr Lear, was to understand the Scope of Works and agree how the debris would be removed (Mr Lear ts 786). That evidence was not challenged, and was consistent with the evidence of the CMA representatives.
656 Elsewhere in these reasons I discuss in detail the findings of the dive surveys carried out later in 2007. The debris remaining on the seabed (excluding the identified larger pieces) was not capable of being handled by the dredge. Nor was it properly described as lightly reinforced. The representations made at the meeting on 1 March 2007 were misleading or likely to mislead.
657 The argument put forward by CMA that it was Van Oord that represented the capacity of its dredge is not to the point if the required causal link can be shown between the misleading statements made by CMA representatives and loss or damage. In particular, CMA is responsible if the representation by Van Oord was as to the capacity of the Hippopotes to handle the size, shape and quantity of material that CMA represented would be encountered by the dredge. Nor does the availability of the Fugro survey to the other parties at the meeting deny causation.
658 CMA also pleads that any representation as to the debris on the harbour floor was a statement of opinion for which it had reasonable grounds. This plea really goes nowhere. First, while it may have been a conclusion from available evidence and, in that sense, an opinion, the statements carried representations of fact. Second, the fact that a statement is, or includes, a matter of opinion does not preclude the conduct of making that statement from being misleading: see, for example, MGICA (1992) Ltd (formerly MGICA Ltd) v Kenny & Good Pty Ltd [1996] FCA 766; (1996) 140 ALR 313; Campbell v Backoffice Investments [33].
659 Accordingly, I am satisfied that CMA did, at the meeting on 1 March 2007, in the context of the earlier documents, engage in misleading and deceptive conduct in representing that blasting of the dolphins had produced fragmentation of the concrete into sufficiently small pieces to enable that debris to be removed reasonably efficiently by bucket dredge, but for those larger blocks shown on the mud map.
660 I am also satisfied that John Holland did, at least in part, rely on those representations in adopting the methodology of attempting to remove the rubble using the dredge. The statutory cause of action arises when a person suffers loss of damage 'by' the contravening conduct of another person: see Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 525. General principles of causation apply: Wardley (525).
661 No question of apportionment has been raised. CMA's conduct need not be the sole inducement in sustaining the loss, although it is necessary that the contravening conduct had a substantial rather than a negligible effect: see, for example, Gould v Vaggelas [1985] HCA 75; (1985) 157 CLR 215; Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 [109]; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 [33], [57]. Reliance must 'be addressed from the subjective perspective of the party or persons said to have been affected by the misleading and deceptive conduct, at least until the point where it might be argued that their reliance was so unreasonable as to break the chain of causation': Grainger v Williams [2009] WASCA 60 [26].
662 The fact that John Holland also had the Fugro survey, and had observed the blasts which produced the debris, do not break the chain of causation. CMA was not simply stating what the Fugro survey showed. And it was in a position of greater knowledge. It had conducted some (although insufficient) dive surveys. CMA, or its agent, had designed the blast pattern and knew what it was designed to achieve.
663 Although there was no direct evidence from any John Holland employee that he was induced by what was said, reliance on what was represented at the meeting may be inferred. Indeed, such inference from the surrounding circumstances may be more reliable as a guide to causation than ex post facto evidence from an interested party: see Baiyai Pty Ltd v Guy [2009] NSWCA 65 [56]. I am satisfied that John Holland relied on the representation that debris produced in the demolition could be removed reasonably efficiently by bucket dredge. That is the most likely explanation for what it then did.
664 Although CMA sought to make much of the change in methodology from a two pass method, under which debris would have been removed before the Hippopotes attempted to dredge the silt of the berthing pocket, it does not affect the essential issue: that John Holland committed the Hippopotes to the removal of debris in circumstances where it could not manage that material.
665 There is also the issue of the suitability of the Hippopotes. The Hippopotes was not suitable for what it attempted to do. But on the evidence of Mr Hutchison, and the findings and recommendations made by the ICAM following damage to the Hippopotes, I am satisfied that it was suitable for dredging (providing it allowed for hard rock) and the debris would have been within its capability if that debris had been as CMA represented.
666 On those findings, I would hold CMA liable for loss and damage caused by its misleading or deceptive conduct. Ultimately, it may be of little practical importance because the loss that resulted from misleading conduct is part only of the costs incurred by John Holland in retrieving the demolition debris from the harbour floor. The statutory claim is, however, important to the issue of liability for the periods when the Hippopotes was stood down for repair caused by the presence of debris.
667 The principles relevant to assessing damages in contract or tort are not directly relevant to the assessment of damages for the statutory cause of action. The objects of the legislation tell against a narrow, inflexible construction of causation in determining the loss caused by the breach: Henville v Walker [96] (McHugh J); Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 [56] (McHugh, Hayne and Callinan JJ), [99] (Gummow J). John Holland is entitled to the loss directly flowing from its reliance on the representation, at least if the loss is foreseeable: Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 [11] (Mason, Wilson and Dawson JJ).
668 John Holland claimed damages under this cause of action for debris removal by the Hippopotes, the Westsea 10 and Westsea 9 and related equipment (including tugs). The costs of removing debris using the Westsea 10 and Westsea 9 were incurred as a result of the presence of the debris, and are recoverable under other causes of action, but are not causally related to the misleading conduct.
669 This claim is pleaded in pars 108A and 108B of the counterclaim. As a further or alternative claim, John Holland pleads a claim under cl 17.5, which provides that John Holland may, either itself or by a third party, perform any obligation under the Subcontract which CMA was obliged to perform but which it failed to perform within the time required in accordance with the Subcontract. The costs, expenses and damages suffered or incurred by John Holland in so performing such a Subcontract obligation will be a debt due from CMA to John Holland.
670 John Holland pleads that CMA failed to perform its obligation to retrieve from the seabed, convey to shore and dispose of any material that fell to the seabed from the demolition and removal works, within the time required or at all. John Holland claims the sum of $12,646,401for:
671 In its reply and defence to counterclaim, CMA denies the allegations in pars 108A and 108B of John Holland's counterclaim (pars 61, 62). It is necessary to also have regard to CMA's pleas regarding the use of the Hippopotes (reply and defence to counterclaim pars 56 59). The effect of the defence to counterclaim may be stated in this way.
672 First, in relation to each of the claims made by John Holland, CMA says the costs claimed were wholly or substantially incurred in relation to performing dredging works for which John Holland was responsible under its contract with BHP Billiton and for which CMA was not responsible. There is no doubt that John Holland was responsible for dredging works under its contract with BHP. The costs recoverable under cl 17.5 are those extra costs incurred because John Holland was required to also remove debris from the demolition.
673 Second, CMA submits that it is impossible to calculate the amount of time spent on dredging demolition waste or the volume of demolition waste dredged because John Holland failed to keep any or any adequate records of the time spent or volume of material recovered and prevented CMA from recording that information. I agree that it is difficult to calculate the additional time spent on dredging waste. John Holland has, however, proved some particular items of loss, or costs incurred, which can be calculated by the application of generally accepted principles in the assessment of damages. I deal with that more fully in considering the assessment of damages.
674 Third, CMA pleads that John Holland claimed from BHP Billiton all of the costs it now claims from CMA. CMA says that John Holland has been reimbursed in full or in part for the costs it has claimed, or ought reasonably have recovered those costs from BHP Billiton. CMA puts in issue the reasonableness of the settlement between John Holland and BHP Billiton. I deal with the claims against BHP separately below.
675 Fourth, on the proper construction of the Subcontract, John Holland's only right to recover costs incurred in performing an obligation imposed on CMA (absent termination) arose only if CMA failed to perform that obligation within the time required by the Subcontract. CMA says that the works performed by John Holland, for which it claims under cl 17.5, were performed before expiry of the time for CMA to perform those works. There are three reasons why I do not accept this argument. The first is that, except for some dredging by the Hippopotes in March 2007, the work for which John Holland claims was carried out after the specified Date for Completion under the Subcontract. The second is that the obligation to ensure that debris did not fall to the seabed where it would interfere with other operations was an ongoing obligation. CMA was required to fulfil it before debris interfered with either pile driving or dredging. Finally, CMA had advised John Holland that it could not itself recover the debris. John Holland was, from that time, entitled to act on the basis that CMA was not carrying out its obligation under the Subcontract.
676 As to the claim relating to the use of the Hippopotes, CMA also pleads that the Hippopotes was not reasonably fit for purpose, or was not used in accordance with the agreed methodology. In particular, CMA pleads that, at the direction of John Holland the Hippopotes attempted to dredge rock that it was incapable of dredging because of the hardness of that material, and was damaged in performing those dredging works.
677 CMA says that hydraulic system failures causing oil leakages on 8, 9 and 10 April 2007 were the result of the hardness of the material to be dredged and the fact that the Hippopotes was not suitable for the task it was performing. The cause of the event of 22 April was indeterminate, but included the fact that the Hippopotes was not suitable for the task it was performing.
678 CMA pleads that it has suffered loss and damage, being any amounts it is required to pay John Holland in relation to the hire of the Hippopotes and loss as a result of the delay caused by the damage to the Hippopotes.
679 I am not satisfied that CMA has made out these claims. I accept the evidence of Mr Hutchinson, to the effect that the Hippopotes was suitable for the dredging. The presence of hard material had to be dealt with by appropriate work methods the hard material should be isolated and left for other equipment.
680 It is not possible to say whether the damage to the hydraulics was caused by attempting to dredge the hard subsea rock or whether, or to what extent, it was caused by the hard material in the extensive debris. Each could cause it, and both in combination. It is likely that both contributed. The other damage to the dredge bucket and arm could have been caused by either. The most likely cause of the incident on 22 April was debris in the batter slope. The real cause of the loss, however, was not the damage itself but the need to stand the Hippopotes down until the area to be dredged had been cleared of debris. The failure by CMA to carry out is contractual obligations was at least a material contribution to that cause.
681 The work method single sweep, or initial sweep to remove debris was clearly discussed. But the evidence does not show that it became contractually binding. Indeed, my general finding is that the parties failed to reach a binding agreement regarding the 'first variation' claimed by John Holland.
682 In summary, I am satisfied that John Holland is entitled to recover the costs it incurred in the retrieval and conveyance of demolition debris under cl 17.5. This overlaps with my findings on the cause of action in misleading and deceptive conduct, and my finding that CMA breached the Subcontract in failing to retrieve debris that fell to the seabed where it might interfere with other works.
683 In its counterclaim, John Holland pleads that, by an email dated 3 May 2007, CMA informed John Holland that it could not meet its obligation to remove the debris (par 99A). It pleads that the parties further varied the Subcontract, by an agreement made about 5 June 2007, and agreed in effect that:
(a) in lieu of removing the other blast debris by the 'Hippopotes', removal would be effected by the dredge Westsea 10 ... and other necessary equipment;
(b) [John Holland] would charter [the Westsea 10] and would cause Westsea Marine Pty Ltd to operate it to carry out the other debris removal;
(c) [CMA] would reimburse [John Holland] for the costs incurred in using the Westsea 10 and other necessary equipment for that work;
(d) those costs would be at the rate of $3,300.00 per day for the Westsea 10, $7,500.00 per week for an associated 250 tonne crane and the reasonable costs of hiring other necessary equipment;
(e) the mobilisation and demobilisation costs of the equipment would be apportioned according to the proportion of time for which the equipment was engaged or stood down for the purposes of the demolition and removal works;
(f) [CMA] would reimburse [John Holland] the reasonable costs of using other equipment that was necessary to enable the debris to be removed by the Westsea 10 (par 100).
684 John Holland pleads that, pursuant to that varied Subcontract, it chartered the Westsea 10 and other necessary equipment to carry out the remaining other debris removal work between June 2007 and late October 2007.
685 While the evidence includes an email dated 5 June 2007, which says that it 'confirms' an agreement and purports to record agreed terms, John Holland does not allege that agreement was formed by any specified document.
686 CMA admits that the demolition debris has been removed by the Westsea 10 and by CMA (defence to counterclaim par 56). In par 57, it denies the allegations regarding the second variation to the Subcontract. CMA pleads, as an alternative, that the parties agreed to share the cost of the hire of the Westsea 10 and associated equipment on the basis that:
(i) [John Holland] would hire the Westsea 7, together with other equipment referred to in a letter from [John Holland to CMA] dated 5 June 2007;
(ii) [John Holland] would provide personnel to perform engineering, supervision and crew functions for the Westsea 7 and associated equipment;
(iii) the Westsea 7, associated equipment and personnel would be used for the purpose of breaking up rock material and in performing dredging [John Holland] was required to perform as well as collecting demolition waste from the seabed for which [CMA] was responsible;
(iv) the direct costs ... of mobilisation, set up, operation and demobilisation of the Westsea 7 and the equipment and personnel referred to would be shared on a pro rata basis according to the use of the equipment and personnel;
(v) the payment of costs was conditional on the [parties] agreeing a method of apportionment and [John Holland] maintaining accurate records of the time spent dredging demolition debris or the volume of demolition debris collected (par 61).
687 In its final submissions, CMA argued that any contract was subject to a condition subsequent. It submitted that it had negotiated on the basis that it be charged on a pro rata basis, according to the time actually spent removing the demolition debris relative to the time actually devoted to dredging, and conditional upon John Holland providing accurate records. CMA argued that the agreement was limited on that basis. It is not entirely clear whether that submission is based upon an implied condition of the Subcontract. There is nothing in the evidence to show that the parties had expressly agreed to a condition subsequent in those terms. It is not a term that would be implied in fact or as a matter of law.
688 CMA does not dispute that the Westsea 10, the equipment and the personnel were used for collecting demolition waste. But it says that the large majority of the time claimed by John Holland was spent in performing dredging works for John Holland. In that regard, CMA pleads:
689 CMA also pleads that, if there was a contract under which it was liable to reimburse John Holland, it was limited to the reasonable costs incurred in collecting demolition waste, and the costs claimed are not reasonable. Further, it pleads that any obligation to reimburse was conditioned on the parties agreeing a method of apportioning costs, and none was agreed. Nor did John Holland keep accurate records of time spent or volume of material collected.
690 Finally, CMA says that John Holland has been reimbursed in full or in part by BHP Billiton for the costs it has claimed from CMA. In particular, CMA alleges that John Holland claimed from BHP Billiton all of the costs it now claims from CMA, and settled its claim against BHP Billiton so that it has recovered, or ought reasonably to have recovered from BHP Billiton the amount it now claims.
691 In reply, John Holland asserts that the Westsea 10 was used exclusively for the purpose of removing demolition debris for 255 of the 259 days it was on site, although it also pleads that between about late September and late October 2007, it was also used to remove a small amount of unfractured rock disintegrated by the Erkat rock cutter (which came on site in October 2007). I should note that the period of 259 days combines the periods of hire of both the Westsea 10 and the Westsea 9. They must be dealt with separately, and the parties did so in final submissions.
692 If the parties intended to assert an agreement formed either orally, or by correspondence, neither pleading identifies the effect of any relevant document or the purport of any relevant conversation.
693 In closing submissions (annexure D), John Holland put its case on the basis that the agreement was formed verbally in a telephone conversation between Mr Crosthwaite and Mr Clarke on 11 May 2007, the substance of which was recorded in an email from Mr Crosthwaite on 12 May 2007, followed by further discussions culminating in a letter dated 5 June 2007 recording the terms pleaded.
694 In deciding whether the parties had formed an enforceable agreement by 5 June 2007, by their correspondence and conduct, it is not necessary to identify an offer and acceptance. A contract may be inferred from the acts and conduct of the parties, including what they have said to each other and what they have not said. The question is whether, in all of the circumstances, an agreement can be inferred even though it may not be openly expressed. This requires consideration of whether the parties' conduct, viewed objectively, manifests a mutual assent and an intention to create legal relations. What would a reasonable person in the position of each party think as to whether there was a concluded bargain?
695 The authorities also suggest some caution. A contract will only be inferred 'if it can be stated with some confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding': Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 [369] (Allsop J); see also Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 [162]; Pegrum v Fatharly (1996) 14 WAR 92, 94 95. The conduct relied on must point to the existence of the particular contract in the terms alleged in the proceedings: Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, 535 536; Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44 [5] [9]. And see Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520 [21] [23] (Pullin JA), [89] [90] (Buss JA), [203] [205] (Le Miere AJA); RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128 [92] [97] (Newnes JA); Fazio v Fazio [2012] WASCA 72 [188] [195] (Murphy JA).
696 Where it is alleged that an agreement was made by or on a certain date, the conduct of the parties, including conduct after that date, may be considered in deciding whether a contract has been concluded, and for the purpose of identifying the subject matter of the agreement and its necessary terms.
697 Finally, what is said by the parties in correspondence needs to be considered in the context of the correspondence and the parties' conduct as a whole. See Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551, 14,570 (Kirby P):
Reference to an 'agreement' having been reached does not necessarily prove the existence of a presently binding contract. Conversely, references to a 'proposed' agreement, and similar expressions, will not necessarily mean that no agreement presently exists. It is a question of how the words are to be interpreted in their context, and in the light of the correspondence, viewed as a whole.
See also, Geebung Investments (14,552) (Gleeson CJ).
698 On 3 May 2007, Mr Michael wrote to Mr Hancock regarding: 'Demolition works phase 4 grab/clam shelling operations orf demolition rubble on seabed'. He referred to a meeting on 1 May 2007 and continued:
Due to the near impossibility of getting the resources in manning and gearing up in the form of barge or crane by ourselves on short notice, it is suggested that it be done by yourselves.
In turn we will pay the day rate required for the period of time the barge is in operations for the removal of the debris near the old wharf area. In terms of anchor movement and, if possible any form of towing we will endeavour our best to assist.
699 On 12 May 2007, Mr Crosthwaite wrote to Mr Clarke regarding the mobilisation of the Westsea 10. In particular, referring to an earlier conversation between them, Mr Crosthwaite wrote:
We also agreed that all of the costs associated with the hire of the barge during the demolition clean up and the dredge pocket soil condition investigations would be shared on a pro rata basis determined by the agreed usage of the barge. The activities of the barge will be closely monitored and recorded to ensure accurate recording of usage whilst it is on hire. Both parties will keep the costs of this charter and other associated costs of this operation in separate cost codes and no markups for profit or offsite overheads will be applied to these costs when the apportionment is calculated. This will also apply to the mobilisation tow of the Westsea 10 from its current location offshore Dampier to Port Hedland.
I am comfortable pressing on with the cost only pooling arrangements and to further discuss the cost allocation formula generally in accord with your suggestions ... To that end I now have to hand the internal arrangements AJ has agreed to for the mobilization tow and equipment rental ... I propose that we split the mobilization and demobilization costs 50/50 and the operation costs on a pro rata usage basis. Once we have the equipment mobilised for use we need to understand how we 'cost' our respective contributions to the operation.
700 It is significant that CMA, at this time, proposed mobilisation of the equipment before resolution of the cost contributions. While Mr Clarke on this occasion proposed a 50/50 split of mobilisation and demobilisation costs, I note that CMA pleads that if an agreement was formed it was on terms that these costs would be shared pro rata.
701 On 19 May 2007, John Holland requested the MPDJV to approve the temporary release of Van Oord, and the Hippopotes was released for use at Dampier Port for the period from 27 May to 25 June 2007 (V11/4256). The charter hire agreement was suspended while the Hippopotes was absent from Port Hedland.
702 On 5 June 2007, Mr Crosthwaite wrote to Mr Clarke regarding 'various discussions and agreements' with regard to the removal of demolition material, piles and pile stubs from the Berth C berth pocket (V11/4258-4259). The letter is expressed as 'confirming' an agreement that:
703 The letter concluded with a request for CMA to confirm its agreement by return. No response is in evidence.
704 On 21 June 2007, Mr Bryce wrote to Mr Clarke, referring to the letter of 5 June. He advised that the Westsea 10 and associated equipment commenced preparation for clamming demolition materials on 16 June 2007, and had commenced operations on 20 June. John Holland required CMA to place a supervisor or equivalent on the Westsea 10 to manage the operation of the clamming process (V11/4280).
705 On 29 June 2007, Mr Laing of CMA prepared a proposed scope of works for the removal of piles, fractured concrete and larger concrete pieces, noting that the removal of fractured concrete was 'currently underway and working well' (V11/4314).
706 Site diaries show that the Westsea 10 was used to remove demolition debris, including blocks of concrete, and pile stubs throughout July, particularly in the area around the demolished berthing dolphins. Further concrete blocks were removed by the Westsea 10 in the area around BD2 on 18 and 20 August (V26/9567, 9569); and debris was removed from around BD1 on 15 and 16 August 2007 (V26/9565). The site diaries show debris, piles and pile stubs were removed on at least 12 days during August 2007.
707 On 16 August 2007, Mr Crosthwaite wrote to Mr Clarke regarding the earlier request for CMA to place a supervisor or equivalent on the Westsea 10 to manage the operation of the clamming process. He requested CMA to provide the name of its nominated representative to supervise those operations (V11/4448).
708 Clamming operations to remove debris using the Westsea 10 continued into September 2007, with large pieces of debris being broken up or drilled.
709 In this regard, the parties' subsequent conduct is consistent with an agreement for the use of the Westsea 10 and associated equipment having been made. I believe that it was made in the terms put forward by Mr Crosthwaite in his letter of 5 June 2007. In particular, I find that it was agreed that costs be shared according to the use of the equipment.
710 Even if I were not satisfied that an agreement in the terms alleged has been proved, John Holland would be entitled to recover the costs, expenses and damages it suffered or incurred in removing the debris on the alternative basis under cl 17.5 of the Subcontract. At the time of the engagement of the Westsea 10, CMA had both failed to remove the debris as required under the Subcontract and advised John Holland that it was not able to do so within a reasonable time. The debris interfered with other operations it had caused dredging to be deferred. John Holland was entitled to perform the work itself and claim the costs as a debt due.
711 From about 19 September 2007, John Holland took over the charter of the Westsea 9 and ran the clamming operation from that barge into 2008. The crane that had been on the Westsea 10 was transferred to the Westsea 9. The parties did not make a separate agreement regarding the recovery of costs of using the Westsea 9. At the time it was engaged, CMA remained in breach of its obligation to remove the debris from its demolition. John Holland was entitled to recover those costs for the breach, including under cl 17.5.
712 The assessment of the damages to which John Holland is entitled, on proof of breach of contract, is to be carried out according to the principle that it is to be placed in the same situation with respect to damages, so far as money can do it, as if the contract had been performed: Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 [13]; Robinson v Harman [1848] EngR 135; (1848) 154 ER 363; (1848) 1 Ex 850, 855 (Parke B); Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80.
713 John Holland bears the burden of proving not only that it has incurred costs or suffered loss, but also the amount of those costs or the loss it has sustained. It has to prove these matters on the balance of probabilities and with as much precision as the subject matter reasonably permits: see Commonwealth v Amann Aviation Pty Ltd (80, 83 84) (Mason CJ and Dawson J), (138) (Toohey J), (153) (Gaudron J), (161) (McHugh J); Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; (2003) 196 ALR 257 [37]. This involves two steps; first, that the loss suffered resulted from the breach and, secondly, that the loss was not too remote: Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd [1968] HCA 64; (1968) 120 CLR 516, 523.
714 It is well recognised that in some cases a party cannot adduce precise evidence of what has been lost. Generally, mere difficulty does not relieve a court from estimating damages as best it can: Commonwealth v Amann Aviation (83); Fink v Fink [1946] HCA 54; (1946) 74 CLR 127, 143; McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377, 411 412. This may, of necessity, involve an element of guesswork rather than estimation, although that does not detract from the need to adopt a reasoning process with a rational basis: Zorom Enterprises Pty Ltd (in liq) v Zabow [2007] NSWCA 106; (2007) 71 NSWLR 354 [84]. However, where damages are uncertain for lack of evidence, difficulties of assessment are in general resolved against the party who could or should have provided the evidence: LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 [12]; Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98 [42]
715 In the present case, the extent of damages claimed by John Holland, including, in particular, the stand down time of the Hippopotes, also raises important questions of remoteness of damage.
Remoteness in relation to the law of contract requires that on the information available to the defendant when the contract was made, the defendant, or a reasonable person in his or her position, should have realised that the loss was sufficiently likely to result from the breach of contract so as to make it proper to hold that the loss flowed naturally from the breach, or that loss of that kind should have been within his or her contemplation: Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454, 471 472; Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653, 657 658, 672 673; Commonwealth v Amann Aviation (99); Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603, 613. In Unity v Rocco, Gummow J [68] (albeit dissenting in the result, but not with respect to this statement of principle) said, with reference to remoteness, 'Here, as in other fields of law, hindsight may mislead'.
Witcombe as Executrix of the Estate of Witcombe v Talbot and Olivier [2011] WASCA 107; (2011) 280 ALR 177, [133] (Murphy JA).
716 In Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454 in the passage referred to by Murphy JA in Witcombe, Walsh J said:
In my opinion the error that is contained in the argument for the appellants consists in treating rules which constitute useful guidance in the ascertainment of damages as rigid rules of universal application, instead of treating them as prima facie rules which may be displaced or modified whenever it is necessary to do so in order to achieve a result which provides reasonable compensation for a breach of contract without imposing a liability upon the other party exceeding that which he could fairly be regarded as having contemplated and been willing to accept (471 472).
717 Where the assessment is based upon cl 17.5, the clause itself states the measure of damages: the costs, expenses and damages suffered or incurred by John Holland in so performing the relevant Subcontract obligation. Again the court must estimate them as well as it can.
718 The first issue in assessing damages is determining on what basis the work done by John Holland in retrieving and conveying the debris should be costed, where there was no agreed mechanism for allocating costs. All of the equipment that was hired from third parties was on a time basis, and the time charges incurred are, in my opinion, the logical basis to assess costs. In some areas, John Holland has attempted an allocation on the basis of an estimate of the percentage of the volume of material recovered. John Holland's own arguments show this cannot be done.
719 Had John Holland followed the initial proposal of a sweep to recover debris, followed by dredging, the calculation would be easier. In the assessment which follows, I have based allocation on time, except where the parties put forward an agreed percentage of time based on other factors.
720 John Holland puts its case by reference to three discrete time periods: 7 March to 22 April 2007, the stand down period from 22 April to 27 May when the Hippopotes was engaged at Dampier, and the final period between 10 July and 28 August when the Hippopotes returned to Port Hedland to complete dredging up to its demobilisation. The three periods are a useful guide, but, particularly the first period, must be treated with caution.
721 From 7 March to 21 April, the Hippopotes was engaged in dredging operations, but there were significant interruptions for damage and stand down for other reasons, including cyclones.
722 During this period, Van Oord charged $74,500 a day when the dredge was operating, and $57,500 on standby. John Holland claims a 3.5% administrative mark up. When CMA and John Holland were negotiating over the use of the Hippopotes, CMA accepted in principle that John Holland would apply a mark-up (see V11/4055-4056; Mr Clarke ts 468). As I have found, however, the parties did not conclude an agreement about the commercial terms for the use of the Hippopotes. On an assessment based on the costs that John Holland incurred, there is no basis for applying the 3.5% mark up.
723 John Holland submits that CMA accepted the rates for the Hippopotes. Again there was no final agreement. But those rates were what John Holland was charged by Van Oord, and in my opinion are the proper measure of the costs incurred.
724 John Holland then argues for an allocation of 15% of the costs on the days the Hippopotes was dredging silt and debris, based on evidence that 15% or more of the material recovered was debris (ts 591; V15/6281-6286). But this is no reasonable basis for the assessment when the costs are time based. In final submissions, John Holland argued that some of the debris was not easily accessible, some was submerged, some was joined to other debris with rebar. Unmanageable size and irregular shape contributed to difficulty in lifting. Weight ranged from small blocks to up to 120 ton. The recovery of 15% of the debris has no relationship to the amount of time and the hire charges incurred.
725 The damages John Holland suffered are measured by what the operation actually cost, less the amount it would have had to pay had the debris not been present. This requires it to show to what extent the operation took longer. Save for those periods when the dredging could not continue because of the presence of debris, I can only speculate about the extent to which the dredging was prolonged. As a result, on those days when dredging occurred I am not satisfied that John Holland has proved the extent of its loss.
726 Where the Hippopotes was on standby for reasons unconnected with the presence of debris, for cyclones, or other causes, John Holland suffered no loss and incurred no additional costs by reason of the presence of the debris.
727 The days on which I am satisfied John Holland incurred costs which it would not have otherwise incurred are those days of standby where the lost time was caused by the presence of debris. That is, following the damage to the rock guard on 17 March 2007, including 18 March and part of 19 March 2007, on the basis that the damage was probably caused by an obstruction on the sea bed (see exhibit 44A [79] [80]; V13/4998 5001). John Holland has calculated this amount in its final submissions, but with the 3.5% mark up (see John Holland's final submissions, annexure G1). I would allow the amount claimed, being the amount invoiced by Van Oord, but not the mark up, in the total amount: $178,608.
728 John Holland accepts, correctly in my opinion, that the stand down for repair to the hydraulics on various days in April are for an unknown cause.
729 John Holland claims for the stand down on 7 April 2007, to the extent this was to enable a diver inspection of the obstruction. It claims one third of the stand down time, that is, $8,867. That time, in my opinion, is properly claimed. The allocation of a third to CMA is conservative.
730 The second period is following the incident on 22 April 2007. Save for two days when the Hippopotes was able to dredge in an area that had been confirmed clear of debris, the vessel could not operate (see V13/5050, 5081). Although I have found that the incident on 22 April was more probably caused by debris in the batter slope, even if that was not the case, the stand down is attributable to the presence of debris. And it is a cause for which CMA is liable.
731 CMA submitted that by 7 May, there would have been too much congestion in the area to be dredged and the Hippopotes would have had to be put on standby for a significant period anyway because of that congestion. CMA also submitted that John Holland must prove a counterfactual, that the Hippopotes would have continued dredging but for the standby. It argues that the experience of March and April show that it would have been on standby for considerable periods in any event, due to the hard seabed material, and would have only operated at the same limited productivity.
732 This is part of a more general argument that John Holland has not shown the costs of the standby period were reasonably incurred because of CMA.
733 In my opinion, however, John Holland need only show that the Hippopotes was stood down as a result of CMA's breach of the Subcontract; alternatively that it incurred the stand down costs in performing an obligation that CMA should have performed under the Subcontract. The costs incurred, not including mark up, are $2,060,106.
734 The third period, on the return of the Hippopotes in July 2007, saw the Hippopotes primarily engaged in dredging, although there are periods when it was on standby because of demolition debris on the seabed. These periods ranged from 15 or 20 minutes to a seven day period 30 July to 5 August 2007 (V13/5122 - 5158).
735 John Holland claims the costs of the periods of interruption, and I am satisfied it is entitled to them on the basis that they were caused by the presence of debris. John Holland also claims 15% of the operating costs for the period when the Hippopotes was dredging, based on the presence of some debris in every barge. Again, I am not satisfied that is a sound basis for allocating costs based on a time charge.
736 The evidence suggests that the Hippopotes may have worked more slowly at times during this period, because of the need to coordinate with the Westsea 10. It is not possible to quantify the effect of this on the time taken in dredging.
737 For the third period, I would assess damages based on the periods of interruption shown in the Hippopotes logs as due to the presence of debris, that is:
(i) from 30 July 2007 up to and including 5 August 2007 (V13/5130 5136);
(j) two periods of 380 minutes, and 15 minutes on 18 August 2007 (V13/5151);
738 In the absence of an agreement between John Holland and CMA regarding costs of mobilisation, and demobilisation and incidental costs such as on-charter and off-charter survey, I am not satisfied that those costs can be apportioned between the parties. They are costs that John Holland would have incurred in any event.
739 John Holland also claims for additional crew costs but I am not satisfied the basis for those costs has been established.
740 The total damages for the use of the Hippopotes are $2,880,820.
741 The Westsea 10 was chartered for 154 days from 18 May 2007 to 19 October 2007 and the total cost of the charter was $525,386. This total period was an initial hire of seven weeks, with three extensions.
742 The period between 18 May 2007 and 21 June 2007 was used in setting the vessel up for clamming (Mr Dick ts 1064, 1066). The 'clamshell' was set up on 21 June 2007, and work could then commence.
743 The Westsea 10 conducted clamming from 21 June 2007 and into early September 2007 on a daily basis (Mr Dick ts 1066). CMA disputed the extent to which the Westsea 10 was used for removal of rubble, rather than dredging.
744 Mr Dick assessed that, during clamming operations, the strike rate for picking up material from the dolphins at about 90%, that is:
90% of the time, what came up in the buckets was debris. Where we picked up a grab which looked like mud, we did not know what was in it so we would put that into the dump barge also. Where we did lift mud, that was a good sign. It indicated we had cleared that area. We did not attempt to dredge with the claim. That was the role of the Hippopotes (exhibit 48 [33]).
745 That view was largely supported by CMA's witnesses. Mr Marks agreed that, as far as he could remember, the removing of debris was 'virtually all [Westsea 10] was doing' (ts 288). Mr Michael, who observed the operations of the Westsea 10, agreed that it did not dredge up silt 'other than anything that happened to be in the bucket when it picked up debris' (ts 598). He agreed that the type of clam used for some of the time (described as 'orange peel') was not suitable for dredging ordinary silt. To the extent that dredge material was recovered, that was incidental to the removal of debris.
746 Some rock may also have been picked up, if it was already broken up. But until the Erkat rock breaker arrived (in September 2007), there was no machine on site that was capable of breaking up the hard sea floor (Mr Marks ts 287).
747 Mr Hutchinson also gave evidence, which I accept, on the use of the Westsea 10. He said, in effect, that the clamshell was not capable of breaking up or dredging hard seabed (exhibit 58A [114]). The Westsea 10 was suitable for the removal of large blocks, including blocks connected by reinforcing and concrete piles and it was reasonable to use it for that task. But the Westsea 10 'could not have dredged the complete works to the required survey tolerance' and 'a dredger such as the Hippopotes would have always been required to dredge the bulk of the works and to clean [up] any spilt silt muds if the works were to be completed in a commercial time frame' (exhibit 58A [116] - [118]).
748 On the whole of the evidence, I am satisfied that the Westsea 10 did dredge up some rock, limestone and silt, as well as demolition debris, although estimates of the percentage appear to be best guesses. It is not in dispute that the dredging of the seabed was John Holland's responsibility.
749 But the extent to which the Westsea 10 could be regarded as being engaged in dredging operations for either silt or rock is, in my opinion, insignificant. Silt and rock recovery were incidental to its use in removing the debris left by the demolition. It was not used in hard rock removal, that required the rock cutter which was only later brought onto the site. And further dredging to survey tolerance was going to be needed, after the removal of the debris.
750 It is also, in my opinion, misleading to make this assessment by reference to volume of material. The costs incurred were based on time, the charter of the vessel, hire of equipment, and time of personnel, not volume.
751 John Holland accepts that there were four days in which the Westsea 10 was engaged in other construction activity. It claims 90 days of total operation, with 86 of those days apportioned to CMA.
752 From early September 2007 until it was demobilised on 19 October 2007, the Westsea 10 remained on charter during the removal of the crane (exhibit 36A 10419). An off hire survey was carried out and damage was identified requiring repair (exhibit 36B 10743 10749). This was required under the charter hire agreement (V11/4278). John Holland arranged a quote for repair work and that work was carried out until at least 15 October (exhibit 36B 10741 - 10742, 10772, 10785). John Holland was then responsible for the redelivery of the vessel to Dampier.
753 CMA submits that only 50 days of the Westsea 10 operating time should be taken into account as dredging for concrete.
754 The first evidence on which it relies is a document prepared by John Holland in March 2008 for submission to BHP in support of a claim by John Holland for a variation under the Head Contract (V16/6613). The document includes a spread sheet which includes the following information for the Westsea 10 (V16/6674):
On site 16May07 to 6Oct07 = 143 days
43 days supporting the Erkat for dredging
Balance of 100 days @50% for dredging
755 The spreadsheet is, however, patently unreliable. First, it is an attachment to a document which, though not marked as a draft, is clearly not final: sections of it are missing, with the words 'input from Corrs [John Holland's solicitors] required' in some sections. Second, the accompanying email puts it forward for 'review and comment' by employees of John Holland and Leighton (V16/6613). Third, the information is inconsistent with other (not disputed) evidence. For example, the Erkat rock grinder only came into operation on 20 September 2007. If the Westsea 10 was only on site to 6 October (which is also an incorrect figure), the Westsea 10 and Erkat were both there for only 16 days.
756 CMA offered an alternative analysis, based on the site diaries of Mr Marks and Mr Dick. Those diaries showed total operational hours of the barge and clam on dredging as 509 hours, with setup and disassembly recorded as 470 hours. At 10 hours a day this is 51 days of clamming, and 47 days of setup and disassembly. Even on this analysis there are discrepancies, although relatively minor ones.
757 The Westsea 10 was on charter from 14 May 2007. It first conducted clamming on 21 June. CMA do not dispute the inclusion of the mobilisation period, if it is liable to pay for the use of the Westsea 10. CMA also accepts the inclusion of nine days demobilisation between 11 and 19 September.
758 The area of dispute concerns the period of operation. CMA submits that any analysis ought to exclude the occasions when no clamming was carried out because the Westsea 10 was engaged on concrete pours, was unable to get access to the areas to be dredged, or was on standby for a reason that has not been explained. On this basis it calculates the 51 days.
759 CMA further contends that approximately 15% of the material recovered in the clamming operations was mud or other soft material, scooped up with the concrete. It submits that John Holland's entitlement should be limited to a percentage of the daily higher rate, and that percentage should be applied to 98 days.
760 In selecting a rate, CMA adopts 87%, based on particulars filed by John Holland in 2013, rather than its own estimate of 85%. Despite the similarity in the two percentages, the two rates are unrelated. John Holland was particularising what proportion of the days that the Westsea 10 was on site were used for debris removal. John Holland contends that before 20 September 2007 (124 days) it was used exclusively for demolition debris removal; once the Erkat was on site, it was used for 10 days only out of 30.
761 These references to percentages should not obscure two things. First, it is for John Holland to prove the loss and damage that it suffered, or the costs it incurred under cl 17.5, in removing the debris. Second, mathematical precision is an illusory ideal in these circumstances.
762 After the Hippopotes was placed on standby, it was necessary to remove debris before dredging of the berth pocket could recommence. It was for this purpose the John Holland agreed to charter the Westsea 10, and to hire the necessary operating equipment including a Manitowac crane. Hire of the Westsea 10 was at a rate of $3,300 per day, including operators, and the crane at $7,500 per week.
763 John Holland also claims for the cost of a supervisor. I am satisfied that it was proper to have a supervisor on board the vessel and that supervision was part of the cost of the operation and was at CMA's cost. John Holland required CMA to place a supervisor on board the Westsea 10, and CMA failed to do so. John Holland then provided the supervisor - Mr Dick. CMA should be responsible for that cost.
764 John Holland originally put forward two alternative bases upon which to assess the proper cost of Mr Dick's services. It pressed the first and more conservative approach, based upon his actual salary during the period when he was engaged in supervising the Westsea 10's operations. During the period of its operation, Mr Dick was on the Westsea 10, except for when he had days off or had to attend meetings, until the end of August 2007. He estimated that 90% of his time was spent on the barge.
765 On an analysis of the site diaries, CMA contends that Mr Dick was present on only 40.4 of the days in which the Westsea 10 was engaged in active clamming. I do not accept that the cost of the Westsea 10 is recoverable only for days of actual clamming. It is proper to subtract time spent productively on other construction work, but otherwise the presence of the vessel, equipped with the crane, was caused by CMA's failure to remove the demolition debris. John Holland is entitled to recover that cost, subject to reasonable mitigation. The evidence is that the conditions of the site required coordination of various activities and contractors. The fact that the Westsea 10 was not dredging debris on a particular day does not exclude that day from the assessment. I accept John Holland's argument that it could charge the whole of the time of the charter as caused by CMA's breach.
766 That reasoning does not, necessarily, translate to the costs incurred in using an existing employee. Assessment based on a witness's estimate that he spent 90% of his time on a particular task is never going to be precise. Nor does it represent the actual cost to John Holland of using its own employee, at least in the absence of evidence about what Mr Dick would otherwise have been doing. If his absence on particular days was for leave, that leave entitlement may have accrued before or independently of his engagement on the Westsea 10. Ultimately, I am not satisfied that the cost to John Holland has been proved other than for the days Mr Dick was engaged in supervising clamming operations. That is, I accept CMA's basic position and assess that part of the damages as the 40.4/365 of Mr Dick's annual salary.
767 John Holland also claims that CMA is responsible for the costs that were incurred after the Westsea 10 ceased clamming in September as those costs were a necessary part of using the barge, the sole purpose of which was to remove demolition debris. I am satisfied those amounts are recoverable as part of the costs of removing the debris.
768 On that basis I assess the damages as follows, based on the invoiced amounts for equipment:
769 The records for crew hire for all crew over the period total $275,133.55. On the basis I have accepted for the estimation of the cost of Mr Dick's services as supervisor, the amount of $28,730 is reached by multiplying his annual salary by the proportion of the year he performed that function.
770 There are two further points. First, CMA submits that it should not be responsible for crew hire while the Westsea 10 was on standby. For the reasons I have given in relation to the vessel itself, the whole of the period they were required (even if not being immediately engaged in clamming) was caused by the failure of CMA, in breach of contract, to recover demolition debris. There is no basis to apportion the crew hire costs by reference to the time engaged in clamming. Even though there were fluctuations in weekly amounts, there is nothing in the evidence to cast doubt on the fact that was the actual cost.
771 Second, on the evidence that the Westsea 10 was used in other construction work for four days, John Holland claims only 95.5% (86/90 days) of the total costs. That implies this exercise can achieve a degree of precision I believe is illusory, but I will allow that discount in favour of CMA. The total is ($1,116,821.98 x 86/90): $1,067,185.
772 CMA disputed its liability for the costs associated with the use of the Westsea 9. Ultimately, the parties were in agreement that, assuming CMA was liable, one third of the charter hire costs during the period the Westsea 9 was engaged in debris removal should be borne by CMA. That apportionment is apparently based on the percentage of material recovered, rather than time, but because it is common to the parties I will accept it.
774 I accept CMA's submission that the small identified component of crane repair may not have been discounted for the agreed apportionment factor of 33.33%. The invoiced cost of charter hire, including the crane and repair, is ($316,449.08 x 1/3): $105,483.02. Subtracting the disputed amount of $3,891 leaves $101,592.02.
775 The crew charge is $218,232.75. The evidence (which I accept as a business record) is a print out of the pay runs for various weeks, identifying the crew member, hours worked, and amount. The record is combined for the Westsea 9 and 10, but the periods of this operation do not overlap. Once it is accepted that the vessel was required to carry out work that CMA was obliged to perform, John Holland has proved the actual crew costs. That amount is recoverable unless CMA demonstrates it was not reasonably incurred. It would, in my opinion, be inconsistent with the agreed apportionment to not apply it also to the cost of crew. The result is $72,744.25 (being 1/3 of the $218,232.75 for crew).
777 John Holland pleaded that, in order to enable the Westsea 10 to carry out other debris removal work, it was necessary to engage a tug to move the Westsea 10 and later the Westsea 9. John Holland contracted for the use of two tugs: Swissco and later the Westsea Panther for that purpose. It incurred costs for which it claims CMA is liable (counterclaim pars 104 105). John Holland pleaded its claim for recovery of this amount by reference to the variation to the Subcontract, alternatively in restitution, alternatively by reference to cl 17.5 of the Subcontract.
778 CMA denies these allegations and repeats the matters pleaded in answer to the claim regarding the operation of the Westsea 10.
779 The proof of this component of John Holland's claim requires a degree of estimation. It is convenient to summarise the principles which I apply to the assessment.
780 The findings made regarding liability for the use of the Westsea 10 apply to this part of John Holland's claim. I am satisfied that there was an agreement for the use of the Westsea 10, and that it was used for the purpose of removing debris from the demolition of the dolphins. The cost of tugs is necessarily part of the cost of carrying out that work, and should be recovered, to the extent that it has been proved. Different factual considerations, however, apply to the different support vessels.
781 While CMA disputed its liability for these amounts, for the purposes of quantum it accepted John Holland's claim of one third of hire fees of the Swissco between 20 June and 7 August 2007. It disputed, however, that:
782 I accept that the survey fee and deck coating are costs of the charter. I have found, however, there was an agreement that direct costs associated with mobilisation, set-up, operation and demobilisation would be shared and apportioned according to use. That agreement logically extends to the support tugs. Allowing for the agreed conversion from Singapore to Australian dollars, John Holland is entitled to payment for the hire fees it incurred for the Swissco of $28,469.20, and $3,065.22 for deck coating and survey fees.
783 If there was no agreement, and CMA is liable on the alternative bases (breach of the Subcontract, or liable under cl 17.5), it would not be liable for the survey fee and deck coating costs which John Holland would have incurred in any event, and which have not been shown to have been increased as a result of the engagement of John Holland in removing debris. One third of the hire fees, as invoiced, should be allowed, but not those other costs, and John Holland would be entitled to payment for the hire fees it incurred for the Swissco of $28,469.20.
784 I am satisfied that John Holland has proved the actual costs of the crew. It has tendered the pay records for the relevant weeks - they are part of the agreed trial bundle, and proved by the witness statement of Mr Chan. There is no evidence to raise any question about whether they should be allowed. The one third apportionment of costs should be applied to those costs as well. The amount is $44,627. That amount is in Singapore dollars and must be converted.
785 In relation to the Westsea Panther, for the period 12 August 2007 to 19 September 2007, John Holland claimed one third of the hire fees and crew costs. The basis for the apportionment appears to be Mr Dick's estimate that the tug divided its time equally between the Westsea 10 and two other barges. The period claimed by John Holland includes the days while the tug was steaming to Australia, until 31 August 2007 (V15/6183, 6185), despite the fact that the Westsea Panther was then used at Port Hedland until 29 February 2008. The apportionment of a third of the tugs time to the Westsea 10 cannot apply to the steaming time or to the voyage insurance ($4,100). No alternative basis for apportioning those costs has been claimed or demonstrated.
786 CMA disputes the claim more generally and says the diaries show the Westsea Panther operated with the clam shell for only 15 out of the 39 days. Further, the tug was not exclusively engaged in servicing the Westsea 10 as it was required for manoeuvring construction barges. CMA submits that no basis has been demonstrated for allocating the time to the dredging of concrete spoil.
787 I have found that the costs of the Westsea 10, during the period it was engaged in debris removal, are recoverable against CMA and I will not repeat the reasons for that finding. Those costs were apportioned 95.5% to debris removal, on the basis that the Westsea 10 engaged in four days of construction activity unrelated to debris removal. John Holland says it had completed its construction activity before the period when the Westsea Panther was engaged, and puts it claim without any further apportionment. The estimation of 95.5%, however, has been an averaging exercise. I would apply the same percentage to the costs incurred by the use of the Westsea Panther in supporting the Westsea 10.
788 The starting point for the assessment is, accordingly, the charges for the period from 1 September to 19 September, at $2,700 a day. Those charges are apportioned to one third to the Westsea 10, and then further discounted according to the general estimate of the proportion of time the Westsea 10 was engaged in debris removal. The result is $16,330.
789 CMA also submits that John Holland has not proved what crew operated the Westsea Panther and what they were paid.
790 The Westsea Panther crew was provided by Dalmarine Pty Ltd. The invoices from this source are more detailed, and specify sums for travel and travel days, amounts for induction, and medical checks. I infer from the invoices that the named crew are the crew of the Westsea Panther. Two of the invoices include the costs of the master and deckhand for another vessel, the Barker. Although there is some evidence that the Barker was used in removing blocks of concrete, particularly in January 2008, these invoices are not related to the present claim. Otherwise, the invoices support the inference that the amounts charged for the crew named in the invoices were for the crew who operated the dredge and show what they were paid.
791 Two invoices relate to the month of September 2007, the last month on which the Westsea 10 was engaged in clamming. The invoice dated 18 September 2007 is for travel, pre-employment medical and accommodation expenses, and is for $2,283.66 (excluding GST). No basis has been shown for the attributing one third of these amounts to the removal of debris, when those expenses apparently relate to the whole of the period in which the Westsea Panther operated. The invoice dated 25 September 2007 includes travel days and induction and the costs of a master, engineer and deckhand from 6 to 30 September. The invoice claims $80,693.53 (including GST) as the wages for the period. The one third apportionment (based on percentage of volume dredged) can only be applied to the crew cost from 6 to 19 September, that is, 13 of the 24 days. The result is $13,245 (excluding GST).
792 The Westsea Panther also operated in the period 27 September 2007 to 31 January 2008, supporting the Westsea 9. Again, CMA submits that John Holland has failed to establish the extent to which the tug was used in attending the Westsea 9, rather than carrying out other activities, and has not proved the time allocated.
793 CMA submits that on the evidence of the site diaries of Mr Marks (V26/9742), the Westsea 9 ceased its operations on 12 January 2008. He records on that day the Westsea 9 demobilised. This is consistent with the invoiced crew costs for Westsea 9 and Westsea 10 (the invoices are combined), which are significantly less from January 2008.
794 There is no agreed apportionment for the time of the Westsea Panther in supporting the Westsea 9. John Holland argues for an estimate of a 1/6 (16.67%) for the period it supported the Westsea 9. That estimate is based on the evidence that the Westsea Panther was divided between the Harrier and the Westsea 9 when the Westsea 9 was doing both debris and hard seabed removal. The mathematical basis of the split is to first assume equal time supporting the Harrier and the Westsea 9, and then apply that to the two thirds/one third split (accepted by CMA for the Westsea 9 based on the percentage of material recovered). This, in my opinion, goes beyond an estimation based in the evidence.
795 The evidence does show the Westsea Panther supported the Westsea 9 in debris removal work, and it is probable that John Holland incurred costs that it would not have incurred, but for the removal of the debris. But there are no records to enable more than a guess when it comes to the correct apportionment of the total costs. It was within John Holland's power to keep those records, but it did not. While I am satisfied that John Holland has proved that it incurred costs, it has not proved that the extent of those costs can be estimated by the one sixth apportionment of invoices.
796 This difficulty is compounded when regard is had to the two invoices for January and February 2008, for $70,854 and $85,094 (plus GST). Both of these amounts (or one sixth of them) are claimed. There is some evidence that the tugs were used directly in towing concrete blocks on 24 and 26 January 2008 (V26/9754, 9756). But the two considerable amounts for January and February 2008 have not been shown to be related to the tug attending to the Westsea 9 for all or some of the invoiced period.
797 The invoices on which John Holland relies also includes amounts for the master and deckhand of the Barker. The invoices for November and December 2007 claim additional amounts for nightshift - it has not been shown that the debris removal caused those amounts to be incurred.
798 Going to the site diaries, it is possible to identify days where the Westsea Panther assisted the Westsea 9, but not what the Westsea 9 was doing on those days. This is not a case where a party has failed to prove that it suffered loss. But it has failed to prove the extent of its loss.
799 John Holland carried out the work of conveying blast debris to the shore and transferring it to trucks provided by CMA (counterclaim par 107). It pleads that this activity was pursuant to both the varied Subcontract regarding the use of the Hippopotes, and also the varied Subcontract regarding the use of the Westsea 10. John Holland pleaded costs of $3,811,768 were incurred, for which CMA is liable. Alternatively, John Holland pleaded its claim for this amount in restitution on a quantum meruit basis, and under cl 17.5. In final submissions, the amount claimed was just over $3.2 million.
800 The amount is claimed to be the actual operational and standby costs incurred by John Holland for the use of various plant, equipment and labour for the conveyance of all materials removed from the seabed, less the reasonable operational and standby costs that it would have incurred, but for the presence of blast debris and piles.
801 In its negotiations with CMA for the use of the Hippopotes to retrieve debris, John Holland proposed an agreement extending to the hire of a long reach excavator and 40 ton Moxy trucks. John Holland proposed that CMA would reimburse it for the costs of two supervisors, and would pay a proportion of the mobilisation and demobilisation of the equipment, according to the percentage of time the Hippopotes was engaged in on each party's scope of work (Letter of Mr Bryce, 25 February 2007, V11/4026). As I have found, there was no agreement on those terms. The costs recoverable by John Holland for the period of dredging by the Hippopotes are for breach of contract.
802 I am satisfied that the parties reached an agreement for the use of the Westsea 10 and associated equipment, which extended to mobilisation and demobilisation costs of the Manitowac crane and the clamshell. The variation regarding the use of the Westsea 10 did not include an agreement regarding conveyance and disposal of debris, and did not extend to incidental costs of the onshore equipment which was already on site. No separate agreement was made regarding the costs associated with the Westsea 9.
803 The claim accordingly depends upon the contention that, upon the proper construction of the Subcontract, the works to be carried out by CMA, for the agreed consideration, included retrieving, conveying to shore and disposing of any material that fell to the seabed from the demolition and removal works. The costs sought to be recovered are as damages for breach, or as a debt recoverable under cl 17.5. The measure of John Holland's claim is the costs it actually incurred, less the costs it would have incurred had CMA met its contractual obligations.
804 CMA generally denied the claim. To the extent it was based in the pleaded contract variations, CMA pleaded that if it had entered into a contract to reimburse John Holland for costs incurred in collecting and conveying the demolition waste:
805 Clause 8.1 of the Subcontract required CMA to 'perform the works in accordance with the Works Description, any documents issued by John Holland, the Subcontractor Documentation and any Direction or Variation Order'. The works description, in sch H, provided for the collection and transportation of demolished steel material, except salvageable items, and for any material falling to the seabed to be retrieved at the subcontractor's costs.
806 The Scope of Works in sch I also provided for the removal of spoil, although there is an overlap where dredging and spoil removal are combined. In particular, the Scope of Works expressly provided that the dredge may be used to assist in the removal of piles.
807 Part 9.2 of the Technical Specifications in sch I provides for the demolition of the existing berthing and mooring dolphins by a specialist subcontractor. The scope of the specialist subcontract is to include 'disposal of demolished materials ashore in accordance with the specification'. Demolition methods (pt 9.3) specify:
All debris from the demolition works shall be captured and removed from site. No debris shall be allowed to fall to or remain on the seabed, where it would interfere with the pile driving works, the dredging in the berth, or the operational safety of the berth. Any material that is allowed to fall into the seabed shall be removed by whatever means, to the satisfaction of the Company Representative.
808 These clauses, combined, required CMA to recover, convey to shore, and dispose of the debris from the demolition. I did not understand CMA, despite its pleaded general denial, to contend that it was not so obliged.
809 John Holland identified five items of equipment used in the conveyance onshore (together with associated costs). The equipment used in the conveyance and handling of demolition debris was from four suppliers:
810 John Holland also claims on invoices from IMS for labour hire.
811 As CMA also structured its response by reference to each item of equipment, it is convenient to deal with each item in turn.
812 The invoices show the amounts incurred. The evidence regarding the amount of the claim for each item is otherwise found in the site diaries. The witnesses, in particular Mr Stone, could give evidence about the operation of the equipment, but only very generalised evidence about the extent it was engaged on a daily basis. Accordingly, each party put forward competing analyses of the documents to support its position.
813 The debris recovered from the seabed was taken by barge to a load out area on the shore. At the load out area a 45 tonne excavator was used to empty the barge into a dump truck. A 200 tonne crane was used for larger material (Mr Stone ts 1037).
814 There was a second area, known as the beach, where some demolished material was landed by CMA (Mr Stone ts 1037), but all material in John Holland barges would go to the load out area.
815 The dump truck (Moxy truck) at the load out area would then take the spoil about a kilometre from the load out area to an area that had been set aside to collect the material, where it would be dumped. The material would be left to drain, after which it would be spread out, using an excavator, grader, or bulldozer, depending on what the material was (ts 1038). Demolition material would be picked out from the spoil, to be taken to another area. To this stage, the equipment used was John Holland equipment. At the final area, CMA would salvage what it could recover using its own equipment (Mr Bryce ts 880; Mr Stone ts 1039).
816 The load out facility had only the one crane and excavator, and could handle only one barge at a time. On occasion this led to a second barge waiting for the first to be unloaded. There were also occasions when the load out facility could not be used due to what was described as 'collapse' by Mr Stone; it appeared to be some kind of ongoing tidal erosion (ts 1041). This may have led to some inefficiency and delay, although again it cannot be quantified. That was, however, the condition of the work site. It does not, in my view, make the time spent unreasonable, in the absence of evidence that John Holland could have carried out this task more efficiently. Further, as John Holland submitted, the creation of an additional or expanded load out facility to handle the volume of demolition debris, with additional machinery, would have been at CMA's cost.
817 Again there is an issue of an apportionment, as John Holland was also transporting dredged material to shore. It did not maintain records which differentiated between the different tasks. The assessment, accordingly, involves estimation of the additional costs involved in handling the debris.
818 John Holland appears to have approached the assessment on two assumptions: CMA is liable for the costs of use of the equipment, and also for standby time, and incidental costs of mobilisation and demobilisation; and the costs of handling the debris onshore should be apportioned in the same manner as the recovery of that material from the seabed.
820 In the absence of an agreement to meet those costs, I am not satisfied John Holland has established a basis on which it is entitled to 'incidental' costs, such as mobilisation and demobilisation. Those are costs it would have incurred even if CMA had not failed to meet its obligations. They are not properly attributed to the presence of demolition debris on the seabed. I agree with CMA's submission that the same reasoning applies to the claim for the water truck. The default by CMA may have extended the period for which the water truck was required, but that is a delay cost which John Holland recovers on a separate basis. The normal operation of the water truck was for dust suppression and was part of the cost of handling the dredged material onshore.
821 The assumption that the apportionment on shore should match the proportion in retrieving the debris has no support in evidence. The invoices are based on time, either operational or standby. There is no evidence that the proportion of time in handling debris, once it had been retrieved, is the same as that in recovering it. Despite being satisfied that John Holland incurred substantial costs, for which it should be compensated, I have had considerable difficulty in establishing what proportion of those costs have been proved to be attributable to the default of CMA.
822 In the period between 7 March and 21 April, when the Hippopotes was dredging the berth pocket, I have found that John Holland has not proved the extent of its loss. Similarly, it is not possible to make an assessment of what time was devoted to the unloading of debris, compared with other dredged material. During this time, the Hippopotes was also, at times, on standby for cyclones or other causes.
823 The days on which I am satisfied John Holland incurred costs which it would not have otherwise incurred are those days of standby where the lost time was caused by the presence of debris: 17 to 19 March and part of 7 April 2007. I have not, however, been able to identify the effect of that standby on the operation of the excavator. John Holland simply claims 15% of the total invoices for the period between 16 March and 14 April. That, in my opinion, has not been shown to be the proper measure of the loss. As a result, I am not satisfied that the amount claimed has been proved.
824 The second period, from 22 April to 19 June, involved no retrieval of debris by dredging. Despite this, John Holland claims 15% of the time when invoices record work being done by the excavator. The number of hours is relatively small and the amount small, but it has not been shown to be a recoverable cost.
825 The more significant cost in this period is for the standby time. CMA opposes this claim, on the basis that there was no dredging and therefore no concrete to be conveyed. I do not believe that is the proper way to approach this issue. There was no material, concrete or otherwise, being conveyed because of the presence of debris in the berthing channel as a result of CMA's breach. There is no evidence to show that John Holland unreasonably failed to mitigate its losses during this period by maintaining the equipment on standby and using it when it could. I am satisfied that the costs of the stand-by of the excavator during this period should be recovered. I have calculated those costs as: $229,592.80.
826 The Westsea 10 conducted clamming from 21 June 2007 and into early September 2007 on a daily basis. Although some other material was recovered during that time, the work was primarily directed to the recovery of debris. Mr Dick assessed that, during clamming operations, about 90% of what was recovered was debris.
827 During the period 20 June to 9 July, the Westsea 10 was the only vessel being used. As I have said above, the recovery of anything else was incidental. The evidence does not show that the time the excavator was employed was in any way extended by the other material. I am satisfied that John Holland has proved its claim for 100% of the costs of this period, that is: $93,936.00.
828 Between 10 July and 28 August 2007, the Westsea 10 and the Hippopotes were both operating. John Holland claims 15% of the costs incurred in this period on the basis of the 'offshore' apportionment. It is, in my opinion, a conservative estimate when the Westsea 10 was daily engaged in retrieving debris. I will allow the claim at $34,614.00.
829 Between 29 August and 19 September 2007, the Westsea 10 was again the sole operating vessel. I am satisfied for such periods, John Holland has proved 100% of its costs: $92,601.60.
830 After 20 September 2007, the Westsea 9 and the Erkat were operating in the berth pocket, removing hard rock and some debris. I have accepted a one third/two thirds apportionment for the offshore costs. The evidence does not, however, show that the same proportions should apply to onshore handling. In particular, I note that there are significant standby costs. In short, I am not satisfied that John Holland has proved the extent of its loss or costs on this part of the claim.
831 I will not repeat the reasoning set out above, as the same apportionment (or lack of proof) applies also to this part of the claim.
832 In the period between 7 March and 21 April, John Holland has not proved the extent of its loss.
833 For the second period, the stand down of the Hippopotes from 22 April to 19 June, I am satisfied that John Holland has proved its entitlement to the costs of the standby time, in the amount of: $283,269.25. I have reached this figure by subtracting the amounts claimed for the water truck, for working dump truck and operator hours, and supervision from the amounts invoiced.
834 During the period 20 June to 9 July, I am satisfied that John Holland has proved its claim for 100% of the costs of the dump trucks on the invoice 1 June to 30 June, that is: $38,315. The invoice for 1 July to 31 July does not enable the same discrimination of different costs. The proportion of costs recoverable on the earlier invoice was approximately 57%. Applying that to the amount claimed for 1 to 9 July 2007, gives $42,590, for a total for this period of: $80,905.00.
835 Between 10 July and 28 August 2007, John Holland claims 15% of the costs incurred in this period at $70,740.59. That includes the water cart. CMA claims a further 15% should be subtracted for the water cart. I will allow the claim at $60,129.50.
836 Between 29 August and 19 September 2007, I am satisfied John Holland has proved 100% of its costs (again subject to the water cart): $79,916.
837 After 20 September 2007, I am not satisfied that John Holland has proved the extent of its loss or costs on this part of the claim.
838 A similar exercise can be carried out for the costs of the dozer and grader.
839 In the period between 7 March and 21 April, John Holland has not proved the extent of its loss.
840 For the second period, John Holland has proved its entitlement to the costs of the standby time but not working time, in the amount of: $92,988 (dozer) and $36,067 (grader)
841 During the period 20 June to 9 July, John Holland has proved its claim for: $35,178 (dozer) and $12,399 (grader).
842 Between 10 July and 28 August 2007, John Holland claims 15% of the costs incurred. I will allow the claim at $14,760 (dozer) and $4,623 (grader).
843 Between 29 August and 19 September 2007, I am satisfied John Holland has proved 100% of its costs: $38,622 (dozer) and $13, 563 (grader).
844 After 20 September 2007, I am not satisfied that John Holland has proved the extent of its loss or costs on this part of the claim.
845 As well as the equipment costs, John Holland has claimed management or supervision time for a proportion of the time of Mr Bryce and Mr Hancock. I am not satisfied John Holland has proved its loss with regard to these staff costs. First, there are no reliable records of actual time spent. The estimates made by the employees involved of the proportion of their time on supervising the debris handling are essentially speculative. Second, each of those employees was an existing employee who was also engaged in other tasks within John Holland's scope of works. John Holland has not shown that the salary paid to them would not have been incurred had CMA met its contractual obligations.
846 John Holland pleads this claim in pars 109A to 112 of its counterclaim. In essence, it pleads that in breach of the Subcontract, or in breach of the Subcontract as varied, CMA failed to remove the concrete debris and rebar from the dredging area or the seabed. John Holland pleads that the volume and number of large pieces of concrete was 'significantly greater than it would have been had [CMA] performed its obligations as agreed', and that a large proportion of that material lay in areas where piles were to be driven for the new wharf. As a result, it became necessary for John Holland to mobilise the Westsea 10, and to prolong the operation of that vessel and the Hippopotes.
847 John Holland pleads that as a result its construction activities, including the driving of piles, were severely disrupted and it has suffered loss and damage. In particular, John Holland pleads that the barges Harrier, Mari, Nuri, Wren and Buckley - which are engaged in construction activity and pile driving - were required to standby, or be moved to other areas, or to work at a lower level of productivity.
848 CMA denies the allegations in these paragraphs. Further, it pleads that in respect of delay or disruption John Holland is confined to the remedy of liquidated damages under cl 13.4 of the Subcontract.
849 Three witnesses gave evidence on behalf of John Holland regarding the disruption. Mr Bryce, in his witness statement, gave very general evidence that the Harrier, Wren and Nuri had to stay away from work areas where the Westsea 10 was carrying out its work due to the risk of tangling anchor lines. He further said that divers were required to locate and remove demolition debris, and the vessels needed to stay away from work fronts to avoid risk to the divers (exhibit 43A [103] [104]).
850 Mr Nairn also gave relatively general evidence of disruption to piling. Mr Nairn was on the Harrier barge, supervising piling operations. He said that there were periods between May and September 2007 when the crew on the Harrier had to wait for CMA's divers to cut piles and survey the area for objects that might prevent piling. He could not recall when, how long, or how many times this occurred. He also observed the Harrier have difficulty when driving piles. From his observations, he concluded that the obstructions were concrete blocks, pile offcuts and piles stubs because, on occasions, he saw material of that nature removed from the seabed, and there were occasions when a pile appeared to glance an object, or crush it while being driven (exhibit 37 [64] [65]). Even accepting that evidence, I can make no quantitative assessment of the alleged disruption.
851 Finally, Mr Smith addressed this issue in his witness statement and oral evidence. Mr Smith was also on the Harrier. In his statement, Mr Smith said that several times during the piling operation, the Harrier could not pile in the required location because of obstructions on the seabed. He also could not recall how many times, when or in what locations this occurred. He also concluded that the obstructions were concrete blocks or pile off-cuts, for effectively the same reasons given by Mr Nairn (exhibit 41 [22] [24]). Mr Smith said that when the Harrier could not get on with the piling work, it had to either wait or participate in other construction work. Mr Smith said that the problems occurred every day (ts 860). He did not estimate the time that was lost. Although he had kept a diary, it has been lost.
852 John Holland also relies upon the records maintained by the Hippopotes and the Westsea 10.
853 CMA relied upon an analysis of pile driving logs carried out by Mr Griffith (exhibit 60C). The effect of this evidence is, however, restricted by the fact that he relied in part upon records included in a witness statement which was not admitted into evidence (statement of Jay Whitman). The site diary records available to him had little information for the period from May 2007.
854 In the circumstances, I am satisfied that there was some disruption to John Holland's construction work and in particular the driving of the front piles for the construction of the new wharf.
855 John Holland having shown a breach of CMA's obligation, it is entitled to at least nominal damages. If John Holland were to recover other than nominal damages for this component of its claim, it must prove that it has in fact suffered loss or damage for which it is not otherwise being compensated. It is not sufficient, in my opinion, for John Holland to prove that there was some, unquantified, disruption of its pile driving operations.
856 John Holland attempts to estimate the amount of time various employees spent in supervising, due to the presence of demolition debris, so as to calculate additional supervision costs. John Holland also estimates it was required to undertake an additional 63 days of piling works. While it says that is a conservative approach, it not a figure which in my opinion is supported by evidence. The measure is crude. Activities which were originally planned to take 46 calendars took an additional 53 calendar days, plus a 10 further days caused by the late demolition of MD 4A. It is not, in my opinion, possible to simply look at the delay in this manner, particularly when John Holland had itself put forward a claim to BHP Billiton that piling had been delayed 116 days due to unexpected sub seabed conditions (exhibit 61 10960, 10966) which resulted in a 24.7% increase in the actual driven length over the design driven length.
857 For reasons given earlier, I am not satisfied that it was a breach of contract to produce debris or rubble from the demolition of the dolphins that fell to the seabed. CMA was in breach, however, in not removing the debris from the seabed within the time allowed by the Subcontract for completion of its obligations, and also for permitting it to remain on the seabed where it would interfere with the pile driving works and the dredging in the berth (sch I to the Subcontract). It is to be compensated by an award of liquidated damages from CMA for the delay in achieving completion. It has, apparently, been compensated, at least in part, by BHP Billiton for delay in completing the pile driving operations. Damages otherwise awarded in this action include damages for the costs incurred in removing the debris, and the charge out of the vessels and equipment used.
858 If there was a breach in allowing the debris to fall to the seabed, and damages that extended beyond compensation for the delay, I am not satisfied that John Holland has proved any resulting loss for which it has not otherwise been compensated. It may be entitled to nominal damages. But I am satisfied that any amount that would be awarded as nominal damages is included in the award otherwise made, under which it will be compensated for the delay in completion, and for use of the Hippopotes, the Westsea 10, and associated equipment.
859 John Holland claims liquidated damages under cl 13.4 of the Subcontract on the basis that CMA failed to achieve completion of the demolition works by the specified date for completion (defence and counterclaim par 152). The date specified in the contract (cl 10.1 and particulars) was 14 March 2007. Subject to an extension of time for delay or variations (and on the basis that time was not agreed to be at large) that date was not varied.
860 CMA did not deny that, on the proper construction of the Subcontract, it was liable for liquidated damages for failure to achieve completion by the Date for Completion. Indeed, it argued that, because John Holland did not terminate the Subcontract, liquidated damages were its sole remedy. Those damages were subject to the limits of liability provided for in cl 13.4 and sch A of the Subcontract. In particular, CMA contended that, on its proper construction, the contract sum was $10,397,000 (excluding GST) and was not subject to adjustment to calculate the 10% limit.
861 CMA denied the claim for liquidated damages on the basis that John Holland breached the Subcontract by failing to move the shiploader to enable commencement of the phase 4 works on 29 January 2007. It similarly pleaded that other delays were caused by John Holland failure to give access to the site, in breach of cl 7.2 of the Subcontract. As a result of those breaches, CMA was prevented from carrying out the works under the Subcontract in accordance with the requirements of its Construction Programme. This plea was also made in answer to response to the alleged failure by CMA to comply with the formal requirements of the Subcontract to give notice of and claim extensions of time for delay.
862 In the alternative, CMA says that the John Holland has suffered no damage, or has not suffered the damage claimed as:
863 The plea that performance was delayed or prevented by John Holland raises the principle commonly referred to as the 'prevention principle'. In summary, a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party's nonperformance. In Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [No 2] [2012] WASCA 53; (2012) 287 ALR 360 [47], McLure P characterised this principle 'as a particular manifestation of the obligation to cooperate implied as a matter of law in all contracts': see, for example, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607.
864 The prevention principle applies to delays in practical completion of a contract caused by acts or omissions of the principal within the scope of the contract that prevent practical completion within the time stipulated in the contract. It is particularly relevant in response to John Holland's claim for liquidated damages. If, in the events that have occurred, CMA has been prevented by John Holland's breach or default from achieving the stipulated date, and there is no contractual mechanism for substituting a new date, then there is no date from which liquidated damages will run, and the right to liquidated damages will be lost. In the context of this case, CMA's obligation to achieve practical completion by 14 March 2007 is replaced by an obligation to reach practical completion within a reasonable time.
865 The application of the prevention principle must be considered in the context of the particular contract. The Subcontract between John Holland and CMA directly addressed this question in cl 10.13, providing that if CMA failed to comply with the notice procedures in cl 10.12 it shall have no entitlement to an extension of time and any principle of law or equity which might render the Date for Practical Completion unenforceable shall not apply. Expressly, cl 10.13 purports to exclude the prevention principle. In my opinion, it is effective in doing so. CMA is precluded from the benefit of an extension of time and is liable for liquidated damages, even where the relevant delay has been caused by John Holland: see Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 [78], referred to by McLure P in Spiers [57].
866 CMA also pleaded in its reply and argued that it had achieved completion under the Subcontract by 25 June 2007, because by then the fragments and rebar which were necessary to be removed to achieve Completion (as defined in the Subcontract) were removed.
867 The argument starts with the proper construction of 'Completion' under the Subcontract.
Completion means the stage when the Works are or a Stage is complete:
(a) except for minor Defects which do not prevent the Works or the Stage from being reasonably capable or being used for the intended purpose and correction of which will not prejudice the lawful and convenient use; and
(b) the Subcontractor has done everything which the Subcontract requires it to do prior to completion including those things described in the Particulars.
Defects means any defect, shrinkage or omission in the Works or a Stage and includes loss or damage (and if before Completion also includes Works Materials and unfixed goods and materials) or any other aspect of the Works or a Stage which is not in accordance with the Subcontract.
869 CMA argued that the definition is ambiguous. It must be properly construed by giving content to both limbs of the definition. Further, CMA submitted that the reading for which John Holland contends leads to circularity in the definitions of 'Completion' and 'Works'.
Works means all things or tasks which it is necessary for the Subcontractor to do to comply with its Subcontract obligations including the physical works which the Subcontractor must complete and hand over to John Holland in accordance with the terms and conditions of this Subcontract such physical works being briefly described in the particulars.
870 The submission that both limbs of the definition of Completion must be given content is clearly correct. The whole of an instrument must be considered 'and the words of every clause must if possible be construed so as to render them all harmonious one with another': Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109. The construction task is then to read the words of the definition in the substantive provisions of the Subcontract, including cl 8 and cl 13, which must then be construed.
871 With respect, I do not see any difficulty arising out of giving effect to both limbs of the definition. The Subcontract may oblige a Subcontractor to do things which, while undone, do not prevent the works from being reasonably capable of being used for their intended purpose. Schedules H and I both require 'clearing from the berth pocket all falling demolition materials from the demolished structures'. In the present case, it is not a reasonable construction of the Subcontract to regard the works as complete, even if the wharf may be used, while demolition debris or pile stubs are still required to be removed within the terms of the Scope of Works.
872 The Subcontract does not, in my opinion, intend to treat failure to complete that part of the Scope of Works as 'defects', let alone 'minor Defects' referred to in cl 13.1. Perhaps the removal of some remaining debris missed in the removal of the demolition material might be properly regarded as a minor defect. But the extent of debris remaining after the Date for Completion (even if extended to June 2007) was too extensive to be regarded as a minor defect.
873 Earlier in these reasons I have discussed the evidence of the dive surveys carried out between July and December 2007 in the areas surrounding the locations of the demolished berthing dolphins (BD1 to BD7) and in the area around the demolished mooring dolphins (MD2, 3, 3A, 4, and 4A). The debris remaining in the berthing pocket from the demolition of the berthing dolphins was significant, both in the number and in the size of some of the blocks. Blocks frequently had protruding metal reinforcement bar, sometime sticking out several metres (exhibit 42B [14]). I have also outlined the evidence, from site diaries, of the debris, pile and pile stub removal carried out using the Westsea 10 in July, August, and September.
874 The wharf was operational by the end of October 2007. On 29 October 2007, John Holland gave notice to the MPDJV that the berth was ready to accept a 'Panamax class vessel' as from 29 October 2007 (V4/1448). It was not in dispute that the new wharf was operational for the larger class of vessels it was designed to accommodate from about that time.
875 Much of the demolition material was removed between August and November 2007, although material (for example, around BD6 and BD7) was still being removed in January and February 2008. Other evidence shows the nature of the task required to remove this debris. The debris removal included the breaking up or removal of sizeable blocks. In crossexamination, Mr Marks gave the following evidence (ts 288):
The process of removing debris from about mid June 2007 till the end of March 2007 [the reference to 2007 is clearly intended to be 2008] was a sustained daily occupation, wasn't it?---Yes, it was.
Some of the items of debris that had to be removed were extremely difficult to remove?---Yes.
Attempts were made on several occasions to move individual pieces and initial attempts would fail until you were able to successfully get them to the shore?---Yes.
There was one particularly large concrete block that came out of near the former berthing dolphin 7, wasn't there?---Yes, there was.
That proved to be the most difficult of all the items of debris to get ashore?---Yes.
And in summary attempts were made to float it. Correct?---Yes.
876 The large block was estimated by Mr Marks at 380 tonne (although Mr Rees gave a more conservative estimate at 180 tonne). Mr Marks records the use of Cardox (another technology for fracturing material without the use of explosives) and the attempts to float large blocks over several days in late October and early November 2007. Similar evidence was given in crossexamination by Mr Michael, who agreed there was a very substantial activity of removing debris from the dolphin demolition from June 2007 to about mid-March 2008 (ts 600, 601).
877 Some of this evidence is imprecise. But Mr Marks also maintained a diary of activities between June 2007 and March 2008 (exhibit 26). Those diary entries show removal of rubble, rebar, piles and pile stubs throughout that period, particularly from late September 2007. The site diaries record extensive demolition debris clearance throughout the third and fourth quarters of 2007. The site diaries include a record of attempts to move the large block in late October (V14/5681), and early November (V26/9644-9673), before it was eventually broken into pieces and removed in mid-November (V26/9644 9673, V14/5682 5702).
878 Mr Marks also agreed that it was common for CMA to be required to remove rubble or debris that was interfering with John Holland's construction work (ts 301).
879 Mr Marks attributed the duration of the debris clearance activity to problems that resulted from being denied access by John Holland to the relevant areas (ts 301). He estimated denial of access was four to six days a fortnight (ts 316). Even if this contributed to delay, I am satisfied that the extent and nature of the debris to be removed was also a material factor. Further, it was always part of this Subcontract that the activities of demolition in construction by a number of different contractors, in a relatively confined area, had to be coordinated.
880 On the evidence, I am satisfied that CMA did not achieve Completion in 2007. It is unnecessary to be more precise, as the aggregate of liquidated damages was reached, even if the extensions of time claimed by CMA were allowed, by October 2007 at the latest.
If GC 13.4 (a) and GC13.4(b) applies, payment of liquidated damages shall be the sole remedy available to John Holland for failure to achieve a Milestone by its Milestone Date or to bring the work under the Subcontract to Practical Completion by the Date for Completion (as the case may be) and shall be in full satisfaction of the Subcontractor's liability for such failure, provided that:
882 The specified rated of liquidated damages was $22,000 a day, for every day after the Date for Completion that the Works were not complete until the Works reached Completion or the Subcontract was terminated (cl 13.4 and particulars in sch A of the Subcontract). Liquidated damages were limited in the aggregate to 10% of the 'contract sum'. The Subcontract did not define 'contract sum', but cl 1.1 relevantly defined Subcontract Sum to mean the lump sum specified in the particulars 'and is subject to adjustment in accordance with this Subcontract'. The reference to the contract sum must be read as a reference to the Subcontract Sum. That is the only contract sum in the Subcontract, and is the only sum which the parties can have intended. Only in that way can the limitation on the aggregate liquidated damages be given some practical operation.
883 The particulars defined 'Subcontract Sum' as 'in accordance with Schedule K'. Schedule K provided solely for a lump sum of $10,397,000. By cl 11.4, subject to cl 8.5 and 16.4 (neither of which is presently relevant), 'the Subcontract Sum will be adjusted for all Variations which have been the subject of a Variation Order'. Reading those provisions together, the relevant sum for the calculation of the aggregate liquidated damages is the sum in sch K, as adjusted for agreed variations. John Holland accepted, in final submissions, that the sum paid for iron ore spillage removal was not properly characterised as a variation of this Subcontract, and does not lead to an adjustment of the Subcontract Sum (ts 1352). The total of the Subcontract Sum ($10,397,000) and the agreed variations ($1,430,000) is $11,827,000.
884 Accordingly, on John Holland's case, CMA is liable to a maximum of $1,182,700 in liquidated damages.
885 John Holland further pleads that, even if CMA was entitled, as it claims, to an extension of time to 25 June 2007, it failed to achieve Completion by that date. Initially, John Holland alleged that CMA had failed to achieve Completion at all. It departed from that position and accepted that it had achieved completion but at some time in 2008. Delay of 54 days is sufficient for the aggregate of 10% of the contract sum to be reached. That delay had occurred by September 2007.
886 The claim that John Holland is disentitled by its own breach of the Subcontract is inconsistent with the terms of the agreement between the parties. Breach of the Subcontract by John Holland, leading to delay, is expressly provided for in cl 10. Where delay is caused by any default or breach by John Holland, cl 10.19 and 10.14(c), read together, entitle CMA to its costs and on site overheads attributable to the delay. That entitlement, however, is subject to the condition precedent in cl 10.13, which expressly denies the application of the prevention principle.
887 For these reasons, I accept that John Holland is entitled to the liquidated damages claimed.
John Holland's claims against BHP Billiton The plea
888 In its defence to a range of the claims brought by John Holland, CMA denies that John Holland suffered loss or, to the extent it suffered loss, it has either been compensated for that loss by BHP Billiton, or had a right to recover the costs it incurred from BHP Billiton. To the extent that John Holland settled its claims against BHP Billiton, CMA denies the settlement was reasonable.
889 CMA pleads this defence to the claims for liquidated damages for delay for the costs incurred in hiring the Hippopotes, and for the costs of dredging demolition waste using the Hippopotes and the Westsea 10 and associated equipment.
890 In its reply to the defence to counterclaim, John Holland pleads that in and from November 2007, it made claims against BHP Billiton under the Head Contract. These included claims for additional costs incurred with respect to debris removal in the dredging area, dredging and extensions of time. Following negotiations, the claims were resolved as between BHP Billiton and John Holland under a Settlement and Release Deed dated 13 April 2008, under which BHP Billiton accepted (on a without admission of liability basis) certain of the claims. John Holland says that:
891 As an alternative plea, John Holland says that CMA is not absolved from its contractual obligations to pay John Holland and John Holland is entitled to the bargain it had made with BHP Billiton.
892 The settlement deed between BHP Billiton and John Holland, dated 30 April 2008, reveals little. It recites:
C Subsequent to the Supplemental Agreement [an agreement between John Holland and BHP Billiton executed 13 April 2007] a number of disputes or differences have arisen between the parties in relation to the marine works under the Contract.
D The Parties have agreed to settle all of the disputes and differences on the terms set out in this Deed, without any admission of liability in relation to the matters dealt with herein, or otherwise under or in connection with the Contract.
893 Clause 1.1 contains definitions. It defines 'John Holland Claims' as the claims listed in sch 1 to the deed. Clause 1.1 also defines 'Settlement Money', as 'the balance to be paid to John Holland pursuant to clause 2 to ensure the final Contract Sum is one hundred and ninety million dollars ($190,000,000) plus any GST'. There is an additional amount of $23.5 million.
894 Clause 3 contains releases by each party to the deed.
895 By cl 10, none of the payment of the Settlement Money, the return of bank guarantees given by John Holland, and the execution of the deed by the parties, constitutes an admission by either party of liability.
896 Schedule 1 sets out claims, including agreed variations and claims 'submitted and discussed' on 10 and 17 December 2007. Relevantly, those claims submitted and discussed include pile driving, and rebar in BD1, 2 and 6. Each of those claims was given nil 'agreed value in settlement'. An additional 29 days for dredging ($3,625,000) and $2 million for Erkat works are listed as claims submitted and discussed. There are also extension of time costs of $10,291,542.
897 CMA also put in evidence a book of the claims made by John Holland against BHP Billiton, each of them said to be pursuant to a 28 November 2007 Agreement. There are eight claims:
898 Claims apparently corresponding to these claims are listed among the claims in sch 1 to the Settlement Deed.
899 On the findings I have made above, John Holland is entitled to the costs it incurred in removing the demolition debris from the seabed and for conveying the debris. It is for John Holland to prove the costs it incurred, including the amount. But the onus rests on CMA to show that John Holland obtained money from another source that must be taken into account in diminution of the recoverable loss. On the face of the Settlement Deed, and the book of claims, there is no settlement of any claim relating to the claims it makes in this action, with the possible exception of the claim for disruption in pile driving. That is, the amounts received from BHP Billiton, to the extent they can be attributed to particular activities, do not result in a double payment should John Holland recover from CMA for removal of debris, or handling of debris. It may have been different in relation to the claim for disruption of pile driving, but I have not allowed that claim.
900 John Holland also claims as liquidated damages from CMA for delay. Those damages are an agreed sum. CMA has not alleged that the agreed damages are a penalty. It is not necessary for John Holland to prove its actual loss.
901 Finally, CMA denied that the settlement John Holland reached with BHP Billiton was reasonable. It is no part of John Holland's claim that it has settled its claims with BHP Billiton, resulting in loss, and seeks to recover from CMA for that loss or balance of the loss it has suffered. Were that so, John Holland would have the onus of proving it reached a reasonable settlement. If CMA is to have damages reduced on the basis it has pleaded, it is for CMA to show the settlement relates to the damages John Holland now claims and was unreasonable. Taking into account the range of claims John Holland brought under the Head Contract some of which may have been accepted, some perhaps rejected and the general terms in which the Settlement Deed is expressed, it is not surprising that CMA has not been able to show the settlement was of any particular claim and was unreasonable. The settlement was not structured in that way.
902 In par 90 of its reply and defence to counterclaim, CMA pleads, as a general answer to John Holland's claims for damages, that by reason of a joint venture agreement between John Holland and PT Leighton Contracting Indonesia (or another subsidiary of Leighton Holdings Limited) John Holland only incurred 50% of the losses claimed or has been reimbursed for its losses.
903 This issue was not the subject of evidence other than the tender of the joint venture agreement.
904 In its submissions, CMA accepted that the plea did not constitute a defence to the claims in contract. But it maintained the plea against the claims in misleading and deceptive conduct, and the claims for restitution. For the reasons I have given, John Holland is entitled to succeed in its claims in contract, either under the second pleaded variation agreement or the claim under cl 17.5 of the Subcontract, or for breach of the Subcontract. The plea in par 90 is of no relevance to the result.
905 Although CMA disputed John Holland's right to assert a set off against amounts due to it under the Subcontract, I am satisfied that cl 12.14 entitles John Holland to set off the amounts I have found are due to it from CMA.
906 To the extent that CMA's claim was not conceded, it is allowed in the amount of $639,568.21, the amount agreed for Variation 79. The other disputed claims have not been established.
907 The counterclaim is allowed. I have set out the sums for individual components in the body of these reasons. The damages total $5,386,612, plus $1,182,700 in liquidated damages. The total is $6,569,312. The crew costs for the Swissco must be added, but that amount must first be converted to Australian dollars.
(2003) 128 FCR 1
(1988) 18 NSWLR 540
(2002) 209 CLR 95
(1954) 91 CLR 353
(1985) 2 NSWLR 309
(1987) 162 CLR 221
(1982) 42 ALR 177
(2000) 104 FCR 564
(2010) 241 CLR 357
(1985) 157 CLR 215
(2001) 53 NSWLR 153
(1996) 14 WAR 92
(1988) 14 NSWLR 523
(1991) 174 CLR 64
(1968) 120 CLR 516
(1979) 144 CLR 596
(2008) 232 CLR 635
(1986) 40 NSWLR 631
(2009) 238 CLR 304
(2004) 218 CLR 592
(1996) 140 ALR 313
(1992) 175 CLR 514
(2001) 206 CLR 459
(1998) 196 CLR 494
(1973) 129 CLR 629
(1995) 49 NSWLR 315
(2002) 210 CLR 109
(1986) 160 CLR 1
(2001) 117 FCR 424
(2008) 35 WAR 520
(2009) 236 CLR 272
(2003) 196 ALR 257
(1946) 74 CLR 127
(1951) 84 CLR 377
(2007) 71 NSWLR 354
(1972) 127 CLR 454
(1986) 161 CLR 653
(1998) 192 CLR 603
(2011) 280 ALR 177
(2012) 287 ALR 360
(1973) 129 CLR 99