Earthtec Pty Ltd v Livingstone Shire Council [2023] QSC 22

[1] Earthtec Pty Ltd (Earthtec) is a contractor in the business of providing civil construction services such as earthmoving, road and revetment wall construction. Earthtec entered into numerous contracts with the defendant, the Livingstone Shire Council (Livingstone) for the construction of a part of the Scenic Highway adjacent to Statue Bay, near Yeppoon (the project). The project was undertaken by Livingstone as the principal.

[2] This application is two-fold. First**,** Livingstone applies, pursuant to rule 171 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), to strike out Earthtec's statement of claim, whether in part or in whole. Second, Livingstone seeks an order pursuant to UCPR 670 and s 1335 of the Corporations Act 2001 (Cth) for security for past costs and future costs in the amount of $800,000.

[3] The statement of claim is a lengthy document. It runs to 128 pages and comprises 478 paragraphs. The general approach of the statement of claim, unfortunately, is to tell the story of the project. As interesting as that may be, the result is that significant parts of the pleading deal with facts that may or may not be controversial and may or may not be material to the many claims, but nevertheless require a response from the defendant. For example, the pleading explains in considerable detail the negotiations leading up to the relevant contracts, a topic that appears to lead nowhere.

[4] It is necessary to explain Earthtec's case by reference to the statement of claim.

[5] On or about 12 March 2016, Livingstone sought expressions of interest for the construction work on the project.[1] That same day, the first expressions of interest request, which contained the various drawings and details of the project, was made available by Livingstone to Earthtec. It is alleged that the request included various representations, but those representations are not pursued in the pleading.

[6] On 14 April 2016, Earthtec provided their expression of interest in performing the construction work to Livingstone. This expression of interest included numerous documents touching on, amongst other things, insurance, capacity and experience.

[7] In May 2016, Livingstone decided to not proceed with the project by way of a single construction contract. Instead, Livingstone sought to split the project into two main areas of work, which are referred to as the down-slope component and the up-slope component. The down-slope component (the DS Work) involved the construction of a new road and all works below that new road down to a revetment wall adjacent to the ocean. The up-slope component (the US Work) concerned the stabilisations of the rock face above the road.

[8] On or about 12 May 2016, Livingstone sought an expression of interest from Earthtec relating specifically to the DS Work of the construction work.

[9] On or about 26 May 2016, Earthtec provided Livingstone with their expression of interest in performing the DS Work. On 8 July 2016, Livingstone shortlisted Earthtec as a tenderer for the DS Work. On or about 16 August 2016, Earthtec provided a tender to Livingstone for the performance of the DS Work. Throughout this process, the parties communicated back and forth, seeking clarifications and amendments, until agreement was reached.

[10] In late September 2016, at the request of Livingstone, Earthtec supplied Livingstone with an updated tender at a price of approximately $7.6m. Earthtec alleges that a contract was formed on:

(a) 27 September 2016, when Livingstone sent a letter to Earthtec purporting to accept the down-slope tender, albeit at a price provided for in a previous tender; or

(b) 20 October 2017, by Earthtec commencing the work.

[11] In or about mid-October 2016, Earthtec commenced the design work for the DS Work. On or about 20 October 2019, prior to any physical work commencing, representatives from Earthtec and Livingstone met on site. There, a pre-commencement construction meeting was held, and it is assumed that thereafter construction commenced. However, it was not until about mid-February 2017 that the parties executed a written contract in the form of a deed.

[12] In November 2016, Livingstone requested that Earthtec tender for the performance of the up-slope component of the project. On 29 November 2016, Earthtec submitted its tender to perform the US Work. There were negotiations and, on 3 May 2017, in response to a request by Livingstone, Earthtec submitted an amended tender at a price of approximately $6.9m.

[13] In the meantime, on 20 February 2017, the superintendent of the project was notified that a latent condition had been encountered. Clay was discovered in locations where the down-slope contract provided that rock would be encountered. This led to a series of negotiations which resulted in the parties entering into a deed on 9 May 2017 (the transition deed) to complete the DS Work and, in the event that the parties were able to agree on a price for the US Work, the preparation of a New Contract covering both areas of work.

[14] On the following day, 10 May 2017, Livingstone accepted Earthtec's tender to complete the US Work.

[15] Thus, the transition deed required Livingstone to consolidate the final down-slope contract and the up-slope contract into a single new contract. The pleading contends that Livingstone breached that deed by failing to consolidate the two binding contracts. It is difficult to see how an administrative failure to, in effect, combine two bundles of paper into one bundle of paper could lead to substantive loss. However, Earthtec claims that the breach has a number of substantive consequences, which it pleads in paragraph 96(d) of the statement of claim.

[16] Earthtec then make a number of claims under the down-slope contract, the up-slope contract, or a combined contract comprising those two contracts.[2] The claims are made on the basis of those three alternative contracts.

[17] Earthtec's claims start at paragraph 102 of the pleading. The claims fall into the following categories.

[18] First, Earthtec pleads that Livingstone paid $1.34m and $1.64m, plus interest and adjudicator's costs, pursuant to adjudication decisions made under Part 3 of the Building and Construction Industry Payments Act 2004 (Qld). Earthtec seeks a declaration that those amounts were properly paid. Thus, no sum is claimed. The claim is entirely defensive.

[19] Second, on three alternative bases, Earthtec claims $378,423 under one or other of the three alternative contracts for disposal of excess materials offsite.

[20] Third, a claim labelled as a 'latent condition claim' and appears to involve these allegations of fact:

(a) there was an unexpected discovery of stiff clay in areas that were expected to comprise hard rock;

(b) inspections, notice of delay, directions sought from the superintendent, a suspension of work, a concession by Livingstone that the ground conditions were unexpected, directions to perform the work in accordance with revised drawings, a claim for the additional construction costs associated with that work in accordance with the revised drawings (although the contractual basis for that claim is unstated);

(c) A meeting involving representatives of Earthtec, Livingstone and the superintendent on 4 April 2017 at which certain representations were made;

(d) A direction that Earthtec were to proceed with the construction of the revetment wall in accordance with a report from Douglas Partners which specified Type 1 Designs for rock and Type 2 Designs for stiff clay;

(e) The Type 2 Designs caused additional work - although the precise claim is not specified, and one can only speculate as to the contractual basis for the claim.

[21] Fourth, Earthtec make a claim labelled 'Upslope Latent Conditions'. The claim here seems to have these features:

(a) prior to agreeing to the contracts, Earthtec had only a limited capacity to assess the geotechnical conditions on site;

(b) the US Works required Earthtec to install soil nails across the site in each of three stabilisation zones;

(c) whilst carrying out that work Earthtec encountered large voids - which were unexpected and not reasonably anticipated;

(d) the voids caused Earthtec to incur additional costs of $155,868;

(e) Earthtec is entitled to be paid those additional costs pursuant to clause 12.2 of the general conditions in the up-slope contract or the equivalent provision in the consolidated contract.

[22] Fifth, Earthtec alleges that it was prevented from proceeding with the construction of the foundations to the revetment walls until 30 August 2017. It seems to be that the prevention of that work was caused by stiff clay, a latent or unexpected condition, and the absence of a direction by the superintendent allowing Earthtec to address the latent or unexpected condition. As a result, it is alleged that Earthtec was delayed in achieving practical completion by 97 days or 83 working days, which caused a loss of $996,000 (at $12,000 per day).

[23] Sixth, Earthtec claims that the contractual time for the completion of the DS Work was 93 days but, by reason of the superintendent's direction made on 30 August 2017, Earthtec was delayed in reaching practical completion by 111 working days which caused a loss of $1,575,341 (at $68,493 per week).

[24] Seventh, Earthtec says that its Upslope contractual obligation required that it perform certain clearing, grubbing, trimming and scaling works and that those works required that Earthtec prepare a construction methodology for those works, and carry out the works in accordance with certain Main Roads Specifications. Earthtec contends that before it could commence those works Livingstone was required to identify the extent and scope of that work so that Earthtec could prepare the construction methodology.[3]

[25] Earthtec says that it did prepare a draft construction methodology which it emailed to the superintendent on 7 June 2017 but there was then a period of correspondence in which the superintendent argued about the adequacy of the draft construction methodology and Earthtec argued that it was entitled to have Livingstone identify the extent and scope of the work.

[26] Ultimately, Earthtec says the superintendent's intransigence caused a delay in reaching practical completion by 19 days which caused a loss of $170,091 (at $8,952 per day).

[27] Eighth, Earthtec complains that on 17 August 2017 the superintendent directed Earthtec to carry out some additional testing which delayed practical completion by three weeks and caused a loss of $161,139 (3 weeks at $53,713).

[28] Ninth, Earthtec alleges that representations were made, or assumptions were made, as to the work sequence and work conditions, seemingly on the basis that the DS Work and the US Work could be carried out contemporaneously and would not interfere with each other. However, Earthtec claims that it was prevented from proceeding with the construction of the foundations to the revetment walls until 30 August 2017 (the fifth claim), and that the direction on 30 August 2017 (the sixth claim) caused delays totalling 19 weeks and damages of $971,965 (at $51,156 per week).

[29] Tenth, Earthtec claims various variations by reason of directions of the superintendent to vary the works, namely:

(a) the Type 2 Design changes (see claim 3 above) caused increased work and cost;[4]

(b) the work constructing the access tracks, which Earthtec says involved 6,646m3 at $9.22 per m3, a total of $61,279 but Earthtec has been paid only $40,470, leaving a balance of $20,808;[5]

(c) the work on special excavation and temporary batters for the revetment wall, which involved work valued at $301,002 (7,162m3 at $42.03) but Earthtec was paid only $179,939 leaving a balance of $103,063;[6]

(d) Earthtec says that it was required to import and install additional rock protection out from the revetment wall, presumably by reason of the direction on 30 August 2017, and says that it is entitled to $206,524 for that work;

(e) the DS Work required Earthtec to supply MSE fill to backfill the revetment wall, and the direction on 30 August 2017 required Earthtec to use imported fill rather than fill from the site, and Earthtec claims $1,079,069 for that work ($899,225 for the direct expense plus 20% for overheads[7]);

(f) the DS Works required Earthtec to supply the materials necessary for the reinforced soil structure and Earthtec is entitled to $1,316,670 for that work;[8]

(g) the US Works required Earthtec to undertake ultimate state suitability testing of sacrificial soil nails but Earthtec's proposed procedure was implicitly rejected by the superintendent and Earthtec was directed to carry out more onerous testing at a cost of $43,868.

[30] Eleventh, Livingstone terminated, or purported to terminate, the contract 'for convenience' based on clause 45A of the contract. Under that clause Earthtec's right to legitimate claims made prior to the termination, or to legitimate claims for work carried out before the termination were preserved. Earthtec therefore seeks its variation claims, as well as the costs associated with a termination direction to take steps to preserve property as well as handover costs.

[31] It can be seen that many of the claims appear to be contractual claims but the pleading does not explain the precise contractual basis of each claim. That broad problem is at the heart of many of the difficulties with the pleading.

[32] For present purposes it is unnecessary to dwell on Livingstone's defence but its contentions regarding the formation of the various contracts is as follows:

(a) The final down-slope contract came into existence on 27 September 2016;

(b) The down-slope tender was accepted, despite the letter referring to a price in a previous tender;

(c) The formal instrument of agreement operated retrospectively during the period of 27 September 2016 to 22 February 2017, when Earthtec commenced working on site;

(d) The up-slope contract comprised an offer on 29 November 2016 and an exchange of a revised bill of quantities which identified a contract sum of $6,854,777;

(e) Livingstone contends that the content of various meetings and documents created between 4 April 2017 and 9 May 2017 cannot be referred to by Earthtec on the basis a "without prejudice privilege" applies.

(f) No consequences should follow Livingstone's failure to produce the new contract or its failure to cause a timely resolution of the design of the Type 2 Foundations.

(g) Earthtec did not rely upon representations made by Livingstone.

[33] A statement of claim serves to identify the material facts that support the claims made in the claim. More specifically, UCPR 149(1) requires that each pleading must:

(a) be as brief as the nature of the case permits; and

(b) contain a statement of all the material facts on which the party relies but not the evidence by which the facts are to be proved; and

(c) state specifically any matter that if not stated specifically may take another party by surprise; and

(d) subject to rule 156, state specifically any relief the party claims; and

(e) if a claim or defence under an Act is relied on - identify the specific provision under the Act.

[34] The requirements of brevity, and the requirement to state the material facts rather than the evidence, serve an important purpose. The objective is for the case to be reduced to its 'factual skeleton'.[9] Thus, if a statement of claim pleads material that does not comprise material facts, the defendant is required to respond with the result that unnecessary fronts are opened in the battle between the litigants. As Jackson J explained in Mio Art Pty Ltd v Macequest Pty Ltd:

By adhering to the concept of a material fact in the practice of pleadings, the courts serve the purposes of efficiency and cost-saving which inform the procedural rules. The only issues joined are upon material facts. The only evidence led proves or disproves the material facts. The decision in the case is not affected by the irrelevant and the decision maker is not distracted from the material facts.[10]

[35] In Mio Art Pty Ltd v Macequest Pty Ltd Jackson J explained the concept of a material fact. For present purposes, it is important to emphasise that those facts that are material are those facts that comprise the elements of the cause of action or the defence.[11] Material facts do not comprise the law,[12] argument, reasons, theories or conclusions.[13]

[36] Jacob & Goldrein emphasise the cardinal importance of pleadings in the system of civil litigation.[14] The influence and importance of pleadings is pervasive throughout all the stages of a proceeding; it is the nucleus around which the whole case revolves throughout all its stages.[15] The pleadings define the issues and thus set the boundaries of the conflict, they inform the opposite party of the case they have to meet, and in that way uphold the right to a fair trial.[16]

[37] In Equititrust Ltd v Tucker Bowskill J explained the requirements of a pleading by reference to the Court of Appeal's decision in Barr Rock Pty Ltd v Blast Ice Creams Pty Ltd:[17]

Considerations relevant in deciding if a pleading is deficient include whether it fails to fulfil the function of pleadings, which is to state with sufficient clarity the case that must be met and so define the issues for decision, ensuring procedural fairness; whether it is ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against them; and whether the pleader's case is not advanced in a comprehensible, concise form appropriate for consideration by both the court, and for the purpose of the preparation of a response.[18]

[38] Looking at this statement of claim in a broad way, it seems clear that:

(a) A large section of the pleading, paragraphs 18 to 115, comprise pre-contractual negotiations and are unnecessary given that Earthtec's claims are contractual claims;[19]

(b) Many other paragraphs do not comprise material facts, and are not even identifiable as evidence in support of material facts;[20]

(c) For many claims the pleading makes as many as six or seven alternative claims, often pointlessly;

(d) The precise legal basis of the claims being made are often obscured by the pleading of an eclectic mix of facts which make it difficult to work out whether the claim is made for sums due under the contract, or for the valuation of directed work under clause 40, or for damages for breach of some unspecified term of the contract.

[39] Prior to the filing of the present application, Livingstone criticised Earthtec's statement of claim. Earthtec responded that "all the material facts on which it relies and pleads matters which if not stated may have taken Livingston[sic] by surprise".[21] However, some minor changes to the statement of claim were proposed. The arguments proceeded on the basis of an amended statement of claim.

[40] It remains to consider Livingstone's specific complaints about the pleading. The parties did that by addressing specific paragraphs under headings. I will adopt the same approach and the same headings.

[41] Arcadis Australia Pacific Pty Ltd (Arcadis) was commissioned by Livingstone to prepare the preliminary and detailed design of the DS Works and the US Works. Arcadis' designs and reports were distributed to all contractors who participated in the tender process.[22]

[42] Paragraph 3 of the statement of claim provides that "Arcadis Australia Pacific Pty Ltd [Arcadis] is, and was at all times relevant to the matters pleaded herein: ..." a corporation to which the ACL[23] applies [subparagraph 3(e)], a corporation involved in the supply of "services" in "trade or commerce" within the meaning of the ACL [subparagraph 3(f)] and a person who engaged in "trade or commerce" within the meaning of s 18 and s 29 of the ACL [subparagraph 3(g)].

[43] Livingstone argues that these subparagraphs ought to be struck out on the basis that Arcadis is not a party to this proceeding and Earthtec makes no direct allegation that Arcadis' designs or reports were deficient or contrary to any obligation imposed by the ACL. In short, these paragraphs go nowhere.

(a) It is accepted that paragraphs 3(e), (f) and (g) do not plead any material fact for a cause of action relied upon by the plaintiff;

(b) But that is not the relevant test: as the allegations are as to matters which if not pleaded might cause surprise to the defendant;

(c) It is trite that, having admitted Arcadis was a company, and the pleadings of the conduct by Arcadis set out in paragraphs 18 and 19 of the [statement of claim] and 18 and 19 of the defence, that the conclusions of mixed fact and law pleaded at paragraphs 3(e), (f) and (g) are open for the court to reach without more.

(d) It cannot be said therefore that the allegations either have a tendency to delay or are necessarily irrelevant.

(e) The complaint should be rejected.[24]

[45] The requirement in UCPR 149(1)(c), that a party identify any matter that may take their opponent by surprise, may sometimes justify pleadings that go beyond the material facts that are strictly necessary for the claim or the ground of defence.[25] In that sense the 'no surprise' requirement in UCPR 149(1)(c) operates as an exception to the requirement in UCPR 149(1)(b) that the pleading contain a statement of all the material facts on which the party relies but not the evidence by which the facts are to be proved.

[46] An example of the need to avoid surprise can be found in defamation law where there is a need for each relevant imputation to be specifically pleaded, even if it involves a false innuendo. The need to prevent a defamation defendant from being taken by surprise was emphasised by Brennan CJ and McHugh J in Chakravarti v Advertiser Newspapers Ltd.[26] The objective of the 'no surprise' exception is to put the opposite party 'on their guard' as to the case they are required to meet.[27]

[47] The 'no surprise' exception does not require a pleader to guarantee that the opposing party will encounter nothing unexpected at the trial. Trials are full of the unexpected.[28] The 'no surprise' exception requires that a pleading contain all that is reasonably and fairly necessary to ensure that the opposing party is not met at the trial by an unexpected turn in the case which that party, acting in good faith and reasonably, is unable to meet because of a natural failure to prepare to meet it having regard to the content of the pleading.[29] Whether a pleading does or does not comply with this requirement is a matter for the assessment and judgment of the judge who must decide the question ahead of the trial, like all pre-trial rulings.[30]

[48] The 'no surprise' exception does not give a pleader an open licence to plead immaterial facts or to plead evidence. The intention is merely to provide for exceptional cases where there is a genuine apprehension of surprise. To give the 'no surprise' exception a wider function would undermine the requirement of UCPR 149(1)(b) to plead all the material facts on which the party relies but not the evidence by which the facts are to be proved.

[49] The effect of UCPR 149(1)(b) is to confine the pleading to material facts and to exclude matters of evidence from the pleading. Where there is no reasonable prospect of surprise only the material facts ought to be pleaded. That is because pleadings which trespass into evidence endanger proper definition of the issues and risks the creation of false issues. As it happens, in modern civil litigation the element of surprise is largely diminished by the common practice of having the parties, usually in advance of the trial, file and serve affidavits or statements or even summaries of their evidence-in-chief.

[50] In short, the 'no surprise' exception is not a blanket justification for pleadings that go beyond the material facts that are strictly necessary for the claim or for the ground of defence.

[51] Here, Earthtec accepts that paragraphs 3(e), (f) and (g) of the statement of claim do not plead any material facts for a cause of action relied upon by the plaintiff. Earthtec asserts that that is not the relevant test. The relevant test, according to Earthtec, is whether the allegations are as to matters which if not pleaded might cause surprise to the defendant. As explained above, that is not an accurate view of UCPR 149(1)(b) and (c).

[52] There is no reason for thinking that Livingstone might entertain a genuine apprehension of surprise about Arcadis' role in the project or its susceptibility to proceedings based on the ACL. In fact, the only surprise is that these facts are pleaded at all, particularly in circumstances where no relief is sought against Arcadis and the performance of Arcadis' design work is not criticised.

[53] Earthtec's next point is that Livingstone has admitted that Arcadis was a company and has admitted the conduct of Arcadis set out in paragraphs 18 and 19 of the statement of claim, and that the conclusions of mixed fact and law pleaded at paragraphs 3(e), (f) and (g) are open for the court to reach without more. That submission confuses two concepts: materiality and veracity. A party is not justified in pleading immaterial facts or evidence, merely because those immaterial facts or evidence are admitted or likely to be admitted. Extraneous facts are extraneous, whether contested or not.[31]

[54] The vice in a plea of immaterial facts is not just the potential for a pointless battleground. As explained, the pleadings are the nucleus around which the whole case revolves throughout all its stages. The pleadings do not simply define the issues and thus set the boundaries of the conflict. They govern the scope of disclosure, the ambit of pre-trial and trial rulings, and the frontiers of the admissible evidence. Immaterial allegations in a complex construction case have the potential to cause significant disruption, confusion and expense.

[55] For those reasons, these paragraphs should be struck out.

[56] Paragraph 19 of the statement of claim alleges that certain documents (the preliminary design report dated 10 March 2016, bill of quantities and various drawings) were produced by Arcadis during its provision of "professional engineering services" for Livingstone in relation to the project. The term "professional engineering services" is defined in sch 2 of the Professional Engineers Act 2002 (Qld) to mean:

professional engineering service means an engineering service that requires, or is based on, the application of engineering principles and data to a design, or to a construction, production, operation or maintenance activity, relating to engineering, and does not include an engineering service that is provided only in accordance with a prescriptive standard.

[57] Livingstone argues that this paragraph ought to be struck out as Earthtec makes no allegation that Arcadis breached the Professional Engineers Act 2002 (Qld). It is contended that the lack of relevance to the pleaded case means that this paragraph has a tendency to delay the fair trial of this proceeding.

Paragraph 19 is plainly relevant to the reasonableness of reliance by the plaintiff upon the documents authored by Arcadis, the nature of those documents and the nature of the representations made therein.[32] In that context it falls within the operation of r.149(1)(b) as a material fact. But even if it is held not to have been a material fact, it is nevertheless a matter which expressly touches upon the standard the Arcadis Design should be treated as being considered by the Court, namely the work of a person which meets the standard of a "professional engineering service".

For the Court to strike the allegation out, the court would need to be satisfied that there was no prospect of the work performed by Arcadis for the Project being in the nature of a "professional engineering service", and that the allegation could not have any relevance to the plaintiff's case. To the extent the allegations are admitted, it cannot be said that the allegation will have a tendency to delay a fair trial of the proceeding.[33]

[59] First, paragraph 19 can only be entitled to its place in the statement of claim if it pleads a material fact or if it is designed to avoid a genuine apprehension of surprise. Neither is asserted here.

[60] Second, Earthtec appears to equate material facts to any facts that are relevant.[34] That is an error in approach. As explained, material facts are those facts that are strictly necessary to that party's cause or causes of action. They can be distinguished from the evidence which will either prove or disprove those material facts. Here, Earthtec says that paragraph 19 is 'relevant to' the reasonableness of reliance by the plaintiff upon the documents authored by Arcadis, the nature of those documents and the nature of the representations made therein. And so, Earthtec's submission appears to be that material facts need only be those facts that are relevant to or have a connection to the project or to design documents relied on by Earthtec during the course of the project.

[61] The problem is that Arcadis' design documents, and Earthtec's reliance on those documents, goes nowhere. The Arcadis design documents are not said to be flawed. No case is run that the Arcadis documents did not meet any particular standard. No loss or damage is said to have been suffered by Earthtec by reason of its reliance on the Arcadis documents. And Arcadis is not a party to the proceeding.[35] In short, paragraph 19 does not appear to be relevant to any pleaded cause of action.

[62] Third, Earthtec's claim that the facts in paragraph 19 'touch upon' the standards of a 'professional engineering service' does not assist. No case is run that Arcadis breached appropriate professional standards, let alone that Earthtec is entitled to loss and damage for that breach from Arcadis, a non-party.

[63] Paragraph 19 is not a material fact and should be struck out.

[64] Livingstone makes these submissions regarding paragraphs 21 to 30, which are headed "Expression of interest stage":

(a) paragraphs 21 to 30 of the statement of claim are exclusively concerned with the initial 'expression of interest stage' for the Project, which concerned a single works package (i.e. both DS and US Works). For example, paragraph 21 pleads how Livingstone sought expressions of interest for the performance of both the DS Works and US Works and paragraph 24 pleads Earthtec's response to the expression of interest.

(b) Even if pre-contractual exchange of expressions of interest were somehow relevant (which are they not [sic]), on Earthtec's own case, the 'expression of interest stage' was ultimately redundant because Livingstone "determined that it would not proceed with the Construction Work by way of a single construction contract".[36]

(c) Paragraphs 21 to 30 should therefore be struck out because they are irrelevant to the proceeding, have a tendency to delay the fair trial of the proceeding, and are unnecessary.

[65] The objection has force. The pleading of the expression of interest stage of the negotiations does not lead anywhere. No relevant representations are said to have been made. No contractual ambiguity is said to be able to be resolved by resort to the pre-contractual negotiations.[37] No damages or loss is attributed to conduct in the pre-contract stage, let alone in the expression of interest stage when a combined contract was contemplated. And, in any event, Earthtec's own pleading makes clear that, in their negotiations, the parties moved on and considered the DS works separately.

[66] Earthtec's first answer is to say that some of the allegations are matters which are admitted by Livingstone in its defence, and that other of the allegations have been pleaded to. Again, that is not a proper answer to a complaint that the relevant paragraphs do not comprise material facts.

[67] Earthtec's second answer is to say that some of the allegations are matters which, if not pleaded, might have caused surprise. For the reasons stated, the 'no surprise' exception is not a blanket justification for a pleading of immaterial facts. In any event, it is difficult to see how there could be any genuine surprise, except that the allegations appear in the pleading at all.

Additionally, the plaintiff contends that those matters were known to both parties and inform the proper construction of the Final DS Contract, and subsequently by incorporation, the Deed or alternatively the Consolidated Contracts. The plaintiff is required to plead the defendant's knowledge of those matters pursuant to rule 150(1)(k), to the extent that the parties' common knowledge of matters informs the enquiry into the parties' objective intentions in construing the terms of the contract on foot, or alternatively founds the basis for the plaintiff's rectification case.

[69] It is difficult to know what that means. If there is a contest about the interpretation of the contract, that is not pleaded in any clear way by the statement of claim. Certainly also, although it may not be determinative, no declaration is sought as to the proper interpretation of either contract.

[70] It is true that numerous interpretations of the contracts are pleaded in the statement of claim. But few, if any, lead to a substantive claim. The prayer for relief includes one claim for rectification of clause 3.2 of the formal instrument of agreement to the final DS contract (an order of precedence clause for resolving ambiguities) by deleting the words "the Tender Documents" and inserting in lieu thereof "the Contract". Presumably the plaintiff relies on paragraph 58 (and its context) in the statement of claim. But it is difficult to understand the legal basis of that rectification claim, or why the issue matters.

[71] Earthtec's fourth answer, also contained in the paragraph quoted above, is to rely on UCPR 150(1)(k). But that reliance seems misplaced. Paragraphs 21 to 30 plead conduct of the parties, 'determinations'[38] made, and representations made and reliance on those representations. However, despite invoking UCPR 150(1)(k), paragraphs 21 to 30 of the statement of claim do not contain any specific plea of knowledge or common knowledge. Certainly, an allegation of reliance involves a subjective element, but UCPR 150(1)(k) can hardly be said to justify the pleas in paragraphs 21 to 30.

[72] In any event, the culmination of paragraphs 21 to 30 is that "the defendant shortlisted the plaintiff as a tenderer for the Down Slope Work". That demonstrates an intention to 'tell the story' of the project rather than to plead any cause of action which involves a specific reliance on the state of mind of either party as one element in a cause of action.

[73] Livingstone also complains that paragraphs 23 and 24 of the statement of claim plead representations but those representations go nowhere in the sense that the representations are not relied on to support any pleaded cause of action and the representations are irrelevant. Earthtec counters that the "relevance of the allegations as pleaded is as to facts objectively known to the parties at the time of formation of the various contracts".[39] Again, that seems to be a cul-de-sac. The objectively known facts are not identified (possibly they are broadly similar to the representations alleged), their relevance is not explained, and they are not pleaded as part of any particular cause of action prosecuted by Earthtec.

[74] Paragraphs 28 and 29 are in a similar category. They comprise representations, and an alleged reliance on the representation, which lead nowhere.

The matters pleaded in [21] to [43] define a part of the factual matrix upon which the DS Contract and then the Final DS Contract were formed. Indeed, the plaintiff will need to substantially prove those facts to succeed on its contractual construction case at trial.[40]

[76] It is doubtful that the allegations in paragraphs 21 to 43 of the statement of claim are limited to the factual matrix or background to the DS Contract. As explained, the allegations extend to representations that appear to go nowhere. And, even if the factual matrix were confined to the background to the formation of the DS Contract, there is no reason why Earthtec could not simply plead what it contends was the contract, and any relevant terms. Little if anything may be in dispute about the contract and its terms. That seems likely.[41] However, by setting out the pre-contract discussions, in some detail, Earthtec merely invites dispute in areas that do not matter.[42]

[77] In short, by asserting that these paragraphs are part of a 'factual matrix' Earthtec should be taken to be conceding that the paragraphs are not material facts. Earthtec will not need to substantially prove those background facts to succeed on its contractual construction case at trial. Much of what transpired before the contract came into existence may remain contested ground but irrelevant. That is the vice in a pleading that extends beyond material facts.

[78] Indeed, as it happens, both parties agree there was a DS contract and an US contract and the likelihood is that the parties will not be at loggerheads as to the terms of the contract. Earthtec points to paragraph 59 of the defence as showing that the parties are likely to contest the terms of the contract.[43] However, again, Earthtec's approach seems to be to identify what it contends are the terms of the contract in a broad way, and divorced from any particular cause of action. That invites disputation where there need not be dispute.

[79] For those reasons paragraphs 21 to 30 of the statement should be struck out.

[80] Paragraphs 31 to 43 fall under the heading "Tender of Down Slope Works". Livingstone raises a similar objection to these paragraphs as it does in relation to paragraphs 21 to 30, namely:

(a) each of the allegations made in these paragraphs concern the tender for the DS Works - that is, Livingstone's request for a tender from Earthtec and Earthtec's submission of a tender for those works;

(b) the allegations describe the documents included within Livingstone's request for a tender (paragraph 32);

(c) as with the expression of interest stage, paragraph 33 lists further 15 alleged "representations" apparently made by the documents included within Livingstone's request for a tender for the DS Works;

(d) paragraph 34 goes on to describe clarifications provided to the request for tender and paragraph 35 alleges that further representations were apparently made by those clarifications;

(e) paragraphs 36 to 43 then each concern Earthtec's submission of a tender for the DS Works, along with (again) further 'representations' apparently made by Livingstone during this exchange;

(f) each of the allegations between paragraphs 31 to 43 are extrinsic to any contract between the parties and any contractual claim made in the proceeding;[44]

(g) there is no specific allegation that each of the matters pleaded are relevant as part of the pre-contractual factual matrix and therefore relevant to the commercial purpose or object as known between the parties or, indeed, as pre-contractual matters relevant to resolving any ambiguity or uncertainty in the terms of the DS Contract;

(h) each of the matters alleged are, plainly, antecedent oral and written negotiations and therefore should be struck out on the basis that they are irrelevant and have a tendency to delay the fair trial of the proceeding.

[81] For the reasons explained, that submission is accepted.[45]

[82] Incidentally, Livingstone gives two examples of the immateriality of this part of the pleading. Only one need be referred to.

[83] Paragraph 32 of the statement of claim alleges that the "DS Tender Documents" included, relevantly, the "Arcadis DS Design". Paragraph 33 then alleges that the "Arcadis DS Design" 'represented' 15 separate matters. None of those 'representations' are relied upon in a material way later in the statement of claim. For example, paragraph 33(k) alleges that the "Arcadis DS Design" represented that:

'The Arcadis DS Design was designed in accordance with AS4997 - Guidelines for the Design of Maritime Structures: Appendix G.'

[84] Nowhere in the statement of claim is AS4997 pleaded again. The standard is not then referred to, even implicitly. It has no pleaded relevance to any of the claims made by Earthtec.

[85] Paragraphs 46, 48, 49, 51 and 52 of the statement of claim are examples of the narrative style of the pleading:

(a) Paragraph 46 alleges that on 11 October 2016 Livingstone confirmed that the 'design wave' was to be found in Appendix G of an Arcadis report;

(b) Paragraph 48 alleges that on 20 October 2016, prior to work commencing under the DS contract, representatives of Livingstone and Earthtec had a meeting;

(c) Paragraph 49 alleges that at that meeting, which also involved the superintendent, Livingstone "represented, by inference" that Earthtec's design work would comply with the requirements of the DS Contract if the design was capable of resisting the 'design wave' found in Appendix G of the Arcadis report;

(d) Paragraph 51 alleges that on 4 November 2016 there was a further meeting and one or other of them represented that "wave breaking force" could be reliably determined from the "Wave Height & Duration provided" previously by the defendant and Arcadis;

(e) Paragraph 52 pleads that these representations were representations made by Livingstone and Arcadis as to the unidentified forces from wave action which it was reasonable for Earthtec to rely on.

[86] A curiosity is that the precise representations are not identified, nor is the reliance, nor is it alleged that the representations were false or misleading, and there is no plea of loss or damage.

[87] As Livingstone submits, these allegations are not relied upon in support of any claim made by Earthtec. That is, there is no specific allegation that there was a breach of contract by Livingstone (or some other cause of action) based upon the supply of information concerning 'wave forces.'

[88] Earthtec responds to this criticism at paragraphs [111]-[118] of its submissions. It is difficult to discern a substantive response. It is said the allegations are "material to the plaintiff's rectification case and estoppel case", but it is impossible to see how that is so. The rectification case relates to paragraph 3.2 of the formal instrument which deals with the order for precedence.[46] The estoppel case also appears to relate to the order of precedence for the contractual documents.[47]

[89] There appears to be no connection between the representations alleged to have been made concerning 'wave forces' and the order of precedence of the contractual documents. Even if there is a link, it is not clear from the pleading.

[90] As to paragraph 51 of the statement of claim, Earthtec submits that:

It is accepted that paragraph 51, taken in isolation, does not go to the formation of the DS Contract.

However, insofar as it is informative of the construction of the Final DS Contract, it is plainly a matter which if not pleaded might catch the defendant by surprise.

To address any concern that this is not clear, the plaintiff has provided amended particulars to [54] in the [statement of claim].[48]

[91] The first part of that submission is a tacit concession that the paragraph does not plead material facts. Certainly, that is not asserted. In any event, it is perplexing that Earthtec is focussed on a complex process of explaining how the contract came to be formed. That might be appropriate where the nature of the dispute was whether there was a contract at all. That is not the nature of this dispute. Here, Earthtec makes claims pursuant to two contracts (the DS and US Contracts) in circumstances where it is uncontentious that those two contracts were entered into, and were largely performed.

[92] The second part of that submission suggests that paragraph 51 is somehow relevant to an unidentified contract interpretation issue. No such issue is pleaded, or at least identified with any precision, and it is difficult to know how the court's resolution of that issue might be resolved by reference to:

(a) the topics discussed; and

(b) the representations said to have been made;

[93] The alleged representations, to the effect that 'wave breaking force' could be reliably determined from a report provided by Livingstone and Arcadis does not appear to be of any logical assistance in the interpretation of the DS Contract, which Earthtec pleads was a contract formed on 27 September 2016.

[94] The third part of the submission is a reference to new particulars added to paragraph 54 of the statement of claim. Suffice it to say that those particulars do not provide any clarity.

[95] Paragraphs 46, 48, 49, 51 and 52 of the statement of claim should be struck out.

[96] Paragraph 54 of the statement of claim is in these terms:

By reason of the matters pleaded herein, the objective facts mutually known to the plaintiff and the defendant at the time of entry into the DS Contract or in the alternative the Final DS Contract (infra) included:

(a) The "provisional quantity" and "P" items to the Preliminary BOQ were amounts to be adjusted by reference to the actual work performed.

(i) Particulars to paragraphs 34(e), 42(b) and 59(f).

(b) The Contractor Design Work was, insofar as it concerned engineering design, limited to establishing equivalence to the Arcadis Design.

(i) Paragraphs 35(f), 38, 39, 40, 42(e), 42(f), 46 and 49.

[97] It is difficult to work out the point of this paragraph. The reference to 'objective facts mutually known' to the parties suggests that Earthtec pursues some unidentified contract interpretation issue.[49] Possibly also Livingstone is right that what Earthtec seeks to do is to contend that these objective facts are terms of the DS Contract, but that is unclear, and the alleged term is not clear. It is also unclear how the collection of paragraphs referenced in the particulars are particulars of the paragraph 54 allegations.

[98] Suffice it to say the paragraph does not state with sufficient clarity the case that must be met. That paragraph should be struck out.

[99] Paragraph 55 of the statement of claim, which is an alternative to paragraphs 44-53, and also an alternative to paragraph 54, is as follows:

By reason of the matters above, prior to the time of entry into the DS Contract or in the alternative the Final DS Contract the defendant relevantly represented, and the plaintiff relied upon those representations as matters of fact:

(a) The matters pleaded in paragraphs 35, 39 and 42 hereof.

(b) The contract was a lump sum contract subject to adjustment of the amount payable according to the terms of the contract, including those terms in the Revised DS BOQ identified as "provisional quantities" or by the suffix "P" after the item number.

[100] There are many problems here. The paragraph lacks any clarity. The representations relied on in the paragraph do not appear to lead anywhere. They have no obvious connection to any of the claims made. The representations are not said to be false or misleading. No loss or damage is said to arise by reason of reliance on the representations. No issue of interpretation is claimed to arise involving provisional quantities. No claim is made based on provisional quantities.

[101] Earthtec's first response to Livingstone's complaint about this paragraph is to say:

Whilst the plaintiff does not concede the allegations as pleaded are opaque, it has nevertheless provided amendment in the ASOC to address the complaints of the defendant.

[102] The paragraph is not just opaque. It is impenetrable. The amendments do not assist.

[103] The second response is to say that Livingstone has pleaded to the allegations and is apparently not prejudiced by the allegations. As explained, the fact that the opposing party has pleaded is not a sufficient answer to the criticism. The opposing party is required to plead. If the opposite party does not plead in response, there may be a deemed admission. And so, even if an allegation is admitted, or there is a positive response, a legitimate concern is that false issues are raised.

[104] Earthtec's third response is that the denials raise justiciable questions of construction of the contract which properly should be determined at trial. The difficulty with that submission is that, if there is to be a trial, the issues must be properly defined. No issue of interpretation has been properly articulated.

References in the Statement of Claim to the "DS Contract"

[106] Livingstone makes a point about Earthtec's use of the expressions DS Contract and Final DS Contract. The point is a relatively minor complaint about labelling and can be clarified.

[107] Paragraphs 76 to 78 appear under the heading "Pre-Formation Conduct for the Upslope Contract".[50] Paragraph 76 alleges that Livingstone requested a tender from Earthtec for the performance of the US Works. Paragraph 77 then pleads the documents comprising that request. Paragraph 78 alleges that Livingstone, on a later date, provided further amended documents comprising its request for tender. None of those allegations are relevant because:

(a) There is no allegation that the request to provide a tender was accepted or matured into a contract;

(b) in paragraph 79, Earthtec pleads it later submitted a tender for the US Works comprising its "offer" to perform those works.

[108] Paragraphs 76 to 78 are only therefore of modest historic significance. They contribute nothing to any cause of action.

[109] Earthtec submits that the allegations are admitted. Again, that is beside the point. The allegations are not material facts. Earthtec submits that the allegations are directly relevant to what the up-slope tender was for. However, that illustrates the problem. Paragraphs 76 to 78 ought to survive if they plead material facts in the sense discussed, that is, they meaningfully contribute to a cause of action. They should not remain in the pleading if their only purpose is to explain the narrative. Embarking on an explanation of all of the terms of the up-slope tender does not assist the parties or the court. In cases where the claims are based on a construction contract, a party is bound to identify the contract, and the material term, and the breach of that material term. In this context, undertaking the task of identifying all of the terms, including alleged implied terms,[51] merely invites controversies about terms that are not material.

[110] A broad pleading about all of the terms of the up-slope contract does not invoke the 'no surprise' exception. Instead, it has the potential to create false issues.

[111] Paragraph 83 of the statement of claim pleads this:

As a result of the Superintendent and the defendant's design consultant's discovery pleaded in paragraph 82 hereof and the matters pleaded in paragraphs 84, 85 and 143 to 145 hereof, as a matter of law and on a proper construction of the Final DS Contract, the requirement for notice under clause 12.2 of the Amended General Conditions ceased to be a precondition to the subsequent steps for a claim for the consequences of a latent condition.

[112] Not surprisingly, Livingstone raises two objections. The first is that the allegation is hopeless and is bound to fail. The second is that the allegation is rendered entirely irrelevant by the fact that the statement of claim places no express reliance upon this allegation in support of any Earthtec claim.

[113] Both objections have substance. As to the first, it is difficult to understand the factual or legal basis for the claim that the contractual requirement simply ceased. It is true that contractual provisions like this can be waived. But, despite Earthtec's assertion that a waiver of the notice requirement is "clearly supported", no waiver of the requirements of clause 12.2 is actually pleaded in the statement of claim, and none of the facts referred to support such a plea.[52]

[114] As to the second, the plea goes nowhere. The likelihood is that it will produce pointless issues.

[115] Paragraph 84 continues the narrative. There was a meeting on 23 February 2017 where the representatives of the parties discussed the latent conditions and the delays in awarding the US Contract. Paragraph 85 identifies further topic discussed at the meeting - which, it is said, involved the superintendent as well as the representatives of the parties. No agreements were said to have been arrived at in the meeting or as a result of the meeting. The fact of the meeting, and the discussion of those topics, does not contribute to any cause of action. After all, it may be that the discussions of the parties' representatives involved significant disagreement.

[116] These two paragraphs do not constitute material facts and should be struck out.

[117] The objections to paragraphs 86 and 89 are on a different basis. Livingstone claims that these paragraphs are subject to without prejudice privilege. This issue is discussed separately in Part C below. That discussion, it will be seen, identifies some problems with these paragraphs.

[118] Livingstone contends that the ACL does not apply because the relevant alleged conduct pleaded at subparagraphs 89(a), 89(b), and 89(c) of the statement of claim was not in the course of "carrying on a business". This is a limitation on the application of the ACL as an "application law" under s 24 of the Fair Trading Act 1989 (Qld). As Earthtec submits, this issue involves disputed questions inappropriate for determination on a strike out application.[53] For that reason these paragraphs ought not be struck out on this ground.

[119] Paragraph 92(c)[54] provides that, by reason of the earlier pleaded matters, Livingstone was to fairly compensate Earthtec for the costs incurred by Earthtec in addressing two aspects of the work: the foundation latent conditions and the coextensive performance of the DS and US Work.

[120] Livingstone contends that it could not genuinely be contended that the term pleaded at paragraph 92(c) ought to be implied on the principles described in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council[55] and that such an implication is not explicitly alleged. Indeed, Livingstone submits that there is a lack of clarity as to the basis in law upon which it will be asserted that a term to the effect alleged could be implied.

[121] However, at least as I interpret the pleading, Earthtec does not propose an implied term on the basis of BP Refinery principles. Instead, what Earthtec appears to plead is that:

(a) the statement made was that Livingstone would not send Earthtec broke;

(b) it is to be inferred from that statement that Livingstone was representing that it would fairly compensate Earthtec for the costs incurred by Earthtec addressing the Foundation Latent Condition and the coextensive performance of the DS and US works.

[122] A party who says one thing may be taken to infer something else. However, a pleading to that effect should identify the facts or circumstances which justify the court drawing that inference. Here, no facts or circumstances are pleaded which would possibly entitle a court to conclude that a statement about Livingstone not causing Earthtec's insolvency infers that, in fact, Livingstone was promising that it would 'fairly compensate' Earthtec for two categories of costs incurred by Earthtec.

[123] That is a defect in the pleading. The inference is not properly pleaded and should be struck out.

[124] Paragraphs 93(f), 93(g) and 93(h) of the statement of claim allege that as a 'matter of construction of the Deed' that:

The defendant was obliged to provide the plaintiff with a footing design which addressed the Foundation Latent Condition.

The plaintiff was unable to proceed with the DS Work in constructing the Revetment Wall until the defendant had provided the completed foundation design which addressed the Foundation Latent Condition.

A failure by the defendant to provide the foundation design was in breach of the Deed for which the defendant was liable to pay the plaintiff's damages for delay.

[125] As Livingstone submits, no particulars are provided as to how any of these 'matters' arise on 'construction' of the transition deed. That is a concern because there are no express clauses of the deed that required Livingstone to provide a "footing design" to Earthtec, nor is there any clause of the deed which states that "damages" would be paid if Livingstone failed to provide a "foundation design" to Earthtec.

[126] Earthtec's answer is to submit that the defendant's complaint is untenable in the face of paragraphs 118 to 120 of the plaintiff's further and better particulars.

[127] The further and better particulars do not assist. The relevant aspect of the particulars is as follows - from the minutes of the meeting on 28 April 2017:

[Livingstone] and QRA had a workshop with Aecom (engineers) with regards to the design for the foundations for the revetment wall and MSE. From this workshop, it was identified that further geotechnical investigation (seismic and boreholes) by Council would be required to allow Aecom to complete as design for the foundations for the revetment wall and MSE.

[Livingstone] to engage further geotechnical investigation (seismic and boreholes)

[128] Even assuming in Earthtec's favour that this minute of the meeting had some contractual intention, and assuming that the contractual promise was made by Livingstone to Earthtec, the only promise made is that Livingstone will arrange further geotechnical investigations. There is no basis for a contention that Livingstone was contractually bound to provide a foundation design.[56]

[129] These allegations, and the particulars, should be struck out.

[130] As Livingstone's submissions explain, on 10 May 2017, Livingstone sent a letter to Earthtec accepting Earthtec's tender for the US Works. The letter made reference to Earthtec's tender for the US Works and the effect of the letter was to accept the tender, thereby forming a contract between the parties (on the documents comprising Earthtec's tender). The formation of that contract for the US Work does not appear to be controversial. However, paragraphs 94 and 95(c) of the statement of claim (read together) allege that, by reason of Livingstone's letter accepting Earthtec's tender for the US Works, "A contract constituted by the Final DS Contract, the US Contract BOQ, the Amended US Tender Request, the Negotiated US Tender and the Deed came into existence [the Consolidated Contract]." In that way, a third, largely fictional consolidated contract is said to have been formed.

[131] It is one thing to plead the documents constituting the contract. It is another to plead the formation of the agreement. Here the pleading seems to deem the parties as having agreed to the Consolidated Contract by the fact of Livingstone's letter accepting Earthtec's tender for the US Works. That is, by accepting the tender for one part of the works, it is alleged that a contract was simultaneously formed for both parts of the works. In short, Earthtec has not pleaded how the "Consolidated Contract" came into existence.

[132] Presumably, the expression "Consolidated Contract" is designed to refer to a document which somehow combines the terms and obligations of two pre-existing contracts so as to become a separate bargain. And that there is a separate bargain is surprising given that the transition deed expressly provides that Livingstone is to draft and the parties are to, in the future, execute a new contract which would combine the DS and US Works contracts. And so, Earthtec's case seems to be that a new Consolidated Contract was formed, constituted by some documents, one of which expressly contemplated a New Contract to be executed in the future. None of that is clear.

[133] Several subsequent paragraphs of the statement of claim plead reliance upon the "Consolidated Contract" as if it were signed or agreed, and thereby bound the parties. Nothing in the pleading establishes that the "Consolidated Contract" was a contract that bound the parties. Paragraph 95(c) should be struck out and any references to the "Consolidated Contract" in the statement of claim be struck out.

[134] Livingstone has made an objection to this paragraph but the references in the paragraph have been altered. The terms relied on in the paragraph have been confined and there is no basis to strike out the paragraph.

[135] The original version of subparagraph 97(a) alleged that as a consequence of Livingstone's "failure to prepare and enter into the New Contract" (in accordance with the deed) "the US Contract and the Final DS Contract were collateral contracts and were to operate together". As a result of Livingstone's objection, the word "collateral" was changed to "coexist" and, at the end of the subparagraph, the words "and together with the Deed" were added.

[136] The result is an allegation that is tolerably clear. The parties were bound by the obligations imposed by the two contracts and the deed.

[137] However, subparagraphs 97(c) and (d) allege that Livingstone was in ongoing breach of the deed by failing to prepare and enter into a new contract and that, as a consequence, Earthtec was relieved of its various obligations to notify, and there was no date for practical completion and was deprived of other rights. These are extraordinary claims that have no pleaded basis and should be struck out.[57]

[138] The objections to these paragraphs appear to have been met by amendment.

Paragraphs 129, 130 and 131, 177 to 179, 204 to 206, 232 to 234, 259 to 261, 273 to 275, 295 to 297, 321 to 323, 337 to 339, 356 to 358, 384 to 386, 403 to 405, 430 to 432, 451 to 453 and 464 to 466

[139] Paragraphs 129, 130 and 131 have counterparts throughout the pleading. Using paragraphs 129 to 131 as an example, the allegation is that:

(a) the superintendent did not act honestly and fairly or did not arrive at a reasonable measure of quantity or value in valuing the work designated as item 9006.01P at $378,423;

(b) in the premises, Livingstone breached clause 23 of the down-slope contract or the consolidated contract by failing to ensure the superintendent arrived at a measure of quantity and value that was reasonable and fair;

(c) Earthtec has suffered loss as a consequence of the defendant's breach in the amount of the value of item 9006.01P.

[140] Livingstone's first complaint is that Earthtec's allegations that the superintendent "did not act honestly and fairly" are serious allegations and are not to be made by vague or uncertain allegations, lacking particularity, but must be pleaded with a high degree of precision and particularity.[58]

[141] I agree with Livingstone's submissions that those are essential requirements and they have not been met. Earthtec is required to, with precision, spell out the precise manner in which Earthtec alleges that the superintendent did not act honestly and fairly and is required to identify the underlying facts upon which such a conclusion is alleged. The vice in Earthtec's present approach is that it merely labels the superintendent's decision as not honest or unfair and does not address what it says was wrong with the superintendent's decision. That approach is likely to obscure the real issues rather than elucidate them.

[142] The paragraphs using that formula should be struck out.

[143] Paragraphs 132 to 136 plead an alternative estoppel claim. Earthtec alleges that Livingstone 'induced' Earthtec to believe that it would be paid at the rate of $35.00 per m3 for all excess material that it deposed 'off-site' during the project. The conduct of Livingstone that is alleged to have induced that belief comprises:

(a) the inclusion of the item 9006.01P work into the final down-slope work;

(b) pay [Earthtec] the sum of $35.00 (exclusive of GST) per m3 for the item 9006.01P work;

(c) include the written record of the negotiations and agreement to the aforesaid in the final down-slope contract or the consolidated contract at Appendix C;

(d) the matters pleaded in paragraph 59(f)(vi) [i.e. various communications between the parties]; and

(e) not disavowing the representation of the superintendent pleaded in paragraph 127.

[144] The first three of those five factors are in fact references to the contract or parts of it. Livingstone's objection is as follows:

The problem with this allegation is that the down-slope contract was a document negotiated between the parties. The inclusion of specific items and documents within that contract was therefore not "conduct of the defendant", as alleged, but mutual conduct of both parties. That is self-evident given that both parties executed the DS Contract.

As such, Earthtec has failed to plead an actual representation or conduct of the defendant upon which the plea in estoppel is based.[59]

[145] The difficulty with that objection is that the estoppel is said to be based on more than just the contractual provisions. It is based on those provisions, and various communications, and conduct in 'not disavowing' the representation. On this application it is inappropriate to make an assessment of the merits of this aspect of Earthtec's case. It is sufficient to note that sufficient material facts are pleaded.

[146] Even if the basis for Earthtec's estoppel case was confined to the contract, that may provide a proper basis for an estoppel case, or a case based on a representation in breach of s 18 of the ACL. In the context of the ACL, Lockhart[60] traces the court's initial hostility to the idea that contractual promises could in themselves transgress s 18 of the ACL,[61] to the present position that the divining of representations from the making of contractual promises and the entry into contracts is to be approached with caution and with an eye to all the facts rather than by reference to implying representations mechanistically from equivalent promises.[62]

[147] Livingstone also submits that there is no proper plea of reliance or causation. As Livingstone explains, paragraph 134 pleads that 'but for' Livingstone's conduct in 'inducing' the alleged assumption, Earthtec would have, inter alia, attempted to negotiate the DS Contract on different terms. Paragraph 135 pleads the 'detriment' to be the 'loss of opportunity' to negotiate the DS Contract on different terms. Livingstone's objection is in these terms:

This is not a proper plea of detrimental reliance, but, even if were, causation has not been properly pleaded because there are no particulars provided to evidence that Livingstone would have agreed to Earthtec's alternate negotiation of the contractual terms. That is a problem because Earthtec's loss and damage is calculated simply on the basis that it is entitled to $35 x the m3 of spoil disposed off site by it. That is, the casual chain assumes that Livingstone would have agreed to Earthtec's hypothetical amendments to the contract, however, there are no material facts pleaded to support that causal chain.

[148] It seems to me that, in this respect, Earthtec's pleading is sufficient. The estoppel case that Earthtec wishes to prosecute is reasonably clear. The course that the alternative negotiation might have taken is a matter for evidence and submission.

[149] An amendment has been made to the statement of claim to respond to this complaint.

[150] Livingstone's objection to these paragraphs is as follows:

Each of these paragraphs plead correspondence exchanged between Earthtec, Livingstone and the Superintendent in respect of the 'Foundation Latent Condition'. None of the correspondence is relied upon by Livingstone as material facts in support of any claim made in respect of the 'Foundation Latent Condition'.

It is noted that Livingstone invited Earthtec to explain the relevance of this correspondence to any claim made in respect of the 'Foundation Latent Condition', but that invitation was not taken up (at least in a way that links the allegations to a specific claim made by Earthtec).

At best, the allegations are pleas of evidence, not material fact, and should be struck out.[63]

(a) the correspondence is "plainly as to facts, which if not pleaded, could cause surprise to the defendant";

(b) the correspondence comprises "facts which will undoubtedly need to be briefed to experts for the purpose of obtaining reports on the consequences of the discovery of the Foundation Latent Condition";

(c) Livingstone has sought particulars of some of the allegations and has generally been able to plead to the allegations and it is apparent that a triable issue exists as to the content and effect of the correspondence.[64]

[152] Earlier in these reasons,[65] I explained that the effect of UCPR 149(1)(b) is to confine the pleading to material facts and to exclude matters of evidence from the pleading. Where there is no reasonable prospect of surprise, only the material facts ought to be pleaded. Contrary to those principles, paragraphs 147 to 151 of the statement of claim continue a narrative about the course of the project rather than pleading material facts. There is no basis upon which it might be said that any of the facts pleaded in these paragraphs might cause surprise.

[153] The fact that the documents are relevant or may form part of a brief to an expert, does not make them material facts. Similarly, the fact that Livingstone chose to plead or seek particulars does not convert evidence to material facts.

[154] Earthtec's reference to a 'triable issue' is instructive. There may be a vigorously contested dispute as to what was said, or what was conceded, in one or other of the emails referred to in paragraphs 147 to 151 of the statement of claim. There is a potential for parties to disagree about many aspects of the evidence. However, in the pleadings the only issues that should be joined are disputes about material facts. In that way, as Jackson J explained in Mio Art Pty Ltd v Macequest Pty Ltd,[66] the courts serve the purposes of efficiency and cost-saving which inform the procedural rules.

[155] Livingstone's complaints about these paragraphs have been resolved by amendments.

[156] Paragraphs 155 and 156 of the statement of claim repeat the allegations made in paragraphs 86 and 89 of the statement of claim. These are the allegations of discussions at meetings which Livingstone contends were conducted on a without prejudice basis. For the reasons set out in Part C below, it is inappropriate to make a specific finding about that given the other conclusions reached regarding the pleading.

[157] Livingstone makes a number of complaints about paragraphs 181 and 182 but the central complaint is that these paragraphs are difficult to understand. One reason for that is the seemingly haphazard and incomprehensible cross-referencing to earlier paragraphs. Another reason is that one of the concepts embracing in this paragraph, and many others, is that Earthtec 'was not able to continue construction' or 'was not able to progress with the construction'.[67] Earthtec ability or inability to continue construction is not an element of any claim. In so far as Earthtec makes a contract claim the focus must be on the contractual promise and the breach of that promise.

[158] For those reasons it is difficult to understand paragraphs 181 and 182. The reliance on Earthtec's alleged inability to continue or progress construction creates a likely false issue and a distraction. And, given that the claim made is a contractual claim it is impossible to discern the contractual term relied on, or the breach of that term.

[159] Even the summary of this claim in Earthtec's submissions does not identify the relevant term or the alleged breach.[68]

[161] Paragraph 187 of the statement of claim alleges that:

In breach of the Final DS Contract, the defendant failed to cause the Superintendent to suspend the DS Work in accordance with the Final DS Contract.

[162] Livingstone's objection is that, leaving aside the fact that Earthtec has failed to identify the clause of the 'Final DS Contract' that (presumably) Livingstone is alleged to have breached:

(a) there are no material facts pleaded (or relied upon) to support this alleged breach; and

(b) there is no claim for loss and damage suffered by reason of this alleged breach, at least expressly identified within the statement of claim.

[163] In reply, Earthtec firstly submits that, contrary to the defendant's submissions, the material fact pleaded in paragraph 187 is that the superintendent did not suspend the DS Work and that was, it is contended, a breach of the Final DS Contract. Of course, saying the failure to suspend is a breach is one thing. The problem is that Earthtec do not identify the term said to have been breached.

[164] Secondly, Earthtec submits that its particulars identify:

(a) the clauses of the Final DS Contract (cl.23 and 34.1) allegedly breached;

(b) that those clauses obliged the defendant to cause the superintendent to suspend the DS Work;

(c) as well as the facts relied upon in support of the allegation of breach.

[165] Clause 23 of the general conditions is in these terms:

_The Principal shall ensure that at all times there is a Superintendent and that in the exercise of the functions of the Superintendent under the Contract, the Superintendent - _

• (1) acts honestly and fairly;
• (2) acts within the time prescribed under the Contract or where no time is prescribed, within a reasonable time; and
• (3) arrives at a reasonable measure or value of work, quantities or time.

If, pursuant to a provision of the Contract enabling the Superintendent to give directions, the Superintendent gives a direction, the Contractor shall comply with the direction.

In Clause 23 `direction' includes agreement, approval, authorization, certificate, decision, demand, determination, explanation, instruction, notice, order, permission, rejection, request or requirement.

Except where the Contract otherwise provides, a direction may be given orally but the Superintendent shall as soon as practicable confirm it in writing.

If the Contractor in writing requests the Superintendent to confirm an oral direction, the Contractor shall not be bound to comply with the direction until the Superintendent confirms it in writing.

[166] As can be seen, that clause is multi-faceted in that it contains a collection of provisions. Just which part of that clause is relevant, and the aspect of the clause said to have been breached is unclear from the pleading or the particulars. Certainly, nothing in clause 23 obliged Livingstone to cause the superintendent to suspend the DS Work.

[167] The court and the parties should not be required to speculate as to what Earthtec's real case is under this clause.

[168] Clause 34.1 of the general conditions does deal with suspension of the works. That clause provides:

_If the Superintendent considers that the suspension of the whole or part of the work under the Contract is necessary - _

(i) the Principal, the Superintendent or an employee, consultant or agent of the Principal; or

(ii) the Contractor, a subcontractor or an employee or agent of either;

(b) for the protection or safety of any person or property; or

the Superintendent shall direct the Contractor to suspend the progress of the whole or part of the work under the Contract for such time as the Superintendent thinks fit.

[169] Again, there is something of a disconnect between the breach alleged and the clause. The clause starts with the circumstance that the superintendent considers that the suspension of the works is necessary. Earthtec's claim rather ignores that and asserts that:

(a) The clause was breached, in an unidentified way; and

(b) For a reason, which is not explained, clauses 23 and 34.1 obliged Livingstone to cause the superintendent to suspend the DS Work.

[170] It may be that Earthtec's real case is that, in the circumstances, the superintendent ought to have suspended the work. But if that is Earthtec's case, or if its case is something else, the case ought to be clear.

[171] Paragraph 190(c)(iii) of the Statement of Claim alleges that by reason of clause 3.2 of the transition deed, the parties agreed that Livingstone would pay Earthtec:

From after the date of acceptance of the US Contract tender by the defendant the plaintiff was entitled to claim for payment for the matters relating to the EOT Claims under the New Contract insofar as the entitled related to the continuation unabated of the events giving rise to the EOT Claims.

[172] As Livingstone points out, this allegation does not make sense. Earthtec says that the complaint has been resolved in the amendments to the statement of claim. However, I am unable to see that. Clause 3.2 of the transition deed does not make any provision along the lines of that pleaded in paragraph 190(c)(iii). In fact, the purpose of clause 3.2 is not to give Earthtec any right to make extension of time claim. The objective of clause 3.2 is to provide for a one-off payment in full and final satisfaction of the extension of time claims, to ensure that there are no further similar claims, but to preserve any right to make claims for delays after 10 May 2017 and the entitlement is to cease on the date Earthtec is awarded the US Contract.

[173] Thus, clause 3.2 restricts Earthtec's right to claim. It does not bestow a right to claim on Earthtec. Perhaps Earthtec's intention is to say that it is not restricted by clause 3.2. If that is the case the plea is bad because it is not the function of the statement of claim to anticipate a defence.[69]

[174] Paragraph 190(d) of the statement of claim alleges that Livingstone breached the deed because it "failed or refused to execute a New Contract". Livingstone complains that there are no material facts pleaded to support this allegation. In particular, Livingstone says that the pleading does not identify the conduct of Livingstone relied on. In reply, Earthtec submits that:

(a) the allegation of a failure or refusal to execute the new contract made at paragraph 190(d) is a material fact in and of itself;

(b) it is axiomatic that a party cannot normally provide particulars of an act which was not taken.

[175] Of course, even a cursory examination of the pleading demonstrates that there are, in fact, two allegations - a failure to execute the new contract, and a refusal to execute the new contract. Earthtec cannot be required to give particulars of its failure to execute. That is an allegation of a failure to do something; a negative allegation. However, the allegation of a refusal to execute is a positive allegation. A refusal is a positive act involving a rebuff or a rejection of execution.

[176] In any event, the debate is a rather arid one and, as a matter of discretion, I would think that the lack of proper particulars would not justify a strike out of this part of the pleading, or at least the 'refusal' aspect of it. However, Earthtec should be required to provide proper particulars of the refusal.

[177] Amendments have been made to these paragraphs to accommodate the criticisms. For my part, though, there is a concern that even the amended version of paragraph 192(d) is a collection of words and concepts with no real clarity. It is a frustrating and unrewarding process to try to identify the relevant term of the contract, and to identify the alleged breach of that term.

[178] Paragraph 195 of the statement of claim pleads, that:

The Final DS Contract continued to operate, and as a matter of law, the defendant is not, as a result of the matters pleaded in paragraph 190(d) [i.e. the failure or refusal to execute the New Contract] entitled to avoid liability to claims made by the plaintiff within the scope of the EOT Claims including for the consequences of the Foundation Latent Conditions by relying upon cl.3.2(d) to exclude claims for amounts in delay damages incurred after the acceptance to the US Tender.

[179] The vice in that paragraph is clear. The paragraph is framed as, in effect, 'these facts do not entitle you to avoid liability'. The paragraph attempts to anticipate a defence. It should be struck out.

[180] Paragraph 197 of the statement of claim alleges that:

Pursuant to the matters pleaded in paragraphs 180 to 196 hereof, the plaintiff was delayed in progressing the Works and in reaching Practical Completion by the matters pleaded in paragraph 181 hereof for a period of 97 calendar days.

[181] Paragraph 198 alleges that on 19 September 2017 Earthtec made a written claim for 68 days of delay. Paragraph 199 alleges that the costs incurred for each working day was $12,000. Paragraph 200 alleges that:

In the premises of paragraphs 197 to 199 hereof, the defendant is and was obliged, by the operation of the Deed, or in the alternative, the Consolidated Contract, or in the alternative the Contracts, to pay the plaintiff the sum of $996,000.00 (exclusive of GST) [the VAR016 Claim] being the fair and reasonable cost of the delay pleaded.

[182] There are a number of problems. The first is that there is a rather toxic problem of cross-referencing. Excluding subparagraphs, the outset of paragraph 197 refers the reader to 17 different paragraphs. And then the particulars to paragraph 200 cross-reference a further 18 paragraphs. And the purpose of the cross-referencing is not entirely clear.

[183] The second is that Earthtec's reference to its prior written claim seems extraneous to any pleaded claim. It may be part of the narrative, but it is not a material fact.

[184] The third is that the precise basis of the claim is not obvious. It is true that, reading paragraphs 197 to 200 together, Earthtec's claim is that Livingstone was delayed for 83 days, and incurred $12,000.00 of delay damages per day, and says that it is therefore entitled to payment from Livingstone in the sum of $996,000.00 (being 83 x $12,000.00). But the claim is not made pursuant to any clause of the contract. No specific breach is alleged. No basis for the claim is articulated.

Paragraphs 203(b), 231(b), 320(b), 336(b), 383(b) and 463(b)

[186] These six paragraphs are similar. Using paragraph 203(b) as an example, the paragraph reads as follows (with the amendments which were made as a result of criticisms marked):

(a) ...

(b) A declaration that the payment made under the Second DS Adjudication Decision in the sum of $357,500 (exclusive of GST) was an amount otherwise properly payable properly made under the Final DS Contract, or in the alternative, the Consolidated Contract.

[187] The objective of the amendments is to ensure that the court is not required to review the merits of the adjudication decision, which in any event does not finally determine the parties' rights. It is difficult to understand why the adjudication decision comprises a material fact but the criticism has been met and it is not appropriate to strike out these paragraphs.

Paragraphs 207, 208, 237 to 238, 300 to 301, 326 to 327, 342 to 343, 361 to 362 and 389 to 390

[188] These paragraphs all rely on the implied terms alleged in paragraphs 92(c) and 93(e) of the statement of claim. For the reasons stated above those paragraphs are inadequately pleaded. It follows that these paragraphs should also be struck out.

Paragraphs 211, 212, 214, 239 to 240, 304 to 305, 328 to 329, 344 to 345, 363 to 364 and 391 to 392

[189] These criticisms have been responded to in the amended pleading.

[190] Paragraphs 213 and 214 of the statement of claim rely on breaches of paragraphs 93(f), 93(g) and 93(h) of the statement of claim. Those paragraphs have been discussed above. As those paragraphs are to be struck out, it follows that paragraphs 213 and 214 ought to be struck out.

In breach of the terms pleaded in paragraphs 92(a) or 92(b):

(a) the defendant failed to provide the Type 2 Design and the New Contract upon acceptance of the US Tender thereby precluding the plaintiff from having the benefit of the Deed or, in the alternative, the New Contract;

(b) the defendant provided the plaintiff with the Type 2 Design on or about 14 August 2017.

[192] Paragraph 216 of the statement of claim alleges that Earthtec suffered loss and damage by reason of that breach.

[193] The terms alleged to have been breached are the terms pleaded in paragraphs 92(a) and (b), namely:

The Deed contained the following implied terms, the parties would:

(a) co-operate to give each other the benefit of the Deed or the New Contract; or, in the alternative

(b) not conduct themselves in a manner to preclude the other party from having the benefit of the Deed or the New Contract.

[194] There is an aberrant aspect to this claim. The implied terms are, no doubt, based on Lord Blackburn's classic judgment in Mackay v Dick:

[W]here in a written contract it appears that both parties have agreed that something shall be done, which cannot be effectually done unless both parties concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.[70]

[195] That principle was stated in wider terms by Griffith CJ in Butt v M'Donald:

It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.[71]

[196] The principle has been applied many times by the High Court, most recently in Campbell v Backoffice Investments Pty Ltd.[72] This tenet of interpretation is based on a theory of cooperation: courts construe contracts to make them work.[73]

[197] But the principle of interpretation is not a means by which fresh or extraneous obligations can be imposed on a party to the contract. And so, in Australis Media Holdings Pty Ltd v Telstra Corp Ltd Mason P, Beazley and Stein JJA said:

It follows that, leaving aside fiduciary obligations (which are not involved here), there cannot be a duty to co-operate in bringing about something which the contract does not require to happen...

A contract may "contemplate" many benefits for the respective parties, but each can only call on the other to provide, or co-operate in the providing of, benefits promised by that party.[74]

[198] And so, the problem here is that no express term of the transition deed required that Livingstone provide a Type 2 Design to Earthtec. And no facts have been pleaded that demonstrate that an obligation to provide a Type 2 Design was something that the parties agreed was to be done, or which required the cooperation of both parties. In short, these paragraphs need review.

Paragraphs 217, 241, 262, 276, 306, 330, 346, 365 and 393

[199] These paragraphs are in a similar form. Using the first as an example, paragraph 217 of the statement of claim alleges that:

In breach of the terms pleaded in paragraph 93(c) [i.e. a term that the parties agreed to prepare a new contract[75]] and by reason of the matters pleaded in paragraph 97(c), 97(d) and 97(e) hereof:

(a) the plaintiff did not accrue an entitlement to make a claim in respect of the VAR016 Claim which it would otherwise have been entitled to make under the New Contract; and

(b) as a consequence, the plaintiff has suffered loss and damage by reason of not being able to rely on the New Contract to obtain payment for the circumstances the subject of VAR016 Claim.

[200] This claim is something of a mystery. Clause 2.2 of the transition deed certainly contemplates that, if certain conditions are fulfilled, Livingstone was to compile, and the parties were to execute, a new contract. However, as might be expected, the terms of the new contract were to combine the terms of the proposed US Contract and the scope of works of the DS Contract, together with any additional terms or modifications as may reasonably be required. In other words, the terms of the new contract were to be substantially the same as those already in place.

(a) a breach of the term requiring a new contract - that is a failure on the part of Livingstone to prepare the document and a failure of both parties to execute it;

(b) as a result, Earthtec's failure to gain an entitlement to make a claim under the new contract for the VAR016 claim;

(c) loss and damage representing the amount that Earthtec would have been entitled to under the new contract for that claim.

[202] The mystery is just why the new contract would have entitled Earthtec to make the VAR016 claim, and why Earthtec "did not accrue an entitlement to make [that] claim" under the subsisting contractual arrangements. It may be that Earthtec's case is that there was no entitlement to VAR016 under the subsisting contractual arrangements, and that what it has lost is an opportunity to negotiate some unidentified term which would have enabled Earthtec to make such a claim. If that is Earthtec's case, it ought to be clearly pleaded.[76]

[203] In any event, Earthtec's case ought to be pleaded with sufficient clarity. There is a distinct lack of clarity because it is not clear whether this is really a 'lost opportunity' case and, if so, what that case is.

[204] Livingstone complains that paragraphs 97(c), 97(d) and 97(e) are relied on and those paragraphs are inadequately pleaded. I have previously upheld that objection. Paragraph 97(e) appears to rely on paragraphs 97(c) and (d) and so that paragraph is also problematic.

[205] As it happens, a careful reading of paragraph 97(e) rather suggests that the pleader's intention was to refer to paragraphs 97(a) and (b) rather than 97(c), (d) and (e). The former paragraphs refer to the direct consequences of the breach whereas the latter paragraphs refer to the consequences of the breach. Whether that is a mistake or deliberate is difficult to determine.

[207] Livingstone articulated various complaints about these paragraphs. They were mostly issues of particulars or inconsistencies. There is a proposal to amend and so it is unnecessary to deal with the criticisms.

[208] Paragraph 258 of the statement of claim is in these terms:

In the premises of paragraphs 250 to 257, the defendant is and was obliged to pay the plaintiff the sum of $170,091.23 (exclusive of GST), plus overheads as calculated after the provision of expert reports.

[210] The context of the paragraph is that there was, it is alleged, delay by the superintendent in approving a construction methodology required for part of Earthtec's works. However, merely giving a narrative which discloses some delay on the part of the superintendent does not mean that Livingstone is obliged to pay the sum specified. Presumably, Earthtec contends that the delay comprised a breach of one or other of the terms of one or other of the contracts. In its submissions, but not in its pleading, Earthtec relies on a breach of clause 40.5 of the general conditions of the DS Contract.

[211] Earthtec's case needs to be properly pleaded. These paragraphs should be struck out.

[212] Livingstone objects to this paragraph on the grounds that the paragraph discusses the content of a without prejudice meeting on 28 April 2017. Without prejudice privilege is discussed in Part C below. However, this paragraph seems to be merely evidence proffered as part of the narrative and appears to lead nowhere. The paragraph asserts that representations were made at the meeting, but it is not alleged that those representations were false or misleading or deceptive, or that there was reliance on the representations and that loss and damage was caused by that reliance.

[213] Paragraph should not be struck out for that reason rather than any question of privilege.

[214] Paragraphs 277 to 286 plead various background facts. The point of that background is not entirely clear except that at paragraph 287 Earthtec pleads this:

In the premises of paragraphs 277 to 286 above, the plaintiff was delayed in carrying out the US Works as a result of the delay in issuing the Type 2 Design which reduced access because it was required to ...

[215] And so, the superintendent's delay in issuing the Type 2 Design is claimed to have led to the plaintiff being delayed in its work. However, the precise contractual or other basis of that case is unclear.

Between on or about 31 August 2017 and 14 March 2018, for a period of some 19 calendar weeks, the plaintiff was delayed in carrying out the US Work because of the reduced access caused by Type 2 Design and, or in the alternative, the Superintendent directed the plaintiff to carry out the construction of the Revetment Wall in accordance with the Type 1 Design and the Type 2 Design.

[217] Thus, some unidentified delay is said to be attributable to the delay in issuing the Type 2 Design. Then, the Type 2 Design has itself caused reduced access to the site. The delay attributable to each cause is not explained in a context where delay costs of $1m is claimed.

[218] Particulars have been resisted. In my view these paragraphs ought to be struck out. The position is similar for paragraphs 290 to 294.

[219] As can be seen, the problems with the statement of claim are numerous. Large sections of the pleading from paragraphs 18 to 115 comprise immaterial facts. Paragraphs 92(c) and 93(e) appear to have some importance but do not explain how a relatively general statement about one party not sending the other broke infers much more specific representations about fair compensation about two types of work. Earthtec fails to identify how the superintendent did not act honestly and fairly. Earthtec has pleaded numerous items of correspondence, and details of the claims it has made, that are not material facts and are likely to create false issues. In other respects, the basis of Earthtec's claims remains elusive.

[220] In short, the pleading needs substantial overhaul. To allow the proceeding to continue on the basis of the present pleading would risk a more extensive dispute that is justified and would risk putting Livingstone in the position where was required to speculate about the case it was required to meet. The pleading fails to fulfil the function of pleadings, which is to state with sufficient clarity the case that must be met and so define the issues for decision and ensure procedural fairness.[77]

PART C: WITHOUT PREJUDICE PRIVILEGE

[221] Paragraphs 86 and 89 of the statement of claim concern two separate meetings that occurred on 4 April 2017 and 28 April 2017. Specific details of what was allegedly discussed at those meetings are pleaded by Earthtec.

[222] Livingstone says that both meetings were conducted on a without prejudice basis and that Livingstone has not waived its privilege in respect of either meeting. Livingstone says that the evidence of the meetings is inadmissible, and these paragraphs should be struck out. Livingstone contends that, while the meeting minutes from the 28 April meeting ultimately became an attachment to the transition deed, the matters pleaded at subparagraph 89(b) of the statement of claim go beyond what is recorded in those minutes. In Livingstone's submission, any privilege waived in respect of the 28 April meeting could only be to the extent recorded in the meeting minutes.

[223] Earthtec's first answer to the privilege claim is to say that Livingstone has failed to adduce any evidence of a dispute said to be the subject of the "without prejudice privilege" and to complain that Livingstone has adduced only hearsay evidence. The application made by Livingstone is to strike out the statement of claim, or parts of it pursuant to UCPR 171. It is an application for relief other than final relief. UCPR 430 permits statements based on information and belief. Indeed, Earthtec conceded that hearsay is not prima facie inadmissible for an interlocutory application.[78] However, Earthtec submits that hearsay is inappropriate where the application involves resolution of a factual matter for which hearsay would be inadmissible at trial.

[224] Earthtec's submissions do not explain the legal basis for an alleged discretion to refuse to permit statements based on information and belief under UCPR 430. Nor does Earthtec explain why such a discretion, assuming it exists, would be exercised in circumstances where Earthtec did not adduce any evidence to the contrary of Livingstone's evidence. That there were a number of construction disputes seem uncontroversial. Similarly, it seems agreed that there were genuine attempts to resolve those disputes.

[225] The evidence establishes that these two meetings occurred in the context of a number of construction issues, including Earthtec's claim that it was unable to continue, as well as variation claims and delay claims.[79] Subsequent minutes (referred to below) describe there being "outstanding issues" between the parties. In that context, there were meetings involving the representatives of the parties, including the superintendent. The meeting on 4 April 2017 was attended by Mr Michael Rochester of McCullough Robertson, a law firm, whose role was as facilitator. At the outset of the meeting Mr Rochester described the meeting as without prejudice. Mr Alan Moss, an Earthtec representative, agreed.[80] The meeting on 28 April 2017 was a continuation of the discussion on 4 April 2017. The subsequent transition deed of 9 May 2017 includes the minutes of the 28 April meeting and describes the meeting as a 'Without Prejudice Workshop.'[81]

[226] For without prejudice privilege to exist, the following elements must exist:

(a) a dispute, over which litigation might reasonably be contemplated;

(b) in which communications take place between the parties to that dispute;

(c) that are genuinely aimed at negotiating a settlement of that dispute or part of it;

(d) whether or not those communications are expressly stated to be 'without prejudice'.[82]

[227] Those elements are established by the facts I have summarised. The context and the involvement of Mr Rochester in make it plain that, at the meetings, the parties were genuinely attempting to resolve disputes.

[228] Incidentally, the without prejudice rule is not confined to admissions but applies to other statements made during settlement negotiations.[83]

[229] Earthtec's second answer to the claim of without prejudice privilege is that:

"without prejudice" privilege is primarily a matter which goes to the admissibility of evidence, and only attaches to negotiations directed at resolving a dispute existing before and during the negotiation.

[230] The second limb of that objection is accurate. However, the evidence does establish a dispute that was the subject of negotiation. The first part of that limb is also true, but the use of the word "primarily" rather undermines the objection. In any event, even if one were to assume that the privilege may only be raised as an objection to the admissibility of evidence sought to be tendered (despite the discussion below), the allegations pleaded in paragraphs 86 and 89 would be pointless. If the objection is a valid one, no evidence could be given in order to prove what happened at the meetings.

[231] The right to protection afforded by without prejudice privilege is not limited to rulings regarding the admissibility of evidence.[84] The general rule is that nothing which is written or said 'without prejudice' can be referred to in court subsequently without the consent of all parties concerned.[85] That general proposition would encompass pleadings. In any event the protection has been held to extend to prevent disclosure (discovery).[86] Even as between the parties to 'without prejudice' correspondence, they are not entitled to discovery against one another.[87] And so, whilst the issue of the without prejudice privilege most often arises in the context of the tender of evidence, the protection is not limited to that context. The underlying objective of the privilege, of course, is to enable parties to speak freely about all issues when seeking compromise.[88]

[232] Earthtec's third answer is that the privilege does not operate in respect of negotiations where litigation has not been contemplated, such as mere commercial negotiations. That is rather too general. The core principles can be stated in these ways:

(a) the existence of a dispute, and of an attempt to compromise it, are at the heart of the rule whereby evidence may be excluded (or disclosure of material precluded) as 'without prejudice';[89]

(b) it is only disputes over which litigation exists, or might reasonably be contemplated, that can form the foundation for the privilege;[90]

(c) genuine negotiations to resolve disputes should be protected against disclosure in court proceedings;[91]

(d) the privilege enables disputants to engage in discussion for the purpose of arriving at terms of peace;[92]

(e) fixing the parameters of the dispute is critical to determining whether or not the umbrella of without prejudice privilege can be erected over a communication to shield it from disclosure to a court.[93]

[233] Here, there were construction claims being made by Earthtec. The parties' representatives genuinely attempted to resolve those claims. In some cases, resolutions were arrived at. In other cases, the parties agreed to further steps. These were not "mere commercial negotiations". They were a genuine attempts to resolve the disputes. Whilst neither party was preparing to litigate, at least one lawyer was involved, and the objective was to resolve the disputes and thereby avoid litigation. The protection of the privilege is justified.

[234] Earthtec's fourth answer is that the effect of annexing the minutes of the 28 April meeting to the deed was sufficient to amount to a waiver by the parties. It is doubtful that the deed can be read in that way. The deed did not resolve all issues; some unresolved issues remained. The minutes referred to six specific issues. Some preliminary or partial resolutions were recorded. For example, a daily rate was agreed for the down-slope delay costs, but Earthtec was to provide support information to justify the off-site costs of $4,066 per day.

[235] Beyond the minutes themselves, which by means of the deed the parties plainly intended to be 'open' correspondence, it is difficult to see any conduct which is inconsistent with the maintenance of the confidentiality which the privilege was intended to protect.[94] The objective was to narrow the issues or to provide mechanisms for their resolution. For example, in relation to issues related to Foundation Design, Livingstone was to undertake further geotechnical investigation. The intention of annexing the minutes was merely to record what had been agreed thus far, albeit in a preliminary way. I cannot see any inconsistency or unfairness in confining the waiver to the minutes which the parties chose to expose as the extent of their agreement.

[236] Earthec's fifth answer is to assert that the privilege does not apply to conduct contravening ss.18, 20 or 21 of the ACL. One exception to the application of the privilege is that the cloak of 'without prejudice' must not be abused for the purpose of misleading the court.[95] Here, it is difficult to see conduct of that type.

Paragraph 89(b) alleges that during the 28 April meeting, Mr Murdoch or Mr Toon of Livingstone "represented" words to the effect that the "defendant would not send the plaintiff broke". Paragraph 89(c) alleges that this was an "inferred representation" that "the defendant would fairly compensate the plaintiff for the costs incurred by the plaintiff addressing the Foundation Latent Condition and the coextensive performance of the DS Contract and the US Contract works". Paragraph 89(d) alleges that Earthtec "relied" upon this representation. None of these matters appear in the 28 April meeting minutes.

[238] Assuming Earthtec could establish that either of the Livingstone representatives said that Livingstone would not send Earthtec broke,[96] there is no basis for concluding that invoking the privilege puts Livingstone into the position of being able to cause the court to be deceived as to the facts.[97]

[239] Earthtec is in the position of having to demonstrate that there is a public interest in favour of the use of the evidence which outweighs the public interest in fostering the non-litigious compromise of disputes.[98] A party who does no more than put forward his case strongly but honestly and fairly in the course of discussions does not thereby destroy the without prejudice privilege. Even a threat which consists of no more than a statement of that parties' rights and his intention to sue on them remains protected.[99]

[240] Earthtec relied on the High Court's decision in Harrington v Lowe:

Thus, in a proceeding in which the ordinary rules of evidence apply, "without prejudice" material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement. So also where what is in issue is the entry into an impugned agreement as a consequence of engagement in misleading and deceptive conduct by another party.[100]

[241] This case does not fall within the first category of cases referred to. The second category of cases relies on the decision of Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd.[101] There, Hill J said:

It seems to me that if, in the course of "without prejudice" negotiations, a party to those negotiations engages in conduct which is misleading or deceptive or likely to mislead or deceive contrary to s 52 of the Trade Practices Act and as a result the other party to the negotiations relying, for example, upon the misleading or deceptive conduct suffers loss, proof of the negotiations should not be rendered impossible by the "without prejudice" rule. There is, in such a case, no longer the same subject matter in dispute between the parties as was in dispute at the time of the negotiations.

The public policy to be found in Pt V of the Trade Practices Act is not to be rendered nugatory by permitting a party to hide behind the fact that his or her conduct, which is misleading or deceptive conduct, occurred during the course of 'without prejudice' negotiations. A party cannot, with impunity, engage in misleading or deceptive conduct resulting in loss to another under the cover of "without prejudice" negotiations.

[243] Thus, the privilege cannot be relied on where the plaintiff sues alleging that there was misleading or deceptive conduct in the without prejudice negotiations.[102]

[244] And so, does this case fall within that exception? Assessing the true nature of Earthtec's claim is a challenging exercise. The pleading's failure to plead only material facts, and its narrative style, obscures a proper analysis of whether Earthtec's pleading can be characterised as a case of misleading or deceptive conduct where what is sued on is a statement made in the course of the without prejudice negotiations.[103]

[245] Earthtec relies on the Livingstone's representation during the without prejudice discussions that it 'would not send Earthtec broke.' The precise representation alleged is that:

When discussing the increased costs for variations, delays and provision quantity adjustments, Murdoch or in the alternative, Toon of the defendant represented to Moss and Wass of the plaintiff words to the effect that defendant would not send the plaintiff broke.[104]

[246] That representation is said to infer a further representation that "the defendant would fairly compensate the plaintiff for the costs incurred by the plaintiff addressing the Foundation Latent Condition and the coextensive performance of the DS Contract and the US Contract works". I find it impossible to see how or why an express, but very general, representation that Livingstone would not cause Earthtec's insolvency could possibly lead to an inference that fair compensation would be paid for two categories of costs incurred by Earthtec. Certainly, the pleading does not identify any facts or circumstances that might lead to such an inference.[105] And the inferred representation appears to be inherently uncertain. As Livingstone points out, the parties are likely to have entirely different views about what constitutes fair compensation and whether the contracts between the parties specifies prices or rates that provide fair compensation. That makes it unlikely that Livingstone can be taken to have impliedly represented that fair compensation would be paid.

[247] Earthtec then pleads that, relying on the inferred representation,[106] the parties reached an agreement and entered the transition deed. Earthtec says that the representations were as to future matters, made in trade or commerce, and were made with the intention of inducing Earthtec to enter into the transition deed. Curiously, Earthtec then pleads that either the transition deed, or a new proposed contract, would provide for fair compensation. Earthtec is pleaded as relying on the inferred representation in agreeing to enter into the transition deed - which plainly did not provide for fair compensation for the two categories of costs.

[248] Earthtec's case, then, is that the representations were misleading or deceptive because Livingstone has failed or refused to:

(a) compensate Earthtec for all costs incurred by Earthtec relating to the Foundation Latent Condition; and

(b) enter into an agreement which provided for fair compensation for the two categories of costs.

[249] Again, there is a problem. Both the express representation and the inferred representation are statements as to future matters. Thus, the mere non-fulfilment of the future matter does not demonstrate misleading or deceptive conduct.[107] The pleading does not address that aspect, let alone the problem that there is no suggestion that Livingstone has caused Earthtec to become insolvent. Instead, the representations are said to be misleading or deceptive because Livingstone has failed or refused to compensate Earthtec for all the Foundation Latent Condition costs and has failed or refused to enter into an agreement which provided for fair compensation for the two categories of costs. In other words, despite a considerable body of law to the contrary, the mere non-fulfilment is relied on as establishing misleading or deceptive conduct.[108]

[250] Then, Earthtec's case is that the appropriate remedy is:

(a) an order under s 243(b) of the ACL varying the transition deed, or the Consolidated Contract[109] to imply or incorporate a term to the effect that Earthtec be fairly compensated for the two categories of costs; or

(b) damages pursuant to s 236 of the ACL, or compensation pursuant to s 237 of the ACL for its "reasonably incurred costs"[110] in the amounts pleaded at five later points of the pleading, namely claims VAR016, VAR017, VAR025, VAR039 and VAR044.

[251] When one goes to those five claims, they are each claims under the contract. Thus, Earthtec's ACL case is an alternative claim for damages under the contract.[111]

[252] And so, there is at present a claim made that does assert misleading or deceptive conduct that occurred during the course of 'without prejudice' negotiations. It is a flawed claim which arguably raises a different subject matter to the disputes discussed by the parties at their meetings in April 2017 but ends with the same claims.

[253] Without prejudice privilege is an important privilege. Byrne J explained the importance and breadth of the privilege in Village/Nine Network Restaurants & Bars Pty Ltd v Mercantile Mutual Custodians Pty Ltd.[112] The privilege is a matter of right, not discretion.[113] I am unwilling to make a ruling that destroys that privilege when the pleading that is claimed to bring this case within the exception discussed in Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd is so flawed that it needs to be struck out the reasons explained above, and elsewhere in these reasons.

[254] Of course, if and when Earthtec re-pleads, the issue of whether the new pleading falls within the exception will need to be considered.

[255] Earthtec's sixth answer is to submit that the privilege does not apply to the extent there is ambiguity on the face of a subsequent agreement to which the communications in respect of the privilege would assist the court in the identification of the facts objectively known to the parties at the time of formation and ascertaining the intent of said agreement. No authority is stated for that proposition. As explained, Livingstone has a right to invoke the privilege. The privilege is not excluded merely because one party says that the evidence would assist the court to resolve an issue of interpretation. And, Earthtec's answer is entirely hypothetical. No specific ambiguity has been identified and Earthtec has not explained how the statement made would resolve that ambiguity.

[256] Earthtec's seventh answer is to submit that the privilege does not apply if excluding the evidence would result in the Court being misled. As explained, there is no basis for saying that, by invoking the privilege, the court would be misled.

[257] Earthtec's eighth answer is to submit that the privilege does not apply to evidence relevant to ascertaining the existence of an agreement and its terms. Again, no authority is stated for this exception to the without prejudice rule. The submission is not explained. It is sufficient to repeat what is said above, namely that it is for Earthtec to demonstrate that there is a public interest in favour of the use of the evidence which outweighs the public interest in fostering the non-litigious compromise of disputes. That has not been demonstrated.

[258] Earthtec's ninth answer is to submit that the fact of the meetings is plainly not the subject of privilege[114] and that, even if that were not the case, the terms of the deed refer to:

(a) a letter dated 13 April 2017 which is expressed on its face to be in response to various matters raised in the 4 April 2017 meeting, and was said to be provided on the same without prejudice basis;

(b) various claims being made at the time and unresolved claims;

(c) the minutes of the meeting of 28 April 2017.

[259] According to Earthtec, the 'necessary effect' of those references to the without prejudice communications between the parties means that Livingstone cannot maintain a claim of privilege. I am unable to see why that is so. In the context where there were a large number of claims, the parties are able to negotiate some to resolution, and some to a process leading to resolution, and to preserve the privilege over unresolved claims. That intention seems clear from the letter of 13 April 2017 which, as Earthtec concedes, is stated to be expressly in response to the request made by the defendant at the "Without Prejudice Meeting" on 4 April 2017 and is expressed to be given on a "Without Prejudice" basis.[115]

The defendant does not assert that the meetings were stated to be confidential: and without an express statement to that effect they could not be. Indeed, as a public authority, it is doubtful the officers of the defendant could, in any event, engage in a confidential negotiation given the public policy considerations of transparent government.

[261] There is no proper basis for concluding that it is necessary for the parties to state that the meetings were confidential.[116] Nor is there a proper basis for concluding that the protection afforded to confidential communications does not extend to public authorities.

[262] The pleading of the content of the meetings on 4 and 28 April 2017 offends the without prejudice rule unless Earthtec can bring the claims made in the proceeding within the exception discussed in Quad Consulting Pty Ltd v David R Bleakley & Associates Pty Ltd. Earthtec has an argument that the case is within that exception, but it is inappropriate to make a specific finding about that given the other conclusions reached regarding the pleading.

[263] Pursuant to UCPR 670(1) and s 1335(1) of the Corporations Act Livingstone applies for security for its costs of the proceedings up to and including the first day of trial. UCPR 670(1) states:

On application by a defendant, the court may order the plaintiff to give the security the court considers appropriate for the defendant's costs of and incidental to the proceeding.

[264] Similarly, s 1335(1) of the Corporations Act provides:

Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant is successful in her, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

[265] The principles to be applied under UCPR 170 and s 1335 similar. In assessing whether to give security for costs the court must, first of all, satisfy itself that there is reason to believe that Earthtec will not be able to pay Livingston's costs if ordered to pay them. That threshold question is not contested by Earthtec. In any event there is a considerable body of evidence that gives the court reason to believe that Earthtec will not be able to pay an adverse costs order.[117]

[266] The next question is whether the discretion should be exercised. Both parties agree that the discretion is unfettered and must be exercised having regard to all of the circumstances of the particular case without any predisposition in favour, or against, an award for security.[118]

[267] This discretion was considered in Monto Coal 2 Pty Ltd v Sanrus Pty Ltd[119] where Gotterson JA concluded:

I draw from these observations that for a reason to believe that a fact will exist, the objective circumstances must be sufficient to incline the mind towards accepting, rather than rejection, that the fact will exist. By way of contrast, the requisite belief is not merely that the circumstance may come into existence, or that there is some risk that it may. It is a belief that the fact will come into existence.

[268] In deciding whether to make an order for security for costs, the court typically has regard to the matters listed in UCPR 672, namely:

(a) the means of those standing behind the proceeding;

(b) the prospects of success or merits of the proceedings;

(c) the genuineness of the proceeding;

(d) for rule 671(a) - the impecuniosity of a corporation;

(e) whether the plaintiff's impecuniosity is attributable to the defendant's conduct;

(f) whether the plaintiff is effectively in the position of a defendant;

(g) whether an order for security for costs would be oppressive;

(h) whether an order for security for costs would stifle the proceeding;

(i) whether the proceeding involves a matter of public importance;

(j) whether there has been an admission of payment into court;

(k) whether delay by the plaintiff in starting the proceeding has prejudiced the defendant;

(l) whether an order for costs made against the plaintiff would be enforceable within the jurisdiction;

(m) the costs of the proceeding.

[269] Livingstone argues that none of the 13 matters listed above are relevant in this matter, as Earthtec has provided no evidence addressing those matters. However, it seems to me that this is an appropriate case for security for costs having regard to these factors:

(a) Earthtec has produced no evidence of any assets which might be used to meet any adverse costs order;

(b) those standing behind Earthtec have not offered to come out from behind the corporate veil;

(c) no evidence has been led to the effect that a security for costs order would be oppressive or stifle the litigation; and

(d) the proceeding is rather broad in its scope (as the discussion above explains) with a commensurate level of costs.

[270] For those reasons, I propose to order that Earthtec provide security for costs.

[271] Incidentally, as Livingstone submits, one factor not specifically referred to in UCPR 672, but which may weigh against the making of an order for security for costs, is that there is a counterclaim that arises out of the same factual matrix so that the costs for which security is sought will be costs which would be incurred in any event.[120] In this case, however, the counterclaim can be regarded as defensive in nature. I say that because Livingstone has undertaken that, in the event that security is ordered against Earthtec and the ordered security is not provided (such that the proceeding is stayed), it will take no steps in pursuit of its counterclaim.

[272] It is necessary to now turn to the issue of security that was controversial - the quantum of security.

[273] When fixing the amount of security for costs a 'broad brush' approach is to be taken. In Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques, Jackson J said:

I do not propose to deal with each item. A broad brush approach does not require that. Parties should not be encouraged to devote extensive resources (including court resources) to questions of security for costs. It should not be forgotten that an order for security is not a final assessment of anything about the amount of the costs that may be payable but a provision against a contingent amount that depends on a number of things that are not amenable to precise prediction.[121]

[274] In Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd,[122] French J set out guiding principles in relation to the quantum of security, namely:

If security is to be ordered then it must in the language of s 533 [the predecessor to s 1335(1)] be "sufficient".

Beyond the limits imposed by the meaning of the word, there is nothing to limit the amount of security which can be ordered.

It is clear that the security may extend not only to future costs but also to costs already incurred.

In fixing the amount of the security the court must look firstly at the whole case and take into account, inter alia, the chance of it collapsing without coming to trial. It is not bound to give the amount of security which a defendant says will be the amount of his costs.

The court may in such a case, order somewhat less than if there seems to be every prospect that the action will be fought to a finish.

The court does not set out to give a complete and certain indemnity to a defendant.

The process of estimation embodies to a considerable extent, necessary reliance on the "feel" of the case after considering relevant factors.[123]

[275] To assist the court in making its assessment both parties have tendered expert reports. Unfortunately, the quantum of security suggested by those reports is starkly different.

[276] Livingstone tendered a report by Mr Bradbury. Mr Bradbury is a solicitor. He was admitted to the Supreme Court of Queensland in 2001 and specialises predominantly in commercial law disputes. Livingstone asserts that Mr Bradbury is appropriately qualified to estimate recoverable costs under the UCPR as he has experience with proceedings of this nature and the costs associated with those types of proceedings.

[277] In his report, Mr Bradbury estimates Livingstone's costs and outlays for the proceeding up to and including the first day of trial, recoverable on a standard basis, to be $1,019,393 (excluding GST).[124] On the basis of that estimate, Livingstone seeks security of $800,000 which has been arrived at by applying "a reasonable reduction to the estimated likely standard costs".[125]

[278] Earthtec tendered an expert report by Mr Walter, a costs assessor based in Coolangatta. He is the principal of Gold Coast Legal Costs. His name and contact details feature on the Register of Approved Cost Assessors.

[279] In his report, Mr Walter estimates Livingstone's costs and outlays for the proceeding up to trial, recoverable on a standard basis, to be between $181,000 and $207,000. Further, Mr Walter provided an estimate for solicitors' fees up to mediation, its midpoint being $176,677.15.

[280] That stark difference in the views of the two experts is the broad quantum issue. Behind that broad quantum issue are some disputes concerning the approach that the experts should adopt.

[281] First, Earthtec argues that an order for security for costs should be calculated on the standard basis[126] and should not provide the defendant with a complete and certain indemnity.[127] Earthtec asserts that Mr Bradbury applied no discount to either the estimate of future solicitor's costs or disbursements, meaning that Livingstone seeks a complete indemnity for future costs and seeks security for past costs.

[282] Mr Bradbury's affidavit deposes to the fact that the costs to date have been assessed on the standard basis. Mr Bradbury calculates the actual costs incurred by Livingstone and then reduces that sum (from $412,451 to $285,006) to reflect the standard costs that would be recoverable. Thus, there is no reason for thinking that Mr Bradbury adopted an indemnity costs or some other approach to that part of his assessment. However, Mr Bradbury's assessment of the likely future costs ($734,386) looks to be an assessment of what the actual costs will be rather than an assessment of the costs that might be recovered on a standard basis. In that respect, Mr Bradbury estimate of future costs needs to be approached with some caution.

[283] Earthtec points out that in Allen Dodd v Shine Corporate Ltd,[128] Martin J made a 20% reduction for contingencies to an order for security for costs that was sought up to the first day of trial.

[284] It is true that the court has a discretion to apply a discount to guard against the risk of over-estimation or to cater for the risk that the proceeding may end early. However, the former consideration ignores the commensurate risk of under-estimation, and the latter consideration can be met by staged orders for security, although that may involve the parties in further applications and costs.[129]

[285] Here, the number of issues raised by the statement of claim means that staged order for security is appropriate. As in Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques[130] and in Ucchino v Oxygen Finance Pty Ltd[131] there is some good sense in ordering security until a proposed mediation. In this case, assessing the costs likely to be incurred up to the first day of the trial is too onerous a task, and involves too many uncertainties. That is especially so given the review of the statement of claim that is required.

[286] Second, Earthtec submits that Livingstone should not be able to include security for the costs already incurred. Earthtec contends that Livingstone has delayed in making the application for security.

[287] There is support for the idea that delay in making an application for security is a discretionary factor against the making of an order for security.[132] In Bryan E Fencott & Assocs Pty Ltd v Eretta Pty Ltd,[133] French J took the view that it would be unfair to allow a defendant security if that defendant has allowed the plaintiff to work on its case and incur significant expense:

The further a plaintiff has proceeded in an action and the greater the costs it has been allowed to incur without steps being taken to apply for an order for costs, the more difficult it will be to persuade the court that such as order is not, in the circumstances, unfair or oppressive.

[288] Earthtec submits that, as Livingstone's past costs were incurred prior to Livingstone first raising the issue of security in correspondence, and before this application, the past costs ought not be included as part of the amount of security ordered or those past costs ought to be substantially reduced.

[289] However, Earthtec conceded that this proceeding is in its embryonic stages. That is plainly the case. In my opinion, there has not been any delay that should operate as a discretionary factor against security. I have reached that view based on the following chronology.

[290] The proceeding commenced on 15 September 2021. Between 1 October 2021 and 21 February 2022, the parties requested further and better particulars, sought documents from one another, and discussed the merits of the matter being placed on the Supervised Case List. Following those discussions, on 2 March 2022, the matter was placed on the Supervised Case List. On 29 April 2022, Mr Bradbury sent a letter to Earthtec requesting details of Earthtec's ability to meet any future costs order which may be made against it, assessed at $800,000.00.[134] On 3 June 2022, Earthtec responded that they would not provide the requested security for costs.[135] The correspondence failed to provide any details as to Earthtec's ability to meet any future costs order which may be made against it. On 26 July 2022, the court ordered that Livingstone file and serve any application for security for costs on or before 26 August 2022.[136]

[291] Having regard to the nature of this proceeding, and the length of the statement of claim, that timeline does not reflect any substantial or unreasonable delays. Any order for security ought to reflect the quantum of likely future costs as well as costs already incurred.[137]

[292] Third, Earthtec argues that UCPR 672(f) applies because part of its claim is essentially defensive in nature. This principle is best described in Aquatown v Holder Stroud,[138] where Sundberg J held:

Although the applicant is a "plaintiff" in the ordinary sense of the word, a long line of authority established that security is not ordered where the plaintiff/applicant is the party attached and is really in the position of the defendant/respondent. The court is guided by the substance and not the form of the matter.

[293] I do not accept that Earthtec's claim in this proceeding can be characterised as, in substance, a defensive proceeding. It is true that there Earthtec seeks some declaratory relief. It is true also that Livingstone has a counterclaim.[139] However, the dominant claims are those made in the statement of claim. In the proceeding Earthtec seeks $4.7m as a debt due under the contracts, declarations as to payments already made of $1.9m. There are a number of significant alternative claims. One cannot discern any significant element which might suggest that Earthtec's substantive position is as defendant.

[294] One concern is that Mr Walter's estimate is a little unrealistic and does not take into account that complex construction litigation like this is a labour-intensive exercise. For example, Mr Walter includes these allowances:

(a) an allowance of $1,475.00 for a review of Earthtec's reply and answer (estimated to be 125 pages);

(b) an allowance of $27,744.00 for Livingstone's disclosure, along with $13,872.00 to review Earthtec's disclosure;

(c) an allowance of $14,320.00 is made for the preparation of Livingstone's lay (written) evidence (including witnesses conferences);

(d) an allowance of $1,387.20 is made for the review of the (at least) two expert reports to be served by Earthtec; and

(e) an allowance of $3,155.00 is allowed for the preparation of trial briefs, and $17,149.40 for the preparation of trial (including pre-trial conferences with witnesses, conferences with Livingstone, conferences with counsel and communications with Counsel).[140]

[295] Some of Earthtec's criticisms of Mr Bradbury's report also have some force. Mr Bradbury simply makes rather broad estimates. For example, Mr Bradbury estimates that counsels' fees will be as follows:

(a) Junior counsel - $120,000;

(b) Senior counsel - $140,000.

[296] Mr Bradbury's estimates of likely solicitors' work have been allocated to specific tasks. However, it is difficult to know whether an estimate of 400 hours at $415.76 (a total of $166,305) for Livingstone's disclosure is too much or too little. Much may depend on whether the documents are presently held on a searchable database.

[297] Another problem is that it is difficult to assess what work has already been done. Mr Bradbury lists the monthly bills but does not explain the work involved in each bill. The total of $412,451 for costs incurred already appears very large given the embryonic stage of the proceedings but may reflect that analysis of the pleading and the claim is a significant undertaking and may some preparation work such as interviewing witnesses or even taking witness statements. As I have mentioned, there is no detail of the work already carried out.

[298] Livingstone defends Mr Bradbury's estimate by explaining that Mr Bradbury made no allowances for supervised case list reviews or directions hearings, nor were allowances made for any steps in connection with any re-pleading associated with Livingstone's strike out application or any other interlocutory applications.[141]

[299] One cannot be too critical of Mr Walter or Mr Bradbury. It is a near impossible task to assess the costs that might be incurred in the future, especially at this early stage of the proceeding.

[300] Applying a broad-brush approach and using the estimates as something of a rough guide, I think that security of $550,000 ought to be provided by Earthtec. That sum reflects roughly $200,000 for standard costs to date and $350,000 for standard costs to a proposed mediation, which is anticipated after disclosure.

[2] No such document came to be signed or agreed.

[3] Curiously, this obligation resting on Livingstone is not claimed to be a contractual obligation. Rather it seems to be put as an essential prerequisite to Earthtec performing its own contractual obligation.

[4] It will be noticed that this does not appear to be a conventional variation claim. The precise agreement constituting the variation is not identified, and the claim seems not to be a claim which is made under the contractual provision (clause 40) which provides for a direction, a pricing of the proposed variation, and then a valuation of the variation.

[5] This is a contractual claim rather than a variation claim.

[7] But see clause 40 which appears to exclude overheads for variation claims.

[8] The basis for this claim is not clear.

[9] Mio Art Pty Ltd v Macequest Pty Ltd [2013] QSC 211 at [65].

[10] [2013] QSC 211 at [64]- [69].

[11] Each fact that is necessary to constitute the claim or defence is material: Phillips v Phillips [1878] UKLawRpKQB 96; (1878) 4 QBD 127; Dare v Pulham (1982) 148 CLR 658 at 664.

[12] This is subject to UCPR 149(1)(e) referred to above.

[13] Jacob & Goldrein, Pleadings: Principles and Practice, Sweet & Maxwell, London, at 46.

[14] Jacob & Goldrein,(supra) at 10-12.

[15] Jacob & Goldrein (supra) at 11-12.

[16] Jacob & Goldrein (supra) at 12-13.

[17] [2011] QCA 252 at [27]- [28] by Philippides J with the agreement of Chesterman JA and North J.

[18] [2019] QSC 51 at [14].

[19] Of course, in some situations, it may be necessary for a pleading to delve into the pre-contract negotiations. Examples may be where there is an ambiguous term or where pre-contract representations are relied on. But that is not the case here, or at least such cases are not readily apparent.

[20] One frequent example of this is the plea of claims made and rejected in the course of the project - often for amounts that differ from the claims now being made.

[21] Second Bradbury Affidavit, exhibit MRB-36 (page 29) [14].

[22] Livingstone's submissions on strike out at [32].

[24] Paragraphs [71] to [75] of Earthtec's amended submissions.

[25] UI International Pty Ltd v Interworks Architects Pty Ltd [2010] QSC 280 at [14] - [15] per Daubney J and Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 4) [2019] QSC 199 at [11] per Bond J.

[26] [1998] HCA 37; (1998) 193 CLR 519 at 531-532 - a passage cited by de Jersey CJ in Robinson v Laws [2003] 1 Qd R 81 at 93.

[27] Phillips v Phillips [1878] UKLawRpKQB 96; (1878) 4 QBD 127 at 138, 139.

[28] Chan v Goldenwater Ldl Pty Ltd (2021) 7 QR 566 at [11] (per Sofronoff P, with whom Mullins JA and Wilson J agreed).

[31] It should not be forgotten that a defendant, when faced with an immaterial plea, is required to plead an admission, or a non-admission with an explanation or a denial with an explanation. Failure to do so gives rise to a deemed admission: see UCPR 166.

[32] The footnote here refers the reader to paragraphs 28(d)-(j), 33, 35(e) & (h), 36, 38 and 40(a) of the statement of claim. Those paragraphs plead representations and reliance on the representations. But there is no reference to any allegation that the representations were false or misleading and no reference to any loss or damage arising from reliance on the representations.

[33] These are paragraphs 76 and 77 of Earthtec's written submissions.

[34] The first two sentences quoted above suggest that, as does the first sentence of the second paragraph.

[35] Curiously, paragraph 52 of the statement of claim (referred to below) refers to a representation said to have been made by Arcadis but that alleged representation goes nowhere also.

[36] The footnote in Livingstone's submissions refers the reader to paragraph 25(a) of the statement of claim.

[37] But see the issue discussed in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [46]- [52], [110].

[38] Presumably the 'determinations' referred to are decisions made.

[39] Earthtec's written submissions on the strike out at [84].

[40] Earthtec's written submissions on the strike out at [105].

[41] See paragraphs 45 and 56 of the statement of claim and the defence to those two paragraphs.

[42] Again, see paragraphs 45 and 56 of the statement of claim and the defence to those two paragraphs.

[43] Earthtec's written submissions on the strike out at [107].

[44] These subparagraphs are paraphrased from Livingstone's submissions on strike out at [50]-[53].

[45] Earthtec grouped together its arguments in relation to paragraph 21 to 30 and paragraphs 31 to 43.

[46] See prayer for relief A on page 138 of the statement of claim.

[47] See [60] to [73] of the statement of claim.

[48] These are paragraphs [116]-[118] of Earthtec's submissions on the strike out application.

[49] See Jackson J's discussion of whether an ambiguity is a necessary prerequisite to the admissibility of extrinsic facts in Aurizon Network Pty Ltd v Glencore Coal Queensland Pty Ltd [2019] QSC 163; [2019] 1 QR 392.

[50] See paragraphs 89-92 of Livingstone's written submissions on strike out.

[51] See later discussion of alleged implied terms.

[52] No facts demonstrate an express or implied an election between two mutually inconsistent rights: see Commonwealth of Australia v Verwayen (1990) 170 CLR 394.

[53] See the discussion in Murphy v The State of Victoria [2014] VSCA 238; (2014) 45 VR 119, especially at [31].

[54] Paragraph 92(c) in the previous pleading is now paragraph 92A(b).

[56] Note also that the whole context, a workshop and an 'update', and the absence of anything resembling a promise to provide a design, and the absence of any promised date for the design, supports this view.

[57] Earthtec's written submissions in response appear to be non-responsive.

[58] Livingstone cites two cases to support this: Mio Art Pty Ltd v Macequest Pty Ltd [2013] QSC 211 at [70] and Quinlan v ERM Power Ltd [2021] QSC 35 at [65]

[59] Paragraphs 165 and 166 of Livingstone's submissions on strike out.

[60] Lockhart, The Law of Misleading and Deceptive Conduct, 5th ed at [4.25]-[4.28].

[61] L Grollo Darwin Management Pty Ltd v Victor Plaser Products Pty Ltd [1978] FCA 17; (1978) ATPR 40-072

[62] McGrath v Aust Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230 at [138] per Allsop J.

[63] Paragraphs 173 to 175 of Livingstone's strike out submissions.

[64] Paragraphs 222 to 226 of Earthtec's strike out submissions.

[65] See the discussion on paragraphs 3(e), (f) and (g).

[66] [2013] QSC 211 at [64]- [69].

[67] This concept can be found in numerous paragraphs of the statement of claim. See paragraph 194 for example.

[68] See, for example, the summary in paragraph 236 of Earthtec's strike out submissions.

[69] Jacob & Goldrein_, Pleadings: Principles and Practice_, Sweet & Maxwell at 107.

[70] (1881) 6 App Cas 251 at 263.

[71] (1896 7 QLJ 68 at 70-71; see the discussion in Lewison & Hughes, The Interpretation of Contracts in Australia, 2012 at [6.13].

[72] [2009] HCA 25; (2009) 238 CLR 304 at [168]; Lewison & Hughes (supra).

[73] Peden, 'Cooperation' in English Contract Law - to Construe or Imply?' (2000) 16 JCL 56.

[74] (1998) 43 NSWLR 104 at 124-5; Lewison & Hughes (supra).

[75] In fact, paragraph 93(c) speaks of "The parties' common intention was, and the parties agreed that...". For present purposes it has been assumed there was an agreement.

[76] The 'lost opportunity' case is the interpretation adopted by Livingstone at [221] of its submissions on [221].

[77] See above - Equititrust Ltd v Tucker [2019] QSC 51 at [14].

[78] Paragraph 9 of Earthtec's submissions on the strike out.

[79] See paragraph 88 of the statement of claim.

[80] Mr Bradbury's second affidavit at [13].

[81] The transition deed and its annexed minutes are not subject to privilege.

[82] LexisNexis, Without Prejudice Privilege in Australia, 2010 at 19.

[83] Unilever PLC v The Procter & Gamble Co. [2001] 1 All ER 783.

[84] The privilege applies as a matter of right, not discretion: Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurants & Bars Pty Ltd [2001] 1 Qd R 276 at 289.

[85] Simaan General Contracting Co v Pilkington Glass [1987] 1 All ER 345 at 347.

[86] Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7; [1989] AC 1280 at 1305; Austotel Management Pty Ltd v Jamieson [1995] FCA 1284; (1995) 57 FCR 411 at 416.

[87] Rush & Tompkins Ltd v Greater London Council, supra, at 1304.

[88] Unilever PLC v The Procter & Gamble Co. [2001] 1 All ER 783 at 797.

[89] Bradford and Bingley PLC v Rashid [2006] 1 WLR 2066 at 2091.

[91] Rush & Tompkins Ltd v Greater London Council, supra, at 1305.

[92] Re Daintrey; Ex parte Holt [1893] UKLawRpKQB 83; [1893] 2 QB 116 at 119. Byrne J explained the rationale for the privilege in Village/Nine Network Restaurants & Bars Pty Ltd v Mercantile Mutual Custodians Pty Ltd [2001] Qd R 276 at [28].

[94] Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at 13.

[95] McFadden v Snow (1951) 69 WN (NSW) 8 at 10, an authority accepted by Ryan J in JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121 at 134.

[96] As Livingstone submits, even assuming that one or other of the Livingstone representatives stated that the council would not send Earthtec broke, this could not amount to an "inferred representation" that Livingstone would pay to Earthtec "fair" compensation for all of its costs incurred in "addressing the Foundation Latent Condition" and the several other claims made by Earthtec based upon the same premise. What is considered "fair" to Earthtec may not considered "fair" by Livingstone.

[98] Unilever plc v The Procter & Gamble Co [1999] 2 All ER 691 at 701 per Laddie J (this is the first instance decision - subsequently upheld by the English Court of Appeal).

[100] (1996) 190 CLR 311 at 326.

[101] (1990) 27 FCR 86 at 93. This case was carefully analysed and followed by Lander J in Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209.

[102] I do not suggest that the exception is restricted to allegations of misleading or deceptive conduct (i.e. s 18 of the ACL). The exception might equally apply to allegations of misrepresentation, fraud or undue influence: Underwood v Cox (1912) 4 DLR 66, a Canadian decision referred to by Lander J in Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209 at [88]. Without prejudice communications may be admissible as giving rise to an estoppel: Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] FSR 178 at 191.

[103] In other words, the analysis is whether what is now in dispute is a different subject matter to what was disputed at the time of the meetings.

[104] Paragraph 89(b) of the statement of claim.

[105] As to the need to plead those facts and circumstances, see UCPR 150(2).

[106] Paragraph 89(d) refers to "the aforesaid representation" which appears to be a reference to the inferred representation in paragraph 89(c). Other parts of the pleading refer to "representations" presumably meaning both the express and inferred representations.

[107] See the discussion of this topic by Lockhart, The Law of Misleading or Deceptive Conduct, 5th edition at 149.

[108] See, for example, Bill Acceptance Corp Ltd v GWA Ltd (1983) 50 ALR 242 at 250, a case discussed in Lockhart, supra at 150.

[109] This contract does not exist in the sense that it has never been agreed.

[110] Note the difference between this concept and the claims for 'fair compensation' and for 'all costs incurred'.

[111] For present purposes I have not considered the various alternative claims made which appear to follow a similar pattern.

[112] [2001] Qd R 276 at [27]-[29].

[114] This much is accurate and accepted. But the fact of the meetings is not what Livingstone objects to. Livingstone objects to the pleading of the without prejudice content of the meetings.

[115] Page 371 to the Second Bradbury Affidavit.

[116] The parties did label the meetings as "without prejudice" but even that label is not essential.

[117] The evidence is listed at paragraph 7 of the defendant's submissions on security for costs.

[118] Whelan Air Conditioning Pty Ltd v Arcape Pty Ltd [2012] QSC 187 at [13], per Martin J.

[119] [2018] QCA 309 at [43]. In this extract, Gotterson JA (with whom McMurdo JA and Boddice J agreed) adopted the reasoning expressed by Macfarlan JA in Cornelius v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65; (2014) 98 ACSR 301 at [16] and [17].

[120] See Ransard Pty Ltd v MM Holdings (No 2) Pty Ltd [2009] QSC 483.

[121] [2016] QSC 2.

[122] (1987) FCR 497 at 515.

[124] First Bradbury Affidavit, paragraph 43 and 50.

[125] Livingstone's submissions on security at [21]. As to the rationale for the discount see the remarks of Jackson J in Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques [2016] QSC 2 at [44].

[126] Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at 515.

[127] Sanrus Pty ltd v Monto Coal 2 Pty Ltd [2018] QSC 53 at [83].

[128] [2018] QSC 40 at [35].

[129] Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques [2016] QSC 2 at [44].

[130] [2016] QSC 2.

[131] [2013] QSC 187.

[132] Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques [2016] QSC 2 at [21].

[133] [1987] FCA 102; (1987) 16 FCR 497.

[134] First Bradbury Affidavit, paragraph 31, exhibit 'MRB-29'.

[135] First Bradbury Affidavit, paragraph 32, exhibit 'MRB-30'.

[137] Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 at [515].

[138] [1995] FCA 1667; (1995) 18 ACSR 622 at 623.

[139] As mentioned above, Livingstone has undertaken that it will not proceed with its counterclaim if security is not provided.

[140] See paragraph 22(e) of the defendant's submissions on security.

[141] First Bradbury Affidavit, paragraph 62.