District Court of WA|2010-05-20

LANDTEC PROJECTS CORPORATION PTY LTD -v- SPIERS EARTHWORKS PTY LTD [2010] WADC 74 (20 May 2010)

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : LANDTEC PROJECTS CORPORATION PTY LTD -v- SPIERS EARTHWORKS PTY LTD [2010] WADC 74

BETWEEN : LANDTEC PROJECTS CORPORATION PTY LTD (ACN 110 704 875)

Breach of contractual duties - Date of practical completion - Liquidated damages clause not a penalty - Inclusion of GST - Duty of care - Counterclaim - Proof of sums outstanding

Defendant pay liquidated damages of $67,537.48 to the plaintiff plus interest at a rate of 10per cent per annum from 26 July 2005 being $100,084.00

Defendant pay the sum of $44,229.75 to plaintiff plus interest at a rate of 6 per cent per annum from 17 June 2005 until the date of judgment being $57,302.00 in relation to allowed change of James Eden Drive

Defendant pay the sum of $11,906.40 to the plaintiff plus interest at a rate of 6 per cent per annum from 17 June 2005 until the date of judgment being $15,425.00 in relation to repair to Telstra conduits

Plaintiff pay the sum of $131,704.85 to defendant plus interest at a rate of 6 per cent per annum commencing on a date of dates to be determined until the date of judgment

Esanda Finance Corporation Ltd v Plessnig [1989] HCA 7; (1989) 166 CLR 131

Michael Kelloway International Pty Ltd v Shark Bay Airport Pty Ltd, unreported; SCt of WA; Library No 970604; 13 November 1997

Multiplex Constructions v Abgarus Pty Ltd (1992) 33 NSWLR 504

Peninsular Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211

Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 at 1447; [1966] 3 All ER 128 at 142

Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [2010] WASCA 43

Waltons Stores (Interstate) v Maher [1988] HCA 7; (1988) 164 CLR 387

Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491

West Boat Builders Pty Ltd v Cull Holdings Pty Ltd [1999] WASCA 72

1 WAGER DCJ: By contract dated 21 February 2005 the plaintiff engaged the defendant to carry out earthworks, drainage, road works and bridle path construction for a land subdivision in Pinjarra in the Shire of Murray (the first contract).

2 The parties subsequently entered into another contract for road construction of Curtis Lane adjacent to the land subdivision and up to the next intersecting road along Curtis Lane (the second contract).

3 The plaintiff's claims to be determined are that:

The price of the first contract was inclusive of GST.
The defendant failed to perform work under the first contract with reasonable skill, care and diligence.
The defendant failed to use materials and a standard of workmanship required by the first contract in the construction of a road the subject of the first contract (James Eden Drive) and failed to properly compact the sub-base of chainages 120 to 270 of James Eden Drive.
The defendant damaged Telstra conduits that had previously been laid by Unified Contracting, another contractor on site engaged at the time of the first contract, by running over the conduits with its earthmoving equipment at various locations.
The defendant failed to reach practical completion within 10 weeks of the commencement of works on 24 February 2005 contrary to the terms of the first contract.

4 The defendant denies each of these allegations and counterclaims that:

Monies retained by the plaintiff plus payment for extra work performed by the defendant pursuant to the first contract remain outstanding.
Payments due to the defendant from the plaintiff under the second contract and for extra work performed pursuant to the second contract remain outstanding. The plaintiff denies the counterclaim.

(a) Anthony Palermo, director of the plaintiff company who managed the first contract and the second contract.

(b) Peter Bowyer, civil engineer and director of Dennis Price & Miller Engineers (DPM) now known as the Civil Group and the superintendent appointed in relation to the first and second contracts orally and or by letter from the plaintiff on 14 October 2005. Notification of Mr Bowyer's appointment as superintendent was provided to the defendant by letter dated 3 November 2006.

(c) Dr Stephen Emery, an expert witness who holds a PhD in the field of civil engineering with expertise in pavement materials and road structural design. Dr Emery provided opinion evidence in relation to James Eden Drive.

(d) Craig Risbey, director and construction manager of Unified Contracting, the company that contracted to install the water, power and Telstra conduits for the plaintiff at the same time that the defendant carried out the first contract.

(e) Peter McKenzie, construction manager of Downer EDI, the engineer who supervised quotation in relation to remedial works at James Eden Drive.

(f) Steven James, project manager of Siemens & Thiess Communications Joint Venture (STCJV), who conducted the management of the costing out and repairs to damaged Telstra conduits relevant to the first contract.

(g) Kyle Wilson, project engineer for Downer EDI, who supervised the quotation that included asphalting of the whole of James Eden Drive relevant to the defendant's breach or failure to fulfil its duty of care as alleged in relation to the first contract.

(h) Glen Smythe, field supervisor for STCJV who supervised the provision of the Telstra network installed by Unified Contracting relevant to the first contract and who identified and organised the repairs to damaged conduits relevant to the first contract.

(i) Jonathon Brown, senior engineering technician employed by Western Geotechnics in May 2007 who gave evidence about the falling weight deflector (FWD) tests and the California Bearing Ratio (CBR) measurements in respect of James Eden Drive relevant to the defects noted in James Eden Drive alleged in relation to the first contract.

(a) Bradley Spiers, co-director of the defendant who managed works on the site for both the first contract and the second contract and who has approximately 30 years experience in road construction.

(b) Helen Spiers, co-director of the defendant and office administrator for the defendant who compiled the tender documents and invoicing relevant to both contracts and who mailed invoices to the plaintiff.

(c) Kim Begelhole, compliance manager SGS formerly Western Geotechnics Group who gave evidence about the compliance of dry density and layer thickness tests replacing the tests of 5.8.1 of AS1289 in respect of road works.

(d) Anthony Wilkie, project engineer for the plaintiff and the superintendent of the first contract from the date of the invitation to tender until 11 October 2005.

(e) Alan Smith, manager engineering services, Shire of Murray, the relevant shire for the Pinjarra subdivisional area.

7 Although bundles of documents were prepared and provided to the Court by each of the parties, objection was taken to the contents of the bundles being tendered. The obligation to tender the documents once referred to primarily fell on the court. The majority of documents put to a witness during the course of the evidence were conceded by Counsel as "speaking for themselves". A general concession was made by the plaintiff's counsel that the words of the documents were not objectionable however the factual foundation for each of the documents was not conceded. I will refer to documents that were put to witnesses in evidence that from the foundation of a witness's evidence but that were not formally tendered by bundle document number.

8 The plaintiff obtained Western Australian Planning Commission approval for subdivision in the Pinjarra area that is described as Curtis Lane Stage 1. The Shire of Murray approved the subdivision. Mr Wilkie, the plaintiff's superintendent, was advised by letter dated 3 December 2004 of the conditions of planning approval including:

"23. The full construction of Curtis Lane is to be undertaken in the first stage of development being Stage 1A to enable a sealed road to extend to the development."

9 The plaintiff invited tenders for the first contract. The original invitation to tender related to Curtis Lane Stage 1, however it only included the portion of Curtis Lane that bordered Stage 1 being 313 metres being approximately one quarter of the full construction of Curtis Lane. The original invitation to tender was for both the earthworks and the installation of services. The defendant tendered for the full contract, however the plaintiff chose to split the contract and to award the contract in relation to the installation of water, power and Telstra conduits to Unified Contracting. Mr Spiers then suggested to Mr Wilkie and Mr Palermo that the defendant would carry out the remaining portion of the contract in relation to the road works, bridle paths and drainage for the sum of $498,164.36 and the plaintiff agreed.

10 The specifications of the invitation to tender that incorporated AS2124-1986 relevant to these proceedings include:

"General condition 1.9, Goods and services tax

The contract sum shall include all payments for State and Federal taxes where applicable.

AS2124-1986, 23 Superintendent

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 -

(b) acts within the time prescribed under the contract or where no time is prescribed, within a reasonable time; and

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 decision, the Contractor shall not be bound to comply with the direction until the superintendent confirms it in writing.

AS2124-1985, 35 Times for commencement and practical completion

...

35.5 Extension of Time for Practical Completion

When it becomes evident to the Contractor that anything, including an act or omission of the Principal, the Superintendent or the Principal's employees, consultants, other contractors or agents, may delay the work under the Contract, the Contractor shall promptly notify the Superintendent in writing with details of the possible delay and the cause.

When it becomes evident to the Principal that anything which the Principal is obliged to do or provide under the Contract may be delayed, the Principal shall give notice to the Superintendent who shall notify the Contractor in writing of the extent of the likely delay.

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

The causes are -

(a) events occurring on or before the Date for Practical Completion which are beyond the reasonable control of the Contractor including but not limited to:

(b) any of the following events whether occurring before, on or after the Date for Practical Completion -

the Principal's employees, consultants, other contractors or agents;

(ii) actual quantities of work being greater than the quantities in the Bill of Quantities or the quantities determined by reference to the upper limit of accuracy stated in the Annexure (otherwise than by reason of a variation directed under Clause 40.1);

35.6 Liquidated Damages for Delay in Reaching Practical Completion

If the Contractor fails to reach Practical Completion by the Date for Practical Completion, the Contractor shall be indebted to the Principal for liquidated damages at the rate stated in the Annexure for every day after the Date for Practical Completion to and including the Date of Practical Completion or the date that the Contract is terminated under Clause 44, whichever first occurs.

The Contractor's liability under Clause 35.6 is limited to the amount stated in the Annexure.

If the time for Practical Completion is extended by the Superintendent under Clause 35.5 on account of a cause of delay for which the Annexure provides compensation, the Principal shall pay the Contractor the compensation stated in the Annexure and that compensation shall be the limit of the Principal's liability in respect of the delay.

If the Principal is in breach of contract, nothing in Clause 36 shall limit the Principal's liability for damages for breach of contract.

The Defects Liability Period stated in the Annexure shall commence on the Date of Practical Completion.

As soon as possible after Practical Completion, the Contractor shall rectify any defects or omissions in the work under the Contract existing at Practical Completion.

At any time prior to the 14th day after the expiration of the Defects Liability Period, the Superintendent may direct the Contractor to rectify any omission or defect in the work under the Contract which exists at Practical completion or becomes apparent prior to the expiration of the Defects Liability Period. The direction shall identify the omission or defect and state a date by which the Contractor shall complete rectification. The direction may provide that in respect of the work of rectification there shall be a separate Defects Liability Period of a stated duration not exceeding the period stated in the Annexure. The separate Defects Liability Period shall commence on the date the Contractor completes the work of rectification. Clause 37 shall apply in respect of the work of rectification and the Defects Liability Period for that work.

If it is necessary for the Contractor to carry out rectification, the Contractor shall do so at times and in a manner which cause as little inconvenience to the occupants of the Works as is reasonably possible.

...

44.2 Default by the Contractor

If the Contractor commits a substantial breach of contract and the Principal considers that damages may not be adequate remedy, the Principal may give the Contractor a written notice to show cause.

Substantial breaches include but are not limited to -

(a) suspension of work, in breach of Clause 33.1;

(b) failing to proceed with due expedition and without delay, in breach of Clause 33.1;

(c) failing to use the materials or standards of workmanship required by the Contract, in breach of Clause 30.1;

(d) failing to comply with a direction of the Superintendent under Clause 30.2, in breach of Clause 23;

(e) failing to provide evidence of insurance, in breach of Clause 21.1.

44.3 Requirements of a Notice by the Principal to Show Cause

(a) state that it is a notice under Clause 44 of the General Conditions of Contract;

(b) specify the alleged substantial breach;

(c) require the Contractor to show cause in writing why the Principal should not exercise a right referred to in Clause 44.4;

(d) specify the time and date by which the Contractor must show cause (which time shall not be less than 7 clear days after the notice is given to the Contractor);

(e) specify the place at which cause must be shown.

44.4 Rights of the Principal

If by the time specified in a notice under Clause 44.2 the Contractor fails to show reasonable cause why the Principal should not exercise a right referred to in Clause 44.4, the Principal may by notice in writing to the Contractor -

(a) take out of the hands of the Contractor the whole or part of the work remaining to be completed; or

(b) terminate the Contract.

Upon giving a notice under Clause 44.2 the Principal may suspend payments to the Contractor until the expiration of the earlier of -

(i) the date upon which the Contractor shows reasonable cause;

(ii) the date upon which the Principal takes action under Clause 44.4(a) or (b);

(iii) the date which is 7 days after the last day for showing cause in the notice under Clause 44.2.

If the Principal exercises the right under Clause 44.4(a), the Contractor shall not be entitled to any further payment in respect of the work taken out of the hands of the Contractor unless a payment becomes due to the Contractor under Clause 44.6.

44.5 Procedure when the Principal Takes Over Work

If the Principal takes work out of the hands of the Contractor under Clause 44.4(a) the Principal shall complete that work and the Principal may without payment of compensation take possession of such of the Constructional Plant and other things on or in the vicinity of the Site as are owned by the Contractor and are reasonably required by the Principal to facilitate completion of the work.

If the Principal takes possession of Constructional Plant or other things, the Principal shall maintain the Constructional Plant and, subject to Clause 44.6, on completion of the work the Principal shall return to the Contractor the Constructional Plant and any things taken under this Clause which are surplus.

Part A attached to the General Conditions of Contract:

# The time for Practical Completion (Clause 35.2) 10 weeks

# Liquidated Damages per day (Clause 35.6) $13,846 per week or part thereof

# Limit of Liquidated Damages (Clause 35.7) no limit

# The defects liability period (Clause 37) 12 months."

11 Clause 37 states the defects liability period shall commence on the date of practical completion.

12 The plaintiff was entitled to retain a sum of the moneys owed to the defendant pending completion of the contract.

13 The first contract also included the defendant's Bill of Quantities dated 21 February 2005 and the defendant's letter dated 24 January 2005, together with letters and plans relevant to the first contract from Mr Wilkie as superintendent.

14 It is agreed that the defendant commenced work on site on 24 February 2005 and reached practical completion on 26 July 2005 being 81 days after the agreed anticipated completion date of 6 May 2005. The defects liability period ran from 26 July 2005 until 26 July 2006.

15 Mr Palermo's evidence is that he personally cannot recall the details of the start-up meeting or meetings but that once the work commenced the defendant was required to complete the work in line with the first contract. Mr Palermo does not recall any agreement in relation to the areas in which contractors would commence work or in relation to the order in which work would be performed.

16 In contrast Mr Spiers' evidence is that at the site start-up meeting held prior to 24 February 2005 Mr Palermo on behalf of the plaintiff, Mr Risbey of Unified Contracting, Mr Wilkie as superintendent and he, on behalf of the defendant, agreed that Unified Contracting would start work at one end of the site (being the Moores Road end) and the defendant would start at the other end of the site so that the two contractors could work without interfering with each other.

17 Mr Spiers' evidence is that this agreement was not complied with. Because of difficulties with access to site from the Moores Road end both contractors were forced to commence work in the same areas and this immediately led to problems, delays and to a potential compromise of the quality of the work performed by both contractors. The service trenches that were the responsibility of Unified Contracting ran along the side of the proposed roads and, at a number of locations, crossed the roads being constructed by the defendant. Usually, Mr Spiers says, it is his experience that the digging of service trenches and the building of roads is a complimentary process so that the fill removed from the trenches can be used on road surfaces as part of the bulk earthworks however given the way in which construction proceeded the fill could not be used from the service trenches and material had to be brought in and carted out. This caused a delay to the construction of the roads and resulted in variations and additional time being taken in relation to the contract.

18 Mr Wilkie does not specify a date but says that there was a start-up meeting and that the defendant's contract and Unified Contracting's contract were awarded at about the same time with the contracts to be completed at about the same time. When work commenced on site Unified Contracting were advised to start on the east of the site and the defendant was to commence road works on the west so that Unified Contracting would be off-site until the defendant had done the earthworks. This did not eventuate because the plaintiff could not obtain access to the site from the eastern side. Accordingly, Unified Contracting followed the defendant as it performed its work "road for road". Mr Wilkie says that this caused conflict between the parties because the contractors were getting in each other's way. Mr Wilkie considers that the contractors were unable to work in a satisfactory manner until Unified Contracting went to the east of the road. Mr Wilkie assesses that this occurred approximately one month to six weeks after the commencement of the contract.

19 Although neither Mr Palermo nor Mr Risbey of Unified Contracting recalls an agreement that the contractors would start at opposite ends of the subdivisional site, Mr Risbey does recall problems with access from the Moores Road end of the site and problems relating to the access to water. Mr Risbey denies, however, that these problems in themselves caused delay or disruption.

20 Mr Spiers also says that it was only after the contract commenced that he learnt that the plaintiff had agreed to one inspection only of water services to be held approximately two to three weeks before the finalisation of work by Unified Contracting in relation to water services installed in the service trenches. Although no expert evidence was called in relation to the issue of water service inspection and no other evidence was led that the practice was unusual it is Mr Spiers' evidence that in his experience it was unusual to have only one water test because it meant that the service trenches had to remain open or uncovered until the test could occur. The late single water test delayed the closure of the service trenches and it also delayed the compaction of the service trenches both adjacent to and crossing under the roads that the defendant was required to construct.

21 The delay and the quality of the ultimate compaction of the service trenches, in Mr Spiers' view, affected the timing of the construction and the quality of the roads that the defendant ultimately constructed on the subdivision.

22 The defendant's performance of the first contract was also delayed by inclement weather. From March to July 2005 the subdivisional site was affected by very wet weather conditions that disrupted not only the defendant but also Unified Contracting. Mr Risbey's evidence is that, as at May 2005, there was a real problem with water in the service trenches and everywhere else on site. Mr Risbey agrees in cross-examination that the problem with water on site was serious and he recalls pipes floating in the service trenches at one stage. As a result of the weather conditions Unified Contracting could not complete the service trenches until July 2005. Mr Spiers' unchallenged evidence is that a creek within the subdivisional area flooded as a result of the rain. The flooding led to drainage problems on some of the blocks to be prepared for earthworks and construction and further delayed the construction of the road.

23 A further difficulty was encountered by the defendant in relation to the presence of clay on site. Clay had to be removed and appropriate materials brought onto the site before road construction could occur. Mr Spiers says that a significant period of time was spent by the defendant in removing clay so that the roads could be properly constructed. In evidence Mr Spiers says that he had encountered problems with clay in the Pinjarra area previously when working on other contracts. He had 18 years experience as an earth worker in the Pinjarra area and the potentiality of clay being present on the subdivisional site was known to him at the time when he tendered for the first contract. No evidence was given by the defendant as to whether the potentiality of clay and the related delays and additional costs due to the presence of clay were matters that the defendant took into account when calculating the tender sum for the first contract.

The first contract - the defendant's claim for additional days

24 Mr Spiers also gave evidence about a number of variations that the plaintiff requested the defendant to perform arising from factors that included faulty design, variations of design, access to water and other problems on site that have already been identified.

25 The defendant claims that as a result of the difficulties on site including Unified Contracting's interference, and the variations requested by the plaintiff, the first contract could not be completed within the 10 weeks agreed for practical completion and Mr Spiers particularises the reasons why the defendant was prevented from reaching practical completion on time. Although the plaintiff accepts that contract variations were requested and performed by the defendant, that the weather was poor and that some difficulties with clay and water arose, the plaintiff's position is that Mr Palermo made it very clear to the defendant at the outset of the contract that work must be finished on time.

26 Mr Palermo was aware that the defendant had prepared letters of notification of weather conditions and purported delays during the course of the first contract.

27 Mr Palermo himself did not do anything about the correspondence because he considered that notification of matters of this type and any subsequent action in relation to the contract were matters wholly for Mr Wilkie as superintendant of the contract consistent with the terms of the contract. Mr Palermo was unaware of any extension in relation to the completion date being allowed by the superintendant in line with the terms of the first contract. Accordingly the plaintiff submits that the first contract and the variations should have been completed in the 10 week period and that the contract was not the subject of an extension of time.

28 It is accepted that the contents of letters from Mr Spiers to Mr Wilkie (document 2.60, 18 July 2005 referred to in evidence but not tendered) summarising rainfall received on site during the 10 week period is different from the formal rainfall records ultimately referred to in evidence. (Documents 2.115 - 2.119) but Mr Palermo generally accepts that the site was wet and that this made aspects of the contract difficult for contractors on site. Mr Palermo's evidence is, however, that the work on site came to a halt for reasons other than rain. The plaintiff says that those reasons include that the defendant's machinery "disappeared" and that "no-one was on site" (T127), the inference being that manpower and resources had been redirected by the defendant to other contracts not related to the first contract. During the period of the first contract the defendant was also supervising four or five other sites including a contract in Broome. Mr Spiers generally denies taking manpower and resources from the subdivisional site, however no evidence is led by the defendant in relation to the manpower or resources that were on the subdivisional site at any specific time.

29 Mr Palermo also states that if any difficulties or delays arose because the two contractors who were working on site were in the same subdivisional area then that was a matter for the contractors to sort out with the assistance of the superintendent. In Mr Palermo's view a problem with some aspects of the contract is not of itself a reason for delay because even when the site was wet there were other areas on site and there was other work on site that could have been proceeded with by the defendant but that the machinery and the manpower was not available to take up the tasks.

30 In Mr Palermo's view none of the reasons the defendant raised for delays was insurmountable nor did any matters arise from problems on site that were brought to his attention as requiring an extension of time in a form consistent with the first contract, cl 35.5 of AS2124-1985, Extension of time for practical completion, that is, that were in written form to the superintendent setting out the details as required and received by the superintendent within the time limit set by the contract.

31 Mr Palermo's evidence is that, although as project manager he kept a tight rein on the first contract Mr Wilkie was the project engineer and the supervisor for the contract and therefore any decision about the defendant in relation to an extension of time for work to be performed on site had to be made by Mr Wilkie. Mr Palermo agrees that although he may not have liked time being extended on the contract he understood that the claims for an extension of time were a matter for Mr Wilkie and not a decision to be made by him. It is his understanding that Mr Wilkie did not approve any extensions of time in accordance with cl 35.5.

32 The plaintiff submits that not only were no requests for extension of time made in the required form but that there is no evidence that the variations and conditions peculiar to the subdivisional site caused delays that could not have been made up with an efficient workforce or organisation on site and the appropriate quantity of equipment and workers.

33 Mr Wilkie's evidence is that requests for variations to the contract were sent to Mr Palermo and not to Mr Wilkie. As superintendent Mr Wilkie says he was given specific instructions not to approve an extension of time request until he received advice from Mr Palermo. Mr Wilkie did not clarify the form in which requests for extension of time were made either to him or to Mr Palermo.

34 Mr Spiers' evidence is that the additional work days were required because of the plaintiff's demands and the design faults in relation to the first contract. Mr Spiers has calculated the additional work that was required and the days' delay on the site from his 30 years experience in the road construction business and from the details of the invoices forwarded to the plaintiff by the defendant together with information contained in a number of letters, memos and faxes sent by the defendant to Mr Wilkie and/or Mr Palermo. However Mr Spiers did not supervise all of the work on site and the defendant's foremen, Mr Lang and Mr Gallop were responsible for the day-to-day responsibilities on the subdivisional site. Mr Spiers refers in evidence to Mr Gallop keeping a site diary setting out on a daily basis the hours worked, the equipment used and matters of that type. Neither Mr Lang nor Mr Gallop was called to give evidence nor did the defendant produce the site diary referred to by Mr Spiers at trial.

35 No evidence was led by the defendant in relation to the number of workmen on the subdivisional site, the equipment on site, the man hours required for the work to be completed within 10 weeks or how the calculations had been made in relation to the invitation to tender for the first contract.

36 In line with the defendant's amended defence set-off and counterclaim by order made 5 March 2009 Mr Spiers particularises the reasons why the defendant pleads it was prevented from reaching practical completion in the 10 week period. The variations and delays are submitted by the defendant to have been requested by the plaintiff and to be the reason for the delays in completion of the first contract. The additional days sought are as follows:

10A. There was insufficient material available to create fill for the roads on James Eden Drive. Delay in finding material.

37 Mr Palermo approved the provision of fill on 30 March 2005. Four days delay is estimated by Mr Spiers.

38 A hole had to be dug to store water from the old bore hole. Correspondence from Mr Spiers to Mr Wilkie dated 29 March 2005 seeks approval to build a dam on the east block at a price of $3,000. No extra time on the contract is sought by Mr Spiers. Mr Spiers' evidence is that the defendant had to wait for water in order to proceed on site and that no work would proceed until that had occurred. There is no supporting evidence in relation to this claim. An estimate of one day's delay is made by Mr Spiers.

10C Class 2 culverts were installed on James Eden Drive that were not suitable and had to be replaced by Class 4 culverts.

39 By correspondence dated 22 March 2005 Mr Spiers states that the defendant has stopped laying culverts until the claim is resolved. Mr Palermo by correspondence dated 24 March 2005 authorises the culvert variation but states that no extra contract time is allowed. Mr Spiers estimates a delay of seven days in relation to culverts comprised of three days with no correspondence, three days replacing the unsuitable culverts and one day relaying culverts because a wrong building level had been provided. A summary of the correspondence in my view indicates that the three days with no correspondence was not allowed, however the four days in relation to the relaying of culverts was known by the plaintiff.

10D There was too much clay on James Eden Drive at chainage 520 to 540 to construct a road.

40 The unsuitable material was excavated and replaced with suitable material. Mr Spiers states consistent with correspondence dated 30 March 2005 that the excavation required sand cartage from a pit to water. He states that orally he contacted the superintendent Mr Wilkie and received permission from him, however Mr Wilkie did not give specific evidence in relation to this. Mr Spiers calculated three delayed days.

10E Three additional cross-over culverts were installed.

41 Mr Wilkie approved the culvert price and back fill in correspondence to Mr Spiers dated 31 March 2005. Mr Spiers states that no extension of time was formally sought, but the superintendent was aware of the reference to extra culverts. One day's delay is claimed.

42 One day's delay is estimated by Mr Spiers. There was no other evidence.

43 Unified Contracting had open trenches on James Eden Drive, Zaruma Way and San Simeon Way being roads on the subdivisional site before bulk earthworks for drains had been completed. The trenches were not backfilled as the plaintiff agreed to one test on completion and therefore backfill could not occur until after testing. The water in the trenches prevented work for a period estimated to be five days. Mr Spiers states that the effect of a big downfall of rain is that it may delay work for days after the event. Meteorological records note rain commencing 31 March 2005. Mr Spiers estimates a delay of five days.

10H Clearing and drain work to drain subdivision due to flooding to permit upgrading of Curtis Lane shire road.

44 The variation was approved by the plaintiff, however additional contract time was not formally sought. A five day delay is estimated by Mr Spiers.

10I Rain during May 2005 as stated in letters to the superintendent Mr Wilkie dated 2, 4, 19 May 2005 and 7 June 2005.

45 In correspondence dated 2 May 2005 Mr Spiers noted:

"Inclement weather 110 millimetres of rain on 2 May 2005. No work on site for at least three days. Clean up set back because no compaction on service trenches. No responsibility getting involved in trenches."

46 In correspondence dated 4 May 2005 Mr Spiers stated:

"3 May 2005 defendant had trouble draining site of water due to:

other trenches of Unified Contracting
the drain that Spiers had already dug had been backfilled by Unified
no access to drains as Unified are still working on trenches
no compaction of service trenches backfilled by Unified
time delay on completion of contract."

47 In correspondence dated 6 May 2005 and 11 May 2005 Mr Palermo stated: "Ensure all drains reinstated in the event of fresh rains."

48 Mr Wilkie confirms that drains were reinstated before further rains started. In correspondence from Mr Spiers to Mr Wilkie dated 9 May 2005 Mr Spiers stated:

"At this stage no work has been happening on site because weather does not allow this. Some batters need filling."

49 In correspondence dated 7 June 2005 Mr Spiers advised Mr Wilkie:

"Service pits open. Non-compaction inaccessible. Grader bogged in Curtis Lane. Inaccessible and more rains. Groundwater level above culverts still to be completed.

Due to my years of experience we would like to note it will take more than a couple of days of fine weather to rectify this. If we continue to work we will go backwards."

50 In evidence Mr Spiers states that 15 days delay claimed is not guesswork. He notes that he had photos and "stuff with dates. There might have been some records". No records were produced during the course of his evidence.

10J The design of the road drainage on San Simeon Way did not work and had to be changed three times. The culvert and drains changed direction and depth and had to be filled from a cut in the paddock on the west side of Lots 162 and 163. The drains on James Eden Drive and San Simeon Way would not fit in the road verge and the batter angles required correction.

51 Mr Wilkie advised Mr Lang on behalf of the defendants on 5 April 2005:

"Mick, these are the new levels for the culvert chainage 589.2A 4th Road ..."

52 The details were provided to the defendant by the superintendent.

53 Mr Spiers confirms that there was no claim to the superintendent for an extension of time in relation to 10J, however the superintendent's correspondence of 5 April 2005 indicates that he was aware of the need for additional work. Delay of seven days is claimed.

10K The material excavated from the trenches was unsuitable for road making and was left on the road verges

54 Mr Spiers states that 10K was charged as a variation to the plaintiff. Undertaking 10K impeded work on the first contract for three days. There is no formal claim nor other evidence in relation to three days' delay claimed.

10L The Class 2 culverts installed on San Simeon Way at chainage 160 had to be replaced with Class 4 culverts

55 Mr Spiers estimates that it took one day to put the Class 4 culverts in. He clarifies in evidence "I wasn't there to know whether it stopped work or not" (T 625). One day's delay is claimed.

10M Spoil material was placed over demolition material from house on Lots 108 and 109

56 Mr Spiers states that this was maybe the same clay as was required to be taken out of trenches. He notes it was charged as a variation on an hourly rate and therefore did not show on a variation progress payment provided to the plaintiff. One day's delay is claimed. There is no other evidence in relation to this claim.

57 Mr Spiers states this was probably a different time to 10L. It is unclear which trenches are referred to. One day's delay is claimed. There was no other evidence to support this claim.

58 Mr Spiers' evidence is that some top soil was brought in, but he did not know how much was brought in. He saw the job and estimated the time it took to be one day. One day's delay is claimed.

10P Dig out and reinstate culverts on Lot 102 and 208 and place extra pipe in crossover to Lot 207

59 No evidence was specifically led to support 10P. Mr Spiers states in evidence:

"Unless I've brought extra machinery in any extras cost me time on the contract." (T 629)

60 There is no evidence as to whether or not extra machinery was brought in or machinery was specifically allocated to 10P. Two day's delay is claimed.

10Q Backlog of water on Curtis Lane was not draining. Blocked outlet drain on Lot 99 and clean out drain at back of Lots 99, 100 and 101. Remove single culvert on Curtis Lane and replace with double culvert

61 In correspondence from Mr Spiers to Mr Wilkie dated 20 June 2005 this variation is particularised and Mr Wilkie's approval of it is noted. Two days' delay is claimed. Mr Spiers recalls that the work was a variation, however it is not listed on a variation claim and he assumes it was probably performed on an hourly basis. Invoices tendered at trial do not specifically note 10Q. No evidence was led in relation to why performance of the variation delayed the first contract. Two day's delay is claimed.

10R Extend James Eden Drive and place culverts over drain Lot 200 and block drain Lot 202

62 Mr Spiers states that he worked out that this would have taken 10 days. There is no other evidence to support this claim. 10 days' delay is sought.

10S Remove spoil from James Eden Drive intersection with Curtis Lane due to saturated clay.

63 Delay due to no decision from plaintiff. Crossovers installed on various low lying lots so they could be filled. Three days' delay is sought.

10T Build up pads for the electrical dome power boxes for Western Power which were underwater

64 Mr Spiers states that this was a variation and that a bucket was needed. There is no other evidence to substantiate the extension of days. Five days' delay is sought.

10U Cart top soil to fill in borrow pit used for fill for roads and service trenches because plaintiff did not have permit to excavate from Shire

65 Five days' delay is sought. There is no other evidence to support the claim.

10V Change of design in intersection of James Eden Drive and Zaruma Way

66 Mr Spiers states that there was probably not a claim for two days for change of design. It is his estimate that two days' delay is appropriate and is sought. In evidence Mr Wilkie confirms that drainage to Zaruma Way was approved for redesign consistent with correspondence from Mr Spiers to Mr Wilkie dated 22 June 2005.

10W Subgrade material was inadequate to construct roads resulting in laying of biddum cloth under limestone to prevent movement of the road

67 Mr Spiers provided a quote to Mr Wilkie for the removal of unsuitable subgrade. He notes it was not possible to work on site. By correspondence 3 June 2005 Mr Spiers confirms a delay in drainage and the need to box out spoil material and backfill. One day's delay is sought.

68 The culvert invert levels were too high resulting in the culvert protruding out of the subgrade. The levels of the drains had to be recut. In correspondence dated 11 March 2005 Mr Spiers advises Mr Wilkie:

"Culvert pipes and head walls Curtis Lane subdivision ... it has come to our attention from the plan that the culvert invert levels are too high and the culvert will protrude out of the subgrade.

... Please notify Spiers Earthworks Pty Ltd of a solution to rectify this situation ..."

69 In correspondence from Mr Wilkie to Mr Spiers dated 11 March 2005:

"... The culverts have been recalculated and they can be lowered by 155 millimetres as per attached culvert cross-section plans."

70 Mr Spiers' evidence was that there was a claim for extension of time in relation to the correspondence of 11 March 2005. A claim was not, however, tendered at trial. From his recollection Mr Spiers notes:

"I'm quite sure that I did send in a request for extension of time." (T 658)

10Y Two 450 millimetre culverts had to be cement stabilised and culvert on James Eden Drive had to be relaid to new level 31 March 2005

71 A pricing variation was provided to the plaintiff by the defendant in relation to 10Y, however there is no specific request for an extension of time. One day's delay is sought.

10Z Crossovers to Lots 104 and 105 changed as instructed by fax from plaintiff dated 1 April 2005

72 Correspondence from Mr Palermo to Mr Spiers on 1 April 2005 noted:

"Crossover had to be converted from double to 2 tonne single on Lots 104 and 105. If find others ... do not construct them ... notify immediately."

73 Although Mr Palermo was not the superintendent of the contract the correspondence is consistent with a notification to proceed with the identified crossover. One day's delay is sought. No additional evidence has been led in relation to why the conversion of the crossover led to delay on the first contract.

10AA Removal of trees as referred to in email from Anthony Palermo dated 23 March 2005.

74 The correspondence noted "Approval given last week when will they be removed?" Mr Spiers states that he remembers how long the job took to do that. The removal of trees is a variation, however no specific request was made for an extension of time.

10BB On 19 April 2005 defendant requested by A Palermo to halt work due to low level of road and risk of flooding at entry

75 Mr Spiers' evidence is that this was a verbal direction from Mr Palermo and that the delay was for a period of two days. No other evidence was led in relation to the two days' delay sought.

10CC Backfilling and compacting by Unified Contracting inadequate and prevented work

76 The defendant identifies this and other matters to Mr Wilkie by letter dated 7 June 2005 (Document 2.38 referred to in evidence but not tendered):

Due to the service pits still being open as they have not been passed we are unable to do anything.
Due to non-compaction of trenches they are inaccessible by machine as discussed at Thursday's site meeting.
We had a grader stripping on Curtis Lane on Friday and it got bogged, so at this stage it is still inaccessible as there has been more rain since. When conditions allow we will try again.
Ground water level is above invert level of culverts still to be completed. Due to the latent and hidden conditions e.g. clay pockets, work has come to a halt. From many years of experience we would like to note that it will take more than a couple of days of fine weather to rectify this.
If we were to continue to attempt to work the job would go backwards instead of forwards.
If the services were compacted, tested and completed as they were laid this may not have been such a problem.

77 By email to the defendants on 10 June 2005 Mr Palermo wrote (Document 2.39):

"I'm not getting any response from Tony Wilkie.

Can you advise on the following:

(1) Original contract completion date.

(2) Approved extension days.

(3) Specify reason for extension.

(4) Forward authority for extension.

(5) EST new completion date, I need to know for marketing purposes. Some buyers also need an indication.

(6) Claim for wet days ... recently.

(7) My view is that the works could have been better planned. I warned all about the potential condition of the land in winter. By now I would have expected all works other than the seal to have been completed.

(8) Can you advise if you all have the manpower to fast track the works once the site permits."

78 Document 2. 39 was put to Mr Palermo in cross examination as being his document. In response the defendants faxed the following correspondence to Mr Palermo (Document 2.40):

"Tony Palermo

Item 1 - original contract completion date see contract.

Item 2 - approved extension days.

Item 3 - specify reason for extension; due to latent conditions of site, rainfall (approx 35 days), rise in ground water, insufficient compaction of trenches for services. If we were to proceed to establish drains in the soft and wet ground conditions there is a large risk that services will get damaged. Culvert Class 2 to 4 variation (7 days); culvert invert levels (2 days); unsuitable material chain 340 to 550 (2 days).

Item 4 - forward authority for extension.

Item 5 - estimate new completion date. No new completion date can be estimated due to the conditions stated in item 3. When conditions prevail we will recommence work.

Item 6 - claim for wet days (recently) claim for wet days for June until 10/6/05 is 7. The site will also need to dry out on top of this.

Item 7 - as previously notified work could not resume on drain due to services being installed. If backfilling of services had been completed in dry (e.g. compacted and completely backfilled, tested in sections) instead of one complete test the drains could have been completed. We had to try to fit culverts to design on plan not to chain levels of which some had to be changed. The contours on original drawings are wrong which makes it difficult on site.

Item 8 - is manpower available to fast track works once the site permits. We have the manpower to fast track the works when conditions permit. We currently have men and machines parked up and therefore it is also in our best interests to complete the work. This year's rainfall to this stage has been the highest in 50 years."

79 In a facsimile to Mr Wilkie dated 10 June 2005 Mr Palermo asked why pits are still open (Exhibit 2.41). In a facsimile dated 11 June 2005 to Mr Wilkie (Exhibit 2.41.4) Mr Palermo states:

As to what you are doing if you don't inform me in writing I will go to the contractors.

I warned you that lack of minutes, conferences and other would lead to legalities. We are almost there. It appears Spiers will claim in excess of 35 days. Is that correct? Who pays? If I lose any sales someone will pay. I don't care who."

80 Mr Palermo's correspondence to Mr Wilkie dated 17 June 2005 confirms that the compaction of the Unified Contracting backfilling was not adequate at that time. Mr Palermo states (document 2.43):

"3. ... Again using the rain as an excuse is not acceptable. Given the time of the year and given the type of land involved in the subdivision, once winter sets in there are obvious reasons why certain works have to be completed by a certain time frame."

81 The correspondence relevant to the period 10 to 17 June 2005 refers generally to the two days' delay sought.

10DD Changes to drainage services and culverts authorised by plaintiff and Wilkie as per letter from defendant to Wilkie dated 21 June 2005, two days.

82 Mr Wilkie approved the redesign of drainage services. A reference to a claim for inclement weather (10 days, 3 to 15 June 2005) is included in the same claim, however the letter does not specifically refer to changes to drainage services. Two days' delay is sought.

10II 23 June 2005, 37.2 millimetres rain prevented work and water banked up 30 metres. Electrical trench to Lots 99/100 and 100/101 sunk and had to be rectified.

83 Although the defendant raises the need for rectification in relation to 10II with the superintendent in correspondence dated 24 June 2005, Mr Lang, on behalf of the defendant in the same correspondence states:

"Also due to rain Thursday, 23/6/05 there was no work on site, we have a small crew on site today cutting drains and laying culverts."

84 The correspondence would indicate that some work could proceed on site. There is no additional evidence to support the defendant's claim in relation to 10 days' delay.

10JJ Replaced unsuitable material at intersection of Curtis Lane and James Eden Drive as stated in letter from defendant to Wilkie dated 27 June 2005

85 An approximate price for additional work in relation to rectification of 10JJ is provided by the defendant. The correspondence does not refer to additional days required in respect of the first contract. One day's delay is sought.

10KK Raising level of Curtis Lane and James Eden Drive intersection by 100 millimetres as stated in letter from defendant to Wilkie dated 28 June 2005

86 The correspondence refers to the sum to be charged by the defendant in relation to the performance of 10KK. There is no specific request for an extension of time. One additional day is sought.

10LL 4 July 2005, 13 millimetres of rain, whole job is waterlogged.

87 Apart from rain records there is no other evidence in relation to this claim for one additional day.

10MM Anthony Palermo authorises construction of limestone road to Western Power transmitter and another culvert to Lot 207/208 by email dated 15 July 2005

88 Mr Palermo's email authorises the construction of 10MM, however Mr Palermo also notes "Proceed with the works without delay". There is no request nor additional evidence in relation to two days' delay sought in respect of the first contract.

The first contract - the defendant's claim for additional days - findings

Esanda Finance Corporation Ltd v Plessnig

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (404 paragraphs)

LANDTEC PROJECTS CORPORATION PTY LTD -v- SPIERS EARTHWORKS PTY LTD [2010] WADC 74 (20 May 2010)

Parties

Cases Cited (5)