Lacaba Ahden Australia Pty Ltd v Bucyrus

[1] McMURDO J: This is a further dispute about the plaintiff's particulars in this contractual dispute concerning the erection and commissioning of a dragline at a coal mine. The plaintiff claims that it has not been fully paid for its work and part of that case is that it is entitled to further sums because its achievement of practical completion was delayed by causes beyond its control, including acts or omissions of the defendant. Last November, I determined an application by the defendant for further particulars of that delay claim, and this is yet a further application by the defendant for particulars of it.

[2] The current statement of claim[1] now claims a total of about $2.4 million of which the claims affected by the present application account for about $2.1 million. One of those claims is for the payment of a performance bonus. It is common ground that the contract entitled the plaintiff to a bonus of $16,000 for each and every day by which the actual date of practical completion preceded the agreed date, and that the actual date achieved by the plaintiff was 17 April 2000. The defendant's engineer granted a number of extensions of the agreed date, ultimately to 19 April 2000. So the plaintiff has received a bonus of $32,000 (two days at $16,000). The plaintiff claims that the date for practical completion should have been further extended to 21 May 2000, with the consequence that the plaintiff should be paid a bonus for another 32 days, i.e. a further $512,000.

[3] The plaintiff's entitlement (if any) to such an extension of the date for practical completion is by clause 22 of the General Conditions of Contract.[2] According to that term, the plaintiff must prove at least that the achievement of practical completion was delayed by a cause beyond its reasonable control. The plaintiff has identified what it says were the events, which were beyond its reasonable control, which together caused that further delay of 32 days. Those events are set out in Schedule 1 to the statement of claim. The present application concerns that part of Schedule 1 which is item 8, which involves events alleged to have caused the delay of 25 of those 32 days. These 25 days were within what is described as the post-machinery period, which was the 27 days from 21 March to 17 April 2000. The principal complaint by the defendant in this respect is that the plaintiff has not pleaded or particularised the facts by which each of those matters was a cause of any delay in achieving practical completion.

[4] Item 8 of Schedule 1 also represents the particulars of another claim in the plaintiff's case. This is its claim for a price adjustment in reliance upon clause 1.1 of the Special Conditions of Contract. Under that provision, it was agreed that in the event that the plaintiff was delayed by acts of the defendant, the plaintiff would be entitled "to an equitable price adjustment in addition to extension of the time". The plaintiff alleges that by acts of the defendant, it was delayed by a total of 62 days.[3] They include those 25 days attributed in Schedule 1 to the events described in Item 8. Again, the defendant says that the plaintiff has not pleaded the facts by which each of those events was causative of some delay.

[5] In the application decided last November, I required the plaintiff to amend Item 8 and to provide particulars of it, so as to make it correspond with what the plaintiff said was its case, as articulated within the expert opinion of Mr McQueen which the plaintiff proposes to tender at the trial. Item 8 now describes the relevant events as follows:

"1. Lacaba estimates that during the 27 day post-machining period (namely the period from 22 March 2000 to Practical Completion on 17 April 2000, inclusive), 25 days delay was caused by events for which it was not responsible.

2. The causally significant events were:

(a) Variations performed in the post-machining period ("the item 8 variations").

Particulars

Table 3.2 to the expert report of Ian McQueen dated 10 October 2005 ("the expert report") lists the item 8 variations along with the direct manhours recorded for each variation. Further particulars of those manhours are provided in appendix 20 to the expert report.

(b) The other events (including some earlier variations) identified in the two dot points to paragraph 135 of the expert report.

3. As to the manner in which the causally significant events caused the 25 days delay -

(a) The delay caused by the item 8 variations (without taking account of their displacement and disruptive impact) may be assessed by apportioning delay according to the proportion between manhours expended on scope work during the post-machining period and manhours expended on variation work during the post-machining period. Using this methodology, Lacaba estimates that the item 8 variations caused between 18 and 19 days delay during the post-machining period.

Particulars

The way in which the 18 day estimate is reached is explained in section 3.6 of the expert report, in particular paragraphs 125 to 129. The way in which the 19 day estimate is reached is explained in paragraph 131 of the expert report (although the 21 day figure mentioned therein is an error because the figure which flows from the apportionment there set out is actually 19 days).

(b) Lacaba estimates the balance of the 25 days it has claimed may be regarded as having been caused by the displacement and disruptive effect of the item 8 variations and the other events identified in the two dot points to paragraph 135 of the expert report.

Particulars

The way in which the assessment may be reached that the balance of the 25 days claimed may be regarded as having been caused by the displacement and disruptive effect of the item 8 variations and the other events identified in the two dot points to paragraph 135 of the expert report is explained in section 3.6 of the expert report, in particular section 3.6.6 of the expert report.

(c) In respect of the estimates pleaded in the previous subparagraphs, Lacaba says that:

(i) It is impossible or, alternatively, impracticable for Lacaba to identify a connection between each of the causally significant events which it has identified and a discrete amount of delay. The delay which was suffered occurred because of a complex interaction between the causally significant events and their consequences.

(ii) There is no other explanation for that delay than the causally significant events which Lacaba has identified.

(c) Lacaba also advances an alternative case that the entire 25 day delay may be regarded as having been caused by one of the variations performed in the post-machining period, namely the relocation of the swing reactors (cost code 2871). This assessment is explained in section 3.6.3 of the expert report."

[6] So the case is that but for the combined effect of the events described in Item 8, the work in the post-machining period would have taken two days, not 27 days. Mr McQueen's report says so, by reference to other proposed evidence and in particular a statement by Mr M G Smith, the plaintiff's managing director. The plaintiff argues that Mr McQueen's report and that other evidence sufficiently describes and defines its case. The defendant says it does not, mainly because that evidence does not explain the way in which each event had a causal effect on the date of practical completion. I will summarise then what the defendant would know from the McQueen report and that other evidence.

[7] The number of man hours worked within the post-machining period was 3,734. Scope work, that is work required by the original contract, comprised 1,271 hours of that total. Work on variations took the other 2,463 hours. The particular item of scope work or the particular variation upon which a certain number of hours was spent on any day within the period clearly appears from an annexure to the McQueen report. The variations have already been paid for by the defendant and are unlikely to be controversial. There is some issue as to whether the latest version of the Defence withdraws an admission in relation to variations but that need not be resolved here. So the plaintiff has clearly particularised the variation in each case by reference to its nature, what hours were spent upon it and on what days. The same goes for scope work performed within this period.

[8] As the plaintiff has also clearly stated, it is not its case that a certain variation caused a discrete and quantifiable delay, save in one respect. That involves an alternative case that the entire 25 days of delay can be attributed to one variation, namely the relocation of the swing reactors. Otherwise the plaintiff's case is put in this way. Mr Smith says that ordinarily there are about 300 to 600 hours of work which remain to be done in the post-machining period, so that the difference between that figure and the number of hours actually spent in this case represents the delay which he says has no other explanation than the events which the plaintiff has particularised.

[9] Variations, by definition, are things which were not of the plaintiff's making but were the result of instructions on behalf of the defendant. They were productive of delay in this period at least to the extent of the time required to perform them. And the same variations performed within this period were productive of further delay, because they disrupted the performance of scope work in this period. The time spent in doing scope work within this period was also affected by two other things. One was the plaintiff's performance of variations before the post-machining period, which had the effect of displacing the performance of scope work at that time requiring that scope work to be performed within the post-machining period. The second was the delay in the provision to the plaintiff of parts for the dragline, which also required some scope work to be performed within the post-machining period which otherwise would have been performed prior to then.

[10] The defendant accepts that the plaintiff is not required to particularise a discrete period of delay caused by each alleged delaying event. But it argues that the plaintiff "should provide particulars explaining why it is asserted that an event was, or would of necessity have been, causative of delay". In support of its argument, the defendant relies upon an affidavit sworn by its proposed expert witness, Mr G J King. He has been retained to provide assistance which includes evaluating the delay case and he says that such claims are usually evaluated by the construction of an "as built" program, which is a record of the actual dates on which the planned work was performed, which is then compared with to what he describes as the contemporaneous programs, which were programs or plans in existence at the time. This is a comparison of what did occur with what the plaintiff's own records will show was the proposed timing of the various works. Mr King says that by this comparison he will be able to "determine the causal link (if any) between the alleged delaying events and, by reference to the critical path, their impact on the completion of the project". He says that to do this "it is imperative to be able to understand the causal relationship between the events alleged to have created delay and the delays which are said to arise as a result or at least the basis on which it is alleged that such a causal relationship exists". He says that he cannot understand this from the case as it is presently particularised, including within the McQueen report. He claims that the McQueen report does not identify on a "variation by variation" basis how the additional work "impacted, or would have impacted, on succeeding activities" and that "it is essential that the causative effect of each event alleged to have caused delay is clearly articulated so that Bucyrus can understand and respond to the case that delay to the critical path has occurred".

[11] As it appears to me, the defendant and its expert have not understood the plaintiff's case, although this is not due to a want of particulars. The plaintiff does not say that each event was causative of delay by postponing a "succeeding activity". Rather, its case is that most of this delay was simply due to additions to the plaintiff's overall workload by the defendant's requirement for variations. Specifically, the requirement of the plaintiff's performance of the variations which it performed after 21 March inevitably caused the overall job to be completed later than it would have been had those variations not had to be performed. Mr McQueen has calculated that the delay caused in that way accounts for 18 of the 25 days which are claimed. That calculation is criticised and I will return to it. But whether that calculation is flawed, the plaintiff's case in this respect is in my view clear: completion was delayed by the number of days reasonably required to perform those 2,463 hours spent on variation works. Now there may be many answers to that case. For example it may not be the case, as Mr McQueen has calculated, that these 2,463 hours correspond with 18 days of work. Or it may be that contrary to what Mr Smith will say, at least some of these variations could and should have been performed at an earlier time. But in this particular respect, the case is articulated with sufficient clarity.

[12] As to scope work performed after 21 March 2000, the plaintiff's case is that the completion was delayed by having to perform 1,271 hours of work instead of something in the range of 300 to 600 hours. The difference is attributed to what is described in the plaintiff's case as disruption and displacement. Disruption describes the effect of the performance of variation work after 21 March upon the orderly and economical performance of scope work. This is discussed in some detail within paragraphs 133 through 206 of the McQueen report. Mr McQueen says that:

"... because of the dynamics and interrelationships between scope and variation work and because of the large number of separate variations, I am not able to conclude that a particular item of scope work was delayed because of certain variations (or that) each and every late supply of engineering, parts and materials necessarily caused a defined delay."[4]

But he does describe instances of this disruption before ultimately concluding that half of the man hours allocated to scope work in this period were "undisrupted scope work" and the other half is attributable to disruption. So he says that one half of 1,271 hours represents the effect of disruption in the post-machining period. Displacement is the term used to describe the delayed performance of scope work, which would have been performed prior to 22 March 2000 but which was ultimately performed on or after that date. As already mentioned, the plaintiff says that this displacement resulted from its having to perform other variations prior to the post-machining period and also to delay in the supply by the defendant of some required parts. Mr McQueen assesses the effect of this displacement as being in the range of 35 to 335 man hours. He reaches that conclusion by subtracting from the 1,271 hours spent on scope work in this period, 635 hours due to disruption and a further 300-600 hours which Mr Smith says is ordinarily required in the post-machining period.

[13] In respect of both disruption and displacement, the plaintiff's case thereby describes the alleged causal connection between the events relied upon and the alleged delay in the post-machining period. The plaintiff's case does not employ Mr King's methodology. The alleged disruption of scope work does not involve an allegation that variations simply caused a postponement of the date or dates upon which the scope work would have been performed. Rather, the case is that the same work took longer to perform because the intrusion of other work disrupted the orderly and economical performance of the scope work. The displacement case seems closer to what Mr King has in mind, but still it is not advanced upon that methodology. Instead the case is that there is an inherent likelihood that by the plaintiff's having to perform extra work before 22 March in the nature of variations, and by the plaintiff's having to wait for parts, scope work which would have been performed before the post-machining period had to be performed, as it was performed, within that period. The plaintiff's case is that it was working as efficiently as it could and that there is no other explanation for its having to do this scope work within the post-machining period. In my view the plaintiff has sufficiently particularised its case as to how the events relied upon were causative of delay. The plaintiff is not obliged to advance its case upon Mr King's methodology. If the trial judge concludes that it is only by that methodology that the alleged delay could be proved then the plaintiff will simply fail to prove its case. But I can see no unfairness to the defendant which knows by these particulars, incorporating as they do Mr McQueen's report and the documents and evidence referred to in it, the boundaries of the case made against it.

[14] Mr McQueen attributes 18 of the 27 days in this period to variation work and the other nine to scope work. He does so on the basis that the number of hours spent on variation work was about twice the number spent on scope work. On the basis already discussed, he treats all of the variation work as having a delaying effect so that he concludes that there were 18 days of delay through the time taken to perform variation work. And he treats the scope work as occupying in total nine days, from which he subtracts two days for the 300 to 600 hours of work which would ordinarily be performed in this period. He appears to do so on the premise that the plaintiff had resources of the equivalent of 300 man hours per day at the beginning of the period.

[15] However, the plaintiff did not apply 300 man hours for each of the 27 days. As Mr McQueen's material shows, the number of hours per day worked during this period varied from 272 to as low as 78. If it is right to assume that the plaintiff was able to work 300 hours per day, then the defendant says that the 2,463 hours spent on variations should not be equated with 18 days of work. Nor should the additional scope work of no more than about 900 hours be equated with seven days of delay.

[16] On its face that criticism has some force. But there may be many answers to it. It was not the subject of any evidence in response. I am not persuaded that the point is unanswerable and that, moreover, it demonstrates that this entire claim for delay during the post-machining period is bound to fail.

[17] Alternatively to its application for the provision of further particulars, the defendant says that if the plaintiff simply cannot provide those particulars, then this part of its case should be struck out because it is unfair that the defendant should have to meet what it says is such a general claim. The defendant makes that submission in reliance upon a number of cases which have discussed problems with so called global claims. The principles are not in dispute between the parties: what is in dispute is their application to the present case. So the defendant relies particularly upon the remarks of Lord Oliver of Aylmerton in Wharf Properties Ltd & Anor v Eric Cumine Associates & Ors (No 2),[5] that a plaintiff is obliged to specify any discernable nexus between the wrong alleged and the consequent delay and that a failure to do so provides "no agenda" for the trial. But as I have already discussed, the plaintiff here has specified such a nexus. That nexus may or may not be proved, but that is not the present question. This debate arises ultimately because the defendant's approach to the question of delay, no doubt informed by the opinion of its own expert, is different from that which the plaintiff employs in its case. It is the plaintiff's case which must be particularised, not that which the defendant says is the case it would have expected. The difficulties associated with so called global claims have no significant presence here: the causation case is sufficiently described and defined such that the plaintiff can and will be held to it. Moreover the defendant has already the benefit of the evidence which the plaintiff will lead in support of that case.

[18] The plaintiff has an alternative case which is that all of the claimed delay of 25 days during this period can be attributed to one variation, which involved the relocation of the swing reactors. In this respect Mr McQueen has used what he describes as a conventional Critical Path Method analysis which he says shows that if the "duration of this activity is reduced to zero" (the activity of the performance of this variation) then the forecast date of practical completion is brought forward from 17 April to 23 March 2000, accounting thereby for all of the 25 days. Again, the defendant's point is that Mr McQueen has assessed the delay but not explained how this event caused any delay. And again, in my view, the plaintiff's case does offer an explanation. In effect, the plaintiff is saying that had that variation not been required, there would have been a certain sequence and timing of work which with the available resources would have been performed at an earlier date. Mr King says that the McQueen report does not "provide any substantive information relating to the alleged cause or effect of this work on the completion of the dragline" and that he is unable "to fully understand the reasoning behind the criticality of this item of work and alleged impact it had, or would of necessity have had, on delay". He is saying that he does not fully understand why the performance of this variation was critical in the sense that it would appear as a task upon a critical path analysis. But as I read the CPM analysis of Mr McQueen in Appendix 18 to his report, he does discuss the impact of this particular variation upon other tasks. Mr King does not refer to Appendix 18 and it may be significant that he says that it is section 3.6.3 of Mr McQueen's report (rather than Appendix 18) which does not provide the required information. In my conclusion sufficient particulars are provided within the report, at least when Appendix 18 is considered.

[19] For these reasons I conclude that no further particulars need be provided in response to the first of the requests which is the subject of this application.

[20] The second request sought particulars in relation to the variations relied upon as events contributing to this 25 day delay. As already discussed, these are variations performed both within the post-machining period and prior to its commencement. The request sought particulars of any directions or instructions in relation to each of those variations. There is no issue, however, that the plaintiff performed this work and was entitled to be paid for it, in each case, as a variation. The plaintiff says that it will not seek to prove its case, specifically its delay case, by reliance upon the date or approximate date upon which any variation was requested or directed. Its case is that indisputably it had to do this work and that given the other demands upon its resources, it performed these variation works together with the remaining scope work with reasonable expedition. An arguable case to that effect could be advanced without proof of the date of any request or direction for a variation. Again, the defendant has the advantage of the plaintiff's evidence as well as its pleading and existing particulars. The defendant knows that the plaintiff will not seek to prove that any variation was requested or directed on a particular date, but will simply rely upon the defendant's acceptance that in each case the work was required to be done as a variation. The case is appropriately described and defined. Of course it is open for the defendant to plead that having regard to the date upon which a variation was requested or directed, the work could have been performed earlier and with no or less consequential delay. The defendant ought to know the relevant date for each variation because the request was by its own agent. If the defendant pleaded that matter, then it would have the benefit of the rules which require a substantive response and, in particular, an explanation of any dispute by the plaintiff of the alleged date. Accordingly, there need be no further particulars in response to the second request.

[21] The third request sought particulars identifying the period of delay in the supply of each part or material identified by reference, where relevant, to the date on which the part or material was due to be supplied. The plaintiff's case is again contained in Mr McQueen's report and in this respect in its Appendix 57. The plaintiff does not advance a case which seeks to prove the delay in the supply of each relevant part or material. Its case is that there were delays in the provision of certain parts, which it identifies, which taken together and also in conjunction with the defendant's requirement for the variations performed prior to 23 March 2000, displaced scope work which would have been performed such that it had to be performed in the post-machining period. Appendix 57 includes a six page table referring to certain documents and their dates which are contemporaneous records describing delays in the provision of parts. From this the defendant knows the parts involved and the way in which the plaintiff will seek to prove a delay in the provision of them. The defendant also has the further particulars delivered by the plaintiff on 16 January 2006 of which paragraphs 7, 8 and 9 are presently relevant. Paragraph 9 alleges that all components for the dragline should have been supplied originally by 30 May 1999 but that even allowing for all proper extensions through extensions to the date of practical completion, the plaintiff says that all components should have been provided by the defendant prior to 29 February 2000. That date is relevant because it is the earliest date of the documents mentioned in that table in Appendix 57. In other words the plaintiff is saying that all parts, at the latest, should have been delivered to it by 29 February 2000, and the plaintiff will rely upon documents on and after that date which record that the plaintiff was awaiting the provision of parts. In my conclusion the plaintiff has sufficiently particularised the case which it has chosen to advance.

[22] The fourth request for particulars sought particulars of any direction, instruction, information or other matter howsoever relied upon in support of the allegations in respect of delays with the supply of parts and materials. What I have said already should explain why it is not part of the plaintiff's case that there was some direction or instruction which is relevant. As discussed in the previous paragraph, the plaintiff's evidence and particulars together serve the purpose of sufficiently informing the defendant of the way in which the case is put, and it is sufficiently particularised. The plaintiff has made it clear that there are not other matters relied upon to support the claim of delay through the late provision of parts and materials.

[23] Accordingly the present application, being that filed on 16 March 2006, is dismissed. The defendant will pay the plaintiff's costs of that application to be assessed.

[3] Further Amended Statement of Claim, paras 21 and 22 and Schedule 1 of the Further Amended Statement of Claim