Michael Davies Associates Pty Limited v Auburn Council - [2007] NSWSC 877 - NSWSC 2007 case summary — Zoe

NSWNSWSC

Michael Davies Associates Pty Limited v Auburn Council

[2007] NSWSC 877

Supreme Court of NSW|2007-04-30|Before: Bergin J

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Source facts

Court

Supreme Court of NSW

Decision date

2007-04-30

Before

Bergin J

Source

Original judgment source is linked above.

Judgment (273 paragraphs)

[1]

These proceedings 97 The plaintiff commenced these proceedings by Summons filed on 26 February 2004 seeking the recovery of various amounts from the Council totalling $722,011.07. The parties have agreed on many of the claims and the only claims made by the plaintiff in the Summons that require determination are: (1) whether the plaintiff is entitled to an amount of $33,000 pursuant to its PSP dated 2 March 1999 for the provision of "contract documentation" services (Contract Documentation); (2) whether the plaintiff is entitled to make a claim in respect of "Variation CVC04-1" relating to the redesign occasioned by the decision to remove the sprinklers (Variation); and (3) whether the plaintiff is entitled to additional fees for an adjustment for increased costs pursuant to clause 3 of its retainer with the Council (Increased Costs). The parties have agreed that subject to the outcome of the Council's Cross-Claim, there is no longer any issue that the Council is liable to the plaintiff for construction services ($243,980.50); for excess documents and abnormal delivery charges ($19,954.59); and for the car park ($25,000). 98 The main issues for determination arise from the Council's Cross-Claim in which it is alleged that the plaintiff's conduct was misleading or deceptive in breach of s 52 of the TPA. Those allegations were refined during the course of the trial, the final version of which is found in the Further Amended Defence and Cross-Claim filed in Court on 24 April 2007 (the Cross-Claim). The Council claims that it retained the plaintiff on three separate occasions; the first on 3 September 1998 to provide services in relation to the Project referred to as the "DA Retainer"; the second on 3 December 1998 referred to as the "Construction Documentation Retainer"; and the third in about July 1999 to provide further services to be paid on an hourly rate basis referred to as the "Construction Services Retainer". Paragraph 5 of the Cross-Claim is in the following terms: On about 3 December 1998, the Council resolved that its budget for the project was $16.9 million. Mr Brownlee of the Council orally advised Mr Davies of Michael Davies about the Council's budget on or about 3 December 1998. At a Council meeting on 2 December 1998, Mr Davies gave a presentation to Council and said words to the following effect:

[2]

'The GMP is like a lump sum tender. It gives the Council surety that the costs will not go above $16.9 million'. 99 The Cross-Claim alleges that after the initial tenders were received in response to the 'Invitation to Tender for Construction Management Services' in the vicinity of a guaranteed maximum price (GMP) of $22 million the following occurred: 10. In early February 1999, Mr Brownlee of the Council again advised Mr Davies of Michael Davies that the Council's budget for the project was $16.9 million, and that unless savings were made to bring the project down to $16.9 million, it would not proceed. 100 The Cross-Claim alleges that on 3 February 1999 the plaintiff sent Post Tender Notice 1 to the tenderers and that on 5 February 1999 the plaintiff sent to the tenderers Post Tender Notice 2 together with further drawings and specifications prepared by the plaintiff and its consultant Hyder Consulting (Australia) Pty Limited, referred to as "The GMP Documentation" (par 12). It is claimed that the plaintiff knew or ought to have known that the tenderers would offer construction management services with a GMP on the assumption that the GMP Documentation set out either expressly or by implication all of the works and materials that were required to build and complete the Project (par 12B). It is alleged that at no time did any representative of the plaintiff advise the Council that the Project as set out in the GMP Documentation could not be built for $16.9 million (par 13). The Cross-Claim alleges that the Council entered into the Austin Contract "whereby Austin would provide construction management services" and "subject to the terms of the Austin Contract, deliver the project for the guaranteed maximum price (GMP) of $16.9 million" (par 14). It is also alleged that throughout the Project the Council entered into 42 trade contracts upon the recommendations of the plaintiff and also upon the documentation prepared by the plaintiff (par 15). It is alleged that the final cost of the project to the Council was $19,765,598.92 (par 17). The Cross-Claim refers to the commencement of the Arbitration Proceedings by Austin against the Council on 18 May 2001 in which it is alleged Austin claims an entitlement to certain payments upon grounds including that the plaintiff's GMP Documentation did not disclose the whole scope of works. As I have said the Arbitration Proceedings are part heard before the Arbitrator, Austin is now in liquidation and the parties are not expecting to finalise those Arbitration Proceedings until some time in 2008. 101 The Council claims that the plaintiff breached its retainers, in particular clause 4 of the Terms and Conditions which provided: "In providing the services, MDA shall exercise the degree of skill, care and diligence normally exercised by architects in similar circumstances" in that: the GMP Documentation did not set out all of the works and materials which were required to build and complete the Project; the GMP Documentation was not prepared with reasonable care and skill; and the GMP Documentation was inadequate to form the basis of a construction management contract with that GMP (par 20). It is also alleged that the plaintiff breached its retainer by: (a) failing to warn the Council at the time it entered into the Austin Contract that there was a real risk of a significant project cost increase because of the very early stage of the development of the GMP Documentation; and (b) putting forward the GMP Documentation as being adequate to form the scope of works for a construction management contract with a GMP (par 21). It is alleged that had the GMP Documentation been complete, set out all of the works and materials required and been prepared with reasonable care and skill, Austin's tender price would have been higher than $16.9 million and the Council would not have entered into the Austin Contract and would have reduced the scope of works to be included in that contract (par 23-24). It is also alleged that the Council would have required and made design alterations to ensure a reduction in the scope of works so that the cost of the Project was no more than $16.9 million. It is also alleged that the Council would not have been exposed to the risk of damages and costs claimed by Austin in the Arbitration proceedings (par 24). The Council claims damages in respect of the alleged breach of retainer. These same allegations are repeated in the claim that the plaintiff breached its duty of care to the Council in respect of which the Council claims damages (par 27-29). 102 The TPA claims made by the Council as finally pleaded are as follows: 31. In preparing and issuing the Tender Form Part B and The GMP Documentation to the tenderers and to the Council, in circumstances where Michael Davies knew that the Council would not accept a tender for more than $16.9 million, and in the circumstances set out in paragraphs 1-17 above, Michael Davies represented to the Council that: (a) The GMP Documentation had been prepared with reasonable care and skill; (b) The GMP Documentation set out, either expressly or by implication, all the works and materials which were required to build and complete the Project; (c) the Project was capable of being built for $16.9 million; (d) The GMP documentation gave the Council certainty that the cost of the project would not exceed $16.9 million, save for substantial variations initiated by the Council; (e) The GMP documentation was adequate to form the scope of works for a construction management agreement with a GMP; (f) A construction management contract with a GMP was like a lump sum tender and would give the Council surety that construction of the MDA Option 2000 (as described in MDA's professional services proposal dated 19 August 1998) would not exceed $16.9 million; (g) Construction of the MDA Option 2000 through a construction management agreement with a GMP, and based on documentation to be prepared by MDA, would not exceed $16.9 million.

[10]

108 The total of the first three items is $777,800 and the Contract Documentation stage included tendering and negotiating services. In the original retainer constituted by the plaintiff's PSP of 18 August 1998 and the Council's response of 3 September 1998, the Council accepted only option (a) being for services to the DA stage which did not include option (b) being services to Contract Documentation stage. However the 18 August 1998 PSP provided an alternative price for option (b) that did not include tendering and negotiating services. The plaintiff submitted that its 1999 PSP was an attempt to explain how the fees it proposed related to the fees in the 1998 PSP. It was submitted that part of the explanation involved an analysis by the plaintiff of how the fees in the 1998 PSP would be affected by the increased cost of the Project, from $13.7 million to $17 million. That analysis commenced from the premise of the total fee in the 1998 PSP for both options of $600,100 and then added $144,550 to reflect the increase in the cost of the Project from $13.7 million to $17 million producing a total revised fee for option (b) of $744,650. 109 When the Council responded to the plaintiff's 1999 PSP on 31 March 1999 it advised that the "agreed" fee was $744,650 inclusive of Stage 1 and Stage 2. The plaintiff responded to the Council on 27 May 1999 advising it that the $744,650 was a figure provided solely to demonstrate how the plaintiff had arrived at the revised fee of $444,400 for the contract documentation item. The plaintiff claims that although the Council referred to the figure as "agreed" it was "plainly" not the figure advanced in the 1999 PSP for Contract Documentation. The Council has paid the plaintiff $744,650 and the plaintiff claims that it is entitled to the further amount of $33,150. 110 The practice that was adopted in relation to all of the plaintiff's progress claims was that Mr James would look at them, seek Mr Brownlee's approval and, if approved by Mr Brownlee, make arrangements for the claims to be paid. The plaintiff made a progress claim on 31 March 1999 in the following terms: To professional services rendered in connection with the above project in accordance with our Professional Services Proposal dated 2 March 1999, Council's acceptance thereof, and as follows:

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AMOUNT NOW DUE AND PAYABLE WITHIN 30 DAYS $85,810 less 33,330 _______________________________________________________ $52,480 113 The last two entries on this Progress Claim, "less 33,330" and "$52,480" are handwritten and were obviously made the Council officers. It is clear that by this time controversy had arisen in relation to the plaintiff's involvement in what had been referred to as "Stage 3" relating to the "construction" phase of the Project. The correspondence extracted earlier indicates some friction between Mr Davies and Mr Brownlee in relation to this aspect of the matter. The reduction of $33,330 was a reduction relating to "construction services". Mr Brownlee discussed this progress claim with Mr James and Mr Brownlee wrote the words "Payment OK", signed and dated the authorisation. Mr Brownlee claimed in his evidence that in writing those words he was approving payment of the amount of $52,480 and that he intended to exclude the amount of $33,330 for construction services. The total of the figures in the plaintiff's PSP dated 2 March 1999 for Schematic Design, Design Development and Contract Documentation is $777,800 (exclusive of the $222,200 figure for Construction Services). The plaintiff claims that the Council has only paid it $744,650 for those first three items instead of $777,800, and claims that it owes the plaintiff $33,150. 114 The plaintiff submitted that by its conduct in authorising the payments in respect of the progress claims dated 31 March 1999 and 30 April 1999 the Council accepted that the fee for those three items was $777,800 rather than $744,650. In support of this claim reliance was placed on Empirnall Holdings Pty Limited v Machon Paull Partners Pty Limited (1988) 14 NSWLR 523 in which McHugh JA identified the ultimate issue as whether a reasonable bystander would regard the conduct of the offeree as signalling to the offeror that the offer had been accepted (at 535). The Council submitted that far from signalling acceptance of the plaintiff's 1999 PSP, it made very clear that all that it agreed to was a fee of $744,650 and that the plaintiff is not entitled to construct an agreement out of the correspondence between the parties, when that correspondence categorically deals with the alleged confusion with the Council maintaining that its agreement excluded the amount of $33,150. 115 The Council's letter of 31 March 1999 to the plaintiff in response to its 1999 PSP advised that the Council had given authority to proceed with full documentation of the work "for the agreed fee which has been adjusted for the estimated cost budget being increased" from $13.7 million up to $16.9 million and the deletion of the quantity surveyor's fee for the option (b) proposal. The Council resisted any suggestion that it had been confused about the plaintiff's letter and in its letter of 8 July 1999 purported to explain how it reached the figure of $744,650. It claimed that the plaintiff's fee on a project that would cost $13.7 million was 4.4% at $600,100 and that, on a pro-rata basis for a project that would cost $16.9 million, the plaintiff's fee at 4.4% would be $744,650. That was then broken down into Stage 1 fees of $189,800 and Stage 2 fees of $554,850, totalling $744,650. 116 The letter Mr Davies wrote to Ms Rosser on 9 August 1999 referred to the Council's denial of liability for the payment of $33,330 and did not mention the claim for $33,150. It is obviously unsatisfactory that these parties appear to have fallen out in relation to the plaintiff's fees, however I cannot be satisfied that there was a meeting of minds and an agreement to accept the plaintiff's fee proposal in its 1999 PSP, notwithstanding approval of the progress claims dated 31 March 1999 and 30 April 1999. The Council's letters of 31 March 1999 and 8 July 1999 seem to me to evidence an agreement only to pay the plaintiff the lesser amount of $744,650. 117 The plaintiff's claim for an order that the Council pay it $33,150 fails. 118 Variation claim: As I have said earlier, the only issue remaining for determination in relation to the large number of variation claims is whether the plaintiff is entitled to make a claim for variation CVC04-1. The question of the quantum ($33,000) is not in issue. Clause 13 of the plaintiff's Retainer was in the following terms: 13. If MDA's work is increased or protracted due to causes beyond its control and/or you request variations in the scope of services or to the approved design, a variation fee is payable. MDA will notify you when a variation fee is payable and shall not proceed with the variation until authorised by you. Variation fees will be charged for on a time basis as set out in the Professional Services Proposal unless you request some other basis of assessment, in which case the basis shall be agreed and authorised by you prior to MDA putting the work in hand. 119 One aspect of the plaintiff's entitlement to the fee for a variation is notification to the Council. The Council resists the plaintiff's claim on the basis that the plaintiff failed to give the Council notice of the work it did in relation to the removal of the sprinklers. The Council relied upon Rogers CJ Comm D's decision in Wormald Engineering Pty Limited v Resources Conservations Co International (1988) 8 BCL 158 at 162-163 in support of its submission that the requirement to give the Council notice was a precondition to recovery of the variation fee as opposed to providing an entitlement to the Council to damages for breach of retainer. The clause in that case (clause 40.2) involved the contractor forming an opinion about whether compliance with a superintendent's order was likely to prevent the contractor from, or prejudicing it in, fulfilling any of its obligations under the contract; and having formed such an opinion requiring it to "forthwith notify" the superintendent in writing of that opinion. Thereafter the superintendent was obliged "as speedily as is practicable" to determine whether or not the contractor had to comply with its order. 120 The plaintiff sought to distinguish Wormald on the basis that the clause in question in that case provided for: (a) a sufficiently timely variation order to enable re-programming and the formation of opinion as to value; (b) notice by the contractor of the likely effect of the variation order; and (c) a written direction to proceed with the variation order based upon an informed view about disruption and cost. Rogers J emphasised these "carefully constructed machinery steps" (at 161) that enabled potentially complex issues of disruption and cost to be addressed in advance of the instruction to proceed. It was also submitted that Wormald is limited to the construction of the clause in that contract and is accordingly of limited utility in this case. 121 In the present case clause 13 provided that the plaintiff would notify the Council when a variation fee was payable and that it would not proceed with the variation until it was authorised by the Council. The plaintiff submitted that clause 13 is quite different to the clause under consideration in Wormald in that there was no obligation on the plaintiff to advise the Council of the likely cost and its only obligation was to advise the Council that there would be a cost. The plaintiff also submitted that the failure to give a notice required by clause 13 is not destructive of the plaintiff's right to the fee, rather, it may entitle the Council to claim damages. It was further submitted that there is no implication from the express words of clause 13 that a variation that has been carried out without notice cannot be the subject of a later claim. 122 The plaintiff claims that in any event the Court should be satisfied that notice was given to the Council in the plaintiff's letter to Mr James dated 30 March 1999 which included the following: We cannot progress any of the documentation on the Council and Police building until fundamental decisions are made in relation to:

[25]

These decisions, when made, may result in major abortive work involving extensive re-design and re-drafting. 123 The plaintiff claimed that there was no evidence supporting a damages offset from the amount claimed by the plaintiff and that in any event, the plaintiff was entitled to make the alternative quantum meruit claim. 124 The evidence in relation to the question of the deletion of the sprinklers is detailed in appendix A to the plaintiff's outline of submissions in chief. On 19 April 1999 the plaintiff wrote to Grubits advising that as of that afternoon it had received the "go-ahead" from the Council with regard to the Atrium. It stated that in the light of that decision the plaintiff was then "firmly locked into delivering to the Council, a sprinkler free building". There were numerous design meetings at which both the plaintiff and the Council were present and various discussions occurred about compliance with the Building Code of Australia (BCA) and the question of the deletion of the sprinklers. On 28 May 1999 the Council wrote to Austin confirming that it would proceed with the deletion of the sprinklers, subject to such deletion meeting BCA requirements. 125 The only issue in relation to whether the plaintiff is entitled to this variation is whether it was required to give notice pursuant to clause 13 prior to it performing the work relating to the removal of the sprinklers. I am satisfied that the letter of 30 March 1999 gave sufficient notice to the Council that if it made a decision to remove the sprinklers then additional work would have to be done by the plaintiff. That letter combined with the evidence in relation to the design meetings and discussions between the plaintiff, the Council, Grubits and Austin satisfy me that the Council was notified that the plaintiff would have to do additional work should the sprinklers be removed. Once the "go-ahead" was given to the plaintiff in relation to the design for the Atrium, I am satisfied that the Council effectively approved of the additional work for the removal of the sprinklers. In any event having regard to the distinguishing features of the clause in Wormald it does not seem to me that even if the plaintiff had failed to give notice such lack of notice was destructive of its entitlement to claim this variation at a later time. 126 The plaintiff is entitled to the payment of variation CVC04-1. 127 Adjustment for increased costs: This claim relates to the final cost of the Project being at least $19 million. The plaintiff claims that pursuant to clause 3 of the standard terms of its Retainer its fees should increase. Clause 3 of its Retainer provides: When MDA's fee is based on an estimate of cost or likely cost advised by you or your agent and the final cost or final estimated cost exceeds this amount by more than 5%, MDA's fee will be increased in proportion to the whole of the increase in cost, unless such fee was originally a percentage of the cost of the works.

[27]

129 There is an issue as to whether the plaintiff's fee was based on an estimate or cost that was "advised" by the Council or by the Council's agent. The Council claims that the figure was not advised by it but rather by the plaintiff itself and that clause 3 has no application. DG Jones was originally retained by the plaintiff, however the Council retained that firm directly from late November 1998. The Report to the Council for the Meeting on 2 December 1998 stated that, "Council has employed the services of the Quantity Surveyors DG Jones to determine the costings". Ms Rosser agreed that this was an accurate statement and in any event DG Jones was dealing directly with the Council by no later than 25 November 1998 when it provided its suggested scope of quantity surveying services and a "DA Estimate Cost Summary" of $23.3 million. Accordingly the estimate of cost was advised by the Council or its agent and clause 3 will apply to the final cost of the Project the subject of the Arbitration Proceedings. 130 Construction services claim: As I have already indicated there is no longer any issue that the amounts claimed by the plaintiff are owed to it by the Council, subject to the outcome of the Cross Claim. The Council has failed in its Cross-Claim and therefore the plaintiff is entitled to an award in its favour for these amounts. COUNCIL'S CROSS-CLAIM 131 The claims for determination on the Council's Cross-Claim are the alleged breach of retainer by the plaintiff's alleged failure to provide its services with the degree of skill, care and diligence normally exercised by architects in similar circumstances (breach of retainer); the claim in negligence on the same basis (the negligence claim); and the alleged misleading or deceptive representations made by the plaintiff in breach of s 52 of the TPA (the TPA claims). Amendment to Cross-Claim 132 As I have said earlier, the Council was granted leave on 24 April 2007 to file the Cross-Claim in Court. An order was made at that time that in respect of the causes of action in paragraphs 31(f) and 31(g), the date upon which such amendments were to take effect was to be decided after final submissions. The causes of action in those two sub-paragraphs are alleged breaches of s 52 of the TPA by reason of representations allegedly made by Mr Davies at the Council Meeting on 2 December 1998. Those representations as pleaded in the Cross-Claim are: (f) A construction management contract with a GMP was like a lump sum tender and would give the Council surety that construction of the MDA Option 2000 (as described in MDA's professional services proposal dated 19 August 1998) would not exceed $16.9 million;

[28]

(g) Construction of the MDA Option 2000 through a construction management agreement with a GMP, and based on documentation to be prepared by MDA, would not exceed $16.9 million. 133 Section 64 of the Civil Procedure Act 2005 (the Act) confers a general power on the Court to permit amendments. Section 64(3) provides: (3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made. 134 Section 65(2)(c) of the Act provides that leave may be granted to make an amendment which introduces a new cause of action if it arises from the same, or substantially the same, facts as those giving rise to an existing cause of action in the pleading. However, s 65(2)(c) does not limit the Court's general powers under s 64 of the Act. The Council submitted that the amendment should not be permitted except upon terms that preserve the time bar. To determine this issue it is necessary to review the history of the Council's pleadings. 135 The Council filed its Defence and Cross-Claim on 14 May 2004. In that pleading there was no mention of any statement allegedly made by Mr Davies at the Council Meeting on 2 December 1998. Indeed, that pleading included the following: 5. On about 2 December 1998, the Council resolved that its budget for the project was $16.9 million. Michael Davies was in attendance at the Council Meeting on 2 December 1998. Mr Brownlee of the Council orally advised Mr Davies of Michael Davies about the Council's budget on 3 December 1998. 136 The only representations pleaded in the Defence and Cross-Claim filed on 14 May 2004 were as follows: 28. In preparing and issuing the Tender Form Part B and The GMP Documentation to the tenderers and to the Council, in circumstances where Michael Davies knew that the Council's budget for the Project was $16.9 million, Michael Davies represented to the Council that: (a) The GMP Documentation had been prepared with reasonable care and skill; (b) The GMP Documentation set out, either expressly or by implication, all the works and materials which were reasonably required to build and complete the Project; (c) the Project was capable of being built for $16.9 million. 137 On the first day of the trial, 10 April 2007, Mr Faulkner sought leave to file in Court an Amended Defence and Cross-Claim. Mr Simpkins indicated that he had been informed that this amended pleading was a draft that had been in circulation "for some while with some pretty minor recent corrections to it" (tr 26) and on that basis there was no objection to the filing of that pleading. Accordingly leave was granted to file that document in Court. That pleading amended paragraph 5 by adding the following words at the end of the paragraph: At a Council meeting on 2 December 1998, Mr Davies gave a presentation to Council and said words to the following effect: ' The GMP is like a lump sum tender. It gives the Council surety that the costs will not go above $16.9 million' . 138 An amendment was also made to the former paragraph 28 which, by reason of other amendments, became paragraph 31 and was in the following terms (with formatting indicating noting up): 31. In preparing and issuing the Tender Form Part B and The GMP Documentation to the tenderers and to the Council, in circumstances where Michael Davies knew that the Council's budget for the Project was $16.9 million Council would not accept a tender for more than $16.9 million , and in the circumstances set out in paragraphs 12A and 12B 1-17 above, Michael Davies represented to the Council that: (a) The GMP Documentation had been prepared with reasonable care and skill; (b) The GMP Documentation set out, either expressly or by implication, all the works and materials which were reasonably required to build and complete the Project; (c) the Project was capable of being built for $16.9 million. (d) The GMP documentation gave the Council certainty that the cost of the project would not exceed $16.9 million, save for substantial variations initiated by the Council; (e) The GMP documentation was adequate to form the scope of works for a construction management agreement with a GMP. 139 In this amendment the Council also claimed that "the representations" were false because the GMP documentation did not give the Council certainty that the Project would not exceed $16.9 million. 140 Mr Simpkins claimed that the Council had not pleaded that the plaintiff had represented that the GMP would give the Council surety that the costs of the Project would not go above $16.9 million. He accepted that the amendment to paragraph 5 included a claim that Mr Davies made such a statement at the Council Meeting on 2 December 1998, but submitted that such representation was not pleaded in paragraph 31 of the amended pleading (tr 359). Mr Faulkner relied upon the words "in the circumstances set out in paragraphs 1-17 above" in paragraph 31 to submit that it was clear that the statement alleged to have been made by Mr Davies as contained in paragraph 5 of the amended pleading was, by reference, included in paragraph 31 (tr 584). 141 On 24 April 2007 I allowed the Council to further amend its pleading to add representations (f) and (g) to paragraph 31 subject to the question of the date the amendment is to take effect. 142 The plaintiff submitted that the limitation period for the causes of action in sub paragraphs (f) and (g) is 6 years after the day on which the cause of action that relates to the conduct accrued, pursuant to s 82(2) of the TPA. Mr Simpkins referred to Keen Mar Corp Pty Limited v Labrador Park Shopping Centre Pty Limited (1988) ATPR 40-853 and Karedis Enterprises Pty Limited v Antoniou (1995) 59 FCR 35 and submitted that it is unclear whether the approach in the latter case, that the cause of action arose when it became reasonably apparent that the transaction was disadvantageous overruled the approach in the former case, that the cause of action arose at the time of entry into the relevant transaction. It was submitted that on either approach the limitation period has expired rendering the resolution of any inconsistency in these authorities unnecessary. 143 Mr Simpkins submitted that s 65(2)(c) of the Act does not apply because the new causes of action rely upon a different representation, allege different acts in reliance thereon and the facts are not substantially the same as for the existing causes of action. It was submitted that the new cause of action was raised at a time when memories have faded and in circumstances where there are no contemporaneous records that corroborate the claimed representation or any reliance upon it. It was submitted that it is now almost impossible to fairly test and evaluate the alleged representation having regard to the passage of 8 or 9 years before any of the witnesses who claim the representation was made had occasion to reflect back on what, if anything, Mr Davies said at the meeting on 2 December 1998. It was further submitted that the amendment was made late without any attempt to explain its lateness and there is no suggestion that the plaintiff was aware of this claim at any time during the limitation period. Accordingly, Mr Simpkins submitted that the amendment should only date from 24 April 2007, the date on which leave was granted to file the amended pleading. 144 Mr Faulkner submitted that when the Court granted leave on 10 April 2007 to file the pleading in which Mr Davies alleged statement at the Council Meeting of 2 December 1998 was included (par 5), no limitation point was raised. On 17 April 2007 the plaintiff filed a Defence to the amendment of 10 April 2007. That Defence did not raise any limitation point and included a denial that Mr Davies gave a presentation at the Council Meeting on 2 December 1998 and denied that he made the statement as alleged. It is true that the amendments made on 10 April 2007 are taken to have effect as from the date on which the original Cross-Claim was filed, 14 May 2004, thus it is clear that from 14 May 2004 the Council alleged that Mr Davies made the statement at the Council Meeting on 2 December 1998. 145 Mr Faulkner also relied upon the affidavit evidence filed and served in 2006, in particular that of Ms Rosser of 20 July 2006 in which she gave evidence that Mr Davies said the words as alleged in paragraph 5 of the amendment filed on 10 April 2007. Mr Faulkner submitted that all of the representations arise out of the same factual matrix concerning the parties' dealings between August 1998 and March 1999. It was submitted that the new causes of action pleaded in paragraph 31(f) and (g) arise from the same or substantially the same facts as those giving rise to the representations pleaded in paragraphs 31(a) to (e), including the statement allegedly made by Mr Davies at the Council Meeting on 2 December 1998. 146 The Council's pleading was infelicitous. The claim that Mr Davies made the representation as alleged in paragraph 5 of the pleading should have been included in the claims under the TPA with more precision. The use of the expression "and in the circumstances set out in paragraphs 1 to 17 above", although inclusive of the claim in paragraph 5 lacked clarity. However the plaintiff was aware that the Council was alleging that it had relied on the statement pleaded in paragraph 5 in fixing its budget for the Project at $16.9 million and deciding to go forward with the Project. That appears from the affidavit evidence of Mr Brownlee and Ms Rosser that was served on the plaintiff in 2006. It seems to me that the cause of action relied upon arises out of the same facts and circumstances as pleaded in the amendment made on 10 April 2007 to which the Council consented. 147 In all the circumstances I am satisfied that I should allow the amendment and it should take effect from 14 May 2004. Breach of Retainer/Negligence claim 148 In clause 4 of the Retainer the plaintiff agreed to exercise the degree of skill, care and diligence normally exercised by architects in similar circumstances. The Council's claims against the plaintiff for breach of retainer and in negligence are based on the allegations that: (1) the GMP Documentation did not set out all of the works and materials which were required to build and complete the Project: (2) the GMP Documentation was not prepared with reasonable care and skill; (3) the GMP Documentation was inadequate to form the basis of a construction management contract with a GMP; (4) the plaintiff failed to warn the Council at the time it entered into the Austin Contract that there was a real risk of a significant increase in the cost of the Project because of the very early stage of the development of the GMP Documentation; and (5) the plaintiff put forward the GMP Documentation as being adequate to form the scope of works for a construction management contract with a GMP.

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149 The Council claims that had the plaintiff complied with the terms of the Retainer and/or its duty of care to the Council by producing adequate GMP Documentation, Austin's tender price would have been higher than $16.9 million and the Council would not have entered into the Austin Contract. The Council claims that it would not have been exposed to the risk of damages and costs claimed by Austin in the Arbitration Proceedings. There is no direct evidence, in particular from Austin, that it regarded the GMP Documentation as deficient and/or an impediment to its assessment of the level of GMP for which it would submit a tender nor was there any such evidence that had the GMP Documentation set out "all the works and materials" required to build the Project, its GMP would have been greater than $16.9 million. The Council relies upon the circumstance that the final cost of the Project of some $19 million (a figure still subject to the arbitral award) to submit that such an outcome is obvious. 150 Various expert opinions have been expressed with which I will deal shortly but, as I have said above, there is no claim pleaded by Austin in the Arbitration Proceedings that the GMP Documentation was inadequate for it to submit its tender with a GMP of $18.65 million with the alternative GMP of $16.9 million. Rather the claim by Austin in the Arbitration Proceedings is that the conditions precedent contained within the Austin Contract for the GMP of $16.9 million were not met. Austin claims that the deletions were not implemented and therefore the lower GMP of $16.9 million is not applicable. Those are matters for decision in the Arbitration Proceedings, although evidence on that topic was led in these proceedings. "All works and materials"/reasonable skill and care 151 The first basis upon which the Council make its claims of breach of retainer and breach of duty of care is that the GMP Documentation did not set out all of the works and materials which were required to build and complete the Project. There is no issue of fact in relation to this claim. It is clear that the GMP Documentation did not set out "all the works and materials" as claimed. The real issue is whether such absence from the GMP Documentation amounted to a breach of the plaintiff's retainer or a breach of the plaintiff's duty of care to the Council. This will depend upon what it was that the plaintiff was instructed to provide pursuant to its retainer and the ambit of the duty of care in all the circumstances of the case. 152 The 1998 PSP was in relation to the plaintiff's services to the DA stage. The DA was approved at the Council Meeting on 2 December 1998. The plaintiff's letter of 1 December 1998 confirmed that it was proceeding with "tender documentation for demolition work and construction management services". That letter also referred to the Council's awareness that the plaintiff had prepared an "expression of interest package, and advised and attended meetings in relation to selection of the construction management tenderers" which had not been included in either Option (a) or Option (b) in the 1998 PSP. In this letter the plaintiff advised that the preparation of the tender documentation (the GMP Documentation) would be charged for on a time basis in accordance with the PSP, but if the Council proceeded beyond the DA stage, that fee would be absorbed in the next stage Option (b).

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156 Under the Austin Contract, the contract manager (Austin) had a role in the design of the Project. It was obliged to liaise with the Design Manager and to assist the Council and the design team with the coordination of all drawings and specifications, including shop drawings. It was also obliged to consult as necessary in relation to "alternative designs or materials" (3(a)). The Council's obligation included the retention of the architects, engineers and other qualified persons in order to "prepare Drawings and Specifications for the Works and to be responsible for the design" (8 (c)). That contract defined "Drawings and Specifications" as "those documents including Bills of Quantity (if any) produced by the Consultants". "Consultant" was defined to include the "Architect, Engineer, Surveyor and other persons (as appropriate) employed by the Principal to design the Works and to prepare the Drawings and Specifications". 157 A number of experts gave evidence in the proceedings and that evidence is analysed below in relation to other aspects of the Council's claims. However on this aspect of the matter the plaintiff's expert architect, Mr Bullen, gave evidence that under a construction management contract, tenders for construction management contracts are usually obtained on a "skeleton" set of design documents, long before the documentation is complete (Bullen Report October 2005 par 7.2). Mr Bullen reviewed the GMP Documentation and concluded that the "Contract Set" drawings were not "full contract set in the traditional sense but would be referred to commonly in the industry as a "skeleton set" of documents" (Bullen Report October 2005 par 9.2). The Council's expert architect, Mr Poiner, agreed that a "skeleton set" of drawings established a framework for construction documents but lacked "the fleshing out necessary for their full construction usefulness" (Poiner Report 19 July 2006 par 3.6). 158 Mr Poiner analysed the 1998 PSP on the assumption that what the plaintiff was doing prior to February 1999 was in the Scope of Services set out in that PSP. Mr Poiner assumed that in producing the GMP Documentation the plaintiff was providing the service within the description "Contract Documentation/Building Application Services". He referred to the description underneath that heading of "Documentation consisting of the preparation of documents based on Development Application Documents Setting out the Detailed Building Construction Requirements" and observed that there was no mention of limited or partial construction documentation (Poiner Report 19 July 2006 par 3.5). There was no cross-examination of Mr Poiner in relation to this observation, perhaps because of its limited import and/or particularly having regard to the fact that it was not really a matter for expert opinion. However I am satisfied that Mr Poiner proceeded upon an erroneous basis in making this observation. It is clear that the parties understood that when the plaintiff was instructed to produce the GMP Documentation, it was a service that was outside the Scope of Services in the 1998 PSP. That is evidenced by the plaintiff's claim in its letter of 1 December 1998 that it would charge for its services in this regard on a "time basis" and is also evidenced by the fact that when it submitted its claim in February 1999, the Council paid it without demur. 159 It was not until 31 March 1999, after the GMP Documentation had been submitted to the tenderers and the Council had entered into the Austin Contract, that the Council responded to the 1999 PSP dated 2 March 1999. It was in this letter that the Council advised the plaintiff that at its meeting on 17 March 1999 Council had given "authority to proceed with full documentation of the work". Although Mr Poiner observed that in this letter the Council gave the plaintiff those instructions, I am satisfied that he failed to appreciate the significance of the difference between the plaintiff's instructions in late 1998 and its instructions on 31 March 1999. The letter of 31 March 1999 supports the conclusion that the plaintiff was not instructed to produce drawings that set out "all works and materials" until that date.

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167 The plaintiff focused upon establishing the GMP Documentation was "incomplete" and that the Council knew that it was "incomplete". The Council took issue with the relevance of that approach on the basis that the claim it makes was that the GMP Documentation was "inadequate" and not merely "incomplete". A number of experts gave evidence in the proceedings and it is necessary to analyse their evidence on this aspect of the matter as well as for the purpose of determining the other claims the Council makes in its Cross-Claim. Mr Bullen - Architect 168 Mark Bullen, the Principal Architect and Director of Mark Bullen Architects Pty Limited, called by the plaintiff, provided expert opinion upon a number of aspects of the case. In his report of October 2005 Mr Bullen described "construction management" as a method of procurement that is particularly effective for 'fast-tracking' projects to early completion because it allows for the overlap of the traditional stages of design and documentation with construction. Mr Bullen claimed it was generally suitable where the principal is willing to take on a large part of the risk in a project and that it allows more flexibility in design, construction and scheduling of the works (7.1). He also expressed the view that under construction management type arrangements, construction is commenced as soon as the design is formulated and approved and, as I have said above, tenders for construction management contracts are usually obtained on a "skeleton" set of design documents, long before the documentation is complete (7.2). His opinion included the following: 7.5 In construction management type arrangements, it follows that architectural services of design and documentation overlap construction and are delivered concurrently, not sequentially as in other traditional methods of project delivery. At any particular time during construction under construction management, an architect can be designing sun shade devices to the façade of the building, while documenting toilet partitions and answering construction queries on concrete profiles. 169 In the section of his report of November 2006 entitled "Construction Management", Mr Bullen disagreed with the proposition that, "in order to have a GMP one required design documents fully describing the works" (23). In the section of his 2006 report entitled "Mechanical Services Variation" Mr Bullen expressed the following opinion in relation to the completeness of the GMP Documents relating to mechanical services: I agree that the documents prepared by MDA or on its behalf for the CM contract with GMP and dated February 1999 in relation to mechanical services did not detail all the work with respect to the mechanical services required for the building. I also agree that these documents were not adequate for fixed lump sum tendering and for construction. 170 Mr Faulkner cross-examined Mr Bullen in relation to the difference between a construction management contract with a GMP and a fixed-price or lump-sum contract. That evidence included the following (tr 435-439): Q. Is this correct Mr Bullen, that comparing a fixed price contract on the one hand with a construction management with GMP contract on the other, such as we have here, that first of all focusing on the fixed price contract to your understanding as an architect the builder will tender on the basis that the builder has the risk for all costs in excess of the agreed price? A. It depends on the terms and conditions tendered.

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Q. You are agreeing with the proposition that I put you upon those assumptions? A. I do 172 The assumptions Mr Faulkner asked Mr Bullen to make need to be analysed in the context of what actually occurred. When the GMP Documentation was sent out in December 1998 with the Invitation to Tender, there had been no instruction to the plaintiff that it had to prepare the documentation for a contract with a "predetermined cost". At that stage all that had been said relevantly to the tenderers was that the Council "anticipated" that the Project would cost $17 million. As I have said elsewhere, what subsequently happened after the tenders were received in late January 1999 was that an instruction was given to Mr Davies for the plaintiff to find savings by the deletion of certain items so that the Council could obtain a GMP from the tenderers within its then budget of $17 million. The Revised Tender Form Part B set out those various deletions and requested the tenderers to suggest other savings that could be made. It was not until February 1999 that Mr Davies was advised that the Project must be completed for no more than $17 million. 173 The Council was seeking to establish that on the assumptions put to Mr Bullen there was no difference between the tendering process for a fixed price contract and the tendering process that Mr Davies was instructed to proceed with in February 1999. However the reality of the circumstances in February 1999 is somewhat different to the bare assumptions put to Mr Bullen. The assumptions need to be understood in light of the fact that, although Mr Davies had suggested that the Project should be "fully documented", the Council rejected that advice. Other significant facts are that: (a) the Council knew that this was not the "traditional" way to call for tenders as for fixed price or lump sum contracts; (b) it knew that the GMP Documentation was not "fully documented"; (c) the successful tenderer was to have a role in the further modification and finalisation of the design in conjunction with it and its consultants; and (d) the plaintiff was yet to receive instructions to proceed with "full documentation of the work". Mr Poiner - Architect 174 The Council relied upon, inter alia, the expert opinion of John Frederick Poiner, a registered architect (non-practising). Mr Poiner expressed the following opinions in his report dated 19 July 2006 in relation to the GMP Documentation: 3.6 I refer to three parts of the Bullen Report. At sub-paragraph 9.2(d) the report provides the opinion that the Architect's 'contract set' of drawings (that is, the Building Contract Drawings - Architectural) of the type referred to commonly in the industry as a " skeleton set". I agree with this assessment and its implication that they establish the framework for construction documents but lack the fleshing out necessary for their full construction usefulness. At sub-paragraph 9.2(e) the Bullen Report explains that the preparation of a skeleton set of documents, by saving time on documentation early in the process, permits construction to start sooner than would otherwise be the case. I concur, subject to the nature and extent of the construction start being qualified by the documents' limitations and any advance beyond such a start being dependent upon the documents' content being increased. At sub-paragraph 10 (c) however the Bullen Report states 'In my opinion the Contract Set expressly and/or implicitly sufficiently described the works for construction …' . As well as finding it inconsistent with the earlier sub-paragraph 9.2 (d) quoted above I disagree with this opinion. The skeleton set falls short of the standard required to describe the works sufficiently for construction. Apart from documentary deficiencies referred to later herein there is a lack of information in the drawings. The Architect, at this stage, had not completed its undertaking to provide construction documentation. 3.7 Architectural building construction documents are documents, normally in drawn and written form, that seek to describe all of the works, materials and support tasks needed for the construction of a building or a building part. To be effective and to meet accepted architectural practice standards they must: · be clear and unambiguous; · be consistent with allied documents of other consultants; · faithfully reflect and confirm the building's approved design, translating the design into documentation that satisfies legal and industry construction standards; · inform building personnel of all materials and activities required for the construction and · permit accurate and detailed costings of the works and their component parts. 3.8 If for any reason a building construction document is incomplete at a time of its issue for any purpose such incompleteness must be clearly recorded on the document so that no contrary understanding can reasonably arise. This is normally achieved by an unfinished document being marked 'preliminary' or 'not for construction' or, as appropriate, being given a more specific and/or more detailed notation The Building Contract Drawings - Architectural/the Building Contract 3.9 … In my opinion, because of their state of incompletion, the drawings fall short of the necessary standard for architectural building construction documents described in paragraphs 3.7 & 3.8 above. Notwithstanding that they have been advanced sufficiently to show the layout of the building and effectively represent much of the proposed building works a number of wall elements are undefined on plans, sections and elevations, set-out dimensions (apart from column grids and floor-to-floor heights) are generally absent, door and window numbers are not shown and notations relating to elements and finishes are sparse. There is an evident lack of reference to detailed drawings that presumably at that time had not been drawn. Plan layouts of Council offices on plan levels three and four are almost entirely missing, as are the outer walls separating the offices from the atrium. Builders work associated with mechanical and other services plant is not shown.

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3.10 I have examined also the remainder of documents attached to Post Tender Notice No.2, which I have been instructed formed together the set of documents contained in the Building Contract. It is my further opinion that these additional documents do not make good the documentary deficiencies I have described in paragraph 3.6 above. 3.11 In my opinion the Architect's Building Contract Drawings-Architectural together with other Post Tender Notice No 2 documents, were suitable for obtaining expressions of interest from construction management firms such as Austin, but did not permit an accurate detailed costing of the works and their component parts. For this reason I see the GMP in the Austin Tender and the Building Contract as unreliable. 3.12 In my opinion an ordinarily-competent architect, acting in accordance with accepted architectural practice standards and seeking to guard its client's interests in a matter such as that under report would have known at the times of construction management tendering and contracting that the architectural construction drawings were incomplete and that other tender/contract documents did not correct their deficiencies, that the documents were therefore unsuitable for accurate works costing and that a costing of the works based on those documents was unreliable. The architect would have known that if the said documents were used as a basis for a GMP contract between the Council and Austin and the scope of works then extended by their completion, Austin would have been in a position to claim further costs and charges beyond those provided for in the GMP. The architect would have advised its client accordingly, warned it of the danger of cost increases and hence of the inherent dangers of such a contract. 175 I have referred below to the advice Mr Davies gave to the Council in late December 1998 that it had the opportunity to document the Project "fully", the rejection of that advice by the Council and the reasons given for the rejection of that advice. Mr Poiner was advised during cross examination of these matters, of which he had been unaware, and was also advised that Mr Davies had advised the Council that Austin's alternative GMP of $16.9 million was "contrived". Mr Poiner then gave the following evidence in cross-examination (tr 385): Q. Are you aware, Mr Poiner, that Michael Davies Associates in or about early 1999 advised the council that it ought to proceed to finalise the design before it entered into any contract for the project? A. No, I'm not aware of that.

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Q. Have any of the documents today served to change any of the opinions that you have previously expressed? A. Well, I haven't examined the second one except briefly when I was shown it by Mr Simpkins. That may well have a bearing on some of the views I expressed. I'd need to consider that, but that may well have a bearing on it. I had no idea that that had been undertaken. 177 Mr Poiner did not identify the opinions that may have been affected by this knowledge and/or document, or the extent of the change, if any, to the opinions he had expressed. In those circumstances it is not possible to know what, if any, impact these matters may have had on Mr Poiner's opinions. It is not a matter for the Court to try and work out the nature or extent of any possible impact these matters may have had on Mr Poiner's opinions. Once Mr Poiner said in his evidence that the DG Jones' costs estimate of 22 January 1999 "may well have a bearing on some of the views" that he expressed, it was a matter for Mr Poiner to identify those views and what "bearing", if any, the costs estimate had on those views. I am of the view that this significantly diminishes the value of Poiner's opinions. Mr Alden - Structural Engineer 178 John Miles Alden is a civil & structural engineer with over 35 years experience as a consultant engineer. He provided two reports in these proceedings, one dated July 2006 and the other dated 11 February 2007. In the first report Mr Alden observed that at the time of submission of Austin's tender on 10 February 1999, the GMP Documentation clearly recognised that the design process was still incomplete (3.2.17) and that it was clear that at the time the Austin Contract was entered into, further design development work was required (3.2.23). Mr Alden also noted that in his experience, the process of finalising the design for a substantial building project such as the one the subject of this litigation, typically results in some changes to the design and hence the construction requirements and also involves the development and resolution of various design details. He expressed the view that the "final details often define construction requirements and associated costs which could not have been reliably anticipated prior to the development and resolution of the design details" (3.3.12). 179 Mr Alden considered the GMP Documentation to "see how well, in general terms" it "defined the work necessary to construct the building" (3.4.2). In particular he reviewed 16 architectural drawings, 6 structural drawings, engineering services drawings and specifications. He assessed the architectural drawings to be typical of drawings at the "Development Application or Preliminary Design stage, that is prior to the carrying out and documentation of the final detailed design" (3.4.12). He noted that the structural drawings were all marked "PRELIMINARY ONLY - NOT TO BE USED FOR CONSTRUCTION" (3.4.15) and assessed them as being "indicative of a stage in the design development process" that he would describe as being at the Concept Design Stage only (3.4.28). Mr Alden also noted that the engineering services drawings were marked "PRELIMINARY - NOT FOR CONSTRUCTION" and that they were still at an early stage of development. From the state of these drawings he concluded that either the services engineers had not had time to prepare drawings, or they were waiting for further design development and co-ordination to take place so that they could base their services drawings on the final architectural layouts (3.4.31). Mr Alden referred to a number of the specifications as "standard or reference" specifications that had not been modified to address any special requirements for this particular Project (3.4.33). In summary Mr Alden's assessment of the GMP Documentation was that it represented only partial completion of the "Preliminary Design" stage and that it was "quite apparent, from even a reasonably brief review of the drawings, that the drawings were not intended to be used for construction purposes" and that this was "specifically stated on the various engineering drawings" (3.4.40). Mr Alden's conclusions included that (3.6.1): g) The design documentation which formed the basis of the GMP of $18.65 million was at a very early stage. I have assessed this to be, as a whole, somewhere between Concept Design Stage and Preliminary Design Stages. I believe that the design was not yet at a stage which could be described as the end of the Preliminary Design Stage. h) As a result many of the design details required for the construction work to proceed had not yet been developed, and design changes were to be expected as the design progressed.

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180 Mr Alden also reviewed the trade contract for structural steel. He compared the structural steel work drawings that formed part of the Austin Contract with the structural steel work drawings that were issued for the trade contract between the Council and the company known as Profab Industries Pty Ltd. He concluded that the structural steel work drawings were "typical structural steel design drawings, comprising marking plans, member sizes, and steel work design details" (4.2.16). He observed that the drawings were marked "ISSUED FOR TENDER" and that he had not seen any subsequent revisions of the drawings marked "For Construction". Indeed one of the drawings included the notation "HOLD" on one section of the roof framing which indicated that the design was not yet finalised (4.2.17-4.2.18). Having made the above-mentioned comparison Mr Alden concluded that the design contained in the GMP Documentation was "at a very early stage of development" (4.3.3). 181 Mr Alden claimed that it was clear to him that at the time the Austin Contract was entered into the structural and architectural drawings related to a different concept for the roof from that which was contained in the drawings for the trade contract. That suggested to him that there had not been sufficient time for the co-ordination of the architectural and structural designs. He thought that it was probable that the structural design development had not "caught up" with the architectural design development at the time the Council entered into the Austin Contract (4.3.8). He expressed the belief that any estimate of the extent, nature and cost of the structural steel construction works made for the GMP tender would have been largely irrelevant by the time of the trade contract tender (4.3.12). He also noted that the extent of work and cost for the concrete works trade package would be expected to reduce substantially due to the change from concrete roof structures to steel roof structures (4.3.13). 182 In this first report Mr Alden also addressed four questions: (1) Did the GMP Documentation prepared by the plaintiff or on its behalf in relation to structural steel show (either expressly or by inference) all work with respect to structural steel required to construct the building? (2) If not, what items of work were not shown? (3) Was the GMP Documentation prepared by the plaintiff or on its behalf in relation to structural steel prepared with reasonable care and skill? and (4) If not, in what ways was it deficient? 183 In respect of the first question Mr Alden concluded that the GMP Documentation did not show all the work required to construct a building (5.22). In this regard he noted again that the drawings were specifically and prominently marked "PRELIMINARY ONLY NOT TO BE USED FOR CONSTRUCTION" (5.2.8). He concluded that the GMP Documentation did not define the extent and nature of the structural steel work for the Project to a level that would "enable construction to proceed" (5.2.11). He also concluded that the inconsistencies between the GMP architectural drawings and the GMP structural steel work drawing, combined with the areas on the GMP structural steel work drawing where no information was shown and other areas where limited information was shown, was such that "no reliable estimate of the extent (or cost) of work necessary to construct the structural steel work for the project would have been possible" (5.2.12). He also concluded: 5.2.14 I also believe, on the basis of my experience in the industry, that it would have been apparent to a building professional (such as an architect, engineer, quantity surveyor, builder, construction manager etc) that the GMP structural steelwork design was at a very early stage of development, and hence that any contract based on the GMP documentation would be potentially subject to significant variation. 184 In respect of the second question Mr Alden dealt firstly with items of work not shown on the GMP drawings that he believed would have been reasonably apparent to a structural engineer at the time. These items included information on the roof framing for the atrium roof, steel work associated with the lack for restraint at the top walls and steel work for the support of box gutters and/or fascias (5.3.4). The second area included the items of work in the trade contract documentation that was different from the GMP documentation referred to earlier. The third area was the changes subsequent to the trade contract documentation (5.3.5-5.3.6). 185 In relation to the third and fourth questions Mr Alden clarified the nature of a lump-sum contract and the GMP contract as typically used in the building industry. That evidence was as follows: 5.4.3 A lump sum contract is in essence a contract whereby a builder or contractor undertakes to carry out certain works for a lump-sum price, based on the documents that comprise the contract. That is, the lump sum price is for the works defined by the documents. If the documents are varied so as to affect the extent or nature of the works to be carried out, then typically this would result in a corresponding variation to the lump sum price.

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189 It is understandable that Mr Simpkins did not cross-examine Mr Alden on any other matters having regard to the very supportive evidence Mr Alden seemed to be giving in respect to the plaintiff's notations on the drawings. It is clear that Mr Alden regarded it as quite obvious that the GMP Documentation was at a very early stage and that this would have been obvious to anyone in the category of people identified by him. Far from being "hidden" as was submitted on behalf of the Council, the status of the drawings was very obvious. I do not accept that the plaintiff has confused the two concepts of "incomplete" drawings and "inadequate" drawings. Properly analysed, the evidence called by the Council from Mr Alden focused on the fact that the design was at a preliminary stage, which may be expressed otherwise as being "incomplete". It seems to me that the evidence in support of the Council's claim that the GMP Documentation was "inadequate" when analysed is evidence that the Documentation was "incomplete", or at a skeletal or preliminary stage, which, as the Council's experts observed, would have been obvious to any building professional. Certainly the Council was aware that it was incomplete. Mr Chow - Mechanical Engineer 190 The Council also relied upon the evidence of Joseph Chow, the Principal Mechanical Engineer with GHD Pty Ltd, who provided a report dated 31 July 2006. Mr Chow expressed the opinion that the GMP Documentation was "deficient" in the following ways: (1) Drawing numbers shown on sketches did not match those shown on specification; (2) Hand-marked sketches and generic specification did not specify the full extent of the scope of work; (3) details of locations of air-conditioning units and the areas they served, and duct routes were not clearly specified; and (4) the DDC/BMS Control System was not specific enough (2.2). Although Mr Chow expressed the opinion that the documentation was not prepared with reasonable care and skill, it is obviously a matter for the Court taking into account all the relevant circumstances of the matter. However Mr Chow observed that there was a note on the drawings that they were "preliminary sketch design" and that a fully detailed design would be provided at a later date. Mr Chow expressed the view that this "signified that the design has not been completed" (2.2). 191 Although the expression "deficient" was used by Mr Chow, three of the four alleged "deficiencies", the failure to show the full extent of the scope of work, the failure to clearly specify the air-conditioning and the lack of specificity in the Control System are complaints about incompleteness of the drawings. The complaint about the failure to match up the numbers with the specification needs to be understood in the light of the fact that the drawings were noted as preliminary sketch design drawings. The gravamen of Mr Chow's opinion was that the GMP Documentation was "incomplete". Indeed in the conclusion to his report Mr Chow's opinion was that the "hand-marked preliminary mechanical design sketches and sample specification in February 1999 included in the GMP contract were far from complete" (3).

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Mr Wyles - Electrical Engineer 192 The Council also relied upon the opinion of Neil Wyles, a consultant to GHD Pty Ltd in electrical engineering and mechanical building services who provided a report dated 31 July 2006. Mr Wyles expressed the opinion that the extent of electrical services was not clearly defined in the GMP Documentation. The examples of lack of clarity were identified as follows: (1) Power supply; the details of the proposed Energy Australia sub-station were not shown, making it hard to determine the size of cable and installation details of Consumer's Mains; (2) Segregation of supplies; the requirements for Council and Police power systems to be separated and two Main Switchboards were not clearly shown; (3) the supply and installation of smoke detectors and an Emergency Warning and Intercommunications System was not covered on the plans although alluded to in the legend; (4) the extent of work required by Specification Clause 3.2 (xiii) for "public address and radio broadcast system including room speakers and controls, for the NSW Police Services building" would be difficult to determine by an experienced contractor; (5) despite the coded symbols included in the Hyder Lighting Legend and other drawings it would be very difficult to be certain as to the number and required location of each type of light fitting, power, communications outlets or security device; and (6) despite notes on the drawings referring to CCTV cameras and door security systems it was difficult to determine the extent of work required (2.2). 193 Mr Wyles' complaints about the lack of detail or clarity in the GMP Documentation, is a complaint that it was incomplete. Indeed in the Joint Report of the Experts Mr Wyles expressed the opinion that the plaintiff failed to advise the Council that the information was "incomplete". 194 The claim made by the Council in its Cross-Claim does not allege that the plaintiff was obliged to produce GMP Documentation in December 1998 that would enable tenderers to cost the Project at no less than a GMP of $16.9 million. The claim is that Mr Brownlee instructed Mr Davies in early February 1999 to amend the GMP Documentation so that savings could be made to bring the Project down to $16.9 million. The original GMP Documentation that went out with the Invitation to Tender brought responses in the range of approximately $18 to $23 million. The Council knew at the time the original GMP Documentation was sent to the tenderers that it was not "fully documented". As I have already said, when Mr Davies advised Mr Brownlee and Mr James in December 1998, after the Invitations to Tender had been sent out, that there was no need to go down the construction management path because the Police were willing to wait until June 2000 for occupancy of their building, Mr Davies also advised that the time could be used to "fully document the Project and then call traditional tenders". At this time the Council had the choice of amending the GMP Documentation so that it set out more "fully" the extent or scope of the Project. It rejected Mr Davies advice and when the revised tenders were received, Mr Davies was not instructed to document the drawings more fully, but rather was instructed to find ways of deleting or reducing the scope or extent of the Project that had been documented in the original GMP Documentation so that savings could be found. 195 The reason Mr Davies' advice to document the Project "fully" was rejected was because Mr Brownlee was concerned about the "political implications" of going back to the Council. By the time Mr Davies gave this advice the Councillors had already spent a rather large amount of time assessing the Project both at the Workshop in September 1998, reviewing the Report received for the Council Meeting on 2 December 1998 and deciding to call selective tenders from six preferred tenderers for the Project. It had been a lengthy process and the resolution at that Meeting to proceed with the Project was only carried on the casting vote of the Mayor. It may be understandable that Mr Brownlee did not wish to go back to the Councillors at that time but that was the choice that was made in the face of advice from Mr Davies. It is clear beyond doubt that the Council was aware that the GMP Documentation did not fully document the Project or, put another way, the Council was aware that the GMP Documentation was incomplete. Having rejected Mr Davies advice to fully document the Project and call for traditional tenders, it ill behoves the Council to complain that the Project was not fully documented. 196 Quite a deal of time was spent during the trial in testing Mr Davies' claim that there was a difference between a fixed price or lump sum contract on the one hand and a construction management contract with the GMP on the other. The reason for that was because Mr Davies conceded that the GMP documentation was not adequate if tenders had been called for a fixed-price or lump sum contract and he also conceded that the plaintiff would not have complied with its duty of care or its retainer if the GMP Documentation was to be relied upon for tenders for a fixed price or lump sum contract. The Council set out to establish that there is no difference between a fixed price or a lump sum contract and a construction management contract with a GMP. 197 Mr Davies agreed that the documentation sent out to the tenderers in February 1999 was insufficient to enable the tenderers to accurately price the works for a fixed price contract (tr 95). He also agreed that the documentation was insufficient to price the works for a lump sum contract, however he claimed that the documentation was adequate for a construction management contract with a GMP. In his affidavit of 23 November 2006 Mr Davies responded to Mr Poiner's claim that the documentation prepared by the plaintiff did not permit an accurate detailed costing of the works. In paragraph 287 of his affidavit of 23 November 2006 Mr Davies gave the following evidence: In my opinion, as an architect with over forty-six (46) years experience, it would be entirely possible to draft contract terms and conditions which should protect the Principal from risk of increased costs beyond a guaranteed maximum offered by a Construction Manager, bearing in mind the Construction Manager's ability to assess and allow for risk and contingency based on its assessment of the project and level of project documentation. I therefore do not agree with the opinion that the documentation prepared by MDA … was unsuitable because it did not permit "an accurate detailed costing of the works". I accept that such matters might be relevant where the allegation is cast in terms of documentation for the purposes of a fixed price tender - however, that was not the case here. 198 Mr Faulkner cross-examined Mr Davies in respect of this claim in his affidavit as follows (tr 96-97): Q. … Do you contend that the difference between a fixed price contract on the one hand, and a construction management with guaranteed maximum price contract on the other hand is that in the GMP contract it's possible to draft terms sufficient to protect the principal? A. That's an awfully - they're different - they're different things.

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202 I do not accept that the plaintiff has confused the two concepts of "incompleteness" and "inadequacies" in the GMP Documentation. The plaintiff was instructed to adjust the documentation to reduce its scope and to find savings. It was not instructed to proceed with "full" documentation of the Project until nine days after the Austin Contract was signed. I am not satisfied that the GMP Documentation produced by the plaintiff pursuant to its instructions was "inadequate". I am satisfied that the GMP Documentation was "incomplete" or put another way, it was not fully documented, and that the Council was well aware of that fact. Indeed the Council rejected the plaintiff's advice to proceed with the full documentation and traditional tendering method. I am not satisfied that the plaintiff was in breach of its retainer or its duty of care in producing the GMP Documentation Should a warning have been given? 203 The Council alleged that a competent architect would have warned the Council that the GMP Documentation, if used as a basis for a GMP contract, may expose the Council to a claim of an increase in costs and expenses because the scope of works may need to be increased beyond that in the GMP Documentation. The Council relied upon Mr Poiner's opinion in this regard, however, as I have said earlier the value of Mr Poiner's opinions was significantly diminished as a result of his concession that the DG Jones 22 January 1999 estimate "may well have a bearing" on his opinions and the failure to identify those opinions. 204 Mr Poiner accepted that he had no experience in construction management with a guaranteed maximum price but claimed to have experience with many lump sum contracts (tr 367). He admitted that he had not taken any steps to acquaint himself with what was happening within the profession in relation to construction management contracts with GMPs (tr 368). His evidence was that any incompleteness of the Documentation would have an effect upon the estimate of costs "for whatever form of contract" (tr 369). His evidence in cross-examination included the following (tr 369-370): Q. I am asking you about your opinion, do you have the opinion, do you say that there was some time prior to the entry into the Austin contract where Michael Davies & Associates should have given some warning to the council? A. Should have given some warning to the council, I believe that if Michael Davies & Associates were aware that their documents were being used to establish an estimated cost of the building, of the building for whatever form of contract then the architect should have pointed out to their clients that the drawings were incomplete and therefore could not be accurately, the works could not be accurately costed.

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Q. And therefore it would be an important part of any proper assessment, wouldn't it, of what proper architectural practice required to make some assumption about what Michael Davies & Associates might have understood the guarantee would provide for, do you accept that? A. If Michael Davies & Associates knew the form of contract that was being entered into, yes. 205 Mr Davies drafted the form of guarantee in the original and revised Tender Form Part B. The Tender Form contained a guarantee that the total cost of the works would not "under any circumstances (other than delays or substantial variations initiated by the Principal) exceed the sums set out below". Clause 23.1 of the Austin Contract provided that Austin "undertakes" to deliver the Project for $16.9 million "provided that the design is modified and finalised by Council's Consultants (in conjunction with Austin) to match Council's total Construction budget sum" as set out in Austin's letter of 10 February 1999, including its attachments. 206 The plaintiff was not involved at all in the preparation of the terms of the Austin Contract, albeit that the Tender Form that Mr Davies drafted was attached to and formed part of the Contract. The Council took advice from Abbott Tout in relation to the terms of the Contract and Mr Davies was not consulted about the terms of clause 23.1. The guarantee contained in clause 23.1 in the form of an undertaking, was conditional upon the Council's Consultants (a defined term referred to earlier) in conjunction with Austin, modifying and finalising the design of the Project to match the Council's budget for construction. 207 The Austin Contract required the Council, through its agents and employees, to work with Austin to modify and finalise the design that was in the GMP Documentation to delete the items referred to in Austin's letter of 10 February 1999. That requirement needs to be read with the instruction to the plaintiff on 31 March 1999 to proceed with "full" documentation.

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208 I am satisfied that the Council knew that in February 1999 the GMP Documentation was not fully documented and that further modifications to the original design had to occur to obtain from the prospective tenderers a guarantee that matched the Council's budget of $17 million. I am satisfied that Mr Davies advised the Council that Austin's alternative GMP of $16.9 million was "contrived", that it failed to allow for any risk and that it was in complete contrast to its first tender. 209 The warning the Council claims the plaintiff should have given it was, that at the time that it entered into the Austin Contract, there was a "real risk of a significant increase in the cost of the Project because of the very early stage of the development of the GMP Documentation". At the time the Council entered into the Austin Contract it knew that Austin had submitted a tender based on the GMP Documentation of $18.65 million, $1.65 million higher than its budget of $17 million. When Mr Davies warned the Council that the alternative GMP of $16.9 million was contrived, the Council was on notice that Austin had not allowed for any risk and thus the Austin Contract would need to ensure that the Council was protected with an appropriate clause guaranteeing the maximum cost or price. 210 None of the experts gave evidence that there was a "real risk of a significant increase in the cost of the Project because of the very early stage of the development of the GMP Documentation". Mr Alden expressed the opinion that it would have been apparent to a building professional that the structural steelwork design was at a very early stage of development and hence any contract based on the GMP Documentation would be "potentially subject to significant variation" (5.2.14). Mr Alden did not address the specific terms of the Austin Contract in relation to this potential and he did not express the opinion that there was a "real risk" of a significant increase in the cost of the particular Project. There was no suggestion made to the tenderers or the Council that the GMP Documentation was in detailed or final form. The Council's own experts made clear that it would be obvious to the tenderers (and no doubt the Council) that the design was at the preliminary stage and was "not for construction". There is also no evidence to establish that any increase in the cost of the Project had anything to do with the nature or extent of the GMP Documentation at the time the Council entered into the Austin Contract. The claim made by Austin in the Arbitration Proceedings does not suggest that any incompleteness, let alone any inadequacies, in the GMP Documentation was the cause of any increase in the cost of the Project. Rather Austin claims that the Council failed to work in conjunction with it in modifying the design and failed to implement the deletions that were necessary to bring the GMP down from $18.65 to $16.9 million. There is no evidence in these proceedings that establishes that the final cost of the Project was causally related to the state of the GMP Documentation. 211 In all the circumstances of this case I am satisfied that the plaintiff was not required to give the warning to the Council. The Council has failed to establish that the plaintiff breached its retainer or its duty of care to the Council.

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217 I am satisfied that the issuing of the GMP Documentation amounted to a representation by the plaintiff that such documentation was adequate to form a scope of works for a construction management agreement with a GMP. 218 The question is whether such a representation was false. There is no evidence that suggests that the GMP Documentation, although incomplete, was inadequate to form a scope of works for a construction management contract with a GMP. The "scope of works" in this context is not the same as in a traditional tendering process for a fixed price contract or a lump-sum contract. As I have said elsewhere, in the traditional method, full documentation or full design is completed prior to construction commencing, whereas in a construction management contract with the GMP, design is developed concurrently with construction in what has been referred to as a "fast track" method with a skeleton set of documents to be fully documented later. The "scope" for a fixed price contract includes all the materials and work that are necessary to construct the project the subject of the contract. The "scope" in this instance was different. All the materials and details of all the work were to be fully documented later. The adequacy of the scope in this instance is quite different to that which is required for a fixed price contract. Full documentation was not required to be produced by the plaintiff until it received its instruction on 31 March 1999 that the Council had decided at its meeting on 17 March 1999 that such should occur. The GMP was to be provided on the skeleton documents with the proposed deletions and/or savings. The "scope" that was identified in the GMP Documentation was adequate for the purposes of the tendering for a GMP with the scope to be identified in more detail in the "full" documentation, to be completed at a later time. I am not satisfied that the Council has proved that this representation was false or that it was misleading or deceptive. The Council's case in relation to this representation fails. Representation (c): The Project was capable of being built for $16.9 million; Representation ( d): The GMP documentation gave the Council certainty that the cost of the project would not exceed $16.9 million, save for substantial variations initiated by the Council; Representation (f) A construction management contract with a GMP was like a lump sum tender and would give the Council surety that construction of the MDA Option 2000 (as described in MDA's professional services proposal dated 19 August 1998) would not exceed $16.9 million; and Representation (g): Construction of the MDA Option 2000 through a construction management agreement with a GMP, and based on documentation to be prepared by MDA, would not exceed $16.9 million. 219 The issue of whether these representations pleaded in paragraphs 31(c), (d), (f) and (g) requires a determination of whether at the Council Meeting on 2 December 1998 Mr Davies made the statement alleged in paragraph 5 of the Cross-Claim that "the GMP is like a lump sum tender. It gives the Council surety that the costs will not go above $16.9 million". Although the preamble to paragraph 31 refers to the preparation and issuing of the Tender Form Part B and the GMP Documentation the representations are dependent upon Mr Davies knowing that the Council had fixed its budget at $16.9 million and having made the alleged statement at the Council Meeting of 2 December 1998. It is therefore necessary to review the evidence of the various witnesses who attended the Meeting and the documents produced either contemporaneously or otherwise. There are also other aspects of the evidence to be considered in deciding what, if anything, was said by Mr Davies at that Meeting. These include the evidence in relation to the meeting between Mr Davies and Mr Brownlee on 3 December 1998 and Mr Davies' evidence of his understanding of the Council's "budget" or as the Council submitted, the "pre-determined cost", for the Project. The Minutes 220 The Minutes of the Meeting (Ex E) record that those present were the Mayor Mr Keegan, Councillors Borluk (except for a period between 7.07pm to 7.33pm), Cassidy, Chantiri (from 6.31pm), Curtin (except during the period 7.07pm to 7.33pm), Donaldson, Hockley, Jones (except during the period 7.07pm to 7.33pm), Lam, Moore, Murray and Saddick. The Minutes record that the "officers" present were Ms Rosser, Mr D Ryan, Mr T Brown, Mr J Cumberford, Mr Brownlee, Mr P Donovan and Mr B Cockayne. 221 The Report that had been given to the Councillors for the Meeting included the recommendation as follows:

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224 The only witness for the plaintiff who gave evidence of what occurred at the Meeting was Mr Davies. The witnesses for the Council on this aspect of the matter were Mr Brownlee, Ms Rosser, Mr Saddick , and Mr Keegan. Mr Davies 225 It was submitted that Mr Davies was an unimpressive witness and that his denial that he made the alleged statement at the Council Meeting on 2 December 1998 should be rejected. It was submitted that Mr Davies would not answer questions and that this prompted several "interventions" from the Court. It is necessary to analyse those passages in the transcript relied upon by the Council in support of this submission. The first passage relied upon related to a series of questions about a letter dated 30 July 1998 that appeared at page 14 of Exhibit 1. That letter was sent to Ms Kragh who attended the pre-tender meeting with the Council on 28 July 1998 on the plaintiff's behalf. The letter enclosed various documents that included the minutes of the meeting that contained a statement that at a public Council meeting various options were presented to Council and the "figure given" to the Council for Option 2A for the construction costs was $14.7 million. The passage relied upon is as follows (tr 37 - 38): Q. Document number 14 at the bottom? A. Document 14 or page 14? Q. Page 14? Q. Yes. There is also, I might point out -- HER HONOUR: Just wait for the next question. Mr Simpkins is your barrister. If he decides something needs to be cleared up, he can ask a question in re-examination. FAULKNER Q. Looking at page 14, you saw this letter shortly after it was written on 30 July 1998, and the materials sent with it, didn't you? A. Just let me read it. Q. Looking at page 14, I am asking you, did you receive that and the materials referred to in it, at about that time? A. Yes. Q. Now, Mr Davies, a little while ago I asked you had you at any time learned of the council's estimate of the price for construction of $14.7 million; do you remember I asked you that? A. You did. Q. Is it your evidence that you never became aware of that? A. That is not the estimate. Q. Is it your evidence that you never became aware that the council had that figure? A. I was aware that there were two figures in the brief. Q. Just answer my question. Do you say that you never became aware that the council had that estimate? A. I was aware of that figure.

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227 The next passage of transcript relied upon related to the budget figure that Mr Davies included in material sent out to tenderers. Mr Davies agreed that he was prepared to send material out that was "inaccurate" in so far as it was "erroneous" in respect of the budget price (tr 51). The passage relied upon is as follows (tr 52): Q. Would you first weigh up whether you should or should not do it? A. I weighed it up and I did it. Q. You expected that the tenderers would rely on you to be totally accurate to the best of your ability in what you were giving them, didn't you? A. I didn't expect that. Q. You didn't expect that? A. No, doesn't happen. Q. Do you say that you expected that the tenderers might consider that you had deliberately given them some misleading information? A. They could. Q. Do you say that you expected that, that the tenderers might think that you had given them some misleading information? A. No, they wouldn't rely on it. Q. You say that they wouldn't rely on anything that you gave them? A. That's not what I said. I said they wouldn't rely on the figure that you are referring to. Q. Mr Davies, you are focusing on a figure. I am not. Can you forget about the figure for the time being? A. Okay. HER HONOUR: Listen very carefully to Mr Faulkner's questions -- A. Yes HER HONOUR: -- and just answer those. 228 I am not satisfied that this passage of evidence warrants the drawing of an adverse view about Mr Davies' evidence generally. It is true that Mr Faulkner was focusing on the fact that Mr Davies had included a figure in the documents that he sent out to tenderers. It is also true that Mr Davies had admitted that the figure he provided to the tenderers was not the true Council budget. The fact that he was focusing on a figure rather than the general question that Mr Faulkner asked is not something that persuades me that he was deliberately attempting to avoid answering the question. Certainly the "intervention" was not precipitated by such a view. To be fair, the question that was asked was very broad and on reflection it was not unreasonable for Mr Davies to inject the focus on the figure at this stage. 229 The Council relied upon the following evidence to suggest that the evidence extracted above demonstrates an unwillingness to answer questions (tr 76): Q. You were aware when you put this document out that tenderers would rely upon it as a statement coming from you, as accurate as you could make it, didn't you? A. Yes. 230 This evidence does appear to be inconsistent with Mr Davies' earlier evidence that such reliance "doesn't happen" and needs to be taken into account when assessing Mr Davies' other evidence.

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238 Mr Davies denied giving any presentation to the Council at the Meeting or referring to a figure of $16.9 million. His account of the Meeting on 2 December 1999 in his affidavit of 23 November 2006 was as follows: 63. On or about 2 December 1998, I attended Auburn Council's Ordinary Meeting at Auburn Council … I did not make any presentation to Auburn Council at that meeting. I had previously made a presentation to Auburn Council on 15 September 1998 (see paragraph 40 above) on the various options for the redevelopment of the Auburn Civic Centre and possibly a further meeting on 29 October 1998 (see paragraph 48 above). I recall that I only attended the meeting to see whether Auburn Council approved the development application for the Auburn Civic Centre redevelopment and to be "on call" to answer any questions in relation to the same if necessary. I recall that the development application for the Auburn Civic Centre redevelopment was approved at this meeting with very little debate, and with no questions being asked of me. 239 The meeting on 15 September 1998 that Mr Davies referred to was the Councillor Workshop, the purpose of which was for the plaintiff "to discuss the different options available to Council and for Councillors to make comments and debate these options" (Ex 1 - 79; Ex PD - 369). It is obvious that there was a detailed presentation given to the Councillors on that occasion and in paragraph 40 of his affidavit of 23 November 2006 Mr Davies refers to the "overhead presentation" that he provided during the meeting. The "Bottom Line Cost Comparison" provided to the Councillors as part of the presentation at that meeting compared the costs of the various options available to the Council for the redevelopment of the Civic Centre. Those figures range between $13.08 million and $15.79 million for the total building works and between $20.9 million and $24.4 million for the total cost including professional fees, escalation costs and the like. The report of the Workshop noted that a further report would be presented to the Council that would outline the "costs of the project". It was noted that as the "preferred option is developed further the costings will become firmer". The report makes no mention of any discussion about a GMP nor is there any mention of that concept in the overhead documents produced by Mr Davies at the Workshop. 240 The other meeting referred to by Mr Davies in his affidavit was a "possible" meeting on 29 October 1998. His memory of the possibility of that meeting was triggered by a reference in his diary for that date which recorded "Presentation to Council. Auburn Civic Centre". Mr Davies' evidence was that he had no independent recollection of such a meeting or presentation. There are no Minutes in evidence recording the fact of such meeting nor the nature of the proceedings at such a meeting. 241 Mr Davies gave the following evidence in cross-examination in relation to the Council Meeting on 2 December 1998 (tr 59- 60): Q. And you were asked to come forward when the council agenda reached this development project, weren't you? A. No.

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Q. You don't claim, do you, that prior to 2 December 1998 you had had any oral communication with Mr Davies in which he had provided a cost for the project of $16.9 million? A. I believe I did, but I can't say that categorically. 245 Councillor Chantiri did not give evidence. After Mr Brownlee was given the opportunity to check his affidavit he accepted that there was no account of a conversation in the terms suggested in the last question extracted above with Mr Davies prior to 2 December 1998 (tr 162). He also accepted that: (1) he could not identify any document passing between himself and Mr Davies prior to 2 December 1998 in which Mr Davies had referred to a cost of the project of $16.9 million; and (2) he had not made any reference in his report to Council for the Meeting to a cost of $16.9 million for the Project. There was no written record made of Mr Davies having mentioned the $16.9 million figure, or the statement that Mr Brownlee claims Mr Davies made that Council would have a "surety" that the costs would not go above that figure (tr 162). Mr Brownlee admitted that prior to his affidavit of 26 July 2006 he had never given an account to anyone of a conversation involving Mr Davies on 2 December 1998 in which he allegedly referred to a Project cost of $16.9 million. He accepted that the first time he gave such an account was when he made his affidavit, seven and a half years after the subject Meeting, unaided by any reference to any document or other record (tr 162). Ms Rosser 246 Lea Joanne Rosser, the General Manager of the Council in 1998 and up until June 2001, was also present at the Meeting. In her affidavit sworn on 20 July 2006 Ms Rosser gave evidence that prior to the Meeting she had a conversation with Mr Brownlee in relation to the guaranteed maximum price for the Project in which Mr Brownlee said: MDA should be engaged to complete the design and documentation of stage 2 of the Project as they will agree on a GMP of $16.9m and this is the amount of the Council's budget for the construction and management of the Project. 247 Ms Rosser claimed in her affidavit that Mr Davies gave a presentation at the Meeting and that she recalled Mr Davies saying to the Councillors: The GMP is like a lump sum tender. It gives the Council surety that the cost will not go above $16.9m. 248 In evidence-in-chief Ms Rosser claimed that at the Meeting, Mr Davies was in the gallery area and came forward to the head table where the Mayor and senior members of the Council were sitting. She claimed that Mr Davies first gave an overview that took no more than five to ten minutes and then answered questions that took no more than "five or so" minutes. She recalled that Mr Davies was asked, "can you guarantee that the construction of this will not cost more than 16.9 million dollars" and that he responded, "yes, that is why [I] suggested a guaranteed maximum price methodology" (tr 209-210). Ms Rosser's evidence-in-chief also included the following (tr 210): Q. At the end of the, towards the end of the meeting after Mr Davies had spoken did you make a recommendation to the council? A. Yes I did.

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Meeting - 3 December 1998 265 The meeting between Mr Brownlee and Mr Davies on 3 December 1998 is a relevant circumstance for consideration in determining the probabilities of what occurred at the Council Meeting on 2 December 1998. Once again Mr Brownlee and Mr Davies gave competing versions of the conversation that occurred on 3 December 1998 (extracted earlier). The letter dated 31 March 1999 makes no mention of a meeting on 3 December 1998 or any conversation between Mr Brownlee and Mr Davies on that date. The letter that does refer to that meeting is the letter dated 8 July 1999 from Mr Brownlee to Mr Davies which claims that there was an agreement reached that: (1) the plaintiff's fee would be reduced by $39,500 because Council was engaging the quantity surveyor directly; and (2) the plaintiff's fees would be on a pro-rata basis on the competitive fees submitted in the PSP of 19 August 1998. 266 The original cross-claim filed by the Council on 14 May 2004 claimed that Mr Brownlee advised Mr Davies on 3 December 1998 "about the Council's budget". Mr Brownlee's version of the conversation in his affidavit sworn on 26 July 2006 suggests that he said something to Mr Davies that is quite inconsistent with the Council Minutes of the Meeting on 2 December 1998. He claimed that he informed Mr Davies that the Council had "resolved" to undertake the Project because the construction budget had "increased to $16.9 million". There is no such resolution recorded in the Minutes. 267 Mr Davies' diary refers to a meeting at the Council on 3 December 1998 when Mr Smith of the NSW Police Service was in attendance. His recollection of that meeting as recorded in his affidavit of 23 November 2006 was that there was discussion about the layout of the proposed Police Service premises and he denied that any discussion occurred in relation to his fees. Mr Brownlee accepted in cross-examination that Mr Davies had proposed an interim fee regime in the plaintiff's letter of 1 December 1998 and that the plaintiff had made a progress claim on 17 February 1999 consistently with the interim regime proposed in that letter. He accepted that there was nothing in the progress claim dated 17 February 1999 to reflect the conversation that he alleged had occurred on 3 December 1998 about the plaintiff's fees being charged on a pro-rata basis (tr 180-181). Mr Brownlee approved payment of this progress claim and did not write to Mr Davies asserting any different arrangement until the Council's letters of 31 March 1999 and 8 July 1999. The plaintiff submitted that importantly the letter of 8 July 1999 does not include a suggestion that an amount of $16.9 million was discussed on 3 December 1998. 268 The letter of 8 July 1999 referred to a meeting of the Council on 17 March 1999. Mr Brownlee prepared a report for that meeting in which he traced some of the history of the Project. In that report he referred to the Council resolution on 2 December 1998 to proceed with the Project but made no mention of the Council having adopted at that meeting a budget of $16.9 million. However, the report did refer to the fact that the tenders that were submitted in late January 1999 were all in excess of the "Council's budget of 16,905,847". Mr Brownlee accepted that the plaintiff's PSP of 2 March 1999 referred to a revised cost of $17 million (tr 176).

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269 If it had been agreed on 3 December 1998 that the plaintiff's fees were to be paid on a pro-rata basis of an increase in cost from $13.7 million to $16.9 million then it is reasonable to expect that Mr Brownlee would not have approved the payment of the progress claim of 17 February 1999 and would have corrected Mr Davies' claim in his letter of 2 March 1999 that the cost had increased to $17 million rather than $16.9 million. These may appear to be relatively small matters, however when official Council documents do not record what two former Councillors and two former Council employees claim to have occurred at a Council meeting, it is important to look at the surrounding circumstances and documents produced at that time to assess the probabilities of what actually occurred at that meeting. Pre-determined cost 270 Another aspect of the evidence relied upon by the Council in support of its submission that the evidence of the witnesses for the Council ought to be preferred over Mr Davies' evidence of what occurred at the Council Meeting on 2 December 1998, is the question of whether the Council instructed the plaintiff that the GMP Documentation had to be prepared for a "pre-determined cost". 271 The plaintiff submitted that the Council "never instructed that the contract documents had to be prepared for a "pre-determined cost." It was submitted that what the Council required was completion at a pre-determined cost, via a GMP and that this was something quite different. 272 The Council relied upon the Expression of Interest Information Package issued in November 1998 in which one of the Council's objectives was stated as: "The project nonetheless must be completed at an affordable and predetermined cost, and especially within the time allocated for construction". The Council submitted that the plaintiff's submission that there were no instructions that the Contract had to be prepared for a "pre-determined cost" borders on the absurd. It was submitted that Mr Davies admitted that he intended that by using the words "predetermined cost" in the "Expressions of Interest" document, he intended to convey that the cost had to be determined before building works commenced (tr 49). It was also submitted that at the end of January 1999, after Mr Davies was instructed that the works had to be completed for $17 million, he carried out all his duties as an architect on the basis that the Council's budget for the Project was in fact $17 million (tr 84). The Council claimed that the acceptance of that instruction from the Council was an acceptance to proceed on the basis of a "pre-determined cost". Alternatively it was submitted that at the very least, it is confirmation that Mr Davies was aware of the Council's requirement that his duties were to be carried out on the basis that documentation was to be prepared to ensure that the Project was able to be completed for the $17 million pre-determined cost. The Council also relied upon the Post-Tender Notice in which Mr Davies advised the tenderers that the Council had determined to make significant modifications to the design "in order to reduce the Guaranteed Maximum Price to within the budget approved by Council". 273 The Council submitted that Mr Davies' claim that in December 1998 he had an understanding that the Council's budget would have been $19.5 million should be rejected. It was submitted that Mr Davies knew at that time that the Council's budget was $17 million, as is evident from the following (tr 87): Q. Can you tell me, please, in the previous invitation to tender where the budget approved by the Council is indicated? I will take you back to a page. You might go back and look at page 185? A. Sorry, one--?

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Q. And I suggest to you that at page 185 when you gave the answer this morning that you would not agree that your understanding of the Council's budget being $17 million, that that answer was false to your knowledge? A. My understanding of Council's budget is as set out on that sheet to which we referred a little while ago. 274 It was submitted that in this evidence Mr Davies was seeking to avoid revealing that his knowledge in December 1998 was that the Council's budget was $17 million. The document at page 214 to which Mr Faulkner was referring in this cross-examination was Post-Tender Notice Number 1 in which the tenderers were advised that the Tender Evaluation Committee had met and determined not to accept any tenders and to make significant modifications to the design "in order to reduce the Guaranteed Maximum Price to within the budget approved by Council and indicated in the Invitation to Tender issued previously". 275 By at least late January or early February 1999 the Council had decided that it did not wish to spend any more than $17 million on the construction costs of the Project. When it instructed Mr Davies to change the GMP Documentation to facilitate the reduction in the tender amounts so that they were no greater than $17 million, it was an instruction that had built in it the position that the Council wished to obtain a tender for what otherwise might be referred to as a pre-determined cost of $17 million. That much is evident from the wording of Mr Davies' Post-Tender Notice 1 that the "significant" modifications to the designed had been made "in order to reduce" the GMP "to within the budget approved by Council". 276 I am of the view that when he drafted the Post-Tender Notice 1 Mr Davies understood that there was a budget for the Project and that he was to produce the "significant modifications to the design" in order to reduce the GMP. However that does not mean that Mr Davies knew in December 1998 that the Council's budget for the Project was $17 million. When the Invitation to Tender was issued in December 1998 the Council had resolved to proceed with the Project and had resolved to obtain funding for $19.8 million. The document prepared by Mr Davies on 29 January 1999 reflected DG Jones' figures that were included in the report to the Council for its Meeting on 2 December 1998. When Mr Davies drafted the Invitation to Tender in December 1998 he included the figure of $17 million for what he described as "commercial reasons" so as "not to convey to the tenderers what the council's budget was, in order that they would tender a figure somewhere below the budget, and it is not an unusual practice" (tr 76-77). Did Mr Davies make the alleged statement at the Meeting? 277 Mr Faulkner submitted that it is "odd" that there is no reference in the Minutes to Mr Davies making a presentation or the alleged statement and that it was also "odd" that there is no express reference in those Minutes to the fact that the Council resolved that its construction budget was $16.9 million. He submitted that "it is explainable simply on the basis that Council records were not as accurate as they might have been" and that "some imprecision and lack of detail in the minutes is hardly surprising". 278 Even if it is accepted that "some imprecision" is to be expected and/or tolerated in Council Minutes, the lack of any mention of Mr Davies' presentation and/or alleged assurance that the Council could complete the Project for no more than $16.9 million in my view is not mere "imprecision". Neither is the failure to record an alleged resolution to adopt a budget of $16.9 million for the construction of the Project. The Minutes of the Council Meeting record the resolution that the plaintiff's fees were $451,000 subject to variations. It is odd, to use Mr Faulkner's expression, that the Minutes should record the resolution to engage the plaintiff to complete the design and documentation stage of the Project at a particular price and yet not record the alleged resolution that the budget for the Project was fixed at $16.9 million. The motion that was carried included the funding arrangement not for $16.9 million but for $19.861 million. It is reasonable to expect that such significant matters would be recorded in the Council Minutes if they occurred. Indeed it is presumed that the Minutes accurately record the official business of the Council until the contrary is shown: Minister for Natural Resources v New South Wales Aboriginal Land Council & Anor (1987) 9 NSWLR 154 at 164 per McHugh JA. It is not appropriate to dismiss these absences on the basis of mere imprecision and I am satisfied that the absence of any mention of these matters in the Council Minutes is a significant factor to be taken into account in determining whether Mr Davies made the alleged statement at the Meeting. 279 Mr Faulkner submitted that it was far more difficult to explain why four independent witnesses would come to Court and give sworn evidence that Mr Davies made the alleged presentation and statement and all be mistaken. He submitted that it is glaringly improbable that they could all be mistaken. Although Mr Faulkner described these witnesses as "independent", each had a significant role within the Council at the time of the events. Both Mr Brownlee and Ms Rosser still work within local government, however Mr Keegan and Mr Saddick are no longer involved in local government and to that extent they are presently independent. I apprehend that Mr Faulkner's use of the term "independent" was to suggest that the witnesses are no longer employed by, or have an association with, the Council. It must be remembered that these witnesses for the Council did not provide affidavit evidence of what allegedly occurred at the Council Meeting until at least seven years after it occurred. It must also be remembered that the witnesses were reliant upon their recollections unaided by any minute, record or other form of document referring to the alleged presentation or statement. 280 When the Council filed its Cross-Claim on 14 May 2004 it claimed that Mr Davies was present at the Meeting on 2 December 1998 and it made the positive claim that it was Mr Brownlee who advised Mr Davies on 3 December 1998 that the Council's budget for the project was $16.9 million. This was quite the opposite of the claim now made by the Council in its amendment first filed on 10 April 2007 (reflecting affidavit evidence of July 2006) that at the meeting on 2 December 1998 Mr Davies was the source of the statement referring to $16.9 million as a GMP and as a "surety" for the Council. The original Cross-Claim filed on 14 May 2004 was certified by the solicitor for the Council pursuant to s 198L of the Legal Profession Act 1987.

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281 Mr Brownlee claimed that Mr Davies' presentation was five minutes with a question and answer session of five to ten minutes. Ms Rosser claimed that Mr Davies' presentation was no more than five to ten minutes with a question and answer session of five or so minutes. Mr Saddick thought that the presentation took about half an hour. Mr Keegan claimed that Mr Davies spoke for "probably five minutes, something like that, might be a little longer" (tr 301). Mr Brownlee and Mr Keegan claimed that Mr Davies spoke about the various construction options that were available to Council. Mr Saddick denied that such options were discussed at this meeting and claimed that only the costs of the Project was discussed. 282 The plaintiff referred to the fact that Mr Brownlee and Ms Rosser gave identical versions of what Mr Davies said in that each claim he said "The GMP is like a lump sum tender. It gives the Council surety that the costs will not go above $16.9 million" and submitted that it is quite extraordinary that these two witnesses could recall exactly the same words eight years after the event without any assistance from any document or record of any kind. It does present as rather extraordinary, particularly in the absence of any record in the Council Minutes. There is no doubt that both Mr Brownlee and Ms Rosser have analysed the figures that were contained in the report for the Council Meeting on 2 December 1998 to exclude various figures to reach the total of $16.9 million. In fact this exercise was done by Mr Brownlee in his affidavit sworn on 26 July 2006 which included the following: 25. It was my understanding that the GMP gave the Council certainty in relation to the cost. The Council's budget for the construction and management of the project was $16,905,847. The total budget was $19.8 million, which is set out on page 6 of the Council's Report dated 2 December 1998 (at [265 to 266] in Volume 1 of Exhibit "RB-1" ). Contained within the total budget of $19.8 million was the contingency of $1,579,503, escalation costs of $235,896, professional fees of $640,000 and relocation costs of $500,000, which left the Council with a budget for the construction and management of the Project in the sum of $16,905,847. The professional fees figure was a budget allocated for the fees of the architect, quantity surveyor and other consultants. The construction management fees were apportioned and contained within the budget allocated for the Police, Council, library and community centre buildings. 283 That analysis was also referred to by Ms Rosser in her evidence extracted earlier. Both Mr Brownlee and Ms Rosser have given evidence in the Arbitration Proceedings, the transcript of which is in evidence in these proceedings. In that evidence Mr Brownlee claimed that the instruction that he gave to Mr Davies in 1999 was that "the GMP of $16.9m is what council has approved and that we need to stick to that" and that items 1 to 4 in the Revised Tender Form Part B came out as soon as the Council accepted the $16.9 million (ex PD, Vol 25, 8709-8710). 284 Ms Rosser was cross-examined in the Arbitration Proceedings about a conversation she had with Mr Brownlee in 1999 in relation to clause 23.1 of the Austin contract. Ms Rosser was cross-examined on 25 November 2003 and was asked whether she had any recollection of what was said in that conversation. She gave evidence that she had a "general recollection" but not a recollection of "specific words". Her evidence included the following (Ex PD, Vol 26, 9069): There was a general discussion in terms of by this clause are we guaranteed that the maximum price will not increase above $16.9m for - for this particular project. And then we had a general discussion in terms of the meaning of this clause given the circumstances at that time. 285 In the Arbitration Proceedings Ms Rosser was cross-examined about the Council Meeting on 2 December 1998 as follows (ex PD, Vol 26, 9073-9074): Q. Now, $16.9m was in fact not the budget; it was a larger budget, wasn't it? A. No, that's not correct. It was the guaranteed maximum price, construction for $16.9m for the guaranteed maximum price of the building

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Q. At the time that council determined the budget for this project, you didn't have the benefit of Austin's tender, did you? A. No, that's correct. 286 Ms Rosser was not asked any further questions about the so-called "indication" from the architect, however it is apparent that in 2003 her memory was that there had been such an "indication". The difference between the architect giving an "indication" and the architect giving a "guarantee" as referred to in her evidence in these proceedings is of course a significant difference. The evidence in the Arbitration Proceedings extracted above demonstrates that in 2003 Ms Rosser did not have a specific recollection of a number of things including the terms of a conversation with Mr Brownlee and what actually occurred at the Council Meeting on 2 December 1998. Her memory was that there was a guaranteed maximum price contained in the report that went to Council for the Meeting on 2 December 1998. There was no such guaranteed maximum price in that report. Indeed there was no reference to a guaranteed maximum price. In these proceedings Ms Rosser claimed that it was Mr Davies who said to the Council that there was a GMP of $16.9 million, an alleged statement that has never been documented anywhere (except in the affidavits sworn seven and a half years later). 287 Ms Rosser claimed in her evidence in these proceedings that Mr Brownlee informed her that Mr Davies had advised him prior to the Council Meeting on 2 December 1998 that if the guaranteed maximum price methodology was pursued "the price would come in for 16.9 million dollars" (tr 215-216). Mr Brownlee was unable to corroborate this evidence. 288 It is difficult to accept that Ms Rosser's memory could have improved with time. Her lack of precision in recall at the time of her evidence in 2003 in the Arbitration Proceedings of the particular matters discussed at the Council Meeting of 2 December 1998 and/or the contents of the report to Council for that Meeting and the conversations with Mr Brownlee in 1999, means that the assessment of her precise recall some years later of what Mr Davies said at the Meeting should be approached with caution. 289 The delay in raising this matter or suggesting that Mr Davies made such a statement is a significant matter in considering whether Mr Davies made the statement at the Council Meeting on 2 December 1998. The delay is particularly relevant having regard to the fact that the very topic of when it was that the $16.9 million was discussed was the subject of correspondence between Mr Brownlee and Mr Davies in 1999, much closer to the time at which it is alleged Mr Davies made the statement. The correspondence extracted earlier in relation to the confusion about the fees in the plaintiff's 1999 PSP was at times lengthy and/or combative. Mr Brownlee took the opportunity in his letter of the 8 July 1999 to set out what he stated to be the "Council's understanding". That included the recounting of some history including the following: On the 2nd December 1998, Council resolved to undertake Option B, however, Michael Davies Associates had recommended to Council Officers prior to the 2nd December 1998 Council Meeting that the procurement method for delivering this project should be changed from 'Design Novate Construct' to Construction Management with a GMP and a 50/50 cost sharing arrangement. Michael Davies Associates recommendation was accepted and Council subsequently changed its method of procurement. This was reported to Council on 2nd December 1998. 290 There was no suggestion that at this meeting the Council resolved to adopt a budget of $16.9 million. There was no suggestion that at this meeting Mr Davies had given a presentation and an assurance to the Council in relation to a GMP of $16.9 million. The letter then referred to the meeting held on 3 December 1998, with no mention of any discussion of $16.9 million. The first mention of that figure was in the final paragraphs of the letter in which Mr Brownlee advised Mr Davies that Council resolved on 17 March 1999 to accept the tender from Austin for the GMP of $16.9 million. The letter then stated that Council subsequently advised the plaintiff in writing on 31 March 1999 of the "pro-rata-ed fee for the full documentation of the works" based on that figure. 291 If Mr Davies had given an assurance as claimed at the meeting on 2 December 1998 with reference not only to a GMP but also to the figure of $16.9 million, it is very strange that Mr Brownlee did not refer to this fact in his history of the matter in his letter of 8 July 1999. The absence of this reference in this particular letter is also a significant matter to be taken into account in deciding whether Mr Davies made the alleged statement at the Council Meeting on 2 December 1998.

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292 It seems to me that Mr Saddick was somewhat confused about what occurred at the Council Meeting on 2 December 1998. The cross-examination extracted earlier demonstrates that although he claimed positively that the architect had said that any variations would increase the cost by 10%, he was unwilling to endorse such sworn evidence in his cross-examination. It is difficult to have any confidence in Mr Saddick's version of events at the Council Meeting. 293 Mr Keegan's affidavits were only sworn shortly before trial. He accepted that there was no "budget" for $16.9 million, but he claimed that if the amount had "gone over" such a figure it would not have been approved. He recalled Mr Davies giving a number of presentations in the latter half of 1998. His version of what Mr Davies said has some important differences to the identical claims made by Ms Rosser and Mr Brownlee. He did not suggest that Mr Davies likened the GMP to a lump sum contract. He claimed that Mr Davies qualified the assurance by the words "more or less" but claimed that Mr Davies did mention the figure of $16.9 million. Mr Keegan's claim that approval would not have been granted if the figure was greater than $16.9 million is very difficult to accept when it is remembered that less than two weeks later the Council issued the Invitation to Tender with a figure of $17 million within it. 294 The Invitation to Tender issued by the Council on 14 December 1998 referred to the Council's "anticipation" that the cost of the works to be managed would be $17 million. That Invitation did not stipulate that the costs had to be guaranteed at that figure nor was it suggested that this was the Council's budget. It was referred to only as an "anticipation". I accept Mr Davies' evidence that the figure of $17 million was used for commercial reasons and I also accept that this was a device used to attempt to bring tenders in at less than the Council's then total budget of $19.8 million. If the Council had decided that its construction/management budget was $16.9 million, commercial commonsense would suggest that it would not invite tenders at an "anticipated" figure $100,000 greater than its budget. The wording of this document militates against the Council having adopted a budget of $16.9 million at the Meeting or Mr Davies giving an assurance that the cost would not go above $16.9 million. 295 Mr Faulkner's submission that it is glaringly improbable that these witnesses could all have been mistaken must be assessed in the light of the contemporaneous and other relevant documents. There is simply nothing in any document over all the years since 2 December 1998 to suggest that Mr Davies ever made the alleged presentation or statement at the Council Meeting on 2 December 1998. Indeed the documents seem to me to militate against Mr Davies having made such a statement. 296 After the tenders came in at around $22 million in January 1999, over $1 million more than the quantity surveyor's estimate of $20.9 million, Mr Brownlee, on his version of the conversation, informed Mr Davies that savings had to be found to bring the Project down to $16.9 million otherwise it would not proceed. The file note of the Meeting on 27 January 1999 noted that its purpose was to discuss potential deletions from the Project "to reduce the cost to the project budget of M$17.0". Mr Brownlee was present at that meeting as was Mr Davies. If the budget was $16.9 million and not $17 million it is reasonable to expect that there would be recorded somewhere between 2 December 1998 and 27 January 1999 the fact that the Council had adopted such a budget. I find it very difficult to accept in the light of the absence of any document in all those weeks referring to such a figure, that such a figure was in fact mentioned, let alone adopted, by the Council at the Meeting on 2 December 1998 as its budget or that Mr Davies was given an instruction that the budget was $16.9 million. I prefer the evidence of Mr Davies that the figure referred to by Mr Brownlee was $17 million. 297 I do not accept that Mr Brownlee said to Mr Davies on 3 December 1998 that the Council's budget for the Project was $16.9 million. I do not accept that Mr Brownlee informed Mr Davies on 3 December 1998 that the plaintiff's fees were to be adjusted on a pro-rata basis for an increase of costs to $16.9 million. I am satisfied that it is more probable than not that when the tenders were received in late January 1999 the Council reviewed the position before it gave instructions to Mr Davies to issue the Post Tender Notices and/or to attempt to bring the costs of the Project down.

Michael Davies Associates Pty Limited v Auburn Council

At a glance

Court

Decision date

Before

Source

Judgment (273 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (5)

Cited By (2)