Plaintiff v Defendants

2 On 23 January 2003, before Mr Love instituted the proceeding and sought the injunction, Roads Corporation contracted with Abigroup Contractors Pty Ltd for the design and construction of Stage 3 of the Craigieburn Bypass. The design of the Craigieburn Bypass provided for an overpass at O'Herns Road. The protected area lay to the southeast of, but adjacent to, the intersection of O'Herns Road and the route of the Craigieburn Bypass within the land acquired, the right of way reserved, for the bypass.

3 The terms of the contract required Roads Corporation to provide Abigroup with possession of the whole of the land reserved for the construction of the Craigieburn Bypass within 7 days of acceptance of tender. So much was clear on the tender documents and Abigroup prepared and submitted its tender, and the contract was awarded, in the expectation of possession of a site that included the whole of the protected area.

4 The tenant agreed with Abigroup to vacate Clonard on 14 February 2003. On that day, Mr Love sought and obtained an interim injunction.[3] Mr Love failed on an inter partes application for an interlocutory injunction and the interim injunction was discharged, although in certain respects, no longer relevant, the door was left ajar.[4] Mr Love succeeded on a further application on 6 March 2003.[5]

5 The court must determine the question whether Roads Corporation sustained damage and, if so in what amount, because of the injunction.

6 Roads Corporation contends that it incurred costs of $3,420,389.70 including $3,405,139.70 paid to Abigroup, because of the injunction. Interest is also sought from 21 December 2004, the dates of payment to Abigroup. The particulars of its claimed damages are set out in the following table.

Variation for the Design/Estimating Advice for interchange at Clonard

7 With the exception of items 4 and item 5, the balance of the damage suffered, $3,405,139.70 represents payment by Roads Corporation to Abigroup pursuant to its obligations arising under and in consequence of the contract. Of that sum, the contract superintendent certified $3,378,170.08, paid on 21 December 2004, as due to Abigroup, later formally confirmed by Contract Variation 5. Extension of Time Advice No. 1 accompanied that variation, granting an extension of time for practical completion of 86 days. Roads Corporation contends that the payment of $3,378,170.08 so certified comprised damages flowing directly from the injunction. Roads Corporation contends that the payment of the remaining items also flowed directly from the injunction.

8 Mr Love raised a number of objections to the assessment. In summary, he contended that:

(a) Roads Corporation and Abigroup did not mitigate the extra expenses arising from the imposition of the protected area, particularly by failing to take up offers of assistance made by Mr Love on 13 March 2003 and at other times.

(b) The additional project costs recovered by Abigroup did not flow directly from the injunction but were caused by Roads Corporations' 'litigate, not mitigate' attitude. In respect of both the watercourse 4447 culvert and the O'Herns Road Overpass, each of Roads Corporation and Abigroup made no meaningful effort to develop design options to avoid the protected area between March and June 2003 to mitigate delay costs. Rather, Roads Corporation unsuccessfully attempted to lift the injunction.

(c) Roads Corporation failed to give timely directions to Abigroup to minimise the ultimate impact of the protected area on the cost of the project. That failure, not the existence of the injunction, caused or contributed to the losses claimed.

(d) Abigroup had not advanced far with detailed design when it learned of the injunction affecting the protected area. The claimed redesign costs were in fact initial design costs that Abigroup was contractually obliged to bear. It was feasible for Abigroup to have completed the project, avoiding the protected area. Not flowing from the injunction, the costs would have been incurred in any event.

(e) Abigroup used the existence of the protected area as an opportunity to recover profit from an under-costed tender on the project.

(f) Roads Corporation did not have the necessary approvals for the O'Herns Road overpass, which was the cause of the delay claimed by Abigroup. In particular, Roads corporation had not complied with a condition of Federal Government approval under the Australian Land Transport Development Act 1988 (Cth).

(g) Roads Corporation failed to adopt the prudent and feasible alternative to move the entire overpass 20 metres to the north of the proposed northern overpass alignment. While this would have marginally added to the pavement costs it would have eliminated New Jersey Barrier costs, the electrical spotter cost, topsoiling costs and landscaping costs as the southern embankments could have been constructed with the same slope as originally designed.

(h) The capital cost of the relocated culvert did not allow for the savings that had been made or the potential difficulty of excavation through rock.

(i) Alternatively, the actual costs claimed for the O'Herns Road overpass should be disallowed in part as not flowing from the injunction.

(j) The claim for change to haulage routes was caused by the failure of Roads Corporation to direct that Abigroup remove a tree that was not part of the protected area and adopt the haulage route suggested by Mr Love.

(k) The entrance to the Clonard Homestead was outside the protected area and the costs referred to as the CV06 Injunction amount were not attributable to the existence of the protected area.

9 To place Mr Love's contentions in context, I will set out the relevant history of the project, dealing first with the culvert. These findings are based on the documentary record of the project and Mr Love did not challenge the chronology of events put to the court by Roads Corporation.

10 On 11 February 2002, Roads Corporation compulsorily acquired part of the land and improvements at 410 Cooper Street, Epping for construction of the Craigieburn Bypass. The land acquired included an area of land abutting O'Herns Road required for the construction of the O'Herns Road overpass. The land was identified in Whittlesea Planning Scheme Amendment C23 ('original land'). Other land would later be acquired. Roads Corporation took possession of the original land on 15 January 2003. I have already noted the contract with Abigroup followed by the injunction on 6 March 2003.

11 On 13 March 2003, Abigroup advised Mr Love that it was redesigning the culvert crossing. On 17 April 2003, Abigroup informed Roads Corporation that it intended to commence drainage works including works in relation to the culvert during May/June 2003 and design issues and access to the protected area needed to be resolved. On 15 May 2003, Roads Corporation informed Mr Love of the effect of the injunction on the design and construction of the culvert and the potential costs to be incurred.

12 On 20 May 2003, Roads Corporation unsuccessfully applied to the Supreme Court to vary the injunction to permit the culvert works. On 5 June 2003, Roads Corporation requested that Abigroup amend the drainage design for the culvert to clear the protected area. Roads Corporation informed Mr Love of the nature and extent of the potential damages that would flow from the injunction due to the redesign of culvert.

13 Abigroup instructed Sinclair Knight Merz to redesign the culvert crossing so as not to interfere with the protected area. On 17 September 2003, Abigroup claimed $23,260, comprising $20,760 for the redesign and $2,500 for the additional costs associated with the revised design. As I have noted, in late 2004, Mr Sutherland for Roads Corporation assessed the claim as reasonable and Mr Boyd, the superintendent, certified it. Roads Corporation paid the claim in full.

14 Turning to the overpass, on 7 March 2003 Roads Corporation informed Abigroup of the injunction and the co-ordinates of the protected area and asked Abigroup to notify it of the effect of the court order on the works. Abigroup then had taken possession of the original land. If it were not necessary to avoid the protected area, the O'Herns Road Overpass interim arrangement could have been constructed on the original land in the ordinary course of the design and construct contract.

15 The design concept for the overpass/interchange at O'Herns Road (the interim solution) was that the overpass, if constructed (and it was), would be the southern bridge of the ultimate interchange. The ultimate interchange would be four lanes on two bridges, and the northern bridge would be constructed on land to be acquired that formed the northern part of the referred possession area under the contract. For the ultimate O'Herns Road diamond interchange, the interim O'Herns Road Overpass would be widened to the north side with a second bridge. The tender drawings identified further land that would be needed for interchange construction as a diamond shaped area of land designated as the delayed possession area.

16 The contract provided that within 65 weeks of execution, that is by 22 April 2004, Roads Corporation was required to notify Abigroup whether works at O'Herns Road would have to be done. The contract program provided for the actual construction work to construct the O'Herns Road Bridge, if so instructed, to occur between 21 April 2004 and 26 October 2004. The contract was based on the design assumption that if only an overpass was constructed, it would be constructed within the existing road reserve for O'Herns Road. Roads Corporation instructed Abigroup that it was only required to construct the O'Herns Road overpass interim design, being the southern overpass, excluding ramps and the northern overpass. The interchange has not yet been constructed.

17 In March 2003, a Panel appointed on 6 January 2003 under delegation pursuant to ss 153 and 155 of the Planning and Environment Act and the Whittlesea Planning Scheme, reported on the 'O'Herns Road Interchange ­ Amendment C44 to the Whittlesea Planning Scheme'. It recommended the adoption of Amendment C44 to provide for construction of the ultimate full diamond interchange between Craigieburn Bypass and O'Herns Road. The Panel recommended the initial stage of construction include a bridge at O'Herns Road over the Bypass, with no ramp connections to the Bypass (interim design) consistent with the tender, which showed the position of the overpass at O'Herns Road within the existing road reserve.

1. On 3 April 2003, Abigroup was yet to respond to Roads Corporation as to what works were required by its tender within the protected area.

19 On 24 April 2003, Roads Corporation wrote to the Minister for Transport advising of its adoption of Amendment C44 for the reservation of additional land required to construct the O'Herns Road diamond interchange and the northern overpass of O'Herns Road.

20 On 4 June 2003, Abigroup informed Roads Corporation that extensive redesign for the construction of the Bypass, including the interim arrangement at O'Herns Road, to avoid the protected area was required. The estimate of redesign costs was $10,000 to $15,000. Abigroup had commenced the redesign work to mitigate potential impact on the project. During June and July 2003, Abigroup provided Roads Corporation with concept design sketches and budget estimates for the extra over costs to construct the overpass to avoid the protected area. The budget estimates for extra over costs for construction works alone were in the order of $2 million.

21 On 24 July 2003, Abigroup accounted for detailed design variation work to avoid the protected area amounting to $19,469.625. This amount was assessed as reasonable by Roads Corporation and paid to Abigroup.

22 At a meeting on 4 September 2003, Abigroup confirmed that the current design for the O'Herns Road Overpass still affected the protected area. On 12 September 2003, Roads Corporation served Mr Love with a Notice of Intention to Acquire the land identified by Amendment C44, the interchange land. The interchange land included the land required for the construction of the northern overpass of O'Herns Road.

23 On 10 November 2003, Mr Love commenced a proceeding in this court to restrain the acquisition of the interchange land pursuant to Amendment C44. On 27 November 2003, the Notice of Acquisition of Mr Love's land for the interchange was gazetted. The proceeding was dismissed on 4 December 2003 and on 11 December 2003, Roads Corporation informed Mr Love of its intention to take physical possession of the interchange land. The acquisition of this further land made it possible to avoid the impact of the O'Herns Road Overpass on the protected area by constructing the proposed northern bridge for the interchange (rather than a revised design of the southern bridge) as the interim solution.

24 On 16 December 2003, Roads Corporation informed Abigroup that the injunction was likely to still be in place on 22 April 2004, when, under the contract, the overpass works were scheduled to commence. The design of the embankment was critical. Roads Corporation sought estimates for retaining wall options including impact, cost and time estimates. Through January and February 2004, working on the assumption that the injunction would remain in place until at least October 2004, Roads Corporation considered its options, with internal advice that the optimal solution was a retaining wall on either the southern or the northern alignment of O'Herns Road to avoid disturbing the protected area. Roads Corporation asked Abigroup to investigate viable options for the construction of the overpass, emphasising the need to resolve the design and cost options as soon as possible.

25 On 27 February 2004, Roads Corporation independently engaged Hyder Consulting (Aust) Pty Ltd to develop and assess alternative design options for the most cost effective construction of the overpass.

26 On 2 March 2004, Abigroup provided Roads Corporation with various alternative design options and cost estimates to work around the protected area when constructing the overpass. Abigroup recommended that the most cost effective option was to construct the interim overpass on the northern bridge alignment with a low height retaining wall as close as possible to the northern edge of the protected area. On 15 March 2004, Hyder made substantially the same recommendation - that Roads Corporation construct the overpass using the northern alignment rather than the southern alignment as the interim arrangement.

27 On 19 March 2004, Roads Corporation advised Abigroup that construction of the northern overpass would be its preferred option. Abigroup sought written clarification of the request in order to finalise the design. On 31 March 2004, Roads Corporation invited Mr Love to discharge the injunction, as there were no reasonable alternatives for proceeding with the contract works without interfering with the protected area. Roads Corporation informed Mr Love of Abigroup's cost estimates for five identified and investigated options, which ranged from $4,890,000 to $8,317,309. Mr Love declined the request to discharge the injunction.

28 On 15 April 2004, to ensure that the protected area remained undisturbed and that there was no breach of the injunction, Roads Corporation directed Abigroup to design and construct the overpass in a different manner to the tender design. But for the injunction, Abigroup would have built the original interim design, the southern overpass, on the original land that had been acquired for the Bypass and the O'Herns Road overpass.

29 The construction of the O'Herns Road Overpass as the northern bridge of the overpass partly on the original land and partly on the land further north, was only possible by reason of the land further north being acquired for the diamond interchange pursuant to Amendment C44. The most cost effective option for avoiding the protected area when constructing the overpass was for the northern bridge of the overpass to be built with some modifications in the form of a retaining wall. This option could not have been built before the Amendment C44 land was acquired in late 2003.

30 In Davinski Nominees Pty Ltd v I&A Bowler Holdings Limited,[6] Kaye J described the basis for the assessment of damages on an undertaking to the court as uncontroversial: damages flowing directly from the injunction and which could have been foreseen when the injunction was granted, following the decisions of the High Court in Air Express Limited v Ansett Transport Industries (Operations) Pty Ltd[7] and European Bank Limited and Robb Evans of Robb Evans & Associates.[8]

31 In Air Express, Aickin J held that in a proceeding of an equitable nature 'the damages should be those that flow directly from the injunction and which could have been foreseen when the injunction was granted'. On appeal, Barwick CJ agreed with the reasoning of Aickin J. Gibbs J identified the generally accepted view to be that 'the damages must be confined to loss which is the natural consequence of the injunction under the circumstances of which the party obtaining the injunction has notice' adding that 'the party seeking to enforce the undertaking must show that the making of the order was a cause without which the damage would not have been suffered'. Stephen J referred to the court having the power, as far as monetary compensation allows, to make good the harm of which the grant of the injunction was a cause and that but for it he would not have suffered. Mason J said 'generally speaking, so long as the claim for damages is not trivial or trifling, an enquiry should be directed and the defendant will be entitled to recover the loss which is the natural consequence of the grant of the injunction.' The causal connection between the damage and the injunction is to be identified from the purpose for which the undertaking as to damages is designed to serve. That object is to protect a party from damage sustained in the event that it emerges that the plaintiff is not entitled to the relief sought. Its purpose is not to protect the defendant from damage otherwise sustained.

32 In European Bank, the High Court, in a joint judgment, affirmed Air Express, restating the significance of the nature of the undertaking. It is not a contract between parties or some other cause of action upon which a party could sue, but is given to the court for enforcement by the court. The joint judgment emphasised the phrase 'which could have been foreseen'. It is well established that for damage to be reasonably foreseeable it need only be damage of a type or character that is foreseeable or damage of a type or character that could not be considered unlikely.[9] Roads Corporation submitted that the tortious concept 'reasonable foreseeability' is a wider concept than the contractual 'reasonable contemplation'.[10] The High Court in European Bank makes it clear that the inquiry is not whether the actual loss suffered was foreseen at the time the undertaking was given, but is whether loss of a kind actually sustained could have been foreseen.

33 To explain why the kind of loss that Roads Corporation now seeks to recover could have been foreseen in March 2003, relevant circumstances can be identified.

34 The contract (Contract No. 5463) awarded to Abigroup was to design and construct Stage 3 of the Craigieburn Bypass and included the design and construction of an overpass at O'Herns Road. Although Abigroup was provided with concept design plans for tender, it was responsible for the design and construction of the works and was entitled to determine the most cost effective design within the land reservation that met Roads Corporation specifications.

35 Mr Love, who told me he was an experienced engineer and project manager, knew of this contract when he gave his undertaking. On 25 February 2003, an affidavit filed on behalf of Roads Corporation put Mr Love on notice that Abigroup had been awarded the contract on 23 January 2003 and that pursuant to that contract:

(a) Abigroup became entitled to possession on 30 January 2003 of land including the land the object of the injunction;

(b) Failure to give Abigroup clearance to commence work could constitute a breach of clause 27 of the contract allowing Abigroup to make a claim for an extension of time pursuant to clause 35.5 of the contract;

(c) Granting an extension of time pursuant to clause 35.5 of the contract may lead to a delay damages claim pursuant to clause 36 of the contract of up to $169,000 per week plus 10% for profit.

Another affidavit, dated 6 March 2003, informed Mr Love that Roads Corporation had asked Abigroup on 3 March 2003 to consider what impacts an injunction might have on the contract works. Abigroup responded that it would take some weeks for that assessment to be made, as it would need to develop its design sufficiently for that assessment.

36 Mr Love had expert advice from Mr Tom Brock of GHD, a civil engineer experienced in the design of major road projects. Mr Brock was familiar with the detail of the tender documents, having examined the project for an unsuccessful tenderer. Mr Brock reported to Mr Love extensively about the project, the terms of the contract and the details of the tender design. Mr Brock provided some analysis of the consequences that may flow if the injunction was granted. Mr Brock opined that the works could be constructed by avoiding the protected area but as the works were being delivered under a design and construct contract the elements of the detailed design were a matter for the contractor. Gratuitously, Mr Brock opined that the interchange should not be constructed at the location or in the form proposed by Roads Corporation. If the O'Herns Road overpass was not constructed, there might be no impact on the works and insignificant impact on the required construction activities from the existence of the protected area but if either the overpass or a closed diamond interchange were constructed, avoiding the protected area would have implications for the permanent bypass works and construction phase activities.

37 Mr Brock's assessment is primarily expressed in terms of what can be constructed, rather than whether impact on the works and necessary construction activities may result in variation and delay costs for Roads Corporation in the administration of the contract. No doubt, Mr Love found that emphasis attractive. Mr Brock did not concede full force and effect to the nature of Abigroup's contract. For example, when considering the height of the bypass when it passes along the western side of the Clonard Homestead, a matter that affects the encroachment of cut or fill embankments onto the protected area, he acknowledged that Abigroup was likely to use a different gradient to the concept design in the tender documents, but expressed his opinion on the gradient that he developed for an unsuccessful tenderer. He could not do otherwise without knowing Abigroup's detailed designs but the critical point was that, without affecting variation of the tendered time and cost on which the contract was based and within certain constraints, those detailed designs were not a matter for Roads Corporations or, a fortiori, persons who were not parties to the contract. However, Mr Brock did report on the categories of additional costs that he anticipated Roads Corporation could be exposed to should an injunction be granted. Mr Brock's categories were additional costs of construction, additional costs flowing from the need to redesign parts of the project to avoid the protected area, and damages in the form of delay costs.

38 Using concept design plan drawing no. 51421 provided to Abigroup in the tender documents for contract no. 5463, Mr Brock developed the coordinates that precisely identified the protected area, providing the certainty of definition of the protected area identified by the court as a concern when discharging the interim injunction.

39 On the material, the real possibility of damage being sustained by Roads Corporation flowing from claims being made against it by Abigroup was in issue before Nettle J and his Honour concluded that:

One way or another there is a real possibility that once the design is determined by Abigroup it may impinge directly upon the area sought to be protected, or at least necessitate impingement upon the area sought to be protected_._ If that comes about, Roads Corporation could be caused some delay in reaching agreement with Abigroup on what it proposes and, to that extent, be put at risk of a claim for damages or compensation, and perhaps also claims of the more amorphous or nebulous kind ...[11]

That possibility was also recognised by the requirement that the undertaking be secured. Initially, when, on 20 May 2003, an application to vary the dimensions of the protected area was refused, a guarantee from Bank of Melbourne in the sum of $100,000 was required. On 29 July 2005, Osborn J ordered that an unconditional undertaking from Bendigo Bank Limited for $2,990,364 stand in place of the Bank of Melbourne undertaking as security for the usual undertaking as to damages from Mr Love, which undertaking was renewed.

40 The present significance of Mr Brock's report to Mr Love is that it directed Mr Love's attention, before he gave his undertaking, to three critical facts. Abigroup was the contractor obliged to construct the freeway on a design and construct basis. Abigroup, if so notified, was required to construct the overpass at O'Herns Road while the injunction remained in place. The types or categories of damage, which were likely to be sustained if the injunction ultimately granted was obtained, were identified. As I will explain, each head of damage that Roads Corporation seeks to recover under the undertaking falls within the categories that Mr Brock identified to Mr Love by his report of 6 March 2003.

41 The further land acquisition for the delayed possession area under the contract for the proposed interchange is also relevant to the question of foreseeability of the damage as it was in March 2003, that the Panel issued its Planning Report 'Whittlesea Planning Scheme Amendment C44 O'Herns Road Interchange'. The report followed Panel hearings on 17 and 18 February 2003, after a site visit on 5 February 2003. Mr Love was represented at the Panel hearings and made written submissions to the Panel. Before Mr Love gave the undertaking, he exhibited to an affidavit a copy of contract alignment plan sheet 16 of 21 for contract no. 5463 that locates the delayed possession area under the contract. That area includes land to the southeast of the protected area, centrally locating the protected area in the southeast quadrant of the interchange land.

42 The strategic transport and accessibility objectives in the City of Whittlesea's Epping North Strategic Plan, 2002 identified the need to acquire further land to duplicate the O'Herns Road Overpass as part of a full diamond interchange. The Panel identified that land required for the duplication will be on the north side. The Panel, in the executive summary to its report, reveals something of Mr Love's motives and of what understood of the implications of the injunction to protect Clonard. The report noted:

Love was a major submitter to Amendment C44. His submissions about C44 were largely influenced by his views about the route of the Craigieburn Bypass itself and the validity of the route, the acquisition of his land, VicRoads 'proposal to demolish the Clonard Homestead and other past related decisions.

I will return to this report in dealing with one aspect of Mr Love's objection to the damages assessment.

43 I am satisfied that the nature and extent of the damage that might flow from the injunction was foreseeable in March 2003. I am also satisfied that Mr Love foresaw it. First, there was his own interest in, and inquiries into, the process of land acquisition for the freeway and overpass, informed by his experience as an engineer and project manager. Second, there was the advice he sought and received from Mr Brock. Third, there was the information revealed to Mr Love on the applications for the injunction. Fourthly, almost immediately on the grant of the injunction, Mr Love sought to influence the manner in which Abigroup discharged its contract to minimise variation and delay costs to Roads Corporation arising from the impact of the protected area on the project. For the most part, Mr Love's defence of this assessment, his allegation of a want of mitigation, proceeds on the basis that Roads Corporation did not direct, and Abigroup did not implement, Mr Love's suggested solutions to the issues that were likely to arise from the existence of the protected area.

44 How damage might flow from the injunction and the extent of the opportunities for Roads Corporation to 'mitigate' or determine the consequences following on the grant of the injunction were also known, or readily ascertainable, by Mr Love when he gave the undertaking. The contract governs such matters. Mr Love received some general advice from Mr Brock about the terms of the contract. More particularly, an affidavit filed on 25 February 2003 on behalf of Roads Corporation exhibited extracts from the contract, amended conditions AS 4300-1995 and expressly referred to Roads Corporation's contractual exposure for damages because of delay including under Schedule 15 to the contract, at a rate of $169,000 per week plus 10% profit. General Conditions of Contract AS 4300-1995 are in common use for design and construct contracts for major road projects. With that knowledge, the contractor's obligations, the manner of administration of the contract, and the consequences of directions, variations and delay are matters that are generally ascertainable, and thus foreseeable, either by obtaining and reading AS 4300-1995 or seeking expert advice about such matters, perhaps from Mr Brock of from Mr Love's then solicitor. Such matters are also revealed from the reasons of Nettle J.

45 In respect of each head of loss particularised in the table at [6], Roads Corporation led evidence of the itemisation of the claim and produced supporting documentation. Item 1, which was calculated by reference to the agreed hourly rates charged by the design engineers, was assessed as reasonable by Roads Corporation and paid to Abigroup. Items 2A and 2B were certified by the superintendent following the meeting on 29 October 2004 that is discussed elsewhere. Items 1, 2A and 2B followed on directions from the superintendent that are discussed elsewhere. Items 2C and 2D were claimed by Abigroup on 17 September 2003, assessed by Mr Sutherland for Roads Corporation and certified by the superintendent. Item 2C, which followed on the direction to redesign the culvert to avoid the protected area, was calculated on the costs charged by Sinclair Knight Merz and administration costs, together with additional constructions costs of $2,500. Item 2D was calculated pursuant to the contract using the Schedule 2 rates with a 20% loading for inefficiencies. Particulars of the calculation, assessed by Mr Sutherland and certified by Mr Boyd were in evidence. Item 2E was calculated on the basis of accepted charge out rates for Sinclair Knight Merz engineers and was assessed by Mr Sutherland and certified by Mr Boyd.

46 Item 3, described as the CV06 Injunction amount was the cost of a guardrail extension of 60 meters at $125 per meter claimed because, as a result of the injunction, access to the protected area had to be maintained. the extension of the guardrail enabled the existing pavement to be used and the expense of 100 meters of crushed rock driveway within the protected area was avoided. In any event, Mr Love did not consent to that solution. I accept that Mr Sutherland correctly considered that the requirement to maintain access flowed from the protection of Clonard by the injunction and that his assessment of the cost was reasonable. Item 4, reduced by $915 to $3,250, was the sum paid to Mr Rick Bush for independent assessment of Abigroup's delay claims. This amount was not challenged by Mr Love and I accept that this expense flowed from the injunction. Finally Item 5, the fees paid to Hyder for their work assessing design options in the circumstances set out elsewhere, was an expense reasonably incurred that flowed from the injunction. Calculated on agreed hourly charge out rates for the engineers involved, the assessment of that claim by Mr Sutherland, which I accept, was not challenged by Mr Love.

47 In almost every instance, Mr Love did not challenge the detailed assessments of Roads Corporation or the hours worked by consultants or the rates applied in costing detailed design work and the claims made under the contract. I will shortly analyse his objections, mostly put at a more general level that close scrutiny of numbers and calculations.

48 For these reasons, I am satisfied that Roads Corporation has discharged the onus of proving that the quantum of the damages that flowed directly from the injunction and which could have been foreseen when the injunction was granted is $3,420,389.70. I will now explain why the defences advanced by Mr Love on the assessment lack merit.

49 Mr Love opened that one ground of defence that he would establish by cross-examination of Roads Corporation witnesses was that Abigroup used the fact of the injunction to recover profit from an under costed project tender. This conduct was evident, he contended in Abigroup's behaviour concerning both the culvert and the overpass and that Roads Corporation could have put a stop to it with appropriate directions.

50 The terms of the contract relevantly determine Abigroup's right to claim variation and delay costs. Such claims are assessed and certified by the contract superintendent. Mr Love did not directly challenge either Abigroup's contractual right to make the claims that it did or the superintendent's certification of them. On the superintendent's direction that the contract works avoid the protected area, Abigroup became entitled to claim a variation to the works pursuant to clause 40 of the contract. Clause 40.3 provided that variations are to be valued in accordance with the rates or prices included in the Schedules to the contract, including Schedules 5 and 15 which addressed delay costs.

51 In addition, clause 17.2 of the contract provided Abigroup with an indemnity for costs incurred due to Roads Corporation's inability to provide access to the protected area, it being part of the site. Clause 17.2 is expressed in terms of 'claims in respect of the right of the Principal to have the work under the contract carried out', covering claims in relation to the inability to provide access to the protected area for work to be carried out.

52 Clause 35.5 of the contract provided that the Contractor was entitled to an extension of time for any critical delay caused by the Principal, or a variation, or a claim in respect of the Principal's right to have the work under the contract carried out, for example arising from the Principal's inability to provide access to any part of the site. An entitlement to an extension of time also entitled the Contractor to delay and disruption costs not included in the value of a variation. Mr Love did not challenge Abigroup's entitlement to an extension of time or the Superintendent's assessment of Abigroup's entitlement.

53 Roads Corporation called several witnesses, who gave evidence and tendered documents that I accept, about the calculation of delay and disruption costs being claimed by Abigroup. This evidence was not challenged by Mr Love. Mr Love also did not challenge Mr Chambers or Mr Lowrie of Abigroup as to the basis upon which Abigroup prepared the claims. In particular, Mr Love did not suggest that the claims were not bona fide, or that Abigroup's tender had been under costed.

54 I have already noted that the superintendent formally certified by Contract Variation 5 and Extension of Time Advice No. 1 that $3,378,170.08 was due to Abigroup together with an extension of time for practical completion of 86 days consequent on the injunction. Mr Trevor Boyd, the contract superintendent, also gave evidence. I accept that Mr Boyd is an experienced superintendent and I accept his evidence. This claim was discussed between Messrs Boyd, Sutherland, Lowrie and Chambers at a meeting on 29 October 2004 at which Mr Boyd determined the Abigroup claims. Each of Messrs Boyd, Sutherland and Lowrie (Mr Chamber's affidavit was sworn for the injunction application well prior to the meeting) gave evidence of this meeting and all attendees could have been, but were not, cross-examined by Mr Love about the determination of the claims at that meeting.

55 Clause 23.1 of the contract provides that the Superintendent in exercising his functions must act honestly and fairly and arrive at a reasonable measure or value of work, quantities, or time. Mr Love did not challenge Mr Boyd's assessment and certification of the claims. I am satisfied that Mr Boyd acted in accordance with clause 23.1. Mr Love's contention that Abigroup made the claims referable to the injunction to recover profit from an under costed project tender was improper. It was not established and is rejected. The contention was not put to relevant witnesses and there is no basis what so ever for asserting that the conduct of either Roads Corporation or Abigroup in relation to the claims arising from the injunction was opportunistic profit taking. Pursuing this contention at trial was in breach of s 18 of the Civil Procedure Act 2010.

56 Mr Love's principal contention was that there was a failure to avoid or mitigate the damage that could flow from the injunction. The concept of mitigation is, principally, a common law doctrine that refers to the manner in which a claimant has avoided the consequences of a wrong, whether a tort or a breach of contract. MacGregor on Damages[12] suggests that this is the only exact use of the term, but its principal meaning comprises three different, closely interrelated, rules; a claimant cannot recover for avoidable loss, a claimant can recover for loss incurred in reasonable attempts to avoid loss and the claimant cannot recover for an avoided loss. As the classic statement of the principle by Viscount Haldane in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Rail Co of London Ltd[13] demonstrates, the concept of mitigation is a necessary corollary to the compensation principle that serves to reduce the overall cost to the community of legally compensable injury. A defendant must only compensate for losses actually sustained.

57 Although there is much to be said for the view that the primary purpose of equitable damages is compensatory,[14] the equitable obligation is less fettered by the usual common law notions that may limit recovery of damages.[15] There does not appear to have been any express consideration in the cases of the concept of mitigation by a restrained party being compensated by the court. In my view, it is now established that the court, when assessing damages on an undertaking given to it to protect the restrained party from future loss, should not fetter itself with notions borrowed from other areas of law. The notion of mitigation can have a role of informing a decision maker by analogy, but that is all. The primary focus remains that identified by the High Court in European Bank in these terms:

In Air Express, Mason J said that there was little to be gained from an examination of the authorities dealing with causation of damage in contract, tort and other situations; the Court was better advised to look to the purpose which the undertaking as to damages is to serve and to identify the causal connection or standard of causal connection which is most appropriate to that purpose. A party seeking an equitable remedy is required to "do equity" and this is the origin of the requirement that the party giving an undertaking as to damages submit to such order for payment of compensation as the court may consider to be just. Given its origin and application to varied circumstances in particular cases, the process of assessment of compensation cannot be constrained by a rigid formulation.[16]

58 The primary risk of loss for Roads Corporation should it turn out that Mr Love was not entitled to the injunction was that Roads Corporation would become legally obliged to pay design, variation and delay claims against it under the contract. The standard of causal connection of each head of damage claimed to the injunction is to be found in the effect of the injunction on the administration of the contract. Not having challenged the certification of the Abigroup claims by the superintendent or otherwise demonstrating that such claims have no foundation in contractual entitlement, Mr Love has not substantiated any assertion that analysis of the connection between damage and the injunction demonstrates a want of mitigation; that a claim for avoidable loss is being made by Roads Corporation. The onus was on Mr Love to do so.

59 In any event, I reject the notion that Roads Corporation chose to litigate not mitigate. That did not occur. Mr Love's attraction to the alliterative phrase 'litigate not mitigate' has only obscured his analysis. Abigroup and Roads Corporation continued to perform the contract according to its terms, despite that there were several occasions after 6 March 2003 when the parties returned to court, and there is some evidence of Roads Corporation having an eye to when the trial of the proceeding might occur, and there is some correspondence directed to whether the injunction might be lifted by consent. A more sophisticated analysis of the cause of delay, the effect of the injunction, the performance of the contract and the progress of the proceeding was required because the loss now claimed by Roads Corporation is of amounts that it was legally obliged to pay under its contract with Abigroup. Such loss was not avoidable loss.

60 Mr Love contended that the loss was avoidable because he made suggestions to Abigroup about how it might perform the contract to minimise the prospect of variation to or delay in performance of the contract, causing loss to him. Primarily, these suggestions affected the location of the culvert, the relocation of the overpass, and the adopted haulage route.

61 On 13 March 2003, Mr Love met with Mr Mavroyeni of Roads Corporation and Messrs Chambers and Watson of Abigroup to discuss issues concerning the protected area. At the meeting, Mr Love offered to assist with the mitigation effort needed to avoid the costs occasioned by the protected area. Abigroup thought the meeting was premature, as its design was insufficiently progressed for a meaningful assessment of the impact of the injunction, although its representatives clearly stated that any changes to its tender design would not be at its cost. Abigroup's representatives predicted that construction access and keeping O'Herns Road open to through traffic could be affected. While the Abigroup representatives assured Mr Love of their co-operation, expressing little interest in his assistance, Mr Love acknowledged that Abigroup needed to observe its contractual obligations and legal and statutory obligations with others.

62 Following this meeting, there was correspondence between Mr Love's solicitors and Roads Corporation's solicitors by which Mr Love sought detailed information from Abigroup about its proposed designs and commented on the proposed site works. On 30 April 2003, Roads Corporation's wrote to Mr Love's solicitors stating that 'it is not possible for your client to participate in an ongoing dialogue with Abigroup whereby your client effectively reviews Abigroup's design and provides comments at every step of the way.' Mr Love submitted that apart from the meeting of 13 March 2003, when Mr Love was provided no information, and a further site meeting relating to the culvert, there were no other meetings or discussions.

63 Mr Love could not identify any basis that permitted him to be involved in the design and construction process. It was not a consequence of obtaining an injunction, or of having given an undertaking to the court. Roads Corporation had contractually agreed that design and construction were Abigroup's responsibility based on the concept design and specifications submitted for tender. Neither the want of further meetings and discussions between Mr Love and Abigroup, nor the fact that Mr Love pointed, in general terms, to other ways in which he considered the works might have been designed or constructed, or the contract administered, established a want of causal connection between the injunction and the unchallenged contractual entitlements of Abigroup. No witness for either Roads Corporation or Abigroup accepted that Mr Love's suggested designs, construction proposals, or contract administration approach, in those respects that were actually put to them in the witness box, were appropriate.

64 These circumstances do not establish any basis for this court to reduce, or in some way, reassess the amounts certified under the contract as properly recoverable by Abigroup from Roads Corporation following on the direction to avoid all interference with the protected area. The concept of mitigation that Mr Love contends for is misconceived.

Issues with the northern bridge overpass option

65 Mr Love focussed his attack on the costs of constructing the overpass on the ultimate intention to provide for a four-lane two-bridge interchange, which I have already noted. In a nutshell, Mr Love contended that Roads Corporation built the northern bridge that it would ultimately have built in any event.

66 There was a preliminary issue. Mr Love contended that Roads Corporation did not have Federal approval to construct any overpass. The approval from the Federal Department of Transport and Regional Services, evidenced by a letter of 26 March 2004, permitted the construction of a single bridge overpass on two specified conditions. After stating the conditions, which are not presently relevant, the author of the letter drew attention to the requirements of other legislation, not that under which the approval was granted, which raised the need for Roads Corporation to liaise with relevant agencies to identify any environmental and/or heritage issues to be addressed. Mr Love submitted that the paragraph in the letter drawing attention to the environmental and/or heritage issues was a third condition that had not been met.

67 This submission is misconceived. The letter did not impose, and cannot reasonably be construed as imposing, a third condition. There was merely a reminder by the author of the letter of 26 March 2004 of the need to liaise with the relevant agencies to identify any environmental and/or heritage issues that need to be addressed. This reminder did not provide a reason for Roads Corporation to avoid the protected area. The letter and its terms are irrelevant.[17]

68 It was because of the injunction that the northern bridge was constructed after investigation of alternatives to the contract works. Mr Love contended not only that the decision to construct the northern bridge should have been immediately made but also that it should have been constructed a further 20 metres to the north. Mr Love contended that there was no need to modify the northern overpass structure at all. For that purpose land owned by the Urban Land Corporation should have been compulsorily acquired. Mr Love described his alternative proposal as prudent and feasible. While it would have marginally added to the pavement costs, there would have been other savings, referring to New Jersey Barrier costs, the electrical spotter cost, topsoiling costs and landscaping costs, as the southern embankments could have been constructed with the same slope as originally designed.

69 To expose the misconceptions in this contention, I must return to the Amendment C44 Panel hearings and report. Mr Robert Milner, a town planning expert whose evidence I accept, explained that the intention revealed from the planning history of Amendment C44 was that the overpass to be constructed under the contract was a single bridge within the existing road reserve. That is because the presently anticipated demand from road users only warranted a single bridge overpass without an interchange with the bypass. The Report noted that the City of Whittlesea's Epping North Strategic Plan contemplated, generally, future regional growth and, with O'Herns Road as a major local traffic route, in the longer term the emerging traffic demand would require the provision of ramps connecting between O'Herns Road and the bypass and the duplication of O'Herns Road to the east and west.

70 The Amendment C44 Report makes clears that the current amendment C44 would provide for an interchange that could be upgraded to cater for the future duplication of O'Herns Road and the future ramp connections to the bypass without further amendment to the interchange reservation boundaries. The northern bridge would not be required until sufficient land development has occurred in the surrounding area to generate the level of traffic that would justify the capital expenditure. The Panel noted that there were future contingencies that would affect the decision to construct the northern bridge and interchange and it was not likely to occur for many years.

71 Undeterred, Mr Love contended that the land to the north of the existing road reserve was owned by the Urban Lands Corporation, that the same Minister of the Crown was responsible for Roads Corporation and Urban Lands Corporation, and that providing additional land to Roads Corporation to permit the overpass to be aligned 20 metres to the north only required a wave of the ministerial pen. A simple one on one treaty or contract of sale could achieve it. Mr Milner rejected this suggestion. In his view, acquisition of that land for expanding the road reservation would require further planning scheme amendment.

72 Whether using the proposed location for the future northern bridge was feasible or suitable is beside the point. Roads Corporation and Abigroup respectively had no entitlement or obligation to construct the O'Herns Road bridge at that location from the regulatory approvals or by their contract and the certified additional costs that followed on the direction to do so directly flow from the injunction.

74 Mr Love also contended that the delay in formulating the northern bridge option was unreasonable and the delay losses did not flow from the injunction. Mr Love was critical of the time taken by Roads Corporation to issue the direction to proceed with the design and construction of the northern bridge. These contentions were not advanced by reference to the terms of the contract. Clause 33 governs the progress and programming of the works and clause 35.5 governs extensions of time for practical completion. When, and for how long, the superintendent should certify an extension of time for practical completion usually requires careful evaluation of the current construction program. Mr Love did not ground his submission in evidence of the proper approach to be taken by the superintendent in assessing claims for extension of the time for practical completion.

75 I have set out above the chronology of relevant events, which reveals that design work had commenced on the original southern overpass bridge prior to June 2003 and the need for redesign because of the protected area was recognised. There were significant estimates for the costs of additional works to avoid the protected area while building the bridge contemplated by the contract. That the design still affected the protected area was noted and discussed in September 2003. At this time, the acquisition process for the interchange land was underway, which land, once acquired could enable construction of the northern bridge first, if this were considered a better solution to construct without interfering with the protected area, as it ultimately was. Abigroup was then directed to evaluate options of this sort and Roads Corporation did likewise. None of this work or these actions would have been necessary were it not for the injunction and the protected area.

76 Mr Love questioned why such directions and investigations were not taken much earlier. I accept that it is proper and appropriate for Roads Corporation to consider all options and consequences carefully (including costs consequences) before issuing a direction as they did. Mr Mavroyeni told me that he did not give that direction when he first informed Abigroup about the protected area because he was being careful about costs, careful to understand the consequences of a direction. The process adopted by Roads Corporation took into consideration what planning work, what design and what construction would be necessary in order to accommodate a change from Abigroup's tender design. That information was needed before a direction could be considered. I am satisfied that it was prudent for Roads Corporation to take the time to consider the options, to have Hyder, previously engaged for this express purpose, independently assess the options and finally determine the most appropriate option prior to the Superintendent issuing a direction. Mr Love has not persuaded me otherwise.

77 Further, the events were complex and the capacity to extend the footprint of the works beyond the land originally reserved evolved over time as I have explained. There was in any event, a significant period from the contract start date until the overpass works were scheduled. Precisely when within that period, and why, critical steps fell behind in the construction program was not identified by Mr Love as a basis to challenge the assessment by Roads Corporation and the certification of the superintendent of the delay claim. Roads Corporation led detailed evidence as to the sequence of events in 2003 and as to the time taken between December 2003 and April 2004 to finalise the concept design. Mr Love did not challenge that evidence. There could not be, and was not evidence of, any presumption by Roads Corporation at that time that Mr Love would be paying for these costs under his undertaking.

78 Prior to the injunction, the contract required construction of the southern bridge at O'Herns Road over the bypass as part of the contract price. For Roads Corporation, Mr Teague explained the task he undertook to assess the additional direct costs properly payable to Abigroup pursuant to the contract for constructing, not that bridge but a different bridge in a different location. Mr Teague was not cross-examined about the itemised cost allowances that he investigated and calculated. Mr Sutherland, who was Mr Teague's superior, was cross-examined about the individual group cost items but he was not the person who prepared the detailed direct costs assessment. Mr Love also did not cross-examine the superintendent about his determination of individual allowances making up the certified $842,474.74, in lieu of Abigroup's claimed $968,674.00.

79 This approach was required. Mr Love suggested, inappropriately, that the costs of the eastern part of the bridge and the costs of the western part of the bridge could be distinguished as the protected area affected only the eastern part. This was a nonsensical distinction as the costs of building a bridge other than that tendered for as part of the contract price cannot be artificially be split to one side of the bypass only. Mr Love advanced no basis for me to modify or adjust the additional direct costs determined by the Superintendent because of the costs not allowed in the tender for the northern bridge actually constructed. The prospect of future construction of a second bridge is not a proper basis for reducing the actual costs over the price for the tender design, which represents actual damage sustained by Roads Corporation. The need to construct a bridge in a manner and at an extra cost than would otherwise have been the case were it not for the injunction is unaffected by such future intentions, even if certain.

80 Finally, I will make some brief observations about individual cost items challenged by Mr Love.

81 I do not accept that the redesign work for the culvert was unnecessary, because the detailed design of the culvert would not have been commenced prior to 6 March 2003. Although relevant witnesses could no longer retrieve a recollection, that contention was inconsistent with the minutes of design team meetings. Further, for Roads Corporation, Mr Sutherland explained his assessment of the claimed redesign costs and was Mr Love did not challenge that assessment.

82 Mr Love submitted that the area between the protected area and the bypass was sufficient for the movement of articulated dump trucks and Abigroup could have avoided the need for alternative haul routes to avoid the protected area. Mr Love developed this submission upon an incorrect assumption that the largest vehicles using the haul road were articulated dump trucks referred to as 'Moxies', and on some measurements that he had taken of the distance between the protected area and certain points on the 'as constructed' bypass. Further, he gave no evidence of observations of the use of the haulage route by Abigroup during construction, instead extrapolating generally from his own experience with trucks in quarries. This evidence was of no value and I prefer the direct evidence of Mr Byth for Roads Corporation that the gap between the bypass and the eastern boundary of the protected area could not have been used as a haulage route without additional work to make it suitable.

83 In the claimed direct costs of construction of the northern bridge, Mr Teague questioned the allowance for select fill, specifically whether Abigroup had in fact supplied select fill. I am satisfied that this issue was resolved in Abigroup's favour before certification by Mr Boyd during the meeting on 29 October 2004, a matter on which Mr Love did not cross-examine Mr Boyd.

84 Roads Corporation claims interest on its damages sustained due to the injunction, relying on s 60(1) of the Supreme Court Act 1986. Alternatively, it seeks interest upon the monies paid as is just and equitable. Mr Love did not absolutely oppose the interest claim, but submitted that a penalty rate was inappropriate and that a commercial rate would be just and equitable in all of the circumstances.

60 Interest in proceedings for debt or damages

(1) The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.

(2) Nothing in this section -

(a) authorises the granting of interest on interest;

(b) applies in relation to any sum on which interest is recoverable as of right by virtue of any agreement or otherwise;

(c) affects the damages recoverable for the dishonour of a negotiable instrument;

(d) authorises the allowance of any interest otherwise than by consent on any sum for which judgment is entered or given by consent;

(e) applies in relation to any sum on which interest might be awarded by virtue of section 58 or 59; or

(f) limits the operation of any enactment or rule of law which, apart from this section, provides for the award of interest.

(3) If the damages awarded by the Court or jury include or if the Court in its absolute discretion determines that the damages awarded include any amount for -

(a) compensation in respect of liabilities incurred which do not carry interest as against the person claiming interest;

(b) compensation for loss or damage to be incurred or suffered after the date of the award; or

(c) exemplary or punitive damages -

the Court must not allow interest in respect of any amount so included or in respect of so much of the award as in its opinion represents any such damages.

86 The relevant date identified under s 60 is the commencement of the proceeding. In present circumstances that might give rise to a nice question, but the claim is for interest upon damages from 21 December 2004, being the date on which Roads Corporation paid $3,405,139.70 to Abigroup, presumably the last of the payments that comprises the damages that I propose to award.

87 Under s 60, generally, the usual rate for awarding interest is in accordance with the penalty interest rate and Roads Corporation contended that there is no reason to depart from the rate of interest fixed by the Penalty Interest Rates Act 1983 to which s 60 of the Supreme Court Act refers.

88 In the Federal Court, in Specsavers Pty Ltd v The Optical Super Store Pty Ltd (3),[18] a proceeding to enforce an undertaking as to damages, Katzmann J ordered that interest on the damages that Specsavers was obliged to pay be calculated pursuant to s 51(A)(1)(a) of the Federal Court of Australia Act 1976 at the rates referred to in Federal Court Practice Note 16. That Practice Note prescribes a rate of interest, which equates to the Reserve Bank bill rate plus 4%. Although such a rate is lower that that prescribed under the Penalty Interest Rates Act 1983, the court did not discuss the objects of an award of interest under s 51A(1)(a). The applicable statutory regime is different to that applying in Victoria.

89 Section 60 of the Supreme Court Act does not confine 'damages' to any cause of action or right to relief but the term, although wide, is confined to applications in proceeding for the recovery of damages. The language of the section does not confine the concept of damages to compensation for a civil wrong, a tort or a breach of contract. The beneficial purpose of the section is consistent with the purposes for which courts require an undertaking as to damages as explained in European Bank and Air Express.

90 In Giller v Procopets (No. 2)[19] the Court of Appeal, when discussing interest upon equitable damages awarded for breach of confidence, made the following observations about s 60:

It may be that equitable damages awarded for breach of confidence are 'damages' within s 60(1). That would be consistent with the view that s 38 of the Supreme Court Act 1986 (Vic) permits the award of damages for breach of a right recognised only in equity. Even if that is not the case, equitable principles permit the award of interest on an award of equitable compensation. According to Halsbury's Laws of Australia, 'interest may be charged on a sum awarded by way of [equitable] compensation, but only as an element in a proper measure of restitution, not by way of penalty.' In our opinion Ms Giller should receive interest on the $40,000 award from the date of commencement of the proceeding for a period of four years. There was no evidence before the court as to the commercial rate or the trustee rate over the relevant period. Doing the best we can, we would award a lump sum of $12,800 which approximates the interest calculated at the trustee rate of 8 per cent from the date of the commencement of the proceeding for four years.

91 The object of damages awarded by a court on an undertaking to pay should the applicant fail to justify a right to have obtained the injunction may, at its highest be restitutionary, having regard to the equitable nature of the remedy given, but in my view may be better described as compensatory, having regard to the historical object of providing a means of redress. These terms are, perhaps, unhelpful for the reasons given by the High Court in European Bank that I have set out.[20] Having regard to the purpose the undertaking was intended to serve, I am not persuaded that s 60 determines the proper assessment of the interest component that may be awarded in this case. The proper consideration is for what period and at what rate is payment of interest by the injunctor considered just in order to meet the objective that the court had in mind when requiring that a party give to it such an undertaking.

92 The objects of the Penalty Interest Rates Act 1983 may broadly be stated[21] to be primarily to compensate a party for the detriment suffered from being denied the money sum found by the court. Other objects have been recognised, including encouraging defendants to realistically assess their liability in a case and take bona fide steps to compromise the claim and act as a deterrent to judgment debtors delaying proceedings, each of which encourages the early resolution of litigation. It has also been noted that, by the applicable rate under the Act that is usually higher than commercial rates, a defendant may be penalised for not having paid earlier although it is not the purpose of the Act to punish a defendant. The Act, in s 2(2)(b), speaks of the Attorney General, after consultation with the Treasurer, determining whether the recommended institutional rate should be adjusted to include a penalty element.

93 None of these general observations is irrelevant in the present circumstances, although I do not consider that the court's objectives when taking the undertaking included any form of punishment for Mr Love, should it turn out that he was not entitled to the injunction. Rather the intention was to provide a means of ensuring proper compensation for any loss, in case the court was later of the opinion that the injuncted party had sustained loss which the injunctor ought to pay. In addition to those general considerations, particular circumstances relevant in the present case include that:

(b) Roads Corporation has been out of pocket for almost 8 years;

(c) About the time of payment to Abigroup in December 2004, this court ordered, on 14 December 2004 that Mr Love's advance of compensation for compulsory acquisition of land, gazetted in February 2002, stand as security for his undertaking. In 2005 that order was twice varied so that Mr Love has maintained, at his expense, unconditional bank undertakings for $2,990,364. For its part, being largely secured, Roads Corporation has carried a lesser risk of capital loss which may warrant a lower rate of interest;

(d) Although there was some issue raised as to when Mr Love received full particulars of the damages being claimed against him, I am not persuaded that any delay in discovering source documents was material to the question on interest.

94 Balancing all of the foregoing considerations, I consider that the just determination of the obligation of Mr Love to pay interest is that Roads Corporation recover interest on the damages that I have assessed, $3,420,389.70 from 21 December 2004 until the date of judgment at the applicable prescribed rate for the time under the Penalty Interest Rates Act 1983 less 2%.

95 I will invite the parties to agree on the quantum of the interest to be included in the judgment and I will hear further from them on the question of costs.

[1] Order of Nettle J, see Love v Thwaites & Anor (No. 3) [2003] VSC 60.

[2] Order of Cavanough J following judgment in the proceeding, see Love v State of Victoria & Anor [2009] VSC 215 (23 June 2009).

[3] Love v Thwaites & Anor [2003] VSC 22 (Nettle J).

[4] Love v Thwaites & Anor (No. 2) [2003] VSC 53 (Nettle J).

[5] Love v Thwaites & Anor (No. 3) [2003] VSC 60 (Nettle J).

[6] [2011] VSC 220, [29].

[7] [1981] HCA 75; (1981) 146 CLR 249 (Aickin J) [266], approved on appeal (1981) 146 CLR 306, 309-310, 312-313, 318-319, 324-325.

[8] [2010J HCA 6, (2010) 240 CLR 432, 439.

[9] The Wagon Mound No.1 [1961] UKPC 1; [1961] AC 388.

[10] Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310, 365.

[11] [2003] VSC 60, [13].

[12] Sweet & Maxwell, 18th Ed, 2009 at 7-002.

[13] [1912] AC 673, 689.

[14] Nocton v Lord Ashburton [1914] AC 932, McKenzie v McDonald [1927] VicLawRp 19; [1927] VLR 134, Re Dawson (Dec'd )(1966) 84 WN (Pt1) (NSW) 399.

[15] Hill v Rose [1990] VicRp 13; [1990] VR 129, 144; Canson Enterprises Ltd v Broughton & Co [1991] 3 SCR 534, 556, Target Holdings Ltd v Redferns (a firm) [1995] UKHL 10; [1996] 1 AC 421.

[16] [2010] HCA 6, (2010) 240 CLR 432, 439, [17]-[18].

[17] The heritage status or otherwise of 'Clonard' was the subject of detailed factual findings by Cavanough J in this proceeding [2009] VSC 215. Attempts by Mr Love in 2002 to secure heritage registration for Clonard on the Victorian Heritage Register failed. Two Planning Panel Reports concerning the location of the Craigieburn Bypass and the C44 Panel exhaustively considered alleged heritage and environmental considerations in relation to 'Clonard', which was not recognised in the local planning scheme or in or pursuant to Victorian or Commonwealth legislative frameworks as a site or location of either heritage or environmental significance.

[18] [2012] FCA 504.

[19] [2009] VSCA 72, [398]-[403]. See also [135]-[142] (Citations omitted).

[21] See generally Clarke v Foodland Stores Pty Ltd [1993] VicRp 81; (1993) 2 VR 382, Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) [2003] VSC 244, Hartley Poynton v Ali [2005] VSCA 53, Berengo v Amaca [2011] VSC 276.