PLAZA WEST PTY LIMITED v SIMON'S EARTHWORKS [2010] NSWSC 1426 | Case summary

2009/298835 PLAZA WEST PTY LIMITED v SIMON'S EARTHWORKS (NSW) PTY LIMITED and SIMON EMERZIDIS JUDGMENT 1 HIS HONOUR: This dispute arises from a contract between Plaza West Pty Limited (Plaza) and Simon's Earthworks (NSW) Pty Limited (Earthworks) whereunder Earthworks agreed to undertake bulk excavation earthworks and associated civil engineering works for a large development project at 384 Church Street, Parramatta (the site) for a lump sum price of $6,049,873 plus GST. Simon Emerzidis (Emerzidis) is and at all material times was a director and shareholder of Earthworks and as such was the controlling mind of Earthworks. CLAIMS 2 The first claim by Plaza is that in January 2008 Earthworks with the knowledge of Emerzidis sent to Plaza a tax invoice (No 1198) claiming an amount of $1,084,535 in respect of the removal of what was claimed to be contaminated waste from the site. In fact that invoice, dated 25 January 2008, was false to the knowledge of the defendants and Plaza paid the amount claimed in reliance on the false tax invoice furnished to it. Plaza seeks recovery of $690,740.60 which it claims it overpaid Earthworks. A second invoice (No 1199) claimed $175,692, with Earthworks seeking recovery of $156,525.60 in overpayment. 3 The second claim is that Earthworks, with the knowledge of Emerzidis, fraudulently claimed payments for material which had not been removed from the site or disposed of ("ghost loads") and these claims were paid in reliance on the representation. Plaza seeks repayment of $139,936 for this claim. 4 The third claim is that the defendants fraudulently claimed payment in respect of material excavated from the site on the basis that it was contaminated (non-VENM) when to the knowledge of the defendants the material was not contaminated (VENM) but was material which could be disposed as virgin earth and as a result of these fraudulent misrepresentations there was reliance demonstrated by an overpayment to Earthworks in respect of the excavated material is $2,706,063.80. 5 The fourth claim by Plaza is that the price agreement for removal of material from the site by Earthworks was represented to be the actual cost to Earthworks of such removal and disposal plus profit margin overheads and GST and that claims made by Earthworks were on the basis of a fixed cost plus overheads plus GST as a result of which an overpayment was made for removal of material for which it claims recovery. 6 The fifth claim is that the defendants breached s 52 of the Trade Practices Act 1975 (Cth) (TPA) and s 75B of the Fair Trading Act 1987 (NSW) (FTA) by falsely representing that the material removed was contaminated (non-VENM). 7 The sixth claim is that there was a misrepresentation by Earthworks that the fixed rate alleged to be applicable was a "reasonable rate" for removing and disposing the contaminated (non-VENM) material when in fact such rate was greatly in excess of a reasonable market rate at the time. 8 A cross-claim has been filed by the defendants for alleged under-certification, by the Superintendent of the project (Property Group Holdings Pty Ltd (Property Group)), the amounts of contaminated waste said to have been actually removed. This claim is for $873,575 plus GST. ISSUES 9 The following issues arise from the claims of the Plaza and the defences and cross-claim of the defendants.

(ix) Whether in paying Earthworks' invoices for variations based on an agreed rate plus profit overheads and GST, Plaza was discharging its contractual obligations and therefore suffered no loss. BACKGROUND HISTORY 10 On 24 July 2007 Earthworks commenced excavation work on the site and on 8 August 2007 the Earthworks Agreement was signed by Mr George Khattar as a director of Plaza and by Mr Emerzidis as a director of Earthworks. Mr Khattar has since died although affidavit evidence by him was read in the plaintiff's case. 11 Under the contract the revised lump sum price was $6,049,873 plus GST. The work as set out in an incorporated document dated 11 July 2007 relevantly provided for: Bulk excavation in OTR & ROCK to design RL (VENM). Exclusions to the contract which related to contaminated material of any kind (non-VENM) and removal of contaminated water by trucking off site. Completion of the work within 18 weeks. 12 The reference to VENM is to a classification of materials by the New South Wales Department of Environment and Conservation in its Environmental Guidelines: Assessment, Classification and Management of Liquid and Non-Liquid Wastes (May 1999) at 117 where the term is described as: " Virgin Excavated Natural Material (eg clay, gravel, sand, soil and rock) that is not mixed with any other waste and that: (a) … or (b) consists of excavated natural materials that meet such criteria as may be approved by the EPA [NSW Environment Protection Authority]." 13 The Guidelines are concerned with the classification of wastes and non-liquid wastes and in descending order of contamination these are classified as hazardous, industrial, solid or inert. Technically the classification of "VENM" comes within the category of "inert" but the contract in the present case draws a distinction between the two. Technical Appendix 1 to the Guidelines provides criteria for assessing and classifying non-liquid wastes and sets out in tables a series of criteria for determining contaminants. As can be seen from Table 1 of the Guidelines non-liquid waste is included in the description of "inert" waste. 14 The significance of the distinction between VENM and inert classifications for practical purposes is that transport and disposal of contaminated inert waste is more expensive and disposal sites more limited than is the case for material which is classified as VENM. The Guidelines provide in Section 2.1.3 that for the purpose of deciding whether a waste facility requires a licence virgin excavated natural material is not regarded as "waste" and does not need to be considered when deciding whether a waste facility licence is needed. 15 Under clause 1.8.3 Earthworks was required to remove all excavated material from the site and pay all disposal costs including tipping fees. Variations would apply to carting of material other than VENM to a distance greater than 20km from the site plus tip fees. 16 By clause 20 of the Australian Standards 4000 - 1997 General Conditions of Contract, the Superintendent, was given power to appoint a Superintendent's representative to carry out its functions. For most of the relevant period this function was carried out by Mr Tony Watt. 17 Variations were provided for by clause 36 which stated that the contractor should not vary the works except as directed in writing. The Superintendent was given authority to vary the work and to price each variation based on prior agreed rates under the contract or reasonable rates which should include a reasonable amount for profits and overheads. Mr Tony Watt whilst he acted as Superintendent's representative was an employee of City Access Holdings, a company owned by his wife. 18 On 27 August 2007 Mr Fayad, a director of Plaza and the Project Manager in charge of the site on behalf of Plaza had a conversation with Mr Watt in the course of which a figure of $69.60 per tonne to dump the no-VENM waste was discussed. 19 Mr Watt and Mr Fayad differ in their versions of the conversation but the main difference is whether the price for removal of non-VENM was to be based on actual costs to Earthworks plus profit and overheads or whether the figure of $69.60 was a fixed rate together with profit and overheads. 20 On 27 August 2007 Earthworks wrote to Plaza West for the attention of Mr Watt. It was entitled "Variation Inert Waste 1" and reads as follows: "Att: Mr. Tony Watt. Re: Site Order number 2501 dated 8/8/07 for a variation to our lump sum contract to remove and dispose of INERT WASTE from Plaza west Project Parramatta. Dear Sir. Please find the following rate per ton to remove and dispose off site INERT WASTE Rate: To transport including tip fees. = $69,60 per ton plus GST Please note: The above rate has discounted the cost that I would have paid to remove VENM material. Aargus invoice for testing including the total cost for this variation will be invoiced all together on our next claim including 15% for over heads and profit. Yours faithfully Authorized by Simon Emerzidis Mr. Tony Watt Director Superintended [sic] For Plaza west P/L" 21 The letter is signed by Mr Emerzidis as director of Earthworks and by Mr Watt as Superintendent for Plaza. The evidence is that Mr Fayad authorised Mr Watt to sign this letter. 22 On 28 August 2007 there is a variation tax invoice No 1 which refers to removal and disposing of "inert" waste being 377.32 tonnes at $69.60 excluding GST for $26,261.47, and to this is added an overhead and profit figure of 15% together with GST. 23 Over the ensuing period there were claims for extensions of time as the consequence of a latent condition claim made by Earthworks. A Mr Stinson was appointed as Superintendent's representative and this appointment was accepted by Mr Stinson on 28 September 2007. The same day, the Superintendent, Property Group, advised Mr Emerzidis of the appointment of Mr Stinson and Mr Emerzidis reserved the right to object to the appointment as Superintendent. On the following day Mr Emerzidis faxed Mr Stinson formally objecting to his appointment. On 4 October 2007 Property Holdings wrote to Mr Emerzidis enclosing Mr Stinson curriculum vitae and rejecting the objection to his appointment. 24 The latent condition claim by Emerzidis in relation to work on a piling wall was later discussed. 25 On 10 October 2007 Mr Watt signed a site order 2503 for removal of inert waste as a variation to the contract at a rate of $48 per tonne plus GST. This order required that all inert waste was to be inspected and loaded under the supervision of Mr Watt and it stated that no inert waste would be recognised if removal was outside these guidelines. 26 On 14 October a variation tax invoice was issued by Emerzidis to Plaza for removal of 53 loads of inert waste at a total cost of $92,347.20. 27 On 17 October 2007 site order No 2504 was signed by Mr Watt for 3 loads at $69 per tonne in an amount of $2,070 and 10 loads at the rate of $48 per tonne giving a total of $1,440 but this latter figure was crossed out and the sum of $1,240 was substituted. Another Site Order was signed by Mr Watt for removal of 41 loads on the following day in respect of 38 loads at $69.00 plus 3 loads at $48.00. 28 Throughout this period there were a large number of Site Orders signed by Mr Watt for disposal of loads of excavated material which were invoiced and priced on the basis that the loads were contaminated inert material and were not VENM. 29 On 22 October 2007 Mr Emerzidis sent an email to Mr Fayad headed "Plaza West Contamination". This email was in response to a statement by Mr Watt that Plaza had deducted $200 from the rate per load to remove contaminated soil. Mr Emerzidis asserted that he had clear written instructions to remove contaminated soil for a rate that was extra over his contract and he asserted that Mr Fayad now wanted to deduct money in circumstances where Mr Emerzidis was carrying out work he claimed was "a huge risk to me". He said that he had managed to reduce the higher rate per tonne and agreed a rate per load of $2,070 so that charges would not be on a "per tonne" basis. He asserted that he had saved Mr Fayad $276 per load and he gave as an example a new tip fee rate of $76 per tonne without transport for inert waste. He added that in addition he had reduced his administration fee from 15% to 10% for variations over $100,000 and he expressed concern that having saved Mr Fayad money he wanted to deduct further amounts from him. Mr Emerzidis contended that Mr Fayad had given him no incentive to look for any further savings. 30 On 28 October 2007 Variation Invoice No 4/1 was issued referring to the removal of inert waste according to site orders Nos 2504 to 2510 involving 198 loads of material, namely 160 loads at $2,070 and 38 loads at $1,240. 31 It was not until 25 October 2007 that a Construction Certificate was issued by Mr Lyall Dix, an accredited certifier, in relation to the building works and the bulk excavation. The building works certified were described as: "Erection of a 4 and 5 storey mixed use development containing 11 commercial tenancies, a supermarket, 127 residential apartments and a childcare centre for 25 children with 3 levels of basement car parking. - Bulk excavation." 32 On 16 November 2007 Variation Invoice No 5/1 was issued claiming $192,861.90 for removal of inert waste which was paid on 4 December 2007. Thereafter a number of further site orders for disposal of loads of contaminated material were signed by Mr Watt. 33 On 28 November 2007 a tax invoice was issued by Kim Haulage Pty Ltd to Mr Emerzidis for work conducted between 16 and 26 November 2007. Mr Emerzidis thereafter issued a number of further variation tax invoices in respect of inert material which were paid by Plaza including Variation Invoices Nos 6/1 and 7/1 34 Site orders for removal and disposal continued to be issued signed by Mr Watt. WITNESSES GEORGE KHATTAR 35 Mr Khattar filed evidence in this proceeding. He was a major participant in the development of the site. He passed away prior to the hearing and I admitted his affidavit into evidence but apart from the documentary material attached to his affidavit I have not given any significant weight to the statements on the ground that the material could not be cross-examined on and no significant weight appears to have been placed on it by Plaza West in its submissions. MR FAYAD 36 Mr Fayad impressed me as an astute businessman with a keen commercial sense. In some respects Mr Fayad's evidence was unsatisfactory in that his recall of significant events was deficient. He was in charge of the overall project on the site and he was guarded in his responses under cross-examination. This was particularly so in relation to the commencement of excavation work before a construction certificate had been issued and also in relation to his conduct concerning the approval of a stormwater deviation. Nevertheless, having regard to the documentation and the consistency of his testimony with supporting documents and objective circumstances I consider that he gave a truthful and reliable version of what transpired on the site. I have come to this view while approaching his evidence with some degree of circumspection and careful examination. MR WATT 37 Mr Watt is a witness whose evidence I would not accept unless corroborated by documentary or other objective evidence. In particular, the fact that he received a payment of $124,000 from Mr Emerzidis in late 2007 without disclosing it to Plaza casts considerable doubt on the objectivity of his evidence. Obviously, there must have been arrangements and discussions between Mr Watt and Earthworks for some time prior to November 2007. This agreement he conceded could have been made as early as August 2007, although there is some uncertainty as to the precise date, notwithstanding that the undisclosed payment was made in November 2007 in circumstances where despite an opportunity being given he offered no credible reason for the payment at a time when he was issuing site orders for excavation and removal of material from the site. In addition, he readily admitted at Transcript page 525 that he took kickback payments of $300 per load from ACKM Pty Ltd (ACKM), a plant hire company, which again he did not disclose to Plaza. He is a central participant in the excavation and disposal of material from the site throughout the relevant period and where his version of conversations differs from that of Mr Fayad I accept the evidence of Mr Fayad although approaching it with the caution I have referred to earlier. MR EMERZIDIS 38 Mr Emerzidis is a party the proceedings. He was not called. He has filed a number of lengthy affidavits in this proceeding. It is common ground that he intentionally sent falsified invoices to the plaintiff and that he knew payments were to be made in reliance on them. Indeed, when he sent them he pressed most strongly for urgent payment of these invoices. The evidence discloses that Mr Emerzidis was prepared to resort to fraudulent and deceitful tactics to procure urgent payment of over $1 million and to mislead as to actual costs of disposal and as to the true nature of the material removed. Counsel sought to explain his dishonesty on the basis that the false invoices were furnished to "smooth the way" for payment of moneys otherwise due. This "explanation" does not lessen the fraudulent nature of his conduct. The reason given for not calling him to meet the plaintiff's evidence was that he might not be able to be protected in the course of cross-examination in relation to self-incrimination and therefore no adverse inference should be drawn from his non-appearance in the witness box. Suffice it to say that the consequence of his non-appearance in the witness box is that a number of centrally significant matters advanced by the plaintiff remain unexplained and uncontradicted. MR PETRILLO 39 Mr Petrillo was a witness for the defendants. He is an excavator operator. His evidence was of no substantial value because while initially he said that he had headaches from fumes while working on the site he later conceded that he was in an air-conditioned sealed cabin in the excavator and that fumes could not enter from the site. He gave evidence that when he left the cabin to walk across the site he could not recollect smelling any fumes. His evidence was of no real assistance apart from a general inconclusive comment that he noticed some colouration of the soil at some unspecified time or times on the site. TORT OF DECEIT 40 There is no dispute between the parties in this case as to the elements necessary to give rise to the tort of actionable deceit. The High Court in Magill v Magill (2006) 226 CLR 551 considered the necessary elements and the measure of damages in the following terms: "37 The elements of the tort of deceit were stated by Viscount Maugham, in Bradford Third Equitable Benefit Building Society v Borders , as follows (omitting his Lordship's citation of authority): 'First, there must be a representation of fact made by words, or, it may be, by conduct. The phrase will include a case where the defendant has manifestly approved and adopted a representation made by some third person. On the other hand, mere silence, however morally wrong, will not support an action of deceit. Secondly, the representation must be made with a knowledge that it is false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true. Thirdly, it must be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which will include the plaintiff, in the manner which resulted in damage to him. If, however, fraud be established, it is immaterial that there was no intention to cheat or injure the person to whom the false statement was made. Fourthly, it must be proved that the plaintiff has acted upon the false statement and has sustained damage by so doing.' … 40 The author of McGregor on Damages points out that, reflecting the tort of deceit's close connection with contractual situations, most claims for damages in this area are for pecuniary loss resulting from acting in reliance on a misrepresentation by entering into a contract with the defendant or a third party. However, possible forms of pecuniary loss are not limited to such circumstances. Lord Atkin, in Clark v Urquhart , said: 'I find it difficult to suppose that there is any difference in the measure of damages in an action of deceit depending upon the nature of the transaction into which the plaintiff is fraudulently induced to enter. Whether he buys shares or buys sugar, whether he subscribes for shares, or agrees to enter into a partnership, or in any other way alters his position to his detriment , in principle, the measure of damages should be the same, and whether estimated by a jury or a judge. I should have thought it would be based on the actual damage directly flowing from the fraudulent inducement '. (emphasis added) 41 Harm may result from a course of action induced by a fraudulent misrepresentation, even though it has nothing to do with questions of contract or with inducement to undertake financial obligations." 41 While the standard of proof of fraud is the balance of probabilities as evidenced by s 140 of the Evidence Act 1995 (NSW) the courts will not lightly make such a finding: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-363. FIRST CLAIM INVOICE 1198 42 On or about 14 January 2008 Mr Emerzidis sent the plaintiff Variation Tax Invoice No 2007-08/1, Variation No 8/1 claiming an amount of $1,084,535.10 in respect of the removal of contaminated waste on the basis that there had been removal of 433 truck loads at the rate of $2,070 per load. The amount of this claim caused Mr Fayad on 23 January 2008 to request by email all truck delivery dockets and tax invoices submitted to Earthworks from waste disposal facilities accepting the inert waste from the development. 43 On 29 January 2008 Mr Fayad received a fax from Mr Emerzidis stating that he enclosed the invoices from his contractor regarding inert waste as requested and requesting urgent payment for contaminated waste by Wednesday, 30 January which was the next day. He enclosed a tax invoice No 1198 dated 25 January 2008 from Engra Haulage detailing truck loads of material being removed from the Plaza West site during the period 8-14 January 2008 for a total cost of $1,046,243.00 being at a rate of $2,270 per load for transport and disposal of inert material at $69 per tonne plus GST. 44 At this point it should be noted that as a consequence of subpoenas being issued at a later stage, another Engra Haulage Invoice No 1198 of the same date from Engra to Mr Emerzidis was produced and this has a stamp that it had been paid. However, the total amount provided was only $337,480 as opposed to the identical invoice provided by Mr Emerzidis to Plaza on 29 January. The inference is clear and not disputed that the invoice provided by Mr Emerzidis to Plaza of 25 January 2008 for $1,046,243 was false. No adequate explanation has been advanced to explain the conduct of the defendants in sending this false invoice claiming the larger amount. INVOICE 1199 45 In relation to tax invoice No 1199 dated 30 January 2008 and furnished to Plaza by Mr Emerzidis on 1 February 2008 the amount claimed was $216,535. However, in fact this invoice was totally false in that no services had been provided by Engra. The Engra invoices simply copied details of loads from another contractor, Kim Haulage. In his fax transmitting Invoice 1199 Mr Emerzidis requested Mr Fayad to "please make sure my payments go through tonight". It is clear that he was obviously extremely anxious to get instant payment after providing these false invoices. Again there has been a substantial over-claim in an amount of approximately $156,525. 46 The evidence indicates that the false Engra Tax Invoice 1199 was created in circumstances where Engra took none of the material away from the site but simply took a genuine invoice from Kim Haulage and put the details into the false Engra invoice. The Kim Haulage invoices were duly paid by Earthworks. This led to an overpayment in the order of $200,000. The falsity of the invoices and the fact that the defendants knew they were false when they were furnished is not seriously in dispute. 47 The background relevant to the issue as to the nature and extent of the excavated material on the site which is a primary issue dates back to July 2004 and it is not necessary to set out that history in full. Suffice it to say that between July 2002 up to the time when the defendants left the site in March 2008 there has been a lengthy history of investigations of the soil contamination on the site beginning with a report from SMEC Australia Pty Ltd (SMEC) in 2002 and concluding in 2010, which have involved examination of a number of reports by SMEC and other consultants including Aargus in relation to the possibility of contamination by petroleum products, hydrocarbons and other contaminants as the consequence of storage of chemicals on the site over a lengthy period. SECOND CLAIM - GHOST LOADS 48 There is no longer any live dispute as to the claim that there was a substantial number of false claims made as to numbers of loads (ghost loads) in respect of inert waste when in fact there was no such removal. The parties have now agreed on the basis that there were false claims by Earthworks made in respect of these non-existent loads and the defendants have agreed to pay a substantial sum to Plaza in respect of them. There is therefore no need to make orders in relation to the question of ghost loads although their existence remains a significant aspect of the overall factual context. I note that no satisfactory explanation has been forthcoming from the defendants as to why or how these false claims came to be made. It is faintly suggested that they were innocent errors but there is no material to back up this suggestion and the factual context does not support this conclusion. THIRD CLAIM - NATURE OF THE MATERIAL 49 The defendants submit that the claim that Plaza relied on Earthworks' representations as to the material being inert waste should be rejected as disingenuous and contradicted by the totality of the evidence. 50 The defendants submit that the allegation of reliance depends entirely on the acceptance of Mr Fayad's evidence which should be rejected as evasive, internally contradictory and self-serving. The defendants say he was an experienced developer as were his associates in the associated Dyldam group of companies, and consequently he was able to draw on his own experience and his associates' expertise. As an experienced developer Plaza knew or ought to have known the true nature of the material removed and in making the payments they did not rely on any fraudulent representations of the defendants. They say Mr Fayad was at all material times aware of the nature and condition of the site and the material that was to be excavated which was inert material and not VENM or, alternatively, that Plaza turned a "blind eye" to the nature of the material and Plaza was prepared to pay for its disposal at the agreed fixed rate whatever its nature notwithstanding the contract. 51 The defendants submit that Plaza had engaged in illegal practices concerning removal of asbestos and other material from the site in 2006 and 2007 into 2008 on an ongoing basis and that therefore it should be inferred in relation to the Earthworks Contract that they had embarked on a methodology of disposing of contaminated waste regardless of whether the contamination consisted of asbestos, petroleum or other contaminants in order to avoid cost, inconvenience and delay. 52 The defendants say that Mr Fayad and Mr Khattar knew exactly what they were dealing with on the site in respect to contaminated material and were prepared to take all such steps as they thought appropriate to protect their interests and the profitability of the project. It is alleged they have been shown to have engaged in deceitful practices in relation to removal of material from the site. The practices in which Mr Fayad and Mr Khattar are alleged to have been engaged are the removal of asbestos contaminated waste from the Parramatta site to another development site under the control of the Dyldam group at Parklea on a systematic basis. Accordingly they have not been misled by or relied on any representations as to the material being inert waste when in fact it was VENM. 53 Since Mr Fayad and his associates were well aware of the true nature of the material removed, it is said they could not reasonably have been misled by false claims made by Earthworks that Earthworks was removing non-VENM material. 54 In order to consider the defendants' case that there was no reliance by Plaza on the defendants' assertions as to the defendants' claims for payment on the basis of non-VENM material it is necessary to take into account the extent of knowledge of Plaza and its conduct in the light of the information available to them from time to time. 55 The evidence in this matter includes a large number of expert geotechnical reports obtained by the parties and the calling of a number of expert witnesses as to investigations and reports from 2002 to 2010 on the nature and extent of non-VENM material on the site as identified at various stages. 56 Having regard to the totality of the evidence as to the nature and extent of the material excavated and disposed of from the site I am satisfied that Plaza has made good its case that, with a minor exception, the material excavated and disposed of from the site in the relevant period by Earthworks was VENM, and not non-VENM material as claimed for by the defendants. 57 It is necessary to consider the conclusions of the investigations made of the site and the conclusions reached. 58 The relevant period for considering the nature of the material excavated by Earthworks was from late July 2007 to February 2008. Plaza says that the material excavated was VENM with the exception of approximately 1000m3. 59 There were 10 reports obtained by Plaza from SMEC and its testing associates concerning the site before, during and after the carrying out of construction work. 60 The evidence is that the 1 metre fill on the site was removed by 2006 and that the upper 3 metres of natural material, below the fill was removed by January 2008. 61 In 2006 SMEC did a report in which it classified some of the fill material as inert and solid waste. This report did not state that the natural material would not be classified as VENM. 62 In April 2006 Mr Watt dug below ground slabs with a small excavator and found asbestos, bricks, ash and black soil under the slabs. He has no qualifications in classification of soils and did not go below ground level. The evidence is that all the asbestos was removed by 17 October 2006 and all the fill was removal before removal of the natural material. 63 On 17 August 2007 a report was made by Aargus Australia for Mr Emerzidis. The site was visited by Aargus on 6 August 2007 and it was noted that all topsoil fill was scraped back with natural material exposed beneath. Some material had been scraped back and was stockpiled at the edge of the site. Classification was made only in relation to the natural underlying soil. The conclusion reached was that the natural underlying material could be classified according to New South Wales environmental criteria as VENM or natural clean residual soils. The report stated that the VENM was not suitable for export to a rehabilitation area at Moorebank because of the detection of some petroleum hydrocarbons in one sample. In its later revised report of 21 August 2007 Aargus refers to three samples from a stockpile of natural soil which it classified as inert waste. In relation to that limited area the report states that the concentrations of heavy metals and petroleum hydrocarbons were all below the relevant criteria in each of the three samples and that the samples were representative only of the silty clay natural soil found within the stockpile. 64 On 28 September 2007 Mr Daniel Cramer, the National Coordinator for Contamination and Waste at SMEC made a report. His brief was to determine the nature of materials excavated during works on site. At that time the site then had been stripped of hardstand and overlying fill with natural soils remaining across most of the site with some piling works being undertaken. The site had an area of approximately 9,005m2. The excavation was to take place to approximately 8-9 metres below ground level for 2 floors of basement level car parking. The purpose of his exercise was to classify the upper 3 metres of natural soil on the site for off-site disposal. He carried out a review of previous investigations of the site by SMEC and stated that work was carried out for the current report on 20 September 2007. He recorded that the assessment was limited to the scope of works carried out during the investigation and that soil assessment was carried out to 3 metres below ground level. He indicated that conditions could vary below that level and between investigation points, and that during bulk excavation where materials that differ in nature from those outlined in the report were observed additional assessment may be required. He stated that soil or rock that appeared odorous, different in colour or nature, contaminated or unusual would require additional assessment and ground water that appeared contaminated might require management if encountered. His conclusion and recommendations in that report was that the materials to 3 metres below ground level should be classified as VENM and could be disposed of off-site to a licensed waste disposal facility, that recycling of VENM for other projects could be beneficial and cost effective, and that the report should be read as a whole. 65 Mr Cramer in a report of 17 August 2010 which was annexed to his affidavit of 18 August 2010 conducted a sampling and analysis of information for the lower soil horizons. With two exceptions he states that the excavation material in the lower soil layers was appropriately classified as VENM as it was not mixed with other waste and not excavated from areas that were contaminated as a result of industrial, commercial, mining or agricultural activities, with manufactured chemicals. The two exceptions were a volume of soil between 5 and 9 metres below the original surface level in the south-eastern area and 1,000m3 of piling waste spoil. He also noted that the results from 25 soil samples representing the upper 3 metres of natural material did not detect any elevated contaminate levels and that this verified the conclusion that the natural material should be classified as VENM as it was not mixed with any other waste and had been excavated from areas not contaminated as a result of industrial, commercial, mining or agricultural activities or manufactured chemicals. 66 Mr Cramer and Mr Dickson were cross-examined in some detail on the SMEC reports as to the possibility of bias, the adequacy of the investigations carried out, the uncertainty of the conclusions in their reports and the need for further work, and as to communications with Plaza. I am not persuaded that their evidence was weakened in any way by the cross-examination. 67 A further report was prepared by Aargus dated 4 April 2008 which stated that it had visited the site on 22 February 2008 and collected surface soil samples, stockpile samples and surface water samples and analysed them. The natural materials were reported to have had concentrations below the threshold values and the groundwater surface ponding had concentrations below the relevant assessment criteria. The conclusion drawn was that because the VENM soils had apparently been affected by manufactured chemicals and contained a petroleum hydrocarbon odour they could not be disposed of as VENM notwithstanding they were below the criteria. 68 On 13 February 2008, Mr Ray Blinman, a senior geotechnical associate at Douglas Partners Pty Ltd sent an email to Earthworks setting out the reasons why material from the site would not be accepted at Eastern Creek. He noted from a review of reports without making his own independent assessment that the report of September 2007 classified the upper 3 metres of soil as VENM and that all such material had since left the site. He refers to a report of October 2007 providing test results that appear satisfactory but this did not alleviate some concerns he had with respect to groundwater. In relation to groundwater results he criticises the report of 7 February 2008 as having provided only 2 samples recently collected. He considered tentatively that the test results of some groundwater set out in a report of 7 February 2008 indicated possible site contamination and speculated as to possible causes. This report amounts to no more than tentative speculation on some of the reports and on some of the data. In my view it does not carry any significant weight. 69 I am satisfied that I should accept the evidence and conclusions of Mr Cramer in the report of 17 August 2010. 70 Further support for the conclusion that the relevant material was VENM can be found in the evidence of Mr Andrew Kohlrusch in his report of 19 August 2010 annexed to his affidavit of the same date. Mr Kohlrusch is the principal environmental scientist for GHD Pty Ltd. He carried out an extensive review of the reports in the matter complied by both parties. He was not required for cross-examination. His conclusion was that some natural soil on the site was affected by the former presence of underground storage tanks mainly in the south-eastern corner of the site. He considered this represented only a small volume of soil removed from the site. He noted that SMEC had collected 62 samples of natural soil for laboratory analysis and he considered the results from that data to demonstrate that almost all natural soils were not impacted by manufactured chemicals and the classification of VENM for the majority of the natural soil that had been present on the site was appropriate. He also noted in his report that material from the site had been disposed of to more than 20 locations and that the majority of locations were not licensed landfills at the time of the works carried out by Earthworks. Three exceptions were Huntly Heritage, SITA Landfill at Kemps Creek and the Eastern Creek landfill, and he noted that the bulk of the soil removed from the site, in the order of 90% at least, was not disposed to licensed landfills and therefore disposal would not have attracted a landfill levy. 71 Dr Michael Dunbavan, principal environmental engineer of Coffey Environments Pty Ltd made a report for the defendants, dated 23 June 2009 which was annexed to Mr Dunbavan's affidavit of 28 October 2008. He expressed the opinion that only a portion of the upper 3 metres could be classified as VENM and other material would not come within this category because the material would be taken from an area that was likely to have been contaminated by petrol hydrocarbons and because the surface of the natural soil had not been demonstrated to be unaffected by contaminants associated fill material. His conclusions are qualified and speculative in their terms. In a later report of 23 September 2010 also annexed to his 29 October 2010 affidavit, he expressed the view that except for any material impacted by releases from the underground tanks, the remaining natural material would potentially qualify as VENM. 72 The approach of Dr Dunbavan was tentative and it emerged in cross-examination that he had not viewed all the available expert reports, particularly some of those furnished by SMEC. Although he criticised the testing regime in the south-eastern corner, it became obvious that he based his conclusions on an incorrect understanding of the precise location of the underground tanks and that he was also unaware that the underground storage tanks in the south-east corner had been removed about a decade prior to the excavation commencing. On this being pointed out Dr Dunbavan agreed that the amount of contaminants in the soil surrounding the tanks could not have increased and would probably have decreased substantially since that time. His view was that there had been some release of contaminants but could not identify the extent without further examination of the results whether surface spillage was the source. 73 Mr Kohlrusch did not consider that Dr Dunbavan's opinions were based on sufficient supporting data. Dr Cramer in his report of 17 August 2010 reviewed the report of Dr Dunbavan and pointed to a number of significant deficiencies in that report which I accept. 74 So far as the top 3 metres of natural material was concerned, the weight of the evidence is that apart from the test results of the stockpile, the natural material in the upper 3 metres was VENM with minor exceptions and below that level I accept that the material was VENM. 75 Evidence was called for the defendants by Mr Petrillo, an excavator on the site. He did not profess to have any qualifications or experience in soil classification. His evidence was based on general impressions. His evidence did not advance the defendants' position because although he said he developed headaches while operating his Case model CX240B on the site it became apparent that he operated in a sealed air-conditioned environment to prevent fumes entering the cabin. Moreover, when asked in re-examination whether he could smell odours when he was on the site after leaving the machine he could not recall whether he smelt any fumes. He did say that some photographs of the site that showed a blue colouration of the soil represented what he saw. It is not possible to draw any useful conclusions from the limited observations of Mr Petrillo. 76 There are additional factors which support the conclusion that the material on the site was VENM. First is the fact that Earthworks was able to dispose of the allegedly non-VENM material at a fraction of the quoted price of $69.60 per tonne or $2,070 per load for non-VENM. Secondly, the letter from Engra to the Department of Environment and Climate Change of 29 May 2009 states that Engra transported only VENM from the premises to the Calga tip between 7 January 2008 and 14 January 2008, amounting to a total of 9,225 tonnes. Invoices from Engra describe the material transported as "clean inert material" and Dr Dunbavan agreed this was a description sometimes used to describe material classified as VENM. 77 Apart from the reports to which I have specifically referred to above, there were a series of earlier reports. However these were reviewed in SMEC's report of 28 September 2007 and these were taken into account in relation to the investigation of the upper 3 metre layer of natural material. Mr Fayad was cross-examined in detail about the contents of these reports. This was on the premise that the reports contained adverse information as to the nature of the material on site which Plaza had sought to conceal. This premise has not been made out. 78 I am not persuaded on the evidence that Mr Fayad or Mr Khattar or anyone on their behalf misled the defendants as to the nature of the material on the site. I am not satisfied the presence of some discolouration as shown in the photographs or the presence of some odours on the site was sufficient diminish or eliminate reliance in paying for the material disposed of by the defendants. Nor do I consider that it can be said that in any way Mr Fayad and Mr Khattar turned a blind eye to evidence which would lead to a conclusion that the site was comprised almost entirely of non-VENM material. 79 As counsel for Plaza correctly points out, even if the reports had indicated that the material on the site was contaminated, the Earthworks contract only included the removal of VENM. Consequently, there would have been no benefit derived by Plaza from not disclosing these reports and keeping their contents from Earthworks. 80 It was submitted that Mr Fayad as Project Manager exercised a high degree of daily control over the site and its activities. However the task of issuing site orders was assigned to Mr Watt who approved and signed off on the number of truck loads and the nature of the waste being disposed of. Mr Fayad was not involved in that role. At that stage he had no reason to doubt the honesty and reliability of Mr Watt. His evidence was that his role was to review the variation claims for approving payment and in so doing he relied on Mr Watt in determining the number of loads the nature of the material and the cost of disposal. I accept this evidence. 81 I do not accept the submission that Mr Watt was something of a "passive scapegoat". In cross-examination Mr Watt conceded that during the course of works at Parramatta as early as August/September 2007 he had entered into a financial arrangement with Earthworks to pay him an amount of $124,000 which he did not disclose to either Plaza or Property Holdings at a time when he was giving site orders in relation to removal of material. The arrangement involved the payment of these moneys by Earthworks to City Access Holdings, a company which he described as his wife's company. He was also taking kickbacks of $300 per load from ACKM which is described by Counsel for the defendants as a "fabric of his own". FOURTH CLAIM - COST PLUS OR FIXED PRICE 82 It is common ground that the details furnished by the defendants in the Engra Invoices 1198 and 1199 provided to Mr Fayad were false to the knowledge of the defendants. The amounts claimed which were paid to the defendants for disposal was much more than the amounts actually paid by Earthworks to the haulage contractors. As a result of the payment Plaza says that the payments it made can be recovered from the defendants. The case for Plaza is that but for the fraudulent misrepresentations on which it relied it would not have paid the amounts claimed by the defendants in those invoices and as a consequence it has suffered loss. 83 The defendants say that Plaza has not established that any loss was suffered as a result of its reliance on the false invoices and that there was no loss suffered as a consequence of the variation concerning non-VENM. They say that the price agreement made on 27 August 2008 and later varied from time to time by consent was an agreement that the price for the excavation and disposal of contaminated waste from the site would the fixed rate namely $69.60 plus profit and overheads. The defendants say that this was the basis on which the claims for payment were made by the defendants and paid for by Plaza. 84 Plaza says that it entered into the arrangement to pay the sum of $69.60 as a direct consequence of the false representation by or on behalf of the defendants that the price was the actual cost incurred or which would be incurred by the defendants plus profit, plus overheads plus GST and that the amount of $69.60 was represented to be the actual cost whereas in fact Plaza has been charged for amounts greatly in excess of the actual cost incurred by the defendants. Plaza says that the agreement was that the price was for actual cost plus profit and not at a fixed rate plus profit. 85 The defendants' case on reliance in substance is that because Plaza was bound to pay the amount of $69.60 plus profit and overhead under the fixed rate agreement, there was no reliance or overpayment assuming that the material excavated and disposed of could be classified as non-VENM in nature. 86 Consideration of this question requires an examination of the conduct of the parties, their conversations and correspondence and actions over the period including, especially, August 2007 onwards. 87 The starting point for consideration of this issue is a conversation between Mr Watt and Mr Fayad which took place shortly before 27 August 2007 in relation to removal of material which was not VENM from the site. In Mr Fayad's affidavit of 19 October 2009, Mr Watt was alleged to have said: "Simon has told me it will cost him $69.60 per tonne plus GST to dump the inert waste." 88 In response to this Mr Fayad states that he thought that was expensive and Mr Watt said "That is a good rate for what you have got. I recommend you accept it", whereupon Mr Fayad states that he said: "OK if that is what it is going to cost Simon." 89 In response Mr Watt is stated to have said "I will give him the go ahead". 90 Mr Emerzidis has not been called to give any evidence in relation to any conversations with Mr Watt or Mr Fayad although he had made several affidavits in the proceedings. 91 In his version of the above conversation, Mr Watt in his affidavit sworn 23 November 2009 agreed that Mr Fayad expressed concern about the figure of $69.60 being pretty expensive whereupon Mr Watt states he said "I have rung around and this rate is cheaper than anything that has been quoted to us. It is a good rate for the material that you have got". 92 On 27 August 2007 the letter quoted in para [20] was signed by the parties on the letterhead of Earthworks. 93 Although that letter refers to "rate" per tonne I am satisfied that it lends support to the version of the conversation advanced by Mr Fayad that the agreement was cost plus and that the reference to $69.60 was on the basis that that would be the actual cost incurred from time to time by Earthworks. The fact that there is a reference to the total cost for the variation including 15% for overheads and profit lends further support to the version of Mr Fayad because it would normally be inconsistent with a fixed rate agreement to add on overheads and profit. 94 There is also in evidence a diary note of Mr Emerzidis of 21 August 2007 which refers to attempts made by him to obtain the cost of disposing of contaminated material. These inquiries attempting to ascertain an actual cost are consistent with the arrangement being a cost plus agreement as is the concern of Mr Fayad, according to Mr Watt, with the quoted figure being expensive. 95 Between 10 October 2007 and 19 October 2007 Mr Fayad had a discussion with Mr Watt and Mr Emerzidis in which Mr Fayad states in his affidavit of 19 October 2009 that Mr Emerzidis stated: "As you know I am not making money out of this variation as I am only charging you for the actual costs of removing and disposing of the material." (Emphasis added.) 96 Mr Emerzidis has filed a number of statements in this proceeding but he has not given any evidence to rebut this statement nor has he given a different version. Mr Watt said in response that in this conversation he did not recall Mr Emerzidis saying what the cost to him was or that he was only charging for actual cost. As pointed out by Plaza this amounts to no more than a failure to recollect and does not contradict the evidence of Mr Fayad. 97 In the course of the cross-examination of Mr Fayad he was asked by Counsel for the defendants: "Q. What I am putting to you is that your evidence about your understanding of this agreement is just nonsense, that you knew that you were entering into an obligation to pay an agreed rate of $69 plus the margin specified come rain, hail or shine, that was the agreement? A. Yes. " 98 The defendants rely on this answer to support their case. However, the question is far from clear consisting as it does of an insult coupled with a vague reference to "hail, rain or shine" and an assertion that Mr Fayad was entering into an obligation to pay an agreed rate of $69 plus the margin. 99 This exchange took place after several earlier specific questions in which Mr Fayad stated that $69 was stated to be the cost and that he was concerned with what it had actually cost Earthworks and that he only wanted to pay what it actually cost, plus profit and overheads. 100 In my view, when read in context the answer relied on by the defendants to the question concerning the agreed rate does not support the proposition that the agreement for payment was other than cost plus. 101 The defendants also seek to rely on the email of 22 October 2007 referred to in [29] from Mr Emerzidis to Mr Fayad. 102 The defendants contend that this email supports the conclusion the price was to be at a fixed rate. On the contrary, in my view this email lends support to the version of Mr Fayad because if Mr Emerzidis had a fixed rate he would not attempt to vary the rate by having regard to variables including different tipping fees. Again, Mr Emerzidis was not called to explain the surrounding circumstances or give his version of any discussions with Mr Fayad in relation to this email. 103 Generally in relation to these conversations and dealings with Mr Watt where they conflict I prefer the evidence of Mr Fayad as to what I have found with respect to the lack of credibility in relation to Mr Watt discussed in para [37] above. 104 I have approached Mr Fayad's evidence with some circumspection having regard to the matters to which I refer in relation to his credibility in para [36]. I do not consider that the reservations which I have expressed materially bear on the substance of the discussions as to cost plus as opposed to fixed rate. This is so particularly having regard to the objective considerations to which I now refer below. 105 It is important to note that as of October 2007 the agreed price appeared to be less than the cost of $69.60 per tonne previously claimed. 106 The provision of the false Invoices 1198 and 1199 purporting to state the actual costs paid to Engra in respect of actual number and amounts of material disposed of and as to the nature of the material as non-VENM is powerful evidence that Earthworks would be paid its actual costs. Mr Emerzidis was prepared to fraudulently arrange for the preparation of false invoices to disguise the true position as to actual cost, loads and the nature of material. If the agreement was that Earthworks would be paid at a fixed and agreed rate then there was no need to cover up and produce false invoices which did not in fact represent the actual costs. The real invoices evidencing this could and should have been produced. This deceptive behaviour strongly reinforces the case advanced by Mr Fayad as to the nature of the arrangement. The defendants wanted to conceal the fact that actual costs were much less than agreed. 107 Also, the fact that Mr Watt had received a secret payment from Mr Emerzidis while he was on the site in the amount of $124,000 which was not disclosed to Plaza and the fact that Mr Watt took payments from ACKM and to hide the matters from Plaza supports the conclusion that there has been systematic concealment. 108 I am of the opinion that none of Mr Watt's evidence should be accepted except where it can be independently verified by documents or evidence from credible witnesses. 109 For the above reasons I am satisfied that the agreement as to price was for cost plus and not for a fixed price. FIFTH CLAIM - STATUTORY BREACHES 110 Conduct that is misleading or deceptive can also give rise to an action under s 52 of the TPA and s 42 of the FTA. 111 To ground such an action it is not necessary to show fraud. 112 The relevant requirements are that a corporation must be shown to have engaged in conduct that is misleading or deceptive. There is no necessity to show intent. Under s 82 of the TPA a person who suffers loss by conduct of another person done in contravention of s 52 can recover the amount of the loss by action against the other person or against any person involved in the contravention. The same provision as to damage is found in s 68 of the FTA in relation to contravention of s 42. 113 In the present case the relevant person is Earthworks and the person involved in the contravention is Mr Emerzidis. It must be shown however that the claimant for loss has suffered loss or damage as a result of the contravening conduct by the corporation or other person involved. This raises questions of causation and reliance: see s 82(1) and (1AAA) of the TPA. Under s 75B of the TPA a reference to a person involved in a contravention is a reference to a person who has aided, abetted, counselled or procured the contravention or has induced it or has been in any way directly or indirectly knowingly concerned in or a party to the contravention or has conspired with others to effect the contravention. In the present case, for reasons given in this judgment, I am satisfied that Mr Emerzidis has aided and abetted or procured the contravention and that he has been directly or indirectly knowingly concerned in or a party to the contravention. The corporation contravening the Act is Earthworks. Mr Emerzidis is the controlling mind of Earthworks and his acts and intention can be attributed to Earthworks. 114 The findings and conclusions I have reached set out above as to misleading and deceptive conduct in relation to the TPA applies equally to the claims based on the FTA. 115 I find that Mr Emerzidis was responsible for making the false claims as to non-VENM and that these were made on behalf of Earthworks and that he personally knowingly sent the fraudulent Invoices 1198 and 1999 to Plaza in response to a request from Mr Fayad. He was also responsible, on behalf of Earthworks, for the other false representations as to actual costs incurred. SIXTH CLAIM - REASONABLE RATES QUANTUM 116 Mr Barry Tozer, the principal of Tozer and Associates, Consulting and Construction Engineers, filed an affidavit on 19 August 2010 in which he sets out a detailed report on the extent of the overpayment for excavated material on the site. He was not required for cross-examination and I therefore accept his report and conclusions. 117 In substance his conclusions as to the calculation of the quantum of overpayments and recoverable amounts in respect of payments made by Plaza to Earthworks were presented on three alternate assumptions. 118 On the first assumption that Earthworks was to paid the actual extra cost of disposal of the inert material he calculated that the overpayment amounted to $1,904,803.20 plus margins and GST giving a total overpayment of $2,305,151.40. In the alternative on the assumptions that Earthworks were to be paid the difference between a rate of $200 per load irrespective of actual VENM disposal cost and the cost of disposal of the inert material the overpayment amounted to a sum of $1,922,643.20 plus margins and GST which made a total overpayment of $2,326,726.80. On the third assumption which I find has been made out, namely that all the material was VENM the overpayment was the total amount paid to Earthworks for these variations in an amount of $2,265,291.47 plus margins and GST, making a total overpayment for variations of $2,742,447. 119 I accept the findings and report of Mr Tozer. DEFENCES AND CROSS-CLAIMS 120 In relation to the remaining cross-claim for inert waste tip on site by Plaza I note that Plaza has admitted it was necessary to remove 6 loads at a total cost of $1,200 and this is no longer in issue. 121 In relation to the cross-claim for material previously removed and paid for as VENM when in fact it was inert waste the question turns on the submission that the Superintendent who certified the amount of inert waste that had been removed acted wrongly and that an amount of $873,575 plus GST is owing to the defendants. I reject this claim. It is said to be supported by the evidence of Mr Watt whose credibility I do not accept on this issue. The evidence is that the material removed was in fact VENM and not inert and was disposed of as if it were VENM. It did not cause the defendants to incur any additional cost as it was disposed of at the rate applicable to VENM. Moreover, the first time this cross-claim was made against the plaintiff was more than three years after the material had been excavated from the site. With two minor exceptions by way of diary entries, the diaries of Mr Emerzidis on each of the days claimed do not record any complaint as to the number of loads of inert waste that had been assessed. 122 I therefore reject this cross-claim. NON-RELIANCE BY PLAINTIFF 123 The defendants first submit that Plaza knew that significant amounts of the site were contaminated requiring considerable excavation and removal and that the site was problematic and likely to give up material which was inert. They were wilfully blind to precisely what the material was and did not follow up suggestions from SMEC in 2006 and 2007 in relation to testing of further boreholes and the employment of an experienced contaminated land expert to monitor the excavation on the site from time to time. 124 The defendants say that Plaza would not have relied on representations that the material was inert material when they had available the SMEC report in particular of September 2007 which stated that the first 3 metres of material was VENM apart from the two qualifications. Being experienced developers and having access to expert advice and geotechnical consultants they knew the true position. The defendants say that the parties acted on the common understanding that the material was non-VENM and Plaza changed their position on that understanding because it was convenient for them at that time for commercial reasons to do so. It is inconceivable that Plaza would have relied on the opinion of an excavator who was not a geotechnical expert that the material was non-VENM. When Plaza paid for removal of the inert material it did so because it perceived it was in its interest to do so. Plaza knew from work carried out by SMEC there were potential problems with groundwater and believed that the site contained contaminated materials or there were substantial pockets of contaminated material. 125 I accept as at August 2007 the expert and other evidence as to the nature and extent of non-VENM material on site was not completely clear. There was some uncertainty. The weight of the evidence was however that by far the greatest part of the site could properly be classified as VENM. I am satisfied that Mr Fayad had seen the SMEC reports and also had access to the Aargus reports of August 2007. However, I do not consider that his awareness of this material nor his being informed of additional steps that he could consider taking to further investigate the site affords any basis for a conclusion that he did not rely on the false claims and assertions made by the defendants. Taken at its highest, the fact that Mr Fayad may have done something further to ascertain the full picture does not mean that he was not justified in relying upon honest claims and certifications as to the nature of the material from the defendants. During this period Mr Fayad he had no reason to suspect that as from about August 2007 the company owned by the wife of Mr Watt had received $124,000 from Mr Emerzidis which Mr Watt was unable to satisfactorily explain or doubt the apparently impartial assessment of material by Mr Watt as non-VENM. Nor was Mr Fayad aware of the kickback payments from ACKM of $300 per load to Mr Watt which might have put Mr Fayad on notice that he ought to examine the claims more closely. 126 It must be assumed that as a matter of practical commercial common sense Mr Fayad knew that he did not have to pay for the excavation and removal of VENM under the contract and it is unlikely in the extreme that he would have foregone his rights to have the VENM carried at no cost and would have elected to pay over $2 million for removal of the material at extremely high charges on the basis it was non-VENM over a period of 5-6 months. The fact that the false invoices were paid promptly, especially Invoice 1198, points to unquestioning reliance by Plaza on the integrity of the claims. 127 Even if, which I do not accept, Mr Fayad had some basis to believe that the material being removed was non-VENM, this does not mean that if in fact the material removed was VENM to the knowledge of Mr Fayad must be treated as having given up his rights under the agreement, or that Mr Fayad was estopped in some way from recovering moneys paid on the false basis as represented by the defendants on the ground of non-reliance. 128 In my view what transpired in this matter is that by August 2007 and the months following Mr Fayad was aware that there was some uncertainty as to the nature of material on the site. He had been informed by SMEC with some qualifications that subject to further investigations the material on the site to 3 metres could be classified as VENM but this was not absolutely certain. In those circumstances he relied on the accuracy and honesty of the claims made by Earthworks. It cannot be said that he elected to proceed on a common basis that he would pay at non-VENM rates for some unspecified commercial benefit to Plaza and pay for the material regardless of whether it was VENM or non-VENM and to make very substantial payments which he was not bound to make. 129 In so far as the defendants seek to rely on a submission that the payments by Plaza in the light of what was known to Mr Fayad and Plaza was a representation on which the defendants relied so as to found some kind of estoppel, I cannot agree. The nature of the precise representation from conduct or express statement is not clear; the detriment incurred by Mr Emerzidis is not clear and any acceptance or reliance on the representation by the defendants has not been proven. Accordingly this is clearly not a case in which the defendants can rely on estoppel or a submission analogous to one of estoppel. 130 The defendants also say that Plaza should not be entitled to approbate and reprobate in the sense that their conduct amounts to a statement that they are prepared to pay for whatever reason for removal of material as if it were non-VENM when they knew that it was or was likely to be VENM. There is no evidence of any statement or assertion by Mr Fayad or anyone else from Plaza to the effect that they accepted that the material was non-VENM and the mere fact that they paid for each removal as non-VENM does not mean that they are prevented from later saying that they were deceived and rely on that deception to recover the payments made. It cannot be said that in making the payments Plaza has impliedly or expressly agreed to pay for the material regardless of its classification. 131 For the above reasons I am not prepared to accept the submissions as to non-reliance in relation to the nature and extent of the non-VENM material because it has not been made out that Plaza ever adopted such an approach or proceeded to pay regardless of the nature of the material knowing the representations to be false. In my view Plaza, in accepting and paying the claims, clearly relied on the representations being true when in fact they were not and Plaza's reliance was the direct cause of their loss. Accordingly, I reject the assertion of non-reliance as to non-VENM material asserted by the defendants. 132 In this case I am satisfied that the defendants made misrepresentations in writing, orally and by their conduct as to the cost of removal of excavated material from the site between August 2007 to March 2008, that the misrepresentations were false to the knowledge of the defendants with the intention they should immediately be acted upon, and that Plaza has reasonably acted in reliance on the false statements and has suffered loss as a direct consequence. I do not accept the submissions of the defendants that there had been no reliance in making payments or that no loss was incurred by Plaza as a consequence of the fraud. REMOVAL OF CONTAMINATED MATERIALS ON 2, 3 AND 6 AUGUST 2007 133 Mr Watt gave evidence that on 2, 3 and 6 August 2007 he arranged for approximately 58 truckloads of contaminated material to be removed from the site to a tip location in Windsor that was controlled by ACKM Pty Ltd. He says that on or about 30 August 2007 he prepared an invoice from Property Holdings Group to Dyldam for removal of this contaminated waste in accordance with instructions from Mr Fayad. This invoice describes the material as VENM when in fact it was not VENM. Invoice 49 dated 6 August 2007 signed by Mr Watt refers to removal of VENM but the word "VENM" has been substituted for the word "inert" which was originally on the invoice and which was whited out. 134 The vendor's accounts form of 6 August 2007 was checked by and approved by Mr Watt for $16,225, refers to 58 loads being carried on 2, 3 and 6 August at a total cost of $14,750 not including GST. There is a note on that document (SMELL). This was written in the handwriting of Mr Watt. 135 The defendants seek to rely on these records and the evidence of Mr Watt as to a conversation of Mr Fayad to further support the conclusion that Plaza knew that there was contaminated material on the site and sought to disguise it from the defendants and that they were involved in the substitution of the word "VENM" for the word "inert" in Invoice 49 from ACKM. 136 Mr Fayad denies any conversation with Mr Watt to the effect alleged. 137 The evidence is that the material that was removed on those days was not natural material but was part of a small area of remaining fill that had not been removed in 2006 as being near the site sheds. 138 There is no evidence that Plaza altered Invoice 49. Having regard to the fact that Mr Watt received a kickback payment from ACKM of $300 per load and the lack of credibility of Mr Watt I do not accept that there is any substance in the defendants' submission. No evidence was adduced from ACKM to explain the documents and I therefore infer that ACKM's evidence would not have assisted the defendants. I accept the evidence of Mr Fayad that he was unaware that the invoice had been altered until two years later. On the material before me I think it is probable that the alteration was made by either ACKM or Mr Watt given the relationship between them. 139 In fact the records show that ACKM was paid a total of $46,400 for removing 58 loads of material which is equivalent to $800 per load including transport and tipping fees which is considerably in excess of the cost of disposal of VENM. 140 Accordingly, I do not consider that the defendants derive any support for the submission that there were unsavoury practices to which Mr Fayad was a party or in respect of which he had knowledge concerning the removal of material on 2, 3 and 6 August 2007 by ACKM. REMOVAL OF ASBESTOS TO PARKLEA SITE 141 The defendants contend that asbestos was unlawfully dumped at the Parklea development site owned by the Dyldam group of which Plaza was a member and that this is relevant to the conduct of Plaza on the site and that the evidence establishes this. The defendants argue that this practice evidences a continuing and systematic course of conduct which bears on Plaza's activities on the site and the underhand practices which Plaza was prepared to adopt or condone in order to save expense and avoid inconvenience. The alleged removal of asbestos material to Parklea in 2006 from the site is said to support the conclusion that Plaza embarked on a calculated methodology of disposing of contaminated waste regardless of its nature to avoid disadvantages and delay and that this practice continued through the years 2006 to 2008. The defendants seek to rely on this alleged practice to support the proposition that there was therefore no reliance by Plaza on the fraudulent representation made in the invoices as to the nature of the material removed. Implicit in this is the premise that Plaza did not care what the material was or the cost, they simply wanted to dispose of material in any way from the site to suit their convenience and minimise expense. 142 In support of this submission they say there was a falsification of invoices from the Property Holdings Group which referred to the removal of VENM when in fact it was know that what had been removed was inert waste to the knowledge of Messrs Fayad and Khattar and that these persons gave instructions or were involved in the process. 143 Plaza submits that such evidence is irrelevant to the issues before me and I agree. 144 In addition the submissions largely depend for acceptance on the evidence of Mr Watt and inferences said to be available from documentary material. For reasons mentioned earlier I do not accept that any evidence given by Mr Watt can be accepted as true or credible in the absence of clear authenticated documentary material or objective facts in support of what he says. No such evidence exists and accordingly I find that the submission as to disposal of asbestos has not been established particularly having regard to site records and records of disposal areas and invoices. 145 I have taken into account that during 2006 Plaza had paid for independent contractors to carry out extensive asbestos testing of the site and arranged for careful and extensive monitoring of the removal of asbestos and that they had paid SITA an authorised disposal site approximately $138,000 for disposal of asbestos from the site. I accept the evidence of Mr Fayad that he did not know of or participate in any such conduct. I am not satisfied that it has been shown that Mr Khattar, now deceased, was aware of any such practice or that any such practice existed. The fact that the developer engaged specialist independent organisations to ensure the monitored systematic removal of asbestos from the Parramatta site is consistent with Plaza adopting a responsible approach to the excavation and removal of asbestos from the site and is inconsistent with the inference sought to be drawn by the defendants that a policy of deliberately dumping the material at an unauthorised location to save time and expense was implemented. 146 In so far as the defendants seek to rely on disposals on 5 October, 9 October and 11 October 2006, I consider that the available documentation is not sufficient to support any inference that there was any course of conduct on the part of Plaza to dispose of the asbestos material otherwise than properly and in accordance with law. 147 Mr Fayad gave evidence in his affidavit of 18 March 2010 that during the excavation period, before the site was cleared of asbestos in October 2006, as material was excavated on the site, from time to time the Australian Technical Services Pty Ltd Supervisor would indicate whether the material in the bucket was contaminated with asbestos. If he determined that a particular bucket load contained asbestos it was immediately tipped into a waiting truck lined with plastic in accordance with the requirements of SITA. When the truck was full it was then covered and disposed of at SITA's landfill at Kemp's Creek. 148 If the Supervisor determined that that the fill material in the bucket did not contain asbestos then it was either placed in a separate stockpile or loaded directly into a truck for disposal and disposed of at sites arranged by Mr Watt. Mr Fayad's affidavit evidences the systematic way in which asbestos-contaminated material was removed from the site. The evidence shows that careful regard was paid to the need to carefully and lawfully dispose of the asbestos material on the part of Plaza by ensuring this material from the site was properly segregated and disposed of at appropriate tips. It is inconsistent with this practice and expense incurred by Plaza to conclude that it and its agents were reckless or turned a blind eye as to the handling and disposal of contaminated asbestos material from the site by dumping it at Parklea or that Plaza had a deliberate policy of disposing of material unlawfully or in any other similar manner in relation to the removal of material from the site in 2007-2008 as alleged by the defendants. 149 The evidence which I accept is consistent with the documentary records which indicate that material was deposited at several different fill sites on particular days. In a number of cases Parklea and SITA are mentioned as sites utilized on the same day supporting Plaza's evidence as to thorough treatment of asbestos waste. The evidence supports the conclusion that material contaminated with asbestos was properly disposed of at sites other than Parklea. 150 In seeking to make out their case the defendants have relied on uncertain and dubious inferences alleged to be open from ambiguous documents in respect of which no reliable witness has been called to substantiate or give any explanation or authentication. 151 I reject the proposition that there was improper removal of material to the Parklea site. I further consider that even if such an allegation were made out it has no significant relevance so as to provide any defence to the claims based on the manifest clear fraud and misrepresentation in this matter. There is simply no evidence of any connection between the asbestos removal in 2006 and the reliance by Plaza and its officers on the fraudulent misrepresentations by the defendants in this matter. STORMWATER AND CONSTRUCTION CERTIFICATE 152 Mr Fayad was cross-examined in relation to matters relating to stormwater issues and the late issuing of a construction certificate. It appears from the evidence that Plaza and Mr Fayad permitted work to be done on the site without prior approval and have may have misled the authorities in relation to the commencement of bulk excavation work which was later the subject of a construction certificate. In relation to stormwater diversion, it appears that work had been done before approval but this was not disclosed and arguably the relevant authority was misled. 153 I do not consider either of these incidents bears significantly or relevantly on any of the defendants' submissions concerning non-reliance although I have taken them into account in examining the evidence of Mr Fayad. But again, I do not consider that it has any serious impact on his credibility in relation to the central issues in this matter. CONCLUSION AND FINDINGS 154 I am satisfied that the evidence provides a basis for the following findings.

PLAZA WEST PTY LIMITED v SIMON'S EARTHWORKS

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Judgment (26 paragraphs)

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