Reed Constructions Australia Limited v MidCoast County Council trading as MidCoast Water

DECISION : Plaintiff entitled to the judgment. Cross-claim to be dismissed.

CATCHWORDS : Trade Practices Act - Whether conduct misleading or deceptive - Alleged half-truths - Consideration of authorities - Proceedings pursuant to the Building and Construction Industry Security for Payments Act - Whether plaintiff mislead defendant causing it not to put on payment schedule in response to plaintiff's payment claim

LEGISLATION CITED : Building and Construction Industry Security for Payments Act 1999 (NSW) Trade Practices Act 1974 (Cth)

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 270 ALR 204 Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625 CASES CITED : Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 Vitek v Estate Homes Pty Ltd [2010] NSWSC 237

PARTIES : Reed Constructions Australia Limited (Plaintiff) MidCoast County Council trading as MidCoast Water (Defendant)

COUNSEL : Mr B DeBuse (Plaintiff) Mr F Corsaro SC, Mr M Galvin (Defendant)

SOLICITORS : HWL Ebsworth (Plaintiff) Stacks (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST

2010/155800 Reed Constructions Australia Pty Limited v MidCoast County Council t/as MidCoast Water JUDGMENT The proceedings 1 There are before the Court proceedings pursuant to the Building and Construction Industry Security of Payments Act 1999. 2 The parties are Reed Constructions Australia Pty Ltd as plaintiff and MidCoast County Council trading as MidCoast Water as defendant. 3 The essential issue concerns the plaintiff's claim that the defendant is liable to pay it part of an amount claimed by the plaintiff under progress claim 35 dated 30 April 2010 relating to work said to have been undertaken by the plaintiff for the defendant under a construction contract dated 23 March 2007. 4 The plaintiff's claim claimed an amount of $11,033,756.59 but the plaintiff only contends an entitlement to payment of the amount of $1,338,198 on the grounds that the total of the Payment Claim had been the subject of previous adjudicated payment claims under the Act. 5 The plaintiff alleges that:

i. the payment claim was both a progress claim under the contract and a payment claim under s 13 of the Act;

ii. was served on MidCoast on 30 April 2010. 6 The plaintiff maintains an entitlement to recover the claimed amount under s 14 (4) of the act as a consequence of MidCoast's failure to provide a payment schedule to the plaintiff within the time allowed for by the Act. 7 MidCoast initially disputed the fact that the payment claim had been received on 30 April 2010 but at the commencement of the hearing no longer pressed that contention. 8 Notwithstanding its pleadings by the time senior counsel appearing for the defendant commenced his final address it became plain that there was only one issue being pressed. That issue concerned the defendants Trade Practices Claim to the effect that the plaintiff misled the defendant into an impression that the plaintiff had not submitted a payment claim.

The authorities 9 It is convenient before proceeding further to examine certain of the authorities. 10 The often-quoted joint decision of Justices Deane and Fitzgerald in Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, at pages 202 to 203, provides useful guidance in working out whether conduct is misleading or deceptive within the meaning of s 52. They state:

"First, it is necessary to identify the relevant section (or sections) of the public (which may be the public at large) by reference to whom the question of whether conduct is, or is likely to be, misleading or deceptive falls to be tested ( Weitmann v Katies Ltd (1977) 29 FLR 336, per Franki J at 339-40, cited with approval by Bowen CJ and Franki J in Brock v Terrace Times Pty Ltd (1982) 40 ALR 97 at 99; [1982] ATPR 40-267 at 43,412).

Second, once the relevant section of the public is established, the matter is to be considered by reference to all who come within it, "including the astute and the gullible, the intelligent and the not so intelligent, the well educated as well as the poorly educated, men and women of various ages pursuing a variety of vocations": Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1980) 31 ALR 73, per Lockhart J at 93: see also World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 199, per Brennan J (16 ALR at 203).

Thirdly, evidence that some person has in fact formed an erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself conclusively establish that conduct is misleading or deceptive or likely to mislead or deceive. The court must determine that question for itself. The test is objective (see, generally, Annand & Thompson Pty Ltd v Trade Practices Commission (1979) 25 ALR 91 per Franki J at 102; Sterling v Trade Practices Commission (1981) 35 ALR 59, per Franki J (with whom Northop J agreed) at 66 and per Keely J at 69; Snoid v Handley (1981) 38 ALR 383, per the court (Bowen CJ, Northrop and Morling JJ); and Brock v Terrace Times, supra per Bowen CJ and Franki J).

Finally, it is necessary to inquire why proven misconception has arisen: Hornsby Building Information Centre v Sydney Building Information Centre (18 ALR at 647 140 CLR at 228). The fundamental importance of this principle is that it is only by this investigation that the evidence of those who are shown to have been led into error can be evaluated and it can be determined whether they are confused because of misleading or deceptive conduct on the part of the respondent." 11 In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1 Gibbs CJ, at pages 6 to 7, somewhat qualified and further explained the guidelines in Taco Company of Australia v Taco Bell by stating:

"In McWilliams v McDonalds (1980) 33 ALR 394 it was rightly held by Smithers J and by Fisher J that to prove a breach of s 52 it is not enough to establish that the conduct complained of was confusing or caused people to wonder ...

Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. … the section must, in my opinion, be regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will of course depend on all the circumstances. … The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading. It is obvious that where the conduct complained of consists of words, it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words. The same is true of facts." 12 In Vitek v Estate Homes Pty Ltd [2010] NSWSC 237 Barrett J observed in relation to misrepresentation by silence inter alia as follows:

30 While characterised as one of misconduct by silence, the complaint is, in substance, a complaint of misconduct by half-truth. The half-truth concept is illustrated by the decision of the United States Court of Appeals in P Lorrilard Co v Federal Trade Commission 186 F 2d 52 (1950), a tobacco advertising case in which a cigarette manufacturer had claimed that its "Old Gold" product would not harm the throat, quoting a Reader's Digest article comparing various brands of cigarette. The court said: "The fault with this advertising was not that it did not print all that the Reader's Digest article said, but that it printed a small part thereof in such a way as to create an entirely false and misleading impression, not only as to what was said in the article, but also as to the quality of the company's cigarettes. Almost anyone reading the advertisements or listening to the radio broadcasts would have gained the very definite impression that Old Gold cigarettes were less irritating to the throat and less harmful than other leading brands of cigarettes because they contained substantially less nicotine, tars and resins, and that the Reader's Digest had established this fact in impartial laboratory tests; and few would have troubled to look up the Reader's Digest to see what it really had said. The truth was exactly the opposite. There was no substantial difference in Old Gold cigarettes and the other leading brands with respect to their content of nicotine, tars and resins and this was what the Reader's Digest article plainly said." 31 The same thinking caused the Full Federal Court to observe in Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 that, where information is provided, it must constitute a "full and fair disclosure of all relevant facts." In other words, it is not enough that what is said, considered in isolation, is literally true if there is another part of the overall story that should be disclosed and, if disclosed, would cause the total message to be different. … 34 In a situation of arm's length commercial negotiations, however, there is no generally prevailing legal requirement that one party not take advantage of superior knowledge; much less is there a requirement to surrender the advantages that superior knowledge entail. In Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458, Gleeson CJ said at 475: "Where parties are dealing at arms' length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice." 35 Case law about s 52 of the Trade Practices Act 1974 (Cth) and its State equivalents such as s 42 of the Fair Trading Act makes it clear that the factor that may give rise to a requirement to break silence - in the sense that failure to do so will be misleading or deceptive - will be found in the whole of the circumstances in which silence is maintained. The most often quoted statement of the relevant principles is probably that of the Full Federal Court in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. The matter was summarised thus by Handley JA (with whom Hodgson JA and Gzell J agreed) in Metalcorp Recyclers Pty Ltd v Metal Manufactures Ltd [2003] NSWCA 213; (2004) Aust Contract R 90-186: "A finding of misleading or deceptive conduct is open where that conduct, by word or deed, conveyed a misrepresentation ( Wardley Australia Ltd v Western Australia (1992) 175 CLR 514). In this case the misrepresentation is said to have been conveyed by silence, but that is an inadequate and incomplete description. The relevant principles were felicitously summarised by Black CJ in Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 , 32: 'Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive … to speak of "mere silence" or a duty of disclosure can divert attention from that primary question. Although "mere silence" is a convenient way of describing some fact situations, there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.'

The misleading and deceptive conduct relied upon was that of Mr Cook during the critical conversation. As Black CJ said, silence that is capable of being misleading or deceptive never stands alone. In the absence of some positive duty to speak, silence can only be misleading or deceptive against a background of other facts known to both parties which make what is actually said so incomplete that it conveys a misrepresentation." 36 Referring to the particular case before him, Handley JA said: "The Court can now consider whether Mr Cook's conduct was misleading or deceptive. It is said to have this character because of what was not said in the context of what was said." 37 This is the key. One must judge the quality of what was not said in the context of what was said. Only if what was said and the context in which it was said gave rise to a reasonable expectation of disclosure of what was not said will silence be misleading or deceptive. What was said will, of course, include what was asked.

38 Importantly, inequality of information, while one of the relevant circumstances, will not of itself be sufficient. In Eastern Gardens Pty Ltd v Stone [2005] SASC 157; (2005) 239 LSJS 344, White J said at [34], with the concurrence of Doyle CJ and Besanko J: "In considering whether a party engaged in commercial dealing may have a reasonable expectation that a fact, if it exists, will be disclosed, one needs to keep in mind that it will often be the case in such dealings that one party has more knowledge about a relevant matter than the other and yet will not, in accordance with ordinary commercial expectations, be guilty of misleading or deceptive conduct in failing to make that knowledge known to the other."

39 The court must decide whether, on an objective assessment, "a person in the plaintiff's position would be entitled to expect or infer (has a reasonable expectation) that the defendant would disclose". These are the words of Besanko J (with whom Duggan J and Layton J agreed) in Slinger v Southern White Pty Ltd [2005] SASC 267; (2005) 92 SASR 303 at [52] approving what was said by Doyle CJ in Software Integrators Pty Ltd v Roadrunner Couriers Pty Ltd (1997) 69 SASR 288 (see also Donne Place Pty Ltd v Conan Pty Ltd [2005] QCA 481 at [42]).

40 The test is one of reasonable expectation. An entitlement to expect or infer that the other party will disclose, if it exists, will be found in the whole of the circumstances in which the parties dealt with one another. 13 More recently the High Court had occasion in Miller & Associates Insurance Broking Pty Ltd (ACN 089 245 465) v BMW Australia Finance Ltd (ACN 007 101 715) (2010) 270 ALR 204 to deal with misleading or deceptive non-disclosure. 14 The Chief Justice and Kiefel J at [14]-[22] observed inter alia as follows:

Misleading or deceptive non-disclosure [14] In determining whether there has been a contravention of s 52 of the Trade Practices Act , it is necessary to determine "whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive".24 The term "conduct" is to be understood according to its definition in s 4(2)(a) and (b) of the Trade Practices Act, which includes a reference to "refusing to do any act". That, in turn, includes a reference to "refraining (otherwise than inadvertently) from doing that act".25

[15] For conduct to be misleading or deceptive it is not necessary that it convey express or implied representations. It suffices that it leads or is likely to lead into error. …

[17] The 1992 decision of the Full Court of the Federal Court in Demagogue32 represented what has been described accurately as "an emphatic acknowledgement … of the unique nature of the statutory prohibition".33 The Full Court upheld the decision of the primary judge that a vendor of land had created a clear but erroneous impression in the purchasers that there was nothing unusual concerning access to the land and, in particular, had been silent as to the necessity of a grant of a licence by a statutory authority to enable such access.

[18] Gummow J, who wrote the leading judgment and with whom Black CJ and Cooper J agreed, said:34 … it should be no inhibition to giving effect to what, on its proper construction, is provided for in the legislation, that the result may be to achieve consequences and administer remedies which differ from those otherwise obtaining under the general law. Silence, as Black CJ said in his concurring judgment, was to be assessed as a circumstance like any other:35

the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive.

Gummow J referred to the limitation that "unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist".36

[19] The language of reasonable expectation is not statutory. It indicates an approach which can be taken to the characterisation, for the purposes of s 52, of conduct consisting of, or including, non-disclosure of information. That approach may differ in its application according to whether the conduct is said to be misleading or deceptive to members of the public, or whether it arises between entities in commercial negotiations.37 An example in the former category is non-disclosure of material facts in a prospectus.38

[20] In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52.40

[21] To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute. In that connection, Robson AJA in the Court of Appeal spoke of s 52 as making parties "strictly responsible to ensure they did not mislead or deceive their customer or trading partners".41 Such language, while no doubt intended to distinguish the necessary elements of misleading or deceptive conduct from those of torts such as deceit, negligence and passing off, may take on a life of its own. It may lead to the imposition of a requirement to volunteer information which travels beyond the statutory duty "to act in a way which does not mislead or deceive".42 Cicero, in his famous essay On Duties, seems to have contemplated such a standard when he wrote:43 Holding things back does not always amount to concealment; but it does when you want people, for your own profit, to be kept in the dark about something which you know and would be useful for them to know. It would no doubt be regarded as an unrealistic expectation, inconsistent with the protection of that "superior smartness in dealing" of which Barton J wrote in W Scott Fell & Co Ltd v Lloyd ,44 that people who hold things back for their own profit are to be regarded as engaging in misleading or deceptive conduct. As Burchett J observed in Poseidon Ltd v Adelaide Petroleum NL,45 s 52 does not strike at the traditional secretiveness and obliquity of the bargaining process. But his Honour went on to remark that the bargaining process is not to be seen as a licence to deceive, and gave the example of a bargainer who had no intention of contracting on the terms discussed and whose silence was to achieve some undisclosed and ulterior purpose harmful to a competitor.

[22] However, as a general proposition, s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence. Yet that appears to have been, in practical effect, the character of the obligation said to have rested upon Miller in this case. … 15 Hoeben J in Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625 reviewed the relevant authorities before stating:

[190] It seems to me that the qualification suggested by Merkel J in Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) 45 IPR 453 ; (1999) ATPR 41-696 ; [1999] FCA 569at [2]-[4] is correct, namely that the requirement for conduct to be deliberately engaged in only applies where "silence alone" is relied upon as constituting the misleading or deceptive conduct. That is not the situation here. What is relied upon by the plaintiffs is the combination of the full disclosure by Ms Williams of disadvantages affecting the proposed lease site of which she was aware that is lack of services and noise combined with the absence of any mention of the risk of the site being contaminated. Agreed chronology of events 16 It is convenient to commence with setting out an agreed chronology of events. 23 March 2007 17 Contract entered into for the construction of civil and associated works for the Bootawa Water Treatment Plant near Taree. 30 September 2009 18 Payment Claim 28. 1 December 2009 19 Determination of Adjudication Application Progress Claim 28. 1 April 2010 20 MCW inform RCA that Daniel Brauer would "assume the role of Superintendent's Representative" from 1 April. 7 April 2010 21 Site Meeting held (No 70). "MF- Malcolm Flew on holidays until end April. Daniel Brauer acting superintendent rep until Flew returns". 9 April 2010 22 Minutes of Site Meeting 70 emailed to Reed and MCW recipients. 21 April 2010 23 Site Meeting held (No 71). "MF- Malcolm Flew on holidays until end April. Daniel Brauer acting superintendent rep until Flew returns". 30 April 2010 24 Email from MCW to Reed attaching minutes to site meeting 71. 30 April 2010 5.22pm 25 Progress Claim issued by Reed by fax to Daniel Brauer. 3 May 2010, 8:03am 26 Amanda Whear forwards fax to Daniel Brauer by email. 3 May 2010, between 9 and 11am 27 Daniel Brauer transfers email copy of the Payment Claim fax into a folder on Outlook created for the Bootawa project unopened. 3 May 2010 28 Mal Flew and Matthew Koller discuss non-receipt of payment Claim 35 and agree to raise the issue in the meeting the next day. 4 May 2010 29 Site meeting held. Dispute as to conversation regarding claim 35. See attachment 1 "extract of evidence". 7 May 2010 30 Minutes of meeting held on 4 May 2010 circulated. 14 May 2010 31 Payment schedule in response to payment claim 35 due. None received. 17 May 2010 32 Chad Wilkinson checks email from home - still no payment schedule. 18 May 2010 33 Site meeting held, MCW still saying no payment claim 25 received. Dispute as to conversation. 19 May 2010 34 Chad Wilkinson emails fax transmission report to Mal Flew. 20 May 2010 35 Payment Schedule delivered outside of time. 17 June 2010 36 Email re Minutes of meeting 74. 18 June 2010 37 Summons filed. The evidence of the plaintiff's witnesses The evidence of Mr Wilkinson 38 Mr Wilkinson gave evidence that on 30 April 2010 (being a reference date), he prepared and sent to the defendant a payment claim pursuant to the Act by facsimile transmission as being payment claim 35. 39 In his second affidavit he deposed as follows:

i. In preparing the monthly payment claims I was mindful, amongst other things of the fact that on and from each reference date, which under the terms of the contract is the last day of each month, that the Plaintiff is entitled to lodge its payment claim.

ii. There is no specific provision on my reading of the contract conditions concerned with service of payment claims requiring that payment claims be served by a specific time or any mention of business hours.

iii. I had previously received communications by facsimile and email from MCW and more particularly from Daniel Brauer and Mal Flew after 5pm. I was not aware that MCW had particular business hours. My contact with both Mal Flew and Daniel Brauer had not been limited by reference to the business hours now identified by them in their evidence. I have on numerous occasions in the past corresponded with Daniel Brauer after 5pm and have had not had any difficulty in accessing him after those hours.

iv. Generally speaking, it was my practice on previous occasions to serve the payment claims by facsimile to the number provided under the contract which number is (02) 6591 7500. I have served payment claims at times other than those now identified in evidence by MCW as business hours. No direction or request to either serve the payment claims at other times or in any other manner had been made to me by MCW.

v. I knew that Mr Brauer would be on leave as from 3 May 2010 and that Mr Mal Flew was to return on that date, however I did not know exactly what time Mr Brauer would be leaving the office and he did not inform me as to the time of his departure.

vi. The reason why I sent the payment claim on 30 April 2010 at 5.15pm is because the Justice of the Peace, Zoe Falson, who is also a RCA employee, was unavailable to witness my signature on the statutory declaration which is annexed to payment claim 35, until after 5pm on 30 April 2010.

vii. At the time I issued the facsimile, I assumed that Mr Brauer would still be in the office or that if he was not at the office, that a staff member from his office would promptly notify him or Mr Flew of the fact of the service of payment claim 35. I was unaware until receiving the Defendant's Affidavits of the document management system used by MCW to manage facsimiles.

viii. It was not my practice to attend every MCW site meeting as RCA has an on-site manager, John Buchanan as a representative at those meetings. I would attend the site meetings if I was based on site, but generally from January 2010, I have been largely based at the North Sydney Office of RCA.

ix. I recall on 4 May 2010, having a discussion with John Buchanan prior to the site meeting which was then due to the take place. I recall that we went through each of the issue listed under the headings on the minutes of meeting 70 (a copy of which is annexed and marked Annexure B). I recall that when considering the item I under "Claims", I informed John Buchanan that I had lodged payment claim 35 on Friday 30 April 2010.

x. On or about 5 May 2010, I recall having a telephone discussion with John Buchanan in relation to the matters discussed at the 4 May 2010 site meeting with MCW. During that time, I recall John Buchanan saying to me words to the following effect in relation to payment claim 35:- JB: "Matt Koller told me at the meeting that MidCoast Water has not received a copy of the April payment claim. I told him based on our conversation prior to the meeting that I was sure that it had been sent, but would check again with you to confirm that this was so. "

xi. The reference to the April payment claim is a reference to payment claim 35. This prompted me to check the facsimile transmission confirmation for payment claim 35 immediately to confirm that the facsimile transmission had gone through successfully. A copy of that facsimile transmission can be located under Tab 2, Exhibit CW-1 to my Earlier Affidavit. Having confirmed that the facsimile transmission was successful, words to the following effect were said:- Me: "I will just check the facsimile transmission again. It was sent last Friday. Maybe they just need to have some time to go through the correspondence. Mal has just got back, he probably hasn't read all his correspondence." JB: "I thought it was the case, I just wanted to make sure that was all."

xii. On 7 May 2010, I received an email from MCW attaching the Minutes of Meeting dated 4 May 2010 which is annexed here and marked Annexure C. I noted that item I on those minutes stated that "April Claim not received yet".

xiii. Having regard to the earlier discussion with Mr Buchanan on 5 May 2010, I was not surprised to see this and took this as a confirmation of the fact that MCW had indicated at the meeting on 4 May 2010 to Mr Buchanan that they had not received payment claim 35, rather than as a representation of the facts known to MidCoast Water as at 7 May 2010. Given that Mr Buchanan had informed MCW that he thought that payment claim 35 had been served on 30 April 2010, I thought that it was only a matter of time before MCW would check their correspondences and find the payment claim and if for some reason, they could not find it, that they would enquire with me directly. It was never my intention to mislead MidCoast Water about the fact of the service of payment claim 35.

xiv. Given the proximity of the submission of payment claim 35 (on Friday, 30 April 2010) and recent site meeting (which had taken place on Tuesday, 4 May 2010), I also assumed that the MCW personnel who had attended that site meeting had not yet had the time to review all the correspondences and would raise the issue again if they could not locate the payment claim. Therefore I did not see any need at the time for me to respond or do anything further upon receipt of the minutes of the meeting no. 72, on 7 May 2010.

xv. The payment schedule was due on Friday, 14 May 2010. Normally I would receive payment schedules from MCW on the 10 th business day when they were due. The fact that I had not received any prior notification was not unusual. I checked my emails on 14 May 2010 and recall seeing that there had been no correspondence from MCW in relation to payment claim 35.

xvi. I was working from home on Monday, 17 May 2010, I checked my email to see whether there had been any payment schedule from MCW and recall that I had not received any correspondence from MCW.

xvii. A MCW site meeting was scheduled on 18 May 2010. I recall that I checked my email on that day to see if there were any correspondence from MCW in relation to payment claim 35 and recall that I had not received any. I subsequently had a telephone discussion with Mr Buchanan in relation to the minutes of meeting no. 72, prior to his attendance at the MCW site meeting later that day. During that telephone discussion, I recall saying words to the following effect. Me: John, we still have not received a schedule to payment claim 35. It is now overdue. It will be interesting to see their reasons for why they have not sent a payment schedule. 40 Under cross-examination he accepted that by 30 April 2010 he was aware that the Act operated by entitling a claimant to make an endorsed claim and then providing the respondent with a period of time to put on a response by way of payment schedule He also accepted that as at 30 April 2010 he was aware that Mr Flew, who was the superintendent's representative, was on location and was scheduled to return to work within the first business day in May (that is to say he was on leave until the end of April). 41 He was also aware as at 30 April that Mr Brauer who had held that position by way of delegation was filling in for Mr Flew while he was away. 42 There was a deal of cross-examination in relation to the topic of when Mr Wilkinson understood that Mr Brauer would be going on holidays. Mr Wilkinson gave evidence that Reed sometimes worked Saturdays on the project but he did not seek to assert that he believed that Mr Brauer would be working on Saturday 31 May 2010. When asked to accept that when Mr Brauer left work on 30 May 2010 he was on holidays, Mr Wilkinson testified that he did not know when Mr Brauer was going to start holidays. 43 His affidavit evidence was maintained during his cross-examination. In short:

i. He had not attended the site meeting on 4 May although he knew that it was going to take place.

ii. He had by that time told Mr Buchanan about the service of the payment claim.

iii. Although he was not at the meeting, following the meeting he recalled from his conversation with Mr Buchanan that the defendants had indicated that they had not received payment claim and that this would be passed on to Mr Wilkinson.

iv. All that Mr Wilkinson did was to confirm with Mr Buchanan that it had been served he having checked it to make certain that it had been transmitted.

v. He did not expect that Mr Buchanan would be going back to say to Mr Flew that the payment claim had been served.

vi. He had not thought that MidCoast was misconceived and he had relied totally on Mr Buchanan having corrected any misconception under which MidCoast was operating.

vii. He had not thought it prudent to make certain that Mr Flew was under no miss conception by giving him another copy of the claim.

viii. He thought that MidCoast would have a fairly good system where they would know what was coming in. His evidence was that he basically had not thought anything much about the topic at the time and had not taken that much notice. 44 To my mind the evidence of Mr Wilkinson is appropriate to be accepted. It was confidently given. Notwithstanding the very close cross-examination that evidence was essentially not able to be shaken by the cross-examiner. Mr Wilkinson impressed me as a witness of truth. The evidence given by Mr Buchanan 45 Mr Buchanan had been the on-site project manager for Reed Constructions. 46 As with some other witnesses who were called he accepted that he had read a number of affidavits. 47 His evidence included the following:

i. On the morning of 4 May 2010, I had a telephone discussion with RCA's Chad Wilkinson to go through the issues to be discussed at the site meeting later that day. This was a process I carried out preceding site meetings when Chad Wilkinson was unable to attend. We would go through the previous minutes to update the current status of the various items. In the course of our discussions I asked Chad "has the progress claim for April been lodged" and Chad replied with words to the following effect" yes it has".

ii. I recall attending the site meeting with RCA's Mr Turnbull later that day when MCW's Matt Koller said to me words to the effect "the April Payment Claim has not been received. "I said in response "I've spoken to Chad (referring to Chad Wilkinson) and he told me it that it had been submitted but I shall check again with him." Post the meeting, I contacted Chad and said words to the following effect "has the progress claim been processed?" to which Chad Wilkinson's reply was "yes it has, it has been forwarded to MCW". I saw no need to take further action.

iii. My next discussion with Mr. Wilkinson concerning the next up-coming site meeting occurred on the morning of 18 May 2010, prior to the site meeting scheduled later that day. As usual, Mr Wilkinson and I discussed the issues listed under the various headings in the minutes of the meetings (no. 72) which were circulated by MCW. I recall that Mr Wilkinson and I discussed payment claim 35 and saying words to the following effect:- Me: Matt Koller indicated to me at the last site meeting that they had not received the payment claim for April. The minutes reflects that. I informed them that it had been lodged and that I would check that this had been done.

iv. When I attended the site meeting later that day on 18 th May, 2010, I recall that the subject of the April payment claim was again raised by Mr Koller and we said words to the following effect:- MK: We still haven't received the payment claim for April.

Me: That is strange. I spoke with Chad before the meeting, and he told me that it has definitely been lodged. I will check with him yet again. v. I deny that I said the words attributed to me at paragraphs 16 of the Koller Affidavit, paragraph 10 of the Morse Affidavit, paragraph 7 of the Gilbert Affidavit and paragraph 17 of the Flew Affidavit, and refer to paragraph 5 above, as being the account of my discussion with Mr Koller at the site meeting on 4 May 2010.

vi. I also deny the words attributed to me at paragraph 23 of the Koller Affidavit, paragraph 20 of the Morse Affidavit, and paragraph 7 of the Gilbert Affidavit and refer to paragraph 6 above, as being the account of my discussion with Mr Koller at the site meeting on 18 May 2010.

vii. If I had been asked to take any action at both the site meetings of 4 May and 18 May 2010, I would have done so. I believed I had answered Mr Koller's question on both those occasions regarding the service of payment claim 35. My subsequent inquiries of Chad Wilkinson were not as a result of any request from Mr Koller.

viii. On or about 19 May 2010, I informed Mr Wilkinson of my discussion with Matt Koller and said words to the following effect: "Matt said at yesterday's meeting that MCW has still not received the April payment claim. I told him that you had said that it had been sent " I recall Mr Wilkinson's surprise at hearing this and saying words to the effect of: "That's very odd. I will send MCW a copy of the fax confirmation of the progress claim. "

ix. Some days after the site meeting - I cannot precisely recall on which day but recall it being sometime in the week after the 18 th May site meeting, I recall a further conversation with Mr Koller in which I said "has MidCoast Water had been able to locate the April payment claim" to which Mr Koller reply was " Yes, it has been found". I do not recall him indicating how or where it had been found. 48 Under cross-examination he generally did not depart from his affidavit evidence. In short:

i. In relation to the meeting of 4 May which he attended on the understanding that the progress claim had been lodged, his evidence was that Mr Koller had said words to the effect that the progress claim had not been received by MidCoast.

ii. Mr Buchanan had said that he was surprised, he had checked with Mr Wilkinson that it had been lodged.

iii. He was of the belief that that was the case and said that he would check, on the assumption that they hadn't received it he would check.

iv. In effect his evidence was that he had said that he had spoken with Mr Wilkinson and that he had told Mr Buchanan that the progress claim had been submitted but that he would check again with Mr Wilkinson.

v. He denied that when he spoke to those present at the meeting and Mr Koller said that the defendant had not received the payment claim, so far as Mr Buchanan was concerned, the defendant at that stage was operating under a misapprehension as to the truth.

vi. His further evidence under cross-examination was that at the end of the fourth of May meeting he made it his business to check with Mr Wilkinson in order to clarify what had gone wrong in relation to the payment claim.

vii. His evidence was that he had left it to Mr Wilkinson after the 4 May meeting to clarify with the defendant what the situation was in relation to the transmittal of the payment, the matter not his own responsibility.

viii. He had not said to Mr Wilkinson when he spoke to him "Look, they believe they haven't received the payment claim, you should let them know that you have been sent it and how.

ix. His evidence was that he assumed that Mr Wilkinson would do that and as a result of that assumption he did nothing further. 49 I was satisfied that the evidence given by Mr Buchanan could be accepted as recording to the best of his recollection what had occurred. The evidence of Mr Turnbull 50 Mr Turnbull deposed inter alia as follows:

i. I recall that at the site meeting on 4 May 2010, MidCoast Water's (MCW) Matt Koller said words to the effect " we haven't got your latest payment claim yet " (which I now understand to be a reference to payment claim 35). I recall Mr Buchanan responded by saying words to the effect: " I find that surprising as Chad is always on time with the issuing of progress claims. You should go back and double check that you don't have the claim."

ii. I deny that Mr Buchanan said the words attributed to him at paragraph 16 of the Koller Affidavit, paragraph 10 of the Morse Affidavit; paragraph 7 of the Gilbert Affidavit and paragraph 17 of the Flew Affidavit, in relation to the site meeting of 4 May 2010 and refer to paragraph 4 above as being my recollection of the discussion between Mr Koller and Mr Buchanan.

iii. As I have no role or knowledge of matters relating to either the preparation or service of RCA payment claims, I was not in a position to make any comments in relation to the fact of the service of payment claim 35, or to point out any discrepancy or error in the information contained in minutes of the meeting received by me either on the actual date of the meeting, or subsequently thereafter. I refer to paragraph 15 of the Morse Affidavit and paragraph 17 of the Flew Affidavit and deny that my silence was due to any deliberate attempt on my part to mislead MCW and say that it was due to the fact that I had no knowledge and no involvement in the preparation or service of payment claims.

iv. I recall that at the site meeting on 18 May 2010, MCW's Mr Koller said words to the effect " that the progress claim had not been received ." I deny that Mr Buchanan said the words attributed to him in paragraph 23 of the Koller Affidavit; paragraph 20 of the Morse Affidavit; and paragraph 7 of the Gilbert Affidavit.

v. My recollection of the conversation at that meeting is that Mr Buchanan was not asked by MCW's Mr Koller to undertake any further enquiries in relation to the payment claim, rather that MCW would be making further enquiries. I recall making a notation to that effect against the Item I, on the copy of the minutes of the meetings (no 72) which were discussed at that meeting. Annexed and marked Annexure A is a copy of the minutes of the meetings which I referred to and marked up. 51 Under cross-examination he accepted that there was no document in his handwriting by note or otherwise which recorded any of the discussions relating to the payment claim held at the site meeting on 4 May 52 His evidence was that the transmittal of the payment claim was not a matter with which he was directly concerned. In relation to his recollection of the actual discussion that took place on 4 May his evidence was that when it came to that section of the minutes, Mr Koller said words to the effect "We haven't received your payment claim", Mr Buchanan replied with words along the lines "that surprises me because Chad is very diligent in submitting claims, you should go away and double check that you don't have it". 53 His further evidence was that he could clearly recollect a statement made by Mr Buchanan that the defendants were to check with Mr Wilkinson about the service of the claim. 54 I returned to the reliability of the evidence given by Mr Turnbull later in these reasons. The evidence given by the defendant's witnesses The evidence given by Ms Whear 55 Ms Whear deposed as follows:

i. In the period of late April 2010 I was performing relief duties as a Customer Service Officer at the Forster office of MidCoast Water. My duties included serving customers and assisting telephone enquiries and general administration. This included dealing with Section 603 certificates, drainage diagrams and general customer enquiries. As part of my role I also assisted in keeping an eye out for any facsimiles that were related to customer service. We often received requests for Section 603 certificates and drainage diagrams by facsimile and I would regularly check my computer for electronic facsimiles to ensure that the request could be processed. As best I can recall when I was relieving in the position I would be checking my computer approximately every 30 minutes for electronic facsimiles. Whist I was performing the relief duties of Customer Service Officer I reported to Mr Gary Richardson, who is the Customer Services Manager. Mr Richardson is my overall supervisor even when I work from the Taree office as a Customer Services Officer. My usual hours of work are from 8.00 am to 5.00 pm.

ii. On Monday 3 May 2010 I started work at the Forster office of MidCoast Water at approximately 7.50 a.m. Facsimiles are received in MidCoast Water electronically and stored in a folder on the computer. When I arrive for work I check the electronic folder of facsimiles to see if there are any facsimiles requiring my attention such as the certificates and drainage diagrams that people request. On Monday 3 May 2010 at about 8.00 am I checked the facsimile folder from my computer and noticed that there was a facsimile in the folder from Reed Constructions Australia Pty Limited which had been forwarded the previous Friday being the 30 April 2010. It was unopened. I opened the facsimile and noted that it was addressed to Mr Dan Brauer. After I opened the document and saw that it was for Mr Brauer I renamed the document to Mr Brauer's location and forwarded it to Mr Brauer. Exhibited to me at the time of making this my Affidavit and marked Exhibit ALW1 is a copy of a printout of the email that I forwarded to Mr Brauer forwarding the Reed facsimile received on 30 April 2010. iii. I was not aware nor would I be aware in the normal course of holidays or leave being taken by any member of MidCoast Water unless it was brought to my attention by way of general conversation or by email. I had not been informed that Mr Brauer was on leave. I did not forward the facsimile to any other person in MidCoast Water nor did I bring it to any other person's attention. I assumed that Mr Brauer would receive the email in due course and I also assumed that Mr Brauer would register the document if it be a document that required registration, into our electronic document management system. 56 Her evidence is an accepted as reliable. The evidence given by Ms Fenwick 57 Ms Fenwick gave short evidence as follows:

i. MidCoast Water has an electronic document management system. This means that when documents are forwarded to MidCoast Water there is a procedure whereby the documents are captured electronically and stored electronically. This occurs in relation to all correspondence, including facsimiles that are forwarded to MidCoast Water. This also includes all outgoing documents including emails, word documents, excel documents and other business records.

ii. MidCoast Water also has a "User Guide" document which is used for training and reference by staff and management. The User Guide provides instructions and details as to how documents should be captured.

iii. I have two and occasionally three staff working in my area. Their duties include scanning and profiling documents that are forwarded to our section for profiling and recording. By profiling I mean the process by which documents are registered into the system, including the identification of the document and a brief description of its contents.

iv. In relation to correspondence forwarded by mail MidCoast Water has two post office boxes. There is a post office box which relates to the Breese Parade Customer Service Centre. I am informed and verily believe that this post office box is to be closed shortly. In relation to correspondence received at the Breese Parade Post Office box the staff who are at that location are responsible for clearing and registering and profiling any documents at that location. The staff at that location are not under my control. The staff at that location report to Mr Gary Richardson who is the Customer Service Manager in Breese Parade.

v. As at April of 2010 the procedure for the receipt of facsimiles at MidCoast Water was that all faxes regardless of the number to which they are forwarded are diverted to an electronic facsimile number which is captured onto MidCoast Water's network drive. At that point the facsimile is in the electronic drive of MidCoast Water and is able to be reviewed by the Customer Service staff and Records Management staff including myself.

vi. The business hours of MidCoast Water both at the Breese Parade office and the Taree office are from 8.00 a.m. until 5.00 p.m. Facsimiles that are forwarded in this period of time are diverted in the manner referred to above to an electronic fax folder which is then reviewed by the staff and then forwarded on to the recipient.

vii. Facsimiles that are received outside of the business hours of MidCoast Water are not addressed and forwarded on to the recipient until the next business day. It is the responsibility of those who are monitoring any particular folder to which the facsimile is on forwarded to ensure that the document is captured electronically and profiled in the system. This can only occur after the document is forwarded on to the recipient.

viii. In relation to documents with respect to the Bootawa Water Treatment Plant, these documents are captured on receipt of the facsimile and inputed into the electronic document management system of MidCoast Water.

ix. I have conducted a search of our electronic document management system for a facsimile received from Reed Constructions Australia Pty Limited on the 30 April 2010. Based on this search, I can say that no document fitting the description of a facsimile cover sheet relating to Progress Claim 35 was input or registered into the electronic document management system.

x. In circumstances where documents are received after close of business on a Friday the procedure is that the facsimile would be forwarded on to the designated recipient on the next day of business, being a Monday if it is not a public holiday. 58 Her evidence is accepted as reliable. The evidence of Mr Flew 59 Mr Flew is employed by the defendant and is the defendant's manager of major projects. 60 His duties as Superintendent's Representative involved assisting the Superintendent with the administration of progress claims for payment made to Reed in connection with the Reed Contract. 61 In order to fulfil that role he had to review and become familiar with the conditions of the Reed Contract relating to the making, assessment and payment of progress claims. He also aware of the provisions of the Act relating to the service of payment claims, the service of payment schedules in response to payment claims and the adjudication of disputed payment claims made under the Act. 62 His affidavit evidence included the following:

i. MidCoast Water does not receive facsimile transmissions on a traditional fax machine that produces a paper copy reproduction of the electronic transmission received. It uses a fax server. This employs software that stores the facsimile as a TIF file which is then accessed by an operator who then saves it electronically and sends it by email to the email address of the addressee on the facsimile.

ii. I was away from work on leave between 1 April 2010 until the 3 May 2010. The letter which is Exhibit MBF1 to this affidavit informed Reed of my absence from 1 April and Mr Brauer's appointment as a Superintendent's Representative in this period. The minutes of site meeting 70 held on 7 April 2010 and site Meeting 71 held on 21 April 2010 minuted my leave being until the end of April.

iii When I returned from leave on 3 May 2010, I was informed that Reed had not yet submitted progress claim 35, the progress claim relating to the reference date of 30 April 2010. I considered this to be unusual and discussed the matter with Mr Matt Koller. Mr Koller was then acting Project Manager, carrying out Mr Brauer's duties while he was away on leave. We decided to raise the issue with Reed's representatives at a site meeting the next day.

vi. I attended a meeting on site on 4 May 2010. Mr Koller was present. Mr David Morse was also present. Mr John Buchanan, Reed's Site Manager was at the meeting as well. Mr Jeremy Turnbull who was Group Engineering Services Manager for Reed was also in attendance. During the course of the discussions held that day, words to the following effect were said:

a) Mr Koller said to Mr Buchanan and Mr Turnbull: "We haven't received the April claim, we've responded to Claim 34 but nothing has arrived in relation to Claim 35."

v. I cannot now recall the precise words that were used by Mr Buchanan, but do recall that words to the following effect were said:

As a result of the silence of Mr Turnbull and the statement by Mr Buchanan to Mr Koller's statement I took it that Reed had not yet served a payment claim relating to the period ending 30 April 2010 and that follow up action would be initiated by Reed to check the status as to any proposed claim. If I had been told by either of them that Reed had sent Mr Brauer a facsimile containing the payment claim I would have immediately arranged to review the documentation, assess the value of the work claimed for and issued a payment schedule as required by the terms of the Reed Contract and the Building and Construction Industry Security of Payment Act .

vi. I acted on the assumption that Mr Buchanan would bring to the attention of Mr Wilkinson the fact that the claim for Claim 35 had not been received by MidCoast Water. I also acted on the assumption that as Mr Wilkinson and Mr Graydon had been carbon copied into the Minutes of the meeting that they would be aware of the fact that MidCoast had not received the claim. In the circumstances my assumption was that Claim 35 had not been forwarded. I also assumed that in the event that Reed had in fact forwarded the claim, as it has subsequently transpired, and MidCoast Water was acting under a wrong assumption that it had not, that we would be told of the actual position. This is an expectation that I held and is an expectation that prevails in all of the building contracts that I have been involved with. In each and every building contract from my experience where there is a situation where something of such importance as a necessity to forward a Payment Schedule I expect that a Contractor would not take advantage of a wrong assumption made that no Progress Claim or Payment Claim has been received. Whilst MidCoast Water is acutely aware of the necessity to provide a timely response to a Payment Claim by way of a Payment Schedule, we relied upon Reed to ensure that we were made aware of the claim forwarded.

vii. There was an invariable practice followed relating to the preparation of the site meeting minutes. Minutes were kept and prepared to record the substance of the discussions. Copies of the minutes were then circulated to the attendees of the meeting and Mr Chad Wilkinson and Mr Garth Graydon (the General Manager of Reed Group).

viii. Reed was formally notified in writing that I had been reappointed to the role of Superintendent's Representative and Project Director on 7 May 2010.

ix. On 18 May 2010 site meeting 73 was held. I was not present at the meeting. I did however receive a copy of the Minutes.

x. I note from the site meeting Minutes that Mr John Buchanan and Mr Jeremy Turnbull were in attendance from Reed. I also note that the Minutes of the previous meeting held on 4 May 2010 being meeting 72 were read and agreed as to the correct Minutes of the meeting. In addition, in accordance with the practice the Minutes were forwarded by email to Mr Chad Wilkinson and Mr Garth Graydon of Reed. Mr Garth Graydon is the General Manager of the Reed Group.

xi. After site meeting No. 73 held on 18 May 2010 I received an email from Mr Wilkinson attaching the facsimile cover sheet for Claim 35 from Mr Wilkinson.

xii. On receipt of the facsimile cover sheet I became extremely alarmed. I realised that a Payment Schedule had not been provided within the 10 day period required both under the Contract and pursuant to the Building and Construction Industry Security of Payments Act. I made enquiries as to the circumstances in which this occurred and determined that the facsimile having been forwarded to Mr Brauer was not brought to anyone's attention in MidCoast Water as he was on leave at the time that the facsimile was onforwarded to his email address by the office staff.

xiii. I then caused an assessment to be made of the Payment Claim and on 20 May 2010 forwarded a Payment Schedule to Mr Chad Wilkinson of Reed. xiv. I noted on the examination of Progress Claim 35 that the Progress Claim cover sheet was identical to the Progress Claim 34. However my examination of the supporting documents indicated that there were changes in relation to some of the various items that were claimed. It was not possible for me on the examination of the Progress Claim 35 to determine any amount that was due. I cannot discern from Claim 35 and from the table which is annexed to it how the Plaintiff has arrived at the amount it claims in these proceedings. 63 Under cross-examination Mr Flew accepted that when he returned from leave on 3 May 2010 he was informed that Reed had not yet submitted a progress claim. He was so informed by Mr Koller and he relied upon what Mr Koller had told him. He attended the meeting on 4 May. He accepted that it was the case that Mr Wilkinson had the responsibility for lodging or sending payment claims to MidCoast. He knew that Mr Buchanan did not have that responsibility. His evidence was that he believed that Mr Buchanan was going to speak to Mr Wilkinson. He himself could have obtained that telephone number. 64 During Mr Flew's cross-examination, the following exchange took place at T122:

Q. Your expectation was that Mr Buchanan or someone from Reed would respond to MidCoast in relation to whether or not the payment claim had been served? A. Yes.

Q. Mr Buchanan hadn't said that? A. Mr Buchanan said that he would look into it with Chad.

Q. But he hadn't said he would get back to you? A. Mr Buchanan said that he would look into that with Chad and get back to us, yes.

Q. Well the words "get back to you" don't appear anywhere in your affidavit, do they? A. Maybe not, no.

Q. In fact you just made those up in the witness box, didn't you? A. No.

Q. If they'd said he's going to get back to you, why wouldn't you have put that in your statement? A. I was probably incorrect. Mr Buchanan said that he would look into it with Chad, words to that effect.

Q. Well which was it, did he say "I'll look into it with Chad" or "I'll look into it with Chad and get back to you"? A. I will follow that up with Chad, words to that effect.

Q. So he didn't say anything about getting back to you? A. No, he didn't.

65 The above obviously represents a significant concession by Mr Flew. His evidence that Mr Buchanan said that he would check with Mr Wilkinson and get back to MidCoast is obviously not accepted. However outside of the above glitch Mr Flew's evidence appeared to me to be his best endeavour to recall the events of the time. The evidence of Mr Koller 66 Mr Koller was acting in the position of project manager for the defendant during the relevant period. 67 Mr Koller deposed that in the meeting of 4 May 2010 he had said words to the following effect:

"We haven't received your April claim, we've responded to claim 34 but have heard nothing on claim 35". 68 Mr Buchanan of the plaintiff had replied with words to the following effect: "That's Chad's department I'll need to check on that". Mr Koller deposed that he assumed from this response that a claim had not been forwarded. It was his expectation that the raising of the non-receipt of the anticipated Claim 35 would be looked into by Reed. 69 Mr Koller's affidavit evidence also included the following:

i. He would have expected Reed to inform MidCoast if it was the case that they had prepared a claim and forwarded it to MidCoast but it had gone astray. He expected that in those circumstances Reed would bring the fact of it having been forwarded to our attention on an urgent basis so as that we could comply with any requirements under the Act and the Contract. He expected that there would be a level of co-operation by Reed to assist us in ensuring that their claim was assessed and that MidCoast Water were not exposed to any loss of opportunity to respond to their claim.

ii. On 18 May 2010 he attended Site Meeting No. 73 held in the site office of the Bootawa Project. Present were Mr John Buchanan and Mr Jeremy Turnbull from Reed. Mr Koller was present as were Dave Morse and Mr Chris Gilbert from MidCoast Water. The meeting commenced about 11 a.m. and concluded about 12.45 p.m. In the course of discussion in the meeting Mr Koller recalled saying words to the following effect: I said: "We still don't have the April claim". Mr Buchanan said: "I'll have to find out what's happening"."

iii. He acted on the assumption in the period between Meeting No. 72 and Meeting No. 73 that Reed had not forwarded any claim. He formed this assumption based on his understanding that Mr Buchanan was to get back to me as to when a claim would be forwarded. He also expected in the circumstances that Reed would have forwarded a copy of the claim if they had made one but MCW had not received it. 70 Under cross-examination, Mr Koller testified that he expected MidCoast to receive a payment claim at the end of the month or shortly thereafter from Reed. 71 Mr Koller testified that at the 4 May meeting he had formed the expectation that Mr Buchanan would report back to him because of Mr Buchanan saying "I will need to check on that" in relation to the payment claim. 72 Mr Koller testified that he was happy that the minutes for the 4 May meeting simply recorded that MidCoast had not received the payment claim, and did not record that any action was going to be taken, because of his assumption that Reed would inform MidCoast if it had prepared a claim and forwarded it to MidCoast but it had gone astray. 73 He also conceded that he knew Mr Wilkinson himself and had his telephone number and had his e-mail and did not contact Mr Wilkinson between the date which he knew was the reference date and 19 May in relation to the payment claim. 74 He also accepted that there was nothing in his evidence of any conversation with Mr Buchanan when he had said anything such as he would report back to Mr Koller. 75 In relation to the 18 May meeting Mr Koller could not remember whether he expressed surprise about the fact that Mr Buchanan had, after the 4 May meeting, checked in relation to receipt of the payment claim. 76 Mr Koller accepted that after becoming aware, on 19 May, that the payment claim had been received on 30 April, it was apparent to him that the failure of Mr Buchanan to check may have been of extreme relevance. However, Mr Koller accepted that he did not have the minutes of the 18 May 2010 meeting altered - they were not finalised - to reflect the conversation he said he had with Mr Buchanan. Mr Koller rejected the suggestion that this failure to record Mr Buchanan's alleged promise to follow up was because the conversation on 18 May 2010 had not actually transpired as he had deposed. He rejected the version of the 18 May 2010 conversation put forward by Mr Buchanan - which did not include a promise to check. Mr Koller rejected that the 18 May conversation was left on the basis that MidCoast would follow up with Mr Wilkinson of Reed. 77 Mr Koller also rejected the suggestion that on 4 May Mr Buchanan had already told the meeting that the payment claim had been submitted, but that he would check with Mr Wilkinson. [Mr Koller's version being as stated in his affidavit, that Mr Buchanan had simply said it was Mr Wilkinson's department and he would check on it]. 78 Mr Koller conceded that that the 1 June 2010 site minutes continued to record that the April payment claim had not been received, and that he had not recorded any sort of response from Mr Buchanan. Mr Wilkinson of Reed had attended the 1 June meeting, informing the meeting that Reed was going to enforce the payment claim under s 35 of the Act. Mr Koller conceded he did not mention Mr Buchanan's role in all of this. The cross-examiner suggested this was because Mr Koller could not at that time recall Mr Buchanan having any significant role in it, and Mr Koller replied that his recollection was as set out in his affidavits. 79 Mr Koller is generally accepted as a witness of truth. However, as is made clear below I accept Mr Buchanan's version of what was said at the meetings of 4 and 18 May. The evidence of Mr Gilbert 80 Mr Gilbert, an integration coordinator with MidCoast, attended the 18 May meeting. 81 He deposes that at the 18 May meeting when the minutes of the previous meeting reached the heading "I. Claims" Mr Koller said words to the effect "We haven't received the latest claim for April, Claim 35. Is there any update in relation to it?", and Mr Buchanan said words to the following effect: "I haven't got any information I will pursue it." 82 Mr Gilbert accordingly denies the version of events deposed to by the various Reed witnesses, to the effect that Mr Buchanan had responded on 18 May that he had checked with Mr Wilkinson who had said that the payment claim had definitely been lodged. 83 Under cross-examination Mr Gilbert maintained that it was not possible that Mr Buchanan had said what the Reed witnesses claimed he had said. Mr Gilbert rejected the suggestion that the effect of the 18 May conversation was that MidCoast would chase Mr Wilkinson. Mr Gilbert repeatedly rejected the suggestion that his recollection of this part of the meeting was somehow false. 84 Mr Gilbert further deposed:

At no stage in the course of the meeting was it ever indicated by MidCoast Water that MidCoast Water would be rechecking for the document or that it would be undertaking any further action. My recollection is clear that MidCoast was relying upon Reed to come back to us with information regarding Claim 35. Had MidCoast been made aware that the claim had been forwarded on the 30 April 2010 MidCoast Water project personnel would immediately have requested a copy of the claim so as that we could action it and people such as myself could begin the task of assessing any variation component. MidCoast Water to my knowledge has always responded with a payment schedule within the time provided by the Building and Construction Industry Security Payments Act. 85 Although Mr Gilbert is generally accepted as a witness of truth, as is made clear below I accept Mr Buchanan's version of what was said at the meetings of 4 and 18 May. The evidence of Mr Brauer 86 Mr Brauer is employed as a projected manager for MidCoast. He was acting as the Superintendent's representative during April while Mr Flew was on holidays. Mr Brauer himself ceased duties and went on holiday on the afternoon of 30 April 2010. He had not received any emails nor faxes regarding progress claim 35. 87 Nevertheless, it is common ground that a facsimile forwarded to MidCoast regarding progress claim 35 was received at 5.25pm on 30 April 2010. 88 Pursuant to MidCoast's internal office procedures, the fax was forwarded to Mr Brauer's email at 8.03am on Monday 3 May 2010. Mr Brauer accessed his emails from home between 9am and 11am on Monday 3 May 2010, redirecting emails sent to him to Mr Koller who was acting in his position. He did not open the relevant email containing the facsimile payment claim but instead transferred it with other emails into a folder created for the project. 89 Mr Brauer further deposes:

On 20 May 2010 whilst I was still on leave I returned a missed call to Mr Flew and I was made aware at that time that my project folder had a copy of Progress Claim 35 in it. I opened the email which attached the Facsimile of Progress Claim 35 on 20 May 2010 after my conversation with Mr Flew. Had I received the email prior to the close of business on Friday 30 April I would have brought it to the attention of the Superintendent who was at that time Mr Brendan Guiney and Mr Flew who had returned from holidays and had been into the office. The payment claim would have then been assessed in the normal course and a payment schedule served in accordance with the Contract and the Act. 90 Under cross-examination Mr Brauer stated that he left the office between 4.45 and 5pm on 30 April 2010, that is before the relevant progress claim arrived. 91 Mr Brauer agreed that he had discussed what had happened in relation to the transmission with his colleague Mr Koller, when he returned to work on 1 June. 92 He is accepted as a witness of truth. The evidence of Mr Morse 93 Mr Morse is a project and contract administrator with MidCoast. 94 Mr Morse was present at both the 4 May and 18 May meetings, and he deposes to the version of the relevant conversations involving Mr Buchanan which all of the MidCoast witnesses agree upon. 95 Mr Morse's duties included taking minutes at site meetings. He performed this function at the 4 and 18 May meetings. He deposes as follows regarding how this process occurred:

My other method of recording the Minutes was to use scrap paper and the previous Minutes as a rough draft to write on in the course of the meeting. It was my practice when using scrap paper to dispose of the rough draft including the copy of the previous minutes once the Minutes were typed and updated. I used the existing previous Minutes as a template to update. In this way I could note the various items where action had taken place and make entries for new items that were raised. I did not keep any scrap paper noting new items or actions that had taken place in the course of updating and compiling the Minutes for the meeting No. 72 held on 4 May 2010. It was my practice to forward draft Minutes to Mr Flew and Mr Koller for their comment to ensure that comments or updates were not missed. … 10. At the completion of the meeting which lasted from about 10 a.m. until 12.45 p.m. I commenced updating the Minutes and recording the items that were raised in the course of the meeting. In accordance with my practice I immediately commenced preparation of the minutes and l used scrap paper to update the actions from the previous meeting No. 71 and to insert new items that were raised. In the course of preparing the Minutes I prepared three drafts prior to a draft of the Minutes being forwarded to Mr Flew and Mr Koller for their comment. My production of the three drafts occurred as a refinement process to arrive at my recollection of the meeting. … 11. After I had completed the third draft version of the Minutes (Exhibit DRM3) I forwarded a copy of the draft to Mr Flew on 6 May 2010. I received some comments from Mr Flew on that same date which were incorporated in the third draft. … 12. Mr Koller also made certain changes and forwarded the draft back to me which he had saved as draft version 4. … 13. When I was satisfied that I had recorded all of the events and actions and items that were raised in the course of the meeting I saved the final version of the minutes as a document title "RCA Meeting 72 Minutes V.1.00" in "PDF" format and forwarded the Minutes to those who were present at the meeting and also those who were on a distribution list to receive the Minutes on 7 May 2010.

96 Under cross-examination, Mr Morse did not waiver from his essential evidence that the relevant conversations involving Mr Buchanan in the 4 and 18 May 2010 meetings was as all of the MidCoast witnesses deposed. Mr Morse rejected the suggestion that the situation at 18 May had been left at that MidCoast was to chase Mr Wilkinson regarding the payment claim. 97 Mr Morse in his first affidavit had been unsure whether Mr Koller or Mr Flew on behalf of MidCoast had made the relevant statement to Mr Buchanan. He later clarified that it was Mr Koller, and he admitted that he came to this belief after reading the affidavits of other witnesses of the plaintiff. 98 Mr Morse rejected the suggestion that the minutes taken by him were incomplete because they did not record what Mr Buchanan had said in response in the 4 May meeting [he testified in re-examination that he saw that relevant part of the minutes as an accurate reflection of what was said]. Mr Morse had also not recorded in the minutes what Mr Buchanan was alleged to have said in the meeting on 18 May 2010. Mr Morse became aware on 20 May that a payment claim had been served. However, he testified that he had no reason to change the original minute to record Mr Buchanan's alleged response in the 18 May meeting. In re-examination, Mr Morse testified that he saw no reason to change the minutes of 18 May - which contained a note from 4 May that the April payment claim had not been received - in light of the discussions on that day, since it was essentially the same statement, the April payment claim not having been received. 99 Under cross-examination, Mr Morse made the following concession (T146.50) :

Q. See, you saw the responsibility of Reed as being to let you know and by letting you know it meant MidCoast? A. Yeah.

Q. And therefore you have assumed that that's what would have been said? A. Yes. 100 When the suggestion was again put to Mr Morse (T 147.45), he did disagree with it, although not in clear terms: Q. Can I suggest to you that your recollection of what happened on 18 May has been affected by the fact that you are firmly of the belief that Reed had a responsibility to let MidCoast know what had happened about the payment claim? A. By saying I'll find out what is happening, that would be what I would think would be the action. 101 In my view the above concession casts some doubt over the accuracy of Mr Morse's recollection. But aside from that, I would accept Mr Morse as a witness of truth. Standing back from the detail The defendant's pleaded case 102 The Technology and Construction List Response filed by the defendant [in the nature of the dispute section] contends that the defendant failed to provide a payment schedule to the plaintiff because it was misled by the plaintiff into believing that the plaintiff had not served any progress claim under the contract nor payment claim under the Act on the defendant. 103 The issues to arise section of the list response identifies the issues as including whether the defendant failed to provide a payment schedule to the plaintiff because the defendant was misled by the plaintiff into believing that the plaintiff had not served any progress claim under the contract nor payment claim under the act on the defendant 104 The defendant's contentions in part C of the list response relevantly includes the following:

(e) Reed i. Failed to disclose that Reed had served the payment claim, or alternatively deliberately refrained from doing so; ii. failed to inform MidCoast that MidCoast was mistaken in believing that Reed had not made a progress claim under the contract, and accordingly had not made a payment claim under the act, or alternatively deliberately refrained from doing so; iii. instead made a positive representation that MidCoast was correct in believing that Reed had not made a progress claim under the contract and a payment claim under the act

(f) By this conduct, Reed expressly or by implication or by silence until 19 May 2010, made or conveyed the following representations to MidCoast in trade or commerce (the representations):

i. that Reed had not made either a progress claim under the contract nor a payment claim under the act for the period ended 30 April 2010; ii. alternatively, that Reed itself genuinely believed or was genuinely uncertain of the circumstances relating to Reed making a progress claim under the Contract or a payment claim under the Act for the period ending 30 April 2010; and iii. that MidCoast was correct in believing that Reed had not made either a progress claim under the contract or a payment claim under the Act for the period ending 30 April 2010; iv. further, or alternatively, that Reed proposed to make a progress claim for the period ending 30 April 2010 and had not done so and would inform MidCoast when it had done so. The defendant's case 105 Mr Corsaro SC for the defendant submitted in final address that "the defendant's case involved the partial provision of information and/or alternatively a duty to disclose in the context of a site meeting where information was being sought directly but only part of the story was given because Mr Buchanan had remained silent on the evidence". 106 He further submitted as follows:

i. If your Honour accepts what transpired between Mr Buchanan and Mr Wilkinson, [the following] propositions emerge. ii. One, Reed knew it had been served. iii. Two, Reed are told by MidCoast Water, we haven't received it. iv. Three, MidCoast Water is told, I'll check. v. Minutes are then issued saying, not we have been told, or we have said that the overall claim has not been received. vi. The minutes are unequivocal. vii. The minutes say this, 'April claim not received' and they go to Mr Wilkinson. viii. So Mr Wilkinson has a note in respect of the [meeting] which he does not attend which makes a positive assertion that it had not been received. 107 He then submitted as follows:

We say that in that context, the provision of we will check and a failure to say, it had been served where Reed obviously had knowledge that it had, be it inadvertent or otherwise, is partial provision of information or the provision of information which gave rise either to a duty to tell or alternatively led to an impression and expectation that more would be said or alternatively created a misconception and created a misrepresentation that in fact that state of affairs was in fact correct. Decision 108 In my view the issues thrown up can be resolved as follows. 109 A major evidentiary difference between the parties is how Mr Buchanan responded when the defendant stated it had not received a payment claim in the meetings of 4 May and 18 May 2010. 110 On the evidence of the MidCoast employees, Mr Buchanan had only said that he would have to check. Whereas, on the evidence of Mr Buchanan he informed MidCoast at both meetings that he understood that the payment claim had been served, having been told that by Mr Wilkinson, and also said that he would check with Mr Wilkinson. I do not place reliance on the evidence of Mr Turnbull in this area, his recollection of the conversations being significantly different to all other witnesses. 111 The defendant emphasised that it had put forward five witnesses who essentially concurred that Mr Buchanan had only said that he would check and that he had not said that he understood the payment claim had been served. However, this matter is not to be resolved by a mere weighing of the number of witnesses able to support a proposition. That would be a superficial way of treating with the exercise. The Court has examined and accepted the evidence given by Mr Buchanan. Additionally, the defendant's witnesses were not fully accepted in this area. As explained above, Mr Flew made a significant concession, that Mr Buchanan had not said that he would get back to MidCoast after enquiring of Mr Wilkinson. A concession by Mr Morse also cast some doubt over his evidence. 112 The defendant invited the Court to not to believe Mr Buchanan to the extent that he testified that he had told the relevant meetings that he understood that the payment claim had been submitted. Furthermore, in relation to Mr Buchanan's claim to have had a telephone conversation with Mr Wilkinson about correcting the minutes of the relevant meetings, the defendants submitted that Mr Buchanan had in oral evidence created an entirely new conversation not deposed to in his affidavit. The plaintiff rebutted the latter point by saying Mr Buchanan was simply referring to conversations deposed to by both Mr Buchanan and Mr Wilkinson which preceded the relevant meetings. 113 Ultimately, having heard the evidence, I do not accept the defendant's significant attack on Mr Buchanan. That is, I accept Mr Buchanan's recollection that he told the 4 and 18 May meetings that he understood, on Mr Wilkinson's advice, that the relevant payment claims had been served but he would check with Mr Wilkinson. It will be apparent that I reject the defendants' submission that the integrity of the plaintiff's evidence was called into question because of out of Court discussions between its witnesses. 114 I turn to consider the representations alleged by the defendant to have been made by the plaintiff, until 19 May 2010, on this basis:

i. I do not accept that the plaintiff represented that it had not made a progress or payment claim. On the contrary my view of the evidence is that Mr Buchanan disclosed to the defendant in the two meetings that it was his understanding that the payment claim had been served.

ii. I also do not accept that the plaintiff made the second alleged representation, which is pleaded as that the plaintiff genuinely believed or was genuinely uncertain of the circumstances relating to its making of a progress or payment claim [there appears to be a typographical error or omission].

iii. I do not accept that the plaintiff represented that the defendant was correct in believing that the plaintiff had not made a progress claim or payment claim. In my view the defendant was actually made aware that Mr Buchanan believed that a payment claim had been served.

iv. I do not accept that the plaintiff represented that it proposed to make a progress claim and had not done so and would inform the defendant when it had done so.

115 It will be clear that I do not accept that the relevant silence drawn on by the defendant to support its misleading or deceptive conduct case - being the alleged failure of Mr Buchanan to disclose to the two meetings that a payment claim had been served - existed. [Rather, as explained above I accept that Mr Buchanan informed the relevant meetings that he understood a payment claim had been served]. Thus no reasonable expectation of disclosure of the alleged silence could arise: Vitek at [37]. 116 In my view there are three overarching reasons which support the above conclusions:

i. Firstly, for all the heat generated in the courtroom on behalf of each party, the simple fact is that the defendant failed to protect its own interests in circumstances where even a simple phone call to Mr Wilkinson to clarify the issue of whether a payment or progress claim had been served was never made.

ii. Secondly, the defendant failed to ensure that that the facsimile in question was considered in a timely manner, in circumstances where it conceded that it had been properly served upon it. This could be characterised as an internal document management error on the defendant's part which resulted in the facsimile not coming to its attention earlier. It was open to the defendant to enquire of Mr Brauer, who had received the facsimile and was on holidays during the relevant period. As is made clear in the above quoted decision of Justices Deane and Fitzgerald in Taco Co of Australia the Court must determine for itself whether conduct was misleading or deceptive or likely to mislead or deceive. And as part of that exercise it is necessary to enquire why the proven misconception has arisen. In my view the defendant's misconception that a payment claim had not been served did not arise because of any conduct of the plaintiff.

iii. Thirdly, the defendant's submissions placed great weight on Mr Buchanan having told the relevant meetings he would check, with the defendant arguing for an inference that Mr Buchanan would report back in a timely manner. However, the defendant could have protected its interests by considering the possibility either that Mr Buchanan did not think he had to get back to them, or that he would fail to get back to them. Again, it was a straightforward matter for the defendant to make its own enquiries of Mr Wilkinson. 117 It follows that the plaintiff is entitled to judgment against the defendant for the amount sought in the summons. The plaintiff is entitled to interest as sought in the summons. 118 The parties will be given an opportunity to address on costs. 119 The cross-claim is to be dismissed. ***************

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