Rosser v Marine Ministerial Holding Corporation

LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : 1624/93 LOWER COURT JUDICIAL OFFICER : Young J

COUNSEL : P L G Brereton SC/ M K Meek (Appellant) P M Donohoe QC/F Kunc (Respondent) SOLICITORS : S R Wallace & Wallace by their city agents Stewart Cuddy & Mockler (Appellant) English Kearns Coombes Company (Respondent) CATCHWORDS : Contract; unaccepted repudiation; damages for breach of contract; damages in lieu of specific performance; assessment of damages; discount for vicissitudes where contract subject to contingencies; discounting generally. DECISION : Appeal allowed

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

Tuesday, 30 March 1999 Michael Lewis Jack ROSSER v MARINE MINISTERIAL HOLDING CORPORATION (FORMERLY MARITIME SERVICES BOARD OF NEW SOUTH WALES)

1 MEAGHER JA: I agree with Fitzgerald JA 2 BEAZLEY JA: I agree with Fitzgerald JA. 3 FITZGERALD JA: Michael Lewis Jack Rosser ("Rosser") has appealed against an Equity Division judgment dated 17 September 1996 awarding him damages of $576,450 for breach of contract against the Marine Ministerial Holdings Corporation (formerly called the Maritime Services Board and, in this judgment, referred to as the "Board"). Rosser seeks to have his damages increased to $1,862,953. The Board, which has cross-appealed, seeks to have the judgment in Rosser's favour set aside. 4 The trial judge delivered a number of judgments in this proceeding, which was commenced by Rosser by a summons filed on 2 March 1993 seeking a declaration that there was a binding and enforceable contract between himself and the Board and orders for specific performance of that contract and to restrain the Board from letting any other contract contrary to the one which Rosser alleged. In a judgment dated 30 August 1993, the trial judge found that there was a contract which the Board had repudiated and that Rosser had not accepted the Board's repudiation. The Board does not challenge those conclusions. However, his Honour refused specific performance and ordered an assessment of the damages to which Rosser was entitled in lieu of specific performance and an inquiry as to what, if any, damages had been suffered by Rosser as a result of breaches of contract which his Honour found had been committed by the Board. Rosser accepts that his only entitlement is to damages, but the Board contends that he did not prove any loss, and is entitled to only nominal damages. His Honour also held that the Board was entitled to an assessment of damages, "at its own risk as to costs as to any damage suffered by it as a result of any proved breach of contract" by Rosser, but the Board elected not to take advantage of that order. This appeal and cross-appeal are concerned only with the amount of Rosser's recoverable damages. 5 In February 1989, the Board invited expressions of interest for carrying out dredging to establish "a clear shipping channel at least 60 metres wide by 5 metres depth below Port Datum" from the mouth of the Clarence River to Goodwood Island Wharf. The invitation stated that, based on the latest sounding available, dredging would be required in two designated areas, one involving the removal of approximately 18,000 cubic metres and the other involving the removal of approximately 22,000 cubic metres of riverbed sand. Rosser was the only person who responded to the invitation, which he did by a letter in mid-April 1989. Discussions followed, and, more than two years later, some dredging was carried out on Rosser's behalf by a subcontractor, Davidson Dredging Pty Ltd. 6 It is important to note a number of matters at this early stage.

(i) During the course of its discussions with Rosser, the scope of the dredging required by the Board was substantially altered, including an increase in the depth to be dredged, which multiplied the sand to be removed from the river bed. In his judgment dated 30 August 1993, the trial judge stated that "…it was apparent to everyone that somewhere between 5 and 8 and a half metres depth would be required with sufficient width for appropriate shipping to pass along the dredged channel", but that there was "… not …sufficient to hold that there was a term [of the contract] that there was to be a clear shipping channel of at least 60 metres wide by 5 metres deep". (ii) Two principal areas for dredging were identified, called respectively the North Channel and the Goodwood Island Reach. (iii) A license to remove the sand was required from the Department of Land & Water Conservation (formerly called the Department of Conservation and Land Management, and, in this judgment, referred to as the "Department"), which was the "owner of the Clarence River bed". (iv) Stockpile sites to which the sand could be pumped from the North Channel and the Goodwood Island Reach were needed on Hickey Island and Palmers Island respectively. (v) Approvals had to be obtained from the local authority, the Maclean Shire Council, and the State Pollution Control Commission, which required an Environmental Impact Assessment. (vi) In this Court, the Board accepted that stockpile sites and all necessary licences and approvals were obtained.

7 To return to the narrative, after discussions with the Board's representative, Mr Sticka, who was the Manager, Works and Projects, at the Board's Hunter Ports Authority, Mr Rosser wrote to the Board on 9 August 1990 requesting a contract, "…due to fact that major capital purchases of plant are underway …". In reply, he received the following letter dated 27 August 1990 from Mr Geoff Connell, the Managing Director of the Hunter Ports Authority. "Dear Sir,

I refer to our invitation for Expressions of Interest for carrying our maintenance dredging in the Clarence River, called in February 1989 and your reply dated 17 April 1989.

I am pleased to advise that the Authority accepts your offer to carry out maintenance dredging in the Clarence Rover strictly in accordance with the following conditions: i) All dredging and subsequent disposal of spoil will be at no cost to the Authority; ii) No works to be carried out until a Development Application for the works is approved by Maclean Shire Council; iii) All dredging, stockpiling and disposal of spoil and associated works shall be carried out in accordance with the Development Application approved by the Maclean Shire Council and conditions of that approval; iv) All relevant Government Acts, Regulations, Rules etc are to be complied with, all necessary permits obtained from other Government Departments and Bodies, and any valid instruction direction issued by any Government Department or Body is to be complied with; v) Dredging is to be carried out within the commercial shipping channel of the Clarence River between the river mouth and Goodwood Island Wharf in such a way that maximises the continuous depth along the shipping channel; vi) In the operation of any floating plant, any directions of the Authority's Pilot, Yamba shall be complied with; vii) This agreement shall be run for two (2) years from the date of this letter with an option subject to the agreement of both parties for it to be extended by an additional one (1) year. viii) This agreement may be terminated by either party with three months written notice to the other party."

8. In the course of his reasons for judgment delivered on 30 August 1993, the trial judge said:

"After receipt of this letter, Mr Rosser telephoned Mr Sticka and told him that the letter would be okay in the short term, but that it would take much longer than two years to dredge the channel. Mr Sticka replied that this would be sorted out, but they would have to wait until the Environmental Impact Statement was finished and the development approvals obtained."

9 The Environmental Impact Statement, which was prepared for the Board by a firm of consulting engineers and made available in October 1990, more precisely identified the areas to be dredged and estimated that the volumes to be dredged, including dredging of an access channel, would be approximately 66,000 cubic metres if the depth dredged was 5 metres below chart datum Approximately the level of the lowest astronomical tide. and approximately 298,000 cubic metres if the depth dredged was 6 metres below chart datum. In the same section of their report, the engineers stated that it "would take approximately 6.5 years to complete the dredging to 6 metres … (at 4000m3/month) although with continual infilling of the dredged areas the dredging could proceed indefinitely to maintain the required navigable water depths".

10 The Environmental Impact Statement was included with an application to the Council for Development Approval for the Hickey Island stockpile site, and, on 22 February 1991, the Council issued an approval in principle which was subject to conditions, including a requirement that the use of the proposed stockpile site on Hickey Island be limited to 61/2 years. Following negotiations with the Board, the Council, by letter dated 1 July 1991, "… agreed to alter the period of time to be now limited to the period of time as negotiated with the Department ……". The Hickey Island stockpile site licence was always determinable by the Minister by three months notice.

11 Again in the course of his reasons for judgment dated 30 August 1993, the trial judge said:

"By May of 1991, nothing further had apparently happened and Mr Rosser again contacted the [Board]. … Mr Sticka assured Mr Rosser that the wheels of bureaucracy turn slowly over. Mr Rosser said: "The EIS anticipates that it will take about six and a half years for local development to consume the dredged sand. I need some guarantee that I will have the job for the whole of that period. I don't want someone else jumping and cutting me out of the job after we've done all the hard work to get it started. I would like to have the contract for ten years." Mr Sticka replied that he could understand that concern and would try to do something fairly soon because the control of Yamba Port was passing from Newcastle to Sydney and 'the Sydney people can be difficult to deal with. They will want to change things and do them their way. I will make sure that you get a confirmation of the term of the job so that there are no arguments with them. I'll give the job to you for as long as I can.'"

12 Shortly after receipt of the Council's letter of 1 July 1991, Mr Connell again wrote on behalf of the Board to Rosser on 12 July 1991. That letter was in the following terms:

RE: MAINTENANCE DREDGING - CLARENCE RIVER SHIPPING CHANNEL DEVELOPMENT APPLICATION NO 90/2442

The MSB now formally advises of our approval of your application to perform maintenance dredging works in the Clarence River Shipping channel at no cost to the MSB in accordance with the draft development application approval of the Maclean Shire Council (dated 22 February 1991 and 1 July 1991) and all conditions as set out therein and in accordance with all requirements of the statement of environmental effects attached to the development application, as well as:-

1. Indemnifying the MSB against any need for road works as required in the Development Application. 2. Indemnifying the MSB against any other licensing or approval costs required by other Government authorities.

The MSB has endeavoured and will continue to endeavour to reverse conditions 10 and 11 of the draft Development Application referring to the necessity for road works to be built at the entrance to Hickey Island. Further, it cannot guarantee any resolution of these conditions. As listed in the Statement of Environmental Effects, maintenance dredging is to be permitted only within the confines of the shipping channel from the river entrance at Yamba to Goodwood Island and permissible for 6.5 years subject to renegotiations with the Department of Lands."

13 The parties accepted that there was then a concluded contract. Although by no means clearly defined, the areas, depth and volumes to be dredged by Rosser under his contract with the Board were not in dispute in this Court. The trial judge held that the contract permitted Rosser to carry out the operations over a period of 6½ years but contained an implied term enabling to Board to terminate it on reasonable notice, which his Honour held was 6 months. Both parties disputed that conclusion. Rosser's primary case is that he had a contract with the Board which authorised him to carry out his operations over a period of 6½ years, and that the Board had no contractual right to terminate it earlier. The Board's primary case was that the contract entitled the Board to terminate it by three months notice, as provided in its letter to Rosser of 27 August 1990.

14 The Board's contention is plainly untenable. The circumstances altered significantly in the period its letters to Rosser dated respectively 27 August 1990 and 12 July 1991. In the context of those changed circumstances, the Board's plain language in its letter of 12 July 1991 that dredging was "permissible for 6.5 years" cannot be read as subject to a continuing qualification from its letter of 27 August 1990 - almost a year earlier - that the Board could terminate what the later letter expressly made "permissible" by "three months written notice".

15 The trial judge did not explain why a provision for termination on reasonable notice should be implied. Such a provision was not necessary to give business efficacy to the contract and, in my opinion, the implication of a provision for termination on reasonable notice was contrary to the received doctrines governing the implication of terms. It is unnecessary to consider whether other terms might legitimately be implied; for example, a provision that all or some of the work should cease if the material stockpile site or sites became unavailable without fault of either party. Neither Rosser nor the Board advanced such a contention.

16 Rosser commenced to prepare the Hickey Island stockpile site for sand from the North Channel on 19 November 1991 and, shortly afterwards, he commenced negotiations with Davidson Dredging Pty Ltd, which he subsequently engaged to dredge the North Channel area as his subcontractor. Meanwhile, the Council had taken exception to the work being undertaken by Rosser on Hickey Island, leading to an exchange of contentious communications in which the Department was also involved. The major disputes at that time were resolved but it is evident from the Board's letter to Rosser dated 9 December 1991 that the establishment of their relationship commenced badly. That letter provided: "I refer to your letter of 8 December 1991 faxed to Mr Drinkwater on the following day. You will now be aware from our telephone conversation of even date that objections by Maclean Shire Council and the Department of Lands in relation to the manner in which you were undertaking temporary works have now been resolved on the following bases: (a) The quantity of material to be excavated is to be consistent with the quantities required to undertake the work in the manner contemplated in the EIS. (b) The site of any excavation is to be filled with equivalent material to the original levels and reinstated in accordance with the requirements of the Department of Lands - as per condition 6 of the conditions of approval (refer to Maclean Shire Council letter of 17 October 1991). (c) Your obtaining the agreement of Maclean Shire Council that works undertaken at the entrance to Hickey Island meet the requirements of conditions 10 and 11 of the conditions of approval. You are now authorised to resume work on the basis of your written acceptance of paras (a) and (b) (as per your facsimile message of even date) and your compliance with para (c) as soon as is practicable. The following comments are made in relation to the other matters raised in your letter: (a) I have raised the issue of amendments to the methods to be adopted for dealing with sand pumped onto Hickey Island and other technical details concerning the dredging operation. Warren Rackham, Maclean Shire Council's Chief Planner has agreed that any amendments which were agreed upon verbally but not documented in Council's development consent should be formally documented. (b) Your comments regarding the permissibility of removing existing material from the site are noted. You should be aware that the fact that this work was not specifically excluded by the EIS and development consent does not mean that, by default, they are permissible. The approach I suggest we take is that these works are necessary temporary works to enable the main purpose of the development to be achieved. (c) I have written to Maclean Shire Council regarding the above and the issue raised by you on page 3 of your letter, namely the possibility that Portion 68 on Palmers Island may be used as the site for the upstream settlement pond in lieu of Portion 67. (d) Finally, it is noted that your dredge is not yet assembled and that you are therefore not ready to commence dredging. The MSB therefore does not accept that delays in finalising the licence for the bed of the river has in any way delayed that work. Further, although the licence for the use of Hickey Island was not formally executed at that time, the MSB negotiated a commencement date of 1 November 1991 for that licence which allowed more than sufficient time for temporary works to be undertaken prior to dredging commencing. The MSB therefore denies it has delayed your progress in any manner whatsoever." 17 On 25 January 1992, Rosser entered into a licence agreement with the owner of a different portion on Palmers Island to that referred to in paragraph (c) above, namely Portion 65. The licence agreement permitted Rosser to stockpile sand on Portion 65 and remove it by truck at a minimum royalty of 25c per metre3. However, a Development Approval was needed from the Council. 18 By February 1992, the subcontract for the dredging of the North Channel area had been concluded between Rosser and Davidson Dredging Pty Ltd, and the Board's Yamba pilot, Captain Gray, had shown Rosser a copy of a dredging plan and marked out the area of the North Channel for dredging with buoys. On or about 13 February, Davidson Dredging commenced dredging, which was interrupted when the Clarence River flooded on 18 February. On about 21 February, Captain Gray requested Rosser to dredge near the Goodwood Island wharf so that a particular vessel could the tie up there, fully laden. Rosser declined, asserting a need to dredge the North Channel area to fulfil a commitment to supply sand to the Department. Dredging of the North Channel, with the sand pumped to Hickey Island, was recommenced by Davidson Dredging on 20 March 1992, and by, 28 May 1992, approximately 45,000m3 had been dredged and it was estimated that a further 52,000m3 remained for removal in the North Channel. On that day, Rosser and Davidson's subcontract was terminated.

19 The Board made a number of allegations of breach of contract against Rosser and, as noted earlier, in his judgment of 30 August 1993, the trial judge provided for an assessment of the Board's damages (if any) caused by breach by Rosser. In particular, his Honour held that the dredging of the North Channel which took place did not maximise the continuous depth along the shipping channel, but instead approximately 25 to 30% of the area was dredged to a depth of 9 to 10 metres. Elsewhere, in a different context, his Honour held that there was an implied obligation on Rosser to dredge "…at a reasonable rate", and added: "It is clear that the contract was not one where he could dredge when economic conditions, in particular the prospects for the sale of sand suited him". Somewhat curiously perhaps, the Board did not complain in this Court that Rosser had breached his obligation to dredge at a reasonable rate.

20 Before the trial judge, But not in this Court. the Board additionally contended that Rosser's excavation of Hickey Island to establish a stockpile site also breached the contract. Although his Honour rejected the implication of the term upon which this element of the Board's case depended, he found that Rosser, "…did remove more material than was strictly necessary … somewhere in the vicinity of 2000 cubic metres". However, his Honour went on to state that, whatever extra sand was removed from Hickey Island "… would be recompensed in due course by the deposit of spoil from the river bed", Hickey Island having been "… formed by earlier dredging of the river, [with] vegetation … grown on top of it", so that "… the material that forms Hickey Island is largely indistinguishable from the material which is on the bed of the Clarence River".

21 After Davidson Dredging's subcontract was terminated, no further dredging in the North Channel was carried out by Rosser or by any subcontractor on his behalf, and, subject to one qualification, no dredging was carried out in the other major dredging area, the Goodwood Island Reach. A Development Approval with respect to the use of Portion 65 on Palmers Island as a stockpile site for the sand from the Goodwood Island Reach was not obtained from the Council until 1 December 1992. In January 1993, dredging to form an access channel to the Palmer Island stockpile site was commenced by Rosser, who stockpiled 5038m3 of sand on Palmers Island by 18 January, when the Council gave him a notice to cease dredging the access channel.

22 Before the trial judge, the Board alleged that the dredging of this access channel to Palmer Island also involved breach of contract by Rosser. 23 One allegation which the Board made against Rosser was that, when dredging the access channel to the Palmer Island stockpile site, he impermissibly dredged weed beds. His Honour held that Rosser did not "… cut through the weed beds to any extent greater than was necessary in order to do the work". 24 An associated allegation which the Board made against Rosser, namely, that he was required to dredge the access channel to Palmer Island under the direct supervision of the Yamba Pilot, was met by the evidence of the pilot, Captain Gray, that when Rosser informed him that he proposed to start on an access channel to Palmer's Island, Gray replied: "I cannot advise you one way or the other. I am under instructions from head office". 25 It is necessary to retreat a little to elucidate the Board's repudiation of the contract. There is scant detail in the judgments below concerning what occurred in the period after Davidson's Dredging's subcontract with Rosser terminated in late May 1992. Apparently considerable effort was expended in obtaining the Council's approval for the location of the stockpile site for sand from the Goodwood Island Reach to Portion 65 on Palmer's Island. Further, the Board belatedly attempted to procure Rosser to enter into an appropriate contract. His solicitors wrote to the Board on 23 October 1992, stating that he had "… no objection to reducing the present contract to writing …", but was "… unwilling to vary the terms of the contract to incorporate conditions which are less advantageous than those which he presently enjoys". 26 By letter dated 12 November 1992, the Board asserted that Rosser's contract had expired and that he had not fulfilled his contractual obligations, but stated that it was willing to negotiate a fresh contract; otherwise, it proposed "… to call open tenders …". 27 On 2 December 1992, the Board wrote to Rosser in the following terms: "You are advised that no sand is to be removed from the area of Hickey Island under license to the [Board] until further notice. It is anticipated that approval for the further removal of material will not be given until such time as a formal contract has been signed and dredging in the area has recommenced."

28 Rosser's solicitors wrote back on 3 December 1992, stating that there was a contract, which he proposed to continue to perform. The Board's direction in its letter of 2 December was rejected, and it was informed that if it took any action in relation to the Hickey Island stockpile site which caused loss or damage to Rosser, litigation would follow. 29 On 4 December 1992, the Board's solicitors wrote to Rosser's solicitors stating that he had "… continued to dredge the area …", and that they had "… been instructed … to take legal action … to prevent further dredging of the Clarence River and removal of virgin soil from Hickey Island …" by Rosser. 30 Instead, the Board acted unilaterally. On 7 December 1992, the Department, at the request of the Board, terminated the licence for the use of part of Hickey Island for stockpile purposes. On that day, the Department wrote to Rosser in the following terms:

"Following a request from the … Board …, Licence … for Stockpile Purposes on Hickey Island has been cancelled effective from 7 December 1992.

Accordingly, you are advised that you must vacate the subject lands on Hickey Island and cease all operations as of the date of cancellation of the Licence."

31 On the same day, the Department wrote to Rosser's solicitors in almost identical terms, and the Board's solicitors wrote to Rosser's solicitors saying that the Board had informed them that the Department had terminated the licence "… effective … from today". The letter continued:

"Prior to this termination, [the Board] felt obliged to alert [the Department] to the dispute between the [Board] and [Rosser], requesting [the Department] to take any action that it may deem appropriate as owner of the subject property. We understand the response of [the Department] has been to cancel [the Board's] licence at least until the matter of the dredging subcontract is resolved.

We wish to confirm [the Board's] instructions that the action to revoke [the Board's] licence was not in any way prompted by the [Board] and that [the Board] was merely seeking to protect itself against any possible claim by the licensor for damage to its property."

32 That letter was patently inaccurate. The Department's revocation of the licence was preceded by a letter to the Department from the Board in the following terms:

"I refer to my letter of 4 December 1992 and advise that, under the circumstances, the [Board] believes it would be appropriate to revoke the above licence as soon as possible on the understanding that, when the current difficulties with Mr Rosser have been overcome, the licence is reinstated effective from a date to be agreed between the [Board] and the Department. The [Board] acknowledges the obligation to reinstate the area. This would be most effectively undertaken as part of a new contract to dredge the remainder of the North Channel. The [Board] requests the Department's agreement in principle to effect reinstatement in this manner."

33 Not surprisingly, the trial judge held that it was "… crystal clear that the reason why Hickey Island ceased to be available as a dump site and the reason why the Lands Department's Licence was revoked was at the request of [the Board]". 34 The Board accepted that Rosser is entitled to any damages which he proved for his loss "… of the benefit of dredging the North Channel". However, it submits that Rosser's damages are limited to that loss. The foundation for this submission by the Board was that the trial judge correctly held that Rosser was not deprived of the opportunity to dredge the Goodwood Island Reach and sell that sand by the Board's repudiation of the contract, which he did not accept, or by the cancellation of the Hickey Island licence. Rosser's submission was that he was deprived of the benefit of dredging the Goodwood Island Reach and the sale of the sand so obtained by another action of the Board, which caused the Council to require Rosser to stop dredging the access channel to Palmer Island where the sand dredged from the Goodwood Island Reach was to be stockpiled. 35 Reference has earlier been made to the Council's Development Approval to use the Palmer Island stockpile site dated 1 December 1992. Condition 31 of that approval provided:

"31. Under no circumstances are weed beds within the river to be dredged. The access channel to the mooring piles is only to be dredged under the direct supervision of the Yamba Pilot and is to be confined to the minimum necessary to allow safe passage of the dredge." 35 Near the end of December 1992, Rosser informed Captain Gray that he proposed to start dredging in the Goodwood Island Reach. As earlier noted, when Captain Gray was told of Rosser's intention to dredge the access channel to Palmer Island, Captain Gray made himself unavailable to supervise the dredging on instructions "… from head office". Rosser nonetheless proceeded to commence dredging the access channel to Palmer Island. Within a fortnight, he received a letter from the Council, directing him "… to cease the dredging of the access channel and not to recommence until such time as the operation can be carried out, as required, under the supervision of the Yamba Pilot." No further dredging was carried out by Rosser or on his behalf after that time. The Board did not dispute that Captain Gray remained unavailable to supervise dredging by Rosser. 36 The judgments below contain little information concerning the circumstances surrounding the Council's letter of 18 January 1993. The question whether the Board prevented Rosser from exercising his contractual right to win and sell sand from the Goodwood Island Reach was essentially left to the construction of the Council's material letter, which was in the following terms: "…Counsel received advice that a dredging operation had commenced off Portion 65 Parish of Taloumbi on Palmers Island. In response to this advice Council officers inspected the operation to establish under what authority the dredging was occurring.

In discussion with yourself it was ascertained that the operation was dredging of the access channel under the consent to the MSB … for dredging of the Shipping Channels … The inspection revealed that the access channel being dredged was approximately 20 to 30 metres off the Island Foreshore and that approximately 6000 cubic metres of material had been removed … It would appear that this operation is not being conducted in accordance with the development consent as amended.

The construction of any access channel under the consent to DA 90/2442 is pursuant to Condition No. 31 of that consent which reads:

'31. Under no circumstances are weed beds within the river to be dredged. The access channel to the mooring piles is only to be dredged under the direct supervision of the Yamba Pilot and is to be confined to the minimum necessary to allow safe passage of the dredge'.

In discussions with yourself and the Yamba Pilot it is understood that the dredging of the access channel has not been subject to his supervision. You are accordingly advised that you are not in compliance with the requirements of that condition.

You are directed to cease the dredging of the access channel and not to recommence until such time as the operation can be carried out, as required, under the supervision of the Yamba Pilot. Your current action and any further action in contravention of this direction may result in council instigating legal proceedings against you for non-compliance with the conditions of consent." 35 After referring to the dredging carried out by Rosser in the access channel to Palmer Island, which the trial judge said was "… to a depth of 4.5m below chart datum …", his Honour continued: "The stop work notice cited condition 31 … which referred to three matters namely, (a) the weedbeds; (b) the direct supervision of the Pilot; and (c) the dredging being confined to a minimum depth necessary to allow safe passage to the dredge. It is clear that the sole cause of the issuance of the notice was not the failure to supervise. Thus I agree with Mr Donohoe, QC's submission that the evidence does not support the conclusion that the [Board] was responsible for Mr Rosser's breach of condition 31 or that it procured the stop work notice." 36 I am unable to agree with the trial judge for two reasons. One is that, although condition 31of the Development Approval makes reference to the three matters identified by the trial judge, the Council's letter to Rosser dated 18 January 1993 does not rely on all three matters. More importantly, it is plain that the absence of the pilot's supervision was the critical consideration upon which the Council acted, and the direction to cease dredging was only "… until such time as the operation can be carried out, as required, under the supervision of the Yamba Pilot." In these circumstances the reason why Rosser could not dredge the Goodwood Island Reach was that the Board refused to provide its pilot to carry out the necessary supervision. 37 In February, 1993 the Board called tenders for the dredging work, but none were received. Rosser commenced his proceeding on 2 March 1993. On 19 March, the Board gave Rosser a letter purporting to terminate the contract three months from the date of the letter. Plainly, that was another repudiation of the contract by the Board, which again was not accepted by Rosser, and caused him no additional damage. On 14 October 1993, following the trial judge's determination that it could terminate the contract by six months notice, the Board gave Rosser another notice purporting to terminate on 14 April 1994. However, by then, the trial judge had declined to order specific performance on 30 August 1993, and no appeal was brought from that refusal. In his decision of 17 September 1996, the trial judge held that the contract came to an end, or was "lost, when …short minutes of order were proffered to and accepted by the court substituting a right to damages for the right to perform the contract …". That conclusion has not been challenged in this Court. 38 I am satisfied that Rosser was deprived of the opportunity to win and sell sand from both the North Channel and the Goodwood Island Reach by the actions of the Board, which was responsible for the Department's revocation of the licence for the use of the Hickey Island stockpile site, the Council's direction to Rosser to cease dredging the access channel to the Palmer Island stockpile site, and Rosser's inability to recommence dredging under the supervision of the Yamba Pilot. 39 As I have earlier indicated, I am of opinion that the Board did not have a contractual right to terminate the contract during its 6½ year term. The Department revoked the licence to use the Hickey Island stockpile site on 7 December 1992, and the Council directed Rosser to stop dredging the access channel to Palmer Island on 18 January 1993. Those events occurred about 1½ years after the Board's letter to Rosser dated 12 July 1991. When Rosser's performance of the contract was prevented, it had about 5 years to run. 40 His Honour accepted a submission that was made to him on behalf of Rosser that "… when damages are given in substitution for specific performance what the Court is really doing is saying that the plaintiff is entitled to have the contract performed, and is to be awarded the net benefits that he would have received had specific performance been decreed, so as to put the plaintiff as nearly as possible in the position in which he would have been put had specific performance been granted". The Board did not dispute that proposition in this Court. It is unnecessary to consider the question further. At least in the context of the present case, there is no obvious practical difference between the damages to which Rosser is entitled in equity and the damages to which he would have been entitled at common law if he had accepted the Board's repudiation of the contract. Broadly speaking, he is entitled to recover any net profit which he would have made from the performance of the contract, Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, 80. discounted for vicissitudes Faulkner v Keffalinos (1971) 45 ALJR 80, 85. See also McNeill v Richards [1899] 1 IR Rep 79. and further discounted because his present award of damages will be in lieu of income which, had specific performance been ordered, he would have received over a period partly past and partly future. Before this Court, the parties accepted that Rosser was entitled to pre-tax, not after-tax, net profit lost, on the footing that any damages awarded will be subject to income tax. Both parties accepted the correctness of that approach and, as the trial judge observed, their submissions on this point did not "differ markedly". 41 One of the issues raised by the Board before the trial judge, and again in this Court, is that Rosser failed to prove any damages. His Honour correctly accepted that it was insufficient for Rosser merely to assert loss, based on his subjective expectation that performance of the contract would have been profitable, without proving that that was probable. He was required to prove both the fact and the amount of his loss. Commonwealth v Amann Aviation Pty Ltd, at p80; JLW(Vic) Pty Ltd v Tsiloglou (1994) 1 VR 237, 241. If it was established that performance of the contract would probably have resulted in profit without sufficient evidence to permit an assessment of the amount lost through non-performance, only nominal damages should be awarded. However, Rosser submitted that his evidence was sufficient to justify the Court doing its best when assessing damages. "Where there has been an actual loss of some sort, the common law does not permit difficulty of estimating the loss in money to defeat the only remedy it provided for breach of contract, an award of damages." Fink v Fink (1946) 74 CLR 127, 143. The Board did not dispute the applicability of the same principle to the assessment of damages under s68 of the Supreme Court Act. The trial judge considered that, "despite the imperfections" of his case, Rosser "had … provided sufficient material for [his Honour] to find that [Rosser] suffered loss and to quantify that loss". 42 I am satisfied that there was sufficient evidence available to the trial judge to allow his Honour to assess Rosser's loss and award him substantial damages. However, the material could and should have been much better, for which Rosser must bear the blame. Nearly all of the relevant evidence was imprecise and confused, and much of it was speculative. I have little doubt that the trial took significantly longer than would otherwise have occurred because of Rosser's approach. The time needed for the hearing and decision of the appeal to this Court was also extended. The entire trial record was reproduced - about 19 volumes - the vast majority of which was not referred to despite the circumstance that Rosser challenged almost every finding which did not accept a proposition which he asserted at trial. Further, Rosser's argument in this Court on many issues suffered a serious lack of balance which made it singularly unhelpful. Extreme positions were adopted on almost all issues, effectively ignoring the weaknesses in Rosser's evidence, including adverse findings made concerning Rosser and a number of his witnesses. The deference paid by appellate courts to trial findings was largely, if not wholly, disregarded, and the matter approached as though it were appropriate for this Court to retry the matter on the appeal record without regard for the opinion of the trial judge, and, for example, to accept Rosser's testimony and documents as though they had been uncritically adopted by the trial judge. In substantial part, Rosser's appeal consisted of an inappropriate attempt to have this Court second-guess factual conclusions which were open to the trial judge on a body of conflicting evidence, generally without demonstrating any error of principle or approach or advancing any other convincing reason for this Court to hold that his Honour erred. 43 It is instructive to have regard to some of his Honour's comments. It was noted that Rosser did not present the Court with evidence which was to be expected, and, although it had not been put to him in cross-examination that he had deliberately withheld evidence, there was "some force" in the Board's complaints that he had "withheld information if it did not suit him to disclose it" and had "manipulated the figures". Although he conducted some of his business operations through a company, he "…declined to provide … evidence of a proper dissection between himself and the company" or "… the call the accountant who prepared his income tax returns". His case contained "a large amount of suspect and rubbery figures and often showed a disinclination to descend to the real world"; some of his figures were "very rubbery indeed". These considerations "had … influenced [the trial judge's] final assessment". Rosser's expert accountant, one Sanford, was competent, but his evidence was only useful with respect to methodology, because a lot of the data he was provided with by Rosser was of "questionable worth", and he was not instructed to do an appropriate exercise because "it was not going to be cost effective". Rosser's criticisms of the Board's expert accountant, Wills, which were based on Wills' lack of reliable data, "did not detract from … his evidence overall"; the information was unavailable to Wills because Rosser did not make it available. 44 Rosser's damage as assessed by the trial judge, the sum of $576,450, was based on his Honour's conclusion that Rosser could and would have dredged and stockpiled 180,000m3 of sand by 14 April 1994, the date at which his Honour considered that the Board was entitled to terminate the contract by notice. As I have explained, I am of the opinion that the Board could not terminate the contract in that manner, and that the contract permitted performance by Rosser by the end of 1997/beginning of 1998 Subject to his obligation to dredge at a reasonable rate, which was not relied on by the Board.. It was common ground that, at the end of 1992/beginning of 1993 when Rosser was prevented from continuing with the contract, the quantity of sand remaining to be dredged was 253,000m3. It was also common ground that 52,000m3 remained for dredging from the North Channel and stockpiling on Hickey Island, and 201,000m3 remained for dredging from the Goodwood Island Reach and stockpiling on Palmers Island. The trial judge held that there was time for Rosser to complete all dredging by the end of 1997, stating:

"If notice [of termination] had not been given then plainly there was no … risk that Rosser could not dredge all the sand within the remaining term, [of the contract]."

45 His Honour also found that the capacity of the Hickey Island stockpile site was 48,480m3 and that the capacity of the Palmers Island stockpile site was 210,000m3, and that each was adequate to contain the sand dredged from the material area of the river-bed. The Board did not expressly challenge those findings in this Court. Conversely, Rosser did not contend that there was an alternative site on which he could, if necessary, have stockpiled sand if either Hickey Island or Palmers Island became unavailable for that purpose. 46 The evidence concerning potential sales of sand by Rosser in competition with other suppliers to projects which had proceeded in the locality or might occur in the future was vague and unsatisfactory. Davidson Dredging had dredged a total of 45,000m3 from the North Channel by the end of May 1992, and Rosser had dredged a further 5038m3 from the access channel to Palmers Island in January 1993. Almost all that sand had been disposed of by the beginning of December 1994; 250m3 remained. A total of about 50,000m3 had therefore been disposed of at an average of about 1800m3/month over the period May 1992 to December 1994. 47 The trial judge found that Rosser would have been able to sell the further 180,000m3 which he considered Rosser could dredge by 14 April 1994 by the year 2001. Since it seems that Rosser could not have sold more sand by December 1994, his Honour must have considered that it would take him seven years from then to sell 180,000m3; i.e., about 2150m3/month. Of course, on the view of the contract which I have adopted, Rosser would have had 253,000m3, not 180,000m3 of sand, to sell. To sell that quantity by the end of 2001, Rosser would have had to sell 3000m3/month. Put differently, if Rosser had sold sand at the rate of 2150m3 per month, it would have taken him about nine and a half years from December 1994, i.e., until about mid-2003, to sell 253,00m3 of sand. 48 Rosser submitted that the trial judge should have held that he would have sold all the dredged sand by the year 2000. No basis for such a conclusion was demonstrated. 49 There was a dispute with respect to the price(s) at which Rosser would have sold sand, a question which was complicated by a lengthy and confused debate concerning what was referred to as a "bulking factor". A quantity of sand occupies a greater volume when it is "loose", for example, loaded onto a truck from a stockpile or unloaded at a delivery site, than when it is "solid" or "compacted", for example, when in a river-bed or on a stockpile to which it has been pumped after dredging. 50 As the trial judge correctly apprehended, it was "necessary when pricing quantities of sand sold to know whether one is dealing with solid cubic metres or loose truck metres". His Honour also found that the "market price for sand will depend to some extent on whether it is piped straight from the dredge to a building site or whether it is delivered by truck", and that "85% is delivered by truck". 51 Various opinions were expressed by witnesses concerning the respective volumes of the same weight of "loose" and "solid" sand. The trial judge found that a cubic metre of "solid" sand occupied 1.25m3 when "loose", as he was entitled to do on the evidence. While Rosser did not contest that bulking factor, his submissions included argument that his Honour did not appropriately take it into account in calculating the price which Rosser would have received for sand which he would have sold. In fact, the bulking factor was one of a number of variables dealt with in evidence which contained numerous details of a mixture of actual sales, quotations, estimates and opinions with respect to prices which were given by a number of witnesses at different times and places during the trial. His Honour was patently aware of the unsatisfactory state of the evidence, noting:

"It is very difficult to assess from the wide variety of figures that have been provided the "real" sale price for the sand. The onus is on [Rosser] to establish the price. I have been provided with a considerable amount of detail, but the figures are not always consistent." 52 In his judgment of 17 September 1996, his Honour said: "…a bulking factor does not come into the equation. The evidence established that … the real market was for sale of sand to be used as fill which was ultimately paid for after completion to a relative density approved by an engineer and to levels checked by survey. Indeed even hydraulic compaction usually falls short of the engineering requirements for a building site. It is erroneous to use the notion of loose truck metres because the evidence does not establish any quantitative demand for sale of sand calculated in that way. Even where the development site required sand to be trucked to it, the … sand would have to be compacted to the requisite density and paid for accordingly."

53 The statement that "… the evidence does not establish any quantitative demand for sale of sand calculated in that way", i.e., as "loose truck metres", seems to indicate that the trial judge considered that only comparatively small quantities of sand were sold on that basis and that most large sales were "solid" or "compacted" sand. 54 Consistently with the view expressed in the paragraph last quoted, and with his acceptance of Rosser's submission that "a 1995 or later market price" should be accepted, his Honour adopted an individual 1995 transaction as "[a] good a guide as any". In his Honour's opinion, that transaction was "an arm's length transaction apparently without special features". In that transaction, Rosser's sale price "was $8 per cubic metre solid", which "would be the equivalent of $6.40 per loose truck metre". In this Court, Rosser contended for a sale price of $8.30 per loose cubic metre ($11.00 minus a delivery cost of $2.70), which, with a bulking factor of 1.25, would produce a sale price of approximately $10.38 per solid cubic metre. 55 His Honour's statement concerning what "the evidence established" did not mean that there was no contradictory evidence. Obviously, Rosser's evidence (and "supporting material") to the effect that "his usual selling price from late 1995 was $11 per loose truck metre" was rejected. His Honour referred to calculations agreed upon by the accountants for both parties from their examination of Rosser's records that "his sales averaged $7.72 per loose truck metre up to the end of 1993 and $9.78 per loose truck metre thereafter". His Honour considered that those figures "do not necessarily give a complete picture", and had "the vice that the sales are made to comparatively few purchasers, the general evidence in the case tending to show that some special factor usually entered into the price quoted". A little further down, his Honour said:

"There is some evidence of sales in excess of $10 per loose truck metre, but some of these involved compacting the sand when it arrived on the site. A lesser sale price per loose truck metre including delivery seems more consistent with the evidence."

56 His Honour also referred to schedules accompanying the Board's submissions which "set out the evidence as to sale of sand" which had been dredged and pumped "straight to a building site". On his Honour's calculation, these tables resulted in figures of $11.31 per solid cubic metre and $8.30 per loose truck cubic metre after adjustment of "the delivery cost of $2.70 per loose truck metre". In his Honour's opinion, that adjustment had not been made elsewhere, "because delivery is merely added to the price". The figures based on the Board's figures had to be adjusted, his Honour considered, because otherwise "the prices for sand sold by loose truck metre grossly exceed the prices for solid cubic metres". Even after the adjustment, his Honour considered that the prices based on the Board's tables were "still too high … on the evidence as a whole". 57 In this Court, Rosser complained that the trial judge made no reference to the following letter to Rosser from the Department dated 3 June 1994: "Dear Mr Rosser, RE: PHONE CONVERSATION 3 JUNE 1994 The following matters were discussed:

Cost of sand fill at Yamba Variation between trucked and pumped sand fill costs Your written quote to Mr McCloskey re recently filled adjoining land. Requirement of on site settlement ponds for pumped in fill. EPA requirement and necessity in strictly adhear (sic) to same. Specifically:- That you are currently quoting $11.75m3 for supply of sand fill by truck, including site preparation, compaction, replace topsoil and levelling. That for the Leaney property you would clear, fill, compact, replace topsoil, level for $12m3 ($10 fill, $2 to clear, compact, replace topsoil and level m3). That you don't believe it is feasible to pump fill to the Leaney property because of the location and the environmental restraints. For compaction you allow a factor of 1.25 to 1.5 depending on the truck load. That you have a personal relationship with Mr Bob Roulstone and that is the reason that the fill on his site was only $8 a few years ago. That to currently fill the land east of Mr Roulstone's house would be about $11.50 all up, clear, fill, compact, replace topsoil and level." 58 According to Rosser, the price of $11.75 per loose truck cubic metre referred to in the letter consisted of $11 per loose truck cubic metre of sand and 75c per loose truck cubic metre for levelling and other site works. While his Honour might have rejected that evidence consistently with his adverse view of Rosser's testimony, the passage in the letter which I have underlined provides some evidence that, in mid-1994, Rosser was seeking to charge $10/metre3, possibly - although not clearly - for compacted or solid sand. 59 On the other hand, the trial judge made no reference in this context to a statement which he had earlier made to the effect that "on Mr Sanford's lower income figure, Mr Rosser had made sales of $228,693" from the 45,000m3 dredged by Davidson Dredging from the North Channel. Further, investigation of those pre-1995 sales was unlikely to provide much support for the sale price Rosser claimed was achievable past-1995. 60 Although the trial judge's reasoning on this issue is not entirely convincing, I was not persuaded by Rosser's argument that a different price from that adopted by his Honour should be substituted. To some extent at least, his Honour would have been guided by overall impressions which he had formed in listening to the evidence when reaching his conclusion. Other considerations aside, this Court is not in a position to make a more accurate assessment of the probable sale price which Rosser would have received because of the extremely unsatisfactory state of the evidence, a matter for which Rosser is responsible. 61 The evidence with respect to the cost of dredging was no better and Rosser challenged his Honour's conclusions. Various theories were advanced; for example, that Rosser would have carried out half of the dredging and engaged subcontractors to perform the other half. The justification for an appellate court's adoption of such an hypothesis is substitution for the approach adopted by the trial judge was not explained. 62 Nonetheless, I have not been able to gain a clear insight into his Honour's reasoning process on this issue, which does not appear to provide a suitable foundation for his conclusions. His Honour seems to have arrived at the different costs which he fixed in relation to dredging from the North Channel and Goodwood Island Reach by reference to schedules supplied by the Board which contained patent errors, seemingly thinking that those schedules reflected the final, appropriately adjusted opinion with respect to dredging costs of Rosser's former subcontractor, Davidson. The figures and calculations, with variations in the course of the evidence of material witnesses, are very difficult to follow, especially because of the unnecessary complication of converting backwards and forwards between solid and loose cubic metres by reference to the "bulking factor". 63 Despite my reluctance to depart from the trial judge in the circumstances of this case, I have concluded that his Honour erred on the question of dredging costs. For example, his determination concerning the cost of dredging the Goodwood Island Reach considerably exceeded the figure which the Board's expert, Wills, arrived at from an analysis of Rosser's books, and was inconsistent with the evidence of Hollis, a dredger called by the Board who had worked in the area, and with a quote by another subcontractor whom Rosser had employed to dredge an area comparable to the Goodwood Island Reach and pump sand a distance comparable to the distance from that Reach to Palmers Island, none of which exceeded $4.00 per solid metre3. 64 Rosser seems to me correct in his submission that he could have had subcontractors perform the total dredging of both the North Channel and the Goodwood Island Reach for about that cost. His Honour rejected the use of the costs which subcontractors would have charged by a piece of circuitous reasoning. According to his Honour's calculations, their charges were less than their costs and "… no reasonable subcontractor would charge less than the cost of dredging, and one would have to include a figure for the subcontractor's profit margin…". While there is logical force in this approach, its validity is dependent upon an assumption that the Board's dubious schedules were to be preferred to the evidence of the rates at which subcontractors were in fact prepared to dredge. That does not seem to me to be correct. 65 The unsatisfactory evidence available plainly necessitates a broadbrush approach. In my opinion, the approximate cost of dredging and selling sand, including restoration and any costs of setting up and demobilisation, would have been approximately $4/metre3 solid. 66 Accordingly, on the basis that, as earlier accepted, his sale price would have been $8/metre3 solid, his profit would have been $4/metre3 solid. 67 Rosser's potential net profit from performance of the contract, pre-tax, was therefore $1,012,000 (253,000m3 x $4) minus $50,250 (201,000m3 x .25c); i.e., $961,750. As earlier noted, that figure must be discounted to take account of vicissitudes. 68 Rosser's ability to fully perform the contract was subject to numerous contingencies, including the conditions of the licences and approvals from the Department and Council upon which his entitlement to dredge depended. His performance in the 11/2 years for which the contract was in existence prior to him being prevented from continuing dredging gives little cause for confidence that he would have maintained the right to dredge and the use of the stockpile sites until the expiration of the contract term, especially because the evidence revealed opposition from various sections of the community to dredging the riverbed. The trial judge assumed in favour of Rosser that the North Channel would be dredged first, and, possibly, his Honour also considered that sand from that area would be the first sold. Even so, if the licence to use the stockpile site on Hickey island had not been withdrawn in December 1992, it would have been very vulnerable to three months notice of termination by the Minister. Rosser's approach seems to have been less than fully co-operative, and it is doubtful if it is wholly coincidental that, by the end of 1992/beginning of 1993, he had had disagreements with the Board, the Department, the Council and Davidson. The longer the periods of the dredging and sales operations, the greater the chance that Rosser would not have been able to continue, either because a necessary permission was legitimately withdrawn or perhaps because of financial difficulties; e.g., because of costs of necessary repairs or equipment replacements, or because sales were occurring at an insufficient rate to generate needed funds. As noted above, Rosser was not contractually entitled to adjust his rate of dredging to suit his own interests. 69 The Board called an expert in analysing the vicissitudes of commercial life and determining an appropriate rate of discount to take account of those vicissitudes in the present situation. The trial judge accepted the expertise of the witness, Lonergan, but because of his Honour's approach and conclusions, he was not assisted by Lonergan's evidence. The different conclusions at which I have arrived make Lonergan's opinion useful. 70 In accordance with that opinion, the amount of Rosser's lost net profit, pre-tax, should, in my opinion, be reduced by 18% from $961,750 to a rounded-up figure of $800,000. Had the Board not adduced evidence from Lonergan, I would have probably reduced Rosser's damages further to take account of vicissitudes. 71 The trial judge further discounted Rosser's damages by reference to the 3% tables on the footing that 1998 was the midpoint between the dates of his judgment on 17 September 1996 and the year 2001, by which he considered Rosser could have sold all the sand, "so that two years' discount should be taken". This again seems to me quite generous to Rosser. On the footing that "[o]n the 3% tables $1 payable in two years' time is worth 94.7 cents [as at 17 September 1996]", as stated by the trial judge, Rosser's damages should have been reduced to $757,000. 72 His Honour awarded Rosser interest on his damages from January 1995 to the date of his final judgment in September 1996. Rosser did not dispute this approach, perhaps because the trial judge noted that, on Rosser's analysis, "the question as to how one deals with interest just does not arise". However, according to the trial judge's reasons dated 17 September 1996, the Board acknowledged the court's "inherent jurisdiction to award interest at an appropriate date to compensate a plaintiff for loss". In this Court, both parties accepted the approach to interest adopted by his Honour, although the Board contended that his Honour used the wrong rate of interest (12% instead of 10.5%) for the first two months of the applicable period. This point was not taken below or in the Board's notice of cross-appeal, original written submissions, or oral submissions at the hearing, but was first raised in subsequent written submissions. Only a small amount is involved, and the point should not be allowed to be relied on now. 73 On my calculations, the amount of interest to which Rosser was entitled at 17 September 1996 on the basis by adopted by the trial judge was $151,815. 74 Accordingly, in my opinion, the total to which Rosser was entitled at the date of the judgment below was $908,815.00. 75 I would allow the appeal, set aside the orders made below and substitute a judgment for Rosser against the Board as at 17 September 1996 in the sum of $908,815.00. 76 Costs are to be the subject of further submissions.

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