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.