UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd

Biggin & Co Ltd v Permanite Ltd [1951] 2 KB 314 BNP Paribas v Pacific Carriers Ltd [2005] NSWCA 72 Bovis Lend Lease Limited v RT Fire Protection Limited [2003] EWHC 939 (TCC); (2003) 89 ConLR 169 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Commonwealth v Cornwell [2007] HCA 16; (2007) 229 CLR 519 Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 Drayton v Martin (1996) 67 FCR 1 Edwards v Insurance Office of Australia Ltd (1933) 34 SR (NSW) 88 General Feeds Inc Panama v Slobodna Plovidba Yugoslavia [1999] 1 Lloyd's Rep 688 Gibbs v Guild (1881) 8 QBD 296 Hadley v Baxendale (1854) 9 Ex 341; (1854) 156 ER 145 Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 Henville v Walker [2001] HCA 51; (2001) 206 CLR 459 Howe v Teefy (1927) 27 SR (NSW) 301 Hudson Investment Group Ltd v Atanaskovic [2014] NSWCA 255; (2014) 311 ALR 290 I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 King v Western Sydney Local Health Network [2013] NSWCA 162 Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd [2008] NSWSC 144; (2008) 66 ACSR 1 March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377 Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305 Paul v Cooke [2013] NSWCA 311; (2013) 85 NSWLR 167 QBE Insurance (Australia) Ltd v Wesfarmers General Insurance Ltd [2010] NSWSC 855 Rail Corporation NSW v Fluor Australia Pty Ltd [2009] NSWCA 344 Raphael Shin Enterprises Pty Ltd v Waterpoint Shepherds Bay Pty Ltd [2014] NSWSC 743 Rennie Golledge Pty Ltd v Ballard [2012] NSWCA 376; (2012) 82 NSWLR 231 Roe v Minister for Health [1954] 2 QB 66 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 Strong v Woolworths [2012] HCA 5; (2012) 246 CLR 182 Tanna v Deutsche Bank (Asia) AG [1996] NSWSC 408 Tanna v Deutsche Bank (Asia) AG (Court of Appeal (NSW), 15 September 1998, unrep) Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 Zanner v Zanner [2010] NSWCA 343; (2010) 79 NSWLR 702 Texts Cited: DA Bies and CH Hansen, Engineering Noise Control: Theory and Practice (2nd ed, 1996, E & FN Spon) D Villa, Annotated Civil Liability Act 2002 (NSW) (2nd ed, 2013, Lawbook Co) JD Heydon, Cross on Evidence (8th Aust ed, 2010, LexisNexis) The Negligence Review Panel, Review of the Law of Negligence: Final Report (2002) W Courtney, "Settlements Following Breach of Contract" (2013) LMCLQ 157 Category: Principal judgment Parties: UGL Rail Pty Ltd (Plaintiff) Wilkinson Murray Pty Ltd (Defendant) Representation: Counsel: MA Jones SC with Ms JA Steele and Ms CO Gleeson (Plaintiff) RA Cavanagh SC with SJ Walsh (Defendant)

Solicitors: DLA Piper (Plaintiff) Thompson Cooper Lawyers (Defendant) File Number(s): 2011/123652

Introduction

1. In these proceedings, the plaintiff, UGL Rail (formerly known as United Group Rail Pty Ltd), alleges that the defendant, Wilkinson Murray, gave negligent or misleading advice in relation to the steps that should be taken to comply with contractual specifications concerning reverberation control in the Epping to Chatswood Rail Link (ECRL) causing UGL Rail losses said to total $26,429,541.15 plus interest and costs.
2. The ECRL comprises two adjacent cylindrical rail tunnels each approximately 13 km long connecting Chatswood and Epping stations, together with three intermediate stations at Macquarie Park, Macquarie University and North Ryde.
3. Originally, on 6 July 2002, the Director General of the New South Wales Department of Transport entered into a contract (the CIVSYS Deed) with a joint venture between Thiess Pty Ltd and Hochtief Aktiengesellschaft (THJV) for the design and construction of what was then the Parramatta Rail Link. In 2003, the scope of the project was modified to become the ECRL and, on 1 January 2004, the CIVSYS Deed was assigned from the Director General to the Rail Infrastructure Development Corporation, later known as the Transport Infrastructure Development Corporation (TIDC). Under arrangements that are not in evidence, TIDC would make the ECRL available to RailCorp to operate train services between Epping and Chatswood once the link was complete.
4. On 20 December 2002, THJV entered into a subcontract with Alstom Australia Limited (Alstom) for the systems installation component of the ECRL (the Systems Subcontract) for a total price of approximately $179 million. The work subcontracted to Alstom included work associated with the design, construction and testing of sound absorbent panels to be installed in the tunnels to meet the reverberation times specified in the Works Brief, which set out the scope of work to be undertaken by THJV pursuant to the CIVSYS Deed.
5. On 10 June 2003, Alstom entered into a consultancy agreement with Wilkinson Murray (the Consultancy Agreement) under which Wilkinson Murray agreed to provide acoustic consulting services in connection with Alstom's obligations under the Systems Subcontract. It will be necessary to say more about the nature of those services shortly. For present purposes, it is sufficient to observe that the services included advice on the nature and extent of the sound absorbent panels that should be installed in the tunnels to meet the reverberation times specified in the Works Brief and compliance testing of the installed panels.

Some concepts of acoustics

1. Reverberation is caused by the reflection of sound waves off surfaces - most significantly, the surfaces that contain the space in which the original sound was produced. Reverberation affects both the intensity, measured in decibels (dB), and the quality of the sound in the space.
2. A distinction is drawn between early reflections and later ones. It is the later reflections that constitute reverberation and the measurement of reverberation is concerned with those later reflections.
3. Reverberation is measured by reference to the time taken for the level of sound to reduce a specified number of decibels from the time the sound source stops. The time taken for that reduction is called the reverberation time (RT). The standard measure of reverberation time is the time taken for a sound to decay 60 dB after the sound source is stopped. It is approximately the time taken for a relatively loud sound to become inaudible. That standard measure is referred to as RT60. It is possible to plot the reduction in decibels against time. The resulting graph is called a decay curve. The measurement of RT60 is usually taken from a particular time or decibel reading after the sound source stops - for example, from a point on the decay curve that is 5 dB below the initial level to a point that is 65 dB below that level.
4. Although RT60 is used as the standard measure of reverberation, the decline in decibels is usually measured over shorter intervals and the decay curve for the measured interval is extrapolated to obtain RT60. That is particularly so where it is not practical to measure the time taken for the sound to decay by 60 dB. Two measures, which took on particular significance in this case, are RT30 - the time taken for the sound to decline in intensity by 30 dB - and RT20 - the time for the sound to decline in intensity by 20 dB.
5. When the rate of decline of the intensity of a particular sound in a space after the source of the sound is stopped is linear, it is simple to derive RT60 from RT30 and RT20. RT60 is twice RT30 and three times RT20. However, the calculation of RT60 using a simple straight line extrapolation of the decay curve obtained for RT30 and RT20 can produce substantially different results where the rate of decay of the intensity of the relevant sound is non‑linear.
6. The reverberation time is affected by the frequency of the sound (perceived as pitch), which is measured in hertz (Hz), and the acoustic properties of the relevant surfaces and, in particular, the extent to which those surfaces transmit, absorb and reflect sound waves of particular frequencies.

AS2460

1. At the time of the events giving rise to these proceedings, the measurement of reverberation time in rooms was governed by a joint Australian/New Zealand Standard known as AS2460. The standard is expressed to cover the measurement of reverberation time in all types of room.
2. Clause 5.1.2 of AS2460 relevantly provides: The test sound source shall produce a sound pressure level sufficient to provide decay curves with the required minimum dynamic range without contamination by background noise. Under normal circumstances the reverberation time is evaluated from the averaged slope of the decay curve beginning from a sound pressure level of 1 dB to 5 dB below the start of the reverberant decay, or beginning 0.1 seconds to 0.2 seconds after the sound source has been switched off, for a level interval of not less than 30 dB. In the event that insufficient signal is available, it may be necessary to evaluate the reverberation time over a smaller range of the decay of sound pressure level. It is permissible to evaluate the reverberation time for a level interval of less than 30 dB, but not less than 20 dB. However, in such cases the report shall note the level interval over which the reverberation time was determined.
3. Clause 6.2.1 of AS2460 provides: Measurements of reverberation time may be required for a variety of purposes, such as assessment of the amount of room absorption for noise control purposes, assessment of the reverberation time for sound system calculations or verification of building performance against a design brief. The number of measurement positions used to characterize the reverberation time shall be chosen to achieve an appropriate coverage in the room. Clause 6.2.2 deals with measurement spacing. It relevantly provides: No microphone position shall be too close to any source position in order to avoid excessive influence from the direct sound.
4. Section 8 sets out how the reverberation time is to be evaluated from decay curves. Clause 8.1(a) largely repeats cl 5.1.2. It states: The level interval is selected by commencing 2 dB to 5 dB below the start of the reverberant decay, and ending 6 dB to 9 dB above the noise floor. The resulting level interval shall be not less than 20 dB. If the level interval is less than 30 dB, but not less than 20 dB, an appropriate statement shall be included in the test report …
5. Clause 8.1(b) sets out various means of determining the reverberant decay rate of the level interval selected. Clause 8.2 deals with non-linear decay curves. It states: In cases where the decay curve is not a straight line, a unique reverberation time cannot be determined. The following procedure shall be followed: (a) Where the decay curve takes the form of two straight lines, establish a single break point appropriate to all traces at that frequency, in terms of level relative to the initial level. (b) Measure the slope of the upper section and the slope of the lower section of the curve and the appropriate level intervals reported. The minimum acceptable level interval for measurement of each slope shall be 10 dB. …

The Consultancy Agreement

1. Wilkinson Murray was retained to provide consultancy services in relation to two issues. One was achieving the reverberation times specified in the Works Brief. The other concerned advice in relation to ventilation and train breakout noise control. This case only concerns Wilkinson Murray's advice in relation to tunnel reverberation times. The Consultancy Agreement provides a separate fee for those services, which was $16,000. As will become apparent, Wilkinson Murray did a substantial amount of work in relation to tunnel reverberation times before the Consultancy Agreement was signed.
2. Clause 2.1 of the Consultancy Agreement provides: The Consultant acknowledges that the Principal relies on the Consultant to perform the Services with all due skill, care and diligence and that the Principal has entered into this Agreement relying on the representations given by the Consultant set out in clause 3.2.
3. Clause 3.1 relevantly provides: The Consultant must: (1) commence and proceed to perform the Services promptly; … (6) perform the Services: (a) with all due skill, care and diligence; (b) in accordance with the requirements of the Principal's Preliminary Requirements, the Authorities, the Law, Standards and this Agreement; (c) so as to permit the Principal to comply with its obligations under the Contract; (d) by the completion date or dates and milestone dates referred to in Item 10 of the Annexure or such other dates as are directed by the Principal from time to time or contained in the program approved by the Principal under Clause 4.1;
4. Clause 3.2(1) states that Wilkinson Murray "represents and acknowledges that it has the skill, competence, resources and experienced personnel available to perform the Services".
5. "Services" is defined to mean: [A]ll services which the Consultant is required to perform in accordance with the Agreement that are further described or particularised in the Annexure and Schedule 1, together with such other services as would ordinarily be provided by a professional consultant exercising all due skill and expertise in the performance of services such as or similar to the Services in connection with a project such as or similar to the Project.
6. The Annexure states that the Services are those set out in Schedule 1. Schedule 1 states that the Services are those defined in Specification PRL-CSA207400 Rev A. Schedule 1 also states: The Specification PRL-CSA207400 Rev A refers the Project Works Brief [sic], which is included in the Agreement. The Consultant acknowledges that it has received a copy of the Project Works Brief electronically as a PDF file.

Reference must be made to AS2640 [sic] for definitions and measurement methods for reverberation times. The dimensions, materials and locations of the acoustic panels in tunnels must be determined by the Contractor. They must be durable during the design life, and must not be prone to damage during normal maintenance activities, or susceptible to corrosion and fatigue failure. Wind generated by train operations must not cause fibreglass particles, or the like, to be released from the panels. The table in cl 3.14.10 was repeated in cl 5.1 of the Specification. The reference to "AS2640" is clearly an error. The correct reference is to AS2460.

1. The Consultancy Agreement contains two indemnities in favour of Alstom. Clause 6 provides: 6.1 The Consultant indemnifies the Principal against any loss, damage, liability, cost or expense of any kind including (without limitation) any indirect or consequential loss or damage ("Loss") incurred, or suffered by the Principal in connection with the Consultant's performance of the Agreement, any negligence of the Consultant, its employees, servants, agents or sub‑contractors or any breach of the Agreement by the Consultant. 6.2 Without limiting Clause 6.1, if the Consultant's performance of the Agreement or any negligence of the Consultant, its servants, agents and sub‑contractors or any omission or default of the Consultant causes the Principal to, or contributes to the Principal becoming, liable for the allowance or payment of any Loss or other penalties or liquidated damages under the Contract, then the Consultant shall indemnify the Principal against any and all such Loss or other penalties or liquidated damages. 6.3 The Consultant acknowledges that: (1) the provisions of the Contract under which Loss or other penalties or liquidated damages may be imposed upon the Principal are available for inspection at the offices of the Principal during normal business hours; and (2) prior to entering into the Agreement, it was given an opportunity to inspect such provisions.
2. Clause 18.1 provides: The Consultant indemnifies the Principal against: (1) any costs and expenses incurred, and losses and damages suffered by the Principal; and (2) any legal costs (on a solicitor and own client or full indemnity basis, which ever is greater) and other costs and expenses incurred by the Principal in connection with a demand, action, arbitration or other proceeding (including mediation, compromise, out of court settlement or appeal); arising directly or indirectly as a result of or in connection with any breach or non‑performance of any of the obligations of the Consultant or any negligent act or omission of the Consultant under this Agreement whether express or implied.

Events prior to May 2003

1. Alstom was involved with THJV's tender for the Parramatta Rail Project (as the ECRL Project was then known) and, in connection with the tender, it and THJV obtained preliminary advice in March 2002 from Wilkinson Murray on various noise-related issues affecting the project, including in-tunnel reverberation. Wilkinson Murray's preliminary advice was prepared largely by Mr Gross, although, according to the report, it was prepared by Mr Murray, one of its directors, and checked by Mr Bridge, who at the time was a senior engineer at Wilkinson Murray. The report appears to have been based on some calculations performed by Mr Lawrence, which used the classic Sabine formula and assumed a tunnel length of 50 m. Both Mr Murray and Mr Bridge gave evidence. Mr Gross and Mr Lawrence did not. The preliminary report was addressed to Gutteridge Haskins & Davey Pty Ltd, consulting engineers, who had been engaged by THJV in connection with its tender. In that report, Wilkinson Murray made the following recommendation in relation to reverberation control: To meet the reverberation time limits in dual track tunnels, it is recommended that sound absorbent panels be fixed to the walls of the tunnel. A strip of depth 550mm is to be applied to each side of the tunnel at a height of approximately 1m and this strip is to be continuous along the tunnel. Each panel should be constructed using an infill of 50mm thick glasswool faced with a perforated metal of open area at least 20%. The overall panel may be fixed directly to the tunnel wall. … The report went on to attach a diagram of the proposed panels and to give specifications of the sound absorption coefficients of the glasswool to be included in the panels. It was against that background that Alstom approached Wilkinson Murray to provide acoustic consulting services following THJV's successful tender and Alstom's appointment as the subcontractor responsible for the systems installation component of what became the ECRL Project.
2. Mr Murray was approached by Mr Jeremy Mortier at the beginning of October 2002 about providing consulting services in connection with the project. Mr Mortier was the engineer at Alstom who had primary responsibility for the reverberation control aspect of the project. There was correspondence between Mr Murray and Mr Mortier on the terms on which Wilkinson Murray would provide its services and Wilkinson Murray commenced work on the project well before the Consultancy Agreement was signed, although at a time when the drafting of the Consultancy Agreement was well advanced. The parties agree that Wilkinson Murray performed that work on the terms contained in the signed Consultancy Agreement.

Advice in May 2003

1. In May 2003, Wilkinson Murray provided Alstom with a report concerning the quantity and type of acoustic panels to be placed in the ECRL in order to meet the contractual specifications in respect of reverberation time set out in the Works Brief. The report was prepared by Mr Bridge and reviewed by Mr Murray. It was sent to Mr Mortier on 15 May 2003.
2. The report observed: A circular tunnel is not a simple environment in which to predict reverberation time. The mode of reflections within a cylinder are significantly different from those in a more conventional rectangular room. The prediction methodologies are therefore limited in their accuracy within such an environment. The report went on to explain that, in those circumstances, Wilkinson Murray had undertaken reverberation time measurements in a section of the Eastern Suburbs railway tunnel west of Kings Cross station, which had three bands of acoustic panelling each approximately 660 mm across. The report recorded Wilkinson Murray's findings and stated: It was also found that the spread of measurement results was relatively smooth for the range of noise source and measurement locations. These findings provide a high level of confidence that the reverberation time in the Parramatta Rail Link tunnel can be consistently and accurately measured. The results also allow validation of the reverberation time prediction model. That model was explained in these terms in the report: Various adaptations were made to the [Fitzroy/Eyring] model to establish the best model configuration to predict the measured results. The best fit appears to be the use of the model without consideration of the three modes [a reference to different types of relection], but combining the three modes in a way equivalent to the original Eyring model. Taking a representative tunnel length of 30m with tunnel ends being totally sound absorbent (or open to the atmosphere) also resulted in good agreement.
3. On that basis, Wilkinson Murray recommended various options based on different types of sound absorbent material. In the case of glasswool, it recommended 1.2 m per metre of tunnel length on the basis that the glasswool was enclosed in perforated metal sheeting but was not wrapped in mylar. Wilkinson Murray also stated: In order to comply with the reverberation time requirements in the Works Brief, the acoustic absorption can be located in a single band at any position in the tunnel. However, to best meet the intended purpose it should be located in two bands one on each side of the tunnel and at a height approximately midway between the wheels and the carriage windows.

Events following May 2003 advice

1. Following receipt of Mr Bridge's advice, Mr Mortier prepared a number of drawings showing the dimensions of the acoustic panels and their proposed location in the tunnels. The drawings allowed for one row of acoustic panels, each 0.6 m2, on the right hand side of the tunnel as shown on the drawing (opposite the safety walkway). Mr Mortier says that he allowed sufficient space for a second row of panels immediately above the first. The drawing for the panels showed perforated panels with a minimum 15 per cent open area and a maximum of 30 per cent open area. That specification was consistent with Wilkinson Murray's advice; and again, there is no criticism of that aspect of the advice.
2. It is not clear from the evidence what happened then. Mr Mortier prepared a specification for the sound absorbent panels without further assistance from Wilkinson Murray. The final version of the specification was dated 5 October 2004 and Alstom used that specification and the drawings prepared by Mr Mortier to obtain quotes from material suppliers, although Mr Mortier was not involved in that process. Mr Mortier says that he ceased to work on the project in June 2005, although it appears that he continued to have a peripheral involvement after that time. Before Mr Mortier left the project, he prepared an email stating that the design work in relation to reverberation control to be performed by Wilkinson Murray was complete and that Wilkinson Murray had yet to provide test procedures for measuring reverberation times. The email also states: In terms of tunnel sound panels, we were to fit out a section of the tunnel, perform reverberation measurements and then determine final sound panel requirements with respect to the necessity or otherwise for panels on both sides of the tunnel.
3. Following United's acquisition of Alstom's transport business in June 2005 and the novation of the Systems Subcontract to UGL Rail in September 2005, UGL Rail appointed Sound Control Pty Ltd to manufacture the acoustic panels from components obtained from other suppliers.
4. In December 2005, Wilkinson Murray provided a report addressed to Alstom setting out the procedures that Wilkinson Murray proposed to adopt for measuring noise associated with the project, including tunnel reverberation times. In relation to reverberation times, the report stated that all measurements would be performed in accordance with AS2460.

Advice in 2007

1. Following installation of a sample row of panels, Mr Sebastian Giglio of Wilkinson Murray conducted reverberation time tests on 21 May 2007. By that stage, most of the services had been installed in the tunnel. There were approximately 200 m of test panelling. According to Mr Giglio, the panels were 1100 x 620 mm and installed with a 100 mm overlap. The faces of the panels were perforated but with a 50 mm border on the long edges (top and bottom) and 100 mm border on the short edges, giving an effective absorptive area for each panel of 0.47 m2. In performing the tests, Mr Giglio placed the microphone approximately 70 m in from the start of the panelling and conducted various tests with the sound source ranging from 5 m to 160 m from the microphone. Mr Giglio sent a summary of the results to Mr Murray, who was working in Hong Kong at the time. They had a number of discussions concerning the results of the tests.
2. On 25 May 2007, Mr Murray sent Mr Rajendra a fax reporting on the results of the test. After observing that the test revealed reverberation times significantly in excess of those specified, Mr Murray said: The existing amount of acoustic panel in the trial section is insufficient to meet the specified reverberation time limits. It will therefore be necessary to add additional acoustic panel, and at least the second panel on the opposite side of the tunnel will be required. However, our current modeling, validated by the latest measurements, indicates that even more acoustic panel will be required. A third acoustic panel identical to the existing one is likely to be required, and this panel would need to be located at a position which is not adjacent to one of the other two panels. For example, the third panel would best be located at a high location towards the top of the tunnel. Our modeling indicates that three panels along the full length of the tunnels would result in compliance with the reverberation time limits at most frequencies, but with a small exceedance of the limits at 250 Hz. The small exceedance may not eventuate, or may be small enough to be considered acceptable. To meet the limits, we therefore recommend three acoustic panels separated around the tunnel perimeter. It may be a reasonable strategy to fit two panels for further testing, before the decision is made to incorporate the third panel.
3. Although the fax refers to modelling, there is no evidence that Wilkinson Murray had done any additional modelling that formed the basis of this opinion.

The Client is sweating on the results as they must get started on the other 26km in order to finish on time. Obviosuly [sic] they are hoping for no more increases in absorption

1. Mr Murray replied on the same day saying "I say that we should go with this, but with perf to the edge".
2. On 13 August 2007, Mr Giglio reported the results for the 0.6 m test to Mr Rajendra. He said: We think the results will be acceptable, based on the following: * Currently there is only 50m of absoprtion [sic] panels each side of the test location along the tunnel. Having more absorption along a greater length of tunnel will improve the result; * The final panels will be perforated edge-to-edge whereas the prototype panels still have the non-perforated border; therefore in the final result there will be more effective absorption material in the tunnel; * There is usually a tolerance in compliance assessment for reverberation time. If some frequencies are 10% higher than spec then this would be considered acceptable
3. Mr Rajendra replied that there would still be a 20 mm border for structural reasons, but that the test panels had a 50 mm border top and bottom and a 100 mm border on the sides. He asked whether Mr Giglio still believed that that would be acceptable.
4. Mr Giglio replied on 14 August 2007 in the following terms: On 8 June our recommendation was for a minimum of 1.5m^2 of 'effective' perforated panel area per 1m length of tunnel, including having perforated sides on the wider panel. Based on your advice below I understand that now there will be approximately only 1.35m^2 of effective perforated panel per m length of tunnel. The test last week was with approximately 1.3m^2. I was hoping for the additional 15% perforated area, based on our June 8 advice. This, together with a greater length of lined tunnel, was expected to provide reverberation time compliance. Based on the testing carried out I cannot be satisfied that the current proposal as it stands (as described by you below) will unequivocally achieve compliance at project completion. I think we have no other choice, but I am not comfortable and feel I cannot guarantee compliance (even though the chances are good). It appears that, in preparing this email, Mr Giglio had miscalculated the effective area of the perforated panels and, in particular, the size of the panels tested the previous week.

Test results in 2008

1. Installation of the two rows of panels was completed on 17 January 2008, following which Mr Giglio was asked by United to conduct further testing. Mr Giglio conducted those tests on 29 January 2008. Mr Giglio reported to United on those tests on 4 February 2008. It appears from the report that the tests were carried out with distances between the source and receiver ranging from 1 m to 5 m at five different locations along the tunnel. According to Mr Giglio, the test revealed that the reverberation times were within specification at two of the five test locations and exceeded the specification at certain frequencies at three of the five test locations.
2. On 3 July 2008, Mr Giglio was informed by United that it was TIDC's view that the reverberation times in the tunnel did not comply with the specifications. Mr Giglio carried out further tests on 9 July 2008 at 39 locations in the tunnel. He reported on those results on 10 July 2008 to Mr Ian Turnbull. Mr Turnbull's precise role is not clear from the evidence. However, he was one of the United engineers responsible for managing the project. Again, the tests were carried out at various locations in the tunnel and using various distances between source and receiver, ranging from 1 m to 5 m. According to Mr Giglio's results, the reverberation times exceeded specification in a number of locations at a number of frequencies.
3. Mr Johnson returned full time to the project in June or July 2008.
4. It appears that, at some stage, Wilkinson Murray became aware that TIDC had engaged Heggies to advise it on compliance with the reverberation specification and that Heggies had conducted tests showing that the specification had not been met. In response, Mr Giglio prepared a formal report to be sent to United dealing with the issue, which he discussed with Mr Murray. The report took some time to prepare. A version of it was sent by Mr Murray to Mr Turnbull on 2 September 2008 and the final report was sent by Mr Giglio to Mr Turnbull on 3 September 2008. The report summarised results obtained from the 29 January 2008 tests and further tests that Mr Giglio had carried out on 21 July 2008. Based on the results recorded in the report, the report asserted: Reverberation time tests are considered to have met the project goals. Variations between tests can be explained by considering the fact that the reverberation time reported by the instrument is very sensitive in this particular space to where the software determines the start of the sound level decay with time. The report also stated: In the ECRL tunnel, the average absorption coefficient is around 0.1 (β=0.9) as there is approximately 1.5m of the tunnel perimeter that is treated with acoustic absorption material. If the amount of absorption material was doubled to achieve β=0.8 then the reduction in sound level in the tunnel would be of the order of 2decibels. In general, a doubling of absorption represents almost a halving of the reverberation time. Therefore, it can be seen that small differences in the reverberation time of 10%, 20% or even 50% will not have a significant effect on the resultant sound level in the tunnel.

TIDC serves defect notices

1. On 10 October 2008, TIDC sent THJV a letter giving notice that the principal's representative had identified the following defect: [T]he reverberation times in the tunnels exceed the values listed in the table in Section 3.14.10 - Acoustic Panels of the Works Brief. … The letter required that the defect be rectified by 1 May 2009. It also included a copy of a report prepared by Heggies. THJV passed a copy of the letter and report on to United.
2. Mr Johnson responded to that letter and report on 15 October 2008 taking issue with the report.
3. Wilkinson Murray prepared a detailed response dated 23 October 2008 to Heggies's report. Wilkinson Murray's report explained the difficulties in applying AS2460 to tunnels. Wilkinson Murray provided United with amended versions of that report on 27 October 2008 and 3 November 2008.
4. In the meantime, on 30 October 2008, TIDC served a notice on THJV alleging various breaches of the CIVSYS Deed arising from excessive in-car noise.
5. In November 2008, UGL Rail retained Challis Consulting Pty Limited to provide a second opinion in relation to compliance with the reverberation specification.
6. On 12 November 2008, THJV sent United a copy of TIDC's defect notice in relation to in-car noise. The covering letter stated that, to the extent that THJV had any liability for the defect, THJV would look to UGL Rail.
7. In November 2008, Heggies began to investigate the effect on in-car noise of adding additional volumes of absorptive material in the tunnel, its placement in different locations, the benefit of high speed polished rail grinding techniques and the use of rail dampers. It appears from an email dated 16 October 2008 sent by Mr Johnson that TIDC was seeking to reduce in-car noise by approximately 15 dB and that it was seeking to obtain a reduction of 4 to 7 dB through the introduction of additional panelling, a reduction of 4 to 5 dB through rail dampers and a reduction of 4 to 5 dB through additional rail grinding.

Establishment of working group to resolve problems with in-car noise and Mr Challis's reports

1. On 2 December 2008, TIDC wrote to THJV accepting in principle a without prejudice proposal that they and RailCorp together form a working group to proceed expeditiously to seek to agree on a technical solution to the matters the subject of the defect notice served on 30 October 2008 relating to in-car noise and to refer the dispute to mediation. In the meantime, TIDC agreed to fund the direct cost of materials and 50 per cent of the direct costs of installation with the balance of the direct costs being funded by THJV.
2. Following that agreement, Mr Johnson attended meetings of the working group as a representative of United. The working group consisted of representatives from TIDC, including its technical adviser, Heggies; RailCorp, including its technical adviser, Sinclair Knight Merz; THJV, including its technical adviser, Mr Renzo Tonin; and United and its technical adviser, Mr Louis Challis. The focus of the working group was on the reduction of in-car noise. The target set by TIDC was to achieve a sound level of 80 dB for 80 per cent of the journey time in the vestibule of a K-set train. For the remaining 20 per cent of the journey, the in‑train noise levels were not to exceed 85 dB. The working group considered various options for achieving the goals set by TIDC and investigations were conducted by members of the working group into the merits of each option and an estimate of their costs.
3. Independently of that work, Mr Challis conducted reverberation testing in early December 2008 and provided United with a draft report on 8 December 2008 setting out the results of his tests. The draft reported the following results using RT30 to derive RT60: Specified Contract Average of 10 decays Specified Frequency Hz Requirement RT60 @ one position on 2/12/08 (125 Hz - not specified Not specified 8.13 (at 160Hz) 250 2.5 4.62 500 2.2 2.63 1k 1.8 2.25 2k 1.5 2.16 4k 1.2 1.68 8k Not specified 1.12

1. After observing that the measurements were particularly high for low frequencies, the report observed that "the achievement of the conforming reverberation time at 250Hz will dominate the scope of the amelioration program required to achieve conformance of the five specified frequencies". Mr Challis expressed doubt that that specification could be achieved using the existing panels and suggested utilising a supplementary panel configuration that was thicker than the one that had been installed.
2. On 23 December 2008, United received advice from Mallesons Stephen Jaques to the effect that, if there was a failure to meet the specified reverberation times, United would be liable for the cost of work to rectify that breach but that it was more likely than not that United would not be liable in relation to the allegations set out in the defect notice in respect of in-car noise.
3. Mr Challis prepared a further draft report for United dated 8 January 2009. That draft, like the previous one, concluded that the tunnels did not meet the reverberation specification. It also stated that it was not possible at that stage to express a view of how much additional acoustic panelling would need to be added to meet the specification.
4. Mr Challis produced his final report on 29 January 2009. That report included a section setting out Mr Challis's opinion on the amount of additional acoustic panelling that was required in order to meet the specification. Mr Challis's recommendation was summarised in the following table: Frequency Parameter 250Hz 500Hz 1kHz 2kHz 4kHz Height of unity absorption wall lining required for RT30 compliance 4750mm 2400mm 3600mm 3600mm 3600mm Height of unity absorption wall lining required for RT20 compliance 2500mm 1445mm 2645mm 3000mm 2800mm

1. In expressing that opinion, Mr Challis relied on the results of the tests conducted by Heggies, which were set out in their report dated 10 October 2008. It is not easy to follow what Mr Challis did. It appears that he obtained from tests conducted by RMIT the precise absorption coefficients for the panels that were already installed and the material used by Heggies at each test frequency so that he could calculate the effective height of the panels. So, to take a simple example, if the height of the panel was 1200 mm and its absorption coefficient for a particular frequency was 0.5, Mr Challis treated the effective height of the panel for that frequency as being 600 mm. Mr Challis calculated the effective heights for the existing panels and for the additional one, two and three panels tested by Heggies for each frequency. He then plotted the effective heights against the reverberation time to reach a conclusion concerning the effective height of panelling required for each frequency. In the case of the 250 Hz frequency, Mr Challis calculated the effective height of the existing panels and three tests panels as 3496 mm. With that amount of panelling, RT60 (based on RT30) was 3.3 seconds. In that case, Mr Challis appears to have projected his graph to conclude that, in order to reach a reverberation time of 2.5 seconds (the amount specified in the Works Brief), it would be necessary to install panelling with an effective height of 4750 mm, although Mr Challis's calculations appear to contain an arithmetic error. That error aside, assuming that the same panelling was used, that equated to additional panelling of 6765 mm. According to Mr Challis's calculations, substantially less panelling was required to meet the specifications for other frequencies, as is apparent from the table set out above.
2. On the same day Mr Challis produced his final report, Mr David Anderson of RailCorp distributed an email to members of the working group, including Mr Johnson, purporting to summarise the various options, their relative advantages and disadvantages and their estimated costs. The email included a table substantially in the following form: Option Scenario Total Pre- tender Cost Estimate ($M) Av % of Trip over Target Rank (in terms of cost & target compliance) A No Dampers - All Absorption 22.4 41% 6 B All Absorption w Dampers at Selected Locations 23.4 21% 5 C Dampers at Selected Locations - no Lower Walls Abs. 20.8 22% 3 D All Dampers with Optimised Absorption 20.1 20% 1 E All Absorption Except 4ft - Dampers at Selected Locations 20.8 20% 2 F Dampers - All 4ft, No Lower Wall & Min Under WW Abs (3.1km) 21.6 21% 4

1. At a meeting of the working group on 10 February 2009, it was agreed that the preferred technical solution was option D, which appears also to have included rail grinding. Following that meeting, tenders were issued to various suppliers for rail dampers and acoustic panels.

The mediation

1. There was a mediation between TIDC and THJV that commenced on 11 March 2009 and ran for several days. United was not a party to the mediation but agreed to attend it.
2. Prior to the mediation, on 10 March 2009, Mr Johnson prepared a cost estimate comparing the cost of option D (referred to as the "TIDC Solution") and various options proposed by Mr Tonin, Heggies and Mr Challis to meet the reverberation specification. Mr Johnson said in his first affidavit that he concluded that the cost of the TIDC solution was approximately $21,241,000 (assuming that TIDC would be responsible for the supply of the dampers and making certain other assumptions), the cost of the Tonin solution was $22,417,700, the cost of the Heggies solution was substantially the same as the Tonin solution, and the Challis solution would be approximately $1,000,000 less. In performing those calculations, Mr Johnson assumed that the cost of installing acoustic panelling in accordance with the various solutions per metre of additional panelling was the same as the cost per metre of installing acoustic panelling in accordance with the TIDC solution.
3. Mr Johnson prepared a note of his calculations. The note relevantly was in the following terms: In Car Noise Solution Labour Material Vehicles/Misc Total Dampers $1,260,500 $5,922,000 $689,000 $7,871,500 Floor Panels $1,540,700 $1,860,000 $689,000 $4,089,700 Wall Panels $4,201,800 $3,800,000 $1,378,000 $9,379,800 TOTAL $7,003,000 $11,582,000 $2,756,000 $21,341,00 [sic]

TONIN Solution 97,200 sq metres of Acoustisorb2 or 3. 21,600m long by 4.5m high. The In car noise solution has 33,900 lineal metres of panel. Approximating the Tonin solution to 3.75 rows of panels by 1200mm high, gives 3.75 x21,600m or 81,000 lineal metres. Prorata the "Wall Panels" above gives 81,000/33,900 =2.39 Wall Panels $10,042,300 $9,082,000 $3,293,400 $22,417,700 x2.39

The discrepancy between Mr Johnson's affidavit and his note is likely to be a typographical error. The note went on to explain that the estimate in relation to the Heggies solution was a "guestimate based on TIDC position paper stating 3 rows of additional panels bigger and thicker than those currently installed". The note also stated that Mr Challis had been "suitably vague" in defining a solution. However, in reaching a cost estimate, Mr Johnson assumed that there would be a total of 3500 mm of acoustic panelling per metre with additional material behind the existing panelling.

1. Mr Johnson says that his estimate was likely to be an under-estimate because he used a pro rata figure and had not made any allowance for the additional costs associated with the logistical difficulty of installing additional rows of panels.
2. Mr Johnson also prepared a spreadsheet setting out his calculations for the costs of the TIDC solution and a summary of those calculations. The summary was in the following terms: Acoustic Treatment

Item Manufacturer Total Supply Cost Dampers S&V $ 5,922,500 4 foot blocks Adbri $ 1,801,910 Cladding Advance Metal $ 2,892,176 Glasswool Fletcher Insulation $ 666,393 Bedding mortar for blocks (assumed) $ 54,894 Fastenings for wall panels (assumed) $ 240,999 Grand Total Material Supply $ 11,578,872

Total Labour and Plant Labour Costs $ 5,698,000 (tunnel, yard, excludes drivers) Supervisory Costs + Site Overheads $ 1,305,000 (supervisor, eng, safety) Hi-rail vehicle costs $ 2,732,000 (includes driver) Forklift Costs $ 24,000 Grand Total Installation Labour & Plant $ 9,759,000

TOTAL $ 21,337,872

Contingency 10% 2,133,787 Overhead & Profit 17.5% 4,107,540 GRAND TOTAL $ 27,579,199

1. Mr Gary Boyd, who was a quantity surveyor engaged by United's insurers, also undertook some preliminary check calculations of the TIDC solution. His draft calculations indicated that the costs would be approximately $33.5 million - higher than those estimated by Mr Johnson. According to Mr Boyd, the main differences were the assumptions he made concerning the number of acoustic panels required, labour efficiencies and the rate of overhead and profit. In calculating the amount that should be allowed for labour, Mr Boyd took into account the fact that reduced access meant shorter shifts since shuttle trains would be running in the tunnels. Mr Boyd had not, at that stage, prepared comparison costings of a solution designed simply to meet the reverberation specification.
2. It is not entirely clear what happened at the mediation. United was represented by Mr Tim Burt, its General Counsel, who did not give evidence, and Mr Johnson. Mr Boyd also attended the mediation. It is apparent that TIDC was pressing THJV to agree to the TIDC solution and to pay the costs of that solution. One issue that was discussed at the mediation was the comparative costs of the TIDC solution and the costs of meeting the reverberation specification. Reporting to Mr Andrew Summers on that issue, who at the time was the Chief Executive of UGL Infrastructure, Mr Burt said in an email dated 17 March 2009: The rectification works proposed by TIDC ('TIDC Works') are designed to address the in-car noise issue. These works will involve the installation of additional acoustic panels (approx 38,000 m2) on the walls, acoustic blocks between the tracks and dampers on the rails. The works that would be necessary to meet the specified reverberation times ('Reverberation Works') are different to the TIDC Works, and would involve the installation of additional acoustic panels (approx 97,000m), but no acoustic blocks or dampers. The TIDC Works have been costed at $22 - 25m, while the Reverberation Works have been costed at $25 - 27m (both exclusive of contingency, margin and overhead).
3. Other issues that were discussed included how the TIDC solution would be implemented. One issue was the particular suppliers of materials, such as rail dampers and the acoustic panels. Another important issue was the extent to which THJV would be given access to the tunnels to undertake rectification work. At the time, RailCorp was threatening to limit access to four days per week.

Events following the mediation

1. Following the mediation, there were further negotiations between the parties. Mr Simon Campbell took over the project management responsibilities from Mr Johnson and one of his responsibilities was to prepare a detailed costing of the TIDC solution. Mr Campbell prepared that costing in conjunction with Mr Johnson, who remained involved with the project until June 2009, when he moved to Brisbane. Mr Campbell says that the costing was prepared on the same basis as United would have used if it had been tendering for the work. It took into account quotes that had been received for materials and made a number of assumptions concerning access to the tunnel. The total cost of the estimate was $36,718,564.
2. At the same time, Mr Boyd also revised his own cost estimate and prepared cost estimates for solutions directed at meeting the reverberation specification. Mr Boyd's final report, or at least what appears to be a final draft of that report, is dated 2 June 2009. In the report, Mr Boyd says he compared the TIDC solution embodied in what was then a draft of the Settlement Deed with various proposals to meet the reverberation specification. Mr Boyd said that a number of those were too expensive to report on in detail. He concentrated on a solution which he described as the "Leo/Challis Option 2", which was based on a report prepared by Mr Leo dated 12 March 2009. Mr Leo was from Marshall Day, who had been engaged by United's insurers. The report referred to by Mr Boyd was not in evidence. Mr Boyd described the Leo/Challis Option 2 solution in these terms in his report: a. In the original solution proposed by Leo / Challis, Ross Leo proposed an additional 3.91m of 100mm thick acoustic material around the girth of the tunnel … b. The Challis 2 solution amended this advice by saying that the girth could be reduced by approximately 0.4m assuming that additional acoustic material could be placed behind the existing reverberation treatment originally fixed in the tunnel. … c. The revised solution proposed that 2 additional acoustic panels (1 x approx 500mm wide and 1 x approx 900mm wide) could be placed behind the existing panels with a new steel cover plate being used to re-fix the panels back to the tunnel wall. This would avoid the need for approximately 9,500m2 additional steel panels.
3. Mr Boyd estimated that the costs of the TIDC solution based on the terms of the draft Settlement Deed excluding any allowance for overheads and profit were $25,247,799. That figure only related to the costs of the rectification work. It did not include other payments to be made by UGL Rail under the Settlement Deed. Mr Boyd's estimate for implementing the Leo/Challis Option 2 solution was $34,116,831, although in an email dated 26 May 2009 he had estimated those costs as being $31,959,137. The explanation for the difference is not clear from the evidence.

1 There is no clause 6.3 of the Deed. We assume that this is actually intended to refer to clause 6(b). Please let us know if that is correct

1. DLA Phillips Fox went on to explain the circumstances in which the insurers would make the payments referred to in 4, 5 and 6. It also said they would consider paying THJV's and TIDC's costs but only to the extent that they "relate to RT60 defect".
2. Mr Johnson discussed the proposed settlement with Mr Summers. It appears that, some time after receiving the insurers' offer, Mr Summers spoke to Mr Richard Leupen, the Chief Executive Officer of United, and recommended acceptance of the insurers' offer and entry into the Settlement Deed. In making that recommendation, Mr Summers said he formed the view that the settlement was reasonable because:

• the advice UGL Rail had received was that it was liable to THJV for works not meeting the reverberation specification;
• UGL Rail was not required to conduct any tests or meet the requirements of any test or measurement in respect of the completion of the works the subject of the proposed settlement;
• UGL Rail was not required to accept any design responsibility for the TIDC solution. It simply had to undertake the work referred to in the Settlement Deed.
• the works to be undertaken in the Settlement Deed were less expensive than works required to comply with the reverberation specification.

1. Mr Leupen accepted Mr Summers's recommendation.
2. On 10 June 2009, UGL Rail accepted its insurers' offer and, on 23 June 2009, entered into the Settlement Deed.
3. Under the terms of the settlement, TIDC directed THJV to carry out certain work and, pursuant to cl 8.2(b) of the Systems Subcontract, THJV directed UGL Rail to carry out the variation works at no cost to THJV. It was specifically agreed that United did not assume or undertake any design responsibility or warrant any of the design characteristics in respect of the variation works except in relation to "Fixings" (that is, the means by which absorbent panels were to be fixed to the walls, absorbent blocks were to be fixed to the trackbed and glasswool batts were to be fixed to cable trays). The Deed specified various dates by which certain portions of the work was to be completed.

UGL Rail's claim

1. UGL Rail's total claim is $37,361,892, calculated as follows: Item Amount Cost of initial two rows $5,641,585.61 Amount paid to UGL Infrastructure $25,027,000 TJHV and TIDC costs $3,430,295.69 UGL Rail's legal costs $358,717.85 Total $34,457,599.15 Less cost of installing current panelling $8,028,058 Total $26,429,541.15 Plus interest from 12 June 2009 to 21 November 2014 $10,932,350.86 Total $37,361,892

1. One observation to make about this claim is that UGL Rail has not deducted from the claim the additional costs it would have incurred if it had installed the correct amount of acoustic panelling originally. Rather, what it has done is to include as damages the costs of installing the original two rows of panelling on the basis, presumably, that those costs were wasted but to deduct the total costs of installing the panelling recommended by Professor Kang in order to meet the reverberation specification. There may be a question whether that was the correct approach. However, it was not suggested in this case that the two approaches lead to substantially different results.

Did Wilkinson Murray breach a duty it owed UGL Rail?

The allegations

1. The allegation that Wilkinson Murray breached a duty that it owed UGL Rail has two limbs. First, it is alleged that the services provided by Wilkinson Murray in 2003 were not performed with due care and skill. The relevant services are said to be the provision of the May 2003 report and the provision of advice on the question whether it would be reasonable to install a single test row of panels rather than installing the recommended quantity of panelling immediately. A long list of particulars is given for why the services were not performed with due care and skill. Essentially, though, what is alleged is that Wilkinson Murray did not understand the acoustic properties of the tunnels and, for that reason, made incorrect recommendations about the amount of sound absorbent material that it would be necessary to install in order to meet the reverberation specification. It is also alleged that Wilkinson Murray engaged in misleading or deceptive conduct. The relevant conduct is said to be the representations alleged to have been made in cls 3.2(2)(a), 3.2(2)(b) and 3.2(2)(c) of the Consultancy Agreement (that the services would be free from defects in design (cl 3.2(2)(a)), that they would be suitable for their intended purpose and of good quality (cl 3.2(2)(b)) and satisfy the requirements of the Works Brief (cl 3.2(2)(c))) and representations in the report that the acoustic absorption could be located in a single band in any position in the tunnel and that, to best meet the intended purpose, the acoustic absorption should be located in two bands, one on each side, at a height approximately midway between the wheels and the carriage windows.
2. The second limb relates to the services provided in 2007. Those services consist of the advice given concerning the extent to which the two rows of panels that were ultimately installed would meet the reverberation specification. It is alleged that those services were not performed with due care and skill. Again, a long list of particulars are given. Essentially, though, the complaint is that Wilkinson Murray used inappropriate testing procedures. In particular, it used RT20 to derive RT60 when it should have used RT30; and it used the distances between sound source and receiver that were close to zero when it should have used a range of distances up to 20 m. It is also alleged that Wilkinson Murray engaged in misleading or deceptive conduct. The allegations based on cls 3.2(2)(a), 3.2(2)(b) and 3.2(2)(c) are repeated, although it is difficult to make much sense of those allegations in this context. To the extent that those clauses contained representations, those representations were made years earlier. UGL Rail alleges that Wilkinson Murray made a number of other representations. Those representations, in substance, are:

The 2003 services

1. There is a question of how it could be said that Wilkinson Murray breached a duty it owed to UGL Rail in respect of the 2003 services when those services were provided to Alstom. It is true that Alstom's rights under the Consultancy Agreement were assigned to UGL Rail. However, Alstom did not purport to assign any claim it may have had for negligence or under the TPA; and there is no evidence that Alstom had suffered any loss as a consequence of the breach of duty. This question was touched on by Wilkinson Murray in its final written submissions, although it was never seriously pursued. In my opinion, the answer to the question is to be found in the way in which UGL Rail puts its case. UGL Rail maintains that, as a consequence of the assignment of the rights under the Consultancy Agreement and Wilkinson Murray's consent to the assignment, UGL Rail was entitled to rely on advice given by Wilkinson Murray prior to the assignment; and that is what it did. I deal with the question of reliance below. However, it seems to me that, as a consequence of what happened, Wilkinson Murray made the same promises to UGL Rail as it did to Alstom in respect of the advice that it had given. In giving that advice in the circumstances it did, it owed a duty of care not only to Alstom but to any assignee of Alstom's rights; and if it engaged in misleading or deceptive conduct in 2003, the only question is whether UGL Rail relied on that conduct in 2007.
2. As to the question whether Wilkinson Murray breached a duty that it owed, in my opinion, any acoustic engineer acting with reasonable care and skill would have appreciated that a circular tunnel with a length of approximately 13 km was likely to have unusual acoustic properties. Appreciating that fact, such an engineer who was unfamiliar with the acoustic properties of tunnels would have undertaken some research on that topic before making recommendations on the sound absorbent material to be installed in a tunnel as a means of achieving specified reverberation times. Both Professor Kang and Dr Burgemeister agreed that it was important for a consultant acoustic engineer to be aware of current theory for design and that, if faced with an unfamiliar space, it was important for the consultant to undertake research or seek advice. Mr Murray conceded in cross-examination that that was the position. He gave the following evidence: Q. I take it that you agree that in order to start designing for such an unusual space your company would need to become familiar with the type of space you were dealing with? A. Yes. Q. And I take it the best way to become familiar would be to undertake some research so as to discover what fellow engineers in Australia and around the world designing for this type of space were doing? A. Yes, probably.

The 2007 services

1. The 2007 services have two components. The first is the testing of the various configurations of sample panelling. The second is the recommendations that Wilkinson Murray actually made. There is an obvious connection between the two since the first drove the second. However, it will be helpful to consider them separately.
2. Wilkinson Murray submits that the 2007 services fell outside the scope of the Consultancy Agreement, that it owed no duty of care in relation to the provision of those services and that it did not engage in misleading or deceptive conduct in connection with them.
3. In support of the first contention, Wilkinson Murray submits that there is nothing in the Consultancy Agreement that contemplated a "test and see" approach. In its submission, the agreement certainly did not contemplate a test and see approach where there were restrictions placed on what could be done because many of the services had already been installed in the tunnel with the result that there was limited space for additional acoustic panelling. What the Consultancy Agreement contemplated was the provision of a concept design and the testing of that design once it had been installed.
4. In support of the second contention, Wilkinson Murray submits that UGL Rail has not satisfied the requirements of s 5B of the CLA. That section provides: (1) A person is not negligent in failing to take precautions against a risk of harm unless: (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things): (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm.
5. In my opinion, there is no merit in the suggestion that the work performed by Wilkinson Murray in 2007 did not fall within the scope of the Consultancy Agreement. It is true that what was actually done by Wilkinson Murray did not correspond precisely to the three stages set out in the Specification. However, the definition of "Services" is not limited to that work. It includes "such other services as would ordinarily be provided by a professional consultant exercising all due skill and expertise in the performance of services such as or similar to the Services in connection with a project such as or similar to the Project". The work done in 2007 by Wilkinson Murray falls within that description. It was part of the services provided by Wilkinson Murray to assist UGL Rail to determine what quantity of acoustic panelling should be installed in the tunnels so as to meet the reverberation specification. That work went to the heart of the work that Wilkinson Murray was engaged to perform.

Causation

1. Section 5D of the CLA provides: (1) A determination that negligence caused particular harm comprises the following elements: (a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and (b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability). (2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. (3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent: (a) the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and (b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest. (4) For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.
2. Section 5A(1) of the CLA provides: This Part applies to any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise. The Part to which s 5A(1) refers includes s 5D. Therefore, s 5D must be applied in any case to which Pt 1A of the CLA applies: Adeels Palace v Moubarak [2009] HCA 48; (2009) 239 CLR 420 at [48].
3. Section 5D reflects a "structural approach" to the question of causation (Zanner v Zanner [2010] NSWCA 343; (2010) 79 NSWLR 702 at [4]) by separating causation into two elements: "factual causation" and "scope of liability": Adeels Palace v Moubarak at [42]; Wallace v Kam [2013] HCA 19; (2013) 250 CLR 375 at [12]; Paul v Cooke [2013] NSWCA 311; (2013) 85 NSWLR 167 at [83]. The distinction drawn in s 5D(1) between factual causation and scope of liability "should not be obscured by judicial gloss": Wallace v Kam at [14].
4. Section 5D(1)(a) involves the determination whether the negligence complained of was "a necessary condition of the occurrence of harm", which involves nothing more or less than the application of the "but for" test of causation: Wallace v Kam at [14]; Strong v Woolworths [2012] HCA 5; (2012) 246 CLR 182 at [18]; Adeels Palace Pty Ltd v Moubarak at [45]. The effect of s 5(2) is that there are some "exceptional" cases where "legal causation is established even though the plaintiff cannot prove that the defendant's negligence was a necessary condition of the occurrence of the harm": Paul v Cooke at [84]. In those cases, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party: s 5D(2).

Did UGL Rail rely on Wilkinson Murray's advice?

1. Wilkinson Murray submits that UGL Rail has not established that it relied on Wilkinson Murray's advice. If it had relied on the 2003 advice, it would have installed two rows of panels on opposite sides of the tunnel instead of the single row of test panels it did. Similarly, Wilkinson Murray submits that UGL Rail did not rely on the 2007 advice. If it had done so, it would have installed three rows of panels, one of which would have been on the opposite side of the tunnel to the other two.
2. In considering the question of reliance, it is necessary to identify the loss in respect of which UGL Rail sues. That loss is the loss arising from the service of the defect notice in respect of the failure to meet the reverberation specification and THJV's claim that UGL Rail was responsible for that loss. The loss arose because the acoustic panelling installed by UGL Rail was inadequate. The question, then, is whether, in installing the panelling it did, UGL Rail relied on the advice given by Wilkinson Murray and whether, had it been given non-negligent advice, it would have acted on that advice so as to avoid the loss it says arises from service of the defect notice. If UGL Rail would have acted in the same way whether it received negligent or non-negligent advice, then it cannot be said that the negligent advice was a necessary condition of the loss in respect of which UGL Rail sues. The question of reliance in this case, then, depends not only on what UGL Rail did, but on what it would have done if it had been given non-negligent advice: see Tanna v Deutsche Bank (Asia) AG [1996] NSWSC 408 (upheld on appeal in Tanna v Deutsche Bank (Asia) AG (Court of Appeal (NSW), 15 September 1998, unrep)). That, in turn, raises the question of what form the non-negligent advice would have taken. It is convenient to start with that question. This is not a case where Wilkinson Murray, in order to avoid liability for negligence or for misleading or deceptive conduct, could simply have remained silent.
3. UGL Rail submits that, if Wilkinson Murray had exercised reasonable care and skill in 2003, it would have engaged in computer modelling using a software package such as Odeon and, if it had done so, it would have concluded that it was necessary to install 3000 mm of acoustic panelling per metre of tunnel (with the same absorption coefficients as the panelling actually installed), part of which would have to have been located on the opposite side of the tunnel. In making that submission, UGL Rail relies on extensive modelling conducted by Professor Kang using Odeon software. The results of Professor Kang's work are that 3000 mm of panelling was necessary and that it could be installed in a number of configurations. The configuration recommended by Professor Kang based on the work that he did that most closely resembles what was actually done was described by him as Simulation 1. In that simulation, 2000 mm of acoustic panelling was placed on the right-hand side of the tunnel roughly in the position of the panelling actually installed by United. A further 1000 mm was installed at a position approximately 180 degrees around the circumference of the tunnel from the 2000 mm of panelling. According to Professor Kang's simulation, if that amount of panelling had been installed in those positions, the reverberation specification would have been met at all frequencies when measured by reference to RT30 and at distances between sound source and receiver along the track ranging from 0 m to 20 m.

The scope of Wilkinson Murray's duty in 2007

1. Wilkinson Murray submits that the scope of its duty did not extend to the loss in respect of which UGL Rail sues - that is, the losses arising from non-compliance with the reverberation specification. In making that submission it points to a number of factors, including the following:

• UGL Rail did not follow Wilkinson Murray's advice in 2003;
• UGL Rail elected not to obtain advice from Wilkinson Murray on the design of the metal panels;
• Wilkinson Murray's 2003 report was irrelevant to what UGL Rail decided to do in 2007;
• UGL Rail did not accept Wilkinson Murray's advice in 2007 and decided to install panels throughout the tunnel before that precise configuration had been tested;
• UGL Rail did nothing for eight months after it was told that the tunnels did not comply with the specifications;
• the fees paid to Wilkinson Murray were relatively small;
• the costs of appropriate software to do computer modelling would have been greater than the fees charged by Wilkinson Murray;
• the Consultancy Agreement contemplated that Wilkinson Murray would only obtain professional indemnity insurance with a limit of $10 million;
• Alstom allowed approximately $9 million to install acoustic panelling and the evidence suggests that it spent less than that doing so;
• UGL Rail and UGL Infrastructure are related. The reality is that they made a sizeable profit out of what happened.

1. The last of these points raises questions concerning the reasonableness of the settlement and is dealt with later. A number of the other points are not correct. For example, on the findings I have made, it is not correct to say that UGL Rail did not rely on Wilkinson Murray's 2007 advice. But those points aside, it is difficult to see how any of the points made by Wilkinson Murray establish that it is inappropriate for the scope of its liability to extend to losses suffered by UGL Rail as a consequence of the failure of the tunnels to meet the reverberation specification. That was the very issue on which Wilkinson Murray was engaged to advise. It had expertise in that area which UGL Rail did not. It was paid a fee for the advice it gave. There is no merit, in those circumstances, in the suggestion that the scope of its duty did not extend to avoiding the very harm that its advice was intended to prevent.

The estoppel defence and the implied term

1. Wilkinson Murray submits that, as a result of what happened, the parties adopted a common assumption in about 2003 that the design work undertaken by Wilkinson Murray was complete and that the parties would proceed by installing a quantity of acoustic material determined by them, which would then be tested. By not allowing Wilkinson Murray to complete its design work, it is alleged that UGL Rail is estopped from relying on the Consultancy Agreement. Put like this, Wilkinson Murray's estoppel defence echoes its claim that the services provided in 2007 were not provided in accordance with the Consultancy Agreement.
2. Alternatively, Wilkinson Murray submits that it was an implied term of the Consultancy Agreement that each party would do all things necessary to enable the other party to have the benefit of the contract and that UGL Rail breached that implied term in the following respects:

• it contracted with Wilkinson Murray to prepare a Concept Design by June 2003, a Detailed Design by December 2003 and a Final Design by April 2004;
• it installed half the quantity of acoustic material recommended by Wilkinson Murray and then adopted a "test and see" approach;
• it treated the May 2003 report as a Final Design;
• it installed other services in the tunnels before conducting any tests and did not plan for those tests when installing those services;
• it told Wilkinson Murray that it was not possible to install a third row of panels on the other side of the tunnel. Put like this, the claim echoes Wilkinson Murray's complaint that UGL Rail did not follow its advice.

1. Neither of these defences has any merit.
2. As to the estoppel defence, Wilkinson Murray does not point to any evidence which establishes the existence of the common intention; and such a case was never put to UGL Rail witnesses. Contrary to Wilkinson Murray's contention, it did provide what was intended to be a final design in 2003. Alstom elected not to install panels in accordance with that design but, with Alstom's acquiescence, installed a test row of half the recommended panelling. For the reasons given earlier, the services provided by Wilkinson Murray in testing that test row were performed in accordance with the Consultancy Agreement. Wilkinson Murray breached its obligations under that agreement by testing and reporting on the test results in the way that it did. None of that could give rise to an estoppel or could relieve Wilkinson Murray of its obligation to exercise reasonable care and skill in the advice that it gave.

The reasonableness of the settlement

1. A person who settles a claim made by a third party which arises from a breach of a contractual duty owed to the person is generally entitled to recover from the contracting party in breach the amount of the settlement as damages for breach of contract provided the settlement is reasonable. This principle can be traced back at least to the 19th Century, but it has its modern genesis in the decision of the English Court of Appeal in Biggin & Co Ltd v Permanite Ltd [1951] 2 KB 314 ("Biggin"). In that case, the plaintiff bought a quantity of roofing adhesive called Permasec from the defendant and, to the knowledge of the seller, resold it to the Dutch Government to be used in reconstruction work following the end of the Second World War. The adhesive was defective. The Dutch Government commenced arbitration proceedings against the plaintiff, which settled the claim. The plaintiff then sought to recover the amount of the settlement from the defendant. At first instance, Devlin J held that it was not entitled to do so on the basis that the settlement was not a foreseeable consequence of the claim. Rather, it was a voluntary act of the plaintiff. He directed an enquiry into the actual damages caused by the defective adhesive. The Court of Appeal disagreed. It held that the settlement fixed the damages that the plaintiff was entitled to recover from the defendant for breach of contract and gave judgment for that amount in favour of the plaintiff.
2. The reasoning of the Court of Appeal has been criticised: for discussion, see W Courtney, "Settlements Following Breach of Contract" (2013) LMCLQ 157. However, the conclusion reached by the Court of Appeal is generally accepted as being correct; and it was followed, albeit in somewhat different circumstances, by a majority of the High Court in Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 ("Unity Insurance"). In that case, the plaintiff arranged insurance through the defendant broker. The broker failed to disclose the plaintiff's claims history fully to the insurer. The insurer denied liability in respect of a claim on the basis of the non‑disclosure. The insured commenced proceedings against both the insurer and broker. It settled with the insurer and then claimed against the broker the difference between the amount of the settlement and the amount that it would have recovered if the broker had correctly disclosed its claims history. In Biggin, the question was whether the settlement determined the amount of the damages. In Unity Insurance, the question was whether the difference between the settlement and the amount that would have been recovered absent the breach determined the amount of the damages. The majority (Brennan CJ, McHugh and Hayne JJ; Gummow and Kirby JJ dissenting) held that it did. Just as it was not necessary for the plaintiff in Biggin to prove that the Dutch Government was entitled to succeed against it and the amount for which it was entitled to succeed, it was not necessary for the insured in Unity Insurance to prove that, if it had sued the insurer to judgment, it would have failed or recovered no more than the amount for which it settled.

Damages

1. Wilkinson Murray submits that UGL Rail put its case on an all or nothing basis. Having failed to prove the damages it claims, it was entitled to nothing.
2. I do not accept that submission. It is clear from the decision in the Court of Appeal in BNP Paribas v Pacific Carriers Ltd that, if the court concludes that a settlement is not reasonable, it should nonetheless award an amount that reflects a reasonable settlement. For reasons I have explained, the position in the present case is more complicated because the amount that reflects a reasonable settlement as between UGL Rail and THJV does not provide a reasonable basis for determining Wilkinson Murray's liability. But that does not make the approach adopted by the Court of Appeal inapplicable. It is still possible to ask what amount reasonably reflects the loss that UGL Rail suffered as a consequence of Wilkinson Murray's negligence. That loss consists of two components. First, there are the additional costs that UGL Rail would have incurred if it had done the work necessary to comply with the reverberation specification at the time it did the work necessary to comply with the TIDC solution compared to the costs it would have incurred if it had done that work originally. Second, there are costs that it incurred in resolving the dispute concerning the failure to meet the reverberation specification. It is true that UGL Rail did not actually incur costs of the first type. However, it did incur costs of implementing the TIDC solution, which were far greater than those costs; and in implementing the TIDC solution it was relieved of any of the costs of complying with the reverberation specification. Consequently, I cannot see why UGL Rail should not be entitled in principle to recover costs of that type.
3. As to the first type of costs, neither party sought to lead evidence of what those costs might be. However, I am satisfied that UGL Rail would have incurred some costs of that type. It seems clear that the costs of installing acoustic panels would be greater in conditions where UGL Rail had limited access to the tunnels and was required to remove all its equipment each day compared to the position where it had unlimited access and could leave its equipment in place and would have been in a position where it could have installed all the required panelling at one time. In those circumstances, the Court must do the best it can to assess damages on the evidence it has, even if that involves a degree of guess-work: Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J, at 125 per Deane J; McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377 at 411-2 per Dixon and Fullagar JJ; Howe v Teefy (1927) 27 SR (NSW) 301 at 306 per Street CJ.

1. The total length of the tunnels is 25,397 m. Excluding stations, the total length is 24,037 m. Assuming that panelling was installed throughout the tunnels other than in the stations, and assuming that 1.36 m2 of acoustic material was installed per metre of tunnel, the total amount of acoustic material that was installed as part of the installation of the first two rows was 24,037 x 1.36, making 32,690.32 m2. Consequently, the cost per square metre of installing the panelling was $2,123,311.29/32,690.32, making $64.95 per square metre.
2. Tendered during the course of the hearing was a spreadsheet setting out the actual costs incurred by UGL Infrastructure of installing the acoustic panelling that comprised the TIDC solution. The following items in that spreadsheet appear to be relevant to the costs of installing that panelling: Labour costs:

Project management and supervision $882,708.81 Labour crew supervision 46,804.43 Engineering and drafting 47,996.19 Finance and administration 183,033.50

Open side wall panels 769,021.98 Behind tray wall panels 487,072.27 Below cable tray cladding 391,078.18 Above walkway panels 139,763.58 Consultants 2,790.00 $2,950,268.94

Small tools 170,924.32 PPE and medicals 39,037.18 Office consumables 18,091.79 Plant and equipment hire 78,134.94 Equipment enhancements for installation 68,632.29 Site vehicles and fuel 790,435.48 Telecommunications and IT 15,617.15 Site cleaning and security 46,356.42 $1,227,229.57

1. Allowing an amount of 2.2 per cent for off-site costs, the off-site costs were $91,904.97 (that is, ($2,950,268.94 + $1,227,229.57) X 0.022) and the total costs of installing the wall panels was $4,269,403.48 (that is, $2,950,268.94 + $1,227,229.57 + $91,904.97).
2. According to the Settlement Deed, UGL Rail was required to install the following amount of acoustic panelling: Zone Location Panel Height DN Tunnel Extent [m] UP Tunnel Extent [m] Panel Type A (Existing Panels) B Below Existing Panels 0.6m 7,318 4,505 Perforated metal-clad glasswool (2off) C Below Walkway 0.6m 7,276 7,989 Perforated metal-clad glasswool (1 off) 0.3m 9,701 10,652 Fibreglass fabric-clad glasswool (2 off) D Above Walkway 0.6m 2,205 117 Perforated metal-clad glasswool (2off)

On that basis, UGL Rail was required to install the following amount of acoustic panelling in the tunnels: Zone B (7,318 + 4,505) x 0.6 x 2 = 14,187.6 Zone C(1) (7,276 + 7,989) x 0.6 = 9,159.0 Zone C(2) (9,701 + 10,652) x 0.3 x 2 = 12,211.8 Zone D (2,205 + 117) x 0.6 x 2 = 2,786.4 Total 38,344.8

1. Consequently, the costs of installing one square metre of effective panelling in 2009 as part of the TIDC solution was $4,269,403.48/38,344.8, which comes to $111.34 per square metre. On that basis, the additional cost of installing panelling in 2009 was $46.39 per square metre (that is, $111.34 - $64.95).
2. As I have said, according to Professor Kang, it was necessary to install 3000 mm per metre of acoustic material throughout the length of the two tunnels in order to meet the reverberation specification. Approximately 1360 mm had been installed. Consequently, it was necessary to install a further 1640 mm. Using the calculations set out above, the additional costs of installing that panelling would have been 1.64 x 24,037 x $46.39, making $1,828,725.35.
3. Although the figures I have used are very precise, the calculations necessarily involve an approximation. In particular, they make no allowance for the different costs of installing panelling in different parts of the tunnel. They also make no allowance for the efficiencies that might have been achieved if all the panelling had been installed at the same time. There is, however, no means of knowing what allowance, if any, should be made for considerations such as those. In those circumstances, in my opinion, the most reasonable approach is not to try to adjust the figure I have arrived at to take account of those factors.
4. The second type of costs are the costs that UGL Rail became liable to pay TIDC and THJV in connection with the dispute and its own legal costs of resolving the dispute. Those costs comprise the following: TIDC's costs of the dispute $1,000,000.00 THJV's costs of the dispute $867,390.84 THJV's supervision costs $1,251,048.33 UGL Rail's legal costs $358,717.85

1. It is not in dispute that UGL Rail incurred those costs. It became liable to pay the first three types of costs under the Settlement Deed. It is not disputed that its own legal costs in connection with the dispute were $358,717.85. The question is whether UGL Rail's liability for those costs can be said to be caused by Wilkinson Murray's breach of duty.
2. In my opinion, it is appropriate in principle to hold Wilkinson Murray liable for each category of these costs. Wilkinson Murray was responsible for giving UGL Rail advice to ensure that UGL Rail knew what amount of acoustic panelling it had to install in the tunnels to meet the reverberation specification. If it gave negligent advice with the consequence that UGL Rail installed the incorrect amount of panelling, it was to be expected that TIDC would serve a defect notice on THJV and that THJV would make a claim against UGL Rail, which is what happened. It is to be expected that each would incur costs in connection with that dispute and that TIDC would seek to recover its costs under the indemnity given to it by THJV and that THJV would seek to recover those costs and its own from UGL Rail. It is also to be expected that, if rectification work had to be done, that would require THJV to supervise that rectification work and it is to be expected in those circumstances that THJV would seek to recover the costs of supervision from UGL Rail. The relationship between TIDC, THJV and UGL Rail was known to Wilkinson Murray and it must have been within Wilkinson Murray's reasonable contemplation that claims of that type would be made if it gave negligent advice.
3. If the tunnels had complied with the reverberation specification, the likelihood is that no claim would have been brought against UGL Rail. I have already found that UGL Rail would have taken steps to comply with the reverberation specification if it had been given the correct advice by Wilkinson Murray. Consequently, UGL Rail would not have incurred the legal costs it did but for Wilkinson Murray's negligence. It is true that the resolution of the claim against UGL Rail became bound up with issues concerning in-car noise. However, from UGL Rail's point of view, the resolution of issues concerning in-car noise was the mechanism by which it resolved its liability for beach of the reverberation specification. There is no reason to think that the costs of resolving that dispute in some other way would have been less expensive. Consequently, in my opinion, it is appropriate to hold Wilkinson Murray responsible for all the legal costs incurred by UGL Rail in resolving the dispute.

Other defences

1. Wilkinson Murray raises three other defences to UGL Rail's claim. First, it relies on a limitation defence in respect of the 2003 advice. Second, it submits that UGL Rail's claim is an apportionable claim and should be reduced to take account of UGL Rail's responsibility for the loss in accordance with Pt 4 of the CLA or Pt VIA of the TPA. Third, it submits that UGL Rail was guilty of contributory negligence.

Limitation defence

1. Having regard to the conclusions I have reached, Wilkinson Murray's limitation defence does not arise. However, in case those conclusions are wrong, I should say something about it.
2. The proceedings were commenced on 14 April 2011. It is not in dispute that the limitation period in respect of a cause of action for breach of contract and for negligence is six years from the time that the relevant cause of action first accrued: see Limitation Act 1969 (NSW), s 14. It was not alleged that a claim under the TPA was statute barred. A cause of action for breach of contract first accrues when the breach occurs: Gibbs v Guild (1881) 8 QBD 296 at 302 per Field J; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 583 per Deane J; Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305 at 308 per Nicholls LJ. In the present case, the breach must have occurred no later than the end of May 2003 when Wilkinson Murray gave its advice. The proceedings were not commenced until 14 April 2011, well outside the six year limitation period. For that reason, the claimed based on breach of contract is statute barred. On the other hand, a cause of action based on a contractual indemnity first accrues on the date when the costs and expenses in respect of which the indemnity is given were first ascertainable: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 532-3. And a cause of action in negligence first accrues when the plaintiff suffers actionable damage: Hawkins v Clayton; Commonwealth v Cornwell [2007] HCA 16; (2007) 229 CLR 519 at [36]. The costs and expenses in respect of which the indemnity was given were not ascertainable before the Settlement Deed was entered into. UGL Rail did not suffer actionable damage at least until it relied on Wilkinson Murray's advice in 2007. In both cases, it is clear that the limitation period had not expired.

Apportionment

1. Part 4 of the CLA relevantly provides: 34 Application of Part (1) This Part applies to the following claims (apportionable claims): (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law. … (2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. … 35 Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.
2. Similar provisions are contained in Pt VIA of the TPA.
3. In its List Response to Amended Technology and Construction List Statement, Wilkinson Murray pleads that UGL Rail's claim is an apportionable claim and that UGL Rail is a concurrent wrongdoer within the meaning of s 34(2) with the result that its claim should be reduced to an amount reflecting that proportion of the damage or loss claimed that the Court considers just having regard to the extent of Wilkinson Murray's responsibility for the damage or loss.

Contributory negligence

1. In the alternative, Wilkinson Murray contends that the damages claimed by UGL Rail should be reduced on the ground that UGL Rail was guilty of contributory negligence, relying on s 9 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) or, in the case of the claim based on the TPA, s 82(1B) of the TPA. In its List Response to Amended Technology and Construction List Statement, Wilkinson Murray pleads that UGL Rail was guilty of contributory negligence for various reasons, including the following: 1) It failed to have regard to the advice and recommendations set out in the 2003 report; 2) It failed to provide TIDC or its acoustic advisors with Wilkinson Murray's reports; 3) It failed to verify the advice it was given; 4) It failed to ascertain whether TIDC and THJV would be satisfied if targets were met at most frequencies and were within 5 to 10 per cent of the specification at other frequencies; 5) It failed to arrange testing at a time when additional panelling could be installed in the tunnels and failed to configure the services in the tunnel so that additional panelling could be installed; 6) It failed to ensure that testing of the panelling was carried out in a way that was suitable for a tunnel rather than a room; 7) It installed panelling when it knew that that panelling may not be sufficient to meet specification.
2. In my opinion, none of these matters establish that UGL Rail was guilty of contributory negligence. As to the third and sixth points, UGL Rail did not have expertise in acoustic engineering. It is for that reason that it engaged Wilkinson Murray. It was entitled to rely on the advice it received from Wilkinson Murray concerning the amount of panelling that should be installed and how the testing should be carried out. Accordingly, it had no obligation to verify the advice that it received or to take steps to ensure that the testing was carried out properly. It relied, and was entitled to rely, on Wilkinson Murray to do those things.
3. As to the first and seventh points, UGL Rail's failure to rely on advice given by Wilkinson Murray, if there was such a failure, did not amount to contributory negligence. Either UGL Rail relied on the advice it received or it did not. If it did, then it has a claim. If it did not, then it does not; and the question of contributory negligence does not arise.
4. As to the second point, no reason was advanced by Wilkinson Murray for why UGL Rail should have passed its reports on to TIDC. UGL Rail's obligations were to THJV. Those obligations were to install sufficient panelling to meet the reverberation specification in the Works Brief. It was not part of that obligation to pass advice it received in order to comply with that obligation on to TIDC.

Orders

1. There should be judgment in favour of UGL Rail in the sum of $3,593,600.29.
2. It was not suggested that GST was payable on any amount that UGL Rail might be entitled to recover and no claim for GST was made on the amount claimed by UGL Rail. Consequently, I can see no reason to allow GST on the amount of the judgment.
3. UGL Rail claims interest from the date it entered into the Settlement Deed to the date of judgment. In my opinion, interest should run from the date it paid the amounts payable by it in respect of the settlement. That date or those dates do not appear to be clear from the evidence, although it seems that all payments had been made by the end of July 2009. Consequently, in my opinion, it is reasonable to allow interest from 31 July 2009 to the date of judgment. On that basis, UGL Rail is entitled to interest in the amount of $1,465,425.88.
4. I will hear the parties in relation to costs.
5. Consequently, the orders of the Court are: 1. Judgment for the plaintiff in the sum of $5,059,026.17; 2. Stand the matter over to a date to be fixed with my Associate for the hearing of any argument concerning costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 March 2015