Winslow Constructors v Head, Transport for Victoria [2020] VSC 790

1 By originating application to enforce an award filed 26 June 2020, the applicant ('Winslow')[1] seeks:

1. an order under section 35 of the Commercial Arbitration Act 2011 that the following awards be enforced:

(a) the Second Partial Final Award dated 7 April 2020, further or alternatively, the Third Partial Final Award dated 5 May 2020; and

(b) the Fifth Partial Final Award dated 16 June 2020 (together, the Awards);

1. interest at 10% on the sums awarded in the Awards from the due dates for payment in the Awards, pursuant to either the directions in the Third and Fifth Partial Final Awards, alternatively, statute;
2. an order that the Respondent pay the Applicant's costs of and incidental to this proceeding; and

4. such further orders as the court considers appropriate.

2 By contract number 8874 dated 20 November 2014 ('the Contract') between Winslow and the Roads Corporation trading as VicRoads, now the respondent ('the Department'),[2] Winslow was contracted to, in summary, reconfigure an existing unlined landfill, construct a compacted clay liner ('CCL'), relocate existing stockpiles of cement kiln dust ('CKD') (a contaminant) into landfill and cap the landfill at Mt Duneed, Victoria.

3 On 24 August 2018, after disputes arose between Winslow and the Department, Winslow gave a notice of referral to arbitration pursuant to General Condition ('GC') 45 of the Contract.

4 A dispute arose as to the appointment of an arbitrator but, by orders made on 12 December 2018, Croft J appointed Dr Richard Manly QC as the sole arbitrator.

5 The arbitration was conducted on the basis of the following documents:

(a) Winslow's 'Amended Points of Claim' dated 31 July 2019;

(b) Winslow's 'Further and Better Particulars of the Claimant's Points of Claim' dated 27 March 2019;

(c) the Department's 'Points of Amended Defence to Amended Points of Claim and Amended Counterclaim' dated 1 November 2019; and

(d) Winslow's 'Points of Reply and Defence to Amended Points of Defence and Amended Counterclaim' dated 11 November 2019.

6 The arbitration hearing was conducted over eight days between 25 November 2019 and 4 December 2019 as an agreed stop clock hearing.

7 On 13 December 2019, the parties exchanged written closing submissions, and on 18 December 2019, the parties exchanged written closing submissions in reply.

8 On 19 December 2019, the parties presented oral closing submissions.

9 In response to a request by the arbitrator, the parties submitted the following list of questions which they required the arbitrator to answer:

1. Are the Superintendent's decisions under GC 35.4 as regards extensions of time subject to review by the Tribunal, and if so, on what basis and to what extent?
2. What, if any, are Winslow's EOT entitlements, having regard to the following:

(a) the alleged time bars in GC 35.4 and/or GC 48, including whether they apply to the EOT claims and if so, are they enforceable?

(b) if one or both applied and are enforceable, for each EOT, did Winslow comply with the relevant notice requirements of GC 35.4 and/or GC 48?

(c) for each EOT, was Winslow critically delayed due to:

(i) matters that entitle it to an EOT (that is, in essence, an act or omission not caused by Winslow, such as would permit it to claim an EOT under GC 35.4)?

(ii) any breach of the Contract or act or omission by VicRoads, the Superintendent or the employees, professional consultants or agents of VicRoads, such as to permit Winslow to claim delay costs under GC 35.4?

(d) if the answer to Question 2(c) is 'yes', what is the start date and end date of the critical delay (calculated in calendar days)?

3. What is the applicable (adjusted) Date for Practical Completion?

Delay costs

1. Are the Superintendent and/or VicRoads' decisions under GC 35.4 as regards the extra costs of delay subject to review by the Tribunal and if so, on what basis and to what extent?
2. What is Winslow's delay costs entitlement (if any), having regard to the following:

(a) the alleged time bars in GC 35.4 and/or GC 48, including whether one or more of them applies to the claims and if so, is that time bar still enforceable?

(b) GC 34.5, 35.4, 48?

(c) Schedule 15?

1. What, if any, is Winslow's entitlement to further payment for delay costs under Schedule 15, over and above amounts already paid by VicRoads?
2. What, if any, is Winslow's entitlement to further payment for delay costs under Schedule 5, over and above amounts already paid by VicRoads?

1. Are the Superintendent's decisions as regards the Winslow's 'disputed variations' subject to review by the Tribunal and if so, on what basis and to what extent?
2. If the answer to Question 8 is 'yes', then in respect of each disputed variation set out in Amended Schedule C to the APOC:

(a) did the work the subject of the claim form part of the Winslow's scope of work under the Contract?

(b) Did VicRoads direct the work to be carried out?

(c) What, if any, is Winslow's entitlement to payment for each disputed variation claim?

SC 17.3

1. Are Winslow's claims capped in the amounts specified in Winslow's Practical Completion payment claim, in accordance with SC 17. 3, and if so, what is the amount of that cap?

1. What is VicRoads' entitlement to liquidated damages (if any) and is it enforceable?

1. Is Winslow entitled to the return of security provided by Winslow to VicRoads under the Contract?
2. If 'yes' to Question 12, on what date was VicRoads obliged to return the said security?

1. Is either party entitled to the payment of interest and if so, at what rate and how much?

10 On 13 March 2020, the arbitrator published the 'Interim Award' (later renamed 'the First Partial Final Award'), which dealt with 13 of the 14 agreed questions.

11 By email of 17 March 2020 to Winslow's solicitors, the Department's solicitors stated:

We are in the process of reviewing the Interim Award and seeking instructions about interest and costs. We will contact you and Dr Manly QC when we've formed a view about how we think those issues should be resolved.

12 By email of 23 March 2020 to Winslow's solicitors, the Department's solicitors stated:

Further to my email below, please see attached the directions that we wish to propose for dealing with costs and interest. In summary, we think the process should be as follows.

First, the parties may request the Tribunal to correct any errors (section 33(1)(a) of the Commercial Arbitration Act 2011 (Act)) in the Interim Award (proposed directions 1 and 2). Dr Manly will then make any correction to the Interim Award.

Second, the parties are to deliver submissions as to any further award to be made by the Tribunal under section 33(5) of the Act about interest and costs (both in terms of liability and the amount to be paid) together with any evidence in support of the parties' respective positions (proposed directions 3 to 6). Once the parties have delivered their submissions and evidence, a hearing on the question of costs and interest will be held - but given the current situation, that might need to happen via teleconference or videoconference. The Tribunal can then deliver a further award dealing with these two issues.

Please advise whether Winslow agrees to proceed on this basis and whether it agrees to the proposed timeline.

13 By emailed letter dated 27 March 2020 to Winslow's solicitors, the Department's solicitors stated:

We do not agree with your assertion that Winslow was the successful party in this proceeding. Winslow's claims have largely failed. While the Department did not recover 100% of the liquidated damages it claimed, the Interim Award on the whole represents a far better outcome for the Department on its counterclaim than the outcome for Winslow on its claims.

14 Following a request by the parties to make corrections to the First Partial Final Award pursuant to s 33 of the Commercial Arbitration Act 2011 (Vic) ('the Act'), the arbitrator accepted the corrections and, on 7 April 2020, published the 'Second Partial Final Award' ('the Second Award').

15 By the Second Award, the arbitrator determined, in summary, as follows:

1. WC is entitled to EOT of 569.45 working days to the Date for Practical Completion such that the extended Date for Practical Completion is 28 July 2017;
2. WC is entitled to recover from VR delay damages in the total amount of $482,272.94;

iii) WC is entitled to recover from VR $271,844.20 for Variations;

iv) VR is entitled to recover from WC $245,431 for liquidated damages;

v) WC is presently not entitled to return of its security.[3]

16 On 5 May 2020, the arbitrator published the 'Third Partial Final Award regarding Interest' ('the Third Partial Final Award') and directed, pursuant to s 33F of the Act, as follows:

(a) By 12 May 2020, the Department pay Winslow the amount of $647,930.35, being the net amount due under the Second Award after set off.

(b) The Department pay interest on the amount at a daily rate of $142.01 from 6 May 2020 until the date of payment (if payment is made prior to 13 May 2020).

(c) In the event the Department fails to pay the amount due by 12 May 2020, it also pay compound interest on the amount at 10% per annum, together with accrued interest, until such time as payment is made in full.

17 On 8 May 2020, the parties exchanged submissions on costs, and on 22 May 2020, the parties exchanged reply submissions on costs.

18 By email of 12 May 2020 to the Department's solicitors, Winslow's solicitors demanded payment of the amounts due under the Third Partial Final Award.

19 By email of 13 May 2020 to Winslow's solicitors, the Department's solicitors stated:

Thank you for your email. The Department is aware of what was said in the Third Partial Final Award about interest. However, given the substantial issues arising with respect to costs, the Department will await the outcome of the hearing and award on the question of costs.

The Department reserves all of its rights.

20 On 29 May 2020, the Department served submissions entitled 'The Department's Response to New Matters Raised by Winslow in Reply'.

21 On 5 June 2020, the arbitrator published the 'Fourth Partial Final Award regarding Costs Liability' ('the Fourth Partial Final Award'), in which he determined that the Department was liable for Winslow's costs of the arbitration. He also agreed with the parties' requests for an award of a gross sum on account of the costs, following an exchange of some further materials.

22 On 9 June 2020, Winslow served submissions entitled 'Winslow's Further Submissions on Costs following delivery of the Fourth Partial Final Award', and on 11 June 2020, the Department served submissions entitled 'The Department's Response to Winslow's Further Submissions on Costs'.

23 On 16 June 2020, the arbitrator published the 'Fifth Partial Final Award regarding Costs Quantum' ('the Fifth Partial Final Award') and directed that the Department pay Winslow's gross costs of the arbitration, fixed in the total sum of $2,694,754.30 pursuant to s 33(b) of the Act, together with interest on any unpaid portion from 23 June 2020 at 10% per annum.

24 By email of 19 June 2020 to Winslow's solicitors, the Department's solicitors stated:

The Department is currently considering the Partial Awards, including the Fifth Partial Final Award dated 23 June 2020, made by Dr Manly QC. The Department is considering the reasons upon which each of the Partial Awards are based and we will write to you further about that once instructions have been received.

25 On 26 June 2020, Winslow filed the originating application in this proceeding.

26 By emailed letter of 13 July 2020 to Winslow's solicitors, the Department's solicitors referred to this application and stated:

The Department considers that the dispositive parts of the Second Partial Final Award in Winslow's favour ([1166(i)]-[1166)(iii)]) are not enforceable under the Act because the Tribunal failed to adequately state reasons on which those parts are based for the purposes of s 31(3) of the Act. This also affects the subsequent partial final awards because they are dependent on the Second Partial Final Award.

27 By email of 21 July 2020 to the Court, the parties requested that the matter be fixed for trial.

28 By email of 22 July 2020 to the parties, I directed that the Department identify the grounds in s 36 of the Act on which it relies, together with brief reasons.

29 By email of 22 July 2020 to the Court, the Department stated its grounds as follows:

The respondent resists recognition and enforcement of the Second Partial Final Award for failure to state reasons under s 36(1)(a)(iv) of the Commercial Arbitration Act 2011 (Vic). (The statutory obligation to state the reasons upon which the arbitral award is based being imposed by s 31(3) of the Act.) The respondent also resists recognition and enforcement of the Third Partial Final Award and the Fourth Partial Final Award because both are dependent on the enforceability of the Second Partial Final Award.

The respondent contends that the Second Partial Final Award (being the substantive award) reasons do not give reasons for the arbitrator's conclusions with respect to various extension of time, delay costs and variation claims. The following paragraphs are identified: [497], [678], [687] and [880] (EOTs 9, 20, 21 and 27); [606] and [612] (EOT 18); [620], [643], [653], [667], [854] and [902] (EOTs 13, 15, 16, 19, 22 and 35); [727] and [731] (EOT 33); [739] and [743] (EOT 34); [630], [767] and [912] (EOTs 14, 26 and 29); [699] (EOT 28); and [1082] (variation 6).

30 On 23 July 2020, I made the following orders by consent:

1. By 4:00 pm on 5 August 2020, the respondent file and serve any outline of written submissions and affidavits upon which it intends to rely in opposition to the applicant's application under s 35 of the Commercial Arbitration Act 2011 (Vic).
2. By 4:00 pm on 19 August 2020, the applicant file and serve any outline of written submissions and further affidavits upon which it intends to rely in reply.

31 On 6 August 2020, the Department filed its submissions opposing the enforcement of the awards.

32 On 26 August 2020, Winslow filed its submissions supporting the enforcement of the awards.

33 On 15 September 2020, the Department filed its submissions in reply.

34 On 21 and 22 September 2020, at the trial of this proceeding:

(a) Winslow relied upon the affidavits of Mr Dimitrios Ken Toumazou sworn 26 June and 26 August 2020; and

(b) the Department relied upon the affidavits of Mr Paul Benedict Woods sworn 5 August and 15 September 2020.

35 Winslow's tender was accepted by the Department on 20 November 2014. Pursuant to the Contract:

(a) the Department was to give Winslow possession of the site on or before 27 November 2014; and

(b) the original date for practical completion of the works was 24 weeks from the date of acceptance of the tender, being 7 May 2015, or any extended time granted or allowed by the Superintendent pursuant to GC 35.4.

36 Programming of the works was relevantly provided for in the following clauses of the Contract:

33.1 Construction Programme

If the Contract neither includes nor requires the Contractor to supply a construction programme showing the dates by which or the times within which the various stages or parts of the work under the Contract are to be executed or completed, the Superintendent may direct the Contractor to supply to him such a construction programme. The Contractor shall, within the time stated in the direction, supply to the Superintendent such a construction programme and the Contractor shall, subject to Clause 34, adhere to that construction programme unless a deviation therefrom is directed by the Superintendent pursuant to Sub-clause 33.2.

Where the Contract neither incudes nor requires the Contractor to supply a construction programme and the Superintendent has not directed the Contractor to supply to him such a construction programme the Contractor may, within a reasonable time after the date of acceptance of tender, supply a construction programme showing the dates by which or the times within which the various stages or parts of the work under the Contract are to be executed or completed. If such a construction programme is supplied by the Contractor he shall, subject to Clause 34, adhere to that construction programme unless a deviation therefrom is directed by the Superintendent pursuant to Sub-clause 33.2.

33.2 Deviation from Construction Programme

The Superintendent may from time to time direct a deviation from a construction programme included in the Contract or supplied by the Contractor pursuant to a requirement of the Contract or a direction of the Superintendent under Sub-clause 33.1 and, in any such event, the Superintendent may direct the Contractor to supply to him a further construction programme. The Contractor shall, within the time stated in any such direction, supply such a further construction programme.

Any such further construction programme shall have the effect and be subject to the same conditions as if it were a construction programme included in the Contract or supplied by the Contractor pursuant to a requirement of the Contract or a direction of the Superintendent under Sub-clause 33.1.

The supply of a construction programme or of a further construction programme under this clause shall not relieve the Contractor of any of his obligations under the Contract.

33.3 Order of Work

If a construction programme has not been provided pursuant to any preceding provision of this clause the Superintendent shall have full power to direct in what order and at what time the various stages or parts of the work under the Contract shall be performed.

33.4 Extra Costs

The Contractor shall not be entitled to any extra cost resulting from:

(a) a deviation from a construction programme directed by the Superintendent pursuant to Sub-clause 33.2; or

(b) a direction given by the Superintendent pursuant to Sub-clause 33.3;

unless the need for the deviation or the direction was due to an act, default or omission of the Corporation or the Superintendent.

37 Times for the commencement and completion of the works were relevantly provided for in the following clauses of the Contract:

35.4 Extension of Time for Completion

Where the Contractor is delayed in the execution of the Works by any cause arising out of any breach of the provisions of the Contract or out of any other act or omission on the part of the Corporation, the Superintendent or the employees, professional consultants or agents of the Corporation or by any other cause (except a cause arising out of any breach of the provisions of the Contract or any other act or omission on his own part or on the part of his employees, agents or subcontractors or their employees or agents) which he considers to be such as to justify an extension of the time fixed by the Contract for Practical Completion of the Works, the Contractor shall, if he desires to claim an extension of time for Practical Completion of Works, give to the Superintendent not later than twenty eight days after the cause of delay arose notice in writing of his claim for an extension of time for Practical Completion of the Works, together with a statement of the facts on which he bases his claim.

If the Superintendent determines that the cause of the delay is such as to justify an extension of time for Practical Completion of the Works the Superintendent shall grant the Contractor such extension of time for Practical Completion of the Works as the Superintendent thinks fit and shall, as soon as practicable after he has granted that extension of time, notify the Contractor thereof.

If the Superintendent determines that the cause of the delay is not such as to justify an extension of time for Practical Completion of the Works, the Superintendent shall as soon as practicable thereafter notify the Contractor of that determination.

Notwithstanding that the Contractor has not given notice of a claim for an extension of time for Practical Completion of the Works pursuant to this sub-clause, the Superintendent may, at any time and from time to time and for any reason he thinks sufficient, by notice addressed to the Contractor extend the time for Practical Completion of the Works by nominating a date specified in the notice as the date for Practical Completion of the Works and the date so specified in the notice shall, for the purpose of the Contract, be deemed to be the date for Practical Completion of the Works.

...

Any extension or extensions of time granted or allowed by the Superintendent pursuant to this sub-clause may be granted or allowed at any time before the issue of the Final Certificate.

No claim for extra costs incurred by the Contractor by reason of or as a result of or arising from the exercise by the Superintendent of the power to grant or allow any extension of time under this sub-clause shall be entertained by the Corporation unless the need for the extension of time was due to any breach of the provisions of the Contract by or any other act or omission on the part of the Corporation, the Superintendent or the employees, professional consultants or agents of the Corporation.

35.5 Liquidated Damages for Delay in Completion

If the Contractor fails to reach Practical Completion of the Works or of a separable part of the Works, as the case may be, within the relevant time referred to in Sub-clause 35.2 or within any extended time granted or allowed pursuant to Sub-clause 35.4, the Contractor shall be liable to the Corporation, by way of pre-estimated and liquidated damages and not as a penalty, for the amount or amounts stated or referred to in the Annexure hereto for every week and a proportionate part of that amount or of those amounts for every part of a week that shall elapse after that time or the extended time until the whole of the Works or the separable part of the Works, as the case may be, has been executed to Practical Completion or taking over or cancellation under Sub-clause 44.1 occurs, whichever is the sooner and that amount or those amounts shall be respectively a debt or debts due from the Contractor to the Corporation which may be deducted or recovered by the Corporation pursuant to Clause 46.

Where the Corporation has used or occupied any part of the Works pursuant to Sub-clause 35.3, the amount of pre-estimated and liquidated damages for which the Contractor is liable to the Corporation by virtue of this sub-clause may be reduced to an amount determined by the Superintendent and notified by him to the Contractor.

Sections of this Act that contain a reference to the 'Model Law' in the heading are substantially the same as the provisions of the UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985 with amendments as adopted by that Commission in 2006) so as to be as uniform as possible with the UNCITRAL Model Law.

39 Apart from repealing the Commercial Arbitration Act 1984 (Vic) ('the Victorian 1984 Act'), s 1AA of the Act notes that the purpose is 'to improve commercial arbitration processes to facilitate the fair and final resolution of commercial disputes by arbitration without unnecessary delay or expense'.

40 Section 1AC sets out the paramount object of the Act as follows:

(1) The paramount object of this Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.

(2) This Act aims to achieve its paramount object by -

(a) enabling parties to agree about how their commercial disputes are to be resolved (subject to subsection (3) and such safeguards as are necessary in the public interest); and

(b) providing arbitration procedures that enable commercial disputes to be resolved in a cost effective manner, informally and quickly.

(3) This Act must be interpreted, and the functions of an arbitral tribunal must be exercised, so that (as far as practicable) the paramount object of this Act is achieved.

(4) Subsection (3) does not affect the application of section 35 of the Interpretation of Legislation Act 1984 for the purposes of interpreting this Act.

41 With respect to waiver of the right to object (cf Model Law art 4), s 4 provides:

A party who knows that any provision of this Act from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating the party's objection to such non-compliance without undue delay or, if a time-limit is provided for stating the party's objection, within such period of time, is taken to have waived the party's right to object.

42 With respect to the extent of court intervention (cf Model Law art 5), s 5 provides:

In matters governed by this Act, no court must intervene except where so provided by this Act.

43 With respect to the making of awards, Part 6 of the Act provides as follows:

(a) With respect to the form and contents of awards (cf Model Law art 31), s 31(3) provides:

The award must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under section 30.

(b) With respect to the correction and interpretation of awards and the making of additional awards (cf Model Law art 33), s 33 provides:

(1) Within 30 days of receipt of the award, unless another period of time has been agreed on by the parties -

(a) a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature; and

(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers a request under subsection (1) to be justified, it must make the correction or give the interpretation within 30 days of receipt of the request.

(3) The interpretation forms part of the award.

(4) The arbitral tribunal may correct any error of the type referred to in subsection (1)(a) on its own initiative within 30 days of the date of the award.

(5) Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within 30 days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award.

(6) If the arbitral tribunal considers the request to be justified, it must make the additional award within 60 days.

(7) The arbitral tribunal may extend, if necessary, the period of time within which it may make a correction, interpretation or an additional award under subsection (2) or (5).

(8) Section 31 applies to a correction or interpretation of the award or to an additional award.

44 With respect to recourse against awards, Part 7 of the Act provides as follows:

(a) With respect to an application for setting aside as exclusive recourse against an arbitral award (cf Model Law art 34), s 34 provides:

(1) Recourse to the Court against an arbitral award may be made only by an application for setting aside in accordance with subsections (2) and (3) or by an appeal under section 34A.

Note

The Model Law does not provide for appeals under section 34A.

(2) An arbitral award may be set aside by the Court only if -

(a) the party making the application furnishes proof that -

...

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act; or

...

(3) An application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application had received the award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal.

(4) The Court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside of proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside.

(b) With respect to appeals against awards, s 34A(8) provides:

The Court must not exercise its power to set aside an award, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration.

45 With respect to recognition and enforcement of awards, Part 8 provides as follows:

(a) With respect to recognition and enforcement (cf Model Law art 35), s 35(1) provides:

An arbitral award, irrespective of the State or Territory in which it was made, is to be recognised in this State as binding and, on application in writing to the Court, is to be enforced subject to the provisions of this section and section 36.

(b) With respect to the grounds for refusing recognition or enforcement (cf Model Law art 36), s 36(1)(a) relevantly provides:

Recognition or enforcement of an arbitral award, irrespective of the State or Territory in which it was made, may be refused only -

(a) at the request of the party against whom it is invoked, if that party furnishes to the Court proof that -

...

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the State or Territory where the arbitration took place; or

...

46 The parties accepted that the issues raised in the submissions require the Court to determine the answers to the following questions:

1. Question 1 - What obligation with respect to reasons is imposed by s 31(3) of the Act?
2. Question 2 - Does the Second Award state the reasons upon which it is based as required by s 31(3) of the Act?

3. Question 3 - If no to question 2:

(a) Does a failure to comply with s 31(3) constitute the arbitral procedure as not being in accordance with 'the law of the State'?

(b) Has the Department waived its right to object under s 4 of the Act, or is the Department estopped from objecting?

(c) To the extent that parts of the Second Award do state the reasons upon which it is based, can such parts be severed?

(d) Should the Court exercise its discretion not to refuse to enforce the Second Award?

1. Question 4 - If the Court refuses to enforce the Second Award, should it also refuse to enforce the award regarding interest and costs?

What obligation with respect to reasons is imposed by s 31(3) of the Act?

47 The Department contended that the standard of reasons required under s 31(3) of the Act was as stated by Donaldson LJ in Bremer Handelsgesellschaft mbH v Westzucker GmbH [No 2]:

All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is. That is all that is meant by a 'reasoned award'.[4]

This standard is hereafter referred to as 'the Bremer formulation'.

48 In support of this contention, the Department submitted as follows:

(a) The Bremer formulation was the standard referred to by the plurality of the High Court in Westport Insurance Corporation v Gordian Runoff Ltd.[5] Although the High Court was considering the requirement under s 29(1)(c) of the Commercial Arbitration Act 1984 (NSW) ('the NSW 1984 Act'), the words were substantially similar to s 31(3) of the Act, and were recently adopted by Lyons J in Tayar v Feldman.[6]

(b) The textual differences between the 1984 Acts, and the current Act which adopts the Model Law formulation, are immaterial.

(c) In Gordian, the plurality expressly declined to determine whether a different standard of reasons was imposed under the Model Law.[7]

49 Winslow contended that the obligation under s 31(3) of the Act required no more than a statement of reasons to demonstrate whether the arbitrators have addressed the dispute referred for determination. This formulation was part of the following submission made by the Solicitor-General to the High Court in Gordian:

A construction of the obligation in Art 31(2) as satisfied by arbitrators giving their actual reasons sufficient to disclose whether they actually considered the dispute referred to them is consistent with the international jurisprudence on the Model Law and the civil law obligation of arbitrators to give reasons.[8]

50 In support of this contention, Winslow submitted as follows:

(a) The plurality in Gordian did not 'adopt' the Bremer formulation but rather observed that, for the purposes of that case, the parties were content to rest on the Bremer formulation.[9]

(b) Any conclusions by the plurality in adopting the Bremer formulation 'were probably obiter dicta, given that ultimately the remedy given by the Court was the setting aside of the original award, not due to inadequacy of reasons, but due to obvious error of law'.[10]

(c) Gordian was decided in the context of the NSW 1984 Act which, unlike the current Act, allowed for challenges to an award on the basis of an error of law. The only avenue to such a merits appeal in the Act is s 34A, which requires all parties to 'opt in'.

(d) The submissions of the Solicitor-General in Gordian were more consistent with academic writing and international decisions.

51 In my opinion, the proper test to be applied in determining whether an award complies with s 31(3) of the Act is the Bremer formulation, for the following reasons:

(a) The Bremer formulation was applied by the High Court in Gordian. It may be that the plurality only applied the test because the parties were 'content' for it to do so, and that the test was merely obiter. Nonetheless, it was the test applied by the plurality who specifically eschewed the opportunity, provided by the submissions of the Solicitor-General, to formulate an alternative test with respect to the sufficiency of reasons. It is not appropriate for a trial judge of this Court to decline to follow a test applied by the High Court.

(b) In Gordian, the High Court was considering the obligation to provide reasons under s 29(1) of the NSW 1984 Act, which provided as follows:

Unless otherwise agreed in writing by the parties to the arbitration agreement, the arbitrator or umpire shall -

(a) make the award in writing;

(b) sign the award; and

(c) include in the award a statement of the reasons for making the award.[11]

Section 29(1) of the Victorian 1984 Act was in identical terms.

(c) It is difficult to find any textual basis to distinguish the obligations under the 1984 Acts with the obligation under s 31(3) of the Act, which requires that 'the award must state the reasons upon which it is based'.

(d) The plurality's application of the Bremer formulation in Gordian followed its adoption by Allsop P in the New South Wales Court of Appeal below.[12] The President also equated the requirement under s 29(1) of the NSW 1984 Act with that under art 31(2) of the Model Law (as adopted in the current Act), stating:

Subject to agreement to the contrary, there is, however, a requirement for a reasoned award in arbitration. As expressed by Art 31(2) of the Model Law and s 29(1)(c) of the [NSW 1984 Act], it is a statement of reasons for making the award, not a statement of reasons for not making a different award. The essential requirement mandated by s 29(1)(c) and Art 31(2) is a statement of reasons for making the award that was made. This will require a statement of factual findings and legal or other reasons which led the arbitrators to conclude as they did.[13]

(e) The Bremer formulation was applied by Darke J in William Hare UAE LLC v Aircraft Support Industries Pty Ltd, for the purposes of determining conformity with art 31(2) of the Model Law.[14] In dismissing the appeal, Bathurst CJ noted that it had not been argued on appeal that 'the primary judge was incorrect in concluding ... that the standard enunciated by Donaldson LJ [being the Bremer formulation] was the appropriate standard'.[15]

(f) The application of the Bremer formulation to the obligation to give reasons under s 31(3) of the Act was confirmed by the decision of Lyons J in Tayar.[16] His Honour also helpfully observed that, in determining whether the reasons and award were adequate, the Court may take into account:

(1) the weight of the particular issue proportionate to the other issues in dispute; and

(2) the position of the parties and what they may understand the reasons to mean.[17]

(g) The similarity of the tests under ss 29(1)(c) of the 1984 Acts and s 31(3) of the current Act is also supported by the decision of the Court of Appeal in Oil Basins Ltd v BHP Billiton Ltd, where the Court said:[18]

[T]he requirement to give reasons under s 29(1)(c) of the Commercial Arbitration Act ... is not so limited. It reflects the expression in Art 31 of the UNCITRAL Model Law on International Commercial Arbitration of 'a basic rule of justice that those charged with making a binding decision affecting the rights and obligations of others should ... explain the reasons for making that decision'. The effect of the section, as Sir Harry Gibbs explained in an extra-curial lecture delivered in 1988, is that:

The arbitrator is required to explain in the reasons which form part of the award why he or she reached the decision which the award embodies. To do that it is necessary to state the relevant facts and to explain why each issue of fact was resolved in the way in which the arbitrator resolved it. It is further necessary to state what conclusion the arbitrator reached on each question of law or of mixed law and fact and how that conclusion was reached ... .[19]

The High Court in Gordian did not disagree with this proposition, despite taking issue with other elements of the Court of Appeal's decision.[20]

(h) Although, as submitted by Winslow, the application of the Bremer formulation in Australia has been the subject of submissions made by the Solicitor-General in Gordian and academic writing,[21] counsel could cite no authority that supported the proposition that the Bremer formulation should not be applied in determining compliance with s 31(3) of the Act.

Does the Second Award state the reasons upon which it is based as required by s 31(3) of the Act?

Summary of the relevant parts of the Second Award

52 The Second Award consisted of 1167 paragraphs in 224 pages.

53 The arbitrator's reasons with respect to 13 of the 14 questions posed were structured as set out in the following table of contents:

Part 1 Introduction

1.1 The Disputes

1.2 Dramatis Personae

Part 2 The Contract

2.1 Program and Delay Issues

2.2 As planned v As built Windows analysis

Part 3 Determination of the Questions

3.1 Extensions of Time (Questions 1 to 3)

3.1.1 Question 1

A. Reviewability Question

B. Honesty and Fairness: Implied Term

C. Further Implied Terms

• Implied Term (i) - Honestly and Fairly
• Implied Term (ii) - Not to Hinder or Prevent Performance
• Implied Term (iii) - Duty to Co-operate
• Implied Term (iv) - Good Faith
• Implied Term (v) - EPA Approvals

• GC 48 is a residual clause
• GC 48 low threshold

C. Estoppel and Penaalty [sic]

Question 2(b)

Question 2(c)

A. Introductory Matters

A1 The Programming Experts

A2 Programming Evidence and Causation

A3 Inclement Weather

A4 Calendar

A5 Introduction to EOT 1 to EOT 36

B. EOT 1 to EOT 36

B1 Introduction

C. EOT and Delay Cost Conclusion

D. Adverse Weather Deductions

Question 2(d)

3.2 Delay Costs (Questions 4 to 7)

3.2.1 Question 4

3.2.2 Question 5

5(c) Proper Construction of Schedule 15

3.2.3 Question 6

3.2.4 Question 7

3.3 Disputed Variation Claims (Questions 8 to 9)

3.3.1 Question 8

3.3.2 Question 9

• Introduction
• Variation No. 1
• Variation No. 2
• Variation No. 3
• Variation No. 4
• Variation No. 5
• Variation No. 6

3.3.3 Conclusion for Variations

3.4 S 17.3 (Question 10)

3.4.1 Question 10

3.5 Liquidation Damages (Question 11)

3.5.1 Question 11

• The Prevention Principle
• Penalty Doctrine
• Liquidated Damages

3.6 Return of Security (Questions 12 and 13)

3.6.1 Question 12

3.6.2 Question 13

3.7 Interest (Question 14)

3.7.1 Question 14

Part 4 Answers to 13 of the 14 Questions

Part 5 Conclusion

54 With the exception of Variation No. 6, the Department's complaints relate to extensions of time ('EOTs') allowed by the arbitrator, which were dealt with in Part 3.1 of the Second Award.

55 The arbitrator made the following general findings with respect to EOTs:

(a) Determinations made by the Superintendent in relation to EOTs under GC 35.4 of the Contract were subject to a full merits review by the arbitrator pursuant to the procedure laid down in GC 45.[22]

(b) Although he found that there was an implied obligation on the Superintendent to discharge his decision-making function fairly, impartially and honestly,[23] as a result of his finding that he was empowered to undertake a full merits review, it was not necessary for him to make findings as to whether the Superintendent had failed to act honestly and fairly.[24]

(c) There were implied terms that the parties agreed to do all that was necessary to be done on their part to enable the other party to have the benefit of the contract,[25] and an implied duty to co-operate,[26] in accordance with the principles in Mackay v Dick.[27]

(d) There was no implied obligation of good faith under the Contract,[28] nor was there an implied term that the Department had obtained all necessary approvals and consents required, including from the Environmental Protection Authority ('EPA'), to enable Winslow to perform the contractual works.[29]

(e) General Condition 35.4, when read together with Contract Specific clause 1000.11 and Schedules 5 and 15, established a code of procedures to be followed by Winslow when making claims for EOTs and recovery of delay costs, and there were no time bars in this code of procedures.[30] In any event, the EOT claims had been the subject of timely notices of intention to make a claim, which had been particularised by Winslow and therefore were not time barred.[31]

(f) If the conclusion in part (e) was wrong, there was a waiver by election by the Department of the time bar provisions.[32]

56 In relation to the question of Winslow's entitlement to EOTs, the arbitrator divided his response into the following parts:

A Introductory Matters

A.1 The Programming Experts

A.2 Programming Evidence and Causation

A.3 Inclement Weather

A.4 Calendar

A.5 Introduction to EOT 1 to EOT 36

B EOT 1 to EOT 36.

57 Under the heading 'The Programming Experts', the arbitrator noted the following:

1. EOT 13, 14, 15, 16, 18, 19, 20, 21, 28, 32, 33, 34 (a total of 450.6 working days) are alternative claims to EOT 17 (250 working days); and
2. EOT 22 (in part), EOT 24 and 25 are alternative claims to EOT 23 (172 working days).

(b) Expert programming evidence was led from Mr Andrews for Winslow and Ms Halloran for the Department, and both experts agreed that the method of analysis to be adopted was the 'As planned v As built windows'.

58 Both experts divided the components of Winslow's works under the Contract into windows. The arbitrator preferred the six windows selected by Ms Halloran which were as follows:

Completion of mobilisation to commencement of cut-off key construction

Commencement of cut-off key construction to completion of bund works sufficient to commence CCL placement in the cell

Commencement of cell CCL placement to completion of Cell CCL works sufficient to commence CKD backfill in the cell

Commencement of CKD backfill in the cell to completion of CKD backfill works sufficient to commence Capping of the cell

Commencement of Capping of the cell to Practical Completion

59 The arbitrator recorded each parties' criticisms of the evidence of the opposing expert.

60 Under the heading 'Programming Evidence and Causation', the arbitrator noted as follows:

(a) Whether a compensable delay has occurred requires proof of three elements, being that:

(ii) a delay to progress has been caused by that event; and

(iii) delay to progress has likely caused a delay to completion.[33]

61 After setting out the deficiencies in Mr Andrews' approach, the arbitrator stated that he preferred the approach of Ms Halloran but he did not accept all of her conclusions.[34]

62 Under the heading 'Calendar', the arbitrator stated that he used the calendars produced by the experts for the purposes of calculating EOTs and the extended date for practical completion.[35]

63 Under the heading 'Introduction to EOT 1 to EOT 36', the arbitrator:

(a) identified the necessary 'As planned v As built windows' analysis;

(b) confirmed that he had adopted the six window periods of analysis as suggested by Ms Halloran; and

(c) summarised the position on the EOT claims as adopted by Winslow, the Superintendent and each of the experts.[36]

64 The Department contends that the arbitrator did not give reasons for his conclusions ('the disputed conclusions') with respect to Variation No. 6 and the following EOTs:

EOT approved by the Superintendent (working days)

Inclement weather from 13 January 2017 to 1 December 2017

Delay associated with additional time to construct clay liner

Delay associated with part of the works being redesigned at request of EPA Auditor

Inclement weather from 4 December 2017 to 30 January 2018

Claims for EOTs during periods of adverse weather, suspensions and shutdowns

65 Apart from the allegations with respect to each of the disputed conclusions, the Department relied upon a submission that applied generally to the arbitrator's reasoning with respect to Winslow's claims for EOTs during periods of adverse weather, suspensions and shutdowns.

66 Under the heading 'Delay costs', the arbitrator noted as follows:

(a) Winslow was claiming recovery of delay costs incurred during periods of neutral events on the basis that these events were only encountered by Winslow because of prior delays caused by the Department.

(b) Neutral events were explained by the arbitrator as follows:

Neutral events are matters that cause delay to a project for which neither the Contractor nor the Owner are factually responsible. Typically, neutral events are defined in Construction Contracts to include providential events such as exceptionally inclement weather, fires, force majeure events, floods and the like, as well as delays caused by third party intervention or inaction such as strikes, the failure to grant necessary planning or other approvals, and delays caused by statutory undertakers of work affecting the relevant project.[42]

67 The arbitrator rejected Winslow's submissions in support of delay costs arising during periods caused by neutral events, for the following reasons:

(a) Winslow failed to establish any entitlement to be compensated for delay arising from the 'flow on effect' caused by neutral events and did not prove that, but for the delays caused by the Department, it would not have encountered the delays caused by neutral events. In fact, the arbitrator found that Winslow's own conduct caused some of its loss and delay.[43]

(b) To accept Winslow's submission would require him to re-write the Contract, in particular:

(i) the last paragraph of GC 35.4 which provided, in summary, that no claim for extra costs incurred by Winslow should be entertained unless the need for the extension of time was due to a default by the Department or its agents; and

(ii) the last sentence of Standard Section clause 160.D2 which provided that '[n]o additional payment for costs arising from extensions of time granted due to excess adverse weather will be made'.

He was not prepared to rewrite the Contract and did not consider that he had the power to do so.[44]

(a) The arbitrator recited Standard Section clause 160.D2 as follows:

160.D2 Adverse Weather Conditions

Time lost due to adverse weather conditions is defined for the purpose of this Contract as time lost due to wet weather, fog, excessively cold and/or dangerously windy conditions and to the effects of these adverse weather conditions, eg: wet site conditions following rain.

The Contract period includes the following allowance for time lost due to adverse weather conditions:

Whole of Works 40 working days

Separable Part A ##: 'working' days

Separable Part B ##: 'working' days

Separable Part C ##: 'working' days

Separable Part D ##: 'working' days

This allowance includes/does not include allowance for periods when works are suspended due to adverse weather. This allowance is included in the Contract duration and is not to be construed as the actual time lost due to adverse weather conditions likely to be encountered during the Contract. The Contractor is deemed to have made all necessary inquiries as to adverse weather in accordance with Clause 12 of the General Conditions of Contract.

The Contractor's site representative shall notify the Superintendent immediately of any time lost due to adverse weather conditions and shall confirm such notification in writing within 5 business days. This confirmation shall provide details of the nature and extent of delays and the construction activities affected. The Superintendent, if satisfied that the Contractor has taken reasonable steps to minimize the period of delay, will certify at the end of each month an appropriate period of time lost and will issue to the Contractor a monthly summary of certified time lost. The maximum period of time which will be certified on any working day will be ten hours.

Where the Contractor is required to provide a construction program, only delays affecting critical activities will be considered as time lost due to adverse weather conditions.

If the total period of time certified exceeds the total allowance for the Whole of the Works or applicable Separable Part of Works specified above, the Superintendent will, in accordance with the General Conditions of Contract, grant an extension of time for completion of the Whole of Works or applicable Separable Part of Works on the basis of 1 working day for each ten hours of certified time in excess of the allowance. No extension of time will be granted until the total excess period equals ten hours or a multiple thereof. Periods of less than ten hours' duration shall accrue to form part of any subsequent extension of time.

No additional payment for costs arising from extensions of time granted due to excess adverse weather will be made.

(b) He concluded that the effect of GC 35.4 and Standard Section clause 160.D2 was as follows:

As I read Standard Section clause 160.D2, if the total time notified for adverse weather conditions exceeds the 40 working days allowed in the Contract, then the Superintendent will in accordance with the GC, grant an EOT for completion of the whole of the works on the basis of 1 working day for each 10 hours of certified time in excess of the 40 working days allowance.

GC 35.4 provides that when WC is 'delayed in the execution of the Works ... by any other cause (except a cause arising out of any breach of the Contract ... which he considers to be such as to justify an EOT,'

In my opinion, 'any other cause' embraces adverse weather conditions and WC made numerous EOT claims on this basis. In each instance of adverse weather conditions, the critical path was effected and the event(s) caused all up delay to completion of the Project.[45]

69 The Department contended that its 'key point' was that the arbitrator had failed to 'state reasons for his conclusions with respect to EOTs during winter suspensions, Christmas shutdowns, periods when Winslow ran into inclement weather and site recovery after the 2016 winter shutdown'. In other words, the arbitrator had failed to state the reasons why he had granted EOTs for neutral events that he found Winslow had only encountered because of its own prior defaults in the periods before such neutral events.

70 It submitted that there were three problems with Winslow's contention that 'the arbitrator allowed the "neutral event" EOTs because he found an EOT followed for delay caused by inclement weather':

(a) It is inconsistent with the arbitrator's findings with respect to causation. The finding that Winslow had caused its own delay,[46] precluded Winslow's characterisation that the arbitrator inferentially treated the same delays as 'neutral'.

(b) It is not how the arbitrator framed the issues. With respect to EOT 9, the issue was framed in terms of causation alleged and attributable to the Department. However, the arbitrator did not give any reason to reconcile his finding that Winslow caused its own loss,[47] with his finding that Winslow was entitled to an EOT if adverse weather caused a delay which affected the critical path and delayed completion of the project.[48]

(c) The arbitrator's reasons do not explain why the arbitrator considered that a delay justified an EOT under GC 35.4.

(a) The relevant contest at arbitration was with respect to Winslow's claim for delay costs incurred during periods of neutral events, on the basis that such delays were only encountered because of the Department's prior default. The argument with respect to causation was as a pre-condition to compensation by payment of delay costs, not EOTs.

(b) The Department's senior counsel had repeatedly submitted during the hearing before the arbitrator that Winslow was entitled to 'time but not money' for the winter suspensions and adverse weather. The agreed list of questions submitted to the arbitrator distinguished between matters that entitled Winslow to an EOT (being neutral events where Winslow did not itself cause the delay), and delays caused by the Department which would permit a claim for delay costs.

(c) The Department did not argue before the arbitrator that Winslow was required to positively demonstrate that the Department caused a delay in order for it to be granted an EOT (as opposed to delay costs).

In the circumstances, when read as a whole, the Second Award clearly explained the reasons upon which the decision to grant extensions of time for neutral events is based, which were, with respect, utterly unremarkable - particularly when regard is had to the fact that the Superintendent had already granted those EOTs, the Department had not challenged the granting of those EOTs, both of the respective experts of the parties found that the Works had been critically delayed as a result of the neutral events, and the Department had not mounted any 'substantial, clearly articulated argument' against the granting of EOTs for neutral events during the Works or against the Arbitrator awarding them again in the arbitration.[49]

73 The arbitrator's reasons with respect to EOT claims, which the Department contends do not comply with s 31(3) of the Act, arose in response to the following question 2(c):

What, if any, are Winslow's EOT entitlements, having regard to for each EOT, was Winslow critically delayed due to:

(i) matters that entitle it to an EOT (that is, in essence, an act or omission not caused by Winslow, such as would permit it to claim an EOT under GC 35.4)?

(ii) any breach of the Contract or act or omission by VicRoads, the Superintendent or the employees, professional consultants or agents of VicRoads, such as to permit Winslow to claim delay costs under GC 35.4?

74 In answer to question 2(c)(ii), as noted in paragraphs 66 and 67 above, the arbitrator found that Winslow was not entitled to 'recovery of delay costs during periods of adverse weather/suspension/shutdowns (ie: neutral events)' because he was 'not satisfied that VR's conduct was causative of WC's loss or otherwise caused it delay for which it was not compensated'.[50]

75 In answer to question 2(c)(i), the arbitrator allowed EOTs for delays caused by neutral events. His express reason was based on his interpretation of Standard Section clause 160.D2 and GC 35.4 of the Contract, as set out in paragraph 68(b) above. In summary, his interpretation was that Winslow was entitled to an EOT for a delay in the execution of the works from any cause, except a cause arising out of a breach of the Contract by Winslow. Accordingly, for example, as adverse weather did not arise from a breach of the Contract by Winslow, Winslow would be entitled to an EOT (subject to such cause affecting the critical path and resulting in an 'all up delay' to completion).[51]

76 He did not expressly state that it was irrelevant whether a neutral event was only encountered by reason of Winslow's prior default but, in my opinion, it was not necessary to do so for the following reasons:

(a) It was implicit in his express conclusions at paragraphs 207 to 209 of the Second Award, as set out in paragraph 68(b) above.

(b) Unlike with respect to delay costs, I am not satisfied that the Department contended before the arbitrator that Winslow was not entitled to an EOT if Winslow's prior default caused it to run into a neutral event. No such contention was pleaded, and I was not directed to any such written or oral submission made to the arbitrator.

(c) The requirement under s 31(3) of the Act is a 'statement of reasons for making the award, not a statement of reasons for not making a different award'.[52]

77 The Department's submission that the above finding was inconsistent with the arbitrator's finding that Winslow was unable to recover delay costs under the Contract during periods of neutral events is misconceived. The arbitrator's findings on causation were only relevant to his answer to question 2(c)(ii), being that it was Winslow, not the Department, that had caused the prior delays, and therefore Winslow could not claim delay costs for neutral events on the basis of a prior default by the Department.

78 Accordingly, in my opinion, the Second Award stated the reasons for allowing Winslow's claims for EOTs during periods of adverse weather, suspensions and shutdowns, as required by s 31(3) of the Act.

Conclusion on individual EOTs and Variation No. 6

79 The arbitrator dealt with each of the relevant EOTs within the six windows identified by Ms Halloran. The relevant EOTs for the purposes of this claim were within Windows 4, 5 and 6.

80 For the purpose of determining the question of whether the arbitrator's reasons with respect to each disputed conclusion satisfied the Bremer formulation, I am mindful of the fact that:

(a) the Court must have regard to the reasons in the Second Award in their entirety, rather than the summary set out in Annexure A to these reasons; and

(b) in considering the adequacy of the reasons, the Court is not concerned with assessing the merits of the reasons given for the award 'beyond determining whether they adequately indicate how the arbitral tribunal came to its decision'.[53]

81 I have concluded that, for each of the disputed conclusions, the arbitrator set out the relevant facts and explained why, on those facts, he reached his decision and what, in each case, his decision was.

82 In Annexure A below, I have summarised the relevant facts identified by the arbitrator and the reasoning leading to each of the disputed conclusions.

83 In my opinion, particularly having regard to the weight of each of the disputed conclusions proportionate to the entirety of all the issues in dispute in the arbitration, the Second Award stated the reasons upon which each of the disputed conclusions was based, as required by s 31(3) of the Act.

Has the Department waived its right to object under s 4 of the Act?

84 As I have answered question 2 in the affirmative, questions 3 (a) and (b) (as set out in paragraph 46 above) do not arise for consideration. However, as it was fully argued, I will deal with Winslow's allegation that the Department has waived its right to object.

85 Winslow submitted that the conditions for the deemed waiver under s 4 of the Act were satisfied, for the following reasons:

(a) The procedural requirement for reasons is not mandatory. Section 31(3) is 'a provision of this Act from which the parties may derogate', because the requirement under the subsection is expressed to be 'unless the parties have agreed that no reasons are to be given'.

(b) The Department knew or ought to have known of the Second Award's alleged non-compliance with the Act, which is to be inferred from the following facts:

(i) The Department's references to sub-ss 33(1) and 33(5) in correspondence immediately following the publication of the First Partial Final Award.

(ii) The Department proposed detailed corrections to the First Partial Final Award under s 33(1)(a), before it was re-issued as the Second Award.

(iii) The Department's solicitors' detailed analysis of every finding in the Second Award for the purposes of the Department's costs submissions.

(iv) The Department's solicitors' correspondence of 19 June 2019 to the effect that it was carefully considering the reasons of all of the awards.

The 'obvious inference' from the Department's conduct is that it was content with the Second Award, in respect of which it claimed it had been more 'successful', and chose not to raise any concerns until it lost its later application with respect to costs.

(c) The objection was not stated without undue delay. It is implicit from the time limits imposed by other sections of the Act (particularly ss 33, 34(3) and 34A(6)) that any objection to the adequacy of the reasons of an award should, in almost all circumstances, be raised with the arbitrator within 30 days, or at the latest within three months, while it is still possible for the arbitrator to cure any deficiency either through interpretation of the award under s 33(1)(b), remittance under s 34(3), or following an appeal under s 34A.

(d) This interpretation of 'undue delay' with a reference to these sections would be consistent with the following:

(i) The Act's purposes, including its references to finality.

(ii) The decision of the Hong Kong Court of Appeal in Gao Haiyan v Keeneye Holdings Ltd,[54] which quoted Hebei Import & Export Corp v Polytek Engineering Co Ltd,[55] with respect to the effect of keeping an objection 'up the sleeve'.

(iii) The comments of Hon Au J in R v F, who criticised the party applying to set aside the award on the basis of inadequate reasons for taking that course instead of requesting an interpretation of that part of the reasons from the tribunal.[56]

(iv) The comments of Croft J in Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd, who referred to a party's failure to avail themselves of the mechanism for correction and interpretation of an award in s 33 as 'an opportunity not taken'.[57]

(1) The parties must do all things necessary for the proper and expeditious conduct of the arbitral proceedings.

(2) Without limitation, the parties must -

...

(b) take without undue delay any necessary steps to obtain a decision (if required) of the Court with respect to any function conferred on the Court under section 6.

(e) The Department failed to raise any objection about the sufficiency of the reasons in the Second Award from 13 March 2020 (when it was first delivered in uncorrected form as an 'Interim Award') until the letter from the Department's solicitors dated 13 July 2020.

(f) The Department 'proceeded with the arbitration without stating any objection' to the reasons by:

(i) seeking corrections and further awards under ss 33(1)(a) and 33(5) of the Act, but failing to seek any 'interpretation' of the specific part or point of the award under s 33(1)(b) of the Act;

(ii) failing to apply to set aside the Second Award within three months under s 34 of the Act; and

(iii) failing to seek Winslow's agreement to allow an application for leave to appeal under s 34A of the Act.

(g) The Department instead relied on the findings in the Second Award to seek its costs of the arbitration. In fact, it refused to pay the net sum due to Winslow under the Second Award because it said there might be a final award of money in the Department's favour after the decision on costs.

86 The Department submitted that it had not waived its right to resist enforcement by operation of s 4, for the following reasons:

(a) Section 4 is directed to silence prior to the award under challenge. The Department cannot waive a deficiency in award reasons it does not know about until after its publication. Winslow's interpretation would give s 4 a circular operation with the practical effect of negating s 36 where partial final awards are made.

(b) Section 4 is principally directed to the right to object to the process which produces an award, not to challenging an award which is defective on the face of the reasons themselves.

(c) The Department only objects to the Second Award, not to the subsequent partial awards.

87 Under s 4 of the Act, a party is taken to have waived its right to object to non-compliance with a provision of the Act if the following conditions are satisfied:

(a) the parties are able to derogate from the provision;

(b) the party knows of the non-compliance with the provision;

(c) the party has proceeded with the arbitration; and

(d) the party has failed to state its objection to the non-compliance without undue delay.

88 In my opinion, the Department is taken to have waived its right to object to any non-compliance with s 31(3) of the Act because I am satisfied of each of the following:

(a) The parties may derogate from the requirement for reasons under s 31(3).

(b) The Department knew of the alleged non-compliance from shortly after the publication of the First Partial Final Award or, at the very latest, the Second Award.

(c) The Department proceeded with the arbitration and unduly delayed in stating its objection to the alleged non-compliance.

The parties may derogate from s 31(3) of the Act

89 The terms of s 31(3) state that the award must state the reasons 'unless the parties have agreed that no reasons are to be given'.

As to the provisions in the Act from which a party may derogate, the authorities and texts suggest that this relates to provisions which expressly state something like 'unless the parties otherwise agree ...', 'subject to contrary agreement ...' or 'the parties are free to ...'.[58]

91 With respect, I agree and in my opinion, the requirement to give reasons in s 31(3) is a clear example of a provision from which a party may derogate.

The Department knew of the alleged non-compliance

92 I find that the Department knew of any alleged non-compliance from a time shortly after publication of the First Partial Final Award or, at the latest, publication of the Second Award. In fact, the Second Award was published after the parties requested corrections to the First Partial Final Award, presumably after a detailed analysis of the reasons.

The Department unduly delayed in stating its objection

93 A summary of the steps taken following the publication of the Second Award is set out in paragraphs 16 to 23 above.

94 Critically, after publication of the First Partial Final Award and the Second Award, the Department proceeded with the arbitration by applying for Winslow to pay its costs of $1,343,771.77, being its costs with respect to the issues on which it was ultimately successful in the arbitration. With respect to costs, the Department submitted before the arbitrator as follows:

The Department's primary position is that it should be awarded its costs with respect to issues on which it was ultimately successful. Based on the methodology set out in the Woods Affidavit, approximately 52.6% of the Department's total time in this arbitration was spent addressing the issues in respect of which the Department ultimately succeeded.

This equates to $1,343,771.77 in costs (exclusive of GST). The Department ought to be awarded those very substantial costs it incurred with respect to the issues on which it ultimately succeeded in the arbitration.

95 Further, the Department refused to pay the amount due under the Third Partial Final Award of $647,930.35 on the basis that 'given the substantial issues arising with respect to costs, [it] will await the outcome of the hearing and award on the question of costs'.

96 Only after publication of the Fifth Partial Final Award on 16 June 2020, in which the Department was ordered to pay Winslow its costs of the arbitration in the amount of $2,694,754.30, did the Department object to the Second Award on the basis of the alleged inadequacy of the reasons by letter dated 13 July 2020.

97 In my opinion, the Department did not object to the alleged non-compliance with s 31(3) of the Act without undue delay, for the following reasons:

(a) The period of delay was, at least, more than three months, from shortly after 7 April 2020, when the Second Award was published, to 13 July 2020, when the Department first raised its objection.

(b) No explanation was offered to justify the delay.

(c) The only inference to be drawn from the Department proceeding with the arbitration after the Second Award, is that it decided to keep the alleged non-compliance 'up its sleeve' until determination of its application for costs. It is well established that the fact that a party keeps a non-compliance objection up its sleeve, is a relevant consideration in determining whether the right to object has been waived.

98 In Hebei Import, the Court of Final Appeal of the Hong Kong Special Administrative Region considered that a party opposing the enforcement of an award had waived its right to object to the award on the grounds of bias, which it had not raised until the matter reached the courts.[59] Sir Anthony Mason NPJ observed:

Article 45 of the Arbitration Rules provides that a party who knows or should have known that a provision of the Rules has not been complied with yet proceeds without raising his objection in a timely manner shall be deemed to have waived his right to object. Article 45 gives effect to an important principle, not confined to Chinese law, namely that a party to an arbitration who wishes to rely on a non-compliance with the rules governing an arbitration shall do so promptly and shall not proceed with the arbitration as if there had been no non-compliance, keeping the point up his sleeve for later use after an award is made, should that course prove to be expedient.[60]

99 Further, I reject the Department's submission that waiver under s 4 is only directed to the conduct of the party prior to the award under challenge, for the following reasons:

(a) There is no warrant to read such a limitation into the plain words of s 4.

(a) Such an interpretation would not advance the paramount object of the Act, as set out in s 1AC.

(b) Such an interpretation would be inconsistent with the general duty of parties to do 'all things necessary for the proper and expeditious conduct of the arbitral proceedings'.[61]

100 This waiver should be applied in accordance with the words of the statute. However, in this case there are similarities to the common law doctrine of waiver by election.

101 In Zhang v Shanghai Wool and Jute Textile Co Ltd, Chernov JA said that 'waiver by election may be established by demonstrating that the party in question had elected to pursue a substantive right that is inconsistent with that which it is now seeking to press'.[62] His Honour referred to the statement of Brennan J in Commonwealth v Verwayen that '[e]lection consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights'.[63]

102 After receipt of the Second Award, the Department faced a choice between challenging the award for non-compliance with s 31(3) of the Act, or proceeding with the arbitration by applying for costs of the arbitration on the basis of the award. These were alternative and inconsistent rights, and it chose to proceed with the arbitration. The Department cannot have its cake and eat it too.

103 In the circumstances, I am proposing to grant the relief sought in the originating application to enforce an award filed 26 June 2020. I will hear the parties on the final form of orders including interest and costs.

104 The first window in which there were relevant EOTs was Window 4, which was for the period from 21 April 2015 to 20 December 2016. This Window relevantly included EOTs 9, 13 to 16, 18 to 21, 28, 33 and 34.

EOT 9: 2015 Winter Suspension (18 May 2015 to 5 November 2015)

The Superintendent granted an EOT of 120 working days but by letter dated 17 December 2015 reduced it by 30 working days which was the then remaining balance of the Contract allocation of 40 working days for adverse weather

Days Claimed and Delay Period: 18 May to 4 November 2015: 120 working days.

EOT Claim Date: 13 May 2015.

WC Description of Delay: 2015 Winter Suspension.

WC alleges that by reason of delays caused by acts, omissions or breaches of VR it thereby caused delay to the Works during the period November 2014 to May 2015. WC was unable to complete the Works prior to the onset of the 2015 Winder [sic] adverse weather conditions which led it to suspend Works which prevented WC from being able to perform the Works.[64]

(a) With respect to suspension of the works, GC 34.3 of the Contract provided:

Should the Contractor wish to suspend the progress of the whole or any part of the work under the Contract he shall in writing notify the Superintendent and explain the reasons for the suspension. The Superintendent shall thereupon, if he thinks it necessary or reasonable so to do, grant permission for a suspension of the whole or any part of the work under the Contract for such time or times as he may think fit ...

(b) General Condition 34.5 provided that the extra costs of any suspension shall be borne by the Contractor, unless the suspension is due to an act, default or omission of the Corporation or its employees, professional consultants or agents.

(c) By letter dated 13 May 2015 to the Department, Winslow notified of its intention to suspend works, stating:

Further to discussions at our meeting of 12 May 2015, in accordance with Clause 34.3 of the General Conditions of Contract ... due to the climatic conditions that we are encountering and will continue to encounter during Winter, we hereby notify you that we wish to suspend work under the Contract ...

(d) By letter dated 25 May 2015 to Winslow, the Department responded to the request, stating:

... in accordance with clause 34.3 of the General Conditions of Contract approval is granted for suspension of the whole of works from 18 May 2015. In accordance with clause 34.5, any costs associated with the suspension remain the responsibility if [sic] Winslow Contractors.

(e) On 17 December 2015, the Superintendent advised Winslow that the suspension of the works was for the period from 18 May 2015 to 5 November 2015.

(f) However, Winslow's Site Diary recorded that work was performed on 4 November 2015, rather than 5 November 2015, which reduced the claimable EOT to 119 days.

107 The arbitrator allowed an EOT of 119 days, which extended the date for practical completion to 12 November 2015, for the following reasons:

(a) He considered the experts' reports, in particular:

(i) Mr Andrews' report in which he stated that he considered 'the delay due to the 2015 winter suspension occurred between 18 May 2015 and 4 November 2015'; and

(ii) Ms Halloran's report in which she stated that '[i]nclement weather resulted in no works being undertaken between 8 May 2015 and 16 May 2015' and that '[w]orks recommenced on 4 November 2015'.

(b) He found that the weather conditions during the winter period, being from 18 May 2015 to 4 November 2015, delayed the execution of the works on a critical path and caused a delay to the completion of the project of 119 days.

(c) Winslow requested suspension of the works 'due to the climatic conditions that [it was] encountering and [would] continue to encounter during Winter', and the Department approved the grant of a suspension.

(d) Both experts considered that the adverse weather conditions had caused a delay to the completion of the project of 119 days.

108 The arbitrator rejected Winslow's claim for delay costs of $683,298 for these days, because he was not satisfied that Winslow's decision to request the suspension was caused by an act, default or omission of the Department or its agent, and therefore they were not claimable according to terms of GC 34.5.

EOT 13: November 2015 Inclement Weather (5, 6, 10 and 20 November 2015)

The Superintendent granted 3.3 working days EOT

Days Claimed and Delay Period: 5, 6, 10 and 20 November 2015: 3.3 working days.

EOT Claim Date: 29 February 2016.

WC Description of Delay: Inclement Weather on 5, 6, 10 and 20 November 2015[65]

110 The arbitrator allowed an EOT of 3.3 working days, to be set off against the balance of the contractual adverse weather allowance (reducing the allowable EOT to zero, and the balance of the contractual adverse weather allowance to 26.85 working days), for the following reasons:

(a) On 29 February 2016, Winslow claimed 3.3 working days due to inclement weather in November 2015, stating:

During the month of November 2015, 3 days and 3 hours of adverse weather was encountered impacting on WUC [sic]. The duration of time being claimed has been verified by the VicRoads Surveillance Officer of having impacted on the works on Site. We hereby apply for an extension of time of 3 days and 3 hours to our Date for Practical Completion.

(b) On 14 April 2016, the Department issued an EOT of 3.3 working days.

(c) Both experts agreed that the delay was to the critical path. Mr Andrews allowed 3.3 working days based on the Winslow Site Diaries, and Ms Halloran allowed 2.75 working days based on 'her analysis of WC's Site Diaries'.

(d) After reviewing the documents relied upon by the experts, the arbitrator was unable to discern why Ms Halloran had made the reduction in the allowance and preferred Mr Andrews' analysis.

111 The arbitrator disallowed Winslow's claims for delay costs of $41,968.88, on the basis that the delay was caused by inclement weather, not the Department.

EOT 14: 2015 Christmas Shutdown (23 December 2015 to 5 January 2016)

The Superintendent allowed 7 working days EOT

Days Claimed and Delay Period: 23 December 2015 to 5 January 2016: 7 working days.

EOT Claim Date: 25 February 2016.

WC Description of Delay: 2015 Christmas period Shutdown.

No works were able to be performed by WC during this period as WC and the construction industry in general was shutdown for the Christmas/New Year period.

Note: Claimed alternatively to EOT 17.[66]

113 The arbitrator allowed an EOT of eight working days, which extended the date for practical completion to 8 February 2016, for the following reasons:

(a) Standard Section clause 160.D3 provided that 'no work shall be carried out ... during the Christmas to New Year periods ... unless otherwise specified or approved by the Superintendent.'

(b) By letter dated 26 February 2016 to the Department, Winslow retrospectively stated that it was unable to perform works during the period between 23 December 2015 and 5 January 2016 inclusive.

(c) The arbitrator preferred the opinion of Ms Halloran, who noted that Winslow did not carry out works on site between 22 December 2015 and 5 January 2016 inclusive, which equated to a delay of eight working days for which she would grant as an EOT.

(d) The arbitrator stated he had considered the experts' reports and, in particular, Ms Halloran's report, where she concluded that the '2015 Christmas Shutdown therefore actually delayed the Works for 8 days during Window 4'.

114 The arbitrator disallowed Winslow's claim for delay costs of $114,606.08, on the basis that the Christmas shutdown period was a contractual stipulation, and not an act or omission of the Department.

EOT 15: January 2016 Inclement Weather (27 January to 22 February 2016)

The Superintendent allowed 19 working days EOT

Days Claimed and Delay Period: 27 January to 22 February 2016: 18 working days.

EOT Claim Date: 29 February 2016.

WC Description of Delay: January Inclement Weather.

On 27 January 2016, WC experienced a significant rain event during which no works could be performed on the Site. Due to the size of the rain event, access to the Site was limited thereafter and the Works could not recommence until 22 February 2016. Access to the Site required the clean-up of haul/access roads. However, the water was inaccessible and could not be removed without the sump pump. Upon gaining access, WC began to pump out the significant volume of water that was present. Due to the amount of the water to be pumped, larger equipment was arranged and used for these works. Upon removal of the water, WC was required to clean up the Site. Once access was deemed safe for the Works proper to recommence, necessary plant was then floated back to the Site.

Note: Claimed alternatively to EOT 17.[67]

116 The arbitrator allowed an EOT of eight working days, to be set off against the balance of the contractual adverse weather allowance (reducing the allowable EOT to zero, and the balance of the contractual adverse weather allowance to 18.85 working days), for the following reasons:

(a) There was a significant rainfall event on 27 January 2016 which meant that works could not recommence until 22 February 2016.

(b) The evidence of Ms Halloran was that the period of this delay fell on the critical path and she calculated 80 hours of delay due to the wet weather event on 27 January 2016.

117 He disallowed Winslow's claim for delay costs of $45,936 because, under Standard Section clause 160.D2, delay due to inclement weather gave rise to an entitlement to an EOT but not to delay costs.

EOT 16: February 2016 Inclement Weather (23, 24, 25, 26 and 29 February 2016)

The Superintendent granted 0.7 working days EOT

Days Claimed and Delay Period: 23-26 and 29 February 2016: 3.3 working days.

EOT Claim Date: 29 February 2016.

WC Description of Delay: $23 [sic], 24, 25, 26 and 29 February 2016 Inclement Weather.

Due to the rain event on 27 January 2016 (ie: EOT 15) and subsequent overnight showers between 24 and 25 February 2016 the stockpile of clay material on the site was very wet underneath on 23 February 2016 (sic). In this regard, whilst the top of the stockpile material was dry, the layers underneath were not.

Accordingly, the material did not meet the required moisture and density levels required by the Contract for works to proceed.

Note: Claimed alternatively to EOT 17.[68]

119 The arbitrator allowed an EOT of 0.45 working days, to be set off against the balance of the contractual adverse weather allowance (reducing the allowable EOT to zero, and the balance of the contractual adverse weather allowance to 18.4 working days), for the following reasons:

(a) The arbitrator noted that while the Winslow Site Diary recorded that time was lost on 23, 24, 26 and 29 February 2016, it did not record for how long.

(b) The entry for 25 February 2016 recorded that 4.5 hours was lost due to overnight showers which meant that Winslow could not access the site due to haul roads being slippery and unsafe to work.

120 He disallowed Winslow's claim for delay costs of $34,793.24 because, under Standard Section clause 160.D2, delay due to adverse weather gave rise to an entitlement to an EOT but not to delay costs.

EOT 18: EPA Licence Amendment Suspension (25 March to 5 May 2016) The Superintendent allowed 26 working days EOT

Days Claimed and Delay Period: 25 March to 5 May 2016: 26 working days.

EOT Claim Date: 8 June 2016.

WC Description of Delay: EPA Licence Amendment Suspension.

The Works were suspended by VR from 25 March to 5 May 2016 as WC had completed the remaining CCL activities by 24 March 2016 and no further works could be performed by WC until the EPA Licence for Phase 1 was issued. This occurred on 29 April 2016.

Note: Claimed alternatively to EOT 17.[69]

122 The arbitrator allowed an EOT of 26 working days, which extended the date for practical completion to 27 January 2016, for the following reasons:

(a) All works were suspended between 25 March 2016 and 5 May 2016 while the Department obtained an EPA Licence Amendment to allow Winslow to commence CKD backfilling works.

(b) Winslow was not permitted to undertake any works in relation to filling the cell with CKD until the Department provided the EPA Licence Amendment, which was the Department's responsibility to obtain.

(c) Ms Halloran recommended an EOT of 26 working days.

(d) He reviewed the correspondence and rejected the Department's submission that they had reached an agreement which finalised Winslow's entitlement for an EOT and delay costs resulting from the 'EPA Licence Amendment issue'.

123 The arbitrator allowed delay costs of $149,292, being 26 working days at the claimed daily rate of $5,742, because the delay was caused by the Department suspending works while waiting for the necessary EPA approval.

EOT 19: Inclement Weather between 1 March and 25 May 2016

The Superintendent granted 16.2 working days EOT

Days Claimed and Delay Period: 1-5, 7-12, 15-16, 18-19 March 2016;

9-13, 16-20, 25-27 May 2016: 20.1 working days.

EOT Claim Date: 7 and 8 June 2016.

WC Description of Delay: Inclement Weather for February to May 2016.

Note: Claimed alternatively to EOT 17.[70]

125 The arbitrator noted that Winslow was claiming an EOT of 25.8 working days for inclement weather between 1 March 2016 and 27 May 2016, and set out the hours claimed on each of the days during that period.

126 The arbitrator allowed an EOT of 25.8 working days, partially set off against the balance of the contractual adverse weather allowance of 18.4 days (reducing the allowable EOT to 7.4 days). Accordingly, the date for practical completion was extended to 17 February 2016. In summary, his reasons were as follows:

(a) By letter dated 7 June 2016 to Mr Bennett of the Department, Winslow explained how adverse weather had delayed works, and that Winslow had claimed an EOT for due to adverse weather in:

(b) By letter dated 16 September 2016, the Superintendent addressed Winslow's EOT claims. Apart from rejecting claims made with respect to Saturdays, he otherwise provided no explanation for his rejection of the claims.

(c) Mr Andrews concluded that there was a 13 day delay in May 2016, but did not make allowance for April because it was concurrent with EOT 17 (that the arbitrator disallowed).

(d) Ms Halloran concluded that the period from 1 March 2016 to 27 May 2016 was on the 'As built critical path', but she only allowed 19.1 working days. The arbitrator considered that '[s]he appears to have used some discretion in a number of instances to reduce the hours claimed without explanation'.

127 He disallowed Winslow's claim for delay costs of $193,739.56 because, under Standard Section clause 160.D2, delay due to adverse weather gave rise to an entitlement to an EOT but not to delay costs.

EOT 20: 2016 Winter Suspension Part A (30 May to 3 October 2016)

The Superintendent granted 88 working days EOT

Days Claimed and Delay Period: 30 May 2016 to 3 October 2016: 88 working days.

EOT Claim Date: 28 June 2016.

WC Description of Delay: 2016 Winter Suspension, Part A.

WC allege that by reason of the delays caused by the acts, omissions or breaches of VR which caused delay to the works during the period November 2014 to May 2015 and November 2015 to May 2016 WC was unable to complete the works prior to the onset of adverse weather conditions in May 2016 which prevented WC from being able to perform the works. In particular, the delay by VR in procuring the necessary Licence from the EPA to allow the commencement of CKD backfill constituted a breach by VR which delayed the performance of the works by WC.

The whole of the works were suspended between 30 May 2016 and 3 October 2016.

Note: Claimed alternatively to EOT 17.[71]

129 The arbitrator noted that Winslow was claiming an EOT of 88 working days due to the suspension of works caused by the onset of winter, and as time required to complete site recovery works after recommencement.

130 The arbitrator allowed an EOT of 88 working days, which extended the date for practical completion to 22 June 2016, for the following reasons:

(a) On 16 September 2016, the Superintendent notified Winslow that the 2016 winter suspension period had commenced on 30 May 2016 and he anticipated a resumption of onsite work no earlier than 3 October 2016, and accordingly granted an EOT of 88 working days.

(b) On 16 November 2016, the Department wrote to Winslow and advised that it considered the winter suspension period to have ended that day.

(c) Ms Halloran concluded that the cumulative delay to the critical path for EOTs 20 and 21 was 117 working days.

131 The arbitrator disallowed Winslow's claim for delay costs of $511,038, because the Department and its agents did not cause the suspension.

EOT 21: 2016 Winter Suspension Part B (4 October to 16 November 2016)

The Superintendent granted 31 working days EOT

Days Claimed and Delay Period: 4 October to 16 November 2016: 30 working days.

EOT Claim Date: 28 June 2016.

WC Description of Delay: 2016 Winter Suspension, Part B.

The Works remained in suspension between 4 October and 16 November 2016. This is confirmed by a letter from VR to WC dated 9 November 2016.

Note: Claimed alternatively to EOT 17.[72]

133 The arbitrator noted that Winslow was claiming an EOT of 31 working days due to the suspension of works caused by the onset of winter, and as time required to complete site recovery works after recommencement.

134 The arbitrator allowed an EOT of 30 working days, which extended the date for practical completion to 2 August 2016, for the following reasons:

(a) On 16 November 2016, the Department wrote to Winslow and advised that the Superintendent had determined that the contractual end date for the suspension was 16 November 2016 and that an EOT would be processed on that basis.

(b) On 17 January 2017, the Department notified Winslow that it had granted a further EOT of 31 working days.

(c) He adopted the analysis of Ms Halloran, which allowed an EOT of 30 working days.

135 The arbitrator disallowed Winslow's claim for delay costs of $160,776, because the Department and its agents did not cause the suspension.

EOT 28: Site Recovery from 2016 Winter Suspension (16 November to 20 December 2016)

The Superintendent granted 0 days EOT

Days Claimed and Delay Period: 16 November to 20 December 2016: 24 working days.

EOT Claim Date 28 February 2017.

WC Description of Delay: Site Recovery from 2016 Winter Suspension.

On 16 November 2016 the Works were to recommence on Site after the 2016 Winter Suspension.

WC was unable to recommence the Works until 20 December 2016 because it was required to pump out water which had accumulated on the Site over the 2016 Winter Suspension period and otherwise prepare the CCL. These works were not anticipated under the Contract and therefore constituted a Variation.

Note: Claimed alternatively to EOT 17.[73]

137 The arbitrator allowed an EOT of 20 working days, which extended the date for practical completion to 30 August 2016, for the following reasons:

(a) He reviewed Ms Halloran's 'in depth analysis', including detailed references to Winslow's and the Department's contemporaneous documents and the chronology of events after the 2016 winter suspension.

(b) The arbitrator accepted Ms Halloran's conclusion that the delay period between 16 November 2016 and 13 December 2016 was 20 days, caused by 'dewatering and cleaning the Site', based on the following:

1. dewatering was not being carried out in a consistent manner during the period leading up to the end of the 2016 Winter Suspension;
2. it was necessary for WC to dewater the Site and remove the silt which had accumulated over the 2016 Winter Suspension;
3. on 16 November 2016 (ie: the end of the 2016 Winter Suspension) WC installed a pump and dewatered the Site whilst procuring the necessary equipment to recommence work;
4. plant was brought to site around 28 November 2016 to commence removal of material from the cell floor;

v) removal of silt was completed by 13 December 2016;

1. on 15 December 2016, WC provided the survey data and/or photos which enabled Hold Point release to commence CKD backfilling; and
2. by email from Hurley to Rumpf dated 20 December 2016, WC was given approval to proceed with CKD backfilling and that work commenced on 21 December 2016.

138 The arbitrator disallowed Winslow's claim for delay costs of $137,808, because the Department and its agents did not cause the delay.

EOT 33: Delay associated with additional time to construct Clay Liner (17 December 2015 to 24 March 2016)

The Superintendent granted 0 working days EOT

Days Claimed and Delay Period: 17 December 2015 to 24 March 2016: 11 working days.

EOT Claim Date: 28 February 2017 and 28 November 2017.

WC Description of Delay: Delay associated with additional time to place CCL.

Further to the matters set out in EOT 17, in circumstances where:

• no amended EPA Licence had been obtained by VR allowing WC to commence CKD backfilling works in accordance with the Contract Methodology; and

• WC was instructed by continue placement of the remaining CCL;

WC could not construct the Works in accordance with the Contract Methodology, namely WC could not backfill the cell with CKD progressively and simultaneously with the construction of the upper sections of the CCL.

Note: Claimed alternatively to EOT 17.[74]

140 The arbitrator allowed an EOT of eight working days, which extended the date for practical completion to 20 September 2016, for the following reasons:

(a) Winslow claimed it was delayed by 11 working days and set out the reasons for that claim.

(b) He noted the evidence with respect to the nature of the extra works upon which the claim was based.

(c) The CCL works were on Ms Halloran's 'As built critical path' for the period, and she concluded that:

(i) by 17 December 2015, Winslow had approximately 13 metres of vertical height CCL to be placed; and

(ii) Winslow's Site Diaries for the period 17 December 2015 to 24 March 2016 identified 21 unique days on which CCL placement works were undertaken by Winslow, which added an extra eight days to complete the work.

(d) The arbitrator accepted Ms Halloran's conclusion of an eight day EOT, despite describing it as 'equivocal'.

141 With respect to delay costs, the arbitrator found that EOT 33 was the subject of Variation 5, and allowed delay costs of $45,936 (rather than the claimed amount of $63,162), being eight working days at the claimed daily rate of $5,742.

EOT 34: Delay associated with part of the Works (the Sump) being redesigned at the request of the EP Auditor (17 December 2015 to 18 February 2016)

The Superintendent granted 0 working days EOT

Days Claimed and Delay Period: 27 January to 24 February 2016: 20 working days.

EOT Claim Date: 28 February 2017.

WC Description of Delay: Delay associated with part of the Works being redesigned at the request of the EPA Auditor.

In or about February 2016, the Superintendent directed WC to perform additional works to redesign the sump pump by providing sketches to WC which required the installation of geotextile fabric. The existing drainage rock in the sump had to be excavated and replaced with new material and additional geotextile fabric installed. These additional works were required to be performed by WC prior to the EPA Auditor releasing the Hold Point for commencement of CKD backfilling.

Note: Claimed alternatively to EOT 17.[75]

143 The arbitrator allowed an EOT of four working days, which extended the date for practical completion to 26 September 2016, for the following reasons:

(a) By email of 17 February 2016 to Mr Gannon of Winslow, Mr Westcott of the Department attached a revised design specification for the sump and requested a lump sum price from Winslow to perform the variation work.

(b) Winslow claimed an EOT of 21 days as a result of the Superintendent's instruction to perform the additional works needed to redesign the sump pump.

(c) The arbitrator reviewed Mr Gannon's evidence about the circumstances leading up to the request for the variation.

(d) Ms Halloran concluded that the work in the area of the sump was on the critical path between 6 to 20 February 2016 and that the remaining CCL works could not be undertaken for the period from 18 to 24 February 2016.

144 He allowed Winslow's claim for delay costs of $22,968, being four working days at the claimed daily rate of $5,742, because the delay was caused by the actions of the Department or its agents in directing Winslow to carry out variation works.

145 The second window in which there were relevant claims for EOTs was Window 5, which was for the period from 21 December 2016 to 5 April 2017. This Window relevantly included EOTs 22 (in part)[76] and 26.

EOT 22: Inclement Weather (13 and 20 January; 6-7, 20, and 22-24 February; 10-12, 21 and 26 April; 16-17 and 23 November; and 1 December 2017)

The Superintendent granted 4 working days EOT

Days Claimed and Delay Period: 13, 20 January; 6-7 and 20 February; 22-24 March; 10-12, 21 and 26 April; 23 November and 1 December 2017: 17 working days

EOT Claim Date: 1 December 2017.

WC Description of Delay: Inclement weather from 13 January to 1 December 2017.[77]

147 The arbitrator allowed an EOT of 17 working days (being seven working days in Window 5, and 10 working days in Window 6), which extended the date for practical completion to 10 November 2016, for the following reasons:

(a) He found that Winslow experienced inclement weather on the site and was unable to perform the works on 17 working days during the period 13 January 2017 to 1 December 2017.

(b) The arbitrator reviewed the analyses of Mr Andrews, Ms Halloran and the Superintendent (all of whom rejected the claim for a 17 day EOT) but did not accept them. In particular, he did not accept Mr Andrews' analysis on the basis that there was no concurrency with other EOT claims, and noted that Ms Halloran provided 'no explanation' for her disagreement with Winslow's claim.

148 He disallowed Winslow's claim for delay costs of $121,133.83 because, under Standard Section clause 160.D(2), delay due to adverse weather gave rise to an entitlement to an EOT but not delay costs.

EOT 26: Christmas Shutdown (23 December 2016 to 9 January 2017)

The Superintendent allowed 0 working days EOT

Days Claimed and Delay Period: 23 December 2016 to 9 January 2017: 8 working days.

EOT Claim Date: 28 February 2017.

WC Description of Delay: 2016 Christmas period shutdown.

No works were able to be performed by WC during the period as WC and the construction industry in general was shut down for the Christmas/New Year period.[78]

150 The arbitrator allowed an EOT of three working days, which extended the date for practical completion to 3 October 2016, for the following reasons:

No work shall be carried out between Good Friday and Easter Monday inclusive, on any Sunday, public holiday or during the Christmas to New Year periods.

(b) By letter dated 28 February 2017 to the Department, Winslow claimed eight working days for the 2016 Christmas to New Year shutdown.

(c) Ms Halloran reviewed the site records and concluded that Winslow did not work between 26 December 2016 and 2 January 2017, which equated to a delay of three working days.

151 He disallowed Winslow's claim for delay costs of $50,998.08, because the Department and its agents did not cause the delay, and Winslow failed to establish that it ran into the 2016 Christmas shutdown period because of anything done by the Department.

152 The third window in which there were relevant EOTs was Window 6, which was for the period from 6 April 2017 to practical completion on 20 February 2018. This Window relevantly included EOTs 22 (in part), 27, 29 and 35.

EOT 27: 2017 Winter Suspension (26 April to 21 November 2017)

The Superintendent granted 0 working days EOT

Days Claimed and Delay Period: 26 April to 20 November 2017: 146 working days.

EOT Claim Date: 4 December 2017.

WC Description of Delay: 2017 Winter Suspension.

WC alleges that by reason of the delays caused by the acts, omissions or breaches of VR which caused delay to the Works during the period November 2014 to May 2015, November 2015 to May 2016, and October 2016 to June 2017, WC was unable to complete the Works prior to the onset of adverse weather conditions in 2017, which prevented WC from being able to perform the Works.[79]

154 The arbitrator allowed an EOT of 146 working days, which extended the date for practical completion to 13 June 2017, for the following reasons:

(a) Ms Halloran's 'As built critical path' revealed that the 2017 winter suspension commenced on 26 April 2017 and works remained suspended until 8 November 2017, which resulted in a delay of 138 working days.

(b) However, the arbitrator noted that Winslow did not resume physical work on the site until 21 November 2017, which extended the delay out to 146 working days.

(c) He reviewed the correspondence referred to by Ms Halloran and noted that she only recommended allowing a delay of 138 working days, being the first of the following three stages claimed:

1. Suspension of works stage from 26 April to 8 November 2017: 138 working days
2. Submission and approval of SWMS's from 9 to 15 November 2017: 5 working days
3. WC reinduction and preparation work onsite stage from 16 to 20 November 2017: 3 working days

(d) He rejected Ms Halloran's analysis because he concluded that the second and third stages were part of the 'all up delay'.

155 He disallowed Winslow's claim for delay costs of $838,332, because the Department and its agents did not cause the delay.

EOT 29: 2017 Christmas period shutdown (22 December 2017 to 8 January 2018)

The Superintendent granted 0 working days EOT

Days Claimed and Delay Period: 22 December 2017 to 8 January 2018: 8 working days.

EOT Claim Date: 4 December 2017.

WC Description of Delay: 2017 Christmas shutdown period.

No works were able to be performed by WC during this period as WC and the construction industry in general was shut down for the Christmas/New Year period.[80]

157 The arbitrator allowed an EOT of eight working days, which extended the date for practical completion to 10 July 2017, for the following reasons:

(a) Standard Section clause 160.D3 stated that no work was to be carried out during the Christmas to New Year period.

(b) Ms Halloran recommended allowing an EOT of seven days on the basis that no work was carried out on the site between 25 December 2017 and 5 January 2018.

(c) The arbitrator accepted that no works were carried out on those seven days. He further concluded that the absence of any entry in the Winslow Site Diary for 22 December 2017 was most likely due to the fact that no work was carried out on that day either, which added an extra day to Ms Halloran's analysis.

158 He disallowed Winslow's claim for delay damages of $142,804.72, because Standard Section clause 160.D3 gave Winslow no entitlement to recover delay costs during the claimed period.

EOT 35: Inclement Weather (4-6, and 8 December 2017, and 12, 30 January 2018)

The Superintendent granted 0 working days EOT

Days Claimed and Delay Period: 4-6, 8 December 2017, 12 and 30 January 2018: 6 working days.

EOT Claim Date: Amended Points of Claim

WC Description of Delay: Inclement weather from 4 December 2017 to 30 January 2018.[81]

160 The arbitrator allowed an EOT of 5.2 working days, which extended the date for practical completion to 28 June 2017, for the following reasons:

(a) He noted that Mr Andrews recommended allowing an EOT of 5.2 working days based on his review of the Winslow Daily Surveillance Records.

(b) Ms Halloran recommended allowing an EOT of 5.15 working days. The basis for her difference from Mr Andrews' analysis was that she relied on a notation in the Winslow Site Diary that showed 6.5 hours for 12 January 2018, not seven hours, as was listed in the records relied on by Mr Andrews.

(c) The arbitrator was not able to access the Winslow Site Diary for 12 January 2018 and therefore relied upon the Winslow Daily Surveillance Record for that day and accepted Mr Andrews' conclusion.

161 He disallowed Winslow's claim for delay costs of $75,964.62 because, under Standard Section clause 160.D2, delay due to inclement weather gave rise to an entitlement to an EOT but not to delay costs.

162 The arbitrator summarised Variation No. 6 as follows:

Variation No. 6: Pumping of stormwater that had accumulated in the containment area and preparation of the area for CKD placement

Amount claimed $200,284.11[82]

163 The arbitrator allowed the variation for an amount of $200,284.11, for the following reasons:

(a) The arbitrator noted that Variation No. 6 related to the same subject matter as the delay claim in EOT 28, for which he granted 20 days.

(b) The variation claim was for the extra costs of pumping stormwater which had accumulated onsite during the period from April to December 2016, and which could not be disposed of offsite or pumped around the site to allow evaporation.

(c) The claim was based on plant utilisation at hourly rates and was broken down as follows:

• April to October $ 16,675
• October $19,927.46
• November $41,474.01
• December $122,207.64

(d) After the suspension of the works in the winter and spring of 2016, Winslow had to get the site back into a condition to enable critical works to resume, which it did by:

(i) pumping out the rainwater/leachate which had accumulated in the landfill cell on the site over the 2016 winter suspension period; and

(ii) performing additional earthworks in the base of the landfill cell in order to gain access to stockpiles of clay for removal (the clay was trimmed from the batters prior to winter 2016) and to reinstate the area surrounding the sump.

(i) the relevant clauses of the Contract, including Contract Specific clause 300.2 and section 4.8 (Technical Specification); and

a. the claimed works were not part of Winslow's original scope of works under the Contract and constituted a variation; and

b. Winslow took all necessary mitigation steps to recover the site so as to enable work to continue and to comply with the Department's direction and its obligations to use all reasonable endeavours to mitigate delay under Contract Specific clause 1000.11 which entitled Winslow to recover its costs as of a right.

(f) Accordingly, he accepted Winslow's position that the claimed works were variation works and, as there was no challenge to the quantum of the claim, he allowed the amount claimed by Winslow.

[1] On occasion the initials 'WC' appear in quotations. For the avoidance of doubt, WC is a reference to Winslow.

[2] On occasion the initials 'VR' appear in quotations. For the avoidance of doubt, VR is a reference to the Department.

[3] Winslow Constructors Pty Ltd v Roads Corporation (Second Partial Final Award, Dr Richard Manly QC, 7 April 2020) 224 [1166] ('Second Award').

[4] [1981] 2 Lloyd's Rep 130, 132-3 ('Bremer').

[5] [2011] HCA 37; (2011) 244 CLR 239, 269-70 [51], 271 [54] (French CJ, Gummow, Crennan and Bell JJ) ('Gordian').

[6] [2020] VSC 66, [148] ('Tayar').

[7] [2011] HCA 37; (2011) 244 CLR 239, 262 [23].

[8] Ibid 254. For the Solicitor-General's full submissions, see 250-4.

1. [10] Geoff Farnsworth, 'Sufficiency of Reasons in Arbitration Awards' (2012) 26(1) Australian and New Zealand Maritime Law Journal 69, 75.

[12] Gordian Runoff Ltd v Westport Insurance Corporation [2010] NSWCA 57; (2010) 267 ALR 74, 113 [215], 114 [220] (with whom Spigelman CJ and Macfarlan JA agreed).

[14] (2014) 290 FLR 233, 248 [54].

[15] Aircraft Support Industries Pty Ltd v William Hare UAE LLC (2015) 324 ALR 372, 389 [49] (with whom Beazley P and Sackville AJA agreed).

[16] [2020] VSC 66, [148]-[151].

[17] Ibid [151], discussing R v F [2012] HKCFI 1451; [2012] 5 HKLRD 278, 286-7 [37] (Thomas Au J).

[18] [2007] VSCA 255; (2007) 18 VR 346, 364-5 [51] (Buchanan, Nettle and Dodds-Streeton JJA) (emphasis added) (citations omitted) ('Oil Basins').

[19] Ibid (emphasis added by the Court of Appeal).

[20] In Oil Basins [2007] VSCA 255; (2007) 18 VR 346, the Court of Appeal held that the arbitrator was required to provide reasons to a 'judicial standard': at 366 [54]. In Gordian [2011] HCA 37; (2011) 244 CLR 239, the High Court took issue with the reference to 'judicial standard', describing it as an 'unfortunate gloss upon the terms of

s 29(1)(c)': at 270 [53]. Nonetheless, the High Court did not disagree with the general proposition in Oil Basins (quoted in paragraph 51(g) above), and referred with approval to Oil Basins as authority for the proposition that 'what is required ... will depend on the nature of the dispute and the particular circumstances of the case'.

[21] See, eg, Geoff Farnsworth, 'Sufficiency of Reasons in Arbitration Awards' (2012) 26(1) Australian and New Zealand Maritime Law Journal 69, 74-5; John J Hockley et al, LexisNexis Australia, Australian Commercial Arbitration (online at 31 January 2020) [31.30]; Benjamin Hayward and William KQ Ho, 'Balancing the Scales: The Standard of Reasons Required in Commercial Arbitration and Litigation in Australia' (2012) 78(4) Arbitration 314.

[22] Second Award 31 [50]. See also 26-30 [32]-[49].

[27] (1881) 6 App Cas 251, 263 (Lord Blackburn).

[28] Second Award 36-8 [85]-[93].

[37] The Superintendent originally granted an EOT of 120 days, which was subsequently reduced by 30 days.

[38] The arbitrator allowed an EOT of 3.3 days, to be set off against the balance of the contractual adverse weather allowance, reducing the allowable EOT to 0.

[39] The arbitrator allowed an EOT of 8 days, to be set off against the balance of the contractual adverse weather allowance, reducing the allowable EOT to 0.

[40] The arbitrator allowed an EOT of 0.45 days, to be set off against the balance of the contractual adverse weather allowance, reducing the allowable EOT to 0.

[41] The arbitrator allowed an EOT of 25.8 days, to be set off against the balance of the contractual adverse weather allowance, reducing the allowable EOT to 7.4.

[50] Second Award 66 [194], [197].

[52] Gordian Runoff Ltd v Westport Insurance Corporation [2010] NSWCA 57; (2010) 267 ALR 74, 113-4 [218] (Allsop P, with whom Spigelman CJ and Macfarlan JA agreed).

[53] Tayar [2020] VSC 66, [152], citing Giedo van der Garde BV v Sauber Motorsport AG (2015) 317 ALR 792, 796 [12] (Croft J).

[54] [2012] 1 HKLRD 627.

[55] [1999] HKCFA 40; (1999) 2 HKCFAR 111 ('Hebei Import').

[56] [2012] HKCFI 1451; [2012] 5 HKLRD 278, 289 [55].

[57] (2017) 52 VR 198, 203 [16].

1. [58] [2020] VSC 66, [61], citing Ku-Ring-Gai Council v Ichor Constructions Pty Ltd [2018] NSWSC 610, [57], [76]-[79] (McDougall J); Doug Jones, Commercial Arbitration in Australia (Thomson Reuters, 2nd ed, 2013) 3-4 [1.120].

[59] [1999] HKCFA 40; (1999) 2 HKCFAR 111.

1. [60] Ibid 133 (with whom Li CJ and Litton, Ching and Bokhary PJJ agreed) (emphasis added), quoted with approval in Gao Haiyan v Keeneye Holdings Ltd [2012] 1 HKLRD 627, 644 [49] n 20 (Tang VP, with whom Fok JA and Sakhrani J agreed).

[61] Commercial Arbitration Act 2011 (Vic), s 24B.

[62] [2006] VSCA 133; (2006) 201 FLR 178, 185 [15].

[63] Ibid, quoting Commonwealth v Verwayen (1990) 170 CLR 394, 421. See also Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634, 641 (Stephen J).

[64] For the arbitrator's discussion of EOT 9, see Second Award 101-3 [471]-[486].

[65] For the arbitrator's discussion of EOT 13, see Second Award 121-2 [613]-[624].

[66] For the arbitrator's discussion of EOT 14, see Second Award 122-3 [625]-[636].

[67] For the arbitrator's discussion of EOT 15, see Second Award 123-5 [637]-[648].

[68] For the arbitrator's discussion of EOT 16, see Second Award 125-6 [649]-[658].

[69] For the arbitrator's discussion of EOT 18, see Second Award 119-21 [591]-[612].

[70] For the arbitrator's discussion of EOT 19, see Second Award 126-8 [659]-[671].

[71] For the arbitrator's discussion of EOT 20, see Second Award 128-9 [672]-[682].

[72] For the arbitrator's discussion of EOT 21, see Second Award 129-30 [683]-[691].

[73] For the arbitrator's discussion of EOT 28, see Second Award 130-4 [692]-[703].

[74] For the arbitrator's discussion of EOT 33, see Second Award 136-9 [718]-[731].

[75] For the arbitrator's discussion of EOT 34, see Second Award 139-41 [732]-[743].

[76] The time period claimed as part of EOT 22 consisted of days in both Windows 5 and 6.

[77] For the arbitrator's discussion of EOT 22, see Second Award 155-7 [846]-[858].

[78] For the arbitrator's discussion of EOT 26, see Second Award 144-5 [764]-[774].

[79] For the arbitrator's discussion of EOT 27, see Second Award 159-61 [874]-[884].

[80] For the arbitrator's discussion of EOT 29, see Second Award 164-5 [907]-[916].

[81] For the arbitrator's discussion of EOT 35, see Second Award 162-4 [898]-[906].

[82] For the arbitrator's discussion of Variation No. 6, see Second Award 200-6 [1079]-[1104].