NEW SOUTH WALES SUPREME COURT

CITATION:

Neumann Contractors v Wyong Shire Council [2010] NSWSC 614

JURISDICTION:

Equity Division

Technology & Construction List

FILE NUMBER(S):

2007/266721

HEARING DATE(S):

27/4/10, 28/04/10, 29/04/10 and 03/05/10

JUDGMENT DATE:

16 June 2010

PARTIES:

Neumann Contractors Pty Limited (Plaintiff)

Wyong Shire Council (Defendant)

JUDGMENT OF:

McDougall J

LOWER COURT JURISDICTION:

Not Applicable

LOWER COURT FILE NUMBER(S):

Not Applicable

LOWER COURT JUDICIAL OFFICER:

Not Applicable

COUNSEL:

M G Rudge SC / F P Hicks (Plaintiff)

P H Greenwood SC / I G B Roberts (Defendant)

SOLICITORS:

HWL Ebsworth Lawyers (Plaintiff)

Clarke Kann Lawyers (Defendant)

CATCHWORDS:

BUILDING AND ENGINEERING CONTRACTS – action by council to recover alleged overpayment from contractor – contract to rehabilitate and redevelop disused landfill – where specification required plaintiff to excavate to ‘top of waste profile’ –where council claimed that contractor over-excavated – whether contract required or permitted contractor to excavate existing fill beyond the top of waste profile if the material then at the top of waste profile met the specification requirements for cover soil – whether contract required or permitted the contractor to excavate more than 100mm below the top of waste profile if additional excavation was necessary to ensure the cover soil layer met the specification requirements – whether excavation beyond the top of waste profile required council approval – whether council gave approval – whether excavation in fact performed affected ability of site to be impact rolled – whether impact rolling should take place on 100mm cover soil – whether thickness of cover soil layer as a working surface was part of temporary works necessary for contractor to undertake as part of lump sum provided for impact rolling – whether impact rolling trial was a variation – whether importing and laying of crushed sandstone compensable under contract – appropriate rate payable – whether contract included a fixed price for piling of underground tanks – what amount was agreed to be paid for piling of underground tanks.

LEGISLATION CITED:

Building and Construction Industry Security of Payment Act 1999 (NSW)

CATEGORY:

Principal judgment

CASES CITED:

TEXTS CITED:

DECISION:

Defendant's cross-claim succeeds in part. Parties to bring in short minutes of order.

Stand over for argument on costs.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

16 June 2010

2007/266721 NEUMANN CONTRACTORS PTY LTD v WYONG SHIRE COUNCIL

JUDGMENT

1 HIS HONOUR : The plaintiff (Neumann) agreed with the defendant (the council) to rehabilitate and redevelop a disused landfill at Bateau Bay (the site). Neumann received the benefit of determinations by adjudicators pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act). It commenced these proceedings to enforce one such determination. The council has paid all amounts determined in favour of Neumann. It says that Neumann has been substantially overpaid for the work done by it, and by its cross-claim (which is all that remains in issue in these proceedings) the council seeks to recover the amount of the alleged overpayment.

Broad outline of the dispute

2 The site comprises two areas of landfill, referred to in the evidence and in these reasons as “the northern landfill” and “the southern landfill”. They are divided by a drainage channel referred to in the evidence and in these reasons as “the east-west drainage channel”. The site was used for the disposal of municipal waste and other unpleasant substances until the mid 1980s. Thereafter, it was capped, contoured, graded and used for playing fields. That use ceased (at least for the southern landfill) following subsidence in the early 1990s.

3 The council decided to “remediate” the site, which was considered to pose a significant risk of harm to adjacent landowners. The rehabilitation works that, ultimately, Neumann agreed to carry out were to include, in general terms:

(1) levelling the site by reworking the existing capping and waste materials in the southern and northern landfills;

(2) compaction of the reworked material to minimise future settlement;

(3) placing a covering layer of soil;

(4) sealing off the waste by laying a geo-synthetic clay liner (known as GCL) over the cover soil;

(5) laying further material over the GCL to form a level grassed surface for sporting fields; and

(6) the construction or erection of various works including an amenities building, light towers, roads, paths and parking facilities.

4 The specification for the excavation and placement of waste required that Neumann should excavate to what was called the “top of waste profile” shown on the engineering drawings. The objective was to level out the high and low points in the northern and southern landfills, so as to achieve a level profile that could be compacted, sealed and covered.

5 The council claims that Neumann over-excavated, in particular in the southern landfill, and that because it excavated further than it was required to do, Neumann claimed and was paid too much for excavation. For the same reason, the council says, Neumann claimed and was paid too much for replacing waste and capping material, and imported fill, on the site. Five of the seven claimed heads of overpayment relate to those matters and to what are said to be over-payment for excessive impact rolling undertaken as a result of those matters.

6 The drawings and specifications also provided that underground water tanks were to be placed within the remediated area. The council claims that Neumann was overpaid for the cost of providing foundations for the water tanks and the pilings on which those foundations were to rest.

The agreed issues

7 The parties agreed that the real issues for decision were as follows:

A. Over-excavation, impact rolling and crushed sandstone

1. Did the contract require or permit the contractor to excavate existing fill on the site beyond the top of waste profile if the material then at the top of waste profile met the specification requirements for cover soil?

2. If additional excavation was necessary to ensure the cover soil layer met the specification requirements, did the contract require or permit the builder to excavate more than 100mm below the top of waste profile?

3. Did excavation beyond the top of waste profile require approval of the Superintendent?

4. Did the Superintendent give approval to excavation beyond the top of waste profile by reason of the matters set out in the attached particulars.

5. Did the excavation of the site beyond the top of waste profile adversely affect its ability to be impact rolled?

6. Did the Specification provide that impact rolling was to be conducted on a 100mm layer of cover soil?

7. If not, was the thickness of the cover soil layer as a working surface part of temporary works necessary for the contractor to undertake as part of the lump sum provided for impact rolling?

8. Was the impact rolling trial a variation to the contract? If so, when was the contract so varied?

9. If the importing and laying of the crushed sandstone was compensable under the contract, what is the appropriate rate payable?

B. Underground tanks

1. Did the contract awarded on 20 December 2006 include a fixed price for piling of the underground tanks?

2. If not, what amount was agreed to be paid for the piling of the underground tanks?

8 The “particulars of approval” referred to in issue A 4 are as follows:

1. The work was to be supervised on a full-time basis by the Council (section 3.8.3 of the Remediation Action Plan).

2. In April 2007, a joint survey was undertaken by the parties which relevantly indicated that the actual level of the substantial part of the southern landfill was lower than the design profile or level to be achieved.

3. As at April 2007, the earthworks were the subject of a work method statement, a joint survey, a survey set-out on site (star pickets), and inspections and assessment by the Superintendent’s Representative (Wassef) and an officer of the Council (Alderson) prior to commencement. At this time, the Council was advised of Neumann’s proposed methodology for the southern landfill, being:

a. the stripping and stockpiling of all existing capping material;

b. the excavation of waste;

c. the placement of waste; and

d. the placement of a capping layer by the relocation of the stockpiled existing capping material to form the uppermost portion of the fill as a uniform, homogenous and flat strata which incorporated the cover soil layer at the “top of waste profile” (see drawings at JAG-D to affidavit of Jim Gilford sworn 15 April 2010).

The work was to undertaken in stages throughout the southern landfill. The fact that excavation and placement activities was to occur in areas actually below the ultimate design “top of waste” profile” was clear.

4. On or about 5 April 2007, the Superintendent’s Representative (Wassef) approved the performance of the earthworks as proposed by Neumann and released the contractual hold point (clause 250.06.1) so as to allow the works to commence.

5. The earthworks proceeded in stages on the southern landfill and were supervised by the Council and the Superintendent’s Representative as and from about 10 April 2007.

6. At all material times, the nature and extent of the earthworks being performed in the southern landfill was obvious to any person with any basic understanding of engineering and the provisions of the contract.

7. By email sent on 20 April 2007, the Superintendent’s Representative (Wassef) was advised of the likely quantities of excavation and placement required as a result of the approach whereby all existing capping material was to be stripped. The Superintendent’s Representative (Wassef) replied that this was “fine” .

8. The works were performed throughout April, May, June and July 2007 under the direct and close supervision of the Council and the Superintendent’s Representative (Wassef, Tennant and Pradhan).

9. The works were the subject of progress claims which were approved for payment.

10. By letter dated 24 May 2007, Neumann expressly outlined the present earthworks that it was performing and to perform, in the context of its advice that the nature of the site required a design change whereby a sandstone layer be placed. There was no reply or suggestion from the Council or the Superintendent’s Representative that the works being performed or to be performed were inconsistent with (let alone a breach) of the contract.

11. Neumann was directed to undertake a trial of the proposed sandstone layer by the Superintendent in 31 May 2007. The trial of the sandstone proposal was performed in July 2007, and the results provided to the Superintendent’s Representative.

12. The earthworks were completed in or about July 2007.

13. At no time did Mr Tennant or anyone else raise any issue, concern or comment as to the performance of the earthworks in the period that they were substantially performed (April to July 2007).

14. Throughout August and September 2007, Neumann pressed for a direction in respect of the sandstone proposal. The works substantially came to a standstill. At no stage did the Superintendent’s Representative (Pradhan) or the Council suggest that the earthworks had been undertaken in breach of contract or that they were in any way defective.

15. At a meeting on 14 September 2007 and by correspondence 14 September and 17 September 2007:

a. Neumann advises that a direction to proceed with respect to the sandstone proposal is critical because the works have effectively stopped and plant has been demobilised;

b. the Council advises it wants another detailed proposal for the proposed sandstone works;

c. Neumann provides the proposal;

d. the Council advises that it has no objection to Neumann proceeding with the works, but that it is not directing it and the “non-objection” is not an acceptance of any liability;

e. Neumann refuses to proceed on that basis.

16. On or about 17 September 2007, the Department of Commerce (through Pradhan) ceases to act as the Superintendent’s Representative.

17. By correspondence dated 18 and 21 September 2007, the Superintendent (Paul Wise of the Council) asserts that the earthworks performed by Neumann were in breach of contract, have caused the earthworks to be substantially defective (i.e. “destabilised”), and directs that Neumann perform the works under the sandstone proposal as “rectification works” pursuant to clause 30.3 of the general conditions of contract at Neumann’s cost.

The witnesses in the case

9 Although the parties served many statements, affidavits and expert reports, only three witnesses gave oral evidence and were cross-examined. They were (for the council) Mr John Craig Tennant and Mr Raafat (known as George) Wassef, and (for Neumann) Mr James Alan Gilford.

10 Mr Tennant is a project manager employed by the council. He was involved in the remediation project in a number of ways. Of particular interest, he was the Superintendent’s Representative under the contract from 19 April to 21 May 2007 and again from 16 September 2007 on.

11 Mr Wassef is a civil and structural engineer. He was a consultant to the council in connection with the project, and was the Superintendent’s Representative from the commencement of the project until Mr Tennant took over that responsibility on 19 April 2007.

12 Mr Gilford is a civil engineer, and a project manager employed by Neumann. He was Neumann’s project manager for the remediation of the site pursuant to the contract.

13 I pause to note that the Superintendent under the contract was Mr Paul Wise of the council. He was not called to give evidence. The Superintendent’s Representative between the times when Mr Tennant occupied that position was the Department of Commerce. Its functions in that capacity were performed by Mr Rajendra Pradhan. He was not called to give evidence.

14 I did not think that any of Messrs Tennant, Wassef or Gilford sought to give evidence that he knew to be untruthful. However, I think, each of Mr Tennant and Mr Gilford identified himself with the cause of his employer. Whilst I do not suggest, nor do I think, that this caused either of them to give evidence that was knowingly dishonest or misleading, I do think that it needs to be borne in mind when assessing their evidence. In circumstances where there is a substantial volume of contemporaneous material, I think that consistency with that material is the surest guide to reliability of testimony. Further, in Mr Gilford’s case, I have some concerns as to the reliability of his evidence, taking into account the matters referred to in the following paragraph and at [69] to [72] and [146] below.

15 To the extent that there is disagreement between Mr Tennant and Mr Gilford, my preference is for the evidence of Mr Tennant. In general, I thought, Mr Tennant’s evidence was careful and reliable. By contrast, there were aspects of Mr Gilford’s evidence, and of the detail of his recollection, that gave me some concern. Since the area of conflict between Mr Tennant and Mr Gilford is not large, I shall give brief references to three examples only of the matters to which I refer:

(1) Mr Gilford said in para 170 of his affidavit sworn 29 October 2008 that cover soil was required to come from the site. That was not correct, as ultimately, he accepted (T76.20.35).

(2) Mr Gilford asserted more than once that Neumann had not excavated below the top of waste profile in the area of the amenities building (T95.24 - .42; 110 .3 -.15; 134.25 - .34). When pressed on this, he resiled from it (T134.36 - .41; 137.40 - .45).

(3) As part of the matter just mentioned, Mr Gilford initially misidentified the location of the amenities building (T135.28 – 136.41) as he conceded when pressed (T137.1 - .38).

16 Whilst I stress that I do not think that Mr Gilford was seeking to mislead the Court, those matters (and others to which I refer below) nonetheless suggest to me that, particularly where his evidence is controversial, it needs to be assessed with some care.

17 Otherwise, the evidence consisted of expert reports that were not required to be verified or tested (and which in my view added very little to the resolution of the real issues in dispute) and the survey evidence to which I will turn to in a moment (which was of great value).

First to third issues: excavation beyond the top of waste profile

18 Since these issues all concern the proper construction of the contract, it is convenient that they be dealt with together. It is also convenient to give them some factual context by referring to the evidence (substantially unchallenged) as to the extent of the over-excavation alleged.

Relevant provisions of the contract

19 Excavation and placement of waste is dealt with by Specification 250. The scope of works is set out in cl 250.01.1:

- excavation of existing capping soil and landfill waste for proposed east and west drainage channels, main east-west drainage channel;

- excavation of existing capping soil and landfill waste for water storage tanks;

- placement and recompaction of excavated landfill waste and existing capping soil;

- placement of the cover soil layer to achieve the “top of waste” profile;

- sampling and testing of the “top of waste” surface and contamination assessment; and

- impact rolling of the non-batter areas of the “top of waste” surface.

20 The work was to be staged, and Neumann was required to submit a staging plan and work method statement for approval of the Superintendent (cl 250.03). By cl 250.06.1, Neumann was required to “identify the extent of the required excavation for each stage by the use of star pickets and 2 strands of highly visible tape or better…”. The requirement thus to identify the extent of excavation for each stage was described as a “HOLD POINT”. As a result, the Superintendent’s inspection and approval was required, and excavation was not to start, for any stage, before the hold point was “released”.

21 Runoff was dealt with by cls 250.06.4,.5:

4. Unless indicated otherwise in the required management plans or contract documents, the Contractor shall be responsible for ensuring that no surface water runoff enters the excavation.

5. The Contractor shall be responsible for ensuring that all surface water runoff that comes into contact with waste is contained and managed in accordance with the required management plans or contract documents.

22 Clause 250.07 dealt with the extent of excavation. It reads as follows:

1. The Contractor shall excavate the proposed “top of waste” profile shown on the Drawings. Additional excavation may be required to allow for cover soil placement in areas where the material at the excavated surface does not meet the requirements for the cover soil layer (refer clause 250.08). The excavated material is expected to comprise existing capping soil of variable thickness and underlying waste. The waste has the general appearance of municipal waste within a soil matrix but other materials may be present. Refer to site investigation reports.

2. In the area of the water storage tanks, the Contractor shall excavate to the depths shown on the Drawings.

3. All excavated waste and existing capping soil shall remain on site and be placed within the “top of waste” profile unless otherwise directed by the Superintendent.

4. Where excavation exceeds the extent on the drawings or approved by the Superintendent, the Contractor shall reinstate the area. Such work shall not be considered as a justifiable basis for time or cost variation.

5. Where excavation exceeds the lateral extent approved by the Superintendent, the Contractor shall reinstate the area with GENERAL FILL, compacted to at least 95% standard compaction, to the satisfaction of the Superintendent. Such work shall not be considered as a justifiable basis for time or cost variation.

23 Material placement and compaction was dealt with by cl 250.08 and following. Clause 250.08 reads as follows:

1. Materials shall be placed to achieve the “top of waste” profile as shown on the Drawings.

2. COVER SOIL forms the upper 100mm of the “top of waste” profile, as indicated in the Drawings. COVER SOIL shall consist of material with the following characteristics:

(i) comprised predominantly of natural soil materials with less than 5% by volume of other materials such as inert waste or decomposable organic material;

(ii) maximum particle size of 25mm; and

(iii) capable of being compacted to form a dense and relatively smooth surface suitable for GCL placement;

3. The Contractor shall avoid mixing excavated waste and excavated existing capping soil and shall make every effort to place existing capping soil, rather than waste, to form the uppermost portion of the fill.

4. Existing capping soil, where satisfying the requirements for COVER SOIL, may be used to form the COVER SOIL layer.

24 Clause 250.09.7 permitted the importation of fill in the event that material from the site was insufficient to achieve the requisite levels:

7. Material shall be placed and compacted to the “top of waste” profile, with allowance for the thickness of the COVER SOIL as needed. In the case that there is insufficient material available to achieve the design profiles, material is to be supplemented with suitable general fill to match the design waste profiles.

25 Clause 250.10 dealt with cover soil placement. Paragraph 3 is of some significance:

3. On the relatively flat areas of the landform (i.e. non-batter areas), Cover Soil shall be placed to achieve a nominal layer thickness of 100mm after compaction and impact rolling. Compaction will be performed by track rolling, or other method, to form a working surface suitable for impact rolling.

26 Clause 250.12 dealt with impact rolling. Paragraph 1 confirmed that “impact rolling shall be performed using the Cover Soil layer as a working surface.”

The survey evidence

27 Neumann and the council each retained a surveyor to give expert evidence. The surveyors conferred, and produced a joint report. They annexed a number of drawings to that joint report. The first was a contour plan of the overall site. The second was a plan of the southern landfill showing the approximate limits of cut and fill. In general, the batter at the western side of the southern landfill was an area of cut, as was the greater part of the eastern one-third of the southern landfill. The central and northern parts of the southern landfill were, in general, areas of fill, with the exception of a small mound in the northern one-third and the battered or sloping area descending into the east-west drainage channel.

28 The surveyors also prepared a series of transverse (or east-west) cross-sections of the southern landfill at various chainages . Each cross-section showed, as at the chainage to which it referred:

(1) the level before work commenced;

(2) the top of waste profile; and

(3) the level of the excavated surface.

29 In general terms, those cross-sections showed that Neumann had excavated below (and in some cases substantially below) the top of waste profile throughout the southern landfill. That was so both for the areas of cut and for the areas of fill.

30 The information contained in those east-west sections was confirmed by a series of longitudinal (or north-south) sections.

31 In short, the survey evidence showed quite clearly that, as the council said was the case, Neumann had excavated below or substantially below the top of waste profile over much of the southern landfill, and had done so in areas of fill as well as in areas of cut.

The parties’ submissions

32 Mr P H Greenwood of Senior Counsel, who appeared with Mr I G B Roberts of counsel for the council, submitted that the proper construction of the relevant provisions of Specification 250 was plain. He submitted that:

(1) the obligation cast on Neumann by cl 250.7.1, read in conjunction with the relevant drawings, was to excavate to the top of waste profile;

(2) excavation beyond (i.e. below) that level would be permitted only where the material at the excavated surface did not meet the requirements for “Cover Soil” (defined in cl 250.08.2);

(3) further excavation could be carried out only to the extent required to achieve a layer of Cover Soil having a nominal thickness of 100mm after compaction and impact rolling (cl 250.10.3); and

(4) the extent of excavation, including excavation beyond the top of waste profile, required the consent of the Superintendent (cl 250.06.1).

33 Mr M G Rudge of Senior Counsel, who appeared with Mr F P Hicks of counsel for Neumann, submitted that the relevant provisions of Specification 250 (including, in particular, cl 250.07) must be construed by reference to other material forming part of the contract. That other material included reports obtained by the council based on investigations of the site, and containing references to the kinds of remedial work that might be undertaken.

34 Mr Rudge referred specifically to a Rehabilitation Construction Management Plan (RCMP) prepared for the council by URS Australia Pty Ltd (URS) and a Remediation Action Plan (RAP) also prepared by URS. The former of those documents referred to “re-profiling the landform”. Mr Rudge submitted that this referred to recommendations made by other consultants in other documents that formed part of the contract to “reworking” the surface of the site.

35 Mr Rudge submitted that, when one took the whole of the contract into account:

(1) clause 250.7 of the specification applied only where, prior to the commencement of any work, the level of the southern landfill was above the top of waste profile; and

(2) in any event, the further excavation that Neumann carried out (below the top of waste profile) was justified because of the requirement to rework the site so as to enable it to be levelled and compacted in accordance with the specification.

Decision

36 accept that, in construing provisions of a contract, it is necessary to look at the contract as a whole, and to place the provisions being construed into their context. I accept, further, that where the provisions being construed are uncertain or ambiguous, it is not only legitimate but desirable to seek to give them meaning consistent with other relevant provisions of the contract.

37 In this case, in my view, the relevant provisions of the specification are clear and unambiguous.

38 The relevant requirements of the first paragraph of cl 250.07 are found in its first two sentences:

(1) Neumann is to excavate to the top of waste profile shown on the drawings; and

(2) where material at the excavated surface does not meet the requirements to cover soil, additional excavation may be required to allow for the placement of Cover Soil.

39 The starting point, or the general rule, is the requirement to excavate to the top of waste profile. The exception to that general rule arises where, after excavation to the top of waste profile, it is discovered that the material exposed does not meet the requirements for Cover Soil. In those circumstances, further excavation is permitted to permit the placement of Cover Soil. The Cover Soil may be brought from another section of the site (if it is available). Otherwise, it is to be imported onto the site.

40 Further, cl 250.07 dealt with the extent of excavation required. In terms, it did not authorise any excavation in those parts of the southern landfill that were below the top of waste profile before the commencement of any work on the site. If excavation were undertaken in those areas, it could only be (with the consent or at the direction of the Superintendent) to facilitate the processes of compaction and levelling to the top of waste profile. In those areas, of course, the process of levelling would require the placement of fill, not the excavation of the capping layer. Thus, cl 250.07 is applicable to, in the sense that in effect it negatives excavation in, areas of fill.

41 In summary, cl 250.07 operates as follows:

(1) in areas of cut, it permits excavation down to the top of waste profile except where the material exposed thereby does not meet the requirements for Cover Soil;

(2) if that exception applies, cl 250.07 authorises a further 100mm of excavation; and

(3) in areas of fill, cl 250.07 does not authorise any excavation at all, with the result that there is no contractual requirement or authorisation (at least, without the approval or direction of the Superintendent) for excavation in areas of fill.

42 Of course, Neumann would be justified in excavating (or required to excavate) further if so directed by the Superintendent. But there is no suggestion in this case that the Superintendent gave any such direction.

43 That construction, which seems to me to be plain on the ordinary English meaning of the language in which the parties expressed this aspect of their bargain, is not inconsistent with other provisions of the contract. On the contrary, it is consistent with the commercial purpose of the contract. It was a schedule of rates contract. It was in the council’s interest to limit its obligation to pay for excavation and fill, by minimising the extent of those activities. That is why cl 250.06.1 requires the identification of the extent of excavation for each stage of the works, and the approval of the Superintendent before excavation is to commence.

44 The schedule of rates that formed part of the contract contemplated that the material to be excavated would be approximately 34,800m³. That is the approximate volume of material that lay above the top of waste profile in the southern landfill.

45 Further, the parties had available to them reports based on geotechnical investigations. Those reports showed that the capping layers were quite thick, and moderately well compacted. One group of reports, prepared by Coffey Geosciences, suggested that the capping layer had an average depth over the southern landfill of about 0.54 metres. Another, “draft”, report, prepared by Douglas Partners in 2006, suggested that the thickness of the capping layer ranged from 1 to 3 metres. The Douglas Partners report suggested, further, that if an impact roller were used, this “would negate the need for the removal of the initial capping material”.

46 The second sentence of cl 250.07.1 applies only if the capping material is unsuitable for use as Cover Soil. In this case, there is no suggestion that the capping material was not suitable for that use. On the contrary, capping soil that was removed in areas where, on any view, cut was required was redeployed as Cover Soil in areas where, on any view, fill was required. But even if (contrary to the situation that existed on site) the capping material were unsuitable for use as Cover Soil, what the second sentence contemplated was excavation to a depth sufficient to allow a layer of Cover Soil to be placed.

47 By reference to cl 250.10.3, the Cover Soil was to have a nominal thickness of 100mm after compaction and impact rolling. It follows that, if excavation below the top of waste profile were permitted or required in accordance with the second sentence of cl 250.07.1, it should only be to a depth of 100mm below the top of waste profile.

48 If excavation exceeded what was shown on the drawings or approved by the Superintendent, then Neumann was obliged to reinstate at its own cost (see cl 250.07.4). It follows that, even if the second sentence of cl 250.07.1 were engaged, Neumann required the approval of the Superintendent before excavating below the top of waste profile.

Answers to issues 1 to 3

49 For those reasons, I answer issues 1 to 3 as follows:

Issue 1: No.

Issue 2: No.

Issue 3: Yes.

Fourth issue: approval

50 Although it might be thought, from the form of issue 4 and the particulars of approval, that it was Neumann’s case that approval was to be inferred or implied from conduct, it appeared in final submissions that Neumann relied on an email of 20 April 2007 (referred to in para 7 of the particulars) as an express approval. However, I think, it is preferable to review the whole of the material relating to the particulars of approval, rather than to focus simply on that email.

51 Before dealing with the particulars of approval, I shall set out the relevant facts (by which I mean, not just the facts relevant to approval but, because of the substantial overlap between the remaining issues, the facts generally).

The relevant facts

52 On 9 November 2006, Neumann submitted a tender for the performance of the remediation works. The tender offered to perform the works described in it for a lump sum price of $11,577,820.67 inclusive of GST. Nonetheless, the contract as made was agreed to be a schedule of rates contract, under which Neumann was entitled to be paid for the work actually performed.

53 Neumann’s tender specified some departures from the details given in the request for tender issued by the council. Of significance to Section B of the agreed statement of issues, Neumann quoted for two alternatives to the “Envirotank” underground water tanks referred to in the request for tender. It offered to provide underground concrete water storage tanks, and ancillary equipment, for a specified rate per tank. The tender document stated that if Envirotanks were to be used instead of the concrete tanks, there would be an additional sum payable, of $210,298.50. Alternatively, the tender said, if “Ribloc stormwater detention tanks” were used, there would be an additional sum payable, of $184,410.00.

54 In addition, the tender included a number of “clarifications”. One of those clarifications stated:

We have allowed to for [sic] a top capping layer not exceeding 500mm thick. We have allowed the bottom 100mm to be a sacraficial [sic] layer and be[sic] used as general fill with the other excavated rubbish.

55 Mr Robert Vasey of Neumann discussed the tender with Mr Wassef. Following those discussions, on 29 November 2006, Mr Vasey forwarded a revised tender. Again, it provided for concrete water storage tanks instead of Envirotanks.

56 After some further negotiations and clarifications, the council wrote to Neumann on 20 December 2006 accepting the final revision of the tender.

57 On 8 January 2007, Neumann provided to the council a draft work method statement (WMS) covering “waste placement”. A revision, described as Revision 0A, was provided the following day. The procedure for the cut and fill operation was described, so far as it is relevant, as follows:

PROCEDURE

The work involves stripping excess fill for the full width of the site and relocating it to general fill areas (southern building & carpark areas, perimeter mounds, eastern drain zone) then reshaping the waste to the design profile and capping with 100mm of covering soil.

1. Survey the cleared site to establish the base for quantity surveys and set out the top and base of batters.

2. The work will be carried out in accordance with the Staging Plan, essentially commencing at the southern end and progressing northwards.

3. Prepare the receiving areas by benching and, in natural material, rip, recompact and proof roll the subgrade.

4. The Superintendent must be present during proof rolling. Do not proceed to place fill/waste until the relevant Hold Point has been released.

5. Where the subgrade is unsuitable, excavate to the extent directed by the Superintendent and do not proceed until the Superintendent has inspected and released the Hold Point.

6. Replace with General Fill.

…

8. Divide State I & Stage II zones (dwgs 28 & 29) transversely across the site at

a. Northern edge of new amenities building;

b. Middle section (approx 40m wide);

c. North section (approx 40m wide).

9. Strip excess fill from the middle section and

a. Fill the southern section to design subgrade level;

b. Place fill for the perimeter mounds, initially formed as the perimeter access track, later to be reshaped as a mound;

c. Fill under eastern perimeter drain to base of batter.

10. Excavate and place waste to design profile (including 100mm covering soil), winning the covering soil from the adjacent section. …

15. Repeat the above process for the north section.

…

17. Repeat the process by dividing Stage III & IV zones transversely approximately 50m north of the division between Stages I & II and Stages III & IV.

…

21. In the northern section move the waste from north to south along the east-west drain.

58 The “Stages” referred to were identified in one of the contract drawings. The southern landfill was divided into quarters with the two southern-most quarters being Stages I and II and the two northern-most quarters being Stages III and IV (this last Stage was wrongly identified on the drawing as “Stage VI”).

59 A difference of opinion in relation to the tanks emerged at an early stage. An exchange of emails between Mr Gilford and Mr Wassef between 2 and 6 February 2007 shows that Neumann was claiming that the cost of supporting slabs for the tanks was not included in its tender, whereas Mr Wassef took the view that it was. I shall return to this in dealing with section B of the agreed statement of issues.

60 Mr Gilford’s site diary for Tuesday 13 February 2007 notes a meeting with Mr Wassef and asserts that Mr Wassef said that the council “definitely will reimburse for piles”. The relevant note reads as follows:

WSC

-GW

- “Definitely will reimburse for piles

- compensate cost of pile cap with piles

- bigger piles due to revised dwg → higher cost

- RFI 22 re tank capacities emailed...

...

61 Against the left hand side of that entry, but under the initials “WSC”, Mr Gilford placed a bracket and wrote against the bracket “Wed”.

62 A subsequent entry in that page of the diary, relating to various other matters to do with the project, is likewise marked with a bracket on the left hand side against which Mr Gilford wrote “Wed”. Mr Gilford said in his affidavit that the conversation and other matters in fact occurred on Wednesday 14 February 2007. He said that he opened the wrong page of his diary when he recorded them; but that when he realised this, he annotated the note in the way that I have just set out.

63 Mr Wassef denied that he told Mr Gilford that the council would compensate Neumann for the cost of pile capping. He accepted, however, that he said that council would pay for the actual piles. Mr Wassef pointed out that when he received Neumann’s tender response in late November 2006, he realised that it did not provide for piling to support the underground water tanks. He discussed this with Mr Vasey (who was not called to give evidence) and Mr Vasey said that Neumann had just received a quote from a piling subcontractor. In due course, on 1 December 2006, Neumann quoted for piling. It will be necessary to return to the detail of this.

64 I prefer Mr Wassef’s account of the conversation of 14 February 2007. It seems to me to accord, objectively, with the probabilities. It was common ground that the Douglas Partners report had indicated that the underground water tanks should be supported on piles driven through the underlying waste material. It was also common ground that pile caps, or something equivalent, would be required as part of the design. The reason is that pile caps, or something equivalent, would be required to distribute the load evenly to prevent point load impacts on the tanks. The relevant drawing was schematic only and did not purport to be (nor could it have been understood to be) a full design of the tanks with their underlying support structures. On the contrary, the drawing specified that the tanks were to be “Envirotank fibreglass underground storage tanks (100KL) or an approved equivalent”. Further, it noted, the tanks were to be “installed in accordance with the manufactures [sic] specifications”. Mr Gilford accepted that he had not looked at the manufacturer’s specifications. I think that the reality is that when Mr Vasey was asked to quote for piling he did so, but that the need for point loads to be evenly distributed was overlooked. It is clear that, when Neumann submitted its original pricing for tanks, it had overlooked the recommendation of Douglas Partners as to the desirability of supporting the structures by piling.

65 In any event, events moved on from there. On 19 March 2007, Neumann wrote to the council. One of the statements in that letter dealt with pile capping. It said, so far as is relevant:

The addition of piles requires a pile cap, a reinforced concrete slab with beams to distribute the load from the tanks. Neumann Contractors have agreed with WSC to include in our tendered rate for the tanks, the cost of a 130mm slab, as shown on our design drawing No 2. Even though the slab was not originally costed, WSC contend that such a slab would be required irrespective of ground conditions.

66 That point was repeated on the second page of the letter and in the costing on the last page of the letter. It was also confirmed in the email under cover of which the letter was sent to Mr Wassef.

67 Although Mr Wassef’s email in reply complained about the tone of Neumann’s letter and what Mr Wassef saw as Neumann’s disregard for “the nature of the contract (Schedule of rates)”, the letter written by Mr Wassef which replied to Neumann’s letter of 19 March 2007 did not in terms deny the assertion that some agreement had been struck between Neumann and the council in relation to the deduction of the cost of 130mm slab from the cost for pile capping.

68 Neumann commenced work on site on about 5 March 2007. That work was limited to the clearing of vegetation and grubbing out of trees. The WMS Revision 0A had not been approved, and accordingly Neumann was not able to proceed with work under it.

69 Mr Gilford gave evidence that he had a number of conversations on site with Mr Wassef and Mr Michael Alderson of the council. According to Mr Gilford, in one of those conversations, he said words to the effect that Neumann proposed to excavate “to sufficient depths to allow 500mm of capping material over the waste” and that Messrs Wassef and Alderson said “agreed”. Mr Wassef denied that he had had such a conversation with Mr Gilford. So did Mr Alderson.

70 I prefer Mr Wassef’s and Mr Alderson’s denials to Mr Gilford’s evidence of the conversation. The reasons for this include the following:

(1) When cross-examined on this topic, Mr Gilford agreed that he could not recall any specific conversation as given in his affidavit (T83.50-84.2);

(2) It was not consistent with the relevant provisions of Specification 250 or with the WMS that Neumann had submitted and Mr Wassef, as Superintendent’s Representative, had approved;

(3) Mr Gilford appears to have thought that the method was consistent with the WMS, and therefore that no approval was required (T84.46-85.9);

(4) On no view does the WMS Revision 0A specify that this is what Neumann proposed to do. On the contrary, it stated that “[o]nce cleared, there is approximately 35,000 m³ of waste to be relocated on site to form the basic shape of the site”. That is consistent with the estimate of quantities in the tender (34,800 m³). The tender was based on excavation to the top of waste profile, not on an overall excavation to a depth of 500mm.

(5) Further, the detail of the procedure given in the WMS Revision 0A simply referred to “stripping excess fill for the full width of the site”: again, something consistent with the tender and Specification 250;

(6) Mr Wassef struck me as a person whose attention to detail was extremely high (as witnessed, I think, by the time that it took him to approve the WMS; and by the detail of his correspondence in relation to the water tanks). I think it unlikely in the extreme that he would have allowed such a comment to pass by without questioning it: particularly having regard to what I perceive as being the discrepancies between what Mr Gilford alleges he said on this occasion and the requirements of the specification and the WMS; and

(7) The proposition appears to be inconsistent with the “QA checklist” and “inspection and test plan” (or ITP) prepared by Neumann for the purposes of the remediation of the site. Item 4 of the former document refers to, among other things, to “excavated/filled to “top of waste” levels shown on drawings or to design levels of structural footings”; and that is repeated in item 8 of the ITP. Again, that is consistent with the requirements of the specification, and not with some more generalised proposal for overall excavation to a depth of 500mm.

71 Most importantly, I note that Mr Alderson provided a statement, which was tendered without objection, in which he denied the conversation in question. Mr Alderson was not required for cross-examination, nor indeed was his statement required to be verified before it was tendered. No point was taken that it was somehow of less weight because it had not been verified. Nor could such a point have been taken, when the statement could have been verified but its tender without verification was the subject of explicit consent (T129.45).

72 I am not satisfied that Mr Gilford had a conversation with Mr Alderson and Mr Wassef in or to the effect of the terms alleged, in March or April 2007. On the contrary, I conclude that there was no such conversation.

73 After Mr Wassef approved the WMS, the cut and fill operation commenced on the southern landfill. Mr Gilford said that this work commenced on about 6 April 2007, and there is no reason to think otherwise.

74 The evidence on the point is not explicit, but it seems that Neumann set out the excavation works by the use of star pickets and tape as required in cl 250.06.1 of the specification. Certainly, it appears that there were some markers, showing the required levels of excavation, on site on 24 April 2007 when Mr Tennant first went there (T37.41). I do not think that there was evidence as to the extent of setting out, or of the significance, in terms of the proposed excavation, of what might have been shown by reference to the star pickets and tape. Specifically, I do not think that there was evidence that someone in Mr Wassef’s position, looking at the way the site was set out, should have understood that it was proposed to excavate below the top of waste profile in many parts of the southern landfill. If there were such evidence, it was not referred to in submissions.

75 Neumann’s work was halted almost immediately after it began. An adjacent landowner, Mr Darcy Smith, complained because material excavated from the western batter had spread across the boundary of his land. The council issued a stop work order until this problem was resolved.

76 Once the initial problems with Mr Smith were sorted out, work resumed on the southern landfill. It continued until heavy rain fell on 24 April 2007. According to Mr Gilford’s site diary, there was no excavation between 24 and 30 April 2007. A survey carried out as at 19 April 2007 (but sent to Neumann on 30 April 2007), showed that 14,314m³ of material had been excavated in the southern half of the southern landfill, and that a further area of 1,739m³ metres had been excavated near the south western corner of the southern landfill.

77 In the meantime, Neumann had sent its progress claim No 3 to Mr Wassef on about 16 April 2007. Mr Wassef sought clarification by email of that date. Apparently, some of the items claimed in the progress claim (which does not appear to be in evidence) were for excavation. Mr Wassef said that the quantities involved “need to be verified by site measurements approved by our surveyor”. Mr Gilford replied on 20 April 2007. As to quantities, he said the following:

Quantities – As quantity surveying is ongoing and complex, I suggest that we treat progress claims as “on account”, to be finalised once the profile has been completed and prior to impact rolling. We are currently excavating approx 3,000 m³ per day and combined with interim survey I will make a conservative estimate for claims.

Please note that it appears that the SOR quantities will be exceeded. It may be that URS have calculated only the net volumes by comparing CAD models of the original site and waste profiles and not taking into account that the existing capping must be stripped prior to redeployment and capping of the waste. We are surveying the cut surface as it is exposed. Final surface levels will be confirmed after trim and prior to impact rolling.

78 Mr Wassef replied later on 20 April 2007. As to quantities, he said:

The information about the quantities today are [sic] fine.

79 While all that was happening, Mr Wassef advised on 19 April 2007 that he would be ceasing to act as Superintendent’s Representative and that Mr Tennant would be taking over that role. As I have said, Mr Tennant fulfilled that role from 19 April until 21 May 2007.

80 The heavy rain commencing on 24 April 2007 caused significant problems of runoff and escape of “leachate”. By then, a substantial area of the southern landfill had been opened up. Water penetrated directly into the exposed waste material. It then percolated out, including over Mr Smith’s boundary. In effect, soluble waste material was leached out of the site and travelled outside the boundaries of the site.

81 Mr Tennant went to inspect the site on 24 April 2007. He said that he spoke to Mr Gilford and asked “why has so much of the site been opened up, the place looks like a war zone?” He referred to what he perceived as a lack of control, lack of attention to the set-out pegs, lack of segregation of clean cover material from waste, exposed waste material and lack of control of leachate.

82 Mr Tennant was not challenged on this aspect of his evidence. Mr Gilford was cross-examined as to the alleged conversation. He could not “recall the exact words” (T81.7) but was not prepared to deny that Mr Tennant had said that:

· the site looked a war zone;

· there did not appear to be any control over the works;

· nobody seemed to be taking any notice of the set-out pegs; and

· there seemed to be no control over leachate.

83 Mr Gilford “definitely” did not recall Mr Tennant saying that nobody seemed to be making any attempt to segregate clean cover material from waste. He denied, however, that he had said (as Mr Tennant alleged) that he was “trying to find an experienced earthworks foreman to take control of the site” and said that it was not the fact that he was seeking to do so.

84 Having regard to the absence of challenge to Mr Tennant’s account, the substantial concessions made by Mr Gilford and what I have said already as to my general preference for the evidence of Mr Tennant over that of Mr Gilford where the two are in conflict, I find (notwithstanding Mr Gilford’s denial of one point) that a conversation did take place on 24 April 2007 substantially in the terms alleged by Mr Tennant.

85 On 24 May 2007, Neumann wrote to the council about “Construction Issues”. The introductory paragraph of that letter read as follows:

Neumann Contractors formulated a work methodology based on the tender drawings and specifications. Subsequently it has become apparent that site conditions and technical issues dictate some modification to elements of the design while maintaining the original functionality of the project. These changes are related primarily to the bulk excavation and placement of the waste, the leachate collection system and site drainage.

The scope of work as presented in the documents involved reprofiling the existing waste and capping materials on site, primarily excavating waste from the western side of the site and placing it over the top and along the eastern side of the site. The batters around the landfill would be reshaped from the existing 1H:1V to 3H:1V.

86 The author (Mr Gilford) then set out the original methodology. The following paragraph is relevant:

2. Reprofile the waste to the design levels as follows:

· Remove the existing capping (approx one metre thick)

· Excavate waste from the western batter and place on the top and eastern batter

· Cover the waste with minimum 500mm of capping (we recognized that the specified 100mm of capping was manifestly inadequate to support the impact roller)

87 After dealing with a proposed revision to the excavation methodology, the letter turned to the question of compaction. It said:

C.2 Compaction of the Landfill

As a result of advice from Geoquip we have formulated the following proposal to achieve compaction of the landfill.

· Place either geotextile or geonet over the surface

· Place a layer of sandstone over the fabric, approximately 500mm thick;

· Roll the surface for one day and alternatively cease rolling for one day. This process increases pore

pressure in the landfill and then allows time for the water to be forced out;

· Continue the process until the acceptance criteria are met.

The process involves the following steps:

a. Initially conduct a trial on areas already prepared to verify effectiveness of the method and thickness of the sandstone cap. Areas available include the carpark, the southern amenities building area and the southern end of the AFL field.

· The carpark has been excavated to subgrade level over 50% of the design area and is starting to expose waste. It will be necessary to remove and replace this unsuitable subgrade and therefore the trial offers a good opportunity.

· The building area is approximately 15m wide. Incorporating it into the test areas makes the area available for construction of the amenities building.

· Test an area of the playing field 40 metres wide by the width of the field. This is the minimum width

required to operate the roller.

b. Place geotextile with a 50% overlap. This effectively gives double thickness and offers support against the considerable differential settlement that is expected from the impact roller. Geonet offers greater support but at appreciably higher cost.

c. The sandstone should be placed in a single 500mm layer. Compaction by vibrating roller is not necessary. The use of vibrating rollers for compaction runs the risk of structural damage on adjoining properties due to propagation through groundwater.

d. We recommend vibration monitoring during the trial.

e. Asses the trial with respect to effective capping thickness, geotextile performance and efficiency in purging the leachate. Use these results to confirm a procedure for the remainder of the site.

88 Geoquip was the subcontractor engaged (or to be engaged) by Neumann to carry out impact rolling. Neumann wrote again, the following day, dealing with compaction. The letter expanded on the proposal for an impact rolling trial set out in the letter of 24 May 2007.

89 It does not appear that Neumann received the approval it sought. On 29 May 2007, Mr Gilford sent an email to Mr Pradhan (by then, the Department of Commerce had been appointed as Superintendent’s Representative and Mr Pradhan was performing the work associated with that role). The email referred to “lack of direction and approvals from our client” and said that, in those circumstances, Neumann was “unable to proceed with productive work”. That email was followed up by a letter of 30 May 2007 to the Department of Commerce dealing with impact rolling and a further letter of 31 May 2007.

90 Very little work appears to have been done for some time thereafter. A survey sent to Neumann on 21 June 2007 suggested that some 5,199mm³ had been excavated since 4 May 2007.

91 Leaving aside for the moment events to do with the underground water tanks (see at [210] and following below), matters seem to have drifted (at least so far as the southern landfill is concerned) until 13 September 2007. On that date, there was a discussion at the offices of the council. The discussions appear to have considered, among other things, the importation, placement and compaction of ripped (or crushed) sandstone. On 14 September 2007, Neumann wrote to the council purporting to summarise those discussions.

The council replied that day. Relevantly, the council’s letter said:

…

Since yesterday’s meeting I have held further discussions with Council’s design consultant and I need some time to adequately consider the issues raised both by yourselves and the design consultant before making a definitive decision on the matter of liability for the costs incurred to date and yet to be incurred in the importation of sandstone and its use as a preparatory bridging layer for impact rolling of the site.

Under the circumstances the only advice I can offer you at this time is that if Neumann Contractors are of the opinion that the placement of a 500mm thick sandstone bridging layer is the most cost effective method in meeting the site compaction requirements of the contract then I have no objection to you doing so on an interim basis.

I am obliged however to point out that in granting of this advice in no way constitutes a direction under Clause 40 of the General Conditions of Contract or an admission of liability on the part of the Principal to reimburse any additional costs incurred by Neumann Contractors in the execution of the works in accordance with its preferred methodology.

…

92 Neumann replied on 17 September 2007. Its letter pointed out that the lack of a decision was having an adverse impact on the progress of the work, and reiterated its position that a change to the construction methodology was necessary because “[t]he construction methodology nominated in the Specification has been demonstrated to be unworkable”.

93 The council replied on 18 September 2007. Relevantly, that letter said:

…

As advised in my letter of September 14 2007, subsequent to our discussions of September 13, I have had held discussion’s with Council’s design consultant on the difficulties that you have reported to me in complying with the requirements of the contract relating to impact rolling of the site.

As a result of those discussions I have had commissioned a set of plans detailing the excavation requirements as set out in the contract and the extent of excavation carried out by the Contractor on the southern landfill. Those drawings have, for the first time, indicated to me the extent to which the Contractor has undertaken excavation on the site that is in excess of the requirements of the contract as set out in the technical specifications and drawings.

…

In short, it appears that contrary to the requirements of the contract, the Contractor has over excavated all areas nominated under the contract as Capping Types I, II and IV to depths of up to 2.5 metres below the contract levels.

…

This over excavation of the site has resulted in the significant unnecessary disturbance to in situ material that has been in place and subject to natural consolidation for over 20 years.

…

Under the circumstances I am obliged to advise you that I consider all of the earthworks carried out to date to all areas of the site nominated under the contract as Capping Types I, II and IV to be defective work that is liable to rejection as not being in accordance with the contract.

Rather than immediately reject the works and issue a direction under Clause 30 of the General Conditions of Contract at this time it is appropriate to make available to you the survey information upon which I have relied and to give you the opportunity to:

a. Provide me with any information in your possession that you wish me to take into consideration before determining the future course of the works;

b. Your detailed proposals for the reconstruction, replacement or correction of the defective work.

94 Neumann replied on 20 September 2007. It rejected the assertion that the earthworks were defective and said, on the contrary, that “[t]he Superintendent has been kept fully aware of work carried out on site, including the reasons for any changes from the original scope”.

95 The council replied the following day, 21 September 2007. It is that letter which contained the direction on which Neumann relies in relation to sandstone. Relevantly, the letter reads as follows:

5. Affected Areas

Albeit that I have not had the opportunity to fully assess the implications of your breach of the contract I stand by my previous advice that I consider all of the earthworks carried out to date to all areas of the site nominated unde the contract as Capping Types I, II and IV to be defective work that is liable to rejection as not being in accordance with the contract.

I turn now to the matter of rectification of the non-complying works. As stated at the beginning of this letter I note that you have chosen not to take the opportunity to provide me with any proposals for the reconstruction, replacement or correction of the defective work. I am presuming that in the absence of any such proposals to put forward or are denying any responsibility for what has clearly been a significant breach of the contract.

Under the circumstances I am left with no option but to accept the assertion made in your letter that “Sandstone is the most cost effective material as it is relatively low cost and suitable for multiple applications.” Therefore, pursuant to Clause 30.3 of the general Conditions of Contract, I direct you as follows:

1. You are to proceed immediately to import sufficient quantities of crushed sandstone or other suitable material and place a layer of 500mm thickness to the next section of the southern landfill to be subject to impact rolling.

2. The section shall be subjected to impact rolling using the sandstone layer as a subgrade with a minimum of 30 passes of the impact roller or such additional number of passes necessary to achieve the settlement parameters required under the contract.

3. Upon the completion of impact rolling, the section shall be trimmed to the specification levels and profile. All surplus sandstone retrieved by the trimming operation shall be reused in the second section of the southern landfill to be subjected to impact rolling.

4. Additional quantities of sandstone shall be imported as is necessary to provide a layer of 500mm thickness for the second section and repeat Points 2 and 3 as set out above.

The sequence set out in points 1, 2, 3 and 4 shall be repeated on subsequent sections of the southern landfill until all areas of the southern landfill nominated under the contract as Capping Types I, II and IV have been satisfactorily subjected to impact rolling.

I further direct that you provide me with programme detailing the stages and proposed timing for the execution of the works detailed above together with a methodology statement setting out in detail how you propose to undertake the works.

All costs associated with the supply, placement trimming of crushed sandstone or other suitable material, the retrieval and reuse of surplus sandstone and any necessary passes of the impact roller in excess of the specified minimum of 30 passes shall be borne by the Contractor. All other works shall be paid for at the contract rates. Any crushed sandstone incorporated into the works as a consequence of settlement caused by the impact rolling operation shall be paid for at the contract rate for Item 3.2 of the Schedule of Rates.

In giving this direction I reserve the right to issue further directions as I find necessary if the above methodology fails to meet the performance requirements of the contract and/or similar works are found to be necessary on the northern landfill.

Notwithstanding the above directions I remain prepared to consider any alternative rectification proposals you might have that may mitigate the costs to be borne by the Contractor.

96 Further, mostly self-serving, correspondence ensued. I do not think that it is profitable to go to it. I do however note that on 15 November 2007, Mr Tennant, presumably in his capacity as Superintendent’s Representative, directed Neumann “to proceed to supply and place sufficient ripped sandstone to bring the surface level of the northern landfill from the existing level... to the level 500mm higher to that shown on” an identified survey plan. This was to be done to “serve the dual purpose as a bridging layer for subsequent impact rolling operations and to satisfy the estimate 3000 cu metre shortfall in site material necessary to fill the site to design waste level”. The email by which that direction was given stated, relevantly, a rate for payment for the supply and placement of ripped sandstone of $77.00 per m³ inclusive of GST.

The particulars of approval

97 I turn to the particulars of approval.

1. Requirement for supervision under the RAP

98 Section 3.8.3 of the RAP reads as follows:

3.8.3 Supervision

All remediation works will be supervised by the Council site representative and Contractor’s representative. The remediation works will require full time supervision during the landfill resurfacing, capping and drainage system installation stages. Disposal of contaminated soils will require oversight in accordance with the NSW DEC Waste Guidelines. Imported fill materials will require validation in accordance with the Guidelines for the NSW Site Auditor .

99 The RAP formed part of the mass of contractual documents. Specifically, it is one of the “Ancillary Documents” contained in volume 4 of the contract documents.

100 Section 3.8.3 does not vary the requirements of the specification; and Neumann did not submit otherwise. It is, nonetheless, part of the contractual context against which the actions (and omissions) said to constitute consent must be assessed.

101 Mr Tennant agreed that the council’s representatives did supervise the works being carried out by Neumann on site. Mr Alderson was one such representative. As Mr Alderson said in his statement, his duties include the supervision of “large construction and engineering projects for the council”. He said that, for the work carried out by Neumann at the site, he “was a supervisor of the contractor and was required to ensure the contractor was carrying out his [sic] duties under the contract”. That obligation took him to site “almost everyday for about one hour” for a period of about six weeks from March to mid April 2007.

102 The role of the supervisor under section 3.8.3 is quite distinct from the role of the Superintendent’s Representative. Mr Alderson was never the Superintendent’s Representative, and Mr Gilford understood this.

103 It is also necessary to bear in mind that section 3.8.3 of the RAP required a “Contractor’s representative”, as well as a representative of the council, to supervise the works. It is clear that, to whatever extent section 3.8.3 imposed substantive obligations having regard to other relevant provisions of the contract, it did not cast the sole responsibility for supervision on the council.

104 In this context, the general conditions of contract, by cl 25, impose on Neumann an obligation personally to superintend the execution of work under the contract. Clause 25 suggests, as one might expect, that the primary obligation of superintendence is cast on Neumann.

105 Finally, in this context, it is necessary to bear in mind that the role of council’s site representative is conceptually distinct from the role of the Superintendent’s Representative. Clause 23 of the general conditions required there to be a Superintendent, who was to act honestly, fairly and reasonably in the execution of his functions. Those functions are functions of administering the contract. Without intending to be exhaustive, the Superintendent’s functions included:

(1) directing the removal or repair of defective material or work (cl 30.3);

(2) directing tests of the work (cl 31);

(3) suspending the works in certain circumstances (cl 34);

(4) granting extensions of time (cl 35);

(5) directing variations (cl 40); and

(6) certifying payment, practical completion and the like (cl 42).

106 It was not the role of the Superintendent or his Representative to supervise the day to day execution of the works.

2. The April “joint survey”

107 There was no evidence of any joint survey. The survey in question was one prepared by Hunter Survey Services Pty Limited (HSS) for Neumann. It was one of a series of surveys carried out by HSS. Those surveys were used as the basis for calculating provisional quantities that formed the basis of progress claims submitted by Neumann from time to time. There is no evidence (at least, so far as the submissions went) that the survey in question (dated 30 April 2007 and purporting to show the extent of excavation as at 19 April 2007) was given to the council at any relevant time.

108 To digress from the narrative: I refer from time to time to the absence of evidence on a particular point (and the preceding paragraph is an example of this). The parties provided a “court book” comprising seven lever arch folders and a little under 2000 pages. That court book was tendered. Although it was “filletted” so as to remove documents that neither party had suggested were relevant (and one wonders why such documents would have been included in the court book in the first place) I made it plain that I would rely on the parties to take me to the evidence in the court book, to the extent that it was relevant to their submissions (see, for example, T130.45). The provision of a court book is a common feature of proceedings in the Commercial List and the Technology and Construction List, and indeed is required by the usual order for hearing, when made. It is (or can be) a valuable resource. However, particularly in cases where the factual issues are numerous and the detail of the evidence is scattered through many pages of folders of a court book, it is incumbent on parties to take the Court to those pages of the court book that are said to be relevant, one way or another, to the particular issues. The parties should not leave it to the Court, at the conclusion of the hearing, to trawl through the court book hoping to pick up items of material evidence when the parties have not themselves undertaken this task. Put shortly, the provision of a court book does not detract from the customary obligation of parties to address, in submissions, the detail of the evidence relevant to the case that they propound.

109 I return to the narrative. The HSS survey as at 19 April 2007 does not show the levels to which excavation had been undertaken. It shows the parts of the southern landfill that had been excavated and the volumes of excavated material. If one had the CAD data on which the estimate of volume was based, it might be possible to calculate the level of excavation. But the survey did not include such data.

110 In any event, excavation below the top of waste profile occurred substantially during the period to which that survey relates (presumably, from the commencement of excavation works until 19 April 2007).

111 It was shortly after the effective date of that survey that Mr Tennant become aware that there had occurred what the council now characterises as over-excavation. That happened when he went to the site on 24 April 2007, when the heavy rain commenced that caused problems with the escape of leachate. As Mr Tennant said, his attention was focused on dealing with the leachate. It is unrealistic to suggest that the failure to respond to the survey (if it had come to the attention of the council at any relevant time) constitutes some sort of approval to continue excavation as it had been carried out up until 19 April 2007.

3. The WMS, joint survey and other matters

112 For the reasons that I have given at [70(3)-(5)] above and [115] below, the WMS does not indicate, on a fair reading, that Neumann intended to excavate below the top of waste profile over much of the southern landfill. Accordingly, Mr Wassef’s consideration and approval of the WMS cannot constitute consent to what in fact Neumann did.

113 The submissions for Neumann did not identify the joint survey on which it relied. So far as the evidence went, the set-out of the site was not undertaken pursuant to any joint survey.

114 Further, the set-out (using star pickets and survey pegs) indicated what was intended to be done as shown in the WMS. At most, this indicated that there would be excavation to the top of waste profile.

115 To the extent that sub-para 3(a) of the particulars of approval suggest that the WMS identified “the stripping and stockpiling of all existing capping material”, I repeat that the work was described as involving “stripping excess fill for the full width of the site and relocating it to general fill areas… then reshaping the waste to the design profile…”. Reading that by itself suggests that what was involved was cut and fill: cut in areas above the top of waste profile and fill in areas below. It suggests a methodology that was consistent with the specification, and does not indicate an intention to excavate over the whole of the southern landfill.

116 Sub-paragraph 3(d) falls into a somewhat different category. It could be read as suggesting that the drawings to which it refers identified, as at April 2007, a work method in accordance with what Neumann actually did. That is not correct. The drawings referred were prepared by Mr Gilford or at his direction in about April 2010, for the purposes of the litigation, specifically (para 41 of his affidavit sworn 15 April 2010) “to demonstrate the progress of works on the site”. They are a reconstruction of what (according to Neumann) was done. There is no suggestion that equivalent drawings were provided to the council at any time before the work was done.

117 At this stage, it might be noted that the position for which Neumann now contends does not appear to be consistent with Mr Gilford’s understanding of the relevant provisions of the specification. He understood, in substance, that specification called for cut where necessary and fill where necessary. Specifically, he understood that the general requirement was to excavate to the top of waste profile, and that if the material then excavated did not meet the requirements for the cover soil layer, further excavation could occur (T52.44-53.25):

Q. Now, also, may we take it was apparent to you, that down in the southern part of the southern landfill, that is the carpark and the building area, that was an area which was to be mostly cut?

A. Yes.

Q. It was a high area. Now, may we take it, when you read the specification, you noted the extent of excavation that was referred to in 250.07, first sentence?

A. Yes.

Q. And then noted that additional excavation may be required but only in a specific situation set out there?

A. No I didn't, I didn't see that at all.

Q. I see.

A. It doesn't say "only in".

Q. Additional - anyway, in any event, it says:

“additional excavation may be required to allow for cover soil placement in areas where the material at the excavated surface does not meet the requirements for the cover soil layer.”

Did you understand, then, that what was being set out in this specification was that the contractor would excavate, where necessary to excavate, to the proposed top of waste profile and then assess whether the material at the excavated surface met the requirements for the cover soil layer?

A. Yes.

Q. All right. And then, if it did not meet the requirements, additional excavation could occur?

A. Yes.

118 Mr Gilford also understood that if he excavated beyond what was shown on the drawings or approved by the Superintendent, he should reinstate the area and that he could not exceed the requisite amount of excavation shown without approval (T53.27-.35):

Q. And may we take it that you read on, in that section of the specification, to read .4 that "where the excavation exceeds the extent on the drawings or approved by the superintendent the contractor shall reinstate the area"?

A. Yep.

Q. And you understood from that that it was necessary for you not to exceed the extent of excavation shown on the drawings without approval by the superintendent or you may be required to reinstate the area?

A. Yes.

119 Mr Gilford had that understanding before he prepared the two WMS documents (T53.48). The obvious inference, which I draw, is that his preparation of the documents was informed by, and intended to reflect, that understanding. To the extent that the understanding and subjective intention of the person who prepared the two WMS documents is relevant, it confirms that those documents should be read (as one would expect) as intended to give effect to the relevant requirements of the specification.

120 Further, Mr Gilford accepted that the requirements of the specification were reflected in the form of ITP that he approved (see at [70(7)] above), but that what was done was not as described in the ITPs (T75.29-76.11; it is not necessary to go to the paragraph of the affidavit to which this aspect of Mr Gilford’s examination was direction):

Q. In italics there is a reference to that part of the specification I have taken you to already and you have given evidence about and the evidence that you gave is as you say in this paragraph of your affidavit that you understood that the specification meant that if you excavate to the top of waste profile and then the surface is unsuitable for the GCL, that is doesn't comprise cover soil, then further examination is allowed for the placement of cover soil?

A. Yes.

HIS HONOUR: Further excavation I think.

GREENWOOD: Yes, sorry, excavation.

Q. You understood that if the material was observed to be unsuitable, then it could be removed to a depth of 100 ml and replaced suitable cover soil fill material?

A. Yes.

Q. That understanding that you set out there is reflected, in what is in the inspection and test plan that you approved now numbered 1172J from paragraphs - sorry the items numbered 8, 9 and 10, isn't that right? Could you please have a look at it and I will repeat it for you (witness shown document)?

A. Yes, that's what the item here says.

Q. What I was saying to you is your understanding of the specification is reflected in items 8, 9 and 10 of that ITP?

A. Yes.

Q. And those items 8, 9 and 10 then were on the QA check lists as items 4, 5 and 6, were they not (document shown)?

A. Yep.

Q. But that wasn't in fact the work that was being done?

A. No.

121 This evidence, in my view, confirms that what was shown in the WMS documents (on which the quality assurance and ITP documents were based, or which they were intended to reflect) should not be read as:

(1) proposing anything different to the relevant requirements of the specification; or

(2) proposing excavation of the kind in fact undertaken by Neumann.

4. Release of Hold Point

122 Clause 250.06.1 (the relevant part and effect of which are set out at [20] above) required Neumann to identify the extent of excavation for each stage by the use of star pickets and tape. That was to be approved by the Superintendent before any excavation work commenced. The evidence does not in terms deal with the release of this Hold Point. In particular, for present purposes, the evidence does not suggest that what was revealed by the star pickets and tape was in any way inconsistent with the requirements of the specifications, or that it indicated (or should have indicated to a reasonable engineer in Mr Wassef’s position) that Neumann proposed to excavate generally across the southern landfill below the top of waste profile.

123 To the extent that this aspect of the particulars of approval depends on the acceptance of Mr Gilford’s evidence as to his conversation with Messrs Alderson and Wassef on site in March or April 2007, it goes nowhere. For the reasons given at [69] to [71] above, I do not find that such a conversation occurred, and I accept Messrs Alderson’s and Wassef’s denial that it occurred.

124 Neumann’s written closing submissions put that Mr Tennant had conceded in cross-examination that “[t]he extent and areas of excavation and placement was [sic] plain from survey star pickets on site showing the design profile to be achieved, the two-day performance of the works, and the progress claims submitted” (para 58). Mr Tennant conceded no such thing. On the contrary, the relevant part of his evidence suggests that the set-out pegs indicated excavation to the top of waste profile. Mr Tennant accepted that when he arrived on site on 24 April 2007, it was plain that there had been over-excavation, because the set-out indicated excavation to top of waste, and the excavated levels were lower. So far from supporting Neumann’s case, this aspect of Mr Tennant’s evidence confirms that the set-out pegs by themselves would not have indicated an intention to excavate below top of waste (T37.34 - .48):

Q. Can I ask you this Mr Tennant, when you arrived on site on 24 April and made the observations to which you have referred in paragraph 37, was it difficult for you, as an experienced engineer, to conclude that there had been over excavation of the site?

A. It was - it wasn't difficult to conclude, no.

Q. Why was that?

A. Well, when you see a set out peg that indicates a depth to top of waste and an arrow is pointing up and nominating a dimension it looks a little odd that, you know, you are standing below that level that has been clearly excavated.

Q. That would be something you would expect to be apparent to any person with any engineering qualifications who had a knowledge of the basic terms of the contract, is that the case?

A. Yes.

5. Staging and supervision

125 As I have said, I accept that the council’s supervisor, Mr Alderson, attended the site almost daily during the relevant period. Since he was not required for cross-examination, it was not put to him that he should have realised, from what he saw on his site visits, that Neumann was excavating to below the top of waste profile. Nor was that put to Mr Wassef. The only cross-examination on that point was that directed to Mr Tennant, with which I have just dealt; and by the time he made his observations, the over-excavation had occurred.

126 It is suggested that the work was required to be, and was, undertaken by stages. There is no doubt that it was required to be undertaken by stages. However, as the WMS made clear, the stages were to be worked on sequentially. In fact, Neumann appears to have proceeded generally from west to east and south to north across the whole of the southern landfill, carrying out the excavation and replacing of the capping layer and waste material generally. It did not (as the staging plan set out in its WMS contemplated) complete the cut, fill and compaction operations for stages I and II before moving to stages III and IV.

127 This analysis is confirmed by the photographic evidence. Some of the photographs that were tendered show that, as at 12 and 13 April 2007, a substantial part of the southern landfill had been worked on. Mr Tennant’s evidence, which for the reasons given at [81 ] to [84] above I accept, was that when he first went to the site on 24 April 2007, “almost the entire surface area of the southern landfill had been disturbed” and that “the underlying waste materials had been exposed over large areas of the Site” (statement dated 17 July 2008, para 36). That, no doubt, is why he said to Mr Gilford that “the place looks like a war zone”.

128 I do not accept that the work was in fact carried out by stages as proposed in the WMS. Accordingly, to the extent that Neumann relies on the requirement to carry out the work in stages (and, by implication, suggests that it was so carried out) I do not accept this aspect of its submissions.

6. The nature and extent of the work was obvious

129 As I have said, the only evidence on this point is that of Mr Tennant, relating to his observations on 24 April 2007. So far from accepting the fact of over-excavation, Mr Tennant commented, adversely, on the fact that “[n]o-one seems to be taking any notice of the set-out pegs”.

7. The email exchange of 20 April 2007

130 I have set out the relevant facts at [77] and [78] above. As Neumann’s submissions noted, Mr Gilford’s email of 20 April 2007 was addressed to Mr Wassef, presumably in his capacity as Superintendent’s Representative, and copied to Mr Tennant. Mr Wassef’s reply was likewise copied to Mr Tennant.

131 The particular exchange of emails on which Neumann relies must be put into context. The context is that the Neumann had submitted a progress claim, based on the estimate by HSS of the volume of material excavated to date, and Mr Wassef had stated that “[t]he quantities… need to be verified by site measurements approved by our surveyor”. Neumann’s response, in which the passage relied upon appears, was to suggest that progress claims should be treated “as “on account”, to be finalised once the profile had been completed”.

132 The information contained in the email was not limited to the suggestion that excavation quantities be treated as “on account”. Neumann warned Mr Wassef that it was likely that the schedule of rates estimate for excavation would be exceeded. It gave reasons why this was so. But it did not suggest that the work outlined in the email was otherwise than in accordance with the specification or the WMS. If Neumann had intended to draw to Mr Wassef’s attention that the work was being undertaken on some basis other than that outlined in the WMS (which, as I have now said twice, was entirely consistent with the Specification, in that it characterised the work as involving “stripping excess fill… and relocating it to general fill areas…”), it should have used far more explicit language. Of course, as Neumann now puts its case, there was no reason for it to notify Mr Wassef of any departure from the Specification or, in particular, the WMS. That is because, as Neumann now puts its case, the work that was done up until 20 April 2007 was in accordance with the WMS. For the reasons that I have given, I do not accept this.

133 Mr Wassef’s reply stated, among other things, that he was satisfied with “[t]he information about the quantities”. There is no suggestion in the reply that Mr Wassef understood that he was being asked to approve, or was approving, some departure from the WMS. It was not put to Mr Wassef that he had that understanding or intention when he sent his reply.

134 In my view, when one considers the emails in context, it is plain that Mr Wassef was accepting Neumann’s proposals that approval of payment for bulk excavation should be treated as “on account” pending a final survey. That is exactly the sort of common-sense approach that one would expect to see in a substantial construction project. If, as Neumann submitted (written closing submissions, para 59), the email of 20 April 2007 should be read as signalling that Neumann “proposed to undertake the earthworks by stripping all existing capping material”, one would expect to see significantly more detail and a more specific reply.

135 The exchange of emails also needs to be considered in the context of relevant requirements of the contract. The Specification required that any excavation beyond that authorised by the drawings should be approved by the Superintendent. If it did not obtain such approval, Neumann was required to reinstate the area (cl 250.07.04). If Neumann was proposing to undertake the earthworks by carrying out more excavation than was authorised by the specification and the drawings, and was intending to seek Mr Wassef’s approval to that course of action, one would expect it to have drawn the Mr Wassef’s intention specifically and with some degree of detail both the proposed departure from the drawings and the request for approval.

8. Supervision of the works

136 It is clear that, at least from 24 April 2007, the council was aware that excavation had occurred below the top of waste profile. It is equally clear, from Mr Tennant’s evidence of his meeting with Mr Gilford on that date (which evidence, as I have said, I accept) that so far from accepting what was being done, Mr Tennant, and through him the council, objected. Neumann apparently chose to proceed with its method of working notwithstanding that Mr Gilford at least must be taken to have known that what was being done was inconsistent with his understanding of the relevant requirements of the specification, as reflected in the WMS and ITP that he approved. In my view, in choosing so to proceed, Neumann did so accepting the risk that the Superintendent would not approve the over-excavation that would occur.

137 Further – although this is very much a subsidiary point – most of the excavation was complete by the end of May 2007. There is in evidence a survey report of HSS said to have been sent to Neumann on 4 May 2007, but almost certainly sent a month later. According to Mr Gilford, it shows the extent of work completed by the end of May. There is only a relatively small strip of the southern landfill unexcavated according to that survey. To the extent that work progressed thereafter, the quantities involved were small. Even if certification of progress claims “on account” could be taken as indicating some sort of consent to the extent of excavation involved (and for the reasons that I give in dealing with the next issue, it should not) the bulk of the overexcavation had occurred by the end of May 2007. What happened in June and July is of minimal relevance on the question of consent.

9. Approval of claims for payment

138 It is plain, from the email exchange of 20 April 2007, that the parties agreed that approval of claims for excavation would be “on account”. That was done at Neumann’s request. Neumann should not now be heard to say that the council’s acceptance of that proposal, or the Superintendent’s approval of progress claims on that basis, should be taken as unqualified acceptance of entitlement. In any event, the submission is inconsistent with cl 42.1 of the general conditions. That clause states, among other things that:

Payment of moneys shall not be evidence of the value of work or an admission of liability or evidence that work has been executed satisfactorily but shall be a payment on account only, except as provided by Cl 42.8.

139 Clause 42.8, dealing with final certification has no relevance.

10. The letter of 24 May 2007

140 I have set out the relevant parts of this letter at [85] to [87] above. The council’s failure to reply, or to dispute what was said, cannot be taken as some admission or acceptance of anything in the letter. Clause 30.6 of the general conditions states, among other things, that “a failure by the Superintendent or anyone else to disapprove any material or work shall not prejudice the power of the Superintendent to subsequently give a direction under Clause 30.3 or 30.4 or a notice under Clause 30.5”.

141 In any event, the letter does not clearly state that the “Original Methodology” described in section A was inconsistent with the specification. The relevant part is the paragraph numbered two. For convenience, I set it out again:

2. Reprofile the waste to the design levels as follows:

· Remove the existing capping (approx one metre thick)

· Excavate waste from the western batter and place on the top and eastern batter

· Cover the waste with minimum 500mm of capping (we recognized that the specified 100mm of

capping was manifestly inadequate to support the impact roller)

142 The introductory words make it clear that the waste is to be re-profiled “to the design levels”, and what follows in the three bullet points is a statement of how that is to be achieved. The design levels referred to are, clearly enough, the top of waste profile. The letter does not indicate, on a fair reading, that wholesale excavation below the top of waste profile had been, or would be, undertaken. Accordingly, even apart from cl 30.06 of the general conditions, the failure to reply to the letter could not amount to approval of excavation below the top of waste profile.

11. Sandstone trial

143 What was proposed was a trial of work necessary to restore the levels to the top of waste profile where there had been over-excavation. If (as the council contends) that work was necessary to rectify Neumann’s breach of contract, an approval to undertake the trial could hardly be regarded as acceptance of the breach. If (as Neumann contends) there was no breach of contract, the approval is irrelevant.

12. Completion of the earthworks

144 I do not understand how the fact of completion can bear on the question of acceptance. As I have said, if the work was performed in breach of contract, completion does not alter that position and cannot be evidence of acceptance. If there were no breach of contract, the question of completion is irrelevant.

13. The failure of Mr Tennant to complain

145 The factual premise is lacking. As I have found, Mr Tennant did complain: at the site meeting on 24 April 2007 with Mr Gilford. As I have also said, if Neumann chose to proceed thereafter in defiance of what Mr Tennant had said, it did so at its own risk.

146 In any event, by the time Mr Tennant became aware of the fact of over-excavation, it was not practicable to reinstate the work to its original condition. Mr Gilford effectively (although reluctantly, and his reluctance did not enhance his credibility) accepted this (T100.12-.38; again, it is unnecessary to go to the paragraph of his affidavit to which reference was made):

Q. Could you go, please, to paragraph 38. There you assert that, "If at any time prior to September 2007", so all through August at least, "the superintendent had indicated to Neumann that it considered that Neumann had over excavated the site, Neumann could have restored the site to its original condition at its own cost and then imported general fill to make up the shortfall in quantities on the site." How could Neumanns possibly have restored the site to its original condition?

A. How could it have?

Q. Yes.

A. It would have been a very difficult operation.

Q. Impossible?

A. It would be very difficult.

Q. And at any time, frankly, from 24 April on, even earlier, it would have been impossible, wouldn't it?

A. Not impossible.

Q. Virtually impossible?

A. Difficult.

Q. Extremely difficult?

A. Everything on that job was extremely difficult.

Q. But this goes even beyond that, doesn't it?

A. Yes.

14. ailure to complain in August and September 2007

147 Against the background that I have described, this can be no evidence of acceptance.

15 to 17: The meetings and correspondence of September 2007

148 As is plain from the particulars, the council did make clear, in September 2007, that it did not accept that the work done by Neumann was in accordance with the contract, or that the council had any liability for further work (including, relevantly, the placement and compaction of ripped sandstone) that was necessary to rectify what had been done. The council’s position was made even more clear in its letters of 18 and 21 September 2007. Mr Wise directed that the sandstone work be carried out at Neumann’s cost as rectification (cl 30.3 of the general conditions).

149 The suggestion that correspondence either expressly not admitting, or denying, liability could be taken as an acceptance of the work in question is very difficult to understand.

150 It is almost equally difficult to understand how the fact that the Department of Commerce ceased to act as the Superintendent’s Representative could have any bearing on the question of acceptance.

151 Before leaving this group of the particulars, it is necessary to note that Mr Tennant explained in his first statement why the council finally took its stand in September 2007. He became aware, when considering the progress claim for June 2007, that the total amount of excavation was substantially greater than the estimate in the schedule of rates. Mr Pradhan engaged surveyors to clarify the extent of excavation. The advice of those surveyors was received in September 2007 and considered by Mr Tennant around 18 September 2007. It was at that time that Mr Tennant, and through him the council, became aware of the full extent of over-excavation.

152 Perhaps the council should have acted earlier than it did. But its failure to do so can hardly be taken as acceptance, against the background that I have described.

The particulars of acceptance considered as a whole

153 As I said before going to the particulars individually, it is Neumann’s case that acceptance can be inferred from the particularised conduct considered in its totality. That assessment has to be undertaken keeping in mind that, on my findings:

(1) nothing that had happened before Neumann commenced work (including, specifically, the submission or contents of the WMS) should be taken to have alerted the council to some intention on the part of Neumann to proceed otherwise than in accordance with the requirements of the Specification; and

(2) it was not until after a substantial amount of work had been done that the council became aware, on 24 April 2007, that Neumann appeared to have excavated substantially below the top of waste profile.

154 The question is, in essence: once the council became aware that Neumann was excavating other than in accordance with the specification, specifically that it was excavating generally below the top of waste profile, did it consent?

155 On the findings that I have made, Neumann did not flag its intention to proceed otherwise than in accordance with the relevant requirements of the Specification before it started work. Nor did it do anything prior to 24 April 2007 that could be said to be have flagged its intention to do so. For the reasons that I have given, the email of 20 April 2007 should not be regarded as a disclosure of a varied work method.

156 At the time when the council, through Mr Tennant, first became aware that Neumann was not proceeding in accordance with the WMS, the immediate focus of attention was the escape of leachate. Certainly, Mr Tennant recognised that Neumann had excavated, according to the survey pegs, to below the top of waste profile. Equally, he became aware that Neumann was not proceeding by stages, and that it had opened up the southern landfill generally (so far as the excavation had proceeded) and exposed waste material. It is clear, on Mr Tennant’s evidence, that he expressed his disapproval of what Neumann was doing. Nothing that happened thereafter could have been regarded, reasonably, as some withdrawal from the position stated by Mr Tennant.

157 It may be that council should have acted more promptly to state its position formally (certainly, it could have done so). But as I have said, Neumann chose to proceed with its revised work method knowing that Mr Tennant did not approve. It chose to proceed also knowing of the procedures under the contract for approval to excavation to an extent greater than that required by the Specification. In the light of Mr Tennant’s clearly expressed view, a reasonable contractor in Neumann’s position could not have thought that the council’s failure to return to the matter, and to confirm with a degree of formality what Mr Tennant had said, amounted to some change of position.

158 Equally, given that payments for excavation work were “on account”, with the ultimate liability to be established by final survey, a reasonable contractor in Neumann’s position could hardly have thought that the payments made by council constituted some acknowledgment or acceptance of liability for the full amount of excavation undertaken.

159 Looking at the evidence as a whole, within the confines of the particulars, I conclude that the council did not approve excavation beyond the top of waste profile. Nor, returning to the language of the issue, did the Superintendent do so.

160 The fourth issue should be answered “no”.

Fifth issue: did the excavation in fact performed affect the ability of the site to be impact rolled?

161 Mr Tennant said, in his statement of 17 July 2008 (para 35), that it was important, when excavating a site such as the southern landfill, to do so “with minimal disturbance to the underlying waste level”. That was so, he said, because if there were excavation beyond the top of waste profile, “there is a substantial risk, especially if water penetrates, that the under-lying garbage will be de-compacted”. If that happened, he said, “those parts of the site will destabilise and will require substantial further work to be re-stabilised”. He said that the further work could “include additional impact rolling to re-compact the site”.

162 That aspect of Mr Tennant’s evidence was not challenged in cross-examination. I accept it.

163 In this case, there is no doubt that Neumann excavated below the top of waste profile, and exposed the underlying compacted waste. There is no doubt that, during the heavy rain on and following 24 April 2007 and later, there was substantial water penetration into the exposed waste.

164 Before the excavation started, and whilst it was in progress but before the capping soil had been removed, Neumann employed heavy earthmoving equipment on site. That equipment included excavators, bulldozers and large dump trucks. The “dumpers” included 20 and 30 tonne units (as Mr Gilford acknowledged at T63.4-.9). It also included 22 tonne and 35 tonne excavators (T64.15) and a landfill compactor (T64.31).

165 Thus, before the capping soil had been removed and the waste had been exposed, the site was capable of supporting heavy earthmoving equipment.

166 After the waste was exposed and moved, and capping material was replaced over it, it became apparent that the site could not support the construction equipment and that “there was a good chance it would not support an impact roller” (T89.10-.27; T93.29-.34).

167 There is an obvious available inference that the combined effect of removing the capping soil, exposing the waste and destabilisation of the waste following rain did render the site unstable; so that a site which had been capable of supporting heavy construction equipment could no longer do so. In light of Mr Tennant’s unchallenged evidence referred to at [161] above, I draw that inference. The drawing of that inference goes beyond the “post hoc ergo propter hoc” fallacy.

168 It seems to have been the observations referred to at [166] above that caused Mr Gilford to become concerned. He consulted Mr Ken Dawson of Geoquip. It appears to have been Mr Dawson’s view that the site in its then condition could not support impact rolling. Mr Dawson was not called to give evidence and all we know of his opinions comes from Mr Gilford’s cursory and hearsay account of them.

169 In any event, whatever view Mr Dawson may have expressed was based on his observations of the site after it had been opened up and after it had been subject to substantial periods of rainfall. In those circumstances, bearing in mind Mr Tennant’s evidence as to the likely destabilising impact of rain on exposed waste, it would hardly be surprising if, when Mr Dawson came to the site on 15 May 2007, it was then incapable of supporting impact rolling.

170 In this context, I repeat that when Douglas Partners investigated the site in July 2006, it found that the depth of capping material on the southern landfill was between 1 and 3 metres over the domestic waste, and that the capping layers were moderately well compacted. Indeed, the Douglas Partners report suggested that if the capping material were not to be removed, an impact roller could be used “as part of the rehabilitation works”. Although this is proffered as a suggestion and not as a conclusion, it does not indicate any concern as to the ability of the undisturbed capping material to support impact rolling.

171 I conclude, on the basis of the evidence to which I have referred, that the work undertaken by Neumann did destabilize the site, and thus adversely affected its ability to be impact rolled. That is confirmed by the following evidence which Mr Gilford volunteered as a “clarification” in cross-examination (T89.10-.30):

A. I wish to make a clarification on this. We started placing the waste and the capping, the 500 ml capping over it in the middle of April. It was about 15, 16 April and we very quickly became aware that it appeared like it wasn't going to be sufficient. There was an ongoing process over the next few weeks of trying to discover whether we could use the surface as we were preparing it or whether any additional work had to be done. We consulted with Ken Dawson and it was over a process of two or three or four weeks that we developed the methodology or the possibility of using a sandstone bridging layer over the top. As to the exact date that I calculated the costs for the sandstone, I'm sorry, I can't pinpoint that date exactly. All I can say is it was somewhere late April, early May.

Q. But you tell his Honour, do you, that within a very short time of starting the placement of the 500 ml of capping material, you formed a view that it may not be an appropriate working surface for impact rolling?

A. Yes, it wasn't supporting the construction equipment so if it didn't support the construction equipment, I concluded that there was a good chance it would not support an impact roller.

Q. But you still kept going with that same methodology?

A. Yes.

172 His experience, within 10 or 12 days of starting on site, is to be contrasted with the undoubted fact that, before the capping material had been removed, the site was capable of supporting the earthmoving equipment employed by Neumann.

173 Issue 5 should be answered “yes”.

Sixth issue: impact rolling on 100 mm of cover soil

174 Clause 250.10.3 of the Specification requires cover soil to be placed to achieve a nominal layer thickness of 100 mm after compaction and impact rolling. It says nothing as to how thick the layer of cover soil should be before the impact rolling was carried out. There is no other part of the Specification that supports the view that impact rolling should take place on 100 mm of cover soil. Mr Gilford’s attempts to draw support for this proposition from cl 250.01 are unsupportable.

175 It is not clear where this issue goes, in terms of resolving the overall disputes between the parties. Indeed, so far as I can tell, Neumann did not even address the issue in its closing written submissions. However, the issue having been posed, it should be answered. The answer is “no”

Seventh issue: “temporary works”

176 In essence, this issue inquires whether the importation of ripped sandstone to support the impact rolling process was “temporary works” for which the council is not liable.

177 Mr Gilford said that, before the site was impact rolled, a layer of ripped sandstone 500mm thick was placed over the exposed waste. He said, however, that only 130mm of that stone became incorporated into the works – in his view, as “cover soil”. That was illustrated by a drawing that he had prepared for the purposes of these proceedings.

178 The other notional 370mm of sandstone was taken off the surface once impact rolling had finished, taken elsewhere on the site, and to some extent used.

179 There are two different concepts that should be kept separate. First, it is necessary to bear in mind that the amount of fill available on the southern landfill (from excavation of capping material in areas of cut) was insufficient to bring the lower lying areas up to the top of waste profile shown on the drawings. Thus, it was always going to be necessary to import some material to achieve, overall, the top of waste profile. It was also necessary that the upper 100mm, i.e., the layer immediately below the top of waste profile, should meet the requirements of the specification for cover soil. To the extent that ripped sandstone was imported and used as cover soil, in areas where fill would be necessary in any event, there is no doubt that council is liable to pay, although there is a dispute as to whether the appropriate rate is that applicable to cover soil or the substantially higher rate applicable to ripped sandstone.

180 The second concept is the use of ripped sandstone for a working surface, or “bridging layer”, during the impact rolling operation. Neumann’s case is that this was needed because the site, after excavation, could not support impact rolling. The council’s case is that if the site could not support impact rolling, that was because Neumann had over-excavated and destabilised the site, so that the use of ripped sandstone as a bridging layer represents temporary works.

181 In my view, the answers given in relation to the fifth and sixth issues mean that, to the extent that ripped sandstone was used as a bridging layer and not as cover soil, it was “temporary works”. That follows because the only purpose of importing the ripped sandstone, over and above the amount required for cover soil, was to support the impact rolling process. That was necessary because the over-excavation and exposure of the underlying waste, coupled with the rainfall that had occurred, destabilized the site.

182 For those reasons, the seventh issue should be answered “yes”. I should make it quite clear that this answer does not apply to ripped sandstone that was incorporated into the works, either as fill or as cover soil.

Eighth issue: was the impact rolling trial a variation?

The factual background

183 Although the Douglas Partners report said that an impact rolling trial might be conducted, there was no requirement for such a trial in the Specification. The contract provided, in item 3.4 of the revised tender schedule, an amount of $145,848.22 for impact rolling. That was based on impact rolling over flat areas totalling 47,000m². If additional passes were required, they would be charged at a rate of $0.75 per m² for each additional ten passes of the area rolled.

184 Neumann proposed an impact rolling trial in its letter to the council of 25 May 2007 (see at [87] above). That letter stated that Neumann had raised concerns about the suitability of site conditions to support impact rolling, and had proposed a trial to assess whether capping the landfill with a layer of sandstone would be effective. The trial was proposed in three specified areas of the southern landfill, totalling about 8,500 m². The letter said:

The purpose of the trial will be to assess

· The effectiveness of the sandstone capping to support impact rolling;

· Correlation between depth of sandstone and effectiveness of geotextile;

· Effectiveness of the process to expel groundwater from the waste profile and develop a methodology for the balance of the site.

185 Neumann’s letter stated that the trial would take about five days and would cost $28,950.00, together with additional engineering and survey expenses; but it noted that if impact rolling commenced within ten days of the trial, the cost could be reduced in effect by amortising some $23,750.00 of establishment costs.

186 The proposal was revised in a letter of 30 May 2007. The cost increased to $39,200.00, although with the same offer of reduction if impact rolling commenced within ten days of the trial.

187 There was attached to the letter of 30 May 2007 a document apparently prepared by Mr Dawson of Geoquip described as “Methodology Impact Rolling Trial”. That document stated that the purpose of the trial was two-fold:

(1) to determine the optimum thickness for the working surface “taking into account localized weak spots and current conditions”; and

(2) to see how many passes of the impact roller were required to produce the desired outcome.

188 The minutes of a meeting held at the council’s offices on 28 June 2007 appear to record (item 1.4.1) that the council and the then Superintendent’s Representative, the Department of Commerce, “approved the trial as requested by NM”. However, there appears to have been no approval of the cost of the trial or the cost of supply of crushed sandstone (item 1.4.2).

189 The trial was conducted on 11 July 2007. The results are reported in a letter of 20 July 2007 from Neumann to the Department of Commerce. The letter reported total and net settlement after specified numbers of passes, and concluded that the impact roller achieved the contractual requirement for energy input and settlement. It drew the following conclusions:

(1) Site preparation – place 500mm of sandstone over the site material in order to create an operating surface – geotextile not required unless the site material is particularly unsuitable or as indicated by failures during rolling.

(2) Number of passes – after 30 passes monitor settlement every 15 passes, with the expectation of approximately 50 passes required to meet the specified settlement criterion.

(3) Settlement – settlement in the order of 100mm can be expected.

The parties’ submissions

190 Mr Greenwood submitted that the impact rolling trial was neither a test required by the contract nor necessary under it. He pointed out that Neumann had never suggested, prior to excavating the site, that the requirements of the contract, to compact the site using impact rolling, could not be achieved. Thus, he submitted, the trial was undertaken to determine what work was required and how it was to be performed having regard to the conditions on the site at the time. It was not a variation compensable under cl 40 of the general conditions.

191 Neumann’s case was based upon the proposition that the design could not be carried out, because the working surface was insufficient to support the impact roller. Thus, Mr Rudge submitted, it was necessary to conduct a trial to see if the suggested revised methodology, of placing, compacting and impact rolling ripped sandstone, would work. It was therefore a variation which was compensable under the contract.

Decision

192 For the reasons that I have given in dealing with the fifth and seventh issues, the sandstone bridging layer, or working surface, was required because Neumann’s over-excavation of large areas of the southern landfill had destabilised the site. It was necessary to deal with this. The recommended method was the placing, compaction and impact rolling of ripped sandstone. There is no suggestion that the impact rolling trial would have been required in any event (that is to say, if Neumann had not over-excavated as it did).

193 In those circumstances, there is no basis for regarding the impact rolling trial as a variation for which the council is liable. Accordingly, the answer to issue 8 is “no”.

Ninth issue: rate for sandstone

194 In essence, the answer to this issue follows from what I have said. The parties engaged in much debate as to whether sandstone was or was not “Cover Soil” as defined in cl 250.08 of the excavation specification. The council submitted that ripped sandstone was functionally the same as cover soil, and should be treated as cover soil. Neumann submitted that there was a conceptual and geological difference between soil and stone, and that the rate for soil should not be treated as the rate for stone. Neumann relied on a report of Dr Brian Burman, an experienced geotechnical engineer. Whilst I do not doubt Dr Burman’s qualifications and expertise, I did not find his report of any assistance.

195 The answer, in this case, seems to me to follow from the following matters:

(1) if the sandstone was required as a bridging layer, to support the impact rolling operations, that was a consequence of Neumann’s over-excavation and destabilisation of the southern landfill; and

(2) accordingly, even if the sandstone fulfilled not only that function but also the function of cover soil, nonetheless it is only contractually relevant in so far as it is to be regarded as cover soil.

196 There would have been a requirement for cover soil to be imported even if the site had not been overexcavated. That is because the amount of cover soil available from excavation in areas of cut was insufficient to bring the areas of fill up to the top of waste profile. Had cover soil been imported, the council would have been required to pay for it at the appropriate rate specified in the schedule of rates. If sandstone were used in lieu of cover soil, the council would be liable to pay for it as cover soil unless the Superintendent’s Representative approved some higher rate. In this case, the Superintendent’s Representative approved payment at the rate for cover soil. In my view, he was right to do so.

197 There is no doubt that crushed sandstone was used in the northern landfill, and was paid for at a higher rate than the rate applicable to cover soil. But that does not seem to me to matter. The question for present purposes is: what is the applicable rate for ripped sandstone used as cover soil in the southern landfill? For the reasons that I have given, the appropriate rate is the rate for cover soil, because the only need for the use of ripped sandstone arose from Neumann’s over-excavation of the southern landfill and the consequences that followed.

198 Issue 9 should be answered: “to the extent that crushed sandstone was imported and laid as cover soil in the southern landfill, the rate payable is the rate applicable to cover soil under the schedule of rates”.

Tenth and eleventh issue: the underground tanks

199 It is convenient to consider these issues together.

The relevant facts

200 The starting point is the alternatives, in relation to underground water storage tanks, referred to at [53] above.

201 The tender required a rate per tank for the design, supply and installation of 100kL underground water storage tanks with their associated pumps, valves, connections and the like. Neumann offered to supply 107kL in situ concrete tanks, for a substantial cost saving. Before the contract was let, Mr Wassef raised with Mr Vasey the question of piling. Mr Vasey sent an email to Mr Wassef on 1 December 2006 that read as follows:

George,

I have received my prices back for piling from our piling contractor. Our rate would be as follows:

Rate includes 1 establishment, 72 treated pine piles x 150 diameter x 8m long each including splices at 6m.

Price incl. GST is $54.40/m.

Any queries, please call

Regards

Robert Vasey

SENIOR ESTIMATOR

202 On 20 December 2006, the council wrote to Neumann accepting “your offer to perform the works specified in the above contract… in the Schedule of Rates amount of $11,577,810.35 inclusive of GST”. The letter also specified the contract documents. They included specifically the email that I have just set out.

203 At this point, there might appear to be a question as to whether the rate quoted by Mr Vasey was a rate per tank (i.e., a rate based on each tank’s being supported by some 72 piles at $54.40 per metre) or a rate overall. The former construction may well be consistent with the requirement of the schedule of rates to specify (as Neumann did) a rate per tank. However, matters moved on.

204 Neumann prepared a WMS dated 2 February 2007 for the underground storage tanks. That document proposed to supply and install six tanks each of 150kL capacity with their associated fittings. It seems that what was contemplated was concrete tanks constructed in situ. That WMS was sent by email to Mr Wassef on 2 February 2007. The email stated, among other things, that “[i]f you are happy with the design I will put together a costing for the supporting structure (piles & slab)”. The email noted a change to the piling that had been quoted before, and stated that the proposed piles had a greater capacity than the ones originally suggested “and are more cost effective”.

205 Mr Wassef replied, stating in effect that he would be unlikely to have any concerns with the changed design “as long as no additional cost would be incurred”, and indeed that Neumann could have the benefit of any cost saving. Mr Wassef said:

I do not see any grounds for approving any additional cost.

206 At this stage, it appears, the parties shifted their attention to the possible requirement for pile caps, or some other mechanism, to spread the point loads that the piles would generate. Mr Gilford sent an email to Mr Wassef, again on 2 February 2007, in which he stated that “[t]he requirement for the supporting structure is totally independent of the size or type of tank to be used”. He claimed that slabs and piles “would be required even for Envirotanks as shown”. Thus, he claimed, the supporting structure for the tanks, whichever tank was constructed, was a variation.

207 Mr Wassef did not agree, and required a WMS to be submitted that was consistent with Neumann’s tender.

208 Neumann submitted a revised WMS by email on 5 February 2007. That email said, in effect, that there would be no cost advantage by using 150kL tanks as opposed to 100 (or 107)kL tanks.

209 There was substantial further correspondence between the parties. I do not think that much is to be gained by going to the detail of every email and every letter, since they become increasingly self-serving (in truth, a feature of much of the correspondence ammoniating from the parties – in particular, Neumann – in this case).

210 It is, however, necessary to record that on 16 April 2007, Neumann submitted a revised proposal for the tanks, and that work proceeded on the basis of this revised proposal after what Neumann said was an approval given in August 2007.

211 The revised proposal was for the design and supply of six 150kL concrete tanks with their associated fittings. The total, including piles and pile caps, was costed at $941,762.92.

212 On 3 August 2007, Neumann wrote to Mr Pradhan seeking approval of the proposal put on 16 April 2007. That request was reiterated by email sent on 6 August 2007.

213 On 7 August 2007, Mr Pradhan replied, stating, relevantly, that the work should proceed “as per the contract” but referring to cls 40.3, 40.4, 40.5(b) and 40.5(c) of the general conditions.

214 Mr Gilford replied the same day, stating that Neumann would not accept a direction under cl 40.4 (which relates to variations for the convenience of the contractor) and requiring “confirmation that the claim will be assessed on Clause 40.5(c), i.e. the Superintendent acknowledges that the claim is a valid variation”.

215 Mr Gilford said that he had a telephone conversation with Mr Pradhan on 8 August 2007. According to Mr Gilford, Mr Pradhan said:

I support your claim that piling, pile capping and associated costs detailed in Neumann’s letter dated 16 April 2007 constituted a valid variation to be assessed under Clause 40.5(c) of the Contract.

216 Mr Gilford sent an email straightaway to Mr Pradhan, copied to (among others) a Mr Michael Achelles of the council. That email stated, among other things:

Tanks – On this date you have advised us verbally that as Superintendent’s Representative you are supporting our claim that piling, pile cap and associated costs as detailed in our letter dated 16 April 07 constitute a valid variation to be assessed under Clause 40.5(c) of the Contract.

217 Mr Gilford attached a revised costing which deleted an aspect of the earlier costing.

218 On 14 August 2007, after Neumann had engaged its piling contractor and had commenced work, Mr Gilford had a conversation with Mr Achelles. Mr Achelles said, apparently, that he would “recommend that the proposed variation to the tanks with piles and pile caps not be accepted by council. Pradhan did not have the authority to approve it”. Perhaps not surprisingly, Mr Gilford queried Mr Achelles’ assertion.

219 Mr Pradhan did not reply to Mr Gilford’s email confirming (or purporting to confirm) the verbal approval and submitting a revised costing.

220 Mr Pradhan was not called to give evidence. There was no suggestion that he was unavailable. Mr Achelles was not called to give evidence, and there was no suggestion that he was unavailable to give evidence.

(I note that Mr Achelles’ role is obscure.)

The parties’ submissions

221 Mr Greenwood submitted, correctly, that the full amount quoted by item 7.7 of the schedule of rates, together with the dollar amount stated in Mr Vasey’s email of 1 December 2006, had been paid. That, he submitted, was the extent of the council’s liability. If Neumann had failed to allow, in its tendered rate, for the cost of supplying and installing the slab necessary to support each tank, that was not something for which council was liable. The requirement to support the tanks on slabs always existed, and could not amount to a variation.

222 Mr Greenwood submitted further that, Neumann having chosen to supply and install six larger tanks, that was a variation for its convenience and not a variation directed by the Superintendent. He accepted that Mr Wassef had said that he would be likely to approve the installation of six larger rather than nine smaller tanks, but noted (correctly) that this was on condition that there would be no increased cost to the council.

223 As to the piling: Mr Greenwood submitted that the rate quoted in Mr Vasey’s email of 1 December 2006 was an overall rate for all of the tanks, not a rate per tank. He submitted that if it were per tank then the cost savings that had been promised through the use of in situ concrete tanks would disappear.

224 Mr Rudge submitted that the rate proposed for piles in Mr Vasey’s email of 1 December 2006 did not form part of the contract. I may say straight away that I do not accept that submission. As I have noted, the council’s letter of acceptance expressly included the email as one of the documents forming the contract.

225 Mr Rudge referred to what he characterised as evolutions in the design of the tanks and the piling. However, he did not grapple with the problem that Mr Wassef’s attitude was, consistently, that he would approve changes only at the convenience of Neumann, and would not approve them if they resulted in increased cost to the council.

226 At the heart of Mr Rudge’s approach to these issues was his submission that I should accept Mr Gilford’s evidence of the conversation said to have taken place between him and Mr Wassef on 14 April 2007. Mr Rudge relied on that conversation to show, in effect, that the council had accepted that the requirement for slabs and increased piling was a variation for which it was liable to compensate Neumann. For the reasons that I have given already, I do not accept this aspect of Mr Gilford’s evidence, and I prefer Mr Wassef’s account of the conversation (see at [60] to [64] above).

227 However, Mr Rudge pointed to the events of August 2007. He submitted that there was then an approval given under the contract, and that it was not open to the council thereafter to seek to withdraw that approval.

Decision

228 Were it not for the events of August 2007, I would conclude that:

(1) on the proper construction of the contract, including Mr Vasey’s email of 1 December 2006, the rate quoted for piling was a rate per tank; but

(2) Neumann’s claim for a variation in respect of pile capping was not contractually sustainable.

229 As to the first matter: the requirement of the schedule was to quote a rate per tank. That is what Neumann did in its tender, although, mistakenly, the tendered rate per tank did not include at least the cost of piling. Thus, in my view, when Mr Vasey was asked to quote a rate for piles, it is logical that he would have quoted in accordance with item 7.7: a rate per tank.

230 As I have noted, the council’s letter of acceptance specified the arithmetic total of the various rates that had been tendered, as those rates had been “clarified” and amended. It is unclear whether what was incorporated was a one-off allowance for piling. But if it was, then that is a matter for which the council is responsible.

231 As to the second matter: Mr Gilford relied on the fact that the requirement for pile capping, or some other load distribution mechanism, was not specified in the drawings. However, the drawings required the Envirotanks (assuming that they were used) to be installed in accordance with the manufacturer’s requirements, and the tender was for the design, supply and installation of tanks. To my mind, it was for Neumann to ascertain what was required to install the tanks in accordance with the manufacturer’s specification.

232 Equally, if Neumann proposed some alternative method of water storage, it was for it to provide the appropriate design and to quote for everything that was necessary for the appropriate installation. If Neumann overlooked the need for pile caps or slabs, that is something for which it must bear the responsibility.

233 But matters did not rest where they were at the time the contract was let. I conclude that Mr Gilford’s evidence of the verbal approval given by Mr Pradhan should be accepted. The unexplained failure to call Mr Pradhan leads to the inference that his evidence would have been unlikely to assist the council on this point. His failure to reply to the email of 8 August 2007 leads to the inference that he did not disagree with its contents.

234 Mr Achelles appears to have accepted, in the conversation of 15 August 2007 of which Mr Gilford gave evidence, that Mr Pradhan had given (or purported to give) an approval. Mr Achelles did not deny that an approval (or purported approval) had been given. He denied, at most, that the person who gave it had the authority to give it. What he said is consistent with there having been some act of approval, or purported approval. Again, I infer from the failure to call Mr Achelles that his evidence on this point would not have assisted the council.

235 I note that Mr Greenwood did not submit that, if Mr Pradhan had given approval as Mr Gilford said, it was beyond Mr Pradhan’s authority to do so, or that the approval was otherwise ineffective.

236 It follows that Neumann sought a variation under cl 40.5(c), and that the Superintendent, through its then Representative Mr Pradhan, approved that variation. On that analysis, it is not necessary to pursue to a conclusion what the position might have been but for the approval which I find was given by Mr Pradhan on 7 August 2007.

237 Issue 11 (more accurately Issue B1) should be answered: “no”.

238 Issue 12 (more correctly Issue B2) should be answered: “the amount agreed to be paid for the design, supply and installation of the underground water tanks, including all necessary piling, was the amount quoted in Neumann’s letter of 16 April 2007 varied by its letter of 8 August 2007: $735,154.42”.

Conclusion and orders

239 It follows that the council is entitled to be repaid some, but not all, of the amount paid by it to Neumann pursuant to the determination referred to at [1] above. The council is entitled to interest on the amount overpaid, running from the date of payment until the date of judgment.

240 I make the following orders:

(1) Stand proceedings over to 9:30am on 7 July 2010 for the making of final orders.

(2) Direct the parties to submit draft short minutes of order to my Associate by 2 July 2010; if the parties cannot agree on the form of orders to be made then they are to submit competing versions by the same date, together with a short outline of submissions in favour of the orders for which each contends.

241 I will deal with all matters in dispute, including if necessary the question of costs, on 7 July 2010.

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LAST UPDATED:

17 June 2010